-----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, J2Jw9KmmI4FITEW9Umw8PD5DoUw6RWkR9g2yss/Ce+jqUX0/gx/vRxm43gSn4/GL BNq9ys4QZDU/riUNVUeI9Q== 0000930661-00-000394.txt : 20000221 0000930661-00-000394.hdr.sgml : 20000221 ACCESSION NUMBER: 0000930661-00-000394 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 20000218 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: 333-30748 FILM NUMBER: 549655 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 S-4 1 FORM S-4 As filed with the Securities and Exchange Commission on February 18, 2000 Registration No. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- Edison Mission Energy (Exact name of Registrant as specified in its charter) California 4991 95-4031807 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification No.) incorporation or Classification Code organization) 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) --------------- Steven D. Eisenberg, Esq. Edison Mission Energy 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 Four Times Square New York, New York 10036 --------------- 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 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Title of Each Class Proposed Maximum Proposed of Securities to Be Amount to Be Offering Maximum Aggregate Amount of Registered Registered Price Per Share(1) Offering Price(1) Registration Fee - ------------------------------------------------------------------------------------------- 7.73% Senior Notes due June 15, 2009.......... $600,000,000 100% $600,000,000 $158,400
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended. --------------- 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +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. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED FEBRUARY 18, 2000 PROSPECTUS Offer to Exchange $600 Million 7.73% Senior Notes due June 15, 2009 for $600 Million 7.73% Senior Notes due June 15, 2009, Which Have Been Registered Under the Securities Act of 1933, of [EDISON MISSION ENERGY LOGO] 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 notes that are validly tendered and not withdrawn prior to the expiration of the exchange offer. . You may withdraw tenders of original notes at any time prior to the expiration of the exchange offer. . We believe that the exchange of original notes will not be a taxable event for U.S. federal income tax purposes, but you should see "Material United States Federal Income Tax Considerations" on page 66 for more information. . We will not receive any proceeds from the exchange offer. . The terms of the exchange notes are substantially identical to the original notes, except that the exchange notes are registered under the Securities Act and the transfer restrictions and registration rights applicable to the original notes do not apply to the exchange notes. ----------- See "Risk Factors" beginning on page 9 for a discussion of the risks that should be considered by holders prior to tendering their original notes. ----------- 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 , 2000. 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 our control, including, among other things: . general political, economic and business conditions in the countries in which we do business; . governmental, statutory, regulatory or administrative changes or initiatives affecting us or the electricity industry generally; . political and business risks of international projects, including uncertainties associated with currency exchange rates, currency repatriation, expropriation, political instability, privatization efforts and other issues; . supply, demand and price 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; . operating risks, including equipment failure, dispatch levels, availability, heat rate and output; . the cost, availability and pricing of fuel and fuel transportation services for our generating units; and . our ability to complete the development or acquisition of current and future projects. We use words like "anticipate," "estimate," "project," "plan," "expect," "will," "believe" 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 9. In light of these and other risks, uncertainties and assumptions, 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. AVAILABLE INFORMATION We are subject to the informational requirements of the Exchange Act and, in accordance with these requirements, file reports and information statements and other information with the Securities and Exchange Commission. These reports and information statements and other information filed by us with the SEC can be inspected and copied at the Public Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material can be obtained from the Public Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC maintains a Web site that contains reports, proxy and information statements and other materials that are filed through the SEC's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. This Web site can be accessed at http://www.sec.gov. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents filed with the SEC are incorporated by reference into this prospectus: (i) Our Annual Report on Form 10-K for the year ended December 31, 1998; (ii) Our Current Reports on Form 8-K dated March 18, 1999, Form 8-K dated July 19, 1999, Form 8-K dated December 15, 1999 and two reports on Form 8-K/A dated July 19, 1999; and (iii) Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999. i All reports and other documents we subsequently file under Sections 13 and 15(d) of the Securities Exchange Act shall be deemed to be incorporated by reference into this prospectus and to be part of this prospectus from the date we subsequently file these reports and documents. Any statement contained in a document incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus modifies or supersedes this statement. Any statement so modified or superseded will not be deemed to constitute a part of this prospectus except as so modified or superseded. ------------ NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES 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. ---------------- ii 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 notes we are offering, as well as information regarding our business and detailed financial data. We encourage you to read this prospectus in its entirety. You should pay special attention to the "Risk Factors" section beginning on page 9 of this prospectus. Summary of the Exchange Offer On June 28, 1999, we completed the private offering of $600 million aggregate principal amount of 7.73% Senior Notes due June 15, 2009. As part of that offering, we entered into a registration rights agreement with the initial purchasers of these original notes in which we agreed, among other things, to deliver this prospectus to you and to complete an exchange offer for the original notes. Below is a summary of the exchange offer. Securities Offered.......... Up to $600,000,000 aggregate principal amount of new 7.73% Senior Notes due June 15, 2009, which have been registered under the Securities Act. The form and terms of these exchange notes are identical in all material respects to those of the original notes. The exchange notes, however, will not contain transfer restrictions and registration rights applicable to the original notes. The Exchange Offer ......... We are offering to exchange new $1,000 principal amount of our 7.73% Senior Notes due June 15, 2009, which have been registered under the Securities Act, for $1,000 principal amount of our outstanding 7.73% Senior Notes due June 15, 2009. In order to be exchanged, an original note must be properly tendered and accepted. All original notes that are validly tendered and not withdrawn will be exchanged. As of the date of this prospectus, there are $600 million principal amount of original notes outstanding. We will issue exchange notes promptly after the expiration of the exchange offer. Resales..................... Based on interpretations by the staff of the SEC, as detailed in a series of no-action letters issued to third parties, we believe that the exchange notes 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 as long as: . you are acquiring the exchange notes in the ordinary course of your business; . 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 notes; 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 notes: 1 (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 notes for its own account in exchange for original notes that were acquired as a result of market-making or other trading activities must acknowledge that it will comply with the registration and prospectus delivery requirements of the Securities Act in connection with any offer to resell, resale, or other transfer of the exchange notes issued in the exchange offer, including the delivery of a prospectus that contains information with respect to any selling holder required by the Securities Act in connection with any resale of the exchange notes. Furthermore, any broker-dealer that acquired any of its original notes directly from us: . may not rely on the applicable interpretation of the staff of the SEC's position and . must also be named as a selling noteholder in connection with the registration and prospectus delivery requirements of the Securities Act relating to any resale transaction. Expiration Date............. 5:00 p.m., New York City time, on , 2000 unless we extend the expiration date. Accrued Interest on the Exchange Notes and Original Notes........... The exchange notes will bear interest from the most recent date to which interest has been paid on the original notes. If your original notes are accepted for exchange, then you will receive interest on the exchange notes and not on the original notes. Conditions to the Exchange The exchange offer is subject to customary Offer.................... 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 notes. See "The Exchange Offer--Conditions to the Exchange Offer." Procedures for Tendering Original Notes........... Except as described in the section titled "The Exchange Offer-- Guaranteed Delivery Procedures", a tendering holder must, on or prior to the expiration date: . transmit a properly completed and duly executed letter of transmittal, including all other documents required by the letter of transmittal, to The Bank of New York at the address listed in this prospectus; or . if notes are tendered in accordance with the book-entry procedures described in this prospectus, the tendering holder must transmit an agent's message to the exchange agent at the address listed in this prospectus. See "The Exchange Offer--Procedures for Tendering." 2 Special Procedures for Beneficial Holders....... If you are the beneficial holder of original notes 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 notes are registered and instruct that person to tender on your behalf. See "The Exchange Offer--Procedures for Tendering." Guaranteed Delivery If you wish to tender your original notes and you Procedures............... cannot deliver your notes, the letter of transmittal or any other required documents to the exchange agent before the expiration date, you may tender your original notes by following the guaranteed delivery procedures under the heading "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 Notes and Delivery of Exchange Notes........... Subject to the conditions stated in the section "The Exchange Offer--Conditions to the Exchange Offer" of this prospectus, we will accept for exchange any and all original notes which are properly tendered in the exchange offer before 5:00 p.m., New York City time, on the expiration date. The exchange notes will be delivered promptly after the expiration date. See "The Exchange Offer--Terms of the Exchange Offer." Material United States Federal Income Tax Considerations........... We believe that your exchange of original notes for exchange notes to be issued in the exchange offer will not result in any gain or loss to you for U.S. federal income tax purposes. See "Material United States Federal Income Tax Considerations". Exchange Agent.............. The Bank of New York is serving as exchange agent in connection with the exchange offer. The address and telephone number of the exchange agent are listed under the heading "The Exchange Offer--Exchange Agent". Use of Proceeds............. We will not receive any proceeds from the issuance of exchange notes in the exchange offer. We will pay all expenses incident to the exchange offer. See "Use of Proceeds" and "--The Company-- Recent Developments--Offering of Original Notes." 3 Summary of Terms of the Exchange Notes The form and terms of the exchange notes and the original notes are identical in all material respects, except that transfer restrictions and registration rights applicable to the original notes do not apply to the exchange notes. The exchange notes will evidence the same debt as the original notes and will be governed by the same indenture. Where we refer to "notes" in this document, we are referring to both original notes and exchange notes. Aggregate Amount............ $600 million principal amount of 7.73% Senior Notes due June 15, 2009. Maturity ................... June 15, 2009. Interest Rate .............. 7.73% per year. Interest Payment Dates ..... June 15 and December 15 of each year. Ranking..................... The notes are senior unsecured obligations and rank equally with all of our senior unsecured indebtedness and rank senior to our subordinated indebtedness. All existing and future liabilities of our subsidiaries will be effectively senior to the notes. As of September 30, 1999, we had total recourse debt of $1.2 billion, with an additional $4.6 billion of non-recourse debt appearing on our consolidated balance sheet. The percentage of our total recourse debt to capitalization was 36% as of September 30, 1999. The indenture permits us to incur significant additional indebtedness. See "Description of the Notes." Ratings..................... The notes have been assigned ratings of "A-" by Standard & Poor's Ratings Group and "A3" by Moody's Investors Service, Inc. Optional Redemption......... We may redeem any or all of the notes at a redemption price equal to the greater of: . 100% of the principal amount of the notes being redeemed, and . the sum of the present values of the remaining scheduled payments on the notes being redeemed discounted at a rate based on the rates of U.S. Treasury securities with average lives comparable to the remaining lives of the notes plus 37.5 basis points, plus accrued and unpaid interest on the notes being redeemed. 4 The Company Edison Mission Energy We are a leading independent power producer engaged in the business of developing, acquiring, owning and operating electric power generation facilities worldwide. Edison International is our parent company and also owns Southern California Edison Company, one of the largest electric utilities in the United States. At September 30, 1999, we had consolidated assets of approximately $11.2 billion and total shareholder's equity of approximately $2.2 billion. We were formed in 1986 with two domestic operating projects. Our 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, we own interests in 72 domestic and international operating power stations with an aggregate generating capacity of 26,649 megawatts, of which our share is 22,056 megawatts. In addition, we own interests in one domestic and three international projects that are under construction. The capacity of these projects is expected to total 1,797 megawatts, of which our anticipated share will be approximately 714 megawatts. Our Strategic Overview Our business goal is to be one of the leading owners and operators of electric generating assets in the world. We play an active role, as a long-term owner, in all phases of power generation, from planning and development through construction and commercial operation. We believe that this involvement allows us to better ensure, with our experienced personnel, that our projects are well-planned, structured and managed, thus maximizing value creation. We have separate strategies for developed and developing countries. In developed countries, we expect that new long-term contracts are likely to be the exception rather than the rule. Our strategy focuses primarily on three areas with respect to plants whose output is not committed to be sold under long-term contracts, which are known as merchant plants: . we continuously improve our valuation tools, enabling us to bid more effectively and competitively on assets that will be sold over the next five years in the United States, the United Kingdom, Spain, Italy, Australia, New Zealand and other developed countries; . we draw on our power marketing and trading skills to mitigate price risks and to enhance the returns of our merchant plants; and . since our principal customers continue to be regulated utilities, we strive to understand the regulatory and economic environment in which these utilities operate so we may better anticipate and prepare for what they will do. In developing countries, our strategy focuses on investing with good partners, securing non-recourse financing based upon long-term contracts with state-owned utilities, and securing government support from organizations such as the Export-Import Bank of the United States, the U.S. Overseas Private Investment Corporation and The Export-Import Bank of Japan. In making investment decisions, we evaluate potential project returns against rate of return guidelines. We establish these guidelines by identifying a base rate of return and adjusting the base rate by potential risk factors, including risks associated with project location and stage of project development. We endeavor to mitigate these risks by: . evaluating all projects and the markets in which they operate; . selecting partners with complementary skills and local experience; 5 . structuring investments through subsidiaries; . managing up-front development costs; . utilizing limited recourse financing; and . linking revenue and expense components where appropriate. Many of our projects are operated by our subsidiaries, which helps us to preserve and enhance the value of our investments. In response to increasing globalization of the independent power market, we have organized our operation and development activities into three geographic regions: (1) Americas, (2) Asia Pacific and (3) Europe, Central Asia, Middle East and Africa. Each region is served by one or more teams consisting of business development, operations, finance and legal personnel, and each team is responsible for all of our activities within a particular geographic region. Also, we will mobilize personnel from outside a particular region when needed in order to assist in the development of projects. Recent Developments Completed Acquisitions In December 1999 we acquired the fossil-fuel generating assets of Commonwealth Edison Company, totaling 6,812 megawatts of generating capacity, for approximately $4.1 billion. We will operate these plants, which provide access to the Mid-America Interconnected Network and the East Central Area Reliability Council. In connection with this transaction, we entered into power purchase agreements with Commonwealth Edison with a term of up to five years. Concurrently with this acquisition we assigned our right to purchase the Collins Station, a 2,698 megawatt gas and oil-fired generating station located in Illinois, to a third party. After this assignment we entered into a lease of the Collins Station with a term of 33.75 years. The aggregate megawatts purchased or leased as a result of these transactions is 9,510 MW. During October 1999, we completed the acquisition of the remaining 20% of the 220 megawatt natural gas-fired Roosecote project located in England. Consideration for the remaining 20% consisted of a cash payment of approximately $16.0 million. The acquisition was funded with existing cash. In July 1999, we acquired 100% of the Ferrybridge and Fiddler's Ferry coal- fired power plants in the United Kingdom with a total generating capacity of 3,886 megawatts from PowerGen UK plc for approximately $2.0 billion. These plants, which are in the middle of the order in which plants are called upon to dispatch electric power, will complement the pumped-storage hydroelectric power plants we already own in the United Kingdom and will sell power into the electricity trading market there. In May 1999, we acquired 40% of Contact Energy Limited from the government of New Zealand for $635 million. Contact Energy owns and operates nine hydroelectric, geothermal and natural gas-fired power generating plants in New Zealand and owns an interest in one operating gas-fired plant in Australia, with a total aggregate capacity of 2,626 megawatts, of which our share is 949 megawatts. Contact Energy also owns an interest in one project in New Zealand under construction with an expected generating capacity of 45 megawatts, of which our share is 18 megawatts. In March 1999, we acquired 100% of the 1,884 megawatt Homer City Generating Station for approximately $1.8 billion. This facility is one of the largest coal-fired plants in the mid-Atlantic region of the United States and has direct, high voltage interconnections to both the New York Independent System Operator, which controls the transmission grid and energy and capacity markets for the State of New York and is commonly known as the NYISO, and the Pennsylvania-New Jersey-Maryland Power Pool, which is commonly known as the PJM. 6 In December 1998, we acquired 50% of the 540 megawatt EcoElectrica liquefied natural gas-fired combined-cycle cogeneration facility under construction in Penuelas, Puerto Rico for approximately $243 million. The project also includes a desalination plant and liquefied natural gas storage and vaporization facilities, and is expected to commence commercial operation by the first quarter of 2000. Offering of Original Notes On June 28, 1999, we issued and sold the original notes. We used the net proceeds of that offering, which were approximately $596 million, for general corporate purposes, including financing the development and construction of new facilities, additions to working capital, reductions of indebtedness and financing of capital expenditures and pending or potential acquisitions. ---------------- We are incorporated under the laws of the State of California. Our headquarters and principal executive offices are located at 18101 Von Karman Avenue, Suite 1700, Irvine, California 92612, and our telephone number is (949) 752-5588. 7 Summary Consolidated Financial Data The following table includes a summary of our consolidated financial data for the periods indicated. The summary consolidated financial data for the nine months ended September 30, 1999 and 1998 was derived from our unaudited consolidated financial statements. The summary consolidated financial data for the years ended December 31, 1998, 1997, 1996, 1995 and 1994 was derived from our audited consolidated financial statements. This summary is qualified in its entirety by the more detailed information and financial statements, including the notes to these financial statements, included in the documents incorporated by reference in this prospectus. See "Incorporation of Documents by Reference."
Nine Months Ended September 30, Years Ended December 31, --------------------- -------------------------------------- 1999 1998 1998 1997 1996 1995 1994 ---------- --------- ------ ------ ------ ------ ------ (in millions) Income Statement Data Operating revenues...... $ 1,076.2 $ 666.7 $893.8 $975.0 $843.6 $467.3 $380.6 Operating expenses...... 666.2 392.9 543.3 581.1 476.5 264.0 199.9 ---------- -------- ------ ------ ------ ------ ------ Income from operations.. 410.0 273.8 350.5 393.9 367.1 203.3 180.7 Interest expense........ (245.3) (147.7) (196.1) (223.5) (164.2) (93.1) (89.0) Interest and other income................. 21.3 34.4 50.9 53.9 40.7 33.1 38.8 Minority interest....... (3.0) (2.l) (2.8) (38.8) (69.5) (48.3) (46.1) ---------- -------- ------ ------ ------ ------ ------ Income before income taxes.................. 183.0 158.4 202.5 185.5 174.1 95.0 84.4 Provision for income taxes.................. 33.0 57.3 70.4 57.4 82.0 31.0 29.4 ---------- -------- ------ ------ ------ ------ ------ Income before change in accounting principle and extraordinary loss................... 150.0 101.1 132.1 128.1 92.1 64.0 55.0 Extraordinary loss on early extinguishment of debt, net of income tax benefit................ -- -- -- (13.1) -- -- -- Cumulative effect on prior years of change in accounting for start-up costs......... (13.8) -- -- -- -- -- -- ---------- -------- ------ ------ ------ ------ ------ Net income.............. $ 136.2 $ 101.1 $132.1 $115.0 $ 92.1 $ 64.0 $ 55.0 ========== ======== ====== ====== ====== ====== ======
December 31, September 30, -------------------------------------------- 1999 1998 1997 1996 1995 1994 ------------- -------- -------- -------- -------- -------- (in millions) Balance Sheet Data Assets.................. $11,189.1 $5,158.1 $4,985.1 $5,152.5 $4,374.0 $2,842.9 Current liabilities..... 1,293.0 501.3 339.8 270.9 199.8 170.9 Long-term obligations... 5,105.0 2,396.4 2,532.1 2,419.9 1,839.0 1,159.0 Shareholder's equity.... 2,165.3 957.6 826.6 1,019.9 1,028.5 622.2
8 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 notes. The following risk factors, other than "--You may have difficulty selling the notes that you do not exchange," generally apply to the original notes as well as the exchange notes. You may have difficulty selling the notes that you do not exchange. If you do not exchange your original notes for exchange notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your original notes described in the legend on your original notes. The restrictions on transfer of your original notes arise because we issued the original notes under 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 notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold under an exemption from these requirements. We do not intend to register the original notes under the Securities Act. To the extent original notes are tendered and accepted in the exchange offer, the trading market, if any, for the original notes would be adversely affected. See "The Exchange Offer--Consequences of Exchanging or Failing to Exchange Original Notes." Our ability to repay our debt depends upon the performance of our subsidiaries. The original notes are, and the exchange notes will be, exclusively our obligations and not the obligations of any of our subsidiaries or affiliates. Because substantially all of our operations are conducted by our project subsidiaries, our cash flow and ability to service our indebtedness, including our ability to pay the interest on and principal of the notes when due, are dependent upon the ability of our subsidiaries to pay dividends and make distributions to us. Financing agreements for our subsidiaries generally place limitations on the ability of those subsidiaries to pay dividends, make distributions or otherwise transfer funds to us. In addition, financing agreements for our subsidiaries, although generally non-recourse to us, contain representations, warranties, covenants and other agreements that, if not met, could lead to a default under these financings. After a default under a project financing for any reason, project lenders may exercise rights and remedies typically granted to secured parties, including the ability to take control of the project's collateral assets or our ownership interest in the project subsidiary. In addition, we own a minority interest in some of our projects, and therefore are unable unilaterally to cause dividends or distributions to be made to us from those operations. Accordingly, we cannot assure you that we will receive sufficient distributions from our subsidiaries to pay debt service on the notes when due. Any right of ours to receive any assets of any of our subsidiaries upon any liquidation or reorganization of a subsidiary, and the consequent right of holders of the notes to participate in the distribution of, or to realize proceeds from, those assets, will be effectively subordinated to the claims of any of that subsidiary's creditors, including trade creditors and holders of debt issued by that subsidiary. The indenture governing the notes imposes no limitations on the ability of our subsidiaries to permit contractual restrictions on their ability to make dividends or distributions. Our substantial amount of indebtedness may effect our ability to service our indebtedness, finance the acquisition and development of additional projects, compete effectively or operate successfully under adverse economic conditions. As of September 30, 1999, we had total recourse debt of $1.2 billion, with an additional $4.6 billion of non-recourse debt appearing on our consolidated balance sheet. The percentage of our total recourse debt to capitalization was 36% as of September 30, 1999. The indenture governing the notes imposes no limitations on our ability to incur additional indebtedness either at the Edison Mission Energy level or at the subsidiary level. 9 Our substantial amount of total recourse debt and the debt of our subsidiaries present the risk that we might not have sufficient cash to service our indebtedness, including the notes, and that our leveraged capital structure could limit our ability to finance the acquisition and development of additional projects, to compete effectively or to operate successfully under adverse economic conditions. See "Capitalization" and "Selected Consolidated Financial Data." Our project acquisitions and developments may not be successful. The development projects and acquisitions in which we have invested or in which we may invest in the future, including those described in this prospectus, may be large and complex, and we may not be able to complete the development or acquisition of any of these projects. The development of a power project may require us to expend significant sums for preliminary engineering, permitting, legal and other expenses before we can determine whether we will win a competitive bid, or whether a project is feasible, economically attractive or financeable. Moreover, access to capital for future projects is uncertain. We cannot assure you that we will be successful in structuring the financing for our projects on a substantially non-recourse basis or that we will obtain sufficient additional equity capital, project cash flow or additional borrowings to enable us to fund the equity commitments required for future projects. Power purchase agreements often enable the utility to terminate these agreements, or to retain security posted by the developer as liquidated damages, in the event that a project fails to achieve commercial operation or target operating levels by specified dates or fails to meet other significant contractual requirements. In addition, most of our acquisition agreements permit the seller to terminate the agreement or impose penalties if the acquisition of the project is not achieved by a specified date. If these events were to occur, the default provisions in a financing agreement could be triggered, rendering the project debt immediately due and payable, and, as a result, we could lose our interest in the project. A significant portion of our projects operate without long-term power purchase agreements. A significant portion of the projects in which we have acquired, or are acquiring, an interest do not have long-term power purchase agreements. As merchant plants whose output is not committed to be sold under long-term contracts, these projects are subject to market forces to determine the amount and price of power that they sell. We cannot assure you that these plants will be successful in selling power into their respective markets. If they are unsuccessful, they may not be able to generate enough cash to service their own debt or to make distributions to us. In addition, some utilities have brought litigation aimed at forcing the renegotiation or termination of long-term power purchase agreements based upon, among other things, revised estimates of avoided cost or power demands. We cannot assure you that in the future, utilities that purchase power from our contract-based power plants or other power purchasers that purchase power under long-term agreements from us will not seek to terminate their existing agreements with us. Competition could adversely affect our business. The global independent power industry is characterized by numerous strong and capable competitors, some of which may have more extensive operating experience, more extensive experience in the acquisition and development of power projects, larger staffs and greater financial resources than we do. Further, in recent years power markets have been characterized by strong and increasing competition as a result of regulatory changes and other factors which have contributed to a reduction in market prices for power. These regulatory and other changes may continue to increase competitive pressures in the markets where we operate. Increased competition for our new project investment opportunities may adversely affect our ability to develop or acquire projects on economically favorable terms. 10 Our operations are subject to extensive government regulation, and our inability to comply with existing regulations or requirements or changes in applicable regulations or requirements may have a negative impact on our business, results of operations or financial condition. Our operations are subject to extensive regulation by governmental agencies in each of the countries in which we conduct operations. See "Business-- Regulatory Matters." Our domestic projects are subject to energy, environmental and other governmental laws and regulations at the federal, state and local levels in connection with the development, ownership and operation of the projects. Our projects are also subject to federal, state and local laws and regulations that govern the geographical location, zoning, land use and operation of a project. Our international projects are subject to the energy, environmental and other laws and regulations of the foreign jurisdictions in which these projects are located. The degree of regulation varies according to each country and may be materially different from the regulatory regimes in the United States. We cannot assure you that the introduction of new laws or other future regulatory developments in countries in which we conduct our business will not have a material adverse effect on our business, results of operations or financial condition, nor can we assure you that we will be able to obtain and comply with all necessary licenses, permits and approvals for our proposed energy projects. If we cannot comply with all applicable regulations, our business, results of operations and financial condition could be adversely affected. In addition, if any of our projects loses its status as a qualifying facility, eligible facility or foreign utility company under U.S. federal regulations, we could become subject to regulation as a "holding company" under the Public Utility Holding Company Act. See "Business--Regulatory Matters." General operating risks and catastrophic events may reduce revenues generated by our projects or increase their operating costs. The operation of power generating plants involves many risks, including: . start-up problems; . the breakdown or failure of equipment or processes; . performance below expected levels of output; . the inability to meet expected efficiency standards; . operator error; and . catastrophic events such as earthquakes, landslides, fires, floods, explosions or similar calamities. The occurrence of any of these events could significantly reduce revenues generated by our projects or increase their generating expenses, thus diminishing distributions by the projects to us and, as a result, our ability to make payments on the notes. Equipment and plant warranties and insurance obtained by us may not be adequate to cover lost revenues or increased expenses and, as a result, a project may be unable to fund principal and interest payments under its financing obligations and may operate at a loss. A default under a financing obligation could cause us to lose our interest in that project. Our international projects are subject to risks of doing business in foreign countries. Our international projects are subject to political and business risks, including uncertainties associated with currency exchange rates, currency repatriation, expropriation, political instability, privatization efforts and other issues that have the potential to impair these projects from making dividends or other distributions to us and against which we may not be fully capable of insuring. In particular, fluctuations in currency exchange rates can affect, on a U.S. dollar equivalent basis, the amount of our equity contributions to, and distributions from, our international projects. At times, we have hedged a portion of our exposure to fluctuations in currency exchange rates. However, hedge contracts may involve risks, including counterparty default, and we cannot assure you that fluctuations in currency exchange rates will be fully offset by these hedges or that these hedges will be available throughout the term of the notes. 11 On October 7, 1999, Indonesia's state-owned electricity company, PT Perusahaan Listrik Negara, filed a lawsuit in the Central Jakarta District Court against our 40%-owned subsidiary PT Paiton Energy seeking to annul its contract to purchase power from Paiton Energy's coal-fired 1,230 megawatt generating station located in East Java, Indonesia on the basis that the power purchase agreement for this generating station is the result of corruption, cronyism and nepotism and is "one-sided and against the public interest." This contract is currently the sole source of revenue for this generating station. In response, and to protect the integrity of the power purchase agreement, Paiton Energy commenced arbitration proceedings against PT Perusahaan and the Government of Indonesia. On January 20, 2000, PT Perusahaan withdrew its lawsuit and Paiton Energy terminated the arbitration proceedings against PT Perusahaan and the Government of Indonesia, and the parties have commenced negotiation of an interim agreement which will provide for administration of the power purchase agreement until a long-term arrangement is reached. Additionally, PT Perusahaan has failed to pay Paiton Energy in respect of the last eight invoices Paiton Energy has issued and has paid only a portion of another invoice. In response to PT Perusahaan's failure to pay and the occurrence of other events which, with the giving of notice or passage of time, may mature into defaults of this generating station's debt agreements, Paiton Energy entered into an interim agreement on October 15, 1999 with its lenders under which the lenders waived specified defaults under the project's debt agreement until July 31, 2000, including those resulting from the events described above. However, this waiver may expire on an earlier date if additional defaults, other than those specifically waived, or other specified events occur. The interim agreement requires us and other shareholders of Paiton Energy to contribute additional equity from time to time as needed for the payment of interest on the project's debt, operating costs which become due and payable during the term of the interim agreement and costs related to the construction of the project. Under the interim agreement the amount of contingent equity used for the project's construction costs cannot exceed $30 million. Our maximum share of the total unfunded contingent equity commitments at December 31, 1999 was $111 million. As of December 31, 1999, our total investment in the Paiton project was approximately $419 million. Generally, the uncertainty of the legal structure in foreign countries in which we may develop or acquire projects could make it more difficult to enforce our rights under agreements relating to these projects. In addition, the laws and regulations of some countries may limit our ability to hold a majority interest in some of the projects that we may develop or acquire. Risks associated with the year 2000 problem could adversely effect our business. We have successfully implemented systems to address year 2000 issues. We cannot assure you, however, that our year 2000 compliance will not require additional expenditures in the future. As of the date of this prospectus, we are not aware of any Year 2000 problem of our systems and services. In addition, we have not received any notification from any supplier or systems of any Year 2000-related disruption in their business. However, the success to date of our Year 2000 efforts and the efforts of our third party suppliers cannot guarantee that there will not be a material adverse effect on our business should a Year 2000 problem manifest or become apparent in the future. Broker-dealers may become subject to the registration and prospectus delivery requirements of the Securities Act. Any broker-dealer that: . exchanges its original notes in the exchange offer for the purpose of participating in a distribution of the exchange notes, or . resells exchange notes that were received by it for its own account in the exchange offer, may be deemed to have received restricted securities and may be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction by that broker-dealer. Any profit on the resale of the exchange notes and any commission or concessions received by a broker-dealer may be deemed to be underwriting compensation under the Securities Act. 12 You may find it difficult to sell your notes because there is no existing trading market for the exchange notes. You may find it difficult to sell your notes because an active trading market for the notes may not develop. The exchange notes are being offered to the holders of the original notes. The original notes were issued on June 28, 1999 primarily to a small number of institutional investors and overseas investors. After the exchange offer, the trading market for the remaining untendered original notes could be adversely affected. There is no existing trading market for the exchange notes. We do not intend to apply for listing or quotation of the exchange notes 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 notes have informed us that they currently intend to make a market in the exchange notes, 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 notes could be adversely affected. 13 USE OF PROCEEDS We will not receive any proceeds from the exchange offer. In consideration for issuing the exchange notes, we will receive in exchange original notes of like principal amount, the terms of which are identical in all material respects to the exchange notes. The original notes surrendered in exchange for exchange notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the exchange notes 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 June 28, 1999, we issued and sold the original notes. We used the net proceeds of that offering, which were approximately $596 million, for general corporate purposes, including financing the development and construction of new facilities, additions to working capital, reductions of indebtedness and financing of capital expenditures and pending or potential acquisitions. CAPITALIZATION The following table includes the consolidated capitalization of Edison Mission Energy as of September 30, 1999 and reflects the issuance of the original bonds and application of the proceeds from the issuance of the original bonds as discussed in "Use of Proceeds."
As of September 30, 1999 ------------- (in millions) Short-Term Indebtedness........................................... $ 440.6 Long-Term Indebtedness............................................ 798.1 -------- Total Indebtedness(1)........................................... $1,238.7 Shareholder's Equity.............................................. $2,165.3 -------- Total Capitalization............................................ $3,404.0 ========
- -------- (1) Excludes our subsidiary indebtedness of $4.6 billion as of September 30, 1999. 14 SELECTED CONSOLIDATED FINANCIAL DATA The following table includes a summary of our consolidated financial data for the periods indicated. The summary consolidated financial data for the nine months ended September 30, 1999 and 1998 was derived from our unaudited consolidated financial statements. The summary consolidated financial data for the years ended December 31, 1998, 1997, 1996, 1995 and 1994 was derived from our audited consolidated financial statements. This summary is qualified in its entirety by the more detailed information and financial statements, including the notes to those financial statements, included in the documents incorporated by reference in this prospectus. See "Incorporation of Documents by Reference."
Nine Months Ended September 30, Years Ended December 31, ---------------------- ---------------------------------------------- 1999 1998 1998 1997 1996 1995 1994 ------------- -------- -------- -------- -------- -------- ------ (in millions) Income Statement Data Operating revenues................ $ 1,076.2 $ 666.7 $ 893.8 $ 975.0 $ 843.6 $ 467.3 $380.6 Operating expenses................ 666.2 392.9 543.3 581.1 476.5 264.0 199.9 --------- -------- -------- -------- -------- -------- ------ Income from operations............ 410.0 273.8 350.5 393.9 367.1 203.3 180.7 Interest expense.................. (245.3) (147.7) (196.1) (223.5) (164.2) (93.1) (89.0) Interest and other income......... 21.3 34.4 50.9 53.9 40.7 33.1 38.8 Minority interest................. (3.0) (2.1) (2.8) (38.8) (69.5) (48.3) (46.1) --------- -------- -------- -------- -------- -------- ------ Income before income taxes........ 183.0 158.4 202.5 185.5 174.1 95.0 84.4 Provision for income taxes........ 33.0 57.3 70.4 57.4 82.0 31.0 29.4 --------- -------- -------- -------- -------- -------- ------ Income before change in accounting principle and extraordinary loss.. 150.0 101.1 132.1 128.1 92.1 64.0 $ 55.0 Extraordinary loss on early extinguishment of debt, net of income tax benefit............... -- -- -- (13.1) -- -- -- Cumulative effect on prior years of change in accounting for start-up costs................... (13.8) -- -- -- -- -- -- --------- -------- -------- -------- -------- -------- ------ Net income........................ $ 136.2 $ 101.1 $ 132.1 $ 115.0 $ 92.1 $ 64.0 $ 55.0 ========= ======== ======== ======== ======== ======== ====== December 31, September 30, ------------------------------------------------ 1999 1998 1997 1996 1995 1994 ------------- -------- -------- -------- -------- -------- (in millions) Balance Sheet Data Assets............................ $11,189.1 $5,158.1 $4,985.1 $5,152.5 $4,374.0 $2,842.9 Current liabilities............... 1,293.0 501.3 339.8 270.9 199.8 170.9 Long-term obligations............. 5,105.0 2,396.4 2,532.1 2,419.9 1,839.0 1,159.0 Shareholder's equity.............. 2,165.3 957.6 826.6 1,019.9 1,028.5 622.2 Nine Months Ended September 30, Years Ended December 31, ---------------------- ---------------------------------------------- 1999 1998 1998 1997 1996 1995 1994 ------------- -------- -------- -------- -------- -------- ------ Other Data Ratio of earnings to fixed charges(1)....................... 1.5 1.7 1.7 1.6 1.4 1.3 1.2
- -------- (1) For purposes of computing the ratio of earnings to fixed charges, earnings are divided by fixed charges. "Earnings" represent the aggregate of income (loss) before income taxes of Edison Mission Energy (adjusted for the excess or shortfall of dividends or other distributions over equity in earnings of less than 50%-owned entities), amortization of previously capitalized interest and fixed charges (net of capitalized interest). "Fixed charges" represent interest (whether expensed or capitalized), the amortization of debt discount and the interest portion of rentals. 15 THE EXCHANGE OFFER Terms of the Exchange Offer Upon the terms and conditions described in this prospectus and in the accompanying letter of transmittal, which together constitute the exchange offer, we will accept for exchange original notes 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. The exchange offer, however, will not be in effect any longer than 45 business days from the date of this prospectus. As of the date of this prospectus, $600 million aggregate principal amount of the original notes is outstanding. This prospectus, together with the letter of transmittal, is first being sent on or about , 2000, to all holders of original notes known to us. Our obligation to accept original notes for exchange in the exchange offer is subject to the conditions described 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 notes by giving oral or written notice of an extension to the holders of original notes as described below. During any extension period, all original notes previously tendered will remain subject to the exchange offer and may be accepted for exchange by us. Any original notes not accepted for exchange will be returned to the tendering holder after the expiration or termination of the exchange offer. Original notes 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 notes 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 notes as promptly as practicable. If we materially change the terms of the exchange offer, we will resolicit tenders of the original notes, file a post-effective amendment to the prospectus and provide notice to the noteholders. If the change is made less than 5 business days before the expiration of the exchange offer, we will extend the offer so that the noteholders have at least 5 business days to tender or withdraw. 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 notes 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, on or prior to the expiration date: . transmit a properly completed and duly executed letter of transmittal, including all other documents required by the letter of transmittal, to The Bank of New York at the address listed below under the heading "-- Exchange Agent;" or . if notes are tendered in accordance with the book-entry procedures listed below, the tendering holder must transmit an agent's message to the exchange agent at the address listed below under the heading "-- Exchange Agent." In addition: . the exchange agent must receive, on or before the expiration date, certificates for the original notes; or 16 . a timely confirmation of book-entry transfer of the original notes into the exchange agent's account at The Depository Trust Company, the book- entry transfer facility, along with the letter of transmittal or an agent's message; or . the holder must comply with the guaranteed delivery procedures described below. The Depository Trust Company will be referred to as DTC in this prospectus. The term "agent's message" means a message, transmitted to DTC and received by the exchange agent and forming a part of a book-entry transfer, that states that DTC has received an express acknowledgment that the tendering holder agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against this holder. The method of delivery of original notes, 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, 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 notes to us. If you are a beneficial owner whose original notes 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 DTC's book-entry transfer facility system may make book-entry delivery of the original notes by causing DTC to transfer the original notes into the exchange agent's account. Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed unless the original notes surrendered for exchange are tendered: . by a registered holder of the original notes 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 notes 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 note 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 note 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 note 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 notes 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 notes. Nor will we, the exchange agent or any other person incur any liability for failing to give notification of any defect or irregularity. 17 If the letter of transmittal is signed by a person other than the registered holder of original notes, 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 notes must be endorsed or accompanied by appropriate powers of attorney. In either case, the original notes must be signed exactly as the name of any registered holder appears on the original notes. If the letter of transmittal or any original notes 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, these 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, . the exchange notes are being acquired in the ordinary course of business of the person receiving the exchange notes, 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 notes. 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 notes. 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 notes, 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 notes for its own account in exchange for original notes, where the original notes 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 notes. 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 Notes for Exchange; Delivery of Exchange Notes Upon satisfaction or waiver of all of the conditions to the exchange offer, we will accept, promptly after the expiration date, all original notes properly tendered. We will issue the exchange notes promptly after acceptance of the original notes. See "--Conditions to the Exchange Offer" below. For purposes of the exchange offer, we will be deemed to have accepted properly tendered original notes 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 note accepted for exchange, the holder of the original note will receive an exchange note having a principal amount equal to that of the surrendered original note. The exchange notes will bear interest from the most recent date to which interest has been paid on the original notes. Accordingly, registered holders of exchange notes 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. Original notes accepted for exchange will cease to accrue interest from and after the date of completion of the exchange offer. Holders of original notes whose original notes are accepted for exchange will not receive any payment for accrued interest on the original notes 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 notes. 18 In all cases, issuance of exchange notes for original notes will be made only after timely receipt by the exchange agent of: . certificates for the original notes, or a timely book-entry confirmation of the original notes, into the exchange agent's account at the book- entry transfer facility, . a properly completed and duly executed letter of transmittal or an agent's message and; . all other required documents. Unaccepted or non-exchanged original notes will be returned without expense to the tendering holder of the original notes. In the case of original notes tendered by book-entry transfer in accordance with the book- entry procedures described below, the non-exchanged original notes 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 notes at the DTC for purposes of the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC's systems must make book-entry delivery of original bonds by causing DTC to transfer those original bonds into the exchange agent's account at DTC in accordance with DTC's procedure for transfer. This participant should transmit its acceptance to DTC on or prior to the expiration date or comply with the guaranteed delivery procedures described below. DTC will verify this acceptance, execute a book-entry transfer of the tendered original bonds into the exchange agent's account at DTC and then send to the exchange agent confirmation of this book-entry transfer. The confirmation of this book-entry transfer will include an agent's message confirming that DTC has received an express acknowledgement from this participant that this participant has received and agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against this participant. Delivery of exchange bonds issued in the exchange offer may be effected through book-entry transfer at DTC. However, the letter of transmittal or facsimile of it or an agent's message, with any required signature guarantees and any other required documents, must: (1) be transmitted to and received by the exchange agent at the address listed below under "--Exchange Agent" on or prior to the expiration date; or (2) comply with the guaranteed delivery procedures described below. Guaranteed Delivery Procedures If a registered holder of original notes desires to tender the original notes, and the original notes are not immediately available, or time will not permit the holder's original notes 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) stating the name and address of the holder of original notes and the amount of original notes tendered, (b) stating that the tender is being made and (c) guaranteeing that within three New York Stock Exchange trading days after the expiration date, the certificates for all physically tendered original notes, in proper form for transfer, or a book- 19 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 notes, 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 New York Stock Exchange trading days after the expiration date. Withdrawal Rights Tenders of original notes 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, indicated below under "--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 notes to be withdrawn; . identify the notes to be withdrawn, including the certificate number or numbers and principal amount of the original notes; . contain a statement that the holder is withdrawing his election to have the original notes exchanged; . be signed by the holder in the same manner as the original signature on the letter of transmittal by which the original notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer to have the trustee with respect to the original notes register the transfer of the original notes in the name of the person withdrawing the tender; and . specify the name in which the original notes are registered, if different from that of the depositor. If certificates for original notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of these certificates the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an eligible institution unless this holder is an eligible institution. If original notes have been tendered in accordance with 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 notes. We will determine all questions as to the validity, form and eligibility, including time of receipt, of notices of withdrawal. Any original notes so withdrawn will be deemed not to have been validly tendered for exchange. No exchange notes will be issued unless the original notes so withdrawn are validly retendered. Any original notes 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 notes tendered by book-entry transfer, the original notes will be credited to an account maintained with the book- entry transfer facility for the original notes. Properly withdrawn original notes 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. 20 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 notes in exchange for, any original notes, and may terminate or amend the exchange offer, if at any time before the acceptance of the original notes for exchange or the exchange of the exchange notes for the original notes, 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 this transaction, (2) resulting in a material delay in our ability to accept for exchange or exchange some or all of the original notes in 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 the consequences referred to in clauses (1) or (2) above or, in our sole judgment, might result in the holders of exchange notes having obligations with respect to resales and transfers of exchange notes 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 preceding events existing at the time of the commencement of the exchange offer, a material acceleration or worsening of these 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 notes or the exchange notes; 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 we may assert them regardless of the circumstances giving rise to any of these conditions, or we may waive them in whole or in part in our sole discretion. If we do so, the exchange offer will remain open for at least 5 business days following any waiver of the preceding conditions. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of any right. 21 In addition, we will not accept for exchange any original notes tendered, and no exchange notes will be issued in exchange for any original notes, if at this 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. Exchange Agent We have appointed The Bank 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 indicated 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: The Bank of New York, Exchange Agent By Hand or Overnight Delivery: By Registered or Certified Mail: The Bank of New York The Bank of New York 101 Barclay Street 101 Barclay Street, Seventh Floor E Seventh Floor E New York, NY 10288 New York, NY 10288 Attention: Ayikwei Aryeetey Attention: Ayikwei Aryeetey Reorganization Department Reorganization Department For Information Call: (212) 815-3687 By Facsimile Transmission (for Eligible Institutions only): (212) 571-6339 Confirm by Telephone: (212) 815-3687 If you deliver the letter of transmittal to an address other than any address indicated above or transmit instructions via facsimile other than any facsimile number indicated, 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 notes under generally accepted accounting principles. Transfer Taxes Holders who tender their original notes for exchange will not be obligated to pay any related transfer taxes, except that holders who instruct us to register exchange notes in the name of, or request that original notes 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. 22 Consequences of Exchanging or Failing to Exchange Original Notes Holders of original notes who do not exchange their original notes for exchange notes in the exchange offer will continue to be subject to the provisions in the indenture regarding transfer and exchange of the original notes and the restrictions on transfer of the original notes as described in the legend on the notes as a consequence of the issuance of the original notes under exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the original notes may not be offered or sold, unless registered under the Securities Act, except under 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 notes under the Securities Act. Based on interpretations by the staff of the SEC, as described in no-action letters issued to third parties, we believe that exchange notes issued in the exchange offer in exchange for original notes may be offered for resale, resold or otherwise transferred by holders of the original notes, 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, if the exchange notes 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 notes. 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 notes and has no arrangement or understanding to participate in a distribution of exchange notes. 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 notes 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 notes for its own account in exchange for original notes must acknowledge that the original notes were acquired by the broker-dealer as a result of market-making activities or other trading activities and that it will comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. Furthermore, any broker-dealer that acquired any of its original notes directly from us: . may not rely on the applicable interpretation of the staff of the SEC's position contained in Exxon Capital Holdings Corp., SEC no-action letter (April 13, 1988), Morgan, Stanley & Co. Inc., SEC no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1983) and . must also be named as a selling noteholder in connection with the registration and prospectus delivery requirements of the Securities Act relating to any resale transaction. See "Plan of Distribution." In addition, to comply with state securities laws, the exchange notes 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 notes 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 notes in any state where an exemption from registration or qualification is required and not available. 23 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains forward-looking statements regarding Edison Mission Energy. These statements are based on our current plans and expectations that involve risks and uncertainties which could cause actual future activities and results of operations to be materially different from those presented in the forward-looking statements. Important factors that could cause actual results to differ include risks listed in "Risk Factors." Unless otherwise indicated, the information presented in this section is with respect to Edison Mission Energy and its consolidated subsidiaries. General We are a leading independent power producer engaged in the business of developing, acquiring, owning and operating electric power generation facilities worldwide. Our current investments include interests in 72 domestic and international operating power stations with an aggregate generating capacity of 26,649 MW, of which our share is approximately 22,056 MW. In addition, we own interests in one domestic and three international projects that are under construction. The capacity of these projects is expected to total 1,797 MW, of which our anticipated share will be approximately 714 MW. Our consolidated operating revenues are derived primarily from electric revenues and equity in income from energy projects. Consolidated operating revenues also include equity in income from oil and gas investments and revenue attributable to operation and maintenance services. Our acquisitions of interests in the projects described in "Business," each have been accounted for utilizing the purchase method. The purchase prices were allocated to the assets acquired and liabilities assumed based on their respective fair market values. Our consolidated statement of income for the nine months ended September 30, 1999 reflects the operations of the Homer City project beginning March 18, 1999, Contact Energy beginning May 1, 1999 and Ferrybridge and Fiddler's Ferry beginning July 19, 1999. Results of Operations for the Nine Months Ended September 30, 1999 Operating Revenues Operating revenues increased $309.6 million and $409.5 million for the third quarter and nine months ended September 30, 1999, respectively, compared with the corresponding periods of 1998, resulting primarily from increases in electric revenues and equity in income from energy projects. Electric revenues increased $302.1 million and $374.5 million for the third quarter and nine months ended September 30, 1999, respectively, compared with the corresponding periods of 1998, primarily due to revenues from Homer City, acquired in March 1999 and Ferrybridge and Fiddler's Ferry, acquired in July 1999. Equity in income from energy projects increased $31.7 million during the nine months ended September 30, 1999, compared with the corresponding period of 1998. The increase for the nine month period was primarily the result of higher revenues from several cogeneration projects due to a final settlement on energy pricing for prior years and a gain on sale of a power sales agreement. Due to warmer weather during the summer months, electric revenues generated from Homer City are usually higher during the third quarter of each year. In addition, our third quarter revenues from energy projects are materially higher than other quarters of the year due to a significant number of our domestic energy projects located on the West Coast which generally have power sales contracts that provide for higher payments during summer months. Operating Expenses Operating expenses increased $190.3 million and $273.4 million for the third quarter and nine months ended September 30, 1999, respectively, compared with the same prior year periods. These increases are due to 24 higher fuel, plant operations, depreciation and amortization and administrative and general expenses. The increases in fuel expense, plant operations and depreciation and amortization are primarily the result of expenses at Homer City, acquired in March 1999 and Ferrybridge and Fiddler's Ferry, acquired in July 1999. The increase in administrative and general expenses was primarily related to increased project development and acquisition costs. Other Income (Expense) Interest expense increased $60.5 million and $93 million for the third quarter and nine months ended September 30, 1999, respectively, compared with the same prior year periods. The increase was primarily the result of additional debt financing of the Homer City and Ferrybridge and Fiddler's Ferry acquisitions. Provision for Income Taxes We recorded an effective tax provision rate of 18% for the nine months ended September 30, 1999, compared with a 36% rate for the same prior year period. The decrease in the 1999 effective tax rate was primarily due to lower foreign income taxes that result from the permanent reinvestment of earnings from foreign affiliates located in different foreign tax jurisdictions. Cumulative Effect of Change in Accounting Principle In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities," which became effective in January 1999. The Statement requires that specified costs related to start-up activities be expensed as incurred and that specified previously capitalized costs be expensed and reported as a cumulative change in accounting principle. The impact of adopting SOP 98-5 on our net income was $13.8 million, after tax. Annual Results of Operations Operating Revenues Operating revenues decreased approximately 8% in 1998 compared to 1997, and increased approximately 16% in 1997 compared to 1996. The 1998 decrease was primarily due to the Loy Yang B project's new series of power purchase agreements associated with our acquisition of the remainder of that project in May 1997 and lower Australian currency exchange rates, partially offset by higher energy revenues from the First Hydro project as a result of higher energy prices. The 1997 increase resulted primarily from increases in electric revenues attributable to the start of commercial operations of Loy Yang B Unit 2 in October 1996 and the Kwinana project in December 1996, and higher energy revenues from the First Hydro projects as a result of increased utilization and higher pool prices, partially offset by lower capacity prices in 1997. There were no comparable electric revenues for Loy Yang B Unit 2 for the first nine months of 1996 and for the Kwinana project for the first 11 months of 1996. Equity in income from energy projects rose 14% in 1998 compared to 1997, and 17% in 1997 compared to 1996. The 1998 increase was primarily due to earnings from a geothermal project that were previously deferred and lower fuel gas prices at various cogeneration projects, partially offset by lower electric and steam revenues, which are based, in part, on fuel prices. The 1997 increase was mainly attributable to higher electric and steam revenues for several cogeneration projects due to higher fuel gas prices. Equity in income from oil and gas investments decreased approximately 54% in 1998 compared to 1997, and increased approximately 52% in 1997 compared to 1996. The 1998 decrease was primarily due to lower oil and gas prices, while the 1997 increase was due to higher gas prices. Operating Expenses Total operating expenses decreased $37.8 million in 1998 compared to 1997, and increased $104.6 million in 1997 compared to 1996. The 1998 decrease was primarily due to lower fuel and depreciation and 25 amortization expense. Fuel expense decreased $15.4 million and depreciation and amortization decreased $15.5 million in 1998. The increase in 1997 was principally due to higher fuel, plant operations, depreciation and amortization and administrative and general expenses. Fuel and plant operations expense increased $62.8 million, depreciation and amortization expense increased $12.9 million and administrative and general expenses increased $27.6 million in 1997. The 1998 decrease in fuel expense was primarily due to the new fuel supply agreement entered into for the Loy Yang B project in connection with our acquisition of the remainder of that project in May 1997, partially offset by higher fuel expense at the First Hydro projects as a result of higher prices and increased generation in 1998. The 1997 increase in fuel expense and plant operations was primarily due to commencement of commercial operations of the Kwinana project in the fourth quarter of 1996 and increased generation and higher prices at the First Hydro projects. The 1998 decrease in depreciation and amortization is the result of a full year's impact of the extension in the useful life of the Loy Yang B project's plant and equipment from approximately 30 years, the term of the previous power purchase agreement, to 50 years, the projected economic life of the plant, as a result of the May 1997 acquisition, combined with lower Australian currency exchange rates. The 1997 increase in depreciation and amortization resulted from the commencement of commercial operations of Loy Yang B Unit 2 and the Kwinana project in the fourth quarter of 1996. The Loy Yang B project's depreciation expense in 1997 was partially reduced due to the extension in the useful life of its plant and equipment. Administrative and general expenses decreased slightly in 1998 as a result of lower compensation expense for charges related to our phantom stock plan, which is part of the Edison International Equity Compensation Plan, partially offset by higher project development costs. The 1997 increase in administrative and general expenses was attributable to an increase of approximately $54 million in compensation expense as a result of charges related to our phantom stock plan. The 1997 increase in compensation expense was partially offset by lower project development costs. Other Income (Expense) Interest and other income increased $22.5 million in 1998 compared to 1997, and $6.5 million in 1997 compared to 1996. The 1998 and 1997 increases resulted primarily from interest earned on higher cash balances. During the second quarter of 1997, we completed a sale of our ownership interest in B.C. Star Partners for total cash proceeds of $71.2 million. We recorded an after-tax gain of approximately $14 million on the sale in April 1997. During the second quarter of 1996, CalEnergy Company, Inc., our partner in four operating geothermal projects in California, purchased all of the stock of our four wholly-owned subsidiaries, which held interests in these projects. The purchase price of $70 million resulted in an after-tax gain of $15.5 million. There was no impact on our future revenues, as we discontinued recognizing earnings from these projects during 1993. Interest expense decreased $27.4 million in 1998 compared to 1997, and increased $59.2 million in 1997 compared to 1996. The decrease in 1998 was due to lower Australian currency exchange rates and higher capitalized interest as a result of higher accumulated construction expenditures. Capitalized interest decreased $51.9 million in 1997 compared to 1996, due to the completion of construction and resultant commercial operations of Loy Yang B Unit 2 and the Kwinana project in the fourth quarter of 1996, at which time we discontinued recording capitalized interest related to these projects. Minority interest expense decreased $36.1 million in 1998 compared to 1997, and $30.7 million in 1997 compared to 1996. The decreases resulted from the acquisition of the remaining 49% ownership interest in the Loy Yang B project in May 1997. 26 Provision for Income Taxes We had effective tax provision rates of 34.8%, 30.9% and 47.1% in 1998, 1997 and 1996, respectively. The 1998 and 1997 tax provisions reflect a benefit from reductions in the United Kingdom corporate tax rate from 33% to 31% effective in April 1997, and from 31% to 30% effective in April 1999. In accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," this reduction in the United Kingdom income tax rate resulted in reductions in income tax expense of approximately $11 million and $20 million in 1998 and 1997, respectively, to adjust the United Kingdom deferred income tax liability, primarily related to the First Hydro projects, to the new lower tax rate. Extraordinary Loss The early repayment of the Loy Yang B project's existing debt facilities of $713 million in connection with our acquisition of the remaining 49% interest in May 1997 resulted in an extraordinary loss of $13.1 million, net of income tax benefit of $8.6 million, attributable to the write-off of unamortized debt issue costs. Liquidity and Capital Resources For the nine months ended September 30, 1999, net cash provided by operating activities increased to $369 million from $172.5 million for the same period in 1998. The increase in working capital was primarily due to increased accounts payable and accrued liabilities related to our acquisitions of Ferrybridge and Fiddler's Ferry, and Homer City and commercial operations of Doga. Net working capital at September 30, 1999 was ($412.4) million compared to $136 million at December 31, 1998. Net working capital decreased primarily as a result of utilizing short-term capacity under a commercial paper facility to finance a portion of the Homer City project. We expect to re-finance the short-term borrowings during the next year with a combination of new or extended short- term borrowings and issuance of our long-term debt. At September 30, 1999, we had cash and cash equivalents of $450.8 million and had available $353 million of borrowing capacity under a $500 million revolving credit facility that expires in 2001 and $266 million of borrowing capacity under a $700 million commercial paper facility that expires in 2000. This borrowing capacity under the revolving credit facility may be reduced by borrowings for firm commitments to contribute project equity and to fund capital expenditures and construction costs of its project facilities. Net cash provided by financing activities totaled $4,479.2 million during the first nine months of 1999, compared to $6.2 million used in 1998 for the same prior year period. The 1999 increase is primarily due to financing of $1.3 billion related to the Ferrybridge and Fiddler's Ferry project, the Edison Mission Holding Co.'s, parent company of EME Homer City, issuance of $830 million senior secured bonds, our financing of $700 million under our commercial paper facility, our issuance of Senior Notes of $600 million, borrowings of $59 million under Edison Mission Energy Taupo Limited's credit facility, Edison International's $1,066 million equity contribution to us, Edison Mission Energy Global Management, Inc.'s $120 million Flexible Money Market Cumulative Preferred Stock and EME Taupo's $158 million Retail Redeemable Preference Shares. Net cash used in investing activities increased to $4,859.7 million for the nine months ended September 30, 1999 from $82.9 million for the nine months ended September 30, 1998. The increase is primarily due to the purchase of Ferrybridge and Fiddler's Ferry, Homer City and Contact Energy. Cash provided by operating activities is derived primarily from distributions from energy projects and dividends from investments in oil and gas. Net cash provided by operating activities increased $7.1 million in the year ended December 1998 compared to 1997, and decreased $35 million in 1997 compared to 1996. The 1998 increase was primarily due to lower income taxes paid and higher distributions from energy projects, partially offset by lower dividends from investments in oil and gas and an increase in working capital requirements. The 1997 decrease primarily reflected an increase in working capital requirements, principally due to lower accounts receivable collections from the First Hydro projects. Net cash provided by financing activities decreased $43.2 million in 1998 compared to 1997, and $123.7 million in 1997 compared to 1996. The decreases were principally due to a reduction in financing activities. In 27 1997, the Loy Yang B project's financing proceeds received in connection with our acquisition of the remaining 49% of that project were primarily used to repay the project's existing debt facilities. In 1996, we issued 400 million pounds sterling of 9% Guaranteed Secured Bonds (U.S. $603.8 million), the proceeds of which were used to repay the 400 million pounds sterling credit facility entered into in December 1995. In addition, Edison Mission Energy Funding Corp, 99% owned by Broad Street Contract Services, Inc. and 1% owned by us, completed in December 1996 a sale of $450 million of senior notes and bonds to institutional investors pursuant to the Rule 144A exemption under the Securities Act for non-public sales. The Loy Yang B financing in 1997 consisted of (1) borrowings under a $373 million (490 million Australian dollars) 15-year interest only term facility, (2) borrowings under a $583 million (765 million Australian dollars) 20-year amortizing term facility with principal and interest payments scheduled quarterly commencing September 30, 1998 and (3) borrowings under an $8 million (10 million Australian dollars) working capital facility with a term equal to that of the 20-year amortizing term facility. The financing was structured on a non-recourse basis to us. Lenders look solely to the operating cash proceeds of the Loy Yang B project to repay the debt and have taken a security interest in the Loy Yang B project assets. The $450 million of securities issued by EME Funding Corp. in 1996 consist of $260 million of Series A Notes and $190 million of Series B Bonds which mature in September 2003 and September 2008, respectively. The Series A Notes and Series B Bonds bear interest rates of 6.77% and 7.33%, respectively, and were rated "BBB" by Standard & Poor's Ratings Group and "Baa1" by Moody's Investors Service, Inc. The principal and interest payments under the notes issued by our four subsidiaries are identical in terms to the Series A Notes and Series B Bonds. The net proceeds from the sale of these securities were loaned by EME Funding Corp. to us and used by us to repay borrowings under our $500 million revolving credit facility, to retire our 200 million Australian dollar credit facility, to defease other project debt and for other general corporate purposes. The senior notes and bonds are secured by the pledge of (1) notes issued by our four subsidiaries that own interests in four California cogeneration projects, (2) 99% of the capital stock of EME Funding Corp. and (3) a guarantee issued by our four subsidiaries. The financing structure was designed to pool and cross-collateralize available cash flow to our four subsidiaries from the four projects, thus providing for repayment of the senior notes and bonds with available cash flow from the four projects. The obligations of our four subsidiaries are non-recourse to us. Net cash used in investing activities increased $311.1 million in 1998 compared to 1997, and decreased $149.2 million in 1997 compared to 1996. The 1998 increase is principally due to the investments and loans totaling $242.8 million for the purchase of our ownership interest in the EcoElectrica project and lower proceeds from loan repayments. The 1997 decrease is primarily due to an increase in proceeds received from loan repayments related to the Brooklyn Navy Yard and Carbon II projects and fewer loans made to energy projects. Proceeds of $71.2 million were received from the sale of our ownership interest in B.C. Star Partners in 1997. We invested $73.4 million, $87.7 million and $119.4 million in 1998, 1997 and 1996, respectively, in new plant and equipment principally related to the Doga project in 1998 and 1997 and Loy Yang B Unit 2 and the Kwinana project in 1996. 28 Firm Commitments to Contribute Project Equity as of September 30, 1999
Projects Local Currency U.S. ($ in millions) -------- ------------------------ -------------------- ISAB(1)...................... 244 billion Italian Lira $135 EcoElectrica(2).............. 34 Tri Energy(3)................ 25
- -------- (1) ISAB is a 512 MW integrated gasification combined cycle power plant under construction near Siracusa in Sicily, Italy. A wholly-owned subsidiary of Edison Mission Energy owns a 49% interest. Equity will be contributed at commercial operation, which is currently scheduled for the first quarter of 2000. (2) EcoElectrica is a 540 MW liquefied natural gas combined-cycle cogeneration facility under construction in Penuelas, Puerto Rico. A wholly-owned subsidiary of Edison Mission Energy owns a 50% interest. Equity will be contributed at commercial operation, which is currently scheduled for the first quarter of 2000. (3) Tri Energy is a 700 MW gas-fired power plant under construction in the Ratchaburi Province, Thailand. A wholly-owned subsidiary of Edison Mission Energy owns a 25% interest. Equity will be contributed at commercial operation, which is currently scheduled for mid-2000. Firm commitments to contribute project equity could be accelerated due to specified events of default as defined in the non-recourse project financing facilities. We have no reason to believe that these events of default will occur requiring acceleration of the firm commitments. Contingent Obligations to Contribute Project Equity as of September 30, 1999
Projects U.S. ($ in millions) -------- -------------------- Paiton(1)............................................. $141 Tri Energy(2)......................................... 20 Doga(2)............................................... 7 All Other............................................. 17
- -------- (1) Contingent obligations to contribute additional project equity would be based on events principally related to insufficient cash flow to cover interest on project debt and operating expenses, project cost overruns during the plant construction, specified partner obligations or events of default. In any and all circumstances, our obligation to contribute contingent equity will not exceed $141 million. As more fully described below under the caption "Other Commitments and Contingencies", PT Perusahaan Listrik Negara, the main source of revenue for the project, had, at September 30, 1999, failed to pay the project in respect of its last five invoices and paid only a portion of another invoice. In addition, PT Perusahaan has filed a lawsuit, which it subsequently withdrew, contesting the validity of the Power Purchase Agreement under which it was to purchase electricity from the project. In response to PT Perusahaan's failure to pay, Paiton Energy entered into an interim agreement with its lenders which modified the contingent equity provisions of the Paiton debt documents during the agreed interim period, which extends from October 15, 1999 through July 31, 2000. The interim agreement provides, among other things, that contingent equity from us and the other Paiton Energy shareholders shall be contributed from time to time as needed to enable Paiton Energy to pay interim project costs. Interim project costs include interest on project debt and operating costs which become due and payable during the term of the interim agreement and other costs related to the construction of the project, provided that in the latter case no more than an aggregate of $30 million of contingent equity can be used for this purpose. The interim agreement provides that a portion of unfunded contingent equity in the original amount of $206 million, of which our current unfunded share is $85 million, will become due and payable by the shareholders in the event that specified events of default, other than those specifically waived under the interim agreement, occur. The interim agreement further provides that all unfunded contingent equity in the original amount of $300 million, of which our unfunded share at September 30, 1999, was $124 million, will become due and payable by the shareholders in the event that Paiton fails to make any interest payment during the pendency of the interim agreement. As of September 30, 1999, 29 Paiton Energy's shareholders had contributed to Paiton $36 million of contingent equity, of which our share is $17 million. The contractor for the Paiton project and Paiton Energy have reached a global settlement in principle, the terms of which are being finalized in a definitive agreement. The global settlement deals with all claims, including contractor claims for retention, costs relating to a dispute involving a slope adjacent to the Paiton site and other cost overruns related to delays in the completion of the construction of the project and Paiton Energy's claims under the construction contract. Terms and conditions of this settlement, which include a near term partial payment of the amount owed the contractor, will require the approval of Paiton Energy's lenders. We have no reason to believe that these approvals will not be obtained. As noted above the shareholders' obligations to contribute contingent equity to Paiton to enable it to pay the contractor for the finally agreed amount is limited to $30 million. Paiton's obligations to the contractor under the settlement may exceed this amount and thus Paiton may be required to seek lenders' approvals for the settlement. In accordance with the global settlement, this excess is payable over time in accordance with revenues available during and after renegotiation of the Power Purchase Agreement and the project's debt agreements, as more fully discussed under the caption, "Other Commitments and Contingencies." Our contingent equity obligations for the Paiton project are to be cancelled, if unused, as of the later of the date of term financing by the Export-Import Bank of the United States and August 1, 2000. Term financing by the Export-Import Bank of the United States is the subject of a comprehensive set of conditions. The obligation of the Export-Import Bank of the United States to provide term financing was initially scheduled to terminate on October 15, 1999. The Export-Import Bank of The United States agreed to extend the term financing commitment through December 31, 2000 and has determined that the project will need to meet additional terms and conditions for take-out of the construction lenders. (2) Contingent obligations to contribute additional equity to the project would be based on events principally related to capital cost overruns during the plant's construction, specified partner obligations or events of default. Other than as noted above, we are not aware, at this time, of any other contingent obligation or obligations to contribute project equity. Other Commitments and Contingencies Subsidiary Indemnification Agreements Some of our subsidiaries have entered into indemnification agreements under which the subsidiaries agreed to repay capacity payments to the projects' power purchasers in the event the projects unilaterally terminate their performance or reduce their electric power producing capability during the term of the power contracts. Obligations under these indemnification agreements as of September 30, 1999, if payment were required, would be $233 million. We have no reason to believe that the projects will either terminate their performance or reduce their electric power producing capability during the term of the power contracts. Paiton Paiton is a 1,230-MW coal-fired power plant in operation in East Java, Indonesia. A wholly owned subsidiary of Edison Mission Energy owns a 40% interest and has a $388 million investment at September 30, 1999. The tariff is higher in the early years and steps down over time. The tariff for the Paiton project includes infrastructure to be used in common by other units at the Paiton complex. The plant's output is fully contracted with the state-owned electricity company, PT Perusahaan Listrik Negara. Payments are in Indonesian Rupiah, with the portion of such payments intended to cover non-Rupiah project costs, including returns to investors, indexed to the Indonesian Rupiah/U.S. dollar exchange rate established at the time of the Power Purchase Agreement in February 1994. The project received substantial finance and insurance support from the Export-Import Bank of the United States, The Export-Import Bank of Japan, the U.S. Overseas Private Investment Corporation and the Ministry of International Trade and Industry of Japan. PT Perusahaan's payment obligations are supported by the Government of Indonesia. The projected rate of growth of the Indonesian 30 economy and the exchange rate of Indonesian Rupiah into U.S. dollars have deteriorated significantly since the Paiton project was contracted, approved and financed. The Paiton project's senior debt ratings have been reduced from investment grade to speculative grade based on the rating agencies' perceived increased risk that PT Perusahaan might not be able to honor the electricity sales contract with Paiton. The Government of Indonesia has arranged to reschedule sovereign debt owed to foreign governments and has entered into discussions about rescheduling sovereign debt owed to private lenders. Specified events, including those discussed in the paragraph below, which, with the passage of time or upon notice, may mature into defaults of the project's debt agreements have occurred. On October 15, 1999, the project entered into an interim agreement with its lenders under which the lenders waived these defaults until July 31, 2000. However, this waiver may expire on an earlier date if additional defaults, other than those specifically waived, or other specified events occur. In May 1999, Paiton Energy notified PT Perusahaan that Unit 7 of Paiton achieved commercial operation under terms of the Power Purchase Agreement and that Unit 8 of Paiton achieved commercial operation under the terms of the Power Purchase Agreement in July 1999. Because of the economic downturn, PT Perusahaan is experiencing low electricity demand and PT Perusahaan has therefore dispatched the Paiton plant to zero; however, under the terms of the Power Purchase Agreement, PT Perusahaan is required to continue to pay for capacity and fixed operating costs once each unit and the plant achieve commercial operation. An invoice for these charges for May in the amount of $7.8 million was submitted to PT Perusahaan. The project and PT Perusahaan met to review the invoice and a partial payment of $2.5 million was subsequently received. The primary reason for the payment shortage was the use of an arbitrary Indonesian Rupiah/U.S. dollar exchange rate of 2,450 Indonesian Rupiah to one U.S. dollar by PT Perusahaan. The use of this exchange rate is not in agreement with the Power Purchase Agreement, but is the exchange rate on which PT Perusahaan payments to other independent power producers in Indonesia have been based. Invoices for capacity charges and fixed operating costs for June, July, August and September in an aggregate amount of $164.1 million were later submitted to PT Perusahaan. PT Perusahaan has yet to make any payments in respect of the latter invoices. In addition, PT Perusahaan filed a lawsuit contesting the validity of its agreement to purchase electricity from the project. The lawsuit has been terminated by PT Perusahaan and the project and PT Perusahaan have commenced discussions to renegotiate the Power Purchase Agreement, however; it is not yet known what form the renegotiation may take. Any material modifications of the Power Purchase Agreement could also require a renegotiation of the Paiton project's debt agreements. The impact of any of these renegotiations with PT Perusahaan, the Government of Indonesia or the project's creditors on our expected return on its investment in Paiton is uncertain at this time, however; we believe that we will ultimately recover our investment in the project. Contact Energy In May 1999, a wholly-owned subsidiary of Edison Mission Energy issued $120 million of preferred stock in connection with the acquisition of a 40% interest in Contact Energy. We entered into a support agreement with this subsidiary that requires us to make capital contributions to the subsidiary in order for it to maintain a positive net worth and to provide sufficient funds for payment of declared dividends on preferred stock and any redemption price in respect of the preferred stock. Our maximum obligation under the support agreement is limited to either: (A) an amount equal to twice the sum of (1) the liquidation preference of the preferred stock, currently approximately $240 million, and (2) the liquidation preference of all outstanding shares of stock of the subsidiary ranking on a parity with the preferred stock, currently zero; or (B) the amount that we could lawfully distribute to our shareholder under the Corporation Code of the State of California, approximately $370 million as of September 30, 1999. 31 Brooklyn Navy Yard Brooklyn Navy Yard is a 286 MW gas-fired cogeneration power plant in Brooklyn, New York. Our wholly-owned subsidiary owns 50% of the project. In February 1997, the construction contractor asserted general monetary claims under the turnkey agreement against Brooklyn Navy Yard Cogeneration Partners, L.P. for damages in the amount of $136.8 million. Brooklyn Navy Yard Cogeneration Partners has asserted general monetary claims against the contractor. In connection with a $407 million non-recourse project refinancing in 1997, we agreed to indemnify Brooklyn Navy Yard Cogeneration Partners and its partner from all claims and costs arising from or in connection with the contractor litigation, which indemnity has been assigned to Brooklyn Navy Yard Cogeneration Partners's lenders. We believe that the outcome of this litigation will not have a material adverse effect on our consolidated financial position or results of operations. Homer City We have guaranteed to the bondholders, banks and other secured parties which financed the acquisition of the Homer City project the performance and payment when due by Edison Mission Holdings Co. of its obligations in respect of specified senior debt, up to $42 million. This guarantee will be available until December 31, 2001, after which time we will have no further obligations under this guarantee. Other In support of the businesses of our subsidiaries, we have made, from time to time, guarantees and have entered into indemnity agreements with respect to our subsidiaries' obligations, like those for debt service, fuel supply or the delivery of power, and have entered into reimbursement agreements with respect to letters of credit issued to third parties to support our subsidiaries' obligations. We may incur additional guaranty, indemnification and reimbursement obligations as well as obligations to make equity and other contributions to projects in the future. We believe that we will have sufficient liquidity on both a short and long-term basis to fund pre-financing project development costs, make equity contributions to project subsidiaries, pay our debt obligations and pay other administrative and general expenses as they are incurred from (1) distributions from energy projects and dividends from investments in oil and gas, (2) proceeds from the repayment of loans made by us to our project subsidiaries and (3) funds available from our revolving credit facility. Market Risk Exposures Changes in interest rates, changes in electricity pool pricing and fluctuations in foreign currency exchange rates can have a significant impact on our results of operations. Interest rate changes affect the cost of capital needed to finance the construction and operation of our projects. We have mitigated the risk of interest rate fluctuations by arranging for fixed rate financing or variable rate financing with interest rate swaps or other hedging mechanisms for the majority of our project financings. Interest expense included $19.1 million and $15.6 million for the nine months ended September 30, 1999 and 1998, respectively, as a result of interest rate swap and collar agreements. We have entered into several interest rate swap agreements under which the maturity date of the swaps occurs prior to the final maturity of the underlying debt. We do not believe that interest rate fluctuations will have a materially adverse effect on our financial position or results of operations. Our electric revenues decreased by $3.4 million for the nine-month period ended September 30, 1999, compared to an increase of $87.6 million for the nine-month period ended September 30, 1998, as a result of electricity rate swap agreements and other hedging activities. An electricity rate swap agreement is an exchange of a fixed price of electricity for a floating price. As a seller of power, we receive the fixed price in exchange for a floating price, like the index price associated with electricity pools. In the United Kingdom, these forward sales are also called electricity forward agreements or contracts for differences. Electric power generated at our uncontracted plants is generally sold under bilateral arrangements with utilities and power marketers under short-term contracts with terms of two years or less, or, in the case of the 32 Homer City project, to the PJM or the NYISO. We have developed risk management policies and procedures which, among other matters, address credit risk. When making sales under negotiated bilateral contracts, it is our policy to deal with investment grade counterparties. We hedge a portion of the electric output of our merchant plants, whose output is not committed to be sold under long term contracts, in order to lock-in desirable outcomes. When appropriate we manage the "spark spread" or margin, which is the spread between electric prices and fuel prices and use forward contracts, swaps, futures, or options contracts to achieve those objectives. For a detailed description of market risk in connection with the Homer City project, the United Kingdom projects and the Loy Yang B project and how these risks are mitigated, see "Business-- Project Development--Sales of Power from Merchant Plants." Fluctuations in foreign currency exchange rates can affect, on a U.S. dollar equivalent basis, the amount of our equity contributions to, and distributions from, our international projects. As we continue to expand into foreign markets, fluctuations in foreign currency exchange rates can be expected to have a greater impact on our results of operations in the future. At times, we have hedged a portion of our current exposure to fluctuations in foreign exchange rates through financial derivatives, offsetting obligations denominated in foreign currencies, and indexing underlying project agreements to U.S. dollars or other indices reasonably expected to correlate with foreign exchange movements. In addition, we have used statistical forecasting techniques to help assess foreign exchange risk and the probabilities of various outcomes. Foreign exchange considerations for two major international projects are discussed below. The First Hydro projects in the United Kingdom and the Loy Yang B project in Australia have been financed in their local currency, pounds sterling and Australian dollars, respectively, thus hedging the majority of their acquisition costs against foreign exchange fluctuations. Furthermore, we have evaluated the return on the remaining equity portion of these investments with regard to the likelihood of various foreign exchange scenarios. These analyses use market derived volatilities, statistical correlations between specified variables, and long-term forecasts to predict ranges of expected returns. Based upon these analyses, we believe that the investment returns for the First Hydro and Loy Yang B projects are adequately insulated from a broad range of foreign exchange scenarios at this time. In 1996, we repaid a 200 million Australian dollar loan that was originally structured to hedge a portion of the foreign exchange risk associated with our equity investment in the Loy Yang B project. The decision to repay the loan was based on our view that the cost of the hedge was high relative to the current and expected volatility of the Australian dollar. We will continue to monitor our foreign exchange exposure and analyze the effectiveness and efficiency of hedging strategies in the future. The electric power generated by some of our domestic operating projects, excluding Homer City, is sold to electric utilities under long-term, typically, with terms of 15 to 30-years, power purchase agreements and is expected to result in consistent cash flow under a wide range of economic and operating circumstances. To accomplish this, we structure our long-term contracts so that fluctuations in fuel costs will produce similar fluctuations in electric and/or steam revenues and enter into long-term fuel supply and transportation agreements. Environmental Matters and Regulations We are subject to environmental regulation by federal, state and local authorities in the United States and foreign regulatory authorities with jurisdiction over projects located outside the United States. We believe that, as of the date of this prospectus, we are in substantial compliance with environmental regulatory requirements and that maintaining compliance with current requirements will not materially affect our financial position or results of operations. We expect that the implementation of Clean Air Act Amendments will result in increased capital expenditures and operating expenses. For example, we plan to spend approximately $258 million to install upgrades to the environmental controls at the Homer City project to control sulfur dioxide and nitrogen oxide emissions. 33 Similarly, we plan to upgrade the environmental controls at the former Commonwealth Edison plants to control nitrogen oxide emissions. We do not expect these increased capital expenditures and operating expenses to have a material effect on our financial position or results of operations. Year 2000 Issues We have a comprehensive program in place to remediate potential year 2000 impacts from critical systems. We have divided our 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 remediated, might have had a significant impact on customers, the revenue stream, regulatory compliance, or the health and safety of personnel. We have essentially completed all phases of our year 2000 project. The other essential component of our year 2000 readiness program was to identify and assess vendor products and business partners for year 2000 readiness. We have a process in place to identify and contact vendors and business partners to determine their year 2000 status, and have evaluated the responses. Our general policy requires that all newly purchased products be year 2000 ready or otherwise designed to allow us 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. These contingency plans include developing strategies for dealing with year 2000-related processing failures or malfunctions due to our internal systems or those of third parties. Our contingency plans evaluate reasonably likely worst case scenarios or conditions. As of the date of this prospectus, we are not aware of any Year 2000 problem of our systems and services. In addition, we have not received any notification from any supplier or systems of any Year 2000-related disruption in their business. However, the success to date of our Year 2000 efforts and the efforts of our third party suppliers cannot guarantee that there will not be a material adverse effect on our business should a Year 2000 problem manifest or become apparent in the future. 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 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 our financial statements has not been quantified at this time. Recent Developments In December 1999, we completed the acquisition of the fossil-fuel generating assets of Commonwealth Edison, totaling 6,812 MW. We will operate the plants, which are located in the midwestern United States. We financed the $4.1 billion acquisition with a combination of debt secured by the project, corporate debt and funding from Edison International. In connection with this transaction, we entered into transaction contracts with Commonwealth Edison, which will enable Commonwealth Edison to access specified amounts of plant output for up to the next five years to serve its customers. In January 2000, the Board of Directors of Edison International gave preliminary approval for an exchange offer to the holders of outstanding phantom options under our phantom stock plan. Our phantom stock plan is part of the Edison International Equity Compensation Plan. We have taken a one-time charge of $67.5 million in the fourth quarter of 1999 in anticipation of this offer. 34 BUSINESS Overview We are a leading independent power producer engaged in the business of developing, acquiring, owning and operating electric power generation facilities worldwide. Edison International is our parent company and also owns Southern California Edison, one of the largest electric utilities in the United States. At September 30, 1999, we had consolidated assets of approximately $11.2 billion and total shareholder's equity of approximately $2.2 billion. We were formed in 1986 with two domestic operating projects. Our 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, we own interests in 72 domestic and international operating power stations with an aggregate generating capacity of 26,649 MW, of which our share is 22,056 MW. In addition, we own interests in one domestic and three international projects that are under construction. The capacity of these projects is expected to total 1,797 MW, of which our anticipated share will be approximately 714 MW. Strategic Overview Our business goal is to be one of the leading owners and operators of electric generating assets in the world. We play an active role, as a long-term owner, in all phases of power generation, from planning and development through construction and commercial operation. We believe that this involvement allows us to better ensure, with our experienced personnel, that our projects are well-planned, structured and managed, thus maximizing value creation. We have separate strategies for developed and developing countries. In developed countries, we expect that new long-term contracts are likely to be the exception rather than the rule. Our strategy focuses primarily on three areas with respect to plants whose output is not committed to be sold under long term contracts, which are known as merchant plants: valuation, power marketing and trading, and regulation. First, we continuously improve our valuation tools, enabling us to bid more effectively and competitively on assets that will be sold over the next five years in the United States, the United Kingdom, Spain, Italy, Australia, New Zealand and other developed countries. Second, we draw on our power marketing and trading skills to mitigate price risks and to enhance the returns of our merchant plants. Third, since our principal customers continue to be regulated utilities, we strive to understand the regulatory and economic environment in which these utilities operate so it may better anticipate and prepare for what they will do. In developing countries, our strategy focuses on investing with good partners, securing non-recourse financing based upon long-term contracts with state-owned utilities, and securing government support from organizations like the Export-Import Bank of the United States, the U.S. Overseas Private Investment Corporation and The Export-Import Bank of Japan. In making investment decisions, we evaluate potential project returns against rate of return guidelines. We establish these guidelines by identifying a base rate of return and adjusting the base rate by potential risk factors, like risks associated with project location and stage of project development. We endeavor to mitigate these risks by: . evaluating all projects and the markets in which they operate; . selecting partners with complementary skills and local experience; . structuring investments through subsidiaries; . managing up-front development costs; . utilizing limited recourse financing; and . linking revenue and expense components where appropriate. 35 Many of our projects are operated by our subsidiaries, which helps us to preserve and enhance the value of our investments. In response to the increasing globalization of the independent power market, we have organized our operation and development activities into three geographic regions: (1) Americas, (2) Asia Pacific and (3) Europe, Central Asia, Middle East and Africa. Each region is served by one or more teams consisting of business development, operations, finance and legal personnel, and each team is responsible for all our activities within a particular geographic region. Also, we will mobilize personnel from outside a particular region when needed in order to assist in the development of specified projects. Below is a brief discussion of the current strategy for each of the three regions and a summary of some of our projects that are currently in the construction, advanced development or early operations stage and other significant operating projects in each of the regions. Americas Our Americas region is headquartered in Irvine, California, with additional offices located in Chicago, Fairfax, Virginia and Washington, D.C. The strategy for the Americas region is: . to manage our interest in operating and construction-phase projects located throughout the United States, . to pursue the acquisition and development of existing generating assets from utilities, industrial companies and other independent power producers throughout the region and . to pursue the development of new power projects throughout the region. We currently have 34 operating projects in this region, all of which are located in the United States. In December 1998, we acquired 50% of the 540 MW EcoElectrica liquefied natural gas-fired combined-cycle cogeneration facility under construction in Penuelas, Puerto Rico for approximately $243 million. The project also includes a desalination plant and liquefied natural gas storage and vaporization facilities, and is expected to commence commercial operation by the first quarter of 2000. In March 1999, we acquired 100% of the 1,884 MW Homer City Generating Station for approximately $1.8 billion. We financed the acquisition with a combination of debt secured by the project, Edison Mission Energy debt, cash and borrowings under our revolving credit facility. The Homer City project is one of the largest coal-fired plants in the mid-Atlantic region of the United States and has direct, high voltage interconnections to both the NYISO and the PJM. In December 1999, we acquired the fossil-fuel generating assets of Commonwealth Edison, totaling 6,812 MW of generating capacity, for approximately $4.1 billion. We will operate these plants, which provide access to the Mid-America Interconnected Network and the East Central Area Reliability Council. In connection with this transaction, we entered into power purchase agreements with Commonwealth Edison with a term of up to five years. Concurrently with this acquisition we assigned our right to purchase the Collins Station, a 2,698 MW gas and oil-fired generating station located in Illinois, to a third party. After this assignment we entered into a lease of the Collins Station with a term of 33.75 years. The aggregate MW purchased or leased as a result of these transactions is 9,510 MW. For additional information regarding our 34 domestic operating projects, see "--Our Operating Power Generation Facilities--Domestic." 36 Asia Pacific Our Asia Pacific region is headquartered in Singapore with additional offices located in Australia, Indonesia and the Philippines. The strategy for this region is: . to pursue projects in countries where there exist strong political commitment and the structural framework necessary for private power, . to seek opportunities to employ indigenous fuels and . to seek strategic, complementary alliances with partners who bring value to a project by providing fuel, equipment and construction services. Beginning in mid-1997, several of the developing economies in Asia experienced an economic downturn that is continuing, and has resulted in an overall decline in the growth of demand for electric power, and, in some countries, a decline in electric power usage. Many governments in the region have committed to privatization of the electric power industry, and are looking to the private sector to develop a significant portion of new generating capacity and to purchase existing generating assets. Our activity in the Asia Pacific region commenced in December 1992 with the acquisition of a 51% interest of Loy Yang B from the State Government of Victoria, Australia's first electric privatization effort. In May 1997, we acquired the State's remaining 49% interest in the Loy Yang B project. The first of two 500 MW units at the Loy Yang B project began commercial operations in October 1993. Loy Yang B Unit 2 commenced commercial operation in October 1996. An affiliate of ours provides operation and maintenance services for both units. Kwinana is a $108 million 116 MW gas-fired cogeneration project located at the British Petroleum Kwinana refinery near Perth, Australia. The project, which is 100% owned by us, began commercial operations in December 1996. The project supplies electricity to Western Power, formerly The State Electricity Commission of Western Australia, and electricity and steam to the British Petroleum Kwinana refinery. In April 1995, we and our partners, Mitsui & Co. Ltd., General Electric Corporation and P.T. Batu Hitam Perkasa, an Indonesian limited liability company, commenced construction of the $2.5 billion Paiton project, a 1,230 MW coal-fired power plant in East Java, Indonesia. The project consists of two units, each of which has a capacity of approximately 615 MW. In January 1996, we purchased an additional 7.5% interest in the Paiton project from a subsidiary of General Electric Corporation, thus increasing our ownership interest to 40%. In May 1999, Paiton notified PT Perusahaan that Unit 7 of Paiton achieved commercial operation under terms of the Power Purchase Agreement and that Unit 8 of Paiton achieved commercial operation under the terms of the Power Purchase Agreement in July 1999. The project's output is fully contracted with the state-owned electricity company, PT Perusahaan. Payments are in Indonesian Rupiah, with the portion of these payments intended to cover non-Rupiah project costs including returns to investors, indexed to the Indonesian Rupiah/U.S. dollar exchange rate established at the time the power purchase agreement was executed in February 1994. PT Perusahaan's payment obligations are supported by the Government of Indonesia. The exchange rate of Indonesian Rupiah into U.S. dollars and the projected rate of growth of the Indonesian economy have deteriorated significantly since the Paiton project was contracted, approved and financed, thus significantly increasing the cost of power in Rupiah terms to PT Perusahaan. The project received substantial finance and insurance support from the Export-Import Bank of the United States, The Export-Import Bank of Japan, the U.S. Overseas Private Investment Corporation and the Ministry of International Trade and Industry of Japan. The Paiton project's senior debt ratings have been reduced from investment grade to speculative grade based on the rating agencies' perceived increased risk that PT Perusahaan might not be able to honor its power purchase agreement with Paiton. PT Perusahaan has announced its intentions to commence discussions with independent power producers to renegotiate its power purchase agreement; however, it is not yet known what form the negotiation may take. Any material modifications of the Paiton project's power purchase agreement with PT Perusahaan could also require a renegotiation of the Paiton project's debt agreements. The 37 impact of any renegotiation with PT Perusahaan, the Government of Indonesia or the project's creditors on our dividends from the project is uncertain at this time; however, we believe that we will ultimately recover our investment in the project. In July 1998, we purchased a 25% interest in the Tri Energy project, a 700 MW gas-fired power plant under construction in the Ratchaburi Province, Thailand. The project will sell its capacity and energy to the Electricity Generating Authority of Thailand under a 20-year power purchase agreement. Commercial operation is expected to begin in mid-2000. In May 1999, we acquired 40% of Contact Energy from the government of New Zealand for $635 million. Contact Energy owns and operates nine hydroelectric, geothermal and natural gas-fired power generating plants in New Zealand and owns an interest in one operating gas-fired plant in Australia, with a total aggregate capacity of 2,626 MW, of which our share is 949 MW. Contact Energy also owns interests in one project under construction in New Zealand with an expected generating capacity of 45 MW, of which our share is 18 MW. Europe, Central Asia, Middle East and Africa Our Europe, Central Asia, Middle East and Africa region is headquartered in London, England with additional offices located in Italy, Spain and Turkey. The London office was established in 1989. The territorial scope of the region includes Europe, Africa, the Middle East, India and Pakistan. The region is characterized by both mature and developing markets. Our strategy for the region is to pursue the development and acquisition of medium to large scale power and cogeneration facilities with diversified fuel sources and generation technology. Beginning in the early 1990's we acquired the Iberian Hy-Power projects, which consist of 18 small hydroelectric facilities located in Spain, an 80% interest in the 220 MW Roosecote project located in northwest England, and a 33% interest in the 214 MW Derwest project located in Derby, England. In December 1995, we purchased all of the outstanding shares of First Hydro Company for approximately $1 billion or 653 million pounds sterling. First Hydro's principal assets are two pumped-storage electric power stations located in North Wales at Dinorwig and Ffestiniog, which have a combined capacity of 2,088 MW. The Dinorwig station, which was commissioned in 1983, is comprised of six units totaling 1,728 MW. The Ffestiniog station was commissioned in 1963 and is comprised of four units totaling 360 MW. First Hydro is an independent generating company with three main sources of revenues: (1) selling power into the electricity trading market in England and Wales; (2) providing system support services to The National Grid Company plc; and (3) selling its installed capacity on a forward basis by entering into contracts for differences, which are electricity rate swap agreements, with large electricity suppliers. In June 1995, the ISAB project, of which we own 49%, signed a twenty-year power purchase contract with ENEL S.p.A., Italy's state electricity corporation, under which ENEL S.p.A. will purchase 507 MW of output from the 512 MW ISAB power project, which is located near Siracusa in Sicily, Italy. The project will employ gasification technology to convert heavy oil residues from the ISAB refinery in Priolo Gargallo into clean-burning synthetic fuel gas that will be used to generate electricity in a combustion turbine. The approximately 2 trillion lira, or $1.3 billion, project financing was completed in April 1996, with construction commencing in July 1996. The project is near completion, with commercial operation expected to begin in the first quarter of 2000. In February 1995, we signed a shareholders' agreement to develop the $180 million Doga Enerji A.S. project in Esenyurt, near Istanbul, Turkey. In April 1997, we completed financing and commenced construction of the Doga project. The 180 MW combined cycle gas-fired cogeneration facility commenced commercial operation in May 1999. In July 1999, we acquired 100% of the Ferrybridge and Fiddler's Ferry coal- fired power plants in the United Kingdom with a total generating capacity of 3,886 MW from PowerGen UK plc for approximately $2.0 38 billion. These plants, which are in the middle of the order in which plants are called upon to dispatch electric power, will complement the pumped-storage hydroelectric power plants we already own in the United Kingdom and will sell power into the electricity trading market there. During October 1999, we completed the acquisition of the remaining 20 percent of the 220 MW natural gas-fired Roosecote project located in England. Project Development The development of power generation projects, whether through new construction or the acquisition of existing assets, involves numerous elements, including evaluating and selecting development opportunities, evaluating regulatory and market risks, designing and engineering the project, acquiring necessary land rights, permits and fuel resources, obtaining financing, managing construction and, in some cases, obtaining power and steam sales agreements. We initially evaluate and select potential development projects based on a variety of factors, including the reliability of technology, the strength of the potential partners, the feasibility of the project, the likelihood of obtaining a long-term power purchase agreement or profitably selling power without this agreement, the probability of obtaining required licenses and permits and the projected economic return. During the development process, we monitor the viability of our projects and make business judgments concerning expenditures for both internal and external development costs. Completion of the financing arrangements for a project is generally an indication that business development activities are substantially complete. Project Type The selection of power generation technology for a particular project is influenced by various factors, including regulatory requirements, availability of fuel and anticipated economic advantages of a particular application. We have interests in operating projects that employ gas-fired combustion turbine technology, predominantly through an application known as cogeneration. Cogeneration facilities sequentially produce two or more useful forms of energy, such as electricity and steam, from a single primary source of fuel, such as natural gas or coal. Many of our cogeneration projects are located near large, industrial steam users or in oil fields that inject steam underground to enhance recovery of heavy oil. The regulatory advantages for cogeneration facilities under the Public Utility Regulatory Policies Act of 1978, as amended, have become somewhat less significant because of other federal regulatory exemptions made available to independent power producers under the Energy Policy Act. Accordingly, we expect that the majority of our future projects will generate power without selling steam to industrial users. We also have interests in projects that use renewable resources like hydroelectric energy. Our hydroelectric projects, excluding First Hydro's projects, use run-of-the-river technology to generate electricity. The First Hydro project utilizes pumped-storage stations that consume electricity when it is comparatively less expensive in order to pump water for storage in an upper reservoir. Water is then allowed to flow back through turbines in order to generate electricity when its market value is higher. This type of generation is characterized by its speed of response, its ability to work efficiently at wide variations of load and the basic reliance of revenue on the difference between the peak and trough prices of electricity during the day. We also have domestic and international interests in operating projects and projects under construction and advanced development, which are large-scale, coal-fired projects using pulverized coal and coal-fired generation technology. In the United States, we have developed and acquired coal and waste coal-fired projects that employ traditional pulverized coal and circulating fluidized bed technology, which allows for the use of lower quality coal and the direct removal of sulfur from the coal. 39 Long-Term Power and Steam Sales Contracts Many of our operating projects in the United States sell power and steam to domestic electric utilities and industrial steam users under long-term contracts. Electric power generated by several of our international projects is sold under long-term contracts to electric utilities located in the country where the power project is located. These projects' revenues from power purchase agreements usually consist of two components: energy payments and capacity payments. Energy payments are made based on actual deliveries of electric energy, such as kilowatt-hours, to the purchaser. Energy payments are usually indexed to specified variable costs that the purchaser avoids by purchasing this electric energy from our projects as opposed to operating its own power plants to produce the same amount of electric energy. The variable components typically include fuel costs and selected operation and maintenance expenses. These costs may be indexed to the utility's cost of fuel and/or selected inflation indices. Capacity payments are based on a project's proven capability reliably to make electric capacity available, whether or not the project is called on to deliver electric energy. Capacity payments compensate a project for specified fixed costs that are incurred independent of the amount of energy sold by the project. Such fixed costs include taxes, debt service and distributions to the project's owners. To receive capacity payments, there are typically minimum performance standards that must be met, and often there is a performance range that further influences the amount of capacity payments. Steam produced from our cogeneration facilities is sold to industrial steam users, such as petroleum refineries or companies involved in the enhanced recovery of oil through steam flooding of oil fields, under long-term steam sales contracts. Steam payments are generally based on formulas that reflect the cost of water, fuel and capital to us. In some cases, we have provided steam purchasers with discounts from their previous costs for producing this steam and/or has partially indexed steam payments to other indices, including specified oil prices. Sales of Power from Merchant Plants Over the past two years, we have shifted our primary focus to the acquisition and operation of competitive generation, both domestically and internationally. We identify high-quality generating assets that are strategic to deregulated power markets. We have recently acquired, or have under contract for acquisition, a number of merchant plants, which sell capacity, energy and, in some cases, other services on a competitive basis under bilateral arrangements or through centralized power pools that provide an institutional framework for price setting, dispatch and settlement procedures. Electric power generated at the Homer City project is sold under bilateral arrangements with domestic utilities and power marketers under short-term contracts with terms of two years or less, or to the PJM or the NYISO. These pools have short-term markets, which establish an hourly clearing price. The Homer City project is situated in the PJM control area and is physically connected to high-voltage transmission lines serving both the PJM and NYISO markets. The Homer City project can also transmit power to the midwestern United States. Our projects in the United Kingdom sell their electrical energy and capacity through a centralized electricity pool, which establishes a half-hourly clearing price, also referred to as the pool price, for electrical energy. The pool price is extremely volatile and can vary by as much as a factor of ten or more over the course of a few hours, due to the large differentials in demand according to the time of day. First Hydro and Ferrybridge and Fiddler's Ferry mitigate a portion of the market risk of the pool by entering into contracts for differences, which are electricity rate swap agreements related to either the selling or purchasing price of power. These contracts specify a price at which the electricity will be traded, and the parties to the agreement make payments calculated based on the difference between the price in the contract and the pool price for the element of power under contract. These contracts are sold in various structures and act to stabilize revenues or purchasing costs by removing an element of their net exposure to pool price volatility. 40 On July 29, 1998, the Director General of Electricity Supply proposed to the Minister for Science, Energy and Industry that the current structure of contracts for differences and compulsory trading via the pool at half-hourly clearing prices bid a day ahead be abolished. He proposed in their place, among other things: . the establishment of voluntary forwards and futures markets, organized by independent market operators and evolving in response to demand; . a short-term bilateral market operating from 24 to four-hours before a trading period; . a balancing market to enable the system operator to balance generation and demand and resolve any transmission constraints; . a settlement process for recovering imbalances between contracted and metered volumes with stronger incentives for being in balance; and . a Balancing and Settlement Code Panel to oversee governance of the short-term bilateral and balancing markets. The Minister for Science, Energy and Industry has recommended that the proposal be implemented by October 2000. Further definition of the proposal will be required before the effects of the changes can be evaluated. Legislation is being introduced to allow for the implementation of new trading arrangements. The Loy Yang B project sells its electrical energy through a centralized electricity pool, which provides for a system of generator bidding, central dispatch and a settlements system based on a clearing market for each half-hour of every day. The Victorian Power Exchange, operator and administrator of the pool, determines a system marginal price each half-hour. To mitigate exposure to price volatility of the electricity traded into the pool, the Loy Yang B project has entered into a number of financial hedges. From May 8, 1997 to December 31, 2000, approximately 53% to 64% of the plant output sold is hedged under vesting contracts with the remainder of the plant capacity hedged under the state hedge described below. Vesting contracts were put into place by the State Government of Victoria, Australia, between each generator and each distributor, prior to the privatization of electric power distributors, in order to provide more predictable pricing for those electricity customers that were unable to choose their electricity retailer. Vesting contracts set base strike prices at which the electricity will be traded. The parties to the vesting contracts make payments, which are calculated based on the difference between the price in the contract and the half-hourly pool clearing price for the element of power under contract. Vesting contracts are sold in various structures and are accounted for as electricity rate swap agreements. The state hedge is a long-term contractual arrangement based upon a fixed price commencing May 8, 1997 and terminating October 31, 2016. The State of Victoria guarantees the State Electricity Commission of Victoria's obligations under the state hedge. Power Marketing and Trading Activities When making sales under negotiated contracts, it is our policy to deal with investment grade parties. We hedge a portion of the electric output of our merchant plants in order to stabilize and enhance the operating revenues from merchant plants. When appropriate we manage the "spark spread," or margin, which is the spread between electric prices and fuel prices and use forward contracts, swaps, futures, or options contracts to achieve those objectives. Our power marketing and trading organization is divided into front-, middle- and back-office segments, with specified duties segregated for control purposes. The risk management personnel have a high level of knowledge of utility operations, fuel procurement, energy marketing and futures and options trading. We have systems in place which monitor real-time spot and forward pricing and perform option valuations. We also have a wholesale power scheduling group that operates on a 24-hour basis. Fuel Supply Contracts We seek to enter into long-term contracts to mitigate the risks of fluctuations in prices for coal, oil, gas and fuel transportation. We believe, however, that our financial condition will not be substantially adversely 41 affected by these fluctuations because our long-term contracts to sell power and steam typically are structured so that fluctuations in fuel costs will produce similar fluctuations in electric energy and/or steam revenues. The degree of linkage between these revenues and expenses varies from project to project, but generally permits the projects to operate profitably under a wide array of potential price fluctuation scenarios. Project Financing Each project we develop requires a substantial capital investment. The permanent project financing is often arranged immediately prior to the construction of the project. With limited exceptions, this debt financing is for approximately 50 to 80% of each project's costs and is structured on a basis that is non-recourse to us and our other projects. In addition, the collateral security for each project's financing generally has been limited to the physical assets, contracts and cash flow of that project and our ownership interests in that project. In general, each of our direct or indirect subsidiaries is organized as a legal entity separate and apart from us and our other subsidiaries. Any asset of any of these subsidiaries may not be available to satisfy our obligations or any of our other subsidiaries. However, unrestricted cash or other assets that are available for distribution by a subsidiary may, subject to applicable law and the terms of financing arrangements of these subsidiaries, be advanced, loaned, paid as dividends or otherwise distributed or contributed to us. The ability to arrange project financing and the cost of this financing are dependent upon numerous factors, including: . general economic and capital market conditions, . the credit attributes of a project, . conditions in energy markets, regulatory developments, credit availability from banks or other lenders, investor confidence in the industry, . Edison Mission Energy and other project participants, . the continued success of our other projects, and . provisions of tax and securities laws that are conducive to raising capital. We have developed extensive project and corporate financing expertise in the relevant markets of execution and seek to mitigate financing risks by developing flexible financing plans that allow for access to a number of alternate markets. Our financial exposure in any project is generally limited by contractual arrangement to our equity commitment, which is usually about 20 to 50% of our share of the aggregate project cost. In some cases, we provide additional credit support to projects in the form of debt service reserves, contingent equity commitments, revenue shortfall support or other arrangements designed to provide limited support. Permits and Approvals Because the process for obtaining initial environmental, siting and other governmental permits and approvals is complicated and lengthy, often taking a year or longer, we seek to obtain all permits, licenses and other approvals required for the construction and operation of a project, including siting, construction and environmental permits, rights-of-way and planning approvals, early in the development process for a project. See "--Regulatory Matters-- General." Construction, Operations & Maintenance and Management In the project implementation stage, we often provide construction management, start-up and testing services. The detailed engineering and construction of the projects typically are performed by outside contractors under fixed-price, turnkey contracts. Under these contracts, the contractor generally is required to 42 pay liquidated damages to us in the event of cost overruns, schedule delays or the project's failure to meet specified capacity, efficiency and emission standards. As a project goes into operation, operation and maintenance services are provided to the project by one of our operation and maintenance subsidiaries or another operation and maintenance contractor. The projects that we operated in 1998 achieved an average 97% availability. Availability is a measure of the weighted average number of hours each generator is available for generation as a percentage of the total number of hours in a year. An executive director generally manages the day-to-day administration of each project. Management committees comprised of a project's partners generally meet monthly or quarterly to review and manage the operating performance of the project. 43 Our Operating Power Generation Facilities Domestic As indicated in the table below, we currently own interests in 34 domestic operating projects in ten states. These operating projects consist of 13 natural gas-fired cogeneration projects, one coal-fired cogeneration project, seven coal-fired eligible facility projects, one waste coal project and 12 gas- fired eligible facility projects. All of the our domestic cogeneration projects, as well as the waste coal project, are qualifying facilities under the Public Utility Regulatory Policies Act. Our domestic operating projects have a total generating capacity of 15,003 MW, of which our net ownership share is 13,008 MW.
Electric Operation/ Capacity Primary Electric Type of Ownership Acquisition Project Location (in MW) Purchaser(2) Facility(3) Interest Date ------- ------------- -------- ---------------- ---------------- --------- ----------- American Bituminous(1) West Virginia 80 MPC Waste Coal 50% 1993 Auburndale(1) Florida 150 FPC Cogeneration/EWG 50% 1994 Bayonne New Jersey 165 JCP&L/PSE&G Cogeneration 0.38% 1989 Brooklyn Navy Yard New York 286 CE Cogeneration/EWG 50% 1996 Coalinga(1) California 38 PG&E Cogeneration 50% 1991 Commonwealth Atlantic Virginia 340 VEPCO EWG 50% 1992 Gordonsville(1) Virginia 240 VEPCO Cogeneration/EWG 50% 1994 Harbor(1) California 80 Pool EWG 30% 1989 Homer City(1) Pennsylvania 1,884 Pool EWG 100% 1999 Hopewell Virginia 356 VEPCO Cogeneration 25% 1990 Illinois Plants (1) Illinois 9,510 ComEd EWG 100%(4) 1999 (12 projects) James River Virginia 110 VEPCO Cogeneration 50% 1987 Kern River(1) California 300 SCE Cogeneration 50% 1985 March Point 1 Washington 80 PSE Cogeneration 50% 1991 March Point 2 Washington 60 PSE Cogeneration 50% 1993 Mid-Set(1) California 38 PG&E Cogeneration 50% 1989 Midway-Sunset(1) California 225 SCE Cogeneration 50% 1989 Nevada Sun-Peak Nevada 210 NVP EWG 50% 1991 Saguaro(1) Nevada 90 NVP Cogeneration 50% 1991 Salinas River(1) California 38 PG&E Cogeneration 50% 1991 Sargent Canyon(1) California 38 PG&E Cogeneration 50% 1991 Sycamore(1) California 300 SCE Cogeneration 50% 1988 Watson California 385 SCE Cogeneration 49% 1988
- -------- (1) Operated by Edison Mission Energy. (2) Electric purchaser abbreviations are as follows: CE Consolidated Edison Company of New York, Inc. ComEd Commonwealth Edison Company FPC Florida Power Corporation JCP&L Jersey Central Power & Light Company MPC Monongahela Power Company NVP Nevada Power Company Pool Regional electricity trading market
PG&E Pacific Gas & Electric Company PSE Puget Sound Energy, Inc. PSE&G Public Service Electric & Gas Company SCE Southern California Edison Company VEPCO Virginia Electric & Power Company
(3) All of the cogeneration projects are gas-fired facilities, except for the James River project, which uses coal. (4) We own 6,812 MW of the Illinois Plants and lease the remaining 2,698 MW from an unrelated party under a 33.75 year lease entered into by us in December 1999. 44 International As indicated in the table below, we own interests in 38 operating projects outside the United States. The total generating capacity of these facilities is 11,646 MW, of which our net ownership share is 9,048 MW.
Electric Operation/ Capacity Primary Electric Ownership Acquisition Project Location (in MW) Purchaser(/2/) Interest Date - ------- -------------- -------- ---------------- --------- ---------------- Contact (10 projects) New Zealand(6) 2,626 Pool 40% 1999, 2000 Derwent(1) England 214 SE(3) 33% 1995 Dinorwig(1) Wales 1,728 Pool 100% 1995 Doga(1) Turkey 180 TEAS 80% 1999 Ferrybridge(1) England 1,960 Pool 100% 1999 Ffestiniog(1) Wales 360 Pool 100% 1995 Fiddler's Ferry(1) England 1,926 Pool 100% 1999 Iberian Hy- Power I(1) (5 projects) Spain 43 FECSA 100%(7) 1992, 1996 Iberian Hy- Power II(1) (13 projects) Spain 43 FECSA 100% 1993, 1996 Kwinana(1) Australia 116 WP 100% 1996 Loy Yang B(1) Australia 1,000 Pool(4) 100% 1993, 1996, 1997 Paiton(1) Indonesia 1,230 PLN 40% 1999 Roosecote England 220 NORWEB(5) 100% 1992, 1999
- -------- (1) Operated by Edison Mission Energy. (2) Electric purchaser abbreviations are as follows: FECSA Fuerzas Electricas de Cataluma, S.A. PLN PT Perusahaan Listrik Negara NORWEB North Western Electricity Board SE Southern Electric plc WP Western Power TEAS Turkiye Elektrik Urehm, A.S. Pool Electricity trading market for England, Wales, Australia and New Zealand
(3) Sells to the pool with a long-term contract with SE. (4) Sells to the pool with a long-term contract with the State Electricity Commission of Victoria. (5) Sells to the pool with a long-term contract with NORWEB. (6) Minority interest in one project in Australia. (7) Minority interests are owned by third parties in three of the projects. Oil and Gas Investments In 1988, we formed a wholly-owned subsidiary, Mission Energy Fuel Company, to develop and invest in fuel interests. Since that time, Mission Energy Fuel Company has invested in a number of oil and gas properties and a production company. Oil and gas produced from the properties are generally sold at spot or short-term market prices. Four Star Edison Mission Energy and Texaco Inc. each owned approximately 50% of the stock of Four Star Oil & Gas Company at December 31, 1998. The underlying value of Four Star is attributable to production of oil and gas from nine producing properties. Our proportionate interest in net quantities of proved reserves at December 31, 1998 totaled 190.5 billion cubic feet of natural gas and 21.2 million barrels of oil. On November 1, 1999, we completed the sale of a portion of our interest in Four Star to a company in which we hold a 50% interest. Net proceeds from the sale of a portion of this investment were $20.5 million. During the fourth quarter of 1999, we recorded a pre-tax gain on sale of our investment of approximately $6 million dollars. Our net ownership interest in Four Star was reduced from 50% to 34% as a result of the transaction. During December 1999, we purchased additional shares of stock of Four Star, increasing our ownership to 35%. 45 Competition We compete with many other companies, including multinational development groups, equipment suppliers and other independent power producers, including affiliates of utilities, in selling electric power and steam. We also compete with electric utilities in obtaining the right to install new generating capacity. Over the past decade, obtaining a power sales contract with a utility has generally become a progressively more difficult, expensive and competitive process. Many power sales contracts are now awarded by competitive bidding, which both increases the costs of obtaining these contracts and decreases the chances of obtaining these contracts. We evaluate each potential project in an effort to determine when the probability of success is high enough to justify expenditures in developing a proposal or bid for the project. Amendments to the Public Utility Holding Company Act of 1935 made by the Energy Policy Act have increased the number of competitors in the domestic independent power industry by reducing restrictions applicable to projects that are not qualifying facilities under the Public Utility Regulatory Policies Act. Retail wheeling of power, which is the offering by utilities of unbundled retail distribution service, could also lead to increased competition in the independent power market. See "--Regulatory Matters--Retail Competition." Tax Sharing Agreements We are included in the consolidated federal income tax and combined state franchise tax returns of Edison International. We calculate our income tax provision on a separate company basis under a tax sharing arrangement with The Mission Group, which in turn has an agreement with Edison International. Tax benefits generated by us and used in the Edison International consolidated tax return are recognized by us without regard to separate company limitations. Employees and Offices At December 31, 1999, we employed 3,245 people, all of whom were full-time employees and approximately 636, 146 and 1,179 of whom were covered by collective bargaining agreements in the United Kingdom, Australia and the United States, respectively. We have never experienced a work stoppage, strike or labor dispute. We believe we have good relations with our employees. We lease our corporate headquarters in Irvine, California and our principal regional offices in London, Melbourne and Singapore. We also lease other smaller offices in the United States and certain foreign countries. Regulatory Matters General Our operations are subject to extensive regulation by governmental agencies in each of the countries in which we conduct operations. Our domestic projects are subject to energy, environmental and other governmental laws and regulations at the federal, state and local levels in connection with the development, ownership and operation of, and use of electric energy, capacity and related products, including ancillary services from, our projects. Federal laws and regulations govern, among other things, transactions by and with purchasers of power, including utility companies, the operations of a project and the ownership of a project. Under limited circumstances where exclusive federal jurisdiction is not applicable or specific exemptions or waivers from state or federal laws or regulations are otherwise unavailable, federal and/or state utility regulatory commissions may have broad jurisdiction over non- utility owned electric power plants. Energy-producing projects are also subject to federal, state and local laws and regulations that govern the geographical location, zoning, land use and operation of a project. Federal, state and local environmental requirements generally require that a wide variety of permits and other approvals be obtained before the commencement of construction or operation of an energy-producing facility and that the facility then operate in compliance with these permits and approvals. While we believe the requisite approvals for our existing projects have been obtained and that our business is operated in substantial compliance with applicable laws, we remain subject to 46 a varied and complex body of laws and regulations that both public officials and private parties may seek to enforce. Regulatory compliance for the construction of new facilities is a costly and time consuming process. Intricate and changing environmental and other regulatory requirements may necessitate substantial expenditures and may create a significant risk of expensive delays or significant loss of value in a project if the project is unable to function as planned due to changing requirements or local opposition. Each of our international projects is subject to the energy and environmental laws and regulations of the foreign country in which this project is located. The degree of regulation varies according to each country and may be materially different from the regulatory regime in the United States. U.S. Federal Energy Regulation Overview. The enactment of the Public Utility Regulatory Policies Act in 1978 and the adoption of regulations under this act by the Federal Energy Regulatory Commission provided incentives for the development of cogeneration facilities and of small power production facilities utilizing alternative or renewable fuels. The passage of the Energy Policy Act in 1992 further encouraged independent power production by providing limited exemptions from the Public Utility Holdings Company Act, but not from the Federal Power Act or state regulation, for exempt wholesale generators and foreign utility companies. A domestic electricity generating project must be a qualifying facility under the Federal Energy Regulatory Commission regulations in order to take advantage of selected rate and regulatory incentives provided by the Public Utility Regulatory Policies Act. Subject to limited exceptions, the Public Utility Regulatory Policies Act exempts: . owners of qualifying facilities from the Public Utility Holdings Company Act, . qualifying facilities from most provisions of the Federal Power Act and, . qualifying facilities from most provisions of state laws concerning rate, financial or organizational regulation, except under limited circumstances. In order to be a qualifying facility, a cogeneration facility must: (1) sequentially produce both useful thermal, such as steam, and electric energy, (2) meet specified operating standards and energy efficiency standards when oil or natural gas is used as a fuel source and (3) not be controlled, or more than 50% owned, by an electric utility, an electric utility holding company or an affiliate of these entities. A number of non-cogeneration facilities may also be qualifying facilities if they produce power from renewable energy, such as geothermal energy, or a waste source of fuel, such as waste coal, and meet the ownership restrictions discussed above. Before 1990, non-cogeneration qualifying facilities were subject to 30 MW or 80 MW size limits, depending upon their fuel source. In 1990, these limits were lifted for solar, wind, waste, and geothermal qualifying facilities, provided that applications for or notices of qualifying facility status were filed with the Federal Energy Regulatory Commission for these facilities on or before December 31, 1994, and provided, in the case of new facilities, the construction of these facilities commenced on or before December 31, 1999. Amendments made to the Public Utility Holdings Company Act by the Energy Policy Act provide that owners or operators of exempt wholesale generators and foreign utility companies will not be considered electric utility companies, and upstream owners will not be considered holding companies under the Public Utility Holdings Company Act. An exempt wholesale generator is an entity determined by the Federal Energy Regulatory Commission to be exclusively engaged, directly or indirectly, in the business of owning and/or operating specified eligible facilities and selling electric energy at wholesale, or, if located in a foreign country, 47 at wholesale or retail. A foreign utility company is, in general, an entity located outside the United States that owns or operates facilities used for the generation, distribution or transmission of electric energy for sale or the distribution at retail of natural or manufactured gas, but derives none of its income, directly or indirectly, from these activities within the United States. Under present federal law, we are not and will not be subject to regulation as a holding company under the Public Utility Holdings Company Act as long as the projects in which we have an interest are qualifying facilities, exempt wholesale generators or foreign utility companies or are subject to another exemption from regulation. See "Public Utility Holdings Company Act." Public Utility Regulatory Policies Act. The Public Utility Regulatory Policies Act provides two primary benefits to qualifying facilities. First, qualifying facilities are relieved of compliance with extensive federal and state regulations that control the development, financial structure and operation of an energy-producing project and the prices and terms on which wholesale energy may be sold by the project. Second, the Federal Energy Regulatory Commission regulations promulgated under the Public Utility Regulatory Policies Act require that electric utilities purchase electricity generated by qualifying facilities at a price based on the purchasing utility's avoided cost, and that the utilities sell back-up power to the qualifying facility on a non-discriminatory basis. The term "avoided cost" is defined by the Federal Energy Regulatory Commission regulations as the incremental cost to an electric utility of electric energy or capacity or both which, but for the purchase from the qualifying facility or qualifying facilities, this utility would generate itself or purchase from another source. The Federal Energy Regulatory Commission regulations also permit qualifying facilities and utilities to negotiate agreements for utility purchases of power at prices different than the utility's avoided costs. While public utilities are not explicitly required by the Public Utility Regulatory Policies Act to enter into long-term contracts, it has been common for long-term contracts to be negotiated in order, among other things, to facilitate the project financing of independent power facilities and to reflect the deferral by the utility of capital costs for new plant additions. However, increasing competition and the development of new power markets have resulted in a trend toward shorter term power contracts that would place greater risk on the project owner. We endeavor to develop our qualifying facility projects, monitor regulatory compliance by these projects and choose our customers in a manner that minimizes the risks of losing these projects' qualifying facility status. However, some factors necessary to maintain qualifying facility status are subject to risks of events outside of our control. For example, loss of a thermal energy customer or failure of a thermal energy customer to take required amounts of thermal energy from a cogeneration facility that is a qualifying facility could cause this facility to fail requirements regarding the level of useful thermal energy output. Upon the occurrence of this event, we would seek to replace the thermal energy customer or find another use for the thermal energy that meets the Public Utility Regulatory Policies Act's requirements. If one of the projects in which we have an interest were to lose its status as a qualifying facility, the project would no longer be entitled to the qualifying facility-related exemptions from regulation under the Public Utility Regulatory Policies Act and the Federal Power Act. This could subject the project to rate regulation as a public utility under the Federal Power Act and could result in Edison Mission Energy inadvertently becoming a public utility holding company by owning more than 10% of the voting securities of, or controlling, a facility that would no longer be exempt from the Public Utility Holdings Company Act. Loss of qualifying facility status may also trigger defaults under covenants to maintain qualifying facility status in the project's power sales agreements, steam sales agreements and financing agreements and result in termination, penalties or acceleration of indebtedness under these agreements. This loss of qualifying facility status may be on a retroactive or a prospective basis. If a power purchaser ceased taking and paying for electricity or sought to obtain refunds of past amounts paid due to the loss of qualifying facility status, we cannot assure you that the costs incurred in connection with the project could be recovered through sales to other purchasers. Moreover, our business and financial condition could be adversely affected if regulations or legislation were modified or enacted that changed the standards for maintaining qualifying facility status or that eliminated or reduced the benefits and exemptions currently enjoyed by qualifying facilities. If a project were to lose its qualifying facility status, we could attempt to avoid holding company status on a prospective basis by 48 qualifying the project as an exempt wholesale generator. However, assuming this changed status would be permissible under the terms of the applicable power sales agreement, rate approval from the Federal Energy Regulatory Commission would be required. In addition, the project would be required to cease selling electricity to any retail customers, in order to qualify for exempt wholesale generator status, and could become subject to additional state regulation. Loss of qualifying facility status on a retroactive basis could lead to, among other things, fines and penalties being levied against us, or claims by the utility customer for refund of payments previously made. Loss of qualifying facility status by one project could also, because of the Public Utility Regulatory Policies Act ownership restrictions, adversely affect the qualifying facility status of other projects having one or more of the same partners. In addition, under Section 26(b) of the Public Utility Holdings Company Act, any project contracts that are entered into in violation of the Public Utility Holdings Company Act may be determined by the courts or the SEC to be void. The Energy Policy Act. The passage of the Energy Policy Act in 1992 significantly expanded the options available to independent power producers with respect to their regulatory status. The Energy Policy Act created a new class of power producer, the exempt wholesale generator, that, like a qualifying facility, is not considered an electric utility company under the Public Utility Holding Company Act. Exempt wholesale generators may own facilities of any size, use any fuel source and be owned by utilities or non- utilities. Thus, in addition to qualifying facility status, an independent power producer now can also apply to the Federal Energy Regulatory Commission to be granted status as an exempt wholesale generator. Exempt wholesale generators, however, are not exempt from regulation by the Federal Energy Regulatory Commission or state public utility commissions. The effect of these amendments is to enhance the development of non-qualifying facilities that do not have to meet the fuel, production and ownership requirements of the Public Utility Regulatory Policies Act. We believe that the amendments benefit us by expanding our ability to own and operate facilities that do not qualify for qualifying facility status, but also result in increased competition because utilities and other companies, such as equipment suppliers, may now develop facilities that are not subject to the constraints of the Public Utility Holding Company Act. The Energy Policy Act also expanded the Federal Energy Regulatory Commission authority to order utilities to grant transmission access to qualifying facilities and exempt wholesale generators and lifted restrictions on ownership of foreign utilities by U.S. companies. Under the Energy Policy Act, foreign utility companies are also not electric utility companies under the Public Utility Holdings Company Act. Public Utility Holdings Company Act. Under the Public Utility Holdings Company Act, any corporation, partnership or other entity or organized group that owns, controls or holds with 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 registration with the SEC and regulation under the Public Utility Holdings Company Act, unless eligible for an exemption or unless an appropriate application is filed with, and an order is granted by, the SEC declaring it not to be a holding company. A registered public utility holding company regulated under the Public Utility Holdings Company Act is required to limit its utility operations to a single integrated utility system and to divest any other operations not functionally related to the operation of that utility system. Approval by the SEC is required for major financial commitments and other business dealings of the regulated holding company or its subsidiaries. As noted above, however, regulations have been adopted under the Public Utility Regulatory Policies Act and the Energy Policy Act providing that qualifying facilities, exempt wholesale generators and foreign utility companies are not public utility companies under the Public Utility Holdings Company Act. Accordingly, we are not regulated as a holding company under the Public Utility Holdings Company Act because the power generation facilities we own or in which we have investments are either qualifying facilities, exempt wholesale generators or foreign utility companies. All international projects and specified U.S. projects that we are currently developing or proposing to acquire will be non-qualifying facility independent power projects. We intend for each project to qualify as an exempt wholesale generator or as a foreign utility company. Loss of exempt wholesale generator or foreign utility company status, like loss of qualifying facility status, could also result in Edison Mission Energy becoming subject to registration and regulation as a public utility holding 49 company under the Public Utility Holdings Company Act and could trigger defaults under covenants in project agreements. Loss of exempt wholesale generator or foreign utility company status on a retroactive basis could lead to, among other things, fines and penalties and could cause specified project and other contracts to be void. Natural Gas Act. Nineteen of the domestic operating facilities that we own, operate or have investments in are fueled by natural gas. Under the Natural Gas Act, the Federal Energy Regulatory Commission has jurisdiction over the sale, transportation and storage of natural gas in interstate commerce. With respect to most transactions that do not involve the construction of pipeline facilities, regulatory authorization can be obtained on a self-implementing basis. However, pipeline rates for these services are subject to continuing Federal Energy Regulatory Commission oversight. Order No. 636, issued by the Federal Energy Regulatory Commission in April 1992, and affirmed in Orders 636A and 636B issued, respectively, in August and November 1992, required the restructuring of interstate natural gas pipeline sales and transportation services and changed the terms and conditions under which interstate pipelines provide transportation services, as well as the rates pipelines may charge for these services. The restructuring required by the rule included: (1) the separation of a pipeline's sales, transportation and storage services, (2) the prohibition against pipelines engaging in sales of gas, (3) the implementation of a straight fixed-variable rate design methodology under which all of a pipeline's fixed costs are recovered through its reservation charge, (4) the implementation of a capacity releasing mechanism under which holders of firm transportation capacity on pipelines can release that capacity for resale by the pipeline, and (5) the opportunity for pipelines to recover 100% of their prudently incurred costs associated with implementing the restructuring mandated by this rule. Federal Power Act. The Federal Power Act grants the Federal Energy Regulatory Commission exclusive ratemaking jurisdiction over wholesale sales of electricity in interstate commerce, including ongoing as well as initial rate jurisdiction. This ratemaking jurisdiction enables the Federal Energy Regulatory Commission to revoke or modify previously approved rates. These rates may be based on a cost-of-service approach or may, in competitive markets, be market-based. While qualifying facilities under the Public Utility Regulatory Policies Act generally are exempt from the ratemaking and some other provisions of the Federal Power Act, exempt wholesale generators and other non- qualifying facility independent power projects are subject to the Federal Power Act and to Federal Energy Regulatory Commission ratemaking jurisdiction, which may limit their flexibility in negotiations with power purchasers. However, since these projects would not be bound by the Public Utility Regulatory Policies Act's thermal energy use requirement, they have greater latitude in site selection and facility size. In addition, as noted above, we may own 100% of exempt wholesale generators. In addition, the Federal Power Act grants Federal Energy Regulatory Commission jurisdiction over the sale or transfer of jurisdictional facilities, including wholesale power sales contracts, and in some cases, jurisdiction over the issuance of securities or the assumption of specified liabilities. Currently, five of our operating projects, the Homer City, Nevada Sun-Peak, Brooklyn Navy Yard, Commonwealth Atlantic and Harbor projects, are subject to Federal Energy Regulatory Commission rate-making regulation under the Federal Power Act. Our future domestic non-qualifying facility independent power projects will also be subject to Federal Energy Regulatory Commission jurisdiction on rates. State Energy Regulation State public utility commissions have broad jurisdiction over non-qualifying facility independent power projects, including exempt wholesale generators, which are considered public utilities in many states. This jurisdiction often includes the issuance of certificates of public convenience and necessity and/or other certifications to construct, own and operate a facility, as well as regulation of organizational, accounting, financial and other corporate matters on an ongoing basis. Qualifying facilities may also be required to obtain 50 these certificates in some states. Several states that have restructured their electric industries require generators to register to provide electric service to customers. Many states are currently undergoing significant changes in their electric statutory and regulatory frameworks that result from restructuring the electric industries that may affect generators in those states. Although the Federal Energy Regulatory Commission generally has exclusive jurisdiction over the rates charged by a non-qualifying facility independent power project to its wholesale customers, a state's public utility commission has the ability, in practice, to influence the establishment of these rates by asserting jurisdiction over the purchasing utility's ability to pass through the resulting cost of purchased power to its retail customers. A state's public utility commission also has the authority to determine avoided costs for qualifying facilities and regulate the retail rates charged by qualifying facilities. In addition, states may assert jurisdiction over the siting and construction of independent power projects and, among other things, the issuance of securities, related party transactions and the sale or other transfer of assets by these facilities. The actual scope of jurisdiction over independent power projects by state public utility commissions varies from state to state. In addition, state public utility commissions may seek to modify, suspend or terminate a qualifying facility's power sales contract under limited circumstances. This could occur if the state public utility commission determined that the pricing mechanism of the power sales contract is unfairly high in light of the current prevailing market cost of power for the utility purchasing the power. In this instance, the state public utility commission may attempt to alter the terms of the power sales contract to reflect more accurately market conditions for the prevailing cost of power. While we believe that these attempts are not common and that state public utility commissions may not have any jurisdiction to modify the terms of wholesale power sales, we cannot assure you that the power sales contracts of our projects will not be subject to adverse regulatory actions. The California Public Utility Commission has authorized the electric utilities in California to monitor compliance by qualifying facilities with Public Utility Regulatory Policies Act rules and regulations. However, the United States Court of Appeals for the Ninth Circuit found in 1994 that a California Public Utility Commission program was preempted by the Public Utility Regulatory Policies Act to the extent it authorized utilities to determine that a qualifying facility was not in compliance with Public Utility Regulatory Policies Act rules and regulations, to then pay a reduced avoided cost rate and to take other action contrary to a facility's status as a qualifying facility. The court did, however, uphold reasonable monitoring of qualifying facility operating data. Other states, like New York and Virginia, have also instituted qualifying facility monitoring programs. We buy and transport the natural gas used at our domestic facilities through local distribution companies. State public utility commissions have jurisdiction over the transportation of natural gas by local distribution companies. Each state's regulatory laws are somewhat different; however, all generally require the local distribution companies to obtain approval from the relevant public utility commission for the construction of facilities and transportation services if the local distribution company's generally applicable tariffs do not cover the proposed transaction. Local distribution companies rates are usually subject to continuing public utility commission oversight. Recent Foreign Regulatory Matters On July 29, 1998, the British Director General of Electricity Supply proposed to the Minister for Science, Energy and Industry that the current structure of contracts for differences and compulsory trading via the pool at half-hourly clearing prices bid a day ahead be abolished. He proposed in their place, among other things: . the establishment of voluntary forwards and futures markets, organized by independent market operators and evolving in response to demand; . a short-term bilateral market operating from 24 to four-hours before a trading period; 51 . a balancing market to enable the system operator to balance generation and demand and resolve any transmission constraints; . a settlement process for recovering imbalances between contracted and metered volumes with stronger incentives for being in balance; . and a Balancing and Settlement Code Panel to oversee governance of the short-term bilateral and balancing markets. The Minister for Science, Energy and Industry has recommended that the proposal be implemented by October 2000. Further definition of the proposal will be required before the effects of the changes on our U.K. projects can be evaluated. Legislation is being introduced to allow for the implementation of new trading arrangements. The New Zealand Government has been undergoing a steady process of electric industry deregulation since 1987. Reform in the distribution and retail supply sector began in 1992 with legislation that deregulated electricity distribution and provided for competition in the retail electric supply function. The New Zealand Energy Market, established in 1996, is a voluntary competitive wholesale market which allows for the trading of physical electricity on a half-hourly basis. The Electricity Industry Reform Act, which was passed in July 1998, was designed to increase competition at the wholesale generation level by splitting up Electricity Company of New Zealand Limited, the large state-owned generator, into three separate generation companies. The Electricity Industry Reform Act also prohibits the ownership of both generation and distribution assets by the same entity. Transmission of Wholesale Power Generally, projects that sell power to wholesale purchasers other than the local utility to which the project is interconnected require the transmission of electricity over power lines owned by others, which is called "wheeling". The prices and other terms and conditions of transmission contracts are regulated by the Federal Energy Regulatory Commission when the entity providing the wheeling service is a jurisdictional public utility under the Federal Power Act. Until 1992, the Federal Energy Regulatory Commission's ability to compel wheeling was very limited, and the availability of voluntary wheeling service could be a significant factor in determining whether a site was viable for project development. The Federal Energy Regulatory Commission's authority under the Federal Power Act to require electric utilities to provide transmission service on a case by case basis to qualifying facilities, exempt wholesale generators, and other power generators was expanded substantially by the Energy Policy Act. Furthermore, in 1996 the Federal Energy Regulatory Commission issued a rulemaking order, Order 888, in which the Federal Energy Regulatory Commission asserted the power, under its authority to eliminate undue discrimination in transmission, to compel all jurisdictional public utilities under the Federal Power Act to file open access transmission tariffs consistent with a pro forma tariff drafted by the Federal Energy Regulatory Commission. The Federal Energy Regulatory Commission subsequently issued Orders 888-A, 888-B and 888-C to clarify the terms that jurisdictional transmitting utilities are required to include in their open access transmission tariffs. The Federal Energy Regulatory Commission also issued Order 889, which required those transmitting utilities to abide by specified standards of conduct when using their own transmission systems to make wholesale sales of power, and to post certain transmission information, including information about transmission requests and availability, on a publicly available computer bulletin board. Although the pro forma tariff does not cover the pricing of transmission service, Order 888 is expected to improve transmission access for independent power producers like us. A recent decision by the United States Court of Appeals for the Eighth Circuit has cast doubt on the extent of the Federal Energy Regulatory Commission's authority to require specified curtailment policies in the pro forma tariff. 52 Retail Competition In response to pressure from retail electric customers, particularly large industrial users, the state commissions or state legislatures of most states are considering, or have considered, whether to open the retail electric power market to competition. Retail competition is possible when a customer's local utility agrees, or is required, to unbundle its distribution service, from its transmission and generation service. The delivery of electric power through its local distribution lines and the provision of electric power from the utility's generating facilities or wholesale power purchases are examples of a local utility's distribution services and its transmission and generation service, respectively. Several state commissions and legislatures have issued orders or passed legislation requiring utilities to offer unbundled retail distribution service, which is called retail wheeling, beginning as early as 1998 and phasing in retail wheeling over the next several years. Other states are expected to move toward retail competition by 2000. The competitive pricing environment that will result from retail competition may cause utilities to experience revenue shortfalls and deteriorating creditworthiness. However, we expect that most, if not all, state plans will insure that utilities receive sufficient revenues, through a distribution surcharge if necessary, to pay their obligations under existing long-term power purchase contracts with qualifying facilities and exempt wholesale generators. On the other hand, qualifying facilities and exempt wholesale generators may be subject to pressure to lower their contract prices in an effort to reduce the stranded investment costs of their utility customers. We believe that, as a predominantly low cost producer of electricity, we will ultimately benefit from any increased competition that may arise from the opening of the retail market. Although our exempt wholesale generators are forbidden under the Public Utility Holdings Company Act from selling electric power in the retail market, our exempt wholesale generators could sell at wholesale to a power marketer which could resell at retail. Furthermore, qualifying facilities are permitted to market power directly to large industrial users that could not previously be served, because of local franchise laws or the inability to obtain retail wheeling. We also believe we will be an attractive wholesale supplier to power marketers serving the newly- open retail markets. Environmental Regulation The construction and operation of power projects are subject to environmental regulation by federal, state and local authorities in the United States and regulatory authorities with jurisdiction over the projects located outside the United States. We believe that, as of the date of this prospectus, we are in substantial compliance with environmental regulatory requirements and that maintaining compliance with current requirements will not materially affect our financial condition or results of operations. However, possible future developments, like more stringent environmental laws and regulations, could affect the costs and the manner in which we conduct our business. We cannot assure you that in this event we would be able to recover these increased costs from our customers or that our financial position and results of operations would not be materially adversely affected. Typically, environmental laws require a lengthy and complex process for obtaining licenses, permits and approvals prior to construction and operation of a project. Meeting all of the necessary requirements can delay or sometimes prevent the completion of a proposed project as well as require extensive modifications to existing projects, which may involve significant capital expenditures. In 1990, Congress passed amendments to the Clean Air Act that greatly expand the scope of federal regulations in several significant respects. One of our projects made capital expenditures of approximately $5.5 million, of which our share is $2.7 million, during 1999 in order to comply with the amended Clean Air Act. In addition, we plan to spend approximately $258 million to install upgrades to the environmental controls at the Homer City project during 2000 and 2001 in order to control sulfur dioxide and nitrogen oxide emissions. Similarly, we plan to upgrade the environmental controls at the former Commonwealth Edison plants to control 53 nitrogen oxide emissions. Provisions related to nonattainment, air toxins, permitting, enforcement and acid rain may affect our projects; however, final details of all these programs have not been issued by the United States Environmental Protection Agency and state agencies. The Comprehensive Environmental Response, Compensation, and Liability Act requires the cleanup of sites from which there has been a release or threatened release of hazardous substances. As of the date of this prospectus, we are not aware of any liability under this act; however, we cannot assure you that we will not incur this liability in the future. Legal Proceedings In February 1997, a civil action was commenced in the Superior Court of the State of California, Orange County, entitled The Parsons Corporation and PMNC v. Brooklyn Navy Yard Cogeneration Partners, L.P., Mission Energy New York, Inc. and B-41 Associates, L.P., Case No. 774980, in which plaintiffs assert general monetary claims under the Construction Turnkey Agreement in the amount of $136.8 million. Brooklyn Navy Yard has also filed an action entitled Brooklyn Navy Yard Cogeneration Partners, L.P. v. PMNC, Parsons Main of New York, Inc., Nab Construction Corporation, L.K. Comstock & Co., Inc. and The Parsons Corporation, in the Supreme Court of the State of New York, Kings County, Index No. 5966/97 asserting general monetary claims in excess of $13 million under the Construction Turnkey Agreement. On March 26, 1998, the Superior Court in the California action granted PMNC's motion for attachment in the amount of $43 million against Brooklyn Navy Yard and attached a Brooklyn Navy Yard bank account in the amount of $0.5 million. Brooklyn Navy Yard is appealing the attachment order. On the same day, the court stayed all proceedings in the California action pending the New York action. PMNC's motion to dismiss the New York action was denied by the New York Supreme Court and further denied on appeal in September 1998. On March 9, 1999, Brooklyn Navy Yard filed a motion for partial summary judgment in the New York action. The motion was denied and Brooklyn Navy Yard has appealed. The parties have agreed to suspend both the appeal and the commencement of discovery pending voluntary mediation. We agreed to indemnify Brooklyn Navy Yard Cogeneration and its partner from all claims and costs arising from or in connection with the contractor litigation. We believe that the outcome of this litigation will not have a material adverse effect on our consolidated financial position or results of operations. We experience other routine litigation in the normal course of our business. None of our pending litigation is expected to have a material adverse effect on our consolidated financial position or results of operations. See "--Regulatory Matters--Environmental Regulation." 54 MANAGEMENT Directors and Executive Officers Listed below are our current directors and executive officers and their positions.
Name Age Position - ---- --- -------- Alan J. Fohrer................. 49 President and Chief Executive Officer John E. Bryson................. 56 Chairman of the Board Bryant C. Danner............... 62 Director Thomas R. McDaniel............. 50 Director Robert M. Edgell............... 53 Executive Vice President and Division President of Edison Mission Energy, Asia Pacific William J. Heller.............. 43 Senior Vice President and Division President of Edison Mission Energy, Europe, Central Asia, Middle East and Africa Kevin M. Smith................. 41 Senior Vice President and Chief Financial Officer James V. Iaco, Jr.............. 55 Senior Vice President and Division President of Edison Mission Energy, Americas Georgia R. Nelson.............. 50 Senior Vice President and President of Midwest Generation EME, LLC Ronald L. Litzinger............ 40 Senior Vice President, Worldwide Operations Raymond W. Vickers............. 57 Senior Vice President and General Counsel
Business Experience Below is a description of the principal business experience during the past five years of each of the individuals named above and the name of each public company in which any director named above is a director. Mr. Fohrer has been President and Chief Executive Officer of Edison Mission Energy since January 2000. From 1998 to 2000, Mr. Fohrer served as Chairman of the Board. From 1993 to 1998, Mr. Fohrer served as Vice Chairman of the Board. Mr. Fohrer has been Executive Vice President and Chief Financial Officer of Edison International since June 1995. Mr. Fohrer was Executive Vice President and Chief Financial Officer of Southern California Edison from June 1995 until January 2000. Effective February 1996 and June 1995, Mr. Fohrer also served as Treasurer of Southern California Edison and Edison International, respectively, until August 1996. Mr. Fohrer was Senior Vice President, Treasurer and Chief Financial Officer of Edison International, and Senior Vice President and Chief Financial Officer of Southern California Edison from January 1993 until May 1995. Mr. Fohrer was Edison Mission Energy's interim Chief Executive Officer between May 1993 and August 1993. From 1991 until 1993, Mr. Fohrer was Vice President, Treasurer and Chief Financial Officer of Edison International and Southern California Edison. Mr. Bryson has been Chairman of the Board of Edison Mission Energy since January 2000. Mr. Bryson has been President of Edison International since January 2000 and Chairman of the Board and Chief Executive Officer of Edison International since 1990. Mr. Bryson served as Chairman of the Board, Chief Executive Officer and a Director of Southern California Edison from 1990 to January 2000. Mr. Bryson is a director of The Boeing Company and The Times Mirror Company. 55 Mr. McDaniel has been a Director of Edison Mission Energy since February 2000. Mr. McDaniel has been President, Chief Executive Officer and a director of Edison Capital, a wholly owned subsidiary of Edison International, since September 1987. Mr. Danner has been a Director of Edison Mission Energy since May 1993. Mr. Danner has been Executive Vice President and General Counsel of Edison International and Southern California Edison since June 1995. Mr. Danner was Senior Vice President and General Counsel of Edison International and Southern California Edison from July 1992 until May 1995. Mr. Edgell has been Executive Vice President of Edison Mission Energy since April 1988. Mr. Edgell was named Division President of Edison Mission Energy's Asia Pacific region in January 1995. Mr. Heller has been our Senior Vice President and Division President of Edison Mission Energy, Europe, Central Asia, Middle East and Africa since February 2000. Mr. Heller was Senior Vice President of Strategic Planning and New Business Development for Edison International from January 1996 until February 2000. Prior to joining Edison International, Mr. Heller was with McKinsey and Company, Inc from 1982 to 1995, serving as principal and head of McKinsey's Los Angeles Energy Practice from 1991 to 1995. Mr. Smith has been Senior Vice President and Chief Financial Officer of Edison Mission Energy since May 1999. Mr. Smith served as Vice President and Treasurer of Edison Mission Energy and Regional Vice President, Americas region, from March 1998 until April 1999. Mr. Smith served as Treasurer of Edison Mission Energy from 1992 to 2000. Mr. Iaco has been Senior Vice President of Edison Mission Energy since January 1994 and Division President of Edison Mission Energy's Americas region since January 1998. Mr. Iaco served as Chief Financial Officer from January 1994 to May 1999. From September 1993 until December 1993, Mr. Iaco was self- employed and provided consulting services, specializing in restructuring, finance, crisis management and other management services. From October 1992 until September 1993, Mr. Iaco served as senior vice president and chief financial officer of Phoenix Distributors, Inc., a distributor of industrial gas and welding supplies. Ms. Nelson has been President of Midwest Generation EME, LLC since May 1999. From January 1996 until June 1999, Ms. Nelson was Senior Vice President, Worldwide Operations. Ms. Nelson was Division President of Edison Mission Energy's Americas region from January 1996 to January 1998. Prior to joining Edison Mission Energy, Ms. Nelson served as Senior Vice President of Southern California Edison from June 1995 until December 1995 and Vice President of Southern California Edison from June 1993 until May 1995. From 1992 to 1993, Ms. Nelson served as a Special Assistant to the Chairman of Edison International. Mr. Litzinger has been Senior Vice President, Worldwide Operations, since June 1999. Mr. Litzinger served as Vice President-O&M Business Development from December 1998 to May 1999. Mr. Litzinger has been with Edison Mission Energy since November 1995 serving as both Regional Vice President, O&M Business Development and Manager, O&M Business Development until December 1998. Prior to joining Edison Mission Energy, Mr. Litzinger was a Reliability Supervisor with Texaco Refining and Marketing, Inc. from March 1995 to October 1995 and prior to that held numerous management positions with Southern California Edison since June 1986. Mr. Vickers has been Senior Vice President and General Counsel of Edison Mission Energy since March 1999. Prior to joining Edison Mission Energy, Mr. Vickers was a partner with the law firm Skadden, Arps, Slate, Meagher & Flom LLP concentrating on international business transactions, particularly cross- border capital markets and investment transactions, project implementation and finance. Mr. Vickers originally joined Skadden, Arps, Slate, Meagher & Flom LLP in 1989 as resident partner in the Hong Kong office. 56 DESCRIPTION OF THE NOTES The form and terms of the exchange notes and the original notes are identical in all material respects, except that transfer restrictions and registration rights applicable to the original notes do not apply to the exchange notes. For purposes of this summary, references to "Edison Mission Energy", "we", "our", "ours" and "us" do not include any of our direct or indirect subsidiaries or affiliates. The following description is a summary of material provisions of the indenture and the notes. It is not a complete description of the notes and is subject to, and qualified in its entirety, by reference to the notes and the indenture. We urge you to read the indenture and the notes because they, and not this description, define your rights as a holder of these notes. General We issued the original notes and will issue the exchange notes under the indenture and the first supplemental indenture, each dated as of June 28, 1999, between us and The Bank of New York, as trustee. References to the notes include the exchange notes unless the context otherwise requires. The notes are unsecured senior obligations and rank equally in right of payment with all our other unsubordinated indebtedness. Because we conduct substantially all our business through numerous subsidiaries, all existing and future liabilities of our direct and indirect subsidiaries are and will be effectively senior to the notes. The notes are not guaranteed by, or otherwise obligations of, our project subsidiaries and project affiliates, or our other direct and indirect subsidiaries and affiliates. We issued the original notes in aggregate principal amount of $600,000,000. The notes will mature on June 15, 2009 and will bear interest at the rate of 7.73% per annum. We will pay interest on the notes on each June 15 and December 15, to the holders of record on the immediately preceding June 1 and December 1. Interest on the notes will accrue from the most recent date to which interest has been paid. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. The interest rate on the notes may be increased under the circumstances described in "Exchange Offer--Registration Rights." The original notes are, and the exchange notes will be, in denominations of $100,000 and any integral multiple of $1,000 in excess of $100,000. We may issue additional series of notes under the indenture from time to time in accordance with the conditions described in this prospectus. Redemption We may redeem the notes at any time, in whole or in part, at a redemption price equal to: . the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present values of the Remaining Scheduled Payments on the 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 accrued and unpaid interest, if any, on the principal amount of notes being redeemed to the redemption date. "Remaining Scheduled Payments" means, with respect to each note that we are redeeming, the remaining scheduled payments of the principal and interest on that note that would be due after the related redemption date if we were not redeeming that note. 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 that note to the redemption date. 57 "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 Treasury 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. "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 us. If Credit Suisse First Boston Corporation ceases to be a primary U.S. Government securities dealer, we will appoint in its place another nationally recognized investment banking firm that is a primary U.S. Government securities dealer. We will give notice to The Depository Trust Company and holders of definitive notes at least 30 days, but not more than 60 days, before we redeem the notes. If we redeem only some of the notes, DTC's practice is to choose by lot the amount to be redeemed from the notes held by each of its participating institutions. DTC will give notice to these participants, and these participants will give notice to any street name holders of any indirect interests in the notes according to arrangements among them. These notices may be subject to statutory or regulatory requirements. We will not be responsible for giving notice of a redemption of the notes to anyone other than DTC and holders of definitive notes. Covenants Restrictions on Liens We may not pledge, mortgage, hypothecate or permit to exist any mortgage, pledge or other lien upon any property at any time directly owned by us to secure any indebtedness for money borrowed which is incurred, issued, assumed or guaranteed by us, without providing for the notes to be equally and ratably secured with any and all of this indebtedness and with any other indebtedness similarly entitled to be equally and ratably secured. However, this restriction does not apply to, or prevent the creation or existence of: (1) liens existing at the original date of issuance of the notes; (2) purchase money liens which do not exceed the cost or value of the purchased property; (3) other liens not to exceed 10% of our Consolidated Net Tangible Assets; and (4) 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 the indebtedness, secured by liens described in clauses (1) through (3) above. 58 "Consolidated Net Tangible Assets" means, as of any date of determination, the total amount of all of our assets, determined on a consolidated basis in accordance with generally accepted accounting principles as of that date, less the sum of (a) our consolidated current liabilities, determined in accordance with generally accepted accounting principles and (b) our assets that are properly classified as intangible assets in accordance with generally accepted accounting principles, except for any intangible assets which are distribution or related contracts with an assignable value. If we pledge, mortgage or hypothecate any property at any time directly owned by us to secure any indebtedness, other than as permitted by the indenture, we will give prior written notice of this pledge, mortgage or hypothecation to the trustee, who will give notice to the holders of notes. We will also, prior to or simultaneously with this pledge, mortgage or hypothecation, effectively secure all the notes equally and ratably with this indebtedness. This covenant will not restrict the ability of our subsidiaries and affiliates to pledge, mortgage, hypothecate or permit to exist any mortgage, pledge or lien upon their assets, in connection with project financings or otherwise. Merger, Consolidation, Sale, Lease or Conveyance We may not merge or consolidate with or into any other person and we may not sell, lease or convey all or substantially all of our assets to any person, unless; (1) either (A) we are the continuing corporation, or (B) the successor corporation or the person that acquires all or substantially all of our assets is a corporation organized and existing under the laws of the United States or a state of the United States or the District of Columbia and expressly assumes all our obligations under the notes and the indenture, (2) immediately after this merger, consolidation, sale, lease or conveyance, there is no default or event of default under the indenture, (3) if, as a result of the merger, consolidation, sale, lease or conveyance, any or all of our property would become the subject of a lien that would not be permitted by the indenture, we secure the notes equally and ratably with the obligations secured by that lien and (4) we deliver or cause 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 the indenture. The meaning of the term "all or substantially all of the assets" has not been definitely established and is likely to be interpreted by reference to applicable state law if and at the time the issue arises and will be dependent on the facts and circumstances existing at the time. Except for a sale of our assets substantially as an entirety as described above, we may not sell or otherwise dispose of any assets, if, on a pro forma basis, the aggregate net book value of all these sales during the most recent 12-month period would exceed 10% of our Consolidated Net Tangible Assets computed as of the end of the most recent quarter preceding this sale. This restriction on the sale of assets does not apply to assets we are required to sell to conform with governmental regulations and the sale of short-term, readily marketable investments purchased for cash management purposes with funds not from the proceeds of other asset sales. However, any sale will be disregarded for purposes of this 10% limitation if the proceeds are invested in assets in similar or related lines of our business. We may also sell or otherwise dispose of assets in excess of this 10% limitation if we retain the proceeds from these sales or dispositions, which are not 59 reinvested as provided above, as cash or cash equivalents or if we use the proceeds from these sales to purchase and retire notes or indebtedness ranking equal in right of payment to the notes or indebtedness of our subsidiaries. Reporting Obligations We will furnish or cause to be furnished to holders of notes copies of our annual reports and of the information, documents and other reports that we are required to file with the SEC under Section 13 or 15(d) of the Exchange Act within 15 days after we file them with the SEC. Additional Covenants Subject to limited exceptions and qualifications, we agreed in the indenture to do, among other things, the following: (1) deliver to the trustee copies of all reports that we file with the SEC; (2) deliver to the trustee annual officers' certificates with respect to our compliance with our obligations under the indenture; (3) maintain our corporate existence, subject to the provisions described above relating to mergers and consolidations; and (4) pay our taxes when due, except when we are contesting these taxes in good faith. Modification of the Indenture The indenture contains provisions permitting us and the trustee, with the consent of the holders of at least a majority in aggregate principal amount of notes then outstanding, to modify or amend the indenture or the rights of the holders of notes. However, no modification or amendment may, without the consent of the holder of each outstanding note affected by this modification or amendment: (1) change the stated maturity of the principal of, or extend the time of payment of interest on, any note; (2) reduce the principal amount of, or interest on, any note; (3) change the place or currency of payment of principal of, or interest on, any note; (4) reduce any amount payable upon the redemption of any note; or (5) impair the right to institute suit for the enforcement of any payment on or with respect to any note. In addition, without the consent of the holders of all notes then outstanding, no modification or amendment may: (1) reduce the percentage in principal amount of outstanding notes the consent of whose holders is required for modification or amendment of the indenture; (2) reduce the percentage in principal amount of outstanding notes necessary for waiver of compliance with specified provisions of the indenture or for waiver of specified defaults; or (3) modify these provisions with respect to modification and waiver. The holders of at least a majority in principal amount of the outstanding notes may waive compliance by us with restrictive provisions of the indenture. The holders of a majority in principal amount of the outstanding notes may waive any past default under the indenture, except a default in the payment of principal or interest and specified covenants and provisions of the indenture which cannot be amended without the consent of the holder of each outstanding note affected. We and the trustee may, without the consent of any holder of notes, amend the indenture and the notes for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision of the 60 indenture, or in any manner that we and the trustee may determine is not inconsistent with the indenture and the notes and will not adversely affect the interest of any holder of notes. Events of Default Each of the following will be an event of default under the indenture: (1) our failure to pay any interest on any note when due, and the default continues for 30 days; or (2) our failure to pay principal or premium when due; or (3) our failure to perform any other covenant in the notes or the indenture for a period of 90 days after the trustee or the holders of at least 25% in aggregate principal amount of the notes gives us written notice of our failure to perform; or (4) an event of default occurring under any of our instruments under which there may be issued, or by which there may be secured or evidenced, any indebtedness for money borrowed that has resulted in the acceleration of this indebtedness, or any default occurring in payment of any indebtedness at final maturity, and after the expiration of any applicable grace periods, other than (A) indebtedness which is payable solely out of the property or assets of a partnership, joint venture or similar entity of which we or any of our subsidiaries or affiliates is a participant, or which is secured by a lien on the property or assets owned or held by this entity, without further recourse to or liability of us; or (B) indebtedness not exceeding $20,000,000; or (5) one or more nonappealable final judgments, decrees or orders of any court, tribunal, arbitrator, administrative or other governmental body or similar entity for the payment of money aggregating more than $20,000,000 shall be rendered against us, excluding the amount covered by insurance, and shall remain undischarged, unvacated and unstayed for more than 90 days, except while being contested in good faith by appropriate proceedings; or (6) specified events of bankruptcy, insolvency or reorganization in respect of us. If any event of default, other than an event of default due to specified events of bankruptcy, insolvency or reorganization, has occurred and is continuing, either the trustee or the holders of not less than 25% in principal amount of the notes outstanding under the indenture may declare the principal of all notes under the indenture and interest accrued on the notes to be due and payable immediately. The trustee will be entitled, subject to the duty of the trustee during a default to act with the required standard of care, to be indemnified by the holders of notes before proceeding to exercise any right or power under the indenture at the request of these holders. Subject to these provisions in the indenture for the indemnification of the trustee and other limitations, the holders of a majority in principal amount of the notes then outstanding may 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. No holder of notes may institute any action against us under the indenture, except actions for payment of overdue principal or interest, unless: (1) such holder previously has given the trustee written notice of the default and continuance of this default; (2) the holders of not less than 25% in principal amount of the notes then outstanding have requested the trustee to institute this action and offered the trustee reasonable indemnity; (3) the trustee has not instituted this action within 60 days of the request; and (4) the trustee has not received direction inconsistent with this written request from the holders of a majority in principal amount of the notes then outstanding. 61 Defeasance and Covenant Defeasance Defeasance We 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 we have made the deposit described below, and the provisions of the indenture will cease to be applicable with respect to the notes, except for, among other matters, specific obligations to register the transfer of or exchange of the notes, to replace stolen, lost or mutilated notes, to maintain paying agencies and to hold funds for payment in trust, if (1) we have deposited with the trustee, in trust, money and/or selected U.S. government obligations that, through the payment of interest and principal in respect of these obligations in accordance with their terms, will provide money in an amount sufficient to pay the principal of, premium, if any, and accrued interest on the notes at the time these payments are due in accordance with the terms of the indenture, (2) we have delivered to the trustee (A) an opinion of counsel to the effect that note holders will not recognize income, gain or loss for federal income tax purposes as a result of the defeasance 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 this deposit, defeasance and discharge had not occurred, which opinion of counsel must be based upon a ruling of the Internal Revenue Service to the same effect or a change in applicable federal income tax law or related treasury regulations after the date of the indenture and (B) an opinion of counsel to the effect that the defeasance trust does not constitute an "investment company" within the meaning of the Investment Company Act of 1940 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, (3) immediately after giving effect to the 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, will have occurred and be continuing on the date of this deposit or during the period ending on the 123rd day after the date of this deposit, and this deposit shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which we are a party or by which we are bound and (4) if at the time the notes are listed on a national securities exchange, we have delivered to the trustee an opinion of counsel to the effect that the notes will not be delisted as a result of this deposit and discharge. Defeasance of Specified Covenants and Specified Events of Default The provisions of the indenture will cease to be applicable with respect to: (1) the covenants described in "--Covenants", other than those with respect to the maintenance of our existence and those described under the first paragraph of the caption "--Covenants--Merger, Consolidation, Sale, Lease or Conveyance", (2) clause (3) in "--Events of Default" with respect to these covenants and (3) clauses (4) and (5) in "--Events of Default" upon (A) the deposit with the trustee, in trust, of money and/or U.S. government obligations that through the payment of interest and principal in respect of these obligations in accordance with their terms will provide money in an amount sufficient to pay the principal of, premium, if any, and accrued interest on the notes, (B) the satisfaction of the conditions described in clauses (2)(B), (3) and (4) of the preceding paragraph and (C) our delivery to the trustee of an opinion of counsel to the effect that, among other things, the holders of the notes will not recognize income, gain or loss for federal income tax purposes as a 62 result of this deposit and defeasance 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 this deposit and defeasance had not occurred. Defeasance and Other Events of Default If we exercise our option to omit compliance with specified covenants and provisions of the indenture as described in the immediately preceding paragraph and the notes are declared due and payable because of the occurrence of an event of default that remains applicable, the amount of money and/or U.S. government obligations on deposit with the trustee may not be sufficient to pay amounts due on the notes at the time of acceleration resulting from this event of default. In this event, we will remain liable for these payments. Book-Entry; Delivery and Form The certificates representing the exchange notes will be issued in fully registered form. Except as described below, the exchange notes initially will be represented by one or more global notes, in definitive, fully registered form without interest coupons. The global notes 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, thus 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 notes, DTC or its custodian will credit, on its internal system, the respective principal amounts of the exchange notes represented by the global notes to the accounts of persons who have accounts with DTC. Ownership of beneficial interests in the global notes 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 notes 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 notes, DTC or the nominee, as the case may be, will be considered the sole record owner or holder of the exchange notes represented by the global notes for all purposes under the indenture and the exchange notes. No beneficial owners of an interest in the global notes 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 notes will not: . be entitled to have the exchange notes represented by the global notes registered in their names, . receive or be entitled to receive physical delivery of certificated notes in definitive form, and . be considered to be the owners or holders of any exchange notes under the global notes. 63 Accordingly, each person owning a beneficial interest in the global notes 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 notes under the global notes. We understand that under existing industry practice, in the event an owner of a beneficial interest in the global notes desires to take any action that DTC, as the holder of the global notes, is 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 notes represented by the global notes will be made to DTC or its nominee, as the case may be, as the registered owner of the global notes. 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 notes 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 notes will credit participants' accounts with payments in amounts proportionate to their respective beneficial ownership interests in the principal amount of the global notes, 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 notes 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 notes in certificated form for any reason, including to sell notes to persons in states which require the delivery of the notes or to pledge the notes, a holder must transfer its interest in the global notes in accordance with the normal procedures of DTC and the procedures described in the indenture. Unless and until they are exchanged in whole or in part for certificated exchange notes in definitive form, the global notes 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 notes registered in the name of DTC or its nominee will be entitled to be issued, upon request, exchange notes in definitive certificated form. DTC has advised us that DTC will take any action permitted to be taken by a holder of notes, including the presentation of notes for exchange as described below, only at the direction of one or more participants to whose account the DTC interests in the global notes are credited. Further, DTC will take any action permitted to be taken by a holder of notes only in respect of that portion of the aggregate principal amount of notes 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 notes 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 notes may, upon request to the trustee, exchange the beneficial interest for exchange notes in the form of certificated notes. Upon any issuance of certificated notes, the trustee is required to register the certificated notes 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 notes, and a successor depositary is not appointed by us within 90 days, we will issue certificated notes in exchange for the global notes. 64 EXCHANGE OFFER; REGISTRATION RIGHTS As part of the sale of the original notes, and under a registration rights agreement dated as of June 23, 1999, we agreed with the initial purchasers, for the benefit of the holders of the notes, that we will file and use our reasonable best efforts to cause to become effective, at our cost, a registration statement with respect to a registered offer to exchange the original notes for the exchange notes which are in all material respects substantially identical to the original notes. Once this registration statement is declared effective, we will offer the exchange notes in return for surrender of the original notes. This offer will remain open for no less than 30 days after the date notice of the exchange offer is mailed to the original note holders. For each original note surrendered to us under the exchange offer, the original note holder will receive exchange notes in an equal principal amount. Interest on each exchange note will accrue from the last date on which interest was paid on the original note so surrendered. In the event that we determine in good faith that applicable interpretations of the staff of the SEC or other circumstances specified in the registration rights agreement do not permit us to effect this exchange offer, we will, at our cost, use our reasonable best efforts, subject to customary representations and agreements of the note holders, to have a shelf registration statement covering resale of the original notes declared effective and kept effective until,June 23, 2001 subject to specified exceptions. We will, in the event of a shelf registration, provide to each note holder copies of the prospectus, notify each note holder when a registration statement for the notes has become effective and take other actions as are appropriate to permit resale of the notes. In the event that this exchange offer is not commenced or this registration statement is not declared effective by March 24, 2000, the annual interest rate on the notes will increase by one half of one percent (50 basis points) effective on the 271st day following, which increase will remain in effect until the date on which this exchange offer is commenced and the registration statement will have become effective. Each note holder, other than specified holders, who wishes to exchange its original notes for exchange notes in the exchange offer will be required to represent that: . any exchange notes to be received by it will be acquired in the ordinary course of business and . that at the time of the commencement of the exchange offer it will have no arrangement with any person to participate in the distribution, within the meaning of the Securities Act, of the exchange notes. A note holder that sells its notes under 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 several of the civil liability provisions under the Securities Act in connection with this sale and . will be required to agree in writing to be bound by the provisions of the registration rights agreement which are applicable to this note holder, including specified indemnification obligations. 65 MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following summary describes material United States federal income tax considerations that may be relevant to beneficial owners of the notes. The summary is based on the Internal Revenue Code of 1986, as amended, and regulations, rulings and judicial decisions as of the date of this prospectus, 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 notes as a hedge against currency risks or as part of a straddle, synthetic security, conversion transaction or other integrated investment comprised of the notes and one or more other investments. The summary is applicable only to purchasers that acquire the notes under the offering at the initial offering price and who will hold the notes 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 notes 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. As used in this prospectus, the term "United States Holder" means a beneficial owner of a note that is . a citizen or resident of the United States for United States federal income tax purposes, . a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia, . an estate the income of which is subject to United States federal income tax without regard to its source or . 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 note that is not a United States Holder. United States Holders The Exchange For United States federal income tax purposes, a beneficial owner of a note will not recognize any taxable gain or loss on the exchange of the original notes for exchange notes under the exchange offer, and a United States Holder's tax basis and holding period in the exchange notes will be the same as in the original notes. Stated Interest on Exchange Notes Stated interest on an exchange note 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 Note Upon the sale, exchange, redemption, retirement or other disposition of an exchange note, 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 this United States Holder's adjusted tax basis in the exchange note. A United States Holder's tax basis in an exchange note will, in general, be the United States Holder's basis in the note exchanged for the original note. This gain or loss will be capital gain or loss. Capital gain recognized by an individual investor upon a disposition of an exchange note that has been held for more than 12 months will generally be subject to a maximum tax rate of 20% or, in the case of an exchange note that has been held for 12 months or less, will be subject to tax at ordinary income tax rates. 66 Market Discount United States Holders other than original purchasers of the notes in the offering of the original notes should be aware that the sale of the exchange notes 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 note, after the original offering, at a "market discount", i.e., at an amount less than the adjusted issue price of the note as determined on the date of this purchase, exceeding a statutorily-defined de minimis amount, and subsequently recognizes gain upon a disposition, including a partial redemption, of the exchange note received in exchange for an original note, the lesser of such gain or the portion of the market discount that accrued while the original note and exchange note 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 note 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 note until the United States Holder disposes of such note in a taxable transaction. If a holder of a note elects to include market discount in income currently, both of the preceding 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 notes to any Non- United States Holder will not be subject to United States federal income, branch profits or withholding tax provided that . 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 Edison Mission Energy entitled to vote, . the Non-United States Holder is not a bank receiving interest under a loan agreement entered into in the ordinary course of its trade or business, . the Non-United States Holder is not a controlled foreign corporation that is related to Edison Mission Energy (directly or indirectly) through stock ownership, . such interest payments are not effectively connected with a United States trade or business and . certain certification requirements are met. Such certification will be satisfied if the beneficial owner of the exchange note 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) this beneficial owner files such form with the withholding agent or (y) in the case of an exchange note 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 note, such financial institution certifies to Edison Mission Energy or its agent under penalties of perjury that this 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 of such statement; and (b) a Non-United States Holder will not be subject to United States federal income or branch profits tax on gain realized on the sale, exchange, redemption, retirement or other disposition of an exchange note, unless; . the gain is effectively connected with a trade or business carried on by this holder within the United States or, if a treaty applies, and the holder complies with applicable certification and other requirements to claim treaty benefits, is generally attributable to a United States permanent establishment maintained by the holder, or . the holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and specified other requirements are met. 67 The Internal Revenue Service has recently amended the certification rules described in clause (a) above. Non-United States Holders should be aware that withholding certificates or statements that are valid on December 31, 1999 may be treated as valid until the earlier of their expiration or December 31, 2000. Certificates or statements received under the currently effective rules will fail to be effective after December 31, 2000. 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 notes 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: . in the case of a United States Holder, the Holder fails to provide an accurate taxpayer information number, or fails to certify that this Holder is not subject to backup withholding or fails to report all interest and dividends required to be shown on its United States federal income tax returns, or . in the case of a Non-United States Holder, the Holder fails to provide the certification on IRS Form W-8 described above or otherwise does not provide evidence of exempt status. A number of United States Holders, including, among others, corporations, and Non-United States Holders that comply with specified 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 notes should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining this exemption. On October 6, 1997, new Treasury Regulations were issued that generally modify the information reporting and backup withholding rules applicable to specified payments made after December 31, 2000. In general, the new regulations would not significantly alter the present rules discussed above, except in special situations. 68 PLAN OF DISTRIBUTION Each broker-dealer that receives exchange notes for its own account in the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. 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 notes received in exchange for original notes where the original notes were acquired as a result of market-making activities or other trading activities. We have 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 notes may be required to deliver a prospectus. We will not receive any proceeds from any sale of exchange notes by broker- dealers. Exchange notes 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 notes 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 notes. Any broker-dealer that resells exchange notes 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 notes may be deemed to be an underwriter within the meaning of the Securities Act, and any profit on the resale of exchange notes and any commission or concessions received by those persons may be deemed to be underwriting compensation under the Securities Act. Any broker-dealer that resells notes that were received by it for its own account in the exchange offer and any broker-dealer that participates in a distribution of those notes may be deemed to be an underwriter within the meaning of the Securities Act and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, including the delivery of a prospectus that contains information with respect to any selling holder required by the Securities Act in connection with any resale of the exchange notes. 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. Furthermore, any broker-dealer that acquired any of its original notes directly from us: . may not rely on the applicable interpretation of the staff of the SEC's position contained in Exxon Capital Holdings Corp., SEC no-action letter (April 13, 1988), Morgan, Stanley & Co. Inc., SEC no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1983) and . must also be named as a selling noteholder in connection with the registration and prospectus delivery requirements of the Securities Act relating to any resale transaction. For a period of 180 days after the expiration date of the exchange offer, we 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. We have agreed to pay all expenses incident to the exchange offer, including the expenses of one counsel for the holders of the notes, other than commissions or concessions of any brokers or dealers. We will indemnify the holders of the notes, 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) and 15(d) of the Securities 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 69 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 Energy 18101 Von Karman Avenue, Suite 1700 Irvine, California 92612 (949) 752-5588 Attention: Corporate Secretary LEGAL MATTERS The legality of the exchange notes will be passed upon for Edison Mission Energy by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. EXPERTS The consolidated financial statements of Edison Mission Energy and subsidiaries included in Edison Mission Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 1998, which is incorporated by reference in this prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The audited special-purpose combined accounts of Fiddlers Ferry and Ferrybridge C Power Stations for the year ended March 30, 1997, the year ended March 29, 1998 and the nine-month period ended January 3, 1999 incorporated in this prospectus by reference to the two reports on 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. 70 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 , 2000. However, you should realize that our affairs may have changed since the date of this prospectus. --------------- TABLE OF CONTENTS
Page ---- Forward-Looking Statements............................................... i Available Information.................................................... i Incorporation of Documents by Reference ................................. i Notice to New Hampshire Residents ....................................... ii Prospectus Summary ...................................................... 1 Risk Factors ............................................................ 9 Use of Proceeds ......................................................... 14 Capitalization........................................................... 14 Selected Consolidated Financial Data..................................... 15 The Exchange Offer....................................................... 16 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................... 24 Business................................................................. 35 Management............................................................... 55 Description of the Notes................................................. 57 Exchange Offer; Registration Rights ..................................... 65 Material United States Federal Income Tax Considerations................. 66 Plan of Distribution..................................................... 69 Legal Matters............................................................ 70 Experts.................................................................. 70
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- $600,000,000 [EDISON MISSION ENERGY LOGO] 7.73% Senior Notes due June 15, 2009 --------------- PROSPECTUS --------------- , 2000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. Indemnification of Directors and Officers We are a California corporation. Article VI of our Bylaws provide, in effect, that, to the extent and under the circumstances permitted by Section 317 of the California Corporations Code, we 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 our director of officer. 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 this person in connection with this action, suit or proceeding if this 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 this 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 this action or suit is or was pending shall determine that, in view of all of the circumstances of the case, this person is fairly and reasonably entitled to indemnify for these expenses which this court shall deem proper. Section 317 further provides that to the extent that this 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, this person shall be indemnified against expenses, including attorneys' fees, actually and reasonably incurred by him or her in connection. Article IV of our Certificate of Incorporation relieves our directors from monetary damages to us or our shareholders for any breach of this 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 (1) 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 performing his or her duties, of a risk of serious injury to the corporation or its shareholders, (2) 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, (3) for any intentional misconduct or knowing and culpable violation of law, (4) 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, (5) for any transaction from which the director derived an improper personal benefit or (6) 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-1 ITEM 21. Exhibits and Financial Statement Schedules.
Exhibit No. Description ----------- ----------- 2.1 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 Edison Mission Energy's Current Report on Form 8-K, No. 1-13434 dated January 4, 1996. 2.2 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 Edison Mission Energy, incorporated by reference to Exhibit 2.2 to Edison Mission Energy's Current Report on Form 8-K, No. 1-13434 dated May 22, 1997. 2.3 Stock Purchase and Assignment Agreement, dated December 23, 1998, between KES Puerto Rico, L.P., KENETECH Energy Systems, Inc., KES Bermuda, Inc. and Edison Mission Energy 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 Edison Mission Energy's 10-K for the year ended December 31, 1998. 2.4 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 Edison Mission Energy's 10-K for the year ended December 31, 1998. 2.5 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 Edison Mission Energy's 10-K for the year ended December 31, 1998. 2.6 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 Edison Mission Energy's Form 10-Q for the quarter ended March 31, 1999. 2.7 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 Edison Mission Energy's Form 8-K/A dated July 19, 1999. 3.1 Amended and Restated Articles of Incorporation of Edison Mission Energy incorporated by reference to Exhibit 3.1 to Edison Mission Energy's Current Report on Form 8-K, No. 1-13434 dated January 30, 1996. Originally filed with Edison Mission Energy's Registration Statement on Form 10 to the Securities and Exchange Commission on September 30, 1994 and amended by Amendment No. 1 thereto dated November 19, 1994 and Amendment No. 2 thereto dated November 21, 1994 (as so amended, the "Form 10"). 3.2 By-Laws of Edison Mission Energy, incorporated by reference to Exhibit 3.2 to Edison Mission Energy's Form 10. 4.1 Indenture, dated as of June 28, 1999, between Edison Mission Energy and The Bank of New York, as Trustee.* 4.2 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.* 5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Edison Mission Energy.* 10.1 Registration Rights Agreement, dated as of June 23, 1999, between Edison Mission Energy and the Initial Purchasers specified therein.* 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 Edison Mission Energy's Form 10.
II-2
Exhibit No. Description ----------- ----------- 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 Edison Mission Energy'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 Edison Mission Energy's Form 10. 10.4 Power Purchase Contract between Southern California Edison Company and Imperial Energy Company, dated February 22, 1984, incorporated by reference to Exhibit 10.4 Edison Mission Energy's Form 10. 10.4.1 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 Edison Mission Energy's Form 10. 10.6 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 Edison Mission Energy's Form 10. 10.7 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 Edison Mission Energy's Form 10. 10.7.1 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 Edison Mission Energy's Form 10. 10.7.2 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 Edison Mission Energy's Form 10. 10.7.3 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 Edison Mission Energy's Form 10. 10.8 Power Purchase Contract between Southern California Edison Company and Arco Petroleum Products Company (Watson Refinery), incorporated by reference to Exhibit 10.8 to Edison Mission Energy's Form 10. 10.9 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 Edison Mission Energy's Form 10. 10.10 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 Edison Mission Energy's Form 10. 10.11 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 Edison Mission Energy's Form 10. 10.12 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 Edison Mission Energy's Form 10. 10.13 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 Edison Mission Energy's Form 10. 10.14 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 Edison Mission Energy's Form 10.
II-3
Exhibit No. Description ----------- ----------- 10.15 U.S. $325 million Bank of Montreal Revolver, dated October 29, 1993, incorporated by reference to Exhibit 10.15 to Edison Mission Energy's Form 10. 10.15.1 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 Edison Mission Energy's Form 10. 10.15.2 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 Edison Mission Energy's Annual Report on Form 10-K for the year ended December 31, 1994. 10.15.3 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1996. 10.16 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 Edison Mission Energy's Form 10. 10.16.1 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 Edison Mission Energy's Form 10. 10.17 Memorandum of Agreement between Atlantic Richfield Company and Products Cogeneration Company, dated September 17, 1987, incorporated by reference to Exhibit 10.17 to Edison Mission Energy's Form 10. 10.18 Memorandum of Ground Lease between Texaco Producing Inc. and Sycamore Cogeneration Company, dated January 19, 1987, incorporated by reference to Exhibit 10.18 to Edison Mission Energy's Form 10. 10.19 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 Edison Mission Energy's Form 10. 10.20 Memorandum of Lease between Sun Operating Limited Partnership and Midway-Sunset Cogeneration Company, incorporated by reference to Exhibit 10.20 to Edison Mission Energy's Form 10. 10.21 Executive Supplemental Benefit Program, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.22 1981 Deferred Compensation Agreement, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.23 1985 Deferred Compensation Agreement for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.24 1987 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 2313). 10.25 1988 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 2313). 10.26 1989 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 9936). 10.27 1990 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 9936).
II-4
Exhibit No. Description ----------- ----------- 10.28 Annual Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 9936). 10.29 Executive Retirement Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 2313). 10.31 Estate and Financial Planning Program for Executive Officers, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.32 Letter Agreement with Edward R. Muller, incorporated by reference to Exhibit 10.32 to Edison Mission Energy's Form 10. 10.33 Agreement with James S. Pignatelli, incorporated by reference to Exhibit 10.33 to Edison Mission Energy's Form 10. 10.34 Conformed copy of the Guarantee Agreement dated as of November 30, 1994, incorporated by reference to Exhibit 10.34 to Edison Mission Energy's Form 10. 10.35 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.35.1 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.35.2 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.35.3 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.36 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.36.1 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.36.2 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 Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1995. 10.37 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.38 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.39 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 Edison Mission Energy's Form 10-Q for the quarter ended June 30, 1995. 10.40 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 Edison Mission Energy's Form 10-Q for the quarter ended June 30, 1995.
II-5
Exhibit No. Description ----------- ----------- 10.41 400 million sterling pounds Barclays Bank Plc Credit Agreement, dated December 18, 1995, incorporated by reference to Exhibit 10.41 to Edison Mission Energy's Form 8-K, dated December 21, 1995. 10.42 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1995. 10.43 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1995. 10.44 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1996. 10.45 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1997. 10.46 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1997. 10.47 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1998. 10.48 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1998. 10.49 Equity Support Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 10.50 Master Guarantee and Support Instrument by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 10.51 Guarantee Assumption Agreement from Edison Mission Energy, dated December 23, 1998, under Edison Mission Energy 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 10.52 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998.
II-6
Exhibit No. Description ----------- ----------- 10.53 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 10.54 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 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 Edison Mission Energy'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 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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.56.1 Amendment No. 1 to the Guarantee and Collateral Agreement, dated May 27, 1999, between Edison Mission Holdings, Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Company, Mission Energy Westside, Inc., EME Homer City Generation L.P and Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.56.1 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 10.56.2 Open-End Mortgage, Security Agreement and Assignment of Leases and Rents, dated March 18, 1999 from EME Homer City Generation L.P. to United States Trust Company of New York, incorporated by reference to Exhibit 10.56.2 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 10.56.3 Amendment No. 1 to the Open-End Mortgage, Security Agreement and Assignment of Leases and Rents, dated May 27, 1999, from EME Homer City Generation L.P. to United States Trust Company of New York, incorporated by reference to Exhibit 10.56.3 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 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 Edison Mission Energy'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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.58.1 Amendment No. 1 to the Security Deposit Agreement, dated May 27, 1999, between Edison Mission Holdings, Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Company, Mission Energy Westside, Inc., EME Homer City Generation L.P. and United States Trust Company of New York, as Collateral Agent, incorporated by reference to Exhibit 10.58.1 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000.
II-7
Exhibit No. Description ----------- ----------- 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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.59.1 Amendment No. 1 to the Credit Support Guarantee, dated May 27, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.59.1 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.60.1 Amendment No. 1 to the Debt Service Reserve Guarantee, dated May 27, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.60.1 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 10.60.2 Bond Debt Service Reserve Guarantee, dated May 27, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.60.2 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.62 Edison Power Limited (Pounds)1,150,000,000 Guaranteed Secured Variable Rate Bonds due 2019 Guaranteed by Maplekey UK Limited, incorporated by reference to Exhibit 10.62 to Edison Mission Energy's Current Report on Form 8-K, No. 1-13434 dated July 19, 1999. 10.64 Coal and Capex Facility Agreement, dated July 16, 1999 between EME Finance UK Limited; Barclay's Capital and Credit Suisse First Boston; The Financial Institutions named as Banks; and Barclays Bank PLC as Facility Agent, incorporated by reference to Exhibit 10.64 to Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1999. 10.65 Guarantee by Edison Mission Energy dated July 16, 1999 supporting the Coal and Capex Facility Agreement (Facility Agreement) issued by Barclays Bank PLC to secure EME Finance UK Limited obligations pursuant to the Facility Agreement, incorporated by reference to Exhibit 10.65 to Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1999. 10.71 Copy of the Global Debenture representing Edison Mission Energy's 9 7/8% Junior Subordinated Deferrable Interest Debentures, Series A, Due 2024, incorporated by reference as Exhibit 4.1 to Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.72 Conformed copy of the Indenture, dated as of November 30, 1994, between Edison Mission Energy and The First National Bank of Chicago, as Trustee, incorporated by reference to Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.73 First Supplemental Indenture, dated as of November 30, 1994, to Indenture dated as of November 30, 1994 between Edison Mission Energy and The First National Bank of Chicago, as Trustee, incorporated by reference as Exhibit 4.2.1 to Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.74 Indenture, dated as of May 27, 1999, between Edison Mission Holdings Co. and United States Trust Company of New York, as Trustee, incorporated by reference to Exhibit 10.71 to Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on December 3, 1999.
II-8
Exhibit No. Description ----------- ----------- 10.74.1 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, incorporated by reference to Exhibit 10.72 to Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on December 3, 1999. 10.75 Exchange and Registration Rights Agreement, dated as of May 27, 1999, by and among the Initial Purchasers named therein, the Guarantors named therein and Edison Mission Holdings Co, incorporated by reference to Exhibit 10.1 to Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on December 3, 1999. 12.1 Statement regarding the computation of ratio of earnings to fixed charges for Edison Mission Energy.* 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). 25.1 Statement of Eligibility and Qualification on Form T-1 of The Bank 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 ITEM 22. Undertakings (a) The undersigned Registrant hereby undertakes: Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has 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 Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant 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 Registrant 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 Registrant hereby undertakes: (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 II-9 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. (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 Registrant hereby undertakes 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 Registrant hereby undertakes 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 Registrant hereby undertakes 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 Registrant hereby undertakes 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-10 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 18th day of February, 2000. Edison Mission Energy (Registrant) /s/ Kevin M. Smith By: _________________________________ Kevin M. Smith Senior Vice President and Chief Financial Officer 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/ Alan J. Fohrer President, and Chief February 18, 2000 ______________________________________ Executive Officer, Alan J. Fohrer Director (Principal Executive Officer) /s/ Kevin M. Smith Senior Vice President and February 18, 2000 ______________________________________ Chief Financial Officer Kevin M. Smith (Principal Financial and Accounting Officer) /s/ John E. Bryson Chairman of the Board February 18, 2000 ______________________________________ John E. Bryson /s/ Bryant C. Danner Director February 18, 2000 ______________________________________ Bryant C. Danner /s/ Thomas R. McDaniel Director February 18, 2000 ______________________________________ Thomas R. McDaniel
II-11 INDEX TO EXHIBITS
Exhibit No. Description ----------- ----------- 2.1 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 Edison Mission Energy's Current Report on Form 8-K, No. 1-13434 dated January 4, 1996. 2.2 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 Edison Mission Energy, incorporated by reference to Exhibit 2.2 to Edison Mission Energy's Current Report on Form 8-K, No. 1-13434 dated May 22, 1997. 2.3 Stock Purchase and Assignment Agreement, dated December 23, 1998, between KES Puerto Rico, L.P., KENETECH Energy Systems, Inc., KES Bermuda, Inc. and Edison Mission Energy 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 Edison Mission Energy's 10-K for the year ended December 31, 1998. 2.4 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 Edison Mission Energy's 10-K for the year ended December 31, 1998. 2.5 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 Edison Mission Energy's 10-K for the year ended December 31, 1998. 2.6 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 Edison Mission Energy's Form 10-Q for the quarter ended March 31, 1999. 2.7 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 Edison Mission Energy's Form 8-K/A dated July 19, 1999. 3.1 Amended and Restated Articles of Incorporation of Edison Mission Energy incorporated by reference to Exhibit 3.1 to Edison Mission Energy's Current Report on Form 8-K, No. 1-13434 dated January 30, 1996. Originally filed with Edison Mission Energy's Registration Statement on Form 10 to the Securities and Exchange Commission on September 30, 1994 and amended by Amendment No. 1 thereto dated November 19, 1994 and Amendment No. 2 thereto dated November 21, 1994 (as so amended, the "Form 10"). 3.2 By-Laws of Edison Mission Energy, incorporated by reference to Exhibit 3.2 to Edison Mission Energy's Form 10. 4.1 Indenture, dated as of June 28, 1999, between Edison Mission Energy and The Bank of New York, as Trustee.* 4.2 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.* 5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Edison Mission Energy.* 10.1 Registration Rights Agreement, dated as of June 23, 1999, between Edison Mission Energy and the Initial Purchasers specified therein.* 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 Edison Mission Energy's Form 10.
1
Exhibit No. Description ----------- ----------- 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 Edison Mission Energy'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 Edison Mission Energy's Form 10. 10.4 Power Purchase Contract between Southern California Edison Company and Imperial Energy Company, dated February 22, 1984, incorporated by reference to Exhibit 10.4 Edison Mission Energy's Form 10. 10.4.1 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 Edison Mission Energy's Form 10. 10.6 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 Edison Mission Energy's Form 10. 10.7 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 Edison Mission Energy's Form 10. 10.7.1 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 Edison Mission Energy's Form 10. 10.7.2 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 Edison Mission Energy's Form 10. 10.7.3 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 Edison Mission Energy's Form 10. 10.8 Power Purchase Contract between Southern California Edison Company and Arco Petroleum Products Company (Watson Refinery), incorporated by reference to Exhibit 10.8 to Edison Mission Energy's Form 10. 10.9 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 Edison Mission Energy's Form 10. 10.10 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 Edison Mission Energy's Form 10. 10.11 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 Edison Mission Energy's Form 10. 10.12 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 Edison Mission Energy's Form 10. 10.13 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 Edison Mission Energy's Form 10. 10.14 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 Edison Mission Energy's Form 10.
2
Exhibit No. Description ----------- ----------- 10.15 U.S. $325 million Bank of Montreal Revolver, dated October 29, 1993, incorporated by reference to Exhibit 10.15 to Edison Mission Energy's Form 10. 10.15.1 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 Edison Mission Energy's Form 10. 10.15.2 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 Edison Mission Energy's Annual Report on Form 10-K for the year ended December 31, 1994. 10.15.3 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1996. 10.16 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 Edison Mission Energy's Form 10. 10.16.1 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 Edison Mission Energy's Form 10. 10.17 Memorandum of Agreement between Atlantic Richfield Company and Products Cogeneration Company, dated September 17, 1987, incorporated by reference to Exhibit 10.17 to Edison Mission Energy's Form 10. 10.18 Memorandum of Ground Lease between Texaco Producing Inc. and Sycamore Cogeneration Company, dated January 19, 1987, incorporated by reference to Exhibit 10.18 to Edison Mission Energy's Form 10. 10.19 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 Edison Mission Energy's Form 10. 10.20 Memorandum of Lease between Sun Operating Limited Partnership and Midway-Sunset Cogeneration Company, incorporated by reference to Exhibit 10.20 to Edison Mission Energy's Form 10. 10.21 Executive Supplemental Benefit Program, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.22 1981 Deferred Compensation Agreement, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.23 1985 Deferred Compensation Agreement for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-2313). 10.24 1987 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 2313). 10.25 1988 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 2313). 10.26 1989 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 9936). 10.27 1990 Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 9936).
3
Exhibit No. Description ----------- ----------- 10.28 Annual Deferred Compensation Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 9936). 10.29 Executive Retirement Plan for Executives, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1- 2313). 10.31 Estate and Financial Planning Program for Executive Officers, incorporated by reference to Exhibits to Forms 10-K filed by SCEcorp (File No. 1-9936). 10.32 Letter Agreement with Edward R. Muller, incorporated by reference to Exhibit 10.32 to Edison Mission Energy's Form 10. 10.33 Agreement with James S. Pignatelli, incorporated by reference to Exhibit 10.33 to Edison Mission Energy's Form 10. 10.34 Conformed copy of the Guarantee Agreement dated as of November 30, 1994, incorporated by reference to Exhibit 10.34 to Edison Mission Energy's Form 10. 10.35 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.35.1 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.35.2 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.35.3 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.36 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.36.1 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.36.2 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 Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1995. 10.37 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.38 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.39 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 Edison Mission Energy's Form 10-Q for the quarter ended June 30, 1995. 10.40 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 Edison Mission Energy's Form 10-Q for the quarter ended June 30, 1995.
4
Exhibit No. Description ----------- ----------- 10.41 400 million sterling pounds Barclays Bank Plc Credit Agreement, dated December 18, 1995, incorporated by reference to Exhibit 10.41 to Edison Mission Energy's Form 8-K, dated [December 21, 1995]. 10.42 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1995. 10.43 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1995. 10.44 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1996. 10.45 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1997. 10.46 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1997. 10.47 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1998. 10.48 Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1998. 10.49 Equity Support Guarantee by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 10.50 Master Guarantee and Support Instrument by Edison Mission Energy, 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 10.51 Guarantee Assumption Agreement from Edison Mission Energy, dated December 23, 1998, under Edison Mission Energy 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 10.52 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998.
5
Exhibit No. Description ----------- ----------- 10.53 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 10.54 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 Edison Mission Energy's Form 10-K for the year ended December 31, 1998. 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 Edison Mission Energy'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 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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.56.1 Amendment No. 1 to the Guarantee and Collateral Agreement, dated May 27, 1999, between Edison Mission Holdings, Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Company, Mission Energy Westside, Inc., EME Homer City Generation L.P and Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.56.1 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 10.56.2 Open-End Mortgage, Security Agreement and Assignment of Leases and Rents, dated March 18, 1999 from EME Homer City Generation L.P. to United States Trust Company of New York, incorporated by reference to Exhibit 10.56.2 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 10.56.3 Amendment No. 1 to the Open-End Mortgage, Security Agreement and Assignment of Leases and Rents, dated May 27, 1999, from EME Homer City Generation L.P. to United States Trust Company of New York, incorporated by reference to Exhibit 10.56.3 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 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 Edison Mission Energy'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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.58.1 Amendment No. 1 to the Security Deposit Agreement, dated May 27, 1999, between Edison Mission Holdings, Edison Mission Finance Co., Homer City Property Holdings, Inc., Chestnut Ridge Energy Company, Mission Energy Westside, Inc., EME Homer City Generation L.P. and United States Trust Company of New York, as Collateral Agent, incorporated by reference to Exhibit 10.58.1 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000.
6
Exhibit No. Description ----------- ----------- 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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.59.1 Amendment No. 1 to the Credit Support Guarantee, dated May 27, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.59.1 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.60.1 Amendment No. 1 to the Debt Service Reserve Guarantee, dated May 27, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.60.1 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 10.60.2 Bond Debt Service Reserve Guarantee, dated May 27, 1999, made by Edison Mission Energy in favor of United States Trust Company of New York, incorporated by reference to Exhibit 10.60.2 to Amendment No. 1 of Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on February 8, 2000. 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 Edison Mission Energy's Form 8-K dated March 18, 1999. 10.62 Edison Power Limited (Pounds)1,150,000,000 Guaranteed Secured Variable Rate Bonds due 2019 Guaranteed by Maplekey UK Limited, incorporated by reference to Exhibit 10.62 to Edison Mission Energy's Current Report on Form 8-K, No. 1-13434 dated July 19, 1999. 10.64 Coal and Capex Facility Agreement, dated July 16, 1999 between EME Finance UK Limited; Barclay's Capital and Credit Suisse First Boston; The Financial Institutions named as Banks; and Barclays Bank PLC as Facility Agent, incorporated by reference to Exhibit 10.64 to Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1999. 10.65 Guarantee by Edison Mission Energy dated July 16, 1999 supporting the Coal and Capex Facility Agreement (Facility Agreement) issued by Barclays Bank PLC to secure EME Finance UK Limited obligations pursuant to the Facility Agreement, incorporated by reference to Exhibit 10.65 to Edison Mission Energy's Form 10-Q for the quarter ended September 30, 1999. 10.66 Copy of the Global Debenture representing Edison Mission Energy's 9 7/8% Junior Subordinated Deferrable Interest Debentures, Series A, Due 2024, incorporated by reference as Exhibit 4.1 to Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.67 Conformed copy of the Indenture, dated as of November 30, 1994, between Edison Mission Energy and The First National Bank of Chicago, as Trustee, incorporated by reference to Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.68 First Supplemental Indenture, dated as of November 30, 1994, to Indenture dated as of November 30, 1994 between Edison Mission Energy and The First National Bank of Chicago, as Trustee, incorporated by reference as Exhibit 4.2.1 to Edison Mission Energy's Form 10-K for the year ended December 31, 1994. 10.69 Indenture, dated as of May 27, 1999, between Edison Mission Holdings Co. and United States Trust Company of New York, as Trustee, incorporated by reference to Exhibit 10.71 to Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on December 3, 1999.
7
Exhibit No. Description ----------- ----------- 10.69.1 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, incorporated by reference to Exhibit 10.72 to Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on December 3, 1999. 10.70 Exchange and Registration Rights Agreement, dated as of May 27, 1999, by and among the Initial Purchasers named therein, the Guarantors named therein and Edison Mission Holdings Co, incorporated by reference to Exhibit 10.1 to Edison Mission Holdings Co.'s Registration Statement on Form S-4 to the Securities and Exchange Commission on December 3, 1999. 12.1 Statement regarding the computation of ratio of earnings to fixed charges for Edison Mission Energy.* 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). 25.1 Statement of Eligibility and Qualification on Form T-1 of The Bank 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 8 EX-4.1 2 INDENTURE DATED AS OF JUNE 28, 1999 Exhibit 4.1 ================================================================================ 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 ---- ARTICLE 1. DEFINITIONS............................................................................................ 1 Section 1.1. Certain Terms Defined........................................................................... 1 ARTICLE 2. THE NOTES.............................................................................................. 8 Section 2.1. Form and Dating................................................................................. 8 Section 2.2. Amount; Issuable in Series...................................................................... 9 Section 2.3. Execution and Authentication.................................................................... 10 Section 2.4. Registrar and Paying Agent...................................................................... 10 Section 2.5. Paying Agent to Hold Money in Trust............................................................. 11 Section 2.6. Holder Lists.................................................................................... 12 Section 2.7. Transfer and Exchange........................................................................... 12 Section 2.8. Replacement Notes............................................................................... 24 Section 2.9. Outstanding Notes............................................................................... 24 Section 2.10. Temporary Notes................................................................................ 25 Section 2.11. Cancellation................................................................................... 25 Section 2.12. Defaulted Interest............................................................................. 25 ARTICLE 3. COVENANTS OF THE COMPANY AND THE TRUSTEE............................................................... 26 Section 3.1. Payment of Principal and Interest............................................................... 26 Section 3.2. Appointment to Fill Vacancy in Office of Trustee................................................ 26 Section 3.3. Certificate to Trustee, Notices of Defaults..................................................... 26 Section 3.4. Reports by the Company.......................................................................... 26 Section 3.5. Restrictions on Liens........................................................................... 27 Section 3.6. Maintenance of Corporate Existence.............................................................. 27 Section 3.7. Taxes........................................................................................... 27 ARTICLE 4. EVENTS OF DEFAULT AND REMEDIES OF THE TRUSTEE AND NOTEHOLDERS.......................................... 28 Section 4.1. Event of Default Defined; Acceleration of Maturity; Waiver of Default........................... 28 Section 4.2. Collection of Indebtedness by Trustee; Trustee May Prove Debt................................... 30 Section 4.3. Application of Proceeds......................................................................... 32 Section 4.4. Suits for Enforcement........................................................................... 33 Section 4.5. Restoration of Rights on Abandonment of Proceedings............................................. 33 Section 4.6. Limitations of Suits by Noteholders............................................................. 33 Section 4.7. Powers and Remedies Cumulative, Delay or Omission Not Waiver of Default......................... 34 Section 4.8. Control by Noteholders.......................................................................... 34 Section 4.9. Waiver of Past Defaults......................................................................... 34 Section 4.10. Rights of Holders to Receive Payment........................................................... 35
i ARTICLE 5. CONCERNING THE TRUSTEE................................................................................ 35 Section 5.1. Duties and Responsibilities of the Trustee During Default and Prior to Default...................................................................................... 35 Section 5.2. Certain Rights of the Trustee.................................................................. 36 Section 5.3. Trustee Not Responsible for Recitals, Disposition of Notes or Application of Proceeds Thereof.......................................................................... 38 Section 5.4. Trustee and Agents May Hold Notes; Collections, Etc............................................ 38 Section 5.5. Moneys Held by Trustee......................................................................... 38 Section 5.6. Compensation and Indemnification of Trustee and Its Prior Claim................................ 38 Section 5.7. Right of Trustee to Rely on Officers' Certificate, Etc......................................... 39 Section 5.8. Persons Eligible for Appointment as Trustee.................................................... 39 Section 5.9. Resignation and Removal, Appointment of Successor Trustee...................................... 39 Section 5.10. Acceptance of Appointment by Successor Trustee................................................ 40 Section 5.11. Merger, Conversion, Consolidation or Succession to Business of Trustee........................ 41 Section 5.12. Reports by Trustee............................................................................ 41 ARTICLE 6. CONCERNING THE NOTEHOLDERS............................................................................ 42 Section 6.1. Evidence of Action Taken by Noteholders........................................................ 42 Section 6.2. Proof of Execution of Instruments and of Holding of Notes Record Date.......................... 42 Section 6.3. Holders to Be Treated as Owners................................................................ 42 Section 6.4. Notes Owned by Company Deemed Not Outstanding.................................................. 42 Section 6.5. Right of Revocation of Action Taken............................................................ 43 ARTICLE 7. SUPPLEMENTAL INDENTURES............................................................................... 43 Section 7.1. Supplemental Indentures Without Consent of Noteholders......................................... 43 Section 7.2. Supplemental Indentures With Consent of Noteholders............................................ 44 Section 7.3. Effect of Supplemental Indenture............................................................... 45 Section 7.4. Documents to Be Given to Trustee............................................................... 46 Section 7.5. Notation of Notes in Respect of Supplemental Indentures........................................ 46 ARTICLE 8. MERGER, CONSOLIDATION, SALE, LEASE OR CONVEYANCE...................................................... 46 Section 8.1. Covenant Not to Merge, Consolidate, Sell, Lease or Transfer Assets Except Under Certain Conditions................................................................................... 46 Section 8.2. Successor Corporation Substituted.............................................................. 47 Section 8.3. Opinion of Counsel to Trustee; Officers' Certificate........................................... 47 ARTICLE 9. SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS............................................. 48 Section 9.1. Satisfaction and Discharge of Indenture........................................................ 48 Section 9.2. Application by Trustee of Funds Deposited for Payment of Notes................................. 49 Section 9.3. Repayment of Moneys Held by Paying Agent....................................................... 49 Section 9.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years...................... 49
ii Section 9.5. Defeasance and Discharge of Indenture.......................................................... 49 Section 9.6. Defeasance of Certain Obligations.............................................................. 51 ARTICLE 10. REDEMPTION OF NOTES.................................................................................. 52 Section 10.1. Notes Redeemed in Part........................................................................ 52 Section 10.2. Notice of Redemption.......................................................................... 52 Section 10.3. Payment of Notes Called for Redemption........................................................ 52 ARTICLE 11. MISCELLANEOUS PROVISIONS............................................................................. 53 Section 11.1. Incorporators, Shareholders, Officers and Directors of Company Exempt from Individual Liability.................................................................................... 53 Section 11.2. Provisions of the Indenture for the Sole Benefit of Parties and Noteholders................... 53 Section 11.3. Successors and Assigns of Company Bound by Indenture.......................................... 53 Section 11.4. Notices and Demands on Company, Trustee and Noteholders....................................... 54 Section 11.5. Statements to Be Contained in Officers' Certificates and Opinions of Counsel.................. 54 Section 11.6. Payments Due on Saturdays, Sundays and Holidays............................................... 55 Section 11.7. New York Law to Govern........................................................................ 55 Section 11.8. Counterparts.................................................................................. 55 Section 11.9. Effect of Headings............................................................................ 56
iii 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 1. 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. 2 "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. 3 "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. --------------- 4 "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). 5 "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. -------- 6 "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 7 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 2. 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. ----------- 8 (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; 9 (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 10 ("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. - --- 11 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 (S) 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 (S) 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 12 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 13 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; 14 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 15 (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 16 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; 17 (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 18 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. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.7(d)(ii), the Trustee shall cancel the Definitive Note and ------------------ increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note of such series. (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). - ------ 19 (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 20 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 21 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 an 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 22 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 23 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. 24 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. 25 ARTICLE 3. 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 26 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. 27 ARTICLE 4. 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, 28 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 29 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 30 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 31 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. ----------- 32 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. 33 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 34 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 5. 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 35 (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; 36 (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 37 (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 38 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. 39 (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 40 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. 41 ARTICLE 6. 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 42 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 7. 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; 43 (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 44 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 45 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 8. 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 46 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. 47 ARTICLE 9. 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. 48 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: -------- 49 (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. 50 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 51 (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 10. 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 52 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 11. 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. 53 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 54 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. 55 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. 56 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:______________________________________ Name: Steven D. Eisenberg Title: Vice President and Associate General Counsel Attest: By:_________________________ Name: Title: THE BANK OF NEW YORK, as Trustee By:______________________________________ Name: Mary Beth Lewicki Title: Assistant Vice President Attest: By:_________________________ Name: Title: 57 EXHIBIT A [Face of Note] - -------------------------------------------------------------------------------- CUSIP/CINS ____________ ISIN ____________ __% [Series [ ]] Senior Notes due __________ No. ___ $____________ EDISON MISSION ENERGY promises to pay to _____________________________________________________________ or registered assigns, the 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 A-1 [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 A-2 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 (S)(S) 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, A-3 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. A-4 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 A-5 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). A-6 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. A-7 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, B-1 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 B-2 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:________________________ B-3 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. B-4 EXHIBIT C 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 C-1 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 C-2 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:__________________ C-3 EX-4.2 3 FIRST SUPPLEMENTAL INDENTURE EXHIBIT 4.2 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. 2 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. 3 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. 4 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: ______________________________ Name: Steven D. Eisenberg Title: Vice President and Associate General Counsel THE BANK OF NEW YORK, as Trustee By: ______________________________ Name: Mary Beth Lewicki Title: Assistant Vice President 5 EX-5.1 4 OPINION OF SKADDEN, ARPS, SLATE, MEAGHER Exhibit 5.1 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP FOUR TIMES SQUARE NEW YORK, NY 10036 (212) 735-3000 February 18, 2000 Edison Mission Energy 18101 Von Karman Avenue Irvine, California 92612 Re: Edison Mission Energy Registration Statement on Form S-4 ---------------------------------- Ladies and Gentlemen: We are acting as special counsel to Edison Mission Energy, a California corporation (the "Company"), in connection with the public offering of $600,000,000 aggregate principal amount of the Company's 7.73% Senior Notes due June 15, 2009 (the "Exchange Notes"). The Exchange Notes are to be issued pursuant to an exchange offer (the "Exchange Offer") in exchange for a like principal amount of the issued and outstanding 7.73% Senior Notes due June 15, 2009 of the Company (the "Original Notes") under the Indenture, dated as of June 28, 1999, as supplemented by a First Supplemental Indenture, dated as of June 28, 1999 (as so supplemented, the "Indenture"), between the Company and The Bank of New York, as Trustee (the "Trustee"), as contemplated by the Registration Rights Agreement, dated as of June 23, 1999 (the "Registration Rights Agreement"), by and among the Company, Credit Suisse First Boston Corporation, Lehman Brothers 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 Exchange Notes to be filed with the Securities and Exchange Commission (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; (v) the By-Laws of the Company, 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 Notes and the Exchange Notes, the Indenture and related matters; (vii) the Form T-1 of the Trustee filed as an exhibit to the Registration Statement; and (viii) the form of the Exchange Notes. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements, certificates of public officials, certificates of officers or other representatives of the Company 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, had or will have the power, corporate or other, to enter into and 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 and others. Our opinions set forth herein are 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 Exchange Notes (in the form examined by us) have been duly executed and authenticated in accordance with the terms of the Indenture and have been delivered upon consummation 2 of the Exchange Offer against receipt of Original Notes surrendered in exchange therefor in accordance with the terms of the Exchange Offer, the Exchange Notes will constitute valid and binding obligations of the Company, enforceable against the Company 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 of the Indenture and the Exchange Notes and the performance by the Company of its obligations thereunder do not and will not violate, conflict with or constitute a default under any agreement or instrument to which the Company or its 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 as being material to it 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 3 EX-10.1 5 REGISTRATION RIGHTS AGREEMENT, DATED AS OF JUNE EXHIBIT 10.1 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. 2 "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 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. 3 "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) 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 4 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 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. 5 "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 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 6 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 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 7 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 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 ---------------- 8 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. 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 9 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 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 10 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 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 12 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 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 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 13 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 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 14 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 Registrable Notes (including any Initial Purchaser which holds Registrable Notes, including 15 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 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 16 (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. (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, 17 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. 18 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, 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. 19 (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 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 20 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) 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:__________________________________ Name: Title: 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:_______________________________________ Name: Title: EX-12.1 6 STATEMENT REGARDING THE COMPUTATION OF EARNINGS Exhibit 12.1 EDISON MISSION ENERGY Computation of the Ratio of Earnings to Fixed Charges (In Thousands)
Nine months Nine months ended ended September 30, September 30, 1999 1998 1998 1997 1996 1995 1994 ---------------------------------------------------------------------------------------- Earnings: Income before taxes and extraordinary item $ 183,022 $ 158,356 $ 202,579 $ 185,515 $ 174,110 $ 95,008 $ 84,413 Adjustments: Fixed charges, as below 299,903 196,191 260,439 275,426 261,885 187,296 169,645 Interest capitalized (21,065) (12,575) (26,300) (15,000) (64,400) (58,300) (48,725) Equity in earnings of equity method investments (60,148) (38,555) (45,984) (76,694) (72,272) (48,815) 54 Dividends from equity method investments 42,389 28,226 49,208 82,576 72,787 60,251 ---------------------------------------------------------------------------------------- Earnings as adjusted $ 444,101 $ 331,643 $ 439,942 $ 451,823 $ 372,110 $ 235,440 $ 205,387 ======================================================================================== Fixed Charges: Interest on indebtedness (expense and capitalized) $ 283,962 $ 184,733 $ 245,220 $ 260,249 $ 246,895 $ 176,031 $ 167,601 Dividends on preferred securities 14,388 9,905 13,149 13,167 13,100 10,095 744 Interest portion of rental expense 1,553 1,553 2,070 2,010 1,890 1,170 1,300 ---------------------------------------------------------------------------------------- $ 299,903 $ 196,191 $ 260,439 $ 275,426 $ 261,885 $ 187,296 $ 169,645 ======================================================================================== Ratio of Earnings to Fixed Charges 1.5 1.7 1.7 1.6 1.4 1.3 1.2 ========================================================================================
EX-21.1 7 LIST OF SUBSIDIARIES LIST OF SUBSIDIARIES - ---------------------------------------------------------------------------- ENTITY JURISDICTION OF ORGANIZATION - ---------------------------------------------------------------------------- Adelaide Ventures Limited Cayman Islands - ---------------------------------------------------------------------------- Aguila Energy Company California - ---------------------------------------------------------------------------- Anacapa Energy Company California - ---------------------------------------------------------------------------- Arrowhead Energy Company California - ---------------------------------------------------------------------------- Balboa Energy Company California - ---------------------------------------------------------------------------- Beheer-en Beleggingsmaatschappij Botara B.V. The Netherlands - ---------------------------------------------------------------------------- Bergen Point Energy Company California - ---------------------------------------------------------------------------- Blue Ridge Energy Company California - ---------------------------------------------------------------------------- Bretton Woods Energy Company California - ---------------------------------------------------------------------------- Camino Energy Company California - ---------------------------------------------------------------------------- Capistrano Cogeneration Company California - ---------------------------------------------------------------------------- Centerport Energy Company California - ---------------------------------------------------------------------------- Chesapeake Bay Energy Company California - ---------------------------------------------------------------------------- Chester Energy Company California - ---------------------------------------------------------------------------- Chestnut Ridge Energy Co California - ---------------------------------------------------------------------------- Chickahominy River Energy Corp. Virginia - ---------------------------------------------------------------------------- Clayville Energy Company California - ---------------------------------------------------------------------------- Colonial Energy Company California - ---------------------------------------------------------------------------- Collins Generation I, LLC Delaware - ---------------------------------------------------------------------------- Collins Generation II, LLC Delaware - ---------------------------------------------------------------------------- Collins Generation III, LLC Delaware - ---------------------------------------------------------------------------- Collins Generation VI, LLC Delaware - ---------------------------------------------------------------------------- Collins Holdings EME, LLC Delaware - ---------------------------------------------------------------------------- Coronado Energy Company California - ---------------------------------------------------------------------------- Delaware Energy Conservers, Inc. Delaware - ---------------------------------------------------------------------------- Del Mar Energy Company California - ---------------------------------------------------------------------------- Desert Sunrise Energy Company Nevada - ---------------------------------------------------------------------------- Devereaux Energy Company California - ---------------------------------------------------------------------------- Eastern Sierra Energy Company California - ---------------------------------------------------------------------------- East Maine Energy Company California - ---------------------------------------------------------------------------- EcoElectrica Holdings, Ltd. Cayman Islands - ---------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ENTITY JURISDICTION OF ORGANIZATION - ------------------------------------------------------------------------------- EcoElectrica Ltd. Cayman Islands - ------------------------------------------------------------------------------- Edison Alabama Generating Company California - ------------------------------------------------------------------------------- Edison First Power Holdings I California - ------------------------------------------------------------------------------- Edison Mission Ausone Pty. Ltd. Australia - ------------------------------------------------------------------------------- Edison Mission De Laide Pty Ltd. Australia - ------------------------------------------------------------------------------- Edison Mission Energy Asia Pte. Ltd. Singapore - ------------------------------------------------------------------------------- Edison Mission Australia Limited Australia - ------------------------------------------------------------------------------- Edison Mission Energy Fuel California - ------------------------------------------------------------------------------- Edison Mission Energy Fuel Services, Inc. California - ------------------------------------------------------------------------------- Edison Mission Energy Funding Corp. Delaware - ------------------------------------------------------------------------------- Edison Mission Energy Global Management, Delaware Inc. - ------------------------------------------------------------------------------- Edison Mission Energy Holdings Pty. Ltd. Australia - ------------------------------------------------------------------------------- Edison Mission Energy Interface Ltd. British Columbia - ------------------------------------------------------------------------------- Edison Mission Energy International B.V. The Netherlands - ------------------------------------------------------------------------------- Edison Mission Energy Oil & Gas California - ------------------------------------------------------------------------------- Edison Mission Energy Petroleum California - ------------------------------------------------------------------------------- Edison Mission Energy Services B.V. The Netherlands - ------------------------------------------------------------------------------- Edison Mission Energy Taupo Limited New Zealand - ------------------------------------------------------------------------------- Edison Mission Finance Co. California - ------------------------------------------------------------------------------- Edison Mission Financial Marketing & California Trading Co. - ------------------------------------------------------------------------------- Edison Mission Fuel Resources, Inc. California - ------------------------------------------------------------------------------- Edison Mission Fuel Transportation, Inc. California - ------------------------------------------------------------------------------- Edison Mission Holdings Co. California - ------------------------------------------------------------------------------- Edison Mission Marketing & Trading, Inc. California - ------------------------------------------------------------------------------- Edison Mission Midwest Holdings Co. Delaware - ------------------------------------------------------------------------------- Edison Mission Operation & Maintenance, Inc. California - ------------------------------------------------------------------------------- Edison Mission Operation & Maintenance The Netherlands Services B.V. - ------------------------------------------------------------------------------- Edison Mission Overseas Co. Delaware - ------------------------------------------------------------------------------- Edison Mission Overseas Ltd. United Kingdom - ------------------------------------------------------------------------------- Edison Mission O&M Thailand - ------------------------------------------------------------------------------- - ---------------------------------------------------------------------------- ENTITY JURISDICTION OF ORGANIZATION - ----------------------------------------------------------------------------- Edison Mission Project Co. Delaware - ----------------------------------------------------------------------------- Edison Mission Utilities Pty Ltd. Australia - ----------------------------------------------------------------------------- Edison Mission Vendesi Pty Ltd. Australia - ----------------------------------------------------------------------------- El Dorado Energy Company California - ----------------------------------------------------------------------------- EME Adelaide Energy Ltd. United Kingdom - ----------------------------------------------------------------------------- EME Caliraya B.V. The Netherlands - ----------------------------------------------------------------------------- EME del Caribe Cayman Islands - ----------------------------------------------------------------------------- EME del Caribe Holding GmbH Austria - ----------------------------------------------------------------------------- EME Generation Holdings Limited United Kingdom - ----------------------------------------------------------------------------- EME Homer City Generation L.P. Pennsylvania - ----------------------------------------------------------------------------- EME Kalayaan B.V. The Netherlands - ----------------------------------------------------------------------------- EME Monet Ltd. United Kingdom - ----------------------------------------------------------------------------- EME Royale New Zealand - ----------------------------------------------------------------------------- EME Tri Gen B.V. The Netherlands - ----------------------------------------------------------------------------- EME UK International LLC Delaware - ----------------------------------------------------------------------------- EME Victoria B.V. The Netherlands - ----------------------------------------------------------------------------- EME Victoria Generation Ltd. United Kingdom - ----------------------------------------------------------------------------- EMP, Inc. Oregon - ----------------------------------------------------------------------------- Energy Capital Partnership Australia - ----------------------------------------------------------------------------- First Hydro Finance plc United Kingdom - ----------------------------------------------------------------------------- First Hydro Holdings Company United Kingdom - ----------------------------------------------------------------------------- Four Counties Gas Company California - ----------------------------------------------------------------------------- Gippsland Power Pty. Ltd. Australia - ----------------------------------------------------------------------------- Global Generation B.V. The Netherlands - ----------------------------------------------------------------------------- Global Power Investors, Inc. California - ----------------------------------------------------------------------------- Hanover Energy Company California - ----------------------------------------------------------------------------- Holtsville Energy Company California - ----------------------------------------------------------------------------- Homer City Property Holdings, Inc. California - ----------------------------------------------------------------------------- Hydro Energy B.V. The Netherlands - ----------------------------------------------------------------------------- Iberica de Energias Spain - ----------------------------------------------------------------------------- Iberian Hy-Power Amsterdam B.V. The Netherlands - ----------------------------------------------------------------------------- Indian Bay Energy Company California - ----------------------------------------------------------------------------- Jefferson Energy Company California - ----------------------------------------------------------------------------- Kings Canyon Energy Company California - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- ENTITY JURISDICTION OF ORGANIZATION - ----------------------------------------------------------------------------- Kingspark Energy Company California - ----------------------------------------------------------------------------- Lakeview Energy Company California - ----------------------------------------------------------------------------- Laguna Energy Company California - ----------------------------------------------------------------------------- LaJolla Energy Company California - ----------------------------------------------------------------------------- Latrobe Power Partnership Australia - ----------------------------------------------------------------------------- Latrobe Power Pty. Ltd. Australia - ----------------------------------------------------------------------------- Lehigh River Energy Company California - ----------------------------------------------------------------------------- Longview Cogeneration Company California - ----------------------------------------------------------------------------- Loy Yang Holdings Pty Ltd Australia - ----------------------------------------------------------------------------- Loyvic Pty. Ltd. Australia - ----------------------------------------------------------------------------- Madera Energy Company California - ----------------------------------------------------------------------------- Madison Energy Company California - ----------------------------------------------------------------------------- Majestic Energy Limited United Kingdom - ----------------------------------------------------------------------------- Maplekey Holdings Ltd. United Kingdom - ----------------------------------------------------------------------------- Maplekey UK Finance Limited United Kingdom - ----------------------------------------------------------------------------- Maplekey UK Limited United Kingdom - ----------------------------------------------------------------------------- MEC Esenyurt B.V. The Netherlands - ----------------------------------------------------------------------------- MEC IES B.V. The Netherlands - ----------------------------------------------------------------------------- MEC India B.V. The Netherlands - ----------------------------------------------------------------------------- MEC Indo Coal B.V. The Netherlands - ----------------------------------------------------------------------------- MEC Indonesia B.V. The Netherlands - ----------------------------------------------------------------------------- MEC International B.V. The Netherlands - ----------------------------------------------------------------------------- MEC International Holdings B.V. The Netherlands - ----------------------------------------------------------------------------- MEC Laguna B.V. The Netherlands - ----------------------------------------------------------------------------- MEC Perth B.V. The Netherlands - ----------------------------------------------------------------------------- MEC Priolo B.V. The Netherlands - ----------------------------------------------------------------------------- MEC San Pascual B.V. The Netherlands - ----------------------------------------------------------------------------- MEC Sidi Krir B.V) The Netherlands - ----------------------------------------------------------------------------- MEC Sumatra B.V. The Netherlands - ----------------------------------------------------------------------------- MEC Wales B.V. The Netherlands - ----------------------------------------------------------------------------- Midwest Generation EME, LLC Delaware - ----------------------------------------------------------------------------- Mission/Eagle Energy Company California - ----------------------------------------------------------------------------- Mission Energy Company (UK) Limited United Kingdom - ----------------------------------------------------------------------------- Mission Energy Construction Services, Inc. California - ----------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ENTITY JURISDICTION OF ORGANIZATION - -------------------------------------------------------------------------------- Mission Energy Development Australia Pty Ltd Australia - -------------------------------------------------------------------------------- Mission Energy Generation, Inc. California - -------------------------------------------------------------------------------- Mission Energy Holdings, Inc. California - -------------------------------------------------------------------------------- Mission Energy Holdings International, Inc. California - -------------------------------------------------------------------------------- Mission Energy Indonesia California - -------------------------------------------------------------------------------- Mission Energy Italia s.r.l. Italy - -------------------------------------------------------------------------------- Mission Energy (Kwinana) Pty. Ltd. Australia - -------------------------------------------------------------------------------- Mission Energy Mexico California - -------------------------------------------------------------------------------- Mission Energy New York, Inc. California - -------------------------------------------------------------------------------- Mission Energy Ventures Australia Pty. Ltd. Australia - -------------------------------------------------------------------------------- Mission Energy Wales Company California - -------------------------------------------------------------------------------- Mission Energy Westside, Inc. California - -------------------------------------------------------------------------------- Mission Hydro Limited Partnership United Kingdom - -------------------------------------------------------------------------------- Mission Hydro (UK) Limited United Kingdom - -------------------------------------------------------------------------------- Mission Triple Cycle Systems Company California - -------------------------------------------------------------------------------- Mission Victoria Partnership Australia - -------------------------------------------------------------------------------- North Jackson Energy Company California - -------------------------------------------------------------------------------- Northern Sierra Energy Company California - -------------------------------------------------------------------------------- Ortega Energy Company California - -------------------------------------------------------------------------------- Panther Timber Company California - -------------------------------------------------------------------------------- Paradise Energy Company California - -------------------------------------------------------------------------------- Pleasant Valley Energy Company California - -------------------------------------------------------------------------------- Pocono Fuels Company California - -------------------------------------------------------------------------------- Pride Hold Limited United Kingdom - -------------------------------------------------------------------------------- Prince George Energy Company California - -------------------------------------------------------------------------------- Quartz Peak Energy Company California - -------------------------------------------------------------------------------- Rapid Energy Limited United Kingdom - -------------------------------------------------------------------------------- Rapidan Energy Company California - -------------------------------------------------------------------------------- Reeves Bay Energy Company California - -------------------------------------------------------------------------------- Ridgecrest Energy Company California - -------------------------------------------------------------------------------- Rillington Holdings Limited Gibraltar - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------- ENTITY JURISDICTION OF ORGANIZATION - ---------------------------------------------------------------------------- Rio Escondido Energy Company California - ---------------------------------------------------------------------------- Riverport Energy Company California - ---------------------------------------------------------------------------- San Gabriel Energy Company California - ---------------------------------------------------------------------------- San Joaquin Energy Company California - ---------------------------------------------------------------------------- San Juan Energy Company California - ---------------------------------------------------------------------------- San Pascual Cogeneration Company The Netherlands International B.V. (P) - ---------------------------------------------------------------------------- San Pedro Energy Company California - ---------------------------------------------------------------------------- Santa Ana Energy Company California - ---------------------------------------------------------------------------- Santa Clara Energy Company California - ---------------------------------------------------------------------------- Silver Springs Energy Company California - ---------------------------------------------------------------------------- Silverado Energy Company California - ---------------------------------------------------------------------------- Sonoma Geothermal Company California - ---------------------------------------------------------------------------- South Coast Energy Company California - ---------------------------------------------------------------------------- Southern Sierra Energy Company California - ---------------------------------------------------------------------------- Southern Sierra Gas Company California - ---------------------------------------------------------------------------- Southwestern Generation B.V. The Netherlands - ---------------------------------------------------------------------------- Thorofare Energy Company California - ---------------------------------------------------------------------------- Traralgon Power Pty. Ltd. Australia - ---------------------------------------------------------------------------- Viejo Energy Company California - ---------------------------------------------------------------------------- Vista Energy Company New Jersey - ---------------------------------------------------------------------------- Western Sierra Energy Company California - ---------------------------------------------------------------------------- EX-23.1 8 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.1 [LOGO OF ARTHUR ANDERSEN] Consent of Independent Public Accountants As independent public accountants, we hereby consent 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 Los Angeles, California February 17, 2000 EX-23.2 9 CONSENT OF PRICEWATERHOUSE COOPERS EXHIBIT 23.2 CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-4 of Edison Mission Energy of our report dated 30 September 1999 relating to the financial statements of Fiddlers Ferry and Ferrybridge C Power Stations appearing in the Current Reports on the two Form 8-K/A filings of Edison Mission Energy dated 19 July 1999. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /s/ PricewaterhouseCoopers PricewaterhouseCoopers London United Kingdom 18 February 2000 EX-25.1 10 STATEMENT OF ELIGIBILITY 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) [_] _________________ THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) _________________ Edison Mission Energy (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 Von Karman Avenue Suite 1700 Irvine, California 92612 (Address of principal executive offices) (Zip code) _________________ 7.73% Senior Notes due June 15, 2009 (Title of the indenture securities) ================================================================================ 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. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a- 29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank 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 January, 2000. THE BANK OF NEW YORK By: /s/ MARYBETH LEWICKI --------------------------- Name: MARYBETH LEWICKI Title: VICE PRESIDENT ________________________________________________________________________________ Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1999, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
ASSETS Dollar Amounts In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin........ $ 6,394,412 Interest-bearing balances................................. 3,966,749 Securities: Held-to-maturity securities............................... 805,227 Available-for-sale securities............................. 4,152,260 Federal funds sold and Securities purchased under 1,449,439 agreements to resell...................................... Loans and lease financing receivables: Loans and leases, net of unearned income.................................................. 37,900,739 LESS: Allowance for loan and lease losses............................................ 572,761 LESS: Allocated transfer risk reserve................................................. 11,754 Loans and leases, net of unearned income, allowance, and reserve.................................. 37,316,224 Trading Assets............................................. 1,646,634 Premises and fixed assets (including capitalized leases)... 678,439 Other real estate owned.................................... 11,571 Investments in unconsolidated subsidiaries and associated 183,038 companies................................................. Customers' liability to this bank on acceptances 349,282 outstanding............................................... Intangible assets.......................................... 790,558 Other assets............................................... 2,498,658 ----------- Total assets............................................... $60,242,491 =========== LIABILITIES Deposits: In domestic offices....................................... $26,030,231 Noninterest-bearing....................................... 11,348,986 Interest-bearing.......................................... 14,681,245 In foreign offices, Edge and Agreement subsidiaries, and 18,530,950 IBFs...................................................... Noninterest-bearing....................................... 156,624 Interest-bearing.......................................... 18,374,326 Federal funds purchased and Securities sold under 2,094,678 agreements to repurchase................................. Demand notes issued to the U.S.Treasury.................... 232,459 Trading liabilities........................................ 2,081,462 Other borrowed money: With remaining maturity of one year or less............... 863,201 With remaining maturity of more than one year through 449 three years.............................................. With remaining maturity of more than three years.......... 31,080 Bank's liability on acceptances executed and outstanding... 351,286
-4- Subordinated notes and debentures......................... 1,308,000 Other liabilities......................................... 3,055,031 ----------- Total liabilities......................................... 54,578,827 =========== EQUITY CAPITAL Common stock.............................................. 1,135,284 Surplus................................................... 815,314 Undivided profits and capital reserves.................... 3,759,164 Net unrealized holding gains (losses) on (15,440) available-for-sale securities............................ Cumulative foreign currency translation adjustments....... (30,658) ----------- Total equity capital...................................... 5,663,664 ----------- Total liabilities and equity capital..................... $60,242,491 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Reyni Directors Alan R. Griffith Gerald L. Hassell ________________________________________________________________________________ EX-99.1 11 FORM OF LETTER OF TRANSMITTAL Exhibit 99.1 LETTER OF TRANSMITTAL EDISON MISSION ENERGY Offer for all Outstanding 7.73% Senior Notes due June 15, 2009 in Exchange for 7.73% Senior Notes due June 15, 2009 Which Have Been Registered Under the Securities Act of 1933, as Amended, Pursuant to the Prospectus, dated , 2000 - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON , 2000, 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: The Bank of New York, Exchange Agent By Hand or Overnight Delivery: By Registered or Certified Mail: The Bank of New York The Bank of New York 101 Barclay Street 101 Barclay Street, 7E Corporate Trust Services Window New York, NY 10286 Ground Level Attention: Reorganization Section New York, NY 10286 Attention: Reorganization Section For Information Call: (212) 815-6333 By Facsimile Transmission (for Eligible Institutions Only): (212) 571-3080 Confirm by Telephone: (212) 815-6333 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 , 2000 (the "Prospectus"), of Edison Mission Energy, a California corporation (the "Company"), and this Letter of Transmittal (the "Letter"), which together constitute the Company's offer (the "Exchange Offer") to exchange an aggregate principal amount of up to $600,000,000 of the Company's 7.73% Senior Notes due June 15, 2009 (the "Exchange Notes") 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 7.73% Senior Notes due June 15, 2009 (the "Original Notes") from the registered holders thereof (the "Holders"). For each Original Note accepted for exchange, the Holder of such Original Note will receive an Exchange Note having a principal amount equal to that of the surrendered Original Note. The Exchange Notes will bear interest from the most recent date to which interest has been paid on the Original Notes or, if no interest has been paid on the Original Notes, from June 28, 1999. Accordingly, registered Holders of Exchange Notes 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 June 28, 1999. Original Notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders of Original Notes whose Original Notes are accepted for exchange will not receive any payment in respect of accrued interest on such Original Notes 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 Notes either if certificates are to be forwarded herewith or if a tender of certificates for Original Notes, 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 and an Agent's Message is not delivered. Tenders by book-entry transfer may also be made by delivering an Agent's Message in lieu of this Letter. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Exchange Agent and forming a part of a Book-Entry Confirmation (as defined below), which states that the Book-Entry Transfer Facility has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by this Letter and that the Company may enforce this Letter against such participant. Holders of Original Notes whose certificates are not immediately available, or who are unable to deliver their certificates or confirmation of the book-entry tender of their Original Notes 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 Notes 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 Notes to which this Letter relates. If the space provided below is inadequate, the certificate numbers and principal amount of Original Notes should be listed on a separate signed schedule affixed hereto. 2
- ----------------------------------------------------------------------------------------------------- DESCRIPTION OF ORIGINAL NOTES 1 2 3 - ----------------------------------------------------------------------------------------------------- Aggregate Principal Principal Name(s) and Address(es) of Registered Holder(s) Certificate Amount of Amount (Please fill in, if blank) Number(s)* Original Note(s) Tendered** - ----------------------------------------------------------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- TOTAL - ----------------------------------------------------------------------------------------------------- * Need not be completed if Original Notes 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 Notes represented by the Original Notes indicated in column 2. See Instruction 2. Original Notes tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1. - -----------------------------------------------------------------------------------------------------
[_] CHECK HERE IF TENDERED ORIGINAL NOTES 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________________ By crediting the Original Notes to the Exchange Agent's account at the Book-Entry Transfer Facility's Automated Tender Offer Program ("ATOP") and by complying with applicable ATOP procedures with respect to the Exchange Offer, including transmitting to the Exchange Agent a computer-generated Agent's Message in which the holder of the Original Notes acknowledges and agrees to be bound by the terms of, and makes the representations and warranties contained in, this Letter, the participant in the Book-Entry Transfer Facility confirms on behalf of itself and the beneficial owners of such Original Notes all provisions of this Letter (including all representations and warranties) applicable to it and such beneficial owner as fully as if it had completed the information required herein and executed and transmitted this Letter to the Exchange Agent. [_] CHECK HERE IF TENDERED ORIGINAL NOTES 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. 3 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 Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that such Original Notes were acquired by such broker-dealer as a result of market-making or other trading activities and, that it must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, including the delivery of a prospectus that contains information with respect to any selling holder required by the Securities Act in connection with any resale of the Exchange Notes.; 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 Notes, it represents that the Original Notes to be exchanged for the Exchange Notes were acquired as a result of market-making activities or other trading activities. 4 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 Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the Original Notes 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 Notes 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 Notes, with full power of substitution, among other things, to cause the Original Notes 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 Notes, and to acquire Exchange Notes issuable upon the exchange of such tendered Original Notes, 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 Notes acquired in exchange for Original Notes tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the undersigned, that neither the Holder of such Original Notes 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 Notes and that neither the Holder of such Original Notes 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 Notes issued pursuant to the Exchange Offer in exchange for the Original Notes 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 Notes 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 Notes. 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 Notes and has no arrangement or understanding to participate in a distribution of Exchange Notes. 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 Notes 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 Notes for its own account in exchange for Original Notes, it represents that the Original Notes to be exchanged for the Exchange Notes 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 Notes; 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 Notes 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. 5 Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, please deliver the Exchange Notes (and, if applicable, substitute certificates representing Original Notes for any Original Notes not exchanged) in the name of the undersigned or, in the case of a book-entry delivery of Original Notes, 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 Notes (and, if applicable, substitute certificates representing Original Notes for any Original Notes not exchanged) to the undersigned at the address shown above in the box entitled "Description of Original Notes." THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL NOTES AS SET FORTH IN SUCH BOX ABOVE.
- ------------------------------------------------------- ------------------------------------------------- SPECIAL ISSUANCE INSTRUCTIONS SPECIAL ISSUANCE INSTRUCTIONS (See Instructions 3 and 4) (See Instructions 3 and 4) - ------------------------------------------------------- ------------------------------------------------- To be completed ONLY if certificates for Origi- To be completed ONLY if certificates for nal Notes not exchanged and/or Exchange Notes are Original Notes not exchanged and/or Exchange to be issued in the name of and sent to someone Notes are to be sent to someone other than the other than the person or persons whose signature(s) person or persons whose signature(s) appear(s) appear(s) on this Letter above, or if Original Notes on this Letter above or to such person or delivered by book-entry transfer which are not ac- persons at an address other than shown in the cepted for exchange are to be returned by credit to box entitled "Description of Original Notes" on an account maintained at the Book-Entry Transfer this Letter above. Facility other than the account indicated above. Issue Exchange Notes and/or Original Notes to: Mail Exchange Notes and/or Original Notes to: Name(s)______________________________________________ Name(s)__________________________________________ (Please Type or Print) (Please Type or Print) _____________________________________________________ _________________________________________________ (Please Type or Print) (Please Type or Print) Address______________________________________________ Address__________________________________________ _____________________________________________________ _________________________________________________ (Zip Code) (Zip Code) (Complete Substitute Form W-9) [_] Credit unexchanged Original Notes delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below. _____________________________________________________ Book-Entry Transfer Facility Account Number, if applicable) - ------------------------------------------------------- -------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU THEREOF (TOGETHER WITH THE CERTIFICATES FOR ORIGINAL NOTES 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. 6 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____________________________________ _____________________________, 2000 X____________________________________ _____________________________, 2000 (Signature(s) of Owner) (Date) Area Code and Telephone Number____________________________________________ If a holder is tendering any Original Notes, this Letter must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Original Notes 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:__________________________________________________________________ __________________________________________________________________________ (Including Zip Code) SIGNATURE GUARANTEE (If required by Instruction 3) Signature(s) Guaranteed by an Eligible Institution:__________________________________________________ (Authorized Signature) __________________________________________________________________________ (Title) __________________________________________________________________________ (Name and Firm) Dated:_____________________________________________________________, 2000 - -------------------------------------------------------------------------------- 7 INSTRUCTIONS Forming Part of the Terms and Conditions of the Exchange Offer for the 7.73% Senior Notes Due June 15, 2009 of Edison Mission Energy in Exchange for the 7.73% Senior Notes Due June 15, 2009 of Edison Mission Energy Which Have Been Registered Under the Securities Act of 1933, as Amended 1. Delivery of this Letter and Notes; Guaranteed Delivery Procedures. This Letter is to be completed by holders of Original Notes 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 and an Agent's Message is not delivered. Tenders by book-entry transfer may also be made by delivering an Agent's Message in lieu of this Letter. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to and received by the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by the Letter of Transmittal and that the Company may enforce the Letter of Transmittal against such participant. Certificates for all physically tendered Original Notes, or Book-Entry Confirmation, as the case may be, as well as a properly completed and duly executed Letter (or manually signed facsimile hereof or Agent's Message in lieu thereof) 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 Notes tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple thereof Holders whose certificates for Original Notes 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 Notes 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 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 Notes and the amount of Original Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Original Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, together with a properly completed and duly executed Letter (or facsimile thereof or Agent's Message in lieu thereof) with any required signature guarantees 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 Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, together with a properly completed and duly executed Letter (or facsimile thereof or Agent's Message in lieu thereof) with any required signature guarantees and all other documents required by this Letter, are received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. The method of delivery of this Letter, the Original Notes 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 Notes 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. 8 See "The Exchange Offer" section of the Prospectus. 2. Partial Tenders (not applicable to noteholders who tender by book-entry transfer). If less than all of the Original Notes evidenced by a submitted certificate are to be tendered, the tendering holder(s) should fill in the aggregate principal amount of Original Notes to be tendered in the box above entitled "Description of Original Notes--Principal Amount Tendered. " A reissued certificate representing the balance of nontendered Original Notes 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 Notes 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 Notes 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 Notes are owned of record by two or more joint owners, all of such owners must sign this Letter. If any tendered Original Notes 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 Notes specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the Exchange Notes are to be issued, or any untendered Original Notes 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 Notes 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 Notes are tendered: (i) by a registered holder of Original Notes (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 Notes) 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. 9 Tendering holders of Original Notes should indicate in the applicable box the name and address to which Exchange Notes issued pursuant to the Exchange Offer and or substitute certificates evidencing Original Notes 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. Noteholders tendering Original Notes by book-entry transfer may request that Original Notes not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such noteholder may designate hereon. If no such instructions are given, such Original Notes 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 Notes 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 Notes. If withholding results in an overpayment of taxes, a refund may be obtained. Exempt holders of Original Notes (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 Notes 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 Notes 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 Notes 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 Notes to it or its order pursuant to the Exchange Offer. If, however, Exchange Notes and/or substitute Original Notes not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Original Notes tendered hereby, or if tendered Original Notes are registered in the name of any person other than the 10 person signing this Letter, or if a transfer tax is imposed for any reason other than the transfer of Original Notes 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 Notes 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 Notes, by execution of this Letter, shall waive any right to receive notice of the acceptance of their Original Notes 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 Notes nor shall any of them incur any liability for failure to give any such notice. 9. Mutilated, Lost, Stolen or Destroyed Original Notes. Any holder whose Original Notes 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 Notes 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 Notes 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 Notes to be withdrawn (the "Depositor"), (ii) identify the Original Notes to be withdrawn (including certificate number or numbers and the principal amount of such Original Notes), (iii) contain a statement that such holder is withdrawing his election to have such Original Notes exchanged, (iv) be signed by the holder in the same manner as the original signature on the Letter by which such Original Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer to have the Trustee with respect to the Original Notes register the transfer of such Original Notes in the name of the person withdrawing the tender and (v) specify the name in which such Original Notes are registered, if different from that of the Depositor. If Original Notes 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 Notes 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 Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer and no Exchange Notes will be issued with respect thereto unless the Original Notes so withdrawn are validly retendered. Any Original Notes that have been tendered for exchange but which are not exchanged for any reason will be returned to the Holder thereof without cost 11 to such Holder (or, in the case of Original Notes 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 Notes will be credited to an account maintained with the Book-Entry Transfer Facility for the Original Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Original Notes 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. 12 TO BE COMPLETED BY ALL TENDERING HOLDERS (See Instruction 5) PAYOR'S NAME: THE BANK OF NEW YORK - ------------------------------------------------------------------------------------------------------- Part 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND TIN:__________________________ CERTIFY BY SIGNING AND DAT- Social Security Number or ING BELOW. Employer Identification Number SUBSTITUTE ------------------------------------------------------------------ Form W-9 Part 2--TIN Applied For [_] ------------------------------------------------------------------ Department of the Treasury CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT: Internal Revenue Service (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: Taxpayer (a) I am exempt from backup withholding, or (b) I have not Identification Number been notified by the Internal Revenue Service (the "IRS") ("TIN") and that I am subject to backup withholding as a result of a Certification 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 ________________ ________________________________________________________________________________ 13 EX-99.2 12 FORM OF NOTICE OF GUARANTEED DELIVERY Exhibit 99.2 NOTICE OF GUARANTEED DELIVERY FOR EDISON MISSION ENERGY This form or one substantially equivalent hereto must be used to accept the Exchange Offer of Edison Mission Energy (the "Company") made pursuant to the Prospectus, dated , 2000 (the "Prospectus"), if certificates for the outstanding 7.73% Senior Notes due June 15, 2009 of the Company (the "Original Notes") 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 The Bank 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 Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or facsimile thereof or Agent's Message in lieu 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: The Bank of New York, Exchange Agent By Registered or Certified Mail: By Hand or Overnight Delivery: The Bank of New York The Bank of New York 101 Barclay Street, 7E 101 Barclay Street New York, New York 10286 Corporate Trust Services Window Attention: Reorganization Section Ground Level New York, New York 10286 Attention: Reorganization Section For Information Call: (212) 815-6333 By Facsimile Transmission (For Eligible Institutions Only): (212) 571-3080 Confirm by Telephone: (212) 815-6333 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 Notes 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 Notes Tendered: * $_______________________________________ Certificate Nos. (if available): If Original Notes will be delivered bybook-entry transfer to The Depository Trust Company, provide account number. ________________________________________ Total Principal Amount Represented by Original Notes 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) Date or Authorized Signatory Area Code and Telephone Number: _________________________________________ Must be signed by the holder(s) of Original Notes as their name(s) appear(s) on certificates for Original Notes 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. 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 Notes tendered hereby in proper form for transfer, or timely confirmation of the book- entry transfer of such Original Notes 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: __________________________________ Zip Code (Please Type of Print) Area Code and Tel. No.________________ Dated: _________________________________ NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL NOTES WITH THIS FORM. CERTIFICATES FOR ORIGINAL NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL. EX-99.3 13 FORM OF LETTER TO CLIENTS Exhibit 99.3 EDISON MISSION ENERGY OFFER FOR ALL OUTSTANDING 7.73% SENIOR NOTES DUE JUNE 15, 2009 IN EXCHANGE FOR 7.73% SENIOR NOTES DUE JUNE 15, 2009, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED To Our Clients: Enclosed for your consideration is a Prospectus, dated , 2000 (the "Prospectus"), and the related Letter of Transmittal (the "Letter of Transmittal"), relating to the offer (the "Exchange Offer") of Edison Mission Energy (the "Company") to exchange its 7.73% Senior Notes due June 15, 2009, which have been registered under the Securities Act of 1933, as amended (the "Exchange Notes"), for its outstanding 7.73% Senior Notes due June 15, 2009 (the "Original Notes"), 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 June 23, 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 Notes held by us for your account but not registered in your name. A tender of such Original Notes 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 Notes 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 Notes 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 , 2000, unless extended by the Company. Any Original Notes 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 Notes. 2. The Exchange Offer is subject to certain conditions set forth in the Prospectus in the section captioned "The Exchange Offer--Conditions to the Exchange Offer." 3. Any transfer taxes incident to the transfer of Original Notes 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 , 2000, unless extended by the Company. If you wish to have us tender your Original Notes, 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 Notes. 2 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 Energy with respect to its Original Notes. This will instruct you to tender the Original Notes 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. The undersigned expressly agrees to be bound by the enclosed Letter of Transmittal and that such Letter of Transmittal may be enforced against the undersigned. Please tender the Original Notes held by you for my account as indicated below: 7.73% Senior Notes due June 15, 2009 $________________ (Aggregate Principal Amount of Original Notes) [_] Please do not tender any Original Notes held by you for my account. Dated: , 2000 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 Notes 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 Notes held by us for your account. 3 EX-99.4 14 FORM OF LETTER TO BROKERS, DEALERS Exhibit 99.4 EDISON MISSION ENERGY OFFER FOR ALL OUTSTANDING 7.73% SENIOR NOTES DUE JUNE 15, 2009 IN EXCHANGE FOR 7.73% SENIOR NOTES DUE JUNE 15, 2009, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED To: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES: Edison Mission Energy (the "Company") is offering, upon and subject to the terms and conditions set forth in the Prospectus, dated , 2000 (the "Prospectus"), and the enclosed Letter of Transmittal (the "Letter of Transmittal"), to exchange (the "Exchange Offer") its 7.73% Senior Notes due June 15, 2009, which have been registered under the Securities Act of 1933, as amended, for its outstanding 7.73% Senior Notes due June 15, 2009 (the "Original Notes"). The Exchange Offer is being made in order to satisfy certain obligations of the Company contained in the Registration Rights Agreement dated June 23, 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 Notes regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Original Notes registered in your name or in the name of your nominee, or who hold Original Notes registered in their own names, we are enclosing the following documents: 1. Prospectus dated , 2000; 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 Notes 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 Notes 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 The Bank 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 , 2000, unless extended by the Company (the "Expiration Date"). Original notes 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 or Agent's Message in lieu thereof), with any required signature guarantees and any other required documents, should be sent to the Exchange Agent and certificates representing the Original Notes 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 Notes desires to tender, but such Original Notes are not immediately available, or time will not permit such holder's Original Notes 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 Notes 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 Notes 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 The Bank 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 ENERGY 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-----