Exhibit 10.1

Portions of this exhibit marked by an (***) have been omitted pursuant to a
request for
confidential treatment filed separately with the Securities and Exchange
Commission.

--------------------------------------------------------------------------------

IMPLEMENTATION AGREEMENT

by and between

EME HOMER CITY GENERATION L.P.,
and

GENERAL ELECTRIC CAPITAL CORPORATION

Dated as of March 29, 2012

--------------------------------------------------------------------------------

 

US1 32371580.2

--------------------------------------------------------------------------------

TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS    2

Section 1.1.
Defined Terms    2

Section 1.2.
Definitions    2

Section 1.3.
Rules of Interpretation    6

ARTICLE II
ACKNOWLEDGEMENTS aND AGREEMENTS    6

Section 2.1.
Obligations and Rights    6

Section 2.2.
[Reserved]    6

Section 2.3.
Access Rights    6

Section 2.4.
Non-Solicitation    7

Section 2.5.
Rent Default Event    7

Section 2.6.
BOP Agreements    7

ARTICLE III
OBLIGATIONS IN RESPECT OF THE EPC AGREEMENT    8

Section 3.1.
Execution of EPC Agreement    8

Section 3.2.
Actions in Connection with the Execution of the EPC Agreement    8

Section 3.3.
Secondment Agreements    8

Section 3.4.
Acknowledgement Regarding the EPC Counterparty’s Right to Assign the EPC
Agreement; Homer City Cooperation    8

Section 3.5.
Modifications to EPC Agreement and/or BOP Agreements    8

Section 3.6.
No Third Party Beneficiary    9

Section 3.7.
Actions in Connection with the Performance of Obligations Arising Under the EPC
Agreement and BOP Agreements.    9

ARTICLE IV
IMPLEMENTATION TRANSACTIONS    10

Section 4.1.
Implementation Transactions    10

Section 4.2.
Debt Party Consent    10

Section 4.3.
Assistance with Tender Offer    10

Section 4.4.
Release of Confidentiality Restrictions    10

Section 4.5.
Assistance with Rating Agency Review    11

Section 4.6.
Section 467 Loan Balance    11

ARTICLE V
TRANSITION SERVICES    11

Section 5.1.
Transition Services Agreement    11

Section 5.2.
Provision of Information.    11

Section 5.3.
Conduct of Business    12

ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOMER CITY    13

Section 6.1.
Existence, Power and Authority    13

Section 6.2.
Authorization    13

Section 6.3.
No Conflict    13

Section 6.4.
Consents    13

Section 6.5.
Legal Proceedings    14

Section 6.6.
Transfer of Assets    14

Section 6.7.
BOP Agreements    14

ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF GE    14

i

--------------------------------------------------------------------------------

Section 7.1.
Existence, Power and Authority    15

Section 7.2.
Authorization    15

Section 7.3.
No Conflict    15

Section 7.4.
Consents    15

Section 7.5.
Legal Proceedings    15

ARTICLE VIII
INDEMNITY    15

Section 8.1.
General Indemnity by Homer City in Favor of GE    15

Section 8.2.
Procedure for General Indemnity by Homer City in Favor of GE    16

Section 8.3.
General Indemnity by GE in Favor of Homer City    16

Section 8.4.
Procedure for General Indemnity by GE in Favor of Homer City    16

Section 8.5.
Indemnities Not Exclusive    16

ARTICLE IX
TERMINATION AND EXCULPATION    17

Section 9.1.
Termination by GE    17

Section 9.2.
Automatic Termination    17

Section 9.3.
Termination by Homer City    17

Section 9.4.
Termination Amount    18

Section 9.5.
Termination Acknowledgements    18

Section 9.6.
Exculpation    19

Section 9.7.
Non-Exclusive Remedies    19

ARTICLE X
MISCELLANEOUS    20

Section 10.1.
Counterparts    20

Section 10.2.
Governing Law    20

Section 10.3.
Further Assurances    20

Section 10.4.
Notices    20

Section 10.5.
Waiver of Jury Trial    21

Section 10.6.
CONSENT TO JURISDICTION    21

Section 10.7.
Binding Effect; Assignment; Entire Agreement    22

Section 10.8.
Severability    22

Section 10.9.
Survival of Representations and Warranties, Indemnities and
Confidentiality    22

Section 10.10.
Waivers and Amendments; Non-Contractual Remedies; Preservation of

Remedies    22
Section 10.11.
Confidentiality    22

Section 10.12.
Costs and Expenses    23

Section 10.13.
Balance of Plant    24

Section 10.14.
Alternative Transaction    24

Section 10.15.
Cooperation Among the Owner Lessors and Owner Participants    24

Section 10.16.
Joinder of MetLife    24

Section 10.17.
Third Party Beneficiaries    24

Section 10.18.
Side Letter    24

ii

--------------------------------------------------------------------------------

Exhibits

Exhibit A    EPC Purchase Orders and BOP Agreements

Annexes

Annex I    Assignment Term Sheet
Annex II    Sublease Term Sheet

Schedules

Schedule 1.2    Permitted Encumbrances
Schedule 5.3    Permitted Activities
Schedule 6.5    Pending Legal Proceedings – Homer City
Schedule 6.6    Affiliate Assets
Schedule 7.5    Pending Legal Proceedings – GE

iii

--------------------------------------------------------------------------------

This IMPLEMENTATION AGREEMENT (this “Agreement”) is entered into as of March 29,
2012 (the “Effective Date”), by and between EME Homer City Generation L.P.
(“Homer City” or the “Facility Lessee”) and General Electric Capital Corporation
(“GE”).
W I T N E S S E T H
WHEREAS, pursuant to the Facility Lease Agreement (OL1) (and the Other Facility
Leases as defined therein), dated as of December 7, 2001, Homer City entered
into a sale/leaseback transaction with the Owner Lessors (each of which is
beneficially owned by GE or MetLife, as applicable), of the Homer City Electric
Generating Station, an 1,884-MW coal-fired, three unit power generation facility
and adjacent coal cleaning facility located near Indiana, Pennsylvania (the
“Facility”),
WHEREAS, concurrently with the execution of the Facility Lease (OL1) and the
Other Facility Leases, Homer City and the Owner Lessors, as applicable, also
entered into the Participation Agreement (OL1), dated as of December 7, 2001 (as
amended, supplemented or otherwise modified from time to time, the
“Participation Agreement (OL1)”), among Wells Fargo Bank Northwest, National
Association, as independent manager under the Lessor LLC Agreement, General
Electric Capital Corporation, as the owner participant, Homer City Funding, LLC,
as Lender, The Bank of New York, as the Lease Indenture Trustee, the Lease
Indenture Company, the Security Agent, the Bondholder Trustee and the Bondholder
Trustee Company, and the Other Participation Agreements (as defined in the
Participation Agreement (OL1));
WHEREAS, the parties desire that GE, EFS Homer City, LLC, a wholly owned
subsidiary of GE (“EFS Homer City”), or another Affiliate of GE reasonably
acceptable to Homer City (such party, the “EPC Counterparty”) and Kiewit Power
Constructors Co. (“EPC Contractor”) (x) enter into a Turnkey Engineering,
Procurement and Construction Agreement in substantially the form as has been
negotiated as of the date hereof between EFS Homer City and EPC Contractor and
shared with Homer City immediately prior to the execution of this Agreement (the
“EPC Agreement”), pursuant to which EPC Contractor will install pollution
control equipment (the “Project”) at the Facility by adding flue-gas
desulfurization retrofit scrubber systems to Units 1 and 2 of the three
coal-fired boilers of the Facility, a baghouse, and other related improvements
contemplated by the EPC Agreement.
WHEREAS, the parties also desire that (a) the EPC Counterparty assume the
balance of plant construction agreements (the “BOP Agreements”) and other
contracts and purchase orders (including the purchase orders requested from the
EPC Contractor (the “EPC Purchase Orders”)) set forth on Exhibit A attached
hereto which pertain to construction work and other services in support of the
Project, pursuant to which balance of plant construction and installation work
and other services (which is not within the scope of work of the EPC Agreement)
will be performed by the contractors party thereto (the “Other Contractors”) in
connection with such pollution control equipment (the equipment and improvements
to be installed and constructed by the EPC Contractor and the Other Contractors,
as applicable, shall be collectively referred to herein as the “Pollution
Control Improvements”), and (b) the EPC Counterparty or its Affiliate and
Midwest Generation EME, LLC enter into Secondment Agreements with respect to a
project manager and an engineering manager, in each case, in substantially the
form as has been negotiated as of the

1

--------------------------------------------------------------------------------

date hereof and shared with Homer City immediately prior to the execution of
this Agreement (the “Secondment Agreements”);
NOW THEREFORE, in consideration of the foregoing premises, the mutual promises
and covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Homer City and GE
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1.    Defined Terms. Capitalized terms used in this Agreement,
including those in the recitals, and not otherwise defined herein, shall have
the respective meanings set forth in Appendix A to the Participation Agreement
(OL1).
Section 1.2.    Definitions. The following capitalized terms shall have the
following meanings:
“Affiliate Assets” shall have the meaning ascribed to such term in Section 6.6
hereof.
“Agreement” shall have the meaning ascribed to such term in the preamble hereto.
“Alternative Transaction” shall have the meaning ascribed to such term in
Section 10.14 hereof.
“Assignment” shall mean a transaction on substantially the terms and conditions
set forth on Annex I.
“Confidentiality Provisions” shall have the meaning ascribed to such term in
Section 4.4 hereof.
“Data Room” shall mean the electronic data site hosted by Intralinks in respect
of Homer City code named “Project World Series”.
“Easement and Attachment Agreement” means the Easement, License and Attachment
Agreement between Homer City, Penelec and NYSEG, dated as of March 18, 1999,
whereby Homer City agreed to provide Penelec and NYSEG with easements with
respect to the real property transferred to Homer City and whereby Penelec and
NYSEG agreed to provide Homer City with certain attachment rights with respect
to certain real property owned by Penelec and NYSEG.
“Effective Date” shall have the meaning ascribed to such term in the preamble
hereto.
“EME” means Edison Mission Energy, a Delaware corporation.
“Emission Allowances” means all present and future authorizations to emit
specified units of pollutants or hazardous substances, which units are
established by the Governmental Authority with jurisdiction over the Facility
under (i) an air pollution control and emission reduction program designed to
mitigate global warming, interstate or intra-state transport of air

2

--------------------------------------------------------------------------------

pollutants; (ii) a program designed to mitigate impairment of surface waters,
watersheds, or groundwater; or (iii) any pollution reduction program with a
similar purpose. Emission Allowances include allowances, as described above,
regardless as to whether the Governmental Authority establishing such allowances
designates such allowances by a name other than “allowances”.
“Emission Reduction Credits” means credits, in units that are established by the
Governmental Authority with jurisdiction over the Facility that has obtained the
credits, resulting from reductions in the emissions of air pollutants from an
emitting source or facility (including, without limitation, and to the extent
allowable under applicable law, reductions from shut-downs or control of
emissions beyond that required by applicable law) that: (i) have been identified
by the PaDEP as complying with applicable Pennsylvania law governing the
establishment of such credits (including, without limitation, that such
emissions reductions are enforceable, permanent, quantifiable and surplus) and
listed in the Emissions Reduction Credit Registry maintained by the PaDEP or
with respect to which such identification and listing are pending; or (ii) have
been certified by any other applicable Governmental Authority as complying with
the law and regulations governing the establishment of such credits (including,
without limitation, certification that such emissions reductions are
enforceable, permanent, quantifiable and surplus). The term includes emission
reduction credits that have been approved by the PaDEP and are awaiting USEPA
approval. The term also includes certified air emissions reductions, as
described above, regardless as to whether the Governmental Authority certifying
such reductions designates such certified air emissions reductions by a name
other than “emission reduction credits.”
“EPC Agreement” shall have the meaning ascribed to such term in the recitals
hereto.
“EPC Contractor” shall have the meaning ascribed to such term in the recitals
hereto.
“EPC Purchase Orders” shall have the meaning ascribed to such term in the
recitals hereto.
“EPC Termination Event” means (x) the termination of the EPC Agreement by GE or
EFS Homer City, (y) the furnishing of a notice of termination under the EPC
Agreement by the EPC Contractor if such notice is accepted by the EPC
Counterparty, or if such notice is not accepted, such notice has not been
withdrawn by the EPC Contractor by or before the forty fifth (45th) day after
the issuance of such notice, or (z) a modification or amendment of the EPC
Agreement or the occurrence of any other event, in the case of each of clauses
(x), (y) or (z), having the practical effect of terminating work on the Project;
provided, that, no action, event or circumstance arising under the EPC Agreement
after Substantial Completion (as defined in the EPC Agreement) shall constitute
an EPC Termination Event.
“Facility” shall have the meaning ascribed to such term in the recitals hereto.
“Facility Lease” shall mean each Facility Lease Agreement entered into by and
between an Owner Lessor and the Facility Lessee in respect of the lease of an
Undivided Interest in the Facility.

3

--------------------------------------------------------------------------------

“Facility Leases” shall mean, collectively, the GE Facility Leases and the
MetLife Facility Lease.
“Facility Lessee” shall have the meaning ascribed to such term in the recitals
hereto.
“GE” shall have the meaning ascribed to such term in the preamble hereto.
“GE Facility Leases” shall mean, collectively, each Facility Lease entered into
by and between a GE Owner Lessor and Homer City pursuant to the GE Participation
Agreements, each dated as of December 7, 2001.
“GE OL Undivided Interests” shall mean, collectively, the Undivided Interests in
the Facility of each of the GE Owner Lessors pursuant to the GE Participation
Agreements and GE Facility Leases.
“GE Owner Lessors” shall mean collectively Homer City OL1 LLC, Homer City OL2
LLC, Homer City OL3 LLC, Homer City OL4 LLC, Homer City OL5 LLC, Homer City OL7
LLC, and Homer City OL8 LLC.
“GE Participation Agreements” shall mean, collectively, each of the
Participation Agreements entered into by and between the GE Owner Lessors and
Homer City, each dated as of December 7, 2001.
“Good Utility Practices” mean any of the practices, methods and acts engaged in
or approved by a significant portion of the coal-fired electric utility industry
during the relevant time period, or any of the practices, methods or acts which,
in the exercise of reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to accomplish the desired result
at a reasonable cost consistent with good business practices, reliability,
safety and expedition. Good Utility Practices are not intended to be limited to
the optimum practices, methods or acts to the exclusion of all others, but
rather to be acceptable practices, methods or acts generally accepted in the
coal-fired electric utility industry.
“Homer City” shall have the meaning ascribed to such term in the recitals
hereto.
“Homer City Termination Date” shall have the meaning ascribed to such term in
Section 9.3 hereof.
“Implementation Transaction” shall mean the Sublease or an Assignment.
“Lease Indenture Secured Party” shall have the meaning set forth in the Lease
Indenture.
“Legal Proceedings” shall have the meaning ascribed to such term in Section 6.5
hereof.
“MetLife” shall mean Metropolitan Life Insurance Company.
“MetLife Facility Lease” shall mean Facility Lease Agreement (OL6), entered into
by and between MetLife Owner Lessor and Homer City, dated as of December 7,
2001, as

4

--------------------------------------------------------------------------------

transferred by GE to MetLife pursuant to that certain Sale Agreement (Homer City
OL6), dated as of September 19, 2005.
“MetLife OL Undivided Interest” shall mean the Undivided Interests in the
Facility of the MetLife Owner Lessor pursuant to the MetLife Participation
Agreement and MetLife Facility Lease.
“MetLife Owner Lessor” shall mean Homer City OL6 LLC.
“MetLife Participation Agreement” shall mean Participation Agreement (OL6),
entered into by and among the MetLife Owner Lessor, Homer City, GE, Wells Fargo
Bank Northwest, National Association, The Bank of New York, and Homer City
Funding, LLC, dated as of December 7, 2001, as transferred by GE to MetLife
pursuant to that certain Sale Agreement (Homer City OL6), dated as of September
19, 2005.
“NYSEG” means New York State Electric & Gas Corporation, a New York corporation.
“Owner Lessors” shall mean the GE Owner Lessors and the MetLife Owner Lessor,
collectively.
“Owner Participants” shall mean GE and MetLife, collectively.
“Participation Agreement (OL1)” shall have the meaning ascribed to such term in
the recitals hereto.
“Participation Agreements” shall mean the GE Participation Agreements and the
MetLife Participation Agreement.
“Penelec” means the Pennsylvania Electric Company, a Pennsylvania corporation.
“Permitted Encumbrances” means: (i) the easements and access rights that have
been granted by Homer City to Penelec and NYSEG pursuant to the Easement and
Attachment Agreement, including, without limitation, easements authorizing
access, use, maintenance, construction, repair, replacement and other activities
by Penelec and NYSEG, as further described in the Easement and Attachment
Agreement; (ii) those exceptions to title to the Transferred Assets and those
Encumbrances set forth in Schedule 1.2 and any comparable exceptions to title or
Encumbrances arising after December 16, 2011; (iii) statutory liens for taxes or
other governmental charges or assessments not yet due or delinquent or the
validity of which is being contested in good faith by appropriate proceedings
provided that the aggregate amount being so contested does not exceed $1
million; (iv) mechanics’, carriers’, workers’, repairers’ and other similar
liens arising or incurred in the ordinary course of business relating to
obligations as to which there is no default on the part of Homer City or the
validity of which are being contested in good faith, and which do not,
individually or in the aggregate, exceed $1 million; (v) zoning, entitlement,
conservation restriction and other land use and environmental regulations by
Governmental Authorities; and (vi) such other liens, imperfections in or failure
of title, charges, licenses, easements, restrictions and Encumbrances which do
not materially, individually or in the aggregate, detract from the value of the
Transferred Assets as currently used or materially interfere with the present
use of the Transferred Assets and do not secure

5

--------------------------------------------------------------------------------

indebtedness. For purposes of this definition, “Encumbrances” means any
mortgages, pledges, liens, security interests, conditional and installment sale
agreements, activity and use limitations, conservation easements, deed
restrictions, encumbrances and charges of any kind.
“Pollution Control Improvements” shall have the meaning ascribed to such term in
the recitals hereto.
“Project” shall have the meaning ascribed to such term in the recitals hereto.
“Protected Actions” shall have the meaning ascribed to such term in Section
10.11 hereof.
“Secondment Agreements” shall have the meaning ascribed to such term in the
recitals hereto.
“Sublease” shall mean a transaction on substantially the terms and conditions
set forth on Annex III.
“Termination Amount” shall have the meaning ascribed to such term in Section 9.4
hereof.
“Transferred Assets” shall have the meaning ascribed to such term in Section 6.6
hereof.
“Transaction Agreement” shall mean a master transaction agreement implementing
an Implementation Transaction, substantially on the terms and conditions set
forth in Annex I, in the case of an Assignment and Annex II in the case of a
Sublease.
Section 1.3.    Rules of Interpretation. The rules of interpretation set forth
in the Participation Agreement (OL1) shall apply to this Agreement, including
its preamble and recitals.
ARTICLE II
ACKNOWLEDGEMENTS AND AGREEMENTS
Section 2.1.    Obligations and Rights. The parties acknowledge that the EPC
Counterparty’s execution of the EPC Agreement (i) in no way implies any
obligation on the part of the Owner Participants or any of their Affiliates to
take any other action under the Operative Documents or under the EPC Agreement
and (ii) in no way implies that the Owner Participants are waiving any of their
rights under the Operative Documents. Except to the extent modified in Section
2.5, Section 8.5, Section 10.12 and Section 10.13, the terms and conditions set
forth in this Agreement in no way limit, alter or amend the provisions of any of
the Operative Documents, each of which remains in full force and effect in
accordance with the terms thereof.
Section 2.2.    [Reserved]
Section 2.3.    Access Rights. Homer City, in its capacity as Facility Lessee,
agrees, in connection with (and for the purpose of facilitating) the
transactions contemplated by this Agreement, the performance of the work
contemplated by the EPC Agreement and the BOP Agreements, and GE’s due diligence
investigation, to provide reasonable access to the Facility to

6

--------------------------------------------------------------------------------

GE, the EPC Contractor, and the BOP Contractors and their representatives upon
reasonable advance notice; provided, that such access shall be sufficient to
permit the EPC Contractor, any counterparty to a BOP Agreement, and each of
their respective subcontractors and representatives, subcontractors and
designees, as applicable, to complete the work contemplated by the EPC Agreement
and the BOP Agreements in accordance with the terms and conditions thereof
without undue delay or interference; provided, further, that, in all cases, such
access shall (i) be subject to compliance by such persons with applicable health
and safety laws and regulations and the health and safety policies of Homer City
and (ii) not unreasonably interfere with or endanger the operations of the
Facility (taking into account the purpose and intent of the EPC Agreement), it
being understood that the performance of the work contemplated by the EPC
Agreement will necessarily result in certain interference with the operations of
the Facility.
Section 2.4.    Non-Solicitation. GE agrees that neither it nor its Affiliates
shall, directly or indirectly, during the Restricted Period (as defined below),
hire or solicit for employment as an employee, consultant or otherwise, in each
case in connection with the Project or the transactions contemplated by this
Agreement, any person who is as an employee of Homer City or any of its
Affiliates without the written consent of Homer City or such Affiliate, as
applicable; provided, that in connection with the consummation of an
Implementation Transaction or an Alternative Transaction, GE may hire or solicit
for employment employees of Homer City in accordance with the terms and
conditions of the applicable Transaction Agreement; and provided further, that
nothing herein shall prevent GE or its Affiliates from hiring an employee of
Homer City or any of its Affiliates who responds to a general solicitation for
employment that is not targeted at any such employee. For purposes of this
Section 2.4, the “Restricted Period” shall mean, with respect to any employee of
Homer City or any of its Affiliates, the period commencing on the date hereof
and ending on the date which is twenty-four (24) months following the
termination of such employee’s employment with Homer City or the applicable
Affiliate; provided that the Restricted Period shall, solely in respect of Homer
City, automatically terminate upon the consummation of an Implementation
Transaction or an Alternative Transaction, as applicable.
Section 2.5.    Rent Default Event. To the extent permitted under the Operative
Documents, GE hereby waives, and agrees to cause the GE Owner Lessors to waive,
and to use commercially reasonable efforts to cause the MetLife Owner Lessor to
waive, any Rent Default Event occurring during the effectiveness of this
Agreement that would have occurred after the Effective Date but for the
existence of this waiver, and GE agrees to (and shall cause the GE Owner Lessors
and use commercially reasonable efforts to cause the MetLife Owner Lessor, as
applicable, to) evidence any such waiver in a form reasonably acceptable to the
parties hereto promptly following request therefor by Homer City. The waiver set
forth in this Section 2.5 shall be effective for all purposes under the
Operative Documents, provided that (i) each such waiver shall constitute a Rent
Default Event for the purposes of Section 6.10(b) of the Participation
Agreement, (ii) interest shall accrue on any unpaid Rent at the Overdue Rate,
and (iii) any unpaid Rent and accrued interest in respect thereof shall be due
in accordance with the Operative Documents.
Section 2.6.    BOP Agreements. Without limiting Section 6.7. for the avoidance
of doubt, the parties hereto acknowledge and agree that additional contracts
and/or purchase orders

7

--------------------------------------------------------------------------------

for additional services or work to be performed may need to be entered into by
the EPC Counterparty and/or GE in respect of the Pollution Control Improvements.
ARTICLE III
OBLIGATIONS IN RESPECT OF THE EPC AGREEMENT
Section 3.1.    Execution of EPC Agreement. GE shall cause the EPC Counterparty
to (x) enter into the EPC Agreement on or before twenty (20) days after the
Effective Date and (y) subject to obtaining the applicable consents under the
Operative Documents, assume the BOP Agreements and the EPC Purchase Orders, in
each case, in accordance with Section 3.7; provided that, subject to Section
3.5, the EPC Counterparty shall have the right in its sole and absolute
discretion to suspend or terminate the EPC Agreement and the BOP Agreements (to
the extent it has entered into them) in accordance with the terms thereof.
Section 3.2.    Actions in Connection with the Execution of the EPC Agreement.
Homer City shall cooperate with, and provide assistance to, GE and its
Affiliates in connection with the drafting, negotiation and execution of the EPC
Agreement including, without limitation, taking the following actions:
(a) provide material documents, access to key employees and advisors, and
material information and reports (internal and third-party) that Homer City may
have in its possession relating to the ownership, operation or maintenance of
the Facility as GE or its Affiliates may reasonably request, (b) provide to GE,
reports and information with respect to the Facility and the Pollution Control
Improvements as GE or its Affiliate may reasonably request, and (c) take such
other actions as may be reasonably requested by GE in connection with or
incidental to the foregoing.
Section 3.3.    Secondment Agreements. In connection with the entry by the EPC
Counterparty into the EPC Agreement and the assumption of the BOP Agreements and
the EPC Purchase Orders, Midwest Generation EME, LLC and the EPC Counterparty
(or another Affiliate of GE reasonably acceptable to Homer City) shall enter
into the Secondment Agreements.
Section 3.4.    Acknowledgement Regarding the EPC Counterparty’s Right to Assign
the EPC Agreement; Homer City Cooperation. GE may, in its sole and absolute
discretion, choose to assign or cause the EPC Counterparty to assign the EPC
Agreement and the BOP Agreements to one or more of the GE Owner Lessors, to a
contract trust owned by one or more GE Owner Lessors, to an entity to which the
interest of Homer City in the Facility Leases is transferred, or to any other
entity designated by GE. In the event that GE or the EPC Counterparty elects to
effect any such assignment, Homer City shall, at the cost and expense of GE, use
commercially reasonable efforts to assist with and effect any assignment of the
EPC Agreement and the BOP Agreements as may be requested by GE or the EPC
Counterparty.
Section 3.5.    Modifications to EPC Agreement and/or BOP Agreements. GE shall
not, and shall cause the EPC Counterparty not to, amend, waive or otherwise
modify, or suspend performance under or terminate, the EPC Agreement or the BOP
Agreements in a manner (i) which is reasonably likely to negatively impact the
safety of any employee or the public or (ii) that would violate applicable laws
or regulations (environmental or otherwise), excluding, in each case, any
negative impacts on the health or safety of any employees or the public or any

8

--------------------------------------------------------------------------------

violation of law or regulation (environmental or otherwise) resulting from
delays in the installation of, or failure to install, the Pollution Control
Improvements or otherwise from the failure to complete the Project. GE shall,
promptly following execution thereof, deliver to Homer City, copies of any
amendments or modifications to, or waivers of, the EPC Agreement and/or the BOP
Agreements.
Section 3.6.    No Third Party Beneficiary. Nothing herein shall cause (or be
deemed to cause) Homer City or its Affiliates to be a third party beneficiary
under the EPC Agreement or the BOP Agreements.
Section 3.7.    Actions in Connection with the Performance of Obligations
Arising Under the EPC Agreement and BOP Agreements.
(a)    Homer City shall use commercially reasonable efforts to cooperate with,
and provide assistance to, GE, GE’s Affiliates and GE’s designees in connection
with the performance of the obligations of the EPC Counterparty arising under
the EPC Agreement and the BOP Agreements, including, but not limited to, taking
such actions or providing such assistance as is reasonably requested by GE, GE’s
Affiliates or GE’s designees. In connection with the foregoing, Homer City shall
take such actions as are reasonably necessary or desirable to enable the EPC
Counterparty to fulfill their obligations under the EPC Agreement and the BOP
Agreements (other than with respect to payment or indemnity obligations of the
EPC Counterparty under such agreements), including, but not limited to, the
obligations of the EPC Counterparty under Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.8,
and 4.9 of the EPC Agreement. GE shall reimburse Homer City for its actual and
documented costs and expenses reasonably incurred by Homer City in connection
with the foregoing obligations provided that such costs and expenses shall not
include any salaries, benefits or other compensation of Homer City’s employees.
(b)    Subject to obtaining any required third party consents, Homer City
agrees, pursuant to a mutually acceptable transfer agreement, to transfer and
assign to the EPC Counterparty, all obligations, rights, benefits and
entitlements that Homer City may have (other than any rights, benefits or
entitlements of Homer City in its capacity as Facility Lessee) arising out of
(i) the EPC Purchase Orders and (ii) the BOP Agreements, including in each case
all ownership interests in any assets and work product resulting therefrom, and
agrees that regardless of whether or not such transfer and assignment shall have
occurred, it shall not have any interest in the EPC Agreement or the work
product resulting therefrom by reason of the EPC Purchase Orders and the BOP
Agreements. Homer City shall be responsible for payment with respect to all work
performed prior to the date hereof under the EPC Purchase Orders and the BOP
Agreements. In addition, with respect to those EPC Purchase Orders and BOP
Agreements not yet fully performed by the applicable counterparties thereto, and
such other purchase orders as may be subsequently issued by Homer City, (i)
Homer City shall continue to perform all of its obligations thereunder, other
than payment and indemnity obligations with respect to work performed after the
date hereof, which shall be for the account of the EPC Counterparty and (ii)
subject to obtaining required third party consents, Homer City and the EPC
Counterparty shall use commercially reasonable efforts to cause each such EPC
Purchase Order or BOP Agreement to be terminated and replaced with a new
purchase order or agreement directly between EFS

9

--------------------------------------------------------------------------------

Homer City and the applicable counterparty, on substantially the same terms and
conditions as apply to the original.
ARTICLE IV
IMPLEMENTATION TRANSACTIONS
Section 4.1.    Implementation Transactions. GE may, in its sole discretion,
request that Homer City consummate one or more Implementation Transactions and,
following such request, Homer City agrees to promptly consummate any such
Implementation Transaction selected by GE, in each case, in accordance with the
terms and conditions set forth in the Annexes (including the Transaction
Agreement, if applicable) applicable to any such Implementation Transaction. For
sake of clarity, and without limiting Section 9.2 of this Agreement, for so long
as this Agreement shall remain in effect, the fact that GE may have requested
that Homer City pursue any particular Implementation Transaction shall not
prevent GE from requesting that Homer City pursue any other Implementation
Transaction or an Alternative Transaction (including following the consummation
of any Sublease); provided, however, that GE agrees that once an Implementation
Transaction or Alternative Transaction (other than any Sublease) has been signed
(whether or not such Implementation Transaction or Alternative Transaction has
been consummated), GE will not request that Homer City pursue any other
Implementation Transaction or Alternative Transaction for so long as the parties
are actively pursuing the consummation thereof unless GE shall have reasonably
determined that it is reasonably likely that a condition to the closing of such
Implementation Transaction or Alternative Transaction is not capable of being
satisfied in a reasonably timely fashion.
Section 4.2.    Debt Party Consent. If, in connection with any Implementation
Transaction or Alternative Transaction, GE shall seek any consent or waiver from
the holders of the notes issued under the Lease Indentures and/or the holders of
the bonds issued under the Fundco Indenture, or any other Lease Indenture
Secured Party under the Operative Documents, to any waiver of, or amendment to,
any provisions of the Operative Documents, Homer City shall, upon GE’s request,
use commercially reasonable efforts to take such actions as are reasonably
requested by GE in connection with obtaining any such consents or waivers.
Section 4.3.    Assistance with Tender Offer. In the event that GE or any of its
Affiliates or designees launch a tender offer for the purchase of the bonds
issued under the Fundco Indenture, then, at GE’s request, Homer City shall
provide, at Homer City’s cost and expense, all such assistance and cooperation
in connection with any such tender offer as is reasonably requested by GE and
shall use commercially reasonable efforts to assist GE in the completion of any
such tender offer (it being understood and agreed, that in no event shall such
efforts require the payment of any amount by Homer City other than for its own
costs and expenses).
Section 4.4.    Release of Confidentiality Restrictions. Homer City acknowledges
that the consummation of any of the transactions described in Article IV hereof
may require the dissemination and disclosure of information that, pursuant to
Section 17.19 of each Participation Agreement, Section 10.11 of this Agreement,
and certain other confidentiality agreements and provisions, is required to be
kept confidential (collectively, the “Confidentiality Provisions”). Homer City
shall, to the extent in its control, waive any such Confidentiality Provisions
to the extent reasonably requested by GE in connection with the implementation
of any such

10

--------------------------------------------------------------------------------

transaction. The foregoing notwithstanding, in no event shall Homer City be
required to waive (or be deemed to have waived) any Confidentiality Provision to
the extent the information subject to such Confidentiality Provision is required
by contract or applicable law, regulation or legal process to remain
confidential in accordance with the terms thereof; provided that Homer City
agrees to use commercially reasonable efforts, at GE’s reasonable request, to
obtain consent to the waiver of any Confidentiality Provisions that are required
by contract to remain confidential.
Section 4.5.    Assistance with Rating Agency Review. If GE or any of its
Affiliates seek rating agency review of the bonds issued pursuant to the Fundco
Indenture (including in connection with any credit enhancement), then, at GE’s
request, Homer City shall provide such reasonable assistance and cooperation in
connection with any such rating agency review as is reasonably requested by GE
and shall use commercially reasonable efforts to assist GE in the completion of
any such rating agency review. The parties agree that any fees, costs and
expenses of the ratings agencies shall be borne by GE.
Section 4.6.    Section 467 Loan Balance. Homer City acknowledges and agrees
that the execution and delivery of this Agreement does not alter, modify,
change, amend or waive any obligation of GE to pay any Lessor Section 467 Loan
Balance and that no Lessor Section 467 Loan Balance or Lessor Section 467
Interest shall be due or payable solely as result of the execution and delivery
of this Agreement. For the avoidance of doubt, it is understood and agreed that
the treatment of the Lessor Section 467 Loan Balance and any Lessor Section 467
Interest in connection with the consummation of any Implementation Transaction
shall be addressed in the Annex relating to such Implementation Transaction.
ARTICLE V
TRANSITION SERVICES
Section 5.1.    Transition Services Agreement. In connection with any
Implementation Transaction or Alternative Transaction, EME and GE (or a designee
of GE) shall enter into a mutually acceptable transition services agreement (the
“Transition Services Agreement”); provided, that is understood, acknowledged and
agreed that (1) for services provided by EME and its Affiliates (other than
Edison Mission Marketing & Trading, Inc. (“EMMT”)) that have historically had
costs allocated to Homer City, the amounts payable therefor under the Transition
Services Agreement shall be consistent with the past practice of allocating such
costs to Homer City, (2) the costs of any services provided by EMMT to Homer
City shall be mutually agreed by the relevant parties and (3) costs in respect
of certain services provided by EME and its Affiliates have not previously been
allocated to Homer City and that costs with respect to such services shall be
mutually agreed in the Transition Services Agreement by the relevant parties.
Section 5.2.    Provision of Information.
(a)    During the effectiveness of this Agreement, Homer City will, at
reasonable times and upon reasonable notice: (i) provide GE and its Affiliates
and their respective employees, agents and advisors (including, without
limitation, accountants, counsel, environmental consultants, financial advisors
and other authorized representatives) (collectively, “Representatives”) with
access to the Data Room and use commercially reasonable efforts to

11

--------------------------------------------------------------------------------

update the Data Room on a monthly basis with current information of the type or
nature of the information contained in the Data Room on the date hereof; (ii)
give GE and its Representatives reasonable access at reasonable times with
reasonable advance notice to its managerial personnel and to all books, records,
plans, equipment, offices and other facilities and properties constituting the
Transferred Assets; (iii) furnish GE and its Representatives with (A) such
financial data as required to be delivered by Homer City under Section 5.1 of
each Participation Agreement, (B) if requested by GE or its Representatives,
copies of such financial data which has been or is subsequently developed by
Homer City or any of its Representatives on Homer City’s behalf and (C) such
other operating information as GE and its Representatives may from time to time
reasonably request; and (iv) furnish GE and its Representatives at their request
a copy of each material report, schedule or other document filed by Homer City
or any of its Affiliates with respect to the Transferred Assets with the Federal
Energy Regulatory Commission or any successor agency thereto, the Pennsylvania
Department of Environmental Protection and any successor agency thereto
(“PaDEP”) or any federal, state, local or other governmental, regulatory or
administrative agency, commission, department, board, or other governmental
subdivision, court, tribunal, arbitrating body or other governmental authority
(“Governmental Authority”); provided, however, that (A) any such access (and
resulting inspections and investigations) shall be conducted in such a manner as
not to interfere unreasonably with the operation of the Transferred Assets or
any ongoing proceeding before any Governmental Authority, (B) Homer City shall
not be required to take any action which would constitute a waiver of the
attorney-client privilege, and (C) Homer City need not supply GE and its
Representatives with any information which Homer City is under a legal or
contractual obligation not to supply. Homer City shall use commercially
reasonable efforts to cooperate with GE and its Representatives so as to permit
any access or provide any information in a manner not inconsistent with the
foregoing, or otherwise make the restrictions set forth in the above clauses
(A), (B) and (C) inapplicable. In the event that access is not granted by Homer
City in accordance with clauses (A), (B) and (C) above, Homer City shall provide
GE with an explanation regarding its decision to deny access. Notwithstanding
anything in this Section 5.2 to the contrary, Homer City will not furnish or
provide access to any employee personnel records or medical information unless
required by law or specifically authorized by the affected employee, and GE and
its Representatives shall not have the right to perform or conduct any
environmental sampling or testing at, in, on, or underneath the Transferred
Assets.
(b)    All information furnished to or obtained by GE and its Representatives
pursuant to this Section 5.2 shall be subject to the provisions of Section 17.19
of each Participation Agreement and Section 10.11 of this Agreement and shall be
treated as confidential nonpublic information. Except as specifically provided
herein or in Section 17.19 of each Participation Agreement, nothing in this
Section 5.2 shall impair or modify any of the rights or obligations of the
parties under each Participation Agreement, which rights and obligations shall
remain in effect until termination of such agreements in accordance with their
terms
Section 5.3.    Conduct of Business. Except (i) as contemplated or permitted by
this Agreement, (ii) for actions approved by GE in writing (which approval shall
not be unreasonably withheld, conditioned or delayed), (iii) as required by
applicable law, regulation or order, (iv) as may be required to comply with
Homer City’s obligations under the Operative Documents, or (v) as set forth on
Schedule 5.3, during the effectiveness of this Agreement, Homer City shall use
commercially reasonable efforts to operate and maintain its business and the
Facility in all

12

--------------------------------------------------------------------------------

material respects (A) according to its ordinary and usual course of business
consistent with past practice and (B) consistent with Good Utility Practice
(clauses (A) and (B), collectively “GE’s Preferred Approach”) unless Homer City
reasonably determines that a deviation from GE’s Preferred Approach is required
by or prudent in light of Homer City’s financial condition, liquidity needs or
fiduciary duties; provided that Homer City agrees to use commercially reasonable
efforts to consult in good faith with GE in advance of any material deviations
from GE’s Preferred Approach and consider, in good faith, any alternative
courses of action proposed by GE.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOMER CITY
Homer City represents and warrants, and covenants with respect to Section 6.6,
to GE, as of the Effective Date, as follows:
Section 6.1.    Existence, Power and Authority. Homer City is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Pennsylvania and has the requisite power and authority to enter
into this Agreement and to perform its obligations contemplated hereby.
Section 6.2.    Authorization. The execution and delivery by Homer City of this
Agreement, and the performance by Homer City of the transactions contemplated
hereby, have been duly authorized by all requisite organizational action and
proceedings of Homer City. This Agreement has been, or prior to the Effective
Date will be, duly executed and delivered by Homer City, and the provisions
herein are, or when so executed will be, the legally valid and binding
obligations of Homer City, enforceable against Homer City in accordance with the
terms hereof, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws from time to time in effect which affect
creditors’ rights generally or by equitable principles.
Section 6.3.    No Conflict. Neither the execution and delivery of this
Agreement, nor the performance by Homer City of the obligations contemplated
herein (subject, with respect to any Implementation Transaction, to the
satisfaction of the applicable conditions set forth in the Annex related to such
Implementation Transaction), will (a) violate any provision of Homer City’s
organizational documents, (b) conflict with or result in a breach of any
material agreement to which Homer City is a party or by which Homer City is
bound, (c) violate any judgment, order, injunction, decree or award of any
court, administrative agency or government body against, or be binding upon,
Homer City, (d) constitute a violation by Homer City of any law or regulation
applicable to Homer City, or (e) conflict with or result in a breach by Homer
City of any Operative Document.
Section 6.4.    Consents. With respect to any Implementation Transaction, and
subject to the satisfaction of the applicable conditions set forth in the Annex
related to such Implementation Transaction, the execution, delivery and
performance by Homer City of this Agreement does not require any approval or
consent of any third-party or of any trustee or holder of any indebtedness or
obligation of Homer City, or any filing or recording with, or any consent or
approval of, or the taking of any other action with respect to, any government
body, except such as have been

13

--------------------------------------------------------------------------------

obtained or effected on or before the Effective Date (it being understood that
certain of the Implementation Transactions may require such approvals or
consents).
Section 6.5.    Legal Proceedings. Other than as set forth on Schedule 6.5, (a)
there are no actions, suits or proceedings (“Legal Proceedings”) pending, and
Homer City has no knowledge of any such Legal Proceedings threatened, against
Homer City or any Affiliate of Homer City with respect to the Facility, and (b)
Homer City has no knowledge of any investigations by any government body pending
or threatened with respect to the Facility or the transaction contemplated
hereby that, if adversely determined, would materially hinder or prevent Homer
City’s ability to perform its obligations set forth herein or adversely affect
the right, title, or interest of Homer City with respect to its assets,
properties, rights or liabilities.
Section 6.6.    Transfer of Assets. Except to the extent set forth on Annex I,
Homer City covenants that it shall, in connection with the consummation of any
Implementation Transaction, (i) transfer, or cause to be transferred, to GE or
its designee, all properties, assets and rights of whatever nature or kind owned
by Homer City (including any assets reflected on Homer City’s most recent
financial statements) (collectively, the “Transferred Assets”), (ii) use
commercially reasonable efforts to assist GE in identifying any material assets
or rights (for example, parent software licenses) not owned by Homer City (but
owned by an Affiliate of Homer City) and used in the ordinary course of business
in support of Homer City’s operation of the Facility (the “Affiliate Assets”)
which, to Homer City’s knowledge, consist of the assets set forth on Schedule
6.6 and (iii) use commercially reasonable efforts to, at GE’s cost and expense
(provided, that Homer City shall use commercially reasonable efforts to minimize
such costs and expenses), facilitate, to the extent practicable, the transfer
of, or replacement for the Affiliate Assets and any other properties, assets or
rights necessary for the ownership, maintenance or operation of the Facility not
owned by Homer City. If any Affiliate Asset is identified following the
execution of this Agreement and is not set forth on Schedule 6.6, the failure to
include the Affiliate Asset on Schedule 6.6 shall not be a default under this
Agreement and such additional Affiliate Assets will be added to Schedule 6.6;
provided that prior to the consummation of an Implementation Transaction, Homer
City shall cause its Affiliates to permit Homer City to continue to use such
Affiliate Assets on the same terms and conditions, in all material respects, as
used immediately prior to the date of the Implementation Agreement (it being
understood and agreed that the treatment of Affiliate Assets following the
consummation of an Implementation Transaction shall be addressed in the
Transition Services Agreement).
Section 6.7.    BOP Agreements. As of the date hereof, Exhibit A lists the
current, outstanding contracts or purchase orders related to services (including
balance of plant work) to be performed in respect of the Pollution Control
Improvements. For the avoidance of doubt, the parties hereto acknowledge and
agree that additional contracts and/or purchase orders for additional services
or work to be performed may need to be entered into by the EPC Counterparty
and/or GE in respect of the Pollution Control Improvements.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF GE
GE represents and warrants to Homer City, as of the Effective Date, as follows:

14

--------------------------------------------------------------------------------

Section 7.1.    Existence, Power and Authority. GE is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby and thereby.
Section 7.2.    Authorization. The execution and delivery by GE of this
Agreement, and the performance by GE of the transactions contemplated hereby,
have been duly authorized by all requisite organizational action and proceedings
of GE. This Agreement has been, or prior to the Effective Date will be, duly
executed and delivered by GE, and the provisions herein are, or when so executed
will be, the legally valid and binding obligations of GE, enforceable against GE
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws from time to time
in effect which affect creditors’ rights generally or by equitable principles.
Section 7.3.    No Conflict. Neither the execution and delivery of this
Agreement, nor the performance by GE of the obligations contemplated herein
(subject, with respect to any Implementation Transaction, to the satisfaction of
the applicable conditions set forth in the Annex related to such Implementation
Transaction), will (a) violate any provision of GE’s organizational documents,
(b) conflict with or result in a breach of any material agreement to which GE is
a party or by which GE is bound, (c) violate any judgment, order, injunction,
decree or award of any court, administrative agency or government body against,
or be binding upon, GE, (d) constitute a violation by GE of any law or
regulation applicable to GE or (e) conflict with or result in a breach by GE of
any Operative Document.
Section 7.4.    Consents. The execution, delivery and performance by GE of this
Agreement does not require any approval or consent of any third-party or of any
trustee or holder of any indebtedness or obligation of GE, or any filing or
recording with, or any consent or approval of, or the taking of any other action
with respect to, any government body, except such as have been obtained or
effected on or before the Effective Date (it being understood that certain of
the Implementation Transactions may require such approvals or consents).
Section 7.5.    Legal Proceedings. Other than as set forth on Schedule 7.5,
there are no Legal Proceedings pending, and GE has no knowledge of any such
Legal Proceedings threatened, against GE, any GE Owner Lessor or any Affiliate
of GE with respect to the Facility. GE has no knowledge of any investigations by
any government body pending or threatened with respect to the Facility or the
transactions contemplated hereby that, if adversely determined, would materially
hinder or prevent GE’s ability to perform its obligations set forth herein or
adversely affect the right, title, or interest of GE or the GE Owner Lessors in
the Facility or the Project.
ARTICLE VIII
INDEMNITY
Section 8.1.    General Indemnity by Homer City in Favor of GE.     Homer City
hereby covenants and agrees that upon GE’s demand, it will pay and assume
liability for, and indemnify, protect, defend, save and keep harmless GE and its
Affiliates, on an after-tax basis, from and against any and all losses (other
than any claim relating to any Taxes) which may at any time or from time to time
be imposed upon, incurred by or asserted against GE or its Affiliates directly

15

--------------------------------------------------------------------------------

resulting from or arising out of the untruthfulness of any of Homer City’s
representations or warranties contained herein.
Section 8.2.    Procedure for General Indemnity by Homer City in Favor of GE.
When seeking indemnification pursuant to Section 8.1, GE shall give prompt
written notice together with a copy of such claim, process or other legal
pleading to Homer City of the assertion of any claim, or the commencement of any
action, suit or proceeding, in respect of which indemnity is sought hereunder
and will give Homer City such information with respect thereto as Homer City may
reasonably request, but no failure to give such notice shall relieve Homer City
of any liability hereunder (except to the extent Homer City suffers actual
prejudice thereby). Upon written request by GE, Homer City shall take
appropriate action to contest the claim. Homer City may, at its expense,
participate in or assume the defense of any such action, suit or proceeding
involving a third party. Homer City and GE shall in all other respects use
commercially reasonable efforts to cooperate with each other to mitigate the
cost of any indemnifiable claim or proceeding and to settle the same promptly in
a mutually satisfactory manner. The payment of any indemnity due to GE pursuant
to Section 8.1 will be due and payable thirty (30) days after the date that
Homer City receives such notice.
Section 8.3.    General Indemnity by GE in Favor of Homer City.     GE hereby
covenants and agrees that upon Homer City’s demand, it will pay and assume
liability for, and indemnify, protect, defend, save and keep harmless Homer City
and its Affiliates, on an after-tax basis, from and against any and all losses
(other than any claim relating to any Taxes) which may at any time or from time
to time be imposed upon, incurred by or asserted against Homer City or such
Affiliate directly resulting from or arising out of the untruthfulness of any of
GE’s representations or warranties contained herein.
Section 8.4.    Procedure for General Indemnity by GE in Favor of Homer City.
When seeking indemnification pursuant to Section 8.3, Homer City shall give
prompt written notice together with a copy of such claim, process or other legal
pleading to GE of the assertion of any claim, or the commencement of any action,
suit or proceeding, in respect of which indemnity is sought hereunder and will
give GE such information with respect thereto as GE may reasonably request, but
no failure to give such notice shall relieve GE of any liability hereunder
(except to the extent GE suffers actual prejudice thereby). Upon written request
by GE, Homer City shall take appropriate action to contest the claim. GE may, at
its expense, participate in or assume the defense of any such action, suit or
proceeding involving a third party. Homer City and GE shall in all other
respects use commercially reasonable efforts to cooperate with each other to
mitigate the cost of any indemnifiable claim or proceeding and to settle the
same promptly in a mutually satisfactory manner. The payment of any indemnity
due to Homer City pursuant to Section 8.3 will be due and payable thirty (30)
days after the date that GE receives such notice.
Section 8.5.    Indemnities Not Exclusive. The indemnities set forth in this
Article VIII are in addition to the indemnities set forth in the Operative
Documents. Except to the extent provided for in this Article VIII, nothing
herein shall be construed to limit, restrict, or modify the rights of the
parties under the Operative Documents to make, pursue, or prosecute indemnity
claims in accordance with the terms and conditions thereof. GE acknowledges and
agrees (and shall cause the GE Owner Lessors to acknowledge and agree to the
extent applicable) that none of (i) the execution and delivery of this
Agreement, (ii) the taking of any actions contemplated

16

--------------------------------------------------------------------------------

hereunder (including the installation of the Pollution Control Equipment) and
(iii) any breach of this Agreement by Homer City shall give rise to any
obligation of Homer City or any of its Affiliates under any tax indemnity
agreement or any tax indemnity provision contained in the Operative Documents.
Notwithstanding the foregoing clause (iii), if any event occurs which would
result in a breach of this Agreement by Homer City and which would give rise to
any rights or remedies available under the Operative Documents in the absence of
this Agreement, the foregoing clause (iii) shall not limit any rights or
remedies which would be available under the Operative Documents with respect to
such event in the absence of this Agreement. For the avoidance of doubt, it is
understood and agreed that the tax implications of the consummation of any
Implementation Transaction shall be addressed in the Annex relating to such
Implementation Transaction.
ARTICLE IX
TERMINATION AND EXCULPATION
Section 9.1.    Termination by GE. GE may terminate this Agreement for any
reason in its sole discretion at any time by delivery of written notice to Homer
City of its election to terminate. Such election to terminate shall be effective
immediately upon receipt of such notice of termination by Homer City. Upon
receiving any such notice of termination, Homer City shall cease to take all
such actions contemplated hereby as are specified in such notice and upon such
notice the parties shall, subject to Section 10.9, be released from all of their
respective obligations hereunder.
Section 9.2.    Automatic Termination. Unless earlier terminated, this Agreement
and, subject to Section 10.9, the obligations of the parties hereunder, shall
terminate upon the satisfaction or fulfillment of all of the obligations of the
parties hereto and the consummation of an Assignment or an Alternative
Transaction.
Section 9.3.    Termination by Homer City. Homer City may, in its sole
discretion, terminate this Agreement by delivery of written notice to GE, on or
after that date (a “Homer City Termination Date”) which is the earliest to occur
of (x) sixty (60) days following an EPC Termination Event if such EPC
Termination Event occurs prior to the three month anniversary of the Effective
Date, (y) one hundred eighty (180) days following the occurrence of an EPC
Termination Event, if such EPC Termination Event has occurred after the three
month anniversary of the Effective Date, and (z) December 31, 2013; provided
that if, as of December 31, 2013, GE has actually spent at least $100 million
under the EPC Agreement and/or the BOP Agreements then such Homer City
Termination Date shall be postponed until the later of (1) December 31, 2014, so
long as GE has requested that Homer City consummate one or more Implementation
Transactions or an Alternative Transaction and GE continues diligently pursuing
consummation thereof in good faith, including the tender of performance of
obligations under the definitive agreements for one or more Implementation
Transactions or an Alternative Transaction and the exertion of commercially
reasonable efforts to satisfy conditions precedent to such consummation, and (2)
December 31, 2016, so long as (i) GE has requested that Homer City consummate
one or more Implementation Transactions or an Alternative Transaction and GE
continues diligently pursuing consummation thereof in good faith, including the
tender of performance of obligations under the definitive agreements for one or
more Implementation Transactions or an Alternative Transaction and the exertion
of commercially reasonable efforts

17

--------------------------------------------------------------------------------

to satisfy all conditions precedent to the closing of any such Implementation
Transaction or Alternative Transaction, (ii) GE or its Affiliates have actually
spent at least $150 million under the EPC Agreement and/or the BOP Agreements,
and (iii) the consummation of one or more of the Implementation Transactions or
an Alternative Transaction has been delayed by the failure (x) to obtain any
governmental consent the obtainment of which is reasonably necessary to close an
Implementation Transaction or an Alternative Transaction or (y) to resolve any
Legal Proceedings brought by third parties (excluding Legal Proceedings brought
by GE and its Affiliates and/or MetLife and its Affiliates) that has the effect
of blocking the consummation of an Implementation Transaction or an Alternative
Transaction at such time or making the consummation of an Implementation
Transaction or Alternative Transaction commercially impractical; provided that
in the case of (x) and (y), all of the conditions to the closing of an
Implementation Transaction or the applicable Alternative Transaction capable of
satisfaction by GE or its Affiliates shall have been satisfied (excluding, for
the avoidance of doubt, any condition that cannot be satisfied until the
obtainment of any necessary governmental consent or the resolution of such Legal
Proceedings). Upon receiving any such notice of termination, GE shall cease to
take all such actions contemplated hereby as are specified in such notice and
upon such notice GE shall, subject to Section 10.9, be released from all of its
obligations hereunder.
Section 9.4.    Termination Amount. In the event that this Agreement is
terminated pursuant to this Article IX, Homer City agrees (i) that subject to
obtaining all consents required under the Operative Documents (which Homer City
shall use commercially reasonable efforts to obtain), Homer City will repay in
full to GE an amount equal to all reasonable and documented costs and expenses,
including, without limitation, any cancellation charges incurred and paid by GE
in connection with the installation of the Pollution Control Improvements
(including all such reasonable and documented costs and expenses arising in
connection with the balance of plant) (such amount, the “Termination Amount”)
and (ii) that GE may, but shall not be obligated to, agree to accept payment of
the Termination Amount through an increase to Component A of Basic Lease Rent
(subject to obtaining all consents required under the Operative Documents (which
Homer City shall use commercially reasonable efforts to obtain)); provided
however, that any obligation of Homer City to pay the Termination Amount shall
be made subject to Homer City having sufficient funds available to it after
taking into account its obligations to pay (1) Basic Lease Rent (on the schedule
and in the amounts set forth in the Operative Documents), (2) operations and
maintenance costs incurred in the ordinary course of business and necessary to
achieve or maintain Good Utility Practices or (3) the costs of improvements
(capital or otherwise) incurred in the ordinary course of business and necessary
to achieve or maintain Good Utility Practices.
Section 9.5.    Termination Acknowledgements. The parties hereto acknowledge and
agree that (I) no failure to reimburse GE for the Termination Amount shall
cause, create or constitute a Lease Event of Default or Lease Indenture Event of
Default, (II) Homer City’s right to terminate this Agreement in accordance with
Section 9.3 and the effectiveness of any such termination are not contingent
upon, or subject to, the actual payment to GE of the Termination Amount, (III)
the contingent reimbursement obligation of Homer City in respect of the
Termination Amount created by Section 9.4 (or otherwise in this Agreement) shall
constitute an obligation to pay Supplemental Lease Rent under the Operative
Documents and (IV) the contingent obligation of Homer City to reimburse GE with
respect to GE’s payment of the amounts giving rise to Homer City’s contingent
reimbursement obligation in respect of the

18

--------------------------------------------------------------------------------

Termination Amount shall constitute an Excepted Payment; provided, that,
notwithstanding anything in the contrary set forth in the Operative Documents,
any obligation to pay Supplemental Lease Rent pursuant to clause (III) shall not
be payable on an After-Tax Basis. In furtherance of the above, GE agrees for
itself and agrees to cause the GE Owner Lessors not to demand payments of the
Termination Amount except in accordance with Section 9.4 and GE agrees (and
agrees to cause the GE Owner Lessors) (i) not to declare a Lease Event of
Default, (ii) to cause the GE Owner Lessors not to declare a Lease Event of
Default, (iii) to use commercially reasonable efforts to cause the MetLife Owner
Lessor not to declare a Lease Event of Default, in each case on account of any
non- payment of the Termination Amount; provided, however, that except as
expressly provided in this Section 9.5, each of GE and the GE Owner Lessors
shall retain all of their respective rights and remedies under the Operative
Documents. Notwithstanding the foregoing, should any portion of the Termination
Amount remain unpaid on the date of termination such amount shall accrue
interest at the Overdue Rate until paid, and Homer City shall make no Restricted
Payments to Affiliates of Homer City until the Termination Amount and any
interest accrued thereon shall have been paid in full.
Section 9.6.    Exculpation. For the avoidance of doubt, (i) none of EME, any
director or officer of EME, any Affiliate of EME (other than (x) Homer City and
(y) for purposes of the Secondment Agreements only, Midwest Generation EME, LLC)
nor any of their respective members, managers, shareholders, partners,
directors, trustees, officers, employees, agents, advisors, representatives or
Affiliates, in each case in their capacity as such for EME or any Affiliate of
EME (other than (x) Homer City and (y) for purposes of the Secondment Agreements
only, Midwest Generation EME, LLC) (collectively, the “EME Exculpated Parties”)
shall have any liability or obligations under this Agreement to any person for
any reason whatsoever, including, without limitation, for any act taken or
omitted to be taken in connection with or related to the execution, delivery,
formulation, preparation, dissemination, implementation, or administration of
this Agreement and (ii) none of any Affiliate of GE (other than GE, the EPC
Counterparty and any of their respective assignees or designees) nor any of
their respective members, managers, shareholders, partners, directors, trustees,
officers, employees, agents, advisors, representatives or Affiliates, in each
case in their capacity as such for any such Affiliate of GE (other than GE, the
EPC Counterparty and any of their respective assignees or designees)
(collectively, the “GE Exculpated Parties”, and together with the EME Exculpated
Parties, the “ Exculpated Parties”) shall have any liability or obligations
under this Agreement to any person for any reason whatsoever, including, without
limitation, for any act taken or omitted to be taken in connection with or
related to the execution, delivery, formulation, preparation, dissemination,
implementation, or administration of this Agreement.
Section 9.7.    Non-Exclusive Remedies. Notwithstanding anything to the contrary
contained herein or the termination by any party hereto of this Agreement,
following a breach of this Agreement by any other party hereto, each party
hereto may exercise, in addition to all other rights and remedies granted in
this Agreement, all rights and remedies available to it under law or equity with
respect to such breach.

19

--------------------------------------------------------------------------------

ARTICLE X
MISCELLANEOUS
Section 10.1.    Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 10.2.    Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable New York principles of
conflicts of law, other than Section 5-1401 of the New York General Obligations
Law) as to all matters, including but not limited to matters of validity,
construction, effect and performance.
Section 10.3.    Further Assurances. Each of the parties hereto agrees to
execute, acknowledge, deliver, file and record, or cause to be executed,
acknowledged, delivered, filed and recorded, such further documents or other
papers, and to do all such things and acts, as any other party may reasonably
request in order to carry out the provisions and purposes of this Agreement and
the transactions contemplated hereby. In furtherance of the foregoing, and not
in limitation thereof, each of the parties hereto agrees to furnish to the
others such powers of attorney as may be necessary to enable the parties to
carry out their respective duties and realize the benefits provided by this
Agreement.
Section 10.4.    Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission or sent by recognized overnight courier service or
certified or express mail, postage prepaid. If such notice or other
communication is sent by facsimile transmission, it shall promptly be confirmed
by mail or overnight courier as set forth above. Any such notice shall be deemed
given when so delivered or sent by facsimile transmission or, if mailed, three
Business Days after the date of deposit in the United States mail, as follows:
If to GE, to:

General Electric Capital Corporation
800 Long Ridge Road
Stamford, CT 06927
Attention: Homer City Portfolio Manager
Telephone: (203) 357-4005
Facsimile: (203) 961-2606

20

--------------------------------------------------------------------------------

If to Homer City, to:

EME Homer City Generation L.P.
c/o Mission Energy Westside, Inc.
3 MacArthur Boulevard, Suite 100
Santa Ana, California 92707
Attention: Maria Rigatti
Telephone: (714) 513-8000
Facsimile: (714) 513-8914

With a copy to:
Attention: Daniel McDevitt
Telephone: (312) 583-6000
Facsimile: (312) 788-5214
Section 10.5.    Waiver of Jury Trial. EACH OF THE PARTIES HEREBY WAIVES THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. EACH OF THE PARTIES ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT; THAT EACH HAS RELIED ON
SUCH WAIVER IN ENTERING INTO THIS AGREEMENT; AND THAT EACH WILL CONTINUE TO RELY
ON SUCH WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF THE PARTIES WARRANTS
AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER
WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS.
Section 10.6.    CONSENT TO JURISDICTION. EACH OF THE PARTIES HEREBY CONSENTS TO
THE NON-EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY RELEVANT APPELLATE COURT, IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES EXPRESSLY
SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS. EACH OF THE PARTIES HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE UPON SUCH PARTY BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH IN SECTION 10.4 AND
SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

21

--------------------------------------------------------------------------------

Section 10.7.    Binding Effect; Assignment; Entire Agreement. No party may
assign or delegate its rights or obligations hereunder to any other person
without the prior written consent of the other parties hereto. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. No assignment of this Agreement or
of any rights hereunder shall relieve the assigning party of any of its
obligations or liabilities hereunder. This Agreement shall not confer any rights
or remedies upon any person other than the parties and their respective
successors and permitted assigns. This Agreement, including the Schedules,
Exhibits, Annexes, documents, certificates and instruments to be delivered
pursuant hereto or attached hereto, embody the entire agreement among the
parties hereto with respect to the transactions contemplated hereunder and
supersede all negotiations, representations, warranties, commitments, offers,
contracts and writings prior to the date hereof (including any offering
memorandum, summary worksheets or similar documents).
Section 10.8.    Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be effective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement, and the
remainder of such provision and the remaining provisions of this Agreement shall
be interpreted, to the maximum extent possible, so as to conform to the original
intent of this Agreement.
Section 10.9.    Survival of Representations and Warranties, Indemnities and
Confidentiality. Notwithstanding anything to the contrary set forth herein
(including, without limitation, in connection with a termination of this
Agreement), all representations and warranties made herein, Article VIII,
Article IX, Sections 2.2, 2.4, 2.5, 10.11, and 10.12 hereof shall survive the
expiration or termination of this Agreement.
Section 10.10.    Waivers and Amendments; Non-Contractual Remedies; Preservation
of Remedies. This Agreement may be amended, superseded, modified, supplemented
or terminated, and the terms hereof may be waived, only by written instrument
signed by each of the parties hereto or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver hereof. No waiver on the
part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, shall preclude any
further exercise thereof or the exercise of any other such right, power or
privilege. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
Section 10.11.    Confidentiality. Subject to Sections 4.4 and 4.5 hereof, each
party hereto agrees that it will treat this Agreement and the transactions
contemplated thereby as privileged and confidential and will not, without the
prior written consent of the other, disclose this Agreement or the transactions
contemplated hereby to any third party, except for disclosure to its attorneys,
auditors or its successors or permitted assigns and as may be required by
applicable law, regulation or legal process or as may be necessary to effect the
transactions contemplated hereby, in which case the party so disclosing shall
use good faith efforts to limit disclosure to such third parties on a need-to
know basis. In connection with any such disclosure the party

22

--------------------------------------------------------------------------------

making such disclosure shall request and use its commercially reasonable efforts
to obtain confidential treatment of such information. Except as otherwise
required by applicable law or regulation, no party shall issue any press release
or make any public announcement with respect to this Agreement or the
transactions contemplated hereby without each other party’s hereto express
written consent. To the extent Homer City has any obligation to deliver
documents, information or other materials, provide access to employees or
advisors or otherwise cooperate with GE or any other party (collectively, the
“Protected Actions”) the parties hereto acknowledge and agree that under no
circumstances will the taking of any Protected Action require the disclosure or
dissemination by Homer City (or any person or entity acting at Homer City’s
direction) of any privileged information.
Section 10.12.    Costs and Expenses. Unless otherwise expressly set forth in
this Agreement (including in the next succeeding sentence), each party hereto
shall be responsible for the costs and expenses of its own counsel and advisors
in connection with the drafting, negotiation, execution and consummation of this
Agreement and the transactions contemplated by this Agreement (including any
Implementation Transaction or Alternative Transaction). The parties hereto agree
that (i) neither Homer City nor GE, the GE Owner Lessors nor any GE Affiliate
shall be obligated to pay the costs or expenses incurred by Homer City or any
Affiliate of Homer City arising in connection with the drafting or negotiation
of this Agreement or the transactions contemplated by this Agreement (including
any Implementation Transaction or Alternative Transaction), except as and to the
extent set forth in clauses (ii) and (iii) below; (ii) GE shall be responsible
for any fees, costs and expenses of the ratings agencies in connection with the
transactions contemplated by this Agreement (including Section 4.5); and (iii)
GE shall be responsible for Homer City’s and Homer City’s Affiliates’ reasonable
and documented costs and expenses (including legal and advisory fees) in excess
of $1,000,000 (the “Expense Threshold”) in the aggregate in connection with
(1)(x) any activities related to the issuance of new indebtedness related to the
Facility requested by GE in connection with any Implementation Transaction or
Alternative Transaction (whether or not consummated), (y) any tender offer
transaction (whether or not consummated) contemplated by Section 4.3 of this
Agreement and (z) any consents or waivers (or the seeking of any consents or
waivers) contemplated by Section 4.2 of this Agreement (whether or not
obtained), including, without limitation, the costs and expenses of counsel to
the holders of the bonds issued under the Fundco Indenture and (2) to the extent
such costs and expenses are incurred (A) after June 30, 2012 with respect to an
Alternative Transaction or (B) after September 30, 2012 with respect to any
Implementation Transaction, any amendment, modification, suspension, termination
or consummation of any of the transactions contemplated by this Agreement
(including the Implementation Transactions and any Alternative Transaction) and
any drafting and/or negotiation related thereto; provided that GE shall only be
responsible for 90% of Homer City’s and Homer City’s Affiliates’ reasonable and
documented costs and expenses incurred under this clause (2); provided, further,
that, if costs and expenses covered by this clause (iii) exceed the Expense
Threshold, Homer City agrees, other than in respect to clause (z) above, to
consult with GE, from time to time and upon GE’s request, regarding the
incurrence of additional costs and expenses (other than with respect to any de
minimis or ordinary course costs and expenses). The parties hereto agree that
neither Homer City nor GE, the GE Owner Lessors nor any GE Affiliate shall have
any responsibility for fees and expenses (including any success fees) payable to
financial advisors, brokers, finders or their equivalent engaged by or otherwise
working on behalf of EME or its Affiliates in connection with the transactions
contemplated by this Agreement; provided, that the foregoing shall not be

23

--------------------------------------------------------------------------------

construed to prevent, restrict or limit Homer City from engaging and paying
financial or legal advisors if and to the extent that the board of directors of
Homer City reasonably determines that such engagement is required by or prudent
in light of Homer City’s financial condition, liquidity needs or fiduciary
duties. The parties hereto agree that the cost and expense reimbursement
obligations set forth herein are not subject to setoff or counterclaim.
Section 10.13.    Balance of Plant. The parties hereto acknowledge that, solely
during the pendency of this Agreement, Homer City shall have no obligation to
fund the balance of plant construction or improvements which are required or
necessary in conjunction with the Pollution Control Improvements and that all
other obligations of Homer City, if any, to fund the balance of plant
construction or improvements shall be governed by the Operative Documents.
Section 10.14.    Alternative Transaction. In addition, at the request of GE,
Homer City agrees to negotiate, in good faith, a transaction with GE in lieu of
an Assignment having substantially similar economic, legal, regulatory and tax
implications (including with respect to any Lessee Section 467 Loan Balance or
Lessor Section 467 Loan Balance) as the Assignment (such transaction in lieu of
an Assignment, an “Alternative Transaction”). Without limiting the immediately
preceding sentence, no party to this Agreement is committed to consummate an
Alternative Transaction.
Section 10.15.    Cooperation Among the Owner Lessors and Owner Participants.
Whenever any provision references the consent, direction, request or other
similar action of the Owner Participants, such reference shall require that GE
act in concert with each GE Owner Lessor and use commercially reasonable efforts
to cause MetLife to act in concert with GE.
Section 10.16.    Joinder of MetLife. The parties acknowledge and agree that it
is in their mutual interest that MetLife become a party to this Agreement. The
parties agree to take commercially reasonable efforts to facilitate MetLife’s
involvement in any Implementation Transaction or Alternative Transaction and to
amend this Agreement (including its Exhibits and Annexes) to allow for MetLife
to become a party on substantially the same terms and conditions as agreed to by
GE.
Section 10.17.    Third Party Beneficiaries. Neither this Agreement nor any
other agreements contemplated hereby are intended to or shall confer upon any
Person other than the parties hereto and their respective Affiliates any legal
or equitable rights or remedies. Notwithstanding the immediately preceding
sentence, Section 9.6 shall be enforceable by the Exculpated Parties, Section
2.4 shall be enforceable by EME and Article III shall be enforceable by the EPC
Counterparty.
Section 10.18.    Side Letter. The parties hereto agree that this Agreement
shall supersede, in all respects, the Letter Agreement dated as of March 9, 2012
(the “Letter Agreement”) among GE, Homer City and EFS Homer City and that the
Letter Agreement shall automatically terminate and be of no further force and
effect immediately upon the effectiveness of this Agreement.
[Signature Page Follows]

24

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered by their respective officers thereunto duly authorized.

GENERAL ELECTRIC CAPITAL CORPORATION

By: ___/s/ Mark Mellana_____
Name: Mark Mellana
Title: Authorized Signatory

EME HOMER CITY GENERATION L.P.
BY: MISSION ENERGY WESTSIDE, INC., ITS
GENERAL PARTNER

By: __/s/ Maria Rigatti________
Name: Maria Rigatti
Title: Vice President and Chief Financial Officer

Signature Page - Implementation Agreement

--------------------------------------------------------------------------------

Exhibit A

EPC Purchase Orders

Purchase Order 4500085026, dated August 05, 2011, between EME Homer City
Generation L.P. and Kiewit Power Constructors Co.
o
        Line 10: $ (***) issued on August 05, 2011, for the Initial Open Book
bid process

o
        Line 20: $ (***) issued on January 12, 2012 pre-LNTP limited
Authorization

BOP Agreements

Purchase Order 4500083436, dated June 30, 2011, between EME Homer City
Generation L.P. and HDR Engineering, Inc.

Purchase Order 4500084999, dated August 4, 2011, between EME Homer City
Generation L.P. and HDR Engineering, Inc.

Purchase Order 4500086125, dated August 29, 2011, between EME Homer City
Generation L.P. and Venture Engineering & Construction, LLC

Purchase Order 4500086164, dated August 30, 2011, between EME Homer City
Generation L.P. and Cintar, Inc.

Purchase Order 4500071320, dated December 9, 2010, between EME Homer City
Generation L.P. and CME Management LLC

Purchase Order 4500091681, dated December 16, 2011, between EME Homer City
Generation L.P. and Veolia ES Industrial Services, Inc.

Purchase Order 4500092933, dated January 10, 2012, between EME Homer City
Generation L.P. and Patrick Engineering, Inc.

Purchase Order 4500090211, dated November 17, 2011, between EME Homer City
Generation L.P. and Patrick Engineering, Inc.

Purchase Order 4500088359, dated October 13, 2011, between EME Homer City
Generation L.P. and Patrick Engineering, Inc.

Purchase Order 4500089158, dated October 31, 2011, between EME Homer City
Generation L.P. and United Conveyor Corporation

Purchase Order 4500092034, dated December 23, 2011, between EME Homer City
Generation L.P. and McCutcheon Enterprises, Inc.

Exhibit A - Page 1

--------------------------------------------------------------------------------

Purchase Order 4500086246, dated August 31, 2011, between EME Homer City
Generation L.P. and G.D. Barri & Associates, Inc.

Purchase Order 4500085431, dated August 15, 2011, between EME Homer City
Generation L.P. and Per Se Group, Inc.

Purchase Order 4500085434, dated August 15, 2011, between EME Homer City
Generation L.P. and Per Se Group, Inc.

Exhibit A - Page 2

--------------------------------------------------------------------------------

Annex I

Assignment Term Sheet
[Attached]

Annex I - Page 1

--------------------------------------------------------------------------------

This Term Sheet is not intended to be a comprehensive list of all relevant terms
and conditions with respect to a proposed Transaction, as negotiation of the
definitive Transaction Agreement (the "Transaction Agreement") is anticipated to
quickly follow this Term Sheet. This Term Sheet does not constitute an offer to
sell or an offer to purchase any assets, rights or properties of any person, nor
shall it constitute a commitment to do any of the foregoing.1 

--------------------------------------------------------------------------------

TRANSACTION OVERVIEW
 
 

Description of Transaction;
EME Homer City Generation L.P. (the “Seller”) will commit to transfer (and to

Structure:
cause its affiliates to transfer) to a special purpose entity formed by General
Electric Capital Corporation (“GE Capital”) or one or more of its designees or,
alternatively, to the Owner Lessors directly (the “Transferee”),2 the
Transferred Assets, but excluding the Excluded Assets. The Seller will commit to
cause such steps to be taken with respect to the Affiliate Assets as are set
forth in this Term Sheet. The Transferee will commit to assume the Assumed
Liabilities, but will not assume the Excluded Liabilities. The transactions
contemplated by this Term Sheet (collectively, the “Transaction”) will be
structured as set forth in this Term Sheet, with such changes and modifications
as may be negotiated by the parties in good faith.

--------------------------------------------------------------------------------

TRANSACTION TERMS
 
 

Consideration:
Except as otherwise provided in the Transaction Agreement, the consideration for
consummation of the Transaction would include the release of the Seller and its
affiliates from their obligations under the leveraged lease documents, together
with the assumption by the Transferee of the Assumed Liabilities.

 
 

Transferred Assets:
"Transferred Assets" shall mean all of Seller's right, title and interest in and
to all properties, assets and rights of whatever nature or kind owned by Seller,
including without limitation those assets identified in schedules to be attached
to the Transaction Agreement (the "Schedules") and those assets described below
(but excluding the Excluded Assets, which shall not be transferred), each as in
existence on the Closing Date:

 
 

 

1 
If the parties determine that the Transaction could be effected without
bondholder consent under the Lease Indenture or Fundco Indenture, the parties
will consider in good faith altering the structure of the Transaction and making
such changes and modifications to this Term Sheet as may be required to achieve
such result, together with such other changes or modifications as may be
appropriate in light of the revised structure.

2 
Note: GE Capital may cause transferred employees to be employed by an affiliate
or other designee not acquiring the Transferred Assets.

Annex I - Page 2

--------------------------------------------------------------------------------

 
 

1) Those certain parcels of real property (including all buildings, facilities
and other improvements thereon and all appurtenances thereto) described in the
Schedules (the "Real Property"), but subject to normal and customary permitted
encumbrances and any exceptions which may be listed in the Schedules and except
as otherwise constituting part of the Excluded Assets;
2) All inventories and all emission allowances;
3) All machinery, mobile or otherwise, equipment (including communications
equipment), vehicles, tools, furniture and furnishings and other personal
property located on the Real Property on the Closing Date, including, without
limitation, the items of personal property included in the Schedules, other than
property used or primarily usable as part of the transmission assets or
otherwise constituting part of the Excluded Assets;
4) Subject to the receipt of any necessary third-party consents and, in the case
of the leveraged lease documents, the applicable Transfer Agreement, all
Seller's Agreements, including those Seller's Agreements described in the
Schedules which meet the agreed-upon thresholds for disclosure as are material
to the business and operations of Seller;
5) Subject to the receipt of any necessary third-party consents, all real
property leases under which Seller is a lessee or lessor and which relate to the
Transferred Assets, including those real property leases described in the
Schedules which meet the agreed-upon thresholds for disclosure as are material
to the business and operations of Seller ("Real Property Leases");
6) All cash (other than cash or other assets of the type described in Clauses 6
and 10 of the definition of Excluded Assets), cash equivalents and notes
receivable (trade or otherwise);
7) All transferable permits;3 
 
 

 

3 
Note: Seller to use commercially reasonable efforts to, at Transferee's cost and
expense (provided, that Seller shall use commercially reasonable efforts to
minimize such costs and expenses), cooperate with Transferee's reasonable
requests to assist it in effecting the transfer of all permits that need to be
transferred, modified, amended or revoked and reissued by the applicable
regulatory authority.

Annex I - Page 3

--------------------------------------------------------------------------------

 
 

8) All books, operating records, operating, safety and maintenance manuals,
engineering design plans, documents, blueprints and as built plans,
specifications, procedures and similar items of Seller relating specifically to
the aforementioned assets, necessary for the operation of the Facility and in
existence on the Closing Date (subject to the right of Seller to retain copies
of same for their use for legal and compliance purposes or for any bona fide
business purpose in light of the terms of the Agreement) other than such items
which are proprietary to third parties and accounting records;
9) All unutilized emission reduction credits generated at the Facility prior to
the Closing, including those emission reduction credits identified in the
Schedules;
10) All unexpired, transferable warranties and guarantees from third parties
(other than EME and its subsidiaries and affiliates) with respect to any item of
Real Property or personal property constituting part of the Transferred Assets,
as of the Closing Date;
11) The name of the Facility;
12) The intellectual property owned by Seller or described on the Schedules;
13) Subject to the receipt of any necessary third-party consents, the
transmission-related revenues attributed to Seller’s transmission of power to
the New York power pool (including any agreement or arrangement relating to such
revenues);
14) To the extent permitted by applicable law and contractual obligations, (i)
the records of Seller that relate to transferred employees to the extent that
such records pertain to: (A) skill and development training, (B) seniority
histories, (C) salary and benefit information, (D) Occupational, Safety and
Health Administration reports and records and (E) active medical restriction
forms and (ii) all other records of Seller that relate to transferred employees
to the extent that a release of
 
 

Annex I - Page 4

--------------------------------------------------------------------------------

 
 

liability from the applicable employees is provided with respect to such
records;4 5 
15) If (and only if) Transferee has exercised the Retiree Medical Assumption
Election, all cash and other assets relating to the EMMT Pre-Pay (as adjusted
pursuant to the “EMMT Pre-Pay Adjustment” Section below);
16) The substation equipment set forth in Schedule A to the Interconnection
Agreement, dated as of August 1, 1998 (the "Interconnection Agreement"), between
the Pennsylvania Electric Company ("Penelec"), New York State Electric & Gas
Corporation ("NYSEG") and Seller, and designated therein as being transferred to
Seller; and
17) The rights of Seller in and to any causes of action against third parties
(including indemnification and contribution) relating to any taxes (other than
taxes attributable to income of Seller) imposed by any federal, state or local
government on the ownership, operation or use of the Transferred Assets,
including any claims for refunds, prepayments, offsets, recoupment, judgments
and the like, whether received as payment or credit against future liabilities,
relating specifically to the Facility or the site.
 
 

Excluded Assets:
"Excluded Assets" shall mean any right, title or interest in or to the following
specific assets which are associated with the Transferred Assets, but which are
hereby specifically excluded from the transfer and from the definition of
Transferred Assets herein:

1) All bank accounts and any income, sales, payroll or other tax receivables;
2) The rights of Seller and its affiliates to the names EME, Edison Mission
Energy, Edison Mission Marketing & Trading, Inc., EMMT, Edison Mission, Midwest
Generation, LLC, Mission Energy Westside, Inc., Chestnut Ridge Energy Company,
and EME Homer City
 
 

 

4 
To the extent that the transferred employees are to be employed by an affiliate
or other designee of GE Capital that is not acquiring the Transferred Assets,
Seller will deliver its records that relate to transferred employees as set
forth in Clause 14 to such affiliate or other designee.

5 
Note: GE Capital would expect that as part of the employee offer process, such
releases would be provided to employees and acceptance of any offer would
include such release.

Annex I - Page 5

--------------------------------------------------------------------------------

 
 

Generation L.P. or any related or similar trade names, domain names, trademarks,
service marks, corporate names or logos, or any part, derivative or combination
thereof and all other names, trademarks, service marks, and domain names not
expressly set forth in the Schedules;
3) Subject to the Transfer of Affiliate Assets Section and Clause 13 appearing
under Transferred Assets above, all tariffs and intercompany agreements and
arrangements to which Seller is a party for the purchase or sale of electric
capacity and/or energy or for the purchase of transmission or ancillary
services, including Seller's market-based rate authorization;
4) Subject to Clause 10 and Clause 17 appearing under Transferred Assets above,
the rights of Seller in and to any causes of action against third parties
(including indemnification and contribution) relating to any Real Property or
personal property, permits, environmental permits, Real Property Leases or
Seller's Agreements, if any, including any claims for refunds, prepayments,
offsets, recoupment, insurance proceeds, condemnation awards, judgments and the
like, whether received as payment or credit against future liabilities, relating
specifically to the Facility or the site and relating to any period prior to the
Closing Date;
5) Records of Seller that relate to Seller's employees, other than the records
referred to in clause 14 of Transferred Assets;
6) Any and all of Seller's rights in any contract representing an intercompany
transaction between Seller and an affiliate of Seller, whether or not such
transaction relates to the provision of goods and services, payment
arrangements, intercompany charges or balances, or the like, including, if (and
only if) the Transferee has not exercised the Retiree Medical Assumption
Election, the intercompany balances and the cash related to such intercompany
balances between Edison Mission Marketing & Trading, Inc. ("EMMT") and Seller
associated with the amounts pre-paid by EMMT to Seller for certain revenues,
which pre-paid amounts are net of any intercompany balances existing between
EMMT and Seller immediately prior to such prepayments (the
 
 

Annex I - Page 6

--------------------------------------------------------------------------------

 
 

"EMMT Pre-Pay");
7) All records prepared for purposes of the analysis, consideration, valuation
or execution of the transfer of the Transferred Assets and Assumed Liabilities;
8) All rights of Seller and its affiliates under the Transaction Agreement and
related ancillary agreements;
9) All assets under any benefit plans sponsored or maintained by Seller; and
10) An amount of cash sufficient to satisfy the liabilities and obligations set
forth in Clauses 3(i), 3(ii), 3(iii) and 3(v) of the definition of Excluded
Liabilities, including any liabilities and obligations with respect to any
severance or accrued but unused vacation actually payable and to be paid by
Seller in accordance with applicable law or existing benefit plan provisions,
but only to the extent such liabilities and obligations relate to employees
employed by Seller immediately prior to the Closing.6 
 
 

NYSEG and Penelec Assets:
For the avoidance of doubt, the following assets, which are the property of
NYSEG or Penelec, will not be transferred to Transferee:

•
1) The electrical transmission or distribution facilities (as opposed to
generation facilities) of NYSEG or Penelec or any of their respective affiliates
located at the site or formerly forming part of the Facility (whether or not
regarded as a "transmission" or "generation" asset for regulatory or accounting
purposes) and retained by Penelec and NYSEG when Seller acquired the Facility
and site in 1999, including all switchyard facilities, substation facilities and
support equipment, as well as all permits, contracts and warranties (other than
those permits, contracts or warranties owned by Seller or to which Seller has
the right to transfer), to the extent they relate to such transmission and
distribution assets identified as the "Transmission Assets" in Schedule 2.2(a)
of the Asset Purchase Agreement, dated as of August 1, 1998 (the "NYSEG/Penelec
Purchase Agreement"), by and among Penelec, NGE Generation, Inc., NYSEG and
Mission Energy Westside, Inc. (as assigned by Mission Energy

 
 

 

6 
Seller to provide potential cost of such liabilities and obligations.

Annex I - Page 7

--------------------------------------------------------------------------------

 
 

Westside, Inc. to Seller); and
2) Certain switches and meters in the Facility and at the site, gas facilities,
revenue meters and remote testing units, drainage pipes and systems, as
identified in the Easement, License and Attachment Agreement among Seller,
Penelec and NYSEG, dated as of March 18, 1999.
 
 

Retiree Medical Benefits
At Transferee’s request, Seller shall use commercially reasonable efforts to
cooperate and assist with, and shall make available to Transferee such
information, data, books, records and personnel as shall be reasonably necessary
to permit Transferee and its third party advisors to perform diligence with
respect to the actuarial valuation provided by Seller to GE Capital prior to the
date of the IA (the amount of such valuation, the "Seller Actuarial Valuation
Amount") with respect to the obligations of Seller (the "Seller Retiree Medical
Obligations") relating to the retiree medical benefits to employees transferred
to Transferee under the Transaction Agreement under benefit plans maintained by
Seller and its affiliates for the benefit of such employees (the "Seller Retiree
Medical Plans").

Prior to the parties entering into the definitive Transaction Agreement,
Transferee may elect to assume the Seller Retiree Medical Obligations from and
after the Closing (such election, the "Retiree Medical Assumption Election")
under a benefit plan or plans maintained by Transferee (the "Transferee Retiree
Medical Plans").
If the Transferee assumes the Seller Retiree Medical Obligations, the Transferee
shall fund such Seller Retiree Medical Obligations through the formation of a
VEBA (voluntary employees' beneficiary association) trust (or other appropriate
trust) and shall only use such funds for the purpose of providing retiree
medical or other welfare benefits to employees transferred to Transferee under
the Transaction Agreement, and such funds will in no event revert to Transferee.
If the Transferee does not assume the Seller Retiree Medical Obligations, Seller
shall fund such Seller Retiree Medical Obligations through the formation of a
VEBA trust (or other appropriate trust) and shall only use such funds for the
purpose of providing retiree medical or other welfare benefits to employees
transferred to Transferee under the
 
 

Annex I - Page 8

--------------------------------------------------------------------------------

 
 

Transaction Agreement, and such funds will in no event revert to Seller.

 
 

EMMT Pre-Pay Adjustment
Seller shall cause the EMMT Pre-Pay, for the month in which Closing is to occur,
to be deposited with Seller prior to such Closing, and if the EMMT Pre-Pay is
less than the Seller Actuarial Valuation Amount, Seller shall cause EMMT to pay
to Seller the amount (the "Retiree Medical Payment") equal to the difference
between the Seller Actuarial Valuation Amount and the EMMT Pre-Pay.

At or prior to the Closing, Seller and EMMT shall enter into a forbearance
agreement or arrangement which provide that Seller shall not repay the EMMT
Pre-Pay until after the Closing Date (as increased pursuant to this "EMMT
Pre-Pay Adjustment" provision).
 
 

Assumed Liabilities:
"Assumed Liabilities" shall mean the following liabilities and obligations of
Seller, direct or indirect, known or unknown, absolute or contingent, in
accordance with the respective terms and subject to respective conditions
thereof:7 

1) All liabilities and obligations of Seller arising under the leveraged lease
documents;
2) All liabilities and obligations of Seller arising under Seller's Agreements,
the Real Property Leases, Permitted Encumbrances and the transferable permits in
accordance with the terms thereof (to the extent transferred to Transferee at
Closing), and the contracts, licenses, agreements and personal property leases
entered into by Seller with respect to the Transferred Assets after the date and
consistent with the terms of the Transaction Agreement;
3) All trade payables or other liabilities and obligations relating to the day
to day operation of the Facility, whether arising prior to, on or after the
Closing Date, but excluding the intercompany balances between
 
 

 

7 
With respect to clauses (1) and (2) under Assumed Liabilities, the parties agree
that the Seller's disclosure schedules to the Transaction Agreement shall
include, subject to agreed upon materiality thresholds, any known liabilities or
obligations of Seller to third parties under the leveraged lease documents and
any known liabilities or obligations of Seller to third parties that arise in
respect of any breach, default or non-performance under the Seller's Agreements
or the Real Property Leases, and Transferee shall be afforded an opportunity to
diligence any such matters.

Annex I - Page 9

--------------------------------------------------------------------------------

 
 

EMMT and Seller associated with the EMMT Pre-Pay;
4) All transfer taxes incurred in connection with the Closing of the
Transaction;
5) (i) All liabilities and obligations (a) arising on or after the Closing Date
as a result of the employment by Transferee of any employee transferred to
Transferee, including obligations arising under any applicable collective
bargaining agreement, and including liabilities and obligations for any claims
relating to the transfer of Seller's records that relate to transferred
employees or (b) resulting from any failure or alleged failure by Transferee or
its designee to comply with all applicable laws when selecting, offering
employment to and hiring the transferred employees, and (ii) if (and only if)
Transferee has exercised the Retiree Medical Assumption Election, the Seller
Retiree Medical Obligations. The Transferee and its designee will comply with
all applicable laws when selecting, offering employment to and hiring the
transferred employees;
6) Any liability, obligation, or responsibility under or related to
environmental laws or with respect to environmental matters to the extent due to
facts, circumstances or conditions that arise on or after the Closing Date that
are related to the ownership, operation, or use of the Transferred Assets,
including: (i) fines and penalties associated with any violation or alleged
violation of environmental laws or environmental permits that occur on or after
the Closing Date, and the costs of any necessary corrective actions or
mitigation to the extent required after the Closing Date for any violations of
environmental laws or permits occurring on or after the Closing Date, provided,
for purposes of clarification, that Transferree is not assuming liability
relating to actions in connection with the Transferred Assets, occurring prior
to the Closing Date, that are alleged to be violations of federal or state NSR
or PSD regulations, including allegations that such violations continued after
the Closing Date, except as set forth in paragraph 7 below; (ii) loss of life,
injury to persons or property or damage to natural resources caused (or
allegedly caused) by hazardous substances initially released at, in, on, under
or from the
 
 

Annex I - Page 10

--------------------------------------------------------------------------------

 
 

Transferred Assets on or after the Closing Date; (iii) the investigation and
remediation of the Transferred Assets resulting from hazardous substances
initially released at, in or under the Transferred Assets on or after the
Closing Date; (iv) the closure of any land-based units on or at the Transferred
Assets used for the treatment, storage or disposal of hazardous substances or
other wastes, including, without limitation, landfill cells, surface
impoundments, or ash impoundments; and (v) the off-site disposal, storage, or
transport, or the arrangement for same, of hazardous substances, in connection
with the ownership or operation of the Transferred Assets on or after the
Closing Date;
7) The following additional liabilities, obligations, or responsibilities under
or related to environmental laws or with respect to environmental matters: (i)
all costs of necessary corrective actions, mitigation, or other action,
including pollution control installation and operation costs, the costs of
performing any other emission reduction method or technique and permitting,
required after the Closing Date to correct or address any violations or alleged
violations of environmental laws or environmental permits occurring prior to the
Closing Date (excluding the payment of monetary fines or penalties for such
violations or required emission allowance surrenders or forfeitures, which are
Excluded Liabilities); (ii) any investigation and remediation of the Transferred
Assets (whether or not such remediation commenced before the Closing Date or
commences on or after the Closing Date) resulting from a release of hazardous
substances prior to the Closing Date at, on, or under the Transferred Assets
(but excluding any legal compensatory or punitive damages arising from third
party claims for property damage, personal or bodily injury or natural resource
damages with respect to such releases, other than as set forth in clause (iv));
(iii) all costs of any necessary corrective action or mitigation undertaken on
or at the Transferred Assets to resolve or address third party claims for
property damage, personal or bodily injury or natural resource damages resulting
from a release of hazardous substances or any emission or discharge prior to the
Closing Date at, on or under the Transferred Assets arising as a result of a
third
 
 

Annex I - Page 11

--------------------------------------------------------------------------------

 
 

party claim, (but excluding legal compensatory or punitive damages with respect
to such claims, other than as set forth in clause (iv)); (iv) legal compensatory
damages or punitive damages arising from third party claims for property damage,
personal or bodily injury, or natural resource damages resulting from a release
of hazardous substances or any emission or discharge prior to the Closing Date
at, on, or under the Transferred Assets, but only if such claims arise due to
the negligence or willful misconduct of Transferee on or after the Closing Date
with respect to such conditions; and (v) loss of life or injury to persons
arising from exposure to asbestos or asbestos-containing materials at the
Transferred Assets to the extent that such exposure occurs on or after the
Closing Date (such liability to be allocated between Seller and Transferee if a
claimant is exposed to asbestos prior to and after the Closing Date);
8) Any and all liabilities or obligations (other than environmental-related
liabilities and obligations, which are addressed in clauses (6) and (7), above)
to third parties (including employees) for personal injury or tort, or similar
causes of action arising out of or related to the ownership or operation of the
Transferred Assets on or after the Closing Date, provided that such liabilities
or obligations resulted from an action or inaction on the part of or taken on
behalf of Transferee on or after the Closing Date;
9) Any fines, penalties or costs imposed by a governmental authority resulting
from an investigation, proceeding, request for information or inspection before
or by a governmental authority commencing on or after the Closing Date; provided
that such fine, penalty or cost resulted from an action or inaction on the part
of or taken on behalf of Transferee on or after the Closing Date;
10) Notwithstanding any other clause of this definition of Assumed Liabilities,
all liabilities and obligations of Seller, arising on or after the Closing, with
respect to the Transferred Assets under the agreements or consent
 
 

Annex I - Page 12

--------------------------------------------------------------------------------

 
 

orders set forth on a Schedule to the Transaction Agreement8 relating to certain
environmental matters, to the extent not constituting a liability or obligation
to pay funds to a third party except as a result of an action or inaction on the
part of or taken on behalf of Transferee on or after the Closing Date; and
11) With respect to the Transferred Assets, any tax (other than taxes
attributable to income of Seller) that may be imposed by any federal, state or
local government on the ownership, sale, operation or use of the Transferred
Assets in taxable periods ending prior to, on or after the Closing Date arising
or related to the ownership, operation or use of the Transferred Assets.
 
 

Excluded Liabilities:
"Excluded Liabilities" shall mean all of the liabilities and obligations of
Seller or any of its affiliates, direct or indirect, known or unknown, absolute
or contingent, which relate to, result from or arise out of the ownership, use,
or operation of the Transferred Assets (other than the Assumed Liabilities),
including:9 

1) Any liabilities or obligations of Seller in respect of any Excluded Assets;
2) Any liabilities or obligations of Seller (including the EMMT Pre-Pay) arising
under any contract, representing an intercompany transaction between Seller and
an affiliate of Seller, whether or not such transaction relates to the provision
of goods and services, payment arrangements, intercompany charges or balances,
or the like;
3) Any liabilities or obligations incurred with respect to the employment of any
employee by Seller or its affiliates, including, without limitation, any
liabilities relating to (i) any employee plans, (ii) any of Seller’s and its
affiliates' employee benefit or compensation agreements, plans or other
arrangements, (iii) COBRA other than any
 
 

 

8 
Such Schedule to set forth the consent orders to which Seller is subject.

9 
Indemnification with respect to Excluded Liabilities will be subject to
customary and agreed provisions, including provisions relating to Seller's
participation and/or control in matters that, in whole or in part, constitute
Excluded Liabilities, a requirement that matters being defended by Transferee
that are subject to indemnification not be settled absent Seller's consent, and
conditioning Seller's indemnification on compliance with such provisions.

Annex I - Page 13

--------------------------------------------------------------------------------

 
 

qualifying event occurring with respect to and after the date a transferred
employee commences employment with Transferee, (iv) any liabilities under WARN
or similar law; provided that Seller's liability is conditioned on Transferee
providing Seller with at least 90 days written notice of the number of employees
that shall be transferred to Transferee so that Seller has time to perform any
actions required by WARN or other applicable law; (v) any liability for any
workers’ compensation or similar workers’ protection claims with respect to any
transferred employee that is the result of an injury or illness originating on
or prior to the Closing Date; and (vi) unless Transferee has exercised the
Retiree Medical Assumption election, the Seller Retiree Medical Obligations;
4) Any liabilities or obligations in respect of taxes attributable to income of
Seller;
5) Any liability of Seller arising out of a breach by Seller of any of its
respective obligations under the Transaction Agreement or related ancillary
agreements; and
6) The following liabilities and obligations resulting from a release of
hazardous substances to soil, groundwater or surface water at, on or under the
Transferred Assets prior to the Closing Date that migrates offsite from the
Transferred Assets and is not attributable to the negligence or willful
misconduct of the Transferee: (i) the investigation and/or remediation of such
release at the off-site location, including related costs associated with legal
or administrative proceedings in connection with such work; (ii) third party
claims for property damage, personal or bodily injury or natural resource
damages associated with said release; and (iii) monetary fines and penalties
associated with such release.
Provided that it is understood that the listing of any liabilities in any
Transaction Agreement that has the effect of making them Excluded Liabilities
will affect the division of liabilities as between Seller and Transferee only
and will not add to, diminish or affect the liability of any other person or
entity including any affiliate of Seller or of Transferee, unless so expressly
provided. Prior to settling any claim for an Excluded Liability, Transferee will
comply with all applicable indemnification procedure provisions set forth in the
 
 

Annex I - Page 14

--------------------------------------------------------------------------------

 
 

Transaction Agreement.
 
 

Transfer of Affiliate Assets:
Edison Mission Marketing & Trading, Inc. ("EMMT") will transfer its arrangements
listed on the Schedules to Transferee at the Closing, to the extent that any
necessary third party consents have been received. Transferee will commit to
honor the day-ahead trades entered into by EMMT on behalf of Seller in the
ordinary course of business and will commit to assume and honor such trades
after the Closing.

Seller shall use commercially reasonable efforts to, at Transferee’s cost and
expense (provided, that Seller shall use commercially reasonable efforts to
minimize such costs and expenses), facilitate, to the extent practicable, the
transfer of, or replacement for the Affiliate Assets, any other properties,
assets or rights necessary for the ownership, maintenance or operation of the
Facility not owned by Seller.
"Affiliate Assets" shall mean material assets or rights (for example, parent
software licenses) not owned by Seller (but owned by an affiliate of Seller) and
used in the ordinary course of business in support of Seller’s operation of the
Facility.
 
 

Closing:
The closing of the Transaction (the “Closing”) will take place following the
satisfaction or waiver of all closing conditions set forth in the Transaction
Agreement. Transferee shall determine the date on which the Closing takes place;
provided that such date (i) is the second or third business day of the month in
which it occurs, (ii) is otherwise as soon as practicable following the
satisfaction or waiver of all closing conditions set forth in the Transaction
Agreement and (iii) is on or prior to a Homer City Termination Date as defined
in Section 9.3 of the Implementation Agreement (the “IA”); provided that if all
closing conditions are satisfied prior to such Homer City Termination Date and
the Closing is delayed as a result of the application of clause (i) above to a
date that occurs after such Homer City Termination Date, such Homer City
Termination Date shall automatically be extended to the date of the Closing as
required under such clause. The date on which Closing takes place is herein
referred to as the “Closing Date”.

 
 

Transfer Agreement:
At the Closing, there will be such bills of sale, assignment agreements and any
other instruments of transfer and conveyance as may be required to effect the
Transaction (the “Transfer Agreements”).

 
 

Annex I - Page 15

--------------------------------------------------------------------------------

 
 

Representations and
Seller would provide customary representations and warranties

Warranties/Covenants:
for transactions of this type, including as to organization and qualification,
corporate authorities, consents, no conflicts, financial statements, absence of
changes, no undisclosed liabilities, insurance, title to assets, real property
matters, environmental matters, labor and benefits matters, material contracts,
litigation, compliance with law and permits, taxes, intellectual property
matters, brokers' fees and energy regulatory status.

Transferee would provide customary representations and warranties for
transactions of this type, including as to organization, corporate authorities,
consents, no conflicts, litigation, no knowledge of Seller's breach of the
Transaction Agreement , qualification of Transferee as an exempt wholesale
generator and to obtain permits and market-based rate authorization, brokers'
fees, energy regulatory status and no additional representations or reliance.
The Seller's covenants with respect to operation of the Facility pending Closing
will, unless Transferee provided written notice to Seller that it reasonably
believed the Conditions to Closing could be satisfied within six (6) months of
the delivery of such notice (the “Covenant Notice”), be as set forth in Section
5.3 of the IA. Upon delivery of the Covenant Notice, Seller’s covenants with
respect to the operation of the Facility pending the Closing will be
automatically modified to include customary covenants (which take into account
Seller's financial condition, liquidity needs and fiduciary duties) for
transactions of this type. Seller's covenants with respect to provision of
information will be as set forth in Section 5.2 of the IA. With respect to
covenants other than the covenants described in the preceding sentences, Seller
would provide customary covenants for transactions of this type including,
without limitation, covenants requiring its cooperation and assistance with GE
Capital and the Transferee in connection with the receipt of all necessary
consents and approvals for the Transaction.
If, after the delivery of a Covenant Notice by Transferee, and provided that
Transferee has been using its commercially reasonable efforts to cause the
Closing and the Conditions to Closing of the Transaction to be satisfied as soon
as practicable following its delivery of such Covenant Notice, Transferee
determines in good faith that the Closing will not occur within the six (6)
month period following its delivery of such Covenant
 
 

Annex I - Page 16

--------------------------------------------------------------------------------

 
 

Notice, Transferee shall revoke such Covenant Notice (with the effect as if such
Covenant Notice had never been delivered by the Transferee). Notwithstanding the
foregoing, in no event shall Transferee deliver a Covenant Notice more than two
times.
Transferee would also provide other customary covenants for transactions of this
type.
 
 

Interconnection Agreement:
Seller and Transferee will commit to cooperate and to each use commercially
reasonable efforts to obtain an assignment, effective as of the Closing, of the
Interconnection Agreement to Transferee, including obtaining the prior written
consent of Penelec and NYSEG and entering into appropriate instruments of
assumption and release; provided that neither Seller nor Transferee shall have
any obligation to pay any money or grant any consideration in connection with
such assignment.

 
 

Further Assurances:
In the event that any Transferred Asset shall not have been conveyed to
Transferee at the Closing, Seller shall commit to use commercially reasonable
efforts to convey such asset to Transferee (at Transferee's expense, not
including any internal costs or expenses of Seller or its affiliates) as
promptly as is practicable after the Closing and in addition, in the event that
any Transferred Asset shall not have been conveyed to Transferee at the Closing
by reason of the failure to obtain a third party consent, the parties shall
enter into such reasonable arrangements so as to pass the benefits and
obligations of the Transferred Assets to the Transferee.

Transferee and Seller each shall use its commercially reasonable efforts to
cause the Closing and the conditions to closing of the Transaction to be
satisfied as soon as reasonably practicable from and after the execution of the
Transaction Agreement.
 
 

Indemnification:
Seller would provide customary indemnification rights to the Transferee and its
affiliates for (i) the Excluded Liabilities, (ii) breaches of covenants, and
(iii) subject to certain customary limitations (including caps, baskets and
survival periods, in each case to be negotiated), breaches of representations
and warranties (but only to the extent such breaches of representations and
warranties arise out of fraud, gross negligence or willful misconduct).
Transferee would provide customary indemnification rights to the Seller and its
affiliates for the Assumed Liabilities.

 
 

Annex I - Page 17

--------------------------------------------------------------------------------

 
 

Seller and Transferee to agree to certain customary indemnification procedure
provisions, including with respect to the control and defense of indemnification
claims (including that Seller has the right to consent to any settlement by
Transferee of any claim as to which Transferee would seek indemnification from
Seller).
 
 

Transition Services Agreements:
At the Transferee's election, the Transferee will enter into a transition
services agreement with EME and/or a scheduling and dispatch services agreement
with Edison Mission Marketing & Trading, Inc., in each case on terms and subject
to conditions to be negotiated by the parties thereto.

 
 

OTHER CONSIDERATIONS
 
 

Conditions:
The obligations of Seller to effect the Transaction would be conditioned upon
satisfaction or waiver of the following:

•    the execution of the Transfer Agreements, Transition Services Agreements
and related ancillary agreements;
•    at the election of the Transferee, either (i) the receipt of all consents
and approvals required for the assignment of the Interconnection Agreement to
the Transferee or (ii) the Transferee entering into a replacement
interconnection agreement;
•    no statute, rule or regulation enacted by any federal or state government
or governmental agency or injunction, order or decree issued by any federal or
state court shall be in effect that restrains, enjoins, prevents or prohibits
the consummation of the Transaction;
•    the receipt of all required approvals and authorizations from regulatory
authorities;
•    the receipt of material third party consents (including material consents
arising under the Lease Indenture and Fundco Indenture), or, at the option of
Transferee the execution and delivery of mutually agreeable legally enforceable
indemnification arrangements in favor of Seller;
•    the bring down of the representations and warranties of the Transferee in
the Transaction Agreement; and
•    the performance by the Transferee in all material
 
 

Annex I - Page 18

--------------------------------------------------------------------------------

 
 

respects of all covenants in the Transaction Agreement to be performed by the
Transferee on or prior to the Closing.
The obligations of Transferee to effect the Transaction would be conditioned
upon satisfaction or waiver of the following;
•    the execution of the Transfer Agreements, Transition Services Agreements
and related ancillary agreements;
•    at the election of the Transferee, either (i) the receipt of all consents
and approvals required for the assignment of the Interconnection Agreement to
the Transferee or (ii) the Transferee entering into a replacement
interconnection agreement;
•    the absence of a material adverse change in the business, operations,
assets or condition of Seller between the date of the Transaction Agreement and
the Closing;
•    the receipt of all required approvals and authorizations from regulatory
authorities;
•    the receipt of material third party consents (including material consents
arising under the Lease Indenture and Fundco Indenture);
•    the bring down of the representations and warranties of the Seller in the
Transaction Agreement;
•    the performance by the Seller in all material respects of all covenants in
the Transaction Agreement to be performed by the Seller on or prior to the
Closing;
•    no statute, rule or regulation enacted by any federal or state government
or governmental agency or injunction, order or decree issued by any federal or
state court shall be in effect that restrains, enjoins, prevents or prohibits
the consummation of the Transaction;
•    the lack of any pending or threatened legal proceedings by any third party,
including governmental authorities, that is reasonably likely to result in a
material adverse effect on the Transferee or any of its affiliates from and
after the Closing; and
•    Transferee entering into, if applicable (at Transferee’s
 
 

Annex I - Page 19

--------------------------------------------------------------------------------

 
 

election), O&M agreements with respect to the Transferred Assets following the
Closing.
 
 

Termination:
The Transaction Agreement may be terminated:

•    By mutual written consent of the Transferee and the Seller, any time prior
to the Closing;
•    By Transferee, for any reason in its sole discretion (i) if GE Capital at
the same time terminates the IA pursuant to Section 9.1 of the IA or (ii) absent
termination of the IA, if Transferee elects to enter into a separate
Implementation Transaction contemplated by the IA following the time Transferee
determines that it is reasonably likely that a condition precedent to either
party’s obligation to close the Transaction is not capable of being satisfied in
a timely manner;
•    By Seller, upon the termination of the IA by Seller pursuant to Section 9.3
of the IA, on or after a Homer City Termination Date;
•    By either party, if (i) any governmental authority has issued a final and
nonappealable order, judgment, decree or ruling permanently restraining,
enjoining or otherwise prohibiting the Closing or (ii) any statute, rule, order
or regulation shall have been enacted or issued by any governmental authority
which, directly or indirectly, prohibits the Closing; provided that the
terminating party shall have fulfilled its obligations under the Transaction
Agreement with respect to regulatory consents and approvals;
•    By either party, if the other party has materially breached the Transaction
Agreement (rendering the satisfaction of any condition of the non-breaching
party impossible) and such breach has not been cured or waived; provided that
the terminating party is not in material breach of the Transaction Agreement; or
•    By Transferee, if a casualty has occurred which has had a material adverse
effect and the parties have failed to agree on a settlement relating to such
casualty.
 
 

Tax Matters
Provisions regarding tax matters to be negotiated.

 
 

Binding Effect:
The parties understand and acknowledge that this Term Sheet

 
 

Annex I - Page 20

--------------------------------------------------------------------------------

 
 

and any amendment hereto is not, and shall not be construed to be, a legally
binding agreement, and the failure to execute and deliver definitive agreements
shall impose no liability on GE Capital or the Seller.
 
 

Definitions:
Capitalized terms used in this Term Sheet without definition shall have the
meanings assigned to such terms in the Implementation Agreement by and between
the Seller and GE Capital.

"Seller's Agreements" means Seller's contracts, agreements, licenses and leases
relating to the ownership, operation and maintenance of the Facility and site
and being assigned to Transferee as part of the Transferred Assets, including
without limitation the Agreement, dated January 1, 2008 – December 31, 2012 (or
any successor agreement thereto), between Seller and Local Union 459 of the
International Brotherhood of Electrical Workers, and, for the avoidance of
doubt, excluding the NYSEG/Penelec Purchase Agreement.
 
 

Annex I - Page 21

--------------------------------------------------------------------------------

Annex II

Sublease Term Sheet
[Attached]

--------------------------------------------------------------------------------

EME HOMER CITY GENERATION L.P.
a wholly-owned subsidiary of
MISSION ENERGY WESTSIDE, INC.
and
CHESTNUT RIDGE ENERGY COMPANY
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS

SUBLEASE

OF

HOMER CITY GENERATING STATION
A 1,884 Megawatt (net), Coal-Fired Electric Generation Power Facility
located northeast of Pittsburgh, Pennsylvania

--------------------------------------------------------------------------------

A. PRINCIPAL PARTICIPANTS
1.    Lessors:
 
The Delaware limited liability companies created by the Owner Participant, with
respect to each Undivided Interest are, respectively, Homer City OL1 LLC, Homer
City OL2 LLC, Homer City OL3 LLC, Homer City OL4 LLC, Homer City OL5 LLC, Homer
City OL6 LLC, Homer City OL7 LLC and Homer City OL8 LLC, and referred to herein
collectively as the "Owner Lessors" and together with the Owner Participants and
the Lessee, the "Lease Parties".

2.    Owner Participants:
 
General Electric Capital Corporation, a Delaware corporation ("GECC"), and
Metropolitan Life Insurance Company, a New York corporation ("MetLife"). GECC
and MetLife are referred to herein collectively as the "Owner Participants".

3.    Lessee/Sublessor:
 
EME Homer City Generation L.P. ("Homer City"), in its capacity as lessee under
the Facility Lease, the "Lessee," and in its capacity as sublessor under the
Facility Sublease, the "Sublessor").

Homer City is a wholly-owned subsidiary of Mission Energy Westside, Inc. and
Chestnut Ridge Energy Company, which in turn are indirect wholly-owned
subsidiaries of Edison Mission Energy ("EME").

4.    Sublessee:
 
A [TYPE OF ENTITY] newly formed and owned by the Owner Participants or any
affiliates thereof (the "Sublessee," and together with the Sublessor, the
"Sublease Parties").

Capitalized terms used but not defined herein shall have the meaning ascribed to
them in Appendix A to the Participation Agreement. For purposes of these Terms
and Conditions, in certain instances, we will refer to one Participation
Agreement and one Facility Lease. However, the proposed transaction will include
all eight Facility Leases and related Operative Documents (as defined in each
Participation Agreement). Sublease of Homer City's leasehold interest under each
Facility Lease and related Operative Documents will take place concurrently and
such assignments will be conditioned on each other.

Annex II - Page 1

--------------------------------------------------------------------------------

B.    THE FACILITIES
1.    The Facility:
 
The 1,884-megawatt (net) coal-fired electric generation power facility commonly
known as the Homer City Station (the "Facility").

2.    Facility Ownership:
 
The Facility is owned by the Owner Lessors, and is currently leased to Homer
City under eight facility lease agreements, each dated as of December 7, 2001
(collectively, the "Facility Leases").

3.    The Facility Site:
 
The Facility is located on a portion of an approximately [ ]-acre parcel of land
(such portion, the "Facility Site") located near the Borough of Homer City,
County of Indiana, Pennsylvania.

4.    Facility Site Ownership:
 
The Facility Site is currently owned by Homer City. The Facility Site is
currently leased to the Owner Lessors under eight site leases (collectively, the
"Facility Site Leases") and subleased back to Homer City under eight parallel
site subleases (collectively, the "Facility Site Subleases"), all of which were
executed concurrently with the Facility Leases.

5.    Sublease Closing Date Transactions:
 
On the Sublease Closing Date, the Sublessor will sublease the Facility to the
sublessee pursuant to a sublease (the "Facility Sublease").

On the Sublease Closing Date, the Sublessor will sub-sublease the Facility Site
to the Sublessee pursuant to the Site Sub-Subleases (the "Site Sub-Sublease").

6.    Support Arrangements:
 
An O&M Agreement with a third party O&M provider on mutually satisfactory terms,
including without limitation, uninterrupted access and operation rights with
respect to (i) the assets set forth in Exhibit B to each Facility Lease and (ii)
other Transferred Assets (as defined in the Term Sheet attached as Annex I to
that certain Implementation Agreement, dated March 29, 2012, between GECC and
Homer City (the "Assignment TS") and not including any Excluded Assets (as
defined in the Assignment TS).

A Transaction Services Agreement.

On the Sublease Closing Date, the Sublessee will assume the Sublessor's
obligations or will enter into back-to-back agreements with the Sublessor or its
Affiliates with respect to the agreements

Annex II - Page 2

--------------------------------------------------------------------------------

 
 
relating to the Facility to which Sublessor or its Affiliates are party on the
Sublease Closing Date.10 The parties will in good faith negotiate such
agreements and assignments consistent with the Assignment TS but subject to the
covenants of the Operative Documents.

Provisions of the Assignment TS set forth in the section entitled "Transfer of
the Affiliate Assets" are incorporated herein by reference mutatis mutandis.
7.    Allocation of Liabilities
 
Liabilities of the Sublessor and the Sublessee before and after the Sublease
Closing Date will reflect the allocation of liabilities set forth in the
Assignment TS.

 

10 
A schedule of such mutually acceptable agreements will be developed based on the
definition of the Seller's Agreements in the Assignment TS mutatis mutandis.
Agreements such as collective bargaining agreements will be assigned, other
contractual obligations, such as coal contracts will be subject to back-to-back
arrangements, in each case consistent with the Assignment TS.

Annex II - Page 3

--------------------------------------------------------------------------------

C.    OWNERSHIP AND LEASING STRUCTURE
1.    Sublease Closing Date
 
The date when all the closing conditions are satisfied and the parties execute
the Sublease Operative Documents (the "Sublease Closing Date "). The Sublessee
shall determine the date on which the Sublease closing shall take place;
provided that such date (i) is the second or third business day of the month in
which it occurs and (ii) is otherwise as soon as practicable following the
satisfaction or waiver of all closing conditions set forth in the Sublease
Operative Documents.
2.    Sublease Subject to the Facility Lease and Operative Documents
 
The Sublessor and the Sublessee acknowledge and agree that the Facility Sublease
will be subject and subordinate to all of the terms and conditions of the
Facility Lease. Neither the Sublessor nor any of its Affiliates shall be deemed
to have assumed any duty or obligation of the Owner Lessor under the Facility
Lease and shall not be liable or responsible in any manner whatsoever for any
failure of the Owner Lessor to perform any such duty or obligation. The
Sublessee will abide by, comply in all respects with, and fully and completely
perform all terms, covenants, conditions, and provisions of the Facility Lease
and the other Operative Documents (including, without limitation, terms,
covenants, conditions, and provisions relating to operation, maintenance,
insurance and alterations) as if the Sublessee were the Lessee under the
Facility Lease and the other Operative Documents, provided that Sublessee will
have responsibility for Sublessor's liabilities under the Facility Lease and
other Operative Documents.

To the extent that the Facility Lease or any other Operative Document imposes or
requires the performance of the Lessee thereunder of any duty or obligation that
is more stringent than or in conflict with any term, covenant, condition, or
provision of the Facility Sublease, the applicable term, covenant, condition, or
provision of the Facility Lease or such other Operative Document will control
and will constitute the duties and obligations of Sublessee under the Facility
Sublease as to the subject matter of such term, covenant, condition, or
provision. The Sublessee will not engage in or permit any conduct that would:
(i) constitute a breach of or default under the Facility Lease; or (ii) result
in the Owner Lessor being entitled to terminate the Facility Lease or to
terminate the Sublessor’s right as lessee under the Facility Lease, or to
exercise any other rights or remedies to which the Owner Lessor may be entitled
for a default or breach under the Facility Lease.

3.    Conditions Precedent:
 
The obligations of (i) the Sublessor to sublease the Facility to the Sublessee
and (ii) the Sublessee to sublease the Facility from the Sublessor shall be
subject to completion of the following conditions on the Sublease Closing Date:

Annex II - Page 4

--------------------------------------------------------------------------------

 
 
(a)    all conditions set forth in Section 19.1 of each Facility Lease;
 
 
(b)    the Owner Lessors shall have released Homer City and its Affiliates from
obligations under the Tax Indemnity Agreement, the Special Tax Indemnity
Agreement and other tax indemnity provisions of the Operative Documents, subject
to the provisions of Section B.7 hereof; and
 
 
(c)    delivery by the Sublessee or an Affiliate thereof of credit support for
the Sublessee's obligations under the Sublease Operative Documents (other than
obligations with respect to Basic Lease Rent and Termination Value) in form and
substance reasonably satisfactory to the Sublessor and the Sublessee ("Sublease
Credit Support"); and
 
 
(d)    resolution of the prepayment to EMMT for power under the Master Purchase
and Sale Agreement in accordance with the Assignment TS.
 
 
The Sublessor and the Sublessee shall each notify the other as soon as possible
if it believes that any closing condition may not be timely satisfied.

Annex II - Page 5

--------------------------------------------------------------------------------

D.    THE FACILITY SUBLEASE
1.    Sublease Term:
 
The Facility Sublease term will run until the earlier of (i) expiration of the
Facility Lease on August 7, 2035 (the "Sublease Term"), (ii) termination of the
Facility Leases in accordance with their terms and (iii) such earlier date as an
Implementation Transaction or an Alternative Transaction (each as defined in the
Implementation Agreement) is consummated or another consensual transaction is
consummated that results in the Sublessee or an Affiliate thereof or another
entity designated by GE obtains full operational control and economic ownership
of the Facility and the Sublessor's interest under the Facility Leases.
Indemnity and release provisions will survive termination of the Facility
Sublease.

2.    Sublease Renewal Options:
 
No renewal rights. The Facility Lessee will agree not to exercise its renewal
rights under the Facility Lease without the prior written consent of the
Sublessee.

3.    Facility Sublease Rent:
 
The Sublessee shall pay to the Sublessor any and all Sublease Base Rent (which
shall be in the same amount as the Basic Lease Rent payable under the Facility
Lease) and all Supplemental Sublease Rent, promptly as the same shall become due
and owing, or where no due date is specified, promptly after demand by the
Sublessor, and in the event of any failure on the part of the Sublessee to pay
any Sublease Base Rent and Supplemental Sublease Rent, the Sublessor shall have
all the same rights, powers and remedies as are provided for herein or by law or
equity or otherwise for the failure to pay Sublease Base Rent or Supplemental
Sublease Rent.

"Supplemental Sublease Rent" shall mean all (A) Supplemental Lease Rent (other
than Supplemental Lease Rent payable as a result of any Sublessor Retained
Obligation (to be defined consistent with the allocation of liabilities agreed
in the Assignment TS) and (B) any and all amounts, liabilities and obligations
(other than Sublease Base Rent) that the Sublessee assumes or agrees to pay
under the Facility Sublease Documents to the Sublessor or any other Person.
4.    Net Sublease:
 
The Facility Sublease will be a net sublease. The Sublessee will be responsible
for, among other things, operating, repairing, insuring and maintaining the
Facility and the Transferred Assets, and for all costs, expenses and liabilities
incurred in connection therewith. Insurance with respect to the Facility shall
comply with the requirements of the Facility Lease and shall name the Sublessor
as an additional insured on all policies relating to the Facility and the
Transferred Assets.

Annex II - Page 6

--------------------------------------------------------------------------------

5.    Covenants of the Sublessee
 
SPV type covenants (including limitations on incurrence of debt, liens and
business activities) to be agreed.
6.    Event of Loss and Right to Rebuild or Replace
 
Event of Loss provisions and right to rebuild will be consistent with the
requirements of the Facility Lessee and the Sublessor will only pass through the
rights it has under the Facility Lease subject to the same terms and conditions.
7.    Termination Values:
 
Termination Value shall be calculated in accordance with the Facility Agreement
and will be equal to the corresponding Termination Value payable under the
Facility Lease.
8.    Payment of Termination Value:
 
If an Event of Loss occurs where the Sublessee elects not to rebuild or replace
the Facility or fails to satisfy the conditions applicable to such rebuilding or
replacement, then on a TV Payment Date applicable to such Event of Loss, the
Sublessee shall pay to the Sublessor the sum of the following:
 
 
(a) the Termination Value on the TV Payment Date; plus
 
 
(b) all reasonable documented out-of-pocket costs and expenses incurred in
connection with the Event of Loss by the Sublessor and the other Lease Parties;
plus
 
 
(c) any other payments under the Sublease or under any other Sublease Document
due and unpaid on the TV Payment Date.
 
 
Upon payment of such amounts (the "Event of Loss Payment") the Sublease and the
Facility Site Sub-Sublease shall terminate.
 
 
Unless the Sublessee has elected to rebuild or replace the Facility, any
insurance proceeds or proceeds of Requisition shall be used to pay, or to
reimburse the Sublessor for, the Event of Loss Payment. Such proceeds in excess
of the Event of Loss Payment shall be for the account of the Sublessee, the
Sublessor, and the Lessor in accordance with their respective interests in the
Facility immediately before the Event of Loss.
9.    Return of Facility:
 
All of the provisions in the Facility Lease governing the return of the Facility
to the Lessor will be incorporated into the Facility Sublease mutatis mutandis.
References to the "Lessee" in those provisions will be deemed to be references
to the Sublessee.
10.    Quiet Enjoyment:
 
So long as no Event of Default has occurred and is continuing under the Sublease
and no Lease Event of Default has occurred and is continuing under the Facility
Lease, the Sublessee's right of quiet enjoyment under the Facility Sublease may
not be disturbed by the Sublessor or any party acting by, through or under such
party.
11.    Transfers:
 
The Sublessee shall not have the right to assign or sublet the Facility Sublease
or any Facility Sublease document, or any interest therein. However,, should the
Sublessee wish to transfer

Annex II - Page 7

--------------------------------------------------------------------------------

 
 
its interest in the Facility, upon an election to terminate the Facility
Sublease by the Sublessee, the Sublessor will enter into a new sublease, with a
party designated by the Sublessee (the "New Sublease") on substantially the same
terms as the Facility Sublease (including the Sublease Credit Support). All of
the Conditions Precedent to the execution of the Facility Sublease will also
apply to any execution of a New Sublease.
12.    Events of Default:
 
The following (and only the following) shall constitute events of default under
the Facility Sublease (each, an "Event of Default"):
 
 
(a) all of the events of default under the Facility Lease will be incorporated
into the Facility Sublease mutatis mutandis. References to the "Lessee" in those
provisions will be deemed to be references to the Sublessee;
 
 
(b) failure by the Sublessee to make payment when due of any Sublease Rent or to
perform or observe any covenant, obligation or agreement to be performed or
observed under the Facility Sublease or any other Facility Sublease Document
subject to the cure periods consistent with the Facility Lease;
 
 
(c) customary bankruptcy and insolvency events of default with respect to the
Sublessee;
 
 
(d) acceleration of any indebtedness of the Sublessee (excluding obligations
under the [Facility Sublease Documents]) in excess of $[xx] million in the
aggregate;
 
 
(e) any Facility Sublease Document to which the Sublessee is a party is
terminated or ceases to be in full force and effect; and
 
 
(f) any judgment against the Sublessee in excess of $[xx] million that is not
vacated, discharged or effectively stayed or bonded within 60 days.
13.    Early Termination Options:
 
In addition to the early termination rights set forth in the Facility Lease,
which shall be incorporated into the Sublease, mutatis mutandis, the Sublessee
shall have the right, at any time, to terminate the Sublease at any time in
connection with the consummation of an Implementation Transaction or an
Alternative Transaction. The Facility Lessee will agree not to exercise any of
its early termination rights under the Facility Leases without the prior written
consent of the Sublessee.

Annex II - Page 8

--------------------------------------------------------------------------------

E.    GENERAL INDEMNITY
 
 
The indemnity provisions will be consistent with the indemnity provisions of the
Facility Lease and all references to the Operative Documents should include the
Sublease Operative Documents. In addition, the indemnity will also cover:
 
 
(a)    the continuing fees (if any) and expenses of any Facility Lease Party
acting as a trustee or agent (including the reasonable fees and expenses of its
counsel, accountants and other professional persons) arising out of discharge of
its duties under or in connection with the Facility Lease Documents;
 
 
(b)    in any other way relating to the Facility Lease or the Facility Sublease,
or the transaction contemplated by the Facility Sublease Documents; and
 
 
(c)    any and all costs and expenses (including without limitation, property
taxes, insurance etc) with respect to the Transferred Assets.
 
 
The general indemnity will be subject to customary exclusions to be agreed.11

 

11 
[The parties will consider, in good faith, whether credit support from a
creditworthy entity should be provided for the Sublessee's indemnity obligations
under the Sublease.]

Annex II - Page 9

--------------------------------------------------------------------------------

F.    GENERAL TAX INDEMNITY
 
 
The Sublessee will, on an after-tax basis, indemnify the Sublessor and its
respective members, partners, agents, employees, servants and affiliates for,
hold them harmless from, and defend them against, any and all liability for
Taxes resulting from or attributable to the ownership of any interest in or the
operation of the Facility, the Facility Site, the Ground Interest or any
Component or portion thereof or any interest therein, the Indenture Estate, the
Collateral or upon any Operative Document or interest therein, for any taxable
period that includes, or begins after, the Closing Date on the same terms and
conditions as set forth under the General Tax Indemnity provisions of the
Participation Agreement. The Owner Participants shall release the Sublessor from
any and all liability under Section 10.2 of each Participation Agreement subject
to the provisions of Section B.7 hereof.

Annex II - Page 10

--------------------------------------------------------------------------------

G.    INCOME TAX INDEMNITY
 
 
The Sublessee will, on an after-tax basis, indemnify the Sublessor and its
respective members, partners, agents, employees, servants and affiliates for,
hold them harmless from, and defend them against, all amounts which the
Sublessor is responsible to pay to the Owner Participant under the Participation
Agreement, the Tax Indemnity Agreement or the Special Indemnity Agreement for
any taxable period commencing after, or including, the Closing Date on the same
terms and conditions as are set forth in the Tax Indemnity Agreement, except
that such indemnity will also include an indemnity for breach of the Tax
Representations set forth below (the "Income Tax Indemnity").
 
 
(a)    The Sublessee represents and warrants to, and covenants (such
representations, warranties and covenants constituting the "Tax
Representations") with, the Sublessor that
 
 
neither the Sublessee nor any Affiliate of the Sublessee will take any position
in any income tax filing that is inconsistent with the characterization of the
Facility Lease as terminating on or prior to the Sublease Closing Date.

Annex II - Page 11

--------------------------------------------------------------------------------

Schedule 1.2 – Permitted Encumbrances
Surety Bond-Mining (General), dated March 12, 2001, by EME Homer City Generation
L.P. and Argonaut Insurance Company
Surety Bond, dated February 3, 1999, by EME Homer City Generation L.P. and
Safeco Insurance Company of America
In 2006, EME Homer City Generation L.P. filed an appeal with the Court of Common
Pleas concerning Pennsylvania franchise tax and corporate net income tax for the
2001 tax year. Under Pennsylvania procedure, this required posting of security
(letter of credit or appeal bond) while the appeal was pending; it also resulted
in the posting of a lien notice at the courthouse. The amount of security
required was 120% of the unpaid tax plus penalty (approximately $9.5 million).
At the time of filing the appeal, only the net income tax was unpaid. This
matter was settled in 2008 and the Court issued an Authority to Satisfy,
acknowledging full payment and satisfaction of the lien and authorizing the
Court Prothonotary to record the full satisfaction. EME Homer City Generation
L.P. recently sent the Authority to Satisfy to the Prothonotary along with a
request that the lien be cleared at the courthouse. EME Homer City Generation
L.P. has received notification that the lien has been satisfied.
Encumbrances in connection with the Operative Documents, including those
encumbrances set forth in the UCC table, below.
Below, please find a table of UCC financing statements filed against EME Homer
City Generation L.P. with the Secretary of the Commonwealth of Pennsylvania as
of December 1, 2011.

UCC Date
UCC Ref #
Debtor Name
Secured Party
Jurisdiction
Type
Description
12/17/2001
34721711
EME Homer City Generation L.P.
The Bank of New York, as Security Agent
PA
Financing Statement
“Homer City OL5 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services”
listed as assignor secured party
12/12/2006
2006121207351
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Continuation of 34721711
12/12/2006
2006121207630
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Amendment of 34721711 re: address of secured party
11/9/2011
2011110902175
 
Bank of New York as Security Agent The
PA
Financing Statement Amendment
Continuation of 34721711

Schedule 1.2 - Page 1

--------------------------------------------------------------------------------

UCC Date
UCC Ref #
Debtor Name
Secured Party
Jurisdiction
Type
Description
12/17/2001
34721732
EME Homer City Generation L.P.
The Bank of New York, as Security Agent
PA
Financing Statement
“Homer City OL4 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services”
listed as assignor secured party
12/12/2006
2006121207438
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Continuation of 34721732
12/12/2006
2006121207654
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Amendment of 34721732 re: address of secured party
11/9/2011
2011110902214
 
Bank of New York as Security Agent The
PA
Financing Statement Amendment
Continuation of 34721732
12/17/2001
34721753
EME Homer City Generation L.P.
The Bank of New York, as Security Agent
PA
Financing Statement
“Homer City OL3 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services”
listed as assignor secured party
12/12/2006
2006121207414
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Continuation of 34721753
12/12/2006
2006121207553
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Amendment of 34721753 re: address of secured party
11/9/2011
2011110902238
 
Bank of New York as Security Agent The
PA
Financing Statement Amendment
Continuation of 34721753
12/17/2001
34721774
EME Homer City Generation L.P.
The Bank of New York, as Security Agent
PA
Financing Statement
“Homer City OL2 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services”
listed as assignor secured party
12/12/2006
2006121207399
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Continuation of 34721774
12/12/2006
2006121207678
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Amendment of 34721774 re: address of secured party
11/9/2011
2011110902252
 
Bank of New York as Security Agent The
PA
Financing Statement Amendment
Continuation of 34721774

Schedule 1.2 - Page 2

--------------------------------------------------------------------------------

UCC Date
UCC Ref #
Debtor Name
Secured Party
Jurisdiction
Type
Description
12/17/2001
34730155
EME Homer City Generation L.P.
The Bank of New York, as Security Agent
PA
Financing Statement
“Homer City OL6 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services”
listed as assignor secured party
10/10/2006
2006101001173
 
The Bank of New York, as Collateral Agent
PA
Financing Statement Amendment
Continuation of 34730155
10/13/2006
2006101303767
 
The Bank of New York, as Collateral Agent
PA
Financing Statement Amendment
Amendment of 34730155 re: address of secured party and to change capacity of
secured party from “Security Agent” to “Collateral Agent”
7/2/2007
2007070501076
EME Homer City Generation L.P.
The Bank of New York, as Collateral Agent
PA
Financing Statement Amendment
Amendment of 34730155 to change capacity of secured party from “Collateral
Agent” to “Security Agent”
11/9/2011
2011110902276
 
Bank of New York as Security Agent The
PA
Financing Statement Amendment
Continuation of 34730155
12/17/2001
34730222
EME Homer City Generation L.P.
The Bank of New York, as Security Agent
PA
Financing Statement
“Homer City OL1 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services”
listed as assignor secured party
12/12/2006
2006121207337
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Continuation of 34730222
12/12/2006
2006121207577
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Amendment of 34730222 re: address of secured party
11/9/2011
2011110902353
 
Bank of New York as Security Agent The
PA
Financing Statement Amendment
Continuation of 34730222
12/18/2001
34730243
EME Homer City Generation L.P.
The Bank of New York, as Security Agent
PA
Financing Statement
“Homer City OL7 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services”
listed as assignor secured party

Schedule 1.2 - Page 3

--------------------------------------------------------------------------------

UCC Date
UCC Ref #
Debtor Name
Secured Party
Jurisdiction
Type
Description
12/12/2006
2006121207375
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Continuation of 34730243
12/12/2006
2006121207591
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Amendment of 34730243 re: address of secured party
11/9/2011
2011110902339
 
Bank of New York as Security Agent The
PA
Financing Statement Amendment
Continuation of 34730243
12/17/2001
34730264
EME Homer City Generation L.P.
The Bank of New York, as Security Agent
PA
Financing Statement
“Homer City OL8 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services”
listed as assignor secured party
12/12/2006
2006121207313
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Continuation of 34730264
12/12/2006
2006121207539
 
The Bank of New York, as Security Agent
PA
Financing Statement Amendment
Amendment of 34730264 re: address of secured party
11/9/2011
2011110902377
 
Bank of New York as Security Agent The
PA
Financing Statement Amendment
Continuation of 34730264
12/19/2001
34731687
EME Homer City Generation L.P.
The Bank of New York, as collateral agent
PA
Financing Statement
 
12/5/2006
2006120506354
 
The Bank of New York, as Collateral Agent
PA
Financing Statement Amendment
Continuation of 34731687
12/12/2006
2006121207616
 
The Bank of New York, as Collateral Agent
PA
Financing Statement Amendment
Amendment of 34731687 re: address of secured party
11/9/2011
2011110902113
 
The Bank of New York as Collateral Agent
PA
Financing Statement Amendment
Continuation of 34731687
11/22/2006
2006112201055
EME Homer City Generation L.P.
VFS Leasing Co.
PA
Financing Statement
 

Schedule 1.2 - Page 4

--------------------------------------------------------------------------------

UCC Date
UCC Ref #
Debtor Name
Secured Party
Jurisdiction
Type
Description
10/26/2011
2011102605935
EME Homer City Generation L.P.
VFS Leasing Co.
PA
Financing Statement Amendment
Continuation of 2006112201055
1/11/2007
2007011101419
EME Homer City Generation L.P.
VFS Leasing Co.
PA
Financing Statement
 
2/5/2008
2008020508010
EME Homer City Generation L.P.
Varilease Finance, Inc.
PA
Financing Statement
 
2/28/2008
2008022804351
 
Varilease Finance, Inc.
PA
Financing Statement Amendment
Assignment of 2008020508010 to Somerset Leasing Corp. VII
3/20/2008
2008032005068
EME Homer City Generation
American Agip Co., Inc.
PA
Financing Statement
 
2/9/2009
2009020903402
EME Homer City Generation L.P.
VFS Leasing Co.
PA
Financing Statement
 
6/16/2010
2010061601682
EME Homer City Generation L.P.
Caterpillar Financial Services Corporation
PA
Financing Statement
 
7/12/2010
2010071205343
EME Homer City Generation L.P.
Caterpillar Financial Services Corporation
PA
Financing Statement
 
4/4/2011
2011040407598
EME Homer City Generation L.P.
VFI - SPV V Corp.
PA
Financing Statement
 
7/11/2011
2011071107347
 
VFI - SPV V Corp.
PA
Financing Statement Amendment
Assignment of 2011040407598 to Republic Bank, Inc.
8/4/2011
2011080407089
 
Republic Bank, Inc.
PA
Financing Statement Amendment
Assignment of 2011040407598 to Somerset Capital Group, Ltd.
8/8/2011
2011080807188
 
Somerset Capital Group, Ltd.
PA
Financing Statement Amendment
Assignment of 2011040407598 to Somerset Leasing Corp. I

All exceptions to title set forth in the following:
(1)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-H-Plant, dated October 24, 2011;

Schedule 1.2 - Page 5

--------------------------------------------------------------------------------

(2)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-Reservoir, dated October 24, 2011;
(3)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-C-Wright, dated October 24, 2011;
(4)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-D, dated October 24, 2011;
(5)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-F-Coral, dated October 24, 2011;
(6)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-G-Senate, dated October 24, 2011;
(7)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-B-Steffee, dated October 24, 2011;
(8)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-A-Kuzemczak, dated October 24, 2011; and
(9)    Commonwealth Land Title Insurance Company, Commitment for Title
Insurance, numbered 111018PIT-E-Tanoma, dated October 24, 2011.

Schedule 1.2 - Page 6

--------------------------------------------------------------------------------

Schedule 5.3 – Permitted Activities

Reduction in Homer City's coal inventory below the (***) day level; provided
that any reduction of its coal inventory below a (***) day level will be deemed
a deviation from GE’s Preferred Approach and Homer City shall undertake its
consultation obligation and consider, in good faith, alternative courses of
action proposed by GE under and consistent with Section 5.3 of the
Implementation Agreement.
The Unit (***) spring (***) day outage originally scheduled for (***) through
(***)has been postponed until (***),(***) through (***). Major work items
include: (***).
A (***) day outage has been added to the schedule starting (***). Work includes,
but is not limited to: (***).

Schedule 5.3 - Page 1

--------------------------------------------------------------------------------

Schedule 6.5 – Pending Legal Proceedings – Homer City

The proceedings referenced in the Complaint, dated January 4, 2011, by the
United States Environmental Protection Agency against EME Homer City Generation
L.P., Homer City OL1 LLC, Homer City OL2 LLC, Homer City OL3 LLC, Homer City OL4
LLC, Homer City OL5 LLC, Homer City OL6 LLC, Homer City OL7 LLC, Homer City OL8
LLC, New York State Electric and Gas Corporation, and Pennsylvania Electric Co.
The proceedings referenced in the Class Action First Amended Complaint, dated
May 31, 2011, by Scott Jackson and Maria Jackson against EME Homer City
Generation L.P., Homer City OL1 LLC, Homer City OL2 LLC, Homer City OL3 LLC,
Homer City OL4 LLC, Homer City OL5 LLC, Homer City OL6 LLC, Homer City OL7 LLC,
Homer City OL8 LLC, New York State Electric and Gas Corporation, Pennsylvania
Electric Co., Edison Mission Energy, Mission Energy Holding Co., and Edison
International
The proceedings referenced in the Citation and Notification of Penalty, issued
on July 26, 2011 by the U.S. Department of Labor, Occupational Safety and Health
Administration to EME Homer City Generation L.P.
The proceedings referenced in the Notice of Probable Violation, issued on July
11, 2011 by the U.S. Department of Transportation, Pipeline and Hazardous
Materials Safety Administration to EME Homer City Generation L.P.
The proceedings referenced in the Consent Assessment of Civil Penalty, dated
October 1, 2009, between PaDEP and EME Homer City Generation L.P.
The proceedings referenced in the Letter re: Department of Environmental
Protection v. EME Homer City Generation, L.P., No. 293 M.D. 2007, dated August
3, 2007, from EME Homer City Generation L.P. to PaDEP
The proceedings referenced in the Letter re: Department of Environmental
Protection v. EME Homer City Generation, L.P., No. 293 M.D. 2007, dated November
26, 2008, from EME Homer City Generation L.P. to PaDEP
The proceedings referenced in the Complaint, dated February 27, 2009, by
Exergetic Systems, LLC against Energy Future Holding Corp., Texas Competitive
Electric Holdings Co. LLC, TXU Energy Retail Co. LLC, Edison Mission Energy, and
Midwest Generation LLC
The proceedings referenced in the Letter re: Department of Environmental
Protection v. EME Homer City Generation, L.P., No. 293 M.D. 2007, dated January
21, 2009, from EME Homer City Generation L.P. to PaDEP
The proceedings referenced in the Letter re: Department of Environmental
Protection v. EME Homer City Generation, L.P., No. 293 M.D. 2007, dated April
13, 2009, from EME Homer City

Schedule 6.5 - Page 1

--------------------------------------------------------------------------------

Generation L.P. to PaDEP
The proceedings referenced in the Letter re: Department of Environmental
Protection v. EME Homer City Generation, L.P., No. 293 M.D. 2007, dated April
27, 2009, from EME Homer City Generation L.P. to PaDEP
The proceedings referenced in the Letter re: EME Homer City Generation, LP,
Center Township, Indiana County Consent Decree, No. 293 M.D. 2007, dated June
23, 2010, from EME Homer City Generation L.P. to PaDEP
The proceedings referenced in the Notice of Violation, dated December 12, 2011,
by PaDEP to Edison Mission Energy/Homer City
The proceedings referenced in the Letter re: Notice of Intent to Sue under the
Federal Clean Air Act and Pennsylvania Air Pollution Control Act, dated February
13, 2012, from Earthjustice to EME Homer City Generation L.P., Homer City OL1
LLC, Homer City OL2 LLC, Homer City OL3 LLC, Homer City OL4 LLC, Homer City OL5
LLC, Homer City OL6 LLC, Homer City OL7 LLC and Homer City OL8 LLC.
The proceedings referenced in Tibble, et. al. v. Edison International, et. al. –
The plaintiffs in Tibble allege that the defendants breached various fiduciary
duties and committed various prohibited transactions with respect to the Edison
401(k) Plan. The District Court in Tibble found in favor of the defendants on
all claims, except for one breach of fiduciary duty claim, as a result of which
defendants were ordered to pay damages of $370,732. Appeals by both parties are
pending. Although EME Homer City Generation L.P. is not named as a defendant in
the lawsuit, EME Homer City Generation L.P. could be responsible under the terms
of the Edison 401(k) Plan to make corrective contributions on behalf of its
current and former employees who benefit from a judgment favorable to the
plaintiffs. Additionally, if the District Court’s rulings are upheld on appeal,
EME Homer City Generation L.P. may be required to pay the portion of damages
allocable to its participants in the Edison 401(k) Plan.
Sales and Use Tax: In 2011, EME Homer City Generation L.P. was assessed taxes,
penalties and interest in connection with a Pennsylvania sales and use tax audit
for the period May 1, 2006 through October 31, 2010. In response to the
assessment, EME Homer City Generation L.P. filed a Petition for Reassessment
with the Pennsylvania Board of Appeals. EME Homer City Generation L.P. is
contesting, and has not paid, that portion of the assessment pertaining to the
purchase and installation of certain equipment related to its selective
catalytic reduction (SCR) system. Approximately $54,650 of use tax is in dispute
with this matter, plus penalties and interest. EME Homer City Generation L.P.’s
position is that the assessed purchases are exempt from sales or use tax
pursuant to the manufacturing exemption under Pennsylvania Regulation 32.32. The
auditor has asserted that the purchases in question constitute "pre-production"
storage tanks which are not eligible for the exemption. A hearing on this matter
was held on September 22, 2011. The hearing officer was recently granted an
extension of time to decide the appeal; to date, no decision has been
communicated concerning the appeal.

Schedule 6.5 - Page 2

--------------------------------------------------------------------------------

Schedule 6.6 – Affiliate Assets

Edison Mission Marketing & Trading, Inc. Capacity Sales:
Planning Period
Auction Type
Resource Name
Resource Type
LDA Name
(***)
(***)
2011/2012
BASE
HOMER CITY 1
GEN
RTO
(***)
(***)
2011/2012
BASE
HOMER CITY 2
GEN
RTO
(***)
(***)
2011/2012
BASE
HOMER CITY 3
GEN
RTO
(***)
(***)
2012/2013
BASE
HOMER CITY 1
GEN
MAAC
(***)
(***)
2012/2013
BASE
HOMER CITY 2
GEN
MAAC
(***)
(***)
2012/2013
BASE
HOMER CITY 3
GEN
MAAC
(***)
(***)
2013/2014
BASE
HOMER CITY 1
GEN
MAAC
(***)
(***)
2013/2014
BASE
HOMER CITY 2
GEN
MAAC
(***)
(***)
2013/2014
BASE
HOMER CITY 3
GEN
MAAC
(***)
(***)
2014/2015
BASE
HOMER CITY 1
GEN
MAAC
(***)
(***)
2014/2015
BASE
HOMER CITY 2
GEN
MAAC
(***)
(***)
2014/2015
BASE
HOMER CITY 3
GEN
MAAC
(***)
(***)

Edison Mission Marketing & Trading, Inc. Capacity Purchases:
Planning Period
Auction Type
LDA Name
Segment Name
(***)
(***)
2012/2013
FIRST
MAAC
5
(***)
(***)
2012/2013
FIRST
MAAC
6
(***)
(***)
2012/2013
FIRST
MAAC
7
(***)
(***)
2012/2013
FIRST
MAAC
8
(***)
(***)
2012/2013
FIRST
MAAC
9
(***)
(***)
2012/2013
FIRST
MAAC
10
(***)
(***)

All day-ahead and real-time sales of energy produced by the Facility and sold by
EME Homer City Generation L.P. to Edison Mission Marketing & Trading, Inc., and
then resold by Edison Mission Marketing & Trading, Inc. to PJM Interconnection,
L.L.C. or New York Independent System Operator, Inc., pursuant to an
intercompany agreement between Edison Mission Marketing & Trading, Inc. and EME
Homer City Generation L.P., which have not been delivered as of the closing of
the applicable Implementation Transaction.
Agreement re: Transmission Rights, dated June 11, 2010, between New York State
Electric & Gas Corporation and Edison Mission Marketing & Trading, Inc.

Schedule 6.6 - Page 1

--------------------------------------------------------------------------------

Any Emission Allowances and Emission Reduction Credits held by Edison Mission
Marketing & Trading, Inc. on behalf of EME Homer City Generation L.P.
Reference is made to the financial transmission rights set forth on the
spreadsheet attached hereto.
Software
Business Process Supported
Adobe Software
Illustrator, PhotoShop, Reader, Pro
Autodesk - AutoCad
Engineering design and review software
Business Objects Reporting
Enterprise Reporting Platform
CCure
Security and badging software
Citrix - Terminal Server
Virtual Desktop Application
Commvault - Simpana
Tape back-up solution
StackVision - Continuous Emission Monitoring System
Stack monitoring software
DocuMint/Loveland
Instrument calibration and maintenance documentation
Ellipse - Read Only
Plant Finance, Materiels Managment, and Maintenance Management. (EAM --
Enterprise Asset Management)
EMBARCADERO TECHNOLOGIES, INC.
Database Modeling software
EMC Corporation - VMAX
Enterprise Storage solution
EMC - eRoom
Enterprise Collaboration & Document Mgmt
Esker, Inc.
Faxing Software
ESS
Environmental Safety and Compliance
GE - XA21 Generation Management System
Generation Management System
General Physics - Learning Mgmt System
Learning Management System
GMS - Unit Capability Forms
Plant capability tracking tool
Informatica - ETL
Extract, Transform & Load software
Informatica - Metadata Manager
Database data management tool
LANDESK Management Agent
Inventory, Remote Control, Application deployment
Latisys-Internet Service Provider
Interet service provider for Homer City
Morningstar - Data Provider
Market data provider
IBM - Lotus Notes
Email, Calendar & Scheduling
Navigant - Microgads
Tracks and reports generator outages and deratings
Microsoft - Windows OS
Windows operating system
Microsoft - Office
Office Software - Word, Excel, etc.
Net MRI
Network Log Management
NiSoft - Eclipse
Lock-out Tagout & Safety Permitting

Schedule 6.6 - Page 2

--------------------------------------------------------------------------------

Novell - Identity Asset Mgmt
Provisioning and access mgmt
Open Text Inc. - Livellink
Enterprise document management
Openlink - Endur
Trading and Risk Management System
Oracle
Transactional Database.
OSI Soft - Pi
Plant Information historian
Netwrix - Password Manager
Self service password reset
Presensoft
Instant Messenger Tracking and Logging
PSINET
Network bandwidth montoring software
Q1 Labs
Network event monitoring tool
Quest Toad
Database administration software
Redhat Linux
Database operating system with support
SAP ECC
Enterprise Resource Planning Tools
Shavlik
Server patch management software
IBM - Sherpa Mail Attender
Email health monitoring tool
SKM Powertools
Engineering Software
SnagIT
Image capturing software to help with documentation.
Sophos
Desktop and server anti-virus
SQL Server
Transactional Database
Teamstudio, Inc.
Desktop rollout packaging
Tube Track
Boiler tube leaks tracking system
Ventex - nMarket & Offer Manager
ISO Bidding and Scheduling System
Verisign
Certificate provider and domain name registrar
Websense
Enterprise web-filtering software
Winshuttle
SAP software uploads
Wolfram Research - Mathworks
Modeling and analytics software

Schedule 6.6 - Page 3

--------------------------------------------------------------------------------

Schedule 7.5 – Pending Legal Proceedings – GE

Schedule 6.5 is incorporated herein by reference.

Schedule 7.5 - Page 1