-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OxLqJpnL5TQglxKjQ8Hmo5VFYZHOGuPuchcPxJzkXPq+RBEfHf/v+nb5tt2VddR8 WjsBub5P34gxcc5r547+VA== 0000912057-99-008172.txt : 19991206 0000912057-99-008172.hdr.sgml : 19991206 ACCESSION NUMBER: 0000912057-99-008172 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 30 FILED AS OF DATE: 19991203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDISON MISSION HOLDINGS CO CENTRAL INDEX KEY: 0001099532 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330826940 STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-92047 FILM NUMBER: 99768505 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9497525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDISON MISSION ENERGY CENTRAL INDEX KEY: 0000930835 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 954031807 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-92047-01 FILM NUMBER: 99768506 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVE STREET 2: STE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9497525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVE STREET 2: STE 1700 CITY: IRVINE STATE: CA ZIP: 92612 FORMER COMPANY: FORMER CONFORMED NAME: MISSION ENERGY CO DATE OF NAME CHANGE: 19941003 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOMER CITY PROPERTY HOLDINGS INC CENTRAL INDEX KEY: 0001099533 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330851685 STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-92047-02 FILM NUMBER: 99768507 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9497525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EME HOMER CITY GENERATION LP CENTRAL INDEX KEY: 0001099534 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330826938 STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-92047-03 FILM NUMBER: 99768508 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9497525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHESTNUT RIDGE ENERGY CO CENTRAL INDEX KEY: 0001099535 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330826590 STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-92047-04 FILM NUMBER: 99768509 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9497525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSION ENERGY WESTSIDE INC CENTRAL INDEX KEY: 0001099536 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330550657 STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-92047-05 FILM NUMBER: 99768510 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9497525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDISON MISSION FINANCE CO CENTRAL INDEX KEY: 0001099537 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330839202 STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-92047-06 FILM NUMBER: 99768511 BUSINESS ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 9497525588 MAIL ADDRESS: STREET 1: 18101 VON KARMAN AVENUE STREET 2: SUITE 1700 CITY: IRVINE STATE: CA ZIP: 92612 S-4 1 FORM S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 3, 1999 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- EDISON MISSION HOLDINGS CO. (Exact name of Registrant as specified in its charter) CALIFORNIA 4991 33-0826940 (STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER OF INDUSTRIAL IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
------------------------------ 18101 VON KARMAN AVENUE, SUITE 1700 IRVINE, CALIFORNIA 92612 (949) 752-5588 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------------ SEE TABLE OF ADDITIONAL REGISTRANTS -------------------------- STEVEN D. EISENBERG, ESQ. EDISON MISSION HOLDINGS CO. 18101 VON KARMAN AVENUE, SUITE 1700 IRVINE, CALIFORNIA 92612 (949) 752-5588 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------ COPY TO: ROBERT M. CHILSTROM, ESQ. HAROLD F. MOORE, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 919 THIRD AVENUE NEW YORK, NEW YORK 10022 -------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. -------------------------- If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / / If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. / /______ If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /______ -------------------------- CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE 8.137% Senior Secured Bonds due 2019(2).............................. $300,000,000 100% $300,000,000 $79,200 8.734% Senior Secured Bonds due 2026(2).............................. $530,000,000 100% $530,000,000 $139,920 Guarantees of 8.137% Senior Secured Bonds due 2019 and 8.734% Senior Secured Bonds due 2026 of Registrants other than Edison Mission Holdings Co................................... -- -- -- None(3)
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended. (2) Issued by Edison Mission Holdings Co. (3) Pursuant to Rule 457(n), no separate fee is paid in connection with these guarantees. ------------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS
PRIMARY STANDARD STATE OF INCORPORATION INDUSTRIAL CLASSIFICATION I.R.S. EMPLOYER NAME OR ORGANIZATION CODE NUMBER IDENTIFICATION NUMBER - ---- ---------------------- ------------------------- --------------------- Edison Mission Finance Co............................ California 4991 33-0839202 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 (949) 752-5588 Homer City Property Holdings, Inc.................... California 4991 33-0851685 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 (949) 752-5588 Mission Energy Westside, Inc......................... California 4991 33-0550657 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 (949) 752-5588 Chestnut Ridge Energy Company........................ California 4991 33-0826590 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 (949) 752-5588 EME Homer City Generation L.P........................ Pennsylvania 4991 33-0826938 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 (949) 752-5588 Edison Mission Energy................................ California 4991 95-4031807 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 (949) 752-5588
SUBJECT TO COMPLETION, DATED DECEMBER 3, 1999 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. PROSPECTUS Offer to Exchange All 8.137% Senior Secured Bonds due 2019 and All 8.734% Senior Secured Bonds due 2026 for 8.137% Senior Secured Bonds due 2019 and 8.734% Senior Secured Bonds due 2026, Respectively, Which Have Been Registered Under the Securities Act of 1933, As Amended, of EDISON MISSION [LOGO] HOLDINGS CO. An EDISON MISSION ENERGY Company
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2000, UNLESS EXTENDED. - -------------------------------------------------------------------------------- Terms of the exchange offer: - We will exchange all original bonds that are validly tendered and not withdrawn prior to the expiration of the exchange offer. - You may withdraw tenders of original bonds at any time prior to the expiration of the exchange offer. - We believe that the exchange of original bonds will not be a taxable event for U.S. federal income tax purposes, but you should see "Certain United States Federal Income Tax Considerations" on page 88 for more information. - We will not receive any proceeds from the exchange offer. - The terms of the exchange bonds are substantially identical to the original bonds, except that the exchange bonds are registered under the Securities Act and the transfer restrictions and registration rights applicable to the original bonds do not apply to the exchange bonds. - -------------------------------------------------------------------------------- SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR ORIGINAL BONDS. - -------------------------------------------------------------------------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- THE DATE OF THIS PROSPECTUS IS , 1999. FORWARD-LOOKING STATEMENTS This prospectus includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events based upon our knowledge of facts as of the date of this prospectus and our assumptions about future events. These forward-looking statements are subject to various risks and uncertainties that may be outside of our control, including, among other things: - governmental, statutory, regulatory or administrative initiatives affecting our company, our subsidiaries that are guaranteeing the bonds, the Homer City generating units or the United States electricity industry generally; - demand for the electric capacity and energy in the markets served by our generating units; - competition from other power plants, including new plants that may be developed in the future; and - the cost and availability of fuel and fuel transportation services for our generating units. We use words like "believes," "expects," "anticipates," "intends," "may," "will," "should," "estimate," "projected" and similar expressions to help identify forward-looking statements in this prospectus. For additional factors that could affect the validity of our forward-looking statements, you should read "Risk Factors" beginning on page 13. In light of these and other risks, uncertainties and assumptions, the actual events or results may be very different from those expressed or implied in the forward-looking statements in this prospectus or may not occur. We have no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. -------------- NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. -------------- i PROSPECTUS SUMMARY THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. THIS PROSPECTUS INCLUDES SPECIFIC TERMS OF THE EXCHANGE BONDS WE ARE OFFERING, AS WELL AS INFORMATION REGARDING OUR BUSINESS AND DETAILED FINANCIAL DATA. WE ENCOURAGE YOU TO READ THIS PROSPECTUS IN ITS ENTIRETY. THE TERMS "THE COMPANY," "WE," "OURS," "OUR" OR "US" AS USED IN THIS PROSPECTUS REFER TO EDISON MISSION HOLDINGS CO. AND ITS DIRECT AND INDIRECT SUBSIDIARIES, UNLESS THE CONTEXT OTHERWISE REQUIRES. ALL CAPITALIZED TERMS USED IN THIS PROSPECTUS AND NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE "GLOSSARY OF DEFINED TERMS" ATTACHED HERETO AS APPENDIX A. YOU SHOULD PAY SPECIAL ATTENTION TO THE "RISK FACTORS" SECTION BEGINNING ON PAGE 13 OF THIS PROSPECTUS. SUMMARY OF THE EXCHANGE OFFER On May 27, 1999, we completed the private offering of $300 million aggregate principal amount of 8.137% Senior Secured Bonds due 2019 and $530 million aggregate principal amount of 8.734% Senior Secured Bonds due 2026. As part of that offering, we entered into a registration rights agreement with the initial purchasers of these original bonds in which we agreed, among other things, to deliver this prospectus to you and to complete an exchange offer for the original bonds. Set forth below is a summary of that exchange offer. Securities Offered................... We are offering up to $300,000,000 aggregate principal amount of new 8.137% Senior Secured Bonds due 2019 and up to $530,000,000 aggregate principal amount of new 8.734% Senior Secured Bonds due 2026, which have been registered under the Securities Act. The form and terms of these exchange bonds are identical in all material respects to those of the original bonds. The exchange bonds, however, will not contain transfer restrictions and registration rights applicable to the original bonds. The Exchange Offer................... We are offering to exchange new $1,000 principal amount of our 8.137% Senior Secured Bonds due 2019, which have been registered under the Securities Act, for $1,000 principal amount of our outstanding 8.137% Senior Secured Bonds due 2019, and to exchange new $1,000 principal amount of our 8.734% Senior Secured Bonds due 2026, which have been registered under the Securities Act, for $1,000 principal amount of our outstanding 8.734% Senior Secured Bonds due 2026. In order to be exchanged, original bonds must be properly tendered and accepted. All original bonds that are validly tendered and not withdrawn will be exchanged. As of the date of this prospectus, there are $830 million principal amount of original bonds outstanding. We will issue exchange bonds promptly after the expiration of the exchange offer. Resales.............................. Based on interpretations by the staff of the SEC, as set forth in a series of no-action letters issued to third parties, we believe that the exchange bonds issued in the exchange offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act provided that: - you are acquiring the exchange bonds in the ordinary course of your business;
1 - you are not participating, do not intend to participate and have no arrangement or understanding with any person to participate, in a distribution of the exchange bonds; and - you are not an "affiliate" of ours. If you are an affiliate of ours, are engaged in or intend to engage in or have any arrangement or understanding with any person to participate in the distribution of the exchange bonds: (1) you cannot rely on the applicable interpretations of the staff of the SEC and (2) you must comply with the registration requirements of the Securities Act in connection with any resale transaction. Each broker or dealer that receives exchange bonds for its own account in exchange for original bonds that were acquired as a result of market-making or other trading activities must acknowledge that it will deliver this prospectus in connection with any offer to resell, resale, or other transfer of the exchange bonds issued in the exchange offer. Expiration Date...................... 5:00 p.m., New York City time, on , 2000, unless we extend the expiration date. Accrued Interest on the Exchange Bonds and Original Bonds........... The exchange bonds will bear interest from the most recent date to which interest has been paid on the original bonds or, if no interest has been paid on the original bonds, from May 27, 1999. If your original bonds are accepted for exchange, then you will receive interest on the exchange bonds and not on the original bonds. Conditions to the Exchange Offer..... The exchange offer is subject to customary conditions. We may assert or waive these conditions in our sole discretion. If we materially change the terms of the exchange offer, we will resolicit tenders of the original bonds. Please read the section "The Exchange Offer--Conditions to the Exchange Offer" of this prospectus for more information regarding conditions to the exchange offer. Procedures for Tendering Original Bonds.............................. If you wish to tender your original bonds, you must complete, sign and date the letter of transmittal, or a facsimile of it, according to its instructions and transmit the letter of transmittal, together with your original bonds and any other required documentation to United States Trust Company of New York. United States Trust Company of New York, who is the exchange agent, must receive this documentation at the address set forth in the letter of transmittal by 5:00 p.m., New York City time, on the expiration date. By executing the letter of transmittal, you will represent to us that you are acquiring the exchange bonds in the ordinary course of your business, that you are not participating, do not intend to participate and have no arrangement or understanding with any person to participate, in the distribution of exchange bonds, and
2 that you are not an "affiliate" of ours. See "The Exchange Offer--Procedures for Tendering." Special Procedures for Beneficial Holders............................ If you are the beneficial holder of original bonds that are registered in the name of your broker, dealer, commercial bank, trust company or other nominee, and you wish to tender in the exchange offer, you should promptly contact the person in whose name your original bonds are registered and instruct that person to tender on your behalf. See "The Exchange Offer--Procedures for Tendering." Guaranteed Delivery Procedures....... If you wish to tender your original bonds and you cannot deliver your bonds, the letter of transmittal or any other required documents to the exchange agent before the expiration date, you may tender your original bonds according to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures." Withdrawal Rights.................... Tenders may be withdrawn at any time before 5:00 p.m., New York City time, on the expiration date. Acceptance of Original Bonds and Delivery of Exchange Bonds......... Subject to the conditions set forth in the section "The Exchange Offer--Conditions to the Exchange Offer" of this prospectus, we will accept for exchange any and all original bonds which are properly tendered in the exchange offer before 5:00 p.m., New York City time, on the expiration date. The exchange bonds will be delivered promptly after the expiration date. See "The Exchange Offer--Terms of the Exchange Offer." Certain United States Federal Income Tax Considerations................. We believe that your exchange of original bonds for exchange bonds pursuant to the exchange offer will not result in any gain or loss to you for U.S. federal income tax purposes. See "Certain United States Federal Income Tax Considerations" in this prospectus. Exchange Agent....................... United States Trust Company of New York is serving as exchange agent in connection with the exchange offer. The address and telephone number of the exchange agent are set forth in "The Exchange Offer--Exchange Agent" in this prospectus. Use of Proceeds...................... We will not receive any proceeds from the issuance of exchange bonds pursuant to the exchange offer. We will pay all expenses incident to the exchange offer. See "Use of Proceeds."
3 SUMMARY OF TERMS OF THE EXCHANGE BONDS THE FORM AND TERMS OF THE EXCHANGE BONDS AND THE ORIGINAL BONDS ARE IDENTICAL IN ALL MATERIAL RESPECTS, EXCEPT THAT TRANSFER RESTRICTIONS AND REGISTRATION RIGHTS APPLICABLE TO THE ORIGINAL BONDS DO NOT APPLY TO THE EXCHANGE BONDS. THE EXCHANGE BONDS WILL EVIDENCE THE SAME DEBT AS THE ORIGINAL BONDS AND WILL BE GOVERNED BY THE SAME INDENTURE. WHERE WE REFER TO "BONDS" IN THIS DOCUMENT, WE ARE REFERRING TO BOTH SERIES OF ORIGINAL BONDS AND EXCHANGE BONDS. Total Amount of Exchange Bonds Offered...................... $300 million in aggregate principal amount of 8.137% Senior Secured Bonds due 2019 (the "Series A bonds"). $530 million in aggregate principal amount of 8.734% Senior Secured Bonds due 2026 (the "Series B bonds"). Maturity............................. Series A bonds: October 1, 2019. Series B bonds: October 1, 2026. Issue Price.......................... Par plus accrued interest from May 27, 1999. Payment Dates........................ April 1 and October 1, beginning October 1, 1999. Amortization......................... Principal of the bonds will be amortized in accordance with the schedules set forth under "Description of the Bonds--Amortization of the Bonds." Initial Average Life................. Series A bonds: 13.9 years. Series B bonds: 20.7 years. Denominations........................ We will sell the exchange bonds in minimum denominations of $100,000 or any integral multiple of $1,000 in excess thereof. Ratings.............................. "Baa3" by Moody's Investors Service, Inc. ("Moody's"), "BBB-" by Standard & Poor's Rating Services ("S&P") and "BBB" by Duff & Phelps Credit Rating Co. ("Duff & Phelps"). Subsidiary Guarantees................ Each guarantor is our wholly-owned subsidiary. If we cannot make payments on the bonds when they are due, the subsidiary guarantors must make them instead. Optional Redemption.................. We may redeem any of the bonds at any time at a redemption price equal to: - 100% of the principal amount of the bonds being redeemed, PLUS - accrued interest on the bonds being redeemed, PLUS - a yield maintenance premium based on rates of comparable treasury securities PLUS 50 basis points. Mandatory Redemption................. In the event of any damage to the Facilities (defined below), governmental taking or other recovery event at the Facilities, we must use any proceeds actually received by us in excess of $5 million that are not used to repair or replace the Facilities to redeem bonds and prepay our other senior secured debt. In such event, the redemption price for the bonds will be 100% of the principal amount of the bonds being redeemed PLUS accrued interest. Debt Service Reserve Account......... We will be required to establish a debt service reserve account for the benefit of the holders of the bonds. This account will be funded
4 with enough money to pay the projected debt service on the bonds due in the next six months (initially approximately $35 million). We do not have to fund this account with cash if we provide acceptable debt service credit support, which may be either an undertaking of Edison Mission Energy ("EME"), which owns us (if EME is rated "Baa1" or better by Moody's and "BBB+" or better by S&P) or a letter of credit provided by a bank or trust company rated "A2" or better by Moody's and "A" or better by S&P. The Collateral Agent will disburse funds from this account or call upon the credit support only to pay principal and interest on the bonds that is past due. Credit Support Guarantee............. If at any time before December 31, 2001 neither we nor the subsidiary guarantors can make payments on the bonds or our other senior secured debt and there is not enough money in the revenue and other accounts to make such payments, EME must make up to $42 million of these payments. EME will be required to make payments on the bonds before money in the debt service reserve account for the bonds or the acceptable credit support contained in such account is used. Ranking of the Bonds................. The bonds: - are senior secured obligations; - are equivalent in right of payment to all of our existing and future senior indebtedness; and - rank senior to all of our existing and future subordinated indebtedness. Collateral........................... The bonds and our other senior secured debt will be secured by: - a mortgage on our real property; - a security interest in our insurance policies and all of the money paid to us on such policies; - a security interest in all of our governmental approvals, if we are able to assign such approvals; - a security interest in reserve and other accounts and all money in such accounts; and - a security interest in all of our other assets, including our ownership interests in our subsidiaries. Non-Recourse Obligations............. We are obligated to make payments on the bonds. Neither EME nor any other affiliate of EME will guarantee payment of the bonds or will have any obligation to make payments on the bonds, other than EME's obligations under the Credit Support Guarantee or any credit support that we use to satisfy the debt service reserve requirement for the bonds. Operating Flow of Funds.............. We will deposit all of our revenues into the revenue account established for your benefit and for the benefit of the holders of our other senior secured debt. These revenues will be used to pay operating expenses, administrative fees and expenses and debt service and to fund the debt service reserve accounts for the bonds and our other senior secured debt. Any money remaining after we
5 make these payments will be transferred into an equity account in order to make distributions to us if we satisfy the distribution conditions described below under "--Distributions." Distributions........................ Other than as described below under "Use of Proceeds," we can make distributions only with funds in the equity account if the following conditions are satisfied on the quarterly distribution date: - no default or event of default under the indenture exists or would result from the distribution; - we have paid all amounts due on our senior debt and all reimbursement obligations due in respect of our letters of credit, if any, and have fully funded or provided acceptable debt service credit support for our debt service reserve accounts; - we certify that the debt service coverage ratio for the previous four quarters is at least 1.50 to 1.0 for any period ending on or before December 31, 2001 or 1.70 to 1.0 for any period ending after December 31, 2001; and - we certify that the projected debt service coverage ratio for each four-quarter period during the next eight quarters is at least 1.50 to 1.0 for any period ending on or before December 31, 2001 or 1.70 to 1.0 for any period ending after December 31, 2001. Covenants............................ The terms of the bonds will require us to, among other things: (1) provide financial statements, default notices and other notices to the trustee and the rating agencies; (2) comply with applicable laws; (3) obtain all necessary governmental approvals; and (4) pay taxes and maintain books and records. The terms of the bonds will restrict our ability to, among other things: (1) incur additional debt; (2) incur liens on our property; (3) sell assets; (4) enter into certain transactions with affiliates; and (5) create new subsidiaries. These limitations are subject to a number of important qualifications and exceptions which are described in "Description of Principal Financing Documents--Indenture." Change of Control.................... It is an Event of Default under the bonds if EME's direct or indirect beneficial ownership in us is reduced to less than 50% at any time, unless either: - the bonds are rated at least investment grade by each rating agency rating the bonds at that time and we receive a confirmation of the ratings of the bonds; or - the reduction in EME's voting interest is approved by bondholders holding at least 66 2/3% in aggregate principal amount of the outstanding bonds. Governing Law........................ The bonds and the other Financing Documents (other than the mortgage of our real property, which will be governed by the laws of the Commonwealth of Pennsylvania) will be governed by the laws of the State of New York.
6 THE COMPANY EDISON MISSION HOLDINGS CO. We are a California corporation formed for the purpose of issuing the bonds and, through its subsidiaries, acquiring, owning and operating three coal-fired electric generating units (individually "Unit 1," "Unit 2" and "Unit 3" and, collectively, the "Homer City Units" or the "Units") with an aggregate capacity of 1,884 megawatts ("MW"), and related facilities (the Units and such related facilities, the "Facilities"), located near Pittsburgh, Pennsylvania. EME owns the Company. On March 18, 1999, the Company's subsidiary, EME Homer City Generation L.P. ("EME Homer City"), completed its acquisition (the "Acquisition") of 100% of the ownership interests in the Facilities from wholly-owned subsidiaries of GPU Inc. and Energy East Corporation for approximately $1.8 billion. The Company formed five subsidiaries, including EME Homer City, in order to effect the acquisition, ownership, financing and operation of the Facilities. Each of these subsidiaries is providing a guarantee with respect to the bonds as well as a pledge of substantially all of its assets and cash flow as collateral for the bonds. The nameplate capacities of the Homer City Units are 620 MW (Unit 1), 614 MW (Unit 2) and 650 MW (Unit 3) and the Units are among the lowest cost fossil-fired generating units in the Northeastern United States. The Units benefit from direct transmission access into both the Pennsylvania--New Jersey--Maryland power market ("PJM") and the New York power market ("NYPP"). In 1998, the Units had fuel expenses and operating and maintenance costs of approximately $17/megawatt-hour ("MWh") and were among the first fossil-fired units in the merit order for dispatch within both PJM and NYPP. EDISON MISSION ENERGY EME is a leading global power producer. Through its subsidiaries, EME engages in the business of developing, acquiring, owning and operating electric power generation facilities worldwide. Edison International owns EME and also owns Southern California Edison Company, one of the largest electric utilities in the United States. At September 30, 1999, EME had consolidated assets of approximetely $11 billion and total shareholder's equity of approximately $2 billion. The bonds will be non-recourse to EME. EME was formed in 1986 with two domestic operating projects. EME's business has evolved from the development of contract-based domestic power projects to the development of contract-based international power projects and the acquisition of operating generating assets within developed and deregulating power markets. Currently, EME owns interests in 58 domestic and international operating power stations with an aggregate generating capacity of 16,443 MW, of which EME's share is approximately 12,369 MW. One domestic acquisition of twelve operating projects totaling approximately 9,510 MW of generating capacity (of which EME's anticipated share is 100%) is currently pending. In addition, EME owns interests in one domestic and five international projects which are under construction. The capacity of these projects is expected to total 2,493 MW (of which EME's anticipated share is approximately 891 MW). EME's business goal is to be one of the leading owners and operators of electric generating assets in the world. EME will play an active role, as a long-term owner, in all phases of power generation, from planning and development through construction and commercial operation. EME believes that such involvement allows EME to better ensure, with its experienced personnel, that its projects are well-planned, structured and managed, thereby maximizing value creation. In the United States, long-term contracts are likely to be the exception rather than the rule. EME's strategy focuses primarily on three areas with respect to uncontracted plants: valuation, trading and regulation. First, EME continuously improves its valuation tools, enabling EME to bid effectively and competitively on assets that will be sold over the next five years. Second, EME strives to develop its trading skills to enhance the returns of its generating assets. Third, EME's principal customers 7 continue to be regulated utilities; therefore, understanding the regulatory and economic environment in which these utilities operate allows EME to better react to what they will do. In March 1999, EME entered into definitive acquisition documentation to acquire 100% of the fossil-fuel generating assets of Commonwealth Edison Co. ("ComEd"), totaling approximately 9,510 MW of generating capacity. EME will operate the plants, which are located in the Midwest. The closing of the transaction is subject to various state and federal regulatory approvals and is expected to be completed by year-end 1999. On May 14, 1999, EME acquired 40% of Contact Energy Limited ("Contact Energy") from the government of New Zealand. Contact Energy owns ten hydroelectric, geothermal and natural gas-fired power generating plants in New Zealand (including two that are under construction), with a total aggregate capacity of 2,371 MW, of which EME's share is 949 MW. Contact Energy also supplies gas and electricity to customers in New Zealand and has a minority interest in a power project currently under construction in Australia. In July 1999, EME acquired two power plants in the United Kingdom with a total generating capacity of 3,886 MW from PowerGen UK plc ("PowerGen"). These mid-merit plants will complement the pumped-storage hydroelectric power plants EME already owns in the United Kingdom and sell power to the electricity trading market there. Upon closing of the ComEd acquisition, EME will have an interest in approximately 29,500 MW of generating capacity, of which EME's share will be approximately 23,200 MW. STRATEGIC OVERVIEW Over the past two years, EME has shifted its primary focus to the acquisition and operation of competitive generation, both domestically and internationally. EME identifies high-quality generating assets that are strategic to deregulated power markets. EME has participated in several auctions in the PJM and NYPP power markets because of the stable and developed nature of the regions served by those markets. EME believes that low-cost, base load assets in those markets are attractive because they operate all of the time and because they are difficult to displace in the merit order. The acquisition of the Homer City Units represents EME's entry into the PJM and NYPP competitive markets. The Units satisfy EME's competitive generation strategy as they: - Are among the first fossil-fired plants to be dispatched in PJM and NYPP; - Have the ability to access two competitive power markets, PJM and NYPP; - Are located near large quantities of low-cost coal reserves; - Are efficiently staffed and have an experienced workforce; - Have a high average equivalent availability and efficient plant heat rate; and - Provide the opportunity to implement a proactive environmental upgrade program. POWER SALES STRATEGY POWER MARKETS. EME Homer City sells output from the Homer City Units into the PJM and NYPP competitive markets for capacity and energy and may also enter into bilateral contracts for the sale of capacity and energy to power marketers and load serving entities within PJM, NYPP and surrounding markets. PJM is divided into three distinct locational marginal pricing zones and the Facilities are located in the Western zone. PJM has been operating as an Independent System Operator (an "ISO") since November 1997 and provides bid-based markets for energy and installed capacity. PJM is characterized by predominantly coal-fired base load and marginal units, a high concentration of nuclear facilities, extensive regional transmission interconnections and retail competition in the underlying Pennsylvania retail market. NYPP is divided into eleven distinct locational marginal pricing zones and the Facilities are located in the Western region. NYPP has received conditional Federal Energy Regulatory Commission ("FERC") approval to become an ISO and has proposed to provide bid-based markets for energy, installed capacity and ancillary services. NYPP is characterized by predominantly coal-fired base load and marginal units and transmission interconnections with the New England Power Pool ("NEPOOL") 8 market, as well as with PJM and several Canadian transmission systems. Retail customers in New York began to have the ability to choose their electric supplier in 1998. We can transmit 1,884 MW from the Homer City Units into NYPP through two 345 kilovolts ("kV") high voltage transmission lines and can transmit 1,884 MW into PJM through two 230 kV lines. We will not incur any access or wheeling charges for any energy delivered into PJM or for up to 942 MW of energy delivered into NYPP. A 13-mile 230 kV line from the Homer City Units also provides an indirect interconnection to the East Central Area Reliability ("ECAR") market. POWER MARKETING ACTIVITIES. We have entered into a contract with a marketing affiliate for the sale of energy and capacity produced by the Homer City Units, which enables such marketing affiliate to engage in forward sales and hedging transactions to manage our electricity price exposure. The marketing affiliate has systems in place which monitor real-time spot and forward pricing and perform option valuations. We will pay the marketing affiliate a nominal fee for the performance of marketing services. All revenue from physical sales transactions executed by the marketing affiliate will be deposited into the revenue account established for the benefit of the bondholders and the holders of our other senior secured debt. As of September 30, 1999, we had sold 82% of the anticipated energy output of Units 1 and 2 for the remainder of 1999. These forward energy sales average $22.00/MWh, compared to the Power Market Consultant's base case projections of $19.14/MWh for PJM and $22.30/MWh for NYPP. Also as of September 30, 1999, we had entered into forward energy sales totaling 856 MW during on-peak hours in calendar year 2000 at an average price of $40.90/MWh. The marketing affiliate has sold 99% of the remaining installed capacity over the transition contract amounts through May 2000 at a weighted average price of $65.00/MW-day. TRANSITION CONTRACTS. We have entered into separate transition contracts (the "Transition Contracts") with Pennsylvania Electric Company ("Penelec") and New York State Electric & Gas Corporation ("NYSEG"), pursuant to which we may exercise a put option to sell certain quantities of capacity to Penelec and NYSEG, and Penelec and NYSEG may exercise call options to purchase certain quantities of our capacity. The terms of the NYSEG Transition Contract and the Penelec Transition Contract continue until April 30, 2001 and May 31, 2001, respectively. We have exercised our put option to sell 942 MW of capacity to Penelec for the first and second contract years under the Penelec Transition Contract for a price of $49.90/MW-day for the first contract year and $59.90/MW-day for the second contract year. We have entered into a letter agreement with NYSEG to adjust the contract periods under the NYSEG Transition Contract to conform to the PJM capacity planning cycle. We have also entered into contractual arrangements with NYSEG to sell it 942 MW of capacity for the period from March 18, 1999 to May 31, 1999 for a price of $55.00/MW-day and to sell it 500 MW of capacity during the period from June 1, 1999 through May 31, 2000 for a price of $60.00/MW-day. The amount of capacity covered by these Transition Contracts with respect to which a put or call option has not yet been exercised is subject to reduction in the event that there is a decrease in the amount by which NYSEG's and Penelec's projected load supply obligations exceed the capacity available to be provided by their remaining owned generation and existing power purchase entitlements. ENVIRONMENTAL STRATEGY We have contracted with a division of ABB Flakt, Inc. ("ABB") to make environmental improvements to the Units. ABB will construct a limestone-based, wet scrubber flue gas desulfurization ("FGD") system at Unit 3 and a selective catalytic reduction ("SCR") system at each of the three Units (the "Environmental Capital Improvements"). The Environmental Capital Improvements are expected to enable the Homer City Units to comply with Phase II of Title IV of the Clean Air Act regarding SO(2) emissions, the Pennsylvania NO(x) allowance regulations and Pennsylvania's response to the Environmental Protection Agency's ("EPA") State Implementation Plan Call regarding NO(x) emissions. The Environmental Capital Improvements will cost approximately $246 million, which amount includes a fixed price, turnkey engineering, procurement and construction contract, project 9 management costs and other project costs, and are scheduled to be installed during 2000-2001. The Environmental Capital Improvements will be funded with loans under an existing credit facility. FUEL SUPPLY STRATEGY The Homer City Units utilize coal as their primary source of fuel and benefit from access by truck to significant native coal reserves located within the western Pennsylvania portion of the Northern Appalachian region. Northern Appalachian coal is relatively inexpensive and has a high heat content. We will work with our affiliates to provide short-term and long-term market-based fuel arrangements after the existing supply contracts expire and to minimize fuel costs as enabled by the Environmental Capital Improvements. Up to 95% of the coal used by Units 1 and 2 is supplied under existing contracts with regional mines which are located within 50 miles of the Facilities, while the remainder is purchased in the spot market. The coal for Units 1 and 2 is cleaned in our coal cleaning facility (the "Coal Cleaning Plant") to reduce sulfur content. Unit 3 utilizes lower sulfur coal which is blended at an on-site coal blending facility. OPERATION AND MAINTENANCE STRATEGY We employ a skilled and disciplined workforce that is well prepared to operate within a competitive and deregulated environment. We believe that our staffing levels are comparable with benchmark standards for facilities of a similar size and type. Employee headcount has been reduced by nearly 30% over the past five years, while at the same time high standards for equivalent availability and safety have been consistently maintained. The majority of the technical staff at the Facilities has been retained after completing our acquisition of the Homer City Units, thus providing us with a knowledgeable and experienced base of employees which average over 22 years of experience in the operation of the Homer City Units and similar facilities. Our workforce is employed pursuant to a collective bargaining agreement which was restructured in 1994. The collective bargaining agreement provides us with a measure of labor cost certainty through 2002. The collective bargaining agreement enables us to manage our workforce and to establish flexible work rules going forward. We plan to cross-train our employees to perform different functions, thus minimizing the use of more expensive or less efficient subcontractors. Our operating and maintenance plan, as well as several planned overhauls of major equipment and controls, are consistent with our goal of extending the remaining life of the Homer City Units for an additional 39 years. We utilize a state-of-the-art computerized maintenance system to plan and schedule all maintenance activities. We also employ a preventive maintenance program complemented by new predictive maintenance technologies such as ferrography, thermography, vibration analysis and acoustic analysis. Reliability-centered maintenance techniques are currently being developed for critical systems to better define condition monitoring parameters and redefine maintenance strategies. OFFERING OF ORIGINAL BONDS On May 27, 1999, we issued and sold the original bonds. We used the net proceeds of that offering, which were approximately $823 million, (1) to repay the principal of loans outstanding under the Acquisition Facility and (2) to repay a portion of EME's equity investment in us in the form of a distribution. 10 SOURCES AND USES OF FUNDS FINANCING PLAN We entered into a Credit Agreement, dated as of March 18, 1999 (the "Credit Agreement"), with the banks and other financial institutions party thereto (the "Banks"). The Credit Agreement provides for (1) a 364-day term loan facility in an amount up to $800 million (the "Acquisition Facility"), (2) a five-year term loan facility in an amount up to $250 million (the "Environmental Capital Improvements Facility") and (3) a five-year revolving credit facility in an amount up to $50 million (the "Working Capital Facility"). On March 18, 1999, we borrowed $800 million of term loans under the Acquisition Facility and used the proceeds of such loans, together with equity contributions from EME in the amount of $1.06 billion, to fund the purchase price for the Facilities. We used the net proceeds of the sale of the original bonds to repay the outstanding principal of, and to permanently reduce the bank commitments associated with, the term loans borrowed under the Acquisition Facility, and to repay a portion of EME's equity investment in us in the form of a distribution. We will use amounts available under the Environmental Capital Improvements Facility to fund the Environmental Capital Improvements and will use amounts available under the Working Capital Facility for general working capital purposes. All outstanding amounts under the Working Capital Facility will be repaid each year on the anniversary of the issuance of the original bonds. Under certain conditions, we have access to additional liquidity in a debt service reserve account and under a credit support guarantee provided by EME. TABLE OF SOURCES AND USES OF FUNDS The following table sets forth the approximate sources and uses of funds in connection with the Acquisition.
AMOUNT -------------- (IN THOUSANDS) SOURCES OF FUNDS: Equity.................................................... $1,030,000 ---------- Debt: Acquisition Facility.................................... -- Bonds................................................... 830,000 ---------- Total Debt(1)............................................. 830,000 ---------- TOTAL SOURCES OF FUNDS...................................... $1,860,000 USES OF FUNDS: Acquisition Costs......................................... $1,801,000 Transaction Expenses, Inventories, Other.................. 59,000 ---------- TOTAL USES OF FUNDS......................................... $1,860,000
- ------------------------ (1) Does not include amounts available for drawing under the $250 million Environmental Capital Improvements Facility or the $50 million Working Capital Facility. 11 SUMMARY CONSOLIDATED FINANCIAL DATA The following table sets forth a summary of our consolidated financial data for the period indicated. The summary consolidated financial data was derived from the audited financial statements of the Company. The summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, included herein or incorporated by reference.
NINE MONTHS ENDED SEPTEMBER 30, 1999 -------------- (IN THOUSANDS) INCOME STATEMENT DATA: Operating revenues.......................................... $ 245,788 Operating expenses.......................................... 150,999 ---------- Income from operations...................................... 94,789 Interest expense............................................ (35,506) Interest and other income................................... 834 ---------- Income before income taxes.................................. 60,117 Provision for income taxes.................................. 24,939 ---------- Income before extraordinary loss............................ 35,178 Extraordinary loss on early extinguishment of debt, net of income tax benefits....................................... (2,667) ---------- Net income.................................................. $ 32,511 ========== SEPTEMBER 30, 1999 -------------- BALANCE SHEET DATA: Assets...................................................... 2,121,696 Current liabilities......................................... 60,263 Long-term obligations....................................... 992,004 Shareholders' equity........................................ 1,069,429
12 RISK FACTORS IN ADDITION TO THE INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS SHOULD BE CAREFULLY CONSIDERED BY EACH PROSPECTIVE INVESTOR IN EVALUATING AN INVESTMENT IN THE BONDS. THE RISK FACTORS SET FORTH BELOW, OTHER THAN "-YOU MAY EXPERIENCE ADVERSE CONSEQUENCES IF YOU FAIL TO EXCHANGE YOUR ORIGINAL BONDS FOR EXCHANGE BONDS," GENERALLY APPLY TO THE ORIGINAL BONDS AS WELL AS THE EXCHANGE BONDS. YOU MAY EXPERIENCE ADVERSE CONSEQUENCES IF YOU FAIL TO EXCHANGE YOUR ORIGINAL BONDS FOR EXCHANGE BONDS. If you do not exchange your original bonds for exchange bonds pursuant to the exchange offer, you will continue to be subject to the restrictions on transfer of your original bonds described in the legend on your original bonds. The restrictions on transfer of your original bonds arise because we issued the original bonds pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, you may only offer or sell the original bonds if they are registered under the Securities Act and applicable state securities laws, or offered and sold pursuant to an exemption from such requirements. We do not intend to register the original bonds under the Securities Act. In addition, if you exchange your original bonds in the exchange offer for the purpose of participating in a distribution of the exchange bonds, you may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. To the extent original bonds are tendered and accepted in the exchange offer, the trading market, if any, for the original bonds would be adversely affected. See "The Exchange Offer-- Consequences of Exchanging or Failing to Exchange Original Bonds." WE ARE THE ONLY ONES REQUIRED TO MAKE PAYMENTS ON THE BONDS AND OUR ABILITY TO DO SO IS DEPENDENT ON CIRCUMSTANCES BEYOND OUR CONTROL. We are the only ones required to make payments on the bonds. None of our affiliates, shareholders, officers, directors or employees will be required to make payments on the bonds, including EME, other than EME's obligations under the Credit Support Guarantee or any guarantee provided by EME that we use to satisfy our debt service reserve requirements. We are a special purpose finance company and our only significant assets are our equity interests in our subsidiaries. Our ability to make payments on the bonds is dependent on our subsidiaries' ability to repay subordinated intercompany loans and make equity distributions. Our subsidiaries' ability to repay the intercompany loans and make equity distributions is dependent on revenues generated by the Facilities, which is dependent on the Facilities' performance level and on market conditions for the sale of capacity and energy. THE OPERATION OF THE FACILITIES INVOLVES RISKS. The operation of power generation facilities involves many operating risks, including: - performance below expected levels of output or efficiency; - interruptions in fuel supply; - disruptions in the transmission of electricity; - breakdown or failure of equipment or processes; - violation of permit requirements; and - operator error or catastrophic events such as fires, earthquakes, explosions, floods or other similar occurrences affecting power generation facilities. 13 Although we employ experienced operating personnel to operate the Facilities and will maintain insurance (including business interruption insurance) to mitigate the effects of certain of the operating risks described above, we cannot assure you that the occurrence of one or more of the events listed above would not significantly decrease or eliminate revenues generated by the Facilities or significantly increase the costs of operating the Facilities. A decrease or elimination in revenues generated by the Facilities or an increase in the costs of operating the Facilities could decrease or eliminate funds available to us to make payments on the bonds. THE REVENUES GENERATED BY THE OPERATION OF THE FACILITIES ARE SUBJECT TO MARKET RISKS WHICH ARE BEYOND OUR CONTROL. We may sell all or a portion of the Homer City Units' output into the PJM, NYPP or other competitive power markets or on a bilateral basis and may also sell such output to our marketing affiliate, which will in turn sell such output into the PJM, NYPP or other markets. Participants in PJM and NYPP are not guaranteed any specified rate of return on their capital investments through recovery of mandated rates payable by purchasers of electricity. Therefore, with the exception of revenue generated by the Transition Contracts (which expire in 2001) and from bilateral contracts for the sale of electricity with third-party load serving entities and power marketers, our revenues and results of operations will be dependent upon prevailing market prices for energy, capacity and ancillary services in PJM, NYPP and other competitive markets. Among the factors that will influence the market prices for energy, capacity and ancillary services in PJM and NYPP are: - prevailing market prices for fuel oil, coal and natural gas and associated transportation costs; - the extent of additional supplies of capacity, energy and ancillary services from current competitors or new market entrants, including the development of new generation facilities that may be able to produce electricity less expensively; - transmission congestion in PJM and/or NYPP; - the extended operation of nuclear generating plants in PJM and NYPP beyond their presently expected dates of decommissioning; - weather conditions prevailing in PJM and NYPP from time to time; - the possibility of a reduction in the projected rate of growth in electricity usage as a result of factors such as regional economic conditions and the implementation of conservation programs; and - regulations, yet to be finalized, to take effect upon implementation of the ISO in NYPP. All of the factors listed above are beyond our control. WE HAVE BEEN OPERATING THE FACILITIES FOR ONLY A SHORT PERIOD OF TIME. Substantially all of our current business consists of owning and operating the Facilities. Although the Homer City Units had a significant operating history at the time we acquired them, we have a very limited history of owning and operating the Homer City Units. In addition, the Units were operated as integrated parts of regulated utilities prior to our acquisition and their output of electricity was sold by NYSEG and Penelec at prices which were based upon rates set by regulatory authorities. We cannot assure you that we will be successful in operating the Homer City Units in a competitive environment in which electricity rates will be set by the operation of market forces. We also cannot assure you that the Homer City Units will perform as expected or that the revenues generated by the Units will support our indebtedness, the cost of operating the Facilities and the capital expenditures needed to 14 maintain the Facilities. Our historical consolidated financial data are not helpful in predicting our future income because we have not been operating the Facilities for a significant period of time. OUR BUSINESS IS SUBJECT TO SUBSTANTIAL REGULATIONS AND PERMITTING REQUIREMENTS AND MAY BE ADVERSELY AFFECTED BY OUR INABILITY TO COMPLY WITH EXISTING REGULATIONS OR REQUIREMENTS OR CHANGES IN APPLICABLE REGULATIONS OR REQUIREMENTS. Our business is subject to extensive energy and environmental regulation by federal, state and local authorities. We are required to comply with numerous laws and regulations, and to obtain numerous governmental permits, in our operation of the Facilities. We cannot assure you that existing regulations will not be revised or reinterpreted, that new laws and regulations will not be adopted or become applicable to us or the Facilities or that future changes in laws and regulations will not have a detrimental effect on our business. One of our strategies for compliance with federal regulations regarding SO(2) emissions and federal and state regulations regarding NO(x) emissions is the construction of the Environmental Capital Improvements. A delay in the completion of the Environmental Capital Improvements or the failure of the improvements to perform to their technical specifications could adversely affect our compliance strategy and require us to purchase emissions allowances or reduce the expected levels of operation of the Homer City Units. Although our construction contract with ABB contains customary performance and completion guarantees, we cannot assure you that the Environmental Capital Improvements will be installed when anticipated or whether such systems will perform at the expected levels. We believe that we have obtained all material energy-related federal, state and local approvals currently required to operate the Facilities. Although not currently required, additional regulatory approvals may be required in the future due to a change in laws and regulations, a change in our customers or for other reasons. We cannot assure you that we will be able to obtain all required regulatory approvals that we do not yet have or that we may require in the future, or that we will be able to obtain any necessary modifications to existing regulatory approvals or maintain all required regulatory approvals. If there is a delay in obtaining any required regulatory approvals or if we fail to obtain and comply with any required regulatory approvals, the operation of the Facilities or the sale of electricity to third parties could be prevented or subject to additional costs. We are required to comply with numerous statutes, regulations and ordinances relating to the safety and health of employees and the public, the protection of the environment and land use. These statutes, regulations and ordinances are constantly changing. We may incur significant additional costs because of our compliance with these requirements. If we fail to comply with these requirements, we could be subject to civil or criminal liability and the imposition of clean-up liens or fines. In acquiring the Facilities, we assumed, subject to certain exceptions, all on-Site liabilities associated with the environmental condition of the Facilities, regardless of when such liabilities arose and whether known or unknown, and generally agreed to indemnify the former owners of the Facilities for these liabilities. We cannot assure you that we will at all times be in compliance with all applicable environmental laws and regulations or that steps to bring the Facilities into compliance would not materially and adversely affect our ability to make payments on the bonds. THE INSURANCE COVERAGE FOR THE FACILITIES MAY NOT BE ADEQUATE. We are required to have insurance for the Facilities, including all-risk property damage insurance, commercial general public liability insurance, boiler and machinery coverage and business interruption insurance. We cannot assure you that the insurance coverage for the Facilities will be available in the future on commercially reasonable terms. We also cannot assure you that the insurance proceeds received for any loss of the Facilities or any damage to the Facilities will be sufficient to permit us to make any payments on the bonds. 15 RISKS ASSOCIATED WITH THE YEAR 2000 PROBLEM COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS. We expect to implement successfully systems to address year 2000 issues. We cannot assure you, however, that our year 2000 compliance will not be delayed or require significant expenditures. Our inability to implement the appropriate software on a timely basis could have an adverse effect on our business. We may also suffer an adverse impact on our business if our suppliers, customers, financial institutions, technical advisors and others with which we conduct business are not year 2000 compliant. YOU MAY FIND IT DIFFICULT TO SELL YOUR BONDS. You may find it difficult to sell your bonds because an active trading market for the bonds may not develop. The exchange bonds are being offered to the holders of the original bonds. The original bonds were issued on May 27, 1999 primarily to a small number of institutional investors and overseas investors. After the exchange offer, the trading market for the remaining untendered original bonds could be adversely affected. There is no existing trading market for the exchange bonds. We do not intend to apply for listing or quotation of the exchange bonds on any exchange. Therefore, we do not know the extent to which investor interest will lead to the development of a trading market or how liquid that market might be. Although the initial purchasers of the original bonds have informed us that they currently intend to make a market in the exchange bonds, they are not obligated to do so, and any market-making may be discontinued at any time without notice. As a result, the market price of the exchange bonds could be adversely affected. FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID SUBSIDIARY GUARANTEES AND REQUIRE BONDHOLDERS TO RETURN PAYMENTS RECEIVED FROM SUBSIDIARY GUARANTORS. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, our subsidiaries' guarantees of the bonds could be voided, or claims in respect thereof could be subordinated to all other debts of a subsidiary guarantor, if, among other things, such guarantor, at the time it incurred the indebtedness evidenced by its guarantee: - received less than fair consideration or reasonably equivalent value for the guarantee; - was insolvent or rendered insolvent by reason of such issuance; - was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or - intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. In addition, any payment by such subsidiary guarantor pursuant to its guarantee could be voided and required to be returned to such subsidiary guarantor, or to a fund for the benefit of the creditors of the guarantor. Our subsidiaries' liabilities under their guarantees are contractually limited to the maximum amount they could pay without the guarantees being deemed to be fraudulent transfers. We cannot assure you, however, that this limitation would be effective and, if it was effective, if the limited amount would be sufficient to pay the bonds in full. IT MAY BE DIFFICULT TO REALIZE THE VALUE OF THE COLLATERAL PLEDGED TO SECURE THE BONDS AND THE PROCEEDS RECEIVED FROM A SALE OF THE COLLATERAL MAY BE INSUFFICIENT TO REPAY THE BONDS. Our obligation to make payments on the bonds is secured only by the collateral described in this offering circular. The Collateral Agent's ability to foreclose on the collateral on your behalf may be subject to perfection and priority issues and to practical problems associated with the realization of the Collateral Agent's security interest in the collateral. For example, the Collateral Agent may need to obtain the consent of a third party prior to transferring an asset upon foreclosure. We cannot assure 16 you that the Collateral Agent will be able to obtain such consent. Further, we cannot assure you that foreclosure on the collateral would provide sufficient funds to repay all amounts due on the bonds. In addition, senior debt outstanding under the existing bank credit facilities and certain types of other debt that we are permitted to incur will rank equally with the bonds and share ratably in the collateral which secures the bonds. This would reduce the benefits of the collateral to you and your ability to control certain actions taken with respect to the collateral. USE OF PROCEEDS We will not receive any proceeds from the exchange offer. In consideration for issuing the exchange bonds, we will receive in exchange original bonds of like principal amount, the terms of which are identical in all material respects to the exchange bonds. The original bonds surrendered in exchange for exchange bonds will be retired and canceled and cannot be reissued. Accordingly, issuance of the exchange bonds will not result in any increase in our indebtedness. We have agreed to bear the expenses of the exchange offer. No underwriter is being used in connection with the exchange offer. On May 27, 1999, we issued and sold the original bonds. We used the net proceeds of that offering (1) to repay the principal of loans outstanding under the Acquisition Facility and (2) to repay a portion of EME's equity investment in us in the form of a distribution. CAPITALIZATION The following table sets forth the consolidated capitalization of the Company as of September 30, 1999, and reflects the issuance of the original bonds and the application of the approximate proceeds therefrom as described in "Use of Proceeds." CAPITALIZATION AS OF SEPTEMBER 30, 1999 (UNAUDITED, IN THOUSANDS) Short-Term Indebtedness..................................... $ 60,263 Long-Term Indebtedness: Bonds Payable............................................. 885,000 ---------- Total Long-Term Indebtedness............................ $ 885,000 Shareholders' Equity........................................ $1,069,429 ---------- Total Capitalization.................................... $1,954,429 ==========
17 SELECTED CONSOLIDATED FINANCIAL DATA The following table sets forth a summary of our consolidated financial data for the period indicated. The summary consolidated financial data was derived from the audited financial statements of the Company. The summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, included herein or incorporated by reference.
NINE MONTHS ENDED SEPTEMBER 30, 1999 -------------- (IN THOUSANDS) INCOME STATEMENT DATA: Operating revenues.......................................... $ 245,788 Operating expenses.......................................... 150,999 ---------- Income from operations...................................... 94,789 Interest expense............................................ (35,506) Interest and other income................................... 834 ---------- Income before income taxes.................................. 60,117 Provision for income taxes.................................. 24,939 ---------- Income before extraordinary loss............................ 35,178 Extraordinary loss on early extinguishment of debt, net of income tax benefit........................................ (2,667) ---------- Net income.................................................. $ 32,511 ========== SEPTEMBER 30, 1999 -------------- BALANCE SHEET DATA: Assets...................................................... $2,121,696 Current liabilities......................................... 60,263 Long-term obligations....................................... 992,004 Shareholders' equity........................................ 1,069,429 OTHER DATA: Ratio of earnings to fixed charges(1)....................... 2.65
- ------------------------ (1) For purposes of computing the ratio of earnings to fixed charges, earnings are divided by fixed charges. "Earnings" represent the aggregate of income before taxes and extraordinary income and fixed charges, net of capitalized interest. "Fixed charges" represent interest expense (prior to capitalized interest). 18 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS REGARDING THE COMPANY. THESE STATEMENTS ARE BASED ON THE CURRENT PLANS AND EXPECTATIONS OF THE COMPANY AND INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL FUTURE ACTIVITIES AND RESULTS OF OPERATIONS TO BE MATERIALLY DIFFERENT FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER INCLUDE RISKS SET FORTH IN "RISK FACTORS." GENERAL The Company is a special-purpose California corporation formed on October 7, 1998 for the purpose of facilitating the financing of the acquisition and, through its wholly-owned subsidiaries, acquiring, making improvements to and operating the three coal-fired electric generating units and related facilities. EME Homer City, an indirect subsidiary of the Company, acquired the Facilities on March 18, 1999 for a purchase price of approximately $1.8 billion, with adjustments for changes in the book value of inventories and prorations related to certain items including but not limited to taxes, rents and fees under transferred permits. EME Homer City derives revenue from the sale of energy and capacity into PJM and NYPP and from bilateral contracts with power marketers and load serving entities within PJM, NYPP and the surrounding markets. EME Homer City has entered into a contract with a marketing affiliate for the sale of energy and capacity produced by the Facilities, which enables such marketing affiliate to engage in forward sales and hedging. EME Homer City will pay the marketing affiliate a nominal fee currently set at $0.02/MWh (approximately $0.1 million for the period). EME Homer City believes there may also be opportunities to derive revenue from the sale of installed capacity and ancillary services. Under the terms of the Penelec Transition Contract and the NYSEG Transition Contract, EME Homer City has elected to exercise certain options to sell capacity. These contracts expire mid-year 2001. EME Homer City also has the option to sell non-contracted capacity in PJM and NYPP. It is believed the Units should be capable of producing revenues from the sale of voltage support based on previous utilization of the Units. RESULTS OF OPERATIONS Results of operations from March 18, 1999 through September 30, 1999: OPERATING REVENUES Revenues for the period from March 18, 1999 through September 30, 1999 were $245.8 million. Revenues primarily consist of energy revenue of $222.3 million, capacity revenue of $22.0 million and sale of emission credits of $1.5 million. These sales were made through a contract with a marketing affiliate, which enables the affiliate to engage in forward sales and hedging transactions. Due to warmer weather during the summer months, electric revenues generated from EME Homer City are substantially higher during the third quarter. The Facilities generated 6,624 GWhr of electricity since they were acquired and had an availability factor of 85.4%. The weighted average price for energy was $33.30/MWh. OPERATING EXPENSES Operating expenses consisted of expenses for fuel, plant operations, depreciation and amortization and administrative and general expenses. Fuel expense of $84.4 million included $84.0 million of coal for the period at an average price of $31.04 per ton. The Units benefit from access by truck to significant native coal reserves located within the western Pennsylvania portion of the North Appalachian region. Up to 95% of the coal used by Units 1 and 2 is supplied under existing contracts 19 with regional mines which are located within 50 miles of the facility, while the remainder is purchased on the spot market. The coal for Units 1 and 2 is cleaned by the coal cleaning facility to reduce sulfur content. Unit 3 utilizes lower sulfur coal which is blended at an on-site coal blending facility. Plant operations expense was $40.8 million, which included labor and overhead of $11.2 million, outside services of $18.8 million, parts and supplies of $5.6 million, and other administrative costs of $5.2 million. Depreciation and amortization expenses were $25.3 million. Depreciation expense primarily relates to the acquisition of the Facilities which is being depreciated over thirty-nine years. Administrative and general expenses of $0.5 million were due to an allocation of EME corporate overhead costs. OTHER INCOME (EXPENSE) Interest expense was $35.5 million, which included interest on the $800 million Acquisition Facility of $9.6 million (retired with proceeds from the Bonds), interest on the $830 million Bonds of $24.4 million, amortization of deferred financing costs of $1.2 million, and Credit Facility fees of approximately $0.3 million. The average interest rate on outstanding indebtedness was 8.39% at September 30, 1999. Interest and other income of $0.8 million was earned on cash and cash equivalents. PROVISION FOR INCOME TAXES The Company had an effective tax rate before extraordinary item of 41.5%. The effective tax rate was higher than the federal statutory rate of 35% due to state income taxes. EXTRAORDINARY LOSS The early repayment of the $800 million Acquisition Facility in May 1999 resulted in an extraordinary loss of $2.7 million (net of income tax benefit of $2.3 million) attributable to the write-off of unamortized debt issue costs. LIQUIDITY AND CAPITAL EXPENDITURES Net cash flow provided by Operating Activities from March 18, 1999 through September 30, 1999 was $113.8 million. Net working capital was $132.3 million which included $102.2 million of cash that was restricted by the trust agreement associated with the Company's senior secured bonds. In March 1999, EME Homer City completed the acquisition of the 1,884 MW Homer City Electric Generating Station and related facilities from GPU, Inc., New York State Electric & Gas Corporation and their respective affiliates. Consideration for the purchase was a cash payment of approximately $1.8 billion. In order to finance the acquisition, EME Homer City entered into a Credit Agreement, dated as of March 18, 1999 with banks and other financial institutions party thereto (the "Banks"). The Credit Agreement provides for (1) a 364-day term loan facility in an amount up to $800 million ("Acquisition Facility"), (2) a five-year term loan facility in an amount up to $250 million ("Environmental Capital Improvements Facility") and (3) a five-year revolving credit facility in an amount up to $50 million ("Working Capital Facility"). On March 18, 1999, the Company borrowed $800 million of term loans under the Acquisition Facility and used the proceeds of such loans, together with equity contributions from EME of approximately $1 billion, to fund the purchase price for the Facilities. 20 On May 27, 1999, the Company completed a private offering of $300 million aggregate principal amount of the Series A bonds and $530 million aggregate principal amount of the Series B bonds. The net proceeds of the sale of the Bonds were used to repay the outstanding principal of, and to permanently reduce the bank commitments associated with the term loans borrowed under the Acquisition Facility, and to repay a portion of EME's equity investment in the Company in the form of a distribution. The Company intends to use amounts available under the Environmental Capital Improvements Facility to fund the Environmental Capital Improvements; the Company had drawn $55 million under the facility at September 30, 1999. The Company may use amounts available under the Working Capital Facility for general working capital purposes. All outstanding amounts under the Working Capital Facility will be repaid each year on the anniversary of the issuance of the Bonds. Under certain conditions, the Company may have access to additional liquidity in a debt service reserve account and under a credit support guarantee provided by EME. The Company intends to invest approximately $246 million for the Environmental Capital Improvements, including a SCR on all three Units and a fuel gas desulfurization system ("FGD") system on Unit 3, pursuant to a fixed price, turnkey engineering, procurement and construction contract. The SCR on Unit 2 is expected to be installed by September 2000, the SCRs on Units 1 and 3 are expected to be installed by May 2001 and the FGD system is expected to be installed by September 2001. Capital expenditures for the nine month period ended September 30, 1999 were $74.1 million, primarily related to the FGD. The environmental improvements will enhance the economics of the Units by reducing fuel costs, NO(X) allowance purchases and SO(2) allowance purchases. These capital expenditures will be financed through the Company's $250 million Environmental Capital Improvements Facility. The Company also has access to the $50 million Working Capital Facility that is available for five years from the date of acquisition. OTHER COMMITMENTS AND CONTINGENCIES The Company's parent, EME, has entered into the Credit Support Guarantee, which, under certain conditions, must make up to $42 million in payments. The Credit Support Guarantee is available until December 31, 2001 as additional cashflow to support shortfalls in the payment of the Bonds and other senior secured debt. EME has also provided a guarantee as of the date of the offering to satisfy the Company's debt service reserve requirement with respect to the Bonds. Similar guarantees have been extended by EME with respect to the obligations in the Credit Agreement. Prior to March 18, 1999, the Company had engaged in no operations since its formation in October 1998. There are no separate financial statements available with regard to the Facilities because their operations were fully integrated with, and their results of operations were consolidated into, the former owners of the Facilities. In addition, the electric output of the Units was sold based on rates set by regulatory authorities. As a result thereof and because electricity rates will now be set by the operation of market forces, the historical financial data with respect to the Facilities are not meaningful or indicative of the Company's future results. The Company's results of operations in the future will depend primarily on revenues from the sale of energy, capacity and other related products, and the level of its operating expenses. CHANGES IN INTEREST RATES, CHANGES IN ELECTRICITY MARKET PRICING AND OTHER OPERATING RISKS Changes in interest rates and changes in electricity pool pricing can have a significant impact on the Company's results of operations. Interest rate changes affect the cost of capital needed to operate the Facilities. The Company has mitigated the risk of interest rate fluctuations by arranging for fixed rate financing for the majority of its project financings. The Company does not believe that interest rate fluctuations will have a materially adverse effect on its financial position or results of operations. 21 With the exception of revenue generated by the Transition Contracts (which expire in 2001) and from bilateral contracts for the sale of electricity with third-party load serving entities and power marketers, the Company's revenues and results of operations are dependent upon prevailing market prices for energy, capacity, ancillary services in PJM, NYPP and other competitive markets. Among the factors that will influence the market prices for energy, capacity and ancillary services in PJM and NYPP are: - prevailing market prices for fuel oil, coal and natural gas and associated transportation costs; - the extent of additional supplies of capacity, energy and ancillary services from current competitors or new market entrants, including the development of new generation facilities that may be able to produce electricity at a lower cost; - transmission congestion in PJM and/or NYPP; - the extended operation of nuclear generating plants in PJM and NYPP beyond their presently expected dates of decommissioning; - weather conditions prevailing in PJM and NYPP from time to time; - the possibility of a reduction in the projected rate of growth in electricity usage as a result of factors such as regional economic conditions and the implementation of conservation programs; and - regulations, yet to be finalized, to take effect upon implementation of the ISO in NYPP. EME Homer City derives revenues from sales of electric energy. Pricing provisions are individually negotiated with customers by its marketing affiliate and may include fixed prices or prices based on a daily or monthly market index. EME Homer City may benefit from forward energy sales contracts entered into by its marketing affiliate depending on market conditions. As of September 30, 1999, we had sold 82% of the anticipated energy output of Units 1 and 2 for the remainder of 1999. These forward energy sales average $22.00/MWh, compared to the Power Market Consultant's base case projections of $19.14/MWh for PJM and $22.30/MWh for NYPP. Also as of September 30, 1999, we had entered into forward energy sales totaling 856 MW during on-peak hours in calendar year 2000 at an average price of $40.90/MWh. The marketing affiliate has sold 99% of the remaining installed capacity over the transition contract amounts through May 2000 at a weighted average price of $65.00/MW-day. The Company provides credit support for an affiliate that enters into various electric energy transactions, including futures and swap agreements. The Company could be exposed to the risk of higher electric energy prices in the event of non-performance by a counterparty. However, the Company does not anticipate non-performance by a counterparty and the marketing affiliate. ENVIRONMENTAL MATTERS OR REGULATIONS The Company is subject to environmental regulation by federal, state and local authorities in the U.S. The Company believes that it is in substantial compliance with environmental regulatory requirements and that maintaining compliance with current requirements will not materially affect its financial position or results of operations. YEAR 2000 ISSUE The Company, as part of EME, has a comprehensive program in place to remediate potential Year 2000 impact on critical systems. EME divided its Year 2000 Issue activities into five phases: inventory, impact assessment, remediation, documentation and certification. A critical system was defined as those applications and systems, including embedded processor technology, which if not appropriately 22 remediated might have had a significant impact on customers, the revenue stream, regulatory compliance, or the health and safety of personnel. The other essential component of the Company's Year 2000 readiness program was to identify and assess vendor products and business partners for Year 2000 readiness. The Company put a process in place to identify and contact vendors and business partners to determine their Year 2000 status, and has evaluated the responses. The Company's general policy requires that all newly purchased products be Year 2000 ready or otherwise designed to allow the Company to determine whether such products present Year 2000 issues. Plant contingency plans have been developed and reviewed for any significant issues and to schedule appropriate testing and/or training. Such contingency plans include developing strategies for dealing with Year 2000-related processing failures or malfunctions due to the Company's internal systems or from external parties. The Company's contingency plans evaluate reasonably likely worst case scenarios or conditions. The Company does not expect the Year 2000 issue to have a material adverse effect on its results of operations or financial position. However, if not effectively remediated, negative effects from Year 2000 issues, including those related to external systems, vendors, business partners, the independent system operator, the power exchange or customers, could cause results to differ. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133 In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities", which, as amended, will be effective in January 2001. The Statement establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. A derivative's gains and losses for qualifying hedges offset related results on the hedged item in the income statement and a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. The impact of adopting Statement 133 on the Company's financial statements has not been quantified at this time. 23 THE EXCHANGE OFFER TERMS OF THE EXCHANGE OFFER Upon the terms and conditions set forth in this prospectus and in the accompanying letter of transmittal, which together constitute the exchange offer, we will accept for exchange original bonds which are properly tendered on or before the expiration date and not withdrawn as permitted below. As used in this prospectus, the term "expiration date" means 5:00 p.m., New York City time, on , 2000. However, if we, in our sole discretion, have extended the period of time for which the exchange offer is open, the term "expiration date" means the latest time and date to which we extend the exchange offer. As of the date of this prospectus, $300 million aggregate principal amount of the Series A original bonds and $530 million aggregate principal amount of the Series B original bonds are outstanding. This prospectus, together with the letter of transmittal, is first being sent on or about , 1999, to all holders of original bonds known to us. Our obligation to accept original bonds for exchange pursuant to the exchange offer is subject to the conditions set forth below under "--Conditions to the Exchange Offer." We reserve the right to extend the period of time during which the exchange offer is open. We would then delay acceptance for exchange of any original bonds by giving oral or written notice of an extension to the holders of original bonds as described below. During any extension period, all original bonds previously tendered will remain subject to the exchange offer and may be accepted for exchange by us. Any original bonds not accepted for exchange will be returned to the tendering holder after the expiration or termination of the exchange offer. Original bonds tendered in the exchange offer must be in denominations of principal amount of $1,000 and any integral multiple of $1,000. We reserve the right to amend or terminate the exchange offer, and not to accept for exchange any original bonds not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified below under "--Conditions to the Exchange Offer." We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the original bonds as promptly as practicable. If we materially change the terms of the exchange offer, we will resolicit tenders of the original bonds. We will notify you of any extension by means of a press release or other public announcement no later than 9:00 a.m., New York City time on that date. Our acceptance of the tender of original bonds by a tendering holder will form a binding agreement upon the terms and subject to the conditions provided in this prospectus and in the accompanying letter of transmittal. PROCEDURES FOR TENDERING Except as described below, a tendering holder must transmit a properly completed and duly executed letter of transmittal, including all other documents required by the letter of transmittal, to United States Trust Company of New York, the exchange agent, on or before the expiration date. In addition, the exchange agent must receive, on or before the expiration date: - certificates for the original bonds; or - a timely confirmation of book-entry transfer of the original bonds into the exchange agent's account at The Depository Trust Company, the book-entry transfer facility, in accordance with the procedures for book-entry described below. The method of delivery of original bonds, letters of transmittal and all other required documents is at your election and risk. If the delivery is by mail, we recommend that you use registered mail, 24 properly insured, with return receipt requested. In all cases, you should allow sufficient time to assure timely delivery. You should not send letters of transmittal or original bonds to us. If you are a beneficial owner whose original bonds are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and wish to tender, you should promptly instruct the registered holder to tender on your behalf. Any registered holder that is a participant in The Depository Trust Company's book-entry transfer facility system may make book-entry delivery of the original bonds by causing The Depository Trust Company to transfer the original bonds into the exchange agent's account. The Depository Trust Company will be referred to as "DTC" in this prospectus. Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed unless the original bonds surrendered for exchange are tendered: - by a registered holder of the original bonds who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal, or - for the account of an "eligible institution." If signatures on a letter of transmittal or a notice of withdrawal are required to be guaranteed, the guarantees must be by an "eligible institution." An "eligible institution" is a financial institution--including most banks, savings and loan associations and brokerage houses--that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program. We will determine in our sole discretion all questions as to the validity, form and eligibility of original bonds tendered for exchange. This discretion extends to the determination of all questions concerning the timing of receipts and acceptance of tenders. These determinations will be final and binding. We reserve the right to reject any particular original bond not properly tendered or any which acceptance might, in our judgment or our counsel's judgment, be unlawful. We also reserve the right to waive any defects or irregularities or conditions of the exchange offer as to any particular original bond either before or after the expiration date, including the right to waive the ineligibility of any tendering holder. Our interpretation of the terms and conditions of the exchange offer as to any particular original bond either before or after the expiration date, including the letter of transmittal and the instructions to the letter of transmittal, shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of original bonds must be cured within a reasonable period of time. Neither we, the exchange agent nor any other person will be under any duty to give notification of any defect or irregularity in any tender of original bonds. Nor will we, the exchange agent or any other person incur any liability for failing to give notification of any defect or irregularity. If the letter of transmittal is signed by a person other than the registered holder of original bonds, the letter of transmittal must be accompanied by a written instrument of transfer or exchange in satisfactory form duly executed by the registered holder with the signature guaranteed by an eligible institution. The original bonds must be endorsed or accompanied by appropriate powers of attorney. In either case, the original bonds must be signed exactly as the name of any registered holder appears on the original bonds. If the letter of transmittal or any original bonds or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing. Unless waived by us, proper evidence satisfactory to us of their authority to so act must be submitted. By tendering, each holder will represent to us that, among other things, 25 - the exchange bonds are being acquired in the ordinary course of business of the person receiving the exchange bonds, whether or not that person is the holder and - neither the holder nor the other person has any arrangement or understanding with any person to participate in the distribution of the exchange bonds. In the case of a holder that is not a broker-dealer, that holder, by tendering, will also represent to us that the holder is not engaged in and does not intend to engage in a distribution of the exchange bonds. If any holder or other person is an "affiliate" of ours, as defined under Rule 405 of the Securities Act, or is engaged in, or intends to engage in, or has an arrangement or understanding with any person to participate in, a distribution of the exchange bonds, that holder or other person can not rely on the applicable interpretations of the staff of the SEC and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives exchange bonds for its own account in exchange for original bonds, where the original bonds were acquired by it as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus that meets the requirements of the Securities Act in connection with any resale of the exchange bonds. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. See "Plan of Distribution." ACCEPTANCE OF ORIGINAL BONDS FOR EXCHANGE; DELIVERY OF EXCHANGE BONDS Upon satisfaction or waiver of all of the conditions to the exchange offer, we will accept, promptly after the expiration date, all original bonds properly tendered. We will issue the exchange bonds promptly after acceptance of the original bonds. See "--Conditions to the Exchange Offer" below. For purposes of the exchange offer, we will be deemed to have accepted properly tendered original bonds for exchange when, as and if we have given oral or written notice to the exchange agent, with prompt written confirmation of any oral notice. For each original bond accepted for exchange, the holder of the original bond will receive an exchange bond having a principal amount equal to that of the surrendered original note. The exchange bonds will bear interest from the most recent date to which interest has been paid on the original bonds or, if no interest has been paid on the original bonds, from May 27, 1999. Accordingly, registered holders of exchange bonds on the relevant record date for the first interest payment date following the completion of the exchange offer will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from May 27, 1999. Original bonds accepted for exchange will cease to accrue interest from and after the date of completion of the exchange offer. Holders of original bonds whose original bonds are accepted for exchange will not receive any payment for accrued interest on the original bonds otherwise payable on any interest payment date the record date for which occurs on or after completion of the exchange offer and will be deemed to have waived their rights to receive the accrued interest on the original bonds. In all cases, issuance of exchange bonds for original bonds will be made only after timely receipt by the exchange agent of: - certificates for the original bonds, or a timely book-entry confirmation of the original bonds, into the exchange agent's account at the book-entry transfer facility, - a properly completed and duly executed letter of transmittal and - all other required documents. 26 Unaccepted or non-exchanged original bonds will be returned without expense to the tendering holder of the original bonds. In the case of original bonds tendered by book-entry transfer pursuant to the book-entry procedures described below, the non-exchanged original bonds will be credited to an account maintained with the book-entry transfer facility, as promptly as practicable after the expiration or termination of the exchange offer. BOOK-ENTRY TRANSFER The exchange agent will make a request to establish an account for the original bonds at the book-entry transfer facility for purposes of the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in the book-entry transfer facility's systems may make book-entry delivery of original bonds by causing the book-entry transfer facility to transfer the original bonds into the exchange agent's account at the facility. However, although delivery of the original bonds may be made through the book-entry transfer facility, the letter of transmittal or a facsimile of the letter of transmittal, with any required signature guarantees and any other required documents, must, in any case, be transmitted to, and received by, the exchange agent on or before the expiration date, unless the holder has strictly complied with the guaranteed delivery procedures described below. GUARANTEED DELIVERY PROCEDURES If a registered holder of original bonds desires to tender the original bonds, and the original bonds are not immediately available, or time will not permit the holder's original bonds or other required documents to reach the exchange agent before the expiration date, or the procedure for book-entry transfer described above cannot be completed on a timely basis, a tender may nonetheless be made if: - the tender is made through an eligible institution; - prior to the expiration date, the exchange agent received from an eligible institution a properly completed and duly executed letter of transmittal, or a facsimile of the letter of transmittal, and notice of guaranteed delivery, substantially in the form provided by us, by facsimile transmission, mail or hand delivery, (a) setting forth the name and address of the holder of original bonds and the amount of original bonds tendered, (b) stating that the tender is being made and (c) guaranteeing that within three NYSE trading days after the expiration date, the certificates for all physically tendered original bonds, in proper form for transfer, or a book-entry confirmation, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and - the certificates for all physically tendered original bonds, in proper form for transfer, or a book-entry confirmation, as the case may be, and all other documents required by the letter of transmittal, are received by the exchange agent within three NYSE trading days after the expiration date. WITHDRAWAL RIGHTS Tenders of original bonds may be withdrawn at any time before 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective, the exchange agent must receive a written notice of withdrawal at the address or, in the case of eligible institutions, at the facsimile number, set forth below under 27 "--Exchange Agent" before 5:00 p.m., New York City time, on the expiration date. Any notice of withdrawal must: - specify the name of the person, referred to as the depositor, having tendered the original bonds to be withdrawn; - identify the bonds to be withdrawn, including the certificate number or numbers and principal amount of the original bonds; - contain a statement that the holder is withdrawing his election to have the original bonds exchanged; - be signed by the holder in the same manner as the original signature on the letter of transmittal by which the original bonds were tendered, including any required signature guarantees, or be accompanied by documents of transfer to have the trustee with respect to the original bonds register the transfer of the original bonds in the name of the person withdrawing the tender; and - specify the name in which the original bonds are registered, if different from that of the depositor. If original bonds have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn original bonds. We will determine all questions as to the validity, form and eligibility, including time of receipt, of notices of withdrawal. Any original bonds so withdrawn will be deemed not to have been validly tendered for exchange. No exchange bonds will be issued unless the original bonds so withdrawn are validly retendered. Any original bonds that have been tendered for exchange, but which are not exchanged for any reason, will be returned to the tendering holder without cost to the holder. In the case of original bonds tendered by book-entry transfer, the original bonds will be credited to an account maintained with the book-entry transfer facility for the original bonds. Properly withdrawn original bonds may be retendered by following the procedures described under "--Procedures for Tendering" above at any time on or before 5:00 p.m., New York City time, on the expiration date. CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the exchange offer, we shall not be required to accept for exchange, or to issue exchange bonds in exchange for, any original bonds, and may terminate or amend the exchange offer, if at any time before the acceptance of the original bonds for exchange or the exchange of the exchange bonds for the original bonds, any of the following events shall occur: - there shall be threatened, instituted or pending any action or proceeding before, or any injunction, order or decree shall have been issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission: (1) seeking to restrain or prohibit the making or completion of the exchange offer or any other transaction contemplated by the exchange offer, or assessing or seeking any damages as a result of such transaction, (2) resulting in a material delay in our ability to accept for exchange or exchange some or all of the original bonds pursuant to the exchange offer; or any statute, rule, regulation, order or injunction shall be sought, proposed, introduced, enacted, promulgated or deemed applicable to the exchange offer or any of the transactions contemplated by the exchange offer by any governmental authority, domestic or foreign, or (3) any action shall have been taken, proposed or threatened, by any governmental authority, domestic or foreign, that in our sole judgment might directly or indirectly result in any of 28 the consequences referred to in clauses (1) or (2) above or, in our sole judgment, might result in the holders of exchange bonds having obligations with respect to resales and transfers of exchange bonds which are greater than those described in the interpretation of the SEC referred to above, or would otherwise make it inadvisable to proceed with the exchange offer; or - there shall have occurred: (1) any general suspension of or general limitation on prices for, or trading in, securities on any national securities exchange or in the over-the-counter market; (2) any limitation by a governmental authority which may adversely affect our ability to complete the transactions contemplated by the exchange offer; (3) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority which adversely affects the extension of credit; or (4) a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the foregoing existing at the time of the commencement of the exchange offer, a material acceleration or worsening of such calamities; or - any change, or any development involving a prospective change, shall have occurred or be threatened in our business, financial condition, operations or prospects and those of our subsidiaries taken as a whole that is or may be adverse to us, or we shall have become aware of facts that have or may have an adverse impact on the value of the original bonds or the exchange bonds; which in our sole judgment in any case makes it inadvisable to proceed with the exchange offer and/or with such acceptance for exchange or with such exchange. These conditions to the exchange offer are to our sole benefit and may be asserted by us regardless of the circumstances giving rise to any of these conditions, or may be waived by us in whole or in part in our sole discretion. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of any right. In addition, we will not accept for exchange any original bonds tendered, and no exchange bonds will be issued in exchange for any original bonds, if at such time any stop order is threatened or in effect relating to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939. 29 EXCHANGE AGENT We have appointed United States Trust Company of New York as the exchange agent for the exchange offer. You should direct all executed letters of transmittal to the exchange agent at the address set forth below. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery to the exchange agent addressed as follows: DELIVERY TO: United States Trust Company of New York, EXCHANGE AGENT BY HAND BEFORE 4:30 P.M.: BY REGISTERED OR CERTIFIED MAIL: United States Trust Company of New York United States Trust Company of New York 111 Broadway P.O. Box 848 Cooper Station New York, NY 10006 New York, NY 10276 Attention: Lower Level Corporate Trust Window Attention: Corporate Trust Services
BY HAND OR OVERNIGHT DELIVERY AFTER 4:30 P.M. ON THE EXPIRATION DATE: United States Trust Company of New York 770 Broadway, 13(th) Floor New York, NY 10003 FOR INFORMATION CALL: (800) 548-6565 BY FACSIMILE TRANSMISSION (FOR ELIGIBLE INSTITUTIONS ONLY): (212) 420-6211 Attention: Customer Service CONFIRM BY TELEPHONE: (800) 548-6565 IF YOU DELIVER THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMIT INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, THEN YOUR DELIVERY OR TRANSMISSION WILL NOT CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL. FEES AND EXPENSES We will not make any payment to brokers, dealers, or others soliciting acceptances of the exchange offer. The estimated cash expenses to be incurred in connection with the exchange offer will be paid by us. We estimate these expenses in the aggregate to be approximately $500,000. ACCOUNTING TREATMENT We will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will amortize the expense of the exchange offer over the term of the exchange bonds under generally accepted accounting principles. 30 TRANSFER TAXES Holders who tender their original bonds for exchange will not be obligated to pay any related transfer taxes, except that holders who instruct us to register exchange bonds in the name of, or request that original bonds not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer taxes. CONSEQUENCES OF EXCHANGING OR FAILING TO EXCHANGE ORIGINAL BONDS Holders of original bonds who do not exchange their original bonds for exchange bonds pursuant to the exchange offer will continue to be subject to the provisions in the indenture regarding transfer and exchange of the original bonds and the restrictions on transfer of the original bonds as set forth in the legend on the bonds as a consequence of the issuance of the original bonds pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the original bonds may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. As discussed in "Exchange Offer; Registration Rights," we do not currently anticipate that we will register original bonds under the Securities Act. Based on interpretations by the staff of the SEC, as set forth in no-action letters issued to third parties, we believe that exchange bonds issued pursuant to the exchange offer in exchange for original bonds may be offered for resale, resold or otherwise transferred by holders of the original bonds, other than any holder which is an "affiliate" of ours within the meaning of Rule 405 under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the exchange bonds are acquired in the ordinary course of the holders' business and the holders have no arrangement or understanding with any person to participate in the distribution of the exchange bonds. However, the SEC has not considered the exchange offer in the context of a no-action letter. We cannot assure you that the staff of the SEC would make a similar determination with respect to the exchange offer as in the other circumstances. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of exchange bonds and has no arrangement or understanding to participate in a distribution of exchange bonds. If any holder is an affiliate of ours, is engaged in or intends to engage in or has any arrangement or understanding with any person to participate in the distribution of the exchange bonds to be acquired in the exchange offer, that holder: (1) could not rely on the applicable interpretations of the staff of the SEC, and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives exchange bonds for its own account in exchange for original bonds must acknowledge that the original bonds were acquired by the broker-dealer as a result of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of the exchange bonds. See "Plan of Distribution." In addition, to comply with state securities laws, the exchange bonds may not be offered or sold in any state unless they have been registered or qualified for sale in such state or an exemption from registration or qualification, with which there has been compliance, is available. The offer and sale of the exchange bonds to "qualified institutional buyers," as defined under Rule 144A of the Securities Act, is generally exempt from registration or qualification under the state securities laws. We currently do not intend to register or qualify the sale of exchange bonds in any state where an exemption from registration or qualification is required and not available. 31 THE COMPANY AND EME THE COMPANY The Company is a special-purpose California corporation formed on October 7, 1998 to facilitate the financing of the Acquisition. The indenture limits the Company's business activities to the ownership and operation of the Facilities, any expansion of the facilities or improvements thereto, and matters reasonably incidental thereto. See "Description of Principal Financing Documents--Indenture--Negative Covenants--Limitation on Business Activities." The only income available to the Company to pay principal of, premium, if any, and interest on the bonds will be repayments of subordinated loans and equity distributions from its subsidiaries. As of the date of this prospectus, the authorized capital stock of the Company consisted of 10,000 shares of common stock, no par value, of which 100 shares were issued and outstanding. There is no public trading market for the common stock of the Company. All of such common stock is owned by EME. The address of the principal executive offices of the Company is 18101 Von Karman Avenue, Suite 1700, Irvine, California 92612-1046, telephone (949) 752-5588. EME EME is a leading global power producer. Through its subsidiaries, EME engages in the business of developing, acquiring, owning and operating electric power generation facilities worldwide. Edison International owns EME and also owns Southern California Edison Company, one of the largest electric utilities in the United States. At September 30, 1999, EME had consolidated assets of approximately $11 billion and total shareholders' equity of approximately $2 billion. The bonds will be non-recourse to EME. EME was formed in 1986 with two domestic operating projects. EME's business has evolved from the development of contract-based domestic power projects to the development of contract-based international power projects and the acquisition of operating generating assets within developed and deregulating power markets. Currently, EME owns interest in 58 domestic and international operating power stations with an aggregate generating capacity of 16,443 MW, of which EME's share is approximately 12,369 MW. One domestic acquisition of twelve operating projects totaling approximately 9,510 MW of generating capacity (of which EME's anticipated share is 100%) is currently pending. In addition, EME owns interests in one domestic and five international projects which are under construction. The capacity of these projects is expected to total 2,493 MW (of which EME's anticipated share is approximately 891 MW). EME's business goal is to be one of the leading owners and operators of electric generating assets in the world. EME will play an active role, as a long-term owner, in all phases of power generation, from planning and development through construction and commercial operation. EME believes that such involvement allows EME to better ensure, with its experienced personnel, that its projects are well-planned, structured and managed, thereby maximizing value creation. In the United States, long-term contracts are likely to be the exception rather than the rule. EME's strategy focuses primarily on three areas with respect to uncontracted plants: valuation, trading and regulation. First, EME continuously improves its valuation tools, enabling EME to bid effectively and competitively on assets that will be sold over the next five years. Second, EME strives to develop its trading skills to enhance the returns of its generating assets. Third, EME's principal customers continue to be regulated utilities; therefore, understanding the regulatory and economic environment in which these utilities operate allows EME to better react to what they will do. In March 1999, EME entered into definitive acquisition documentation to acquire 100% of the fossil-fuel generating assets of ComEd, totaling approximately 9,510 MW of generating assets. EME will operate the plants, which are located in the Midwest. The closing of the transaction is subject to various state and federal regulatory approvals and is expected to be completed by year-end 1999. On May 14, 1999, EME acquired 40% of Contact Energy from the government of New Zealand. Contact 32 Energy owns ten hydroelectric, geothermal and natural gas-fired power generating plants in New Zealand (including two that are under construction), with a total aggregate capacity of 2,371 MW, of which EME's share is 949 MW. Contact Energy also supplies gas and electricity to customers in New Zealand and has a minority interest in a power project currently under construction in Australia. In July 1999, EME acquired two power plants in the United Kingdom with a total generating capacity of 3,886 MW from PowerGen. These mid-merit plants will complement the pumped-storage hydroelectric power plants EME already owns in the United Kingdom and sell power to the electricity trading market there. Upon closing of the ComEd acquisition, EME will have an interest in approximately 29,500 MW of generating capacity, of which EME's share is approximately 23,200 MW. THE COMPANY'S SUBSIDIARIES The direct and indirect wholly-owned subsidiaries of the Company consist of EME Homer City, Edison Mission Financing Co. ("FinanceCo"), Homer City Property Holdings, Inc. ("PropertyCo"), Mission Energy Westside, Inc. ("ME Westside") and Chestnut Ridge Energy Company ("Chestnut Ridge" and, collectively with EME Homer City, FinanceCo, PropertyCo and ME Westside, the "Guarantors"). The Guarantors will guarantee the Company's obligations in respect of the bonds. EME Homer City is a Pennsylvania limited partnership and each of FinanceCo, PropertyCo, ME Westside and Chestnut Ridge is a California corporation. The Financing Documents limit the Guarantors' activities to the ownership and operation of the Facilities, any expansion of the facilities or improvements thereto, and matters reasonably incidental thereto. See "Description of Principal Financing Documents--Indenture--Negative Covenants--Limitation on Business Activities." Following is a chart illustrating our ownership structure. [LOGO] 33 BUSINESS INDUSTRY OVERVIEW The United States electric industry, including companies engaged in providing generation, transmission, distribution and ancillary services, has undergone significant change over the last several years, leading to significant deregulation and increased competition. The FERC, pursuant to Order No. 888 and Order No. 889 (the "Open Access Rules"), requires the owners and operators of electric transmission facilities to make those facilities available for transmission on a non-discriminatory basis to all wholesale generators, sellers and buyers of electricity ("wholesale wheeling"). In addition to wholesale wheeling, throughout the United States there has been an increasing number of proposals at the state level to allow retail customers to choose their electricity suppliers, with incumbent utilities required to deliver that electricity over their transmission and distribution systems ("retail wheeling"). Numerous electric utilities nationwide are in the process of divesting all or a portion of their electricity generation business or are expected to commence such process in the foreseeable future, as legislative and regulatory developments drive the industry to disaggregate. EME, through the Company and its other subsidiaries, is among a group of companies actively pursuing opportunities created by the deregulating domestic electric markets to operate as competitive electric generation and wholesale supply companies in a deregulated marketplace. POWER MARKETS PJM. PJM is the largest centrally-dispatched power pool in North America and the fourth largest in the world, consisting of over 540 generating units with a total installed capacity of 56,709 MW. PJM serves 8.7% of the United States population and covers portions of Pennsylvania, New Jersey, Maryland, Delaware, the District of Columbia and Virginia. PJM was recently restructured as a competitive, non-discriminatory market in response to the Open Access Rules and includes bid-based energy and capacity markets. The PJM ISO operates the spot energy market and determines the market-clearing price for each hour based on bids submitted by participating generators which indicate the minimum prices a bidder is willing to accept to be dispatched at various incremental generation levels. A transmission charge based on the location of the energy purchaser is added to the energy price if the transmission system becomes constrained and generators with higher bids are dispatched prior to those with lower bids. PJM has a day-ahead installed capacity market and monthly installed capacity markets extending twelve months in the future. Each installed capacity market has a single market-clearing price for each day during which the market is in operation. NYPP. NYPP includes 34,881 MW of installed capacity and serves over 99% of New York State's electric power requirements. The current NYPP members are the seven New York investor-owned utilities and the New York Power Authority. NYPP has received conditional FERC approval to restructure NYPP as a competitive, non-discriminatory market similar to PJM. NYPP's restructuring proposal includes, among other things, the establishment of an ISO and the creation of bid-based markets for energy, capacity and ancillary services. FERC conditionally approved the establishment of the NYPP ISO in an order issued on June 30, 1998 and conditionally approved the proposed rules governing the NYPP bid-based markets in an order issued on January 27, 1999. The market-clearing price for NYPP's day-ahead and real-time energy markets is expected to be calculated by the NYPP ISO in a manner similar to the PJM ISO's determination of the market-clearing price for transactions in the PJM spot energy market. THE ACQUISITION On March 18, 1999, EME Homer City acquired ownership of the Facilities for a purchase price of approximately $1.8 billion pursuant to an Asset Purchase Agreement dated August 1, 1998 (as amended, the "Asset Purchase Agreement") with Penelec, NYSEG and NGE Generation, Inc. ("NGE" 34 and, collectively with Penelec and NYSEG, the "Sellers"). See "Description of Principal Contracts--Asset Purchase Agreement." Penelec is a wholly-owned subsidiary of GPU Inc. and NYSEG and NGE are wholly-owned subsidiaries of Energy East Corporation. Prior to the sale, Penelec and NGE each owned 50% of the beneficial ownership interests in the Facilities. In addition to the Asset Purchase Agreement, EME Homer City has entered into the Transition Contracts, an interconnection agreement and an easement agreement with the Sellers. See "Description of Principal Contracts--Transition Contracts," "--Interconnection Agreement" and "--Easement Agreement." FACILITY OVERVIEW The Homer City Units are among the lowest cost generating facilities in the Northeast region. In 1998, the Units had fuel expenses and operating and maintenance costs of approximately $17/MWh, and are among the first coal-fired units in the merit order for dispatch within both NYPP and PJM. The Facilities are located on a 2,413-acre site (the "Site") approximately 45 miles northeast of Pittsburgh within Indiana County, Pennsylvania. The Facilities consist of the Homer City Units, the Coal Cleaning Plant, Two Lick Dam and associated support facilities. The Homer City Units benefit from direct transmission access to both PJM and NYPP through four high voltage lines which interconnect through a switchyard located on the Site. The Homer City Units are coal-fired boiler and steam generating units. Units 1 and 2, which are essentially identical to one another, were constructed as positive pressure units, placed into commercial operation in 1969 and converted to balanced draft units in 1976 and 1977, respectively. Unit 1 has an installed capacity of 620 MW and Unit 2 has an installed capacity of 614 MW. The steam turbines and generators for Units 1 and 2 were manufactured by Westinghouse Electric Corporation ("Westinghouse") and the boilers for such Units were manufactured by Foster Wheeler Energy Corporation ("Foster Wheeler"). The Unit 1 and 2 boilers have been retrofitted with Foster Wheeler dual air register and internal flame staging low NO(x) burners to meet Phase I NO(x) Clean Air Act standards. In addition, both boilers have supplemental over-fired air ("SOFA") systems to further reduce NO(x) emissions to satisfy Pennsylvania Title I (ozone) requirements. Unit 3 commenced commercial operation in 1977 and has an installed capacity of 650 MW. The steam turbine and generator for Unit 3 were manufactured by General Electric Corporation ("General Electric") and the Unit 3 boiler was manufactured by Babcock & Wilcox. The boiler for Unit 3 was originally constructed with Babcock & Wilcox low NO(x) burners which satisfied Phase I NO(x) Clean Air Act standards, and a SOFA system was installed in 1995 at Unit 3 to further reduce NO(x) emissions. The following table summarizes specific design details for the Units.
UNIT 1 UNIT 2 UNIT 3 -------------------------- -------------------------- ------------------- CAPACITY (MW) 620 614 650 COMMERCIAL OPERATION 1969 1969 1977 BOILER MANUFACTURER Foster Wheeler Foster Wheeler Babcock & Wilcox BOILER TYPE Once thru Supercritical Once thru Supercritical Natural Circulation STEAM FLOW (LBS/HOUR) 4,613,000 4,613,000 4,750,000 OPERATING PRESSURE (PSI) 3,600 3,600 2,600 TURBINE MANUFACTURER Westinghouse Westinghouse General Electric THROTTLE PRESSURE (PSI) 3,500 3,500 2,400 STEAM TEMPERATURE ( DEG.F) 1,000 1,000 1,000
SALES STRATEGY EME Homer City sells capacity, energy and voltage support from the Homer City Units into PJM's and NYPP's centralized power markets. The Units comprise the second largest coal-fired facility 35 within PJM and the largest coal-fired facility servicing NYPP. EME Homer City may also enter into bilateral contracts for the sale of capacity and energy to power marketers and load serving entities within PJM, NYPP and surrounding markets. MARKETING AND TRADING. EME Homer City has entered into a contract with a marketing affiliate for the sale of energy and capacity produced by the Homer City Units, which enables such marketing affiliate to engage in forward sales and hedging transactions to manage EME Homer City's electricity price exposure. The terms of the Financing Documents do not permit EME Homer City to take speculative futures positions by selling capacity and energy in excess of its anticipated output. It is the policy of the marketing affiliate to make sales only to entities which have an investment grade rating or whose obligations are guaranteed by an entity with an investment grade rating. The forward sales and trading positions taken by the marketing affiliate relating to the Units have the benefit of credit support from the Company. The marketing organization is divided into front-, middle- and back-office segments, with certain duties segregated for control purposes. The risk management personnel have a high level of knowledge of utility operations, fuels procurement, energy marketing and futures and options trading. The marketing affiliate has systems in place which monitor real-time spot and forward pricing and perform option valuations and has a wholesale power scheduling group that operates on a 24-hour basis. EME Homer City pays the marketing affiliate a fee of $0.02/MWh (approximately $300,000 per year), and all revenue from the physical sales transactions executed by the marketing affiliate will be deposited into the revenue account established for the benefit of the bondholders and the holders of other Senior Debt. As of September 30, 1999, we had sold 82% of the anticipated output of Units 1 and 2 for the remainder of 1999. These forward energy sales average $22.00/MWh, compared to the Power Market Consultant's base case projections of $19.14/MWh for PJM and $22.30/MWh for NYPP. Also as of September 30, 1999, we had entered into forward energy sales totaling 856 MW during on-peak hours in 2000 at an average price of $40.90/MWh. The marketing affiliate has also sold 99% of the remaining installed capacity over the transition contract amounts through May 2000 at a weighted average price of $65.00/MW-day. TRANSITION CONTRACTS. NYSEG and Penelec have entered into separate Transition Contracts with EME Homer City, pursuant to which EME Homer City has a put option to sell certain quantities of capacity to NYSEG and Penelec, and NYSEG and Penelec have call options to purchase certain quantities of capacity from EME Homer City. The term of the NYSEG Transition Contract continues until April 30, 2001 and the term of the Penelec Transition Contract continues until May 31, 2001. EME Homer City has exercised its put option to sell 942 MW of capacity to Penelec for the first and second contract years under the Penelec Transition Contract for a price of $49.90/MW-day for the first contract year and $59.90/MW-day for the second contract year. EME Homer City entered into a letter agreement with NYSEG to adjust the contract periods under the NYSEG Transition Contract to conform to the PJM capacity planning cycle. EME Homer City also entered into contractual arrangements with NYSEG to sell 942 MW of capacity to NYSEG for the period from March 18, 1999 to May 31, 1999 for a price of $55.00/MW-day and to sell 500 MW of capacity to NYSEG during the period from June 1, 1999 through May 31, 2000 for a price of $60.00/MW-day. The amount of capacity covered by these Transition Contracts with respect to which a put or call option has not yet been exercised is subject to a reduction in the event that there is a decrease in the amount by which Penelec's and NYSEG's projected load supply obligations exceed the capacity available to be provided by their remaining owned generation and existing power purchase entitlements. See "Description of Principal Contracts--Transition Contracts." 36 FUEL SUPPLY UNITS 1 AND 2. Units 1 and 2 consume approximately 4,200,000 tons of mid-range sulfur coal per year. Approximately 90% to 95% of such coal is obtained under contracts with local suppliers within approximately 50 miles of the Facilities and the remainder of such coal is purchased in the spot market. All of such coal is delivered to the Site by truck. The existing coal supply contracts for Units 1 and 2 currently provide for the supply of a minimum of approximately 348,000 tons of coal per month at prices ranging from $19.00/ton to $26.75/ton. See "Description of Principal Contracts--Fuel Agreements--Coal Supply Agreements." The coal purchased for consumption by Units 1 and 2 is cleaned in the Coal Cleaning Plant, which has the capacity to clean up to 5,000,000 tons of coal per year. The Coal Cleaning Plant utilizes heavy media cyclones, froth floatation and spiral separators to reduce the ash and sulfur content of the raw coal to meet both combustion and environmental requirements. The Coal Cleaning Plant is operated by Homer City Coal Processing Corporation ("Homer City Coal") pursuant to a Coal Cleaning Agreement dated August 8, 1990 (the "Coal Cleaning Agreement") which is scheduled to expire on August 31, 2002. See "Description of Principal Contracts--Fuel Agreements--Coal Cleaning Agreement." UNIT 3. Unit 3 consumes approximately 1,600,000 tons of compliance coal per year. EME Homer City purchases approximately 75% of such coal from Tanoma Coal Sales, Inc. ("Tanoma") at approximately $37.00/ton (FOB Unit 3) pursuant to a coal sales agreement expiring on December 31, 2002, and such coal is blended by Tanoma at the coal blending facility pursuant to an Operating Agreement dated March 1, 1997 (the "Operating Agreement") which is coterminous with the Tanoma coal sales agreement. EME Homer City obtains the remainder of the coal needed for Unit 3 in the spot market. All coal purchased for Unit 3 is delivered to the Site by truck. See "Description of Principal Contracts--Fuel Agreements--Coal Supply Agreements." Upon completion of the FGD system for Unit 3, the Unit is expected to be able to burn less expensive, higher sulfur coal. ENVIRONMENTAL CAPITAL IMPROVEMENTS EME Homer City has contracted with a division of ABB to make environmental improvements to the Units. ABB will construct a limestone-based, wet scrubber flue gas desulfurization system at Unit 3 and a selective catalytic reduction system at each of the three Units. The Environmental Capital Improvements are expected to enable the Homer City Units to comply with Phase II of Title IV of the Clean Air Act regarding SO(2) emissions, the Pennsylvania NO(x) allowance regulations and Pennsylvania's response to the EPA's State Implementation Plan Call regarding NO(x) emissions. The Environmental Capital Improvements will cost approximately $246 million, which includes a fixed price, turnkey engineering, procurement and construction contract, project management costs and other project costs, and are scheduled to be installed during 2000-2001. The Environmental Capital Improvements will be funded with loans under an existing credit facility. See "Description of Principal Contracts--EPC Contract." 37 OPERATING PERFORMANCE The Homer City Units have historically had high equivalent availability, efficient heat rates and low costs. The following charts set forth certain historical operating data for the Units as a whole and for each Unit individually.
FUEL AND EQUIVALENT NET HEAT RATE O&M COSTS AVAILABILITY FACTOR (%) (BTU/KWH) ($/MWH) ----------------------- ------------- ----------------------- Homer City Units--1,884 MW 1998 89.79 9,793 17.12 1997 85.83 9,804 18.17 1996 85.04 9,718 18.00 1995 80.12 9,644 19.87 1994 76.41 9,653 21.37 5-Year Average 83.44 9,722 18.79 Unit 1--620 MW 1998 85.01 9,902 17.17 1997 92.05 9,963 18.44 1996 72.27 9,764 18.05 1995 88.68 9,644 20.08 1994 57.87 9,671 21.88 5-Year Average 79.18 9,789 18.97 Unit 2--614 MW 1998 91.15 9,607 17.17 1997 74.63 9,618 18.44 1996 90.21 9,621 18.05 1995 66.95 9,590 20.08 1994 85.42 9,575 21.88 5-Year Average 81.67 9,602 18.97 Unit 3--650 MW 1998 93.07 9,882 17.01 1997 90.47 9,794 17.65 1996 92.33 9,777 17.92 1995 84.42 9,689 19.47 1994 85.57 9,725 20.45 5-Year Average 89.17 9,773 18.44
38 OPERATION AND MAINTENANCE The Facilities are operated by employees of EME Homer City who were recruited and selected in accordance with the Asset Purchase Agreement and are former employees of GPU Generation, Inc. ("GPU Genco"). EME Homer City employs a skilled and disciplined workforce that is well prepared to operate within a competitive and deregulated environment. We believe that our staffing levels are comparable with benchmark standards for facilities of a similar size and type. Employee headcount has been reduced by nearly 30% over the past five years, while, at the same time, high standards for equivalent availability and safety have been consistently maintained. The majority of the technical staff at the Facilities has been retained after completing the Acquisition thus providing us with a knowledgeable and experienced base of employees which average over 22 years of experience in the operation of the Homer City Units and similar facilities. EME Homer City's workforce is employed pursuant to a collective bargaining agreement which was restructured in 1994. The collective bargaining agreement provides EME Homer City with a measure of labor cost certainty through 2002. The collective bargaining agreement enables us to manage our workforce and to establish flexible work rules going forward. EME Homer City's plans to cross-train its employees to perform different functions, thus minimizing the use of more expensive or less efficient subcontractors. EME Homer City's operating and maintenance plan, as well as several planned overhauls of major equipment and controls, are consistent with EME Homer City's goal of extending the remaining life of the Units for an additional 39 years. EME Homer City utilizes a state-of-the-art computerized maintenance system to plan and schedule all maintenance activities. EME Homer City also employs a preventative maintenance program complemented by new predictive maintenance technologies such as ferrography, thermography, vibration analysis and acoustic analysis. Reliability-centered maintenance techniques are currently being developed for critical systems to better define condition monitoring parameters and redefine maintenance strategies. The EME Homer City employees will provide engineering, maintenance, operation and facility management services and will receive functional direction from, and be held to the operating standards and guidelines of, EME's operation and maintenance organization, which, together with EME's operating affiliates, provide operation and maintenance services at 36 operating plants in Australia, Spain, the United Kingdom and the United States and are the contracted operator for three projects under construction or commissioning in Indonesia, Italy and Turkey. EME and its operating affiliates manage over 7,000 MW of operating plants and over 2,000 MW of plants under construction. The operating facilities managed by EME's operating affiliates have an average lifetime availability factor of over 94%. TRANSMISSION AND INTERCONNECTION Existing transmission lines leaving the Units are interconnected with both PJM and NYPP. EME Homer City is able to transmit into PJM full plant output of up to 1,884 MW through a 126-mile 345 kV line owned by Penelec and a 19-mile and 15-mile 230 kV lines owned by Penelec. EME Homer City has the right to transmit into NYPP full plant output of up to 1,884 MW through 175-mile and 207-mile 345 kV lines owned by NYSEG. In addition, a 13-mile 230 kV line from the Homer City Units provides an indirect interconnection to the ECAR market. The points of interconnection with the Homer City Units include (1) the 230 kV circuit from the Unit 1 main power transformer, (2) the 345 kV circuit from the Unit 2 main power transformer, (3) the 345 kV circuit from the Unit 3 main power transformer, (4) the 345/230/23 kV north and south autotransformers and (5) substation services No. 1 and No. 2 (clauses (1) through (5), collectively, the "Facility Interconnection Points"). The ownership of the transmission and distribution assets for the Facilities, including the site switchyard, substation and support equipment, remained with Penelec and NYSEG following the Acquisition. 39 Penelec and NYSEG have agreed to provide EME Homer City with all services necessary to interconnect the Homer City Units with the Penelec and NYSEG transmission systems (other than services provided under existing tariffs) pursuant to the Interconnection Agreement. See "Description of Principal Contracts--Interconnection Agreement." WATER SUPPLY AND OTHER SUPPORT FACILITIES The Homer City Units receive their water supply from Two Lick Creek. The water supply to Two Lick Creek is regulated by releases from Two Lick Dam, which is located approximately eight miles upstream of the Units and is owned, operated and maintained by EME Homer City in accordance with a dam safety permit and a drought management plan and related consent order and agreement with the Pennsylvania Department of Environmental Protection (the "PADEP"). Each of the Homer City Units has a natural draft cooling tower. A portion of the waste heat in the water leaving the Units' condensers is diverted from such towers to a fourteen-acre polyethylene roofed greenhouse complex located adjacent to the Homer City Units (the "Greenhouse"). After the water passes through the Greenhouse, it is returned to the basin of the cooling towers for reuse. Other support facilities located on the Site include an ash disposal area, a coal refuse disposal area, coal receiving and storage facilities and water treatment and pumping facilities. PROPERTIES EME Homer City owns a fee interest in the 2,413-acre site on which the Homer City Units, Two Lick Dam and the other Facilities are located. The Site is approximately 45 miles northeast of Pittsburgh, Pennsylvania in Indiana County. EME Homer City leases portions of the Site to third parties, which leases are described below. EME Homer City leases the surface of an approximately 14-acre parcel to Tanoma upon which the coal blending facility is located. In lieu of rental payments, Tanoma blends the first 30,000 tons of coal per month in the coal blending facility at no charge. EME Homer City also leases an office building located on the Site to Tanoma, which Tanoma uses for administrative activities associated with the coal blending facility. Each of the Tanoma leases expires on December 31, 2002. EME Homer City has granted Cabot Oil & Gas Corporation ("Cabot") the right to operate and produce gas from existing wells located on the Site, provided that gas is found in paying quantities. EME Homer City receives 16% of the market value of the gas at the well head as royalties and also receives gas of 250,000 cubic feet at no charge from each well per annum. Cabot currently purchases such gas from EME Homer City at the market value at the well head. PropertyCo leases a 34.15-acre parcel upon which the Greenhouse was constructed to Green Leaf Enterprises, Inc. The Greenhouse produces wholesale perennials, bedding and starter plants in addition to special holiday crops for sale to other greenhouses in the eastern United States. COMPETITION FEDERAL. The Energy Policy Act of 1992 (the "Energy Policy Act") laid the groundwork for a competitive wholesale market for electricity. Among other things, the Energy Policy Act expanded the FERC's authority to order electric utilities to transmit, or "wheel," third-party electricity over their transmission lines, thus allowing qualifying facilities under the Public Utility Regulatory Policies Act of 1978 ("PURPA"), power marketers and exempt wholesale generators ("EWGs") to more effectively compete in the wholesale market. In April 1996, the FERC issued the Open Access Rule, which requires utilities to offer eligible wholesale transmission customers non-discriminatory open access on utility transmission lines on a comparable basis to the utilities' own use of the lines. In addition, the Open Access Rule directed the 40 regional power pools (including PJM and NYPP) that control the major electric transmission networks to file uniform, non-discriminatory open access tariffs. The Open Access Rule has been the subject of rehearing at the FERC and now is undergoing judicial review. Over the past few years, Congress and the Clinton Administration have considered various pieces of legislation to restructure the electric industry that would require, among other things, customer choice, repeal the Public Utility Holding Company Act of 1935 ("PUHCA") and PURPA. The debate is likely to continue, and perhaps intensify. The effect of enacting such legislation cannot be predicted with any degree of certainty. STATE. The Energy Policy Act did not preempt state authority to regulate retail electric service. Historically, in most states, competition for retail customers is limited by statutes or regulations granting existing electric utilities exclusive retail franchises and service territories. Since the passage of the Energy Policy Act, the advisability of retail competition has been the subject of intense debate in federal and state legislative and regulatory forums. Many states have taken steps to facilitate retail competition as a means to stimulate competitive generation rates. Retail competition commenced in New York in 1998. Retail competition in Pennsylvania commenced on January 1, 1999 and Pennsylvania is expected to be fully competitive by January 2, 2000. INSURANCE EME Homer City maintains insurance coverages consistent with those normally carried by companies engaged in similar businesses and owning similar properties. The insurance program includes all-risk insurance and covers commercial general public liability, replacement value of all real and personal property, including losses from boiler and machinery breakdowns, and the perils of earthquake and flood, subject to certain sublimits. EME Homer City also carries general liability insurance covering liabilities to third parties for bodily injury or property damage resulting from operations, automobile liability insurance and excess liability insurance. Further, EME Homer City has the benefit of title insurance and business interruption insurance. Limits and deductibles in respect of these insurance policies are comparable to those carried by other electric generating facilities of similar size. LEGAL PROCEEDINGS No material legal proceedings are presently pending against the Company or any of the Guarantors. ENVIRONMENTAL MATTERS ENVIRONMENTAL AND LAND USE PERMIT AND APPROVAL STATUS As of the date of this prospectus, all material environmental and land use permits required in order to own and operate the Facilities as they are currently operated have been transferred or reissued to EME Homer City and all permits required to begin construction of the Environmental Capital Improvements have been issued by the PADEP. ENVIRONMENTAL CONDITIONS AND COMPLIANCE GENERAL Under various federal, state and local environmental laws and regulations, a current or previous owner or operator of any facility, including an electric generating facility, may be required to investigate and remediate releases or threatened releases of hazardous or toxic substances or petroleum products located at such facility, and may be held liable to a governmental entity or to third parties for property damage, personal injury and investigation and remediation costs incurred by such parties in connection with such releases or threatened releases. Many such laws, including the Comprehensive 41 Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, impose liability without regard to whether the owner knew of or caused the presence of the hazardous substances, and courts have interpreted liability under such laws to be strict and joint and several. The cost of investigation, remediation or removal of such substances may be substantial. In connection with its ownership and operation of the Facilities, EME Homer City may be liable for such costs. EME Homer City, in the course of operating the Facilities, must comply with all applicable environmental laws and regulations, including numerous federal and state statutes and regulations. These requirements include, but are not limited to, the federal Clean Water Act, the Clean Air Act, the Resources Conservation and Recovery Act and similar state requirements. In addition, persons who arrange for the disposal or treatment of hazardous or toxic substances at a disposal or treatment facility may be liable for the costs of removal or remediation of a release or threatened release of hazardous or toxic substances at such disposal or treatment facility, whether or not such facility is owned or operated by such person. Some environmental laws and regulations create a lien on a contaminated site in favor of the government for damages and costs it incurs in connection with the contamination. The owner of a contaminated site and persons who arrange for the disposal of hazardous substances at such site also may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from such site. In connection with its ownership and operation of the Facilities, EME Homer City may be liable for such costs. Certain federal, state and local laws, regulations and ordinances also govern the removal, encapsulation or disturbance of asbestos-containing materials ("ACMs") when such materials are in poor condition or in the event of construction, remodeling, renovation or demolition of a building. Such laws and regulations may impose liability for release of ACMs and may provide for the ability of third parties to seek recovery from owners or operators of such properties for personal injury associated with ACMs. In connection with its ownership and operation of the Facilities, EME Homer City may be liable for such costs. AIR QUALITY GENERAL. EME Homer City believes that the Facilities are in material compliance with applicable state and federal air quality requirements. Further reductions in the Units' emissions may be required for the achievement and maintenance of National Ambient Air Quality Standards for ozone, fine particulate matter and regional haze. In August 1995, the Sellers submitted a Title V operating permit application to the PADEP for review. EME Homer City expects such permit to be issued by mid-1999. A continuous emissions monitoring system was installed at the Homer City Units in 1993 for measuring SO(2), NO(x), CO(2), and exhaust gas flow on a real-time basis, in order to comply with regulatory requirements. NITROGEN OXIDES ("NO(X)"). All three Units must comply with Reasonably Available Control Technology requirements for NO(x) that result in a limit of 0.5 lbs/MMBtu on a 30-day rolling average. In order to comply with such requirements, the Sellers installed low NO(x) burners and SOFA systems on Units 1 and 2 and a SOFA system on Unit 3. Low NO(x) burners were installed on Unit 3 when it was first constructed. The three Units have routinely operated below the 0.5 lbs/MMBtu limit. The Units' current NO(x) emission rates are 0.47 lbs/MMBtu for Unit 1, 0.44 lbs/MMBtu for Unit 2 and 0.41 lbs/MMBtu for Unit 3. Pursuant to the Ozone Transport Commission Memorandum of Understanding, the PADEP has allocated 10,085 tons of ozone season NO(x) allowances to the Homer City Units each year from 1999 through 2002. At projected capacity factors, the Units will generate 13,500 tons of NO(x) during the 1999 ozone season and 10,200 tons of NO(x) during the 2000 ozone season. EME Homer City expects to install an SCR system on each of the three Units, which will reduce NO(x) emissions to 0.1 lbs/MMBtu per Unit. The SCR for Unit 2 is expected to be in service 42 during the 2000 ozone season and the SCRs for Units 1 and 3 are expected to be in service for the 2001 ozone season. NO(x) production during the 2001 and 2002 ozone seasons will average 3,110 tons and as such the Units will have a surplus of 6,975 tons of NO(x) allowances to sell. In 2003, the Homer City Units' NO(x) allowance is reduced to 4,740 tons per ozone season. From and after 2003, average production is anticipated to be 3,080 tons per ozone season resulting in a projected surplus of 1,660 tons to sell each year. EME Homer City currently has 2,365 tons of banked NO(x) allowances from 1997 and 1998 which will offset purchases of NO(x) allowances in 1999. The Sellers obtained EPA approval for the Clean Air Act Amendment Title IV Early Election Program for NO(x) with an annual average NO(x) emission limit of 0.5 lbs/MMBtu through 2007. In 2008, the Units become subject to Phase II emission rate limitations under Title IV for wall-fired dry bottom boilers of 0.46 lbs/MMBtu on an annual average basis. The Homer City Units' annual average NO(x) emissions for 1997 were well below the current Title IV requirements. SULFUR DIOXIDE ("SO(2)"). Unit 3 is subject to New Source Performance Standards and, therefore, has an SO(2) emission limit of 1.2 lbs/MMBtu on a three-hour and a 24-hour average. Units 1 and 2 are "existing" boilers with a PADEP SO(2) emission limit of 3.7 lbs/MMBtu on a 30-day rolling average, a daily average limit of 4.0 lbs/MMBtu (up to two exceedances per 30 days) and a not-to-be-exceeded limit of 4.8 lbs/MMBtu. To control SO(2) emissions, EME Homer City relies on the Coal Cleaning Plant to manage the sulfur content of a significant amount of the coal feedstock for Units 1 and 2. Unit 3 relies on the use of low-sulfur coal. In 1997, the annual average SO(2) emissions were 2.73 lbs/MMBtu for Unit 1, 2.72 lbs/MMBtu for Unit 2 and 1.13 lbs/MMBtu for Unit 3. All three Units are Phase II Acid Rain Program-affected units. Accordingly, beginning in 2000, all of the Units will be required to obtain sufficient SO(2) allowances to account for the total SO(2) emissions from the Units. EME Homer City believes that it will be able to obtain such SO(2) allowances for the Homer City Units at a reasonable cost prior to the time required. In addition, EME Homer City will install a system on Unit 3 which will reduce SO(2) emissions to 0.4 lbs/MMBtu. The system is expected to be installed by September 2001. EMISSION REDUCTION CREDITS. The Homer City Units have a number of Emission Reduction Credits ("ERCs") that were generated through the retirement of dryers A and B at the Coal Cleaning Plant. Such ERCs are pending PADEP approval, and EME Homer City believes that once approved they will not expire until 2006. The ERCs have not been included in the projections prepared by the Independent Engineer. PARTICULATE MATTER ("PM"). Particulate matter is regulated through two separate and distinct methods: mass emissions and visual opacity. The Homer City Units' recent PM stack tests show that emissions are well below regulatory limits. All three Units control PM through the use of electrostatic precipitators; Units 1 and 2 also utilize an SO(2) flue gas injection conditioning system. To improve precipitator performance, capital improvements were made in 1997 and 1998 for Units 1 and 2. Recent modifications to the Coal Cleaning Plant have also resulted in reduced particulate emissions from Units 1 and 2. WATER QUALITY The Facilities are subject to regulations regarding the quality of surface water, ground water and drinking water. To protect surface water quality, the Facilities rely on an industrial wastewater treatment system, on-site sewage treatment and a number of settling ponds and impoundments. The Facilities' surface water discharges are governed by two, five-year National Pollutant Discharge Elimination System ("NPDES") permits issued in 1994 and 1995. Modeling results indicate that PADEP may impose more stringent discharge limits for certain contaminants at the time of NPDES 43 permit renewal, which may require upgrade of the Facilities' wastewater treatment systems with such approaches as reverse osmosis, ozonation, dechlorination and/or recycling of water. EME Homer City conducts ground water monitoring in a number of areas throughout the Site, including active and former ash disposal sites, wastewater and runoff settling and drainage ponds, coal refuse disposal sites, the coal pile and present and former underground storage tank locations. A pump-and-treat ground water treatment system is in operation for the industrial wastewater flow ponds. To date, the PADEP has not requested that any additional remediation actions be performed at the Site. The Facilities have a drinking water treatment system designed to meet applicable potable water standards. Recent tests indicate that the Facilities' drinking water supply meets these standards. SOLID AND HAZARDOUS WASTE Both ash from the Homer City Units and coal refuse from the Coal Cleaning Plant are disposed of on-Site in separate, permitted disposal areas. EME Homer City has entered into a joint services agreement with Helvetia for the treatment and disposal of leachate and runoff water from EME Homer City's coal refuse disposal facility. Approximately 600,000 tons of ash and 1,000,000 tons of coal refuse are disposed of annually. In 1997, the PADEP issued a 10-year permit for operation of the ash disposal site. A five-year permit for the operation of the coal refuse disposal site was issued by the Pennsylvania Bureau of Mining and Reclamation in 1994. For the past several years, the Facilities have undergone a program for the removal of equipment with polychlorinated biphenyl ("PCB") levels of over 500 ppm. As of Spring of 1998, all PCB transformers had been removed. MINING ACTIVITIES The Homer City Units were originally constructed as a mine-mouth generating station, where coal produced from two adjacent deep mines was delivered directly to the Units by coal conveyors. The two adjacent deep mines were owned by Helen Mining Company ("Helen"), a subsidiary of the Quaker State Corporation, and the Helvetia Mining Company ("Helvetia"), a subsidiary of the Rochester and Pittsburgh Coal Company. Both Helen and Helvetia developed mine refuse sites, water treatment facilities and other mine related facilities on the Site. The Helen mine was closed in the early 1990s and the mine surface operations and maintenance shop areas were restored before Helen left the Site. Helen has continuing mine water and refuse site leachate treatment obligations and remains obligated to perform any clean-up required with respect to its refuse site. Helvetia's on-Site mine was closed in 1995. As a result of the cessation of its on-Site mining activities, Helvetia has continuing mine discharge and refuse site leachate discharge treatment obligations which it performs using water treatment facilities owned by Helvetia and located on the Site. Bonds posted by Helvetia may not be sufficient to fund Helvetia's obligations in the event of Helvetia's failure to comply with its mine-related permits at the Site. Current annual operating costs for Helvetia's treatment systems are estimated to be approximately $372,500. Should Helvetia default on its treatment obligations, the government may look to EME Homer City to fund these commitments. REGULATION STATE LAW PENNSYLVANIA. Pursuant to the Pennsylvania Public Utility Law (the "PPUL"), the PPUC regulates all "public utilities" operating in the Commonwealth. A "public utility" under the PPUL includes any entity which owns or operates equipment or facilities for the production, generation, transmission or distribution of gas, electricity or steam for the production of light, heat or power to the public for consumption. The PPUL does not specifically address the utility status of entities selling electricity at wholesale within Pennsylvania (e.g., EWGs). Because of EME Homer City's status as an EWG which sells electricity exclusively in the wholesale market and does not hold itself out to the public generally 44 as a supplier of utility service, it is not likely to be regulated as a public utility under the PPUL. If, however, EME Homer City were deemed to be a Pennsylvania public utility, the PPUC could retroactively apply certain provisions of the PPUL to the Homer City Units. One such provision requires every public utility to obtain a certificate of public convenience and necessity ("CPCN") from the PPUC as evidence of its approval prior to rendering service as a public utility. If the PPUC were to require EME Homer City to obtain a CPCN, EME Homer City might be required to discontinue operation of the Homer City Units pending application for, and receipt of, a CPCN. Another such provision requires every public utility to obtain PPUC approval before it issues or guarantees securities. If EME Homer City were found to be a public utility, its failure to have obtained this approval could call into question the validity of EME Homer City's obligations under the Guarantee and Collateral Agreement. In addition, EME Homer City would be subject to other laws and regulations (other than rate regulation) applicable to Pennsylvania public utilities. EME Homer City's rates, however, would remain subject to the jurisdiction of the FERC. NEW YORK. Pursuant to the New York Public Service Law (the "NYPSL"), the New York Public Service Commission ("NYPSC") regulates all "public utility companies" or "utility companies" operating in New York. A "public utility company" or "utility company" under the NYPSL includes, among other things, any entity engaged in the production, transmission or distribution of electricity to the public for light, heat or power purposes. EME Homer City, as an EWG, will not provide electricity directly to the public and plans to sell only to power marketers and energy service companies. Although the NYPSL is silent with respect to the utility status of electric corporations selling wholesale within New York, EME Homer City will not likely be subject to regulation as a New York public utility. If, however, EME Homer City were deemed to be a public utility under the NYPSL, the NYPSC could retroactively apply certain provisions of the statute to the Homer City Units. EME Homer City would also be subject to other laws and regulations (other than rate regulation) applicable to New York public utility companies. EME Homer City's rates, however, would remain subject to the jurisdiction of the FERC. FEDERAL LAW FEDERAL POWER ACT. The Federal Power Act gives the FERC exclusive rate-making jurisdiction over wholesale sales of electricity and the transmission of electricity in interstate commerce. Pursuant to the Federal Power Act, all public utilities subject to the FERC's jurisdiction are required to file rate schedules with the FERC prior to commencement of wholesale sales or transmission of electricity. Because it will be selling power in the wholesale market, EME Homer City is deemed to be a public utility for purposes of the Federal Power Act. In November 1998, EME Homer City filed a rate schedule with the FERC requesting authority to sell power and ancillary services at market-based rates. On January 13, 1999, the FERC accepted the rate schedule for filing with respect to sales of power, thereby authorizing EME Homer City to make sales of power at market-based rates. The FERC deferred consideration of EME Homer City's request to sell anciliary services at market-based rates. The FERC also granted EME Homer City waivers of certain of the accounting, record-keeping and reporting requirements that are imposed on utilities with cost-based rate schedules. In addition, the FERC's order, as is customary with market-based rate schedules, reserved the right to revoke EME Homer City's market-based rate authority on a prospective basis if it is subsequently determined that EME Homer City or any of its Affiliates possesses excessive market power. If the FERC were to revoke EME Homer City's market-based rate authority, it would be necessary for EME Homer City to file, and obtain FERC acceptance of, its rate schedule as a cost-of-service rate schedule. In addition, the loss of market-based rate authority would subject EME Homer City to the accounting, record-keeping and reporting requirements that are imposed on utilities with cost-based rate schedules. 45 PUHCA. PUHCA provides that any corporation, partnership or other entity or organized group that owns, controls or holds power to vote 10% or more of the outstanding voting securities of a "public utility company" or a company that is a "holding company" of a public utility company is subject to pervasive regulation under PUHCA as a registered holding company, unless an exemption is established or an order is issued by the Securities and Exchange Commission declaring it not to be a holding company. Registered holding companies under PUHCA are required to limit their utility operations to a single integrated utility system and to divest any other operations not functionally related to the operation of the utility system. In addition, a public utility company that is a subsidiary of a registered holding company under PUHCA is subject to financial and organization regulation, including approval by the Securities and Exchange Commission of certain of its financing transactions. However, under the Energy Policy Act, a company engaged exclusively in the business of owning and/or operating a facility used for the generation of electric energy exclusively for sale at wholesale may be exempted from PUHCA regulation as an EWG. On March 12, 1999, the General Counsel of the FERC issued a letter determining that, based on the facts set forth in its application, EME Homer City is an EWG. If there occurs a "material change" in facts which might affect EME Homer City's continued eligibility for EWG status, within 60 days of such material change EME Homer City must (1) file a written explanation of why the material change does not affect its EWG status, (2) file a new application for EWG status or (3) notify the FERC that it no longer wishes to maintain EWG status. If EME Homer City were to lose its EWG status, it and its affiliates would be subject to regulation under PUHCA that would be difficult to comply with absent a restructuring. 46 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY The directors of the Company (the "Board of Directors") are elected by, and serve until their successors are elected by, the Company's sole stockholder. The officers of the Company are elected from time to time by the Board of Directors and hold office at the discretion of the Board of Directors. The Company's Board of Directors currently contains five members. The Board of Directors or the Company's sole stockholder may elect to appoint additional directors from time to time. Set forth below are the current directors and executive officers of the Company and their positions with the Company.
NAME POSITION - ---- -------- James V. Iaco, Jr.................... Director and President Kevin M. Smith....................... Director, Senior Vice President, Chief Financial Officer and Treasurer Martha A. Spikes..................... Director, Vice President and Secretary Raymond W. Vickers................... Director Paul R. Gillespie.................... Director and Vice President Mark E. Irwin........................ Vice President Steven D. Eisenberg.................. Vice President and General Counsel Mary Ellen Olson..................... Vice President and Assistant General Counsel Michael P. Childers.................. Vice President John K. Deshong...................... Vice President
Set forth below are the principal occupations and business activities of the directors and executive officers of the Company for the past five years, in addition to their positions described above. JAMES V. IACO, JR. has been Senior Vice President and Division President of EME's Americas region since May 1998. Mr. Iaco served as Chief Financial Officer of EME from January 1994 to May 1999. KEVIN M. SMITH has been Senior Vice President and Chief Financial Officer of EME since May 1999 and Regional Vice President--Finance of EME's Americas region since March 1998. Mr. Smith has served as Treasurer of EME since September 1992. MARTHA A. SPIKES has been Corporate Secretary of EME since July 1996. Ms. Spikes has served as corporate and project counsel to EME since 1991. RAYMOND W. VICKERS has been Senior Vice President and General Counsel of EME since March 1, 1999. Prior to joining EME, Mr. Vickers was a partner with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP since 1989. PAUL R. GILLESPIE has been Vice President--Tax of EME since May 1996. Prior to joining EME, Mr. Gillespie was Senior Tax Counsel for Mobil Corporation from January 1996 to May 1996 and Manager, Tax Planning of Mobil Corporation since July 1991. MARK E. IRWIN has been Vice President--Business Management of EME's Americas region since July 1995. Mr. Irwin has served as Vice President of EME since July 1995. STEVEN D. EISENBERG has been Vice President and Associate General Counsel of EME and Regional Vice President--Legal of EME's Americas region since January 1999. Prior to joining EME, Mr. Eisenberg was a partner with the law firm of Morgan, Lewis & Bockius from September 1997 to December 1998. Prior to that, Mr. Eisenberg was Vice President and General Counsel of Diamond 47 Energy, Inc. from January 1995 to September 1997 and Vice President and Associate General Counsel of Diamond Energy, Inc. from September 1992 to January 1995. MARY ELLEN OLSON has been Vice President and Assistant General Counsel of EME and Regional Vice President--Legal of EME's Americas region since December 1997. Ms. Olson served as Regional Vice President and Assistant General Counsel of EME since February 1997. Ms. Olson has served as corporate and project counsel to EME since 1988. MICHAEL P. CHILDERS has been Vice President of EME and Regional Vice President--Development of EME's Americas region since October 1997. Prior to joining EME, Mr. Childers was a Director at Enron Corporation from April 1996 to September 1997. Prior to that, Mr. Childers was Senior Manager of Business Development at Diamond Energy, Inc. from May 1994 to April 1996. JOHN K. DESHONG has been Regional Vice President--Tax of EME's Americas region since November, 1998. Mr. Deshong has served as Director, Tax Planning & Special Projects to EME since 1997. Prior to joining EME, Mr. Deshong was Director of Tax at United States Enrichment Corporation from December 1995 to April 1997. Prior to that, Mr. Deshong was Senior Tax Advisor at Mobil Corporation from April 1993 to December 1995. EXECUTIVE COMPENSATION The officers of the Company receive compensation from EME and receive no compensation from the Company. For information concerning the compensation of the Chief Executive Officer and four most highly paid executive officers, other than the Chief Executive Officer, of EME, see EME's Form 10-K for the year ended December 31, 1998, which is incorporated by reference herein. For information concerning the benefit plans maintained by EME for the officers and employees of the Company, see EME's Form 10-K for the year ended December 31, 1998, which is incorporated by reference herein. DIRECTORS COMPENSATION The directors of the Company receive no compensation for their service as directors. 48 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ENERGY SALES AGREEMENT EME Homer City has entered into a contract with a marketing affiliate for the sale of energy and capacity produced by the Homer City Units, which enables such marketing affiliate to engage in forward sales and hedging transactions. EME Homer City will pay the marketing affiliate a nominal fee currently set at $0.02/MWh (approximately $300,000 per year), and all revenue from physical sales transactions executed by the marketing affiliate will be deposited into the Revenue Account. See "Description of Principal Contracts--Energy Sales Agreement." INTERCOMPANY LOANS The Company has entered into an intercompany loan agreement with FinanceCo pursuant to which it has agreed to make loans to FinanceCo from time to time with the proceeds of loans made to the Company under the Credit Agreement. FinanceCo has entered into a corresponding intercompany loan agreement with EME Homer City pursuant to which it has agreed to make loans to EME Homer City from time to time with the proceeds of loans made to FinanceCo by the Company. The loans described in this paragraph, and all other obligations owed by a Guarantor to another Guarantor or to the Company, are subordinated to all of the Guarantors' obligations under the Financing Documents. See "Description of Principal Financing Documents--Subordination Agreement." RELATIONSHIP OF THE COMPANY AND THE GUARANTORS TO EME Each of the Company and each Guarantor has been organized and operated as a legal entity separate and apart from EME, Edison International and any other affiliates of EME or Edison International, and, accordingly, the assets of the Company and the Guarantors will not be generally available to satisfy the obligations of EME, Edison International or any other affiliates of EME or Edison International; PROVIDED, HOWEVER, that unrestricted cash of the Company and the Guarantors or other assets which are available for distribution may, subject to applicable law and the terms of financing arrangements of such parties, be advanced, loaned, paid as dividends or otherwise distributed or contributed to Edison International, EME or affiliates thereof. The bonds are non-recourse to EME and Edison International. See "Description of the Bonds--Nature of Recourse." 49 DESCRIPTION OF PRINCIPAL CONTRACTS THE FOLLOWING IS A SUMMARY OF CERTAIN FEATURES OF THE FACILITIES AND SELECTED PROVISIONS OF CERTAIN PRINCIPAL AGREEMENTS RELATED TO THE FACILITIES AND THE BUSINESS OF THE COMPANY AND THE GUARANTORS, AND IS NOT CONSIDERED TO BE A FULL STATEMENT OF THE TERMS OF SUCH AGREEMENTS. ACCORDINGLY, THE FOLLOWING SUMMARIES OF SUCH AGREEMENTS ARE QUALIFIED BY REFERENCE TO EACH AGREEMENT AND ARE SUBJECT TO THE TERMS OF THE FULL TEXT OF EACH AGREEMENT. UNLESS OTHERWISE STATED, ANY REFERENCE IN THIS PROSPECTUS TO ANY AGREEMENT SHALL MEAN SUCH AGREEMENT AND ALL SCHEDULES, EXHIBITS AND ATTACHMENTS THERETO AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED AND IN EFFECT AS OF THE DATE HEREOF. COPIES OF ALL SUCH AGREEMENTS MAY BE OBTAINED FROM THE COMPANY, SUBJECT TO CERTAIN CONFIDENTIALITY RESTRICTIONS. SEE "AVAILABLE INFORMATION." SUMMARY EME Homer City is party to various agreements related to the operation of the Homer City Units. EME Homer City purchased the Facilities from the Sellers on March 18, 1999 pursuant to the Asset Purchase Agreement. In connection with the Acquisition, NYSEG and Penelec entered into the Transition Contracts, the Interconnection Agreement and the Easement Agreement with ME Westside, and ME Westside subsequently assigned these contracts to EME Homer City. The Transition Contracts provide NYSEG and Penelec with an option to buy, and EME Homer City with an option to sell, certain quantities of capacity from the Units. Pursuant to the Interconnection Agreement, NYSEG and Penelec have agreed to provide the services necessary to interconnect the Homer City Units with NYSEG's and Penelec's transmission systems. The Easement Agreement is intended to provide the use and access rights to EME Homer City, NYSEG and Penelec necessary for the performance of their respective obligations under the Interconnection Agreement. EME Homer City has also entered into the Energy Sales Agreement with one of its affiliates, pursuant to which such affiliate will purchase capacity and energy produced by the Homer City Units for sale to third parties. NYSEG and Penelec entered into several fuel supply agreements to obtain the coal requirements for the Homer City Units. NGE and GPU Genco entered into the Coal Cleaning Agreement to provide for the operation and maintenance of the Coal Cleaning Plant, and NYSEG and Penelec entered into the Operating Agreement to provide for the blending of coal for Unit 3. All of these agreements were assigned to EME Homer City in connection with the Acquisition. EME Homer City has also entered into an agreement with ABB for the provision of all engineering, procurement and construction services necessary to complete the Environmental Capital Improvements. Unless otherwise indicated herein, each of the agreements described below contains the following customary indemnification, force majeure and assignment provisions: - an agreement by each party to indemnify the other party and such other party's affiliates, successors, officers, directors, employees and agents for all claims, losses, damages and expenses for damage to property or injury to or death of any person to the extent caused by an act or omission of the indemnifying party or its officers, directors, employees or agents in connection with the contract; - a force majeure clause excusing a party's performance under the contract if performance is prevented by a cause beyond the reasonable control of the party which is unable to perform; and - a provision stating that a party may not assign its rights or obligations under the contract without the prior consent of the other party. 50 ASSET PURCHASE AGREEMENT ME Westside entered into the Asset Purchase Agreement with the Sellers on August 1, 1998 and assigned the contract to EME Homer City on November 6, 1998. Pursuant to the Asset Purchase Agreement, EME Homer City purchased the assets constituting the Facilities on the Acquisition Effective Date, including, but not limited to, certain specified real property, inventories of raw materials and fuels, machinery and equipment, real property leases, agreements, permits, easements and emission reduction credits (collectively, the "Purchased Assets"), and excluding the related electrical transmission and distribution facilities (collectively, the "Transmission Assets" and, together with all other assets not transferred, the "Excluded Assets"). The purchase price was $1,801 million with adjustments for certain differences in book value of inventories. ASSUMPTION OF LIABILITIES. Pursuant to the Asset Purchase Agreement, and subject to certain exceptions, EME Homer City agreed to assume and discharge certain of the Sellers' liabilities and obligations, including all liabilities and obligations to be paid or performed on or after the Acquisition Effective Date under the following: (1) the contracts, agreements, licenses and leases relating to the ownership, operation and maintenance of the Facilities which were assigned to EME Homer City; (2) the leases, contracts and other agreements entered into by the Sellers with respect to the Purchased Assets after the execution of the Asset Purchase Agreement; (3) those permits which are transferable from the Sellers to EME Homer City; (4) all liabilities and obligations with respect to transferred employees; (5) taxes incurred in connection with the Acquisition; and (6) subject to certain exceptions, any liability related to violations of environmental laws, tort claims and remediation procedures with respect to the ownership or operation of the Purchased Assets. REPRESENTATIONS AND WARRANTIES. Each Seller makes certain representations and warranties to EME Homer City in the Asset Purchase Agreement which survive for 18 months after the Acquisition Effective Date, including that: (1) such Seller is duly incorporated, existing and in good standing; (2) such Seller has the full power and authority to enter into the Asset Purchase Agreement and the Asset Purchase Agreement is enforceable in accordance with its terms; and (3) subject to obtaining the Sellers' required regulatory approvals, no consent or approval is necessary for the execution of the Asset Purchase Agreement other than such filings or consents which if not obtained will not prevent such Seller from performing its material obligations thereunder. Certain claims under the Asset Purchase Agreement also survive for 18 months after the Acquisition Effective Date. Such claims include those which arise from the Sellers' noncompliance with the covenants regarding the conduct of business and filings with tax authorities in jurisdictions in which a portion of the purchase price may be required to be withheld or EME Homer City would be liable for tax liabilities of the Sellers. INDEMNIFICATION. Pursuant to the Asset Purchase Agreement, the Sellers and EME Homer City agreed to customary indemnification provisions. The Asset Purchase Agreement contains certain limitations on the Sellers' indemnity obligations, including a release from liability for any environmental condition or violation of environmental law related to the Purchased Assets other than liabilities not assumed by EME Homer City under the Asset Purchase Agreement. ENERGY SALES AGREEMENT EME Homer City entered into the Energy Sales Agreement dated as of March 18, 1999 (the "Energy Sales Agreement") with Edison Mission Marketing & Trading Co. ("EMMT"). The Energy Sales Agreement provides for the sale by EME Homer City and the purchase by EMMT of capacity and energy produced by the Homer City Units up to the capacity of the Units. The transactions executed pursuant to the Energy Sales Agreement may not be for speculative purposes. TERM. The Energy Sales Agreement will remain in effect unless terminated by either party upon 90 days prior written notice to the other party. 51 PAYMENTS. EMMT will make payments to EME Homer City for capacity and energy delivered to the bus bar at the Units at a price equal to (i) the price which a third-party purchaser of the capacity or energy has agreed to pay to EMMT less (ii) $0.02 per MWh of capacity or energy. If EME Homer City fails to deliver capacity or energy to EMMT as agreed, EME Homer City will be required to pay EMMT an amount equal to (1) $0.02 per MWh of capacity or energy purchased by EMMT to replace the capacity or energy that EME Homer City failed to deliver plus (2) the price at which EMMT, acting in a commercially reasonable manner, purchases replacement capacity or energy or, if EMMT does not purchase replacement capacity or energy, the market price for replacement capacity or energy as determined by EMMT in a commercially reasonable manner. TRANSITION CONTRACTS NYSEG TRANSITION CONTRACT ME Westside entered into the NYSEG Transition Contract with NYSEG on August 1, 1998, and subsequently assigned the NYSEG Transition Contract to EME Homer City on November 6, 1998. The NYSEG Transition Contract provides NYSEG with a call option to buy, and EME Homer City with a put option to sell, certain quantities of electric generating capacity from the Homer City Units. TERM. The NYSEG Transition Contract will expire on April 30, 2001 unless terminated earlier in accordance with its terms. NYSEG may terminate the NYSEG Transition Contract prior to its stated expiration date by providing 25 days notice to EME Homer City upon an event of default of EME Homer City thereunder. LETTER AGREEMENTS. EME Homer City entered into a letter agreement with NYSEG to adjust the contract periods under the NYSEG Transition Contract to conform to the PJM capacity planning cycle. EME Homer City also entered into contractual arrangements with NYSEG to sell 942 MW of capacity to NYSEG for the period from March 18, 1999 to May 31, 1999 for a price of $55/MW-day and to sell 500 MW of capacity to NYSEG during the period from June 1, 1999 through May 31, 2000 for a price of $60/MW-day. OPTIONS. NYSEG and EME Homer City may exercise their options to purchase and sell capacity during the periods from June 1, 2000 through October 31, 2000 (the "Third Contract Period") and from November 1, 2000 to April 30, 2001 (the "Fourth Contract Period"). EME Homer City may exercise its put option to sell to NYSEG up to an amount of capacity (the "NYSEG Option Capacity") equal to the lesser of (1) 942 MW and (2) one half of NYSEG's projected load supply obligations to NYPP less the capacity available to be provided by its remaining owned generation and existing power purchase entitlements. NYSEG may exercise its call option to purchase from EME Homer City up to an amount of capacity equal to equal to (1) the NYSEG Option Capacity less (2) the amount of capacity which EME Homer City has elected to sell to NYSEG pursuant to its put option. PAYMENTS. If either EME Homer City or NYSEG exercises its option, NYSEG will make monthly payments to EME Homer City equal to the sum of (1) (x) $72.30 per MW of capacity for the Third Contract Period or (y) $77.20 per MW of capacity for the Fourth Contract Period, in each case sold pursuant to EME Homer City's put option, multiplied by the number of days in the month or portion thereof and (2) (x) $91.70 per MW of capacity for the Third Contract Period or (y) $103.00 per MW of capacity for the Fourth Contract Period, in each case sold pursuant to NYSEG's call option, multiplied by the number of days in the month or portion thereof. PENELEC TRANSITION CONTRACT ME Westside entered into the Penelec Transition Contract with Penelec on August 1, 1998, and subsequently assigned the Penelec Transition Contract to EME Homer City on November 6, 1998. The 52 Penelec Transition Contract provides Penelec with a call option to buy, and EME Homer City with a put option to sell, certain quantities of electric generating capacity from the Homer City Units. TERM. The Penelec Transition Contract will expire on May 31, 2001 unless terminated earlier in accordance with its terms. OPTIONS. EME Homer City has exercised its put option to sell 942 MW of capacity to Penelec during the period which commenced on the Acquisition Effective Date and ends on May 31, 1999 (the "First Contract Period") and during the period which commences on June 1, 1999 and ends on May 31, 2000 (the "Second Contract Period"). Penelec and EME Homer City may exercise their remaining options to purchase and sell capacity during the period from June 1, 2000 to May 31, 2001 (the "Third Contract Period"). EME Homer City may exercise its put option to sell to Penelec up to an amount of capacity (the "Penelec Option Capacity") equal to the lesser of (1) 942 MW and (2) GPU's projected load supply obligations to PJM less the capacity available to be provided by its remaining owned generation and existing power purchase entitlements. Penelec may exercise its call option to purchase from EME Homer City up to an amount of capacity equal to (1) the Penelec Option Capacity less (2) the amount of capacity which EME Homer City has elected to sell to Penelec pursuant to its put option. PAYMENTS. During the First Contract Period, Penelec will make monthly payments to EME Homer City equal to the product of (1) $47,005.80, (2) the number of days in the relevant month or portion thereof and (3) a fraction (not greater than 1) the numerator of which is one minus the forced outage rate of the Units (calculated pursuant to the PJM rules) for the relevant month and the denominator of which is 0.91. During the Second Contract Period, Penelec will make monthly payments to EME Homer City equal to the product of (1) $56,425.80, (2) the number of days in the relevant month or portion thereof and (3) a fraction (not greater than 1), the numerator of which is the "unforced capacity" (installed capacity rated at summer conditions that is not on average experiencing a forced outing or forced derating) attributable to the installed capacity provided by EME Homer City and the denominator of which is 91% of such installed capacity. If either EME Homer City or Penelec exercises its option for the Third Contract Period, Penelec will make monthly payments to EME Homer City equal to the product of (1) $77.40 per MW of capacity sold pursuant to EME Homer City's put option plus $100.90 per MW of capacity sold pursuant to Penelec's call option, (2) the number of days in the month or portion thereof and (3) a fraction (not greater than 1), the numerator of which is the "unforced capacity" attributable to the installed capacity provided by EME Homer City and the denominator of which is 91% of such installed capacity. INDEMNIFICATION. The indemnification obligations of EME Homer City and Penelec under the Penelec Transition Contract arise only upon the negligence or willful misconduct of the indemnifying party. EPC CONTRACT EME Homer City entered into the Turnkey Engineering, Procurement and Construction Contract dated as of April 7, 1999 (the "EPC Contract") with ABB Environmental Systems, a division of ABB (the "Contractor"). The Contractor has agreed to complete the work necessary to add selective catalytic reduction ("SCR") systems to each of the Units and to add a limestone based, wet scrubber flue gas desulfurization ("FGD") system to Unit 3 (collectively, the "Project"). CONTRACTOR'S DUTIES. The EPC Contract requires the Contractor to, among other things, (1) procure all labor, materials, tools, equipment, insurance, security, supplies, manufacturing and related services and certain permits necessary for the completion of the work, (2) provide monthly progress reports, damage reports and other reports to EME Homer City, (3) coordinate the procurement of spare parts for the Project, (4) train EME Homer City's personnel in the operation of 53 the Project and supervise start-up and testing activities and (5) perform all guaranteed performance tests specified in the EPC Contract. CONTRACT PRICE. The contract price for completion of the work under the EPC Contract is $233,849,804, which is to be paid by EME Homer City in installments upon completion of certain milestones to the Contractor. EME Homer City is entitled to retain 10% of the contract price as security until the Contractor has performed all of its obligations under the EPC Contract. GUARANTEED MECHANICAL COMPLETION DATES. The guaranteed mechanical completion dates under the EPC Contract are as follows: (1) June 1, 2000 for installation of the SCR system at Unit 2; (2) May 1, 2001 for installation of the SCR systems at Units 1 and 3; and (3) September 20, 2001 for installation of the FGD system at Unit 3. The guaranteed mechanical completion dates are subject to extension pursuant to the terms of the EPC Contract. PERFORMANCE GUARANTEES AND LIQUIDATED DAMAGES. The Contractor is required to pay EME Homer City liquidated damages for failure of the Project to meet certain performance guarantees and for excess outages at the Units and delay in completion of the Project. Liquidated damages for failure to satisfy the performance guarantees are limited to 15% of the contract price and liquidated damages for excess outages and delay in completion are limited to 15% of the contract price. The total amount of performance, excess outage and delay liquidated damages cannot exceed 25% of the contract price. PERFORMANCE SECURITY. The EPC Contract requires the Contractor to provide a performance and payment bond in the full amount of the contract price in order to secure the Contractor's obligations under the EPC Contract. To satisfy this requirement, the Contractor has provided performance and payment bonds from Federal Insurance Company and American Home Assurance Company. FUEL AGREEMENTS COAL SUPPLY AGREEMENTS NYSEG and Penelec entered into several coal supply agreements with local suppliers to obtain the coal requirements for the Homer City Units. These agreements were assigned to EME Homer City in connection with the Acquisition. Following is a table summarizing the key terms of the existing coal supply agreements. All of the coal supply agreements other than the Tanoma agreement terminating on December 31, 2002 are for Units 1 and 2.
MINIMUM QUANTITY MAXIMUM QUANTITY BASE PRICE SUPPLIER TERMINATION DATE (TONS PER MONTH) (TONS) ($/TON) - -------- ---------------- ---------------- ----------------------- ---------- Canterbury Coal Company..... 12/31/03 28,000 40,000/month 21.33(1) Mears Enterprises, Inc...... 12/31/00 30,000 35,000/month 21.41 Rosebud Mining Company...... 12/31/00 25,000 1,050,000/contract term 21.42 Helvetia Coal Company....... (2) 1,800,000/year None 26.75(3) Unionvale Coal Company...... 12/31/07 (4) (5) (6) Tanoma Coal Sales, Inc...... 12/31/04 25,000 (7) (8) 12/31/99 10,000 25,000 (9) 12/31/99 15,000 None 21.40 12/31/02 85,000 95,000/month 37.00(10) Kajon Materials, Inc........ 5/31/00 10,000 360,000/contract term 20.37 DLR Coal Company............ 12/31/04 20,000 1,500,000/contract term 19.00 Britt Resources, Inc........ 4/30/03 15,000 65,000/month (11)
- ------------------------ (1) The base price under the Canterbury Coal Company agreement will increase to $22.05 on January 1, 2000 and to $22.30 on January 1, 2002. 54 (2) The Helvetia agreement will terminate when 16 million tons of raw coal have been delivered thereunder. At current delivery rates, the contract will expire in 2002. (3) The base price for coal delivered under the Helvetia agreement was $26.75 per ton as of January 1995 and is adjusted quarterly in accordance with a cost index and a market index. (4) The minimum monthly quantities under the Unionvale Coal Company agreement are as follows: (1) through July 31, 1999, 30,000 tons; (2) from August 1, 1999 through December 31, 2000, 35,000 tons; (3) from January 1, 2001 through December 31, 2001, 45,000 tons; and (4) from January 1, 2002 through December 31, 2007, 60,000 tons. (5) The maximum monthly quantities under the Unionvale Coal Company agreement are as follows: (1) through July 31, 1999, 45,000 tons; (2) from August 1, 1999 through December 31, 2000, 50,000 tons; (3) from January 1, 2001 through December 31, 2001, 60,000 tons; and (4) from January 1, 2002 through December 31, 2007, 67,500 tons. (6) The price paid for coal under the Unionvale Coal Company agreement is as follows: (1) through December 31, 2000, $21.50/ton; (2) from January 1, 2001 through December 31, 2001, $21.93/ton; (3) from January 1, 2002 through December 31, 2002, $22.37/ton; (4) from January 1, 2003 through December 31, 2005, as determined in good faith between the parties to the agreement, not to exceed the price specified in clause (3) plus 5%; (5) from January 1, 2006 through December 31, 2006, the price specified in clause (4) plus 2% thereof; and (6) from January 1, 2007 through December 31, 2007, the price specified in clause (5) plus 2% thereof. (7) Under the Tanoma agreement terminating on December 31, 2004, EME Homer City can receive up to 35,000 tons of coal per month on and after July 1, 1999 if it notifies Tanoma by February 1, 1999, and can receive up to 45,000 tons of coal per month on and after October 1, 2000 if it notifies Tanoma by May 1, 2000. (8) The price paid for coal under the Tanoma agreement terminating on December 31, 2004 is as follows: (1) through December 31, 2000, $21.30/ton; and (2) from January 1, 2001 through December 31, 2004, as determined in accordance with a combination of (a) good faith negotiations between the parties, (b) changes in the prices under other coal supply agreements for the Homer City Units and (c) changes in the economic dispatch rates for Units 1 and 2. (9) The price paid for coal under the Tanoma agreement terminating on December 31, 1999 is as follows: (1) for the first 10,000 tons, $22.05/ton; (2) for the next 10,000 tons, $22.89/ton; and (3) for the final 5,000 tons, $22.47/ton. (10) The price paid for coal under the Tanoma agreement terminating on December 31, 2002 is subject to adjustment for certain factors, including the economic dispatch rate for Unit 3 and the market price of similar low sulfur coal. (11) The price paid for coal under the Britt Resources, Inc. agreement is as follows: (1) up to 25,000 tons, $21.00/ton; (2) from 25,001 to 40,000 tons, $22.00/ton; and (3) from 40,001 to 65,000 tons, $23.00/ton. PRICE ADJUSTMENTS. The base price paid for coal under EME Homer City's coal supply agreements will be increased if the heat content of the coal delivered thereunder is greater than the applicable guaranteed heat content and will be decreased if the heat content of the coal delivered is less than the applicable guaranteed heat rate. The base price under the Tanoma, Britt Resources, Inc., Unionvale Coal Company, Mears Enterprises, Inc. and Rosebud Mining Company agreements will also be decreased if the sulfur content of the coal delivered is in excess of the levels specified in such agreements. 55 DELIVERY. All coal procured under the coal supply agreements for the Homer City Units is obtained from mines designated by EME Homer City and is delivered to the Units on the suppliers' trucks. All coal deliveries are FOB the Homer City Units, freight prepaid and allowed. INDEMNIFICATION. The indemnification obligations under the coal supply agreements run only from the suppliers to EME Homer City. COAL CLEANING AGREEMENT NGE and GPU Genco entered into the Coal Cleaning Agreement with Homer City Coal on August 8, 1990. NGE and GPU Genco assigned their rights and obligations under the Coal Cleaning Agreement to EME Homer City in connection with the Acquisition. The Coal Cleaning Agreement provides for the operation and maintenance of the Coal Cleaning Plant by Homer City Coal. TERM. The Coal Cleaning Agreement will expire on August 31, 2002 unless terminated earlier in accordance with the terms thereof. Either EME Homer City or Homer City Coal may terminate the Coal Cleaning Agreement prior to the contract's stated expiration date upon prior notice to the other party. OPERATION AND MAINTENANCE SERVICES. Homer City Coal is obligated to operate and maintain the Coal Cleaning Plant in accordance with the Operating Specification dated January 4, 1990 and reissued as Revision 2 on January 28, 1998. The operation and maintenance services provided by Homer City Coal include the completion of periodic performance tests, the provision of administrative support staff, the monitoring of inventory, the preparation of an annual budget for proposed capital expenditures and operating expenses for the Coal Cleaning Plant and the procurement of materials required for operation and maintenance of the Coal Cleaning Plant up to $25,000. PAYMENTS. EME Homer City is required to reimburse Homer City Coal for the actual costs incurred in the operation and maintenance of the Coal Cleaning Plant. EME Homer City is also required to pay to Homer City Coal (1) an annual fixed general and administrative services fee of $260,200 ($173,467 in 2002), payable monthly, and (2) an operating fee ranging from $0.20 to $0.35 per ton of coal cleaned depending on the level of tonnage. OPERATING AGREEMENT NYSEG and Penelec entered into the Operating Agreement with Tanoma on March 1, 1997 and assigned the contract to EME Homer City in connection with the Acquisition. The Operating Agreement provides for the blending of coal for Unit 3 at the coal blending facility. TERM. Unless terminated earlier in accordance with its terms, the Operating Agreement will terminate upon termination of the coal supply agreement under which Tanoma supplies coal for Unit 3 (the "Unit 3 Coal Supply Agreement"). Such coal supply agreement is currently scheduled to expire on December 31, 2002. See "--Coal Supply Agreements" above. COAL BLENDING SERVICES. Tanoma is required to store, blend, crush and process raw coal at the coal blending facility in an amount sufficient to satisfy its delivery obligations under the Unit 3 Coal Supply Agreement and any other agreement between Tanoma and EME Homer City for the supply of coal for Unit 3. The Operating Agreement requires EME Homer City to provide power, filtered water, storm water treatment and fugitive dust control services for the coal blending facility. PAYMENTS. EME Homer City is obligated to reimburse Tanoma for the actual cost of transporting coal to the Facilities' coal storage area. EME Homer City also pays a fee of $1.00 per ton of coal in excess of 30,000 tons per month. The first 30,000 tons per month of coal is deemed consideration for the lease of the coal blending facility site to Tanoma. See "Business--Properties." 56 INTERCONNECTION AGREEMENT ME Westside entered into the Interconnection Agreement with NYSEG and Penelec on August 1, 1998, and subsequently assigned the Interconnection Agreement to EME Homer City on November 6, 1998. Pursuant to the Interconnection Agreement, NYSEG and Penelec have agreed to provide the services necessary to interconnect the Homer City Units with NYSEG's and Penelec's transmission systems. TERM. Unless terminated earlier in accordance with the terms thereof, the Interconnection Agreement will terminate on a date mutually agreed to by EME Homer City, NYSEG and Penelec not to exceed the retirement date for the Homer City Units. REGULATORY AMENDMENTS. Upon changes in the regulatory environment affecting Penelec's or NYSEG's ability to perform under the Interconnection Agreement, NYSEG, Penelec and EME Homer City are required to negotiate in good faith any amendments to the Interconnection Agreement required to adapt the terms thereof to such changes. If the parties to the Interconnection Agreement are unable to reach agreement on such amendments, NYSEG and Penelec have the right to make a unilateral filing with the FERC to modify the Interconnection Agreement as appropriate. EME Homer City has the right to oppose any such filing and to participate fully in any related FERC proceeding. INTERCONNECTION SERVICES. NYSEG and Penelec have agreed to provide EME Homer City with interconnection services at the Homer City Units' interconnection points in order to interconnect the Units, and any addition to or upgrade or repowering of the Units, with NYSEG's and Penelec's transmission systems. EME Homer City is required to compensate NYSEG and Penelec for all reasonable costs associated with any modifications, additions or replacements made to NYSEG's and Penelec's interconnection facilities or transmission systems in connection with any addition to or upgrade or repowering of the Homer City Units. The interconnection services provided by NYSEG and Penelec may be interrupted or discontinued if, in the reasonable judgment of NYSEG and Penelec (or the transmission operator designated by NYSEG or Penelec), the operation of the Homer City Units would have an adverse impact on the quality of service rendered by NYSEG and Penelec (including transmission or distribution services and services provided to end users) or interfere with the safe and reliable operation of NYSEG's and Penelec's transmission systems, until the condition has been corrected. PAYMENTS. EME Homer City is required to compensate NYSEG and Penelec for all reasonable costs and fees incurred by the Sellers in the provision of interconnection services to EME Homer City, including, without limitation, any tax liabilities, any costs of acquiring land necessary for NYSEG's and Penelec's interconnection facilities and the costs and fees of all permits, licenses, franchises and regulatory or other approvals necessary for the construction, maintenance and operation of NYSEG's and Penelec's interconnection facilities. Reimbursement payments are made on a monthly basis. STEP-IN RIGHTS. NYSEG and Penelec have a right to assume operational control of certain of EME Homer City's communication facilities, metering facilities, transformers, building facilities and other facilities necessary for NYSEG's and Penelec's maintenance of their transmission systems in the event of (1) a voluntary or involuntary bankruptcy or insolvency of EME Homer City, (2) a cessation of operations by EME Homer City for more than 30 days or (3) a failure of EME Homer City to perform its material obligations under the Interconnection Agreement for more than two days if such failure adversely affects NYSEG's and Penelec's transmission systems. NYSEG and Penelec are required to return control of such facilities to EME Homer City after the event permitting the exercise of step-in rights has ceased or has been cured. LOCAL SERVICES. NYSEG and Penelec have also agreed to provide EME Homer City with the following local services: (1) at no charge, secondary system (below 600 volts) substation service power 57 to the extent provided immediately prior to the Acquisition Effective Date; (2) at no charge, heating, ventilation, air conditioning, lighting and other building services to the extent provided immediately prior to the Acquisition Effective Date; (3) at no charge, a security system for the substation control building, as in existence immediately prior to the Acquisition Effective Date; and (4) for the reimbursement of reasonable costs, metering services. EME Homer City has agreed to provide NYSEG and Penelec with the following local services: (1) at no charge, secondary system (below 600 volts) substation service power to the extent provided from the Homer City Units immediately prior to the Acquisition Effective Date; (2) at no charge, building services, potable water for NYSEG's and Penelec's substation control building, treatment for the sewage released from NYSEG's and Penelec's substation and a plant paging system in NYSEG's and Penelec's substation, in each case to the extent provided immediately prior to the Acquisition Effective Date; (3) at mutually agreed upon costs, substation operating and maintenance services; and (4) at no charge, office and storage space at the locations in place immediately prior to the Acquisition Effective Date. ASSIGNMENT. EME Homer City may assign its rights and obligations under the Interconnection Agreement to any of its majority-owned subsidiaries and may assign its rights and interests under the Interconnection Agreement to any party (or trustee therefor) providing financing for the Facilities. LIMITATION ON LIABILITY. NYSEG and Penelec will not be liable to EME Homer City under the Interconnection Agreement for damages exceeding $5 million in any 12-month period, whether such liability arises out of negligence, gross negligence, willful misconduct, breach of warranty, strict liability or breach of contract. EASEMENT AGREEMENT EME Homer City entered into the Easement, License and Attachment Agreement (the "Easement Agreement") with NYSEG and Penelec on March 18, 1999. The Easement Agreement is intended to provide the use and access rights to EME Homer City, NYSEG and Penelec necessary for the performance of their respective obligations under the Interconnection Agreement. EASEMENTS. EME Homer City has granted to NYSEG and Penelec the following easements, among others, on its property: (1) an easement permitting all electrical substations, communications equipment, drainage pipes and systems, transmission facilities, revenue meters, remote terminal units and distribution facilities owned by NYSEG and Penelec (either jointly or individually) to remain in place and permitting NYSEG and Penelec to operate, upgrade, replace or otherwise use such structures; (2) an easement for all purposes necessary for NYSEG and Penelec to exercise their rights and perform their obligations under the Interconnection Agreement; (3) an easement to use the existing railroad siding located on EME Homer City's property; (4) an easement to install supporting structures, cables, wires and other equipment within the main substation area at the Site; and (5) an easement of access to EME Homer City's property for the purposes of exercising any of NYSEG's and Penelec's rights under the Easement Agreement. EME Homer City has retained the right to keep the portion of its property located in the main substation area at the Site in its present location and to use such property in the manner described in the Interconnection Agreement. ASSIGNMENT. The parties to the Easement Agreement may assign all or any part of their rights thereunder, provided that for so long as the Interconnection Agreement is in effect, such assignment (other than with respect to rights relating to distribution facilities and communication equipment) may be made only in connection with an assignment of rights and obligations under the Interconnection Agreement in accordance with the terms thereof. 58 DESCRIPTION OF THE BONDS THE FORM AND TERMS OF THE EXCHANGE BONDS AND THE ORIGINAL BONDS ARE IDENTICAL IN ALL MATERIAL RESPECTS, EXCEPT THAT TRANSFER RESTRICTIONS AND REGISTRATION RIGHTS APPLICABLE TO THE ORIGINAL BONDS DO NOT APPLY TO THE EXCHANGE BONDS. THE FOLLOWING IS A DESCRIPTION OF CERTAIN PROVISIONS OF THE BONDS OFFERED HEREBY. THE FOLLOWING INFORMATION DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF THE BONDS AND IS SUBJECT TO, AND QUALIFIED IN ITS ENTIRETY BY, REFERENCE TO THE BONDS AND THE INDENTURE. UNLESS OTHERWISE SPECIFIED, THE FOLLOWING DESCRIPTION APPLIES TO ALL OF THE BONDS. GENERAL The original bonds were issued, and the exchange notes will be issued, pursuant to an indenture by and between the Company and the trustee, dated as of May 27, 1999. References to the bonds include the exchange bonds unless the context otherwise requires. The terms of the bonds include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The bonds, together with all other secured Senior Debt, are senior secured obligations of the Company and will rank PARI PASSU in right of payment with all other existing and future Senior Debt of the Company, and senior in right of payment to all existing and future Indebtedness of the Company that is designated as subordinate or junior in right of payment to the bonds. See "Description of Principal Financing Documents--Indenture." For purposes of this summary, references to the "Company" do not include the Guarantors. PRINCIPAL, MATURITY AND INTEREST The Series A bonds were issued in aggregate principal amount of $300 million and will mature on October 1, 2019. The Series B bonds were issued in aggregate principal amount of $530 million and will mature on October 1, 2026. Interest on the bonds will be payable semiannually in arrears on each April 1 and October 1, commencing on October 1, 1999. Interest will accrue on the basis of a 360-day year consisting of 12 months of 30 days each at a rate of 8.137% in the case of the Series A bonds and 8.734% in the case of the Series B bonds. Principal, premium, if any, and interest on the bonds will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest may be made by check mailed to the bondholders at their respective addresses set forth in the register of bondholders; PROVIDED that all payments of principal, premium, if any, and interest with respect to bonds for which bondholders have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the relevant bondholders. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the trustee maintained for such purpose. The original bonds are, and the exchange bonds will be, issued in denominations of $100,000 or any multiple of $1,000 in excess thereof. AMORTIZATION OF THE BONDS Principal of the bonds is payable in semiannual installments on each April 1 and October 1 occurring on or after April 1, 2004 to the registered holder thereof on the immediately preceding Regular Record Date, such that the weighted average life of the Series A bonds is 13.9 years and the weighted average life of the Series B bonds is 20.7 years. The following table shows the percentage of principal of the bonds which is payable on each semiannual Principal Payment Date. 59
PERCENTAGE OF PERCENTAGE OF PRINCIPAL PRINCIPAL PRINCIPAL PAYMENT AMOUNT PAYABLE AMOUNT PAYABLE DATES ON SERIES A BONDS ON SERIES B BONDS - --------- ----------------- ----------------- April 1 and October 1, 2004................................. 1.000% 0.055% April 1 and October 1, 2005................................. 2.000% 0.480% April 1 and October 1, 2006................................. 2.000% 0.590% April 1 and October 1, 2007................................. 2.500% 0.375% April 1 and October 1, 2008................................. 3.000% 0.375% April 1 and October 1, 2009................................. 3.000% 0.415% April 1 and October 1, 2010................................. 3.000% 1.000% April 1 and October 1, 2011................................. 3.000% 1.750% April 1 and October 1, 2012................................. 3.000% 2.000% April 1 and October 1, 2013................................. 3.000% 1.250% April 1 and October 1, 2014................................. 3.000% 1.500% April 1 and October 1, 2015................................. 4.000% 2.000% April 1 and October 1, 2016................................. 4.000% 2.000% April 1 and October 1, 2017................................. 5.000% 2.000% April 1 and October 1, 2018................................. 5.000% 2.000% April 1 and October 1, 2019................................. 3.500% 2.500% April 1 and October 1, 2020................................. -- 3.500% April 1 and October 1, 2021................................. -- 3.500% April 1 and October 1, 2022................................. -- 3.500% April 1 and October 1, 2023................................. -- 4.000% April 1 and October 1, 2024................................. -- 4.000% April 1 and October 1, 2025................................. -- 5.000% April 1 and October 1, 2026................................. -- 6.210%
NATURE OF RECOURSE Recourse for payment or performance of any obligations of the Company in respect of the bonds will be limited solely to the Company and the Guarantors. Neither any Affiliate of the Company (other than the Guarantors) nor any officer, director or stockholder of the Company or any Affiliate of the Company, will be liable for the payment of the principal of, premium, if any, or interest on the bonds, and bondholders will have no claim against or recourse to (whether by operation of law or otherwise) such entities or persons or their Affiliates, other than with respect to the Credit Support Guarantee and any guarantee by EME issued to satisfy the Bond Debt Service Reserve Requirement. See "Description of Principal Financing Documents--Other Security Documents." RATINGS Moody's has assigned the bonds a long-term senior secured debt rating of "Baa3," S&P has assigned the bonds a long-term senior secured debt rating of "BBB-" and Duff & Phelps has assigned the bonds a long-term senior secured debt rating of "BBB". Such expectations reflect only the views of Moody's, S&P and Duff & Phelps, respectively, at the time the rating is issued, and any explanation of the significance of such ratings may be obtained only from the rating agency. There is no assurance that such ratings will remain in effect for any given period of time or that such ratings will not be lowered, suspended or withdrawn entirely by Moody's, S&P or Duff & Phelps, if, in such rating agency's judgment, circumstances so warrant. Any such lowering, suspension or withdrawal of such ratings may have an adverse effect on the market price or marketability of the bonds. 60 REDEMPTION AND REPURCHASE MANDATORY REDEMPTION The bonds will be subject to mandatory redemption, ratably with all other Senior Debt in existence at such time, upon the occurrence of a Recovery Event with respect to the Facilities, other than with respect to amounts received by the Company and the Guarantors in connection with a Recovery Event for which the Company elects to restore or replace the asset or assets in respect of which such Recovery Event occurred and a Reinvestment Notice is provided within 45 days of such Recovery Event (provided that, with respect to any Recovery Event of $50 million or more, the Independent Engineer shall have certified as to the reasonableness of the Company's repair and replacement plans as set forth in the Company's Reinvestment Notice relating to such Recovery Event). Any mandatory redemption of the bonds will be without premium or penalty at a Redemption Price equal to the unpaid principal amount thereof plus accrued and unpaid interest thereon to the Redemption Date. OPTIONAL REDEMPTION The bonds shall be subject to optional redemption at any time at a Redemption Price equal to the outstanding principal amount of the bonds to be redeemed plus all accrued and unpaid interest thereon to the Redemption Date, plus the Yield Maintenance Premium, if any. "Yield Maintenance Premium" means, with respect to any bond to be redeemed on any Redemption Date, an amount calculated by the Company as of such date equal to the excess, if any, of (1) the net present value of the then remaining scheduled installments of principal and payments of interest (but excluding that portion of any scheduled installment of principal or payment of interest that is actually due and paid on the Redemption Date) in respect of such bond calculated using a discount factor equal to the sum of the Treasury Yield plus 50 basis points over (2) the unpaid principal amount of such bond. Such Yield Maintenance Premium shall be determined in accordance with the following provisions: (a) the average life of the remaining scheduled installments of principal in respect of such bond (the "Remaining Average Life") shall be calculated as of such Redemption Date; and (b) the "Treasury Yield" shall be calculated for the United States Treasury security having an average life equal to the Remaining Average Life and trading in the secondary market at the price closest to par (the "Primary Issue"); PROVIDED, HOWEVER, that, if no United States Treasury security has an average life equal to the Remaining Average Life, the yields (the "Other Yields") for maturities of the two United States Treasury securities having average lives most closely corresponding to such Remaining Average Life and trading in the secondary market at the price closest to par shall be calculated, and the yield to maturity for the Primary Issue shall be the yield interpolated or extrapolated from such Other Yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. SELECTION AND NOTICE If less than all of the bonds are to be redeemed at any time, selection of bonds for redemption will be made by the trustee on a PRO RATA basis, by lot or by such method as the trustee shall deem fair and appropriate; PROVIDED THAT no less than $1,000 of any bonds shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the Redemption Date to each bondholder at its registered address. Notices of redemption may not be conditional. If any bond is to be redeemed in part only, the notice of redemption that relates to such bond shall state the portion of the principal amount thereof to be redeemed. A new bond in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original bond. Bonds called for redemption become due on the date fixed for 61 redemption. On and after the Redemption Date, interest ceases to accrue on bonds or portions of them called for redemption. BOOK-ENTRY, DELIVERY AND FORM The certificates representing the exchange bonds will be issued in fully registered form. Except as described below, the exchange bonds initially will be represented by one or more global bonds, in definitive, fully registered form without interest coupons. The global bonds will be deposited with the trustee as custodian for DTC and registered in the name of Cede & Co. or another nominee as DTC may designate. DTC has advised us as follows: - DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provision of Section 17A of the Exchange Act. - DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and other organizations. Indirect access to the DTC system is available to others, including banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. - Upon the issuance of the global bonds, DTC or its custodian will credit, on its internal system, the respective principal amounts of the exchange bonds represented by the global bonds to the accounts of persons who have accounts with DTC. Ownership of beneficial interests in the global bonds will be limited to persons who have accounts with DTC or persons who hold interests through the persons who have accounts with DTC. Persons who have accounts with DTC are referred to as "participants." Ownership of beneficial interests in the global bonds will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee, with respect to interests of participants, and the records of participants, with respect to interests of persons other than participants. So long as DTC or its nominee is the registered owner or holder of the global bonds, DTC or the nominee, as the case may be, will be considered the sole record owner or holder of the exchange bonds represented by the global bonds for all purposes under the indenture and the exchange bonds. No beneficial owners of an interest in the global bonds will be able to transfer that interest except according to DTC's applicable procedures, in addition to those provided for under the indenture. Owners of beneficial interests in the global bonds will not: - be entitled to have the exchange bonds represented by the global bonds registered in their names, - receive or be entitled to receive physical delivery of certificated bonds in definitive form, and - be considered to be the owners or holders of any exchange bonds under the global bonds. Accordingly, each person owning a beneficial interest in the global bonds must rely on the procedures of DTC and, if a person is not a participant, on the procedures of the participant through which that person owns its interests, to exercise any right of a holder of exchange bonds under the global bonds. We understand that under existing industry practice, in the event an owner of a beneficial interest in the global bonds desires to take any action that DTC, as the holder of the global bonds, is 62 entitled to take, DTC would authorize the participants to take that action, and that the participants would authorize beneficial owners owning through the participants to take that action or would otherwise act upon the instructions of beneficial owners owning through them. Payments of the principal of, premium, if any, and interest on the exchange bonds represented by the global bonds will be made to DTC or its nominee, as the case may be, as the registered owner of the global bonds. Neither we, the trustee, nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the global bonds or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests. We expect that DTC or its nominee, upon receipt of any payment of principal of, premium, if any, or interest on the global bonds will credit participants' accounts with payments in amounts proportionate to their respective beneficial ownership interests in the principal amount of the global bonds, as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in the global bonds held through these participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for these customers. These payments will be the responsibility of these participants. Transfer between participants in DTC will be effected in the ordinary way in accordance with DTC rules. If a holder requires physical delivery of bonds in certificated form for any reason, including to sell bonds to persons in states which require the delivery of the bonds or to pledge the bonds, a holder must transfer its interest in the global bonds in accordance with the normal procedures of DTC and the procedures set forth in the indenture. Unless and until they are exchanged in whole or in part for certificated exchange bonds in definitive form, the global bonds may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC. Beneficial owners of exchange bonds registered in the name of DTC or its nominee will be entitled to be issued, upon request, exchange bonds in definitive certificated form. DTC has advised us that DTC will take any action permitted to be taken by a holder of bonds, including the presentation of bonds for exchange as described below, only at the direction of one or more participants to whose account the DTC interests in the global bonds are credited. Further, DTC will take any action permitted to be taken by a holder of bonds only in respect of that portion of the aggregate principal amount of bonds as to which the participant or participants has or have given that direction. Although DTC has agreed to these procedures in order to facilitate transfers of interests in the global bonds among participants of DTC, it is under no obligation to perform these procedures, and may discontinue them at any time. Neither we nor the trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Subject to specified conditions, any person having a beneficial interest in the global bonds may, upon request to the trustee, exchange the beneficial interest for exchange bonds in the form of certificated bonds. Upon any issuance of certificated bonds, the trustee is required to register the certificated bonds in the name of, and cause the same to be delivered to, the person or persons, or the nominee of these persons. In addition, if DTC is at any time unwilling or unable to continue as a depositary for the global bonds, and a successor depositary is not appointed by us within 90 days, we will issue certificated bonds in exchange for the global bonds. 63 DESCRIPTION OF PRINCIPAL FINANCING DOCUMENTS THE FOLLOWING SUMMARIES OF CERTAIN PROVISIONS OF THE FINANCING DOCUMENTS DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO, ALL OF THE PROVISIONS THEREOF, INCLUDING DEFINITIONS THEREIN OF CERTAIN TERMS. COPIES OF THE FINANCING DOCUMENTS WILL BE PROVIDED FOR INSPECTION UPON WRITTEN REQUEST OF ANY POTENTIAL INVESTOR TO THE COMPANY, SUBJECT TO APPROPRIATE CONFIDENTIALITY RESTRICTIONS. SEE "AVAILABLE INFORMATION." CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED IN THIS PROSPECTUS HAVE THE MEANINGS ASCRIBED TO SUCH TERMS IN THE FINANCING DOCUMENTS. INDENTURE GENERAL The bonds will be issued under the indenture and, together with all other secured Senior Debt, will be senior secured obligations of the Company and will rank PARI PASSU in right of payment with all other existing and future Senior Debt of the Company, and senior in right of payment to all existing and future Indebtedness of the Company that is designated as subordinate or junior in right of payment to the bonds. The bonds, together with all other secured Senior Debt, will be fully and unconditionally guaranteed by each Guarantor and secured by, INTER ALIA, a mortgage and first priority lien on all of the Company's and the Guarantors' tangible and intangible assets. As a result, the bonds will effectively rank PARI PASSU with all secured Senior Debt of the Company and the Guarantors and senior to all other Indebtedness except Indebtedness permitted to be incurred pursuant to the indenture and secured by Permitted Liens. Any right of the Company to receive assets of any of the Guarantors upon the latter's liquidation or reorganization (and the consequent right of the bondholders and the other Secured Parties to participate in the receipt of those assets) will be effectively senior to the claims of that Guarantor's creditors, except with respect to Permitted Liens. AFFIRMATIVE COVENANTS Following is a description of certain affirmative covenants in favor of the trustee and the bondholders with which the Company will be obligated to comply under the indenture so long as any bonds remain outstanding. INFORMATION REQUIREMENTS The Company shall furnish or cause to be furnished to the trustee, each of the Rating Agencies and, with respect to clauses (1) and (2) below, upon written request (which may be a single continuing request), any bondholder or beneficial owner or prospective bondholder or beneficial owner: (1) as soon as available and in any event within 60 days after the end of the Company's first, second and third fiscal quarters of each fiscal year (commencing with the fiscal quarter ending June 30, 1999), unaudited financial statements of the Company as of the end of such fiscal quarter, together with an Officer's Certificate of the Company stating that such financial statements fairly present the financial condition and results of operations of the Company on the dates and for the periods indicated in accordance with GAAP; (2) as soon as available and in any event within 120 days after the end of each fiscal year of the Company (commencing with the fiscal year ending December 31, 1999), audited financial statements of the Company, together with an Officer's Certificate of the Company stating that no Default or Event of Default has occurred and is continuing, or that if a Default or an Event of Default has occurred and is continuing, a statement as to the nature thereof; (3) within 10 days after an authorized officer of the Company obtains actual knowledge thereof, written notice of the occurrence of any event or condition which constitutes a Default or 64 an Event of Default, specifically stating that such event or condition has occurred and describing it and any action being or proposed to be taken with respect thereto; (4) within 15 days after an authorized officer of the Company has actual knowledge thereof, written notice of any pending or threatened material litigation which has or could reasonably be expected to have a Material Adverse Effect; and (5) at any time when the Company is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, copies of any filing made with the Securities and Exchange Commission thereunder, within five days after such filing is made. At any time when the Company is not subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, upon the request of any bondholder or beneficial owner or prospective bondholder or beneficial owner, the Company shall promptly furnish to such bondholder or beneficial owner or prospective bondholder or beneficial owner the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act in order to permit compliance with Rule 144A in connection with a resale or other permitted transfer of any bond. The Company shall also provide to the trustee and the Rating Agencies annual operational and construction reports, updated Power Market Consultant reports, any Officer's Certificates provided by the Company relating to the incurrence of Indebtedness under clause (6) or (7) under "--Negative Covenants--Limitation on Incurrence of Indebtedness" below (at least 30 days' prior to the incurrence of such Indebtedness) and notice of any transfers of assets permitted by clause (1) under "--Negative Covenants--Limitation on Sale of Assets" below. MAINTENANCE OF EXISTENCE; COMPLIANCE WITH LAWS The Company shall, and shall cause each of the Guarantors to, at all times (1) maintain their respective existence in good standing under the laws of their respective jurisdictions of organization and (2) maintain and renew all of their respective rights, powers, privileges and franchises except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The Company shall, and shall cause each of the Guarantors to, comply with all applicable laws, acts, rules, regulations, permits, orders and requirements of any legislative, executive, administrative or judicial body relating to the Company and the Guarantors, except where (1) the failure to do so could not reasonably be expected to have a Material Adverse Effect or (2) the Company is disputing in good faith any such law, act, rule, regulation, permit, order or requirement and (A) the Company has established or accrued adequate cash reserves in accordance with GAAP or provided other appropriate assurances against any liabilities arising from such dispute and (B) the Company's action to dispute such law, act, rule, regulation, permit, order or requirement could not reasonably be expected to have a Material Adverse Effect. GOVERNMENT APPROVALS The Company shall, and shall cause each of the Guarantors to, obtain and maintain in full force and effect all governmental approvals required under applicable laws to be obtained by or on behalf of the Company and the Guarantors to conduct their respective businesses pursuant to and perform their obligations under the Financing Documents to which each of them is a party, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. MAINTENANCE OF PROPERTY; INSURANCE The Company shall cause EME Homer City to (1) keep and maintain all property useful and necessary in its business in good working order and condition consistent with Prudent Industry Practice and (2) maintain good and valid title to its properties and assets (subject to no Liens other than 65 Permitted Liens), except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. The Company shall cause EME Homer City to maintain with financially sound and reputable insurance companies, insurance for such amounts against such risks, loss, damage and liability as are customarily insured against by other enterprises of like size and type as that of the Facilities, subject to the availability of such coverage on commercially reasonable terms, all on terms and conditions which are in accordance with Prudent Industry Practice. OTHER AFFIRMATIVE COVENANTS The indenture also contains certain other covenants of the Company, including obligations of the Company to, and to cause each of the Guarantors to: (1) make all payments on the bonds; (2) pay all taxes and claims; (3) maintain books and records; (4) maintain a paying agent office with respect to the bonds; and (5) maintain the perfection of the security interests created by the Security Documents. NEGATIVE COVENANTS Following is a description of certain negative covenants in favor of the trustee and the bondholders with which the Company will be obligated to comply under the indenture so long as any bonds remain outstanding. LIMITATION ON INCURRENCE OF INDEBTEDNESS The Company will not, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness other than Permitted Indebtedness. "Permitted Indebtedness" shall mean any of the following items of Indebtedness: (1) Indebtedness incurred in respect of the original bonds and the exchange bonds; (2) Indebtedness outstanding on the Closing Date; (3) Indebtedness incurred under the Credit Agreement; (4) Capital Lease Obligations and purchase money indebtedness entered into in the ordinary course of business in an amount not to exceed $10 million outstanding at any one time; (5) Indebtedness to any wholly-owned Subsidiary of the Company (so long as such Indebtedness is held by such Subsidiary); (6) Indebtedness in respect of Required Capital Improvements, PROVIDED that (a) the Company delivers to the trustee an Officer's Certificate stating that the Indebtedness is being incurred to fund a Required Capital Improvement and (b) after giving effect to the incurrence of such Indebtedness, either (1) the average projected Debt Service Coverage Ratio through the final maturity date of the bonds shall not be less than 1.75 to 1.0 and the minimum projected Debt Service Coverage Ratio for any four quarters through the final maturity date of the bonds, taken as one accounting period, shall not be less than 1.50 to 1.0 or (2) a Ratings Reaffirmation is obtained; 66 (7) Indebtedness so long as, after giving effect to the incurrence of such Indebtedness, the Company delivers to the trustee an Officer's Certificate stating that (a) the average projected Debt Service Coverage Ratio through the final maturity date of the bonds shall not be less than 2.50 to 1.0 and the minimum projected Debt Service Coverage Ratio for any four quarters through the final maturity date of the bonds, taken as one accounting period, shall not be less than 2.00 to 1.0 (PROVIDED that if the proceeds of such Indebtedness are to be applied to construct a new facility, the bonds must be rated Investment Grade after giving effect to the incurrence of such Indebtedness) or (b) the bonds are rated at least Investment Grade by each Rating Agency then rating the bonds; (8) Indebtedness incurred for working capital purposes only and not in excess of $50 million at any one time outstanding (with such amount to be escalated annually in accordance with increases in the Consumer Price Index), PROVIDED that the outstanding principal amount of such Indebtedness on each anniversary of the Closing Date shall be $0; (9) Indebtedness represented by Interest Rate Hedging Obligations, so long as such Interest Rate Hedging Obligations relate to Indebtedness otherwise permitted to be incurred by the Company; (10) Reimbursement obligations or other Indebtedness relating to reimbursement under any letter of credit issued to satisfy any Debt Service Reserve Requirement; (11) Subordinated Indebtedness to Affiliates of the Company, PROVIDED that the incurrence of such Indebtedness satisfies the covenant described below under "--Limitation on Restricted Payments"; (12) Indebtedness in the form of guarantees entered into by the Company in the ordinary course of business in connection with fuel procurement or sales, purchases or exchanges by Affiliates of the Company related to physical or financial capacity, energy and emissions credits related to the Facilities, so long as such activities are not for speculative purposes; (13) Indebtedness in respect of letters of credit, surety bonds or performance bonds issued in the ordinary course of the Company's business; (14) Indebtedness incurred in exchange for, or the net proceeds of which are used to refund, refinance or replace, indebtedness of the Company incurred under clause (3) above, PROVIDED that (a) the principal amount (net of expenses) of such new Indebtedness shall not exceed the principal amount of the old Indebtedness and (b) either (1) the average life of such new Indebtedness shall not be shorter than the remaining average life of the Securities or (2) such new Indebtedness shall be rated at least Investment Grade by each Rating Agency then rating such Indebtedness; and (15) other senior Indebtedness not to exceed $20 million at any one time outstanding. For purposes of incurring Indebtedness under clauses (6), (7) and (14) above, the Power Market Consultant will provide updated electricity price projections to allow the Company to provide the requisite certification. For purposes of determining compliance with this covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (15) above as of the date of incurrence thereof, the Company shall, in its sole discretion, be entitled to classify or reclassify such item of Indebtedness in any manner that complies with this covenant. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. 67 LIMITATION ON INCURRENCE OF GUARANTOR INDEBTEDNESS The Company will not permit any Guarantor to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any Indebtedness other than (1) Subordinated Indebtedness or (2) Indebtedness in respect of letters of credit, surety bonds or performance bonds issued, or purchase money or trade indebtedness incurred, in the ordinary course of business and in an aggregate amount not to exceed $15 million at any one time outstanding. LIMITATION ON RESTRICTED PAYMENTS The Company will not, and will not permit any of the Guarantors to, directly or indirectly: (1) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of the Guarantors' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any Guarantor) or to the direct or indirect holders of the Company's or any of the Guarantors' Equity Interests in their capacity as such, other than (A) dividends or distributions payable in Equity Interests of the Company, (B) dividends or distributions payable to the Company or another Subsidiary of the Company or (C) dividends payable to EME with respect to the equity distribution described above under "Use of Proceeds"; (2) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company or any Guarantor) any Equity Interests of the Company or any direct or indirect parent of the Company or other Affiliate of the Company; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness, except a payment of interest or principal at Stated Maturity, or a payment of interest made through the issuance of additional Indebtedness of the same kind as the Indebtedness on which such interest shall have accrued; or (4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence of such Restricted Payment; and (b) the amount on deposit in each Accrued Interest Account and in each Principal Account shall be equal to or greater than the amount then required to be on deposit in such Accrued Interest Account or Principal Account, as the case may be, in accordance with priority THIRD or FOURTH, as the case may be, under "--Security Deposit Agreement--Priority of Payments"; (c) the Debt Service Reserve Accounts are each fully funded; (d) the Debt Service Coverage Ratio for the preceding four quarters, taken as one accounting period, is equal to or greater than 1.50 to 1.0 in the case of any such period ending on or prior to December 31, 2001 or 1.70 to 1.0 in the case of any such period ending thereafter, as set forth in an Officer's Certificate; and (e) the projected Debt Service Coverage Ratio for each four-quarter period, taken as one accounting period, during the next eight quarters is equal to or greater than 1.50 to 1.0 in the case 68 of any such period ending on or prior to December 31, 2001 or 1.70 to 1.0 in the case of any such period ending thereafter, as set forth in an Officer's Certificate. At intervals not to exceed every three years, the Power Market Consultant will provide updated electricity price projections to allow the Company certification for purposes of making Restricted Payments. LIMITATION ON LIENS The Company will not, and will not permit any of the Guarantors to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind upon any of their property or assets, now owned or hereafter acquired, other than Permitted Liens. The provisions of the first paragraph of this covenant shall not apply to the incurrence of any of the following types of Liens (collectively, "Permitted Liens"): (1) Liens existing on the Closing Date; (2) Liens created under the Security Documents; (3) carriers', warehousemen's, mechanics', landlords' materialmen's, repairmen's or other like Liens arising in the ordinary course of business in respect of obligations not yet due and payable or which are being contested in good faith by appropriate proceedings promptly instituted and diligently prosecuted; PROVIDED that any reserve or other appropriate provision as shall be required to conform with GAAP shall have been made therefor; (4) Liens for taxes, assessments or governmental charges or levies that are not yet delinquent and remain payable without penalty or that are being contested in good faith by appropriate proceedings promptly instituted and diligently prosecuted; PROVIDED that any reserve or other appropriate provision as shall be required to conform with GAAP shall have been made therefor; (5) Liens that are incidental to the business of the Company and the Guarantors, are not for borrowing money and are not material, taken as a whole, to the business of the Company and the Guarantors; and (6) Liens to secure Indebtedness permitted under clauses (3), (4), (6), (7), (8), (9), (10), (14) and (15) of the covenant described above under "--Limitation on Incurrence of Indebtedness." LIMITATION ON SUBSIDIARIES AND INVESTMENTS The Company shall not create or acquire any Subsidiary unless (1) such Subsidiary shall become an additional Guarantor under the Security Documents, and (2) at the time of the creation or acquisition of such Subsidiary, such Subsidiary shall have no Indebtedness outstanding other than Indebtedness permitted under the Financing Documents. The Company will retain 100% direct or indirect beneficial ownership in its Subsidiaries for so long as the bonds remain outstanding. The Company will not, nor will it permit any of the Guarantors to, make any investment other than Permitted Investments. LIMITATION ON MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY ALL ASSETS The Company will not, directly or indirectly, consolidate or merge with or into any other person (whether or not the Company is the surviving corporation), or sell, assign, convey, lease, transfer or otherwise dispose of, all or substantially all of its properties or assets in one or a series of transactions, to any Person or Persons, except that the Company may consolidate with or merge into any other 69 Person so long as (1) the Company is the surviving corporation and (2) both immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. Notwithstanding the foregoing, the Company may merge or consolidate with or transfer substantially all of its assets to an Affiliate that has no significant assets or liabilities and was formed solely for the purpose of changing the jurisdiction of organization of the Company or the form of organization of the Company; PROVIDED that the amount of Indebtedness of the Company and the Guarantors is not increased thereby; and PROVIDED, FURTHER that the successor assumes all obligations of the Company under the indenture and the registration rights agreement. Upon any such consolidation or merger, or any such sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of the Company in accordance with the immediately preceding sentence, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for and may exercise every right and power of the Company under the indenture with the same effect as if such successor Person had been named as the Company therein (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of the indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under the indenture with the same effect as if such successor Person had been named as the Company therein; PROVIDED, HOWEVER, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the bonds except in the case of a sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets of the Company on a combined basis that meets the requirements of this paragraph. The Company will not permit any of the Guarantors to, directly or indirectly, consolidate or merge with or into any other Person (whether or not or such Guarantor is the surviving corporation), or sell, assign, convey, lease, transfer or otherwise dispose of, all or substantially all of its properties or assets in one or a series of transactions, to any Person or Persons, other than a merger with or into the Company or, in the case of any wholly-owned Subsidiary, a merger with or into any other wholly-owned Subsidiary, a merger of any other wholly-owned Subsidiary into such wholly-owned Subsidiary or a transfer or disposition of substantially all of its properties or assets to the Company or any other wholly-owned Subsidiary. LIMITATION ON SALE OF ASSETS Except in connection with a merger, consolidation or sale of substantially all of its properties or assets, which is covered by the covenant described above under "--Limitation on Merger, Consolidation and Sale of Substantially All Assets," the Company will not, and will not permit any of the Guarantors to, sell or otherwise dispose of any assets or enter into Sale-Leaseback Transactions (including by way of the issue or sale by the Company or any of the Guarantors of Equity Interests in such Guarantors) other than (1) transfers of assets among the Company and the Guarantors, so long as a Ratings Reaffirmation is obtained, (2) sales and dispositions in the ordinary course of business not in excess of $10 million in any fiscal year, (3) any sales or dispositions of surplus, obsolete or worn out equipment, and (4) any sales or dispositions required for compliance with applicable law or necessary governmental approvals. 70 LIMITATION ON BUSINESS ACTIVITIES The Company will not, nor will it permit any Guarantor to, engage in any business or conduct any activities other than the ownership and operation of the Facilities, any expansion of facilities or improvements thereto, and matters reasonably incidental thereto. The Company and the Guarantors may enter into fuel procurement or sales, purchases or exchanges related to physical or financial capacity, energy and emissions credits related to the Facilities, so long as such activities are not for speculative purposes. LIMITATION ON TRANSACTIONS WITH AFFILIATES Subject to certain conditions contained in the indenture, the Company will not, and will not permit any of the Guarantors to, enter into any transaction or arrangement, whether or not in the ordinary course of business, with any Affiliate (other than the Company and its Subsidiaries), other than (1) management, operating, marketing, trading or other similar services agreements between and among the Company and its Affiliates in existence on the Closing Date and (2) any transaction which is on terms that are no less favorable to the Company or the relevant Guarantor than those that would have been obtained in a comparable arm's-length transaction by the Company or such Guarantor with an unrelated Person. EVENTS OF DEFAULT The indenture provides that each of the following constitutes an Event of Default: (1) default for 15 days in the payment when due of any principal of, premium, if any, or interest on the bonds; (2) failure by the Company or any of the Guarantors to comply with the provisions described above under the captions "--Negative Covenants--Limitation on Incurrence of Indebtedness," "--Negative Covenants--Limitation on Incurrence of Guarantor Indebtedness," "--Negative Covenants--Limitation on Liens," "--Negative Covenants-- Limitation on Restricted Payments," "--Negative Covenants--Limitation on Asset Sales," "--Negative Covenants--Limitation on Business Activities," "--Negative Covenants--Limitation on Merger, Consolidation and Sale of Substantially All Assets" or "--Affirmative Covenants--Maintenance of Existence," and such failure shall continue uncured for 30 or more days from the date an authorized officer of the Company receives actual notice thereof; (3) failure by the Company or any of the Guarantors to comply with any of its other agreements in the indenture, the bonds or the Security Documents and such failure shall continue uncured for 60 or more days from the date an authorized officer of the Company receives actual notice thereof (or to the extent such Default is curable but cannot be cured within such 60 day period, so long as the Company provides an Officer's Certificate to the trustee stating that it is diligently pursuing a cure, such longer period of time which may be necessary in good faith to cure the same, but in no event to exceed 90 days); (4) the occurrence of a Change of Control; (5) any portion of the security interests granted under the Security Documents ceasing to be a senior security interest in full force and effect, which cessation has a Material Adverse Effect; PROVIDED that the Company shall have 10 days to cure any such cessation; (6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by 71 the Company or any of the Guarantors (or the payment of which is guaranteed by the Company or any of the Guarantors) whether such Indebtedness or guarantee now exists, or is created after the Closing Date, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates without duplication $15 million or more; (7) failure by the Company or any of the Guarantors to pay final, non-appealable judgments aggregating in excess of $15 million (excluding amounts covered by insurance), which judgments are not paid, discharged or stayed for a period of 90 days; and (8) certain events of bankruptcy or insolvency with respect to the Company or any of the Guarantors (including any involuntary proceeding that continues unstayed and undismissed for a period of 60 or more consecutive days). ENFORCEMENT Subject to the Intercreditor Agreement, if any Event of Default occurs and is continuing, the trustee may, and upon written direction of bondholders holding not less than 33 1/3% (in the case of any Event of Default specified in clause (1) under "--Events of Default" above) or 50% (in the case of any other Event of Default) of the aggregate principal amount of the bonds shall, (1) declare, by written notice, the entire outstanding principal amount of the bonds, accrued interest thereon, premium (if any) and other amounts payable with respect thereto to be due and payable immediately; PROVIDED THAT in the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to the Company or any of the Guarantors, all outstanding principal, accrued interest and premium (if any) and other amounts payable with respect to the bonds will become due and payable without further action or notice; and (2) proceed to enforce all remedies available to the trustee under the indenture and the other documents to which the trustee is a party or available under applicable law. Bondholders may not enforce the indenture or the bonds except as provided in the indenture. Subject to certain limitations, bondholders holding a majority in principal amount at maturity of the then outstanding bonds may direct the trustee in its exercise of any trust or power. The trustee may withhold from bondholders notice of any continuing Default or Event of Default (except a Default or an Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. Bondholders holding a majority (or, with respect to the Event of Default specified in item (4) under "--Events of Default" above, 66 2/3%) in aggregate principal amount at maturity of the bonds then outstanding by notice to the trustee may on behalf of all the bondholders waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default specified in item (1) or (8) under "--Events of Default" above. No bondholder shall have any right to institute any proceeding for a remedy under the indenture unless (1) such bondholder has previously given to the trustee written notice of the occurrence of an Event of Default, (2) the bondholders holding a majority in aggregate principal amount of the Outstanding bonds have made written request to the trustee to institute such proceeding, (3) the bondholders have offered to the trustee adequate security and indemnity against costs and liabilities associated with such proceeding, 72 (4) the trustee has failed to institute such proceeding within 60 days after the receipt of such notice and (5) no direction inconsistent with such written request has been given to the trustee during such 60 day period. The right of any bondholder, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and interest on its bonds on or after the due date therein expressed, or to institute suit for the enforcement of such payment on or after such due date, or the obligation of the Company, which is also absolute and unconditional, to pay the principal of, premium, if any, and interest on each of such bonds to such bondholder thereof at the time and place set forth in the bonds, shall not be impaired or affected without the consent of such bondholder. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Legal and covenant defeasance shall be permitted upon terms and conditions customary for transactions of this nature. SATISFACTION AND DISCHARGE The Company may terminate the indenture by delivering all outstanding bonds to the trustee for cancellation and by paying all other sums payable under the indenture. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, subject to the Intercreditor Agreement, the indenture or the bonds may be amended or supplemented with the consent of bondholders holding at least a majority in principal amount at maturity of the bonds then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, bonds), and any existing default or compliance with any provision of the indenture or the bonds may be waived with the consent of bondholders holding at least a majority in principal amount at maturity of the then outstanding bonds (including consents obtained in connection with a tender offer or exchange offer for bonds). Without the consent of each bondholder affected, an amendment or waiver may not (with respect to any bonds held by a non-consenting bondholder): (1) reduce the principal amount of bonds whose holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any bond or alter the provisions with respect to the redemption of the bonds; (3) reduce the rate of or change the time for payment of interest on any bond; (4) waive a default or an Event of Default in the payment of principal of, premium, if any, or interest on the bonds (except a rescission of acceleration of the bonds by bondholders holding at least 66 2/3% in aggregate principal amount at maturity of the bonds and a waiver of the Default that resulted from such acceleration); (5) make any bond payable in money other than that stated in the bonds; (6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of bondholders to receive payments of principal of, premium, if any, or interest on the bonds; (7) waive a redemption payment with respect to any bond; or (8) make any change in the foregoing amendment and waiver provisions. 73 Notwithstanding the foregoing, without the consent of any bondholder, the Company and the trustee may amend or supplement the indenture or the bonds to cure any ambiguity, omission, defect or inconsistency, to provide for uncertificated bonds in addition to or in place of certificated bonds, to provide for the assumption of the Company's obligations to bondholders in the case of a merger, consolidation or asset transfer, to make any change that would provide any additional rights or benefits to the bondholders or that does not adversely affect the legal rights under the indenture of any such bondholder, or to comply with requirements of the Securities and Exchange Commission in order to effect or maintain the qualification of the indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE The indenture contains certain limitations on the rights of the trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; HOWEVER, if it acquires any conflicting interest it must eliminate such conflict within 90 days or resign. Bondholders holding a majority in principal amount of the then outstanding bonds will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default shall occur (which shall not be cured), the trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any bondholder, unless such bondholder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense. TRANSFER AND EXCHANGE A bondholder may transfer or exchange bonds in accordance with the indenture. The Registrar and the trustee may require a bondholder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a bondholder to pay any taxes and fees required by law or permitted by the indenture. The Company is not required to transfer or exchange any bond selected for redemption. Also, the Company is not required to transfer or exchange any bond for a period of 15 days before a selection of bonds to be redeemed. The registered bondholder will be treated as the owner of it for all purposes. SECURITY DEPOSIT AGREEMENT GENERAL The Company, each of the Guarantors and the Collateral Agent entered into a Security Deposit Agreement, dated as of March 18, 1999 (the "Security Deposit Agreement"), pursuant to which (1) certain accounts (the "Accounts") of the Company and the Guarantors were established with the Collateral Agent, (2) instructions for deposits into, and payments from, each of the Accounts were established and (3) the Company and each of the Guarantors pledged and assigned to the Collateral Agent, and created in favor of the Collateral Agent, for the benefit of the Secured Parties, a security interest in each such party's interest in and to Revenues received by such party, the Accounts, all amounts on deposit from time to time in the Accounts and all proceeds of the foregoing. ESTABLISHMENT OF ACCOUNTS The following Accounts have been, or will be, established by the Collateral Agent: - Revenue Account; 74 - Accrued Interest Accounts; - Principal Accounts; - Debt Service Reserve Accounts; - Environmental Capital Expenditure Account; - Recovery Event Proceeds Account; and - Equity Account. The Company and the Guarantors have granted a security interest in the Accounts to the Collateral Agent for the benefit of the Secured Parties. The Accounts will at all times be in the name of the Collateral Agent. The Company and the Guarantors will not have any right to withdraw monies from the Accounts or any other rights with respect to the Accounts other than as set forth in the Security Deposit Agreement. REVENUE ACCOUNT All Revenues received by the Company or the Guarantors shall be deposited into the Revenue Account. Funds on deposit in the Revenue Account shall be transferred on each Monthly Transfer Date as set forth under "--Priority of Payments" below. ACCRUED INTEREST ACCOUNTS; PRINCIPAL ACCOUNTS Accrued Interest Accounts and Principal Accounts will be established for each class of Senior Debt entitled to the benefits of the Security Documents. Such Accounts shall be funded from funds on deposit in the Revenue Account on each Monthly Transfer Date as set forth below under "--Priority of Payments." Amounts on deposit in the Accrued Interest Accounts and Principal Accounts will be utilized by the Secured Parties' Representatives to pay when due amounts owing from time to time under Senior Debt. DEBT SERVICE RESERVE ACCOUNTS Debt Service Reserve Accounts will be established for each class of Senior Debt that, pursuant to the terms of the Financing Document governing such Senior Debt, requires the Company to satisfy a Debt Service Reserve Requirement for such Senior Debt. Any DSR Credit Instrument delivered to the Collateral Agent pursuant to any Debt Service Reserve Requirement will be deposited in the related Debt Service Reserve Account. ENVIRONMENTAL CAPITAL EXPENDITURE ACCOUNT All proceeds of the Construction Term Loans issued under the Credit Agreement will be deposited into the Environmental Capital Expenditure Account. Except during a Default Period, as specified in a letter from the Company to the Collateral Agent requesting a transfer (a "Request Letter"), the Collateral Agent will transfer to the Company or any of the Guarantors, from the funds on deposit in the Environmental Capital Expenditure Account, the amount certified in such Request Letter to be the aggregate amount then due and payable in respect of Environmental Capital Expenditures. RECOVERY EVENT PROCEEDS ACCOUNT All Recovery Event Proceeds will be deposited into the Recovery Event Proceeds Account. Except during a Default Period, funds on deposit in the Recovery Event Proceeds Account shall be utilized as follows, in each case pursuant to the terms of the Financing Documents governing Senior Debt: either (1) the Collateral Agent shall transfer to the Company or any of the Guarantors, from the funds on 75 deposit in the Recovery Event Proceeds Account, the amount certified in the related Request Letter to be the aggregate amount then due and payable in respect of restoration of the asset or assets pursuant to which Recovery Event Proceeds have been received; or (2) the Collateral Agent shall transfer to the Secured Parties' Representative for Senior Debt required to be repaid from such Recovery Event Proceeds the amount certified in the related Request Letter to be the aggregate amount of principal, premium and interest then due and payable in respect of such Senior Debt. EQUITY ACCOUNT The Equity Account will be funded from amounts on deposit in the Revenue Account on each Monthly Transfer Date as set forth below under "--Priority of Payments." Except during a Default Period, on each Restricted Payment Date, the Collateral Agent shall transfer, from the funds on deposit in the Equity Account, the amount certified by the Company in the Request Letter delivered in connection with such Restricted Payment Date to be then available for use in making Restricted Payments in accordance with the terms of the Financing Documents. PRIORITY OF PAYMENTS Except during a Default Period, on each Monthly Transfer Date the Collateral Agent shall transfer, from the funds on deposit in the Revenue Account, the following amounts in the following order of priority: (1) FIRST, to the operating account established by the Company for such purpose, the amount certified in the related Request Letter to be the excess, if any, of the aggregate amount of operating expenses then due and payable or projected to become due and payable in the next succeeding month over the balance then on deposit in such account; (2) SECOND, to the Collateral Agent and each Secured Parties' Representative, the amount certified in the related Request Letter to be the sum of the unpaid fees, indemnities, costs and expenses then due and payable to the Collateral Agent and such Secured Parties' Representatives in respect of their respective services in such capacities; (3) THIRD, (1) into each Accrued Interest Account, the Accrued Interest Amount calculated for such Accrued Interest Account, together with the amount of all deficiencies, if any, with respect to deposits of Accrued Interest Amounts required in all prior months, as certified in the related Request Letter, (2) into each Principal Account (other than (A) the Principal Account relating to the Loans and any other Principal Account established in respect of non-amortizing Senior Debt, (B) any Principal Account established for non-amortizing DSR Letter of Credit Indebtedness or Ordinary Course Letter of Credit Indebtedness (or, so long as any Loans or related commitments remain outstanding, any DSR Letter of Credit Indebtedness) and (C) any Principal Account relating to Swap Indebtedness), an amount equal to 1/6th of the principal amount, if any, which is payable on or within six months following such Monthly Transfer Date on account of the Senior Debt with respect to which such Principal Account was established, together with the amount of all deficiencies, if any, with respect to deposits of principal required in all prior months, as certified in the related Request Letter, (3) into each Principal Account relating to non-amortizing Ordinary Course Letter of Credit Indebtedness, the amount certified in such Request Letter to be sufficient to repay in full the related Ordinary Course Letter of Credit Indebtedness then outstanding, (4) into each Swap Indebtedness Termination Payment Account, the amount certified in the related Request Letter to be sufficient to repay in full the related termination payment then due and payable and (5) to the Administrative Agent, the amount specified in the related Request Letter to be applied to the repayment of Revolving Loans; 76 (4) FOURTH, into each Principal Account relating to non-amortizing DSR Letter of Credit Indebtedness (or, so long as any Loans or related commitments remain outstanding, any DSR Letter of Credit Indebtedness), the amount certified in the related Request Letter to be sufficient to repay in full the related DSR Letter of Credit Indebtedness then outstanding; (5) FIFTH, into each Debt Service Reserve Account, the amounts certified in the related Request Letter to be necessary to cause the amount on deposit (in the form of one or more DSR Credit Instruments, cash, Permitted Investments or a combination thereof) in such Debt Service Reserve Account to be equal to the related Debt Service Reserve Requirement; and (6) SIXTH, into the Equity Account, the balance remaining in the Revenue Account. If, on any Monthly Transfer Date, the funds on deposit in the Revenue Account are insufficient to make in full any transfer required pursuant to clause FIRST, SECOND, THIRD or FOURTH above, the Collateral Agent shall make such transfer with funds then on deposit in the Equity Account. If, on any Senior Debt Payment Date, after giving effect to any transfer to be made on such date from funds on deposit in the Revenue Account or Equity Account as specified above, the funds on deposit in the Accrued Interest Account for any Senior Debt for which Debt Service is payable on such date are less than such Debt Service, the Collateral Agent shall demand payment under the Credit Support Guarantee. The Collateral Agent shall allocate the proceeds of such payment received under the Credit Support Guarantee among all Accrued Interest Accounts (without regard to whether there is any shortfall therein) PRO RATA based on the principal amount of all Senior Debt outstanding or committed on such date. If on any Senior Debt Payment Date, after giving effect to any transfer to be made on such date from funds on deposit in the Revenue Account or Equity Account, or from payments under the Credit Support Guarantee, in each case as specified above, the funds on deposit in the Accrued Interest Account or Principal Account for any Senior Debt for which Debt Service is payable on such date are less than such Debt Service, the Collateral Agent shall obtain the funds necessary to pay such Debt Service: FIRST, from funds in the Debt Service Reserve Account with respect to such Senior Debt, if any, including funds obtained from drawings under any DSR Credit Instrument (other than any Debt Service Reserve Guarantee) held by the Collateral Agent in respect of such Senior Debt; and, SECOND, from the proceeds of any Debt Service Reserve Guarantee held by the Collateral Agent in respect of such Senior Debt. PRIORITY OF PAYMENTS DURING AN EVENT OF DEFAULT During a Default Period, the Company will be entitled to issue Request Letters and otherwise direct the transfer of funds from the Accounts until the Collateral Agent receives a Notice of Action directing that action be taken. See "Intercreditor Agreement--Default; Acceleration; Exercise of Remedies." At any time after the Collateral Agent receives a Notice of Action specifying that action be taken pursuant to the Security Deposit Agreement, the Collateral Agent shall: (1) transfer all amounts in the Environmental Capital Expenditure Account to the Administrative Agent (and such transfer shall be deemed to be a payment made on account of the Debt Service then due and payable in respect of the Construction Term Loans); (2) with respect to any Senior Debt, transfer all amounts in the Debt Service Reserve Account with respect to such Senior Debt, including amounts obtained from drawings under any DSR Credit Instrument held by the Collateral Agent in respect of such Senior Debt, to the Secured Parties' Representative for such Senior Debt (and such transfer shall 77 be deemed to be a payment made on account of the Debt Service then due and payable in respect of such Senior Debt); and (3) with respect to any Senior Debt, transfer all amounts in the Accrued Interest Account and the Principal Account with respect to such Senior Debt to the Secured Parties' Representative for such Senior Debt (and such transfer shall be deemed to be a payment made on account of the Debt Service then due and payable in respect of such Senior Debt). After making the transfers specified by the immediately preceding clauses (1), (2) and (3), the Collateral Agent shall take or discontinue to take all actions specified in such Notice of Action and/or shall transfer all amounts remaining in the Accounts in the following order of priority: (1) FIRST, to the Collateral Agent and each Secured Parties' Representative, the amount certified by such Person to be the sum of the unpaid fees, indemnities, costs and expenses then due and payable to such Person for its services in such capacity; (2) SECOND, to each Secured Parties' Representative for Senior Debt, the amount certified by such Secured Parties' Representative to be the aggregate amount of principal, premium and interest then due and payable in respect of such Senior Debt under the related Financing Documents; (3) THIRD, to each Secured Parties' Representative for Senior Debt, the amount certified by such Secured Parties' Representative to be the aggregate amount of all Debt Service (other than principal, premium and interest) then due and payable in respect of such Senior Debt under the related Financing Documents; and (4) FOURTH, any surplus then remaining shall be paid to the Company or its successors or assigns or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. INTERCREDITOR AGREEMENT GENERAL The Company, each of the Guarantors, the Administrative Agent and the Collateral Agent, together with other Secured Parties' Representatives from time to time party thereto, entered into a Collateral Agency and Intercreditor Agreement, dated as of March 18, 1999 (the "Intercreditor Agreement"), pursuant to which (1) the Collateral Agent was appointed by the Secured Parties' Representatives as collateral agent for such parties under the Security Documents and (2) the Secured Parties' Representatives agreed as to certain procedures regarding the sharing of Collateral. Upon the issuance of the bonds, the trustee will also become a party to the Intercreditor Agreement as a Secured Parties' Representative. Pursuant to the Intercreditor Agreement, all secured Senior Debt incurred by the Company from time to time shall be entitled to the benefits of the Security Documents and rank PARI PASSU without any preference among such obligations by reason of date of incurrence or otherwise. DEFAULT; ACCELERATION; EXERCISE OF REMEDIES The Intercreditor Agreement permits holders of Senior Debt to declare defaults and events of default with respect to the Financing Document governing such Senior Debt, and to accelerate such Senior Debt upon the occurrence of an event of default, pursuant to the provisions set forth in such Financing Document. Notice of any such event of default or acceleration of Senior Debt must be provided by the applicable Secured Parties' Representative to the Collateral Agent, who shall promptly forward such notice to the Company and each other Secured Parties' Representative. 78 Following the delivery of a notice of acceleration of Senior Debt to the Collateral Agent, during any period during which an event of default under Senior Debt shall have occurred and be continuing, the Required Secured Parties may deliver a notice (any such notice, a "Notice of Action") to the Collateral Agent directing the Collateral Agent to exercise one or more of the rights and remedies available to the Collateral Agent under the Security Documents. The Collateral Agent shall exercise the rights and remedies and take the other actions described in such Notice of Action at the time or times specified in such Notice of Action. AMENDMENT OF FINANCING DOCUMENTS Pursuant to the Intercreditor Agreement, in addition to any consent requirement contained in any Financing Document, the consent of each Secured Parties' Representative shall be required (1) in connection with any amendment, supplement or other modification of any Financing Document that would increase the amount of or change the scheduled date of maturity of any Senior Debt or the scheduled date of any installment of principal payable on any such Senior Debt, or increase the stated rate of any interest, premium, fee or other amount payable in respect thereof or change the scheduled date of any payment thereof, or provide for any additional mandatory prepayment of any such Senior Debt, (2) to release all or any material portion of the Collateral from the Liens of the Security Documents, (3) to release any of the Company or any of the Guarantors from its obligations under the Security Documents, (4) to release EME from its obligations under the Credit Support Guarantee, (5) to amend, modify or waive any provision of the Security Documents relating to the order of priority or amounts of transfers of cash and other property to be made thereunder or to amend or modify the definitions of "Obligations" or "Senior Debt" thereunder, or (6) to amend or modify the definition of "Required Secured Parties" under the Security Documents or the percentages required for any action to be taken under the Security Documents. AMENDMENT OF INTERCREDITOR AGREEMENT With the written consent of the Required Secured Parties, the Collateral Agent, the Company and the Guarantors may, from time to time, enter into an amendment, supplement, waiver or other modification of the Intercreditor Agreement or change in any manner the rights of the Collateral Agent, the Secured Parties or the Company thereunder; PROVIDED that (1) any amendment, supplement, waiver or other modification of the provisions set forth therein relating to amendments of Financing Documents shall require the consent of each Secured Parties' Representative and the Collateral Agent and (2) any amendment, supplement, waiver or other modification of the provisions relating to amendments of the Intercreditor Agreement set forth therein shall require the consent of each Secured Parties' Representative, the Collateral Agent, the Company and each of the Guarantors. Notwithstanding the foregoing, without the consent of any Secured Party, the Collateral Agent, the Company and, as long as any obligations are outstanding under the Credit Agreement, the Administrative Agent, at any time and from time to time, may enter into one or more agreements supplemental to the Intercreditor Agreement, in form satisfactory to the Collateral Agent, (1) to add to the covenants of the Company and the Guarantors for the benefit of the Secured Parties or to surrender any right or power therein conferred upon the Company or any of the Guarantors, (2) to mortgage or pledge to the Collateral Agent, or grant a security interest in favor of the Collateral Agent 79 in, any property or assets as security or additional security for the obligations under secured Senior Debt or (3) to cure any ambiguity, defect or inconsistency or to make any other change that would provide any additional rights or benefits to the Secured Parties or that does not adversely affect the legal rights under the Financing Documents of any Secured Party. OTHER SECURITY DOCUMENTS GUARANTEE AND COLLATERAL AGREEMENT Pursuant to the Guarantee and Collateral Agreement, (1) the Secured Parties will have a security interest in certain collateral, including all tangible and intangible property of the Company and each Guarantor, all proceeds and products of any and all of the foregoing, all collateral security and guarantees given by any Person with respect to any of the foregoing and the books and records pertaining to the above securing, in the case of the Company, the Obligations of the Company under Senior Debt and, in the case of the Guarantors, the Obligations of the Guarantors under the Guarantor Guarantees, and (2) each Guarantor will fully and unconditionally guarantee the Obligations of the Company under the Senior Debt (the "Guarantor Guarantees"). The Obligations of each Guarantor under its respective Guarantor Guarantee will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor (including, without limitation, any obligations under any Senior Debt) and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such Guarantor under its Guarantor Guarantee, result in the Obligations of such Guarantor under its Guarantor Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. MORTGAGE Pursuant to the Mortgage, the Secured Parties will have a Lien on all of the real property interests of EME Homer City now held or after acquired as security for the Company's Obligations under Senior Debt and EME Homer City's Obligations under its Guarantor Guarantee. CREDIT SUPPORT GUARANTEE Pursuant to the Credit Support Guarantee, EME unconditionally and irrevocably guarantees to the Collateral Agent, for the benefit of the Secured Parties, the prompt and complete payment and performance by the Company when due of all of the Company's Obligations under the Senior Debt up to an amount of $42 million. Pursuant to the Security Deposit Agreement, the Credit Support Guarantee would be utilized for payments on Senior Debt prior to amounts available in the Debt Service Reserve Accounts. Amounts under the Credit Support Guarantee will be available until December 31, 2001. BOND DEBT SERVICE RESERVE ACCOUNT A Debt Service Reserve Account will be established with the Collateral Agent for the benefit of the bondholders. Amounts on deposit in the Bond Debt Service Reserve Account will be used to pay the Company's scheduled installments of principal and interest on the bonds in the event that the Company's cash flow from operations is inadequate therefor. The required balance of Bond Debt Service Reserve Account (the "Bond Debt Service Reserve Requirement") on any date of determination will be 100% of the projected debt service on the bonds for the succeeding six-month period. The Bond Debt Service Reserve Requirement may be satisfied by one or a combination of the following: (1) cash; (2) a letter of credit that constitutes Acceptable Credit Support; or (3) a guarantee of the Company's obligations with respect to the Bond Debt Service Reserve Requirement, in the form 80 set forth in the indenture, made by EME in favor of the Collateral Agent for the benefit of the bondholders (so long as such guarantee constitutes Acceptable Credit Support). SUBORDINATION AGREEMENT The Company, each Guarantor and the Collateral Agent entered into the Intercompany Loan Subordination Agreement on March 18, 1999 (the "Subordination Agreement"), pursuant to which any and all obligations owed by the Company or any Guarantor to the Company or any Guarantor are subordinated to the Company's and the Guarantors' obligations under the Financing Documents. The Subordination Agreement includes customary "deep subordination" terms, including without limitation (1) an agreement by the subordinated parties not to exercise any remedies in respect of subordinated claims until all of the senior claims have been indefeasibly paid in full, (2) an obligation of the subordinated parties to turn over any payments received in respect of the subordinated claims in violation of the Subordination Agreement and (3) a right of the holders of senior claims to enforce subordinated claims in a bankruptcy proceeding of the borrower. CREDIT AGREEMENT GENERAL On March 18, 1999, the Company executed the Credit Agreement, under which the Banks agreed to provide the following credit facilities: (1) the Acquisition Facility in an amount of up to $800 million (the loans thereunder, the "Acquisition Loans"); (2) the Environmental Capital Improvements Facility in an amount of up to $250 million (the loans thereunder, the "Environmental Capital Improvements Loans"); and (3) the Working Capital Facility in an amount of up to $50 million (the loans thereunder, the "Working Capital Loans"). The Acquisition Facility will be eliminated upon issuance of the bonds. Proceeds of the Acquisition Loans were used to finance a portion of the Acquisition, proceeds of the Environmental Capital Improvements Loans will be used as necessary to finance costs associated with the Environmental Capital Improvements and proceeds of the Working Capital Loans will be used for the Company's and the Guarantors' general working capital purposes. INTEREST The Company will pay interest on the unpaid principal amount of the Loans (1) with respect to Base Rate Loans, at a rate per annum equal to the Base Rate, and (2) with respect to LIBO Rate Loans, at a rate per annum equal to LIBOR plus an applicable margin, which will be variable depending on the Company's debt rating. The Company will also pay facility fees on the Construction Term Loan Commitments and the Revolving Loan Commitments. CONDITIONS PRECEDENT Each loan under the Credit Agreement shall be subject to the satisfaction of the following conditions precedent: (1) certain representations and warranties previously made by the Company shall continue to be true and correct in all material respects with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); (2) no default or event of default under the Credit Agreement shall have occurred and be continuing or would result from such loans; (3) the Administrative Agent shall have received a borrowing request for such loans (where each of the delivery of a borrowing request and the acceptance by the Company of the 81 proceeds of such loans shall constitute a representation and warranty by the Company that on the date of such loans, both immediately before and after giving effect to such loans and the application of the proceeds thereof, the statements made in clauses (1) and (2) above are true and correct); and (4) all documents executed or submitted pursuant to the Credit Agreement by or on behalf of the Company shall be satisfactory in form and substance to the Administrative Agent and its counsel. AFFIRMATIVE COVENANTS Until all Obligations under the Credit Agreement are paid in full and the Commitments are terminated, the Company shall: (1) deliver to the Administrative Agent (a) unaudited quarterly consolidated financial statements and (b) audited annual consolidated financial statements of the Company (which will include results for its consolidated Subsidiaries), together with an unqualified opinion of Arthur Andersen & Co. (or other internationally recognized independent auditors); (2) at the time of delivery of the audited financial statements, deliver to the Administrative Agent either (a) the annual report provided to senior management and shareholders of the Company for the preceding calendar year with respect to the Facilities or (b) a report including certain information with respect to the Facilities; (3) at the time of delivery of the audited financial statements, deliver to the Administrative Agent an operating budget for the Facilities for the current calendar year, together with, in the case of each calendar year beginning with the year 2000, an "income statement variance report" showing the actual experience for the preceding calendar year (or portion thereof) against the income statement projections for the preceding calendar year (or portion thereof); (4) within 60 days of each quarterly payment date on which the Company intends to make certain investments or restricted payments, deliver to the Administrative Agent a certificate showing certain actual and projected Debt Service Coverage Ratios of the Company; (5) deliver to the Administrative Agent notices of defaults under material agreements of the Company or any of the Guarantors, material litigation, certain ERISA events and other material events; (6) deliver to the Administrative Agent all reports and registration statements which the Company files with the Securities and Exchange Commission or any national securities exchange; (7) deliver to the Administrative Agent notices of any change in the Company's debt rating; (8) deliver to the Administrative Agent notices of casualty or damage or loss to the Facilities involving a probable loss of $3 million or more and the occurrence of the cancellation or other material change regarding the insurance policies required to be maintained; (9) deliver to the Administrative Agent notice of any material modification of its environmental capital expenditure program; (10) deliver to the Administrative Agent notice that any material governmental approval may be revoked, fail to be granted or renewed, or materially modified; 82 (11) continue its business and maintain its existence and its material rights and privileges; (12) comply with applicable laws and contractual obligations, except to the extent non-compliance would not have a Material Adverse Effect; (13) maintain in good repair property and equipment, ordinary wear and tear excepted, to the extent that is necessary to do business; (14) maintain certain insurance against casualties and contingencies; (15) maintain books and records; (16) implement a Year 2000 plan; (17) comply with environmental laws; (18) perform any and all acts required to maintain perfection of the Collateral including after-acquired property covered by the relevant Security Documents; and (19) in relation to any Recovery Event, provide the Administrative Agent and the Collateral Agent with a Reinvestment Notice; PROVIDED, THAT if the settlement or payment related to such Recovery Event is $50 million or more, the Company shall either make a prepayment of the net proceeds of such Recovery Event (with a corresponding reduction in the amount of the Commitments) or, if such net proceeds are to be used for restoration or replacement, the Independent Engineer shall have certified as to the Company's restoration or replacement plan and the feasibility thereof as set forth in the Company's Reinvestment Notice relating to such Recovery Event. NEGATIVE COVENANTS Until all Obligations under the Credit Agreement are paid in full and the Commitments are terminated, the Company agrees, and agrees to cause the Guarantors: (1) not to suffer to exist any Indebtedness other than certain permitted Indebtedness; (2) not to suffer to exist any Liens granted by the Company and the Guarantors other than certain permitted Liens; (3) not to consolidate with or merge into any other Person or sell, convey or lease all or substantially all of its assets to any Person unless (a) no default or event of default shall occur and be continuing prior to and after such consolidation, merger or sale and (b) the Company or the relevant Guarantor is the surviving entity; (4) not to undertake the sale of assets subject to certain exceptions; (5) not to create or acquire Subsidiaries; (6) not to make investments in any other Person subject to certain exceptions (such exceptions include investments in EME Homer City to implement its environmental capital expenditure program and investments in EME Homer City to make capital expenditures for improvements to the Facilities; PROVIDED, in the latter case, that all amounts due and payable in respect of the Senior Debt has been paid, there is no default or event of default under the Credit Agreement, certain Debt Service Coverage Ratios are above certain specified levels and the Debt Service Reserve Requirement for the Loans is satisfied); (7) not to enter into transactions with Affiliates subject to certain exceptions; 83 (8) not to make distributions, dividend payments or other restricted payments subject to certain exceptions (such exceptions include restricted payments by the Company, PROVIDED THAT there is no default or event of default under the Credit Agreement, certain Debt Service Coverage Ratios are above certain specified levels and the Debt Service Reserve Requirement for the Loans is satisfied); (9) not to enter into any agreement prohibiting the ability of the Company to amend or otherwise modify the Credit Agreement or any related agreement, or the ability of any Guarantor to make dividend payments and other payments to the Company; (10) not to engage in any business other than the ownership, maintenance and operation of the Facilities, the sale of wholesale electric power therefrom and related products and services and other incidental businesses; (11) not to take any action which may subject the Company or any of the Guarantors to certain governmental regulation or cause the Company or any of the Guarantors to lose certain rights to sell electric power and related products and services; and (12) not to engage in speculative transactions. EVENTS OF DEFAULT The following constitute events of default under the Credit Agreement: (1) nonpayment of principal when due; (2) nonpayment of interest, fees or other amounts within five business days of the date when due; (3) inaccuracy in any material respect of representations and warranties when made; (4) violation of covenants (subject, in the case of certain affirmative covenants, to a 30-day grace period); (5) cross-default with respect to other indebtedness of the Company or any of the Guarantors of at least $15 million in principal amount; (6) bankruptcy events with respect to the Company or any of the Guarantors; (7) certain ERISA events; (8) judgments in excess of $15 million in the aggregate not discharged, stayed or bonded within 60 days; (9) EME shall cease to own, directly or indirectly, 50% of the economic equity interests in the Company and each of the Guarantors or cease to maintain equivalent voting control of the Company and each of the Guarantors, or EME shall cease, directly or through a Guarantor, to be in control of the operation of the Facilities, or the Company shall cease to own, directly or indirectly, 100% of the general and limited partnership interests in EME Homer City; and (10) until the termination of the Credit Support Guarantee or while any guarantee of EME is being used to satisfy the Debt Service Reserve Requirement for the Loans, (a) bankruptcy events with respect to EME and (b) cross-default with respect to Indebtedness of EME of at least $20 million in principal amount. 84 REMEDIES Except as may be otherwise agreed among the Banks, upon the occurrence and during the continuance of an event of default under the Credit Agreement other than bankruptcy events with respect to the Company, the majority Banks may exercise any or all of the following remedies: (1) declaration of all or any portion of the outstanding principal amount under the Credit Agreement to be immediately due and payable; or (2) termination of their Commitments. In case of a bankruptcy event with respect to the Company, the Commitments shall automatically terminate and the outstanding principal amount under the Credit Agreement shall automatically and immediately become due and payable, without notice or demand. BANK DEBT SERVICE RESERVE ACCOUNT A Debt Service Reserve Account was established with the Collateral Agent for the benefit of the Banks to be used to pay the Company's scheduled Debt Service for the Loans in the event that the Company's cash flow from operations is inadequate therefor. 85 EXCHANGE OFFER; REGISTRATION RIGHTS As part of the sale of the original bonds and pursuant to a registration rights agreement dated as of May 27, 1999, the Company agreed with the initial purchasers, for the benefit of the holders of the bonds, that the Company will file and use its reasonable best efforts to cause to become effective, at its cost, a registration statement with respect to a registered offer to exchange the original bonds for the exchange bonds which are in all material respects substantially identical to the original bonds. Upon such registration statement being declared effective, the Company shall offer the exchange bonds in return for surrender of the original bonds. Such offer shall remain open for no less than 30 days after the date notice of the exchange offer is mailed to the bondholders. For each original bond surrendered to the Company under the exchange offer, the bondholder will receive exchange bonds aggregating an equal principal amount. Interest on each exchange bond shall accrue from the last Interest Payment Date on which interest was paid on the original bond so surrendered or, if no interest has been paid, since May 27, 1999. In the event that the Company determines in good faith that applicable interpretations of the staff of the Securities and Exchange Commission or other circumstances specified in the registration rights agreement do not permit the Company to effect such an exchange offer, the Company shall, at its cost, use its reasonable best efforts (subject to customary representations and agreements of the bondholders) to have a shelf registration statement covering resale of the original bonds declared effective and kept effective until two years after the Closing Date, subject to certain exceptions. The Company shall, in the event of such a shelf registration, provide to each bondholder copies of the prospectus, notify each bondholder when a registration statement for the original bonds has become effective and take certain other actions as are appropriate to permit resale of the original bonds. In the event that such exchange offer is not commenced or such registration statement is not declared effective by February 21, 2000, the respective annual interest rates on the original bonds shall increase by one-half of one percent (50 basis points) effective on the 271(st) day following the Closing Date until the date on which such exchange offer is commenced or such registration statement shall have become effective. Each bondholder (other than certain specified holders) who wishes to exchange the original bonds for exchange bonds in the exchange offer shall be required to represent that any exchange bonds to be received by it shall be acquired in the ordinary course of business and that at the time of the commencement of the exchange offer it shall have no arrangement with any person to participate in the distribution (within the meaning of the Securities Act) of the exchange bonds. A bondholder that sells such original bonds pursuant to a shelf registration generally would be required to be named as a selling holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sale and will be required to agree in writing to be bound by the provisions of the registration rights agreement which are applicable to such bondholder (including certain indemnification obligations). 86 PLAN OF DISTRIBUTION Each broker-dealer that receives exchange bonds for its own account in the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the exchange bonds. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange bonds received in exchange for original bonds where the original bonds were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the expiration date of the exchange offer, it will make this prospectus available to any broker-dealer for use in connection with any resale. In addition, until , 2000, all dealers effecting transactions in the exchange bonds may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of exchange bonds by broker-dealers. Exchange bonds received by broker-dealers for their own account in the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange bonds or a combination of these methods of resale. These resales may be made at market prices prevailing at the time of resale, at prices related to these prevailing market prices or negotiated prices. Any resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any broker-dealer or the purchasers of any of the exchange bonds. Any broker-dealer that resells exchange bonds that were received by it for its own account in the exchange offer and any broker or dealer that participates in a distribution of the exchange bonds may be deemed to be an underwriter within the meaning of the Securities Act, and any profit on the resale of exchange bonds and any commission or concessions received by those persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act. For a period of 180 days after the expiration date of the exchange offer, the Company will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests these documents in the letter of transmittal. The Company has agreed to pay all expenses incident to the exchange offer, including the expenses of one counsel for the holders of the bonds, other than commissions or concessions of any brokers or dealers. The Company will indemnify the holders of the bonds, including any broker-dealers, against various liabilities, including liabilities under the Securities Act. In addition, all reports and other documents we subsequently file under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act will be deemed to be incorporated by reference into this prospectus and to be part of this prospectus from the date we subsequently file the reports and documents. Any statements contained in a document incorporated or deemed to be incorporated by reference into this prospectus are deemed to be modified or superseded for purposes of this prospectus to the extent modified or superseded by another statement contained in any subsequently filed document also incorporated by reference in this prospectus. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute part of this prospectus. You may request a copy of any of these filings, at no cost, by writing or telephoning us at the following address or phone number: Edison Mission Holdings Co. 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 (949) 752-5588 Attention: Corporate Secretary 87 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following summary describes certain material United States federal income tax considerations that may be relevant to beneficial owners of the bonds. The summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and judicial decisions as of the date hereof, all of which may be repealed, revoked or modified with possible retroactive effect. This discussion does not deal with holders that may be subject to special tax rules (including, but not limited to, insurance companies, tax-exempt organizations, financial institutions, dealers in securities or currencies, holders whose functional currency is not the United States dollar or holders who will hold the bonds as a hedge against currency risks or as part of a straddle, synthetic security, conversion transaction or other integrated investment comprised of the bonds and one or more other investments). The summary is applicable only to purchasers that acquire the bonds pursuant to the offering at the initial offering price and who will hold the bonds as capital assets within the meaning of Section 1221 of the Code. This summary is for general information only and does not address all aspects of United States federal income taxation that may be relevant to holders of the bonds in light of their particular circumstances, and it does not address any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction. Prospective holders should consult their own tax advisors as to the particular tax consequences to them of acquiring, holding or disposing of the bonds. As used herein, the term "United States Holder" means a beneficial owner of a bond that is (1) a citizen or resident of the United States for United States federal income tax purposes, (2) a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia, (3) an estate the income of which is subject to United States federal income tax without regard to its source or (4) a trust if (x) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (y) the trust has a valid election in effect under applicable United States Treasury regulations to be treated as a United States Holder. A "Non-United States Holder" is any beneficial holder of a bond that is not a United States Holder. UNITED STATES HOLDERS THE EXCHANGE For United States federal income tax purposes, a beneficial owner of a bond will not recognize any taxable gain or loss on the exchange of the original bonds for exchange bonds pursuant to the exchange offer, and a United States Holder's tax basis and holding period in the exchange bonds will be the same as in the original bonds. STATED INTEREST ON EXCHANGE BONDS Stated interest on an exchange bond generally will be taxable to a United States Holder as ordinary income at the time it accrues or is received in accordance with the United States Holder's method of accounting for United States federal income tax purposes. DISPOSITION OF AN EXCHANGE BOND Upon the sale, exchange, redemption, retirement or other disposition of an exchange bond, a United States Holder generally will recognize gain or loss equal to the difference between the amount realized upon the sale, exchange, redemption, retirement or other disposition (not including amounts attributable to accrued but unpaid interest, which will be taxable as such) and such United States Holder's adjusted tax basis in the exchange bond. A United States Holder's tax basis in an exchange bond will, in general, be the United States Holder's basis in the bond exchanged therefor. Such gain or loss will be capital gain or loss. Capital gain recognized by an individual investor upon a disposition of an exchange bond that has been held for more than 12 months will generally be subject to a maximum 88 tax rate of 20% or, in the case of an exchange bond that has been held for 12 months or less, will be subject to tax at ordinary income tax rates. MARKET DISCOUNT United States Holders other than original purchasers of the bonds in the offering of the original bonds should be aware that the sale of the exchange bonds may be affected by the market discount provisions of the Code. The market discount rules generally provide that if a United States Holder purchased the bond, after the original offering, at a "market discount" (i.e., at an amount less than the adjusted issue price of the bond as determined on the date of such purchase) exceeding a statutorily-defined DE MINIMIS amount, and thereafter recognized gain upon a disposition, including a partial redemption, of the exchange bond received in exchange for an original bond, the lesser of such gain or the portion of the market discount that accrued while the original bond and exchange bond were held by such United States Holder will be treated as ordinary interest income at the time of disposition. The rules also provide that a United States Holder who acquires a bond at a market discount may be required to defer a portion of any interest expense that may otherwise be deductible on any indebtedness incurred or maintained to purchase or carry the bond until the United States Holder disposes of such bond in a taxable transaction. If a holder of a bond elects to include market discount in income currently, both of the foregoing rules would not apply. NON-UNITED STATES HOLDERS Under present United States federal income tax law, subject to the discussion of backup withholding and information reporting below: (a) payments of principal and interest on the exchange bonds to any Non-United States Holder will not be subject to United States federal income or withholding tax provided that (1) the Non-United States Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (2) the Non-United States Holder is not a bank receiving interest pursuant to a loan agreement entered into in the ordinary course of its trade or business, (3) the Non-United States Holder is not a controlled foreign corporation that is related to the Company (directly or indirectly) through stock ownership, (4) such interest payments are not effectively connected with a United States trade or business and (5) certain certification requirements are met. Such certification will be satisfied if the beneficial owner of the exchange bond certifies on IRS Form W-8 or a substantially similar substitute form, under penalties of perjury, that it is not a United States person and provides its name and address, and (x) such beneficial owner files such form with the withholding agent or (y) in the case of an exchange bond held by a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution") and holds the exchange bond, such financial institution certifies to the Company or its agent under penalties of perjury that such statement has been received from the beneficial owner by it or by a financial institution between it and the beneficial owner and furnishes the withholding agent with a copy thereof; and (b) a Non-United States Holder will not be subject to United States federal income tax on gain realized on the sale, exchange, redemption, retirement or other disposition of an exchange bond, unless (1) the gain is effectively connected with a trade or business carried on by such holder within the United States or, if a treaty applies, is generally attributable to a United States permanent establishment maintained by the holder, or (2) the holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other requirements are met. 89 BACKUP WITHHOLDING AND INFORMATION REPORTING In general, payments of interest and the proceeds of the sale, exchange, redemption, retirement or other disposition of the exchange bonds payable by a United States paying agent or other United States intermediary will be subject to information reporting. In addition, backup withholding at a rate of 31% will apply to these payments if the holder fails to provide an accurate taxpayer identification number in the case of a United States Holder or the certification described above (in the case of a Non-United States Holder) or other evidence of exempt status or fails to report all interest and dividends required to be shown on its United States federal income tax returns. Certain United States Holders (including, among others, corporations) and Non-United States Holders that comply with certain certification requirements are not subject to backup withholding. Any amount paid as backup withholding will be creditable against the holder's United States federal income tax liability provided that the required information is timely furnished to the IRS. Holders of exchange bonds should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining such an exemption. On October 6, 1997, new Treasury Regulations were issued that generally modify the information reporting and backup withholding rules applicable to certain payments made after December 31, 2000. In general, the new regulations would not significantly alter the present rules discussed above, except in certain special situations. 90 LEGAL MATTERS Certain legal matters with respect to the exchange bonds and the guarantees (other than the guarantee of EME Homer City Generation L.P.) will be passed upon for the Company by Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York. Certain legal matters with respect to the guarantee of EME Homer City Generation L.P. will be passed upon for the Company by Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, Pennsylvania. EXPERTS The consolidated financial statements of Edison Mission Holdings Co. and subsidiaries for the nine months ended September 30, 1999, which are included in this prospectus and the consolidated financial statements of Edison Mission Energy and subsidiaries for the fiscal year ended December 31, 1998, included in Edison Mission Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, which are incorporated by reference in this Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. The audited special-purpose combined accounts of Fiddlers Ferry and Ferrybridge C Power Stations for the year ended March 29, 1998 and the nine month period ended January 3, 1999 incorporated in this prospectus by reference to the Form 8-K/A dated July 19, 1999 of Edison Mission Energy have been so incorporated in reliance on the report of PricewaterhouseCoopers, Chartered Accountants, given the authority of said firm as experts in auditing and accounting. AVAILABLE INFORMATION EME is subject to the informational requirements of the Exchange Act and, in accordance therewith, files reports and information statements and other information with the Securities and Exchange Commission. Such reports and information statements and other information filed by EME with the Securities and Exchange Commission can be inspected and copied at the Public Reference Section of the Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Securities and Exchange Commission located at Seven World Trade Center, 13(th) Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Securities and Exchange Commission maintains a Web site that contains reports, proxy and information statements and other materials that are filed through the Securities and Exchange Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. This Web site can be accessed at http://www.sec.gov. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Securities and Exchange Commission are incorporated by reference into this prospectus: (i) EME's Annual Report on Form 10-K for the year ended December 31, 1998; (ii) EME's Current Reports on Form 8-K dated March 18, 1999, Form 8-K dated July 19, 1999 and Form 8-K/A dated August 2, 1999; and (iii) EME's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999. Any statement contained in a document incorporated by reference herein will be deemed to be modified or superceded for purposes of this prospectus to the extent that a statement contained herein modifies or supersedes such statement. Any such statement so modified or superseded will not be deemed to constitute a part of this prospectus except as so modified or superseded. 91 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE -------- EDISON MISSION HOLDINGS CO. Report of Independent Public Accountants.................... F-2 Consolidated Balance Sheet--September 30, 1999.............. F-3 Consolidated Statement of Operations--Nine Months Ended September 30, 1999......................................... F-4 Consolidated Statement of Changes in Shareholder's Equity--Nine Months Ended September 30, 1999......................................... F-5 Consolidated Statement of Cash Flows--Nine Months Ended September 30, 1999........................................ F-6 Notes to Consolidated Financial Statements--September 30, 1999....................................................... F-7
F-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Edison Mission Holdings Co.: We have audited the accompanying consolidated balance sheet of Edison Mission Holdings Co. and subsidiaries (the Company), a wholly owned subsidiary of Edison Mission Energy, as of September 30, 1999, and the related consolidated statements of operations, shareholders equity and cash flows for the nine months ended September 30, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Edison Mission Holdings Co. as of September 30, 1999, and the results of its operations and its cash flows for the nine months ended September 30, 1999, in conformity with generally accepted accounting principles. Los Angeles, California November 5, 1999 F-2 EDISON MISSION HOLDINGS CO. CONSOLIDATED BALANCE SHEET--SEPTEMBER 30, 1999
1999 -------------- (IN THOUSANDS) ASSETS Current assets Cash and cash equivalents................................. $ 125,204 Due from Edison Mission Energy and Affiliates............. 21,053 Fuel inventory............................................ 21,315 Spare parts inventory..................................... 23,647 Other current assets...................................... 1,376 ---------- Total current assets.................................. 192,595 ---------- Operating facility and equipment Property, plant & equipment............................... 1,942,667 Accumulated depreciation.................................. (25,280) ---------- Net property, plant & equipment........................... 1,917,387 Other assets Deferred financing charges, net........................... 11,714 ---------- Total assets........................................ $2,121,696 ========== LIABILITIES AND EQUITY Current liabilities Accounts payable.......................................... $ 8,497 Accrued liabilities....................................... 26,910 Interest Payable.......................................... 24,856 ---------- Total current liabilities............................. 60,263 ---------- Long-term debt.............................................. 885,000 Deferred taxes.............................................. 14,623 Benefits plans.............................................. 17,150 Maintenance accrual......................................... 75,231 ---------- Total liabilities..................................... 1,052,267 ---------- Commitments and contingencies (Note 7) Shareholder's equity Common stock, no par value; 10,000 shares authorized; 100 shares issued and outstanding........................... -- Additional paid-in-capital................................ 1,036,921 Retained Earnings......................................... 32,508 ---------- Total shareholder's equity............................ 1,069,429 ---------- Total liabilities and shareholder's equity.......... $2,121,696 ==========
The accompanying notes are an integral part of these consolidated financial statements. F-3 EDISON MISSION HOLDINGS CO. CONSOLIDATED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1999
1999 -------------- (IN THOUSANDS) Operating revenues from marketing affiliate Capacity revenues....................................... $ 22,010 Energy revenues......................................... 223,778 -------- Total operating revenues.................................... 245,788 -------- Operating expenses Fuel.................................................... 84,391 Plant operations........................................ 40,786 Depreciation and amortization........................... 25,280 Administrative and general.............................. 542 -------- Total operating expenses.................................... 150,999 -------- Income from operations...................................... 94,789 -------- Other income (expense) Interest and other income............................... 834 Interest expense........................................ (35,506) -------- Total other expense......................................... (34,672) -------- Income before income taxes and extraordinary loss........... 60,117 Provision for income taxes before extraordinary loss........ 24,939 -------- Income before extraordinary loss............................ 35,178 -------- Extraordinary loss on early extinguishment of debt, net of income tax benefit of $2,280....................... (2,667) -------- NET INCOME.................................................. $ 32,511 ========
The accompanying notes are an integral part of these consolidated financial statements. F-4 EDISON MISSION HOLDINGS CO. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY NINE MONTHS ENDED SEPTEMBER 30, 1999
COMMON ADDITIONAL RETAINED SHAREHOLDER'S STOCK PAID-IN-CAPITAL EARNINGS EQUITY -------- --------------- -------- ------------- (IN THOUSANDS) Balance at January 1, 1999....................... $ -- $ 3 $ (3) $ -- ------- ---------- ------- ---------- Net income....................................... -- -- 32,511 32,511 Cash contribution................................ -- 1,066,917 -- 1,066,917 Cash dividends................................... -- (29,999) -- (29,999) ------- ---------- ------- ---------- Balance at September 30, 1999.................... $ -- $1,036,921 $32,508 $1,069,429 ======= ========== ======= ==========
The accompanying notes are an integral part of these consolidated financial statements. F-5 EDISON MISSION HOLDINGS CO. CONSOLIDATED STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1999
1999 -------------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net income................................................ $ 32,511 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary loss on early extinguishment of debt, net of tax.......................................... 2,667 Depreciation and amortization......................... 26,434 Deferred tax provision................................ 14,623 Increase in due from Edison Mission Energy and Affiliates.......................................... (18,773) Increase in inventory................................. (3,541) Increase in prepaid and other assets.................. (1,376) Increase in payables.................................. 8,498 Increase in accrued liabilities....................... 26,134 Increase in interest payable.......................... 24,856 Increase in other liabilities......................... 1,804 ----------- Net cash provided by operating activities............... 113,837 ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Homer City facility....................... (1,818,631) Capital expenditures.................................. (74,105) ----------- Net cash used in investing activities................... (1,892,736) ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Capital contribution from parent...................... 1,066,917 Borrowings on long-term obligations................... 885,000 Borrowings under Acquisition Facility................. 800,000 Repayments on debt obligations........................ (800,000) Financing costs....................................... (17,815) Cash dividends to parent.............................. (29,999) ----------- Net cash provided by financing activities............... 1,904,103 ----------- NET INCREASE IN CASH........................................ 125,204 CASH AND CASH EQUIVALENTS, beginning of period.............. -- ----------- CASH AND CASH EQUIVALENTS, at end of period................. $ 125,204 ===========
The accompanying notes are an integral part of these consolidated financial statements. F-6 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1999 1. GENERAL Edison Mission Holdings Co. (the "Company"), a wholly owned subsidiary of Edison Mission Energy ("EME"), an indirect wholly owned subsidiary of Edison International("EIX"), is a California corporation formed for the purpose of issuing the bonds and, through its subsidiaries, acquiring, owning and operating three coal-fired electric generating units (collectively, the "Homer City Units" or the "Units") and related facilities (the Units and such related facilities, the "Facilities") located in Indiana County, Pennsylvania for the purpose of producing electric energy. On March 18, 1999, the Company's subsidiary, EME Homer City Generation L.P. completed its acquisition (the "Acquisition") of 100% of the ownership interests in the Facilities and assumed certain liabilities of the former owners. The accompanying financial statements reflect the operations of the Facilities commencing from the date of acquisition. The acquisition has been accounted for utilizing the purchase method. The purchase price was allocated to the assets acquired and liabilities assumed based upon a preliminary assessment of their respective fair market values. This allocation may change as the fair market valuation is finalized. The acquisition was financed through a capital contribution by EME of approximately $1.1 billion and a short-term loan of approximately $800 million. The short-term loan was subsequently replaced by $830 million of senior secured bonds. The Facilities consist of three coal fired steam turbine units, one coal preparation facility, an 1,800 acre dam site and associated support facilities. Units 1 and 2 are essentially identical steam turbine generators with net summer capacities of 620 MW and 614 MW, respectively. Units 1 and 2 began commercial operation in 1969. Unit 3 is also a steam turbine generator with a net summer capacity of 650 MW. Unit 3 began commercial operations in 1977. The Station benefits from direct transmission access into both the Pennsylvania-New Jersey-Maryland power market (the "PJM") and the New York power market ("NYPP"). The Company has entered into a contract with a marketing affiliate for the sale of energy and capacity produced by the Facilities, which enables such marketing affiliate to engage in forward sales and hedging transactions to manage electricity price exposure. The marketing affiliate has systems in place which monitor real-time spot and forward pricing and perform options valuations. The Company pays the marketing affiliate a nominal fee for the performance of marketing services. All revenues from physical sales transactions executed by the marketing affiliate are deposited into a revenue account established for the benefit of the holders of the Company's senior secured debt. Additionally, the Company has entered into separate transition contracts (the "Transition Contracts") with Pennsylvania Electric Company ("Penelec") and New York State Electric & Gas Corporation ("NYSEG"), pursuant to which EME Homer City may exercise a put option to sell certain quantities of capacity to Penelec and NYSEG, and Penelec and NYSEG may exercise call options to purchase certain quantities of capacity. The terms of the NYSEG Transition Contract and the Penelec Transition Contract continue until April 30, 2001 and May 31, 2001, respectively. EME Homer City has exercised a put option to sell 942 MW of capacity to Penelec for the period from March 18, 1999 through May 31, 2000 under the Penelec Transition Contract for a price of $49.90/MW-day from March 18, 1999 through May 31, 1999 and $59.90/MW-day for the year ending May 31, 1999. EME Homer City has also entered into contractual arrangements with NYSEG to sell 942 MW of capacity for the period from March 18, 1999 to May 31, 1999 for a price of $55.00/MW-day and sell 99% of the remaining installed capacity over the transition contracts through May 31, 2000 at a weighted average price of $65.00/MW-day. F-7 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES IN FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NEW ACCOUNT PRONOUNCEMENT In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS 133) "Accounting for Derivative Instruments and Hedging Activities". SFAS 133, as amended, will become effective on January 1, 2001. This statement establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. It also requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. A derivative's gains and losses for qualifying hedges offset related results on the hedged item in the income statement and a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. The impact of adopting Statement 133 on the Company's financial statements has not been quantified at this time. CASH AND CASH EQUIVALENTS The Company considers cash and cash equivalents to include cash and short-term investments with original maturities of three months or less. RESTRICTED CASH A portion of the Company's cash balance, totaling $102.2 million at September 30, 1999, was restricted as to use. Permitted use for such cash includes payment of operating costs and other current items, as defined in the trust agreement associated with the Company's senior secured bonds. INVENTORY Inventory consists of spare parts, coal and fuel oil and is stated at the lower of weighted average cost or market. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation is computed on a straight-line basis over the following estimated useful lives: Power plant facilities...................................... 39 years Furniture, office equipment, and vehicles................... 5 to 7 years
F-8 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) At September 30, 1999, property, plant and equipment consisted of the following:
(IN THOUSANDS) Land........................................................ $ 4,500 Power plant facilities...................................... 1,862,458 Construction in progress.................................... 71,816 Equipment, furniture, and fixtures.......................... 3,893 ---------- 1,942,667 ---------- Accumulated depreciation.................................... (25,280) ---------- Property, plant and equipment, net.......................... $1,917,387 ==========
DEFERRED COSTS Deferred costs at September 30, 1999 consisted of the following:
(IN THOUSANDS) Deferred financing costs.................................... $12,233 Accumulated amortization.................................... (519) ------- Net deferred financing costs................................ $11,714 =======
Deferred financing costs consist of legal and other costs incurred by the Company to obtain long-term financing (Note 3). These costs are being amortized over the life of the related long-term debt using the effective interest method. REVENUE RECOGNITION Revenue and related costs are recorded as electricity is generated or services are provided. POWER MARKETING ACTIVITIES The Company has entered into a contract with a marketing affiliate for the sale of energy and capacity produced by the Station, which enables such marketing affiliate to engage in forward sales and hedging transactions to manage the Company's electricity price exposure. Net gains or losses on hedges by the marketing affiliate which are physically settled are recognized in the same manner as the hedged item. The Company receives the net transaction price on all contracts that are physically settled by its marketing affiliate. Another marketing affiliate of the Company enters into option contacts using the credit of the Company. Options written and premiums received by this affiliate are not transferred to the Company. INCOME TAXES The Company is included in the consolidated federal income tax and combined state franchise tax returns of EIX. The Company calculates its income tax provision on a separate company basis under a tax sharing arrangement with an affiliate of EIX, which in turn has an agreement with EIX. Tax F-9 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) benefits generated by the Company and used in the EIX consolidated tax return are recognized by the Company without regard to separate company limitations. The Company accounts for income taxes using the asset-and-liabilities method, wherein deferred tax assets and liabilities are recognized for future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities using enacted rates. MAINTENANCE ACCRUAL Each of the Facility's major pieces of equipment (e.g. boiler and turbine) requires major maintenance on a periodic basis ranging from three to thirty years. These costs are being accrued on a straight-line basis over the respective periods. The maintenance accrual is based on management's estimates of what these events will cost at the time the events occur. Due to fluctuations in prices and changes in the scope and timing of the work to be performed, the actual amounts expended, may differ from the amounts estimated for these events. 3. LONG-TERM DEBT On March 18, 1999 the Company entered into a debt agreement (the "Initial Financing") with a bank for a combination of loan and line of credit agreements aggregating $1.1 billion. The Initial Financing consisted of a short-term loan for $800 million for the initial financing of the acquisition (the "Acquisition Facility"), a $250 million construction loan (the "Environmental Capital Improvements Facility") that would be drawn on when needed, and a $50 million line of credit (the "Working Capital Facility"). Amounts outstanding under the Initial Financing bear interest at variable Eurodollar rates or Base rates as defined in the Agreement, at the option of the Partnership. If the Company elects to pay Eurodollar rates, interest costs include a margin of 0.85% to 2.50% depending on the Company's current debt rating. At September 30, 1999 the margin was 1.00%. Additionally, the Company pays a facility fee of .0015% to .0050%, depending on the Company's current debt rating, on the total outstanding commitment irrespective of usage. At September 30, 1999 the facility fee was .0025%. The Company also pays an agent bank fee of $50,000 per year. On May 27, 1999, the Company completed a private offering of $300 million aggregate principal amount of 8.137% Senior Secured Bonds due 2019 and $530 million aggregate principal amount of 8.734% Senior Secured Bonds due 2026 (collectively the "Senior Secured Bonds"). The net proceeds from the Senior Secured Bonds were used to repay the outstanding principal of, and to permanently reduce the bank commitments associated with, the Acquisition Facility and to repay a portion of EME's equity investment in the form of a dividend. As a result of the early extinguishment of the Acquisition Facility, the Company wrote off unamortized deferred financing costs which were reported as an extraordinary loss of $4.9 million ($2.7 million after tax). At September 30, 1999, the Company had drawn $55 million on the Environmental Capital Improvements Facility and had not drawn on the Working Capital Facility. The Environmental Capital Improvements Facility matures on March 18, 2004. Interest on the Initial Financing is indexed at LIBOR (5.387% at September 30, 1999). Interest paid under the Initial Financing and Senior Secured Bonds was $9.6 million and $24.4 million, respectively for the nine months ended September 30, 1999. F-10 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 3. LONG-TERM DEBT (CONTINUED) At September 30, 1999, the future maturities of the debt are as follows:
PERIOD ENDING SEPTEMBER 30, - --------------------------- (IN THOUSANDS) October 1999-September 2000................................. $ -- October 2000-September 2001................................. -- October 2001-September 2002................................. -- October 2002-September 2003................................. -- October 2003-September 2004................................. 58,292 Thereafter.............................................. 826,708 -------- Total................................................... $885,000 ========
The Company has certain financial and non-financial debt covenants associated with its debt that may limit distributions. With the exception of the initial $30 million distribution from the net proceeds of the Senior Secured Bonds, the Company, in order to make distributions, must maintain a specified debt service coverage ratio, net cash flows over the aggregate principal, interest, and fixed charges for a period, ranging from 1.5 to 1.7 over the life of the debt. The Company is also limited in obtaining new debt including capital lease obligations in excess of $10 million, working capital loans in excess of $50 million (with such amount to be escalated annually in accordance with the consumer price index), and other senior indebtedness in excess of $20 million. The collateral for the Bonds includes all assets, whether now owned or thereafter acquired. The Company's parent, EME, has entered into the Credit Support Guarantee, which, under certain conditions, must make up to $42 million in payments. The Credit Support Guarantee is available until December 31, 2001 as additional cashflow to support shortfalls in the payment of the Bonds and other senior secured debt. EME has also provided a guarantee as of the date of the offering to satisfy the Company's debt service reserve requirement with respect to the Bonds. Similar guarantees have been extended by EME with respect to the obligations in the Credit Agreement. 4. RELATED-PARTY TRANSACTIONS Certain administrative services such as payroll, employee benefit programs, and information technology, all performed by EIX or EME, are shared among all affiliates of EIX and the costs of these corporate support services are allocated to all affiliates, including the Company. Costs are allocated based on one of the following formulas: percentage of time worked, equity in investment and advances, number of employees, or multi-factor (operating revenues, operating expenses, total assets and number of employees). In addition, services of EIX or EME are sometimes directly requested by the Company and such services are performed for the Company's benefit. Labor and expenses of these directly requested services are specifically identified and billed at cost. Management believes the allocation methodologies utilized are reasonable. The Company made reimbursements for the cost of these programs and other services, which amounted to $520,000 for the period ended September 30, 1999. F-11 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 4. RELATED-PARTY TRANSACTIONS (CONTINUED) The Company pays its trading affiliate a two-cent per mega-watt hour commission fee for all power sold under power marketing arrangements. For the period ended September 30, 1999, commission fees totaled $131,000. 5. INCOME TAXES Income tax expense includes the current tax benefit from the operating loss and the change in deferred income taxes during the year. The components of the net accumulated deferred income tax liability were:
NINE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------- -------------- (IN THOUSANDS) Deferred tax assets Loss carryforwards........................................ $ 1,226 State tax deduction..................................... 834 Other................................................... 225 ------- $ 2,285 ------- Deferred tax liabilities Accumulated depreciation difference....................... $16,908 ------- Deferred taxes, net......................................... $14,623 =======
F-12 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 5. INCOME TAXES (CONTINUED) Loss carryforwards represent Pennsylvanian state tax losses totaling $12.3 million at September 30, 1999, which would expire in 2009 and are limited in use to $2.0 million per year. The provision for income taxes is comprised of the following:
NINE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------- ----------- (IN THOUSANDS) Current Federal................................................... $ 6,522 State..................................................... 1,514 ------- Total current........................................... 8,036 ------- Deferred Federal................................................... 10,984 State..................................................... 3,639 ------- Total deferred.......................................... 14,623 ------- Provision for income taxes.................................. $22,659 =======
Income tax provision (benefit) is included in the statement of operations as follows: Income before extraordinary loss............................ $24,939 Extraordinary loss.......................................... (2,280) ------- Total................................................... $22,659 =======
The components of the deferred tax provision, which arise from timing differences between financial and tax reporting, are presented below:
NINE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------- -------- Accumulated depreciation difference......................... $16,908 Loss carryforwards.......................................... (1,226) State tax deduction......................................... (834) Other....................................................... (225) ------- Total deferred provision................................ $14,623 =======
F-13 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 5. INCOME TAXES (CONTINUED) Variations from the 35% federal statutory rate are as follows:
NINE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------- -------- Expected provision for federal income taxes................. $21,041 Decrease in taxes from: State tax--net of federal benefit......................... 3,898 ------- Total provision for income taxes........................ $24,939 ======= Effective tax rate.......................................... 41.48% =======
6. EMPLOYEE BENEFITS PLANS Employees of the Company are eligible for various benefit plans of EIX. PENSION PLANS The Company maintains a pension plan specifically for the benefit of its union employees. The Company's non-union employees participate in the EIX pension plan. Both plans are noncontributory, defined benefit pension plans and cover employees who fulfill minimum service requirements. There are no prior service costs for the plans. F-14 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 6. EMPLOYEE BENEFITS PLANS (CONTINUED) Information on plan assets and benefits obligations is shown below:
NINE MONTHS ENDED SEPTEMBER 30, UNION PLAN NON-UNION - ------------------------------- ---------- --------- (IN THOUSANDS) Change in Benefit Obligation Benefit obligation at beginning of period............ $ -- $ -- Benefit obligation acquired.......................... (6,000) (800) Service cost......................................... (344) (94) Interest cost........................................ (241) (28) Actuarial gain....................................... -- 122 ------- ------- Benefit obligation at end of period................ $(6,585) $ (800) ------- ------- Change in Plan Assets Fair value of plan assets at beginning of period..... $ -- $ -- Actual return on plan assets......................... 2 -- Employer contributions............................... 100 -- ------- ------- Fair value of plan assets at end of period......... $ 102 $ -- ------- ------- Funded status.......................................... $(6,484) $ (800) Unrecognized net loss (gain)........................... 3 (122) ------- ------- Pension liability.................................... $(6,481) $ (922) ======= ======= Discount rate.......................................... 7.50% 7.0-7.5% Rate of compensation increase.......................... 5.00% 5.00% Expected return on plan assets......................... 6.75% 7.50%
Components of pension expense were: Service cost........................................... $344 $ 94 Interest cost obligation............................... 241 28 Expected return on plan assets......................... (4) -- ---- ---- Net pension expense.................................... $581 $122 ==== ====
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company's employees retiring at or after age 55 with at least 10 years of service are eligible for postretirement health care, dental, life insurance and other benefits. F-15 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 6. EMPLOYEE BENEFITS PLANS (CONTINUED) Information on plan assets and benefit obligations is shown below:
NINE MONTHS ENDED SEPTEMBER 30, 1999 UNION PLAN NON-UNION - ------------------------------------ ---------- --------- (IN THOUSANDS) Change in Benefit Obligation Benefit obligation at beginning of period............ $ -- $ -- Benefit obligation acquired.......................... (7,500) (1,600) Service cost......................................... (233) (47) Interest cost........................................ (301) (66) Actuarial loss (gain)................................ -- 185 Benefits paid........................................ -- -- ------- -------- Benefit obligation at end of period................ $(8,034) $ (1,528) ------- -------- Change in Plan Assets Fair Value of plan assets at beginning of period..... $ -- $ -- Employer contributions............................... -- -- Benefits paid........................................ -- -- ------- -------- Fair value of plan assets at end of period......... $ -- $ -- ------- -------- Funded status.......................................... $(8,034) $ (1,528) Unrecognized net loss (gain)........................... -- (185) ------- -------- Recorded liability................................... $(8,034) $ (1,713) ======= ======== Discount rate.......................................... 6.75% 7.0-7.5%
The components of post-retirement benefits other than pension expense were: Service cost........................................... $ 233 $ 47 Interest cost.......................................... 301 66 ------- -------- Total expense.......................................... $ 534 $ 113 ======= ========
For the non-union plan, the assumed rate of future increases in the per-capita cost of health care benefits is 8.25% for 1999, gradually decreasing to 5.0% for 2009 and beyond. Increasing the health care cost trend rate by one percentage point would increase the accumulated obligation as of September 30, 1999, by $400,000 and annual aggregate service and interest costs by $15,000. Decreasing the health care cost trend rate by one percentage point would decrease the accumulated obligation as of September 30, 1999, by $300,000 and annual aggregate service and interest costs by $10,000. For the union plan, the assumed rate of future increases in the per-capita cost of health care benefits is 8.60% for 1999, gradually decreasing to 5.0% for 2009 and beyond. Increasing the health care cost trend rate by one percentage point would increase the accumulated obligation as of September 30, 1999, by $1.9 million and annual aggregate service and interest costs by $230,000. Decreasing the health care cost trend rate by one percentage point would decrease the accumulated obligation as of June 30, 1999, by $1.5 million and annual aggregate service and interest costs by $180,000. F-16 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 6. EMPLOYEE BENEFITS PLANS (CONTINUED) EMPLOYEE STOCK PLANS A 401(k) plan is maintained to supplement eligible employees' retirement income. The Company matches 100 percent of non-union employee contributions up to 6 percent of such employees' annual compensation. The Company also matches 65 percent of contributions made by union employees, up to 2.6 percent of annual compensation. Employer contributions vest 20 percent per year. 7. COMMITMENTS AND CONTINGENCIES ASH DISPOSAL SITE Pennsylvania Department of Environmental Protection ("PaDEP") regulations governing ash disposal sites require, among other things, groundwater assessments of landfills if existing groundwater monitoring indicates the possibility of degradation. The assessments could lead to the installation of additional monitoring wells and if degradation of the groundwater is discovered, the Company would be required to develop abatement plans, which may include the lining of unlined sites. To date, the Facilities' ash disposal site has not shown any signs that would require abatement. Management does not believe that the costs of maintaining and abandoning the ash disposal site will have a material impact on the Company's results of operations or financial position. TWO LICK CREEK RESERVOIR DEEP MINE DISCHARGES In connection with its purchase of the Facilities on March 18, 1999, the Company acquired the Two Lick Creek Dam and Reservoir. Acid discharges from two inactive deep mines were being collected and partially treated on the reservoir property by a mining company before being pumped off the property for additional treatment at a nearby treatment plant. The mining company, which filed for bankruptcy, operated the collection and treatment system until May 1999, when its assets were allegedly depleted. The PaDEP initially advised the Company that it was potentially responsible for treating the discharges by virtue of its alleged ownership of the property of which the discharges allegedly emanated. Without any admission of its liability, the Company voluntarily agreed through a Letter Agreement to fund the operation of the treatment plant (approximately $11,000 per month) for an interim period while PaDEP continued its investigation. The agency has recently notified the Company that it is responsible for treatment of one of the discharges. It has also advised the owner of the mineral rights and three former operators of the mine that they are liable and has requested them to cooperatively develop and implement a plan with the Company to treat the discharge. The Company estimates the cost of a passive treatment system to be approximately $750,000. The cost of operating a passive treatment system would be considerably less than the cost of operating the current treatment plant. FUEL CONTRACTS COMMITMENT The Company has entered into several fuel purchase agreements with various third party suppliers for the purchase of bituminous steam coal. These contracts call for the purchase of a minimum quantity of coal over the term of the contracts, which extend from three months to 8.5 years from F-17 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 7. COMMITMENTS AND CONTINGENCIES (CONTINUED) September 30, 1999, with an option at the Company's discretion to purchase additional amounts of coal as stated in the agreements. The minimum quantity of coal to be purchased through these contracts is 19.9 million tons over the terms of the respective contracts. Pricing is based on fixed prices per ton with various methods of escalation as defined in the agreements. The escalation is generally based on market conditions. These agreements may be terminated by notice to the seller. If notice of termination is filed at the Company's convenience, the Company would be liable for unpaid amounts for coal already delivered and the seller's incidental costs of closing out the agreement. In no event shall the Company be liable for lost anticipated profit or for any charges for coal not delivered. PLANT IMPROVEMENTS Upon acquisition, the Company began major plant improvements consisting primarily of a turnkey pollution control retrofit project ("Environmental Capital Improvements"). The estimated cost of this project is $233.8 million. LEASES At September 30, 1999 the Company had no capital leases, however, the Company did have several operating leases in place relating mainly to flue gas conditioning equipment and trucks. At September 30, 1999, the future operating lease commitments were as follows:
PERIOD ENDING SEPTEMBER 30, - --------------------------- (IN THOUSANDS) October 1999-September 2000................................. $ 811 October 2000-September 2001................................. 132 October 2001-September 2002................................. 131 October 2002-September 2003................................. 126 October 2003-September 2004................................. 75 ------ Total................................................... $1,275 ======
8. SUPPLEMENTAL STATEMENTS OF CASH FLOWS INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------- -------------- (IN THOUSANDS) Cash paid: Interest.................................................... $10,131
NINE MONTHS ENDED SEPTEMBER 30, 1999 - ------------------------------- ---------- Details of facility acquisition: Fair value of assets acquired............................... $1,909,983 Liabilities assumed......................................... 91,352 ---------- Net cash paid for acquisition............................... $1,818,631 ==========
F-18 EDISON MISSION HOLDINGS CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 9. YEAR 2000 COMPLIANCE (UNAUDITED) The Year 2000 ("Y2K") problem concerns the inability of information and technology-based operating systems to properly recognize and process date-sensitive information beyond December 31, 1999. This could result in systems failures and miscalculations, which could cause business disruptions. Equipment that uses a date, such as computers and operating control systems, may be affected. This includes not only the Company's equipment but that used by the Company's customers and suppliers. The Company has completed its assessment of the implication Y2K will have on its own equipment and is nearing completion in its remediation efforts. The total costs incurred to date as well as the additional costs associated with the remaining remediation efforts related to plant equipment as well as management information systems is anticipated to be immaterial. The Company is also well into its program to identify and assess the Y2K readiness of its critical and important suppliers and customers. In addition, the Station is well underway in development of contingency plans to address unforeseen problems both with the Company's own equipment and also that of their customers and suppliers. While there can be no assurance that the Company's remediation and contingency plans will be successful, management does not expect that any disruptions will have a material adverse effect on the Station's overall financial position or results of operations; however, if not effectively remediated, negative effects from the Y2K issues, including those related to internal systems, vendors, business partners, or other customers, could cause results to differ. F-19 APPENDIX A GLOSSARY OF DEFINED TERMS Unless the context requires otherwise, any reference in this prospectus to any agreement shall mean such agreement and all schedules, exhibits and attachments thereto as amended, supplemented or otherwise modified and in effect as of the date of this prospectus. All terms defined herein used in the singular shall have the same meanings when used in the plural and vice versa. CERTAIN TERMS DEFINED BELOW ARE SUMMARIES OF TERMS DEFINED IN, AND ARE DEFINED MORE SPECIFICALLY IN, THE OPERATIVE CONTRACTS AND THE FINANCING DOCUMENTS. SUCH SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO, ALL OF THE PROVISIONS OF THE OPERATIVE CONTRACTS AND THE FINANCING DOCUMENTS. COPIES OF THE OPERATIVE CONTRACTS AND THE FINANCING DOCUMENTS REASONABLY REQUESTED ARE AVAILABLE FOR INSPECTION, SUBJECT TO APPROPRIATE CONFIDENTIALITY RESTRICTIONS, AT THE CORPORATE OFFICE OF THE COMPANY. SEE "AVAILABLE INFORMATION." "Acceptable Credit Provider" means a bank or trust company with a combined capital and surplus of at least $1 billion whose long term unsecured debt is rated "A2" or higher by Moody's or "A" or higher by S&P. "Acceptable Credit Support" means (1) an unconditional guarantee by EME or any other Affiliate of the Company, with such entity in each case being rated "Baa1" or higher by Moody's and "BBB+" or higher by S&P or (2) an irrevocable letter of credit from an Acceptable Credit Provider. In the event of a downgrade of any Acceptable Credit Provider by Moody's or S&P to below the minimum criteria specified above, substitute Acceptable Credit Support must be provided within 30 days of such event. Otherwise, the Trustee shall draw down the then outstanding amount of the Acceptable Credit Support and deposit such monies into the Debt Service Reserve Accounts. "Accounts" means, collectively, the Accrued Interest Accounts, the Debt Service Reserve Accounts, the Equity Account, the Environmental Capital Expenditures Account, the Principal Accounts, the Recovery Event Proceeds Account and the Revenue Account. "Accrued Interest Account" means, for each class of Senior Debt, the account established by the Collateral Agent for such Senior Debt pursuant to the Security Deposit Agreement into which amounts shall be deposited for the purpose of making payments when due of accrued interest on such Senior Debt. "Accrued Interest Amount" means, with respect to any Accrued Interest Account, as of any date of calculation, an amount sufficient to cause the balance of such Accrued Interest Account to equal the sum of (1) all accrued and unpaid interest and fees in respect of the related Indebtedness on such date, (2) all amounts in respect of funding losses, increased capital costs, taxes, indemnities, costs and expenses associated with such Indebtedness due and payable on such date and (3) if the next succeeding interest payment date with respect to such Indebtedness will occur prior to the next succeeding Monthly Transfer Date, all interest and fees projected to accrue in respect of such Indebtedness from the date of calculation to but excluding such interest payment date and all amounts in respect of funding losses, increased capital costs, taxes, indemnities, costs and expenses associated with such Indebtedness projected to be due and payable on such interest payment date. "Acquisition Effective Date" means March 18, 1999. "Additional Bonds" means any bonds issued pursuant to the indenture other than the original bonds. "Administrative Agent" means Citicorp USA, Inc., in its capacity as administrative agent for the Bank Lenders, and includes each other Person as may have subsequently been appointed as the successor Administrative Agent pursuant to the Credit Agreement. A-1 "Affiliate" means, with respect to any specified Person, any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person. A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Alternate Base Rate" means, on any date and with respect to all Base Rate Loans, a fluctuating rate of interest per annum equal to the higher of (1) the "base rate" of the Administrative Agent and (2) the Federal Funds Rate most recently determined by the Administrative Agent plus 1/2 of 1%. "Bank Debt Service Reserve Account" means the Debt Service Reserve Account established for the benefit of the Banks under the Security Deposit Agreement. "Banks" means the banks and other financial institutions party to the Credit Agreement. "Base Rate Loans" means all Loans bearing interest based on the Alternate Base Rate. "Beneficial Owner" means any person who holds a beneficial ownership interest in a bond. "Bond Debt Service Reserve Account" means the Debt Service Reserve Account established for the benefit of the bondholders under the Security Deposit Agreement. "Bondholders" means the registered holder of any bond from time to time. "Bonds" means the original bonds and any Additional Bonds. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. "Capital Lease Obligation" means, as to any Person, all monetary obligations of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of the indenture, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP. "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation). "Cash Equivalents" means, at any time: (1) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Government or an agency thereof; (2) other investments in securities or bank instruments rated at least "A" by S&P and "A2" by Moody's or "A-1" by S&P and "P-1" by Moody's and with maturities of less than 366 days; or (3) other securities as to which the Company has demonstrated, to the satisfaction of the trustee, adequate liquidity through secondary markets or deposit agreements. "Change of Control" means the reduction in EME's direct or indirect beneficial ownership in the Company to less than 50% at any time unless at such time either (1) the bonds are rated at least Investment Grade by each Rating Agency then rating the bonds and a Ratings Reaffirmation is obtained or (2) the reduction in EME's voting interest has been approved by a vote of more than 66 2/3% of the bondholders. "Closing Date" means May 27, 1999. "Collateral Agent" means United States Trust Company of New York, as collateral agent for the benefit of the Secured Parties under the Guarantee and Collateral Agreement, together with its successors and assigns. "Commitments" means the collective reference to the 364-Day Term Loan Commitments, the Construction Term Loan Commitments and the Revolving Loan Commitments. A-2 "Consumer Price Index" means the consumer price index as published by the United States Department of Labor, Bureau of Labor Statistics. "Credit Support Guarantee" means the Credit Support Guarantee, dated as of March 18, 1999, as amended, made by EME in favor of the Collateral Agent. "Debt Service" means, with respect to any Senior Debt, principal (or, in the case of Swap Indebtedness, amounts payable on early termination of the related Interest Rate Hedging Obligation), interest (or, in the case of any Swap Indebtedness, fixed payments in respect of the related Interest Rate Hedging Obligation), fees and amounts in respect of funding losses, increased capital costs, taxes, indemnities, costs and expenses, in each case payable in respect of such Senior Debt. "Debt Service Coverage Ratio" means, for any period, a ratio the numerator of which is Net Cashflow for such period, and the denominator of which is the aggregate of all principal, interest and other fixed charges payable during such period on the bonds or on other Permitted Indebtedness which is PARI PASSU with the bonds. "Debt Service Reserve Accounts" means, collectively, (1) the Bond Debt Service Reserve Account, (2) the Bank Debt Service Reserve Account and (3) any similar debt service reserve accounts established for the benefit of holders of other secured Senior Debt. "Debt Service Reserve Guarantee" means the Debt Service Reserve Guarantee, dated as of March 18, 1999, made by EME in favor of the Collateral Agent for the benefit of the Banks. "Debt Service Reserve Requirement," with respect to any Indebtedness, has the meaning ascribed to the term "Debt Service Reserve Requirement" in the Financing Documents relating to such Indebtedness. "Default" means an event or condition that, with the giving of notice or the lapse of time, or both, would become an Event of Default. "DSR Credit Instrument" means, with respect to any Senior Debt, a letter of credit, guarantee or other instrument that under the Financing Documents relating to such Senior Debt may be delivered to the Collateral Agent in total or partial satisfaction of the Debt Service Reserve Requirement relating to such Senior Debt. "DSR Letter of Credit Indebtedness" means any indebtedness incurred under an agreement relating to letters of credit issued to satisfy a Debt Service Reserve Requirement. "Environmental Capital Improvements" means capital improvements in furtherance of the Company's proposed schedule and budget for the installation of a flue gas desulfurization unit and three selective catalytic reduction units at the Homer City Units. "Environmental Capital Improvements Facility" means the $250 million five-year term loan facility provided under the Credit Agreement, the proceeds of which will be used for the Environmental Capital Improvements. "Equity Account" means the account of such name established under the Security Deposit Agreement. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Event of Default" means an "Event of Default" under the indenture. "Exchange Act" means the Securities Exchange Act of 1934, as amended. A-3 "Final Maturity Date" means the last stated maturity date of any series of the bonds. "Financing Documents" means, collectively, the indenture, the bonds, the Purchase Agreement, the registration rights agreement, the Credit Agreement and the Security Documents. "GAAP" means generally accepted accounting principles as in effect in the United States from time to time. "Governmental Authority" means any nation or government, any state, provincial or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Guarantee and Collateral Agreement" means the Guarantee and Collateral Agreement, dated as of March 18, 1999, by the Company and the Guarantors in favor of the Collateral Agent. "Guarantor Guarantee" means the guarantee obligations of each Guarantor under the Guarantee and Collateral Agreement. "Indebtedness" of any Person means, without duplication: (1) all indebtedness for borrowed money; (2) all obligations issued, undertaken or assumed as the deferred purchase price of property or services which purchase price is due more than six months from the date of incurrence of the obligation in respect thereof or is evidenced by a note or other instrument, except trade accounts arising in the ordinary course of business; (3) all reimbursement obligations with respect to surety bonds, letters of credit (to the extent not collateralized with cash or Cash Equivalents), bankers' acceptances and similar instruments (in each case, whether or not matured); (4) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (5) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property); (6) all Capital Lease Obligations; (7) all Interest Rate Hedging Obligations; (8) all indebtedness referred to in clauses (1) through (7) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (9) all contingent liabilities. "Independent Engineer" means Stone and Webster Management Consultants, Inc. or another nationally recognized independent engineering and consulting firm which, as Independent Engineer, will independently review the technical aspects of the project, analyze the contractual structure and create financial projections for the benefit of the bondholders. "Indenture" means the indenture, dated as of the Closing Date, between the Company and the trustee. "Original Bonds" means the $300,000,000 8.137% Senior Secured Bonds due 2019 and the $530,000,000 8.734% Senior Secured Bonds due 2026 issued by the Company. "Initial Purchasers" means, collectively, Lehman Brothers Inc., Credit Suisse First Boston Corporation, Salomon Smith Barney Inc. and SG Cowen Securities Corp. A-4 "Intercreditor Agreement" means the Collateral Agency and Intercreditor Agreement, dated as of March 18, 1999, among the Company, the Guarantors, the Secured Parties' Representatives, the Administrative Agent and the Collateral Agent. "Interest Payment Date" means (1) with respect to the bonds, each April 1 and October 1, commencing on October 1, 1999 and concluding on the Final Maturity Date and each other date on which interest on the bonds becomes due and payable, whether on a Redemption Date, the Final Maturity Date, declaration of acceleration or otherwise, and (2) with respect to any other Secured Obligations, each regularly scheduled date on which interest is due and payable with respect to such Secured Obligations, as such date may be established from time to time, and any date on which interest on such Secured Obligations becomes due and payable, whether at redemption, the final maturity date or declaration of acceleration or otherwise. "Interest Rate Hedging Obligations" means, as to any Person, the net payment Obligations of all interest rate swaps, caps or collar agreements or similar arrangements entered into by such Person in order to protect against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, and, in any event, not for speculative purposes. "Interest Rate Protection Agreement" means any agreement providing for swaps, ceiling rates, ceiling and floor rates, contingent participation or other hedging mechanisms with respect to the payment of interest. "Investment Grade" means a rating of at least "Baa3" from Moody's, at least "BBB-" from S&P and at least "BBB-" from Duff & Phelps. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including Guarantees of Indebtedness or other Obligations), advances of assets or capital contributions (excluding commission, travel and entertainment, moving, and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "LIBO Rate Loans" means all Loans bearing interest based upon a rate determined in the London Interbank Market. "Loans" means the collective reference to Acquisition Loans, Environmental Capital Improvements Loans and Working Capital Loans. "Monthly Transfer Date" means the last Business Day of each month. "Mortgage" means the Mortgage and Security Agreement, dated as of March 18, 1999, as amended, by EME Homer City in favor of the Collateral Agent. "Net Cash Flow" means, for any period, (1) all Revenues for such period, MINUS (2) the sum of (a) all amounts paid by or on behalf of the Company and the Guarantors during such period in respect of fuel, administration, operation, maintenance, repairs and overhead, but excluding all subordinated payments made to Affiliates and capital expenditures which are funded with Permitted Indebtedness PLUS (b) all taxes paid by the Company and the Guarantors during such period, PLUS (c) all fees paid by the Company and the Guarantors relating to financing activities during such period. "Obligations" means any principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or any of the Guarantors whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees and other A-5 liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereof. "Officer" means, with respect to any Person, any Chairman of the Board, President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Senior Vice President, Vice President, Treasurer or Secretary of such Person. "Officer's Certificate" means a certificate signed by an Officer of the Company. "Operative Contracts" means, collectively, the Transition Contracts, the Interconnection Agreement, the Easement Agreement, the Coal Supply Agreements, the Coal Cleaning Agreement, the Operating Agreement, the Joint Services Agreement, the Leases and any other material agreement entered into by the Company or any of the Guarantors with respect to the operation, maintenance, management, repair or improvement of the Facilities. "Opinion of Counsel" means a written opinion of counsel for any Person either expressly referred to in the indenture or otherwise reasonably satisfactory to the trustee which may include, without limitation, counsel for the Company, whether or not such counsel is an employee of the Company. "Ordinary Course Letter of Credit Indebtedness" means any indebtedness incurred in the form of reimbursement obligations relating to letters of credit, surety bonds and performance bonds used by the Company and the Guarantors in the ordinary course of their business. "Outstanding" means when used with respect to the bonds, shall mean, as of the date of determination, all bonds theretofore authenticated and delivered under the indenture, except: (1) bonds theretofore canceled by the trustee or delivered to the trustee for cancellation; (2) bonds or portions thereof deemed to have been paid within the meaning set forth in the indenture; and (3) bonds in exchange for or in lieu of which other bonds have been authenticated and delivered pursuant to the indenture; PROVIDED, HOWEVER, that in determining whether the holders of the requisite principal of bonds outstanding have given any request, demand, authorization, direction, notice, consent or waiver under the indenture or the Security Documents or whether or not a quorum is present at a meeting of bondholders, bonds owned by the Company or any Affiliate thereof shall be disregarded and deemed not to be outstanding as provided in the indenture. "Permitted Investments" means (1) obligations issued or guaranteed as to principal and interest (including money market securities) by (a) the United States of America or (b) any agency thereof for which its obligations are backed by the full faith and credit of the United States of America, and certificates evidencing ownership of the right to the payment of the principal of and interest on such obligations, provided that such obligations are held in the custody of an Acceptable Credit Provider in a special account separate from the general assets of such custodian; (2) certificates of deposit or other interest-bearing obligations of the Collateral Agent, an Acceptable Credit Provider or other bank with long-term unsecured debt rated either "AAA" by S&P or "Aaa" by Moody's, or "A" or higher by S&P and "A2" or higher by Moody's; and (3) commercial paper, money market securities and other corporate debt securities rated, on the date of purchase, "A-1" by S&P or "P-1" by Moody's or higher for securities with original maturities of less than one year and "AAA" by S&P or "Aaa" by Moody's, or "A" or higher by S&P and "A2" or higher by Moody's, for securities with original maturities of one year or greater and maturing not more than one year from the date of acquisition thereof. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Authority or any other entity. "Power Market Consultant" means PHB Hagler Bailly, Inc. or another nationally recognized power market consulting firm which, as Power Market Consultant, which will perform a market study of A-6 certain markets relating to the Facilities and develop independent electricity price forecasts for the benefit of the bondholders. "Principal Account" means, for each class of Senior Debt, the account established by the Collateral Agent for such Senior Debt pursuant to the Security Deposit Agreement into which amounts shall be deposited for the purpose of making payments when due of the principal amount of such Senior Debt. "Principal Payment Date" means (1) with respect to the bonds, the date on which all or a portion of the principal of such bonds becomes due and payable as provided therein or in the indenture, whether on a scheduled date for payment of principal, at a Redemption Date, the Final Maturity Date, declaration of acceleration or otherwise and (2) with respect to any other Secured Obligations, the date on which all or a portion of the principal of such Secured Obligations becomes due and payable pursuant to the terms thereof, whether on a scheduled date for payment of principal, at a Redemption Date, a final maturity date, declaration of acceleration or otherwise. "Prudent Industry Practice" means any of the practices, methods, standards and acts (including but not limited to the practices, methods and acts engaged in or approved by a significant portion of the electric power generation industry in the United States) that, at a particular time, in the exercise of reasonable judgment in light of the facts known or that should reasonably have been known at the time a decision was made, could have been expected to accomplish the desired result consistent with good business practices, reliability, economy, safety and expedition, and which practices generally conform to applicable law and governmental approvals. "Qualified Institutional Buyer" means a "qualified institutional buyer" as defined in Rule 144A under the Securities Act. "Rating Agencies" means each of Moody's, S&P and Duff & Phelps, together with any other nationally recognized credit rating agency of similar standing if any such entity is not then currently rating the bonds. "Ratings Reaffirmation" means, with respect to a specified event, a written confirmation from two or more Rating Agencies that a lowering of the then-current credit ratings of the bonds will not result from such event. "Recovery Event" means any settlement of or payment of $5,000,000 or more in respect of (1) any property or casualty insurance claim relating to any asset of the Company or any of the Guarantors or (2) any seizure, condemnation, confiscation or taking of, or requisition of title or use of, the Facilities or any part thereof by any Governmental Authority. "Recovery Event Proceeds" means proceeds received in respect of a Recovery Event. "Redemption Date" means a date set forth for redemption of bonds pursuant to the indenture. "Redemption Price" means the price to be paid by the Company for the bonds that are redeemed pursuant to the indenture. "Regular Record Date" means, with respect to any scheduled payment date of any installment of principal of any bond, or payment of interest thereon, shall mean the 15th day (whether or not a Business Day) next preceding such payment date. "Reinvestment Notice" means a notice executed by an authorized Officer of the Company to the Collateral Agent and the trustee (1) setting forth in reasonable detail the nature of the proposed restoration or replacement relating thereto and the estimated cost and time to complete such restoration or replacement and (2) stating that (a) no Default or Event of Default has occurred and is continuing, (b) such restoration or replacement is technologically and economically feasible, (c) the net cash proceeds of such Recovery Event, together with other resources available to the Company and the A-7 Guarantors, are sufficient to pay the estimated cost of completing such restoration or replacement and (d) the Company has sufficient resources (through business interruption insurance or otherwise) to pay all principal, interest and other fixed charges projected to become due and payable with respect to Senior Debt prior to the completion of such restoration or replacement. "Required Capital Improvements" means capital improvements to the Facilities which are either required by applicable law or which the Company reasonably believes are appropriate in response to enacted or anticipated changes in applicable law or the interpretation thereof. "Redemption Date" means the date on which the Company elects or is required to redeem all or a portion of the bonds in accordance with the indenture. "Required Secured Parties" shall mean, at any time, holders of Senior Debt that at such time hold greater than 50% of the sum of all such Senior Debt outstanding at such time (which amount shall include, (1) in the case of the Loans, DSR Letter of Credit Indebtedness and Ordinary Course Letter of Credit Indebtedness, the commitments with respect thereto at such time and (2) in the case of Swap Indebtedness, (a) prior to the occurrence of an event of default under any Senior Debt, zero, and (b) after the occurrence of an event of default under any Senior Debt, the termination value of the Interest Rate Hedging Obligation underlying such Swap Indebtedness). "Restricted Investment" means any Investment other than a Permitted Investment. "Restricted Payment Date" means the Closing Date and the first Business Day of each January, April, July and October. "Revenue Account" means the account of such name established under the Security Deposit Agreement. "Revenues" means (1) all revenues received from the operation of the Facilities, (2) all proceeds from business interruption or other insurance and (3) all other amounts received in respect of the Facilities. "Sale-Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Guarantor transfers such property to a Person and the Company or a Guarantor leases it from such Person. "Secured Parties" means the bondholders, the Banks, the Collateral Agent, the Secured Parties' Representatives and any other person that becomes a secured party under any Financing Document. "Secured Parties' Representatives" means the Administrative Agent and each Person that serves as indenture trustee, collateral agent, lender's representative or in any similar capacity for Persons that provide any Senior Debt. "Securities Act" means the Securities Act of 1933, as amended. "Security Deposit Agreement" means the Security Deposit Agreement, dated as of March 18, 1999, as amended, among the Company, the Guarantors and the Collateral Agent. "Security Documents" means (1) the Guarantee and Collateral Agreement, the Mortgage, the Subordination Agreement, the Intercreditor Agreement, the Security Deposit Agreement and (2) the Credit Support Guarantee and any other guarantee or instrument hereafter entered into by the Company or any other Person which guarantees or secures payment of the indebtedness evidenced by the bonds or payment or performance of any other Obligation. "Senior Debt" means (1) the Company's Indebtedness under the bonds, (2) the Company's Indebtedness under the Credit Agreement, (3) any additional senior Indebtedness incurred by the Company which is permitted under the terms of any Senior Debt, (4) the Company's Interest Rate Hedging Obligations to any lender under the Credit Agreement with respect to the loans thereunder A-8 and (5) the Company's Indebtedness as set forth above in clauses (10) and (13) of the covenant described under the caption under "Description of Principal Financing Documents--Indenture--Limitation on the Incurrence of Indebtedness". "Senior Debt Payment Date" means each date on which any Debt Service in respect of any Senior Debt is due and payable, including without limitation any Interest Payment Date or Principal Payment Date. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the credit agreement or other original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Indebtedness" means (1) with respect to Indebtedness of the Company or any Guarantor to any entity other than the Company or any Guarantor, Indebtedness that is (a) payable solely and exclusively from the funds that would otherwise have been available to make Restricted Payments from the Company, (b) fully subordinated in all rights and remedies to the bonds and (c) unsecured, or (2) with respect to Indebtedness from the Company to any Guarantor or from any Guarantor to the Company or any other Guarantor, Indebtedness for which payments of principal and interest are included in cash flow available to pay senior Indebtedness. "Subordination Agreement" means the Subordination Agreement, dated as of March 18, 1999, among the Company, the Guarantors and the Collateral Agent. "Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company or other entity of which more than 50% of the outstanding capital stock, partnership interests or other equity interests having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) or to control the management of such partnership, limited liability company or other entity is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person. "Swap Indebtedness" means any indebtedness incurred under Interest Rate Hedging Obligations of the Company and the Guarantors. "Trustee" means United States Trust Company of New York, as trustee for the benefit of the bondholders under the indenture, together with its successors and assigns. A-9 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- We have not authorized any dealer, salesperson or other person to give any information or represent anything not contained in this prospectus. You must not rely on unauthorized information. This prospectus does not offer to sell or buy any shares in any jurisdiction where it is unlawful. The information in this prospectus is current as of , 1999. However, you should realize that our affairs may have changed since the date of this prospectus. ------------------- TABLE OF CONTENTS
Page -------- Forward-Looking Statements............. i Notice to New Hampshire Residents...... i Prospectus Summary..................... 1 Summary Consolidated Financial Data.... 12 Risk Factors........................... 13 Use of Proceeds........................ 17 Capitalization......................... 17 Selected Consolidated Financial Data... 18 Management's Discussion and Analysis of Financial Condition.................. 19 The Exchange Offer..................... 24 The Company and EME.................... 32 Business............................... 34 Management............................. 47 Certain Relationships and Related Transactions......................... 49 Description of Principal Contracts..... 50 Description of the Bonds............... 59 Description of Principal Financing Documents............................ 64 Exchange Offer; Registration Rights.... 86 Plan of Distribution................... 87 Certain United States Federal Income Tax Considerations................... 88 Legal Matters.......................... 91 Experts................................ 91 Available Information.................. 91 Incorporation of Certain Documents by Reference............................ 91 Index to Consolidated Financial Statements........................... F-1 Appendix A--Glossary of Defined Terms................................ A-1
$830,000,000 EDISON MISSION [LOGO] HOLDINGS CO. An EDISON MISSION ENERGY Company
8.173% SENIOR SECURED BONDS DUE 2019 8.734% SENIOR SECURED BONDS DUE 2026 ------------------- PROSPECTUS , 1999 ----------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS I. EDISON MISSION HOLDINGS CO., EDISON MISSION FINANCE CO., HOMER CITY PROPERTY HOLDINGS, INC., MISSION ENERGY WESTSIDE, INC., CHESTNUT RIDGE ENERGY COMPANY AND EDISON MISSION ENERGY. Edison Mission Holdings Co. (the "Company"), Edison Mission Finance Co., Homer City Property Holdings, Inc., Mission Energy Westside, Inc. and Chestnut Ridge Energy Company, is each a California corporation. Article VI of each of the Company's, Edison Mission Finance Co.'s, Homer City Property Holdings, Inc.'s, Mission Energy Westside, Inc.'s, Chestnut Ridge Energy Company's and Edison Mission Energy's respective Bylaws provide, in effect, that, to the extent and under the circumstances permitted by Section 317 of the California Corporations Code, each such company shall indemnify any person who was or is a party or is threatened to be made a party to any action, suit or proceeding of the type described in that section by reason of the fact that he or she is or was a director of officer of the applicable company. Section 317 of the California Corporations Code empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than in certain actions by or in the right of the corporation as described below), by reason of the fact that he or she is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a corporation that was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation, against expenses (including attorneys' fees), judgments, fines, settlements and other amounts actually or reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner he or she reasonably believed to be in the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. In the case of an action by or in the right of the corporation, no indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation in the performance of his or her duty to the corporation and its shareholders unless and only to the extent that the court in which such action or suit is or was pending shall determine that, in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which such court shall deem proper. Section 317 further provides that to the extent that such director, officer, employee or agent of a corporation has been successful on the merits in defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith. Article V of each of the Company's, Edison Mission Finance Co.'s, Homer City Property Holdings, Inc.'s, Mission Energy Westside, Inc.'s, and Chestnut Ridge Energy Company's respective Articles of Incorporation and Article IV of Edison Mission Energy's Articles of Incorporation relieve their respective directors from monetary damages to their respective companies or their respective shareholders for any breach of such director's fiduciary duty as a director to the extent permitted by the California Corporations Code. Under Section 204(a)(10) of the California Corporations Code, a corporation may relieve its directors from personal liability to such corporation or its shareholders for monetary damages for any breach of their fiduciary duty as directors except (i) for acts or omissions that show a reckless disregard for the director's duty to the corporation or its shareholders in circumstances in which the director was unaware, or should have been aware, in the ordinary course of II-1 performing his or her duties, of a risk of serious injury to the corporation or its shareholders, (ii) for any act or omission not in good faith or that a director believes to be contrary to the best interests of the corporation or its shareholders, (iii) for any intentional misconduct or knowing and culpable violation of law, (iv) for any willful or negligent violation of certain provisions of the California Corporations Code imposing certain requirements with respect to the making of loans or guarantees and the payment of dividends, (v) for any transaction from which the director derived an improper personal benefit or (vi) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the corporation or its shareholders. II. EME HOMER CITY GENERATION L.P. EME Homer City Generation L.P. (the "Partnership") is a limited partnership organized under the laws of the State of Pennsylvania. Section 8510 of the Pennsylvania Revised Uniform Limited Partnership Act provides that, subject to such standards and restrictions, if any, as are set forth in its partnership agreement, a limited partnership may, and shall have the power to, indemnify and hold harmless any partner or other persons from and against any and all claims and demands whatsoever; provided, however, that such indemnification shall not be made in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness. Section 8.7 of the Partnership's Agreement of Limited Partnership (the "Agreement") provides that the General Partner (as defined in the Agreement) will not be liable to the Partnership or the Limited Partners (as defined in the Agreement) for any act or omission by the General Partner pursuant to the authority granted to it by the Agreement, except by reason of fraud, bad faith, willful misfeasance, gross negligence or any act in breach of the Agreement. The General Partner will indemnify and save harmless the Partnership and the Limited Partners from any loss or liability arising out of its fraud, bad faith, willful misfeasance, gross negligence or breach of the Agreement. Moreover, the Partnership will indemnify and save harmless the General Partner from any loss or liability incurred by the General Partner by reason of any act performed by the General Partner on behalf of the Partnership or in furtherance of the Partnership's interest other than by reason of the General Partner's fraud, bad faith, willful misfeasance, negligence or breach of the Agreement. In the event the General Partner is found personally liable for any debts of the Partnership (other than any debt or liability incurred by reason of the General Partner's fraud, bad faith, willful misfeasance, negligence or breach of the Agreement) and is required to and does satisfy a Partnership liability out of its personal assets, the General Partner will have a right of reimbursement out of the assets of the Partnership (the "Right of Reimbursement"). The Right of Reimbursement will accrue to the General Partner 30 days after written notice thereof is given to each of the other Partners. Upon such accrual of the Right of Reimbursement, the General Partner will be reimbursed out of the assets of the Partnership in the order of priority specified in Section 8.7 of the Agreement, but only to the extent necessary to satisfy such Right of Reimbursement. To the extent not reimbursed as provided in the Agreement, the General Partner will have no right of contribution from the Limited Partners. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT NO. DESCRIPTION - ----------- ----------- 3.1 Articles of Incorporation of the Company.* 3.2 Certificate of Amendment of Articles of Incorporation of the Company.* 3.3 By-Laws of the Company.* 3.4 Articles of Incorporation of Edison Mission Finance Co.* 3.5 By-Laws of Edison Mission Finance Co.*
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EXHIBIT NO. DESCRIPTION - ----------- ----------- 3.6 Articles of Incorporation of Homer City Property Holdings, Inc.* 3.7 By-Laws of Homer City Property Holdings, Inc.* 3.8 Articles of Incorporation of Mission Energy Westside, Inc.* 3.9 Certificate of Amendment to Articles of Incorporation of Mission Energy Westside, Inc.* 3.10 By-Laws of Mission Energy Westside, Inc.* 3.11 Articles of Incorporation of Chestnut Ridge Energy Company.* 3.12 By-Laws of Chestnut Ridge Energy Company.* 3.13 EME Homer City Generation L.P. Agreement of Limited Partnership.* 3.14 Amended and Restated Articles of Incorporation of EME, incorporated by reference to Exhibit 3.1 to EME's Current Report on Form 8-K, dated January 30, 1996. 3.15 By-Laws of EME, incorporated by reference to Exhibit 3.2 to EME's Registration Statement on Form 10 filed with the Securities and Exchange Commission on November 21, 1994 ("Form 10"). 4.1 Indenture, dated as of May 27, 1999, between the Company and United States Trust Company of New York, as Trustee.* 5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Company.* 5.2 Opinion of Morgan, Lewis & Bockius LLP, special Pennsylvania counsel to EME Homer City Generation L.P.** 10.1 Exchange and Registration Rights Agreement, dated as of May 27, 1999, by and among the Initial Purchasers, the Guarantors and the Company.* 10.2 Power Purchase Contract between Southern California Edison Company and Champlin Petroleum Company, dated March 8, 1985, incorporated by reference to Exhibit 10.2 to EME's Form 10. 10.2.1 Amendment to Power Purchase Contract between Southern California Edison Company and Champlin Petroleum Company, dated July 29, 1985, incorporated by reference to Exhibit 10.2.1 to EME's Form 10. 10.2.2 Amendment No. 2 to Power Purchase Contract between Southern California Edison Company and Champlin Petroleum Company, dated October 29, 1985, incorporated by reference to Exhibit 10.2.2 to EME's Form 10. 10.3 Power Purchase Contract between Southern California Edison Company and Imperial Energy Company, dated February 22, 1984, incorporated by reference to Exhibit 10.4 EME's Form 10. 10.3.1 Amendment to Power Purchase Contract between Southern California Edison Company and Imperial Energy Company, dated November 13, 1984, incorporated by reference to Exhibit 10.4.1 to EME's Form 10. 10.4 Power Purchase Contract between Southern California Edison Company and Imperial Energy Company Niland No. 2, dated April 16, 1985, incorporated by reference to Exhibit 10.6 to EME's Form 10. 10.5 Power Purchase Contract between Southern California Edison Company and Chevron U.S.A. Inc., dated November 9, 1984, incorporated by reference to Exhibit 10.7 to EME's Form 10.
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EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.5.1 Amendment No. 1 to Power Purchase Contract between Southern California Edison Company and Chevron U.S.A. Inc., dated March 29, 1985, incorporated by reference to Exhibit 10.7.1 to EME's Form 10. 10.5.2 Amendment No. 2 to Power Purchase Contract between Southern California Edison Company and Chevron U.S.A. Inc., dated November 21, 1985, incorporated by reference to Exhibit 10.7.2 to EME's Form 10. 10.5.3 Amendment No. 3 to Power Purchase Contract between Southern California Edison Company and Chevron U.S.A. Inc., dated November 21, 1985, incorporated by reference to Exhibit 10.7.3 to EME's Form 10. 10.6 Power Purchase Contract between Southern California Edison Company and Arco Petroleum Products Company (Watson Refinery), incorporated by reference to Exhibit 10.8 to EME's Form 10. 10.7 Power Supply Agreement between State Electricity Commission of Victoria, Loy Yang B Power Station Pty. Ltd. and the Company Australia Pty. Ltd., as managing partner of the Latrobe Power Partnership, dated December 31, 1992, incorporated by reference to Exhibit 10.9 to EME's Form 10. 10.8 Power Purchase Agreement between P.T. Paiton Energy Company as Seller and Perusahaan Umum Listrik Negara as Buyer, dated February 12, 1994, incorporated by reference to Exhibit 10.10 to EME's Form 10. 10.9 Amended and Restated Power Purchase Contract between Southern California Energy Company and Midway-Sunset Cogeneration Company, dated May 5, 1988, incorporated by reference to Exhibit 10.11 to EME's Form 10. 10.10 Parallel Generation Agreement between Kern River Cogeneration Company and Southern California Energy Company, dated January 6, 1984, incorporated by reference to Exhibit 10.12 to EME's Form 10. 10.11 Parallel Generation Agreement between Kern River Cogeneration (Sycamore Project) Company and Southern California Energy Company, dated December 18, 1984, incorporated by reference to Exhibit 10.13 to EME's Form 10. 10.12 Amendment No. 2 to Power Purchase Agreement between Southern California Energy Company and Vulcan/BN Geothermal Power Company, dated April 1, 1986, incorporated by reference to Exhibit 10.14 to EME's Form 10. 10.13 U.S. $325 million Bank of Montreal Revolver, dated October 29, 1993, incorporated by reference to Exhibit 10.15 to EME's Form 10. 10.13.1 U.S. $400 million Bank of America National Trust and Savings Association Credit Agreement, dated October 27, 1994, incorporated by reference to Exhibit 10.15.1 to EME's Form 10. 10.13.2 Conformed copy of the Amended and Restated U.S. $400 million Bank of America National Trust and Savings Association Credit Agreement, dated as of November 17, 1994, incorporated by reference to Exhibit 10.15.2 to EME's Annual Report on Form 10-K for the year ended December 31, 1994. 10.13.3 Conformed copy of the Second Amended and Restated U.S. $400 million Bank of America National Trust and Savings Association Credit Agreement, dated as of October 11, 1996, incorporated by reference to Exhibit 10.15.3 to EME's Form 10-K for the year ended December 31, 1996.
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EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.14 Amended and Restated Ground Lease Agreement between Texaco Refining and Marketing Inc. and March Point Cogeneration Company, dated August 21, 1992, incorporated by reference to Exhibit 10.16 to EME's Form 10. 10.14.1 Amendment No. 1 to Amended and Restated Ground Lease Agreement between Texaco Refining and Marketing Inc. and March Point Cogeneration Company, dated August 21, 1992, incorporated by reference to Exhibit 10.16 to EME's Form 10. 10.15 Memorandum of Agreement between Atlantic Richfield Company and Products Cogeneration Company, dated September 17, 1987, incorporated by reference to Exhibit 10.17 to EME's Form 10. 10.16 Memorandum of Ground Lease between Texaco Producing Inc. and Sycamore Cogeneration Company, dated January 19, 1987, incorporated by reference to Exhibit 10.18 to EME's Form 10. 10.17 Amended and Restated Memorandum of Ground Lease between Getty Oil Company and Kern River Cogeneration Company, dated November 14, 1984, incorporated by reference to Exhibit 10.19 to EME's Form 10. 10.18 Memorandum of Lease between Sun Operating Limited Partnership and Midway-Sunset Cogeneration Company, incorporated by reference to Exhibit 10.20 to EME's Form 10. 10.19 Executive Supplemental Benefit Program, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.20 1981 Deferred Compensation Agreement, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.21 1985 Deferred Compensation Agreement for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.22 1987 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.23 1988 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.24 1989 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.25 1990 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.26 Annual Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.27 Executive Retirement Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.28 Long-Term Incentive Plan for Executive Officers, incorporated by reference to the Registration Statement (File No. 33-19541) under which SCEcorp registered securities to be offered pursuant to the Plan under the Securities Act of 1933. 10.29 Estate and Financial Planning Program for Executive Officers, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.30 Letter Agreement with Edward R. Muller, incorporated by reference to Exhibit 10.32 to EME's Form 10.
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EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.31 Agreement with James S. Pignatelli, incorporated by reference to Exhibit 10.33 to EME's Form 10. 10.32 Conformed copy of the Guarantee Agreement dated as of November 30, 1994, incorporated by reference to Exhibit 10.34 to EME's Form 10. 10.33 Indenture of Lease between Brooklyn Navy Yard Development Corporation and Cogeneration Technologies, Inc., dated as of December 18, 1989, incorporated by reference to Exhibit 10.35 to EME's Form 10-K for the year ended December 31, 1994. 10.33.1 First Amendment to Indenture of Lease between Brooklyn Navy Yard Development Corporation and Cogeneration Technologies, Inc., dated November 1, 1991, incorporated by reference to Exhibit 10.35.1 to EME's Form 10-K for the year ended December 31, 1994. 10.33.2 Second Amendment to Indenture of Lease between Brooklyn Navy Yard Development Corporation and Cogeneration Technologies, Inc., dated June 3, 1994, incorporated by reference to Exhibit 10.35.2 to EME's Form 10-K for the year ended December 31, 1994. 10.33.3 Third Amendment to Indenture of Lease between Brooklyn Navy Yard Development Corporation and Cogeneration Technologies, Inc., dated December 12, 1994, incorporated by reference to Exhibit 10.35.3 to EME's Form 10-K for the year ended December 31, 1994. 10.34 Conformed copy of A$200 million Bank of America National Trust and Savings Association Credit Agreement, dated November 22, 1994, incorporated by reference to Exhibit 10.36 to EME's Form 10-K for the year ended December 31, 1994. 10.34.1 Conformed copy of the Amended and Restated A$200 million Bank of America National Trust and Savings Associated Credit Agreement, dated December 12, 1994, incorporated by reference to Exhibit 10.36.1 to EME's Form 10-K for the year ended December 31, 1994. 10.34.2 Conformed copy of First Amendment to Amended and Restated A$200 million Bank of America National Trust and Savings Associated Credit Agreement, dated June 7, 1995, incorporated by reference to Exhibit 10.36.2 to EME's Form 10-Q for the quarter ended September 30, 1995. 10.35 Amended and Restated Limited Partnership Agreement of Mission Capital, L.P., dated as of November 30, 1994, incorporated by reference to Exhibit 10.37 to EME's Form 10-K for the year ended December 31, 1994. 10.36 Action of General Partner of Mission Capital, L.P. creating the 9 7/8% Cumulative Monthly Income Preferred Securities, Series A, dated as of November 30, 1994, incorporated by reference to Exhibit 10.38 to EME's Form 10-K for the year ended December 31, 1994. 10.37 Action of General Partner of Mission Capital, L.P. creating the 8 1/2% Cumulative Monthly Income Preferred Securities, Series B, dated as of August 8, 1995, incorporated by reference to Exhibit 10.39 to EME's Form 10-Q for the quarter ended June 30, 1995. 10.38 Power Purchase Contract between ISAB Energy, S.r.l. as Seller and Enel, S.p.A. as Buyer, dated June 9, 1995, incorporated by reference to Exhibit 10.40 to EME's Form 10-Q for the quarter ended June 30, 1995. 10.39 400 million sterling pounds Barclays Bank Plc Credit Agreement, dated December 18, 1995, incorporated by reference to Exhibit 10.41 to EME's Form 8-K, dated December 21, 1995. 10.40 Guarantee by EME, dated December 1, 1995 supporting Letter of Credit issued by Bank of America National Trust and Savings Association to secure payment of bonds issued pursuant to the Brooklyn Navy Yard project tax-exempt bond financing, incorporated by reference to Exhibit 10.42 to EME's Form 10-K for the year ended December 31, 1995.
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EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.41 Guarantee by EME, dated December 1, 1995, supporting Letter of Credit issued by Bank of America National Trust and Savings Association to secure Brooklyn Navy Yard's indemnity to the New York City Industrial Development Agency pursuant to the Brooklyn Navy Yard project tax-exempt bond financing, incorporated by reference to Exhibit 10.43 to EME's Form 10-K for the year ended December 31, 1995. 10.42 Guarantee by EME, dated December 20, 1996, in favor of The Fuji Bank, Limited, Los Angeles Agency, to secure Camino Energy Company's payments pursuant to Camino Energy Company's Credit Agreement and Defeasance Agreement, incorporated by reference to Exhibit 10.44 to EME's Form 10-K for the year ended December 31, 1996. 10.43 Power Purchase Agreement between National Power Corporation and San Pascual Cogeneration Company International B.V., dated September 10, 1997, incorporated by reference to Exhibit 10.45 to EME's Form 10-K for the year ended December 31, 1997. 10.44 Power Purchase Agreement between Gulf Power Generation Co., LTD., and Electricity Generating Authority of Thailand, dated December 22, 1997, incorporated by reference to Exhibit 10.46 to EME's Form 10-K for the year ended December 31, 1997. 10.45 Guarantee by EME, dated June 30, 1998, in favor of Tri Energy Company Limited and the Sanwa Bank, Limited to guarantee payment of 25% of Tri Energy Company Limited's aggregate capital contributions under the Equity Bridge Loan, incorporated by reference to Exhibit 10.47 to EME's Form 10-Q for the quarter ended September 30, 1998. 10.46 Guarantee by EME, dated June 30, 1998, in favor of Tri Energy Company Limited and the Sanwa Bank, Limited to guarantee payment of 37.5% of Tri Energy Company Limited's aggregate capital contributions attributable to Banpu Gas and BANPU, incorporated by reference to Exhibit 10.48 to EME's Form 10-Q for the quarter ended September 30, 1998. 10.47 Equity Support Guarantee by EME, dated December 23, 1998, in favor of ABN AMRO Bank N.V., and the Chase Manhattan Bank to guarantee certain equity funding obligations of EcoElectrica Ltd. and EcoElectrica Holdings Ltd. pursuant to EcoElectrica Ltd.'s Credit Agreement dated as of October 31, 1997, incorporated by reference to Exhibit 10.49 to EME's Form 10-K for the year ended December 31, 1998. 10.48 Master Guarantee and Support Instrument by EME, dated December 23, 1998, in favor of ABN AMRO Bank N.V., and the Chase Manhattan Bank to guarantee the availability of funds to purchase fuel for the EcoElectrica project pursuant to EcoElectrica Ltd.'s Credit Agreement dated as of October 31, 1997 and Intercreditor Agreement dated as of October 31, 1997, incorporated by reference to Exhibit 10.50 to EME's Form 10-K for the year ended December 31, 1998. 10.49 Guarantee Assumption Agreement from EME, dated December 23, 1998, under EME assumed all of the obligations of KENETECH Energy Systems, Inc. to Union Carbide Caribe Inc., under the certain Guaranty dated November 25, 1997, incorporated by reference to Exhibit 10.51 to EME's Form 10-K for the year ended December 31, 1998. 10.50 Transition Power Purchase Agreement, dated August 1, 1998, between New York State Electric & Gas Corporation and Mission Energy Westside, Inc, incorporated by reference to Exhibit 10.52 to EME's Form 10-K for the year ended December 31, 1998. 10.51 Transition Power Purchase Agreement, dated August 1, 1998, between Pennsylvania Electric Company and Mission Energy Westside, Inc., incorporated by reference to Exhibit 10.53 to EME's Form 10-K for the year ended December 31, 1998.
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EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.52 Guarantee, dated August 1, 1998, between Edison Mission Energy, Pennsylvania Electric Company, NGE Generation, Inc. and New York State Electric & Gas Corporation, incorporated by reference to Exhibit 10.54 to EME's Form 10-K for the year ended December 31, 1998. 10.53 Second Amended and Restated Credit Agreement among EME and Bank of America, dated as of October 11, 1996, US$400 million Bank of America Revolver, incorporated by reference to Exhibit 10.15.3 to EME's Form 10-K for the year ended December 31, 1996. 10.54 Sale, Purchase and Leasing Agreements between Edison First Power Limited and PowerGen UK plc for the purchase of the Ferrybridge C and Fiddler's Ferry Power Stations; incorporated by reference to Exhibits 2.7 and 2.8 to EME's Form 8-K/A, dated August 2, 1999. 10.55 Credit Agreement, dated March 18, 1999, among Edison Mission Holdings Co. and Certain Commercial Lending Institutions, and Citicorp USA, Inc., incorporated by reference to Exhibit 10.55 to EME's Form 8-K dated March 18, 1999. 10.56 Guarantee and Collateral Agreement made by Edison Mission Holdings Co., Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy Westside, Inc., EME Homer City Generation L.P. and Edison Mission Energy in favor of United States Trust Company of New York, dated as of March 18, 1999, incorporated by reference to Exhibit 10.56 to EME's Form 8-K dated March 18, 1999. 10.57 Collateral Agency and Intercreditor Agreement among Edison Mission Holdings Co., Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy Westside, Inc., EME Homer City Generation L.P., The Secured Parties' Representatives, Citicorp USA, Inc. as Administrative Agent and United States Trust Company of New York, as Collateral Agent, dated as of March 18, 1999, incorporated by reference to Exhibit 10.57 to EME's Form 8-K dated March 18, 1999. 10.58 Security Deposit Agreement among Edison Mission Holdings Co., Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy Westside, Inc., EME Homer City Generation L.P. and United States Trust Company of New York, as Collateral Agent, dated as of Marcy 18, 1999, incorporated by reference to Exhibit 10.58 to EME's Form 8-K dated March 18, 1999. 10.59 Credit Support Guarantee, dated as of March 18, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.59 to EME's Form 8-K dated March 18, 1999. 10.60 Debt Service Reserve Guarantee, dated as of March 18, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York on behalf of the various financial institutions (Lenders) as are or may become parities to the Credit Agreement, dated as of March 18, 1999, among Edison Mission Holdings Co., the Lenders and Citicorp USA, Inc., incorporated by reference to Exhibit 10.60 to EME's Form 8-K dated March 18, 1999. 10.61 Credit Agreement, dated March 18, 1999, among Edison Mission Energy and Certain Commercial Lending Institutions, and Citicorp USA, Inc., incorporated by reference to Exhibit 10.61 to EME's Form 8-K dated March 18, 1999. 10.62 Agreement for the sale and purchase of shares in First Hydro Limited, dated December 21, 1995, between PSB Holding Limited and First Hydro Finance Plc, incorporated by reference to Exhibit 2.1 to EME's Current Report on Form 8-K, No. 1-13434 dated January 4, 1996.
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EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.63 Transaction Implementation Agreement, dated March 29, 1997, between The State Electricity Commission of Victoria, Edison Mission Energy Australia Limited, Loy Yang B Power Station Pty Ltd, Loy Yang Power Limited, The Honourable Alan Robert Stockdale, Leanne Power Pty Ltd and EME, incorporated by reference to Exhibit 2.2 to EME's Current Report on Form 8-K, No. 1-13434 dated May 22, 1997. 10.64 Stock Purchase and Assignment Agreement, dated December 23, 1998, between KES Puerto Rico, L.P., KENETECH Energy Systems, Inc., KES Bermuda, Inc. and EME del Caribe for the (i) sale and purchase of KES Puerto Rico, L.P.'s shares in EcoElectrica Holdings Ltd.; (ii) assignment of KENETECH Energy Systems' rights and interests in that certain Project Note from the Partnership; and (iii) assignment of KES Bermuda, Inc.'s rights and interests in that certain Administrative Services Agreement dated October 31, 1997, incorporated by reference to Exhibit 2.3 to EME's 10-K for the year ended December 31, 1998. 10.65 Asset Purchase Agreement, dated August 1, 1998, between Pennsylvania Electric Company, NGE Generation, Inc., New York State Electric & Gas Corporation and Mission Energy Westside, Inc, incorporated by reference to Exhibit 2.4 to EME's 10-K for the year ended December 31, 1998. 10.66 Asset Sale Agreement, dated March 22, 1999 between Commonwealth Edison Company and Edison Mission Energy as to the Fossil Generating Assets, incorporated by reference to Exhibit 2.5 to EME's 10-K for the year ended December 31, 1998. 10.67 Agreement for the Sale and Purchase of Shares in Contact Energy Limited, dated March 10, 1999, between Her Majesty the Queen in Right of New Zealand, Edison Mission Energy Taupo Limited and Edison Mission Energy, incorporated herein by reference to Exhibit 2.6 to the EME's Form 10-Q for the quarter ended March 31, 1999. 10.68 Copy of the Global Debenture representing EME's 9 7/8% Junior Subordinated Deferrable Interest Debentures, Series A, Due 2024, incorporated by reference as Exhibit 4.1 to EME's Form 10-K for the year ended December 31, 1994. 10.69 Conformed copy of the Indenture, dated as of November 30, 1994, between EME and The First National Bank of Chicago, as Trustee, incorporated by reference as Exhibit 4.2 to EME's Form 10-K for the year ended December 31, 1994. 10.70 First Supplemental Indenture, dated as of November 30, 1994, to Indenture dated as of November 30, 1994 between EME and The First National Bank of Chicago, as Trustee, incorporated by reference as Exhibit 4.2.1 to EME's Form 10-K for the year ended December 31, 1994. 10.71 Indenture, dated as of June 28, 1999, between EME and The Bank of New York, as Trustee.* 10.72 First Supplemental Indenture, dated as of June 28, 1999, to Indenture dated as of June 28, 1999, between EME and The Bank of New York, as Trustee.* 10.73 Registration Rights Agreement, dated as of June 23, 1999, between EME and the Initial Purchasers specified therein.* 12.1 Statement regarding the computation of ratio of earnings to fixed charges for EME.* 21.1 List of Subsidiaries.* 23.1 Consent of Arthur Andersen LLP.* 23.2 Consent of PricewaterhouseCoopers.*
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EXHIBIT NO. DESCRIPTION - ----------- ----------- 23.3 Consent of Skadden, Arps, Slate Meagher & Flom LLP (included in Exhibit 5.1). 23.4 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.2). 25.1 Statement of Eligibility and Qualification on Form T-1 of United States Trust Company of New York, as Trustee, under the Indenture filed as Exhibit 4.1 hereto.* 99.1 Form of Letter of Transmittal.* 99.2 Form of Notice of Guaranteed Delivery.* 99.3 Form of Letter to Clients.* 99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.*
- ------------------------ *Filed herewith **To be filed by amendment ITEM 22. UNDERTAKINGS (a) The undersigned Registrants hereby undertake: Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. II-10 (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrants hereby undertake that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) For purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) The undersigned Registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (c) The undersigned Registrants hereby undertake to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (d) The undersigned Registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. II-11 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on the 3rd day of December, 1999. EDISON MISSION HOLDINGS CO. (REGISTRANT) By: /s/ KEVIN M. SMITH ----------------------------------------- Kevin M. Smith VICE PRESIDENT AND TREASURER
POWER OF ATTORNEY KNOWN TO ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin M. Smith and Steven D. Eisenberg his attorneys-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JAMES V. IACO, JR. ---------------------------- President and Director December 3, 1999 James V. Iaco, Jr. (Principal Executive Officer) Vice President, Treasurer /s/ KEVIN M. SMITH and Director ---------------------------- (Principal Financial and Accounting December 3, 1999 Kevin M. Smith Officer) /s/ MARTHA A. SPIKES ---------------------------- Director December 3, 1999 Martha A. Spikes /s/ RAYMOND W. VICKERS ---------------------------- Director December 3, 1999 Raymond W. Vickers /s/ PAUL R. GILLESPIE ---------------------------- Director December 3, 1999 Paul R. Gillespie
II-12 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on the 3rd day of December, 1999. EDISON MISSION FINANCE CO. (REGISTRANT) By: /s/ KEVIN M. SMITH ----------------------------------------- Kevin M. Smith VICE PRESIDENT AND TREASURER
POWER OF ATTORNEY KNOWN TO ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin M. Smith and Steven D. Eisenberg his attorneys-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JAMES V. IACO, JR. ---------------------------- President and Director December 3, 1999 James V. Iaco, Jr. (Principal Executive Officer) Vice President, Treasurer /s/ KEVIN M. SMITH and Director ---------------------------- (Principal Financial and Accounting December 3, 1999 Kevin M. Smith Officer) /s/ MARTHA A. SPIKES ---------------------------- Director December 3, 1999 Martha A. Spikes /s/ RAYMOND W. VICKERS ---------------------------- Director December 3, 1999 Raymond W. Vickers /s/ PAUL R. GILLESPIE ---------------------------- Director December 3, 1999 Paul R. Gillespie
II-13 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on the 3rd day of December, 1999. HOMER CITY PROPERTY HOLDINGS, INC. (REGISTRANT) By: /s/ KEVIN M. SMITH ---------------------------------------------- Kevin M. Smith VICE PRESIDENT AND TREASURER
POWER OF ATTORNEY KNOWN TO ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin M. Smith and Steven D. Eisenberg his attorneys-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JAMES V. IACO, JR. ---------------------------- President and Director December 3, 1999 James V. Iaco, Jr. (Principal Executive Officer) Vice President, Treasurer /s/ KEVIN M. SMITH and Director ---------------------------- (Principal Financial and Accounting December 3, 1999 Kevin M. Smith Officer) /s/ MARTHA A. SPIKES ---------------------------- Director December 3, 1999 Martha A. Spikes /s/ RAYMOND W. VICKERS ---------------------------- Director December 3, 1999 Raymond W. Vickers /s/ PAUL R. GILLESPIE ---------------------------- Director December 3, 1999 Paul R. Gillespie
II-14 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on the 3rd day of December, 1999. MISSION ENERGY WESTSIDE, INC. (REGISTRANT) By: /s/ KEVIN M. SMITH ----------------------------------------- Kevin M. Smith VICE PRESIDENT AND TREASURER
POWER OF ATTORNEY KNOWN TO ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin M. Smith and Steven D. Eisenberg his attorneys-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JAMES V. IACO, JR. ---------------------------- President and Director December 3, 1999 James V. Iaco, Jr. (Principal Executive Officer) Vice President, Treasurer /s/ KEVIN M. SMITH and Director ---------------------------- (Principal Financial and Accounting December 3, 1999 Kevin M. Smith Officer) /s/ MARTHA A. SPIKES ---------------------------- Director December 3, 1999 Martha A. Spikes /s/ RAYMOND W. VICKERS ---------------------------- Director December 3, 1999 Raymond W. Vickers /s/ PAUL R. GILLESPIE ---------------------------- Director December 3, 1999 Paul R. Gillespie
II-15 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on the 3rd day of December, 1999. CHESTNUT RIDGE ENERGY COMPANY (REGISTRANT) By: /s/ KEVIN M. SMITH ----------------------------------------- Kevin M. Smith VICE PRESIDENT AND TREASURER
POWER OF ATTORNEY KNOWN TO ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin M. Smith and Steven D. Eisenberg his attorneys-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JAMES V. IACO, JR. ---------------------------- President and Director December 3, 1999 James V. Iaco, Jr. (Principal Executive Officer) Vice President, Treasurer /s/ KEVIN M. SMITH and Director ---------------------------- (Principal Financial and Accounting December 3, 1999 Kevin M. Smith Officer) /s/ MARTHA A. SPIKES ---------------------------- Director December 3, 1999 Martha A. Spikes /s/ RAYMOND W. VICKERS ---------------------------- Director December 3, 1999 Raymond W. Vickers /s/ PAUL R. GILLESPIE ---------------------------- Director December 3, 1999 Paul R. Gillespie
II-16 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on the 3rd day of December, 1999. EME HOMER CITY GENERATION L.P. (REGISTRANT) By: /s/ KEVIN M. SMITH ----------------------------------------- Kevin M. Smith VICE PRESIDENT AND TREASURER
POWER OF ATTORNEY KNOWN TO ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin M. Smith and Steven D. Eisenberg his attorneys-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JAMES V. IACO, JR. ---------------------------- President and Director December 3, 1999 James V. Iaco, Jr. (Principal Executive Officer) Vice President, Treasurer /s/ KEVIN M. SMITH and Director ---------------------------- (Principal Financial and Accounting December 3, 1999 Kevin M. Smith Officer) /s/ MARTHA A. SPIKES ---------------------------- Director December 3, 1999 Martha A. Spikes /s/ RAYMOND W. VICKERS ---------------------------- Director December 3, 1999 Raymond W. Vickers /s/ PAUL R. GILLESPIE ---------------------------- Director December 3, 1999 Paul R. Gillespie
II-17 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on the 3rd day of December, 1999. EDISON MISSION ENERGY (REGISTRANT) By: /s/ KEVIN M. SMITH ----------------------------------------- Kevin M. Smith SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
POWER OF ATTORNEY KNOWN TO ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kevin M. Smith and Steven D. Eisenberg his attorneys-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ EDWARD R. MULLER President and Chief Executive ---------------------------- Officer, Director December 3, 1999 Edward R. Muller (Principal Executive Officer) /s/ KEVIN M. SMITH ---------------------------- December 3, 1999 Kevin M. Smith Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) /s/ ALAN J. FOHRER ---------------------------- Chairman of the Board December 3, 1999 Alan J. Fohrer /s/ BRYANT C. DANNER ---------------------------- Director December 3, 1999 Bryant C. Danner /s/ ROBERT M. EDGELL ---------------------------- Director December 3, 1999 Robert M. Edgell
II-18 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION - ----------- ----------- 3.1 Articles of Incorporation of the Company.* 3.2 Certificate of Amendment of Articles of Incorporation of the Company.* 3.3 By-Laws of the Company.* 3.4 Articles of Incorporation of Edison Mission Finance Co.* 3.5 By-Laws of Edison Mission Finance Co.* 3.6 Articles of Incorporation of Homer City Property Holdings, Inc.* 3.7 By-Laws of Homer City Property Holdings, Inc.* 3.8 Articles of Incorporation of Mission Energy Westside, Inc.* 3.9 Certificate of Amendment to Articles of Incorporation of Mission Energy Westside, Inc.* 3.10 By-Laws of Mission Energy Westside, Inc.* 3.11 Articles of Incorporation of Chestnut Ridge Energy Company.* 3.12 By-Laws of Chestnut Ridge Energy Company.* 3.13 EME Homer City Generation L.P. Agreement of Limited Partnership.* 3.14 Amended and Restated Articles of Incorporation of EME, incorporated by reference to Exhibit 3.1 to EME's Current Report on Form 8-K, dated January 30, 1996. 3.15 By-Laws of EME, incorporated by reference to Exhibit 3.2 to EME's Registration Statement on Form 10 filed with the Securities and Exchange Commission on November 21, 1994 ("Form 10"). 4.1 Indenture, dated as of May 27, 1999, between the Company and United States Trust Company of New York, as Trustee.* 5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Company.* 5.2 Opinion of Morgan, Lewis & Bockius LLP, special Pennsylvania counsel to EME Homer City Generation L.P.** 10.1 Exchange and Registration Rights Agreement, dated as of May 27, 1999, by and among the Initial Purchasers, the Guarantors and the Company.* 10.2 Power Purchase Contract between Southern California Edison Company and Champlin Petroleum Company, dated March 8, 1985, incorporated by reference to Exhibit 10.2 to EME's Form 10. 10.2.1 Amendment to Power Purchase Contract between Southern California Edison Company and Champlin Petroleum Company, dated July 29, 1985, incorporated by reference to Exhibit 10.2.1 to EME's Form 10. 10.2.2 Amendment No. 2 to Power Purchase Contract between Southern California Edison Company and Champlin Petroleum Company, dated October 29, 1985, incorporated by reference to Exhibit 10.2.2 to EME's Form 10. 10.3 Power Purchase Contract between Southern California Edison Company and Imperial Energy Company, dated February 22, 1984, incorporated by reference to Exhibit 10.4 EME's Form 10. 10.3.1 Amendment to Power Purchase Contract between Southern California Edison Company and Imperial Energy Company, dated November 13, 1984, incorporated by reference to Exhibit 10.4.1 to EME's Form 10. 10.4 Power Purchase Contract between Southern California Edison Company and Imperial Energy Company Niland No. 2, dated April 16, 1985, incorporated by reference to Exhibit 10.6 to EME's Form 10. 10.5 Power Purchase Contract between Southern California Edison Company and Chevron U.S.A. Inc., dated November 9, 1984, incorporated by reference to Exhibit 10.7 to EME's Form 10.
EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.5.1 Amendment No. 1 to Power Purchase Contract between Southern California Edison Company and Chevron U.S.A. Inc., dated March 29, 1985, incorporated by reference to Exhibit 10.7.1 to EME's Form 10. 10.5.2 Amendment No. 2 to Power Purchase Contract between Southern California Edison Company and Chevron U.S.A. Inc., dated November 21, 1985, incorporated by reference to Exhibit 10.7.2 to EME's Form 10. 10.5.3 Amendment No. 3 to Power Purchase Contract between Southern California Edison Company and Chevron U.S.A. Inc., dated November 21, 1985, incorporated by reference to Exhibit 10.7.3 to EME's Form 10. 10.6 Power Purchase Contract between Southern California Edison Company and Arco Petroleum Products Company (Watson Refinery), incorporated by reference to Exhibit 10.8 to EME's Form 10. 10.7 Power Supply Agreement between State Electricity Commission of Victoria, Loy Yang B Power Station Pty. Ltd. and the Company Australia Pty. Ltd., as managing partner of the Latrobe Power Partnership, dated December 31, 1992, incorporated by reference to Exhibit 10.9 to EME's Form 10. 10.8 Power Purchase Agreement between P.T. Paiton Energy Company as Seller and Perusahaan Umum Listrik Negara as Buyer, dated February 12, 1994, incorporated by reference to Exhibit 10.10 to EME's Form 10. 10.9 Amended and Restated Power Purchase Contract between Southern California Energy Company and Midway-Sunset Cogeneration Company, dated May 5, 1988, incorporated by reference to Exhibit 10.11 to EME's Form 10. 10.10 Parallel Generation Agreement between Kern River Cogeneration Company and Southern California Energy Company, dated January 6, 1984, incorporated by reference to Exhibit 10.12 to EME's Form 10. 10.11 Parallel Generation Agreement between Kern River Cogeneration (Sycamore Project) Company and Southern California Energy Company, dated December 18, 1984, incorporated by reference to Exhibit 10.13 to EME's Form 10. 10.12 Amendment No. 2 to Power Purchase Agreement between Southern California Energy Company and Vulcan/BN Geothermal Power Company, dated April 1, 1986, incorporated by reference to Exhibit 10.14 to EME's Form 10. 10.13 U.S. $325 million Bank of Montreal Revolver, dated October 29, 1993, incorporated by reference to Exhibit 10.15 to EME's Form 10. 10.13.1 U.S. $400 million Bank of America National Trust and Savings Association Credit Agreement, dated October 27, 1994, incorporated by reference to Exhibit 10.15.1 to EME's Form 10. 10.13.2 Conformed copy of the Amended and Restated U.S. $400 million Bank of America National Trust and Savings Association Credit Agreement, dated as of November 17, 1994, incorporated by reference to Exhibit 10.15.2 to EME's Annual Report on Form 10-K for the year ended December 31, 1994. 10.13.3 Conformed copy of the Second Amended and Restated U.S. $400 million Bank of America National Trust and Savings Association Credit Agreement, dated as of October 11, 1996, incorporated by reference to Exhibit 10.15.3 to EME's Form 10-K for the year ended December 31, 1996. 10.14 Amended and Restated Ground Lease Agreement between Texaco Refining and Marketing Inc. and March Point Cogeneration Company, dated August 21, 1992, incorporated by reference to Exhibit 10.16 to EME's Form 10. 10.14.1 Amendment No. 1 to Amended and Restated Ground Lease Agreement between Texaco Refining and Marketing Inc. and March Point Cogeneration Company, dated August 21, 1992, incorporated by reference to Exhibit 10.16 to EME's Form 10.
EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.15 Memorandum of Agreement between Atlantic Richfield Company and Products Cogeneration Company, dated September 17, 1987, incorporated by reference to Exhibit 10.17 to EME's Form 10. 10.16 Memorandum of Ground Lease between Texaco Producing Inc. and Sycamore Cogeneration Company, dated January 19, 1987, incorporated by reference to Exhibit 10.18 to EME's Form 10. 10.17 Amended and Restated Memorandum of Ground Lease between Getty Oil Company and Kern River Cogeneration Company, dated November 14, 1984, incorporated by reference to Exhibit 10.19 to EME's Form 10. 10.18 Memorandum of Lease between Sun Operating Limited Partnership and Midway-Sunset Cogeneration Company, incorporated by reference to Exhibit 10.20 to EME's Form 10. 10.19 Executive Supplemental Benefit Program, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.20 1981 Deferred Compensation Agreement, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.21 1985 Deferred Compensation Agreement for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.22 1987 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.23 1988 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.24 1989 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.25 1990 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.26 Annual Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.27 Executive Retirement Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.28 Long-Term Incentive Plan for Executive Officers, incorporated by reference to the Registration Statement (File No. 33-19541) under which SCEcorp registered securities to be offered pursuant to the Plan under the Securities Act of 1933. 10.29 Estate and Financial Planning Program for Executive Officers, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.30 Letter Agreement with Edward R. Muller, incorporated by reference to Exhibit 10.32 to EME's Form 10. 10.31 Agreement with James S. Pignatelli, incorporated by reference to Exhibit 10.33 to EME's Form 10. 10.32 Conformed copy of the Guarantee Agreement dated as of November 30, 1994, incorporated by reference to Exhibit 10.34 to EME's Form 10. 10.33 Indenture of Lease between Brooklyn Navy Yard Development Corporation and Cogeneration Technologies, Inc., dated as of December 18, 1989, incorporated by reference to Exhibit 10.35 to EME's Form 10-K for the year ended December 31, 1994. 10.33.1 First Amendment to Indenture of Lease between Brooklyn Navy Yard Development Corporation and Cogeneration Technologies, Inc., dated November 1, 1991, incorporated by reference to Exhibit 10.35.1 to EME's Form 10-K for the year ended December 31, 1994. 10.33.2 Second Amendment to Indenture of Lease between Brooklyn Navy Yard Development Corporation and Cogeneration Technologies, Inc., dated June 3, 1994, incorporated by reference to Exhibit 10.35.2 to EME's Form 10-K for the year ended December 31, 1994.
EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.33.3 Third Amendment to Indenture of Lease between Brooklyn Navy Yard Development Corporation and Cogeneration Technologies, Inc., dated December 12, 1994, incorporated by reference to Exhibit 10.35.3 to EME's Form 10-K for the year ended December 31, 1994. 10.34 Conformed copy of A$200 million Bank of America National Trust and Savings Association Credit Agreement, dated November 22, 1994, incorporated by reference to Exhibit 10.36 to EME's Form 10-K for the year ended December 31, 1994. 10.34.1 Conformed copy of the Amended and Restated A$200 million Bank of America National Trust and Savings Associated Credit Agreement, dated December 12, 1994, incorporated by reference to Exhibit 10.36.1 to EME's Form 10-K for the year ended December 31, 1994. 10.34.2 Conformed copy of First Amendment to Amended and Restated A$200 million Bank of America National Trust and Savings Associated Credit Agreement, dated June 7, 1995, incorporated by reference to Exhibit 10.36.2 to EME's Form 10-Q for the quarter ended September 30, 1995. 10.35 Amended and Restated Limited Partnership Agreement of Mission Capital, L.P., dated as of November 30, 1994, incorporated by reference to Exhibit 10.37 to EME's Form 10-K for the year ended December 31, 1994. 10.36 Action of General Partner of Mission Capital, L.P. creating the 9 7/8% Cumulative Monthly Income Preferred Securities, Series A, dated as of November 30, 1994, incorporated by reference to Exhibit 10.38 to EME's Form 10-K for the year ended December 31, 1994. 10.37 Action of General Partner of Mission Capital, L.P. creating the 8 1/2% Cumulative Monthly Income Preferred Securities, Series B, dated as of August 8, 1995, incorporated by reference to Exhibit 10.39 to EME's Form 10-Q for the quarter ended June 30, 1995. 10.38 Power Purchase Contract between ISAB Energy, S.r.l. as Seller and Enel, S.p.A. as Buyer, dated June 9, 1995, incorporated by reference to Exhibit 10.40 to EME's Form 10-Q for the quarter ended June 30, 1995. 10.39 400 million sterling pounds Barclays Bank Plc Credit Agreement, dated December 18, 1995, incorporated by reference to Exhibit 10.41 to EME's Form 8-K, dated December 21, 1995. 10.40 Guarantee by EME, dated December 1, 1995 supporting Letter of Credit issued by Bank of America National Trust and Savings Association to secure payment of bonds issued pursuant to the Brooklyn Navy Yard project tax-exempt bond financing, incorporated by reference to Exhibit 10.42 to EME's Form 10-K for the year ended December 31, 1995. 10.41 Guarantee by EME, dated December 1, 1995, supporting Letter of Credit issued by Bank of America National Trust and Savings Association to secure Brooklyn Navy Yard's indemnity to the New York City Industrial Development Agency pursuant to the Brooklyn Navy Yard project tax-exempt bond financing, incorporated by reference to Exhibit 10.43 to EME's Form 10-K for the year ended December 31, 1995. 10.42 Guarantee by EME, dated December 20, 1996, in favor of The Fuji Bank, Limited, Los Angeles Agency, to secure Camino Energy Company's payments pursuant to Camino Energy Company's Credit Agreement and Defeasance Agreement, incorporated by reference to Exhibit 10.44 to EME's Form 10-K for the year ended December 31, 1996. 10.43 Power Purchase Agreement between National Power Corporation and San Pascual Cogeneration Company International B.V., dated September 10, 1997, incorporated by reference to Exhibit 10.45 to EME's Form 10-K for the year ended December 31, 1997. 10.44 Power Purchase Agreement between Gulf Power Generation Co., LTD., and Electricity Generating Authority of Thailand, dated December 22, 1997, incorporated by reference to Exhibit 10.46 to EME's Form 10-K for the year ended December 31, 1997.
EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.45 Guarantee by EME, dated June 30, 1998, in favor of Tri Energy Company Limited and the Sanwa Bank, Limited to guarantee payment of 25% of Tri Energy Company Limited's aggregate capital contributions under the Equity Bridge Loan, incorporated by reference to Exhibit 10.47 to EME's Form 10-Q for the quarter ended September 30, 1998. 10.46 Guarantee by EME, dated June 30, 1998, in favor of Tri Energy Company Limited and the Sanwa Bank, Limited to guarantee payment of 37.5% of Tri Energy Company Limited's aggregate capital contributions attributable to Banpu Gas and BANPU, incorporated by reference to Exhibit 10.48 to EME's Form 10-Q for the quarter ended September 30, 1998. 10.47 Equity Support Guarantee by EME, dated December 23, 1998, in favor of ABN AMRO Bank N.V., and the Chase Manhattan Bank to guarantee certain equity funding obligations of EcoElectrica Ltd. and EcoElectrica Holdings Ltd. pursuant to EcoElectrica Ltd.'s Credit Agreement dated as of October 31, 1997, incorporated by reference to Exhibit 10.49 to EME's Form 10-K for the year ended December 31, 1998. 10.48 Master Guarantee and Support Instrument by EME, dated December 23, 1998, in favor of ABN AMRO Bank N.V., and the Chase Manhattan Bank to guarantee the availability of funds to purchase fuel for the EcoElectrica project pursuant to EcoElectrica Ltd.'s Credit Agreement dated as of October 31, 1997 and Intercreditor Agreement dated as of October 31, 1997, incorporated by reference to Exhibit 10.50 to EME's Form 10-K for the year ended December 31, 1998. 10.49 Guarantee Assumption Agreement from EME, dated December 23, 1998, under EME assumed all of the obligations of KENETECH Energy Systems, Inc. to Union Carbide Caribe Inc., under the certain Guaranty dated November 25, 1997, incorporated by reference to Exhibit 10.51 to EME's Form 10-K for the year ended December 31, 1998. 10.50 Transition Power Purchase Agreement, dated August 1, 1998, between New York State Electric & Gas Corporation and Mission Energy Westside, Inc, incorporated by reference to Exhibit 10.52 to EME's Form 10-K for the year ended December 31, 1998. 10.51 Transition Power Purchase Agreement, dated August 1, 1998, between Pennsylvania Electric Company and Mission Energy Westside, Inc., incorporated by reference to Exhibit 10.53 to EME's Form 10-K for the year ended December 31, 1998. 10.52 Guarantee, dated August 1, 1998, between Edison Mission Energy, Pennsylvania Electric Company, NGE Generation, Inc. and New York State Electric & Gas Corporation, incorporated by reference to Exhibit 10.54 to EME's Form 10-K for the year ended December 31, 1998. 10.53 Second Amended and Restated Credit Agreement among EME and Bank of America, dated as of October 11, 1996, US$400 million Bank of America Revolver, incorporated by reference to Exhibit 10.15.3 to EME's Form 10-K for the year ended December 31, 1996. 10.54 Sale, Purchase and Leasing Agreements between Edison First Power Limited and PowerGen UK plc for the purchase of the Ferrybridge C and Fiddler's Ferry Power Stations; incorporated by reference to Exhibits 2.7 and 2.8 to EME's Form 8-K/A, dated August 2, 1999. 10.55 Credit Agreement, dated March 18, 1999, among Edison Mission Holdings Co. and Certain Commercial Lending Institutions, and Citicorp USA, Inc., incorporated by reference to Exhibit 10.55 to EME's Form 8-K dated March 18, 1999. 10.56 Guarantee and Collateral Agreement made by Edison Mission Holdings Co., Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy Westside, Inc., EME Homer City Generation L.P. and Edison Mission Energy in favor of United States Trust Company of New York, dated as of March 18, 1999, incorporated by reference to Exhibit 10.56 to EME's Form 8-K dated March 18, 1999.
EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.57 Collateral Agency and Intercreditor Agreement among Edison Mission Holdings Co., Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy Westside, Inc., EME Homer City Generation L.P., The Secured Parties' Representatives, Citicorp USA, Inc. as Administrative Agent and United States Trust Company of New York, as Collateral Agent, dated as of March 18, 1999, incorporated by reference to Exhibit 10.57 to EME's Form 8-K dated March 18, 1999. 10.58 Security Deposit Agreement among Edison Mission Holdings Co., Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy Westside, Inc., EME Homer City Generation L.P. and United States Trust Company of New York, as Collateral Agent, dated as of Marcy 18, 1999, incorporated by reference to Exhibit 10.58 to EME's Form 8-K dated March 18, 1999. 10.59 Credit Support Guarantee, dated as of March 18, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.59 to EME's Form 8-K dated March 18, 1999. 10.60 Debt Service Reserve Guarantee, dated as of March 18, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York on behalf of the various financial institutions (Lenders) as are or may become parities to the Credit Agreement, dated as of March 18, 1999, among Edison Mission Holdings Co., the Lenders and Citicorp USA, Inc., incorporated by reference to Exhibit 10.60 to EME's Form 8-K dated March 18, 1999. 10.61 Credit Agreement, dated March 18, 1999, among Edison Mission Energy and Certain Commercial Lending Institutions, and Citicorp USA, Inc., incorporated by reference to Exhibit 10.61 to EME's Form 8-K dated March 18, 1999. 10.62 Agreement for the sale and purchase of shares in First Hydro Limited, dated December 21, 1995, between PSB Holding Limited and First Hydro Finance Plc, incorporated by reference to Exhibit 2.1 to EME's Current Report on Form 8-K, No. 1-13434 dated January 4, 1996. 10.63 Transaction Implementation Agreement, dated March 29, 1997, between The State Electricity Commission of Victoria, Edison Mission Energy Australia Limited, Loy Yang B Power Station Pty Ltd, Loy Yang Power Limited, The Honourable Alan Robert Stockdale, Leanne Power Pty Ltd and EME, incorporated by reference to Exhibit 2.2 to EME's Current Report on Form 8-K, No. 1-13434 dated May 22, 1997. 10.64 Stock Purchase and Assignment Agreement, dated December 23, 1998, between KES Puerto Rico, L.P., KENETECH Energy Systems, Inc., KES Bermuda, Inc. and EME del Caribe for the (i) sale and purchase of KES Puerto Rico, L.P.'s shares in EcoElectrica Holdings Ltd.; (ii) assignment of KENETECH Energy Systems' rights and interests in that certain Project Note from the Partnership; and (iii) assignment of KES Bermuda, Inc.'s rights and interests in that certain Administrative Services Agreement dated October 31, 1997, incorporated by reference to Exhibit 2.3 to EME's 10-K for the year ended December 31, 1998. 10.65 Asset Purchase Agreement, dated August 1, 1998, between Pennsylvania Electric Company, NGE Generation, Inc., New York State Electric & Gas Corporation and Mission Energy Westside, Inc, incorporated by reference to Exhibit 2.4 to EME's 10-K for the year ended December 31, 1998. 10.66 Asset Sale Agreement, dated March 22, 1999 between Commonwealth Edison Company and Edison Mission Energy as to the Fossil Generating Assets, incorporated by reference to Exhibit 2.5 to EME's 10-K for the year ended December 31, 1998. 10.67 Agreement for the Sale and Purchase of Shares in Contact Energy Limited, dated March 10, 1999, between Her Majesty the Queen in Right of New Zealand, Edison Mission Energy Taupo Limited and Edison Mission Energy, incorporated herein by reference to Exhibit 2.6 to the EME's Form 10-Q for the quarter ended March 31, 1999.
EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.68 Copy of the Global Debenture representing EME's 9 7/8% Junior Subordinated Deferrable Interest Debentures, Series A, Due 2024, incorporated by reference as Exhibit 4.1 to EME's Form 10-K for the year ended December 31, 1994. 10.69 Conformed copy of the Indenture, dated as of November 30, 1994, between EME and The First National Bank of Chicago, as Trustee, incorporated by reference as Exhibit 4.2 to EME's Form 10-K for the year ended December 31, 1994. 10.70 First Supplemental Indenture, dated as of November 30, 1994, to Indenture dated as of November 30, 1994 between EME and The First National Bank of Chicago, as Trustee, incorporated by reference as Exhibit 4.2.1 to EME's Form 10-K for the year ended December 31, 1994. 10.71 Indenture, dated as of June 28, 1999, between EME and The Bank of New York, as Trustee.* 10.72 First Supplemental Indenture, dated as of June 28, 1999, to Indenture dated as of June 28, 1999, between EME and The Bank of New York, as Trustee.* 10.73 Registration Rights Agreement, dated as of June 23, 1999, between EME and the Initial Purchasers specified therein.* 12.1 Statement regarding the computation of ratio of earnings to fixed charges for EME.* 21.1 List of Subsidiaries.* 23.1 Consent of Arthur Andersen LLP.* 23.2 Consent of PricewaterhouseCoopers.* 23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1). 23.4 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.2). 25.1 Statement of Eligibility and Qualification on Form T-1 of United States Trust Company of New York, as Trustee, under the Indenture filed as Exhibit 4.1 hereto.* 27.1 Financial Data Schedule.* 99.1 Form of Letter of Transmittal.* 99.2 Form of Notice of Guaranteed Delivery.* 99.3 Form of Letter to Clients.* 99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.*
* Filed herewith ** To be filed by amendment EX-3.1 2 EXHIBIT 3.1 Exhibit 3.1 ARTICLES OF INCORPORATION OF EME HOMER CITY HOLDINGS CO. I The name of the corporation is EME Homer City Holdings Co. II The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. III The name and address in the State of California of the corporation's initial agent for service of process are: Martha A. Spikes 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612-1046 IV This corporation is authorized to issue only one class of shares, which shall be designated "common" shares. The total authorized number of such shares authorized to be issued is ten thousand (10,000) shares. V 1. The liability of directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. 2. The corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) through bylaw provisions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject only to the applicable limits set forth in Section 204 of the California Corporations Code with respect to actions for breach of duty to the corporation and its shareholders. Dated: As of October 6, 1998 /s/ Mary Ellen Olson ------------------------- Mary Ellen Olson EX-3.2 3 EXHIBIT 3.2 Exhibit 3.2 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION Mary Ellen Olson and Michelle J. Johnson certify that: 1. They are the Vice President and Assistant Secretary, respectively, of EME Homer City Holdings Co., a California corporation. 2. Article I of the Articles of Incorporation of this corporation is amended to read as follows: "The name of this corporation is Edison Mission Holdings Co." 3. The foregoing Amendment of Articles of Incorporation has been duly approved by the board of directors. 4. The foregoing Amendment of Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporations Code. The total number of outstanding shares of the corporation is 100. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Date: November 12, 1998. /s/ Mary Ellen Olson ---------------------------------------- Mary Ellen Olson, Vice President /s/ Michelle J. Johnson ---------------------------------------- Michelle J. Johnson, Assistant Secretary EX-3.3 4 EXHIBIT 3.3 EXHIBIT 3.3 BYLAWS OF EDISON MISSION HOLDINGS CO. ADOPTED NOVEMBER 17, 1998 EDISON MISSION HOLDINGS CO. INDEX ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE. 1 Section 1.2 OTHER OFFICES. 1 ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS. 1 Section 2.2 ANNUAL MEETINGS. 1 Section 2.3 SPECIAL MEETINGS. 1 Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING. 2 Section 2.5 QUORUM; ADJOURNMENT. 2 Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF. 3 Section 2.7 VOTING. 3 Section 2.8. RECORD DATE. 4 Section 2.9. CONSENT OF ABSENTEES; WAIVER OF NOTICE. 4 Section 2.10 ACTION WITHOUT MEETING. 4 Section 2.11 PROXIES. 4 ARTICLE III -- DIRECTORS Section 3.1 POWERS. 5 Section 3.2 NUMBER OF DIRECTORS. 5 Section 3.3 ELECTION AND TERM OF OFFICE. 5 Section 3.4 VACANCIES. 6 Section 3.5 PLACE OF MEETING. 6 Section 3.6 ORGANIZATION MEETING. 6 Section 3.7 SPECIAL MEETINGS. 6 Section 3.8 QUORUM. 7 Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. 7 Section 3.10 WAIVER OF NOTICE. 7 Section 3.11 ADJOURNMENT. 8 Section 3.12 FEES AND COMPENSATION. 8 Section 3.13 ACTION WITHOUT MEETING. 8 ARTICLE IV -- OFFICERS Section 4.1 OFFICERS. 8 Section 4.2 ELECTION. 8 Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT. 8 Section 4.4 REMOVAL AND RESIGNATION. 9 Section 4.5 APPOINTMENT OF OTHER OFFICERS. 9 Section 4.6 VACANCIES. 9 Section 4.7 SALARIES. 9 Section 4.8 CHAIRMAN OF THE BOARD. 9 Section 4.9 PRESIDENT. 9 Section 4.10 VICE PRESIDENT. 10 Section 4.11 CHIEF OPERATING OFFICER. 10
i Section 4.12 GENERAL MANAGER. 10 Section 4.13 GENERAL COUNSEL. 10 Section 4.14 ASSISTANT GENERAL COUNSEL. 10 Section 4.15 CONTROLLER. 10 Section 4.16 SECRETARY. 11 Section 4.17 ASSISTANT SECRETARY. 11 Section 4.18 SECRETARY PRO TEMPORE. 11 Section 4.19 TREASURER. 11 Section 4.20 ASSISTANT TREASURER. 11 Section 4.21 PERFORMANCE OF DUTIES. 12 ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS. 12 Section 5.2 CONTRACTS AND OTHER INSTRUMENTS,LOANS, NOTES AND DEPOSIT OF FUNDS. 12 Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. 12 Section 5.4 ANNUAL REPORT TO SHAREHOLDERS. 13 Section 5.5 FISCAL YEAR AND SUBDIVISIONS. 13 Section 5.6 CONSTRUCTION AND DEFINITIONS. 13 ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. 13 Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS. 14 Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT. 15 Section 6.4 SUCCESSFUL DEFENSE. 15 Section 6.5 NONEXCLUSIVITY OF RIGHTS. 15 Section 6.6 INSURANCE. 15 Section 6.7 EXPENSES AS A WITNESS. 15 Section 6.8 INDEMNITY AGREEMENTS. 15 Section 6.9 SEVERABILITY. 16 Section 6.10 EFFECT OF REPEAL OR MODIFICATION. 16 ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS. 16
ii BYLAWS BYLAWS FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY STATUTE OR ITS ARTICLES OF INCORPORATION OF EDISON MISSION HOLDINGS CO. ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the corporation is hereby fixed and located at 18101 Von Karman Avenue, Suite 1700, in the City of Irvine, County of Orange, State of California. The Board of Directors ("the Board") is hereby granted full power and authority to change the principal executive office from one location to another. Section 1.2 OTHER OFFICES. Branches or subordinate offices may be established at any time by the Board of Directors or the President at any place within or without the State of California. ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS. All meetings of shareholders shall be held at the principal executive office, or at such other office or places within or without the State of California as may be designated by either the Board or by the person or persons giving notice of the meeting pursuant to Section 2.4. Section 2.2 ANNUAL MEETINGS. The annual meeting of shareholders shall be held on the 2nd Tuesday in the month of May of each year, at the hour of 8:00 a.m. on said day, or at such other time on such other day as shall be fixed by the Board, to elect directors to hold office for the year next ensuing and until their successors shall be elected, and to consider and act upon such other matters as may lawfully be presented to such meeting; provided, however, that should said day fall upon a legal holiday observed by this corporation, then any such annual meeting of shareholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. Section 2.3 SPECIAL MEETINGS. Special meetings of the shareholders may be called at any time by the Board, the Chairman of the Board, if any, the President, the Executive Vice President, if any, the Senior Vice President, if any, or the holders of shares entitled to cast not less than ten percent of the 1 votes at such meeting. Upon request to the Chairman of the Board, if any, the President, the Executive Vice President, the Senior Vice President, the Secretary or Assistant Secretary by any person entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five nor more than sixty days after the receipt of the request. If the notice is not given within twenty days after receipt of the request, the persons entitled to call the meeting may give the notice. Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING. Written notice of each annual or special meeting of shareholders shall be given not less than ten nor more than sixty days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (ii) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to the provisions of applicable law, any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the name of nominees intended at the time of the notice to be presented by the Board for election. Notice of a shareholders' meeting or any report to the shareholders shall be given either personally to the recipient or to a person in the office of the recipient or by first-class United States mail, by private mail or messenger service, by telephone facsimile transmission, or by any other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. Such notice or report shall be deemed to have been given at the time when delivered personally, deposited in the United States mail or sent by private mail or messenger service, by telephone facsimile transmission or sent by any other means of written or electronic communication. Section 2.5 QUORUM; ADJOURNMENT. (a) A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders. (b) Except as provided in subsection (c) below, the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Articles. (c) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. 2 (d) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subsection (c) above. Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF. Any shareholders' meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum (except as permitted by applicable law in the case of withdrawals by shareholders to reduce the number remaining to less than a quorum) no other business may be transacted at such meeting. With exceptions under Section 601(d) of the California Corporations Code and any other applicable law, it shall not be necessary to give any notice of the time and place of the adjourned meeting or of the business to be transacted thereat, other than by announcement at the meeting at which such adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. Section 2.7 VOTING. The shareholders entitled to notice of any meeting or to vote at any such meeting shall be only persons in whose name shares stand on the stock records of the corporation on the record date determined in accordance with Section 2.8. Voting shall in all cases be subject to the provisions of Chapter 7 of the California General Corporation Law, including the following provisions: (a) Shares standing in the name of another corporation, domestic or foreign, may be voted by an officer, agent, or proxyholder as the bylaws of the other corporation may prescribe or, in the absence of such provision, as the Board of the other corporation may determine or, in the absence of that determination, by the chairman of the board, president or any vice president of the other corporation, or by any other person authorized to do so by the chairman of the board, president, or any vice president of the other corporation. Shares which are purported to be voted or any proxy purported to be executed in the name of a corporation (whether or not any title of the person signing is indicated) shall be presumed to be voted or the proxy executed in accordance with the provisions of the California General Corporation Law, unless the contrary is shown. (b) Shares of this corporation owned by its subsidiary shall not be entitled to vote on any matter. (c) Shares of this corporation held by this corporation in a fiduciary capacity, and shares of this corporation held in a fiduciary capacity by its subsidiary, shall not be entitled to vote on any matter, except as follows: (i) to the extent that the settlor or beneficial owner possesses and exercises a right to vote or to give this corporation binding instructions as to how to vote such shares; or (ii) where there are one or more cotrustees who are not affected by the prohibition of this subsection, in which case the shares may be voted by the cotrustees as if it or they are the sole trustees. 3 Section 2.8. RECORD DATE. The Board may fix, in advance, a record date for the determination of the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution, or any allotment of any rights or entitled to exercise any rights, in respect of any other lawful action. The record date so fixed shall be not more than sixty days nor less than ten days prior to the date of the meeting nor more than sixty days prior to any other action. When a record date is so fixed, only shareholders of record at the close of business on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation after the record date, except as otherwise provided by law or these Bylaws. Section 2.9 Consent of Absentees; Waiver of Notice. The transactions of any meeting of shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by this division to be included in the notice but not so included, if such objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, unless otherwise provided in the Articles or Bylaws, except as provided in the California General Corporation Law. Section 2.10 ACTION WITHOUT MEETING. Subject to Section 603 of the California General Corporation Law, any action which, under any provision of the California General Corporation Law, may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Section 2.11 PROXIES. Every person entitled to vote shares has the right to do so either in person or by one or more persons authorized by a written proxy executed by such shareholder and filed with the Secretary. No proxy shall be valid after the expiration of eleven (11) months from the date thereof, unless otherwise provided in the proxy. 4 ARTICLE III -- DIRECTORS Section 3.1 POWERS. Subject to any limitations of the Articles, of these Bylaws and of the California General Corporation Law relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. The Board may delegate the management of the day-to-day operation of the business of the corporation provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Board shall have the following powers in addition to the other powers enumerated in these Bylaws: (a) To select and remove all the other officers, agents and employees of the corporation, prescribe the powers and duties for them as may not be inconsistent with law, with the Articles or these Bylaws, fix their compensation and require from them security for faithful service. (b) To conduct, manage and control the affairs and business of the corporation and to make such rules and regulations therefor not inconsistent with law, or with the Articles or these Bylaws, as they may deem best. (c) To adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time as in their judgment they deem best. (d) To authorize the issuance of shares of stock of the corporation from time to time, upon such terms and for such consideration as may be lawful. (e) To borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. Section 3.2 NUMBER OF DIRECTORS. The authorized number of directors shall not be less than three (3) nor more than six (6) until changed by amendment of the Articles or by a Bylaw duly adopted by the shareholders. The exact number of directors shall be fixed, within the limits specified, by the Board or the shareholders in the same manner provided in these Bylaws for the amendment thereof. The exact number of authorized directors shall be six (6) until changed as provided in these Bylaws. Section 3.3 ELECTION AND TERM OF OFFICE. The directors shall be elected at each annual meeting of the shareholders, but if 5 any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Each director shall hold office until the next annual meeting and until a successor has been elected and qualified. Section 3.4 VACANCIES. Any director may resign effective upon giving written notice to the Chairman of the Board, if any, the President, the Secretary, or the Board, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Vacancies in the Board, except those existing as a result of a removal of a director, may be filled by a majority of the remaining directors, whether or not less than a quorum, or by a sole remaining director, and each director so elected shall hold office until the next annual meeting and until such director's successor has been elected and qualified. Vacancies existing as a result of a removal of a director may be filled by the shareholders as provided by law. A vacancy or vacancies in the Board shall be deemed to exist in case of the death, resignation or removal of any director, or if the authorized number of directors be increased, or if the shareholders fail, at any annual or special meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be voted for at that meeting. The shareholders may elect a director or directors at any time to fill any vacancy not filled by the directors. Any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares entitled to vote. If the Board accepts the resignation of a director tendered to take effect at a future time, the Board or the shareholders shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of the director's term of office. Section 3.5 PLACE OF MEETING. Regular or special meetings of the Board shall be held at any place within or without the State of California which has been designated from time to time by the Board or as provided in these Bylaws. In the absence of such designation, regular meetings shall be held at the principal executive office. Section 3.6 ORGANIZATION MEETING. Promptly following each annual meeting of shareholders the Board shall hold a regular meeting for the purpose of organization, election of officers and the transaction of other business. Section 3.7 SPECIAL MEETINGS. Special meetings other than organization meetings of the Board for any purpose 6 or purposes may be called at any time by the Chairman of the Board, if any, the President, any Executive Vice President, Senior Vice President, the Secretary, an Assistant Secretary or by any two directors. Such meetings of the Board shall be held upon four days' written notice by mail or forty-eight hours' notice given personally or by telephone, telephone facsimile transmission, telegraph, telex or other similar means of communication. Any such notice shall be addressed or delivered to each director at such director's address as it is shown upon the records of the corporation or as may have been given to the corporation by the director for purposes of notice or, if such address is not shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. The notice need not specify the purpose of such meeting. Notice by first-class mail shall be deemed to have been given at the time a written notice is deposited in the United States mail, postage prepaid or sent by private mail or messenger service. Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient, to a person in the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient, delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means to the recipient. Oral notice shall be deemed to have been given at the time it is communicated, in person, by telephone to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. Section 3.8 QUORUM. One-third of the maximum number of authorized directors constitutes a quorum of the Board for the transaction of business, except to adjourn as provided in Section 3.11 of this Article. As defined in Article III, Section 3.2, the maximum number of authorized directors is six. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board, unless a greater number is required by law or by the Articles; provided, however, that a meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Such participation constitutes presence in person at such meeting. Section 3.10 WAIVER OF NOTICE. The transactions of any meeting of the Board, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or 7 made a part of the minutes of the meeting. Section 3.11 ADJOURNMENT. A majority of the directors present, whether or not a quorum is present, may adjourn any directors' meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place is fixed at the meeting adjourned. If the meeting is adjourned for more than twenty-four hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment. Section 3.12 FEES AND COMPENSATION. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the Board. Section 3.13 ACTION WITHOUT MEETING. In accordance with the provisions of Section 307(8)(b) of the California General Corporation Law, any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall have the same force and effect as a unanimous vote of the Board and shall be filed with the minutes of the proceedings of the Board. ARTICLE IV -- OFFICERS Section 4.1 OFFICERS. The officers of the corporation shall be a President, Vice President, a Controller, a Secretary and a Treasurer. The corporation may also have, at the discretion of the Board, a Chairman of the Board, one or more additional Vice Presidents, a Chief Operating Officer, a General Manager, General Counsel, one or more Assistant General Counsels, one or more Assistant Controllers, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.5 of this Article. Section 4.2 ELECTION. The officers of the corporation, except such officers as may be elected or appointed in accordance with the provisions of Section 4.5 or Section 4.6 of this Article, shall be chosen annually by, and shall serve at the pleasure of the Board, and shall hold their respective offices until their resignation, removal, or other disqualification from service, or until their respective successors shall be elected. Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT. No person shall be eligible for the office of Chairman of the Board, if there shall be such an officer, or President unless such person is a member of the Board of the corporation; 8 any other officer may or may not be a director. Section 4.4 REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by the Board at any time or by any officer upon whom such power of removal may be conferred by the Board. Any such removal shall be without prejudice to the rights, if any, of the officer under any contract of employment of the officer. Any officer may resign at any time by giving written notice to the corporation, but without prejudice to the rights, if any, of the corporation under any contract of employment to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4.5 APPOINTMENT OF OTHER OFFICERS. The Board may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in the Bylaws or as the Board may from time to time determine. Notwithstanding the job title for such person, no employee or other representative of this corporation shall be an officer of this corporation unless elected by the Board. Section 4.6 VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular election or appointment to such office. Section 4.7 SALARIES. The salaries of the Chairman of the Board, if any, President, General Manager, if any, Vice Presidents, Controller, Treasurer and Secretary of the corporation shall be fixed by the Board. Salaries of all other officers shall be approved from time to time by the chief executive officer. Section 4.8 CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an officer, shall preside at all meetings of the Board, and shall exercise such powers and perform such duties as from time to time may be conferred upon or assigned to him by the Board or the Bylaws. Section 4.9 PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board, if there be such an officer, the President shall be the chief executive officer of the corporation and has, subject to the control of the Board, general supervision, direction, and control of the business and affairs of the corporation. The President shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board or if there be none, at all meetings of the Board. The President has the general powers and duties of 9 management usually vested in the office of president of a corporation and has such other powers and duties as may be prescribed by the Board or the Bylaws. The President may designate from time to time the titles which the employees or other representatives of this corporation shall use, including the appointment of agent for service of process. Without limiting the foregoing, the President may designate one or more employees as regional vice-presidents. Section 4.10 VICE PRESIDENT. In the absence or disability of the President, the Vice Presidents in order of their rank shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to all the restrictions upon the President. The Board of Directors may establish the order of rank of the Vice Presidents. In the absence of such ranking, the Vice Presidents shall be ranked as follows: Executive Vice President (if any), Senior Vice President (if any). Vice Presidents holding identical titles shall be ranked in order of election to that office by the Board. Section 4.11 CHIEF OPERATING OFFICER. The Chief Operating Officer, if there shall be such an officer, must be a vice president of the corporation and shall be subject to the exercise of the general powers of supervision, direction and control of the business and officers of the corporation by the President, and supervise the operations of the corporation. Section 4.12 GENERAL MANAGER. The General Manager, if there shall be such an officer, must be a vice president of the corporation and shall, subject to the exercise of the general powers of supervision, direction and control by the President, or the Chief Operating Officer, if any, shall manage the operations of the corporation. In the absence of the Chief Operating Officer, the General Manager shall perform all the duties of the Chief Operating Officer and when so acting shall have all the powers of, and be subject to, all the restrictions upon the Chief Operating Officer. Section 4.13 GENERAL COUNSEL. The General Counsel shall be the chief consulting officer of the corporation in all legal matters and, subject to the President, shall have control over all matters of legal import concerning the corporation. Section 4.14 ASSISTANT GENERAL COUNSEL. One or more Assistant General Counsels, if any, shall perform such of the duties of the General Counsel as the General Counsel may designate, and in the absence or disability of the General Counsel, any Assistant General Counsel, in order of election to that office by the Board, shall perform the duties of the General Counsel. Section 4.15 CONTROLLER. The Controller shall be the chief accounting officer of the corporation and shall have control over all accounting matters concerning the corporation and shall perform such other duties as the President or General Manager shall designate. 10 Section 4.16 SECRETARY. The Secretary shall keep or cause to be kept, at the principal executive office and such other place as the Board may order, a book of minutes of all meetings of the shareholders, the Board, and its committees, and a share register or a duplicate share register. The Secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board and any committees thereof required by the Bylaws or by law to be given, shall keep the seal of the corporation in safe custody, shall from time to time issue such corporate secretarial certificates as may be required for the business and affairs of the corporation, and shall have such other general powers and duties of management usually vested in the office of secretary of a corporation and as may be prescribed by the Board, the President or the Bylaws. Section 4.17 ASSISTANT SECRETARY. One or more Assistant Secretaries, if any, shall perform such of the duties of the Secretary as the Secretary shall designate, and in the absence or disability of the Secretary, any Assistant Secretary, in order of election to that office by the Board, shall perform the duties of the Secretary. Section 4.18 SECRETARY PRO TEMPORE. At any meeting of the Board or of the shareholders from which the Secretary and Assistant Secretary are absent, a Secretary pro tempore may be appointed by the Board of Directors or shareholders as appropriate and act. Section 4.19 TREASURER. The Treasurer is the chief financial officer of the corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation. The books of account shall at all times be open to inspection by any director. The Treasurer shall deposit, or cause to be deposited, all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors pursuant to Section 5.2. The Treasurer shall disburse or cause to be disbursed, the funds of the corporation as may be ordered by the President or the General Manager, shall render to the President, the General Manager or the directors, whenever they request it, an account of all transactions as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board, or the Bylaws. Section 4.20 ASSISTANT TREASURER. One or more Assistant Treasurers, if any, shall perform such of the duties of the Treasurer as the Treasurer shall designate, and in the absence or disability of the Treasurer, any Assistant Treasurer, in order of election to that office by the Board, shall perform the duties of the Treasurer. 11 Section 4.21 PERFORMANCE OF DUTIES. Officers shall perform the duties of their respective offices as stated in these Bylaws, and such additional duties as the Board shall designate. ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS. The corporation shall keep in its principal executive office the original or a copy of these Bylaws, as amended to date, which shall be open to inspection by shareholders at all reasonable times during office hours. Section 5.2 CONTRACTS AND OTHER INSTRUMENTS, LOANS, NOTES AND DEPOSIT OF FUNDS. The Chairman of the Board, if any, the President and any Vice President of this corporation, either alone or with the Secretary or an Assistant Secretary, shall execute in the name of the corporation such written instruments as may be authorized by the Board and, without special direction of the Board, such instruments as transactions of the ordinary business of the corporation may require and, such officers without the special direction of the Board may authenticate, attest or countersign any such instruments when deemed appropriate. The Board may authorize any person, persons, entity, entities, attorney, attorneys, attorney-in-fact, attorneys-in-fact, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by resolution of the Board as it may direct. Such authority may be general or confined to specific instances. All checks, drafts, or other similar orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as the Board, Chief Executive Officer or Treasurer may direct. Unless authorized by the Board or these Bylaws, no officer, agent, employee or any other person or persons shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or amount. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board may direct. Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The President or any other officer or officers authorized by the Board or the President are each authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any other corporation or corporations standing in the 12 name of the corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officer. Section 5.4 ANNUAL REPORT TO SHAREHOLDERS. The annual report to shareholders referred to in Section 1501 of the California General Corporation Law is expressly waived, but nothing herein shall be interpreted as prohibiting the Board from issuing annual or other periodic reports to shareholders. Section 5.5 FISCAL YEAR AND SUBDIVISIONS. The calendar year shall be the corporate fiscal year of the corporation. For the purpose of paying dividends, for making reports and for the convenient transaction of the business of the corporation, the Board may divide the fiscal year into appropriate subdivisions. Section 5.6 CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the General Provisions of the California Corporations Code and in the California General Corporation Law shall govern the construction of these Bylaws. ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each person who was or is a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, formal or informal, whether brought in the name of the corporation or otherwise and whether of a civil, criminal, administrative or investigative nature (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of this corporation or is or was serving at the request of this corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is an alleged action or inaction in an official capacity or in any other capacity while serving as a director or officer shall, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permissible under California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors, and administrators; provided, however, that (A) this corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of this corporation other than a suit permitted by Section 6.3; (B) this corporation shall indemnify any such person seeking indemnification in connection with settlement of a proceeding (or part thereof) other than a 13 proceeding by or in the name of this corporation to procure a judgment in its favor only if any settlement of such a proceeding is approved in writing by this corporation; (C) that no such person shall be indemnified (i) except to the extent that the aggregate of losses to be indemnified exceeds the amount of such losses for which the director or officer is paid pursuant to any directors' and officers' liability insurance policy maintained by the corporation; (ii) on account of any suit in which judgment is rendered against such person for an accounting of profits made from the purchase or sale by such person of securities of this corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state, or local statutory law; (iii) if a court of competent jurisdiction finally determines that any indemnification hereunder is unlawful; and (iv) as to circumstances in which indemnity is expressly prohibited by Section 317 of the General Corporation Law of California (the "Law"); and (D) that no such person shall be indemnified with regard to any action brought by or in the right of this corporation for breach of duty to this corporation and its shareholders (a) for acts or omissions involving intentional misconduct or knowing and culpable violation of law; (b) for acts or omissions that the director or officer believes to be contrary to the best interests of this corporation or its shareholders or that involve the absence of good faith on the part of the director or officer; (c) for any transaction from which the director or officer derived an improper personal benefit; (d) for acts or omissions that show a reckless disregard for the director's or officer's duty to this corporation or its shareholders in circumstances in which the director or officer was aware, or should have been aware, in the ordinary course of performing his or her duties, of a risk of serious injury to this corporation or its shareholders; (e) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's or officer's duties to this corporation or its shareholders; and (f) for costs, charges, expenses, liabilities, and losses arising under Section 310 or 316 of the Law. The right to indemnification conferred in this Article shall include the right to be paid by this corporation expenses incurred in defending any proceeding in advance of its final disposition; provided, however, that if the Law permits the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, such advances shall be made only upon delivery to this corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts to this corporation if it shall be ultimately determined that such person is not entitled to be indemnified." Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS. A person who was or is a party or is threatened to be made a party to or is involved in any proceeding by reason of the fact that he or she is or was an employee or agent of this corporation or is or was serving at the request of this corporation as an employee or agent of another enterprise, including service with respect to employee benefit plans, whether the basis of such action is an alleged action or inaction in an official capacity or in any other capacity while serving as an employee or agent, may, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permitted by California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses, (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. 14 Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT. If a claim under Section 6.1 of this Article is not paid in full by this corporation within 30 days after a written claim has been received by this corporation, the claimant may at any time thereafter bring suit against this corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. Neither the failure of this corporation (including its Board, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met the applicable standard of conduct, if any, nor an actual determination by this corporation (including its Board, independent legal counsel, or its shareholders) that the claimant has not met the applicable standard of conduct, shall be a defense to the action or create a presumption for the purpose of an action that the claimant has not met the applicable standard of conduct. Section 6.4 SUCCESSFUL DEFENSE. Notwithstanding any other provisions of this Article, to the extent that a director or officer has been successful on the merits in defense of any proceeding referred to in Section 6.1 or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. Section 6.5 NONEXCLUSIVITY OF RIGHTS. The right to indemnification provided by this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, agreement, vote of shareholders, or disinterested directors, or otherwise. Section 6.6 INSURANCE. This corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of this corporation or another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not this corporation would have the power to indemnify such person against such expense, liability, or loss under the Law. Section 6.7 EXPENSES AS A WITNESS. To the extent that any director, officer, employee, or agent of this corporation is, by reason of such position or a position with another entity at the request of this corporation, a witness in any action, suit, or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her on his or her behalf in connection therewith. Section 6.8 INDEMNITY AGREEMENTS. This corporation may enter into agreements with any director, officer, employee, or agent of this corporation providing for indemnification to the fullest extent permissible under the Law and this corporation's Articles of Incorporation. 15 Section 6.9 SEVERABILITY. Each and every paragraph, sentence, term, and provision of this Article is separate and distinct so that if any paragraph, sentence, term, or provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other paragraph, sentence, term, or provision hereof. To the extent required, any paragraph, sentence, term, or provision of this Article may be modified by a court of competent jurisdiction to preserve its validity and to provide the claimant with, subject to the limitations set forth in this Article and any agreement between this corporation and claimant, the broadest possible indemnification permitted under applicable law. Section 6.10 EFFECT OF REPEAL OR MODIFICATION. Any repeal or modification of this Article shall not adversely affect any right of indemnification of a director or officer existing at the time of such repeal or modification with respect to any action or omission occurring prior to such repeal or modification. ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS. In accordance with Section 211 and subject to the provisions contained in Section 212 of the California Corporation Law, these Bylaws may be amended or repealed either by approval of the outstanding shares or by the approval of the Board; provided, however, that a Bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable Board or vice versa may only be adopted by approval of the outstanding shares. The exact number of directors within the maximum and minimum number specified in these Bylaws may be amended by the Board alone. [End of Bylaws] 16 EX-3.4 5 EXHIBIT 3.4 EXHIBIT 3.4 ARTICLES OF INCORPORATION OF EDISON MISSION FINANCE CO. I The name of the corporation is Edison Mission Finance Co. II The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. III The name and address in the State of California of the corporation's initial agent for service of process are: Martha A. Spikes 18101 Von Karman Avenue, Suite 1700 Irvine, California 92715 IV This corporation is authorized to issue only one class of shares, which shall be designated "common" shares. The total authorized number of such shares authorized to be issued is ten thousand (10,000) shares. V 1. The liability of directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. 2. The corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) through bylaw provisions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject only to the applicable limits set forth in Section 204 of the California Corporations Code with respect to actions for breach of duty to the corporation and its shareholders. Dated: As of November 12, 1998 /s/ Mary Ellen Olson ------------------------- Mary Ellen Olson EX-3.5 6 EXHIBIT 3.5 EXHIBIT 3.5 BYLAWS OF EDISON MISSION FINANCE CO. ADOPTED DECEMBER 1, 1998 EDISON MISSION FINANCE CO. INDEX
ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE. 1 Section 1.2 OTHER OFFICES. 1 ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS. 1 Section 2.2 ANNUAL MEETINGS. 1 Section 2.3 SPECIAL MEETINGS. 1 Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING. 2 Section 2.5 QUORUM; ADJOURNMENT. 2 Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF. 3 Section 2.7 VOTING. 3 Section 2.8. RECORD DATE. 4 Section 2.9. CONSENT OF ABSENTEES; WAIVER OF NOTICE. 4 Section 2.10 ACTION WITHOUT MEETING. 4 Section 2.11 PROXIES. 4 ARTICLE III -- DIRECTORS Section 3.1 POWERS. 5 Section 3.2 NUMBER OF DIRECTORS. 5 Section 3.3 ELECTION AND TERM OF OFFICE. 5 Section 3.4 VACANCIES. 6 Section 3.5 PLACE OF MEETING. 6 Section 3.6 ORGANIZATION MEETING. 6 Section 3.7 SPECIAL MEETINGS. 6 Section 3.8 QUORUM. 7 Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. 7 Section 3.10 WAIVER OF NOTICE. 7 Section 3.11 ADJOURNMENT. 8 Section 3.12 FEES AND COMPENSATION. 8 Section 3.13 ACTION WITHOUT MEETING. 8 ARTICLE IV -- OFFICERS Section 4.1 OFFICERS. 8 Section 4.2 ELECTION. 8 Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT. 8 Section 4.4 REMOVAL AND RESIGNATION. 9 Section 4.5 APPOINTMENT OF OTHER OFFICERS. 9 Section 4.6 VACANCIES. 9 Section 4.7 SALARIES. 9 Section 4.8 CHAIRMAN OF THE BOARD. 9 Section 4.9 PRESIDENT. 9 Section 4.10 VICE PRESIDENT. 10 Section 4.11 CHIEF OPERATING OFFICER. 10
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Section 4.12 GENERAL MANAGER. 10 Section 4.13 GENERAL COUNSEL. 10 Section 4.14 ASSISTANT GENERAL COUNSEL. 10 Section 4.15 CONTROLLER. 10 Section 4.16 SECRETARY. 11 Section 4.17 ASSISTANT SECRETARY. 11 Section 4.18 SECRETARY PRO TEMPORE. 11 Section 4.19 TREASURER. 11 Section 4.20 ASSISTANT TREASURER. 11 Section 4.21 PERFORMANCE OF DUTIES. 12 ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS. 12 Section 5.2 CONTRACTS AND OTHER INSTRUMENTS,LOANS, NOTES AND DEPOSIT OF FUNDS. 12 Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. 12 Section 5.4 ANNUAL REPORT TO SHAREHOLDERS. 13 Section 5.5 FISCAL YEAR AND SUBDIVISIONS. 13 Section 5.6 CONSTRUCTION AND DEFINITIONS. 13 ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. 13 Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS. 14 Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT. 15 Section 6.4 SUCCESSFUL DEFENSE. 15 Section 6.5 NONEXCLUSIVITY OF RIGHTS. 15 Section 6.6 INSURANCE. 15 Section 6.7 EXPENSES AS A WITNESS. 15 Section 6.8 INDEMNITY AGREEMENTS. 15 Section 6.9 SEVERABILITY. 16 Section 6.10 EFFECT OF REPEAL OR MODIFICATION. 16 ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS. 16
ii BYLAWS BYLAWS FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY STATUTE OR ITS ARTICLES OF INCORPORATION OF EDISON MISSION FINANCE CO. ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the corporation is hereby fixed and located at 18101 Von Karman Avenue, Suite 1700, in the City of Irvine, County of Orange, State of California. The Board of Directors ("the Board") is hereby granted full power and authority to change the principal executive office from one location to another. Section 1.2 OTHER OFFICES. Branches or subordinate offices may be established at any time by the Board of Directors or the President at any place within or without the State of California. ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS. All meetings of shareholders shall be held at the principal executive office, or at such other office or places within or without the State of California as may be designated by either the Board or by the person or persons giving notice of the meeting pursuant to Section 2.4. Section 2.2 ANNUAL MEETINGS. The annual meeting of shareholders shall be held on the 2nd Tuesday in the month of May of each year, at the hour of 3:00 p.m. on said day, or at such other time on such other day as shall be fixed by the Board, to elect directors to hold office for the year next ensuing and until their successors shall be elected, and to consider and act upon such other matters as may lawfully be presented to such meeting; provided, however, that should said day fall upon a legal holiday observed by this corporation, then any such annual meeting of shareholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. Section 2.3 SPECIAL MEETINGS. Special meetings of the shareholders may be called at any time by the Board, the Chairman of the Board, if any, the President, the Executive Vice President, if any, the Senior Vice President, if any, or the holders of shares entitled to cast not less than ten percent of the 1 votes at such meeting. Upon request to the Chairman of the Board, if any, the President, the Executive Vice President, the Senior Vice President, the Secretary or Assistant Secretary by any person entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five nor more than sixty days after the receipt of the request. If the notice is not given within twenty days after receipt of the request, the persons entitled to call the meeting may give the notice. Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING. Written notice of each annual or special meeting of shareholders shall be given not less than ten nor more than sixty days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (ii) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to the provisions of applicable law, any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the name of nominees intended at the time of the notice to be presented by the Board for election. Notice of a shareholders' meeting or any report to the shareholders shall be given either personally to the recipient or to a person in the office of the recipient or by first-class United States mail, by private mail or messenger service, by telephone facsimile transmission, or by any other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. Such notice or report shall be deemed to have been given at the time when delivered personally, deposited in the United States mail or sent by private mail or messenger service, by telephone facsimile transmission or sent by any other means of written or electronic communication. Section 2.5 QUORUM; ADJOURNMENT. (a) A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders. (b) Except as provided in subsection (c) below, the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Articles. (c) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. 2 (d) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subsection (c) above. Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF. Any shareholders' meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum (except as permitted by applicable law in the case of withdrawals by shareholders to reduce the number remaining to less than a quorum) no other business may be transacted at such meeting. With exceptions under Section 601(d) of the California Corporations Code and any other applicable law, it shall not be necessary to give any notice of the time and place of the adjourned meeting or of the business to be transacted thereat, other than by announcement at the meeting at which such adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. Section 2.7 VOTING. The shareholders entitled to notice of any meeting or to vote at any such meeting shall be only persons in whose name shares stand on the stock records of the corporation on the record date determined in accordance with Section 2.8. Voting shall in all cases be subject to the provisions of Chapter 7 of the California General Corporation Law, including the following provisions: (a) Shares standing in the name of another corporation, domestic or foreign, may be voted by an officer, agent, or proxyholder as the bylaws of the other corporation may prescribe or, in the absence of such provision, as the Board of the other corporation may determine or, in the absence of that determination, by the chairman of the board, president or any vice president of the other corporation, or by any other person authorized to do so by the chairman of the board, president, or any vice president of the other corporation. Shares which are purported to be voted or any proxy purported to be executed in the name of a corporation (whether or not any title of the person signing is indicated) shall be presumed to be voted or the proxy executed in accordance with the provisions of the California General Corporation Law, unless the contrary is shown. (b) Shares of this corporation owned by its subsidiary shall not be entitled to vote on any matter. (c) Shares of this corporation held by this corporation in a fiduciary capacity, and shares of this corporation held in a fiduciary capacity by its subsidiary, shall not be entitled to vote on any matter, except as follows: (i) to the extent that the settlor or beneficial owner possesses and exercises a right to vote or to give this corporation binding instructions as to how to vote such shares; or (ii) where there are one or more cotrustees who are not affected by the prohibition of this subsection, in which case the shares may be voted by the cotrustees as if it or they are the sole trustees. 3 Section 2.8. RECORD DATE. The Board may fix, in advance, a record date for the determination of the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution, or any allotment of any rights or entitled to exercise any rights, in respect of any other lawful action. The record date so fixed shall be not more than sixty days nor less than ten days prior to the date of the meeting nor more than sixty days prior to any other action. When a record date is so fixed, only shareholders of record at the close of business on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation after the record date, except as otherwise provided by law or these Bylaws. Section 2.9 Consent of Absentees; Waiver of Notice. The transactions of any meeting of shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by this division to be included in the notice but not so included, if such objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, unless otherwise provided in the Articles or Bylaws, except as provided in the California General Corporation Law. Section 2.10 ACTION WITHOUT MEETING. Subject to Section 603 of the California General Corporation Law, any action which, under any provision of the California General Corporation Law, may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Section 2.11 PROXIES. Every person entitled to vote shares has the right to do so either in person or by one or more persons authorized by a written proxy executed by such shareholder and filed with the Secretary. No proxy shall be valid after the expiration of eleven (11) months from the date thereof, unless otherwise provided in the proxy. 4 ARTICLE III -- DIRECTORS Section 3.1 POWERS. Subject to any limitations of the Articles, of these Bylaws and of the California General Corporation Law relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. The Board may delegate the management of the day-to-day operation of the business of the corporation provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Board shall have the following powers in addition to the other powers enumerated in these Bylaws: (a) To select and remove all the other officers, agents and employees of the corporation, prescribe the powers and duties for them as may not be inconsistent with law, with the Articles or these Bylaws, fix their compensation and require from them security for faithful service. (b) To conduct, manage and control the affairs and business of the corporation and to make such rules and regulations therefor not inconsistent with law, or with the Articles or these Bylaws, as they may deem best. (c) To adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time as in their judgment they deem best. (d) To authorize the issuance of shares of stock of the corporation from time to time, upon such terms and for such consideration as may be lawful. (e) To borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. Section 3.2 NUMBER OF DIRECTORS. The authorized number of directors shall not be less than three (3) nor more than six (6) until changed by amendment of the Articles or by a Bylaw duly adopted by the shareholders. The exact number of directors shall be fixed, within the limits specified, by the Board or the shareholders in the same manner provided in these Bylaws for the amendment thereof. The exact number of authorized directors shall be six (6) until changed as provided in these Bylaws. Section 3.3 ELECTION AND TERM OF OFFICE. The directors shall be elected at each annual meeting of the shareholders, but if 5 any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Each director shall hold office until the next annual meeting and until a successor has been elected and qualified. Section 3.4 VACANCIES. Any director may resign effective upon giving written notice to the Chairman of the Board, if any, the President, the Secretary, or the Board, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Vacancies in the Board, except those existing as a result of a removal of a director, may be filled by a majority of the remaining directors, whether or not less than a quorum, or by a sole remaining director, and each director so elected shall hold office until the next annual meeting and until such director's successor has been elected and qualified. Vacancies existing as a result of a removal of a director may be filled by the shareholders as provided by law. A vacancy or vacancies in the Board shall be deemed to exist in case of the death, resignation or removal of any director, or if the authorized number of directors be increased, or if the shareholders fail, at any annual or special meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be voted for at that meeting. The shareholders may elect a director or directors at any time to fill any vacancy not filled by the directors. Any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares entitled to vote. If the Board accepts the resignation of a director tendered to take effect at a future time, the Board or the shareholders shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of the director's term of office. Section 3.5 PLACE OF MEETING. Regular or special meetings of the Board shall be held at any place within or without the State of California which has been designated from time to time by the Board or as provided in these Bylaws. In the absence of such designation, regular meetings shall be held at the principal executive office. Section 3.6 ORGANIZATION MEETING. Promptly following each annual meeting of shareholders the Board shall hold a regular meeting for the purpose of organization, election of officers and the transaction of other business. Section 3.7 SPECIAL MEETINGS. Special meetings other than organization meetings of the Board for any purpose 6 or purposes may be called at any time by the Chairman of the Board, if any, the President, any Executive Vice President, Senior Vice President, the Secretary, an Assistant Secretary or by any two directors. Such meetings of the Board shall be held upon four days' written notice by mail or forty-eight hours' notice given personally or by telephone, telephone facsimile transmission, telegraph, telex or other similar means of communication. Any such notice shall be addressed or delivered to each director at such director's address as it is shown upon the records of the corporation or as may have been given to the corporation by the director for purposes of notice or, if such address is not shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. The notice need not specify the purpose of such meeting. Notice by first-class mail shall be deemed to have been given at the time a written notice is deposited in the United States mail, postage prepaid or sent by private mail or messenger service. Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient, to a person in the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient, delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means to the recipient. Oral notice shall be deemed to have been given at the time it is communicated, in person, by telephone to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. Section 3.8 QUORUM. One-third of the maximum number of authorized directors constitutes a quorum of the Board for the transaction of business, except to adjourn as provided in Section 3.11 of this Article. As defined in Article III, Section 3.2, the maximum number of authorized directors is six. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board, unless a greater number is required by law or by the Articles; provided, however, that a meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Such participation constitutes presence in person at such meeting. Section 3.10 WAIVER OF NOTICE. The transactions of any meeting of the Board, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or 7 made a part of the minutes of the meeting. Section 3.11 ADJOURNMENT. A majority of the directors present, whether or not a quorum is present, may adjourn any directors' meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place is fixed at the meeting adjourned. If the meeting is adjourned for more than twenty-four hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment. Section 3.12 FEES AND COMPENSATION. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the Board. Section 3.13 ACTION WITHOUT MEETING. In accordance with the provisions of Section 307(8)(b) of the California General Corporation Law, any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall have the same force and effect as a unanimous vote of the Board and shall be filed with the minutes of the proceedings of the Board. ARTICLE IV -- OFFICERS Section 4.1 OFFICERS. The officers of the corporation shall be a President, Vice President, a Controller, a Secretary and a Treasurer. The corporation may also have, at the discretion of the Board, a Chairman of the Board, one or more additional Vice Presidents, a Chief Operating Officer, a General Manager, General Counsel, one or more Assistant General Counsels, one or more Assistant Controllers, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.5 of this Article. Section 4.2 ELECTION. The officers of the corporation, except such officers as may be elected or appointed in accordance with the provisions of Section 4.5 or Section 4.6 of this Article, shall be chosen annually by, and shall serve at the pleasure of the Board, and shall hold their respective offices until their resignation, removal, or other disqualification from service, or until their respective successors shall be elected. Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT. No person shall be eligible for the office of Chairman of the Board, if there shall be such an officer, or President unless such person is a member of the Board of the corporation; 8 any other officer may or may not be a director. Section 4.4 REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by the Board at any time or by any officer upon whom such power of removal may be conferred by the Board. Any such removal shall be without prejudice to the rights, if any, of the officer under any contract of employment of the officer. Any officer may resign at any time by giving written notice to the corporation, but without prejudice to the rights, if any, of the corporation under any contract of employment to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4.5 APPOINTMENT OF OTHER OFFICERS. The Board may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in the Bylaws or as the Board may from time to time determine. Notwithstanding the job title for such person, no employee or other representative of this corporation shall be an officer of this corporation unless elected by the Board. Section 4.6 VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular election or appointment to such office. Section 4.7 SALARIES. The salaries of the Chairman of the Board, if any, President, General Manager, if any, Vice Presidents, Controller, Treasurer and Secretary of the corporation shall be fixed by the Board. Salaries of all other officers shall be approved from time to time by the chief executive officer. Section 4.8 CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an officer, shall preside at all meetings of the Board, and shall exercise such powers and perform such duties as from time to time may be conferred upon or assigned to him by the Board or the Bylaws. Section 4.9 PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board, if there be such an officer, the President shall be the chief executive officer of the corporation and has, subject to the control of the Board, general supervision, direction, and control of the business and affairs of the corporation. The President shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board or if there be none, at all meetings of the Board. The President has the general powers and duties of 9 management usually vested in the office of president of a corporation and has such other powers and duties as may be prescribed by the Board or the Bylaws. The President may designate from time to time the titles which the employees or other representatives of this corporation shall use, including the appointment of agent for service of process. Without limiting the foregoing, the President may designate one or more employees as regional vice-presidents. Section 4.10 VICE PRESIDENT. In the absence or disability of the President, the Vice Presidents in order of their rank shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to all the restrictions upon the President. The Board of Directors may establish the order of rank of the Vice Presidents. In the absence of such ranking, the Vice Presidents shall be ranked as follows: Executive Vice President (if any), Senior Vice President (if any). Vice Presidents holding identical titles shall be ranked in order of election to that office by the Board. Section 4.11 CHIEF OPERATING OFFICER. The Chief Operating Officer, if there shall be such an officer, must be a vice president of the corporation and shall be subject to the exercise of the general powers of supervision, direction and control of the business and officers of the corporation by the President, and supervise the operations of the corporation. Section 4.12 GENERAL MANAGER. The General Manager, if there shall be such an officer, must be a vice president of the corporation and shall, subject to the exercise of the general powers of supervision, direction and control by the President, or the Chief Operating Officer, if any, shall manage the operations of the corporation. In the absence of the Chief Operating Officer, the General Manager shall perform all the duties of the Chief Operating Officer and when so acting shall have all the powers of, and be subject to, all the restrictions upon the Chief Operating Officer. Section 4.13 GENERAL COUNSEL. The General Counsel shall be the chief consulting officer of the corporation in all legal matters and, subject to the President, shall have control over all matters of legal import concerning the corporation. Section 4.14 ASSISTANT GENERAL COUNSEL. One or more Assistant General Counsels, if any, shall perform such of the duties of the General Counsel as the General Counsel may designate, and in the absence or disability of the General Counsel, any Assistant General Counsel, in order of election to that office by the Board, shall perform the duties of the General Counsel. Section 4.15 CONTROLLER. The Controller shall be the chief accounting officer of the corporation and shall have control over all accounting matters concerning the corporation and shall perform such other duties as the President or General Manager shall designate. 10 Section 4.16 SECRETARY. The Secretary shall keep or cause to be kept, at the principal executive office and such other place as the Board may order, a book of minutes of all meetings of the shareholders, the Board, and its committees, and a share register or a duplicate share register. The Secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board and any committees thereof required by the Bylaws or by law to be given, shall keep the seal of the corporation in safe custody, shall from time to time issue such corporate secretarial certificates as may be required for the business and affairs of the corporation, and shall have such other general powers and duties of management usually vested in the office of secretary of a corporation and as may be prescribed by the Board, the President or the Bylaws. Section 4.17 ASSISTANT SECRETARY. One or more Assistant Secretaries, if any, shall perform such of the duties of the Secretary as the Secretary shall designate, and in the absence or disability of the Secretary, any Assistant Secretary, in order of election to that office by the Board, shall perform the duties of the Secretary. Section 4.18 SECRETARY PRO TEMPORE. At any meeting of the Board or of the shareholders from which the Secretary and Assistant Secretary are absent, a Secretary pro tempore may be appointed by the Board of Directors or shareholders as appropriate and act. Section 4.19 TREASURER. The Treasurer is the chief financial officer of the corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation. The books of account shall at all times be open to inspection by any director. The Treasurer shall deposit, or cause to be deposited, all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors pursuant to Section 5.2. The Treasurer shall disburse or cause to be disbursed, the funds of the corporation as may be ordered by the President or the General Manager, shall render to the President, the General Manager or the directors, whenever they request it, an account of all transactions as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board, or the Bylaws. Section 4.20 ASSISTANT TREASURER. One or more Assistant Treasurers, if any, shall perform such of the duties of the Treasurer as the Treasurer shall designate, and in the absence or disability of the Treasurer, any Assistant Treasurer, in order of election to that office by the Board, shall perform the duties of the Treasurer. 11 Section 4.21 PERFORMANCE OF DUTIES. Officers shall perform the duties of their respective offices as stated in these Bylaws, and such additional duties as the Board shall designate. ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS. The corporation shall keep in its principal executive office the original or a copy of these Bylaws, as amended to date, which shall be open to inspection by shareholders at all reasonable times during office hours. Section 5.2 CONTRACTS AND OTHER INSTRUMENTS, LOANS, NOTES AND DEPOSIT OF FUNDS. The Chairman of the Board, if any, the President and any Vice President of this corporation, either alone or with the Secretary or an Assistant Secretary, shall execute in the name of the corporation such written instruments as may be authorized by the Board and, without special direction of the Board, such instruments as transactions of the ordinary business of the corporation may require and, such officers without the special direction of the Board may authenticate, attest or countersign any such instruments when deemed appropriate. The Board may authorize any person, persons, entity, entities, attorney, attorneys, attorney-in-fact, attorneys-in-fact, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by resolution of the Board as it may direct. Such authority may be general or confined to specific instances. All checks, drafts, or other similar orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as the Board, Chief Executive Officer or Treasurer may direct. Unless authorized by the Board or these Bylaws, no officer, agent, employee or any other person or persons shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or amount. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board may direct. Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The President or any other officer or officers authorized by the Board or the President are each authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any other corporation or corporations standing in the 12 name of the corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officer. Section 5.4 ANNUAL REPORT TO SHAREHOLDERS. The annual report to shareholders referred to in Section 1501 of the California General Corporation Law is expressly waived, but nothing herein shall be interpreted as prohibiting the Board from issuing annual or other periodic reports to shareholders. Section 5.5 FISCAL YEAR AND SUBDIVISIONS. The calendar year shall be the corporate fiscal year of the corporation. For the purpose of paying dividends, for making reports and for the convenient transaction of the business of the corporation, the Board may divide the fiscal year into appropriate subdivisions. Section 5.6 CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the General Provisions of the California Corporations Code and in the California General Corporation Law shall govern the construction of these Bylaws. ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each person who was or is a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, formal or informal, whether brought in the name of the corporation or otherwise and whether of a civil, criminal, administrative or investigative nature (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of this corporation or is or was serving at the request of this corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is an alleged action or inaction in an official capacity or in any other capacity while serving as a director or officer shall, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permissible under California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors, and administrators; provided, however, that (A) this corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of this corporation other than a suit permitted by Section 6.3; (B) this corporation shall indemnify any such person seeking indemnification in connection with settlement of a proceeding (or part thereof) other than a 13 proceeding by or in the name of this corporation to procure a judgment in its favor only if any settlement of such a proceeding is approved in writing by this corporation; (C) that no such person shall be indemnified (i) except to the extent that the aggregate of losses to be indemnified exceeds the amount of such losses for which the director or officer is paid pursuant to any directors' and officers' liability insurance policy maintained by the corporation; (ii) on account of any suit in which judgment is rendered against such person for an accounting of profits made from the purchase or sale by such person of securities of this corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state, or local statutory law; (iii) if a court of competent jurisdiction finally determines that any indemnification hereunder is unlawful; and (iv) as to circumstances in which indemnity is expressly prohibited by Section 317 of the General Corporation Law of California (the "Law"); and (D) that no such person shall be indemnified with regard to any action brought by or in the right of this corporation for breach of duty to this corporation and its shareholders (a) for acts or omissions involving intentional misconduct or knowing and culpable violation of law; (b) for acts or omissions that the director or officer believes to be contrary to the best interests of this corporation or its shareholders or that involve the absence of good faith on the part of the director or officer; (c) for any transaction from which the director or officer derived an improper personal benefit; (d) for acts or omissions that show a reckless disregard for the director's or officer's duty to this corporation or its shareholders in circumstances in which the director or officer was aware, or should have been aware, in the ordinary course of performing his or her duties, of a risk of serious injury to this corporation or its shareholders; (e) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's or officer's duties to this corporation or its shareholders; and (f) for costs, charges, expenses, liabilities, and losses arising under Section 310 or 316 of the Law. The right to indemnification conferred in this Article shall include the right to be paid by this corporation expenses incurred in defending any proceeding in advance of its final disposition; provided, however, that if the Law permits the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, such advances shall be made only upon delivery to this corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts to this corporation if it shall be ultimately determined that such person is not entitled to be indemnified." Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS. A person who was or is a party or is threatened to be made a party to or is involved in any proceeding by reason of the fact that he or she is or was an employee or agent of this corporation or is or was serving at the request of this corporation as an employee or agent of another enterprise, including service with respect to employee benefit plans, whether the basis of such action is an alleged action or inaction in an official capacity or in any other capacity while serving as an employee or agent, may, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permitted by California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses, (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. 14 Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT. If a claim under Section 6.1 of this Article is not paid in full by this corporation within 30 days after a written claim has been received by this corporation, the claimant may at any time thereafter bring suit against this corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. Neither the failure of this corporation (including its Board, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met the applicable standard of conduct, if any, nor an actual determination by this corporation (including its Board, independent legal counsel, or its shareholders) that the claimant has not met the applicable standard of conduct, shall be a defense to the action or create a presumption for the purpose of an action that the claimant has not met the applicable standard of conduct. Section 6.4 SUCCESSFUL DEFENSE. Notwithstanding any other provisions of this Article, to the extent that a director or officer has been successful on the merits in defense of any proceeding referred to in Section 6.1 or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. Section 6.5 NONEXCLUSIVITY OF RIGHTS. The right to indemnification provided by this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, agreement, vote of shareholders, or disinterested directors, or otherwise. Section 6.6 INSURANCE. This corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of this corporation or another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not this corporation would have the power to indemnify such person against such expense, liability, or loss under the Law. Section 6.7 EXPENSES AS A WITNESS. To the extent that any director, officer, employee, or agent of this corporation is, by reason of such position or a position with another entity at the request of this corporation, a witness in any action, suit, or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her on his or her behalf in connection therewith. Section 6.8 INDEMNITY AGREEMENTS. This corporation may enter into agreements with any director, officer, employee, or agent of this corporation providing for indemnification to the fullest extent permissible under the Law and this corporation's Articles of Incorporation. 15 Section 6.9 SEVERABILITY. Each and every paragraph, sentence, term, and provision of this Article is separate and distinct so that if any paragraph, sentence, term, or provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other paragraph, sentence, term, or provision hereof. To the extent required, any paragraph, sentence, term, or provision of this Article may be modified by a court of competent jurisdiction to preserve its validity and to provide the claimant with, subject to the limitations set forth in this Article and any agreement between this corporation and claimant, the broadest possible indemnification permitted under applicable law. Section 6.10 EFFECT OF REPEAL OR MODIFICATION. Any repeal or modification of this Article shall not adversely affect any right of indemnification of a director or officer existing at the time of such repeal or modification with respect to any action or omission occurring prior to such repeal or modification. ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS. In accordance with Section 211 and subject to the provisions contained in Section 212 of the California Corporation Law, these Bylaws may be amended or repealed either by approval of the outstanding shares or by the approval of the Board; provided, however, that a Bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable Board or vice versa may only be adopted by approval of the outstanding shares. The exact number of directors within the maximum and minimum number specified in these Bylaws may be amended by the Board alone. [End of Bylaws] 16 EX-3.6 7 EXHIBIT 3.6 Exhibit 3.6 ARTICLES OF INCORPORATION OF HOMER CITY PROPERTY HOLDINGS, INC. I The name of the corporation is Homer City Property Holdings, Inc. II The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. III The name and address in the State of California of the corporation's initial agent for service of process are: Martha A. Spikes 18101 Von Karman Avenue, Suite 1700 Irvine, California 92715 IV This corporation is authorized to issue only one class of shares, which shall be designated "common" shares. The total authorized number of such shares authorized to be issued is ten thousand (10,000) shares. V 1. The liability of directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. 2. The corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) through bylaw provisions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject only to the applicable limits set forth in Section 204 of the California Corporations Code with respect to actions for breach of duty to the corporation and its shareholders. Dated: As of March 9, 1999 /s/ Thomas C. Gustafson ---------------------------------- Thomas C. Gustafson, Incorporator EX-3.7 8 EXHIBIT 3.7 Exhibit 3.7 BYLAWS OF HOMER CITY PROPERTY HOLDINGS, INC. ADOPTED MARCH 15, 1999 HOMER CITY PROPERTY HOLDINGS, INC. INDEX
ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE .......................................................... 1 Section 1.2 OTHER OFFICES ....................................................................... 1 ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS ................................................................... 1 Section 2.2 ANNUAL MEETINGS ..................................................................... 1 Section 2.3 SPECIAL MEETINGS .................................................................... 1 Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING ................................................. 2 Section 2.5 QUORUM; ADJOURNMENT ................................................................. 2 Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF ................................................ 3 Section 2.7 VOTING .............................................................................. 3 Section 2.8. RECORD DATE ......................................................................... 4 Section 2.9. CONSENT OF ABSENTEES; WAIVER OF NOTICE............................................... 4 Section 2.10 ACTION WITHOUT MEETING .............................................................. 4 Section 2.11 PROXIES ............................................................................. 4 ARTICLE III -- DIRECTORS Section 3.1 POWERS .............................................................................. 5 Section 3.2 NUMBER OF DIRECTORS ................................................................. 5 Section 3.3 ELECTION AND TERM OF OFFICE ......................................................... 5 Section 3.4 VACANCIES ........................................................................... 6 Section 3.5 PLACE OF MEETING .................................................................... 6 Section 3.6 ORGANIZATION MEETING ................................................................ 6 Section 3.7 SPECIAL MEETINGS .................................................................... 6 Section 3.8 QUORUM .............................................................................. 7 Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE ................................... 7 Section 3.10 WAIVER OF NOTICE .................................................................... 7 Section 3.11 ADJOURNMENT ......................................................................... 8 Section 3.12 FEES AND COMPENSATION ............................................................... 8 Section 3.13 ACTION WITHOUT MEETING .............................................................. 8 ARTICLE IV -- OFFICERS Section 4.1 OFFICERS ............................................................................ 8 Section 4.2 ELECTION ............................................................................ 8 Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT ................................... 8 Section 4.4 REMOVAL AND RESIGNATION ............................................................. 9 Section 4.5 APPOINTMENT OF OTHER OFFICERS ....................................................... 9 Section 4.6 VACANCIES ........................................................................... 9 Section 4.7 SALARIES ............................................................................ 9 Section 4.8 CHAIRMAN OF THE BOARD ............................................................... 9 Section 4.9 PRESIDENT ........................................................................... 9 Section 4.10 VICE PRESIDENT ...................................................................... 10 Section 4.11 CHIEF OPERATING OFFICER ............................................................. 10
i Section 4.12 GENERAL MANAGER ..................................................................... 10 Section 4.13 GENERAL COUNSEL ..................................................................... 10 Section 4.14 ASSISTANT GENERAL COUNSEL ........................................................... 10 Section 4.15 CONTROLLER .......................................................................... 10 Section 4.16 SECRETARY ........................................................................... 11 Section 4.17 ASSISTANT SECRETARY ................................................................. 11 Section 4.18 SECRETARY PRO TEMPORE ............................................................... 11 Section 4.19 TREASURER ........................................................................... 11 Section 4.20 ASSISTANT TREASURER ................................................................. 11 Section 4.21 PERFORMANCE OF DUTIES ............................................................... 12 ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS ................................................................ 12 Section 5.2 CONTRACTS AND OTHER INSTRUMENTS, LOANS, NOTES AND DEPOSIT OF FUNDS .................. 12 Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS ...................................... 12 Section 5.4 ANNUAL REPORT TO SHAREHOLDERS ....................................................... 13 Section 5.5 FISCAL YEAR AND SUBDIVISIONS ........................................................ 13 Section 5.6 CONSTRUCTION AND DEFINITIONS ........................................................ 13 ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS ........................................... 13 Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS ............................................. 14 Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT ....................................... 15 Section 6.4 SUCCESSFUL DEFENSE .................................................................. 15 Section 6.5 NONEXCLUSIVITY OF RIGHTS ............................................................ 15 Section 6.6 INSURANCE ........................................................................... 15 Section 6.7 EXPENSES AS A WITNESS ............................................................... 15 Section 6.8 INDEMNITY AGREEMENTS ................................................................ 15 Section 6.9 SEVERABILITY ........................................................................ 16 Section 6.10 EFFECT OF REPEAL OR MODIFICATION .................................................... 16 ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS .......................................................................... 16
ii BYLAWS BYLAWS FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY STATUTE OR ITS ARTICLES OF INCORPORATION OF HOMER CITY PROPERTY HOLDINGS, INC. ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the corporation is hereby fixed and located at 18101 Von Karman Avenue, Suite 1700, in the City of Irvine, County of Orange, State of California. The Board of Directors ("the Board") is hereby granted full power and authority to change the principal executive office from one location to another. Section 1.2 OTHER OFFICES. Branches or subordinate offices may be established at any time by the Board of Directors or the President at any place within or without the State of California. ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS. All meetings of shareholders shall be held at the principal executive office, or at such other office or places within or without the State of California as may be designated by either the Board or by the person or persons giving notice of the meeting pursuant to Section 2.4. Section 2.2 ANNUAL MEETINGS. The annual meeting of shareholders shall be held on the 2nd Tuesday in the month of May of each year, at the hour of 4:00 p.m. on said day, or at such other time on such other day as shall be fixed by the Board, to elect directors to hold office for the year next ensuing and until their successors shall be elected, and to consider and act upon such other matters as may lawfully be presented to such meeting; provided, however, that should said day fall upon a legal holiday observed by this corporation, then any such annual meeting of shareholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. Section 2.3 SPECIAL MEETINGS. Special meetings of the shareholders may be called at any time by the Board, the Chairman of the Board, if any, the President, the Executive Vice President, if any, the Senior Vice President, if any, or the holders of shares entitled to cast not less than ten percent of the 1 votes at such meeting. Upon request to the Chairman of the Board, if any, the President, the Executive Vice President, the Senior Vice President, the Secretary or Assistant Secretary by any person entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five nor more than sixty days after the receipt of the request. If the notice is not given within twenty days after receipt of the request, the persons entitled to call the meeting may give the notice. Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING. Written notice of each annual or special meeting of shareholders shall be given not less than ten nor more than sixty days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (ii) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to the provisions of applicable law, any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the name of nominees intended at the time of the notice to be presented by the Board for election. Notice of a shareholders' meeting or any report to the shareholders shall be given either personally to the recipient or to a person in the office of the recipient or by first-class United States mail, by private mail or messenger service, by telephone facsimile transmission, or by any other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. Such notice or report shall be deemed to have been given at the time when delivered personally, deposited in the United States mail or sent by private mail or messenger service, by telephone facsimile transmission or sent by any other means of written or electronic communication. Section 2.5 QUORUM; ADJOURNMENT. (a) A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders. (b) Except as provided in subsection (c) below, the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Articles. (c) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. 2 (d) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subsection (c) above. Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF. Any shareholders' meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum (except as permitted by applicable law in the case of withdrawals by shareholders to reduce the number remaining to less than a quorum) no other business may be transacted at such meeting. With exceptions under Section 601(d) of the California Corporations Code and any other applicable law, it shall not be necessary to give any notice of the time and place of the adjourned meeting or of the business to be transacted thereat, other than by announcement at the meeting at which such adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. Section 2.7 VOTING. The shareholders entitled to notice of any meeting or to vote at any such meeting shall be only persons in whose name shares stand on the stock records of the corporation on the record date determined in accordance with Section 2.8. Voting shall in all cases be subject to the provisions of Chapter 7 of the California General Corporation Law, including the following provisions: (a) Shares standing in the name of another corporation, domestic or foreign, may be voted by an officer, agent, or proxyholder as the bylaws of the other corporation may prescribe or, in the absence of such provision, as the Board of the other corporation may determine or, in the absence of that determination, by the chairman of the board, president or any vice president of the other corporation, or by any other person authorized to do so by the chairman of the board, president, or any vice president of the other corporation. Shares which are purported to be voted or any proxy purported to be executed in the name of a corporation (whether or not any title of the person signing is indicated) shall be presumed to be voted or the proxy executed in accordance with the provisions of the California General Corporation Law, unless the contrary is shown. (b) Shares of this corporation owned by its subsidiary shall not be entitled to vote on any matter. (c) Shares of this corporation held by this corporation in a fiduciary capacity, and shares of this corporation held in a fiduciary capacity by its subsidiary, shall not be entitled to vote on any matter, except as follows: (i) to the extent that the settlor or beneficial owner possesses and exercises a right to vote or to give this corporation binding instructions as to how to vote such shares; or (ii) where there are one or more cotrustees who are not affected by the prohibition of this subsection, in which case the shares may be voted by the cotrustees as if it or they are the sole trustees. 3 Section 2.8. RECORD DATE. The Board may fix, in advance, a record date for the determination of the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution, or any allotment of any rights or entitled to exercise any rights, in respect of any other lawful action. The record date so fixed shall be not more than sixty days nor less than ten days prior to the date of the meeting nor more than sixty days prior to any other action. When a record date is so fixed, only shareholders of record at the close of business on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation after the record date, except as otherwise provided by law or these Bylaws. Section 2.9 Consent of Absentees; Waiver of Notice. The transactions of any meeting of shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by this division to be included in the notice but not so included, if such objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, unless otherwise provided in the Articles or Bylaws, except as provided in the California General Corporation Law. Section 2.10 ACTION WITHOUT MEETING. Subject to Section 603 of the California General Corporation Law, any action which, under any provision of the California General Corporation Law, may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Section 2.11 PROXIES. Every person entitled to vote shares has the right to do so either in person or by one or more persons authorized by a written proxy executed by such shareholder and filed with the Secretary. No proxy shall be valid after the expiration of eleven (11) months from the date thereof, unless otherwise provided in the proxy. 4 ARTICLE III -- DIRECTORS Section 3.1 POWERS. Subject to any limitations of the Articles, of these Bylaws and of the California General Corporation Law relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. The Board may delegate the management of the day-to-day operation of the business of the corporation provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Board shall have the following powers in addition to the other powers enumerated in these Bylaws: (a) To select and remove all the other officers, agents and employees of the corporation, prescribe the powers and duties for them as may not be inconsistent with law, with the Articles or these Bylaws, fix their compensation and require from them security for faithful service. (b) To conduct, manage and control the affairs and business of the corporation and to make such rules and regulations therefor not inconsistent with law, or with the Articles or these Bylaws, as they may deem best. (c) To adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time as in their judgment they deem best. (d) To authorize the issuance of shares of stock of the corporation from time to time, upon such terms and for such consideration as may be lawful. (e) To borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. Section 3.2 NUMBER OF DIRECTORS. The authorized number of directors shall not be less than three (3) nor more than six (6) until changed by amendment of the Articles or by a Bylaw duly adopted by the shareholders. The exact number of directors shall be fixed, within the limits specified, by the Board or the shareholders in the same manner provided in these Bylaws for the amendment thereof. The exact number of authorized directors shall be six (6) until changed as provided in these Bylaws. Section 3.3 ELECTION AND TERM OF OFFICE. The directors shall be elected at each annual meeting of the shareholders, but if 5 any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Each director shall hold office until the next annual meeting and until a successor has been elected and qualified. Section 3.4 VACANCIES. Any director may resign effective upon giving written notice to the Chairman of the Board, if any, the President, the Secretary, or the Board, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Vacancies in the Board, except those existing as a result of a removal of a director, may be filled by a majority of the remaining directors, whether or not less than a quorum, or by a sole remaining director, and each director so elected shall hold office until the next annual meeting and until such director's successor has been elected and qualified. Vacancies existing as a result of a removal of a director may be filled by the shareholders as provided by law. A vacancy or vacancies in the Board shall be deemed to exist in case of the death, resignation or removal of any director, or if the authorized number of directors be increased, or if the shareholders fail, at any annual or special meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be voted for at that meeting. The shareholders may elect a director or directors at any time to fill any vacancy not filled by the directors. Any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares entitled to vote. If the Board accepts the resignation of a director tendered to take effect at a future time, the Board or the shareholders shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of the director's term of office. Section 3.5 PLACE OF MEETING. Regular or special meetings of the Board shall be held at any place within or without the State of California which has been designated from time to time by the Board or as provided in these Bylaws. In the absence of such designation, regular meetings shall be held at the principal executive office. Section 3.6 ORGANIZATION MEETING. Promptly following each annual meeting of shareholders the Board shall hold a regular meeting for the purpose of organization, election of officers and the transaction of other business. Section 3.7 SPECIAL MEETINGS. Special meetings other than organization meetings of the Board for any purpose 6 or purposes may be called at any time by the Chairman of the Board, if any, the President, any Executive Vice President, Senior Vice President, the Secretary, an Assistant Secretary or by any two directors. Such meetings of the Board shall be held upon four days' written notice by mail or forty-eight hours' notice given personally or by telephone, telephone facsimile transmission, telegraph, telex or other similar means of communication. Any such notice shall be addressed or delivered to each director at such director's address as it is shown upon the records of the corporation or as may have been given to the corporation by the director for purposes of notice or, if such address is not shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. The notice need not specify the purpose of such meeting. Notice by first-class mail shall be deemed to have been given at the time a written notice is deposited in the United States mail, postage prepaid or sent by private mail or messenger service. Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient, to a person in the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient, delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means to the recipient. Oral notice shall be deemed to have been given at the time it is communicated, in person, by telephone to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. Section 3.8 QUORUM. One-third of the maximum number of authorized directors constitutes a quorum of the Board for the transaction of business, except to adjourn as provided in Section 3.11 of this Article. As defined in Article III, Section 3.2, the maximum number of authorized directors is six. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board, unless a greater number is required by law or by the Articles; provided, however, that a meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Such participation constitutes presence in person at such meeting. Section 3.10 WAIVER OF NOTICE. The transactions of any meeting of the Board, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or 7 made a part of the minutes of the meeting. Section 3.11 ADJOURNMENT. A majority of the directors present, whether or not a quorum is present, may adjourn any directors' meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place is fixed at the meeting adjourned. If the meeting is adjourned for more than twenty-four hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment. Section 3.12 FEES AND COMPENSATION. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the Board. Section 3.13 ACTION WITHOUT MEETING. In accordance with the provisions of Section 307(8)(b) of the California General Corporation Law, any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall have the same force and effect as a unanimous vote of the Board and shall be filed with the minutes of the proceedings of the Board. ARTICLE IV -- OFFICERS Section 4.1 OFFICERS. The officers of the corporation shall be a President, Vice President, a Controller, a Secretary and a Treasurer. The corporation may also have, at the discretion of the Board, a Chairman of the Board, one or more additional Vice Presidents, a Chief Operating Officer, a General Manager, General Counsel, one or more Assistant General Counsels, one or more Assistant Controllers, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.5 of this Article. Section 4.2 ELECTION. The officers of the corporation, except such officers as may be elected or appointed in accordance with the provisions of Section 4.5 or Section 4.6 of this Article, shall be chosen annually by, and shall serve at the pleasure of the Board, and shall hold their respective offices until their resignation, removal, or other disqualification from service, or until their respective successors shall be elected. Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT. No person shall be eligible for the office of Chairman of the Board, if there shall be such an officer, or President unless such person is a member of the Board of the corporation; 8 any other officer may or may not be a director. Section 4.4 REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by the Board at any time or by any officer upon whom such power of removal may be conferred by the Board. Any such removal shall be without prejudice to the rights, if any, of the officer under any contract of employment of the officer. Any officer may resign at any time by giving written notice to the corporation, but without prejudice to the rights, if any, of the corporation under any contract of employment to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4.5 APPOINTMENT OF OTHER OFFICERS. The Board may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in the Bylaws or as the Board may from time to time determine. Notwithstanding the job title for such person, no employee or other representative of this corporation shall be an officer of this corporation unless elected by the Board. Section 4.6 VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular election or appointment to such office. Section 4.7 SALARIES. The salaries of the Chairman of the Board, if any, President, General Manager, if any, Vice Presidents, Controller, Treasurer and Secretary of the corporation shall be fixed by the Board. Salaries of all other officers shall be approved from time to time by the chief executive officer. Section 4.8 CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an officer, shall preside at all meetings of the Board, and shall exercise such powers and perform such duties as from time to time may be conferred upon or assigned to him by the Board or the Bylaws. Section 4.9 PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board, if there be such an officer, the President shall be the chief executive officer of the corporation and has, subject to the control of the Board, general supervision, direction, and control of the business and affairs of the corporation. The President shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board or if there be none, at all meetings of the Board. The President has the general powers and duties of 9 management usually vested in the office of president of a corporation and has such other powers and duties as may be prescribed by the Board or the Bylaws. The President may designate from time to time the titles which the employees or other representatives of this corporation shall use, including the appointment of agent for service of process. Without limiting the foregoing, the President may designate one or more employees as regional vice-presidents. Section 4.10 VICE PRESIDENT. In the absence or disability of the President, the Vice Presidents in order of their rank shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to all the restrictions upon the President. The Board of Directors may establish the order of rank of the Vice Presidents. In the absence of such ranking, the Vice Presidents shall be ranked as follows: Executive Vice President (if any), Senior Vice President (if any). Vice Presidents holding identical titles shall be ranked in order of election to that office by the Board. Section 4.11 CHIEF OPERATING OFFICER. The Chief Operating Officer, if there shall be such an officer, must be a vice president of the corporation and shall be subject to the exercise of the general powers of supervision, direction and control of the business and officers of the corporation by the President, and supervise the operations of the corporation. Section 4.12 GENERAL MANAGER. The General Manager, if there shall be such an officer, must be a vice president of the corporation and shall, subject to the exercise of the general powers of supervision, direction and control by the President, or the Chief Operating Officer, if any, shall manage the operations of the corporation. In the absence of the Chief Operating Officer, the General Manager shall perform all the duties of the Chief Operating Officer and when so acting shall have all the powers of, and be subject to, all the restrictions upon the Chief Operating Officer. Section 4.13 GENERAL COUNSEL. The General Counsel shall be the chief consulting officer of the corporation in all legal matters and, subject to the President, shall have control over all matters of legal import concerning the corporation. Section 4.14 ASSISTANT GENERAL COUNSEL. One or more Assistant General Counsels, if any, shall perform such of the duties of the General Counsel as the General Counsel may designate, and in the absence or disability of the General Counsel, any Assistant General Counsel, in order of election to that office by the Board, shall perform the duties of the General Counsel. Section 4.15 CONTROLLER. The Controller shall be the chief accounting officer of the corporation and shall have control over all accounting matters concerning the corporation and shall perform such other duties as the President or General Manager shall designate. 10 Section 4.16 SECRETARY. The Secretary shall keep or cause to be kept, at the principal executive office and such other place as the Board may order, a book of minutes of all meetings of the shareholders, the Board, and its committees, and a share register or a duplicate share register. The Secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board and any committees thereof required by the Bylaws or by law to be given, shall keep the seal of the corporation in safe custody, shall from time to time issue such corporate secretarial certificates as may be required for the business and affairs of the corporation, and shall have such other general powers and duties of management usually vested in the office of secretary of a corporation and as may be prescribed by the Board, the President or the Bylaws. Section 4.17 ASSISTANT SECRETARY. One or more Assistant Secretaries, if any, shall perform such of the duties of the Secretary as the Secretary shall designate, and in the absence or disability of the Secretary, any Assistant Secretary, in order of election to that office by the Board, shall perform the duties of the Secretary. Section 4.18 SECRETARY PRO TEMPORE. At any meeting of the Board or of the shareholders from which the Secretary and Assistant Secretary are absent, a Secretary pro tempore may be appointed by the Board of Directors or shareholders as appropriate and act. Section 4.19 TREASURER. The Treasurer is the chief financial officer of the corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation. The books of account shall at all times be open to inspection by any director. The Treasurer shall deposit, or cause to be deposited, all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors pursuant to Section 5.2. The Treasurer shall disburse or cause to be disbursed, the funds of the corporation as may be ordered by the President or the General Manager, shall render to the President, the General Manager or the directors, whenever they request it, an account of all transactions as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board, or the Bylaws. Section 4.20 ASSISTANT TREASURER. One or more Assistant Treasurers, if any, shall perform such of the duties of the Treasurer as the Treasurer shall designate, and in the absence or disability of the Treasurer, any Assistant Treasurer, in order of election to that office by the Board, shall perform the duties of the Treasurer. 11 Section 4.21 PERFORMANCE OF DUTIES. Officers shall perform the duties of their respective offices as stated in these Bylaws, and such additional duties as the Board shall designate. ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS. The corporation shall keep in its principal executive office the original or a copy of these Bylaws, as amended to date, which shall be open to inspection by shareholders at all reasonable times during office hours. Section 5.2 CONTRACTS AND OTHER INSTRUMENTS, LOANS, NOTES AND DEPOSIT OF FUNDS. The Chairman of the Board, if any, the President and any Vice President of this corporation, either alone or with the Secretary or an Assistant Secretary, shall execute in the name of the corporation such written instruments as may be authorized by the Board and, without special direction of the Board, such instruments as transactions of the ordinary business of the corporation may require and, such officers without the special direction of the Board may authenticate, attest or countersign any such instruments when deemed appropriate. The Board may authorize any person, persons, entity, entities, attorney, attorneys, attorney-in-fact, attorneys-in-fact, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by resolution of the Board as it may direct. Such authority may be general or confined to specific instances. All checks, drafts, or other similar orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as the Board, Chief Executive Officer or Treasurer may direct. Unless authorized by the Board or these Bylaws, no officer, agent, employee or any other person or persons shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or amount. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board may direct. Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The President or any other officer or officers authorized by the Board or the President are each authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any other corporation or corporations standing in the 12 name of the corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officer. Section 5.4 ANNUAL REPORT TO SHAREHOLDERS. The annual report to shareholders referred to in Section 1501 of the California General Corporation Law is expressly waived, but nothing herein shall be interpreted as prohibiting the Board from issuing annual or other periodic reports to shareholders. Section 5.5 FISCAL YEAR AND SUBDIVISIONS. The calendar year shall be the corporate fiscal year of the corporation. For the purpose of paying dividends, for making reports and for the convenient transaction of the business of the corporation, the Board may divide the fiscal year into appropriate subdivisions. Section 5.6 CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the General Provisions of the California Corporations Code and in the California General Corporation Law shall govern the construction of these Bylaws. ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each person who was or is a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, formal or informal, whether brought in the name of the corporation or otherwise and whether of a civil, criminal, administrative or investigative nature (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of this corporation or is or was serving at the request of this corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is an alleged action or inaction in an official capacity or in any other capacity while serving as a director or officer shall, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permissible under California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors, and administrators; provided, however, that (A) this corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of this corporation other than a suit permitted by Section 6.3; (B) this corporation shall indemnify any such person seeking indemnification in connection with settlement of a proceeding (or part thereof) other than a 13 proceeding by or in the name of this corporation to procure a judgment in its favor only if any settlement of such a proceeding is approved in writing by this corporation; (C) that no such person shall be indemnified (i) except to the extent that the aggregate of losses to be indemnified exceeds the amount of such losses for which the director or officer is paid pursuant to any directors' and officers' liability insurance policy maintained by the corporation; (ii) on account of any suit in which judgment is rendered against such person for an accounting of profits made from the purchase or sale by such person of securities of this corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state, or local statutory law; (iii) if a court of competent jurisdiction finally determines that any indemnification hereunder is unlawful; and (iv) as to circumstances in which indemnity is expressly prohibited by Section 317 of the General Corporation Law of California (the "Law"); and (D) that no such person shall be indemnified with regard to any action brought by or in the right of this corporation for breach of duty to this corporation and its shareholders (a) for acts or omissions involving intentional misconduct or knowing and culpable violation of law; (b) for acts or omissions that the director or officer believes to be contrary to the best interests of this corporation or its shareholders or that involve the absence of good faith on the part of the director or officer; (c) for any transaction from which the director or officer derived an improper personal benefit; (d) for acts or omissions that show a reckless disregard for the director's or officer's duty to this corporation or its shareholders in circumstances in which the director or officer was aware, or should have been aware, in the ordinary course of performing his or her duties, of a risk of serious injury to this corporation or its shareholders; (e) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's or officer's duties to this corporation or its shareholders; and (f) for costs, charges, expenses, liabilities, and losses arising under Section 310 or 316 of the Law. The right to indemnification conferred in this Article shall include the right to be paid by this corporation expenses incurred in defending any proceeding in advance of its final disposition; provided, however, that if the Law permits the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, such advances shall be made only upon delivery to this corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts to this corporation if it shall be ultimately determined that such person is not entitled to be indemnified." Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS. A person who was or is a party or is threatened to be made a party to or is involved in any proceeding by reason of the fact that he or she is or was an employee or agent of this corporation or is or was serving at the request of this corporation as an employee or agent of another enterprise, including service with respect to employee benefit plans, whether the basis of such action is an alleged action or inaction in an official capacity or in any other capacity while serving as an employee or agent, may, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permitted by California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses, (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. 14 Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT. If a claim under Section 6.1 of this Article is not paid in full by this corporation within 30 days after a written claim has been received by this corporation, the claimant may at any time thereafter bring suit against this corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. Neither the failure of this corporation (including its Board, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met the applicable standard of conduct, if any, nor an actual determination by this corporation (including its Board, independent legal counsel, or its shareholders) that the claimant has not met the applicable standard of conduct, shall be a defense to the action or create a presumption for the purpose of an action that the claimant has not met the applicable standard of conduct. Section 6.4 SUCCESSFUL DEFENSE. Notwithstanding any other provisions of this Article, to the extent that a director or officer has been successful on the merits in defense of any proceeding referred to in Section 6.1 or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. Section 6.5 NONEXCLUSIVITY OF RIGHTS. The right to indemnification provided by this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, agreement, vote of shareholders, or disinterested directors, or otherwise. Section 6.6 INSURANCE. This corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of this corporation or another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not this corporation would have the power to indemnify such person against such expense, liability, or loss under the Law. Section 6.7 EXPENSES AS A WITNESS. To the extent that any director, officer, employee, or agent of this corporation is, by reason of such position or a position with another entity at the request of this corporation, a witness in any action, suit, or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her on his or her behalf in connection therewith. Section 6.8 INDEMNITY AGREEMENTS. This corporation may enter into agreements with any director, officer, employee, or agent of this corporation providing for indemnification to the fullest extent permissible under the Law and this corporation's Articles of Incorporation. 15 Section 6.9 SEVERABILITY. Each and every paragraph, sentence, term, and provision of this Article is separate and distinct so that if any paragraph, sentence, term, or provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other paragraph, sentence, term, or provision hereof. To the extent required, any paragraph, sentence, term, or provision of this Article may be modified by a court of competent jurisdiction to preserve its validity and to provide the claimant with, subject to the limitations set forth in this Article and any agreement between this corporation and claimant, the broadest possible indemnification permitted under applicable law. Section 6.10 EFFECT OF REPEAL OR MODIFICATION. Any repeal or modification of this Article shall not adversely affect any right of indemnification of a director or officer existing at the time of such repeal or modification with respect to any action or omission occurring prior to such repeal or modification. ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS. In accordance with Section 211 and subject to the provisions contained in Section 212 of the California Corporation Law, these Bylaws may be amended or repealed either by approval of the outstanding shares or by the approval of the Board; provided, however, that a Bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable Board or vice versa may only be adopted by approval of the outstanding shares. The exact number of directors within the maximum and minimum number specified in these Bylaws may be amended by the Board alone. [End of Bylaws] 16 EX-3.8 9 EXHIBIT 3.8 Exhibit 3.8 ARTICLES OF INCORPORATION OF SUN COAST ENERGY COMPANY I The name of the corporation is SUN COAST ENERGY COMPANY. II The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. III The name and address in the State of California of the corporation's initial agent for service of process are: Alan M. Fenning 18101 Von Karman Ave., Suite 1700 Irvine, California 92715-1007 IV This corporation is authorized to issue only one class of shares, which shall be designated "common" shares. The total authorized number of such shares authorized to be issued is ten thousand (10,000) shares. V 1. The liability of directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. 2. The corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) through bylaw provisions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject only to the applicable limits set forth in Section 204 of the California Corporations Code with respect to actions for breach of duty to the corporation and its shareholders. Dated: As of February 25, 1992 /s/ H.L. Mortensen ----------------------------------- H.L. Mortensen EX-3.9 10 EXHIBIT 3.9 Exhibit 3.9 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION Letitia D. Davis and H. L. Mortensen certify that: 1. They are the Vice President and the Secretary, respectively, of Sun Coast Energy Company, a California corporation. 2. Article I of the Articles of Incorporation of this corporation is amended to read as follows: "The name of this corporation is Mission Energy Westside, Inc." 3. The foregoing Amendment of Articles of Incorporation has been duly approved by the board of directors. 4. The foregoing Amendment of Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporations Code. The total number of outstanding shares of the corporation is 100. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Date: June 21, 1993. /s/ Letitia D. Davis ------------------------------------ Letitia D. Davis, Vice President /s/ H. L. Mortensen ------------------------------------ H. L. Mortensen, Secretary EX-3.10 11 EXHIBIT 3.10 EXHIBIT 3.10 BYLAWS OF MISSION ENERGY WESTSIDE, INC. AS AMENDED THROUGH APRIL 5, 1994 MISSION ENERGY WESTSIDE, INC. INDEX ARTICLE I -- OFFICES Section 1.1 Principal Executive Office....................................................1 Section 1.2 Other Offices.................................................................1 ARTICLE II -- SHAREHOLDERS Section 2.1 Meeting Locations.............................................................1 Section 2.2 Annual Meetings...............................................................1 Section 2.3 Special Meetings..............................................................2 Section 2.4 Notice of Annual or Special Meeting...........................................2 Section 2.5 Quorum; Adjournment...........................................................2 Section 2.6 Adjourned Meeting and Notice Thereof..........................................3 Section 2.7 Voting........................................................................3 Section 2.8 Record Date...................................................................4 Section 2.9 Consent of Absentees; Waiver of Notice........................................4 Section 2.10 Action Without Meeting........................................................5 Section 2.11 Proxies.......................................................................5 ARTICLE III -- DIRECTORS Section 3.1 Powers........................................................................5 Section 3.2 Number of Directors...........................................................6 Section 3.3 Election and Term of Office...................................................6 Section 3.4 Vacancies.....................................................................6 Section 3.5 Place of Meeting..............................................................7 Section 3.6 Organization Meeting..........................................................7 Section 3.7 Special Meetings..............................................................7 Section 3.8 Quorum........................................................................8 Section 3.9 Participation in Meetings by Conference Telephone.............................8 Section 3.10 Waiver of Notice..............................................................8 Section 3.11 Adjournment...................................................................8 Section 3.12 Fees and Compensation.........................................................9 Section 3.13 Action Without Meeting........................................................9 ARTICLE IV -- OFFICERS Section 4.1 Officers......................................................................9 Section 4.2 Election......................................................................9 Section 4.3 Eligibility of Chairman of the Board or President.............................9 Section 4.4 Removal and Resignation......................................................10
i Section 4.5 Appointment of Other Officers................................................10 Section 4.6 Vacancies....................................................................10 Section 4.7 Salaries.....................................................................10 Section 4.8 Chairman of the Board........................................................10 Section 4.9 President....................................................................11 Section 4.10 Vice President...............................................................11 Section 4.11 Chief Operating Officer......................................................11 Section 4.12 General Manager..............................................................11 Section 4.13 General Counsel..............................................................12 Section 4.14 Assistant General Counsel....................................................12 Section 4.15 Controller...................................................................12 Section 4.16 Secretary....................................................................12 Section 4.17 Assistant Secretary..........................................................12 Section 4.18 Secretary Pro Tempore........................................................13 Section 4.19 Treasurer....................................................................13 Section 4.20 Assistant Treasurer..........................................................13 Section 4.21 Performance of Duties........................................................13 ARTICLE V -- OTHER PROVISIONS Section 5.1 Inspection of Bylaws.........................................................13 Section 5.2 Contracts and Other Instruments, Loans, Notes and Deposit of Funds...........14 Section 5.3 Representation of Shares of Other Corporations...............................14 Section 5.4 Annual Report to Shareholders................................................14 Section 5.5 Fiscal Year and Subdivisions.................................................15 Section 5.6 Construction and Definitions.................................................15 ARTICLE VI -- INDEMNIFICATION Section 6.1 Indemnification of Directors and Officers....................................15 Section 6.2 Indemnification of Employees and Agents......................................16 Section 6.3 Right of Directors and Officers to Bring Suit................................17 Section 6.4 Successful Defense...........................................................17 Section 6.5 Nonexclusivity of Rights.....................................................17 Section 6.6 Insurance....................................................................17 Section 6.7 Expenses as a Witness........................................................17 Section 6.8 Indemnity Agreements.........................................................18 Section 6.9 Severability.................................................................18 Section 6.10 Effect of Repeal or Modification.............................................18 ARTICLE VII -- AMENDMENTS Section 7.1 Amendments...................................................................18
ii BYLAWS BYLAWS FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY STATUTE OR ITS ARTICLES OF INCORPORATION OF MISSION ENERGY WESTSIDE, INC. AS AMENDED THROUGH APRIL 5, 1994 ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE The principal executive office of the corporation is hereby fixed and located at 18101 Von Karman Avenue, Suite 1700, in the City of Irvine, County of Orange, State of California. The Board of Directors ("the Board") is hereby granted full power and authority to change the principal executive office from one location to another. Section 1.2 OTHER OFFICES Branches or subordinate offices may be established at any time by the Board of Directors or the President at any place within or without the State of California. ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS All meetings of shareholders shall be held at the principal executive office, or at such other office or places within or without the State of California as may be designated by either the Board or by the person or persons giving notice of the meeting pursuant to Section 2.4. Section 2.2 ANNUAL MEETINGS The annual meeting of shareholders shall be held on the 1st Tuesday in the month of April of each year, at the hour of 10:30 a.m. on said day, or at such other time on 1 such other day as shall be fixed by the Board, to elect directors to hold office for the year next ensuing and until their successors shall be elected, and to consider and act upon such other matters as may lawfully be presented to such meeting; provided, however, that should said day fall upon a legal holiday observed by this corporation, then any such annual meeting of shareholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. Section 2.3 SPECIAL MEETINGS Special meetings of the shareholders may be called at any time by the Board, the Chairman of the Board, if any, the President, the Executive Vice President, if any, the Senior Vice President, if any, or the holders of shares entitled to cast not less than ten percent of the votes at such meeting. Upon request to the Chairman of the Board, if any, the President, the Executive Vice President, the Senior Vice President, the Secretary or Assistant Secretary by any person entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five nor more than sixty days after the receipt of the request. If the notice is not given within twenty days after receipt of the request, the persons entitled to call the meeting may give the notice. Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING Written notice of each annual or special meeting of shareholders shall be given not less than ten nor more than sixty days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (ii) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to the provisions of applicable law, any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the name of nominees intended at the time of the notice to be presented by the Board for election. Notice of a shareholders' meeting or any report to the shareholders shall be given either personally to the recipient or to a person in the office of the recipient or by first-class United States mail, by private mail or messenger service, by telephone facsimile transmission, or by any other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the 2 principal executive office is located. Such notice or report shall be deemed to have been given at the time when delivered personally, deposited in the United States mail or sent by private mail or messenger service, by telephone facsimile transmission or sent by any other means of written or electronic communication. Section 2.5 QUORUM; ADJOURNMENT (a) A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders. (b) Except as provided in subsection (c) below, the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Articles. (c) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. (d) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subsection (c) above. Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF Any shareholders' meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum (except as permitted by applicable law in the case of withdrawals by shareholders to reduce the number remaining to less than a quorum) no other business may be transacted at such meeting. With exceptions under Section 601(d) of the California Corporations Code and any other applicable law, it shall not be necessary to give any notice of the time and place of the adjourned meeting or of the business to be transacted thereat, other than by announcement at the meeting at which such adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. 3 Section 2.7 VOTING The shareholders entitled to notice of any meeting or to vote at any such meeting shall be only persons in whose name shares stand on the stock records of the corporation on the record date determined in accordance with Section 2.8. Voting shall in all cases be subject to the provisions of Chapter 7 of the California General Corporation Law, including the following provisions: (a) Shares standing in the name of another corporation, domestic or foreign, may be voted by an officer, agent, or proxyholder as the bylaws of the other corporation may prescribe or, in the absence of such provision, as the Board of the other corporation may determine or, in the absence of that determination, by the chairman of the board, president or any vice president of the other corporation, or by any other person authorized to do so by the chairman of the board, president, or any vice president of the other corporation. Shares which are purported to be voted or any proxy purported to be executed in the name of a corporation (whether or not any title of the person signing is indicated) shall be presumed to be voted or the proxy executed in accordance with the provisions of the California General Corporation Law, unless the contrary is shown. (b) Shares of this corporation owned by its subsidiary shall not be entitled to vote on any matter. (c) Shares of this corporation held by this corporation in a fiduciary capacity, and shares of this corporation held in a fiduciary capacity by its subsidiary, shall not be entitled to vote on any matter, except as follows: (i) to the extent that the settlor or beneficial owner possesses and exercises a right to vote or to give this corporation binding instructions as to how to vote such shares; or (ii) where there are one or more cotrustees who are not affected by the prohibition of this subsection, in which case the shares may be voted by the cotrustees as if it or they are the sole trustees. 4 Section 2.8. RECORD DATE The Board may fix, in advance, a record date for the determination of the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution, or any allotment of any rights or entitled to exercise any rights, in respect of any other lawful action. The record date so fixed shall be not more than sixty days nor less than ten days prior to the date of the meeting nor more than sixty days prior to any other action. When a record date is so fixed, only shareholders of record at the close of business on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation after the record date, except as otherwise provided by law or these Bylaws. Section 2.9 CONSENT OF ABSENTEES; WAIVER OF NOTICE The transactions of any meeting of shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by this division to be included in the notice but not so included, if such objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, unless otherwise provided in the Articles or Bylaws, except as provided in the California General Corporation Law. Section 2.10 ACTION WITHOUT MEETING Subject to Section 603 of the California General Corporation Law, any action which, under any provision of the California General Corporation Law, may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. 5 Section 2.11 PROXIES Every person entitled to vote shares has the right to do so either in person or by one or more persons authorized by a written proxy executed by such shareholder and filed with the Secretary. No proxy shall be valid after the expiration of eleven (11) months from the date thereof, unless otherwise provided in the proxy. ARTICLE III -- DIRECTORS Section 3.1 POWERS Subject to any limitations of the Articles, of these Bylaws and of the California General Corporation Law relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. The Board may delegate the management of the day-to-day operation of the business of the corporation provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Board shall have the following powers in addition to the other powers enumerated in these Bylaws: (a) To select and remove all the other officers, agents and employees of the corporation, prescribe the powers and duties for them as may not be inconsistent with law, with the Articles or these Bylaws, fix their compensation and require from them security for faithful service. (b) To conduct, manage and control the affairs and business of the corporation and to make such rules and regulations therefor not inconsistent with law, or with the Articles or these Bylaws, as they may deem best. (c) To adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time as in their judgment they deem best. (d) To authorize the issuance of shares of stock of the corporation from time to time, upon such terms and for such consideration as may be lawful. (e) To borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and 6 securities therefor. Section 3.2 NUMBER OF DIRECTORS The authorized number of directors shall not be less than three (3) nor more than six (6) until changed by amendment of the Articles or by a Bylaw duly adopted by the shareholders. The exact number of directors shall be fixed, within the limits specified, by the Board or the shareholders in the same manner provided in these Bylaws for the amendment thereof. The exact number of authorized directors shall be six (6) until changed as provided in these Bylaws. Section 3.3 ELECTION AND TERM OF OFFICE The directors shall be elected at each annual meeting of the shareholders, but if any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Each director shall hold office until the next annual meeting and until a successor has been elected and qualified. Section 3.4 VACANCIES Any director may resign effective upon giving written notice to the Chairman of the Board, if any, the President, the Secretary, or the Board, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Vacancies in the Board, except those existing as a result of a removal of a director, may be filled by a majority of the remaining directors, whether or not less than a quorum, or by a sole remaining director, and each director so elected shall hold office until the next annual meeting and until such director's successor has been elected and qualified. Vacancies existing as a result of a removal of a director may be filled by the shareholders as provided by law. A vacancy or vacancies in the Board shall be deemed to exist in case of the death, resignation or removal of any director, or if the authorized number of directors be increased, or if the shareholders fail, at any annual or special meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be voted for at that meeting. The shareholders may elect a director or directors at any time to fill any vacancy not filled by the directors. Any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares 7 entitled to vote. If the Board accepts the resignation of a director tendered to take effect at a future time, the Board or the shareholders shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of the director's term of office. Section 3.5 PLACE OF MEETING Regular or special meetings of the Board shall be held at any place within or without the State of California which has been designated from time to time by the Board or as provided in these Bylaws. In the absence of such designation, regular meetings shall be held at the principal executive office. Section 3.6 ORGANIZATION MEETING Promptly following each annual meeting of shareholders the Board shall hold a regular meeting for the purpose of organization, election of officers and the transaction of other business. Section 3.7 SPECIAL MEETINGS Special meetings other than organization meetings of the Board for any purpose or purposes may be called at any time by the Chairman of the Board, if any, the President, any Executive Vice President, Senior Vice President, the Secretary, an Assistant Secretary or by any two directors. Such meetings of the Board shall be held upon four days' written notice by mail or forty-eight hours' notice given personally or by telephone, telephone facsimile transmission, telegraph, telex or other similar means of communication. Any such notice shall be addressed or delivered to each director at such director's address as it is shown upon the records of the corporation or as may have been given to the corporation by the director for purposes of notice or, if such address is not shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. The notice need not specify the purpose of such meeting. Notice by first-class mail shall be deemed to have been given at the time a written notice is deposited in the United States mail, postage prepaid or sent by private mail or messenger service. Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient, to a person in the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient, delivered to a common carrier for transmission, or actually transmitted by the 8 person giving the notice by electronic means to the recipient. Oral notice shall be deemed to have been given at the time it is communicated, in person, by telephone to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. Section 3.8 QUORUM One-third of the maximum number of authorized directors constitutes a quorum of the Board for the transaction of business, except to adjourn as provided in Section 3.11 of this Article. As defined in Article III, Section 3.2, the maximum number of authorized directors is six. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board, unless a greater number is required by law or by the Articles; provided, however, that a meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Such participation constitutes presence in person at such meeting. Section 3.10 WAIVER OF NOTICE The transactions of any meeting of the Board, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 3.11 ADJOURNMENT A majority of the directors present, whether or not a quorum is present, may adjourn any directors' meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place is fixed at the meeting adjourned. If the meeting is adjourned for more than twenty-four hours, notice of any adjournment to another time or place shall be given prior to the time of the 9 adjourned meeting to the directors who were not present at the time of the adjournment. Section 3.12 FEES AND COMPENSATION Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the Board. Section 3.13 ACTION WITHOUT MEETING In accordance with the provisions of Section 307(8)(b) of the California General Corporation Law, any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall have the same force and effect as a unanimous vote of the Board and shall be filed with the minutes of the proceedings of the Board. ARTICLE IV -- OFFICERS Section 4.1 OFFICERS The officers of the corporation shall be a President, Vice President, a Controller, a Secretary and a Treasurer. The corporation may also have, at the discretion of the Board, a Chairman of the Board, one or more additional Vice Presidents, a Chief Operating Officer, a General Manager, General Counsel, one or more Assistant General Counsels, one or more Assistant Controllers, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.5 of this Article. Section 4.2 ELECTION The officers of the corporation, except such officers as may be elected or appointed in accordance with the provisions of Section 4.5 or Section 4.6 of this Article, shall be chosen annually by, and shall serve at the pleasure of the Board, and shall hold their respective offices until their resignation, removal, or other disqualification from service, or until their respective successors shall be elected. Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT 10 No person shall be eligible for the office of Chairman of the Board, if there shall be such an officer, or President unless such person is a member of the Board of the corporation; any other officer may or may not be a director. Section 4.4 REMOVAL AND RESIGNATION Any officer may be removed, either with or without cause, by the Board at any time or by any officer upon whom such power of removal may be conferred by the Board. Any such removal shall be without prejudice to the rights, if any, of the officer under any contract of employment of the officer. Any officer may resign at any time by giving written notice to the corporation, but without prejudice to the rights, if any, of the corporation under any contract of employment to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4.5 APPOINTMENT OF OTHER OFFICERS The Board may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in the Bylaws or as the Board may from time to time determine. Notwithstanding the job title for such person, no employee or other representative of this corporation shall be an officer of this corporation unless elected by the Board. Section 4.6 VACANCIES A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular election or appointment to such office. Section 4.7 SALARIES The salaries of the Chairman of the Board, if any, President, General Manager, if any, Vice Presidents, Controller, Treasurer and Secretary of the corporation shall be fixed by the Board. Salaries of all other officers shall be approved from time to time by the chief executive officer. 11 Section 4.8 CHAIRMAN OF THE BOARD The Chairman of the Board, if there shall be such an officer, shall preside at all meetings of the Board, and shall exercise such powers and perform such duties as from time to time may be conferred upon or assigned to him by the Board or the Bylaws. Section 4.9 PRESIDENT Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board, if there be such an officer, the President shall be the chief executive officer of the corporation and has, subject to the control of the Board, general supervision, direction, and control of the business and affairs of the corporation. The President shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board or if there be none, at all meetings of the Board. The President has the general powers and duties of management usually vested in the office of president of a corporation and has such other powers and duties as may be prescribed by the Board or the Bylaws. The President may designate from time to time the titles which the employees or other representatives of this corporation shall use, including the appointment of agent for service of process. Without limiting the foregoing, the President may designate one or more employees as regional vice-presidents. Section 4.10 VICE PRESIDENT In the absence or disability of the President, the Vice Presidents in order of their rank shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to all the restrictions upon the President. The Board of Directors may establish the order of rank of the Vice Presidents. In the absence of such ranking, the Vice Presidents shall be ranked as follows: Executive Vice President (if any), Senior Vice President (if any). Vice Presidents holding identical titles shall be ranked in order of election to that office by the Board. Section 4.11 CHIEF OPERATING OFFICER The Chief Operating Officer, if there shall be such an officer, must be a vice president of the corporation and shall be subject to the exercise of the general powers of supervision, direction and control of the business and officers of the corporation by the President, and supervise the operations of the corporation. 12 Section 4.12 GENERAL MANAGER The General Manager, if there shall be such an officer, must be a vice president of the corporation and shall, subject to the exercise of the general powers of supervision, direction and control by the President, or the Chief Operating Officer, if any, shall manage the operations of the corporation. In the absence of the Chief Operating Officer, the General Manager shall perform all the duties of the Chief Operating Officer and when so acting shall have all the powers of, and be subject to, all the restrictions upon the Chief Operating Officer. Section 4.13 GENERAL COUNSEL The General Counsel shall be the chief consulting officer of the corporation in all legal matters and, subject to the President, shall have control over all matters of legal import concerning the corporation. Section 4.14 ASSISTANT GENERAL COUNSEL One or more Assistant General Counsels, if any, shall perform such of the duties of the General Counsel as the General Counsel may designate, and in the absence or disability of the General Counsel, any Assistant General Counsel, in order of election to that office by the Board, shall perform the duties of the General Counsel. Section 4.15 CONTROLLER The Controller shall be the chief accounting officer of the corporation and shall have control over all accounting matters concerning the corporation and shall perform such other duties as the President or General Manager shall designate. Section 4.16 SECRETARY The Secretary shall keep or cause to be kept, at the principal executive office and such other place as the Board may order, a book of minutes of all meetings of the shareholders, the Board, and its committees, and a share register or a duplicate share register. The Secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board and any committees thereof required by the Bylaws or by law to be given, shall keep the seal of the corporation in safe custody, shall from time to time issue such corporate secretarial certificates as may be required for the business and affairs of 13 the corporation, and shall have such other general powers and duties of management usually vested in the office of secretary of a corporation and as may be prescribed by the Board, the President or the Bylaws. Section 4.17 ASSISTANT SECRETARY One or more Assistant Secretaries, if any, shall perform such of the duties of the Secretary as the Secretary shall designate, and in the absence or disability of the Secretary, any Assistant Secretary, in order of election to that office by the Board, shall perform the duties of the Secretary. Section 4.18 SECRETARY PRO TEMPORE At any meeting of the Board or of the shareholders from which the Secretary and Assistant Secretary are absent, a Secretary pro tempore may be appointed by the Board of Directors or shareholders as appropriate and act. Section 4.19 TREASURER The Treasurer is the chief financial officer of the corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation. The books of account shall at all times be open to inspection by any director. The Treasurer shall deposit, or cause to be deposited, all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors pursuant to Section 5.2. The Treasurer shall disburse or cause to be disbursed, the funds of the corporation as may be ordered by the President or the General Manager, shall render to the President, the General Manager or the directors, whenever they request it, an account of all transactions as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board, or the Bylaws. Section 4.20 ASSISTANT TREASURER One or more Assistant Treasurers, if any, shall perform such of the duties of the Treasurer as the Treasurer shall designate, and in the absence or disability of the Treasurer, any Assistant Treasurer, in order of election to that office by the Board, shall perform the duties of the Treasurer. 14 Section 4.21 PERFORMANCE OF DUTIES Officers shall perform the duties of their respective offices as stated in these Bylaws, and such additional duties as the Board shall designate. ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS The corporation shall keep in its principal executive office the original or a copy of these Bylaws, as amended to date, which shall be open to inspection by shareholders at all reasonable times during office hours. Section 5.2 CONTRACTS AND OTHER INSTRUMENTS, LOANS, NOTES AND DEPOSIT OF FUNDS. The Chairman of the Board, if any, the President and any Vice President of this corporation, either alone or with the Secretary or an Assistant Secretary, shall execute in the name of the corporation such written instruments as may be authorized by the Board and, without special direction of the Board, such instruments as transactions of the ordinary business of the corporation may require and, such officers without the special direction of the Board may authenticate, attest or countersign any such instruments when deemed appropriate. The Board may authorize any person, persons, entity, entities, attorney, attorneys, attorney-in-fact, attorneys-in-fact, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by resolution of the Board as it may direct. Such authority may be general or confined to specific instances. All checks, drafts, or other similar orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as the Board, Chief Executive Officer or Treasurer may direct. Unless authorized by the Board or these Bylaws, no officer, agent, employee or any other person or persons shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or amount. All funds of the corporation not otherwise employed shall be deposited from 15 time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board may direct. Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS The President or any other officer or officers authorized by the Board or the President are each authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officer. Section 5.4 ANNUAL REPORT TO SHAREHOLDERS The annual report to shareholders referred to in Section 1501 of the California General Corporation Law is expressly waived, but nothing herein shall be interpreted as prohibiting the Board from issuing annual or other periodic reports to shareholders. Section 5.5 FISCAL YEAR AND SUBDIVISIONS The calendar year shall be the corporate fiscal year of the corporation. For the purpose of paying dividends, for making reports and for the convenient transaction of the business of the corporation, the Board may divide the fiscal year into appropriate subdivisions. Section 5.6 CONSTRUCTION AND DEFINITIONS Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the General Provisions of the California Corporations Code and in the California General Corporation Law shall govern the construction of these Bylaws. ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS 16 Each person who was or is a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, formal or informal, whether brought in the name of the corporation or otherwise and whether of a civil, criminal, administrative or investigative nature (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of this corporation or is or was serving at the request of this corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is an alleged action or inaction in an official capacity or in any other capacity while serving as a director or officer shall, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permissible under California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors, and administrators; provided, however, that (A) this corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of this corporation other than a suit permitted by Section 6.3; (B) this corporation shall indemnify any such person seeking indemnification in connection with settlement of a proceeding (or part thereof) other than a proceeding by or in the name of this corporation to procure a judgment in its favor only if any settlement of such a proceeding is approved in writing by this corporation; (C) that no such person shall be indemnified (i) except to the extent that the aggregate of losses to be indemnified exceeds the amount of such losses for which the director or officer is paid pursuant to any directors' and officers' liability insurance policy maintained by the corporation; (ii) on account of any suit in which judgment is rendered against such person for an accounting of profits made from the purchase or sale by such person of securities of this corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state, or local statutory law; (iii) if a court of competent jurisdiction finally determines that any indemnification hereunder is unlawful; and (iv) as to circumstances in which indemnity is expressly prohibited by Section 317 of the General Corporation Law of California (the "Law"); and (D) that no such person shall be indemnified with regard to any action brought by or in the right of this corporation for breach of duty to this corporation and its shareholders (a) for acts or omissions involving intentional misconduct or knowing and culpable violation of law; (b) for acts or omissions that the director or officer believes to be contrary to the best interests of this corporation or its shareholders or that involve the absence of good faith on the part of the director or officer; (c) for any transaction from which the director or officer derived an improper personal benefit; (d) for acts or omissions that show a reckless disregard for the director's or officer's duty to this corporation or its shareholders in circumstances in which the director or officer was aware, or should have been aware, in the ordinary course of performing his or her duties, of a risk of serious injury 17 to this corporation or its shareholders; (e) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's or officer's duties to this corporation or its shareholders; and (f) for costs, charges, expenses, liabilities, and losses arising under Section 310 or 316 of the Law. The right to indemnification conferred in this Article shall include the right to be paid by this corporation expenses incurred in defending any proceeding in advance of its final disposition; provided, however, that if the Law permits the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, such advances shall be made only upon delivery to this corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts to this corporation if it shall be ultimately determined that such person is not entitled to be indemnified." Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS A person who was or is a party or is threatened to be made a party to or is involved in any proceeding by reason of the fact that he or she is or was an employee or agent of this corporation or is or was serving at the request of this corporation as an employee or agent of another enterprise, including service with respect to employee benefit plans, whether the basis of such action is an alleged action or inaction in an official capacity or in any other capacity while serving as an employee or agent, may, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permitted by California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses, (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT If a claim under Section 6.1 of this Article is not paid in full by this corporation within 30 days after a written claim has been received by this corporation, the claimant may at any time thereafter bring suit against this corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. Neither the failure of this corporation (including its Board, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met the applicable standard of conduct, if any, nor an actual determination by this corporation (including its Board, independent legal counsel, or its 18 shareholders) that the claimant has not met the applicable standard of conduct, shall be a defense to the action or create a presumption for the purpose of an action that the claimant has not met the applicable standard of conduct. Section 6.4 SUCCESSFUL DEFENSE Notwithstanding any other provisions of this Article, to the extent that a director or officer has been successful on the merits in defense of any proceeding referred to in Section 6.1 or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. Section 6.5 NONEXCLUSIVITY OF RIGHTS The right to indemnification provided by this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, agreement, vote of shareholders, or disinterested directors, or otherwise. Section 6.6 INSURANCE This corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of this corporation or another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not this corporation would have the power to indemnify such person against such expense, liability, or loss under the Law. Section 6.7 EXPENSES AS A WITNESS To the extent that any director, officer, employee, or agent of this corporation is, by reason of such position or a position with another entity at the request of this corporation, a witness in any action, suit, or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her on his or her behalf in connection therewith. Section 6.8 INDEMNITY AGREEMENTS This corporation may enter into agreements with any director, officer, employee, or agent of this corporation providing for indemnification to the fullest extent permissible under the Law and this corporation's Articles of Incorporation. 19 Section 6.9 SEVERABILITY Each and every paragraph, sentence, term, and provision of this Article is separate and distinct so that if any paragraph, sentence, term, or provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other paragraph, sentence, term, or provision hereof. To the extent required, any paragraph, sentence, term, or provision of this Article may be modified by a court of competent jurisdiction to preserve its validity and to provide the claimant with, subject to the limitations set forth in this Article and any agreement between this corporation and claimant, the broadest possible indemnification permitted under applicable law. Section 6.10 EFFECT OF REPEAL OR MODIFICATION Any repeal or modification of this Article shall not adversely affect any right of indemnification of a director or officer existing at the time of such repeal or modification with respect to any action or omission occurring prior to such repeal or modification. ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS In accordance with Section 211 and subject to the provisions contained in Section 212 of the California Corporation Law, these Bylaws may be amended or repealed either by approval of the outstanding shares or by the approval of the Board; provided, however, that a Bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable Board or vice versa may only be adopted by approval of the outstanding shares. The exact number of directors within the maximum and minimum number specified in these Bylaws may be amended by the Board alone. [End of Bylaws] 20 EX-3.11 12 EXHIBIT 3.11 Exhibit 3.11 ARTICLES OF INCORPORATION OF CHESTNUT RIDGE ENERGY COMPANY I The name of the corporation is Chestnut Ridge Energy Company. II The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. III The name and address in the State of California of the corporation's initial agent for service of process are: Martha A. Spikes 18101 Von Karman Avenue, Suite 1700 Irvine, California 92715 IV This corporation is authorized to issue only one class of shares, which shall be designated "common" shares. The total authorized number of such shares authorized to be issued is ten thousand (10,000) shares. V 1. The liability of directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. 2. The corporation is authorized to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) through bylaw provisions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject only to the applicable limits set forth in Section 204 of the California Corporations Code with respect to actions for breach of duty to the corporation and its shareholders. Dated: As of October 13, 1998 /s/ Martha A. Spikes ---------------------- Martha A. Spikes EX-3.12 13 EXHIBIT 3.12 EXHIBIT 3.12 BYLAWS OF CHESTNUT RIDGE ENERGY COMPANY ADOPTED OCTOBER 21, 1998 CHESTNUT RIDGE ENERGY COMPANY INDEX ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE. 1 Section 1.2 OTHER OFFICES. 1 ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS. 1 Section 2.2 ANNUAL MEETINGS. 1 Section 2.3 SPECIAL MEETINGS. 1 Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING. 2 Section 2.5 QUORUM; ADJOURNMENT. 2 Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF. 3 Section 2.7 VOTING. 3 Section 2.8. RECORD DATE. 4 Section 2.9. CONSENT OF ABSENTEES; WAIVER OF NOTICE. 4 Section 2.10 ACTION WITHOUT MEETING. 4 Section 2.11 PROXIES. 4 ARTICLE III -- DIRECTORS Section 3.1 POWERS. 5 Section 3.2 NUMBER OF DIRECTORS. 5 Section 3.3 ELECTION AND TERM OF OFFICE. 5 Section 3.4 VACANCIES. 6 Section 3.5 PLACE OF MEETING. 6 Section 3.6 ORGANIZATION MEETING. 6 Section 3.7 SPECIAL MEETINGS. 6 Section 3.8 QUORUM. 7 Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. 7 Section 3.10 WAIVER OF NOTICE. 7 Section 3.11 ADJOURNMENT. 8 Section 3.12 FEES AND COMPENSATION. 8 Section 3.13 ACTION WITHOUT MEETING. 8 ARTICLE IV -- OFFICERS Section 4.1 OFFICERS. 8 Section 4.2 ELECTION. 8 Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT. 8 Section 4.4 REMOVAL AND RESIGNATION. 9 Section 4.5 APPOINTMENT OF OTHER OFFICERS. 9 Section 4.6 VACANCIES. 9 Section 4.7 SALARIES. 9 Section 4.8 CHAIRMAN OF THE BOARD. 9 Section 4.9 PRESIDENT. 9 Section 4.10 VICE PRESIDENT. 10 Section 4.11 CHIEF OPERATING OFFICER. 10
i Section 4.12 GENERAL MANAGER. 10 Section 4.13 GENERAL COUNSEL. 10 Section 4.14 ASSISTANT GENERAL COUNSEL. 10 Section 4.15 CONTROLLER. 10 Section 4.16 SECRETARY. 11 Section 4.17 ASSISTANT SECRETARY. 11 Section 4.18 SECRETARY PRO TEMPORE. 11 Section 4.19 TREASURER. 11 Section 4.20 ASSISTANT TREASURER. 11 Section 4.21 PERFORMANCE OF DUTIES. 12 ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS. 12 Section 5.2 CONTRACTS AND OTHER INSTRUMENTS,LOANS, NOTES AND DEPOSIT OF FUNDS. 12 Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. 12 Section 5.4 ANNUAL REPORT TO SHAREHOLDERS. 13 Section 5.5 FISCAL YEAR AND SUBDIVISIONS. 13 Section 5.6 CONSTRUCTION AND DEFINITIONS. 13 ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. 13 Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS. 14 Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT. 15 Section 6.4 SUCCESSFUL DEFENSE. 15 Section 6.5 NONEXCLUSIVITY OF RIGHTS. 15 Section 6.6 INSURANCE. 15 Section 6.7 EXPENSES AS A WITNESS. 15 Section 6.8 INDEMNITY AGREEMENTS. 15 Section 6.9 SEVERABILITY. 16 Section 6.10 EFFECT OF REPEAL OR MODIFICATION. 16 ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS. 16
ii BYLAWS BYLAWS FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY STATUTE OR ITS ARTICLES OF INCORPORATION OF CHESTNUT RIDGE ENERGY COMPANY ARTICLE I -- OFFICES Section 1.1 PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the corporation is hereby fixed and located at 18101 Von Karman Avenue, Suite 1700, in the City of Irvine, County of Orange, State of California. The Board of Directors ("the Board") is hereby granted full power and authority to change the principal executive office from one location to another. Section 1.2 OTHER OFFICES. Branches or subordinate offices may be established at any time by the Board of Directors or the President at any place within or without the State of California. ARTICLE II -- SHAREHOLDERS Section 2.1 MEETING LOCATIONS. All meetings of shareholders shall be held at the principal executive office, or at such other office or places within or without the State of California as may be designated by either the Board or by the person or persons giving notice of the meeting pursuant to Section 2.4. Section 2.2 ANNUAL MEETINGS. The annual meeting of shareholders shall be held on the 2nd Tuesday in the month of May of each year, at the hour of 3:30 p.m. on said day, or at such other time on such other day as shall be fixed by the Board, to elect directors to hold office for the year next ensuing and until their successors shall be elected, and to consider and act upon such other matters as may lawfully be presented to such meeting; provided, however, that should said day fall upon a legal holiday observed by this corporation, then any such annual meeting of shareholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. Section 2.3 SPECIAL MEETINGS. Special meetings of the shareholders may be called at any time by the Board, the Chairman of the Board, if any, the President, the Executive Vice President, if any, the Senior Vice President, if any, or the holders of shares entitled to cast not less than ten percent of the 1 votes at such meeting. Upon request to the Chairman of the Board, if any, the President, the Executive Vice President, the Senior Vice President, the Secretary or Assistant Secretary by any person entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five nor more than sixty days after the receipt of the request. If the notice is not given within twenty days after receipt of the request, the persons entitled to call the meeting may give the notice. Section 2.4 NOTICE OF ANNUAL OR SPECIAL MEETING. Written notice of each annual or special meeting of shareholders shall be given not less than ten nor more than sixty days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (ii) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to the provisions of applicable law, any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the name of nominees intended at the time of the notice to be presented by the Board for election. Notice of a shareholders' meeting or any report to the shareholders shall be given either personally to the recipient or to a person in the office of the recipient or by first-class United States mail, by private mail or messenger service, by telephone facsimile transmission, or by any other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. Such notice or report shall be deemed to have been given at the time when delivered personally, deposited in the United States mail or sent by private mail or messenger service, by telephone facsimile transmission or sent by any other means of written or electronic communication. Section 2.5 QUORUM; ADJOURNMENT. (a) A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders. (b) Except as provided in subsection (c) below, the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Articles. (c) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. 2 (d) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subsection (c) above. Section 2.6 ADJOURNED MEETING AND NOTICE THEREOF. Any shareholders' meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum (except as permitted by applicable law in the case of withdrawals by shareholders to reduce the number remaining to less than a quorum) no other business may be transacted at such meeting. With exceptions under Section 601(d) of the California Corporations Code and any other applicable law, it shall not be necessary to give any notice of the time and place of the adjourned meeting or of the business to be transacted thereat, other than by announcement at the meeting at which such adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. Section 2.7 VOTING. The shareholders entitled to notice of any meeting or to vote at any such meeting shall be only persons in whose name shares stand on the stock records of the corporation on the record date determined in accordance with Section 2.8. Voting shall in all cases be subject to the provisions of Chapter 7 of the California General Corporation Law, including the following provisions: (a) Shares standing in the name of another corporation, domestic or foreign, may be voted by an officer, agent, or proxyholder as the bylaws of the other corporation may prescribe or, in the absence of such provision, as the Board of the other corporation may determine or, in the absence of that determination, by the chairman of the board, president or any vice president of the other corporation, or by any other person authorized to do so by the chairman of the board, president, or any vice president of the other corporation. Shares which are purported to be voted or any proxy purported to be executed in the name of a corporation (whether or not any title of the person signing is indicated) shall be presumed to be voted or the proxy executed in accordance with the provisions of the California General Corporation Law, unless the contrary is shown. (b) Shares of this corporation owned by its subsidiary shall not be entitled to vote on any matter. (c) Shares of this corporation held by this corporation in a fiduciary capacity, and shares of this corporation held in a fiduciary capacity by its subsidiary, shall not be entitled to vote on any matter, except as follows: (i) to the extent that the settlor or beneficial owner possesses and exercises a right to vote or to give this corporation binding instructions as to how to vote such shares; or (ii) where there are one or more cotrustees who are not affected by the prohibition of this subsection, in which case the shares may be voted by the cotrustees as if it or they are the sole trustees. 3 Section 2.8. RECORD DATE. The Board may fix, in advance, a record date for the determination of the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution, or any allotment of any rights or entitled to exercise any rights, in respect of any other lawful action. The record date so fixed shall be not more than sixty days nor less than ten days prior to the date of the meeting nor more than sixty days prior to any other action. When a record date is so fixed, only shareholders of record at the close of business on that date are entitled to notice of and to vote at the meeting or to receive the dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of shares on the books of the corporation after the record date, except as otherwise provided by law or these Bylaws. Section 2.9 CONSENT OF ABSENTEES; WAIVER OF NOTICE. The transactions of any meeting of shareholders, however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by this division to be included in the notice but not so included, if such objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, unless otherwise provided in the Articles or Bylaws, except as provided in the California General Corporation Law. Section 2.10 ACTION WITHOUT MEETING. Subject to Section 603 of the California General Corporation Law, any action which, under any provision of the California General Corporation Law, may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Section 2.11 PROXIES. Every person entitled to vote shares has the right to do so either in person or by one or more persons authorized by a written proxy executed by such shareholder and filed with the Secretary. No proxy shall be valid after the expiration of eleven (11) months from the date thereof, unless otherwise provided in the proxy. 4 ARTICLE III -- DIRECTORS Section 3.1 POWERS. Subject to any limitations of the Articles, of these Bylaws and of the California General Corporation Law relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. The Board may delegate the management of the day-to-day operation of the business of the corporation provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Board shall have the following powers in addition to the other powers enumerated in these Bylaws: (a) To select and remove all the other officers, agents and employees of the corporation, prescribe the powers and duties for them as may not be inconsistent with law, with the Articles or these Bylaws, fix their compensation and require from them security for faithful service. (b) To conduct, manage and control the affairs and business of the corporation and to make such rules and regulations therefor not inconsistent with law, or with the Articles or these Bylaws, as they may deem best. (c) To adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time as in their judgment they deem best. (d) To authorize the issuance of shares of stock of the corporation from time to time, upon such terms and for such consideration as may be lawful. (e) To borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. Section 3.2 NUMBER OF DIRECTORS. The authorized number of directors shall not be less than three (3) nor more than six (6) until changed by amendment of the Articles or by a Bylaw duly adopted by the shareholders. The exact number of directors shall be fixed, within the limits specified, by the Board or the shareholders in the same manner provided in these Bylaws for the amendment thereof. The exact number of authorized directors shall be six (6) until changed as provided in these Bylaws. Section 3.3 ELECTION AND TERM OF OFFICE. The directors shall be elected at each annual meeting of the shareholders, but if 5 any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Each director shall hold office until the next annual meeting and until a successor has been elected and qualified. Section 3.4 VACANCIES. Any director may resign effective upon giving written notice to the Chairman of the Board, if any, the President, the Secretary, or the Board, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Vacancies in the Board, except those existing as a result of a removal of a director, may be filled by a majority of the remaining directors, whether or not less than a quorum, or by a sole remaining director, and each director so elected shall hold office until the next annual meeting and until such director's successor has been elected and qualified. Vacancies existing as a result of a removal of a director may be filled by the shareholders as provided by law. A vacancy or vacancies in the Board shall be deemed to exist in case of the death, resignation or removal of any director, or if the authorized number of directors be increased, or if the shareholders fail, at any annual or special meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be voted for at that meeting. The shareholders may elect a director or directors at any time to fill any vacancy not filled by the directors. Any such election by written consent other than to fill a vacancy created by removal requires the consent of a majority of the outstanding shares entitled to vote. If the Board accepts the resignation of a director tendered to take effect at a future time, the Board or the shareholders shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of the director's term of office. Section 3.5 PLACE OF MEETING. Regular or special meetings of the Board shall be held at any place within or without the State of California which has been designated from time to time by the Board or as provided in these Bylaws. In the absence of such designation, regular meetings shall be held at the principal executive office. Section 3.6 ORGANIZATION MEETING. Promptly following each annual meeting of shareholders the Board shall hold a regular meeting for the purpose of organization, election of officers and the transaction of other business. Section 3.7 SPECIAL MEETINGS. Special meetings other than organization meetings of the Board for any purpose 6 or purposes may be called at any time by the Chairman of the Board, if any, the President, any Executive Vice President, Senior Vice President, the Secretary, an Assistant Secretary or by any two directors. Such meetings of the Board shall be held upon four days' written notice by mail or forty-eight hours' notice given personally or by telephone, telephone facsimile transmission, telegraph, telex or other similar means of communication. Any such notice shall be addressed or delivered to each director at such director's address as it is shown upon the records of the corporation or as may have been given to the corporation by the director for purposes of notice or, if such address is not shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. The notice need not specify the purpose of such meeting. Notice by first-class mail shall be deemed to have been given at the time a written notice is deposited in the United States mail, postage prepaid or sent by private mail or messenger service. Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient, to a person in the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient, delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means to the recipient. Oral notice shall be deemed to have been given at the time it is communicated, in person, by telephone to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. Section 3.8 QUORUM. One-third of the maximum number of authorized directors constitutes a quorum of the Board for the transaction of business, except to adjourn as provided in Section 3.11 of this Article. As defined in Article III, Section 3.2, the maximum number of authorized directors is six. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board, unless a greater number is required by law or by the Articles; provided, however, that a meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Section 3.9 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Such participation constitutes presence in person at such meeting. Section 3.10 WAIVER OF NOTICE. The transactions of any meeting of the Board, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or 7 made a part of the minutes of the meeting. Section 3.11 ADJOURNMENT. A majority of the directors present, whether or not a quorum is present, may adjourn any directors' meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place is fixed at the meeting adjourned. If the meeting is adjourned for more than twenty-four hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment. Section 3.12 FEES AND COMPENSATION. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the Board. Section 3.13 ACTION WITHOUT MEETING. In accordance with the provisions of Section 307(8)(b) of the California General Corporation Law, any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall have the same force and effect as a unanimous vote of the Board and shall be filed with the minutes of the proceedings of the Board. ARTICLE IV -- OFFICERS Section 4.1 OFFICERS. The officers of the corporation shall be a President, Vice President, a Controller, a Secretary and a Treasurer. The corporation may also have, at the discretion of the Board, a Chairman of the Board, one or more additional Vice Presidents, a Chief Operating Officer, a General Manager, General Counsel, one or more Assistant General Counsels, one or more Assistant Controllers, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.5 of this Article. Section 4.2 ELECTION. The officers of the corporation, except such officers as may be elected or appointed in accordance with the provisions of Section 4.5 or Section 4.6 of this Article, shall be chosen annually by, and shall serve at the pleasure of the Board, and shall hold their respective offices until their resignation, removal, or other disqualification from service, or until their respective successors shall be elected. Section 4.3 ELIGIBILITY OF CHAIRMAN OF THE BOARD OR PRESIDENT. No person shall be eligible for the office of Chairman of the Board, if there shall be such an officer, or President unless such person is a member of the Board of the corporation; 8 any other officer may or may not be a director. Section 4.4 REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by the Board at any time or by any officer upon whom such power of removal may be conferred by the Board. Any such removal shall be without prejudice to the rights, if any, of the officer under any contract of employment of the officer. Any officer may resign at any time by giving written notice to the corporation, but without prejudice to the rights, if any, of the corporation under any contract of employment to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4.5 APPOINTMENT OF OTHER OFFICERS. The Board may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in the Bylaws or as the Board may from time to time determine. Notwithstanding the job title for such person, no employee or other representative of this corporation shall be an officer of this corporation unless elected by the Board. Section 4.6 VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular election or appointment to such office. Section 4.7 SALARIES. The salaries of the Chairman of the Board, if any, President, General Manager, if any, Vice Presidents, Controller, Treasurer and Secretary of the corporation shall be fixed by the Board. Salaries of all other officers shall be approved from time to time by the chief executive officer. Section 4.8 CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an officer, shall preside at all meetings of the Board, and shall exercise such powers and perform such duties as from time to time may be conferred upon or assigned to him by the Board or the Bylaws. Section 4.9 PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board, if there be such an officer, the President shall be the chief executive officer of the corporation and has, subject to the control of the Board, general supervision, direction, and control of the business and affairs of the corporation. The President shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board or if there be none, at all meetings of the Board. The President has the general powers and duties of 9 management usually vested in the office of president of a corporation and has such other powers and duties as may be prescribed by the Board or the Bylaws. The President may designate from time to time the titles which the employees or other representatives of this corporation shall use, including the appointment of agent for service of process. Without limiting the foregoing, the President may designate one or more employees as regional vice-presidents. Section 4.10 VICE PRESIDENT. In the absence or disability of the President, the Vice Presidents in order of their rank shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to all the restrictions upon the President. The Board of Directors may establish the order of rank of the Vice Presidents. In the absence of such ranking, the Vice Presidents shall be ranked as follows: Executive Vice President (if any), Senior Vice President (if any). Vice Presidents holding identical titles shall be ranked in order of election to that office by the Board. Section 4.11 CHIEF OPERATING OFFICER. The Chief Operating Officer, if there shall be such an officer, must be a vice president of the corporation and shall be subject to the exercise of the general powers of supervision, direction and control of the business and officers of the corporation by the President, and supervise the operations of the corporation. Section 4.12 GENERAL MANAGER. The General Manager, if there shall be such an officer, must be a vice president of the corporation and shall, subject to the exercise of the general powers of supervision, direction and control by the President, or the Chief Operating Officer, if any, shall manage the operations of the corporation. In the absence of the Chief Operating Officer, the General Manager shall perform all the duties of the Chief Operating Officer and when so acting shall have all the powers of, and be subject to, all the restrictions upon the Chief Operating Officer. Section 4.13 GENERAL COUNSEL. The General Counsel shall be the chief consulting officer of the corporation in all legal matters and, subject to the President, shall have control over all matters of legal import concerning the corporation. Section 4.14 ASSISTANT GENERAL COUNSEL. One or more Assistant General Counsels, if any, shall perform such of the duties of the General Counsel as the General Counsel may designate, and in the absence or disability of the General Counsel, any Assistant General Counsel, in order of election to that office by the Board, shall perform the duties of the General Counsel. Section 4.15 CONTROLLER. The Controller shall be the chief accounting officer of the corporation and shall have control over all accounting matters concerning the corporation and shall perform such other duties as the President or General Manager shall designate. 10 Section 4.16 SECRETARY. The Secretary shall keep or cause to be kept, at the principal executive office and such other place as the Board may order, a book of minutes of all meetings of the shareholders, the Board, and its committees, and a share register or a duplicate share register. The Secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board and any committees thereof required by the Bylaws or by law to be given, shall keep the seal of the corporation in safe custody, shall from time to time issue such corporate secretarial certificates as may be required for the business and affairs of the corporation, and shall have such other general powers and duties of management usually vested in the office of secretary of a corporation and as may be prescribed by the Board, the President or the Bylaws. Section 4.17 ASSISTANT SECRETARY. One or more Assistant Secretaries, if any, shall perform such of the duties of the Secretary as the Secretary shall designate, and in the absence or disability of the Secretary, any Assistant Secretary, in order of election to that office by the Board, shall perform the duties of the Secretary. Section 4.18 SECRETARY PRO TEMPORE. At any meeting of the Board or of the shareholders from which the Secretary and Assistant Secretary are absent, a Secretary pro tempore may be appointed by the Board of Directors or shareholders as appropriate and act. Section 4.19 TREASURER. The Treasurer is the chief financial officer of the corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation. The books of account shall at all times be open to inspection by any director. The Treasurer shall deposit, or cause to be deposited, all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors pursuant to Section 5.2. The Treasurer shall disburse or cause to be disbursed, the funds of the corporation as may be ordered by the President or the General Manager, shall render to the President, the General Manager or the directors, whenever they request it, an account of all transactions as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board, or the Bylaws. Section 4.20 ASSISTANT TREASURER. One or more Assistant Treasurers, if any, shall perform such of the duties of the Treasurer as the Treasurer shall designate, and in the absence or disability of the Treasurer, any Assistant Treasurer, in order of election to that office by the Board, shall perform the duties of the Treasurer. 11 Section 4.21 PERFORMANCE OF DUTIES. Officers shall perform the duties of their respective offices as stated in these Bylaws, and such additional duties as the Board shall designate. ARTICLE V -- OTHER PROVISIONS Section 5.1 INSPECTION OF BYLAWS. The corporation shall keep in its principal executive office the original or a copy of these Bylaws, as amended to date, which shall be open to inspection by shareholders at all reasonable times during office hours. Section 5.2 CONTRACTS AND OTHER INSTRUMENTS,LOANS, NOTES AND DEPOSIT OF FUNDS. The Chairman of the Board, if any, the President and any Vice President of this corporation, either alone or with the Secretary or an Assistant Secretary, shall execute in the name of the corporation such written instruments as may be authorized by the Board and, without special direction of the Board, such instruments as transactions of the ordinary business of the corporation may require and, such officers without the special direction of the Board may authenticate, attest or countersign any such instruments when deemed appropriate. The Board may authorize any person, persons, entity, entities, attorney, attorneys, attorney-in-fact, attorneys-in-fact, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by resolution of the Board as it may direct. Such authority may be general or confined to specific instances. All checks, drafts, or other similar orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as the Board, Chief Executive Officer or Treasurer may direct. Unless authorized by the Board or these Bylaws, no officer, agent, employee or any other person or persons shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or amount. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board may direct. Section 5.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The President or any other officer or officers authorized by the Board or the President are each authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any other corporation or corporations standing in the 12 name of the corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officer. Section 5.4 ANNUAL REPORT TO SHAREHOLDERS. The annual report to shareholders referred to in Section 1501 of the California General Corporation Law is expressly waived, but nothing herein shall be interpreted as prohibiting the Board from issuing annual or other periodic reports to shareholders. Section 5.5 FISCAL YEAR AND SUBDIVISIONS. The calendar year shall be the corporate fiscal year of the corporation. For the purpose of paying dividends, for making reports and for the convenient transaction of the business of the corporation, the Board may divide the fiscal year into appropriate subdivisions. Section 5.6 CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the General Provisions of the California Corporations Code and in the California General Corporation Law shall govern the construction of these Bylaws. ARTICLE VI -- INDEMNIFICATION Section 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each person who was or is a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, formal or informal, whether brought in the name of the corporation or otherwise and whether of a civil, criminal, administrative or investigative nature (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of this corporation or is or was serving at the request of this corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is an alleged action or inaction in an official capacity or in any other capacity while serving as a director or officer shall, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permissible under California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors, and administrators; provided, however, that (A) this corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of this corporation other than a suit permitted by Section 6.3; (B) this corporation shall indemnify any such person seeking indemnification in connection with settlement of a proceeding (or part thereof) other than a 13 proceeding by or in the name of this corporation to procure a judgment in its favor only if any settlement of such a proceeding is approved in writing by this corporation; (C) that no such person shall be indemnified (i) except to the extent that the aggregate of losses to be indemnified exceeds the amount of such losses for which the director or officer is paid pursuant to any directors' and officers' liability insurance policy maintained by the corporation; (ii) on account of any suit in which judgment is rendered against such person for an accounting of profits made from the purchase or sale by such person of securities of this corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state, or local statutory law; (iii) if a court of competent jurisdiction finally determines that any indemnification hereunder is unlawful; and (iv) as to circumstances in which indemnity is expressly prohibited by Section 317 of the General Corporation Law of California (the "Law"); and (D) that no such person shall be indemnified with regard to any action brought by or in the right of this corporation for breach of duty to this corporation and its shareholders (a) for acts or omissions involving intentional misconduct or knowing and culpable violation of law; (b) for acts or omissions that the director or officer believes to be contrary to the best interests of this corporation or its shareholders or that involve the absence of good faith on the part of the director or officer; (c) for any transaction from which the director or officer derived an improper personal benefit; (d) for acts or omissions that show a reckless disregard for the director's or officer's duty to this corporation or its shareholders in circumstances in which the director or officer was aware, or should have been aware, in the ordinary course of performing his or her duties, of a risk of serious injury to this corporation or its shareholders; (e) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's or officer's duties to this corporation or its shareholders; and (f) for costs, charges, expenses, liabilities, and losses arising under Section 310 or 316 of the Law. The right to indemnification conferred in this Article shall include the right to be paid by this corporation expenses incurred in defending any proceeding in advance of its final disposition; provided, however, that if the Law permits the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, such advances shall be made only upon delivery to this corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts to this corporation if it shall be ultimately determined that such person is not entitled to be indemnified." Section 6.2 INDEMNIFICATION OF EMPLOYEES AND AGENTS. A person who was or is a party or is threatened to be made a party to or is involved in any proceeding by reason of the fact that he or she is or was an employee or agent of this corporation or is or was serving at the request of this corporation as an employee or agent of another enterprise, including service with respect to employee benefit plans, whether the basis of such action is an alleged action or inaction in an official capacity or in any other capacity while serving as an employee or agent, may, subject to the terms of any agreement between this corporation and such person, be indemnified and held harmless by this corporation to the fullest extent permitted by California law and this corporation's Articles of Incorporation, against all costs, charges, expenses, liabilities, and losses, (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. 14 Section 6.3 RIGHT OF DIRECTORS AND OFFICERS TO BRING SUIT. If a claim under Section 6.1 of this Article is not paid in full by this corporation within 30 days after a written claim has been received by this corporation, the claimant may at any time thereafter bring suit against this corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. Neither the failure of this corporation (including its Board, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met the applicable standard of conduct, if any, nor an actual determination by this corporation (including its Board, independent legal counsel, or its shareholders) that the claimant has not met the applicable standard of conduct, shall be a defense to the action or create a presumption for the purpose of an action that the claimant has not met the applicable standard of conduct. Section 6.4 SUCCESSFUL DEFENSE. Notwithstanding any other provisions of this Article, to the extent that a director or officer has been successful on the merits in defense of any proceeding referred to in Section 6.1 or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. Section 6.5 NONEXCLUSIVITY OF RIGHTS. The right to indemnification provided by this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, agreement, vote of shareholders, or disinterested directors, or otherwise. Section 6.6 INSURANCE. This corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of this corporation or another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not this corporation would have the power to indemnify such person against such expense, liability, or loss under the Law. Section 6.7 EXPENSES AS A WITNESS. To the extent that any director, officer, employee, or agent of this corporation is, by reason of such position or a position with another entity at the request of this corporation, a witness in any action, suit, or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her on his or her behalf in connection therewith. Section 6.8 INDEMNITY AGREEMENTS. This corporation may enter into agreements with any director, officer, employee, or agent of this corporation providing for indemnification to the fullest extent permissible under the Law and this corporation's Articles of Incorporation. 15 Section 6.9 SEVERABILITY. Each and every paragraph, sentence, term, and provision of this Article is separate and distinct so that if any paragraph, sentence, term, or provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other paragraph, sentence, term, or provision hereof. To the extent required, any paragraph, sentence, term, or provision of this Article may be modified by a court of competent jurisdiction to preserve its validity and to provide the claimant with, subject to the limitations set forth in this Article and any agreement between this corporation and claimant, the broadest possible indemnification permitted under applicable law. Section 6.10 EFFECT OF REPEAL OR MODIFICATION. Any repeal or modification of this Article shall not adversely affect any right of indemnification of a director or officer existing at the time of such repeal or modification with respect to any action or omission occurring prior to such repeal or modification. ARTICLE VII -- AMENDMENTS Section 7.1 AMENDMENTS. In accordance with Section 211 and subject to the provisions contained in Section 212 of the California Corporation Law, these Bylaws may be amended or repealed either by approval of the outstanding shares or by the approval of the Board; provided, however, that a Bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable Board or vice versa may only be adopted by approval of the outstanding shares. The exact number of directors within the maximum and minimum number specified in these Bylaws may be amended by the Board alone. [End of Bylaws] 16 EX-3.13 14 EXHIBIT 3.13 Exhibit 3.13 EME HOMER CITY GENERATION L.P. AGREEMENT OF LIMITED PARTNERSHIP
TABLE OF CONTENTS PAGE Article 1. Definitions..................................................................................1 Act ..................................................................................................1 Adjusted Capital Account .............................................................................1 Adjusted Capital Account Deficit .....................................................................1 Affiliate ............................................................................................1 Agent ................................................................................................1 Agreed Value .........................................................................................2 Agreement ............................................................................................3 Allocation Year ......................................................................................3 Capital Accounts .....................................................................................3 Capital Contributions ................................................................................3 Certificate ..........................................................................................3 Code .................................................................................................3 Depreciation .........................................................................................3 Dissolution Event ....................................................................................4 Effective Date .......................................................................................4 Fiscal Year ..........................................................................................4 General Partner ......................................................................................4 GP Interest ..........................................................................................4 Interest Holder ......................................................................................4 Limited Partner ......................................................................................4 Liquidator ...........................................................................................4 LP Interest ..........................................................................................4 Majority Interest ....................................................................................4 Nondeductible Expenditure ............................................................................4 Nonrecourse Deductions ...............................................................................4 Partner ..............................................................................................4 Partner Nonrecourse Debt Minimum Gain ................................................................5 Partner Nonrecourse Debt .............................................................................5 Partner Nonrecourse Deductions .......................................................................5 Partnership ..........................................................................................5 Partnership Interest .................................................................................5 Partnership Minimum Gain .............................................................................5 Percentage Interest ..................................................................................5 Permitted Transfer ...................................................................................5 Person ...............................................................................................5 Profits" and "Losses .................................................................................5 Regulations ..........................................................................................6 Transfer .............................................................................................6 Article 2. Formation of Partnership; Purpose............................................................6 2.1. Formation......................................................................................6 2.2. Name...........................................................................................7 2.3. Registered Office, Registered Agent and Places of Business.....................................7 2.4. Power of Attorney..............................................................................7 2.5. Term...........................................................................................8 2.6. Certificate of Limited Partnership.............................................................8 2.7. Purpose........................................................................................8 Article 3. Capital Contributions; Percentage Interests..................................................9 3.1. General Partner................................................................................9 3.2. Limited Partners...............................................................................9 3.3. No Interest....................................................................................9
i 3.4. Loans from Partners............................................................................9 3.5. Additional Contributions.......................................................................9 Article 4. Capital Accounts.............................................................................9 Article 5. Distributions...............................................................................11 5.1. In General....................................................................................11 5.2. Liquidating Distributions.......................................................................11 Article 6. Allocations of Profits and Losses...........................................................11 6.1. Profits.......................................................................................11 6.2. Losses........................................................................................11 6.3. Limitations on Allocations of Losses..........................................................11 6.4. Special Allocations...........................................................................11 6.4.1. Minimum Gain Chargeback....................................................................12 6.4.2. Partner Minimum Gain Chargeback............................................................12 6.4.3. Qualified Income Offset....................................................................12 6.4.4. Nonrecourse Deductions.....................................................................12 6.4.5. Partner Nonrecourse Deductions.............................................................13 6.4.6. Certain 754 Adjustments....................................................................13 6.5. Curative Allocations..........................................................................13 6.6. Other Allocation Rules........................................................................13 6.6.1. Allocations When Interests Change..........................................................13 6.6.2. Allocation of Particular Items.............................................................14 6.6.3. Tax Reporting..............................................................................14 6.6.4. Profit Shares..............................................................................14 6.6.5. Minimum Allocations to General Partner......................................................14 6.6.6. Book Items Used in Special Allocations.....................................................14 6.7. Tax Allocations; Code Section 704(c)..........................................................15 6.7.1. Generally..................................................................................15 6.7.2. Contributed Property.......................................................................15 6.7.3. Adjustments to Agreed Value................................................................15 6.7.4. Elections..................................................................................15 Article 7. Tax Matters.................................................................................16 7.1. Preparation of Tax Returns....................................................................16 7.2. Tax Elections.................................................................................16 7.3. Tax Controversies.............................................................................16 Article 8. Business Management and Operation; Indemnification..........................................16 8.1. Powers of General Partner.....................................................................16 8.2. Duties of General Partner.....................................................................18 8.3. Prohibited Actions and Actions Requiring Limited Partner Approval.............................19 8.4. Reimbursement of the General Partner..........................................................19 8.5. Partnership Funds.............................................................................19 8.6. Outside Activities............................................................................20 8.7. Limited Liability; Indemnification............................................................20 8.8. Books, Records, and Accounting................................................................21 8.9. Fiscal Year; Taxable Year.....................................................................21 Article 9. Limited Partner Rights and Obligations......................................................22 9.1. Limitation of Liability.......................................................................22 9.2. Management of Business........................................................................22 9.3. Outside Activities............................................................................22 9.4. Return of Capital.............................................................................22 9.5. Rights of Limited Partners....................................................................22 Article 10. Transfers of Interests.....................................................................23 10.1. General Partner...............................................................................23 10.1.1. Voluntary Transfers and Withdrawals.......................................................23 10.1.2. Involuntary Transfers.....................................................................23
ii 10.1.3. Prohibited Transfers...................................................................24 10.2. Limited Partners..............................................................................24 10.2.1. In General................................................................................24 10.2.2. Permitted Transfers.......................................................................24 10.2.3. Conditions to Permitted Transfers.........................................................24 10.2.4. Prohibited Transfers......................................................................25 Article 11. Additional Partners........................................................................25 Article 12. Dissolution and Liquidation................................................................25 12.1. Dissolution...................................................................................25 12.2. Liquidation...................................................................................26 12.3. Distribution in Kind..........................................................................27 12.4. Cancellation of Certificate of Limited Partnership............................................28 12.5. No General Partner Liability for Return of Capital............................................28 12.6. Waiver of Partition...........................................................................28 12.7. Compliance with Timing Requirements of Regulations............................................28 12.8. Non-Dissolving Code Section 708(b) Terminations...............................................28 12.9. Allocations during the Period of Liquidation..................................................29 Article 13. Amendment of Agreement.....................................................................29 Article 14. General Provisions.........................................................................29 14.1. Personal Property.............................................................................29 14.2. Addresses and Notices.........................................................................29 14.3. Headings......................................................................................29 14.4. Binding Effect................................................................................29 14.5. Integration...................................................................................30 14.6. Waiver........................................................................................30 14.7. Counterparts..................................................................................30 14.8. Severability..................................................................................30 14.9. Applicable Law................................................................................30
iii EME HOMER CITY GENERATION L.P. AGREEMENT OF LIMITED PARTNERSHIP THIS AGREEMENT OF LIMITED PARTNERSHIP, is dated as of October 31, 1998, and is entered into by and among MISSION ENERGY WESTSIDE, INC., a California corporation ("Mission"), as general partner, and CHESTNUT RIDGE ENERGY COMPANY, a California corporation ("Chestnut Ridge"), as limited partner. ARTICLE 1. DEFINITIONS The following definitions shall for all purposes, unless otherwise clearly indicated to the contrary, apply to the terms used in this Agreement. "ACT" means the Pennsylvania Revised Uniform Limited Partnership Act, 15 Pa.C.S.A. ch.85, as amended from time to time (or any corresponding provisions of succeeding law). "ADJUSTED CAPITAL ACCOUNT" means, with respect to an Interest Holder, an account the balance (which may be a deficit balance) in which is equal to the balance in such Interest Holder's Capital Account as of the end of the relevant Allocation Year, after giving effect to the following adjustments: (i) credit to such Capital Account any amounts which such Interest Holder is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore to the Partnership pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) debit to such Capital Account such Interest Holder's share of items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to an Interest Holder, the deficit balance, if any, in such Interest Holder's Adjusted Capital Account. "AFFILIATE" means, with respect to any Person (i) any other Person who bears a relationship to the first Person described in either Code Section 267(b) (substituting, however, "10 percent" for "50 percent" everywhere in Code Section 267) or Code Section 707(b) (substituting, however, "10 percent" for "50 percent" everywhere in Code Section 707), and (ii) any officer, director, general partner, or trustee of any Person described in clauses (i) or (ii) of this sentence. "AGENT" has the meaning specified in Section 2.4.1. 1 "AGREED VALUE" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) The initial Agreed Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset; (ii) The Agreed Values of all Partnership assets shall be adjusted to equal their respective gross fair market values (taking Code Section 7701(g) into account) as of the following times: (a) the acquisition of an additional interest in the Partnership by any new or existing Interest Holder in exchange for more than a DE MINIMIS Capital Contribution; (b) the distribution by the Partnership to an Interest Holder of more than a DE MINIMIS amount of Partnership property as consideration for an interest in the Partnership; (c) the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and (d) at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2; provided that the adjustments described in clauses (a) and (b) of this paragraph shall be made only if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Interest Holders in the Partnership; (iii) The Agreed Value of any Partnership asset distributed to any Interest Holder shall be the gross fair market value (taking Code Section 7701(g) into account) of such asset on the date of distribution; and (iv) The Agreed Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 732(d), Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining capital accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Agreed Values shall not be adjusted pursuant to this clause (iv) to the extent that an adjustment pursuant to clause (ii) hereof is made in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (iv). The Agreed Value of any interest in another partnership held by the Partnership shall be determined as provided above, except that (a) at any time at which such Agreed Value is determined pursuant to clause (i), (ii) or (iii) above, it shall be increased by the Partnership's share of the liabilities of such other partnership under Code Section 752 at such time and (b) Agreed Value shall be increased or decreased to reflect subsequent increases or decreases in the Partnership's share of such liabilities or increases in the Partnership's individual liabilities by reason of its assumption of liabilities of such other partnership or decreases in the Partnership's individual liabilities by reason of such other partnership's assumption thereof to the same extent and at the same time that it would be so increased or decreased if it were actually the federal income tax basis of the Partnership's interest in such other partnership. 2 If the Agreed Value of an asset has been determined or adjusted pursuant to this definition of Agreed Value, such Agreed Value shall thereafter be adjusted by Depreciation with respect to such asset taken into account in computing Profits and Losses. Determinations of gross fair market value for purposes of this definition of Agreed Value shall be made as follows: (a) in situations described in paragraphs (i), (ii)(a), (ii)(b) and (iii) above by agreement between the General Partner and the Interest Holder making the contribution or receiving the distribution as the case may be, provided, however that if the General Partner (or any Affiliate of the General Partner) is the contributor or the distributee such determination shall require agreement between the contributor or the distributor and a Majority Interest; and (b) in other situations by agreement between the General Partner and a Majority Interest. In a case in which agreement cannot be reached as required in the foregoing provisions of this paragraph, the appraisal procedure set forth in Section 10.1.2.3 shall be followed to determine gross fair market value, substituting, however, the parties whose agreement is so required as the persons to select the initial two appraisers. "AGREEMENT" means this Agreement of Limited Partnership. "ALLOCATION YEAR" means (i) the period commencing on the date of inception of the Partnership and ending on the next following December 31, (ii) any subsequent twelve (12) month period commencing on January 1 and ending on December 31, or (iii) any portion of the period described in clauses (i) or (ii) for which the Partnership is required to allocate Profits, Losses and other items of Partnership income, gain, loss or deduction pursuant to Article 6. "CAPITAL ACCOUNTS" mean the capital accounts maintained with respect to Partnership Interests pursuant to Article 4. "CAPITAL CONTRIBUTIONS" means with respect to any Partner the amount of money and the initial Agreed Value of any property (other than money) contributed to the Partnership with respect to the interest in the Partnership held by such Partner. "CERTIFICATE" means the certificate of limited partnership for the Partnership required to be filed pursuant to Section 8511 of the Act. "CODE" means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). "DEPRECIATION" means, for each Allocation Year, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Allocation Year, except that if the Agreed Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Allocation Year, 3 Depreciation shall be determined in accordance with Regulations Section 1.704-1(b)(2)(iv)(g)(3) or Regulations Section 1.704-3(d)(2), whichever is applicable. "DISSOLUTION EVENT" has the meaning assigned to that term in Section 12.1. "EFFECTIVE DATE" means October 31, 1998. "FISCAL YEAR" means (i) the period commencing on the date of inception of the Partnership and ending on the next following December 31, (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31 and (iii) the period commencing on the immediately preceding January 1 and ending on the date on which all Partnership property has been distributed to the Interest Holders pursuant to Section 12.2 hereof. "GENERAL PARTNER" means Mission or any other Person admitted to the Partnership pursuant to this Agreement in the capacity of a general partner. "GP INTEREST" means an interest in the Partnership issued pursuant to this Agreement to a Person in its capacity as the General Partner. "INTEREST HOLDER" means any Person who is entitled to receive distributions and allocations with respect to a Partnership Interest. "LIMITED PARTNER" means, as the case may be, Chestnut Ridge or any other Person admitted to the Partnership pursuant to this Agreement in the capacity of a limited partner. "LIQUIDATOR" has the meaning specified in Section 12.2. "LP INTEREST" means an interest in the Partnership issued pursuant to this Agreement to a Person its capacity as a Limited Partner. "MAJORITY INTEREST" means Limited Partners whose aggregate Percentage Interests total more than one-half of the aggregate Percentage Interests of the Limited Partners. "NONDEDUCTIBLE EXPENDITURE" has the meaning specified under the definition of Profits below. "NONRECOURSE DEDUCTIONS" has the meaning set forth in regulations Section 1.704-2(b)(1). The amount and items of Nonrecourse Deductions shall be determined in accordance with Regulations Sections 1.704-2(c) and 1.704-2(j)(1). "PARTNER" means the General Partner or a Limited Partner. 4 "PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in Regulations Section 1.704-2(i). "PARTNER NONRECOURSE DEBT" has the meaning set forth in Regulations Section 1.704-2(b)(4). "PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations Section 1.704-2(i). "PARTNERSHIP" means EME Homer City Generation L.P., a Pennsylvania limited partnership. "PARTNERSHIP INTEREST" means a GP Interest or an LP Interest. "PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d). "PERCENTAGE INTEREST" means, with respect to any Interest Holder, the Interest Holder's interest, expressed as a percentage, in certain Profits, Losses (and items thereof) and distributions of the Partnership as set out in this Agreement and as may be amended from time to time to reflect the transfer of Partnership Interests or the issuance of additional Partnership Interests. "PERMITTED TRANSFER" is defined in Section 10.2.2. "PERSON" means an individual, a corporation, a partnership, a trust, an unincorporated organization, an association, or any other entity. "PROFITS" and "LOSSES" means, for each Allocation Year, an amount equal to the Partnership's taxable income or loss for such Allocation Year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (i) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such taxable income or loss; (ii) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(b) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) ("Nondeductible Expenditures"), and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be subtracted from such taxable income or loss; 5 (iii) If the Agreed Value of any Partnership asset is adjusted pursuant to clause (ii) or clause (iii) of the definition of Agreed Value hereunder, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (iv) Gain or loss resulting from any disposition of Partnership property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Agreed Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Agreed Value; (v) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Allocation Year; (vi) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) is required, pursuant to Regulations Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of an Interest Holder's interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses; and (vii) Notwithstanding any other provision of this definition, any items which are specially allocated pursuant to Section 6.4 or Section 6.5 hereof shall not be taken into account in computing Profits or Losses. "REGULATIONS" means the Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "TRANSFER" means, as a noun, any voluntary or involuntary transfer, sale, pledge, hypothecation, or other disposition and, as a verb, voluntarily or involuntarily to transfer, sell, pledge, hypothecate, or otherwise dispose of. ARTICLE 2. FORMATION OF PARTNERSHIP; PURPOSE 2.1. FORMATION. Subject to the provisions of this Agreement, the General Partner and the Limited Partner hereby form the Partnership as a limited partnership pursuant to the provisions of the Act. The General Partner and the Limited Partner hereby enter into this Agreement to set forth the rights and obligations of the Partners and certain matters related thereto. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration, dissolution, and termination of the Partnership shall be governed by the Act. 6 2.2. NAME. The name of the Partnership shall be, and the business of the Partnership shall be conducted under the name of, "EME Homer City Generation L.P."; provided, however, that (a) the Partnership's business may be conducted under any other name or names deemed advisable by the General Partner, (b) the General Partner in its sole discretion may change the name of the Partnership at any time and from time to time, and (c) the name of the Partnership and any name under which the Partnership conducts business shall include "L.P." or "Limited Partnership" (or similar words or letters) where necessary for purposes of maintaining the limited liability status of the Limited Partners or otherwise complying with the laws of any jurisdiction that so requires. 2.3. REGISTERED OFFICE, REGISTERED AGENT AND PLACES OF BUSINESS. The registered office of the Partnership in the Commonwealth of Pennsylvania is CT Corporation, 1635 Market Street, Philadelphia, Pennsylvania 19103. The General Partner may change the registered office of the Partnership in the Commonwealth of Pennsylvania upon giving notice of such change to the other Partners. The Partnership may establish other offices at such places as the General Partner deems advisable. 2.4. POWER OF ATTORNEY. 2.4.1. The Limited Partners hereby constitute and appoint the General Partner or, if a Liquidator shall have been selected pursuant to Section 12.2, the Liquidator, with full power of substitution, as their true and lawful agent and attorney-in-fact ("Agent"), with full power and authority in such Partners' name, place, and stead to: 2.4.1.1. execute, swear to, acknowledge, deliver, file, and record in the appropriate public offices (A) all certificates, documents, and other instruments (including, without limitation, this Agreement and the Certificate and any amendments or restatements thereof) that the Agent deems appropriate or necessary to form or qualify, or continue the existence or qualification of, the Partnership as a limited partnership (or a partnership in which the Limited Partners have limited liability) under the laws of any state or jurisdiction; (B) all certificates, documents, and other instruments that the Agent deems appropriate or necessary to reflect any amendments, changes, or modifications of this Agreement in accordance with its terms; (C) all conveyances and other documents or instruments that the Agent deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement; and (D) all certificates, documents, and other instruments relating to the admission, substitution or withdrawal of any Partner pursuant to Article 10 or 11 and other events described in Article 10 or 11; and 2.4.1.2. execute, swear to, acknowledge, and file all ballots, consents, approvals, waivers, certificates, documents, and other instruments that the Agent deems appropriate or necessary in order to make, evidence, give, confirm, or ratify any vote, consent, approval, agreement, or other action that is made or given by the Partners hereunder, is deemed to be made or given by the 7 Partners hereunder, is consistent with the terms of this Agreement, or is deemed by the Agent to be appropriate or necessary to effectuate the terms or intent of this Agreement or the purposes of the Partnership; provided, however, that, if any vote or approval of the Limited Partners is specifically required for an action by any provision of this Agreement, the Agent may exercise the power of attorney made in this Section 2.4.1.2 to take such action only after such vote or approval is obtained. 2.4.2. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and not be affected by the subsequent termination, incapacity, or bankruptcy of any Limited Partner and the transfer of all or any portion of a Limited Partner's Partnership Interest and shall extend to a Limited Partner's transferees and assigns. The Limited Partners hereby agree to be bound by any representations made by the Agent acting in good faith pursuant to such power of attorney; and the Limited Partners hereby waive any and all defenses that may be available to contest, negate, or disaffirm the action of the Agent taken in good faith pursuant to such power of attorney. The Limited Partners shall execute and deliver to the Agent, within fifteen days after receipt of the Agent's request therefor, such further designations, powers of attorney, and other instruments as the Agent deems appropriate or necessary to effectuate the terms or intent of this Agreement or the purposes of the Partnership. 2.5. TERM. The term of the Partnership shall commence upon the filing of the Certificate with the Pennsylvania Secretary of State and shall continue until the close of Partnership business on December 31, 2048 or until the earlier termination of the Partnership in accordance with the provisions of Article 12. 2.6. CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner shall file a Certificate for the Partnership with the Secretary of State of the Commonwealth of Pennsylvania as required by the Act. The Certificate, and any amendment to the Certificate, shall address only the matters set forth in Section 8511(a)(1), (2), (3) and (4) of the Act. The General Partner shall deliver to each Limited Partner a copy of the Certificate and any further certificate of amendment thereto. The General Partner shall cause to be filed such other certificates or documents as may be required for the operation, and qualification of a limited partnership in Pennsylvania and any other state in which the Partnership may elect to do business. The General Partner shall thereafter file any necessary certificates of amendment to the Certificate and such other certificates and documents and do all things requisite to the maintenance of the Partnership as a limited partnership (or as a partnership in which the Limited Partners have limited liability) under the laws of Pennsylvania and any other state in which the Partnership may elect to do business. 2.7. PURPOSE. The purpose and business of the Partnership shall be to engage in acquiring, owning, and operating the Homer City Electric Generation Station located near Indiana, Pennsylvania, and certain facilities and other assets associated 8 therewith and ancillary thereto, to obtain financing in respect thereof and to engage in all other lawful business activities in connection therewith. ARTICLE 3. CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS 3.1. GENERAL PARTNER. As of the Effective Date, Mission shall, in its capacity as the General Partner, contribute to the Partnership such amount and shall own the Percentage Interest set forth opposite its name in SCHEDULE A hereto. 3.2. LIMITED PARTNERS. At the request of the General Partner made as of the Effective Date, Chestnut Ridge, in its capacity as a Limited Partner, shall contribute to the Partnership such amount and shall own the Percentage Interest set forth opposite its name in SCHEDULE A hereto. 3.3. NO INTEREST. No interest shall be paid by the Partnership on any Capital Contributions or on the amount in any Partner's Capital Account. 3.4. LOANS FROM PARTNERS. Loans or other similar advances by a Partner to or for the account of the Partnership shall not be considered Capital Contributions. Any such loans or other similar advances shall be made subject to such terms and conditions acceptable to the lending Partner as the General Partner determines to be in the best interests of the Partnership. 3.5. ADDITIONAL CONTRIBUTIONS. Except as provided in this Section 3.5 or as required pursuant to an agreement relating to the purchase by any person other than Mission or Chestnut Ridge of a Partnership Interest in the Partnership, no Partner shall be entitled to make additional capital contributions to the Partnership, except upon the approval of the General Partner; PROVIDED that each Partner shall be given the opportunity for 30 days after written notice from the General Partner to make such Partner's PRO RATA share of additional contributions. If such rights of contribution are exercised by some but not all of the partners, the General Partner shall so notify all of the Partners. Thereafter, the Partners that elected to exercise such rights of contribution shall have the further right to make additional contributions up to the amount of the contribution shortfall on a PRO RATA basis, or as they may otherwise agree, within 10 days of receipt of such second notice, and the respective Partnership Interests of all the Partners shall be adjusted to reflect such unequal additional contributions. Nothing in this Section 3.5 shall require the General Partner to give the initial written notice requesting additional Capital contributions. ARTICLE 4. CAPITAL ACCOUNTS The Partnership shall maintain for each Interest Holder a single Capital Account with respect to the Interest Holder's Partnership Interest in accordance with the regulations issued pursuant to Section 704 of the Code. The Capital Account of each 9 Interest Holder shall be maintained for such Person in accordance with the following provisions: (a) To each Person's Capital Account there shall be credited such Person's Capital Contributions, and such Person's distributive share of Profits and any items in the nature of income or gain which are specially allocated pursuant to Section 6.4 or Section 6.5 or Section 6.6.5 hereof, and the amount of any Partnership liabilities which are assumed by such Person or which are secured by any Partnership property distributed to such Person. (b) To each Person's Capital Account there shall be debited the amount of cash and the Agreed Value of any Partnership property distributed to such Person pursuant to any provision of this Agreement, such Person's distributive share of Losses and any items in the nature of expenses or losses which are specially allocated pursuant the Section 6.4 or Section 6.5 or Section 6.6.5 hereof, and the amount of any liabilities of such Person which are assumed by the Partnership or which are secured by any property contributed by such Person to the Partnership. (c) In the event that all or a portion of a Partnership Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent that it relates to the transferred interest. (d) In determining the amount of any liability for purposes of paragraphs (a) and (b) of this definition, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations. The principal amount of a promissory note which is not readily traded on an established securities market and which is contributed to the Partnership by the maker of the note shall not be included in the Capital Account of any Interest Holder until the Partnership makes a taxable disposition of the note or until (and to the extent) principal payments are made on the note, all in accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2). The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner consistent with such Regulations. To the extent that such Regulations require that adjustments other than those set out above or in Section 6.4.6 be made to the Capital Accounts of the Partners, such adjustments shall be made, but without duplication of any such required adjustments that are effected through the definitions of "Profits" and "Losses" or Section 6.4.6 or Section 6.6.6. 10 ARTICLE 5. DISTRIBUTIONS 5.1. IN GENERAL. The General Partner shall determine from time to time whether the Partnership has funds in excess of those reasonably needed by the business of the Partnership (including reasonable reserves for operating expenses, for debt service, for repairs, for capital expenditures, improvements, and additions, and for contingencies). Such determination shall be made as of the end of each calendar year and the excess funds so determined with respect to a calendar year, if any, shall be distributed to the Partners within 60 days after the end of such calendar year. The General Partner may also determine in its sole discretion to make additional distributions of excess Partnership funds to the Partners. Any such annual or additional distributions shall be made to the Interest Holders in proportion to their respective Percentage Interests. 5.2. LIQUIDATING DISTRIBUTIONS. Notwithstanding Section 5.1 to the contrary, following the dissolution of the Partnership, distributions to the Partners shall be made in accordance with the provisions of Article 12. ARTICLE 6. ALLOCATIONS OF PROFITS AND LOSSES 6.1. PROFITS. After giving effect to the special allocations set forth in Sections 6.4 and 6.5 hereof, Profits for any Allocation Year shall be allocated among the Interest Holders in proportion to their respective Percentage Interests. 6.2. LOSSES. After giving effect to the special allocations set forth in Sections 6.4 and 6.5 hereof, and subject to the provisions of Section 6.3 below, Losses for any Allocation Year shall be allocated among the Interest Holders in proportion to their respective Percentage Interests. 6.3. LIMITATIONS ON ALLOCATIONS OF LOSSES. The Losses allocated to any Interest Holder pursuant to Section 6.2 hereof for any Allocation Year shall not exceed the maximum amount of Losses that can be so allocated without causing such Interest Holder to have (or to suffer an increase to) an Adjusted Capital Account Deficit at the end of the Allocation Year. Any Losses otherwise allocable to an Interest Holder but for the limitation set forth in this Section 6.3 shall be reallocated among Interest Holders, if any, having positive balances in their Adjusted Capital Accounts in accordance with the provisions of Section 6.2, subject, however, to the limitation of the preceding sentence and a consequent reallocation pursuant to this sentence. Any Losses which may be allocated to no Interest Holder under Section 6.2 due to such limitation shall be allocated among the Interest Holders in the proportions required by Regulations Section 1.704-1(b)(3). 6.4. SPECIAL ALLOCATIONS. The following special allocations shall be made in the following order: 11 6.4.1. MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section 1.704-2(f) of the Regulations, notwithstanding any other provision of this Article 6, if there is a net decrease in Partnership Minimum Gain during any Allocation Year, each Interest Holder shall be specially allocated items of Partnership income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years) in an amount equal to such Interest Holder's share of the net decrease in Partnership Minimum Gain, determined in accordance with Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Interest Holder pursuant thereto. The items to be so allocated shall be determined in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 6.4.1 is intended to comply with the minimum gain chargeback requirement in Section 1.704-2(f) of the Regulations and shall be interpreted consistently therewith. 6.4.2. PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of this Article 6, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt during any Allocation Year, each Interest Holder who has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of Partnership income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years) in an amount equal to such Interest Holder's share of the net decrease in Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Interest Holder pursuant thereto. The items to be so allocated shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations. This Section 6.4.2 is intended to comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations and shall be interpreted consistently therewith. 6.4.3. QUALIFIED INCOME OFFSET. If any Interest Holder unexpectedly receives any adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Interest Holder in an amount and manner sufficient to eliminate, to the extent required by the Regulations, any resulting Adjusted Capital Account Deficit of such Interest Holder as quickly as possible; provided, however, that an allocation pursuant to this Section 6.4.3 shall be made if and only to the extent that such Interest Holder would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article 6 have been tentatively made as if this Section 6.4.3 were not in this Agreement. 6.4.4. NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Allocation Year shall be allocated among the Interest Holders in proportion to their respective Percentage Interests. 12 6.4.5. PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse Deductions for any Allocation Year shall be allocated to the Interest Holder who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i)(1). 6.4.6. CERTAIN 754 ADJUSTMENTS. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 743(b), Code Section 732(d) or Code Section 734(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts as the result of a distribution to an Interest Holder in complete liquidation of its interest in the Partnership, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Interest Holders in accordance with their interests in the Partnership as determined under Regulations Section 1.704-1(b)(3) in the event Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Interest Holder to whom such distribution was made in the event Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies. 6.5. CURATIVE ALLOCATIONS. The allocations set forth in Sections 6.4.1 through 6.4.6, inclusive, and 6.6.5 hereof (the "REGULATORY ALLOCATIONS") are intended to comply with certain requirements of the Regulations and Internal Revenue Service advance ruling requirements. It is the intent of the parties to this Agreement that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of income, gain, loss or deduction pursuant to this Section 6.5. Therefore, notwithstanding any other provision of this Article 6 (other than the Regulatory Allocations and the following sentence), the General Partner shall make such offsetting special allocations of Partnership income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Interest Holder's Capital Account balance is, to the extent possible, equal to the Capital Account balance which such Interest Holder would have had if the Regulatory Allocations were not part of this Agreement and all Partnership items were allocated pursuant to Sections 6.1 and 6.2 hereof. In exercising its discretion under this Section 6.5, the General Partner shall take into account Regulatory Allocations under Sections 6.4.1 and 6.4.2 that, although not yet made, are likely to offset other Regulatory Allocations previously made under Sections 6.4.4 and 6.4.5. 6.6. OTHER ALLOCATION RULES. 6.6.1. ALLOCATIONS WHEN INTERESTS CHANGE. For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be determined on a daily, monthly, or other basis, as determined by the General Partner using any permissible method under Code Section 706 and the Regulations thereunder; provided, however, that any adjustments to the Agreed 13 Value of a Partnership asset treated as gain or loss under paragraph (iii) of the definition of "Profits" and "Losses" or under Section 6.6.6.3 hereof shall be allocated only to those persons who were Interest Holders immediately before the event giving rise to such adjustment. 6.6.2. ALLOCATION OF PARTICULAR ITEMS. Except as otherwise provided in this Agreement, all items of Partnership income, gain, loss, deduction and any other allocations not otherwise provided for shall be divided among the Interest Holders in the same proportions as they share Profits or Losses, as the case may be, for the year. 6.6.3. TAX REPORTING. The Interest Holders are aware of the income tax consequences of the allocations made by this Article 6 and hereby agree to be bound by the provisions of this Article 6 in reporting their shares of Partnership income and loss for income tax purposes. 6.6.4. PROFIT SHARES. Solely for purposes of determining an Interest Holder's proportionate share of the Partnership's "excess nonrecourse liabilities," as defined in Regulations Section 1.752-3(a), the Interest Holders' interests in Partnership profits shall be deemed to be in proportion to their respective shares of Profits set forth in Section 6.1. 6.6.5. MINIMUM ALLOCATIONS TO GENERAL PARTNER. Notwithstanding the preceding provisions of this Article 6, other than Sections 6.3. and 6.4, the General Partner shall be allocated not less than one percent of each item of income, gain, deduction or loss of the Partnership for each Allocation Year. 6.6.6. BOOK ITEMS USED IN SPECIAL ALLOCATIONS. For purposes of determining the Partnership's items of income, gain, loss or deduction for any Allocation Year available to be allocated pursuant to Sections 6.4, 6.5 and 6.6.5 hereof, the following rules shall be applied: 6.6.6.1. Any income of the Partnership that is exempt from federal income tax shall be taken into account as an item of income; 6.6.6.2. Any Nondeductible Expenditure of the Partnership shall be taken into account as an item of deduction; 6.6.6.3. In the event the Agreed Value of any Partnership asset is adjusted pursuant to paragraph (ii) or paragraph (iii) under the definition herein of "Agreed Value," the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset; 6.6.6.4. Gain or loss resulting from any disposition of Partnership property with respect to which gain or loss is recognized for federal 14 income tax purposes shall be computed by reference to the Agreed Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Agreed Value; 6.6.6.5. In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing the Partnership's taxable income or loss there shall be taken into account Depreciation for such Allocation Year; and 6.6.6.6. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) is required, pursuant to Regulations Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of an Interest Holder's interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) from the disposition of such asset. 6.7. TAX ALLOCATIONS; CODE SECTION 704(c). 6.7.1. GENERALLY. An Interest Holder's allocable share of the Partnership's items of income (including income exempt from tax), gain, deduction, loss and Nondeductible Expenditure for tax purposes shall be determined under the foregoing provisions of this Article 6 except as provided in this Section 6.7. 6.7.2. CONTRIBUTED PROPERTY. In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the Partnership shall, solely for tax purposes, be allocated among the Interest Holders so as to take account of any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its initial Agreed Value, determined in accordance with the definition of Agreed Value hereunder. 6.7.3. ADJUSTMENTS TO AGREED VALUE. If the Agreed Value of any Partnership asset is adjusted pursuant to the definition of Agreed Value hereunder, subsequent allocations of income, gain, loss and deduction with respect to such asset for tax purposes shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Agreed Value in the same manner as under Code Section 704(c) and the Regulations thereunder. 6.7.4. ELECTIONS. Any elections or other decisions relating to allocations pursuant to this Section 6.7 shall be made by the General Partner in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 6.7 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Interest Holder's 15 Capital Account or share of Profits, Losses, other items or distributions pursuant to any provision of this Agreement. ARTICLE 7. TAX MATTERS 7.1. PREPARATION OF TAX RETURNS. The General Partner shall arrange for the preparation and timely filing of all returns of Partnership income, gains, losses, deductions, credits, and other items necessary for federal, state and local income tax purposes and shall use reasonable best efforts to furnish to the Interest Holders within ninety days after the close of each taxable year of the Partnership the tax information reasonably required for federal, state and local income tax reporting purposes. The classification, realization, and recognition of income, gains, losses, deductions, credits, and other items shall be on the accrual method of accounting for federal income tax purposes, unless the General Partner shall elect otherwise in its sole discretion in accordance with applicable law. The General Partner shall not change the method of accounting initially elected by the Partnership (except if required to do so by law) without the prior written consent of a Majority Interest. 7.2. TAX ELECTIONS. Except as provided in Section 7.1, the General Partner shall, in its sole discretion, determine whether to make any election available under the Code or any other applicable taxing statute; provided, however, (i) that the General Partner shall not make an election to adjust the basis of property pursuant to Code Sections 754, 734(b) and 743(b), or comparable provisions of state or local law, without the prior written consent of a Majority Interest and shall make such election if requested to do so by a Majority Interest, and (ii) the General Partner shall not extend the statute of limitations for assessment of tax deficiencies against the Interest Holders with respect to adjustments to the Partnership's federal, state or local tax returns unless the Limited Partners unanimously vote for such extension. 7.3. TAX CONTROVERSIES. The General Partner is designated as the Tax Matters Partner (as defined in section 6231 of the Code) and is authorized and required to represent the Partnership (at the Partnership's expense) in connection with all examinations of the Partnership's affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend Partnership funds for professional services and costs associated therewith. Each of the Interest Holders agrees to cooperate with the General Partner and to do or refrain from doing any and all things reasonably required by the General Partner to conduct such proceedings. ARTICLE 8. BUSINESS MANAGEMENT AND OPERATION; INDEMNIFICATION 8.1. POWERS OF GENERAL PARTNER. Except as otherwise expressly provided in this Agreement, all powers to control and manage the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner 16 shall have any right or power to control or manage the business and affairs of the Partnership. Except as otherwise expressly provided in this Agreement, in addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law, or which are granted to the General Partner under any other provisions of this Agreement, the General Partner is hereby authorized and empowered, in the name of and on behalf of the Partnership, to do and perform any and all acts and things that it deems appropriate or necessary in the conduct of the business and affairs of the Partnership, including, without limitation, the following (but subject to the restrictions set forth in the following), but only in furtherance of the purposes of the Partnership and for the benefit of the Partnership: 8.1.1. To lend money and, without recourse to the Partners: to borrow money, to assume, guarantee, or otherwise become liable for indebtedness and other liabilities, and to issue evidences of indebtedness and, in connection therewith, to authorize confession of judgment against the Partnership; 8.1.2. To buy, lease (as lessor or lessee), sell, mortgage or encumber (without personal recourse to the Partners), or otherwise acquire or dispose of any or all of the assets of the Partnership; 8.1.3. To invest the assets of the Partnership; 8.1.4. To purchase and sell products, services, and supplies; 8.1.5. To make tax, regulatory, and other filings with, and to render periodic and other reports to, governmental agencies or bodies having jurisdiction over the assets or business of the Partnership; 8.1.6. To open, maintain, and close bank accounts and to draw checks and other orders for the payment of money; 8.1.7. To negotiate, execute, and perform any contracts, conveyances, or other instruments; 8.1.8. To distribute cash and other property of the Partnership in accordance with the provisions of this Agreement; 8.1.9. To utilize the services of employees of the General Partner and of any other Persons and to select and dismiss employees (if any) and outside attorneys, accountants, consultants, and contractors; 8.1.10. To maintain insurance for the benefit of the Partnership and the Partners; 17 8.1.11. To form, participate in, or contribute or loan cash or property to limited or general partnerships, joint ventures, corporations, or similar arrangements in which, in all cases the Partnership shall have an ownership interest; 8.1.12. To expand the business activities in which the Partnership is engaged or engage in new business activities by acquisition or internal development; 8.1.13. To conduct litigation and incur legal expenses and otherwise deal with or settle claims or disputes; and 8.1.14. To purchase or otherwise acquire Partnership Interests from, or sell or otherwise or dispose of Partnership Interests to, Persons other than the Partnership; in each case at such times and upon such terms and conditions as the General Partner deems appropriate or necessary, and subject to any express restrictions contained elsewhere in this Agreement. 8.2. DUTIES OF GENERAL PARTNER. The General Partner shall manage the business and affairs of the Partnership in the manner that the General Partner deems appropriate or necessary. Without limiting the generality of the foregoing, the General Partner's duties shall include the following: 8.2.1. To take possession of the assets of the Partnership; 8.2.2. To staff and operate the business of the Partnership; 8.2.3. To perform or cause to be performed financial, accounting, logistical, and other administrative functions for the Partnership; 8.2.4. To render such reports and make such periodic and other filings as may be required under applicable federal, state, and local laws, rules, and regulations; 8.2.5. To provide or cause to be provided purchasing, procurement, repair, and other services for the Partnership; and 8.2.6. To conduct the business of the Partnership in accordance with this Agreement and all applicable laws, rules, and regulations; in each case in such a manner as the General Partner deems appropriate or necessary. 18 8.3. PROHIBITED ACTIONS AND ACTIONS REQUIRING LIMITED PARTNER APPROVAL. Notwithstanding any other provisions of this Agreement to the contrary the General Partner shall not take any of the following actions without the prior consent of all of the Partners: 8.3.1. Change the nature of the Partnership business or the purpose of the Partnership set forth in Section 2.7; 8.3.2. Amend the provisions contained in Articles 5 or 6; 8.3.3. Amend the provisions of this Section 8.3 or the definitions of the defined terms used herein; 8.3.4. Terminate or dissolve the Partnership (except for terminations or dissolutions by reason of the circumstances described in Article 12); 8.3.5. Take any action or cause the Partnership to take action that could cause the Partnership not to be recognized as a partnership for federal income tax purposes; or 8.3.6. Admit to the Partnership any additional or successor Partners or recognize the validity of any attempted transfer of an interest in the Partnership except in accordance with the provisions of Article 10. The foregoing rights granted to each Partner in this Section 8.3 shall include only the right to grant or withhold consent to any of the foregoing actions that are initiated or proposed by the General Partner and each Partner shall have no right to require the General Partner to take any such action. If any consent of any Partner with respect to any course of action to be taken or not taken by the Partnership is requested, such consent shall not be unreasonably denied or withheld; and if such Partner shall not respond within fifteen (15) days after receipt of such request, such Partner shall be deemed to have given its consent pursuant to such request, and the other Partners (i) shall be entitled to take or refrain from taking any action in reliance thereon, and (ii) shall have no liability to such Partner as a result of such action or inaction. 8.4. REIMBURSEMENT OF THE GENERAL PARTNER. The General Partner shall be promptly reimbursed from the assets of the Partnership for all reasonable and proper expenses incurred on behalf of the Partnership. 8.5. PARTNERSHIP FUNDS. The funds of the Partnership shall be deposited in such account or accounts as shall be designated by the General Partner and shall not be commingled with the funds of the General Partner. All withdrawals from or charges against such accounts shall be made by the General Partner or by its agents. 19 8.6. OUTSIDE ACTIVITIES. 8.6.1. The General Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, for its own account and for the account of others, without having or incurring any obligation to offer any interest in such businesses or activities to the Partnership or any Partner. Neither the Partnership nor any of the Partners shall have any rights by virtue of this Agreement or the Partnership relationship created hereby in any such business interests. 8.6.2. The General Partner may lend to the Partnership funds needed by the Partnership on such terms and for such periods of time as the General Partner may determine; provided, however, that the General Partner may not charge the Partnership an effective rate of interest (including points or other financing charges or fees) greater than the effective rate of interest (including points or other financing charges or fees) that would be charged to the Partnership by unrelated lenders on loans with comparable terms. The Partnership shall reimburse the General Partner for any costs reasonably incurred by the General Partner in connection with the borrowing of funds obtained by the General Partner and loaned to the Partnership. 8.7. LIMITED LIABILITY; INDEMNIFICATION. The General Partner will not be liable to the Partnership or the Limited Partners for any act or omission by the General Partner pursuant to the authority granted to it by this Agreement, except by reason of fraud, bad faith, willful misfeasance, gross negligence or any act in breach of this Agreement. The General Partner will indemnify and save harmless the Partnership and the Limited Partners from any loss or liability arising out of its fraud, bad faith, willful misfeasance, gross negligence or breach of this Agreement. The Partnership will indemnify and save harmless the General Partner from any loss or liability incurred by the General Partner by reason of any act performed by the General Partner on behalf of the Partnership or in furtherance of the Partnership's interest other than by reason of the General Partner's fraud, bad faith, willful misfeasance, negligence or breach of this Agreement. In the event the General Partner is found personally liable for any debts of the Partnership (other than any debt or liability incurred by reason of the General Partner's fraud, bad faith, willful misfeasance, negligence or breach of this Agreement) and is required to and does satisfy a Partnership liability out of its personal assets, the General Partner will have a right of reimbursement out of the assets of the Partnership (the "Right of Reimbursement"). The Right of Reimbursement will accrue to the General Partner 30 days after written notice thereof is given to each of the other Partners. Upon such accrual of the Right of Reimbursement, the General Partner will be reimbursed out of the assets of the Partnership in the following order of priority, but only to the extent necessary to satisfy such Right of Reimbursement: (i) out of the amounts then available for distribution to Interest Holders pursuant to Section 5.1 or Section 12.2; (ii) out of funds obtained by the Partnership from unsecured borrowings by the Partnership without recourse to any Partner; (iii) out of funds obtained by the 20 Partnership from sale or refinancing of the assets of the Partnership; and (iv) out of funds obtained by the Partnership in any other manner; provided, however, that before any such sale or refinancing is consummated, the General Partner will have endeavored to obtain funds in the form of loans to the Partnership from the Limited Partners in an amount sufficient to reimburse the General Partner; and, provided further, that in the event the General Partner is to be reimbursed out of the proceeds of a proposed sale or refinancing of the assets of the Partnership, the General Partner will give 90 days prior written notice of any such proposed sale or refinancing to each of the other Partners. If sufficient funds described in clauses (i) or (ii) of the preceding sentence are obtained and used by the Partnership to reimburse the General Partner prior to the expiration of such 90-day period, such proposed sale or refinancing will not be consummated unless all of the Partners consent thereto. To the extent not reimbursed as provided above, the General Partner will have no right of contribution from the Limited Partners. 8.8. BOOKS, RECORDS, AND ACCOUNTING. 8.8.1. The General Partner shall keep or cause to be kept books and records with respect to the Partnership's business, which books and records shall at all times be kept at the principal office of the Partnership. The books of the Partnership shall be maintained, for financial reporting purposes, under an accounting method that is consistent with the accounting method selected under Section 7.1 for federal income tax purposes. 8.8.2. The Partnership shall also keep at its principal office the following items: (i) a current list of the full name and last known business address or home address of each Partner; (ii) a copy of the Certificate and all certificates of amendment thereto, together with executed copies of any powers of attorney pursuant to which any certificate has been executed; (iii) copies of the Partnership's federal, state, and local income tax returns and reports, if any, for all Fiscal Years since inception of the Partnership; and (iv) copies of the then effective Partnership Agreement and of any financial statements of the Partnership for the three most recent years. 8.9. FISCAL YEAR; TAXABLE YEAR. The fiscal year of the Partnership for financial accounting purposes and the taxable year of the Partnership for income tax purposes shall be the Fiscal Year, unless the General Partner shall determine otherwise in its sole discretion in accordance with applicable law. 21 ARTICLE 9. LIMITED PARTNER RIGHTS AND OBLIGATIONS 9.1. LIMITATION OF LIABILITY. No Limited Partner shall have liability for the debts, obligations, or liabilities of the Partnership. 9.2. MANAGEMENT OF BUSINESS. A Limited Partner shall not, in its capacity as a Limited Partner, take part in the operation, management, or control (within the meaning of the Act) of the Partnership's business, transact any business in the Partnership's name, or have the power to sign documents for or otherwise bind the Partnership. 9.3. OUTSIDE ACTIVITIES. A Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership. Neither the Partnership nor any of the other Partners shall have any rights by virtue of this Agreement or the Partnership relationship created hereby in any business ventures of any Limited Partner. 9.4. RETURN OF CAPITAL. A Limited Partner shall not be entitled to the withdrawal or return of its Capital Contributions, except to the extent provided for in this Agreement. 9.5. RIGHTS OF LIMITED PARTNERS. In addition to other rights provided by this Agreement or by applicable law, a Limited Partner shall have the right, upon reasonable demand, during ordinary business hours, and at the Limited Partner's own expense: (a) to inspect and copy any of the Partnership's records maintained pursuant to Section 8.8.2; (b) to obtain from the General Partner true and full information regarding the state of the business and financial condition of the Partnership; (c) promptly after becoming available, to receive a copy of the Partnership's federal, state, and local income tax returns for each year; and (d) to obtain such other information from the General Partner regarding the affairs of the Partnership as is just and reasonable. 22 ARTICLE 10. TRANSFERS OF INTERESTS 10.1. GENERAL PARTNER. 10.1.1. VOLUNTARY TRANSFERS AND WITHDRAWALS. The General Partner shall not voluntarily resign or dissolve, or withdraw, transfer, sell, assign or pledge all or any part of its GP Interest without the prior written consent of all of the Limited Partners, which may be withheld in their discretion. The withdrawing, transferring, selling or assigning General Partner who has received the prior written consent of the Limited Partners to the withdrawal, transfer, sale or assignment of all of its GP Interest, shall cease to be the General Partner upon (i) the withdrawal, transfer, sale or assignment of all of its GP Interest and (ii) the filing, in accordance with the provisions of the Act, of an appropriate certificate of amendment to the Certificate. The General Partner who withdraws, transfers, sells or assigns any portion, but less than all, of its GP Interest with the consent of the Limited Partners, shall continue to be the General Partner of the Partnership. If the General Partner does resign or dissolve, or withdraw, transfer, sell or assign all or any part of its GP Interest without the prior written consent of the Limited Partners, the remaining Partners may proceed in accordance with the provisions of Section 12.1 hereof to continue the business of the Partnership. If the General Partner shall request the Limited Partners' consent to a sale of all (but not less than all) of its GP Interest pursuant to a bona fide written offer to purchase such interest on a date (the "Proposed Purchase Date") that follows such request by not less than 90 days and the Limited Partners shall withhold such consent, and if the General Partner shall furnish to the Partnership an opinion of counsel, which counsel and opinion shall be satisfactory to the Limited Partners, that such sale will not cause the Partnership to terminate for federal income tax purposes or to be classified as an association taxable as a corporation for federal income tax purposes, then the General Partner shall (except in connection with the dissolution of the Partnership) have the option to require, subject to the proviso below, that the Limited Partners (ratably in proportion to their respective Percentage Interests) or another willing Person designated by a Majority Interest purchase the GP Interest for an amount equal to the purchase price set out in such written offer, and payable on the same terms contained in such written offer; provided, however, that the Limited Partners (or such other purchaser designated by a Majority Interest) may elect instead to purchase the GP Interest on the last day of the calendar month that includes the Proposed Purchase Date for a cash purchase price (payable, if the Limited Partners are the purchasers, ratably by the Limited Partners in proportion to their respective Percentage Interests) equal to the positive balance, if any, in the Capital Account of the General Partner as determined by closing the books of the Partnership on the last day of such calendar month and payable within 30 days after the end of such calendar month. 10.1.2. INVOLUNTARY TRANSFERS. The successor in interest to the General Partner by reason of the dissolution, liquidation or other termination of the General Partner shall have the rights of an assignee to receive only (i) the allocations of Profits, Losses and other items of Partnership income, gain, deduction, loss and credit, 23 (ii) and the distributions of money or other property to which the General Partner would have been entitled under the provisions of this Agreement. If, following such dissolution, liquidation or other termination of the General Partner, the Partnership has been continued pursuant to Section 12.1, and all of the remaining Partners consent thereto (which consent may be withheld for any reason), an appropriate amendment to this Agreement is executed and an appropriate amendment to the Certificate is executed and filed, and the successor in interest to the General Partner agrees to be bound by all of the obligations of the General Partner hereunder, such successor in interest may be admitted to the Partnership as a substitute General Partner. 10.1.3. PROHIBITED TRANSFERS. Any purported Transfer of a GP Interest in the Partnership that is not authorized pursuant to this Agreement shall be null and void and of no effect whatever. 10.2. LIMITED PARTNERS. 10.2.1. IN GENERAL. Except as hereinafter provided, no Limited Partner may Transfer all or any part of its LP Interest. 10.2.2. PERMITTED TRANSFERS. Subject to the conditions and restrictions set forth in Section 10.2.3 hereof, a Limited Partner may at any time Transfer all or any portion of its interest in the Partnership (a) to any Limited Partner, , or (b) subject to the prior written consent of the General Partner, which may be withheld in its discretion, to any Purchaser (any such Transfer being referred to in this Agreement as a "Permitted Transfer"). 10.2.3. CONDITIONS TO PERMITTED TRANSFERS. A Transfer shall not be treated as a Permitted Transfer under Section 10.2.2 hereof unless and until the following conditions are satisfied (except to the extent that a General Partner shall waive any or all of such conditions): 10.2.3.1. The transferor and transferee shall execute and deliver to the Partnership such documents and instruments of conveyance as may be necessary or appropriate in the opinion of counsel to the Partnership to effect such Transfer and to confirm the agreement of the transferee to be bound by the provisions of this Section 10. In any case not described in the preceding sentence, the Transfer shall be confirmed by presentation to the Partnership of legal evidence of such Transfer, in form and substance satisfactory to counsel to the Partnership. In all cases, the Partnership shall be reimbursed by the transferor and/or transferee for all costs and expenses that it reasonably incurs in connection with such Transfer. 10.2.3.2. The transferor shall furnish to the Partnership an opinion of counsel, which counsel and opinion shall be satisfactory to the Partnership, that the Transfer will not cause the Partnership to terminate for federal income tax purposes. 24 10.2.3.3. The transferor and transferee shall furnish the Partnership with the transferee's taxpayer identification number, sufficient information to determine the transferee's initial tax basis in the interests transferred, and any other information reasonably necessary to permit the Partnership to file all required federal and state tax returns and other legally required information statements or returns. Without limiting the generality of the foregoing, the Partnership shall not be required to make any distribution otherwise provided for in this Agreement with respect to any transferred interests until it has received such information. 10.2.3.4. The transferor shall provide an opinion of counsel, which opinion and counsel shall be satisfactory to the Partnership, to the effect that such Transfer is exempt from all applicable registration requirements and that such Transfer will not violate any applicable laws regulating the Transfer of securities. 10.2.4. PROHIBITED TRANSFERS. Any purported Transfer of an LP Interest that is not a Permitted Transfer shall be null and void and of no effect whatever. ARTICLE 11. ADDITIONAL PARTNERS The General Partner may admit additional or substitute Partners to the Partnership only in accordance with the Act and only with the prior consent of each Partner, which consent may be withheld for any reason. Upon such an admission of any substitute or additional Partner, the General Partner shall cause to be properly prepared, filed and executed: (i) pursuant to the Act any amendment of the Certificate that is required by the Act by reason of such admission and (ii) any amendment to any registration, certificate or other document required by any State by reason of such admission. ARTICLE 12. DISSOLUTION AND LIQUIDATION 12.1. DISSOLUTION. The Partnership shall be dissolved, and its affairs shall be wound up, upon the first to occur of any of the following events (each a "Dissolution Event"): 12.1.1. the expiration of its term as provided in Section 2.5; 12.1.2. the withdrawal or bankruptcy of the General Partner or any other event that results in a General Partner ceasing to be a general partner in the Partnership under the Act, provided that any such event shall not constitute a Dissolution Event if the Partnership is continued pursuant to this Section 12.1; 12.1.3. a written election by all Limited Partners; 25 12.1.4. the sale of all or substantially all of the properties of the Partnership; or 12.1.5. the occurrence of any other event that makes it unlawful, impossible or impractical to carry on the business of the Partnership; provided, however, that upon the occurrence of any event set forth in Section 12.1.2, the Partnership shall not be dissolved or required to be wound up if within one hundred eighty (180) days after such event a Majority Interest of the remaining Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such event, of a successor General Partner. For purposes of this Section 12.1, bankruptcy of the General Partner shall be deemed to have occurred when the General Partner: (i) makes an assignment for the benefit of creditors; (ii) files a voluntary petition in bankruptcy; (iii) is adjudged bankrupt or insolvent; (iv) files an application or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition or application filed against it in any proceeding of a type referred to in clause (ii) or (iv); or (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the General Partner or of all or any substantial part of its properties. In addition, for purposes of this Section 12.1, bankruptcy of the General Partner shall be deemed to have occurred if within 120 days after the commencement of any proceeding against the General Partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation the proceeding has not been dismissed or if within 90 days after the appointment without its consent or acquiescence of a trustee, receiver or liquidator of the General Partner or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated. 12.2. LIQUIDATION. Upon dissolution of the Partnership, the then General Partner, or in the event the General Partner has withdrawn from the Partnership or become bankrupt (as defined in Section 12.1), a liquidator or liquidating committee approved by a Majority Interest, shall be the liquidator of the Partnership (the "Liquidator"). The Liquidator shall be entitled to receive such compensation for its services as may be approved by a Majority Interest. The Liquidator shall not resign at any time without fifteen days' prior written notice and, if other than the General Partner, may be removed at any time, with or without cause, by notice of removal approved by a Majority Interest. Upon dissolution, resignation, or removal of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers, and obligations of the original Liquidator) shall, within thirty days thereafter, be approved by a Majority Interest. Except as expressly provided in this Article 12, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or approval of any of the parties hereto, all of the powers conferred upon 26 the General Partner under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers) to the extent appropriate or necessary in the good faith judgment of the Liquidator to carry out the duties and functions of the Liquidator hereunder for and during such period of time as shall be reasonably required in the good faith judgment of the Liquidator to complete the winding-up and liquidation of the Partnership as provided for herein. The Liquidator shall liquidate the assets of the Partnership and apply and distribute the proceeds of such liquidation in the following order and priority, to the maximum extent permitted by law: 12.2.1. First, to pay the costs and expenses of the winding up, liquidation and termination of the Partnership; 12.2.2. Then, to creditors of the Partnership (including Interest Holders to the extent permitted by law) in satisfaction of the Company's known debts and liabilities (whether by payment or the making of provision for the known amount thereof); 12.2.3. Then, to establish reserves adequate to meet any and all contingent or unforeseen liabilities or obligations of the Partnership, provided that at the expiration of such period of time as the Liquidator may deem advisable, the balance of such reserves remaining after the payment of such contingencies or liabilities shall be distributed as hereinafter provided; 12.2.4. Then, to the Interest Holders, in proportion to, and to the extent of, the positive balances in their respective Capital Accounts adjusted pursuant to Article 6 to reflect (i) their respective distributive shares of the income, gain, loss, and deduction of the Partnership for the taxable year of the Partnership in which the distribution in liquidation occurs up through and including the date of distribution and (ii) all distributions made to the Interest Holders during such taxable year up to but not including such date. 12.2.5. The balance, if any, to the Partners in proportion to their respective Partnership Interests. 12.3. DISTRIBUTION IN KIND. Notwithstanding the provisions of Section 12.2 requiring the liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if on dissolution of the Partnership the Liquidator determines that an immediate sale of part or all of the Partnership's assets would be impractical or would cause undue loss to the Partners, the Liquidator may, in its sole discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership and may, in its sole discretion, distribute to the Partners, as tenants in common, in lieu of cash, and as their interests may appear in accordance with the provisions of Section 12.2.2, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation; provided, however, that the Liquidator must comply with the liquidating distribution timing requirements of Section 12.7 hereof. 27 Any distributions in kind shall be subject to such conditions relating to the disposition and management thereof as the Liquidator deems reasonable and equitable. By way of clarification, for purposes of determining the Interest Holders' respective shares of income, gain, loss, and deduction of the Partnership for the taxable year of the Partnership in which the distribution in liquidation occurs and of adjusting the Capital Accounts of the Interest Holders therefor in accordance with Section 12.2.2 and Article 6, the definitions herein of "Agreed Value" and "Profits" and "Losses" require that Partnership assets to be distributed in kind shall be considered to have been first sold at their fair market values (taking Code Section 7701(g) into account) and the Profits or Losses deemed realized therefrom shall be allocated among the Interest Holders as if an actual sale had occurred, and the Capital Accounts of the Interest Holders shall be adjusted to reflect such allocation in accordance with Article 6. The fair market value of any property distributed in kind shall be the value determined by an appraiser selected by a Majority Interest unless the Partners agree as to such fair market value. 12.4. CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. Upon the completion of the distribution of Partnership property pursuant to Sections 12.2 and 12.3, the Partnership shall be terminated, and the Liquidator (or the Limited Partners if necessary) shall cause the cancellation of the Certificate and all qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the Commonwealth of Pennsylvania and shall take such other actions as may be necessary to terminate the Partnership. 12.5. NO GENERAL PARTNER LIABILITY FOR RETURN OF CAPITAL. No General Partner shall be personally liable for the return of the Capital Contributions of the Limited Partners, or any portion thereof, it being expressly understood that any such return shall be made solely from Partnership assets. 12.6. WAIVER OF PARTITION. Each Partner hereby waives any rights to partition of the Partnership's property. 12.7. COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. In the event that the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(G), then (a) distributions shall be made pursuant to Section 12.2 to the Interest Holders who have positive Capital Accounts in compliance with the timing requirements of Regulations Section 1.704-1(b)(2)(ii)(B)(2); provided, however, that the Liquidator may exercise the discretion set forth in Section 12.2.2. If any Interest Holder has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Interest Holder shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever. 12.8. NON-DISSOLVING CODE SECTION 708(B) TERMINATIONS. Notwithstanding any other provision of this Section 12, in the event that the Partnership 28 is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Dissolution Event has occurred, the Partnership's assets shall not be liquidated, the Partnership's liabilities shall not be paid or discharged, and the Partnership's affairs shall not be wound up. 12.9. ALLOCATIONS DURING THE PERIOD OF LIQUIDATION. Until the date on which all of the assets of the Partnership have been distributed to the Interest Holders pursuant to Section 12.2 hereof, the Interest Holders shall continue to share Profits, Losses and other items of Partnership income, gain, deduction and loss as provided in Article 6 hereof. ARTICLE 13. AMENDMENT OF AGREEMENT Amendments to this Agreement may be proposed by any Partner. A proposed amendment shall be effective only when approved in writing by the General Partner and a Majority Interest unless the consent of all Partners is unambiguously required by the Act. ARTICLE 14. GENERAL PROVISIONS 14.1. PERSONAL PROPERTY. The Partnership Interest of any Partner shall be personal property for all purposes. 14.2. ADDRESSES AND NOTICES. Any notice, demand, request, payment, or report required or permitted to be given or made to a Limited Partner under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class mail or by other means of written communication to such Partner at such Partner's address as shown on the signature page or pages hereof or to such other address as such Partner may specify for the purpose by notice to the General Partner given in accordance with this Section 14.2. Any notice to the Partnership or the General Partner shall be deemed given if received in writing by the General Partner at the General Partner's address as shown on the signature page or pages hereof or to such other address as the General Partner may specify for the purpose by notice to each Limited Partner in accordance with this Section 14.2. 14.3. HEADINGS. All article or section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof 14.4. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the parties hereto (including the additional Persons that become Partners as provided herein) and their heirs, executors, administrators, successors, legal representatives, and assigns. 29 14.5. INTEGRATION. This Agreement constitutes the entire Agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. 14.6. WAIVER. No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or of any other covenant, duty, agreement, or condition. 14.7. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on the parties hereto including the additional Persons that become Interest Holders as provided herein. 14.8. SEVERABILITY. If any provision of this Agreement is or becomes invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions hereof, or of such provision in other respects, shall not be affected thereby. 14.9. APPLICABLE LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania, without reference to principles of choice of law or choice of forum. * * * 30 IN WITNESS WHEREOF, this Agreement of Limited Partnership of EME Homer City Generation L.P. has been duly executed and entered into by the General Partner and the Limited Partner on the date first above written. GENERAL PARTNER MISSION ENERGY WESTSIDE 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 By: /s/ James V. Iaco, Jr. --------------------------------- Name: James V. Iaco, Jr. Its: President LIMITED PARTNER CHESTNUT RIDGE ENERGY COMPANY 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 By: /s/ James V. Iaco, Jr. --------------------------------- Name: James V. Iaco, Jr. Its: President 31 SCHEDULE A INITIAL CAPITAL CONTRIBUTION/PERCENTAGE INTEREST
CAPITAL PERCENTAGE NAME INTEREST CONTRIBUTION INTEREST Mission G.P. ----------------- ---------------- Chestnut Ridge L.P. ----------------- ----------------
EX-4.1 15 EXHIBIT 4.1 Exhibit 4.1 INDENTURE dated as of May 27, 1999 among Edison Mission Holdings Co., a California corporation (the "COMPANY") and United States Trust Company of New York, as trustee (the "TRUSTEE"). The Company and the Trustee agree as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the 8.137% Senior Secured Bonds due 2019 (the "INITIAL SERIES A Bonds") and the 8.734% Senior Secured Bonds due 2026 (the "INITIAL SERIES B BONDS" and, together with the Initial Series A Bonds, the "INITIAL BONDS") and, if and when issued in the Exchange Offer, the 8.137% Senior Secured Bonds due 2019 (the "NEW SERIES A BONDS") and the 8.734% Senior Secured Bonds due 2026 (the "NEW SERIES B BONDS" and, together with the New Series A Bonds, the "NEW BONDS" and, together with the New Series A Bonds and the Initial Bonds, the "BONDS"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFENCE 1.1 SECTION DEFINITIONS "ACCEPTABLE CREDIT PROVIDER" means a bank or trust company with a combined capital and surplus of at least $1 billion whose long term unsecured debt is rated "A2" or higher by Moody's or "A" or higher by S&P. "ACCEPTABLE CREDIT SUPPORT" means (i) an unconditional guarantee by EME or any other Affiliate of the Company, with such entity in each case being rated "Baa1" or higher by Moody's and "BBB+" or higher by S&P or (ii) an irrevocable letter of credit from an Acceptable Credit Provider. In the event of a downgrade of any Acceptable Credit Provider by Moody's or S&P to below the minimum criteria specified above, substitute Acceptable Credit Support must be provided within 30 days of such event. Otherwise, the Trustee shall draw down the then outstanding amount of the Acceptable Credit Support and deposit such monies into the Bond Debt Service Reserve Account. "ACCRUED INTEREST ACCOUNT" has the meaning set forth in the Security Deposit Agreement. "AFFILIATE" means, with respect to any specified Person, any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person. A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "AGENT" means any Registrar, Paying Agent, co-registrar, authenticating agent or securities custodian. 2 "APPLICABLE PROCEDURES" means, with respect to any transfer or exchange of or for beneficial interests in any Global Bond, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "BENEFICIAL OWNER" means any person who holds a beneficial ownership interest in a Bond. "BOARD OF DIRECTORS" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board of Directors. "BOARD RESOLUTION" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person or the general partner, in the case of a limited partnership, of such Person (or, if such Person is a partnership, one of its general partners) to have been duly adopted by the Board of Directors of such Person or the general partner, in the case of a limited partnership, of such Person (or, if such Person is a partnership, one of its general partners) and to be in full force and effect on the date of such certification, and delivered to the Trustee. "BOND DEBT SERVICE RESERVE ACCOUNT" means the Debt Service Reserve Account established by the Collateral Agent for the benefit of Holders pursuant to the Security Deposit Agreement. "BOND DEBT SERVICE RESERVE REQUIREMENT" has the meaning set forth in Section 4.20 hereof. "BONDS" has the meaning set forth in the preamble to this Indenture. "BUSINESS DAY" means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. "CAPITAL LEASE OBLIGATION" means, as to any Person, all monetary obligations of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of the Indenture, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP. "CAPITAL STOCK" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, and any and all equivalent ownership interests in a Person (other than a corporation). "CASH EQUIVALENTS" means, at any time: (i) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States 4 Government or an agency thereof; (ii) other investments in securities or bank instruments rated at least "A" by S&P and "A2" by Moody's or "A-1" by S&P and "P-1" by Moody's and with maturities of less than 366 days; or (iii) other securities as to which the Company has demonstrated, to the satisfaction of the Trustee, adequate liquidity through secondary markets or deposit agreements. "CEDEL" means Cedelbank. "CHANGE OF CONTROL" means the reduction in EME's direct or indirect beneficial ownership in the Company to less than 50% at any time unless at such time either (i) the Bonds are rated at least Investment Grade by each Rating Agency then rating the Bonds and a Ratings Reaffirmation is obtained or (ii) the reduction in EME's voting interest has been approved by a vote of more than 66-2/3% of the Holders. "CLOSING DATE" means the date of issuance and delivery of the Initial Bonds. "COLLATERAL AGENT" has the meaning set forth in the Security Deposit Agreement. "COLLATERAL" means the collective reference to all assets, whether now owned or hereafter acquired, upon which a Lien is created or granted from time to time pursuant to any Security Document. "COMMISSION" means the United States Securities and Exchange Commission. "COMPANY" has the meaning set forth in the preamble to this Indenture. "CONSUMER PRICE INDEX" means the consumer price index as published by the United States Department of Labor, Bureau of Labor Statistics. "CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the Trustee specified in Section 10.2 hereof or such other address as to which the Trustee may give notice to the Company. "CREDIT AGREEMENT" has the meaning set forth in the Security Deposit Agreement. "CUSTODIAN" means the Trustee, as custodian with respect to the Bonds in global form, or any successor entity thereto. "DEBT SERVICE COVERAGE RATIO" means, for any period, a ratio the numerator of which is Net Cash Flow for such period, and the denominator of which is the aggregate of all principal, interest and other fixed charges payable during such period on the Bonds or on other Permitted Indebtedness which is PARI PASSU with the Bonds. 4 "DEBT SERVICE RESERVE ACCOUNTS" has the meaning set forth in the Security Deposit Agreement. "DEBT SERVICE RESERVE REQUIREMENT" has the meaning set forth in the Security Deposit Agreement. "DEFAULT" means an event or condition that, with the giving of notice or the lapse of time, or both, would become an Event of Default. "DEFINITIVE BOND" means a certificated Bond registered in the name of the Holder thereof and issued in accordance with Section 2.6 hereof, in the form of Exhibit A-1 hereto except that such Bond shall not bear the Global Bond Legend and shall not have the "Schedule of Exchanges of Interests in the Global Bond" attached thereto. "DEPOSITARY" means, with respect to the Bonds issuable or issued in whole or in part in global form, the Person specified in Section 2.3 hereof as the Depositary with respect to the Bonds, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "DSR LETTER OF CREDIT INDEBTEDNESS" has the meaning set forth in the Security Deposit Agreement. "DUFF & PHELPS" means Duff & Phelps Credit Rating Co. "EME" means Edison Mission Energy, a California corporation. "EME HOMER CITY" means EME Homer City Generation L.P., a Pennsylvania limited partnership. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE OFFER" has the meaning set forth in the Registration Rights Agreement. "EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in the Registration Rights Agreement. 5 "FACILITIES" means the Homer City Electric Generating Station and certain facilities and other assets associated therewith and ancillary thereto. "FINANCING DOCUMENTS" has the meaning set forth in the Security Deposit Agreement. "GAAP" means generally accepted accounting principles as in effect in the United States from time to time. "GLOBAL BONDS" means, individually and collectively, each of the Restricted Global Bonds and the Unrestricted Global Bonds, in the form of Exhibit A hereto issued in accordance with Section 2.1, 2.6(b)(iv), 2.6(d)(ii) or 2.6(f) hereof. "GLOBAL BOND LEGEND" means the legend set forth in Section 2.6(g)(ii), which is required to be placed on all Global Bonds issued under this Indenture. "GOVERNMENT SECURITIES" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "GOVERNMENTAL AUTHORITY" means any nation or government, any state, provincial or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "HEDGING OBLIGATIONS" means, with respect to any Person, the net payment Obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements in the ordinary course of business and pursuant to past practices designed to protect such Person against fluctuations in commodity prices, interest rates or currency exchange rates. "HOLDER" means a Person in whose name a Bond is registered. "INDEBTEDNESS" of any Person means, without duplication: (i) all indebtedness for borrowed money; (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services which purchase price is due more than six months from the date of incurrence of the obligation in respect thereof or is evidenced by a note or other instrument, except trade accounts arising in the ordinary course of business; (iii) all reimbursement obligations with respect to surety bonds, letters of credit (to the extent not collateralized with cash or Cash Equivalents), bankers' acceptances and similar instruments (in each case, whether 6 or not matured); (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property); (vi) all Capital Lease Obligations; (vii) all Interest Rate Hedging Obligations; (viii) all indebtedness referred to in clauses (i) through (vii) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (ix) all contingent liabilities. "INDENTURE" means this Indenture, dated as of the Closing Date, between the Company and the Trustee. "INDEPENDENT ENGINEER" means Stone and Webster Management Consultants, Inc. or another nationally recognized independent engineering and consulting firm which, as Independent Engineer, will independently review the technical aspects of the project, analyze the contractual structure and create financial projections for the benefit of the Holders. "INDIRECT PARTICIPANT" means a Person who holds a beneficial interest in a Global Bond through a Participant. "INITIAL BONDS" has the meaning specified in the preamble hereto. "INITIAL PURCHASER" has the meaning set forth in the Registration Rights Agreement. "INITIAL SERIES A BONDS" has the meaning specified in the preamble hereto. "INITIAL SERIES B BONDS" has the meaning specified in the preamble hereto. "INTERCREDITOR AGREEMENT" has the meaning ascribed to the term "Collateral Agency and Intercreditor Agreement" in the Security Deposit Agreement. "INTEREST RATE HEDGING OBLIGATIONS" means, as to any Person, the net payment Obligations of all interest rate swaps, caps or collar agreements or similar arrangements entered into by such Person in order to protect against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, and, in any event, not for speculative purposes. "INVESTMENT GRADE" means "Baa3" with respect to Moody's, "BBB-" with respect to S&P and "BBB-" with respect to Duff & Phelps. 7 "INVESTMENTS" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of direct or indirect loans (including Guarantees of Indebtedness or other Obligations), advances of assets or capital contributions (excluding commission, travel and entertainment, moving and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Bonds for use by such Holders in connection with the Exchange Offer. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in any asset and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "MATERIAL ADVERSE EFFECT" means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (i) the business, assets, property, financial condition or operations of the Company and the Guarantors, taken as a whole, since the Closing Date or (ii) the ability of the Company or any Guarantor to perform its obligations under the Financing Documents. "MOODY'S" means Moody's Investors Service, Inc. "NET CASH FLOW" means, for any period, (i) all Revenues for such period, minus (ii) the sum of (a) all amounts paid by or on behalf of the Company and the Guarantors during such period in respect of fuel, administration, operation, maintenance, repairs and overhead, but excluding all subordinated payments made to Affiliates and capital expenditures which are funded with Permitted Indebtedness, plus (b) all taxes paid by the Company and the Guarantors during such period, plus (c) all fees paid by the Company and the Guarantors relating to financing activities during such period. "NEW BONDS" has the meaning set forth in the preamble to this Indenture. "NEW SERIES A BONDS" has the meaning set forth in the preamble to this Indenture. "NEW SERIES B BONDS" has the meaning set forth in the preamble to this Indenture. "NON-U.S. PERSON" means a Person who is not a U.S. Person. 8 "OBLIGATIONS" means any principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or any of the Guarantors whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereof. "OFFERING" means the offering of the Initial Bonds by the Company. "OFFICER" means, with respect to any Person, any Chairman of the Board, President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Senior Vice President, Vice President, Treasurer or Secretary of such Person. "OFFICER'S CERTIFICATE" means a certificate signed by an Officer of the Company. "144A GLOBAL BOND" means one or more global notes in the form of Exhibit A-l hereto bearing the Global Bond Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in an aggregate denomination equal to the outstanding principal amount of the Bonds sold in reliance on Rule 144A. "OPINION OF COUNSEL" means a written opinion of counsel for any Person either expressly referred to in the Indenture or otherwise reasonably satisfactory to the Trustee which may include, without limitation, counsel for the Company, whether or not such counsel is an employee of the Company. "ORDINARY COURSE LETTER OF CREDIT INDEBTEDNESS" has the meaning set forth in the Security Deposit Agreement. "PARTICIPANT" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Cedel). "PERMITTED INVESTMENTS" means (i) obligations issued or guaranteed as to principal and interest (including money market securities) by (a) the United States of America or (b) any agency thereof for which its obligations are backed by the full faith and credit of the United States of America, and certificates evidencing ownership of the right to the payment of the principal of and interest on such obligations, provided that such obligations are held in the custody of an Acceptable Credit Provider in a special account separate from the general assets of such custodian; (ii) certificates of deposit or other interest-bearing obligations of the Collateral Agent, an Acceptable Credit Provider or other bank with long-term unsecured debt rated either "AAA" by S&P or "Aaa" by Moody's, or "A" or higher by S&P and "A2" or higher by Moody's; and (iii) commercial paper, money market securities and other corporate debt securities rated, on the date of purchase, "A-1" by S&P or "P-1" by Moody's or higher for securities with original 9 maturities of less than one year and "AAA" by S&P or "Aaa" by Moody's, or "A" or higher by S&P and "A2" or higher by Moody's, for securities with original maturities of one year or greater and maturing not more than one year from the date of acquisition thereof. "PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Authority or any other entity. "POWER MARKET CONSULTANT" means PHB Hagler Bailly, Inc. or another nationally recognized power market consulting firm which, as Power Market Consultant, will perform a market study of certain markets relating to the Facilities and develop independent electricity price forecasts for the benefit of the Holders. "PRINCIPAL ACCOUNT" has the meaning set forth in Security Deposit Agreement. "PRIVATE PLACEMENT LEGEND" means the legend set forth in Section 2.6(g)(i) to be placed on all Bonds issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "PRUDENT INDUSTRY PRACTICE" means any of the practices, methods, standards and acts (including but not limited to the practices, methods, standards and acts engaged in or approved by a significant portion of the electric power generation industry in the United States) that, at a particular time, in the exercise of reasonable judgment in light of the facts known or that should reasonably have been known at the time a decision was made, could have been expected to accomplish the desired result consistent with good business practices, reliability, economy, safety and expedition, and which practices generally conform to applicable law and governmental approvals. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "RATING AGENCIES" means each of Moody's, S&P and Duff & Phelps, together with any other nationally recognized credit rating agency of similar standing if any such entity is not then currently rating the Bonds. "RATINGS REAFFIRMATION" means, with respect to a specified event, a written confirmation from two or more Rating Agencies that a lowering of the then-current credit ratings of the Bonds will not result from such event. "RECOVERY EVENT" means any settlement of or payment of $5,000,000 or more in respect of (i) any property or casualty insurance claim relating to any asset of the Company or any of the Guarantors or (ii) any seizure, condemnation, confiscation or taking of, or requisition of title or use of, the Facilities or any part thereof by any Governmental Authority. 10 "REDEMPTION DATE" means a date set forth for redemption of Bonds pursuant to the Indenture. "REDEMPTION PRICE" means the price to be paid by the Company for the Bonds that are redeemed pursuant to the Indenture. "REGISTRATION RIGHTS AGREEMENT" means the Exchange and Registration Rights Agreement, dated as of May 27, 1999, by and among the Company, the Guarantors and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "REGULATION S" means Regulation S promulgated under the Securities Act. "REGULATION S GLOBAL BOND" means a Regulation S Temporary Global Bond or Regulation S Permanent Global Bond, as appropriate. "REGULATION S PERMANENT GLOBAL BOND" means a permanent Global Bond in the form of Exhibit A-1 hereto bearing the Global Bond Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in an aggregate denomination equal to the outstanding principal amount of the Regulation S Temporary Global Bond upon expiration of the Restricted Period. "REGULATION S TEMPORARY GLOBAL BOND" means a temporary Global Bond in the form of Exhibit A-2 hereto bearing the Global Bond Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in an aggregate denomination equal to the outstanding principal amount of the Bonds initially sold in reliance on Rule 903 of Regulation S. "REINVESTMENT NOTICE" means a notice executed by an authorized Officer of the Company to the Collateral Agent and the Trustee relating to a Recovery Event (i) setting forth in reasonable detail the nature of the proposed restoration or replacement relating to such Recovery Event and the estimated cost and time to complete such restoration or replacement and (ii) stating that (a) no Default or Event of Default has occurred and is continuing, (b) such restoration or replacement is technologically and economically feasible, (c) the net cash proceeds of such Recovery Event, together with other resources available to the Company and the Guarantors, are sufficient to pay the estimated cost of completing such restoration or replacement and (d) the Company and the Subsidiary Guarantors have sufficient resources (through business interruption insurance or otherwise) to pay all principal, interest and other fixed charges projected to become due and payable with respect to Senior Debt prior to the completion of such restoration or replacement. "REQUIRED CAPITAL IMPROVEMENTS" means capital improvements to the Facilities which are either required by applicable law or which the Company reasonably believes are 11 appropriate in response to enacted or anticipated changes in applicable law or the interpretation thereof. "RESPONSIBLE OFFICER," when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "RESTRICTED GLOBAL BOND" means a Global Bond bearing the Private Placement Legend. "RESTRICTED INVESTMENT" means any Investment other than a Permitted Investment. "RESTRICTED PERIOD" means the 40-day restricted period as defined in Regulation S. "REVENUES" means (i) all revenues received from the operation of the Facilities, (ii) all proceeds from business interruption or other insurance and (iii) all other amounts received in respect of the Facilities. "RULE 144" means Rule 144 promulgated under the Securities Act. "RULE 144A" means Rule 144A promulgated under the Securities Act. "RULE 903" means Rule 903 promulgated under the Securities Act. "RULE 904" means Rule 904 promulgated under the Securities Act. "S&P" means Standard & Poor's Rating Services. "SALE-LEASEBACK TRANSACTION" means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Guarantor transfers such property to a Person and the Company or a Guarantor leases it from such Person. "SECURITY DEPOSIT AGREEMENT" means the Security Deposit Agreement, dated as of March 18, 1999, as amended, by and among the Company, the Guarantors and the Collateral Agent. "SECURITY DOCUMENTS" has the meaning set forth in the Security Deposit Agreement. "SECURITIES ACT" means the Securities Act of 1933, as amended. 12 "SENIOR DEBT" has the meaning set forth in the Security Deposit Agreement. "SERIES A BONDS" means the Initial Series A Bonds and the New Series A Bonds. "SERIES B BONDS" means the Initial Series B Bonds and the New Series B Bonds. "SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "STATED MATURITY" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the credit agreement or other original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "SUBORDINATED INDEBTEDNESS" means (i) with respect to Indebtedness of the Company or any Guarantor to any entity other than the Company or any Guarantor, Indebtedness that is (a) payable solely and exclusively from the funds that would otherwise have been available to make Restricted Payments from the Company, (b) fully subordinated in all rights and remedies to the Bonds and (c) unsecured, or (ii) with respect to Indebtedness from the Company to any Guarantor or from any Guarantor to the Company or any other Guarantor, Indebtedness for which payments of principal and interest are included in cash flow available to pay senior Indebtedness. "SUBSIDIARY" means, with respect to any Person, any corporation, partnership, limited liability company or other entity of which more than 50% of the outstanding capital stock, partnership interests or other equity interests having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) or to control the management of such partnership, limited liability company or other entity is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person. "SUBSIDIARY GUARANTORS" means, collectively, EME Homer City, Edison Mission Finance Co., Homer City Property Holdings, Inc., Mission Energy Westside, Inc. and Chestnut Ridge Energy Company. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "TRUSTEE" means United States Trust Company of New York, as trustee for the benefit of the Holders under the Indenture, together with its successors and assigns. 13 "UNRESTRICTED DEFINITIVE BOND" means one or more Definitive Bonds that do not bear and are not required to bear the Private Placement Legend. "UNRESTRICTED GLOBAL BOND" means a permanent Global Bond in the form of Exhibit A-1 attached hereto that bears the Global Bond Legend and that has the "Schedule of Exchanges of Interests in the Global Bond" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Bonds that do not bear the Private Placement Legend. "U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the Securities Act. "YIELD MAINTENANCE PREMIUM" means, with respect to any Bond to be redeemed on any Redemption Date, an amount calculated by the Company as of such date equal to the excess, if any, of (i) the net present value of the then remaining scheduled installments of principal and payments of interest (but excluding that portion of any scheduled installment of principal or payment of interest that is actually due and paid on the Redemption Date) in respect of such Bond calculated using a discount factor equal to the sum of the Treasury Yield plus 50 basis points, over (ii) the unpaid principal amount of such Bond. Such Yield Maintenance Premium shall be determined in accordance with the following provisions: (a) the average life of the remaining scheduled installments of principal in respect of such Bond (the "Remaining Average Life") shall be calculated as of such Redemption Date; and (b) the "Treasury Yield" shall be calculated for the United States Treasury security having an average life equal to the Remaining Average Life and trading in the secondary market at the price closest to par (the "Primary Issue"); PROVIDED, HOWEVER, that, if no United States Treasury security has an average life equal to the Remaining Average Life, the yields (the "Other Yields") for maturities of the two United States Treasury securities having average lives most closely corresponding to such Remaining Average Life and trading in the secondary market at the price closest to par shall be calculated, and the yield to maturity for the Primary Issue shall be the yield interpolated or extrapolated from such Other Yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. SECTION 1.2 OTHER DEFINITIONS
Defined in Term Section "AUTHENTICATION ORDER"......................................2.2 "COVENANT DEFEASANCE".......................................8.3 "DTC" ......................................................2.3 "EVENT OF DEFAULT"..........................................6.1
14 "INCUR" ....................................................4.9 "LEGAL DEFEASANCE" .........................................8.2 "PAYING AGENT"..............................................2.3 "PERMITTED INDEBTEDNESS"....................................4.9 "PERMITTED LIENS"..........................................4.13 "REGISTRAR".................................................2.3 "RESTRICTED PAYMENTS".......................................4.7
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "INDENTURE SECURITIES" means the Bonds; "INDENTURE SECURITY HOLDER" means a Holder of a Bond; "INDENTURE TO BE QUALIFIED" means this Indenture; "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and "OBLIGOR" on the indenture securities means the Company and any successor obligor upon the indenture securities. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule under the TIA have the meanings so assigned to them. SECTION 1.4 RULES OF CONSTRUCTION Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) or is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and 15 (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the Commission from time to time. SECTION 1.5 ONE CLASS OF SECURITIES The Initial Series A Bonds, Initial Series B Bonds, New Series A Bonds and New Series B Bonds shall vote and consent together on all matters as one class and none of the Initial Series A Bonds, Initial Series B Bonds, New Series A Bonds and New Series B Bonds shall have the right to vote or consent as a separate class on any matter. ARTICLE 2. THE BONDS SECTION 2.1 FORM AND DATING (a) GENERAL. The Bonds and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Bonds may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Bond shall be dated the date of its authentication. The Bonds shall be in denominations of $100,000 and integral multiples of $1,000 in excess thereof. The terms and provisions contained in the Bonds shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Bond conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) GLOBAL BONDS. Bonds issued in global form shall be substantially in the form of Exhibits A-1 or A-2 attached hereto (including the Global Bond Legend thereon and the "SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL BOND" attached thereto). Bonds issued in definitive form shall be substantially in the form of Exhibit A-l attached hereto (but without the Global Bond Legend thereon and without the "SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL BOND" attached thereto). Each Global Bond shall represent such of the outstanding Bonds 16 as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Bonds from time to time endorsed thereon and that the aggregate principal amount of outstanding Bonds represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Bond to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Bonds represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with written instructions given by the Holder thereof as required by Section 2.6 hereof. (c) TEMPORARY GLOBAL BONDS Bonds offered and sold in reliance on Regulation S shall be issued initially in the form of a Regulation S Temporary Global Bond, which shall be deposited on behalf of the purchasers of the Bonds represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of a Regulation S Temporary Global Bond (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Bond bearing a Private Placement Legend, all as contemplated by Section 2.6(a)(ii) hereof), and (ii) an Officer's Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in a Regulation S Temporary Global Bond shall be exchanged for beneficial interests in Regulation S Permanent Global Bonds pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Bonds, the Trustee shall cancel the Regulation S Temporary Global Bond. The aggregate principal amount of a Regulation S Temporary Global Bond and the Regulation S Permanent Global Bonds may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (d) EUROCLEAR AND CEDEL PROCEDURES APPLICABLE. The provisions of the "OPERATING PROCEDURES OF THE EUROCLEAR SYSTEM" and "TERMS AND CONDITIONS GOVERNING USE OF EUROCLEAR" and the "GENERAL TERMS AND CONDITIONS OF CEDELBANK" and "CUSTOMER HANDBOOK" of Cedel shall be applicable to transfers of beneficial interests in a Regulation S Temporary Global Bond and the Regulation S Global Bonds that are held by Participants through Euroclear or Cedel. SECTION 2.2 EXECUTION AND AUTHENTICATION Two Officers shall sign the Bonds for the Company by manual or facsimile signature. The Company's seals, if any, shall be reproduced on the Bonds and may be in facsimile form. 17 If an Officer whose signature is on a Bond no longer holds that office at the time a Bond is authenticated, the Bond shall nevertheless be valid. A Bond shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Bond has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers of the Company (an "AUTHENTICATION ORDER"), authenticate Series A Bonds for original issue up to the aggregate principal amount of $300,000,000 and Series B Bonds for original issue up to the aggregate principal amount of $530,000,000. The aggregate principal amount of Series A Bonds or Series B Bonds outstanding at any time may not exceed such amounts except as provided in Section 2.7 hereof. The Trustee may (at the expense of the Company) appoint an authenticating agent acceptable to the Company to authenticate Bonds. An authenticating agent may authenticate Bonds whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company and has the same protections under Article 7 herein. SECTION 2.3 REGISTRAR AND PAYING AGENT The Company shall maintain an office or agency where Bonds may be presented for registration of transfer or for exchange ("REGISTRAR") and an office or agency where Bonds may be presented for payment ("PAYING AGENT"). The Registrar shall keep a register of the Bonds and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "REGISTRAR" includes any co-registrar and the term "PAYING AGENT" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of the Subsidiary Guarantors may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Bonds. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Bonds. SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all 18 money held by the Paying Agent for the payment of principal of, premium, if any, or interest on the Bonds, and will notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary Guarantor) shall have no further liability for the money. If the Company or a Subsidiary Guarantor acts as Paying Agent, it shall segregate and hold in a separate trust funds for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Bonds. SECTION 2.5 HOLDER LISTS The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Bonds and the Company shall otherwise comply with TIA ss. 312(a). SECTION 2.6 TRANSFER AND EXCHANGE (a) TRANSFER AND EXCHANGE OF GLOBAL BONDS. A Global Bond may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Bonds will be exchanged by the Company for Definitive Bonds if (i) the Company delivers to the Trustee written notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Bonds (in whole but not in part) should be exchanged for Definitive Bonds and delivers a written notice to such effect to the Trustee; PROVIDED that in no event shall a Regulation S Temporary Global Bond be exchanged by the Company for Definitive Bonds prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Bonds shall be issued in such names as the Depositary shall instruct the Trustee in writing. Global Bonds also may be exchanged or replaced, in whole or in part, as provided in Sections 2.7 and 2.10 hereof. Every Bond authenticated and delivered in exchange for, or in lieu of, a Global Bond or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Bond. A 19 Global Bond may not be exchanged for another Bond other than as provided in this Section 2.6(a), however, beneficial interests in a Global Bond may be transferred and exchanged as provided in Section 2.6(b), (c) or (f) hereof. (b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL BONDS. The transfer and exchange of beneficial interests in the Global Bonds shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Bonds shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Bonds also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL BOND. Beneficial interests in any Restricted Global Bond may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Bond in accordance with the transfer restrictions set forth in the Private Placement Legend; PROVIDED, HOWEVER, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Temporary Regulation S Global Bond may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Bond may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Bond. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.6(b)(i). (ii) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL INTERESTS IN GLOBAL BONDS. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.6(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Bond in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Bond in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Bond shall be registered to effect the transfer or exchange referred to in (1) above; PROVIDED that in no event shall Definitive Bonds be issued upon the transfer or exchange of beneficial interests in a Regulation S Temporary Global Bond prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. 20 Upon consummation of an Exchange Offer by the Company in accordance with Section 2.6(f) hereof, the requirements of this Section 2.6(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Bonds. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Bonds contained in this Indenture and the Bonds or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Bond(s) pursuant to Section 2.6(h) hereof. (iii) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER RESTRICTED GLOBAL BOND. A beneficial interest in any Restricted Global Bond may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Bond if the transfer complies with the requirements of Section 2.6(b)(ii) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Bond, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Bond or the Regulation S Permanent Global Bond, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof. (iv) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL BOND FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED GLOBAL BOND. A beneficial interest in any Restricted Global Bond may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Bond or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Bond if the exchange or transfer complies with the requirements of Section 2.6(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be exchanged, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the New Bonds or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; 21 (C) such transfer is effected by an Initial Purchaser pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Bond proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Bond, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Bond proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Bond, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Bond has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted Global Bonds in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Bond cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Bond. (c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR DEFINITIVE BONDS. (i) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL BONDS TO RESTRICTED DEFINITIVE BONDS. If any holder of a beneficial interest in a Restricted Global Bond proposes to exchange such beneficial interest for a Restricted Definitive Bond or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Bond, then, upon receipt by the Registrar of the following documentation: 22 (A) if the holder of such beneficial interest in a Restricted Global Bond proposes to exchange such beneficial interest for a Restricted Definitive Bond, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; (F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof; or (G) if such beneficial interest is being transferred to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904 thereunder, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(d) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Bond to be reduced accordingly pursuant to Section 2.6(h) hereof, and the Company shall execute and the Trustee shall upon receipt of an Authentication Order authenticate and deliver to the Person designated in the instructions a Definitive Bond in the appropriate principal amount. Any Definitive Bond issued in exchange for a beneficial interest in a 23 Restricted Global Bond pursuant to this Section 2.6(c) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Notwithstanding Sections 2.6(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Bond may not be exchanged for a Definitive Bond or transferred to a Person who takes delivery thereof in the form of a Definitive Bond prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (iii) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL BONDS TO UNRESTRICTED DEFINITIVE BONDS. A holder of a beneficial interest in a Restricted Global Bond may exchange such beneficial interest for an Unrestricted Definitive Bond or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Bond only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the New Bonds or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by an Initial Purchaser pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Bond proposes to exchange such beneficial interest for a Definitive Bond that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Bond proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Bond that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof, 24 and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iv) BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL BONDS TO UNRESTRICTED DEFINITIVE BONDS. If any holder of a beneficial interest in an Unrestricted Global Bond proposes to exchange such beneficial interest for a Definitive Bond or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Bond, then, upon satisfaction of the conditions set forth in Section 2.6(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Bond to be reduced accordingly pursuant to Section 2.6(h) hereof, and the Company shall execute and the Trustee shall upon receipt of an Authentication Order authenticate and (at the expense of the Company) deliver to the Person designated in the instructions a Definitive Bond in the appropriate principal amount. Any Definitive Bond issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the applicable Participant or Indirect Participant. The Trustee shall (at the expense of the Company) deliver such Definitive Bonds to the Persons in whose names such Bonds are so registered. Any Definitive Bond issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iv) shall not bear the Private Placement Legend. (d) TRANSFER AND EXCHANGE OF DEFINITIVE BONDS FOR BENEFICIAL INTERESTS. (i) RESTRICTED DEFINITIVE BONDS TO BENEFICIAL INTERESTS IN RESTRICTED GLOBAL BONDS. If any Holder of a Restricted Definitive Bond proposes to exchange such Bond for a beneficial interest in a Restricted Global Bond or to transfer such Restricted Definitive Bond to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Bond, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Bond proposes to exchange such Bond for a beneficial interest in a Restricted Global Bond, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Bond is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; 25 (C) if such Restricted Definitive Bond is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Bond is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Bond is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (F) if such Restricted Definitive Bond is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cancel the Restricted Definitive Bond, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Bond, in the case of clause (B) above, the 144A Global Bond, and in the case of clause (C) above, the Regulation S Global Bond. (ii) RESTRICTED DEFINITIVE BONDS TO BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL BONDS. A Holder of a Restricted Definitive Bond may exchange such Bond for a beneficial interest in an Unrestricted Global Bond or transfer such Restricted Definitive Bond to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Bond only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the New Bonds or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by an Initial Purchaser pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: 26 (1) if the Holder of such Restricted Definitive Bond proposes to exchange such Bond for a beneficial interest in the Unrestricted Global Bond, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Restricted Definitive Bond proposes to transfer such Bond to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Bond, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.6(d)(ii), the Trustee shall cancel the Definitive Bonds and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Bond. (iii) UNRESTRICTED DEFINITIVE BONDS TO BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL BONDS. A Holder of an Unrestricted Definitive Bond may exchange such Bond for a beneficial interest in an Unrestricted Global Bond or transfer such Unrestricted Definitive Bond to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Bond at any time. Upon receipt of a written request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Bond and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Bonds. If any such exchange or transfer from a Definitive Bond to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Bond has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate, one or more Unrestricted Global Bonds in an aggregate principal amount equal to the principal amount of Definitive Bonds so transferred. (e) TRANSFER AND EXCHANGE OF DEFINITIVE BONDS FOR DEFINITIVE BONDS. Upon request by a Holder of Definitive Bonds and such Holder's compliance with the provisions of this Section 2.6(e), the Registrar shall register the transfer or exchange of Definitive Bonds. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Bonds duly endorsed or accompanied by a 27 written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.6(e). (i) RESTRICTED DEFINITIVE BONDS TO RESTRICTED DEFINITIVE BONDS. Any Restricted Definitive Bond may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Bond if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) RESTRICTED DEFINITIVE BONDS TO UNRESTRICTED DEFINITIVE BONDS. Any Restricted Definitive Bond may be exchanged by the Holder thereof for an Unrestricted Definitive Bond or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Bond if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the New Bonds or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by an Initial Purchaser pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: 28 (1) if the Holder of such Restricted Definitive Bonds proposes to exchange such Bonds for an Unrestricted Definitive Bond, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (I)(d) thereof; or (2) if the Holder of such Restricted Definitive Bonds proposes to transfer such Bonds to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Bond, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) UNRESTRICTED DEFINITIVE BONDS TO UNRESTRICTED DEFINITIVE BONDS. A Holder of Unrestricted Definitive Bonds may transfer such Bonds to a Person who takes delivery thereof in the form of an Unrestricted Definitive Bond. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Bonds pursuant to the instructions from the Holder thereof. (f) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2, the Trustee shall authenticate for each series of Bonds (i) one or more Unrestricted Global Bonds in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Bonds tendered for acceptance by Persons that certify in the Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the New Bonds and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Bonds in an aggregate principal amount equal to the principal amount of the Restricted Definitive Bonds accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Bonds, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Bonds to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and (at the expense of the Company) deliver to the Persons designated by the Holders of Definitive Bonds so accepted Definitive Bonds in the appropriate principal amount. (g) LEGENDS. 29 The following legends shall appear on the face of all Global Bonds and Definitive Bonds issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) PRIVATE PLACEMENT LEGEND. (A) Except as permitted by subparagraph (B) below, each Global Bond and each Definitive Bond (and all Bonds issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM OR NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACQUISITION HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR AN AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE") OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE 30 UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT IS PURCHASING THE CERTIFICATES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OR TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT." (B) Notwithstanding the foregoing, any Global Bond or Definitive Bond issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.6 (and all Bonds issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) GLOBAL BOND LEGEND. Each Global Bond shall bear a legend in substantially the following form: "THIS GLOBAL BOND IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS BOND) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.7 OF THE INDENTURE, (II) THIS GLOBAL BOND MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL BOND MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL BOND MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." 31 (iii) REGULATION S TEMPORARY GLOBAL BOND LEGEND. The Regulation S Temporary Global Bond shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL BOND, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED BONDS, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL BOND SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL BONDS. At such time as all beneficial interests in a particular Global Bond have been exchanged for Definitive Bonds or a particular Global Bond has been redeemed, repurchased or canceled in whole and not in part, each such Global Bond shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Bond is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Bond or for Definitive Bonds, the principal amount of Bonds represented by such Global Bond shall be reduced accordingly and an endorsement shall be made on such Global Bond by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Bond, such other Global Bond shall be increased accordingly and an endorsement shall be made on such Global Bond by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Bonds and Definitive Bonds upon receipt of an Authentication Order in accordance with Section 2.2 hereof or upon receipt of a written request of the Registrar in accordance with the terms hereof. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Bond or to a Holder of a Definitive Bond for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.6, 3.7, 3.8 and 9.5 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Bond selected for redemption in whole or in part, except the unredeemed portion of any Bond being redeemed in part. 32 (iv) All Global Bonds and Definitive Bonds issued upon any registration of transfer or exchange of Global Bonds or Definitive Bonds shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Bonds or Definitive Bonds surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Bonds during a period beginning at the opening of business 15 days before the day of any selection of Bonds for redemption under Section 3.2 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Bond so selected for redemption in whole or in part, except the unredeemed portion of any Bond being redeemed in part or (C) to register the transfer of or to exchange a Bond between a record date and the next succeeding interest payment date. (vi) Prior to due presentment for the registration of a transfer of any Bond, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of receiving payment of principal of and interest on such Bond and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Bonds and Definitive Bonds in accordance with the provisions of Section 2.2 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may be submitted by facsimile. SECTION 2.7 REPLACEMENT BONDS If any mutilated Bond is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Bond, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Bond if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity Bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Bond is replaced. The Company and the Trustee may charge for their expenses in replacing a Bond. Every replacement Bond is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Bonds duly issued hereunder. SECTION 2.8 OUTSTANDING BONDS 33 The Bonds outstanding at any time are all the Bonds authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Bond effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.9 hereof, a Bond does not cease to be outstanding because the Company or an Affiliate of the Company holds the Bond. If a Bond is replaced pursuant to Section 2.7 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Bond is held by a bona fide purchaser. If the principal amount of any Bond is considered paid under Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Bonds payable on that date, then on and after that date such Bonds shall be deemed to be no longer outstanding and shall cease to accrue interest. SECTION 2.9 TREASURY BONDS In determining whether the Holders of the required principal amount of Bonds have concurred in any direction, waiver or consent, Bonds owned by the Company or any Subsidiary Guarantor, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any Subsidiary Guarantor shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Bonds that the Trustee knows are so owned shall be so disregarded. SECTION 2.10 TEMPORARY BONDS Until certificates representing Bonds are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Bonds. Temporary Bonds shall be substantially in the form of certificated Bonds but may have variations that the Company considers appropriate for temporary Bonds and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Bonds in exchange for temporary Bonds. Holders of temporary Bonds shall be entitled to all of the benefits of this Indenture. SECTION 2.11 CANCELLATION 34 The Company at any time may deliver Bonds to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Bonds surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Bonds surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Bonds (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Bonds shall be delivered (at the expense of the Company) to the Company. The Company may not issue new Bonds to replace Bonds that it has paid or that have been delivered to the Trustee for cancellation. SECTION 2.12 DEFAULTED INTEREST If the Company defaults in a payment of interest on the Bonds, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Bonds and in Section 4.1 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Bond and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, PROVIDED that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. SECTION 2.13 CUSIP NUMBERS The Company in issuing the Bonds may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders, PROVIDED, HOWEVER, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Bonds or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Bonds, and any such redemption shall not be affected by any defect in or omission of such numbers. 35 ARTICLE 3. REDEMPTION AND PREPAYMENT SECTION 3.1 NOTICES TO TRUSTEE If the Company elects to redeem Bonds pursuant to the redemption provisions of Section 3.7 or 3.8 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officer's Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Bonds to be redeemed and (iv) the redemption price. SECTION 3.2 SELECTION OF BONDS TO BE REDEEMED If less than all of the Bonds are to be redeemed at any time, the Trustee shall select the Bonds to be redeemed among the Holders of the Bonds in compliance with the requirements of the principal national securities exchange, if any, on which the Bonds are listed or, if the Bonds are not so listed, on a PRO RATA basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Bonds to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Bonds not previously called for redemption. The Trustee shall promptly notify the Company of the Bonds selected for redemption and, in the case of any Bond selected for partial redemption, the principal amount thereof to be redeemed. Bonds and portions of Bonds selected shall be in amounts of $100,000 or whole multiples of $1,000 in excess thereof; except that if all of the Bonds of a Holder are to be redeemed, the entire outstanding amount of Bonds held by such Holder, even if not in the amount of $100,000 or a multiple of $1,000 in excess thereof, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Bonds called for redemption also apply to portions of Bonds called for redemption. SECTION 3.3 NOTICE OF REDEMPTION At least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Bonds are to be redeemed at its registered address. The notice shall identify the Bonds to be redeemed and shall state: (a) the redemption date; (b) the redemption price; 36 (c) if any Bond is being redeemed in part, the portion of the principal amount of such Bond to be redeemed and that, after the redemption date upon surrender of such Bond, a new Bond or Bonds in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Bond; (d) the name and address of the Paying Agent; (e) that Bonds called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Bonds called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Bonds and/or Section of this Indenture pursuant to which the Bonds called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Bonds. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date (or such shorter time period acceptable to the Trustee), an Officer's Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION Once notice of redemption is mailed in accordance with Section 3.3 hereof, Bonds called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. SECTION 3.5 DEPOSIT OF REDEMPTION PRICE One Business Day prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Bonds to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Bonds to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Bonds or the portions of Bonds called for redemption. If a Bond is redeemed on or after an interest record date but on or prior to 37 the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Bond was registered at the close of business on such record date. If any Bond called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Bonds and in Section 4.1 hereof. SECTION 3.6 BONDS REDEEMED IN PART Upon surrender of a Bond that is redeemed in part, the Company shall issue and, upon receipt of an Authentication Order, the Trustee shall authenticate for the Holder at the expense of the Company a new Bond equal in principal amount to the unredeemed portion of the Bond surrendered. SECTION 3.7 OPTIONAL REDEMPTION The Bonds shall be subject to optional redemption at any time at a Redemption Price equal to the outstanding principal amount of the Bonds to be redeemed plus all accrued and unpaid interest thereon to the Redemption Date, plus the Yield Maintenance Premium, if any. SECTION 3.8 MANDATORY REDEMPTION The Bonds will be subject to mandatory redemption, ratably with all other Senior Debt in existence at such time, upon the occurrence of a Recovery Event with respect to the Facilities, other than with respect to amounts received by the Company and the Subsidiary Guarantors in connection with a Recovery Event for which the Company elects to restore or replace the asset or assets in respect of which such Recovery Event occurred and a Reinvestment Notice is provided to the Collateral Agent and the Trustee within 45 days of such Recovery Event (provided that, with respect to any Recovery Event of $50 million or more, the Independent Engineer shall have certified as to the reasonableness, in light of Prudent Industry Practice, of the Company's repair and replacement plans as set forth in the Company's Reinvestment Notice relating to such Recovery Event). Any mandatory redemption of the Bonds will be without premium or penalty at a Redemption Price equal to the unpaid principal amount thereof plus accrued and unpaid interest thereon to the Redemption Date. 38 ARTICLE 4. COVENANTS SECTION 4.1 PAYMENT OF BONDS The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Bonds on the dates and in the manner provided in the Bonds. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Bonds to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Bonds may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Bonds and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Bonds may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.3. SECTION 4.3 INFORMATION REQUIREMENTS 39 The Company shall furnish or cause to be furnished to the Trustee, each of the Rating Agencies and, with respect to clauses (a) and (b) below, upon written request (which may be a single continuing request), any Holder or Beneficial Owner or prospective Holder or Beneficial Owner: (a) as soon as available and in any event within 60 days after the end of the Company's first, second and third fiscal quarters of each fiscal year (commencing with the fiscal quarter ending June 30, 1999), unaudited financial statements of the Company as of the end of such fiscal quarter, together with an Officer's Certificate of the Company stating that such financial statements fairly present the financial condition and results of operations of the Company on the dates and for the periods indicated in accordance with GAAP; (b) as soon as available and in any event within 120 days after the end of each fiscal year of the Company (commencing with the fiscal year ending December 31, 1999), audited financial statements of the Company, together with an Officer's Certificate of the Company stating that no Default or Event of Default has occurred and is continuing, or that if a Default or an Event of Default has occurred and is continuing, a statement as to the nature thereof; (c) within 10 days after an authorized officer of the Company obtains actual knowledge thereof, written notice of the occurrence of any event or condition which constitutes a Default or an Event of Default, specifically stating that such event or condition has occurred and describing it and any action being or proposed to be taken with respect thereto; (d) within 15 days after an authorized officer of the Company has actual knowledge thereof, written notice of any pending or threatened material litigation which has or could reasonably be expected to have a Material Adverse Effect; and (e) at any time when the Company is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, copies of any filing made with the Commission thereunder, within five days after such filing is made. At any time when the Company is not subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, upon the request of any Holder or Beneficial Owner or prospective Holder or Beneficial Owner, the Company shall promptly furnish to such Holder or Beneficial Owner or prospective Holder or Beneficial Owner the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act in order to permit compliance with Rule 144A in connection with a resale or other permitted transfer of any Bond. The Company shall also provide to the Trustee and the Rating Agencies annual budgets, quarterly operational reports, quarterly construction reports, updated Power Market Consultant reports, any Officer's Certificates provided by the Company relating to the incurrence 40 of Indebtedness under Section 4.9(f) or (g) (at least 30 days' prior to the incurrence of such Indebtedness) and notice of any transfers of assets permitted by Section 4.11(i) hereof (at least 30 days' prior to such transfer of assets). SECTION 4.4 COMPLIANCE CERTIFICATE So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.3 above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable, directly or indirectly, to any Person for any failure to obtain knowledge of any such violation. SECTION 4.5 TAXES; MAINTENANCE OF BOOKS AND RECORDS The Company shall pay, and shall cause each of the Subsidiary Guarantors to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Bonds. The Company shall, and shall cause each of the Subsidiary Guarantors to, maintain its books and records in accordance with the generally accepted accounting principles in effect in the United States. SECTION 4.6 STAY, EXTENSION AND USURY LAWS The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. SECTION 4.7 LIMITATION ON RESTRICTED PAYMENTS The Company shall not, and shall not permit any of the Subsidiary Guarantors to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of the Subsidiary Guarantors' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any Subsidiary Guarantor) or to the direct or indirect holders of the Company's or any of the Subsidiary Guarantors' Equity Interests in their capacity as such, other than (A) dividends or distributions payable in Equity Interests of the Company, (B) dividends or distributions payable to the Company or another Subsidiary of the Company or (C) dividends payable to EME not to exceed $30 million from the proceeds of the Bonds; (ii) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the 41 Company or any Subsidiary Guarantor) any Equity Interests of the Company or any direct or indirect parent of the Company or other Affiliate of the Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness, except a payment of interest or principal at Stated Maturity, or a payment of interest made through the issuance of additional Indebtedness of the same kind as the Indebtedness on which such interest shall have accrued; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence of such Restricted Payment; and (b) the amount on deposit in each Accrued Interest Account and in each Principal Account shall be equal to or greater than the amount then required to be on deposit in such Accrued Interest Account or Principal Account in accordance with priority THIRD or FOURTH, as the case may be, in Section 4.1(a) of the Security Deposit Agreement; (c) the Debt Service Reserve Accounts are each fully funded; (d) the Debt Service Coverage Ratio for the preceding four quarters, taken as one accounting period, is equal to or greater than 1.50 to 1.0 in the case of any such period ending on or prior to December 31, 2001 or 1.70 to 1.0 in the case of any such period ending thereafter, as set forth in an Officer's Certificate; and (e) the projected Debt Service Coverage Ratio for each four-quarter period, taken as one accounting period, during the next eight quarters is equal to or greater than 1.50 to 1.0 in the case of any such period ending on or prior to December 31, 2001 or 1.70 to 1.0 in the case of any such period ending thereafter, as set forth in an Officer's Certificate. The Company shall cause the Power Market Consultant to provide, at intervals not to exceed every three years, updated electricity price projections to allow the Company certification for purposes of making Restricted Payments pursuant to this Section 4.7. SECTION 4.8 LIMITATION ON SUBSIDIARIES AND INVESTMENTS 42 The Company shall not create or acquire any Subsidiary unless (i) such Subsidiary shall become an additional Guarantor under the Security Documents and (ii) such Subsidiary at the time of creation or acquisition shall have no Indebtedness outstanding other than Indebtedness permitted under Section 4.10. The Company shall retain 100% direct or indirect beneficial ownership in each of its Subsidiaries so long as the Bonds remain outstanding. The Company shall not, nor shall it permit any of the Subsidiary Guarantors to, make any investment other than Permitted Investments. SECTION 4.9 LIMITATION ON INCURRENCE OF INDEBTEDNESS The Company shall not, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness other than Permitted Indebtedness. "PERMITTED INDEBTEDNESS" shall mean any of the following items of Indebtedness: (a) Indebtedness incurred in respect of the Bonds; (b) Indebtedness outstanding on the Closing Date; (c) Indebtedness incurred under the Credit Agreement; (d) Capital Lease Obligations and purchase money indebtedness entered into in the ordinary course of business in an amount not to exceed $10 million outstanding at any one time; (e) Indebtedness to any wholly-owned Subsidiary of the Company (so long as such Indebtedness is held by such Subsidiary); (f) Indebtedness in respect of Required Capital Improvements, PROVIDED that (i) the Company delivers to the Trustee an Officer's Certificate stating that the Indebtedness is being incurred to fund a Required Capital Improvement and (ii) after giving effect to the incurrence of such Indebtedness, either (A) the average projected Debt Service Coverage Ratio through the final maturity date of the Bonds shall not be less than 1.75 to 1.0 and the minimum projected Debt Service Coverage Ratio for any four quarters through the final maturity date of the Bonds, taken as one accounting period, shall not be less than 1.50 to 1.0 or (B) a Ratings Reaffirmation is obtained; (g) Indebtedness so long as, after giving effect to the incurrence of such Indebtedness, the Company delivers to the Trustee an Officer's Certificate stating that (i) the average projected Debt Service Coverage Ratio through the final maturity date of the Bonds shall not be less than 2.50 to 1.0 and the minimum projected Debt Service Coverage Ratio for any four quarters through the final maturity date of the Bonds, taken as one accounting period, shall not be less than 2.00 to 1.0 (PROVIDED that if the proceeds 43 of such Indebtedness are to be applied to construct a new facility, the Bonds must be rated Investment Grade after giving effect to the incurrence of such Indebtedness) or (ii) the Bonds are rated at least Investment Grade by each Rating Agency then rating the Bonds; (h) Indebtedness incurred for working capital purposes only and not in excess of $50 million at any one time outstanding (with such amount to be escalated annually in accordance with increases in the Consumer Price Index), PROVIDED that the outstanding principal amount of such Indebtedness on each anniversary of the Closing Date shall be $0; (i) Indebtedness represented by Interest Rate Hedging Obligations, so long as such Interest Rate Hedging Obligations relate to Indebtedness otherwise permitted to be incurred by the Company hereunder; (j) Reimbursement obligations or other Indebtedness related to reimbursement under any letter of credit issued to satisfy any Debt Service Reserve Requirement; (k) Subordinated Indebtedness to Affiliates of the Company, PROVIDED that the incurrence of such Indebtedness complies with the provisions of Section 4.7 hereof; (l) Indebtedness in the form of guarantees entered into by the Company in the ordinary course of business in connection with fuel procurement or sales, purchases or exchanges by Affiliates of the Company related to physical or financial capacity, energy and emissions credits related to the Facilities, so long as such activities are not for speculative purposes; (m) Indebtedness in respect of letters of credit, surety bonds or performance bonds issued in the ordinary course of the Company's business; (n) Indebtedness incurred in exchange for, or the net proceeds of which are used to refund, refinance or replace, indebtedness of the Company incurred under clause (c) above, PROVIDED that (i) the principal amount (net of expenses) of such new Indebtedness shall not exceed the principal amount of the old Indebtedness and (ii) either (1) the average life of such new Indebtedness shall not be shorter than the remaining average life of the Bonds or (2) such new Indebtedness shall be rated at least Investment Grade by each Rating Agency then rating such Indebtedness; and (o) other senior Indebtedness not to exceed $20 million at any one time outstanding. 44 The Company shall cause the Power Market Consultant to provide, for purposes of incurring Indebtedness under clauses (f), (g) and (n) above, updated electricity price projections to allow the Company to provide the requisite certification. For purposes of determining compliance with this Section 4.9, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (a) through (o) above as of the date of incurrence thereof, the Company shall, in its sole discretion, be entitled to classify or reclassify such item of Indebtedness in any manner that complies with this Section 4.9. Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.9. SECTION 4.10 LIMITATION ON INCURRENCE OF SUBSIDIARY GUARANTOR INDEBTEDNESS The Company shall not permit any Subsidiary Guarantor to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any Indebtedness other than (i) Subordinated Indebtedness or (ii) Indebtedness in respect of letters of credit, surety bonds or performance bonds issued, or purchase money or trade Indebtedness incurred, in the ordinary course of business and in an aggregate amount not to exceed $15 million at any one time outstanding. SECTION 4.11 LIMITATION OF SALE OF ASSETS Except in connection with a merger, consolidation or sale of substantially all of its properties or assets, covered by Section 5.1 hereto, the Company shall not, and shall not permit any of the Subsidiary Guarantors to, sell or otherwise dispose of any assets or enter into Sale-Leaseback Transactions (including by way of the issue or sale by the Company or any of the Subsidiary Guarantors of Equity Interests in such Subsidiary Guarantors) other than (i) transfers of assets among the Company and the Subsidiary Guarantors, so long as a Ratings Reaffirmation is obtained, (ii) sales and dispositions in the ordinary course of business not in excess of $10 million in any fiscal year, (iii) any sales or dispositions of surplus, obsolete or worn out equipment, and (iv) any sales or dispositions required for compliance with applicable law or necessary governmental approvals. SECTION 4.12 LIMITATION ON TRANSACTIONS WITH AFFILIATES The Company shall not, and shall not permit any of the Subsidiary Guarantors to, enter into any transaction or arrangement, whether or not in the ordinary course of business, with any Affiliate (other than the Company and its Subsidiaries), other than (i) management, operating, marketing, trading or other similar services agreements between and among the Company and its Affiliates in existence on the Closing Date and (ii) any transaction which is on terms that are no less favorable to the Company or the relevant Subsidiary Guarantor than those 45 that would have been obtained in a comparable arm's-length transaction by the Company or such Subsidiary Guarantor with an unrelated Person. SECTION 4.13 LIMITATION ON LIENS The Company shall not, and shall not permit any of the Subsidiary Guarantors to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind upon any of their property or assets, now owned or hereafter acquired, other than Permitted Liens. The provisions of the first paragraph of this Section 4.13 shall not apply to the incurrence of any of the following types of Liens (collectively, "PERMITTED LIENS"): (a) Liens existing on the Closing Date; (b) Liens created under the Security Documents; (c) carriers', warehousemen's, mechanics', landlords' materialmen's, repairmen's or other like Liens arising in the ordinary course of business in respect of obligations not yet due and payable or which are being contested in good faith by appropriate proceedings promptly instituted and diligently prosecuted; PROVIDED that any reserve or other appropriate provision as shall be required to conform with GAAP shall have been made therefor; (d) Liens for taxes, assessments or governmental charges or levies that are not yet delinquent and remain payable without penalty or that are being contested in good faith by appropriate proceedings promptly instituted and diligently prosecuted; PROVIDED that any reserve or other appropriate provision as shall be required to conform with GAAP shall have been made therefor; (e) Liens that are incidental to the business of the Company and the Subsidiary Guarantors, are not for borrowing money and are not material, taken as a whole, to the business of the Company and the Subsidiary Guarantors; and (f) Liens to secure Indebtedness permitted under clauses (c), (d), (f), (g), (h), (i), (j), (n) and (o) of Section 4.9 hereof. SECTION 4.14 LIMITATION ON BUSINESS ACTIVITIES The Company shall not, nor shall it permit any Subsidiary Guarantor to, engage in any business or conduct any activities other than the ownership and operation of the Facilities, any expansion of facilities or improvements thereto, and matters reasonably incidental thereto. Notwithstanding the previous sentence, the Company and the Subsidiary Guarantors may enter into fuel procurement or sales, purchases or exchanges related to physical or financial capacity, 46 energy and emissions credits related to the Facilities, so long as such activities are not for speculative purposes. SECTION 4.15 MAINTENANCE OF EXISTENCE The Company shall, and shall cause each of the Subsidiary Guarantors to, at all times (i) maintain their respective existence in good standing under the laws of their respective jurisdictions of organization and (ii) maintain and renew all of their respective rights, powers, privileges and franchises except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect. SECTION 4.16 PAYMENTS FOR CONSENT The Company shall not, and shall not permit any of the Subsidiary Guarantors to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Bonds for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Bonds unless such consideration is offered to be paid or is paid to all Holders of the Bonds that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.17 COMPLIANCE WITH LAWS The Company shall, and shall cause each of the Subsidiary Guarantors to, comply with all applicable laws, acts, rules, regulations, permits, orders and requirements of any legislative, executive, administrative or judicial body relating to the Company and the Subsidiary Guarantors, except where (i) the failure to do so could not reasonably be expected to have a Material Adverse Effect or (ii) the Company is disputing in good faith any such law, act, rule, regulation, permit, order or requirement and (A) the Company has established or accrued adequate cash reserves in accordance with GAAP or provided other appropriate assurances against any liabilities arising from such dispute and (B) the Company's action to dispute such law, act, rule, regulation, permit, order or requirement could not reasonably be expected to have a Material Adverse Effect. SECTION 4.18 GOVERNMENT APPROVALS The Company shall, and shall cause each of the Subsidiary Guarantors to, obtain and maintain in full force and effect all governmental approvals required under applicable laws to be obtained by or on behalf of the Company and the Subsidiary Guarantors to conduct their respective businesses pursuant to and perform their obligations under the Financing Documents to which each of them is a party, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. SECTION 4.19 MAINTENANCE OF PROPERTY; INSURANCE 47 The Company shall cause EME Homer City to (i) keep and maintain all property useful and necessary in its business in good working order and condition consistent with Prudent Industry Practice and (ii) maintain good and valid title to its properties and assets (subject to no Liens other than Permitted Liens), except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. The Company shall cause EME Homer City to maintain with financially sound and reputable insurance companies, insurance for such amounts against such risks, loss, damage and liability as are customarily insured against by other enterprises of like size and type as that of the Facilities, subject to the availability of such coverage on commercially reasonable terms, all on terms and conditions which are in accordance with Prudent Industry Practice. SECTION 4.20 BOND DEBT SERVICE RESERVE ACCOUNT The Company shall establish and, so long as any Bonds remain outstanding, maintain with the Collateral Agent the Bond Debt Service Reserve Account for application pursuant to the Security Deposit Agreement. On the Closing Date and on any date on which a Restricted Payment is made pursuant to Section 4.7, the required balance of the Bond Debt Service Reserve Account (the "BOND DEBT SERVICE RESERVE REQUIREMENT") on such date of determination will be 100% of the projected debt service on the Bonds for the succeeding six-month period, and may be satisfied by one or a combination of the following: (i) cash; (ii) a letter of credit issued by a bank or trust company that constitutes Acceptable Credit Support; or (iii) a guarantee of the Company's obligations with respect to the Bond Debt Service Reserve Requirement for the Bonds, in the form set forth as Exhibit D hereto, made by EME in favor of the Collateral Agent for the benefit of the Holders (so long as such guarantee constitutes Acceptable Credit Support). SECTION 4.21 PERFECTION OF SECURITY INTERESTS The Company shall, and shall cause each of the Subsidiary Guarantors to, preserve the security interests granted under the Security Documents and undertake all actions which are necessary or appropriate in the reasonable judgment of the Trustee to (a) maintain the security interest of the Collateral Agent in the Collateral in full force and effect at all times (including the priority thereof), and (b) preserve and protect the Collateral and protect and enforce the Company's rights and title and the rights of the Collateral Agent to the Collateral, including, without limitation, the making or delivery of all filings and recordations, the payments of fees and other charges and the issuance of supplemental documentation for such purposes. ARTICLE 5. SUCCESSORS 48 SECTION 5.1 LIMITATION ON MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY ALL ASSETS (a) The Company shall not, directly or indirectly, consolidate or merge with or into any other person (whether or not the Company is the surviving corporation), or sell, assign, convey, lease, transfer or otherwise dispose of, all or substantially all of its properties or assets in one or a series of transactions, to any Person or Persons, except that the Company may consolidate with or merge into any other Person so long as (i) the Company is the surviving corporation and (ii) both immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing. Notwithstanding the foregoing, the Company may merge or consolidate with or transfer substantially all of its assets to an Affiliate that has no significant assets or liabilities and was formed solely for the purpose of changing the jurisdiction of organization of the Company or the form of organization of the Company; PROVIDED that the amount of Indebtedness of the Company and the Subsidiary Guarantors is not increased thereby; and PROVIDED, FURTHER that the successor assumes all obligations of the Company under the Indenture and the Registration Rights Agreement. (b) The Company shall not permit any of the Subsidiary Guarantors to, directly or indirectly, consolidate or merge with or into any other Person (whether or not or such Subsidiary Guarantor is the surviving corporation), or sell, assign, convey, lease, transfer or otherwise dispose of, all or substantially all of its properties or assets in one or a series of transactions, to any Person or Persons, other than a merger with or into the Company or, in the case of any wholly-owned Subsidiary, a merger with or into any other wholly-owned Subsidiary, a merger of any other wholly-owned Subsidiary into such wholly-owned Subsidiary or a transfer or disposition of substantially all of its properties or assets to the Company or any other wholly-owned Subsidiary. SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.1(a) hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, conveyance or other disposition, the provisions of this Indenture referring to the "COMPANY" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; PROVIDED, HOWEVER, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Bonds except in the case of a sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets of the Company on a combined basis that meets the requirements of Section 5.1(a) hereof. 49 ARTICLE 6. EVENTS OF DEFAULT SECTION 6.1 EVENTS OF DEFAULT Each of the following shall constitute an Event of Default hereunder: (a) default for 15 days in the payment when due of any principal of, premium, if any, or interest on the Bonds; (b) failure by the Company or any of the Subsidiary Guarantors to comply with the provisions described above under Sections 4.7, 4.9, 4.10, 4.11, 4.13, 4.14, 4.15, or 5.1, and such failure shall continue uncured for 30 or more days from the date an authorized officer of the Company receives actual notice thereof; (c) failure by the Company or any of the Subsidiary Guarantors to comply with any of its other agreements in the Indenture, the Bonds or the Security Documents and such failure shall continue uncured for 60 or more days from the date an authorized officer of the Company receives actual notice thereof (or to the extent such Default is curable but cannot be cured within such 60 day period, so long as the Company provides an Officer's Certificate to the Trustee stating that it is diligently pursuing a cure, such longer period of time which may be necessary in good faith to cure the same, but in no event to exceed 90 days); (d) the occurrence of a Change of Control; (e) any portion of the security interests granted under the Security Documents ceasing to be a senior security interest in full force and effect, which cessation has a Material Adverse Effect; PROVIDED that the Company shall have 10 days to cure any such cessation; (f) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of the Subsidiary Guarantors (or the payment of which is guaranteed by the Company or any of the Subsidiary Guarantors) whether such Indebtedness or guarantee now exists, or is created after the Closing Date, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates without duplication $15 million or more; (g) failure by the Company or any of the Subsidiary Guarantors to pay final, non-appealable judgments aggregating in excess of $15 million (excluding amounts 50 covered by insurance), which judgments are not paid, discharged or stayed for a period of 90 days; (h)ab the Company or any of the Subsidiary Guarantors pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) make a general assignment for the benefit of its creditors, or (v) generally is not paying its debts as they become due; or (i) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of the Subsidiary Guarantors in an involuntary case; (ii) appoints a custodian of the Company or any of the Subsidiary Guarantors or for all or substantially all of the property of the Company or any of the Subsidiary Guarantors; or (iii) orders the liquidation of the Company or any of the Subsidiary Guarantors; and, in which case, the order or decree remains unstayed and in effect for 60 consecutive days. SECTION 6.2 ACCELERATION If any Event of Default (other than an Event of Default specified in clause (h) or (i) of Section 6.1 hereof with respect to the Company or any Subsidiary Guarantor) occurs and is continuing, the Trustee may, and upon written direction of the Holders of at least 33-1/3% (in the case of any Event of Default specified in clause (a) of Section 6.1 hereof) or 50% (in the case of any other Event of Default) in principal amount of the then outstanding Bonds shall, declare, by written notice to the Company, all the Bonds to be due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (h) or (i) of Section 6.1 hereof occurs with respect to the Company or any Subsidiary Guarantor, all outstanding Bonds shall be due and payable without further action or notice. Holders of the Bonds may not enforce this Indenture or the Bonds except as provided in this Indenture. The Trustee may withhold from 51 Holders of the Bonds notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the then outstanding Bonds by notice to the Trustee may on behalf of the Holders of all of the Bonds rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. The Holders of a majority (or, with respect to the Event of Default specified in clause (d) of Section 6.1 hereof, 66-2/3%) in aggregate principal amount of the Bonds then outstanding by notice to the Trustee may on behalf of the Holders of all of the Bonds waive any existing Default or Event of Default and its consequences under this Indenture except (i) a continuing Default or Event of Default in the payment of principal of, premium, if any, or interest on, the Bonds (including in connection with an offer to purchase) and (ii) an Event of Default specified in clause (h) or (i) of Section 6.1 hereof. SECTION 6.3 OTHER REMEDIES Subject to the Intercreditor Agreement, if an Event of Default occurs and is continuing, the Trustee, in its sole discretion, may pursue any available remedy to collect the payment of principal, premium, if any, or interest on the Bonds or to enforce the performance of any provision of the Bonds or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Bonds or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Bond in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.4 WAIVER OF PAST DEFAULTS Upon any waiver of any existing Default or Event of Default pursuant to the second paragraph of Section 6.2, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.5 CONTROL BY MAJORITY Holders of a majority in principal amount of the then outstanding Bonds may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of other Holders of Bonds or that may involve 52 the Trustee in personal liability. The Trustee may take any other action consistent with this Indenture relating to any such direction. SECTION 6.6 LIMITATION ON SUITS A Holder of a Bond may pursue a remedy with respect to this Indenture or the Bonds only if: (a) the Holder of a Bond gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of a majority in principal amount of the then outstanding Bonds make a written request to the Trustee to pursue the remedy; (c) such Holder of a Bond or Holders of Bonds offer and, if requested, provide to the Trustee security and indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of security and indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Bonds do not give the Trustee a direction inconsistent with the request. A Holder of a Bond may not use this Indenture to prejudice the rights of another Holder of a Bond or to obtain a preference or priority over another Holder of a Bond. SECTION 6.7 RIGHTS OF HOLDERS OF BONDS TO RECEIVE PAYMENT Notwithstanding any other provision of this Indenture, the right of any Holder of a Bond, which is absolute and unconditional, to receive payment of principal, premium, if any, and interest on the Bond, on or after the respective due dates expressed in the Bond (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, or the obligation of the Company, which is also absolute and unconditional, to pay the principal of, premium, if any, and interest on the Bond to such Holder at the time and place set forth in the Bond, shall not be impaired or affected without the consent of such Holder. SECTION 6.8 COLLECTION SUIT BY TRUSTEE If an Event of Default specified in Section 6.1(a) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Bonds and interest on overdue principal and, to the extent lawful, 53 interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, fees, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, fees, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Bonds allowed in any judicial proceedings relative to the Company (or any other obligor upon the Bonds), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the compensation, fees, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under or in connection with this Indenture. To the extent that the payment of any such compensation, fees, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under or in connection with this Indenture out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a perfected, first priority Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise, and such Lien in favor of a predecessor Trustee shall be senior to the Lien in favor of the current Trustee. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Bonds or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10 PRIORITIES If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: FIRST: to the Trustee (including any predecessor Trustee), its agents and attorneys for amounts due under Section 7.7 hereof, including payment of all compensation, fees, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; SECOND: to Holders of Bonds for amounts due and unpaid on the Bonds for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Bonds for principal, premium, if any, and interest, respectively; and 54 THIRD: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Bonds pursuant to this Section 6.10. SECTION 6.11 FOR COSTS In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Bond pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Bonds. ARTICLE 7. TRUSTEE SECTION 7.1 DUTIES OF TRUSTEE (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: 55 (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c), (e) and (f) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request or direction of any Holders, unless such Holder shall have offered and, if requested, provided to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.2 RIGHTS OF TRUSTEE (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company personally or by agent or attorney. (b) Before the Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer's Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. 56 (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e)ab Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered and, if requested, provided to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (g) No permissive right of the Trustee to act hereunder shall be construed as a duty. (h) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate, an Opinion of Counsel, or both. SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE The Trustee in its individual or any other capacity may become the owner or pledgee of Bonds and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.4 TRUSTEES DISCLAIMER The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Bonds or the Registration Rights Agreement; it shall not be accountable for the Company's use of the proceeds from the Bonds or any money paid to the Company or upon the Company's direction under any provision of this Indenture; it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Bonds or any other document in connection with the sale of the Bonds or pursuant to this Indenture other than its certificate of authentication. 57 SECTION 7.5 NOTICE OF DEFAULTS If a Default or an Event of Default occurs and is continuing and if the Trustee receives written notice thereof, the Trustee shall (at the expense of the Company) mail to Holders of Bonds a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or an Event of Default in payment of principal of, premium, if any, or interest on any Bond, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Bonds. SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE BONDS Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Bonds remain outstanding, the Trustee shall (at the expense of the Company) mail to the Holders of the Bonds a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Bonds shall be mailed to the Company and filed with the Commission and each stock exchange on which the Bonds are listed in accordance with TIA ss. 313(d). The Company shall promptly notify the Trustee when the Bonds are listed on any stock exchange. SECTION 7.7 COMPENSATION AND INDEMNITY The Company agrees to pay to the Trustee from time to time compensation as agreed upon by the Trustee and the Company, and, in the absence of any such agreement, reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the compensation, disbursements and reasonable expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.7) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with, relating to, or arising out of (i) the exercise or performance of any of its powers or duties hereunder, or in connection herewith, and (ii) the validity, invalidity, adequacy or inadequacy of this Indenture, the Bonds or the Registration Rights Agreement, except to the extent any such 58 loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it intends to seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company to the Trustee under this Indenture shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Bonds on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Bonds. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(h) or (i) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. SECTION 7.8 REPLACEMENT OF TRUSTEE A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Bonds of a majority in principal amount of the then outstanding Bonds may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may by a Board Resolution remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting as trustee hereunder. 59 If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Bonds may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Bonds of at least 10% in principal amount of the then outstanding Bonds may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after receiving a written request by any Holder of a Bond who has been a BONA FIDE Holder of a Bond for at least six months, fails to comply with Section 7.10, such Holder of a Bond may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Bonds. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, PROVIDED all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company's obligations under Section 7.7 hereof shall continue for the benefit of the retiring Trustee. SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC If the Trustee or any Agent consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee or Agent, as the case may be. SECTION 7.10 ELIGIBILITY; DISQUALIFICATION There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that together with its direct parent, if any, or in the case of a corporation included in a bank holding company system, its related bank holding company, has a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). 60 SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. SECTION 7.12 OTHER CAPACITIES All references in this Indenture to the Trustee shall be deemed to refer to the Trustee in its capacity as Trustee and in its capacities as any Agent, to the extent acting in such capacities, and every provision of this Indenture relating to the conduct or affecting the liability or offering protection, immunity or indemnity to the Trustee shall be deemed to apply with the same force and effect to the Trustee acting in its capacities as any Agent. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANTDEFEASANCE The Company may, at its option and at any time, elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding Bonds upon compliance with the conditions set forth below in this Article 8. SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE Upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.2, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Bonds on the date the conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Bonds, which shall thereafter be deemed to be "OUTSTANDING" only for the purposes of Section 8.5 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Bonds and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Bonds to receive solely from the trust fund described in Section 8.4 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Bonds when such payments are due, (b) the Company's obligations with respect to such Bonds under Article 2 and Section 4.2 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee and any Agent hereunder and the Company's obligations in connection therewith, including, without limitation, Article 7 and 61 Section 8.5 and 8.7 hereunder, and (d) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.2 notwithstanding the prior exercise of its option under Section 8.3 hereof. SECTION 8.3 COVENANT DEFEASANCE Upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.3, the Company and each Subsidiary Guarantor shall, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be released from its obligations under the covenants contained in Sections 4.3 (except for the second to last paragraph thereto), 4.4, 4.5, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.17, 4.18, 4.19, 4.20, 4.21 and 5.1 hereof with respect to the outstanding Bonds on and after the date the conditions set forth in Section 8.4 are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Bonds shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "OUTSTANDING" for all other purposes hereunder (it being understood that such Bonds shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Bonds, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1 hereof, but, except as specified above, the remainder of this Indenture and such Bonds shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.3 hereof, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(d) through 6.1(g) hereof shall not constitute Events of Default. SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE The following shall be the conditions to the application of either Section 8.2 or 8.3 hereof to the outstanding Bonds: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Bonds, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Bonds on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Bonds are being defeased to maturity or to a particular redemption date; 62 (b) in the case of an election under Section 8.2 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.3 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the outstanding Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Sections 6.1(h) or 6.1(i) hereof are concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture or any other Financing Document) to which the Company or any of the Subsidiary Guarantors is a party or by which the Company or any of the Subsidiary Guarantors is bound; (f) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that (subject to customary qualifications and assumptions) after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company shall have delivered to the Trustee an Officer's Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Bonds over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (h) the Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that, subject to customary assumptions and exclusions, all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. 63 SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS Subject to Section 8.6 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the "TRUSTEE") pursuant to Section 8.4 hereof in respect of the outstanding Bonds shall be held in trust and applied by the Trustee, in accordance with the provisions of such Bonds and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent), to the Holders of such Bonds of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company agrees to pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Bonds. Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.6 REPAYMENT TO COMPANY Any money deposited with the Trustee or any Paying Agent, or then held by the Company in trust for the payment of the principal of, premium, if any, or interest on any Bond and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Bond shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. 64 SECTION 8.7 REINSTATEMENT If the Trustee or Paying Agent is unable to apply any United States dollars or noncallable Government Securities in accordance with Section 8.2 or 8.3 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Bonds shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is permitted by such court or governmental authority to apply all such money in accordance with Section 8.2 or 8.3 hereof, as the case may be; PROVIDED, HOWEVER, that, if the Company makes any payment of principal of, premium, if any, or interest on any Bond following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Bonds to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF BONDS Notwithstanding Section 9.2 of this Indenture, subject to the Intercreditor Agreement, the Company and the Trustee may amend or supplement this Indenture, the Bonds or any Financing Document without the consent of any Holder of a Bond: (a) to cure any ambiguity, omission, defect or inconsistency; (b) to provide for uncertificated Bonds in addition to or in place of certificated Bonds or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not adversely affect any Holder; (c) to provide for the assumption of the Company's obligations to the Holders of the Bonds by a successor to the Company pursuant to Article 5 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Bonds or that does not adversely affect the legal rights hereunder of any Holder of the Bonds; or (e) to make any newly created or acquired Subsidiary of the Company a party to the Security Documents to comply with clause (i) of Section 4.8; (f) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture or any Security Document under the TIA. Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such amended or supplemental Indenture, and upon receipt by 65 the Trustee of the documents described in Section 7.2 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.2 WITH CONSENT OF HOLDERS OF BONDS Except as provided below in this Section 9.2, subject to the Intercreditor Agreement, the Company and the Trustee may amend or supplement this Indenture and the Bonds may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Bonds then outstanding voting as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Bonds), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or Event of Default (other than a Default or an Event of Default in the payment of the principal of, premium, if any, or interest on the Bonds, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Bonds may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Bonds voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Bonds). Section 2.8 hereof shall determine which Bonds are considered to be "outstanding" for purposes of this Section 9.2. Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Bonds as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.2 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Bonds under this Section 9.2 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Bonds affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a majority in aggregate principal amount of the Bonds then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Bonds. However, without the consent of each Holder affected, an amendment or 66 waiver under this Section 9.2 may not (with respect to any Bonds held by a non-consenting Holder): (a) reduce the principal amount of Bonds whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Bond or alter or waive any of the provisions with respect to the redemption of the Bonds; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Bond; (d) waive a Default or an Event of Default in the payment of principal of, premium, if any, or interest on the Bonds (except a rescission of acceleration of the Bonds by the Holders of at least 66-2/3% in aggregate principal amount of the then outstanding Bonds and a waiver of the payment Default that resulted from such acceleration); (e) make any Bond payable in money other than that stated in the Bonds; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Bonds to receive payments of principal of, premium, if any, or interest on the Bonds; (g) waive a redemption payment with respect to any Bond; or (h) make any change in the foregoing amendment and waiver provisions. SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT Every amendment or supplement to this Indenture or the Bonds shall be set forth in an amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Bond is a continuing consent by the Holder of a Bond and every subsequent Holder of a Bond or portion of a Bond that evidences the same debt as the consenting Holder's Bond, even if notation of the consent is not made on any Bond. However, any such Holder of a Bond or subsequent Holder of a Bond may revoke the consent as to its Bond if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. 67 SECTION 9.5 NOTATION ON OR EXCHANGE OF BONDS The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Bond thereafter authenticated. The Company in exchange for all Bonds may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Bonds that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Bond shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.1 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 10.4 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10. MISCELLANEOUS SECTION 10.1 TRUST INDENTURE ACT CONTROLS If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall control. SECTION 10.2 NOTICES Any notice or communication by the Company, the Subsidiary Guarantors or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address If to the Company and/or any Subsidiary Guarantor: Edison Mission Holdings Co. 18101 Von Karman Avenue Suite 1700 Irvine, CA 92612-1046 68 Attention: Treasurer Facsimile: 949-752-5624 With a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Attention: Harold F. Moore, Esq. Facsimile: 212-735-2000 If to the Trustee: United States Trust Company of New York 114 West 47th Street 25th Floor New York, New York 10036 Attention: Corporate Trust Division Facsimile: 212-852-1625 The Company, the Subsidiary Guarantors or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it, except for notices or communications to the Trustee, which shall be effective only upon actual receipt thereof. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. 69 SECTION 10.3 COMMUNICATION BY HOLDERS OF BONDS WITH OTHERHOLDERS OF BONDS Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Bonds. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 10.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee, if so requested by the Trustee: (a) an Officer's Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 10.5 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 10.5 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 10.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. 70 SECTION 10.6 RULES BY TRUSTEE AND AGENTS The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 10.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS No director, officer, employee, incorporator, shareholder or Affiliate (other than the Subsidiary Guarantors and EME under the Financing Documents) of the Company, as such, shall have any liability for any obligations of the Company under the Bonds, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Bonds by accepting a Bond waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Bonds. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. SECTION 10.8 GOVERNING LAW THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE BONDS. SECTION 10.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 10.10 SUCCESSORS All agreements of the Company in this Indenture and the Bonds shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 10.11 SEVERABILITY In case any provision in this Indenture or in the Bonds shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 10.12 COUNTERPART ORIGINALS The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 71 SECTION 10.13 TABLE OF CONTENTS, HEADINGS, ETC The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 72 SIGNATURES Dated as of May 27,1999 EDISON MISSION HOLDINGS CO. By: /s/ Steven D. Eisenberg ----------------------------- Name: Steven D. Eisenberg Title: Vice President UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By: /s/ Christopher J. Grell ------------------------------ Name: Christopher J. Grell Title: Assistant Vice President EXHIBIT A-1 (FACE OF BOND) [INSERT THE GLOBAL BOND LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] [INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] CUSIP/CINS ___________ [8.137] [8.734]% SENIOR SECURED BOND DUE [2019] [2026] No.______ $__________ EDISON MISSION HOLDINGS CO. promises to pay to__________________________________________________________ or registered assigns, the principal sum of____________________________________________________________ Dollars in a series of installments as specified below with a final payment date of _________________. Payment Dates: April 1 and October 1 Record Dates: March 15 and September 15 EDISON MISSION HOLDINGS CO. BY:________________________ Name: Title: BY:________________________ Name: Title: This is one of the Global Bonds referred to in the within-mentioned Indenture: UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By: _______________________ Dated: May 27 , 1999 Name: Title: A-1-1 A-1-2 (BACK OF BOND) [8.137] [8734]% Senior Secured Bond due [2019] [2026] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Edison Mission Holdings Co. (the "COMPANY"), a California corporation, promises to pay interest on the principal amount of this Bond at [8.137] [8.734]% per annum from May 27, 1999 until maturity, as adjusted pursuant to Section 4 of the Registration Rights Agreement referred to below. The Company shall pay interest semi-annually on April 1 and October 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each a "PAYMENT DATE"). Interest on the Bonds will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; PROVIDED that if there is no existing Default in the payment of interest, and if this Bond is authenticated between a record date referred to on the face hereof and the next succeeding Payment Date, interest shall accrue from such next succeeding Payment Date; PROVIDED, FURTHER, that the first Payment Date shall be October 1, 1999. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. PRINCIPAL. The principal of this Bond shall be due and payable in consecutive semiannual installments on each Payment Date, commencing on April 1, 2004, and ending on the Payment Date for the final installment of principal set forth above, and each such installment of principal shall be in the amount, if any, set forth in Schedule 1 attached hereto in the column headed "Scheduled Principal Amount Payable" with respect to the date of such installment, PROVIDED that the final installment of principal shall be equal to the then unpaid principal balance of the Bond. 3. METHOD OF PAYMENT. The Company will pay interest or principal due on the Bonds (except defaulted interest) to the Persons who are registered Holders of Bonds at the close of business on the March 15 or September 15 next preceding the Payment Date, even if such Bonds are canceled after such record date and on or before such Payment Date, except as provided in Section 2.12 of the Indenture (as herein defined) with respect to defaulted interest. The Bonds will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within the City and State of New York, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that all payments of principal, premium, if any, and interest with respect to Bonds the Holders of which have given wire transfer instructions to the Company at least ten business days prior to the applicable payment date will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 4. PAYING AGENT AND REGISTRAR. Initially, United States Trust Company of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. A-1-3 5. INDENTURE. The Company issued the Bonds under an Indenture dated as of May 27, 1999, as amended or supplemented from time to time ("INDENTURE"), between the Company and the Trustee. The terms of the Bonds include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Bonds are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Bond conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Series [A] [B] Bonds are obligations of the Company limited to [$___] million in aggregate principal amount. 6. OPTIONAL REDEMPTION. The Bonds shall be subject to optional redemption at any time at a Redemption Price equal to the outstanding principal amount of the Bonds to be redeemed plus all accrued and unpaid interest thereon to the Redemption Date, plus the Yield Maintenance Premium, if any. 7. MANDATORY REDEMPTION. The Bonds will be subject to mandatory redemption, ratably with all other Senior Debt in existence at such time, upon the occurrence of a Recovery Event with respect to the Facilities, other than with respect to amounts received by the Company and the Subsidiary Guarantors in connection with a Recovery Event for which the Company elects to restore or replace the asset or assets in respect of which such Recovery Event occurred and a Reinvestment Notice is provided to the Collateral Agent and the Trustee within 45 days of such Recovery Event (provided that, with respect to any Recovery Event of $50 million or more, the Independent Engineer shall have certified as to the reasonableness of the Company's repair and replacement plans as set forth in the Company's Reinvestment Notice relating to such Recovery Event). Any mandatory redemption of the Bonds will be without premium or penalty at a Redemption Price equal to the unpaid principal amount thereof plus accrued and unpaid interest thereon to the Redemption Date. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Bonds are to be redeemed at its registered address. Bonds in denominations larger than $100,000 may be redeemed in part but only in whole multiples of $1,000 in excess thereof, unless all of the Bonds held by a Holder are to be redeemed. On and after the redemption date, interest ceases to accrue on Bonds or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Bonds are in registered form without coupons in denominations of $100,000 and integral multiples of $1,000 in excess thereof. The transfer of Bonds may be registered and Bonds may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Bond or portion of a Bond selected for redemption, except for the unredeemed portion of any Bond being redeemed in part. Also, the Company need not exchange or register the transfer of any Bonds for a period of 15 days before a selection of Bonds to be redeemed or during the period between a record date and the next succeeding Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Bond may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Bonds may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Bonds voting as a single class, and any existing default or compliance with any provision of the Indenture or the Bonds may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Bonds voting as a single class. Without the consent of any Holder A-1-4 of a Bond, the Indenture, the Bonds or any Financing Document may be amended or supplemented to cure any ambiguity, omission, defect or inconsistency, to provide for uncertificated Bonds in addition to or in place of certificated Bonds or to alter the provisions of Article 2 of the Indenture (including the related definitions) in a manner that does not affect any Holder, to provide for the assumption of the Company's obligations to Holders of the Bonds in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Bonds or that does not adversely affect the legal rights under the Indenture of any such Holder, to make any newly created or acquired Subsidiary of the Company a party to the Security Documents to comply with clause (i) of Section 4.8, or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture or any Security Document under the Trust Indenture Act. 12. DEFAULTS AND REMEDIES. An "Event of Default" occurs if there is the occurrence of any of the following: (i) default for 15 days in the payment when due of any principal of, premium, if any, or interest on the Bonds, (ii) failure by the Company or any of the Subsidiary Guarantors to comply with the provisions described under Sections 4.7, 4.9, 4.10, 4.11, 4.13, 4.14, 4.15, or 5.1 of the Indenture, and such failure shall continue uncured for 30 or more days from the date an authorized officer of the Company receives actual notice thereof, (iii) failure by the Company or any of the Subsidiary Guarantors to comply with any of its other agreements in the Indenture, the Bonds or the Security Documents and such failure shall continue uncured for 60 or more days from the date an authorized officer of the Company receives actual notice thereof (or to the extent such Default is curable but cannot be cured within such 60 day period, so long as the Company provides an Officer's Certificate to the Trustee stating that it is diligently pursuing a cure, such longer period of time which may be necessary in good faith to cure the same, but in no event to exceed 90 days), (iv) the occurrence of a Change of Control, (v) any portion of the security interests granted under the Security Documents ceasing to be a senior security interest in full force and effect, which cessation has a Material Adverse Effect; PROVIDED that the Company shall have 10 days to cure any such cessation, (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of the Subsidiary Guarantors (or the payment of which is guaranteed by the Company or any of the Subsidiary Guarantors) whether such Indebtedness or guarantee now exists, or is created after the Closing Date, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates without duplication $15 million or more, (vii) failure by the Company or any of the Subsidiary Guarantors to pay final, non-appealable judgments aggregating in excess of $15 million (excluding amounts covered by insurance), which judgments are not paid, discharged or stayed for a period of 90 days; and (viii) certain events of bankruptcy or insolvency with respect to the Company or any of the Subsidiary Guarantors. If any Event of Default occurs and is continuing, the Trustee may, and upon the written direction of the Holders of at least 33-1/3% (in the case of any Event of Default specified in clause (i) above) or 50% (in the case of any other Event of Default) in principal amount of the then outstanding Bonds shall, declare all the Bonds to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any Subsidiary Guarantor, all outstanding Bonds shall be due and payable without further action or notice. Holders may not enforce the Indenture or the Bonds except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Bonds may in writing direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Bonds notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority (or, with respect to an Event of Default specified in clause (iv) above, 66-2/3) in aggregate principal amount of the Bonds then outstanding by written notice to the Trustee may on behalf of the Holders A-1-5 of all of the Bonds waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Bonds. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator, shareholder or Affiliate (other than the Subsidiary Guarantors and EME) of the Company, as such, shall have any liability for any obligations of the Company under the Bonds, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Bond waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Bonds. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 15. AUTHENTICATION. This Bond shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL BONDS AND RESTRICTED DEFINITIVE BONDS. In addition to the rights provided to Holders of Bonds under the Indenture, Holders of Restricted Global Bonds and Restricted Definitive Bonds shall have all the rights set forth in the Exchange and Registration Rights Agreement dated as of May 27, 1999, among the Company, the Subsidiary Guarantors and Lehman Brothers Inc. (the "REGISTRATION RIGHTS AGREEMENT"). 18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Bonds and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Bonds or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 19. GUARANTEES AND SECURITY. This Bond will be entitled to the benefits of certain guarantees made and certain security interests created for the benefit of the Holders and holders of other senior indebtedness of the Company. Reference is hereby made to the Security Documents for a statement of the security interests granted therein and the respective rights, limitations of rights, duties and obligations thereunder of the Subsidiary Guarantors. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Edison Mission Holdings Co. 18101 Von Karman Avenue Suite 1700 Irvine, CA 92612-1046 Attention: Treasurer A-1-6 Facsimile: 949-752-5624 20. COUNTERPARTS. This Bond may be executed by one or more of the parties to this Bond on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 21. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THIS BOND. A-1-7 SCHEDULE OF SCHEDULED PAYMENTS OF PRINCIPAL [Attach the following table for Series A Bonds]
PRINCIPAL PAYMENT DATES PERCENTAGE OF ORIGINAL PRINCIPAL AMOUNT PAYABLE ON EACH PRINCIPAL PAYMENT DATE - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2004 1.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2005 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2006 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2007 2.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2008 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2009 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2010 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2011 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2012 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2013 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2014 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2015 4.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2016 4.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2017 5.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2018 5.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2019 3.500% ======================================================= ===========================================================
A-1-8 [Attach the following table for Series B Bonds]
PRINCIPAL PAYMENT DATES PERCENTAGE OF ORIGINAL PRINCIPAL AMOUNT PAYABLE ON EACH PRINCIPAL PAYMENT DATE - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2004 0.055% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2005 0.480% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2006 0.590% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2007 0.375% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2008 0.375% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2009 0.415% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2010 1.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2011 1.750% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2012 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2013 1.250% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2014 1.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2015 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2016 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2017 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2018 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2019 2.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2020 3.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2021 3.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2022 3.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2023 4.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2024 4.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2025 5.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2026 6.210% ======================================================= ===========================================================
A-1-9 ASSIGNMENT FORM To assign this Bond, fill in the form below: (I) or (we) assign and transfer this Bond to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________ to transfer this Bond on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date:_____________________ Your signature:___________________________________ (Sign exactly as your name appears on the face of this Bond) Tax Identification No.:___________________________ SIGNATURE GUARANTEE: ___________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-1-10 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL BOND(1) The following exchanges of a part of this Global Bond for an interest in another Global Bond or for a Definitive Bond, or exchanges of a part of another Global Bond or Definitive Bond for an interest in this Global Bond, have been made:
Principal Amount Amount of Amount of increase of this Global Bond Signature of decrease in in Principal following such authorized officer Principal Amount Amount of this decrease (or of Trustee or Date of Exchange of this Global Bond Global Bond Increase) Custodian - ---------------- ------------------- --------------- ------------- -------------
- -------- (1) THIS SHOULD BE INCLUDED ONLY IF THE BOND IS ISSUED IN GLOBAL FORM. A-1-11 EXHIBIT A-2 (FACE OF REGULATION S TEMPORARY GLOBAL BOND) THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL BOND, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED BONDS, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL BOND SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. [INSERT THE GLOBAL BOND LEGEND, PURSUANT TO THE PROVISIONS OF THE INDENTURE] [INSERT THE PRIVATE PLACEMENT LEGEND, PURSUANT TO THE PROVISIONS OF THE INDENTURE] A-2-1 CUSIP/CINS ___________ [8.137] [8.734]% SENIOR SECURED BOND DUE [2019] [2026] No.______ $__________ EDISON MISSION HOLDINGS CO. promises to pay to__________________________________________________________ or registered assigns, the principal sum of___________________________________________________ Dollars in a series of installments as specified below with a final payment date of _____________________________________________________________________________ Payment Dates: April 1 and October 1 Record Dates: March 15 and September 15 EDISON MISSION HOLDINGS CO. BY:________________________ Name: Title: BY:________________________ Name: Title: This is one of the Global Bonds referred to in the within-mentioned Indenture: UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By: _______________________ Dated: May 27, 1999 Name: Title: A-2-2 (BACK OF REGULATION S TEMPORARY GLOBAL BOND) [8.137] [8.734]% Senior Secured Bond due [2019] [2026] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Edison Mission Holdings Co. (the "COMPANY"), a California corporation, promises to pay interest on the principal amount of this Bond at [8.137] [8.734]% per annum from May 27, 1999 until maturity, as adjusted pursuant to Section 4 of the Registration Rights Agreement referred to below. The Company shall pay interest semi-annually on April 1 and October 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each a "PAYMENT DATE"). Interest on the Bonds will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; PROVIDED that if there is no existing default in the payment of interest, and if this Bond is authenticated between a record date referred to on the face hereof and the next succeeding Payment Date, interest shall accrue from such next succeeding Payment Date; PROVIDED, FURTHER, that the first Payment Date shall be October 1, 1999. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Until this Regulation S Temporary Global Bond is exchanged for one or more Regulation S Permanent Global Bonds, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Bond shall in all other respects be entitled to the same benefits as other Bonds under the Indenture. 2. PRINCIPAL. The principal of this Bond shall be due and payable in consecutive semiannual installments on each Payment Date, commencing on April 1, 2004, and ending on the Payment Date for the final installment of principal set forth above, and each such installment of principal shall be in the amount, if any, set forth in Schedule 1 attached hereto in the column headed "Scheduled Principal Amount Payable" with respect to the date of such installment, PROVIDED that the final installment of principal shall be equal to the then unpaid principal balance of the Bond. 3. METHOD OF PAYMENT. The Company will pay interest or principal due on the Bonds (except defaulted interest) to the Persons who are registered Holders of Bonds at the close of business on the March 15 or September 15 next preceding the Payment Date, even if such Bonds are canceled after such record date and on or before such Payment Date, except as provided in Section 2.12 of the Indenture (as herein defined) with respect to defaulted interest. The Bonds will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within the City and State of New York, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that all payments of principal, premium, if any, and interest with respect to Bonds the Holders of which have given wire transfer instructions to the Company at least ten business days prior to the applicable payment date will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. A-2-3 4. PAYING AGENT AND REGISTRAR. Initially, United States Trust Company of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 5. INDENTURE. The Company issued the Bonds under an Indenture dated as of May 27, 1999, as amended or supplemented from time to time ("INDENTURE"), between the Company and the Trustee. The terms of the Bonds include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Bonds are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Bond conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Series [A] [B] Bonds are obligations of the Company limited to [$___] million in aggregate principal amount. 6. OPTIONAL REDEMPTION. The Bonds shall be subject to optional redemption at any time at a Redemption Price equal to the outstanding principal amount of the Bonds to be redeemed plus all accrued and unpaid interest thereon to the Redemption Date, plus the Yield Maintenance Premium, if any. 7. MANDATORY REDEMPTION. The Bonds will be subject to mandatory redemption, ratably with all other Senior Debt in existence at such time, upon the occurrence of a Recovery Event with respect to the Facilities, other than with respect to amounts received by the Company and the Subsidiary Guarantors in connection with a Recovery Event for which the Company elects to restore or replace the asset or assets in respect of which such Recovery Event occurred and a Reinvestment Notice is provided to the Collateral Agent and the Trustee within 45 days of such Recovery Event (provided that, with respect to any Recovery Event of $50 million or more, the Independent Engineer shall have certified as to the reasonableness of the Company's repair and replacement plans as set forth in the Company's Reinvestment Notice relating to such Recovery Event). Any mandatory redemption of the Bonds will be without premium or penalty at a Redemption Price equal to the unpaid principal amount thereof plus accrued and unpaid interest thereon to the Redemption Date. 8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Bonds are to be redeemed at its registered address. Bonds in denominations larger than $100,000 may be redeemed in part but only in whole multiples of $1,000 in excess thereof, unless all of the Bonds held by a Holder are to be redeemed. On and after the redemption date, interest ceases to accrue on Bonds or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Bonds are in registered form without coupons in denominations of $100,000 and integral multiples of $1,000 in excess thereof. The transfer of Bonds may be registered and Bonds may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Bond or portion of a Bond selected for redemption, except for the unredeemed portion of any Bond being redeemed in part. Also, the Company need not exchange or register the transfer of any Bonds for a period of 15 days before a selection of Bonds to be redeemed or during the period between a record date and the next succeeding Payment Date. This Regulation S Temporary Global Bond is exchangeable in whole or in part for one or more Global Bonds only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) A-2-4 required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Bond for one or more Global Bonds, the Trustee shall cancel this Regulation S Temporary Global Bond. 10. PERSONS DEEMED OWNERS. The registered Holder of a Bond may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture or the Bonds may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Bonds voting as a single class, and any existing default or compliance with any provision of the Indenture or the Bonds may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Bonds voting as a single class. Without the consent of any Holder of a Bond, the Indenture, the Bonds or any Financing Document may be amended or supplemented to cure any ambiguity, omission, defect or inconsistency, to provide for uncertificated Bonds in addition to or in place of certificated Bonds or to alter the provisions of Article 2 of the Indenture (including the related definitions) in a manner that does not affect any Holder, to provide for the assumption of the Company's obligations to Holders of the Bonds in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Bonds or that does not adversely affect the legal rights under the Indenture of any such Holder, to make any newly created or acquired Subsidiary of the Company a party to the Security Documents to comply with clause (i) of Section 4.8, or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture or any Security Document under the Trust Indenture Act. 12. DEFAULTS AND REMEDIES. An "Event of Default" occurs if there is the occurrence of any of the following: (i) default for 15 days in the payment when due of any principal of, premium, if any, or interest on the Bonds, (ii) failure by the Company or any of the Subsidiary Guarantors to comply with the provisions described under Sections 4.7, 4.9, 4.10, 4.11, 4.13, 4.14, 4.15, or 5.1 of the Indenture, and such failure shall continue uncured for 30 or more days from the date an authorized officer of the Company receives actual notice thereof, (iii) failure by the Company or any of the Subsidiary Guarantors to comply with any of its other agreements in the Indenture, the Bonds or the Security Documents and such failure shall continue uncured for 60 or more days from the date an authorized officer of the Company receives actual notice thereof (or to the extent such Default is curable but cannot be cured within such 60 day period, so long as the Company provides an Officer's Certificate to the Trustee stating that it is diligently pursuing a cure, such longer period of time which may be necessary in good faith to cure the same, but in no event to exceed 90 days), (iv) the occurrence of a Change of Control, (v) any portion of the security interests granted under the Security Documents ceasing to be a senior security interest in full force and effect, which cessation has a Material Adverse Effect; PROVIDED that the Company shall have 10 days to cure any such cessation, (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of the Subsidiary Guarantors (or the payment of which is guaranteed by the Company or any of the Subsidiary Guarantors) whether such Indebtedness or guarantee now exists, or is created after the Closing Date, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates without duplication $15 million or more, (vii) failure by the Company or any of the Subsidiary Guarantors to pay final, non-appealable judgments aggregating in excess of $15 million (excluding amounts covered by insurance), which judgments are not paid, discharged or stayed for a period of 90 days; and (viii) certain events of bankruptcy or insolvency with respect to the Company or any of the Subsidiary Guarantors. If any Event of Default occurs and is continuing, the Trustee may, and upon the written direction of the Holders of at least 33-1/3% (in the case of any Event of Default specified in clause (i) above) or 50% (in the case of any other Event of Default) in principal amount of the then A-2-5 outstanding Bonds shall, declare all the Bonds to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any Subsidiary Guarantor, all outstanding Bonds shall be due and payable without further action or notice. Holders may not enforce the Indenture or the Bonds except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Bonds may in writing direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Bonds notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority (or, with respect to an Event of Default specified in clause (iv) above, 66-2/3) in aggregate principal amount of the Bonds then outstanding by written notice to the Trustee may on behalf of the Holders of all of the Bonds waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Bonds. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or shareholder or Affiliate (other than the Subsidiary Guarantors and EME) of the Company, as such, shall have any liability for any obligations of the Company under the Bonds, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Bond waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Bonds. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 15. AUTHENTICATION. This Bond shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL BONDS AND RESTRICTED DEFINITIVE BONDS. In addition to the rights provided to Holders of Bonds under the Indenture, Holders of Restricted Global Bonds and Restricted Definitive Bonds shall have all the rights set forth in the Exchange and Registration Rights Agreement dated as of May 27, 1999, among the Company, the Subsidiary Guarantors and Lehman Brothers Inc. (the "REGISTRATION RIGHTS AGREEMENT"). 18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Bonds and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Bonds or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 19. GUARANTEES AND SECURITY. This Bond will be entitled to the benefits of certain guarantees made and certain security interests created for the benefit of the Holders and holders of other senior indebtedness of the Company. Reference is hereby made to the Security Documents for a statement of the security interests granted therein and the respective rights, limitations of rights, duties and obligations thereunder of the Subsidiary Guarantors. A-2-6 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Edison Mission Holdings Co. 18101 Von Karman Avenue Suite 1700 Irvine, CA 92612-1046 Attention: Treasurer Facsimile: 949-752-5624 20. COUNTERPARTS. This Bond may be executed by one or more of the parties to this Bond on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 21. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THIS BOND. A-2-7 SCHEDULE OF SCHEDULED PAYMENTS OF PRINCIPAL [Attach the following table for Series A Bonds]
PRINCIPAL PAYMENT DATES PERCENTAGE OF ORIGINAL PRINCIPAL AMOUNT PAYABLE ON EACH PRINCIPAL PAYMENT DATE - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2004 1.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2005 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2006 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2007 2.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2008 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2009 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2010 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2011 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2012 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2013 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2014 3.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2015 4.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2016 4.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2017 5.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2018 5.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2019 3.500% ======================================================= ===========================================================
A-2-8 [Attach the following table for Series B Bonds]
PRINCIPAL PAYMENT DATES PERCENTAGE OF ORIGINAL PRINCIPAL AMOUNT PAYABLE ON EACH PRINCIPAL PAYMENT DATE - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2004 0.055% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2005 0.480% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2006 0.590% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2007 0.375% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2008 0.375% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2009 0.415% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2010 1.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2011 1.750% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2012 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2013 1.250% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2014 1.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2015 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2016 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2017 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2018 2.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2019 2.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2020 3.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2021 3.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2022 3.500% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2023 4.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2024 4.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2025 5.000% - ------------------------------------------------------- ----------------------------------------------------------- April 1 and October 1, 2026 6.210% ======================================================= ===========================================================
A-2-9 ASSIGNMENT FORM To assign this Bond, fill in the form below: (I) or (we) assign and transfer this Bond to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________ to transfer this Bond on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ Date:__________________ Your signature:___________________________________ (Sign exactly as your name appears on the face of this Bond) Tax Identification No.:___________________________ SIGNATURE GUARANTEE: ___________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-2-10 SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL BOND The following exchanges of a part of this Regulation S Temporary Global Bond for an interest in another Global Bond, or of other Restricted Global Bonds for an interest in this Regulation S Temporary Global Bond, have been made:
Principal Amount Amount of Amount of increase of this Global Bond Signature of decrease in in Principal following such authorized officer Principal Amount Amount of this decrease (or of Trustee or Date of Exchange of this Global Bond Global Bond Increase) Custodian - ---------------- ------------------- --------------- ------------- -------------
A-2-11 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Edison Mission Holdings Co. 18101 Von Karman Avenue Suite 1700 Irvine, CA 92612-1046 Attention: Treasurer United States Trust Company of New York 114 West 47th Street 25th Floor New York, New York 10036 Attention: Corporate Trust Division Re: [8.137] [8.734]% SENIOR SECURED BONDS DUE [2019] [2026] Reference is hereby made to the Indenture, dated as of May 27, 1999 (the "INDENTURE"), between Edison Mission Holdings Co. (the "COMPANY"), and United States Trust Company of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________ (the "TRANSFEROR") owns and proposes to transfer the Bond[s] or interest in such Bond[s] specified in Annex A hereto, in the principal amount of $____ in such Bond[s] or interests (the "TRANSFER"), to ______ (the "TRANSFEREE"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL BOND OR A DEFINITIVE BOND PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "SECURITIES ACT"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Bond is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Bond for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Bond will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Bond and/or the Definitive Bond and in the Indenture and the Securities Act. 2. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE TEMPORARY REGULATION S GLOBAL BOND, THE REGULATION S GLOBAL BOND OR A DEFINITIVE BOND PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United B-1 States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Bond will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Regulation S Global Bond, the Temporary Regulation S Global Bond and/or the Definitive Bond and in the Indenture and the Securities Act. 3. / / CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A DEFINITIVE BOND PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Bonds and Restricted Definitive Bonds and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) / /such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) / /such Transfer is being effected to the Company or a subsidiary thereof; or (c) / /such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) / /such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Bond or Restricted Definitive Bonds and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee and (2) if such Transfer is in respect of a principal amount of Bonds at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Bond will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Definitive Bonds and in the Indenture and the Securities Act. B-2 4. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL BOND OR OF AN UNRESTRICTED DEFINITIVE BOND. (a) / / CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Bond will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Bonds and the Restricted Definitive Bonds and in the Indenture. (b) / / CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Bond will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Bonds and the Restricted Definitive Bonds and in the Indenture. (c) / / CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Bond will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Bonds and the Restricted Definitive Bonds and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ___________________________ [Insert Name of Transferor] By:________________________ Name: Title: Dated:___________,_____ B-3 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) / / a beneficial interest in the: (i) / /144A Global Bond (CUSIP _____), or (ii) / /Regulation S Global Bond (CUSIP _____), or (b) a Restricted Definitive Bond. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) / / a beneficial interest in the: (i) / /144A Global Bond (CUSIP _____), or (ii) / /Regulation S Global Bond (CUSIP _____), or (iii) / /Unrestricted Global Bond (CUSIP _____); or (b) / / a Restricted Definitive Bond; or (c) / / an Unrestricted Definitive Bond, in accordance with the terms of the Indenture. B-4 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Edison Mission Holdings Co. 18101 Von Karman Avenue Suite 1700 Irvine, CA 92612-1046 Attention: Treasurer United States Trust Company of New York 114 West 47th Street 25th Floor New York, New York 10036 Attention: Corporate Trust Division Re: [8.137] [8.734]% SENIOR SECURED BONDS DUE [2019] [2026] Reference is hereby made to the Indenture, dated as of May 27, 1999 (the "INDENTURE"), between Edison Mission Holdings Co. (the "COMPANY") and United States Trust Company of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ________________ (the "OWNER") owns and proposes to exchange the Bond[s] or interest in such Bond[s] specified herein, in the principal amount of $______ in such Bond[s] or interests (the "EXCHANGE"). In connection with the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE BONDS OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL BOND FOR UNRESTRICTED DEFINITIVE BONDS OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL BOND (a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL BOND TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL BOND. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Bond for a beneficial interest in an Unrestricted Global Bond in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Bonds and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "SECURITIES ACT"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Bond is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL BOND TO UNRESTRICTED DEFINITIVE BOND. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Bond for an Unrestricted Definitive Bond, the Owner hereby certifies (i) the Definitive Bond is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Bonds and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Bond is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. C-1 (c) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE BOND TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL BOND. In connection with the Owner's Exchange of a Restricted Definitive Bond for a beneficial interest in an Unrestricted Global Bond, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Bonds and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE BOND TO UNRESTRICTED DEFINITIVE BOND. In connection with the Owner's Exchange of a Restricted Definitive Bond for an Unrestricted Definitive Bond, the Owner hereby certifies (i) the Unrestricted Definitive Bond is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Bonds and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Bond is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE BONDS OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL BONDS FOR RESTRICTED DEFINITIVE BONDS OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL BONDS (a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL BOND TO RESTRICTED DEFINITIVE BOND. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Bond for a Restricted Definitive Bond with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Bond is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Bond issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Bond and in the Indenture and the Securities Act. (b) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE BOND TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL BOND. In connection with the Exchange of the Owner's Restricted Definitive Bond for a beneficial interest in the [CHECK ONE] 144A Global Bond, Regulation S Global Bond with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Bonds and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Bond and in the Indenture and the Securities Act. C-2 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. _______________________ [Insert Name of Owner] By:____________________ Name: Title: Dated:__________,______ C-3 EXHIBIT D FORM OF BOND DEBT SERVICE RESERVE GUARANTEE [TO COME--CONFORMED FROM CREDIT AGREEMENT GUARANTEE] D-1 CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section 310(a)(1)..................................................................7.10 (a)(2)................................................................7.10 (a)(3).................................................................N.A. (a)(4).................................................................N.A. (a)(5)................................................................7.10 (b)...................................................................7.10 (c)....................................................................N.A. 311(a).....................................................................7.11 (b)...................................................................7.11 (c)....................................................................N.A. 312(a)......................................................................2.5 (b)...................................................................10.3 (c)...................................................................10.3 313(a)......................................................................7.6 (b)(1).................................................................7.7 (b)(2).................................................................7.7 (c)....................................................................7.6 10.2 (d)....................................................................7.6 314(a)......................................................................4.3; 10.2 (b)....................................................................N.A. (c)(1)................................................................10.4 (c)(2)................................................................10.4 (c)(3).................................................................N.A. (e)...................................................................10.5 (f)....................................................................N.A. 315(a)......................................................................7.1 (b)....................................................................7.5 10.2 (c)....................................................................7.1 (d)....................................................................7.1 (e)...................................................................6.11 316(a)(last sentence).......................................................2.9 (a)(1)(A)..............................................................6.5 (a)(1)(B)..............................................................6.4 (a)(2).................................................................N.A. (b)....................................................................6.7 (c)...................................................................2.12 317(a)(1)...................................................................6.8 (a)(2).................................................................6.9 (b)....................................................................2.4 318(a).....................................................................10.1 (b)....................................................................N.A. (c)...................................................................10.1
N.A. means not applicable. *This Cross-Reference Table is not part of the Indenture. EXECUTION COPY - -------------------------------------------------------------------------------- EDISON MISSION HOLDINGS CO. $300,000,000 8.137% SENIOR SECURED BONDS DUE 2019 $530,000,000 8.734% SENIOR SECURED BONDS DUE 2026 INDENTURE Dated as of May 27, 1999 UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee TABLE OF CONTENTS
Page ---- ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1 DEFINITIONS...................................................1 SECTION 1.2 OTHER DEFINITIONS............................................13 SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..................................................13 SECTION 1.4 RULES OF CONSTRUCTION........................................14 SECTION 1.5 ONE CLASS OF SECURITIES......................................14 ARTICLE 2. THE BONDS SECTION 2.1 FORM AND DATING..............................................15 SECTION 2.2 EXECUTION AND AUTHENTICATION.................................16 SECTION 2.3 REGISTRAR AND PAYING AGENT...................................17 SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST..........................17 SECTION 2.5 HOLDER LISTS.................................................18 SECTION 2.6 TRANSFER AND EXCHANGE........................................18 SECTION 2.7 REPLACEMENT BONDS............................................32 SECTION 2.8 OUTSTANDING BONDS............................................32 SECTION 2.9 TREASURY BONDS...............................................32 SECTION 2.10 TEMPORARY BONDS..............................................33 SECTION 2.11 CANCELLATION.................................................33 SECTION 2.12 DEFAULTED INTEREST...........................................33 SECTION 2.13 CUSIP NUMBERS................................................34 ARTICLE 3. REDEMPTION AND PREPAYMENT SECTION 3.1 NOTICES TO TRUSTEE...........................................35 SECTION 3.2 SELECTION OF BONDS TO BE REDEEMED............................35 SECTION 3.3 NOTICE OF REDEMPTION.........................................35 SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION...............................36 SECTION 3.5 DEPOSIT OF REDEMPTION PRICE..................................36 SECTION 3.6 BONDS REDEEMED IN PART.......................................37 SECTION 3.7 OPTIONAL REDEMPTION..........................................37 SECTION 3.8 MANDATORY REDEMPTION.........................................37
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Page ---- ARTICLE 4. COVENANTS SECTION 4.1 PAYMENT OF BONDS.............................................38 SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY..............................38 SECTION 4.3 INFORMATION REQUIREMENTS.....................................38 SECTION 4.4 COMPLIANCE CERTIFICATE.......................................40 SECTION 4.5 TAXES; MAINTENANCE OF BOOKS AND RECORDS......................40 SECTION 4.6 STAY, EXTENSION AND USURY LAWS...............................40 SECTION 4.7 LIMITATION ON RESTRICTED PAYMENTS............................40 SECTION 4.8 LIMITATION ON SUBSIDIARIES AND INVESTMENTS...................41 SECTION 4.9 LIMITATION ON INCURRENCE OF INDEBTEDNESS.....................42 SECTION 4.10 LIMITATION ON INCURRENCE OF SUBSIDIARY GUARANTOR INDEBTEDNESS ..............................44 SECTION 4.11 LIMITATION OF SALE OF ASSETS ................................44 SECTION 4.12 LIMITATION ON TRANSACTIONS WITH AFFILIATES...................44 SECTION 4.13 LIMITATION ON LIENS..........................................45 SECTION 4.14 LIMITATION ON BUSINESS ACTIVITIES............................45 SECTION 4.15 MAINTENANCE OF EXISTENCE.....................................46 SECTION 4.16 PAYMENTS FOR CONSENT.........................................46 SECTION 4.17 COMPLIANCE WITH LAWS.........................................46 SECTION 4.18 GOVERNMENT APPROVALS.........................................46 SECTION 4.19 MAINTENANCE OF PROPERTY; INSURANCE...........................46 SECTION 4.20 BOND DEBT SERVICE RESERVE ACCOUNT............................47 SECTION 4.21 PERFECTION OF SECURITY INTERESTS.............................47 ARTICLE 5. SUCCESSORS SECTION 5.1 LIMITATION ON MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY ALL ASSETS.............................47 SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED............................48 ARTICLE 6. EVENTS OF DEFAULT SECTION 6.1 EVENTS OF DEFAULT............................................49 SECTION 6.2 ACCELERATION.................................................50 SECTION 6.3 OTHER REMEDIES...............................................51 SECTION 6.4 WAIVER OF PAST DEFAULTS......................................51 SECTION 6.5 CONTROL BY MAJORITY..........................................51 SECTION 6.6 LIMITATION ON SUITS..........................................52
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Page ---- SECTION 6.7 RIGHTS OF HOLDERS OF BONDS TO RECEIVE PAYMENT..............................................52 SECTION 6.8 COLLECTION SUIT BY TRUSTEE...................................52 SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.............................53 SECTION 6.10 PRIORITIES...................................................53 SECTION 6.11 FOR COSTS....................................................54 ARTICLE 7. TRUSTEE SECTION 7.1 DUTIES OF TRUSTEE............................................54 SECTION 7.2 RIGHTS OF TRUSTEE............................................55 SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.................................56 SECTION 7.4 TRUSTEE'S DISCLAIMER.........................................56 SECTION 7.5 NOTICE OF DEFAULTS...........................................56 SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE BONDS...................57 SECTION 7.7 COMPENSATION AND INDEMNITY...................................57 SECTION 7.8 REPLACEMENT OF TRUSTEE.......................................58 SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.............................59 SECTION 7.10 ELIGIBILITY; DISQUALIFICATION................................59 SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY..............................................59 SECTION 7.12 OTHER CAPACITIES.............................................59 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE...........................................60 SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE...............................60 SECTION 8.3 COVENANT DEFEASANCE..........................................60 SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE...................61 SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS........62 SECTION 8.6 REPAYMENT TO COMPANY.........................................63 SECTION 8.7 REINSTATEMENT................................................63 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF BONDS..........................64 SECTION 9.2 WITH CONSENT OF HOLDERS OF BONDS.............................64
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Page ---- SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT..........................66 SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS............................66 SECTION 9.5 NOTATION ON OR EXCHANGE OF BONDS.............................66 SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC..............................66 ARTICLE 10. MISCELLANEOUS SECTION 10.1 TRUST INDENTURE ACT CONTROLS.................................67 SECTION 10.2 NOTICES......................................................67 SECTION 10.3 COMMUNICATION BY HOLDERS OF BONDS WITH OTHER HOLDERS OF BONDS.....................................68 SECTION 10.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............................................68 SECTION 10.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION................69 SECTION 10.6 RULES BY TRUSTEE AND AGENTS..................................69 SECTION 10.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS...................69 SECTION 10.8 GOVERNING LAW................................................69 SECTION 10.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS...........................................70 SECTION 10.10 SUCCESSORS...................................................70 SECTION 10.11 SEVERABILITY.................................................70 SECTION 10.12 COUNTERPART ORIGINALS........................................70 SECTION 10.13 TABLE OF CONTENTS, HEADINGS, ETC.............................70
EXHIBITS: A-1 Form of Bond A-2 Form of Regulation S Temporary Global Bond B Form of Certificate of Transfer C Form of Certificate of Exchange D Form of Bond Debt Service Reserve Guarantee iv EX-5.1 16 EXHIBIT 5.1 Exhibit 5.1 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 919 THIRD AVENUE NEW YORK, NY 10022 (212) 735-3000 December 3, 1999 Edison Mission Holdings Co. 18101 Von Karman Avenue Irvine, California 92612 Re: Edison Mission Holdings Co. Registration Statement on Form S-4 ---------------------------------- Ladies and Gentlemen: We are acting as special counsel to Edison Mission Holdings Co., a California corporation (the "Company"), in connection with the public offering of $300,000,000 aggregate principal amount of the Company's 8.137% Senior Secured Bonds due 2019 and of $530,000,000 aggregate principal amount of the Company's 8.734% Senior Secured Bonds due 2026 (collectively, the "Exchange Bonds"), which are to be guaranteed, on a senior secured basis pursuant to guarantees (the "Guarantees" and, together with the Exchange Bonds, the "Securities") by Edison Mission Finance Co., a California corporation ("Edison Finance"), Homer City Property Holdings, Inc., a California corporation ("Homer City Property"), Mission Energy Westside, Inc., a California corporation ("Mission Energy Westside"), Chestnut Ridge Energy Company, a California corporation ("Chestnut Ridge"), Edison Mission Energy, a California corpora tion (collectively with Edison Finance, Homer City Property, Mission Energy Westside and Chestnut Ridge, the "California Subsidiaries"), and EME Homer City Generation L.P., a Pennsylvania limited partnership ("EME Homer City" and, collectively with the California Subsidiaries, the "Guarantors"). The Securities are to be issued pursuant to an exchange offer (the "Exchange Offer") in exchange for a like principal amount of the issued and outstanding 8.137% Senior Secured Bonds due 2019 and 8.734% Senior Secured Bonds due 2026 of the Company (collectively, the "Original Securities") under the Indenture dated as of May 27, 1999 (the "Indenture"), between the Company and United States Trust Company of New York, as Trustee (the "Trustee"), as contemplated by the Registration Rights Agreement, dated as of May 27, 1999 (the "Registration Edison Mission Holdings Co. December 3, 1999 Page 2 Rights Agreement"), by and among the Company, Lehman Brothers Inc., Credit Suisse First Boston Corporation, Salomon Smith Barney Inc. and SG Cowen Securities Corp. This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Act"). In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement on Form S-4 relating to the Securities to be filed with the Securities and Exchange Commis sion (the "Commission") on the date hereof under the Act (the "Registration Statement"); (ii) an executed copy of the Registration Rights Agreement; (iii) an executed copy of the Indenture; (iv) the Articles of Incorporation of the Company and each of the California Subsidiaries as amended to date; (v) the By-Laws of the Company and each of the California Subsidiaries as amended to date; (vi) certain resolutions adopted by the Board of Directors of the Company relating to the Exchange Offer, the issuance of the Original Securities and the Securities, the Indenture and related matters; (vii) certain resolutions adopted by the Boards of Directors of each of the California Subsidiaries relating to, among other things the issuance of the Guarantees by the California Subsidiaries; (viii) the Form T-1 of the Trustee filed as an exhibit to the Registration Statement; and (ix) the form of the Securities. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and each of the California Subsidiaries and such agreements, certificates of public officials, certificates of officers or other representatives of the Company and each of the California Subsidiaries and others, and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents. In making our examination of executed documents or documents to be executed, we have assumed that the parties thereto, other than the Company and the California Subsidiaries, had or will have the power, corporate or other, to enter into and Edison Mission Holdings Co. December 3, 1999 Page 3 perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company, the Guarantors and others. Our opinion set forth herein is limited to California corporate law and the laws of the State of New York which are normally applicable to transactions of the type contemplated by the Exchange Offer and to the extent that judicial or regulatory orders or decrees or consents, approvals, licenses, authorizations, validations, filings, recordings or registrations with governmental authorities are relevant, to those required under such laws (all of the foregoing being referred to as "Opined on Law"). We do not express any opinion with respect to the law of any jurisdiction other than Opined on Law or as to the effect of any such law on the opinions herein stated. Based upon and subject to the foregoing and the limitations, qualifications, exceptions and assumptions set forth herein, we are of the opinion that when the Securi ties (in the form examined by us) have been duly executed and authenticated in accor dance with the terms of the Indenture and have been delivered upon consummation of the Exchange Offer against receipt of Old Securities surrendered in exchange therefor in accordance with the terms of the Exchange Offer, the Securities will constitute valid and binding obligations of the Company and each of the California Subsidiaries, enforceable against the Company and each of the California Subsidiaries in accordance with their terms, except to the extent that enforcement thereof may be limited by (1) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and (2) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). In rendering the opinion set forth above, we have assumed that the execution and delivery by the Company and each of the California Subsidiaries of the Indenture and the Securities and the performance by the Company and each of the California Subsidiaries of their obligations thereunder do not and will not violate, conflict Edison Mission Holdings Co. December 3, 1999 Page 4 with or constitute a default under any agreement or instrument to which the Company or the California Subsidiaries or their respective properties is subject, except that we do not make this assumption for those agreements and instruments which have been identified to us by the Company or the California Subsidiaries as being material to them and which are listed as exhibits to the Registration Statement. We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also consent to the reference to our firm under the caption "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission. Very truly yours, /s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP EX-10.1 17 EXHIBIT 10.1 EXHIBIT 10.1 EXECUTION COPY EDISON MISSION HOLDINGS CO. $300,000,000 8.137% Senior Secured Bonds due 2019 $530,000,000 8.734% Senior Secured Bonds due 2026 EXCHANGE AND REGISTRATION RIGHTS AGREEMENT May 27, 1999 LEHMAN BROTHERS INC. CREDIT SUISSE FIRST BOSTON CORPORATION SALOMON SMITH BARNEY INC. SG COWEN SECURITIES CORP. c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Dear Sirs: In connection with the issue and sale of $300 million in aggregate principal amount of 8.137% Senior Secured Bonds due 2019 and $530 million in aggregate principal amount of 8.734% Senior Secured Bonds due 2026 (the "INITIAL SECURITIES") issued by Edison Mission Holdings Co., a California corporation (the "COMPANY"), pursuant to the terms of the Indenture (as defined below) and as an inducement to Lehman Brothers Inc., Credit Suisse First Boston Corporation, Salomon Smith Barney Inc. and SG Cowen Securities Corp. (the "INITIAL PURCHASERS") to enter into the Purchase Agreement dated May 21, 1999 (the "PURCHASE AGREEMENT"), among the Company, Edison Mission Energy ("EME"), EME Homer City Generation L.P. ("EME HOMER CITY"), Edison Mission Finance Co. ("FINANCECO"), Homer City Property Holdings, Inc. ("PROPERTYCO"), Mission Energy Westside, Inc. ("ME WESTSIDE") and Chestnut Ridge Energy Company ("CHESTNUT RIDGE" and, collectively with EME, EME Homer City, FinanceCo, PropertyCo and ME Westside, the "GUARANTORS") and the Initial Purchasers, the Company and the Guarantors hereby agree to provide the registration rights set forth in this Registration Rights Agreement (this "AGREEMENT") for the benefit of the holders of the Initial Securities. The execution of this Agreement is a condition to the purchase of the Initial Securities under the Purchase Agreement. SECTION 1. DEFINITIONS. Capitalized terms used herein without definition shall have the respective meanings ascribed thereto, whether expressly or by reference to another agreement or document, in the Indenture. The definitions set forth in this Agreement shall 2 equally apply to both the singular and plural forms of the terms defined. As used in this Agreement, the following terms shall have the following meanings: "ADVICE" shall have the meaning set forth in the last paragraph of SECTION 5 of this Agreement. "AFFILIATE", with respect to any Person, shall mean any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such first Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities or by contract or otherwise. For purposes of SECTION 2, an "Affiliate" of the Company or any Guarantor shall mean and include, in addition, any Person deemed an affiliate thereof under the Securities Act or the Exchange Act in connection with the Exchange Offer. "CLOSING DATE" shall mean the date of the initial issuance and sale of the Initial Securities. "COMMISSION" shall mean the United States Securities and Exchange Commission. "COMPANY" shall have the meaning set forth in the first paragraph of this Agreement. "CURE DATE" shall have the meaning set forth in SECTION 4(a) of this Agreement. "EFFECTIVE DATE" shall mean the date which is 270 days after the Closing Date. "EFFECTIVE PERIOD" shall have the meaning set forth in SECTION 3(a) of this Agreement. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "EXCHANGE OFFER" shall have the meaning set forth in SECTION 2(a) of this Agreement. "EXCHANGE OFFER REGISTRATION STATEMENT" shall have the meaning set forth in SECTION 2(a) of this Agreement. "EXCHANGE PERIOD" shall have the meaning set forth in SECTION 2(a) of this Agreement. 3 "EXCHANGE SECURITIES" shall have the meaning set forth in SECTION 2(a) of this Agreement. "GUARANTORS" shall have the meaning set forth in the first paragraph of this Agreement. A "HOLDER" of Registrable Securities shall mean the registered holder of such securities or any beneficial owner thereof. "HOLDER INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 8(a) of this Agreement. "HOLDER INFORMATION" shall have the meaning set forth in SECTION 8(a) of this Agreement. "ILLIQUIDITY EVENT" with respect to the Initial Securities shall mean any of the following events: (a) as of the Effective Date, both (i) an Exchange Offer Registration Statement (which, if applicable pursuant to SECTION 2(a), covers resales of such Exchange Securities) has not become effective and (ii) the Registrable Securities are not the subject of an Initial Shelf Registration Statement which has become effective; or (b) the Exchange Securities offered in exchange for the Registrable Securities are the subject of an Exchange Offer Registration Statement which was effective (and which, if applicable pursuant to SECTION 2(a), covered resales of such Exchange Securities) but which ceased to be effective for any reason prior to the end of the Exchange Period; or (c) the Registrable Securities are the subject of an Initial Shelf Registration Statement or Subsequent Shelf Registration Statement which was effective but which has ceased to be effective for any reason prior to the end of the Effective Period. An Illiquidity Event shall be deemed to cease to exist on the date subsequent to the occurrence of such Illiquidity Event on which: (i) in the case of an Illiquidity Event described in clause (a) above, either (i) an Exchange Offer Registration Statement (which, if applicable pursuant to SECTION 2(a), covers resales of the Exchange Securities exchanged for such Registrable Securities) shall become effective and an Exchange Offer for such Registrable Securities shall have 4 commenced or (ii) an Initial Shelf Registration Statement covering such Registrable Securities shall become effective; or (ii) in the case of an Illiquidity Event described in clause (b) above, either (i) an Exchange Offer Registration Statement (which, if applicable pursuant to SECTION 2(a), covers resales of the Exchange Securities offered in exchange for such Initial Securities) shall become effective and an Exchange Offer for such Registrable Securities shall have commenced pursuant to an Exchange Offer Registration Statement or (ii) an Initial Shelf Registration Statement covering such Registrable Securities shall become effective; or (iii) in the case of an Illiquidity Event described in clause (c) above, a Subsequent Shelf Registration Statement covering such Registrable Securities shall become effective. "INDENTURE" shall mean the Indenture dated as of May 27, 1999, and as further amended or supplemented from time to time in accordance with the terms thereof, between the Company and the Trustee, and pursuant to which the Initial Securities and any Exchange Securities are to be issued. "INITIAL PURCHASERS" shall have the meaning set forth in the first paragraph of this Agreement. "INITIAL SECURITIES" shall have the meaning set forth in the first paragraph of this Agreement. "INITIAL SHELF REGISTRATION STATEMENT" shall have the meaning set forth in SECTION 3(a) of this Agreement. "INSPECTORS" shall have the meaning set forth in SECTION 5(m) of this Agreement. "MANAGING UNDERWRITERS" shall mean the investment banker or investment bankers and manager or managers that shall administer an Underwritten Offering. "NASD" shall mean the National Association of Securities Dealers, Inc. "PROSPECTUS" shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the Prospectus, including post-effective amendments and all material incorporated by reference into such prospectus. "PURCHASE AGREEMENT" shall have the meaning set forth in the first paragraph of this Agreement. 5 "RECORDS" shall have the meaning set forth in SECTION 5(m) of this Agreement. "REGISTRABLE SECURITIES" shall mean the Initial Securities upon original issuance thereof and at all times subsequent thereto until, in the case of any such Initial Security, (i) a Registration Statement covering such Initial Security, or the Exchange Security to be exchanged for such Initial Security (and, in the case of any Resale Security, any resale thereof), has been declared effective and such Initial Security has been disposed of or exchanged (or, in any case where such Registration Statement covers the resale of Resale Securities, such Initial Security has been exchanged and the Resale Security received therefor has been resold), as the case may be, in accordance with such effective Registration Statement, (ii) such Initial Security is sold in compliance with Rule 144 or would be permitted to be sold pursuant to Rule 144(k), (iii) such Initial Security shall have been otherwise transferred and a new certificate therefor not bearing a legend restricting further transfer shall have been delivered by or on behalf of the Company and such Initial Security shall be tradeable by each holder thereof without restriction under the Securities Act or the Exchange Act and without material restriction under the applicable blue sky or state securities laws or (iv) such Initial Security ceases to be outstanding. "REGISTRATION STATEMENT" shall mean any registration statement (including any Shelf Registration Statement) of the Company and the Guarantors that covers any of the Registrable Securities or the Exchange Securities, as the case may be, pursuant to the provisions of this Agreement, including the Prospectus which is part of such Registration Statement, amendments (including post-effective amendments) and supplements to such Registration Statement and all exhibits and appendices to any of the foregoing. For purposes of the foregoing, unless the context requires otherwise, a Registration Statement for an Exchange Offer shall not be deemed to cover Registrable Securities held by a Restricted Person unless such Registration Statement covers the resale of Resale Securities to be received by such Restricted Person pursuant to such Exchange Offer and any such Initial Securities shall continue to be Registrable Securities. "RESALE INITIAL PURCHASER" shall have the meaning set forth in SECTION 8(a) of this Agreement. "RESALE SECURITIES" shall mean any Exchange Security received by a Restricted Person pursuant to an Exchange Offer, and at all times subsequent thereto, until, subject to the time periods set forth herein, such Exchange Security has been resold by such Restricted Person. "RESTRICTED PERSON" shall mean (a) any Affiliate of the Company or any Guarantor, (b) any Initial Purchaser or (c) any Affiliate of any Initial Purchaser (other than Affiliates of such Initial Purchaser that (i) are acquiring Exchange Securities in the ordinary course of business and do not have an arrangement with any Person to distribute Exchange Securities and (ii) may trade such Exchange Securities without restriction under the Securities 6 Act). "RULE 144" shall mean Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. "RULE 144A" shall mean Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. "RULE 415" shall mean Rule 415 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "SHELF NOTICE" shall have the meaning set forth in SECTION 2(b) of this Agreement. "SHELF REGISTRATION STATEMENT" shall have the meaning set forth in SECTION 3(b) of this Agreement. "SPECIAL COUNSEL" shall mean Simpson Thacher & Bartlett, special counsel to the Initial Purchasers, or any other firm acceptable to the Company, acting as special counsel to the holders of Registrable Securities or Exchange Securities. "SUBSEQUENT SHELF REGISTRATION STATEMENT" shall have the meaning set forth in SECTION 3(b) of this Agreement. "TIA" shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder. "TRUSTEE" shall mean United States Trust Company of New York, its successors and any successor trustee under the Indenture. "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a registration in which securities are sold to an underwriter or group of underwriters for reoffering to the public. SECTION 2. EXCHANGE OFFER. 7 (a) Unless the Company determines in good faith that the Exchange Offer shall not be permissible under applicable law or Commission policy, the Company and the Guarantors shall prepare and cause to be filed with the Commission as soon as reasonably practicable after the Closing Date, subject to SECTIONS 2(b) and 2(c) of this Agreement, a Registration Statement (an "EXCHANGE OFFER REGISTRATION STATEMENT") for an offer to exchange (an "EXCHANGE OFFER") the Registrable Securities (subject to SECTION 2(c)) for a like aggregate principal amount of debt securities of the Company that are guaranteed by the Guarantors and are otherwise in all material respects substantially identical to the Initial Securities (the "EXCHANGE SECURITIES") (and which are entitled to the benefits of the Indenture, which shall be qualified under the TIA in connection with such registration, or a trust indenture which is substantially identical in all material respects to the Indenture), other than (i) such changes to the Indenture or any such substantially identical indenture as the Trustee and the Company may deem necessary in connection with the Trustee's rights and duties or to comply with any requirements of the Commission to effect or maintain the qualification thereof under the TIA and (ii) such changes relating to restrictions on transfer set forth in the Indenture. The Exchange Offer shall be registered under the Securities Act on the appropriate form of Registration Statement and shall comply with all applicable tender offer rules and regulations under the Exchange Act and with all other applicable laws. Subject to the terms and limitations of SECTION 2(c), such Exchange Offer Registration Statement may also cover any resales of Exchange Securities by any Restricted Person, in the manner or manners designated by them which, in any event, is reasonably acceptable to the Company. The Company and the Guarantors shall use their respective reasonable best efforts to (i) cause the Exchange Offer Registration Statement to become effective under the Securities Act on or prior to the Effective Date, (ii) keep the Exchange Offer open for a period of not less than the shorter of (A) the period ending when the last remaining Initial Security is tendered into the Exchange Offer and (B) 30 days from the date notice is mailed to the holders of Initial Securities (PROVIDED that in no event shall such period be less than the period required under applicable Federal and state securities laws), and (iii) maintain such Exchange Offer Registration Statement continuously effective for a period (the "EXCHANGE PERIOD") of not less than the longer of (A) the period until the consummation of the Exchange Offer and (B) 120 days after effectiveness of the Exchange Offer Registration Statement, PROVIDED HOWEVER, that in the event that all resales of Exchange Securities (including, subject to the time periods set forth herein, any Resale Securities and including, subject to the time periods set forth herein, any resales by broker-dealers that receive Exchange Securities for their own account pursuant to the Exchange Offer) covered by such Exchange Offer Registration Statement have been made, the Exchange Offer Registration Statement need not remain continuously effective for the period set forth in clause (B) above. Upon consummation of the Exchange Offer, the Company shall deliver to the Trustee under the Indenture for cancellation all Initial Securities tendered by the holders thereof pursuant to the Exchange Offer and not withdrawn prior to the date of consummation of the Exchange Offer. Each Restricted Person shall notify the Company promptly after re-selling all Resale Securities held by such Restricted Person which are covered by any such Registration Statement. 8 Each holder of Registrable Securities to be exchanged in the Exchange Offer (other than any Restricted Person) shall be required as a condition to participating in the Exchange Offer to represent that (i) it is not an Affiliate of the Company or the Guarantors, (ii) any Exchange Securities to be received by it shall be acquired in the ordinary course of its business and (iii) that at the time of the consummation of the Exchange Offer it shall have no arrangement with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Securities. Upon consummation of an Exchange Offer in accordance with this SECTION 2 and compliance with the other provisions of this SECTION 2, the Company and the Guarantors shall, subject to SECTIONS 2(b) and 2(c), have no further obligation to register Registrable Securities pursuant to SECTION 3(a) of this Agreement; PROVIDED that the other provisions of this Agreement shall continue to apply as set forth in such provisions. (b) In the event that the Company reasonably determines in good faith that (i) the Exchange Securities would not, upon receipt in the Exchange Offer by any holder of Registrable Securities (other than any Restricted Person and other than any holder who is not acquiring such Exchange Securities in the ordinary course of business or who has an arrangement with any person to participate in the distribution of such Exchange Securities), be tradeable by each holder thereof without restriction under the Securities Act and the Exchange Act and without restriction under applicable blue sky or state securities laws, (ii) after conferring with counsel, the Commission is unlikely to permit the Exchange Offer Registration Statement to become effective prior to the Effective Date (except in the circumstances set forth in SECTION 2(c)) or (iii) the Exchange Offer may not be made in compliance with applicable laws, then the Company and the Guarantors shall promptly deliver notice thereof (the "SHELF NOTICE") to the holders of the Registrable Securities and the Trustee and shall thereafter file an Initial Shelf Registration Statement pursuant to, and otherwise comply with, the provisions of SECTION 3(a). Following the delivery of a Shelf Notice in accordance with this SECTION 2(b) and compliance with SECTION 3(a), neither the Company nor any of the Guarantors shall have any further obligation under this SECTION 2. (c) In the event that the Company reasonably determines in good faith that (i) the Exchange Securities would not, upon consummation of any resale thereof by a Restricted Person to any Person other than another Restricted Person, be tradeable by each holder thereof without restriction under the Securities Act (other than applicable prospectus requirements) and the Exchange Act and without restriction under applicable blue sky or state securities laws or (ii) the Commission is unlikely to permit the Exchange Offer Registration Statement to become effective prior to the Effective Date solely because such Registration Statement covers resales of the Exchange Securities by Restricted Persons, then the Company and the Guarantors shall promptly deliver a Shelf Notice to the Restricted Persons who are holders of Registrable Securities and to the Trustee, and the Company and the Guarantors shall thereafter file an Initial Shelf Registration Statement with respect to any such Registrable Securities pursuant to, and otherwise comply with, the provisions of SECTION 3(a); PROVIDED that such Initial Shelf Registration Statement shall only cover resales of Registrable Securities by Restricted Persons if a Shelf Notice is not then 9 otherwise required to be delivered pursuant to SECTION 2(b); and, PROVIDED, FURTHER that such Initial Shelf Registration Statement covering Registrable Securities held by Restricted Persons shall be kept effective for at least a period of 120 days and is not required to remain effective with respect to Registrable Securities held by Restricted Persons thereafter. Following the delivery of a Shelf Notice in accordance with this SECTION 2(c) and compliance with SECTION 3(a), neither the Company nor any of the Guarantors shall have any further obligation under this Section 2 with respect to the filing of an offer to exchange the Registrable Securities held by the Restricted Persons (including, without limitation, any obligation to provide that an Exchange Offer Registration Statement filed pursuant to SECTION 2(a) cover resales of Exchange Securities by Restricted Persons); PROVIDED that the provisions of this SECTION 2 shall otherwise remain in full force and effect with respect to Registrable Securities held by any person other than a Restricted Person. SECTION 3. SHELF REGISTRATION; REGISTRABLE SECURITIES. With respect to the Registrable Securities, if a Shelf Notice is delivered in accordance with SECTION 2(b) or 2(c) of this Agreement, then the Company and the Guarantors shall comply with the following provisions of this SECTION 3: (a) INITIAL SHELF REGISTRATION. The Company and the Guarantors shall prepare and cause to be filed with the Commission a Registration Statement for an offering to be made on a continuous basis other than pursuant to an Underwritten Offer pursuant to Rule 415 covering all of the Registrable Securities (or, if a Shelf Notice is delivered solely pursuant to SECTION 2(c), all of the Registrable Securities held by any Restricted Persons) (the "INITIAL SHELF REGISTRATION STATEMENT"); PROVIDED, HOWEVER, that no holder shall be entitled to have its Registrable Securities covered by such Initial Shelf Registration Statement unless such holder agrees in writing, within 10 Business Days after actual receipt of a request therefrom, to be bound by all the provisions of this Agreement applicable to such holder. No holder shall be entitled to the benefits of SECTION 4 of this Agreement unless and until such holder shall have provided all information reasonably requested by the Company (after conferring with counsel), and such holder shall not be entitled to such benefits with respect to any period during which such information was not provided. Each holder to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such holder not materially misleading. The Initial Shelf Registration Statement shall be an appropriate form permitting registration of such Registrable Securities for resale by the holders thereof in the manner or manners reasonably designated by them (but excluding any Underwritten Offerings). The Company and the Guarantors shall use their respective reasonable best efforts to (A) cause the Initial Shelf Registration Statement to be declared effective under the Securities Act on or prior to the Effective Date and (B) keep the Initial Shelf Registration Statement continuously effective under the Securities Act for a period of two years after the Closing Date (subject to extension pursuant to the last paragraph of SECTION 5 and subject, with respect to Registrable Securities held by Restricted Persons, to the limitations set forth in SECTION 2(c)) (such two-year period, as it may be extended, being the "Effective Period"), or such shorter period ending when 10 (1) all Registrable Securities covered by the Initial Shelf Registration Statement have been sold or (2) a Subsequent Shelf Registration Statement covering all of such Registrable Securities remaining unsold has been declared effective under the Securities Act or (3) all Registrable Securities may be sold pursuant to subsection (k) of Rule 144. Notwithstanding any other provision hereof, the Company and the Guarantors may postpone or suspend the filing or the effectiveness of a Registration Statement (or any amendments or supplements thereto), if (1) such action is required by applicable law, or (2) such action is taken by the Company and the Guarantors in good faith and for valid business reasons (not including avoidance of such party's obligations hereunder), including the acquisition or divestiture of assets, other pending corporate developments, public filings with the Commission or other similar events, so long as the Company and the Guarantors promptly thereafter comply with the requirements of SECTION 5(b) hereof, if applicable. Notwithstanding the occurrence of any event referred to in the immediately preceding sentence (a "SUSPENSION"), such event shall not suspend, postpone or in any other manner affect the running of the time period after which an Illiquidity Event shall be deemed to occur and, if the filing or effectiveness of a Registration Statement is postponed or suspended as a result of a Suspension, an Illiquidity Event shall nonetheless exist if all other requirements set forth for the occurrence of an Illiquidity Event shall be satisfied, and the provisions of SECTION 4 requiring the accrual payment of additional interest, as set forth in such Section, on the Registrable Securities, shall be applicable. (b) SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement ceases to be effective for any reason at any time during the Effective Period after the Effective Date, the Company and the Guarantors may attempt to obtain the withdrawal of any order suspending the effectiveness thereof, and may amend such Initial Shelf Registration Statement or Subsequent Shelf Registration Statement in a manner reasonably expected to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional "shelf" Registration Statement applicable to the Initial Securities pursuant to Rule 415 covering all of such Registrable Securities remaining unsold (a "SUBSEQUENT SHELF REGISTRATION STATEMENT"). If a Subsequent Shelf Registration Statement is declared effective, the Company and the Guarantors shall use their respective reasonable best efforts to keep such Shelf Registration Statement continuously effective for a period after the date of such effectiveness equal in length to the length of the Effective Period plus the aggregate number of days from the date of the order suspending the effectiveness of the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement to the date of the effectiveness of the Subsequent Shelf Registration Statement. As used herein, the term "Shelf Registration Statement" means the Initial Shelf Registration Statement and any Subsequent Shelf Registration Statement. SECTION 4. ADDITIONAL INTEREST FOR ILLIQUIDITY. (a) The Company and the Guarantors acknowledge and agree that the Initial 11 Purchasers (and any subsequent holders of the Initial Securities) have acquired the Initial Securities in reliance on the covenant of the Company and the Guarantors to use their respective reasonable best efforts to (i) cause to become effective on or prior to the Effective Date (A) the Exchange Offer Registration Statement or (B) an Initial Shelf Registration Statement, and (ii) maintain the respective effectiveness of such Registration Statements as described herein. The Company and the Guarantors further acknowledge and agree that the failure of the Company and the Guarantors to fulfill such covenants will have an adverse effect on the holders of the Initial Securities. Therefore, the Company and the Guarantors agree that from and after the date on which any Illiquidity Event occurs, additional interest (in addition to the interest otherwise payable with respect to the Registrable Securities) shall accrue with respect to the Initial Securities until but not including the date on which such Illiquidity Event shall cease to exist (and provided no other Illiquidity Event with respect to any Initial Securities shall then be continuing), at the rate of one half of one percent (0.50%) per annum, which additional interest shall be payable by the Company to the holders of all Initial Securities at the times, in the manner and subject to the same terms and conditions set forth in the Indenture, as nearly as may be, as though the interest rates provided in such Initial Securities had been increased by one half of one percent (0.50%) per annum. Subject to the provisions of this SECTION 4, the Company and the Guarantors agree that each of them shall be liable to the holders of all Initial Securities for the payment of any and all additional interest on the Initial Securities that shall accrue pursuant to this SECTION 4. Any such additional interest accrued on any such Initial Securities but unpaid on the date on which such interest ceases to accrue (the "CURE DATE") shall be due and payable on the first interest payment date following the next record date following such Cure Date (or the record date occurring on such Cure Date, if such Cure Date is a record date) to the holders of record of such Initial Securities on such record date. (b) The Company shall promptly notify the holders of the Initial Securities and the Trustee of the occurrence of any Illiquidity Event of which it has knowledge. Notwithstanding the foregoing, the Company and the Guarantors shall not be required to pay the additional interest described in clause (a) of this Section 4 to a holder with respect to the Registrable Securities held by such holder if the applicable Illiquidity Event arises by reason of the failure of such holder to provide such information as (i) the Company may reasonably request, with reasonable prior written notice, for use in the Shelf Registration Statement or any Prospectus included therein to the extent the Company reasonably determines that such information is required to be included therein by applicable law, (ii) the NASD or the Commission may request in connection with such Shelf Registration Statement, or (iii) is required to comply with the agreements of such holder contained in clause (a) of Section 3 to the extent compliance thereof is necessary for the Shelf Registration Statement to be declared effective. SECTION 5. REGISTRATION PROCEDURES. In connection with the registration of any 12 Registrable Securities or Exchange Securities pursuant to SECTIONS 2 and 3 hereof, the Company and the Guarantors shall use their respective reasonable best efforts to effect such registration to permit the sale of such Registrable Securities or Exchange Securities in accordance with any permitted intended method or methods of disposition thereof, and pursuant thereto the Company and the Guarantors shall: (a) prepare and cause to be filed with the Commission a Registration Statement or Registration Statements as prescribed by SECTIONS 2 and 3 of this Agreement, and use their respective best efforts to cause each such Registration Statement to become effective and remain effective for the applicable period as provided herein; PROVIDED, HOWEVER, that (i) during the period in which the Initial Registration Statement is open for the Restricted Persons, the Company shall afford any Restricted Person which is a holder of Registrable Securities or Exchange Securities and the Special Counsel, upon such holder's written request to the Company, an opportunity to review copies of all such documents proposed to be filed, and (ii) if such filing is pursuant to SECTION 3, before filing any Registration Statement or Prospectus or any amendments or supplements thereto (including documents that would be incorporated therein by reference after the initial filing of the Registration Statement), the Company shall afford the Special Counsel for all holders of the Registrable Securities covered by such Registration Statement an opportunity to review copies of all such documents proposed to be filed; (b) prepare and cause to be filed with the Commission such amendments and post-effective amendments to each Shelf Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable period as provided herein; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act, the Exchange Act and the rules and regulations of the Commission promulgated thereunder with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented in accordance with the intended methods of disposition by the sellers of Registrable Securities covered thereby set forth therein; (c) if a Shelf Registration Statement is filed pursuant to SECTION 3 hereof, notify the selling holders of Registrable Securities promptly after the Company or any Guarantor becomes aware thereof, and confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any preliminary prospectus or Prospectus or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company or any Guarantor of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Securities for offer or 13 sale in any jurisdiction, or the initiation of any proceeding for such purpose, (v) of the existence of any fact known to the Company or any Guarantor which results in such Registration Statement or related Prospectus or any document incorporated therein by reference containing any untrue statement of a material fact or omitting to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice may be accompanied by an instruction that such notice constitutes material non-public information and to suspend the use of the prospectus until the requisite changes have been made, and which instruction shall require that such holders shall not communicate such material non-public information to any third party and shall not sell or purchase, or offer to sell or purchase, any securities of the Company or any Guarantor after receipt of such notice) and (vi) if the Company reasonably determines that the filing of a post-effective amendment to such Registration Statement would be appropriate; (d) if a Shelf Registration Statement is filed pursuant to SECTION 3, use its reasonable efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment; (e) if a Shelf Registration Statement is filed pursuant to SECTION 3, furnish to each selling holder of Registrable Securities who so requests (at such holder's address set forth in the Securities Register) without charge, one conformed copy of the Registration Statement or Registration Statements and each post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (f) if a Shelf Registration Statement is filed pursuant to SECTION 3, deliver to each selling holder of Registrable Securities without charge, as many copies of the Prospectus (including each preliminary prospectus) and each amendment or supplement thereto as such persons may reasonably request; and, subject to the last paragraph of this SECTION 5, the Company and each Guarantor hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto; (g) prior to any public offering of Registrable Securities, register or qualify, or cooperate with the selling holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities 14 or blue sky laws of such jurisdictions within the United States as the selling holders reasonably request in writing (provided that, if Registrable Securities are offered other than through an Underwritten Offering, the Company and the Guarantors agree to cause their counsel to perform blue sky investigations and file registrations and qualifications required to be filed pursuant to this SECTION 5(g)); keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective; and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the applicable Registration Statement; provided, however, that neither the Company nor any Guarantor will be required to qualify as a foreign corporation, or to do business, to file a general consent or take any action which would subject it to service of process in any jurisdiction or take any action which would subject itself to taxation in any such jurisdiction; (h) if a Shelf Registration Statement is filed pursuant to SECTION 3, cooperate with the Trustee and the selling holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company, and enable such Registrable Securities to be in such authorized denominations and registered in such names as the holders may reasonably request at least three Business Days prior to any such sale; (i) if a Shelf Registration Statement is filed pursuant to SECTION 3, upon the occurrence of any event contemplated by SECTION 5(c), prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company and the Guarantors so notify the holders to suspend the use of the Prospectus after the occurrence of such an event, the holders shall suspend use of the Prospectus, and not communicate such material non-public information to any third party, and not sell or purchase, or offer to sell or purchase, any securities of the Company and the Guarantors, until the Company and the Guarantors have amended or supplemented the Prospectus to correct such misstatement or omission; (j) use their respective reasonable best efforts to cause the Registrable Securities covered by the Registration Statement to continue to be rated by the rating agencies that initially rated the Initial Securities during the period that the Registration Statement is required hereunder to remain effective (it being acknowledged, however, that the foregoing shall not be deemed to require the Company and the Guarantors to maintain the rating of such Registrable Securities at the rating given the Initial Securities; (k) prior to the effective date of the first Registration Statement relating to the 15 Registrable Securities or the Exchange Securities, as the case may be, (i) provide the Trustee with printed certificates for such securities in definitive form or in a global form eligible for deposit with The Depositary Trust Company and (ii) provide a CUSIP number for such Registrable Securities or Exchange Securities represented by such certificates; (l) if a Shelf Registration Statement is filed pursuant to SECTION 3, enter into such reasonably required agreements and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of such Registrable Securities; (m) in the event of any Underwritten Offering (which shall only be undertaken at the option of the Company), if a Shelf Registration Statement is filed pursuant to SECTION 3, make available prior to the filing thereof for inspection by a representative of the holders of a majority in aggregate principal amount of the Registrable Securities being sold, and the Special Counsel, on the one hand, or underwriter on the other hand (collectively, the "INSPECTORS"), during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and the Guarantors (collectively, the "RECORDS"), and cause the officers, directors and employees of the Company and the Guarantors to supply all relevant information as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities; PROVIDED, HOWEVER, that, as a condition to supplying such information, the Company shall receive an agreement in writing from the Special Counsel agreeing that any information that is designated in writing by the Company or any of the Guarantors, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Inspector (other than as to holders of Registrable Securities) and by any holders of Registrable Securities receiving such information, unless (i) disclosure of such information is required pursuant to applicable law or by court or administrative order, (ii) disclosure of such information is, in the reasonable opinion of counsel to the Company and the Guarantors, necessary to avoid or correct a misstatement or omission of a material fact in the Registration Statement, Prospectus or any supplement or post-effective amendment thereto or disclosure is otherwise required by law, (iii) such information becomes generally available to the public other than as a result of a disclosure by any Inspector or any such holder of Registrable Securities in violation of this SECTION 5(m) or (iv) such information is approved for release by the Company and the Guarantors, in writing; (n) use their respective best efforts to cause the Indenture or the trust indenture provided for in SECTION 2, as the case may be, to be qualified under the TIA not later than the effective date of such Registration Statement; and, in connection therewith, cooperate with the Trustee under the Indenture and the holders of the Registrable Securities to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and execute, and use its best efforts to cause such Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the Commission to enable the Indenture or the trust indenture provided for in SECTION 2 to be so qualified in a timely manner; 16 (o) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission. For purposes of the covenants set forth in this SECTION 5, references to a Shelf Registration Statement, including a Shelf Registration Statement filed pursuant to SECTION 3, shall be deemed to include any Registration Statement, filed pursuant to SECTION 2, which covers, for the period set forth therein, resales of Exchange Securities held by Restricted Persons as provided in SECTION 2, and, in connection with such resales such Restricted Persons shall be entitled to exercise all rights, receive all notices and copies of documents, and otherwise receive all benefits afforded to sellers or holders of Registrable Securities under this SECTION 5 in connection with a Shelf Registration Statement. Without limiting the generality of the foregoing, the Company and the Guarantors agree to fulfill their respective obligations set forth in SECTIONS 5(a), (b), (c), (d), (e), (f), (h), (i), (l) and (m) with respect to any such Registration Statement filed pursuant to SECTION 2 insofar as it covers such resales. The Company may require each seller of Registrable Securities as to which any registration is being effected, as a condition thereto, to furnish to the Company such information regarding the holder and the distribution of such Registrable Securities as the Company may, from time to time, request in writing, including without limitation stating that (i) it is not an Affiliate of the Company or any Guarantor, (ii) the amount of Registrable Securities held by such holder prior to the Exchange Offer, (iii) the amount of Registrable Securities owned by such holder to be exchanged in the Exchange Offer and representing that such holder is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution of the Exchange Securities to be issued, and (iv) it is acquiring the Exchange Securities in its ordinary course of business and to covenant and agree to promptly notify the Company if any such information so provided by such seller ceases to be true and correct and will promptly thereafter furnish the Company with corrected information. The Company may exclude from such registration the Registrable Securities of any Person who fails to furnish such information within a reasonable time after receiving such request. Each holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company and the Guarantors of the happening of any event of the kind described in SECTION 5(c)(ii), 5(c)(iii), 5(c)(v) or 5(c)(vi) hereof, such holder shall forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such holder is advised in writing (the "ADVICE") by the Company and the Guarantors that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto and, if so directed by the Company, such holder will deliver to the Company and the Guarantors (at its expense) all copies in its possession, other than permanent file copies then in such holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice, or certify in writing as to the destruction thereof. In the event the Company and the Guarantors shall give any such notice, the length of the Effective Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including 17 the date when each seller of Registrable Securities covered by such Registration Statement shall have received (x) the copies of the supplemented or amended Prospectus contemplated by SECTION 5(i) or (y) the Advice. SECTION 6. DELIVERY OF PROSPECTUS; NOTIFICATION UPON RESALE. The Initial Purchasers acknowledge that it is the position of the staff of the Commission that any broker-dealer that receives Exchange Securities for its own account in exchange for Registrable Securities pursuant to the Exchange Offer must deliver a prospectus in connection with any resale of such Resale Securities. By so acknowledging, such Initial Purchasers shall not be deemed to admit that, by delivering a prospectus, it is an underwriter within the meaning of the Securities Act. The Initial Purchasers shall notify the Company and the Guarantors promptly upon the completion of the resale of the Resale Securities received by such Initial Purchasers pursuant to the Exchange Offer. SECTION 7. REGISTRATION EXPENSES. The Company and the Guarantors shall bear all expenses incurred in connection with the performance of its obligations under SECTIONS 2, 3 and 4; PROVIDED, HOWEVER, that the Company and the Guarantors shall bear or reimburse the holders for the reasonable fees and disbursements of only one counsel, the Special Counsel, in accordance with the terms of the Purchase Agreement; PROVIDED, FURTHER, HOWEVER, that if the Company and the Guarantors permit an Underwritten Offering, neither the Company nor any of the Guarantors shall be responsible for any fees and expenses of any underwriter, including any underwriting discounts and commissions or any legal fees and expenses of counsel to the underwriters (except for the reasonable fees and disbursements of counsel in connection with state securities or blue sky qualification of any of the Registrable Securities or the Exchange Securities). SECTION 8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and the Guarantors agree to (A) indemnify and hold harmless each holder of Registrable Securities (including any Initial Purchaser which holds Registrable Securities, including Resale Securities, for its own account (each, a "RESALE INITIAL PURCHASER") and each Person, if any, who controls any such Person within the meaning of either the Securities Act or the Exchange Act and each director, officer, employee or agent of each such Person (each a "HOLDER INDEMNIFIED PARTY") against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them are subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement covering Registrable Securities held by such person 18 or any Prospectus relating to any such Registration Statement, or any amendment thereof or supplement thereto and all documents incorporated by reference therein, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, and (B) reimburse each such Holder Indemnified Party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that neither the Company nor any of the Guarantors will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement or Prospectus, or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information relating to such holder provided by such holder to the Company and the Guarantors specifically for use therein (collectively, the "HOLDER INFORMATION"); PROVIDED, FURTHER, HOWEVER, that the indemnity obligations arising out of this SECTION 8 with respect to any untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary Prospectus shall not inure to the benefit of any holder or any controlling Person of such holder if such holder failed to send or deliver to the Person asserting any such losses a copy of the final Prospectus with or prior to the delivery of the written confirmation of the sale of the Registrable Securities or the Exchange Securities, as the case may be, and such final Prospectus would have cured the untrue statement or omission giving rise to such losses if the Company and the Guarantors had previously furnished copies thereof to such holder. This indemnity agreement will be in addition to any liability which the Company or any Guarantor may otherwise have. (b) As a condition to the inclusion of a holder's Registrable Securities in a Registration Statement, such holder shall agree to (i) indemnify and hold harmless the Company and the Guarantors and each person who controls the Company or any of the Guarantors within the meaning of either the Securities Act or the Exchange Act, and each director, officer, employee or agent of each such person, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them are subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in a Registration Statement covering Registrable Securities held by such holder or any Prospectus relating to any such Registration Statement or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, and (ii) reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; in each and every case under clause (i) and (ii) above to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement or Prospectus or in any amendment thereof or supplement thereto, in reliance upon and in conformity with the Holder Information. This 19 indemnity agreement will be in addition to any liability which any such holder may otherwise have. In no event shall the liability of any selling holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds (net of payment of all expenses) received by such holder upon the sale (or, in the case of Resale Securities, the resale) of the Registrable Securities giving rise to such indemnification obligation. (c) Promptly after receipt by an indemnified party under this SECTION 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this SECTION 8, notify the indemnifying party in writing of the commencement thereof (enclosing a copy of all papers served); but the omission to so notify the indemnifying party (i) shall not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such omission results in the forfeiture by the indemnifying party or material impairment of substantial rights and defenses and (ii) shall not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligations provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party of its election to so assume the defense of such claim or action, the indemnifying party will not be liable to such indemnified party under this SECTION 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than costs of investigation; provided that if (i) the defendants in any such action include both the indemnified party and the indemnifying party, the indemnified party shall have received the written opinion of counsel reasonably acceptable to the indemnifying party that representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them, or (ii) the indemnifying party shall not have employed counsel for the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action, then the indemnified party or parties shall have the right to select one firm of separate counsel (in addition to the fees and expenses of local counsel) to assert any separate legal defenses and to otherwise defend such action on behalf of such indemnified party or parties. No indemnifying party shall be liable for any settlement of any action or claim for monetary damages which an indemnified party may effect without the written consent of the indemnifying party, which consent shall not be unreasonably withheld. (d) If the indemnification provided for in SECTION 8(a) or (b) hereof is for any reason, other than as specified in such provisions, unavailable to or insufficient to hold harmless an indemnified party, then each indemnifying party shall contribute to the aggregate losses, claims, damages or liabilities (or actions in respect thereof) referred to in SECTION 8(a) or (b) hereof in such proportion as is appropriate to reflect the relative fault and benefits to the Company and the Guarantors on the one hand and such holders on the other hand in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or 20 actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors and such holders shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent any untrue statement or omission. The obligations of the holders in this SECTION 8(d) are several in proportion to their respective obligations hereunder and not joint. Notwithstanding the provisions of this SECTION 8(d), in no event shall any holder of Registrable Securities be required to contribute any amount which is in excess of (i) the aggregate principal amount of Initial Securities sold or exchanged by such holder less (ii) the amount of any damages that such person has otherwise been required to pay by reason of such alleged untrue statement or omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this SECTION 8, each Holder Indemnified Party shall have the same rights to contribution as a holder, and each person who controls the Company or any Guarantor within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee and agent of such person, shall have the same rights to contribution as the Company and the Guarantors, subject in each case to the applicable terms and conditions of this SECTION 8(d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this SECTION 8(d), notify such party or parties from whom contribution may be sought; but the omission to so notify such party or parties (x) shall not relieve the party or parties from whom contribution may be sought from any liability under this paragraph (d) unless and to the extent it did not otherwise learn of such action and such omission results in the forfeiture by the party or parties from whom contribution may be sought or material impairment of substantial rights and defenses and (y) shall not, in any event, relieve such party or parties from any obligations other than under this SECTION 8(d). (e) The provisions of this SECTION 8 will remain in full force and effect, regardless of any investigation made by or on behalf of any holder of Registrable Securities, the Initial Purchasers, the Company, the Guarantors or any of the officers, directors or controlling persons referred to in this SECTION 8 and will survive the sale (or, in the case of Resale Securities, the resale) by a holder of Registrable Securities of such Registrable Securities. SECTION 9. UNDERWRITTEN REGISTRATIONS (IF ANY). No holder may participate in any Underwritten Registration, which Underwritten Registration shall only be undertaken at the option of the Company, unless such holder (a) agrees to sell such holder's Initial Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. SECTION 10. TERMINATION. In the event that no Initial Securities are sold to the Initial Purchasers pursuant to the Purchase Agreement, this Agreement shall automatically terminate, without liability on the part of any party. Upon the fulfillment of all obligations on 21 the part of the Company and the Guarantors to register the Initial Securities as set forth herein (including maintaining the effectiveness of any applicable Registration Statements), this Agreement shall terminate; provided that the provisions of SECTIONS 7 and 8 hereof shall survive any termination and remain in full force and effect. SECTION 11. MISCELLANEOUS. (a) NO INCONSISTENT AGREEMENTS. Neither the Company nor any Guarantor has, as of the date hereof, entered into, nor shall, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the holders of Registrable Securities herein or otherwise conflicts with the provisions hereof. (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company and the Guarantors have obtained the written consent of holders of at least a majority of the then outstanding aggregate principal amount of the Registrable Securities (or, after the consummation of any Exchange Offer in accordance with SECTION 2, of Exchange Securities); provided that, with respect to any matter that directly or indirectly affects the rights of any Restricted Person hereunder occurring within the period in which the Initial Registration Statement is open for the Restricted Persons, the Company and the Guarantors shall obtain the written consent of each such Restricted Person against which such amendment, modification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except for the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of holders of Registrable Securities whose securities are being sold or exchanged pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other holders of Registrable Securities may be given by holders of at least a majority in aggregate principal amount of the Registrable Securities being sold or exchanged by such holders pursuant to such Registration Statement; provided, however, that the provisions of this sentence may not be amended, modified or supplemented except in accordance with the provisions of the immediately preceding sentence. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Resale Initial Purchasers and that does not directly or indirectly affect the rights of holders of Registrable Securities or Exchange Securities may be given by each of the Resale Initial Purchasers affected thereby. (c) NOTICES. All notices and other communications (including, without limitation, any notices or other communications to the Trustee) provided for or permitted hereunder shall be made in writing and delivered by hand delivery, registered first-class mail, next-day air courier or telecopier: (i) if to a holder of Registrable Securities, at the most current address given by such holder to the Company in accordance with the provisions of this SECTION 11(c), 22 which address initially is, with respect to the Initial Purchasers, at the address set forth in the Purchase Agreement and thereafter at the address for such holders of Registrable Securities set forth in the Security Register applicable to such Registrable Securities; and (ii) if to the Company or any Guarantor, initially at the address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this SECTION 11(c). All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; one Business Day after being timely delivered to a next-day air courier; and when received, if telecopied. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including without limitation and without the need for an express assignment or any consent by the Company or any Guarantor thereto, subsequent holders of Registrable Securities. (e) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) GOVERNING LAW. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York. Each of the parties hereto hereby submits to the non-exclusive jurisdiction of the Federal and State Courts of the Borough of Manhattan in the City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. (h) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every 23 other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. (i) ENTIRE AGREEMENT. This Agreement, together with the Purchase Agreement, is intended by the parties as a final expression of their agreement, and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, together with the Purchase Agreement, supersedes all prior agreements and understandings between the parties with respect to such subject matter. (j) SECURITIES HELD BY THE COMPANY, ETC. Whenever the consent or approval of holders of a specified percentage of principal amount of Registrable Securities is required hereunder, Registrable Securities held by the Company, the Guarantors or any of their respective Affiliates (other than subsequent holders of Registrable Securities if such subsequent holders are deemed to be Affiliates solely by reason of their holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the holders of such required percentage. Please confirm that the foregoing correctly sets forth this agreement between the Company, the Guarantors and you. Very truly yours, EDISON MISSION HOLDINGS CO. By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President EDISON MISSION FINANCE CO. By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President HOMER CITY PROPERTY HOLDINGS, INC. By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President of Mission Energy Westside, Inc. its General Partner CHESTNUT RIDGE ENERGY COMPANY By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President MISSION ENERGY WESTSIDE, INC. By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President EME HOMER CITY GENERATION L.P. By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President of Mission Energy Westside, Inc. EDISON MISSION ENERGY By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President Accepted: LEHMAN BROTHERS INC., on behalf of the Initial Purchasers By: /s/ Frank Napolitano ----------------------- Name: Frank Napolitano Title: Senior Vice President EX-10.71 18 EXHIBIT 10.71 EXHIBIT 10.71 ================================================================================ EXECUTION COPY INDENTURE DATED AS OF JUNE 28, 1999, between EDISON MISSION ENERGY and THE BANK OF NEW YORK, as Trustee Providing for the issuance from time to time of Notes in one or more series ================================================================================ TABLE OF CONTENTS Page INDENTURE, dated as of June 28, 1999, between EDISON MISSION ENERGY, a California corporation (the "Company"), and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"). W I T N E S S E T H: WHEREAS, the Company has duly authorized the issue of its senior notes to be issued in one or more series (the "Notes"), and to provide, among other things, for the authentication, delivery and administration thereof, the Company has duly authorized the execution and delivery of this Indenture; and WHEREAS, all things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee as in this Indenture provided, the valid, binding and legal obligations of the Company, and to constitute these presents a valid Indenture and agreement according to its terms, have been done; NOW, THEREFORE: In consideration of the premises and the purchases of the Notes by the Holders (as defined herein) thereof, the Company and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective Holders from time to time of the Notes as follows: ARTICLE I DEFINITIONS Section 1.1 CERTAIN TERMS DEFINED. The following terms (except as otherwise expressly provided) for all purposes of this Indenture shall have the respective meanings specified in this Section. All accounting terms used herein and not expressly defined shall have the meanings given to them in accordance with GAAP (as defined herein). The words "herein," "hereof' and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article include the plural as well as the singular. "Affiliate" has the meaning set forth in the Registration Rights Agreement. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Authentication Order" has the meaning set forth in SECTION 2.3 hereof. "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. "Board of Directors" means either the Board of Directors of the Company or any committee of such Board duly authorized to act on behalf of such Board. "Broker-Dealer" means any broker or dealer registered under the Exchange Act. "Business Day" means a day which is neither a legal holiday nor a day on which banking institutions (including, without limitation, the Federal Reserve System) are authorized or required by law or regulation to close in The City of New York. "Capital Stock" means, with respect to any Person, any and all outstanding shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of, or interests in (however designated), the equity of such Person, including without limitation all Common Stock and Preferred Stock and partnership and joint venture interests of such Person. "Cedel" means CedelBank, SA. "Commission" means the Securities and Exchange Commission, as from time to constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the TIA, then the body (if any) performing such duties at such time. "Common Stock" means, with respect to any Person, Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of any other class of Capital Stock of such Person. "Company" means Edison Mission Energy, a California corporation, and, subject to Article 8 hereof, its successors and assigns. "Consolidated Net Tangible Assets" means, as of the date of determination thereof, the total amount of all of the Company's assets, determined on a consolidated basis in accordance with GAAP as of such date, less the sum of (a) the Company's consolidated current liabilities determined in accordance with GAAP and (b) the Company's assets properly classified as intangible assets in accordance with GAAP, except for any intangible assets that are distribution or related contracts with an assignable value. "Corporate Trust Office" means the principal office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date as of which this Indenture is dated, located at 101 Barclay Street, Floor 21W, New York, New York 10286. "Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Default" means any occurrence, circumstance or event, or any combination thereof, which, with the lapse of time and/or the giving of notice, would constitute an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with SECTION 2.7 hereof, substantially in the form of Exhibit A hereto, except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in SECTION 2.4 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "DTC" has the meaning set forth in SECTION 2.4 hereof. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Event of Default" means any event or condition specified as such in SECTION 4.1 hereof that shall have continued for the period of time, if any, therein designated. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means the Notes issued in the Exchange Offer pursuant to SECTION 2.7(f) hereof. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "GAAP" means generally accepted accounting principles in the United States applied on a basis consistent with the principles, methods, procedures and practices employed in the preparation of the Company's audited financial statements, including, without limitation, those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto issued in accordance with SECTION 2.1, 2.7(b)(iv), 2.7(d)(ii) or 2.7(f) hereof. "Global Note Legend" means the legend set forth in SECTION 2.7(g)(ii), which is required to be placed on all Global Notes issued under this Indenture. "Good Faith Contest" means the contest of an item if (i) the item is diligently being contested in good faith by appropriate proceedings timely instituted, (ii) adequate reserves are established in accordance with GAAP with respect to the contested item, if the contested item individually or when taken together with all other contested items for which reserves are not at the time being held could reasonably be expected to result in liability of the Company in excess of $1,000,000, (iii) during the period of such contest, the enforcement of any contested item is effectively stayed, unless such enforcement would not reasonably be expected to result in a Material Adverse Effect, (iv) any Lien filed in connection therewith shall have been removed from the record by bonding arrangements by a reputable surety company, or title insurance or cash deposits are otherwise provided to assure the discharge of the Company's obligation in connection therewith, provided that such cash deposits, in the aggregate, shall not exceed $2,000,000, (v) such payment shall have been made as is necessary to prevent the recordation of a tax deed or other similar instrument conveying the property of the Company or any portion thereof, (vi) the failure to pay or comply with the contested item during the period of such Good Faith Contest would not reasonably be expected to result in a Material Adverse Effect and (vii) the Company has no knowledge of any actual or proposed deficiency or additional assessment in connection therewith not otherwise satisfying the requirements of clauses (i) through (vi). "Holder," "Holder of Notes," "Noteholder" and other similar terms mean the registered holder of any Note as reflected in the registration records of the Registrar. "Indebtedness" has the meaning set forth in SECTION 3.5. "Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who is not also a QIB. "Interest Payment Date" means, with respect to any Note, the Stated Maturity of an installment of interest on such Note. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. "Material Adverse Effect" means a material adverse effect on the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries, taken as a whole, or on the ability of the Company to perform its obligations under this Indenture, any indenture supplemental hereto, the Notes, any Registration Rights Agreement or any purchase or underwriting agreement in respect of any series of Notes. "Non-U.S. Person" means a Person who is not a U.S. Person. "Note" or "Notes" has the meaning set forth in the recitals above. "Notes Register" has the meaning set forth in SECTION 2.4 hereof. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by the Chairman of the Board of Directors or the President or any Vice President and by the Chief Financial Officer or the Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer of the Company and delivered to the Trustee. Each such certificate shall include the statements provided for in SECTION 11.5 hereof, if and to the extent required thereby. "Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company. Each such opinion shall include the statements provided for in SECTION 11.5 hereof, if and to the extent required thereby. "Original Issue Date" of any Note (or portion thereof) means the earlier of (a) the date of such Note or (b) the date of any Note (or portion thereof) in exchange for which such Note was issued (directly or indirectly) on registration of transfer, exchange or substitution. "Outstanding", when used with reference to Notes, means, subject to the provisions of SECTIONS 2.9 and 6.4 hereof, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except: (i) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation, or which shall have been paid pursuant to SECTION 2.8 hereof (other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands the Notes are valid obligations of the Company); and (ii) Notes, or portions thereof, for the payment or redemption of which moneys or direct obligations of the United States of America backed by its full faith and credit in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside, segregated and held in trust by the Company (if the Company shall act as its own paying agent), provided that if such Notes are to be redeemed prior to the maturity thereof, written notice of such redemption shall have been herein provided, or provision satisfactory to the Trustee shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to DTC, shall include Euroclear and Cedel). "Paying Agent" has the meaning set forth in SECTION 2.4 hereof. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Preferred Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of preferred or preference Capital Stock of such Person that is outstanding or issued on or after the date of this Indenture. "Private Placement Legend" means the legend set forth in SECTION 2.7(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Registrar" has the meaning set forth in SECTION 2.4 hereof. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of June 23, 1999, by and among the Company and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time, and, with respect to any transfer-restricted Notes issued pursuant to a Series Supplemental Indenture after the date of this Indenture ("Additional Notes"), one or more registration rights agreements between the Company and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time to time, relating to rights given by the Company to the purchasers of Additional Notes to register such Additional Notes, or exchange such Additional Notes for securities registered, under the Securities Act. "Regulation S" means Regulation S promulgated under the Securities Act. "Responsible Officer", when used with respect to the Trustee, means any officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. "Series Supplemental Indenture" means an indenture supplemental to this Indenture entered into by the Company and the Trustee for the purpose of establishing, in accordance with Article 2 of this Indenture, the title, form and terms of the Notes of any series. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "Stated Maturity" means, with respect to any debt security or any installment of interest thereon, the date specified in such debt security as the fixed date on which any principal of such debt security or any such installment of interest is due and payable. "Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof. "TIA" means the Trust Indenture Act of 1939, as amended. "Trustee" means the entity identified as "Trustee" in the first paragraph hereof until the appointment of a successor trustee pursuant to Article 5, after which "Trustee" shall mean such successor trustee. "Unrestricted Global Note" means a permanent Global Note substantially in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "U.S. Government Obligations" means securities that are (i) direct and unconditional obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by, and acting as an agency or instrumentality of, the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company subject to federal or state supervision or examination with a combined capital and surplus of at least $100,000,000, as custodian with respect to any such U.S. Government Obligations or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. ARTICLE II THE NOTES Section 2.1 FORM AND DATING. (a) GENERAL. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $100,000 and any integral multiple of $1,000 in excess thereof. Interest on the Notes shall be computed on the basis of a 360-day year consisting of twelve 30-day months. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. For purposes of this Article 2, the unrestricted Notes pertaining to previously restricted Notes (such as the unrestricted Notes that may be exchanged for restricted Notes pursuant to an Exchange Offer) shall be deemed to be Notes of the same series, notwithstanding that such unrestricted Notes and restricted Notes may be designated as different series and have been issued under different Series Supplemental Indentures. (b) GLOBAL NOTES AND DEFINITIVE NOTES. Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by SECTION 2.7 hereof. (c) INSTITUTIONAL ACCREDITED INVESTORS. Notwithstanding anything to the contrary herein, Institutional Accredited Investors may not hold beneficial interests in any Restricted Global Note, but may be Holders of Restricted Definitive Notes. (d) EUROCLEAR AND CEDEL PROCEDURES APPLICABLE. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of CedelBank" and "Customer Handbook" of Cedel shall be applicable to transfers of beneficial interests in Global Notes sold pursuant to the exemption to the registration requirements of the Securities Act afforded by Regulation S and that are held by Participants through Euroclear or Cedel. Section 2.2 AMOUNT; ISSUABLE IN SERIES. The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited. The Notes may be issued in one or more series. There shall be established in one or more Series Supplemental Indentures, prior to the issuance of Notes of any series: (a) the title of the Notes of such series (which shall distinguish the Notes of such series from all other Notes); (b) any limit upon the aggregate principal amount of the Notes of such series that may be authenticated and delivered under this Indenture (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes of such series pursuant to SECTION 2.7(f), 2.8, 2.10, 7.5 or 10.1 and except for Notes that are deemed never to have been authenticated and delivered hereunder); (c) the date or dates on which the principal of the Notes of such series is payable, the amounts of principal payable on such date or dates and the regular record date for the determination of Holders to whom principal is payable; and the date or dates on or as of which the Notes of such series shall be dated, if other than as provided in the first paragraph of SECTION 2.1(a); (d) the rate or rates at which the Notes of such series shall bear interest, or the method by which such rate or rates shall be determined, the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable and the regular record date for the determination of Holders to whom interest is payable; and the basis of computation of interest, if other than as provided in the first paragraph of SECTION 2.1(a); (e) if other than as provided in SECTION 2.4, the place or places where (i) the principal of and interest on Notes of such series shall be payable, (ii) Notes of such series may be surrendered for registration of transfer or exchange and (iii) notices and demands to or upon the Company in respect of the Notes of such series and this Indenture may be served; (f) the price or prices at which, the period or periods within which and the terms and conditions upon which Notes of such series may be redeemed, in whole or in part, at the option of the Company; (g) the obligation, if any, of the Company to redeem, purchase or repay Notes of such series pursuant to any sinking fund or analogous provision or at the option of a Holder thereof and the price or prices at which and the period or periods within which and the terms and conditions upon which Notes of such series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligations; (h) if other than minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof, the denominations in which Notes of such series shall be issuable; (i) any other terms of such series (which terms shall not be inconsistent with the provisions of this Indenture); (j) any trustees, authenticating or paying agents, warrant agents, transfer agents or registrars with respect to the Notes of such series if different than those provided for herein; and (k) CUSIP numbers, if any. Section 2.3 EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers (an "Authentication Order"), authenticate Notes of a given series for original issue up to the aggregate principal amount stated in the applicable Series Supplemental Indenture. The aggregate principal amount of Notes of a given series outstanding at any time may not exceed such amount except as provided in SECTION 2.8 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 2.4 REGISTRAR AND PAYING AGENT. The Company shall maintain, in the Borough of Manhattan in the City of New York, an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent") and an office or agency where notices and demands to or upon the Company in respect of the Notes or this Indenture may be served. The Registrar shall keep a register ("Notes Register") of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such and shall accept presentations, notices and demands hereunder at the Corporate Trust Office. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes and designates the Trustee's New York office as the office or agency referred to in the first sentence of this Section. Section 2.5 PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. The Company shall, prior to each due date, or not later than 11 AM New York City time on each due date, of the principal of, and premium, if any, or interest on the Notes, deposit with the Paying Agent a sum sufficient to pay such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of any failure to take such action. Anything in this SECTION 2.5 to the contrary notwithstanding, the Company may at any time, for the purpose of obtaining satisfaction and discharge of this Indenture or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by any Paying Agent hereunder, as required by this SECTION 2.5, such sums to be held by the Trustee upon the trusts herein contained. Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this SECTION 3.4 is subject to the provisions of SECTION 9.1 and SECTION 9.3 hereof. Section 2.6 HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes, and the Company shall otherwise comply with TIA section 312(a). Section 2.7 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF GLOBAL NOTES. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary for any of the Global Notes or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary, (ii) there shall have occurred and be continuing an Event of Default with respect to the applicable Notes and beneficial owners holding interests representing an aggregate principal amount of at least 51% of such Notes represented by Global Notes advise the Trustee in writing that the continuation of a book-entry system through the Depositary is no longer in such owner's best interests or (iii) the Company executes and delivers to the Trustee an order that the Global Notes will be so exchangeable. Upon the occurrence of any of the preceding events in clauses (i), (ii) or (iii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee in writing. Global Notes also may be exchanged or replaced, in whole or in part, as provided in SECTIONS 2.8 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this SECTION 2.7 or SECTION 2.8 or 2.10 hereof shall be authenticated and delivered in the form of, and shall be, a Global Note, except as otherwise provided herein. A Global Note may not be exchanged for another Note other than as provided in this SECTION 2.7(a); however, beneficial interests in a Global Note may be transferred and exchanged as provided in SECTION 2.7(b), (c) or (f) hereof. (b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL NOTES. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL NOTE. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in the second sentence of this SECTION 2.7(b)(i). (ii) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL INTERESTS IN GLOBAL NOTES. In connection with all transfers and exchanges of beneficial interests that are not subject to SECTION 2.7(b)(i), the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in clause (B)(1) above. Upon consummation of an Exchange Offer by the Company in accordance with SECTION 2.7(f) hereof, the requirements of this SECTION 2.7(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Note of the applicable series. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to SECTION 2.7(h) hereof. (iii) TRANSFER OF BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in such Restricted Global Note if the transfer complies with the requirements of SECTION 2.7(b)(i) above and the Registrar receives the following: (A) if the transferee will take delivery in the form of a beneficial interest in a Global Note by virtue of the exemption from the registration requirements of the Securities Act afforded by Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and (B) if the transferee will take delivery in the form of a beneficial interest in a Global Note by virtue of the exemption from the registration requirements of the Securities Act afforded by Regulation S, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof. (iv) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE RESTRICTED GLOBAL NOTE OF A SERIES FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED GLOBAL NOTE OF SUCH SERIES. A beneficial interest in the Restricted Global Note of a series may be exchanged by any holder thereof for a beneficial interest in the Unrestricted Global Note of such series, or transferred to a Person who takes delivery thereof in the form of a beneficial interest in the Unrestricted Global Note of such series, if the exchange or transfer complies with the requirements of SECTION 2.7(b)(ii) and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be exchanged, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in the Unrestricted Global Note of such series, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (l)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note of such series, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note of the applicable series has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with SECTION 2.3 hereof, the Trustee shall authenticate, one or more Unrestricted Global Notes of such series in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS IN GLOBAL NOTES FOR DEFINITIVE NOTES. (i) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES TO RESTRICTED DEFINITIVE NOTES. If any holder of a beneficial interest in a Restricted Global Note of a series proposes to exchange such beneficial interest for a Restricted Definitive Note of such series or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note of such series, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; or (E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; the Trustee shall cause the aggregate principal amount of the Global Note of such series to be reduced accordingly pursuant to SECTION 2.7(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this SECTION 2.7(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this SECTION 2.7(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES TO UNRESTRICTED DEFINITIVE NOTES. A holder of a beneficial interest in a Restricted Global Note of a series may exchange such beneficial interest for an Unrestricted Definitive Note of such series or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note of such series only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (l)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES TO UNRESTRICTED DEFINITIVE NOTES. If any holder of a beneficial interest in an Unrestricted Global Note of a series proposes to exchange such beneficial interest for a Definitive Note of such series or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note of such series, then, upon satisfaction of the conditions set forth in SECTION 2.7(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the Unrestricted Global Note of such series to be reduced accordingly pursuant to SECTION 2.7(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note of such series in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this SECTION 2.7(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this SECTION 2.7(c)(iii) shall not bear the Private Placement Legend. (d) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR BENEFICIAL INTERESTS IN GLOBAL NOTES. (i) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES. If any Holder of a Restricted Definitive Note of a series proposes to exchange such Note for a beneficial interest in a Restricted Global Note of such series or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; or (E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof, the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of the Restricted Global Note of such series. (ii) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES. A Holder of a Restricted Definitive Note of a series may exchange such Note for a beneficial interest in an Unrestricted Global Note of such series or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker- Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Note proposes to exchange such Note for a beneficial interest in the Unrestricted Global Note of such series, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note of such series, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) UNRESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note of such series or transfer such Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes of such series. If any such exchange or transfer from a Definitive Note of a series to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note of such series has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with SECTION 2.3 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes of such series in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (e) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR DEFINITIVE NOTES. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this SECTION 2.7(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this SECTION 2.7(e). (i) RESTRICTED DEFINITIVE NOTES TO RESTRICTED DEFINITIVE NOTES. Any Restricted Definitive Note of a series may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note of such series if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) RESTRICTED DEFINITIVE NOTES TO UNRESTRICTED DEFINITIVE NOTES. Any Restricted Definitive Note of a series may be exchanged by the Holder thereof for an Unrestricted Definitive Note of such series or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Note proposes to exchange such Note for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Company so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) UNRESTRICTED DEFINITIVE NOTES TO UNRESTRICTED DEFINITIVE NOTES. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (f) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with SECTION 2.3, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not Broker-Dealers, (y) they are not participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) LEGENDS. The following legends shall, as indicated below, appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) PRIVATE PLACEMENT LEGEND. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear a legend in substantially the following form: "THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF EDISON MISSION ENERGY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO EDISON MISSION ENERGY, (II) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (II) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this SECTION 2.7 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) GLOBAL NOTE LEGEND. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.8 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.7(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF EDISON MISSION ENERGY." (iii) IAI NOTE LEGEND. Each Definitive Note held by and Institutional Accredited Investor shall bear a legend in substantially the following form: "IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS." (h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with SECTION 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's written order or at the Registrar's written request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to SECTIONS 2.10, 7.5 and 11.1 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Article 10 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of SECTION 2.3 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this SECTION 2.7 to effect a registration of transfer or exchange may be submitted by facsimile but originals of such opinions shall follow by mail. Section 2.8 REPLACEMENT NOTES. If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.9 OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in SECTION 6.4 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. If a Note is replaced pursuant to SECTION 2.8 hereof it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under SECTION 3.1 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.10 TEMPORARY NOTES. Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate permanent Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 2.11 CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of the canceled Notes pursuant to its customary practices and procedures in effect from time to time (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation, except as otherwise provided for herein. Section 2.12 DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in SECTION 3.1 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, PROVIDED that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE III COVENANTS OF THE COMPANY AND THE TRUSTEE Section 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Company shall duly and punctually pay or cause to be paid the principal of, and premium, if any, and interest on, each of the Notes at the place or places, at the respective times and in the manner provided in the applicable Series Supplemental Indenture and the Notes. Payment of principal of, and premium and interest on the Notes shall be paid by mailing a check to or upon the written order of the registered Holders of Notes entitled thereto at their last address as it appears on the Notes Register or, upon written application to the Trustee (which shall be received by the Trustee prior to the record date) by a Holder of $1,000,000 or more in aggregate principal amount of Notes, by wire transfer of immediately available funds to an account maintained by such Holder with a bank or other financial institution; PROVIDED, HOWEVER that (subject to the provisions of SECTION 2.8 hereof) payment of principal of, and premium, if any, on any Note may be conditioned upon presentation for payment of the certificate representing such Note. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the rate set forth in the applicable Series Supplemental Indenture and the Notes, and it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Section 3.2 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, shall appoint, in the manner provided in SECTION 5.9 hereof, a Trustee, so that there shall at all times be a Trustee hereunder. Section 3.3 CERTIFICATE TO TRUSTEE, NOTICES OF DEFAULTS. The Company shall furnish to the Trustee (i) on or before March 31 in each year (beginning with March 31, 2000) a brief certificate from the principal executive, financial or accounting officer of this Company as to his or her knowledge of the Company's compliance with all covenants under this Indenture (such compliance to be determined without regard to any period of grace or requirement of notice provided under this Indenture). and (ii) upon becoming aware of any Default or Event of Default, a statement specifying such Default or Event of Default. Within 30 days of its becoming aware of any Default or Event of Default, the Trustee shall provide the Holders with a notice specifying such Default or Event of Default. Section 3.4 REPORTS BY THE COMPANY. The Company shall deliver to the Trustee and provide Noteholders, within 15 days after it files them with the Commission, copies of its annual reports and of the information, documents and other reports that the Company is required to file with the Commission pursuant to SECTION 13 or 15(d) of the Exchange Act, and shall deliver to the Trustee copies of any other report that the Company files with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein, including the Company's compliance with any of its covenants contained hereunder. Section 3.5 RESTRICTIONS ON LIENS. The Company shall not pledge, mortgage or hypothecate, or permit to exist, any mortgage, pledge or other lien upon any property at any time directly owned by the Company to secure any indebtedness for money borrowed that is incurred, issued, assumed or guaranteed by the Company ("Indebtedness"), without making effective provisions whereby the Notes shall be equally and ratably secured with any and all such Indebtedness and with any other Indebtedness similarly entitled to be equally and ratably secured; PROVIDED, HOWEVER, that this restriction shall not apply to or prevent the creation or existence of (i) liens existing at the Original Issue Date of the Notes, (ii) purchase money liens not to exceed the cost or value of the purchased property, (iii) other liens not to exceed 10% of Consolidated Net Tangible Assets, and (iv) liens granted in connection with extending, renewing, replacing or refinancing, in whole or in part, the Indebtedness (including, without limitation, increasing the principal amount of such Indebtedness) secured by liens described in the foregoing clauses (i) through (iii). In the event that the Company proposes to pledge, mortgage or hypothecate any property at any time directly owned by it to secure any Indebtedness, other than as permitted by clauses (i) through (iv) of the previous paragraph, the Company shall give prior written notice thereof to the Trustee, who shall give notice to the Holders, and the Company shall, prior to or simultaneously with such pledge, mortgage or hypothecation, effectively secure all the Notes equally and ratably with such Indebtedness. Section 3.6 MAINTENANCE OF CORPORATE EXISTENCE. Subject to the provisions of Article 8 hereof, the Company shall at all times preserve and maintain in full force and effect (i) its corporate existence and good standing under the laws of the State of California and (ii) its qualification to do business in each other jurisdiction in which the character of its properties or the nature of its activities make such qualification necessary, except where the failure to be so qualified would not reasonably be expected to result in a Material Adverse Effect. Section 3.7 TAXES. The Company shall, prior to the time penalties attach thereto, (i) file, or cause to be filed, all tax and information returns that are required to be, or are required to have been, filed by it in any jurisdiction, and (ii) pay or cause to be paid all taxes shown to be, or to have been, due and payable on such returns and all other taxes lawfully imposed and payable by it, except to the extent there is a Good Faith Contest thereof by the Company. ARTICLE IV EVENTS OF DEFAULT AND REMEDIES OF THE TRUSTEE AND NOTEHOLDERS Section 4.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY; WAIVER OF DEFAULT. If one or more of the following Events of Default (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body or otherwise) shall have occurred and be continuing: (a) default in the payment of all or any part of the principal of, or premium, if any, on, any of the Notes as and when the same shall become due and payable either at maturity, upon any redemption or required repurchase, by declaration of acceleration or otherwise; or (b) default in the payment of any installment of interest upon any of the Notes as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (c) an event of default, as defined in any instrument of the Company under which there may be issued, or by which there may be secured or evidenced, any Indebtedness of the Company that has resulted in the acceleration of such Indebtedness, or any default occurring in payment of any such Indebtedness at final maturity (and after the expiration of any applicable grace periods), other than such Indebtedness (i) which is payable solely out of the property or assets of a partnership, joint venture or similar entity of which the Company or any of its Subsidiaries or Affiliates is a participant, or which is secured by a lien on the property or assets owned or held by such entity, without further recourse to or liability of the Company, or (ii) the principal of, and interest on, which, when added to the principal of and interest on all other such Indebtedness (exclusive of Indebtedness under clause (i) above), does not exceed $20,000,000; or (d) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Notes or in this Indenture and such failure continues for a period of 90 days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that the Company remedy the same, shall have been given to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes at the time Outstanding; or (e) one or more final, nonappealable judgments, decrees or orders of any court, tribunal, arbitrator, administrative or other governmental body or similar entity for the payment of money shall be rendered against the Company or any of its properties in an aggregate amount in excess of $20,000,000 (excluding the amount thereof covered by insurance) and such judgment, decree or order shall remain unvacated, undischarged and unstayed for more than 90 days, except while being contested in good faith by appropriate proceedings; or (f) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment, or composition of or in respect of the Company under any applicable federal or state law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or for any substantial part of its property or ordering the winding up or liquidation of its affairs, shall have been entered, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or (g) the Company shall commence a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or consent to the entry of a decree or order for relief in an involuntary case or proceeding under any such law, or to the commencement of any bankruptcy or insolvency case or proceeding against the Company, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any such applicable federal or state law, or the consent by the Company to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by the Company of an assignment for the benefit of creditors, or the taking of action by the Company in furtherance of any such action; then and in each and every such case (other than an Event of Default with respect to the Company specified in SECTION 4.1(f) or 4.1(g) hereof), unless the principal amount of all of the Notes shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then Outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by Noteholders), may declare the entire principal amount of all the Notes and the interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. This provision, however, is subject to the condition that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Notes and the principal and premium, if any, of any and all Notes that shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the rate of interest specified in the Notes, to the date of such payment or deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other reasonable expenses and liabilities incurred and all reasonable advances made by the Trustee and each predecessor Trustee except as a result of gross negligence or bad faith, and if any and all Events of Default under this Indenture, other than the non-payment of the principal that shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein, then and in every such case the Holders of a majority in aggregate principal amount of the Notes then Outstanding, by written notice to the Company and to the Trustee, may waive all defaults (except, unless theretofore cured, a default in payment of principal of, or premium, if any, or interest on, the Notes) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon. If an Event of Default specified in SECTION 4.1(f) or 4.1(g) hereof occurs with respect to the Company, the principal of and accrued interest on the Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Noteholder. Section 4.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE DEBT. The Company covenants that (a) in case default shall be made in the payment of any installment of interest on any of the Notes when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or (b) in case default shall be made in the payment of all or any part of the principal of, or premium, if any, on, any of the Notes when the same shall have become due and payable, whether upon maturity or upon any redemption or by declaration or acceleration or otherwise, then upon demand of the Trustee, the Company shall pay to the Trustee for the benefit of the Holders of the Notes the whole amount that then shall have become due and payable on all such Notes of principal, premium and interest, as the case may be (with interest to the date of such payment upon the overdue principal or premium and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the rate of interest specified in the Notes), and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any reasonable expenses and liabilities incurred, and all reasonable advances made, by the Trustee and each predecessor Trustee, except as a result of its gross negligence or bad faith. Until such demand is made by the Trustee, the Company may pay the principal of and premium and interest on the Notes to the registered Holders, whether or not the Notes are overdue. In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceeding at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Notes and collect in the manner provided by law out of the property of the Company or other obligor upon the Notes, wherever situated, the moneys adjudged or decreed to be payable. In case there shall be pending proceedings relative to the Company or any other obligor upon the Notes under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian, sequestrator or similar official shall have been appointed for or taken possession of the Company or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Company or other obligor upon the Notes, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective or whether the Trustee shall have made any demand pursuant to the provisions of this SECTION 4.2, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal, premium and interest owing and unpaid in respect of the Notes, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all reasonable expenses and liabilities incurred, and all reasonable advances made, by the Trustee and each predecessor Trustee, except as a result of gross negligence or bad faith) and of the Noteholders, allowed in any judicial proceedings relative to the Company or other obligor upon the Notes, or to the creditors or property of the Company or such other obligor; (b) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of the Notes in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings; and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Noteholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Noteholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Noteholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other reasonable expenses and liabilities incurred, and all reasonable advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholders any plan or reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes or the production thereof at any trial or other proceeding relative thereto, and any such action or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Notes. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Holders of the Notes parties to any such proceedings. Section 4.3 APPLICATION OF PROCEEDS. Any moneys collected by the Trustee pursuant to this Article shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Notes and stamping (or otherwise noting) thereon the payment, or issuing Notes in reduced principal amounts in exchange for the presented Notes if only partially paid, or upon surrender thereof if fully paid: FIRST: To the payment of costs and expenses, including reasonable compensation to the Trustee and each predecessor Trustee and their respective agents and attorneys and of all reasonable expenses and liabilities incurred, and all reasonable advances made, by the Trustee and each predecessor Trustee, except as a result of gross negligence or bad faith, and all other amounts due under SECTION 5.6 hereof; SECOND: In case the principal and premium, if any, of the Notes shall not have become and be then due and payable, to the payment of interest in default in the order of the maturity of the installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest payable at the rate of interest specified in the Notes, such payments to be made ratably to the persons entitled thereto, without discrimination or preference; THIRD: In case the principal of the Notes shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Notes for principal, premium and interest, with interest upon the overdue principal and premium, if any, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest payable at the rate of interest specified in the Notes, and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Notes, then to the payment of such principal, premium and interest, without preference or priority of principal or premium over interest, or of interest over principal or premium, or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal, premium and accrued and unpaid interest; and FOURTH: To the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto. The Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this SECTION 4.3. Section 4.4 SUITS FOR ENFORCEMENT. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Section 4.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the Noteholders shall continue as though no such proceedings had been taken. Section 4.6 LIMITATIONS OF SUITS BY NOTEHOLDERS. Subject to SECTION 4.10, no Holder of any Note shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless (i) such Holder previously has given to a Responsible Officer of the Trustee written notice of default and of the continuance hereof, as hereinbefore provided, (ii) the Holders of not less than 25% in aggregate principal amount of the Notes then Outstanding have made written request upon the Trustee to institute such action or proceeding in its own name as Trustee hereunder and have offered to the Trustee such reasonable security and indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, (iii) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such action or proceeding and (iv) no direction inconsistent with such written request has been given to the Trustee pursuant to SECTION 4.8 hereof; it being understood and intended, and being expressly covenanted by the taker and Holder of every Note with every other taker and Holder and the Trustee, that no one or more Holders of Notes shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of Notes, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Notes. For the protection and enforcement of the provisions of this SECTION 4.6, each and every Noteholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. Section 4.7 POWERS AND REMEDIES CUMULATIVE, DELAY OR OMISSION NOT WAIVER OF DEFAULT. No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Trustee or of any Holder of any of the Notes to exercise as aforesaid any such right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to SECTION 4.6 hereof, every power and remedy given by this Indenture or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Noteholders. Section 4.8 CONTROL BY NOTEHOLDERS. The Holders of a majority in aggregate principal amount of the Notes at the time Outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee by this Indenture; PROVIDED that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture; and PROVIDED FURTHER that (subject to the provisions of SECTION 5.1 hereof) the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability, or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction shall be unduly prejudicial to the interests of Holders of the Notes not joining in the giving of said direction, it being understood that (subject to SECTION 5.1 hereof) the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction by Noteholders. Section 4.9 WAIVER OF PAST DEFAULTS. Prior to the declaration of the maturity of the Notes as provided in SECTION 4.1 hereof, the Holders of a majority in aggregate principal amount of the Notes at the time Outstanding may on behalf of the Holders of all the Notes waive any past Default or Event of Default hereunder and its consequences, except a Default (a) in the payment of principal of, premium, if any, or interest on any of the Notes or (b) in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Note affected. In the case of any such waiver, the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Section 4.10 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture (including, without limitation, SECTION 4.6 hereof), the right of any Holder to receive, and to institute suit to enforce, payment of the principal of, and premium, if any, and interest on the Notes on or after the respective due dates expressed in such Notes (including upon redemption and acceleration of the maturity of the principal of and premium, if any, and interest on the Notes), shall not be affected or impaired, and shall be absolute and unconditional. ARTICLE V CONCERNING THE TRUSTEE Section 5.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE DURING DEFAULT AND PRIOR TO DEFAULT. The Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred, undertakes to perform only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and shall use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that (a) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in principal amount of the Notes at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or indemnity reasonably satisfactory to it against such liability is not reasonably assured to it. Section 5.2 CERTAIN RIGHTS OF THE TRUSTEE. Subject to SECTION 5.1 hereof: (a) the Trustee may rely conclusively and shall be fully protected in acting or refraining from acting upon any resolution, Officers' Certificate or any other certificate (including, without limitation, any certificate provided to the Trustee pursuant to SECTION 3.3 hereof), statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed) and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company; (c) the Trustee may consult with counsel of its selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Noteholders pursuant to the provisions of this Indenture, unless such Noteholders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities that might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing to do so by the Holders of not less than a majority in aggregate principal amount of the Notes then Outstanding; PROVIDED that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured by the security afforded to it by the terms of this Indenture, the Trustee may require indemnity reasonably satisfactory to it against such expenses or liabilities as a condition to proceeding, and the reasonable expenses of every such examination shall be paid by the Company, or by the Trustee or any predecessor Trustee and repaid by the Company upon demand; (g) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (h) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee which conform to the requirements of this Indenture; (i) the Trustee shall not be liable for any error of judgment made in good faith by an officer or officers of the Trustee, unless it shall be conclusively determined by a court of competent jurisdiction that the Trustee was grossly negligent in ascertaining the pertinent facts; (j) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible for any willful misconduct or gross negligence on the part of any agent, attorney, custodian or nominee so appointed; and (k) the Trustee shall not be deemed to have notice of an Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or written notice of any Event of Default is received by the Trustee at its Corporate Trust Office. Section 5.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF NOTES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any of the Notes or of the proceeds thereof. Section 5.4 TRUSTEE AND AGENTS MAY HOLD NOTES; COLLECTIONS, ETC. The Trustee or any agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Company and receive, collect, hold and retain collections from the Company with the same rights it would have if it were not the Trustee or such agent. Section 5.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of SECTION 9.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Company or the Trustee shall be under any liability for interest on any moneys received by it hereunder, except as the Company and the Trustee otherwise may agree. Section 5.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR CLAIM. The Company covenants and agrees to pay to the Trustee from time to time as shall be agreed upon between the Company and the Trustee in writing from time to time, and the Trustee shall be entitled to reasonable compensation (which shall not be limited by any provision of law relating to the compensation of a trustee of an express trust), and the Company covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ), except to the extent any such expense, disbursement or advance may arise from the Trustee's gross negligence or bad faith. The Company also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any and all loss, liability, damage, claims or expenses arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder and the performance of its duties hereunder, including the costs and expenses of defending and investigating any claim of liability in the premises, except to the extent any such loss, liability or expense is due to its own gross negligence or bad faith. The obligations of the Company under this SECTION 5.6 to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Section 5.7 RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC. Subject to SECTION 5.1 and SECTION 5.2 hereof, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of gross negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee. Section 5.8 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee hereunder shall at all times be a corporation organized and doing business under the laws of the United States or of a state thereof having a combined capital and surplus of at least $50,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of a federal, state or District of Columbia supervising or examining authority, then for the purposes of this SECTION 5.8, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. No obligor on the Notes or Person directly or indirectly controlling, controlled by or under common control with such obligor shall serve as Trustee. Section 5.9 RESIGNATION AND REMOVAL, APPOINTMENT OF SUCCESSOR TRUSTEE. (a) The Trustee may at any time resign by giving written notice of resignation to the Company and by mailing notice thereof by first-class mail to Holders of Notes at their last addresses as they shall appear on the Notes Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor Trustee. If no such successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction, at the expense of the Company, for the appointment of a successor trustee, or any Noteholder who has been a bona fide Holder of a Note or Notes for at least six months may, on behalf of itself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: (i) the Trustee shall fail to comply with the provisions of TIA S 310(b), after written request thereafter by the Company or by any Noteholder who has been a bona fide Holder of a Note or Notes for at least six months; (ii) the Trustee shall cease to be eligible in accordance with the provisions of SECTION 5.8 hereof and shall fail to resign after written request therefor by the Company or by any such Noteholder; or (iii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Company may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors of the Company, one copy of which instrument shall be delivered to the Trustee so removed and one copy of which shall be delivered to the successor trustee, or any Noteholder who has been a bona fide Holder of a Note or Notes for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Notes at the time Outstanding may at any time remove the Trustee and appoint a successor trustee by delivering to the Trustee so removed, to the successor trustee so appointed and to the Company the evidence provided for in SECTION 6.1 hereof of the action in that regard taken by the Noteholders. (d) Any resignation or removal of the Trustee and any appointment of a successor trustee pursuant to any of the provisions of this SECTION 5.9 shall become effective only upon acceptance of appointment by the successor trustee as provided in SECTION 5.10 hereof. Section 5.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any successor trustee appointed as provided in SECTION 5.9 hereof shall execute and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but, nevertheless, on the written request of the Company or of the successor trustee, upon payment of its charges then unpaid, the Trustee ceasing to act shall, subject to SECTION 9.4 hereof, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Company shall execute appropriate instruments in writing for more fully and certainly vesting in and confirming to such successor such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such Trustee to secure any amounts then due it pursuant to the provisions of SECTION 5.6 hereof. Upon acceptance of appointment by a successor trustee as provided in this SECTION 5.10, the Company shall mail notice thereof by first-class mail to the Holders of Notes at their last addresses as they shall appear in the Notes Register. If the acceptance of appointment is substantially contemporaneous with a resignation, then the notice called for by the preceding sentence may be combined with the notice called for by SECTION 5.9 hereof. If the Company fails to mail such notice within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Company. Notwithstanding replacement of the Trustee pursuant to this SECTION 5.10, the Company's obligations under SECTION 5.6 hereof shall continue for the benefit of the retiring Trustee. Section 5.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, as long as such corporation shall be eligible under the provisions of SECTION 5.8 hereof, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any of the Notes shall have been authenticated but not delivered at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Notes so authenticated and, in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor trustee, and in such cases such certificate shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have; PROVIDED that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. Section 5.12 REPORTS BY TRUSTEE. The Trustee shall provide to the Holders the reports required to be provided by the Trustee pursuant to Section 313 of the TIA. ARTICLE VI CONCERNING THE NOTEHOLDERS Section 6.1 EVIDENCE OF ACTION TAKEN BY NOTEHOLDERS. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders, in person or by agent duly appointed in writing, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are received by the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to SECTION 5.1 and SECTION 5.2 hereof) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Article. Section 6.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF NOTES RECORD DATE. Subject to SECTION 5.1 and SECTION 5.2 hereof, the execution of any instrument by a Noteholder or his agent or proxy may be provided in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Notes shall be as provided by the Notes Register or by a certificate of the Registrar thereof. The Company may set a record date for purposes of determining the identity of Holders of Notes entitled to vote or consent to any action referred to in SECTION 6.1 hereof, which record date may be set at any time or from time to time by written notice to the Trustee for any date or dates (in the case of any adjournment or resolicitation) not more than 60 days nor less than five days prior to the proposed date of such vote or consent, and, thereafter, notwithstanding any other provisions hereof, only Holders of Notes of record on such record date shall be entitled to so vote or give such consent or to withdraw such vote or consent. Section 6.3 HOLDERS TO BE TREATED AS OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the Person in whose name any Note shall be registered upon the Notes Register as the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of, and premium, if any, on and, subject to the provisions of this Indenture, interest on such Note and for all other purposes, and neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon his order, shall be valid and to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Note. Section 6.4 NOTES OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining whether the Holders of the requisite aggregate principal amount of Notes have concurred in any direction, consent or waiver under this Indenture, Notes that are owned by the Company or any other obligor on the Notes or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the obligor on the Notes shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether a Responsible Officer of the Trustee shall be protected in relying on any such direction, consent or waiver, only Notes that the Trustee actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Notes, if any, known by the Company to be owned or held by or for the account of any of the above-described Persons, and, subject to SECTION 5.1 and SECTION 5.2 hereof, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are Outstanding for the purpose of any such determination. Section 6.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior to (but not after) the evidencing to the Trustee, as provided in SECTION 6.1 hereof, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Notes specified in this Indenture in connection with such action, any Holder of a Note the serial number of which is shown by the evidence to be included among the serial numbers of the Notes the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Note. Except as aforesaid any such action taken by the Holder of any Note shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Note and of any Notes issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Note. Any action taken by the Holders of the percentage in aggregate principal amount of the Notes specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the Holders of all such Notes. ARTICLE VII SUPPLEMENTAL INDENTURES Section 7.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS. The Company, when authorized by a resolution of its Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Notes any property or assets; (b) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company pursuant to ARTICLE 8 hereof; (c) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Board of Directors shall consider to be for the protection of the Holders of Notes, and to make the occurrence, or the occurrence and continuance of a Default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; PROVIDED that in respect of any such additional covenant, restriction, condition or provision, such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other Defaults) or may provide for immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee due solely to such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Notes to waive such an Event of Default; (d) to cure any ambiguity or to cure, correct or supplement any defective provision contained herein or in the Notes, or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Board of Directors may deem necessary or desirable, and in any case which the Trustee and the Company shall determine (i) are not inconsistent with this Indenture and the Notes and (ii) shall not adversely affect the interests of the Holders of the Notes; (e) to modify or supplement this Indenture or any indenture supplemental hereto in such manner as to permit the qualification thereof under the TIA or any other similar federal statute hereafter in effect; and (f) to permit or facilitate the issuance of a series of Notes pursuant to the provisions hereof. The Trustee is hereby authorized to join in the execution of any such supplemental Indenture, to make any further appropriate agreements and stipulations that may be therein continued and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture that affects the Trustee's own rights, duties, indemnities or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this SECTION 7.1 may be executed without the consent of the Holders of any of the Notes at the time Outstanding, notwithstanding any of the provisions of SECTION 7.2 hereof. Section 7.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. With the consent (evidenced as provided in ARTICLE 6 hereof) of the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding, the Company, when authorized by a resolution of its Board of Directors, and the Trustee may, from time to time and at any time, modify this Indenture, any indentures supplemental hereto, the Notes or the rights of the Holders of the Notes, PROVIDED that no such supplemental indenture shall (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Note, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or impair or affect the right of any Noteholder to institute suit for the payment thereof or change the place or currency of payment of principal of, or interest on, any Note, in each case without the consent of the Holder of each Note so affected, or (b) without the consent of the Holders of all Notes then Outstanding, (i) reduce the aforesaid percentage of Notes the consent of the Holders of which is required for any such modification, or the percentage of Notes the consent of the Holders of which is required for any waiver provided for in this Indenture, (ii) change any obligation of the Company to maintain an office or agency in the places and for the purposes specified in SECTION 2.4 or (iii) make any change in SECTION 4.9 or this SECTION 7.2, except to increase any percentages or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holders of each Outstanding Note affected thereby. Upon the request of the Company, accompanied by a copy of a resolution of the Board of Directors certified by the Secretary or an Assistant Secretary of the Company authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Noteholders and other documents, if any, required by SECTION 6.1 hereof, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties, indemnities or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Noteholders under this SECTION 7.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this SECTION 7.2, the Company shall mail a notice thereof by first class mail to the Holders of Notes at their addresses as they shall appear on the Notes Register, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 7.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders of Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 7.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. The Trustee, subject to the provisions of SECTION 5.1 and SECTION 5.2 hereof, shall receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any such supplemental indenture complies with the applicable provisions of this Indenture and that all conditions precedent to the execution of such supplemental indenture have been met. Section 7.5 NOTATION OF NOTES IN RESPECT OF SUPPLEMENTAL INDENTURES. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this ARTICLE 7 may bear a notation in form approved by the Trustee as to any matters provided for by such supplemental indenture or as to any action taken at any such meeting as the Company shall so determine, and new Notes so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Notes then Outstanding, which Notes so exchanged shall be canceled by the Trustee. ARTICLE VIII MERGER, CONSOLIDATION, SALE, LEASE OR CONVEYANCE Section 8.1 COVENANT NOT TO MERGE, CONSOLIDATE, SELL, LEASE OR TRANSFER ASSETS EXCEPT UNDER CERTAIN CONDITIONS. (a) The Company shall not merge or consolidate with or into any other person and the Company shall not sell, lease or convey all or substantially all of its assets to any person, unless (1) the Company is the continuing corporation, or the successor corporation or the person that acquires all or substantially all of the Company's assets is a corporation organized and existing under the laws of the United States or a State thereof or the District of Columbia and expressly assumes all the Company's obligations under the Notes and this Indenture, (2) immediately after such merger, consolidation, sale, lease or conveyance, there is no Default or Event of Default hereunder, (3) if, as a result of the merger, consolidation, sale, lease or conveyance, any or all of the Company's property would become the subject of a lien that would not be permitted by this Indenture, the Company secures the Notes equally and ratably with the obligations secured by that lien and (4) the Company delivers or causes to be delivered to the Trustee an Officers' Certificate and Opinion of Counsel each stating that the merger, consolidation, sale, lease or conveyance comply with this Indenture. (b) Except for the sale of the properties and assets of the Company substantially as an entirety pursuant to subsection (a) above, and other than assets required to be sold to conform with governmental regulations, the Company shall not sell or otherwise dispose of any assets (other than short-term, readily marketable investments purchased for cash management purposes with funds not representing the proceeds of other asset sales) if, on a pro forma basis, the aggregate net book value of all such sales during the most recent 12-month period would exceed 10 percent of Consolidated Net Tangible Assets computed as of the end of the most recent fiscal quarter preceding such sale; PROVIDED, HOWEVER, that any such sales shall be disregarded for purposes of this 10 percent limitation if the proceeds are invested in assets in similar or related lines of business of the Company and, provided further, that the Company may sell or otherwise dispose of assets in excess of such 10 percent limitation if the proceeds from such sales or dispositions, which are not reinvested as provided above, are retained by the Company as cash or cash equivalents or are used by the Company to purchase Notes, which are then delivered to the Trustee for cancellation, or to reduce or retire Indebtedness ranking pari passu in right of payment to the Notes or indebtedness of the Company's Subsidiaries. Section 8.2 SUCCESSOR CORPORATION SUBSTITUTED. In case of any such merger, consolidation, sale, lease, or transfer, and following such an assumption by the successor corporation of the Company's obligations under the Notes and this Indenture, such successor corporation shall succeed to and be substituted for the Company, with the same effect as if it had been named herein. Such successor corporation may cause to be signed, and may issue either in its own name or in the name of the Company prior to such succession, any or all of the Notes issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee, and, upon the order of such successor corporation, instead of the Company, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Notes that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication and any Notes that such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof. In case of any such merger, consolidation, sale, lease or transfer such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate. In the event of any such sale or transfer (other than a transfer by way of lease) the Company or any successor corporation, which shall theretofore have become such in the manner described in this ARTICLE 8, shall be discharged from all obligations and covenants under this Indenture and the Notes and may be liquidated and dissolved. Section 8.3 OPINION OF COUNSEL TO TRUSTEE; OFFICERS' CERTIFICATE. The Trustee, subject to the provisions of SECTION 5.1 and SECTION 5.2 hereof, shall receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any such merger, consolidation, sale, lease or transfer, and any such assumption of obligations described in this ARTICLE 8, and any such liquidation or dissolution described in this ARTICLE 8, complies with the applicable provisions of this Indenture. ARTICLE IX SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS Section 9.1 SATISFACTION AND DISCHARGE OF INDENTURE. If at any time (a) the Company shall have paid or caused to be paid the principal of and premium, if any, and interest on all the Notes Outstanding hereunder, as and when the same shall have become due and payable, or (b) the Company shall have delivered to the Trustee for cancellation all Notes theretofore authenticated (other than any Notes which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in SECTION 2.8 hereof) or (c)(i) all such Notes not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) the Company shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any paying agent to the Company in accordance with SECTION 9.4 hereof) or U.S. Government Obligations, maturing as to principal, premium, if any, and interest in such amounts and at such times as will insure (without reinvestment) the availability of cash sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay at maturity all such Notes not theretofore delivered to the Trustee for cancellation, including principal, premium, if any, and interest due or to become due to such date of maturity as the case may be, and if, in any such case, the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer and exchange, and the Company's right to optional redemption, (ii) substitution of apparently mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Holders to receive payments of principal of and premium, if any, and interest on, the Notes upon the original stated due dates therefor (but not upon acceleration), (iv) the rights and obligations and immunities of the Trustee hereunder, (v) the rights of the Noteholders as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them and (vi) the maintenance by the Company of its existence), and the Trustee, upon written demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; PROVIDED that the rights of Holders of the Notes to receive amounts in respect of principal of and premium, if any, and interest on the Notes held by them shall not be delayed longer than required by then applicable mandatory rules or policies of any securities exchange upon which the Notes are listed. The Company shall reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and shall compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Notes. Section 9.2 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF NOTES. Subject to SECTION 9.4 hereof, all moneys deposited with the Trustee pursuant to SECTION 9.1 hereof shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Company acting as its own Paying Agent), to the Holders of the particular Notes for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. Section 9.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Company, be repaid to it or paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. Section 9.4 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT UNCLAIMED FOR TWO YEARS. Any moneys deposited with or paid to the Trustee or any Paying Agent for the payment of the principal of or premium or interest on any Note and not applied but remaining unclaimed for two years after the date upon which such principal, premium or interest shall have become due and payable shall, upon the written request of the Company, be repaid to the Company by the Trustee or such Paying Agent, and the Holder of such Note shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Company for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such moneys shall thereupon cease. Section 9.5 DEFEASANCE AND DISCHARGE OF INDENTURE. The Company will be deemed to have paid and will be discharged from any and all obligations in respect of the Notes on the 123rd day after the deposit referred to in subparagraph (A) below has been made, and the provisions of this Indenture will no longer be in effect with respect to the Notes (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except as to (a) rights of registration of transfer and exchange, and the Company's right of optional redemption, (b) substitution of apparently mutilated, defaced, destroyed, lost or stolen securities, (c) rights of Holders to receive payments of principal thereof and premium, if any, and interest thereon, (d) the rights, obligations and immunities of the Trustee hereunder, (e) the rights of the Noteholders as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, (f) the obligations of the Company to maintain a place of payment for the Notes under SECTION 3.1 hereof and (g) the maintenance by the Company of its existence; PROVIDED that the following conditions shall have been satisfied: (A) with reference to this SECTION 9.5, the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee (or another trustee satisfying the requirements of SECTION 5.8 hereof) as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Notes, (i) money in an amount, (ii) U.S. Government Obligations, which through the payment of interest and principal in respect thereof in accordance with their terms (without reinvestment), will provide not later than one day before the due date of any payment referred to in clause (x) or (y) of this subparagraph (A) money in an amount, or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, after payment of all federal, state and local taxes or other charges and assessments in respect thereof, (x) the principal of, premium, if any, and each installment of principal and interest on the Outstanding Notes at the maturity date of such principal or installment of principal or interest and (y) any mandatory sinking fund payments or analogous payments applicable to the Notes on the day on which such payments are due and payable in accordance with the terms of this Indenture and the Notes; (B) the Company has delivered to the Trustee (i) an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Company's exercise of its option under this SECTION 9.5 and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, which Opinion of Counsel must be based on (x) a change in applicable federal income tax law or related Treasury Regulations after the date of this Indenture or (y) a ruling of the Internal Revenue Service to the same effect and (ii) an Opinion of Counsel to the effect that the defeasance trust does not constitute an "investment company" under the Investment Company Act of 1940, as amended, and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the U.S. Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law; (C) immediately after giving effect to such deposit, no Default or Event of Default shall have occurred and be continuing on the date of such deposit or during the period ending on the 123rd day after the date of such deposit, and such deposit shall not result in a breach or violation of, or constitute a default under, any other agreement or to which the Company is a party or by which the Company is bound; and (D) if at such time the Notes are listed on a national securities exchange, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Notes will not be delisted as a result of such deposit, defeasance and discharge. Section 9.6 DEFEASANCE OF CERTAIN OBLIGATIONS. The Company may omit to comply with any term, provision, or condition set forth in SECTIONS 3.4, 3.5 and 8.1(b), and SECTION 4.1(d) (with respect to SECTIONS 3.4, 3.5 and 8.1(b)) and SECTIONS 4.1(c) and (e) shall be deemed not to be Events of Default on the 123rd day after the deposit referred to in subparagraph (A) below if: (A) with reference to this SECTION 9.6, the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee (or another trustee satisfying the requirements of SECTION 5.6 hereof) as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Notes, (i) money in an amount, (ii) U.S. Government Obligations, which through the payment of interest and principal in respect thereof in accordance with their terms (without reinvestment), will provide not later than one day before the due date of any payment referred to in clauses (x) or (y) of this SECTION 9.6, money in an amount, or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a certification thereof delivered to the Trustee, to pay and discharge, after payment of all federal, state and local taxes or other charges and assessments in respect thereof, (x) the principal of, premium, if any, and each installment of principal and interest on the Outstanding Notes at the maturity date of such principal or installment of principal or interest and (y) any mandatory sinking fund payments or analogous payments applicable to the Notes on the day on which such payments are due and payable in accordance with the terms of this Indenture and the Notes; (B) the Company has delivered to the Trustee (i) an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Company's exercise of its option under this SECTION 9.6 and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, and (ii) an Opinion of Counsel to the effect that the defeasance trust does not constitute an "investment company" under the Investment Company Act of 1940, as amended, and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the U.S. Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law; (C) immediately after giving effect to such deposit, no Event of Default, or event that after the giving of notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing on the date of such deposit or during the period ending on the 123rd day after the date of such deposit, and such deposit shall not result in a breach or violation of or constitute a default under any other agreement or instrument to which the Company is a party or by which the Company is bound; and (D) if at such time the Notes are listed on a national securities exchange, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Notes will not be delisted as a result of such deposit, defeasance and discharge. ARTICLE X REDEMPTION OF NOTES Section 10.1 NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. Section 10.2 NOTICE OF REDEMPTION. Notice of redemption to the Holders of Notes to be redeemed in accordance with any Series Supplemental Indenture shall be given by the Company by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Notes at their last addresses as they shall appear in the Notes Register. Failure to give notice by mail, or any defect in the notice to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. The notice of redemption to each Holder shall specify that the Notes are being redeemed pursuant to this ARTICLE 10 and the applicable Series Supplemental Indenture, the date fixed for redemption, the place or places of payment, the CUSIP and ISIN numbers (as applicable) of the Notes being redeemed, that payment will be made upon presentation and surrender of the Notes, that interest accrued to the date fixed for redemption will be paid as specified in this Article and that, on and after said date, interest thereon or on the portions thereof redeemed will cease to accrue. Any notice of redemption of Notes to be redeemed at the option of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. At least one Business Day prior to the redemption date specified in the notice of redemption given as provided in this SECTION 10.2, the Company shall deposit with the Trustee or with one or more paying agents (or, if the Company is acting as its own paying agent, set aside, segregate and hold in trust as provided in SECTION 2.5 hereof) an amount of money sufficient to redeem on the redemption date all the Notes so called for redemption. Section 10.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of redemption has been given as above provided, the Notes shall become due and payable on the date and at the place stated in such notice at the redemption price, and on and after said date (unless the Company shall default in the payment of such Notes at the redemption price) interest on the Notes or portions of Notes so called for redemption shall cease to accrue and, except as provided in SECTION 5.5 and SECTION 9.4 hereof, such Notes shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Notes except the right to receive the redemption price thereof. On presentation and surrender of such Notes at a place of payment specified in said notice, said Notes shall be paid and redeemed by the Company at the redemption price, PROVIDED that any semiannual payment of interest becoming due on the date fixed for redemption shall be payable to the Holders of such Notes registered as such on the relevant record date subject to the terms and provisions of SECTION 2.7(i) hereof. If the Company defaults in the payment of the redemption price with respect to any Note called for redemption, upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate borne by the Note. ARTICLE XI MISCELLANEOUS PROVISIONS Section 11.1 INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS OF COMPANY EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Note, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future shareholder, officer or director, as such, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Notes by the Holders thereof and as part of the consideration for the issue of the Notes. Section 11.2 PROVISIONS OF THE INDENTURE FOR THE SOLE BENEFIT OF PARTIES AND NOTEHOLDERS. Nothing in this Indenture or in the Notes, expressed or implied, shall give or be construed to give to any Person, other than the parties hereto and their successors and the Holders (and, where expressly set forth herein, owners of interests in any Global Note), any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and the Holders (and, where expressly set forth herein, owners of interests in any Global Note). Section 11.3 SUCCESSORS AND ASSIGNS OF COMPANY BOUND BY INDENTURE. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not. Section 11.4 NOTICES AND DEMANDS ON COMPANY, TRUSTEE AND NOTEHOLDERS. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders to or on the Company may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Company is filed by the Company with the Trustee) to Edison Mission Energy, 18101 Von Karman Avenue, Suite 1700, Irvine, California 92612, Attention: Chief Financial Officer. Any notice, direction, request or demand by the Company or any Noteholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made at the Corporate Trust Office. Where this Indenture provides for notice to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Notes Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Company and Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Section 11.5 STATEMENTS TO BE CONTAINED IN OFFICERS' CERTIFICATES AND OPINIONS OF COUNSEL. Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the Person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with. Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or Opinion of Counsel may be based, insofar as it relates to factual matters (information with respect to which is in the possession of the Company) upon the certificate, statement or opinion of or representations by an officer or officers of the Company, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. Section 11.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the date of maturity of interest on or principal, or premium, if any, of the Notes or the date fixed for redemption of any Note shall not be a Business Day, then payment of interest, principal, or premium need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date. Section 11.7 NEW YORK LAW TO GOVERN. THIS INDENTURE SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Section 11.8 COUNTERPARTS This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same agreement. Section 11.9 EFFECT OF HEADINGS The Article and Section Headings herein and the Table of Contents are for convenience of reference only and shall not affect the construction hereof. Section 11.10 TRUST INDENTURE ACT When this Indenture is qualified under the TIA, the mandatory provisions thereof shall be deemed to be incorporated by reference herein. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers thereunto duly authorized as of the date first written above. EDISON MISSION ENERGY, as Company By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President and Associate General Counsel Attest: By: /s/ Mary Ellen Olson -------------------- Name: Mary Ellen Olson Title: Vice President THE BANK OF NEW YORK, as Trustee By: /s/ Mary Beth Lewicki --------------------- Name: Mary Beth Lewicki Title: Assistant Vice President Attest: By: /s/ Marie E. Trimboli --------------------- Name: Marie E. Trimboli Title: Assistant Treasurer [FACE OF NOTE] CUSIP/CINS ------------ ISIN ------------ % [Series [ ]] Senior Notes due -- ---------- No. $ --- ------------ EDISON MISSION ENERGY promises to pay to ------------------------------------------------------------- or registered assigns, te principal sum of ___________________________________ DOLLARS on , . ------------- ------- Interest Payment Dates: and ------------ ------------ Record Dates: and ------------ ------------ Dated: , --------------- ---- EDISON MISSION ENERGY By: -------------------------------- Name: Title By: -------------------------------- Name: Title (SEAL) This is one of the Notes referred to in the within-mentioned Indenture: THE BANK OF NEW YORK, as Trustee By: ---------------------------------- Authorized Signatory [Back of Note] % [Series [ ]] Senior Notes due --- ----------- [INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] [INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] [INSERT THE IAI NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Edison Mission Energy, a California corporation (the "Company"), promises to pay interest on the principal amount of this Note at ___% per annum from ________________, ____ until maturity. The Company will pay interest semi-annually in arrears on ___________ and ___________ of each year, (each an "Interest Payment Date"); PROVIDED that if any such day is not a Business Day, then such payment will be made on the next succeeding Business Day. Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from ___________; PROVIDED that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first Interest Payment Date in respect of this Note shall be _____________, ____. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time at a rate that is equal to the rate set forth on the face of this Note; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on this Note (except defaulted interest) to the Person who is the registered Holder of this Note at the close of business on the ___________ or ___________ next preceding the Interest Payment Date, even if this Note is canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. This Note will be payable as to principal, premium, if any, and interest by mailing a check for such to or upon the written order of the registered Holder of this Note entitled thereto at its last address as it appears on the Notes Register or, upon written application to the Trustee by a Holder of $1,000,000 or more in aggregate principal amount of Notes, by wire transfer of immediately available funds to an account maintained by such Holder with a bank or other financial institution. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE. The Company issued this Note under an Indenture, dated as of June 28, 1999 (the "Original Indenture"), between the Company and the Trustee, as supplemented by the [ ] Supplemental Indenture, dated as of ____________ (the "[ ] Supplemental Indenture"), between the Company and the Trustee (the Original Indenture, as so supplemented, and as the same may be amended, modified and further supplemented, the "Indenture"). The terms of this Note include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). This Note is subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Company, and the series of Notes of which this Note is a part is limited to $___ million in aggregate principal amount. 5. REDEMPTION. [INSERT RELEVANT PROVISIONS IF THE SERIES OF NOTES IS REDEEMABLE PURSUANT TO THE APPLICABLE SUPPLEMENTAL INDENTURE] 6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its last registered address. Subject to payment by the Company of a sum sufficient to pay the amount due on redemption, interest on the Notes ceases to accrue upon the date duly fixed for redemption of the Notes. 7. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes of this series are issuable only in registered form without coupons in denominations of $_______ and any integral multiple of $_____ in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 8. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 9. AMENDMENT, SUPPLEMENT. With the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding, evidenced as in the Indenture provided, the Indenture or any supplemental indentures or the rights of the Holders of the Notes may be modified; PROVIDED that no such modification shall (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Note, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on the redemption thereof or impair or affect the rights of any Noteholder to institute suit for the payment thereof or change the place or currency of payment of principal of, or interest on, any Note, in each case without the consent of the Holder of each Note so affected, or (b) without the consent of the Holders of all Notes then outstanding, (i) reduce the aforesaid percentage of Notes the consent of the Holders of which is required for any such modification, or the percentage of Notes the consent of Holders of which is required for any waiver provided for in the Indenture, (ii) change any obligation of the Company to maintain an office or agency for payment of and transfer and exchange of the Notes or (iii) make certain changes to provisions relating to the waiver of past defaults or to the provisions for supplementing the Indenture with the consent of the Holders. 10. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption or otherwise, (iii) failure by the Company for 90 days after notice to the Company by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding voting as a single class to comply with certain other agreements in the Indenture or the Notes; (iv) default under certain other agreements relating to Indebtedness of the Company which default results in the acceleration of such Indebtedness prior to its express maturity; (v) certain final judgments for the payment of money that remain undischarged for a period of 90 days; and (vi) certain events of bankruptcy or insolvency with respect to the Company. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal of all the Notes and the interest accrued thereon to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any past Default or Event of Default except a Default in the payment of principal of, premium, if any, or interest on, any of the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 11. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 12. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder of the Company, as such, shall not have any liability for any obligations of the Company under the Notes, the Indenture or any indenture supplemental thereto or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 13. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 14. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). [15. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of ____________, ____, between the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement").] 16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Edison Mission Energy 18101 Von Karman Avenue Suite 1700 Irvine, California 92612 Attention: Chief Financial Officer Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to: ----------------------------------- Insert assignee's legal name) - -------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------- - -------------------------------------------------------------------------- - -------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: ------------------------ Your Signature: ---------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: ----------------- * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE* The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Signature of Amount of decrease in Amount of increase in of this Global Note authorized officer of Principal Amount Principal Amount following such decrease Trustee or Note Date of Exchange of this Global Note of this Global Note (or increase) Custodian ---------------- ------------------- ------------------- ------------- --------- * THIS SCHEDULE SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Edison Mission Energy 18101 Von Karman Avenue Suite 1700 Irvine, California 92612 The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10288 Attention: Corporate Trust Administration Re: [ ]% SENIOR NOTES DUE [ ] Reference is hereby made to the Indenture, dated as of June 28, 1999 (the "INDENTURE"), between Edison Mission Energy, as issuer (the "COMPANY"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ___________________, (the "TRANSFEROR") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the "TRANSFER"), to ___________________________ (the "TRANSFEREE"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. - CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RESTRICTED GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. - CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RESTRICTED GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Restricted Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. / / CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE RESTRICTED GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) / / such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) / / such Transfer is being effected to the Company or a subsidiary thereof. 4. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE. (a) / / CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) / / CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) / / CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit. -------------------------------- [Insert Name of Transferor] By: ----------------------------- Name: Title: Dated: ------------------------------ ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE] (a) / / a beneficial interest in the Restricted Global Note (CUSIP ); or (b) / / a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) / / a beneficial interest in the: (i) / / Restricted Global Note (CUSIP ); or (ii) / / Unrestricted Global Note (CUSIP ); or (b) / / a Restricted Definitive Note; or (c) / / an Unrestricted Definitive Note, in accordance with the terms of the Indenture. FORM OF CERTIFICATE OF EXCHANGE Edison Mission Energy 18101 Von Karman Avenue Suite 1700 Irvine, California 92612 The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10288 Attention: Corporate Trust Administration Re: [ ]% SENIOR NOTES DUE [ ] (CUSIP ) ------------ Reference is hereby made to the Indenture, dated as of June 28, 1999 (the "INDENTURE"), between Edison Mission Energy, as issuer (the "COMPANY"), and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________________, (the "OWNER") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the "EXCHANGE"). In connection with the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE (a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "SECURITIES ACT"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES (a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the Restricted Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Note and in the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. -------------------------------- [Insert Name of Transferor] By: ----------------------------- Name: Title: Dated: ------------------------------ EX-10.72 19 EXHIBIT 10.72 EXHIBIT 10.72 EXECUTION COPY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE DATED AS OF JUNE 28, 1999 to INDENTURE dated as of June 28, 1999 between EDISON MISSION ENERGY and THE BANK OF NEW YORK, as Trustee - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE, dated as of June 28, 1999 (this "FIRST SUPPLEMENTAL INDENTURE"), to the Indenture, dated as of June 28, 1999 (the "ORIGINAL INDENTURE"), between EDISON MISSION ENERGY, a California corporation (the "COMPANY"), and THE BANK OF NEW YORK, a New York banking corporation (the "TRUSTEE"). WHEREAS, the Company and the Trustee have heretofore executed and delivered the Original Indenture to provide for the issuance from time to time of Notes (as defined in the Original Indenture) of the Company, to be issued in one or more series; WHEREAS, SECTIONS 2.1, 2.2 and 7.1 of the Original Indenture provide, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of establishing the designation, form, terms and provisions of Notes of any series as permitted by SECTIONS 2.1, 2.2 and 7.1 of the Original Indenture; WHEREAS, the Company (i) desires the issuance of a series of Notes to be designated as hereinafter provided and (ii) has requested the Trustee to enter into this First Supplemental Indenture for the purpose of establishing the designation, form, terms and provisions of the Notes of such series; WHEREAS, all action on the part of the Company necessary to authorize the issuance of said Notes under the Original Indenture and this First Supplemental Indenture (the Original Indenture, as supplemented by this First Supplemental Indenture, being hereinafter called the "INDENTURE") has been duly taken. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: That, in order to establish the designation, form, terms and provisions of, and to authorize the authentication and delivery of, said Notes, and in consideration of the acceptance of said Notes by the Holders thereof and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I. DEFINITIONS ----------- (a) Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Original Indenture. (b) The rules of interpretation set forth in the Original Indenture shall be applied hereto as if set forth in full herein. (c) For all purposes of this First Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the following respective meanings (such meanings shall apply equally to both the singular and plural forms of the respective terms): "COMPARABLE TREASURY ISSUE" means the United States Treasury security selected by Credit Suisse First Boston Corporation or an affiliate as having a maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes. "COMPARABLE TREASURY PRICE" means the average of three Reference Treasury Dealer Quotations obtained by the Trustee in respect of the Notes to be redeemed on the applicable redemption date. "REFERENCE TREASURY DEALER QUOTATION" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by a Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business day preceding the redemption date. "REFERENCE TREASURY DEALERS" means Credit Suisse First Boston Corporation (so long as it continues to be a primary U.S. Government securities dealer) and any two other primary U.S. Government securities dealers chosen by the Company. If Credit Suisse First Boston Corporation ceases to be a primary U.S. Government securities dealer, the Company will appoint in its place another nationally recognized investment banking firm that is a primary U.S. Government securities dealer. "REMAINING SCHEDULED PAYMENTS" means, with respect to each Note that the Company is redeeming, the remaining scheduled payments of the principal and interest that would be due after the related redemption date if such Note were not redeemed. However, if the redemption date is not a scheduled interest payment date with respect to that Note, the amount of the next succeeding scheduled interest payment on that Note will be reduced by the amount of interest accrued on such Note to the redemption date. "SERIES A NOTES" shall have the meaning ascribed thereto in SECTION 2.1(a) hereof. "TREASURY RATE" means, with respect to any redemption date, an annual rate equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasure Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the redemption date. The semiannual equivalent yield to maturity will be computed as of the third business day immediately preceding the redemption date. ARTICLE II. THE TERMS OF THE NOTES ---------------------- SECTION 2.1. TERMS OF 7.73% SENIOR NOTES DUE JUNE 15, 2009. --------------------------------------------- (a) There is hereby created one series of Notes designated: 7.73% Senior Notes due June 15, 2009, in the aggregate principal amount of $600,000,000 (the "SERIES A NOTES"). The Series A Notes may forthwith be executed by the Company and delivered to the Trustee for authentication and delivery by the Trustee in accordance with the provisions of SECTION 2.3 of the Original Indenture. (b) Each of the Series A Notes shall have and be subject to such other terms as provided in the Indenture and shall be evidenced by one or more Notes in the form of EXHIBIT A to the Indenture. SECTION 2.2. INTEREST AND PRINCIPAL. ---------------------- The Series A Notes will mature on June 15, 2009 and will bear interest at the rate of 7.73% per annum. The Company will pay interest on the Series A Notes on each June 15 and December 15, beginning on December 15, 1999, to the holders of record on the immediately preceding June 1 or December 1. Interest on the Series A Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from June 28, 1999. SECTION 2.3. REDEMPTION. ----------- The Company at its option may, at any time, redeem the Series A Notes, in whole or in part, upon payment of a redemption price equal to (A) the greater of (i) 100% of the principal amount of the Series A Notes to be redeemed and (ii) the sum of present values of the Remaining Scheduled Payments on the Series A Notes being redeemed discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a rate equal to the Treasury Rate plus 37.5 basis points, plus (B) accrued and unpaid interest, if any, on the principal amount of Notes being redeemed to the redemption date. ARTICLE III. MISCELLANEOUS ------------- SECTION 3.1. EXECUTION OF SUPPLEMENTAL INDENTURE. ----------------------------------- This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this First Supplemental Indenture forms a part thereof. SECTION 3.2. CONCERNING THE TRUSTEE. ---------------------- The recitals contained herein and in the Series A Notes, except with respect to the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture or of the Series A Notes. SECTION 3.3. COUNTERPARTS. ------------ This First Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 3.4. GOVERNING LAW. ------------- THIS FIRST SUPPLEMENTAL INDENTURE AND EACH NOTE OF THE SERIES CREATED HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed by their respective officers thereunto duly authorized as of the date first above written. EDISON MISSION ENERGY By: /s/ Steven D. Eisenberg ----------------------- Name: Steven D. Eisenberg Title: Vice President and Associate General Counsel THE BANK OF NEW YORK, as Trustee By: /s/ Mary Beth Lewicki --------------------- Name: Mary Beth Lewicki Title: Assistant Vice President EX-10.73 20 EXHIBIT 10.73 Exhibit 10.73 EXECUTION COPY $600,000,000 EDISON MISSION ENERGY 7.73% Senior Notes due June 15, 2009 REGISTRATION RIGHTS AGREEMENT June 23, 1999 CREDIT SUISSE FIRST BOSTON CORPORATION LEHMAN BROTHERS INC. SG COWEN SECURITIES CORP. c/o Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010-3629 Dear Sirs: In connection with the issue and sale of $600 million in aggregate principal amount of 7.73% Senior Notes due June 15, 2009 (the "INITIAL NOTES") issued by Edison Mission Energy, a California corporation (the "COMPANY"), pursuant to the terms of the Indenture (as defined below) and as an inducement to Credit Suisse First Boston Corporation, Lehman Brothers Inc. and SG Cowen Securities Corp. (the "INITIAL PURCHASERS") to enter into the Purchase Agreement, dated June 23, 1999 (the "PURCHASE AGREEMENT"), among the Company and the Initial Purchasers, the Company hereby agrees to provide the registration rights set forth in this Registration Rights Agreement (this "AGREEMENT") for the benefit of the holders of the Initial Notes. The execution of this Agreement is a condition to the purchase of the Initial Notes under the Purchase Agreement. SECTION 1. DEFINITIONS. Capitalized terms used herein without definition shall have the respective meanings ascribed thereto, whether expressly or by reference to another agreement or document, in the Indenture. The definitions set forth in this Agreement shall equally apply to both the singular and plural forms of the terms defined. As used in this Agreement, the following terms shall have the following meanings: "ADVICE" shall have the meaning set forth in the last paragraph of Section 5 of this Agreement. "AFFILIATE", with respect to any Person, shall mean any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such first Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities or by contract or otherwise. For purposes of Section 2, an "Affiliate" of the Company shall mean and include, in addition, any Person deemed an affiliate thereof under the Securities Act or the Exchange Act in connection with the Exchange Offer. "CLOSING DATE" shall mean the date of the initial issuance and sale of the Initial Notes. "COMMISSION" shall mean the United States Securities and Exchange Commission. COMPANY" shall have the meaning set forth in the first paragraph of this Agreement. "CURE DATE" shall have the meaning set forth in Section 4(a) of this Agreement. "EFFECTIVE DATE" shall mean the date which is 270 days after the Closing Date. "EFFECTIVE PERIOD" shall have the meaning set forth in Section 3(a) of this Agreement. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "EXCHANGE OFFER" shall have the meaning set forth in Section 2(a) of this Agreement. "EXCHANGE OFFER REGISTRATION STATEMENT" shall have the meaning set forth in Section 2(a) of this Agreement. "EXCHANGE PERIOD" shall have the meaning set forth in Section 2(a) of this Agreement. "EXCHANGE NOTES" shall have the meaning set forth in Section 2(a) of this Agreement. A "HOLDER" of Registrable Notes shall mean the registered holder of such securities or any beneficial owner thereof. "HOLDER INDEMNIFIED PARTY" shall have the meaning set forth in Section 8(a) of this Agreement. "HOLDER INFORMATION" shall have the meaning set forth in Section 8(a) of this Agreement. "ILLIQUIDITY EVENT" with respect to the Initial Notes shall mean any of the following events: (a) as of the Effective Date, both (i) an Exchange Offer Registration Statement (which, if applicable pursuant to Section 2(a), covers resales of such Exchange Notes) has not 2 become effective and (ii) the Registrable Notes are not the subject of an Initial Shelf Registration Statement which has become effective; or (b) the Exchange Notes offered in exchange for the Registrable Notes are the subject of an Exchange Offer Registration Statement which was effective (and which, if applicable pursuant to Section 2(a), covered resales of such Exchange Notes) but which ceased to be effective for any reason prior to the end of the Exchange Period; or (c) the Registrable Notes are the subject of an Initial Shelf Registration Statement or Subsequent Shelf Registration Statement which was effective but which has ceased to be effective for any reason prior to the end of the Effective Period. An Illiquidity Event shall be deemed to cease to exist on the date subsequent to the occurrence of such Illiquidity Event on which: (i) in the case of an Illiquidity Event described in clause (a) above, either (i) an Exchange Offer Registration Statement (which, if applicable pursuant to Section 2(a), covers resales of the Exchange Notes exchanged for such Registrable Notes) shall become effective and an Exchange Offer for such Registrable Notes shall have commenced or (ii) an Initial Shelf Registration Statement covering such Registrable Notes shall become effective; or (ii) in the case of an Illiquidity Event described in clause (b) above, either (i) an Exchange Offer Registration Statement (which, if applicable pursuant to Section 2(a), covers resales of the Exchange Notes offered in exchange for such Initial Notes) shall become effective and an Exchange Offer for such Registrable Notes shall have commenced pursuant to an Exchange Offer Registration Statement or (ii) an Initial Shelf Registration Statement covering such Registrable Notes shall become effective; or (iii) in the case of an Illiquidity Event described in clause (c) above, a Subsequent Shelf Registration Statement covering such Registrable Notes shall become effective. "INDENTURE" shall mean the Indenture, dated as of June 28, 1999, and as further amended or supplemented from time to time in accordance with the terms thereof, between the Company and the Trustee, and pursuant to which the Initial Notes and any Exchange Notes are to be issued. "INITIAL PURCHASERS" shall have the meaning set forth in the first paragraph of this Agreement. "INITIAL NOTES" shall have the meaning set forth in the first paragraph of this Agreement. "INITIAL SHELF REGISTRATION STATEMENT" shall have the meaning set forth in Section 3(a) 3 of this Agreement. "INSPECTORS" shall have the meaning set forth in Section 5(m) of this Agreement. "MANAGING UNDERWRITERS" shall mean the investment banker or investment bankers and manager or managers that shall administer an Underwritten Offering. "NASD" shall mean the National Association of Securities Dealers, Inc. "PROSPECTUS" shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the prospectus included in any Registration Statement, including post-effective amendments and all material incorporated by reference into such prospectus. "PURCHASE AGREEMENT" shall have the meaning set forth in the first paragraph of this Agreement. "RECORDS" shall have the meaning set forth in Section 5(m) of this Agreement. "REGISTRABLE NOTES" shall mean the Initial Notes upon original issuance thereof and at all times subsequent thereto until, in the case of any such Initial Note, (i) a Registration Statement covering such Initial Note, or the Exchange Note to be exchanged for such Initial Note (and, in the case of any Resale Note, any resale thereof), has been declared effective and such Initial Note has been disposed of or exchanged (or, in any case where such Registration Statement covers the resale of Resale Notes, such Initial Note has been exchanged and the Resale Note received therefor has been resold), as the case may be, in accordance with such effective Registration Statement, (ii) such Initial Note is sold in compliance with Rule 144 or would be permitted to be sold pursuant to Rule 144(k), (iii) such Initial Note shall have been otherwise transferred and a new certificate therefor not bearing a legend restricting further transfer shall have been delivered by or on behalf of the Company and such Initial Note shall be tradeable by each holder thereof without restriction under the Securities Act or the Exchange Act and without material restriction under the applicable blue sky or state securities laws or (iv) such Initial Note ceases to be outstanding. "REGISTRATION STATEMENT" shall mean any registration statement (including any Shelf Registration Statement) of the Company that covers any of the Registrable Notes or the Exchange Notes, as the case may be, pursuant to the provisions of this Agreement, including the Prospectus which is part of such Registration Statement, amendments (including post-effective amendments) and supplements to such Registration Statement and all exhibits and appendices to any of the foregoing. For purposes of the foregoing, unless the context requires otherwise, a Registration Statement for an Exchange Offer shall not be deemed to cover Registrable Notes held by a Restricted Person unless such Registration Statement covers the resale of Resale Notes to be received by such 4 Restricted Person pursuant to such Exchange Offer and any such Initial Notes shall continue to be Registrable Notes. "RESALE INITIAL PURCHASER" shall have the meaning set forth in Section 8(a) of this Agreement. "RESALE NOTES" shall mean any Exchange Note received by a Restricted Person pursuant to an Exchange Offer, and at all times subsequent thereto, until, subject to the time periods set forth herein, such Exchange Note has been resold by such Restricted Person. "RESTRICTED PERSON" shall mean (a) any Affiliate of the Company, (b) any Initial Purchaser or (c) any Affiliate of any Initial Purchaser (other than Affiliates of such Initial Purchaser that (i) are acquiring Exchange Notes in the ordinary course of business and do not have an arrangement with any Person to distribute Exchange Notes and (ii) may trade such Exchange Notes without restriction under the Securities Act). "RULE 144" shall mean Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. "RULE 144A" shall mean Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. "RULE 415" shall mean Rule 415 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "SHELF NOTICE" shall have the meaning set forth in Section 2(b) of this Agreement. "SHELF REGISTRATION STATEMENT" shall have the meaning set forth in Section 3(b) of this Agreement. "SPECIAL COUNSEL" shall mean Latham & Watkins, special counsel to the Initial Purchasers, or any other firm acceptable to the Company, acting as special counsel to the holders of Registrable Notes or Exchange Notes. "SUBSEQUENT SHELF REGISTRATION STATEMENT" shall have the meaning set forth in Section 3(b) of this Agreement. "TIA" shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder. "TRUSTEE" shall mean The Bank of New York, its successors and any successor trustee 5 under the Indenture. "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a registration in which securities are sold to an underwriter or group of underwriters for reoffering to the public. SECTION 2. EXCHANGE OFFER. (a) Unless the Company determines in good faith that the Exchange Offer shall not be permissible under applicable law or Commission policy, the Company shall prepare and cause to be filed with the Commission as soon as reasonably practicable after the Closing Date, subject to Sections 2(b) and 2(c) of this Agreement, a Registration Statement (an "EXCHANGE OFFER REGISTRATION STATEMENT") for an offer to exchange (an "EXCHANGE OFFER") the Registrable Notes (subject to Section 2(c)) for a like aggregate principal amount of debt securities of the Company and are otherwise in all material respects substantially identical to the Initial Notes (the "EXCHANGE NOTES") (and which are entitled to the benefits of the Indenture, which shall be qualified under the TIA in connection with such registration, or a trust indenture which is substantially identical in all material respects to the Indenture), other than (i) such changes to the Indenture or any such substantially identical indenture as the Trustee and the Company may deem necessary in connection with the Trustee's rights and duties or to comply with any requirements of the Commission to effect or maintain the qualification thereof under the TIA and (ii) such changes relating to restrictions on transfer set forth in the Indenture. The Exchange Offer shall be registered under the Securities Act on the appropriate form of Registration Statement and shall comply with all applicable tender offer rules and regulations under the Exchange Act and with all other applicable laws. Subject to the terms and limitations of Section 2(c), such Exchange Offer Registration Statement may also cover any resales of Exchange Notes by any Restricted Person, in the manner or manners designated by them which, in any event, is reasonably acceptable to the Company. The Company shall use its reasonable best efforts to (i) cause the Exchange Offer Registration Statement to become effective under the Securities Act on or prior to the Effective Date, (ii) keep the Exchange Offer open for a period of not less than the shorter of (A) the period ending when the last remaining Initial Note is tendered into the Exchange Offer and (B) 30 days from the date notice is mailed to the holders of Initial Notes (PROVIDED that in no event shall such period be less than the period required under applicable Federal and state securities laws), and (iii) maintain such Exchange Offer Registration Statement continuously effective for a period (the "EXCHANGE PERIOD") of not less than the longer of (A) the period until the consummation of the Exchange Offer and (B) 120 days after effectiveness of the Exchange Offer Registration Statement, PROVIDED HOWEVER, that in the event that all resales of Exchange Notes (including, subject to the time periods set forth herein, any Resale Securities and including, subject to the time periods set forth herein, any resales by broker-dealers that receive Exchange Notes for their own account pursuant to the Exchange Offer) covered by such Exchange Offer Registration Statement have been made, the Exchange Offer Registration Statement need not remain continuously effective for the period set forth in clause (B) above. Upon consummation of the Exchange Offer, the Company shall deliver to the Trustee under the Indenture for cancellation all Initial Notes tendered by the holders thereof 6 pursuant to the Exchange Offer and not withdrawn prior to the date of consummation of the Exchange Offer. Each Restricted Person shall notify the Company promptly after re-selling all Resale Securities held by such Restricted Person which are covered by any such Registration Statement. Each holder of Registrable Notes to be exchanged in the Exchange Offer (other than any Restricted Person) shall be required as a condition to participating in the Exchange Offer to represent that (i) it is not an Affiliate of the Company, (ii) any Exchange Notes to be received by it shall be acquired in the ordinary course of its business and (iii) that at the time of the consummation of the Exchange Offer it shall have no arrangement with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes. Upon consummation of an Exchange Offer in accordance with this Section 2 and compliance with the other provisions of this Section 2, the Company shall, subject to Sections 2(b) and 2(c), have no further obligation to register Registrable Notes pursuant to Section 3(a) of this Agreement; PROVIDED that the other provisions of this Agreement shall continue to apply as set forth in such provisions. (b) In the event that the Company reasonably determines in good faith that (i) the Exchange Notes would not, upon receipt in the Exchange Offer by any holder of Registrable Notes (other than any Restricted Person and other than any holder who is not acquiring such Exchange Notes in the ordinary course of business or who has an arrangement with any person to participate in the distribution of such Exchange Notes), be tradeable by each holder thereof without restriction under the Securities Act and the Exchange Act and without restriction under applicable blue sky or state securities laws, (ii) after conferring with counsel, the Commission is unlikely to permit the Exchange Offer Registration Statement to become effective prior to the Effective Date (except in the circumstances set forth in Section 2(c)) or (iii) the Exchange Offer may not be made in compliance with applicable laws, then the Company shall promptly deliver notice thereof (the "SHELF NOTICE") to the holders of the Registrable Notes and the Trustee and shall thereafter file an Initial Shelf Registration Statement pursuant to, and otherwise comply with, the provisions of Section 3(a). Following the delivery of a Shelf Notice in accordance with this Section 2(b) and compliance with Section 3(a), the Company shall not have any further obligation under this Section 2. (c) In the event that the Company reasonably determines in good faith that (i) the Exchange Notes would not, upon consummation of any resale thereof by a Restricted Person to any Person other than another Restricted Person, be tradeable by each holder thereof without restriction under the Securities Act (other than applicable prospectus requirements) and the Exchange Act and without restriction under applicable blue sky or state securities laws or (ii) the Commission is unlikely to permit the Exchange Offer Registration Statement to become effective prior to the Effective Date solely because such Registration Statement covers resales of the Exchange Notes by Restricted Persons, then the Company shall promptly deliver a Shelf Notice to the Restricted Persons who are holders of Registrable Notes and to the Trustee, and the Company shall thereafter file an Initial Shelf Registration Statement with respect to any such Registrable Notes pursuant to, and otherwise comply with, the provisions of Section 3(a); PROVIDED that such Initial Shelf Registration Statement shall only cover resales of Registrable Notes by Restricted Persons if a Shelf Notice is not 7 then otherwise required to be delivered pursuant to Section 2(b); and, PROVIDED, FURTHER that such Initial Shelf Registration Statement covering Registrable Notes held by Restricted Persons shall be kept effective for at least a period of 120 days and is not required to remain effective with respect to Registrable Notes held by Restricted Persons thereafter. Following the delivery of a Shelf Notice in accordance with this Section 2(c) and compliance with Section 3(a), the Company shall not have any further obligation under this Section 2 with respect to the filing of an offer to exchange the Registrable Notes held by the Restricted Persons (including, without limitation, any obligation to provide that an Exchange Offer Registration Statement filed pursuant to Section 2(a) cover resales of Exchange Notes by Restricted Persons); PROVIDED that the provisions of this Section 2 shall otherwise remain in full force and effect with respect to Registrable Notes held by any person other than a Restricted Person. SECTION 3. SHELF REGISTRATION; REGISTRABLE NOTES. With respect to the Registrable Notes, if a Shelf Notice is delivered in accordance with Section 2(b) or 2(c) of this Agreement, then the Company shall comply with the following provisions of this Section 3: (a) INITIAL SHELF REGISTRATION. The Company shall prepare and cause to be filed with the Commission a Registration Statement for an offering to be made on a continuous basis other than pursuant to an Underwritten Offer pursuant to Rule 415 covering all of the Registrable Notes (or, if a Shelf Notice is delivered solely pursuant to Section 2(c), all of the Registrable Notes held by any Restricted Persons) (the "INITIAL SHELF REGISTRATION STATEMENT"); PROVIDED, HOWEVER, that no holder shall be entitled to have its Registrable Notes covered by such Initial Shelf Registration Statement unless such holder agrees in writing, within 10 Business Days after actual receipt of a request therefrom, to be bound by all the provisions of this Agreement applicable to such holder. No holder shall be entitled to the benefits of Section 4 of this Agreement unless and until such holder shall have provided all information reasonably requested by the Company (after conferring with counsel), and such holder shall not be entitled to such benefits with respect to any period during which such information was not provided. Each holder to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such holder not materially misleading. The Initial Shelf Registration Statement shall be an appropriate form permitting registration of such Registrable Notes for resale by the holders thereof in the manner or manners reasonably designated by them (but excluding any Underwritten Offerings). The Company shall use its reasonable best efforts to (A) cause the Initial Shelf Registration Statement to be declared effective under the Securities Act on or prior to the Effective Date and (B) keep the Initial Shelf Registration Statement continuously effective under the Securities Act for a period of two years after the Closing Date (subject to extension pursuant to the last paragraph of Section 5 and subject, with respect to Registrable Notes held by Restricted Persons, to the limitations set forth in Section 2(c)) (such two-year period, as it may be extended, being the "EFFECTIVE PERIOD"), or such shorter period ending when (1) all Registrable Notes covered by the Initial Shelf Registration Statement have been sold or (2) a Subsequent Shelf Registration Statement covering all of such Registrable Notes remaining unsold has been declared effective under the Securities Act or (3) all Registrable Notes may be sold pursuant to subsection (k) of Rule 144. 8 Notwithstanding any other provision hereof, the Company may postpone or suspend the filing or the effectiveness of a Registration Statement (or any amendments or supplements thereto), if (1) such action is required by applicable law, or (2) such action is taken by the Company in good faith and for valid business reasons (not including avoidance of such party's obligations hereunder), including the acquisition or divestiture of assets, other pending corporate developments, public filings with the Commission or other similar events, so long as the Company promptly thereafter complies with the requirements of Section 5(b) hereof, if applicable. Notwithstanding the occurrence of any event referred to in the immediately preceding sentence (a "SUSPENSION"), such event shall not suspend, postpone or in any other manner affect the running of the time period after which an Illiquidity Event shall be deemed to occur and, if the filing or effectiveness of a Registration Statement is postponed or suspended as a result of a Suspension, an Illiquidity Event shall nonetheless exist if all other requirements set forth for the occurrence of an Illiquidity Event shall be satisfied, and the provisions of Section 4 requiring the accrual payment of additional interest, as set forth in such Section, on the Registrable Notes, shall be applicable. (b) SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement ceases to be effective for any reason at any time during the Effective Period after the Effective Date, the Company may attempt to obtain the withdrawal of any order suspending the effectiveness thereof, and may amend such Initial Shelf Registration Statement or Subsequent Shelf Registration Statement in a manner reasonably expected to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional "shelf" Registration Statement applicable to the Initial Notes pursuant to Rule 415 covering all of such Registrable Notes remaining unsold (a "SUBSEQUENT SHELF REGISTRATION STATEMENT"). If a Subsequent Shelf Registration Statement is declared effective, the Company shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective for a period after the date of such effectiveness equal in length to the length of the Effective Period plus the aggregate number of days from the date of the order suspending the effectiveness of the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement to the date of the effectiveness of the Subsequent Shelf Registration Statement. As used herein, the term "Shelf Registration Statement" means the Initial Shelf Registration Statement and any Subsequent Shelf Registration Statement. SECTION 4. ADDITIONAL INTEREST FOR ILLIQUIDITY. (a) The Company acknowledges and agrees that the Initial Purchasers (and any subsequent holders of the Initial Notes) have acquired the Initial Notes in reliance on the covenant of the Company to use its reasonable best efforts to (i) cause to become effective on or prior to the Effective Date (A) the Exchange Offer Registration Statement or (B) an Initial Shelf Registration Statement, and (ii) maintain the respective effectiveness of such Registration Statements as described herein. The Company further acknowledges and agrees that the failure of the Company to fulfill such covenants will have an adverse effect on the holders of the Initial Notes. Therefore, the Company agrees that from and after the date on which any Illiquidity Event occurs, additional 9 interest (in addition to the interest otherwise payable with respect to the Registrable Notes) shall accrue with respect to the Initial Notes until but not including the date on which such Illiquidity Event shall cease to exist (and provided no other Illiquidity Event with respect to any Initial Notes shall then be continuing), at the rate of one half of one percent (0.50%) per annum, which additional interest shall be payable by the Company to the holders of all Initial Notes at the times, in the manner and subject to the same terms and conditions set forth in the Indenture, as nearly as may be, as though the interest rates provided in such Initial Notes had been increased by one half of one percent (0.50%) per annum. Subject to the provisions of this Section 4, the Company agrees that it shall be liable to the holders of all Initial Notes for the payment of any and all additional interest on the Initial Notes that shall accrue pursuant to this Section 4. Any such additional interest accrued on any such Initial Notes but unpaid on the date on which such interest ceases to accrue (the "CURE DATE") shall be due and payable on the first interest payment date following the next record date following such Cure Date (or the record date occurring on such Cure Date, if such Cure Date is a record date) to the holders of record of such Initial Notes on such record date. (b) The Company shall promptly notify the holders of the Initial Notes and the Trustee of the occurrence of any Illiquidity Event of which it has knowledge. Notwithstanding the foregoing, the Company shall not be required to pay the additional interest described in clause (a) of this Section 4 to a holder with respect to the Registrable Notes held by such holder if the applicable Illiquidity Event arises by reason of the failure of such holder to provide such information as (i) the Company may reasonably request, with reasonable prior written notice, for use in the Shelf Registration Statement or any Prospectus included therein to the extent the Company reasonably determines that such information is required to be included therein by applicable law, (ii) the NASD or the Commission may request in connection with such Shelf Registration Statement, or (iii) is required to comply with the agreements of such holder contained in clause (a) of Section 3 to the extent compliance thereof is necessary for the Shelf Registration Statement to be declared effective. SECTION 5. REGISTRATION PROCEDURES. In connection with the registration of any Registrable Notes or Exchange Notes pursuant to Sections 2 and 3 hereof, the Company shall use its reasonable best efforts to effect such registration to permit the sale of such Registrable Notes or Exchange Notes in accordance with any permitted intended method or methods of disposition thereof, and pursuant thereto the Company shall: (a) prepare and cause to be filed with the Commission a Registration Statement or Registration Statements as prescribed by Sections 2 and 3 of this Agreement, and use its reasonable best efforts to cause each such Registration Statement to become effective and remain effective for the applicable period as provided herein; PROVIDED, HOWEVER, that (i) during the period in which the Initial Registration Statement is open for the Restricted Persons, the Company shall afford any Restricted Person which is a holder of Registrable Notes or Exchange Notes and the 10 Special Counsel, upon such holder's written request to the Company, an opportunity to review copies of all such documents proposed to be filed, and (ii) if such filing is pursuant to Section 3, before filing any Registration Statement or Prospectus or any amendments or supplements thereto (including documents that would be incorporated therein by reference after the initial filing of the Registration Statement), the Company shall afford the Special Counsel for all holders of the Registrable Notes covered by such Registration Statement an opportunity to review copies of all such documents proposed to be filed; (b) prepare and cause to be filed with the Commission such amendments and post-effective amendments to each Shelf Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable period as provided herein; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act, the Exchange Act and the rules and regulations of the Commission promulgated thereunder with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented in accordance with the intended methods of disposition by the sellers of Registrable Notes covered thereby set forth therein; (c) if a Shelf Registration Statement is filed pursuant to Section 3 hereof, notify the selling holders of Registrable Notes promptly after the Company becomes aware thereof, and confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any preliminary prospectus or Prospectus or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Notes for offer or sale in any jurisdiction, or the initiation of any proceeding for such purpose, (v) of the existence of any fact known to the Company which results in such Registration Statement or related Prospectus or any document incorporated therein by reference containing any untrue statement of a material fact or omitting to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (which notice may be accompanied by an instruction that such notice constitutes material non-public information and to suspend the use of the prospectus until the requisite changes have been made, and which instruction shall require that such holders shall not communicate such material non-public information to any third party and shall not sell or purchase, or offer to sell or purchase, any securities of the Company after receipt of such notice) and (vi) if the Company reasonably determines that the filing of a post-effective amendment to such Registration Statement would be appropriate; 11 (d) if a Shelf Registration Statement is filed pursuant to Section 3, use its reasonable efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Notes for sale in any jurisdiction and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment; (e) if a Shelf Registration Statement is filed pursuant to Section 3, furnish to each selling holder of Registrable Notes who so requests (at such holder's address set forth in the Securities Register) without charge, one conformed copy of the Registration Statement or Registration Statements and each post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (f) if a Shelf Registration Statement is filed pursuant to Section 3, deliver to each selling holder of Registrable Notes without charge, as many copies of the Prospectus (including each preliminary prospectus) and each amendment or supplement thereto as such persons may reasonably request; and, subject to the last paragraph of this Section 5, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling holders of Registrable Notes and the underwriters, if any, in connection with the offering and sale of the Registrable Notes covered by such Prospectus and any amendment or supplement thereto; (g) prior to any public offering of Registrable Notes, register or qualify, or cooperate with the selling holders of Registrable Notes, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Notes for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as the selling holders reasonably request in writing (provided that, if Registrable Notes are offered other than through an Underwritten Offering, the Company agrees to cause its counsel to perform blue sky investigations and file registrations and qualifications required to be filed pursuant to this Section 5(g)); keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective; and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Notes covered by the applicable Registration Statement; provided, however, that the Company will not be required to qualify as a foreign corporation, or to do business, to file a general consent or take any action which would subject it to service of process in any jurisdiction or take any action which would subject itself to taxation in any such jurisdiction; (h) if a Shelf Registration Statement is filed pursuant to Section 3, cooperate with the Trustee and the selling holders of Registrable Notes to facilitate the timely preparation and delivery of certificates representing Registrable Notes to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company, and enable such Registrable Notes to be in such authorized denominations and registered 12 in such names as the holders may reasonably request at least three Business Days prior to any such sale; (i) if a Shelf Registration Statement is filed pursuant to Section 3, upon the occurrence of any event contemplated by Section 5(c), prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Notes, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company so notifies the holders to suspend the use of the Prospectus after the occurrence of such an event, the holders shall suspend use of the Prospectus, and not communicate such material non-public information to any third party, and not sell or purchase, or offer to sell or purchase, any securities of the Company, until the Company has amended or supplemented the Prospectus to correct such misstatement or omission; (j) use its reasonable best efforts to cause the Registrable Notes covered by the Registration Statement to continue to be rated by the rating agencies that initially rated the Initial Notes during the period that the Registration Statement is required hereunder to remain effective (it being acknowledged, however, that the foregoing shall not be deemed to require the Company to maintain the rating of such Registrable Notes at the rating given the Initial Notes); (k) prior to the effective date of the first Registration Statement relating to the Registrable Notes or the Exchange Notes, as the case may be, (i) provide the Trustee with printed certificates for such securities in definitive form or in a global form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number for such Registrable Notes or Exchange Notes represented by such certificates; (l) if a Shelf Registration Statement is filed pursuant to Section 3, enter into such reasonably required agreements and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of such Registrable Notes; (m) in the event of any Underwritten Offering (which shall only be undertaken at the option of the Company), if a Shelf Registration Statement is filed pursuant to Section 3, make available prior to the filing thereof for inspection by a representative of the holders of a majority in aggregate principal amount of the Registrable Notes being sold, and the Special Counsel, on the one hand, or underwriter on the other hand (collectively, the "INSPECTORS"), during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company (collectively, the "RECORDS"), and cause the officers, directors and employees of the Company to supply all relevant information as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities; PROVIDED, HOWEVER, that, as a condition to supplying such information, the Company shall receive an agreement in writing from the Special Counsel agreeing that any information that is designated in writing by the Company, in good faith, as confidential at 13 the time of delivery of such information shall be kept confidential by such Inspector (other than as to holders of Registrable Notes) and by any holders of Registrable Notes receiving such information, unless (i) disclosure of such information is required pursuant to applicable law or by court or administrative order, (ii) disclosure of such information is, in the reasonable opinion of counsel to the Company, necessary to avoid or correct a misstatement or omission of a material fact in the Registration Statement, Prospectus or any supplement or post-effective amendment thereto or disclosure is otherwise required by law, (iii) such information becomes generally available to the public other than as a result of a disclosure by any Inspector or any such holder of Registrable Notes in violation of this Section 5(m) or (iv) such information is approved for release by the Company, in writing; (n) use its best efforts to cause the Indenture or the trust indenture provided for in Section 2, as the case may be, to be qualified under the TIA not later than the effective date of such Registration Statement; and, in connection therewith, cooperate with the Trustee under the Indenture and the holders of the Registrable Notes to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and execute, and use its best efforts to cause such Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the Commission to enable the Indenture or the trust indenture provided for in Section 2 to be so qualified in a timely manner; (o) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission. For purposes of the covenants set forth in this Section 5, references to a Shelf Registration Statement, including a Shelf Registration Statement filed pursuant to Section 3, shall be deemed to include any Registration Statement, filed pursuant to Section 2, which covers, for the period set forth therein, resales of Exchange Notes held by Restricted Persons as provided in Section 2, and, in connection with such resales such Restricted Persons shall be entitled to exercise all rights, receive all notices and copies of documents, and otherwise receive all benefits afforded to sellers or holders of Registrable Notes under this Section 5 in connection with a Shelf Registration Statement. Without limiting the generality of the foregoing, the Company agrees to fulfill its obligations set forth in Sections 5(a), (b), (c), (d), (e), (f), (h), (i), (l) and (m) with respect to any such Registration Statement filed pursuant to Section 2 insofar as it covers such resales. The Company may require each seller of Registrable Notes as to which any registration is being effected, as a condition thereto, to furnish to the Company such information regarding the holder and the distribution of such Registrable Notes as the Company may, from time to time, request in writing, including without limitation stating that (i) it is not an Affiliate of the Company, (ii) the amount of Registrable Notes held by such holder prior to the Exchange Offer, (iii) the amount of Registrable Notes owned by such holder to be exchanged in the Exchange Offer and representing that such holder is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution of the Exchange Notes to be issued, and (iv) it is acquiring the Exchange Notes in its ordinary course of business and to 14 covenant and agree to promptly notify the Company if any such information so provided by such seller ceases to be true and correct and will promptly thereafter furnish the Company with corrected information. The Company may exclude from such registration the Registrable Notes of any Person who fails to furnish such information within a reasonable time after receiving such request. Each holder of Registrable Notes agrees by acquisition of such Registrable Notes that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(v) or 5(c)(vi) hereof, such holder shall forthwith discontinue disposition of such Registrable Notes covered by such Registration Statement or Prospectus until such holder is advised in writing (the "ADVICE") by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto and, if so directed by the Company, such holder will deliver to the Company (at such holder's expense) all copies in its possession, other than permanent file copies then in such holder's possession, of the prospectus covering such Registrable Notes current at the time of receipt of such notice, or certify in writing as to the destruction thereof. In the event the Company shall give any such notice, the length of the Effective Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Registrable Notes covered by such Registration Statement shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 5(i) or (Y) the Advice. SECTION 6. DELIVERY OF PROSPECTUS; NOTIFICATION UPON RESALE. The Initial Purchasers acknowledge that it is the position of the staff of the Commission that any broker-dealer that receives Exchange Notes for its own account in exchange for Registrable Notes pursuant to the Exchange Offer must deliver a prospectus in connection with any resale of such Resale Securities. By so acknowledging, such Initial Purchasers shall not be deemed to admit that, by delivering a prospectus, it is an underwriter within the meaning of the Securities Act Each Initial Purchaser shall notify the Company promptly upon the completion of the resale of the Resale Securities received by such Initial Purchaser pursuant to the Exchange Offer. SECTION 7. REGISTRATION EXPENSES. The Company shall bear all expenses incurred in connection with the performance of its obligations under Sections 2, 3 and 4; PROVIDED, HOWEVER, that the Company shall bear or reimburse the holders for the reasonable fees and disbursements of only one counsel, the Special Counsel, in accordance with the terms of the Purchase Agreement; PROVIDED, FURTHER, HOWEVER, that if the Company opts for an Underwritten Offering, the Company shall not be responsible for any fees and expenses of any underwriter, including any underwriting discounts and commissions or any legal fees and expenses of counsel to the underwriters (except for the reasonable fees and disbursements of counsel in connection with state securities or blue sky qualification of any of the Registrable Notes or the Exchange Notes). SECTION 8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to (A) indemnify and hold harmless each holder of 15 Registrable Notes (including any Initial Purchaser which holds Registrable Notes, including Resale Securities, for its own account (each, a "RESALE INITIAL PURCHASER") and each Person, if any, who controls any such Person within the meaning of either the Securities Act or the Exchange Act and each director, officer, employee or agent of each such Person (each a "HOLDER INDEMNIFIED PARTY") against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them are subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement covering Registrable Notes held by such person or any Prospectus relating to any such Registration Statement, or any amendment thereof or supplement thereto and all documents incorporated by reference therein, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, and (B) reimburse each such Holder Indemnified Party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement or Prospectus, or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information relating to such holder provided by such holder to the Company specifically for use therein (collectively, the "HOLDER INFORMATION"); PROVIDED, FURTHER, HOWEVER, that the indemnity obligations arising out of this Section 8 with respect to any untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary Prospectus shall not inure to the benefit of any holder or any controlling Person of such holder, to the extent that a prospectus relating to such Registrable Notes or the Exchange Notes, as the case may be, was required to be delivered by such holder under the Securities Act in connection with such sale and any such loss, claim, damage or liability of such holder results from the fact that such holder failed to send or deliver to the Person asserting any such losses a copy of the final Prospectus with or prior to the delivery of the written confirmation of the sale of the Registrable Notes or the Exchange Notes, as the case may be, and such final Prospectus would have cured the untrue statement or omission giving rise to such losses if the Company had previously furnished copies thereof to such holder. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) As a condition to the inclusion of a holder's Registrable Notes in a Registration Statement, such holder shall agree to (i) indemnify and hold harmless the Company and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act, and each director, officer, employee or agent of each such person, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them are subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in a Registration Statement covering Registrable Notes held by such holder or any Prospectus relating to any such Registration Statement or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission 16 or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, and (ii) reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; in each and every case under clause (i) and (ii) above to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement or Prospectus or in any amendment thereof or supplement thereto, in reliance upon and in conformity with the Holder Information. This indemnity agreement will be in addition to any liability which any such holder may otherwise have. In no event shall the liability of any selling holder of Registrable Notes hereunder be greater in amount than the dollar amount of the proceeds (net of payment of all expenses) received by such holder upon the sale (or, in the case of Resale Securities, the resale) of the Registrable Notes giving rise to such indemnification obligation. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof (enclosing a copy of all papers served); but the omission to so notify the indemnifying party (i) shall not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such omission results in the forfeiture by the indemnifying party or material impairment of substantial rights and defenses and (ii) shall not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligations provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party of its election to so assume the defense of such claim or action, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than costs of investigation; provided that if (i) the defendants in any such action include both the indemnified party and the indemnifying party, and the indemnified party shall have received an opinion of counsel reasonably acceptable to the indemnifying party that representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them, or (ii) the indemnifying party shall not have employed counsel for the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action, then the indemnified party or parties shall have the right to select one firm of separate counsel (in addition to the fees and expenses of local counsel) to assert any separate legal defenses and to otherwise defend such action on behalf of such indemnified party or parties. No indemnifying party shall be liable for any settlement of any action or claim for monetary damages which an indemnified party may effect without the written consent of the indemnifying party, which consent shall not be unreasonably withheld. 17 (d) If the indemnification provided for in Section 8(a) or (b) hereof is for any reason, other than as specified in such provisions, unavailable to or insufficient to hold harmless an indemnified party, then each indemnifying party shall contribute to the aggregate losses, claims, damages or liabilities (or actions in respect thereof) referred to in Section 8(a) or (b) hereof in such proportion as is appropriate to reflect the relative fault and benefits to the Company on the one hand and such holders on the other hand in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the Company and such holders shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent any untrue statement or omission. The obligations of the holders in this Section 8(d) are several in proportion to their respective obligations hereunder and not joint. Notwithstanding the provisions of this Section 8(d), in no event shall any holder of Registrable Notes be required to contribute any amount which is in excess of (i) the aggregate principal amount of Initial Notes sold or exchanged by such holder less (ii) the amount of any damages that such person has otherwise been required to pay by reason of such alleged untrue statement or omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each Holder Indemnified Party shall have the same rights to contribution as a holder, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee and agent of such person, shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this Section 8(d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 8(d), notify such party or parties from whom contribution may be sought; but the omission to so notify such party or parties (x) shall not relieve the party or parties from whom contribution may be sought from any liability under this paragraph (d) unless and to the extent it did not otherwise learn of such action and such omission results in the forfeiture by the party or parties from whom contribution may be sought or material impairment of substantial rights and defenses and (y) shall not, in any event, relieve such party or parties from any obligations other than under this Section 8(d). (e) The provisions of this Section 8 will remain in full force and effect, regardless of any investigation made by or on behalf of any holder of Registrable Notes, the Initial Purchasers, the Company or any of the officers, directors or controlling persons referred to in this Section 8 and will survive the sale (or, in the case of Resale Securities, the resale) by a holder of Registrable Notes of such Registrable Notes. SECTION 9. UNDERWRITTEN REGISTRATIONS (IF ANY). No holder may participate in any Underwritten Registration, which Underwritten Registration shall only be undertaken at the option of the Company, unless such holder (a) agrees to sell such holder's Initial Notes on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, 18 indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. SECTION 10. TERMINATION. In the event that no Initial Notes are sold to the Initial Purchasers pursuant to the Purchase Agreement, this Agreement shall automatically terminate, without liability on the part of any party. Upon the fulfillment of all obligations on the part of the Company to register the Initial Notes as set forth herein (including maintaining the effectiveness of any applicable Registration Statements), this Agreement shall terminate; provided that the provisions of Sections 7 and 8 hereof shall survive any termination and remain in full force and effect. SECTION 11. MISCELLANEOUS. (a) NO INCONSISTENT AGREEMENTS. The Company neither has, as of the date hereof, entered into, nor shall, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the holders of Registrable Notes herein or otherwise conflicts with the provisions hereof. (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of holders of at least a majority of the then outstanding aggregate principal amount of the Registrable Notes (or, after the consummation of any Exchange Offer in accordance with Section 2, of Exchange Notes); provided that, with respect to any matter that directly or indirectly affects the rights of any Restricted Person hereunder occurring within the period in which the Initial Registration Statement is open for the Restricted Persons, the Company shall obtain the written consent of each such Restricted Person against which such amendment, modification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except for the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of holders of Registrable Notes whose securities are being sold or exchanged pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other holders of Registrable Notes may be given by holders of at least a majority in aggregate principal amount of the Registrable Notes being sold or exchanged by such holders pursuant to such Registration Statement; provided, however, that the provisions of this sentence may not be amended, modified or supplemented except in accordance with the provisions of the immediately preceding sentence. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Resale Initial Purchasers and that does not directly or indirectly affect the rights of holders of Registrable Notes or Exchange Notes may be given by each of the Resale Initial Purchasers affected thereby. (c) NOTICES. All notices and other communications (including, without limitation, any notices or other communications to the Trustee) provided for or permitted hereunder shall be made in writing and delivered by hand delivery, registered first-class mail, next-day air courier or telecopier: 19 (i) if to a holder of Registrable Notes, at the most current address given by such holder to the Company in accordance with the provisions of this Section 11(c), which address initially is, with respect to the Initial Purchasers, at the address set forth in the Purchase Agreement and thereafter at the address for such holders of Registrable Notes set forth in the Security Register applicable to such Registrable Notes; and (ii) if to the Company, initially at the address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 11(c). All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; one Business Day after being timely delivered to a next-day air courier; and when received, if telecopied. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including, without limitation and without the need for an express assignment or any consent by the Company thereto, subsequent holders of Registrable Notes. (e) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) GOVERNING LAW. This Agreement and the rights and duties of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State of New York. Each of the parties hereto hereby submits to the non-exclusive jurisdiction of the Federal and State Courts of the Borough of Manhattan in the City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. (h) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 20 (i) ENTIRE AGREEMENT. This Agreement, together with the Purchase Agreement, is intended by the parties as a final expression of their agreement, and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, together with the Purchase Agreement, supersedes all prior agreements and understandings between the parties with respect to such subject matter. (j) NOTES HELD BY THE COMPANY, ETC. Whenever the consent or approval of holders of a specified percentage of principal amount of Registrable Notes is required hereunder, Registrable Notes held by the Company or any of its Affiliates (other than subsequent holders of Registrable Notes if such subsequent holders are deemed to be Affiliates solely by reason of their holdings of such Registrable Notes) shall not be counted in determining whether such consent or approval was given by the holders of such required percentage. 21 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers and the Company in accordance with its terms. Very truly yours, EDISON MISSION ENERGY By: /s/ Kevin M. Smith ---------------------------------- Name: Kevin M. Smith Title: Sr. Vice President The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written CREDIT SUISSE FIRST BOSTON CORPORATION LEHMAN BROTHERS INC. SG COWEN SECURITIES CORP. By: CREDIT SUISSE FIRST BOSTON CORPORATION By: /s/ Jonathan Bram ------------------------------------ Name: Jonathan Bram Title: Managing Director 22 EX-12.1 21 EXHIBIT 12.1 EXHIBIT 12.1 EDISON MISSION HOLDINGS CO. COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS ENDED SEPTEMBER 30, 1999 ------------- (IN THOUSANDS) Earnings: Income before taxes and extraordinary item.................. $60,117 Adjustments: Fixed charges, as below................................... 36,135 Interest capitalized...................................... (629) ------- Earnings as adjusted........................................ $95,623 ======= Fixed Charges: Interest on indebtedness (expense and capitalized).......... $36,135 ======= Ratio of Earnings to Fixed Charges.......................... 2.65 =======
EX-21.1 22 EXHIBIT 21.1 Exhibit 21.1 LIST OF SUBSIDIARIES --------------------
NAME JURISDICTION OF ORGANIZATION - ---- ---------------------------- Edison Mission Finance Co. California Mission Energy Westside, Inc. California Chestnut Ridge Energy Company California Homer City Property Holdings, Inc. California EME Homer City Generation L.P. Pennsylvania
EX-23.1 23 EXHIBIT 23.1 Exhibit 23.1 Consent of Independent Public Accountants As independent public accountants, we hereby consent to the use of our report on the consolidated financial statements of Edison Mission Holdings Co., dated November 5, 1999 included in the prospectus, which is part of this registration statement and to the incorporation by reference of our report on the consolidated financial statements of Edison Mission Energy, dated March 15, 1999 included in Edison Mission Energy's Annual Report on Form 10-K for the year ended December 31, 1998 and to all references to our Firm included in or made a part of the prospectus, which is part of this registration statement. /s/ Arthur Andersen LLP December 3, 1999 EX-23.2 24 EXHIBIT 23.2 Exhibit 23.2 CONSENT OF THE INDEPENDENT CHARTERED ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-4 of Edison Mission Holdings Co. of our report dated September 30, 1999 relating to the special-purpose combined accounts of Fiddlers Ferry and Ferrybridge C power stations appearing in the Current Report on Form 8-K/A of Edison Mission Energy dated July 19, 1999. We also consent to the reference to us under the heading "Experts" in such Registration Statement. Yours faithfully /s/ PricewaterhouseCoopers PricewaterhouseCoopers December 2, 1999 EX-25.1 25 EXHIBIT 25.1 Exhibit 25.1 FORM T-1 ============================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) _______ ------------------ UNITED STATES TRUST COMPANY OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-3818954 (Jurisdiction of incorporation (I.R.S. employer if not a U.S. national bank) identification No.) 114 West 47th Street 10036-1532 New York, NY (Zip Code) (Address of principal executive offices) ------------------ EDISON MISSION HOLDINGS CO. (Exact name of obligor as specified in its charter) California 95-4031807 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 18101 Van Karmen Avenue Suite 1700 Irvine, CA 92612 (Address of principal executive offices) (Zip Code) ------------------ 8.137% Senior Secured Bonds due 2019 8.734% Senior Secured Bonds due 2026 (Title of the indenture securities) ============================================== - 2 - GENERAL 1. GENERAL INFORMATION Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Reserve Bank of New York (2nd District), New York, New York (Board of Governors of the Federal Reserve System) Federal Deposit Insurance Corporation, Washington, D.C. New York State Banking Department, Albany, New York (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. 2. AFFILIATIONS WITH THE OBLIGOR If the obligor is an affiliate of the trustee, describe each such affiliation. None 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15: Edison Mission Holdings Co. currently is not in default under any of its outstanding securities for which United States Trust Company of New York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of Form T-1 are not required under General Instruction B. 16. LIST OF EXHIBITS T-1.1 -- Organization Certificate, as amended, issued by the State of New York Banking Department to transact business as a Trust Company, is incorporated by reference to Exhibit T-1.1 to Form T-1 filed on September 15, 1995 with the Commission pursuant to the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990 (Registration No. 33-97056). T-1.2 -- Included in Exhibit T-1.1. T-1.3 -- Included in Exhibit T-1.1. - 3 - 16. LIST OF EXHIBITS (CONT'D) T-1.4 -- The By-Laws of United States Trust Company of New York, as amended, is incorporated by reference to Exhibit T-1.4 to Form T-1 filed on September 15, 1995 with the Commission pursuant to the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990 (Registration No. 33-97056). T-1.6 -- The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990. T-1.7 -- A copy of the latest report of condition of the trustee pursuant to law or the requirements of its supervising or examining authority. NOTE As of ________________ _____, 199___, the trustee had 2,999,020 shares of Common Stock outstanding, all of which are owned by its parent company, U.S. Trust Corporation. The term "trustee" in Item 2, refers to each of United States Trust Company of New York and its parent company, U.S. Trust Corporation. In answering Item 2 in this statement of eligibility as to matters peculiarly within the knowledge of the obligor or its directors, the trustee has relied upon information furnished to it by the obligor and will rely on information to be furnished by the obligor and the trustee disclaims responsibility for the accuracy or completeness of such information. ------------------ Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, United States Trust Company of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 19th day of November, 1999. UNITED STATES TRUST COMPANY OF NEW YORK, Trustee By: /s/ Christopher J. Grell ------------------------------- Christopher J. Grell Assistant Vice President EXHIBIT T-1.6 The consent of the trustee required by Section 321(b) of the Act. United States Trust Company of New York 114 West 47th Street New York, NY 10036 September 1, 1995 Securities and Exchange Commission 450 5th Street, N.W. Washington, DC 20549 Gentlemen: Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, and subject to the limitations set forth therein, United States Trust Company of New York ("U.S. Trust") hereby consents that reports of examinations of U.S. Trust by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. Very truly yours, UNITED STATES TRUST COMPANY OF NEW YORK By: /s/GERARD F. GANEY ------------------------ Gerard F. Ganey Senior Vice President EXHIBIT T-1.7 UNITED STATES TRUST COMPANY OF NEW YORK CONSOLIDATED STATEMENT OF CONDITION JUNE 30, 1999 ($ IN THOUSANDS)
ASSETS Cash and Due from Banks $ 237,532 Short-Term Investments 155,678 Securities, Available for Sale 505,561 Loans 2,312,569 Less: Allowance for Credit Losses 17,486 -------------- Net Loans 2,295,083 Premises and Equipment 56,119 Other Assets 128,087 -------------- TOTAL ASSETS $ 3,378,060 ============== LIABILITIES Deposits: Non-Interest Bearing $ 815,644 Interest Bearing 1,931,882 -------------- Total Deposits 2,747,526 Short-Term Credit Facilities 310,113 Accounts Payable and Accrued Liabilities 131,638 -------------- TOTAL LIABILITIES $ 3,189,277 ============== STOCKHOLDER'S EQUITY Common Stock 14,995 Capital Surplus 53,041 Retained Earnings 121,974 Unrealized Loss on Securities Available for Sale (Net of Taxes) (1,227) -------------- TOTAL STOCKHOLDER'S EQUITY 188,783 -------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 3,378,060 ==============
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do hereby declare that this Statement of Condition has been prepared in conformance with the instructions issued by the appropriate regulatory authority and is true to the best of my knowledge and belief. Richard E. Brinkmann, Managing Director & Controller August 23, 1999 EX-27.1 26 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EDISON MISSION HOLDINGS FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EDISON MISSION HOLDINGS CO. 0001099532 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 125,204 0 0 0 44,962 192,595 1,942,667 25,280 2,121,696 60,263 885,000 0 0 0 1,036,921 2,121,696 0 245,788 0 150,999 0 0 35,506 60,117 24,939 35,178 0 (2,667) 0 32,511 0 0
EX-99.1 27 EXHIBIT 99.1 LETTER OF TRANSMITTAL EDISON MISSION HOLDINGS CO. OFFER FOR ALL OUTSTANDING 8.137% SENIOR SECURED BONDS DUE 2019 IN EXCHANGE FOR 8.137% SENIOR SECURED EXCHANGE BONDS DUE 2019 AND 8.734% SENIOR SECURED BONDS DUE 2026 IN EXCHANGE FOR 8.734% SENIOR SECURED EXCHANGE BONDS DUE 2026 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO THE PROSPECTUS, DATED , 1999 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. Delivery To: United States Trust Company of New York, EXCHANGE AGENT BY HAND BEFORE 4:30 P.M.: BY REGISTERED OR CERTIFIED MAIL: United States Trust Company United States Trust Company of New York of New York 111 Broadway P.O. Box 848 New York, NY 10006 Cooper Station Attention: Lower Level Corporate New York, NY 10276 Trust Window Attention: Corporate Trust Services
BY HAND OR OVERNIGHT DELIVERY AFTER 4:30 P.M. ON THE EXPIRATION DATE: United States Trust Company of New York 770 Broadway, 13(th) Floor New York, NY 10003 FOR INFORMATION CALL: (800) 548-6565 BY FACSIMILE TRANSMISSION (FOR ELIGIBLE INSTITUTIONS ONLY): (212) 420-6211 CONFIRM BY TELEPHONE: (800) 548-6565 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. The undersigned acknowledges that he or she has received the Prospectus, dated , 1999 (the "Prospectus"), of Edison Mission Holdings Co., a California corporation (the "Company"), and this Letter of Transmittal (the "Letter"), which together constitute the Company's offer (the "Exchange Offer") to exchange (i) an aggregate principal amount of up to $300,000,000 of the Company's 8.137% Senior Secured Bonds due 2019 (the "Exchange 2019 Bonds"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of the Company's issued and outstanding 8.137% Senior Secured Bonds due 2019 (the "Original 2019 Bonds") from the registered holders thereof, and (ii) an aggregate principal amount of up to $530,000,000 of the Company's 8.734% Senior Secured Bonds due 2026 (the "Exchange 2026 Bonds" and, together with the Exchange 2019 Bonds, the "Exchange Bonds"), which have been registered under the Securities Act, for a like principal amount of the Company's issued and outstanding 8.734% Senior Secured Bonds due 2026 (the "Original 2026 Bonds" and, together with the Original 2019 Bonds, the "Original Bonds") from the registered holders thereof (together with the holders of the Original 2019 Bonds, the "Holders"). For each Original Bond accepted for exchange, the Holder of such Original Bond will receive an Exchange Bond having a principal amount equal to that of the surrendered Original Bond. The Exchange Bonds will bear interest from the most recent date to which interest has been paid on the Original Bonds or, if no interest has been paid on the Original Bonds, from May 27, 1999. Accordingly, registered Holders of Exchange Bonds on the relevant record date for the first interest payment date following the consummation of the Exchange Offer will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from May 27, 1999. Original Bonds accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders of Original Bonds whose Original Bonds are accepted for exchange will not receive any payment in respect of accrued interest on such Original Bonds otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offer. This Letter is to be completed by a holder of Original Bonds either if certificates are to be forwarded herewith or if a tender of certificates for Original Bonds, if available, is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in "The Exchange Offer--Book-Entry Transfer" section of the Prospectus. Holders of Original Bonds whose certificates are not immediately available, or who are unable to deliver their certificates or confirmation of the book-entry tender of their Original Bonds into the Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other documents required by this Letter to the Exchange Agent on or prior to the Expiration Date, must tender their Original Bonds according to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. See Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent. The undersigned has completed the appropriate boxes below and signed this Letter to indicate the action the undersigned desires to take with respect to the Exchange Offer. List below the Original Bonds to which this Letter relates. If the space provided below is inadequate, the certificate numbers and principal amount of Original Bonds should be listed on a separate signed schedule affixed hereto. - ------------------------------------------------------------------------------------------------------------------ DESCRIPTION OF ORIGINAL BONDS 1 2 3 - ------------------------------------------------------------------------------------------------------------------ AGGREGATE PRINCIPAL AMOUNT OF PRINCIPAL NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE ORIGINAL AMOUNT (PLEASE FILL IN, IF BLANK) NUMBER(S)* BOND(S) TENDERED** - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ TOTAL
2 - ------------------------------------------------------------------------------------------------------------------ * Need not be completed if Original Bonds are being tendered by book-entry transfer. ** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Original Bonds represented by the Original Bonds indicated in column 2. See Instruction 2. Original Bonds tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1. - ------------------------------------------------------------------------------------------------------------------
3 / / CHECK HERE IF TENDERED ORIGINAL BONDS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution ______________________________________________ Account Number _____________________________________________________________ Transaction Code Number ____________________________________________________ / / CHECK HERE IF TENDERED ORIGINAL BONDS ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s) ____________________________________________ Window Ticket Number (if any) ______________________________________________ Date of Execution of Notice of Guaranteed Delivery _________________________ Name of Institution Which Guaranteed Delivery ______________________________ IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING: Account Number _____________________________________________________________ Transaction Code Number ____________________________________________________ / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________________________________________________ Address: ___________________________________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Bonds. If the undersigned is a broker-dealer that will receive Exchange Bonds for its own account in exchange for Original Bonds that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Bonds; however, by so acknowledging and by delivering such a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. If the undersigned is a broker-dealer that will receive Exchange Bonds, it represents that the Original Bonds to be exchanged for the Exchange Bonds were acquired as a result of market-making activities or other trading activities. 3 PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the aggregate principal amount of Original Bonds indicated above. Subject to, and effective upon, the acceptance for exchange of the Original Bonds tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Original Bonds as are being tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the undersigned's true and lawful agent and attorney-in-fact with respect to such tendered Original Bonds, with full power of substitution, among other things, to cause the Original Bonds to be assigned, transferred and exchanged. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Original Bonds, and to acquire Exchange Bonds issuable upon the exchange of such tendered Original Bonds, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Company. The undersigned hereby further represents that any Exchange Bonds acquired in exchange for Original Bonds tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Bonds, whether or not such person is the undersigned, that neither the Holder of such Original Bonds nor any such other person is participating in, intends to participate in or has an arrangement or understanding with any person to participate in the distribution of such Exchange Bonds and that neither the Holder of such Original Bonds nor any such other person is an "affiliate," as defined in Rule 405 under the Securities Act, of the Company. The undersigned acknowledges that this Exchange Offer is being made in reliance on interpretations by the staff of the Securities and Exchange Commission (the "SEC"), as set forth in no-action letters issued to third parties, that the Exchange Bonds issued pursuant to the Exchange Offer in exchange for the Original Bonds may be offered for resale, resold and otherwise transferred by Holders thereof (other than any such Holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Bonds are acquired in the ordinary course of such Holders' business and such Holders have no arrangement with any person to participate in the distribution of such Exchange Bonds. However, the SEC has not considered the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in other circumstances. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Bonds and has no arrangement or understanding to participate in a distribution of Exchange Bonds. If any Holder is an affiliate of the Company, is engaged in or intends to engage in or has any arrangement or understanding with respect to the distribution of the Exchange Bonds to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the SEC and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. If the undersigned is a broker-dealer that will receive Exchange Bonds for its own account in exchange for Original Bonds, it represents that the Original Bonds to be exchanged for the Exchange Bonds were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Bonds; however, by so acknowledging and by delivering a prospectus meeting the requirements of the Securities Act, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the sale, assignment and transfer of the Original Bonds tendered hereby. All authority conferred or agreed to be conferred in this Letter and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section of the Prospectus. 4 Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, please deliver the Exchange Bonds (and, if applicable, substitute certificates representing Original Bonds for any Original Bonds not exchanged) in the name of the undersigned or, in the case of a book-entry delivery of Original Bonds, please credit the account indicated above maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under the box entitled "Special Delivery Instructions" below, please send the Exchange Bonds (and, if applicable, substitute certificates representing Original Bonds for any Original Bonds not exchanged) to the undersigned at the address shown above in the box entitled "Description of Original Bonds." THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL BONDS" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL BONDS AS SET FORTH IN SUCH BOX ABOVE. - ------------------------------------------------------ SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 3 AND 4) --------------------------------------------- To be completed ONLY if certificates for Original Bonds not exchanged and/or Exchange Bonds are to be issued in the name of and sent to someone other than the person or persons whose signature(s) appear(s) on this Letter above, or if Original Bonds delivered by book-entry transfer which are not accepted for exchange are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above. Issue Exchange Bonds and/or Original Bonds to: Name(s) ______________________________________________________________________ (PLEASE TYPE OR PRINT) ______________________________________________________________________________ (PLEASE TYPE OR PRINT) Address ______________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (ZIP CODE) (COMPLETE SUBSTITUTE FORM W-9) / / Credit unexchanged Original Bonds delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below. ___________________________________________________________________________ (BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER, IF APPLICABLE) -------------------------------------------------------- -------------------------------------------------------- SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 3 AND 4) --------------------------------------------- To be completed ONLY if certificates for Original Bonds not exchanged and/or Exchange Bonds are to be sent to someone other than the person or persons whose signature(s) appear(s) on this Letter above or to such person or persons at an address other than shown in the box entitled "Description of Original Bonds" on this Letter above. Mail Exchange Bonds and/or Original Bonds to: Name(s) ______________________________________________________________________ (PLEASE TYPE OR PRINT) ______________________________________________________________________________ (PLEASE TYPE OR PRINT) Address ______________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (ZIP CODE) - ----------------------------------------------------- IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR ORIGINAL BONDS OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. 5 PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING ANY BOX ABOVE. - -------------------------------------------------------------------------------- PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- X ____________________________________ ____________________________________, 1999 X ____________________________________ ____________________________________, 1999 (SIGNATURE(S) OF OWNER) (DATE) Area Code and Telephone Number______________________________________________ If a holder is tendering any Original Bonds, this Letter must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Original Bonds or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3. Name(s): ___________________________________________________________________ ____________________________________________________________________________ (PLEASE TYPE OR PRINT) Capacity: __________________________________________________________________ Address: ___________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ (INCLUDE ZIP CODE) SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 3) Signature(s) Guaranteed by an Eligible Institution: ___________________________________________________ (AUTHORIZED SIGNATURE) ____________________________________________________________________________ (TITLE) ____________________________________________________________________________ (NAME AND FIRM) Dated: __________________, 1999 - -------------------------------------------------------------------------------- 6 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE 8.137% SENIOR SECURED BONDS DUE 2019 IN EXCHANGE FOR 8.137% SENIOR SECURED EXCHANGE BONDS DUE 2019 AND 8.734% SENIOR SECURED BONDS DUE 2026 IN EXCHANGE FOR 8.734% SENIOR SECURED EXCHANGE BONDS DUE 2026 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED 1. DELIVERY OF THIS LETTER AND BONDS; GUARANTEED DELIVERY PROCEDURES. This Letter is to be completed by holders of Original Bonds either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for delivery by book-entry transfer set forth in "The Exchange Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all physically tendered Original Bonds, or Book-Entry Confirmation, as the case may be, as well as a properly completed and duly executed Letter (or manually signed facsimile hereof) and any other documents required by this Letter, must be received by the Exchange Agent at the address set forth herein on or prior to the Expiration Date, or the tendering holder must comply with the guaranteed delivery procedures set forth below. Original Bonds tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. Holders whose certificates for Original Bonds are not immediately available or who cannot deliver their certificates and all other required documents to the Exchange Agent on or prior to the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender their Original Bonds pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to such procedures, (i) such tender must be made through an Eligible Institution, (ii) prior to 5:00 P.M., New York City time, on the Expiration Date, the (as defined below) Exchange Agent must receive from such Eligible Institution a properly completed and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by the Company (by facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of Original Bonds and the amount of Original Bonds tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange ("NYSE") trading days after the Expiration Date, the certificates for all physically tendered Original Bonds, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and any other documents required by this Letter will be deposited by the Eligible Institution with the Exchange Agent, and (iii) the certificates for all physically tendered Original Bonds, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by this Letter, must be received by the Exchange Agent within three NYSE trading days after the Expiration Date. The method of delivery of this Letter, the Original Bonds and all other required documents is at the election and risk of the tendering holders, but the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. If Original Bonds are sent by mail, it is suggested that the mailing be registered mail, properly insured, with return receipt requested, made sufficiently in advance of the Expiration Date to permit delivery to the Exchange Agent prior to 5:00 P.M., New York City time, on the Expiration Date. See "The Exchange Offer" section of the Prospectus. 7 2. PARTIAL TENDERS (NOT APPLICABLE TO BONDHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If less than all of the Original Bonds evidenced by a submitted certificate are to be tendered, the tendering holder(s) should fill in the aggregate principal amount of Original Bonds to be tendered in the box above entitled "Description of Original Bonds--Principal Amount Tendered." A reissued certificate representing the balance of nontendered Original Bonds will be sent to such tendering holder, unless otherwise provided in the appropriate box on this Letter, promptly after the Expiration Date. ALL OF THE ORIGINAL BONDS DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED. 3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter is signed by the registered holder of the Original Bonds tendered hereby, the signature must correspond exactly with the name as written on the face of the certificates without any change whatsoever. If any tendered Original Bonds are owned of record by two or more joint owners, all of such owners must sign this Letter. If any tendered Original Bonds are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter as there are different registrations of certificates. When this Letter is signed by the registered holder or holders of the Original Bonds specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the Exchange Bonds are to be issued, or any untendered Original Bonds are to be reissued, to a person other than the registered holder, then endorsements of any certificates transmitted hereby or separate bond powers are required. Signatures on such certificate(s) must be guaranteed by an Eligible Institution. If this Letter is signed by a person other than the registered holder or holders of any certificate(s) specified herein, such certificate(s) must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name or names of the registered holder or holders appear(s) on the certificate(s) and signatures on such certificate(s) must be guaranteed by an Eligible Institution. If this Letter or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. Endorsements on certificates for Original Bonds or signatures on bond powers required by this Instruction 3 must be guaranteed by a firm that is a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program (each an "Eligible Institution"). Signatures on this Letter need not be guaranteed by an Eligible Institution, provided the Original Bonds are tendered: (i) by a registered holder of Original Bonds (which term, for purposes of the Exchange Offer, includes any participant in the Book-Entry Transfer Facility system whose name appears on a security position listing as the holder of such Original Bonds) who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on this Letter, or (ii) for the account of an Eligible Institution. 4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Original Bonds should indicate in the applicable box the name and address to which Exchange Bonds issued pursuant to the Exchange Offer and or substitute certificates evidencing 8 Original Bonds not exchanged are to be issued or sent, if different from the name or address of the person signing this Letter. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. Bondholders tendering Original Bonds by book-entry transfer may request that Original Bonds not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such bondholder may designate hereon. If no such instructions are given, such Original Bonds not exchanged will be returned to the name and address of the person signing this Letter. 5. TAXPAYER IDENTIFICATION NUMBER. Federal income tax law generally requires that a tendering holder whose Original Bonds are accepted for exchange must provide the Company (as payor) with such holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 below, which in the case of a tendering holder who is an individual, is his or her social security number. If the Company is not provided with the current TIN or an adequate basis for an exemption from backup withholding, such tendering holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, the Exchange Agent may be required to withhold 31% of the amount of any reportable payments made after the exchange to such tendering holder of Exchange Bonds. If withholding results in an overpayment of taxes, a refund may be obtained. Exempt holders of Original Bonds (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. See the enclosed Guidelines of Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for additional instructions. To prevent backup withholding, each tendering holder of Original Bonds must provide its correct TIN by completing the Substitute Form W-9 set forth below, certifying, under penalties of perjury, that the TIN provided is correct (or that such holder is awaiting a TIN) and that (i) the holder is exempt from backup withholding, or (ii) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of a failure to report all interest or dividends or (iii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. If the tendering holder of Original Bonds is a nonresident alien or foreign entity not subject to backup withholding, such holder must give the Exchange Agent a completed Form W-8, Certificate of Foreign Status. These forms may be obtained from the Exchange Agent. If the Original Bonds are in more than one name or are not in the name of the actual owner, such holder should consult the W-9 Guidelines for information on which TIN to report. If such holder does not have a TIN, such holder should consult the W-9 Guidelines for instructions on applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note: Checking this box and writing "applied for" on the form means that such holder has already applied for a TIN or that such holder intends to apply for one in the near future. If the box in Part 2 of the Substitute Form W-9 is checked, the Exchange Agent will retain 31% of reportable payments made to a holder during the sixty (60) day period following the date of the Substitute Form W-9. If the holder furnishes the Exchange Agent with his or her TIN within sixty (60) days of the Substitute Form W-9, the Exchange Agent will remit such amounts retained during such sixty (60) day period to such holder and no further amounts will be retained or withheld from payments made to the holder thereafter. If, however, such holder does not provide its TIN to the Exchange Agent within such sixty (60) day period, the Exchange Agent will remit such previously withheld amounts to the Internal Revenue Service as backup withholding and will withhold 31% of all reportable payments to the holder thereafter until such holder furnishes its TIN to the Exchange Agent. 6. TRANSFER TAXES. The Company will pay all transfer taxes, if any, applicable to the transfer of Original Bonds to it or its order pursuant to the Exchange Offer. If, however, Exchange Bonds and/or substitute Original Bonds not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than 9 the registered holder of the Original Bonds tendered hereby, or if tendered Original Bonds are registered in the name of any person other than the person signing this Letter, or if a transfer tax is imposed for any reason other than the transfer of Original Bonds to the Company or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering holder. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE ORIGINAL BONDS SPECIFIED IN THIS LETTER. 7. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus. 8. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Original Bonds, by execution of this Letter, shall waive any right to receive notice of the acceptance of their Original Bonds for exchange. Neither the Company, the Exchange Agent nor any other person is obligated to give notice of any defect or irregularity with respect to any tender of Original Bonds nor shall any of them incur any liability for failure to give any such notice. 9. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL BONDS. Any holder whose Original Bonds have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 10. WITHDRAWAL RIGHTS. Tenders of Original Bonds may be withdrawn at any time prior to 5:00 P.M., New York City time, on the Expiration Date. For a withdrawal of a tender of Original Bonds to be effective, a written notice of withdrawal must be received by the Exchange Agent at the address set forth above prior to 5:00 P.M., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having tendered the Original Bonds to be withdrawn (the "Depositor"), (ii) identify the Original Bonds to be withdrawn (including certificate number or numbers and the principal amount of such Original Bonds), (iii) contain a statement that such holder is withdrawing his election to have such Original Bonds exchanged, (iv) be signed by the holder in the same manner as the original signature on the Letter by which such Original Bonds were tendered (including any required signature guarantees) or be accompanied by documents of transfer to have the Trustee with respect to the Original Bonds register the transfer of such Original Bonds in the name of the person withdrawing the tender and (v) specify the name in which such Original Bonds are registered, if different from that of the Depositor. If Original Bonds have been tendered pursuant to the procedure for book-entry transfer set forth in "The Exchange Offer--Book-Entry Transfer" section of the Prospectus, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Original Bonds and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Original Bonds so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer and no Exchange Bonds will be 10 issued with respect thereto unless the Original Bonds so withdrawn are validly retendered. Any Original Bonds that have been tendered for exchange but which are not exchanged for any reason will be returned to the Holder thereof without cost to such Holder (or, in the case of Original Bonds tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures set forth in "The Exchange Offer--Book-Entry Transfer" section of the Prospectus, such Original Bonds will be credited to an account maintained with the Book-Entry Transfer Facility for the Original Bonds) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Original Bonds may be retendered by following the procedures described above at any time on or prior to 5:00 P.M., New York City time, on the Expiration Date. 11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter, and requests for Notices of Guaranteed Delivery and other related documents may be directed to the Exchange Agent, at the address and telephone number indicated above. 11 TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5) PAYOR'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN: FORM W-9 TIN IN THE BOX AT RIGHT AND SOCIAL SECURITY NUMBER OR DEPARTMENT OF THE TREASURY CERTIFY BY SIGNING AND EMPLOYER IDENTIFICATION NUMBER INTERNAL REVENUE SERVICE DATING BELOW. PART 2 -- TIN APPLIED FOR / / CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: (1) the number shown on this form is my correct TIN (or I am waiting for a number to be issued to me), PAYOR'S REQUEST FOR (2) I am not subject to backup withholding either because: (a) I TAXPAYER IDENTIFICATION am exempt from backup withholding, or (b) I have not been NUMBER ("TIN") notified by the Internal Revenue Service (the "IRS") that I AND CERTIFICATION am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding and (3) any other information provided on this form is true and correct. SIGNATURE DATE ,
You must cross out item (2) of the above certification if you have been notified by the IRS that you are subject to backup with holding because of underreporting of interest or dividends on your tax return and you have not been notified by the IRS that you are no longer subject to backup withholding. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of the exchange, 31 percent of all reportable payments made to me thereafter will be withheld until I provide a number. SIGNATURE ____________________________________________ DATE _________________ 12 EX-99.2 28 EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY FOR EDISON MISSION HOLDINGS CO. This form or one substantially equivalent hereto must be used to accept the Exchange Offer of Edison Mission Holdings Co. (the "Company") made pursuant to the Prospectus, dated , 1999 (the "Prospectus"), if certificates for the outstanding 8.137% Senior Secured Bonds due 2019 and the outstanding 8.734% Senior Secured Bonds due 2026 of the Company (colletively, the "Original Bonds") are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach United States Trust Company of New York, as exchange agent (the "Exchange Agent") prior to 5:00 P.M., New York City time, on the Expiration Date of the Exchange Offer. Such form may be delivered or transmitted by facsimile transmission, mail or hand delivery to the Exchange Agent as set forth below. In addition, in order to utilize the guaranteed delivery procedure to tender Original Bonds pursuant to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or facsimile thereof) must also be received by the Exchange Agent prior to 5:00 P.M., New York City time, on the Expiration Date. Capitalized terms not defined herein are defined in the Prospectus. DELIVERY TO: United States Trust Company of New York, EXCHANGE AGENT
BY HAND BEFORE 4:30 P.M.: BY REGISTERED OR CERTIFIED MAIL: United States Trust Company of New York United States Trust Company of New York 111 Broadway P.O. Box 848 New York, NY 10006 Cooper Station Attention: Lower Level Corporate Trust Window New York, NY 10276 Attention: Corporate Trust Services
BY HAND OR OVERNIGHT DELIVERY AFTER 4:30 P.M. ON THE EXPIRATION DATE: United States Trust Company of New York 770 Broadway, 13(th) Floor New York, NY 10003 FOR INFORMATION CALL: (800) 548-6565 BY FACSIMILE TRANSMISSION (FOR ELIGIBLE INSTITUTIONS ONLY): (212) 420-6211 CONFIRM BY TELEPHONE: (800) 548-6565 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. Ladies and Gentlemen: Upon the terms and conditions set forth in the Prospectus and the accompanying Letter of Transmittal, the undersigned hereby tenders to the Company the principal amount of Original Bonds set forth below pursuant to the guaranteed delivery procedure described in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. Principal Amount of Original Bonds Tendered:(*) $ ______________________________ Certificate Nos. (if available): _______________________________________________ If Original Bonds will be delivered by book-entry transfer to The Depository Trust Company, provide account number ________________________________________________________________. Total Principal Amount Represented by Original Bonds Certificate(s): $________________________________ Account Number _______________________________ ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED. PLEASE SIGN HERE X ______________________________________________________________________________ X ______________________________________________________________________________ Signature(s) of Owner(s) or Authorized Signatory Date Area Code and Telephone Number: ________________________________________________ Must be signed by the holder(s) of Original Bonds as their name(s) appear(s) on certificates for Original Bonds or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. PLEASE PRINT NAME(S) AND ADDRESS(ES) Name(s): _______________________________________________________________________ _______________________________________________________________________ Capacity: ______________________________________________________________________ Address(es): ___________________________________________________________________ ___________________________________________________________________ - ------------------------ * Must be in denominations of principal amount of $1,000 and any integral multiple thereof. 2 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program, hereby guarantees that the certificates representing the principal amount of Original Bonds tendered hereby in proper form for transfer, or timely confirmation of the book-entry transfer of such Original Bonds into the Exchange Agent's account at The Depository Trust Company pursuant to the procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus, together with any required signature guarantee and any other documents required by the Letter of Transmittal, will be received by the Exchange Agent at the address set forth above, no later than three New York Stock Exchange trading days after the Expiration Date. - ------------------------------------------- ------------------------------------------- Name of Firm Authorized Signature - ------------------------------------------- ------------------------------------------- Address Title Name: - ----------------------------------------------------------------------------------------------- (Please Type of Print) - ----------------------------------------------------------------------------------------------- Zip Code Area Code and Tel. No. - ----------------------------------------------------------------------------------------------- Dated: - -----------------------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL BONDS WITH THIS FORM. CERTIFICATES FOR ORIGINAL BONDS SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL. 3 EX-99.3 29 EXHIBIT 99.3 EDISON MISSION HOLDINGS CO. OFFER FOR ALL OUTSTANDING 8.137% SENIOR SECURED BONDS DUE 2019 IN EXCHANGE FOR 8.137% SENIOR SECURED EXCHANGE BONDS DUE 2019 AND 8.734% SENIOR SECURED BONDS DUE 2026 IN EXCHANGE FOR 8.734% SENIOR SECURED EXCHANGE BONDS DUE 2026 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED TO OUR CLIENTS: Enclosed for your consideration is a Prospectus, dated , 1999 (the "Prospectus"), and the related Letter of Transmittal (the "Letter of Transmittal"), relating to the offer (the "Exchange Offer") of Edison Mission Holdings Co. (the "Company") to exchange (i) an aggregate principal amount of up to $300,000,000 of the Company's 8.137% Senior Secured Bonds due 2019 (the "Exchange 2019 Bonds"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of the Company's issued and outstanding 8.137% Senior Secured Bonds due 2019 (the "Original 2019 Bonds") from the registered holders thereof, and (ii) an aggregate principal amount of up to $530,000,000 of the Company's 8.734% Senior Secured Bonds due 2026 (the "Exchange 2026 Bonds" and, together with the Exchange 2019 Bonds, the "Exchange Bonds"), which have been registered under the Securities Act, for a like principal amount of the Company's issued and outstanding 8.734% Senior Secured Bonds due 2026 (the "Original 2026 Bonds" and, together with the Original 2019 Bonds, the "Orginal Bonds"), upon the terms and subject to the conditions described in the Prospectus and the Letter of Transmittal. The Exchange Offer is being made in order to satisfy certain obligations of the Company contained in the Registration Rights Agreement dated May 27, 1999, by and among the Company and the initial purchasers referred to therein. This material is being forwarded to you as the beneficial owner of the Original Bonds held by us for your account but not registered in your name. A TENDER OF SUCH ORIGINAL BONDS MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish us to tender on your behalf the Original Bonds held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal. Your instructions should be forwarded to us as promptly as possible in order to permit us to tender the Original Bonds on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 P.M., New York City time, on , 1999, unless extended by the Company. Any Original Bonds tendered pursuant to the Exchange Offer may be withdrawn at any time before the Expiration Date. Your attention is directed to the following: 1. The Exchange Offer is for any and all Original Bonds. 2. The Exchange Offer is subject to certain conditions set forth in the Prospectus in the section captioned "The Exchange Offer--Certain Conditions to the Exchange Offer." 3. Any transfer taxes incident to the transfer of Original Bonds from the holder to the Company will be paid by the Company, except as otherwise provided in the Instructions in the Letter of Transmittal. 4. The Exchange Offer expires at 5:00 P.M., New York City time, on , 1999, unless extended by the Company. If you wish to have us tender your Original Bonds, please so instruct us by completing, executing and returning to us the instruction form on the back of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER ORIGINAL BONDS. INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein relating to the Exchange Offer made by Edison Mission Holdings Co. with respect to its Original Bonds. This will instruct you to tender the Original Bonds held by you for the account of the undersigned, upon and subject to the terms and conditions set forth in the Prospectus and the related Letter of Transmittal. Please tender the Original Bonds held by you for my account as indicated below: 8.137% Senior Secured Bonds due 2019 $ _________________________________________ (Aggregate Principal Amount of Original 2019 Bonds) 8.734% Senior Secured Bonds due 2026 $ _________________________________________ (Aggregate Principal Amount of Original 2026 Bonds) / / Please do not tender any Original Bonds held by you for my account. Dated:______ , 1999 Signature(s): __________________________________________________________________ Print Name(s) here: ____________________________________________________________ (Print Address(es)): ___________________________________________________________ (Area Code and Telephone Number(s)): ___________________________________________ (Tax Identification or Social Security Number(s)): _____________________________ None of the Original Bonds held by us for your account will be tendered unless we receive written instructions from you to do so. Unless a specific contrary instruction is given in the space provided, your signature(s) hereon shall constitute an instruction to us to tender all the Original Bonds held by us for your account. 2 EX-99.4 30 EXHIBIT 99.4 EDISON MISSION HOLDINGS CO. OFFER FOR ALL OUTSTANDING 8.137% SENIOR SECURED BONDS DUE 2019 IN EXCHANGE FOR 8.137% SENIOR SECURED EXCHANGE BONDS DUE 2019 AND 8.734% SENIOR SECURED BONDS DUE 2026 IN EXCHANGE FOR 8.734% SENIOR SECURED EXCHANGE BONDS DUE 2026 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED To: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES: Edison Mission Holdings Co. (the "Company") is offering, upon and subject to the terms and conditions set forth in the Prospectus, dated , 1999 (the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of Transmittal"), to exchange (the "Exchange Offer") (i) an aggregate principal amount of up to $300,000,000 of the Company's 8.137% Senior Secured Bonds due 2019 (the "Exchange 2019 Bonds"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of the Company's issued and outstanding 8.137% Senior Secured Bonds due 2019 (the "Original 2019 Bonds") from the registered holders thereof, and (ii) an aggregate principal amount of up to $530,000,000 of the Company's 8.734% Senior Secured Bonds due 2026 (the "Exchange 2026 Bonds" and, together with the Exchange 2019 Bonds, the "Exchange Bonds"), which have been registered under the Securities Act, for a like principal amount of the Company's issued and outstanding 8.734% Senior Secured Bonds due 2026 (the "Original 2026 Bonds" and, together with the Original 2019 Bonds, the "Original Bonds"). The Exchange Offer is being made in order to satisfy certain obligations of the Company contained in the Registration Rights Agreement dated May 27, 1999, by and among the Company and the initial purchasers referred to therein. We are requesting that you contact your clients for whom you hold Original Bonds regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Original Bonds registered in your name or in the name of your nominee, or who hold Original Bonds registered in their own names, we are enclosing the following documents: 1. Prospectus dated , 1999; 2. The Letter of Transmittal for your use and for the information of your clients; 3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if certificates for Original Bonds are not immediately available or time will not permit all required documents to reach the Exchange Agent prior to the Expiration Date (as defined below) or if the procedure for book-entry transfer cannot be completed on a timely basis; 4. A form of letter which may be sent to your clients for whose account you hold Original Bonds registered in your name or the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Exchange Offer; 5. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 6. Return envelopes addressed to United States Trust Company of New York, the Exchange Agent for the Exchange Offer. YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED BY THE COMPANY (THE "EXPIRATION DATE"). ORIGINAL BONDS TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE. To participate in the Exchange Offer, a duly executed and properly completed Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, should be sent to the Exchange Agent and certificates representing the Original Bonds should be delivered to the Exchange Agent, all in accordance with the instructions set forth in the Letter of Transmittal and the Prospectus. If a registered holder of Original Bonds desires to tender, but such Original Bonds are not immediately available, or time will not permit such holder's Original Bonds or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures." The Company will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding the Prospectus and the related documents to the beneficial owners of Original Bonds held by them as nominee or in a fiduciary capacity. The Company will pay or cause to be paid all stock transfer taxes applicable to the exchange of Original Bonds pursuant to the Exchange Offer, except as set forth in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to United States Trust Company of New York, the Exchange Agent for the Exchange Offer, at its address and telephone number set forth on the front of the Letter of Transmittal. Very truly yours, EDISON MISSION HOLDINGS CO. NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL. Enclosures 2 -----END PRIVACY-ENHANCED MESSAGE-----