Document:

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                                                                 Exhibit 10.18.2

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                 AMENDED AND RESTATED SECURITY DEPOSIT AGREEMENT

                                     between

                         EME HOMER CITY GENERATION L.P.

                                       and

                              THE BANK OF NEW YORK

                               as Collateral Agent

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

                          Dated as of December __, 2001

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

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                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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<Table>
                                          TABLE OF CONTENTS

<Caption>
                                                                                                 PAGE

ARTICLE I DEFINITIONS..............................................................................2

<S>                  <C>                                                                          <C>
   Section 1.1       Defined Terms.................................................................2
   Section 1.2       OTHER DEFINITIONAL PROVISIONS.................................................8

ARTICLE II AGREEMENT OF COLLATERAL AGENT; CREATION OF ACCOUNTS; GRANT OF SECURITY INTERESTS........8

   Section 2.1       AGREEMENT OF COLLATERAL AGENT.................................................8
   Section 2.2       CREATION OF ACCOUNTS AND SUBACCOUNTS..........................................8
   Section 2.3       DELIVERY OF REVENUES, ETC. TO COLLATERAL AGENT...............................10
   Section 2.4       SECURITY INTERESTS IN THE LESSEE ACCOUNTS....................................10
   Section 2.5       SECURITIES ACCOUNTS..........................................................11

ARTICLE III DEPOSITS INTO ACCOUNTS................................................................12

   Section 3.1       REVENUE ACCOUNT..............................................................12
   Section 3.2       RECOVERY EVENT PROCEEDS ACCOUNT..............................................12
   Section 3.3       RESERVE ACCOUNT..............................................................13
   Section 3.4       EQUITY ACCOUNT...............................................................13
   Section 3.5       DEPOSITS IRREVOCABLE.........................................................13

ARTICLE IV TRANSFERS FROM ACCOUNTS................................................................14

   Section 4.1       REVENUE ACCOUNT..............................................................14
   Section 4.2       RECOVERY EVENT PROCEEDS ACCOUNT..............................................16
   Section 4.3       SENIOR RENT PAYMENT ACCOUNT..................................................16
   Section 4.4       RESERVE ACCOUNT..............................................................17
   Section 4.5       PERMITTED INDEBTEDNESS ACCOUNT...............................................17
   Section 4.6       EQUITY ACCOUNT...............................................................18
   Section 4.7       SUPPLEMENTAL ACCOUNT.........................................................23
   Section 4.8       SUBORDINATED RENT PAYMENT ACCOUNT............................................24
   Section 4.9       SUBORDINATED RESERVE ACCOUNT.................................................24
   Section 4.10      SUSPENDED DISTRIBUTIONS ACCOUNT..............................................24
   Section 4.11      DELIVERY OF REQUEST LETTERS..................................................25
   Section 4.12      SHORTFALL NOTICES............................................................25
   Section 4.13      TRANSFERS FROM ACCOUNTS DURING A DEFAULT PERIOD..............................25
   Section 4.14      COLLATERAL AGENT'S CALCULATIONS..............................................27
   Section 4.15      INSUFFICIENT AMOUNTS.........................................................27

                                      SECURITY DEPOSIT AGREEMENT
                                      --------------------------

                                                  i

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ARTICLE V INVESTMENT..............................................................................28

ARTICLE VI COLLATERAL AGENT.......................................................................29

   Section 6.1       RIGHTS, DUTIES, ETC..........................................................29
   Section 6.2       RESIGNATION OR REMOVAL.......................................................30

ARTICLE VII DETERMINATIONS........................................................................30

ARTICLE VIII MISCELLANEOUS........................................................................30

   Section 8.1       INDEMNIFICATION OF COLLATERAL AGENT..........................................30
   Section 8.2       WAIVER OF RIGHT OF SET-OFF...................................................31
   Section 8.3       TERMINATION..................................................................31
   Section 8.4       SEVERABILITY.................................................................31
   Section 8.5       COUNTERPARTS.................................................................32
   Section 8.6       AMENDMENTS...................................................................32
   Section 8.7       APPLICABLE LAW...............................................................32
   Section 8.8       NOTICES......................................................................32
   Section 8.9       BENEFIT OF SECURITY DEPOSIT AGREEMENT........................................32
</Table>

                                      SECURITY DEPOSIT AGREEMENT
                                      --------------------------

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         AMENDED AND RESTATED SECURITY DEPOSIT AGREEMENT, dated as of December
__, 2001 (this "AGREEMENT"), between EME HOMER CITY GENERATION L.P., a
Pennsylvania limited partnership ("EME HOMER CITY" or the "FACILITY LESSEE"),
and THE BANK OF NEW YORK, as collateral agent for the Secured Parties (as
defined below) (in such capacity, the "COLLATERAL AGENT") and THE BANK OF NEW
YORK, in its capacity as a "securities intermediary" as defined in
Section 8-102 of the New York UCC (in such capacity, the "Securities
Intermediary").

                                    RECITALS
                                    --------

         A. Contemporaneously herewith, EME Homer City will enter into a
transaction pursuant to the Participation Agreements listed on SCHEDULE 1, each
by and among EME Homer City, the applicable Owner Lessor, Wells Fargo Bank
Northwest, National Association, not in its individual capacity but solely as
Owner Manager, the Owner Participant, Homer City Funding LLC, as Lender, the
Lease Indenture Trustee, the Security Agent and The Bank of New York, not in its
individual capacity but solely as Bondholder Trustee (as amended, modified and
supplemented and in effect from time to time, collectively, the "PARTICIPATION
AGREEMENTS") whereby EME Homer City will sell undivided interests in its
generating assets to the Owner Lessors and the Owner Lessors will lease such
undivided interests in its generating assets to EME Homer City under the
Facility Leases.

         B. In consideration of the transactions contemplated by the
Participation Agreements, EME Homer City will be obligated to pay to the Secured
Parties the aggregate amount of all obligations owed by EME Homer City to the
Secured Parties under the Operative Documents (the "LEVERAGED LEASE
OBLIGATIONS").

         C. In satisfaction of the requirements of the Secured Parties, the
Facility Lessee desires by this Agreement to provide interests in certain
Accounts as security for EME Homer City's obligations under the Participation
Agreements and the other Operative Documents.

         D. In order to simplify administration of such Accounts and to provide
for the orderly enforcement of their respective rights, the Secured Parties have
appointed the Collateral Agent to serve as their common representative, to be
the beneficiary under any security interest intended to benefit the Secured
Parties, and to hold the liens created, or to be created, under the Operative
Documents.

         E. The parties hereto desire by this Agreement (as defined above) to
provide for the receipt of Revenues and the application thereof to the payment
of Operating Expenses (as defined below) and Leveraged Lease Obligations and for
other purposes as described herein.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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         F. Pursuant to the Ownership and Operation Agreement, dated as of
December ___, 2001 (as amended, supplemented or otherwise modified from time to
time, the "OWNERSHIP AND OPERATION AGREEMENT"), among the Collateral Agent and
the Secured Parties, the Collateral Agent has agreed to serve as a common
collateral agent for all Secured Parties.

         G. It is a condition precedent to the approval by the Secured Parties
of the transactions contemplated by the Operative Documents that the Facility
Lessee shall have executed and delivered this Agreement to the Collateral Agent
for the benefit of the Secured Parties.

         H. The parties hereto desire to amend and restate the Security Deposit
Agreement, among Edison Mission Holdings Co., Edison Mission Finance Co., Homer
City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission Energy
Westside, Inc., EME Homer City Generation L.P. and United States Trust Company
of New York, as Collateral Agent, dated March 18, 1999 in its entirety and
release the liens granted therein as provided herein.

         NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, each of the parties hereto hereby agrees that the Security Deposit
Agreement, dated March 18, 1999 is hereby amended and restated as follows:

                                    ARTICLE I
                                    ---------

                                   DEFINITIONS

         Section 1.1 Defined Terms The following terms shall have the meanings
indicated:

         "ACCOUNTS" means all accounts established pursuant to SECTION 2.2 of
this Agreement.

         "ADDITIONAL RESERVE ACCOUNT" has the meaning specified in Section 2.2.

         "ADDITIONAL RESERVE PERIOD" means the period from and including the
Additional Reserve Trigger Date to but excluding the Lien Release Date.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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         "ADDITIONAL RESERVE TRIGGER DATE" means the first Restricted Payment
Date on which the conditions set forth in Section 6.9(c)(i) of the Participation
Agreement are not satisfied.

         "AMENDMENT DATE" means the date the Operative Documents are executed.

         "AUTHORIZED REPRESENTATIVE" means those of officers and employees of
the Facility Lessee whose signatures and incumbency shall have been certified by
the Facility Lessee to the Collateral Agent and each Owner Lessor's
Representative.

         "COLLATERAL AGENT" has the meaning specified in the PREAMBLE.

         "COMPONENT A LETTER OF CREDIT" means a letter of credit that may be
delivered to the Collateral Agent at the election of a Owner Lessor in total or
partial satisfaction of the amount on deposit in the applicable subaccount of
the Equity Account, the Supplemental Equity Account and the Additional Reserve
Account in accordance with Section 4.7 hereof.

         "DEFAULT PERIOD" means the period commencing on the date the Collateral
Agent receives a written notice from the Facility Lessee or any of the Secured
Parties stating that a Lease Default or a Lease Event of Default has occurred
and is continuing under any of the Facility Leases. Such notice shall be deemed
to have been delivered if a voluntary petition of Bankruptcy has been filed
under Title 11 of the United States Code (or any similar action has been taken
under the laws of any other jurisdiction) with respect to the Facility Lessee.

         "DEPOSITARY" means Bank of America NT&SA.

         "EME HOMER CITY" has the meaning specified in the PREAMBLE.

         "ENTITLEMENT ORDER" means "entitlement order" as defined in Article 8
of the New York UCC.

         "EQUITY ACCOUNT" has the meaning specified in SECTION 2.2.

         "FACILITY LESSEE PROVIDED LETTER OF CREDIT" has the meaning provided in
SECTION 4.7(B)(II).

         "LD ACCOUNT" has the meaning specified in SECTION 2.2.

         "LETTER OF CREDIT ACCOUNT" has the meaning specified in SECTION
4.7(b)(i).

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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         "LIEN RELEASE DATE" means the date on which all amounts payable in
respect of the Lessor Notes have been paid in full and the Lien of the Lease
Indenture has been released in accordance with the terms thereof.

         "LIMITATION PERIOD" means each period (a) commencing on a first
Restricted Payment Date on which the condition contained in Section 6.9(c)(i) of
the applicable Participation Agreement is not satisfied and which immediately
succeeds a Restricted Payment Date on which such condition was satisfied and (b)
ending on the first subsequent Restricted Payment Date on which the condition
contained in Section 6.9(c)(i) of the applicable Participation Agreement is
satisfied.

         "MONTHLY TRANSFER DATE" means the last Business Day of each month.

         "MOODY'S" means Moody's Investors Service, Inc.

         "NEW YORK UCC" means the Uniform Commercial Code as from time to time
in effect in the State of New York.

         "NOTICE OF ACTION" has the meaning for so long as the Lessor Notes are
outstanding and the Lien of the Lease Indenture has not been discharged
specified in the Lease Indenture; provided that after the Liens of the Indenture
Trustee have been discharged and the Lease Indenture has been terminated, the
applicable Owner Participant, during any Event of Default and upon the exercise
of remedies pursuant to Section 17.1 of the Facility Lease, the applicable Owner
Participant may deliver a "NOTICE OF ACTION" to the Collateral Agent directing
the Collateral Agent to take action pursuant to Section 4.13(b).

         "NOx RESERVE ACCOUNT" has the meaning specified in SECTION 2.2.

         "NOx RESERVE PERIOD" means the period commencing on the first Monthly
Transfer Date after September 30, 2003 and ending on the first Monthly Transfer
Date when the Homer City Generating Station Units 1,2 and 3 selective catalytic
reduction (SCR) systems become Operational.

         "NOx RESERVE REQUIREMENT" means the amount equal to the expenditures
incurred by the Facility Lessee for acquisition of emission allowances actually
used [(other than pursuant to the Permitted Trading Activities)] during the
prior fiscal year multiplied by two.

         "OBLIGATIONS" means all obligations and liabilities of the Facility
Lessee which may arise under or in connection with the Operative Documents or
any other Transaction Document whether on account of Rent payment obligations,

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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reimbursement obligations, the unpaid principal of and interest on Permitted
Indebtedness, fees, indemnities, costs, expenses or otherwise (including all
fees and disbursements of counsel to the Collateral Agent and to the Secured
Parties that are required to be paid by the Facility Lessee pursuant to the
terms of any Transaction Document).

         "OPERATING ACCOUNT" has the meaning specified in SECTION 2.2.

         "OPERATING EXPENSES" means, in respect of any period, all cash amounts
paid by the Facility Lessee in the conduct of its business during such period,
including premiums for insurance policies, fuel supply and transportation costs,
utilities, costs of maintaining, renewing and amending Governmental Approvals,
franchise, licensing, property, real estate and income taxes, sales and excise
taxes, general and administrative expenses, employee salaries, wages and other
employment-related costs, business management and administrative services fees
and other fees, expenses and capital expenditures necessary for the continued
operation and maintenance of the Facility and the conduct of business of EME
Homer City.

         "OPERATIVE DOCUMENTS" has the meaning specified in each of the
Participation Agreements.

         "ORGANIC DOCUMENT" means, with respect to any Person that is a
corporation, its certificate of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to any of its
authorized shares of capital stock, and, with respect to any Person that is a
limited partnership, its certificate of limited partnership and partnership
agreement.

         "OWNER LESSOR'S REPRESENTATIVE" means each Person designated as serving
as indenture trustee, collateral agent, lenders' representative or in any
similar capacity for an Owner Lessor, provided however, that for as long as the
Lessor Notes of such Owner Lessor are outstanding, this term shall refer to the
Security Agent.

         "PAYMENT DATES" means Rent Payment Dates and Permitted Indebtedness
Payment Dates.

         "PERMITTED INDEBTEDNESS ACCOUNT" has the meaning set forth in Section
2.2 hereof.

         "PERMITTED INDEBTEDNESS PAYMENT DATE" means, with respect to any
Permitted Indebtedness, any date on which amounts are payable on such Permitted
Indebtedness.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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         "PLEDGED ACCOUNTS" means, collectively, the Revenue Account, the Senior
Rent Payment Account, the Recovery Event Proceeds Account and the Equity
Account.

         "PROCEEDS" has the meaning specified in the New York UCC.

         "RECOVERY EVENT" means any settlement of or payment of $5,000,000 or
more in respect of (a) any property or casualty insurance claim relating to the
Facility or any part thereof or (b) any seizure, condemnation, confiscation or
taking of, or requisition of title or use of, the Facility or any part thereof
by any Governmental Authority.

         "RECOVERY EVENT PROCEEDS" means proceeds received in respect of a
Recovery Event (regardless of whether the amount thereof is less than
$5,000,000).

         "RECOVERY EVENT PROCEEDS ACCOUNT" has the meaning specified in
Section 2.2.

         "REQUEST LETTER" means each letter from time to time delivered by an
Authorized Representative of the Facility Lessee or by the Facility Lessee to
the Collateral Agent requesting the transfer and/or release of funds from one or
more Accounts or subaccounts, as applicable to or on behalf of the Facility
Lessee in accordance with the terms of this Security Deposit Agreement, each
such letter to be in such form acceptable to the Collateral Agent.

         "REQUIRED SECURED PARTIES" has the meaning specified in the Ownership
and Operation Agreement.

         "RESTORATION" means the replacement or restoration of the Facility or
any part thereof in respect of which the Facility Lessee or any of the Owner
Lessors have received Recovery Event Proceeds.

         "RESTRICTED PAYMENT BLOCKAGE DATE" means any date on which the Facility
Lessee would not be permitted to make a Component A Payment pursuant to Section
6.9 of the applicable Participation Agreement (other than as a result of the
failure to satisfy the condition set forth in Section 6.9(a) of the applicable
Participation Agreement).

         "RESTRICTED PAYMENT BLOCKAGE PERIOD" means each Limitation Period,
provided that in no event shall any such period exceed eighteen months.

         "RESTRICTED PAYMENTS" has the meaning specified in each of the
Participation Agreements.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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         "REVENUE ACCOUNT" has the meaning specified in SECTION 2.2.

         "S&P" means Standard & Poor's Rating Group.

         "SECURED PARTIES" means the Collateral Agent and the Owner Lessors.

         "SECURITIES INTERMEDIARY" has the meaning specified in SECTION 2.5.

         "SENIOR RENT RESERVE AMOUNT" means, on any date with respect to an
applicable Facility Lease, the sum of the aggregate amount of Senior Rent due
and unpaid on that date under such Facility Lease and the lesser of (i) the
amount of the second succeeding payment of Senior Rent (other than of the type
specified in clause (b) of the definition thereof) under such Facility Lease and
(ii) the aggregate of all amounts transferred into the applicable subaccount of
the Equity Account pursuant to Section 4.1(a) during Limitation Periods (and
regardless of whether any such amounts thereafter remain on deposit in such
applicable subaccount of the Equity Account).

         "SPECIAL RESERVE BALANCE" means, with respect to the calculation of the
Modified Senior Rent Service Coverage Ratio for any period, the sum of (a) the
amount on deposit (or, in the case of the projected Modified Senior Rent Service
Coverage Ratio, projected to be on deposit) in the applicable subaccount of the
Supplemental Account on the last day of such period, (b) the amount deposited
(or, in the case of the projected Modified Senior Rent Service Coverage Ratio,
projected to be deposited) into the applicable subaccount of the Equity Account
during the Limitation Period in which the last day of such calculation period
occurs but only to the extent such amount remains (or is projected to remain) on
deposit in the applicable subaccount of the Equity Account on the last day of
such calculation period, (c) the amount deposited (or, in the case of the
projected Modified Senior Rent Service Coverage Ratio, projected to be
deposited) into the applicable subaccount of the Additional Reserve Account
during the Limitation Period in which the last day of such calculation period
occurs but only to the extent such amount remains (or is projected to remain) on
deposit in the applicable subaccount of the Additional Reserve Account on the
last day of such calculation period, (d) the amount on deposit (or, in the case
of the projected Modified Senior Rent Service Coverage Ratio, projected to be on
deposit) in the applicable subaccount of the Subordinated Rent Payment Account
on the last day of such period and (e) the amount on deposit (or, in the case of
the projected Modified Senior Rent Service Coverage Ratio, projected to be on
deposit) in the applicable subaccount of the Subordinated Reserve Account on the
last day of such period.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       7
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         "TRANSACTION DOCUMENTS" means the Operative Documents and each
indenture, loan agreement, underwriting agreement, security purchase agreement
or other document entered into in connection with any Permitted Indebtedness.

         SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.

                 (a) Unless otherwise defined in SECTION 1.1 hereof, each
capitalized term used in this Agreement and not otherwise defined herein shall
have the respective meaning set forth in Appendix A to the Participation
Agreements unless the context hereof shall otherwise require. The general
provisions of Appendix A to the Participation Agreements shall apply to terms
used in this Agreement and specifically defined herein. References to applicable
Operative Documents (or other agreements) shall mean Operative Documents (or
other agreements) as such term is defined in the Participation Agreement to
which the relevant Owner Lessor is a party.

                                   ARTICLE II
                                   ----------

                         AGREEMENT OF COLLATERAL AGENT;
                CREATION OF ACCOUNTS; GRANT OF SECURITY INTERESTS

         SECTION 2.1 AGREEMENT OF COLLATERAL AGENT. The Collateral Agent agrees
to accept all cash, cash equivalents, instruments, investments and other
securities to be delivered to or held by the Collateral Agent pursuant to the
terms of this Agreement, and, from such cash, cash equivalents, instruments,
investments and other securities, to make the releases and transfers
contemplated by this Agreement as and when required in accordance with the terms
hereof. The Collateral Agent shall hold and safeguard the Accounts (other than
the Operating Account and the cash, cash equivalents, instruments, investments
and other securities on deposit therein) during the term of this Agreement in
accordance with the provisions hereof. The Collateral Agent shall treat the
cash, cash equivalents, instruments, investments and other securities in each
Pledged Account as pledged by the Facility Lessee to the Secured Parties, to be
held by the Collateral Agent, as agent of the Secured Parties, in trust in
accordance with the provisions hereof.

         SECTION 2.2 CREATION OF ACCOUNTS AND SUBACCOUNTS.

                 (a) On or prior to the Amendment Date, (i) the Collateral Agent
shall establish in the corporate trust department of The Bank of New York, a
special, segregated and irrevocable trust account designated the "Homer City

                                       8
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Revenue Account" (the "REVENUE ACCOUNT") and (ii) EME Homer City shall establish
with the Depositary a special and segregated account designated the "Homer City
Operating Account" (the "OPERATING ACCOUNT").

                        (b) On or prior to the Amendment Date, the Collateral
        Agent shall establish in the corporate trust department of The Bank of
        New York, special, segregated and irrevocable trust accounts as follows:

                        (i) one designated the "Homer City Recovery Event
        Proceeds Account" (the "RECOVERY EVENT PROCEEDS ACCOUNT");

                        (ii) one designated the "Homer City Senior Rent Payment
        Account" (the "SENIOR RENT PAYMENT ACCOUNT");

                        (iii) one designated the "Homer City Subordinated Rent
        Payment Account" (the "SUBORDINATED RENT PAYMENT ACCOUNT");

                        (iv) one designated the "Homer City Reserve Account"
        (the "RESERVE ACCOUNT");

                        (v) one designated the "Homer City Equity Account" (the
        "EQUITY ACCOUNT");

                        (vi) one designated the "Homer City Supplemental Equity
        Account" (the "SUPPLEMENTAL ACCOUNT");

                        (vii) one designated the "Homer City Suspended
        Distributions Account" (the "SUSPENDED DISTRIBUTIONS ACCOUNT");

                        (viii) one designated the "Homer City Subordinated
        Reserve Account" (the "SUBORDINATED RESERVE ACCOUNT");

                        (ix) one designated the "Homer City Distributions
        Account" (the "DISTRIBUTIONS ACCOUNT");

                        (x) one designated the "Homer City Permitted
        Indebtedness Account" (the "PERMITTED INDEBTEDNESS ACCOUNT"); and

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       9
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                        (xi) one designated the "Homer City Additional Debt
        Service Reserve Account" (the "ADDITIONAL RESERVE ACCOUNT").

                 (c) On or prior to September 30, 2002, the Collateral Agent
shall establish in the corporate trust department of The Bank of New York
special, segregated and irrevocable trust accounts as follows:

                        (i) one designated the "Homer City Liquidated Damages
        Account" (the "LD ACCOUNT");

                        (ii) one designated the "Homer City NOx Reserve Account"
        (the "NOx RESERVE ACCOUNT").

                 (d) Each of the Accounts (other than the Revenue Account, the
Operating Account and the Permitted Indebtedness Account) shall be subdivided
into eight subaccounts, one subaccount for each Facility Lease. The Collateral
Agent shall maintain separate records for each subaccount. Amounts deposited
into or debited from such Accounts shall be deposited or debited from the
applicable subaccount as provided herein.

         SECTION 2.3 DELIVERY OF REVENUES, ETC. TO COLLATERAL AGENT. The
Facility Lessee shall cause all Revenues and Recovery Event Proceeds and all
cash, cash equivalents, instruments, investments and other securities in its
possession (excluding amounts received by the Facility Lessee as transfers from
the Operating Account or the Distributions Account in accordance with this
Agreement) to be delivered immediately to the Collateral Agent for deposit into
the Accounts pursuant to Article III. All such Revenues, cash, cash equivalents,
instruments, investments and other securities at any time on deposit in the
Accounts shall be held in the exclusive custody of the Collateral Agent for the
purposes and on the terms set forth in this Agreement.

         SECTION 2.4 SECURITY INTERESTS IN THE LESSEE ACCOUNTS. In order to
secure the payment of the Obligations, and the performance and observance by the
Facility Lessee of all of its covenants, agreements and obligations to the
Secured Parties under the Transaction Documents, the Facility Lessee hereby
pledges and assigns to the Collateral Agent, and hereby grants in favor of the
Collateral Agent for the ratable benefit of the Secured Parties, a security
interest in all of the Facility Lessee's right, title and interest, whether now
owned or hereafter acquired and whether now existing or hereafter coming into
existence, in, to and under (i) all Revenues, (ii) the Revenue Account, the
Senior Rent Payment Account, the Recovery Event Proceeds Account, the Equity
Account and all cash, cash

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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equivalents, instruments, investments and other securities on deposit therein,
(iii) all security entitlements with respect to any and/or all of the foregoing
and all Proceeds of the foregoing. All Accounts (other than the Operating
Account) and all cash, cash equivalents, instruments, investments and other
securities on deposit therein and security entitlements with respect thereto
shall, subject to the provisions of this Agreement, be subject to the exclusive
dominion and control of the Collateral Agent, and the Collateral Agent shall
have the sole and exclusive right to withdraw or order a transfer of funds from
such Accounts, and the Facility Lessee hereby irrevocably appoints the
Collateral Agent as its true and lawful attorney, with full power of
substitution, for the purpose of making any such withdrawal or ordering any such
transfer of funds from any such Account, which appointment is coupled with an
interest and is irrevocable. The Facility Lessee shall not have any rights or
powers with respect to any amounts in any of the Accounts (other than the
Operating Account) or any part thereof except (i) as provided in the Investments
section of this Security Deposit Agreement, (ii) the right to have such amounts
applied in accordance with the provisions of this Security Deposit Agreement,
and (iii) the right described in Section 4.7(b)(ii).

         SECTION 2.5 SECURITIES ACCOUNTS. The parties hereto hereby agree that:

                 (a) the Accounts (other than the Operating Account) shall be
treated as "securities accounts" as such term is defined in Section 8-501 of the
New York UCC;

                 (b) The Securities Intermediary shall, subject to the terms
of this Agreement, treat the Facility Lessee as the person entitled to
exercise the rights that comprise any financial assets credited to the
Accounts;

                 (c) all property delivered to the Securities Intermediary,
pursuant to the terms of this Agreement, will be promptly credited to the
appropriate Account;

                 (d) all securities or other property underlying any financial
assets credited to such Accounts shall be registered in the name of the
Securities Intermediary, indorsed to the Securities Intermediary or in blank and
in no case will any financial asset credited to any Account be registered in the
name of the Facility Lessee, payable to the order of the Facility Lessee or
specially indorsed to the Facility Lessee except to the extent the forgoing have
been specially indorsed to the Securities Intermediary or in blank;

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       11
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                 (e) each item of property (whether investment property,
financial asset, security, instrument or cash) credited to such Accounts shall
be treated as a "financial asset" within the meaning of Section 8-102(a)(9) of
the New York UCC; and

                 (f) if at any time the Securities Intermediary shall receive an
Entitlement Order issued by the Collateral Agent and relating to any of the
Pledged Accounts, the Securities Intermediary shall comply with such entitlement
order without further consent by the Facility Lessee or any other person. In the
event the Facility Lessee, if permitted to give any Entitlement Order with
respect to any Pledged Account and such order conflicts with or contradicts an
Entitlement Order issued by the Collateral Agent, the Securities Intermediary
shall always follow the Entitlement Orders issued by the Collateral Agent.

                                  ARTICLE III
                                  -----------

                             DEPOSITS INTO ACCOUNTS

         SECTION 3.1 REVENUE ACCOUNT. The Facility Lessee agrees that there
shall be deposited into the Revenue Account all Revenues and all proceeds of
Permitted Indebtedness (including proceeds received pursuant to the SocGen
Instrument) received by or on behalf of itself and any proceeds of liquidated
damages or settlement proceeds arising out of contractual claims related to the
Facility. If, notwithstanding the foregoing, the Facility Lessee receives any
Revenues or proceeds of Permitted Indebtedness, it shall immediately deliver
such Revenues in the exact form received (duly indorsed, if appropriate, in a
manner satisfactory to the Collateral Agent) to the Collateral Agent for deposit
into the Revenue Account. The Collateral Agent shall have the right to receive
all Revenues directly from the Persons owing the same. All Revenue and proceeds
of Permitted Indebtedness received by the Collateral Agent shall be deposited
into the Revenue Account.

         SECTION 3.2 RECOVERY EVENT PROCEEDS ACCOUNT. The Facility Lessee agrees
that there shall be deposited into the Recovery Event Proceeds Account all
Recovery Event Proceeds PROVIDED, that if the aggregate amount of Recovery Event
Proceeds with respect to a Recovery Event is less than $5 million, such proceeds
shall be transferred to the Revenue Account if requested pursuant to a Request
Letter. If, notwithstanding the foregoing, the Facility Lessee shall receive any
such proceeds, it shall immediately deliver such proceeds in the exact form
received (duly endorsed, if appropriate, in a manner satisfactory to the
Collateral Agent) to the Collateral Agent for deposit into the Recovery Event
Proceeds

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       12
<Page>

Account. The Collateral Agent shall have the right to receive all such
proceeds directly from the Persons owing the same. All such proceeds received by
or on behalf of the Collateral Agent shall be deposited into the Recovery Event
Proceeds Account. Amounts deposited into the Recovery Event Proceeds Account
shall be credited to each subaccount thereof based upon each Owner Lessor's
Percentage of such deposited amounts.

         SECTION 3.3 RESERVE ACCOUNT. The Facility Lessee agrees that on the
Amendment Date there shall be deposited into the Reserve Account the proceeds
from the sale of the Facility received pursuant to the Facility Deeds and the
Bills of Sale, in a total amount of $[134] million. Such amount shall be
credited to each subaccount of the Reserve Account based upon each Owner
Lessor's Percentage of such deposited amount. No additional amounts shall be
deposited into the Reserve Account.

         SECTION 3.4 EQUITY ACCOUNT, SUPPLEMENTAL ACCOUNT AND ADDITIONAL RESERVE
ACCOUNT. The Facility Lessee agrees that any Component A Letter of Credit or
Facility Lessee Provided Letter of Credit (in each case with respect to the
applicable Facility Lease) delivered to the Collateral Agent in accordance with
the terms of Section 4.7(b) hereof shall be deposited in the applicable
subaccounts of the Equity Account, the Additional Reserve Account or the
Supplemental Account and all proceeds from a draw thereon shall be deposited in
the applicable subaccounts of the Equity Account, the Additional Reserve Account
or the Supplemental Account.

         SECTION 3.5 LD ACCOUNT. The Facility Lessee agrees that there shall be
deposited into the LD Account all sums received by or on behalf of the Facility
Lessee during the NOx Reserve Period on account of performance liquidated
damages and similar payments pursuant to the SCR Construction Contract.

         SECTION 3.6 DEPOSITS IRREVOCABLE. Any deposit made into the Accounts
hereunder shall be irrevocable and all cash, cash equivalents, instruments,
investments and other securities on deposit shall be held in trust by the
Collateral Agent, and applied solely as provided herein.

                                   ARTICLE IV
                                   ----------

                             TRANSFERS FROM ACCOUNTS

         SECTION 4.1 REVENUE ACCOUNT.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       13
<Page>

                 (a) Subject to Section 4.13, on each Monthly Transfer Date the
Collateral Agent shall transfer with respect to each Owner Lessor, such Owner
Lessor's Percentage of the funds on deposit in the Revenue Account in the
following amounts in the following order of priority:

                  FIRST, to the Operating Account, the amount certified in such
         Request Letter to be such Owner Lessor's Percentage of the excess, if
         any, of the aggregate amount of Operating Expenses then due and payable
         or projected to become due and payable in the next succeeding month
         over the balance then on deposit in the Operating Account; PROVIDED
         THAT if the Annual Budget in effect for such Fiscal Year of the
         Facility Lessee was determined in accordance with Section 5.14(b) or
         5.14(c) of any Participation Agreement, then the amount withdrawn from
         the Operating Account on any Monthly Transfer Date during such Fiscal
         Year shall not exceed the amount set forth in such Annual Budget for
         the immediately succeeding calendar month unless agreed to by the
         Majority in Interest of the Owner Lessors except with respect to fuel
         and emission allowance costs which shall not be subject to the consent
         or approval of the Owner Lessors;

                  SECOND, to the Collateral Agent, the applicable Owner Lessor's
         Owner Manager, the Lease Indenture Trustee, the Security Agent and the
         Bondholder Trustee, the amount certified in the Request Letter
         delivered in connection with such Monthly Transfer Date to be the sum
         of the unpaid fees, indemnities, costs and expenses then due and
         payable to such Persons in respect of their respective services in such
         capacities; PROVIDED THAT in the case of the Collateral Agent and the
         Bondholder Trustee, such amount shall be such Owner Lessor's Percentage
         of the sum of the unpaid fees, indemnities, costs and expenses of the
         Collateral Agent and the Bondholder Trustee;

                  THIRD, into the applicable subaccount of the Senior Rent
         Payment Account, an amount equal to (a) 1/6th of the aggregate amount
         (except with respect to the first Rent Payment Date following the
         Closing Date, 1/3rd of the aggregate amount) which is payable on or
         within six months following such Monthly Transfer Date on account of
         Senior Rent (other than of the type specified in clause (b) of the
         definition thereof) under such Owner Lessor's Facility Lease and (b)
         the aggregate amount of all Senior Rent of the type specified in clause
         (b) of the definition thereof, under such Owner Lessor's Facility Lease
         for which will become due and payable prior to the next Monthly
         Transfer Date together with the amount of all deficiencies, if any,
         with respect to deposits required to be made in the applicable
         subaccount of

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

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<Page>

         the Senior Rent Payment Account in all prior months, as certified in
         the Request Letter;

                  FOURTH, subject to Section 4.13 hereof and to Section 6.9 of
         the Participation Agreement, if applicable, and to the Operative
         Documents applicable to the Persons entitled thereto, an amount equal
         to all other Supplemental Rent (other than Excepted Payments) under the
         applicable Facility Lease then due and payable to such Persons as
         certified in the Request Letter;

                  FIFTH, into the Permitted Indebtedness Account, such Owner
         Lessor's Percentage of an amount equal to 1/6th of the amounts due and
         payable in respect of Permitted Indebtedness on or within six months
         following such Monthly Transfer Date (including all unpaid fees,
         indemnities, costs and expenses then due and payable with respect to
         such Permitted Indebtedness), as certified in the Request Letter;
         provided that, in the case of the SocGen Instrument, (A) in the event
         that no Early Termination Date (as defined in the SocGen Instrument)
         has occurred, there shall also be deposited into the Permitted
         Indebtedness Account 1/6th of the amount (the "ADDITIONAL AMOUNT")
         required to be paid in accordance with the SocGen Instrument on or
         within six months following such Monthly Transfer Date in excess of the
         amount relating to the SocGen Instrument referred to in this clause
         FIFTH above; and (B) in the event that an Early Termination Date (as so
         defined) has occurred, there shall be deposited into the Permitted
         Indebtedness Account on such Monthly Transfer Date the full amount due
         under the SocGen Instrument (including unpaid fees, indemnities, costs
         and expenses then due and payable with respect to the SocGen
         Instrument);

                  SIXTH, into the applicable subaccount of the Equity Account,
         such Owner Lessor's Percentage of the balance remaining in the Revenue
         Account.

                      (b) If, on any Monthly Transfer Date, such Owner
Lessor's Percentage of the funds on deposit in the Revenue Account are
insufficient to make in full any transfer required pursuant to clause FIRST,
SECOND, THIRD, FOURTH or FIFTH of Section 4.1(a), the Collateral Agent shall
make such transfer with funds then on deposit (in the following order of
priority) (i) in the applicable subaccount of each of the Supplemental
Account, the Subordinated Reserve Account (funds shall be transferred from
the Subordinated Reserve Account only with respect to clause FIRST, SECOND,
THIRD and FOURTH), the Subordinated Rent Payment Account, the Suspended
Distributions Account, the Additional Reserve Account (funds shall be
transferred

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       15
<Page>

from the Additional Reserve Account only with respect to clause FIRST, SECOND
and THIRD), the Equity Account (funds shall be transferred from the Equity
Account only with respect to clause SECOND and THIRD ) or the Reserve Account
(funds shall be transferred from the Reserve Account only with respect to
clause SECOND and THIRD), as available.

         SECTION 4.2 RECOVERY EVENT PROCEEDS ACCOUNT.

                 (a) Except as otherwise provided in Section 4.2(b) and subject
to Section 4.13, on each Monthly Transfer Date occurring after a Recovery Event
and until Restoration with respect thereto is completed, the Collateral Agent
shall transfer to the Facility Lessee, from the funds on deposit in each
subaccount of the Recovery Event Proceeds Account, such Owner Lessor's
Percentage of the amount certified in the Request Letter delivered in connection
with such Monthly Transfer Date to be the aggregate amount then due and payable
in respect of such Restoration.

                 (b) Subject to Section 4.13, on any Rent Payment Date or
Termination Value Payment Date on which Rent or Termination Value under a
Facility Lease is required to be paid with any Recovery Event Proceeds, the
Collateral Agent shall transfer, from the funds on deposit in the applicable
subaccount of the Recovery Event Proceeds Account, the following amounts in the
following order of priority:

         FIRST, to the applicable Owner Lessor under such Facility Lease, the
    amount certified in the Request Letter delivered in connection with such
    Rent Payment Date or Termination Value Payment Date to be the amount then
    due and payable in respect of Senior Rent under such Facility Lease
    (including premium and interest, if any);

         SECOND, into the Permitted Indebtedness Account, the amount sufficient
    to pay in full the Permitted Indebtedness outstanding; and

         THIRD, to the applicable Owner Lessor, the amount certified in such
    Request Letter to be the amount of the Component A of Basic Lease Rent or
    the Component A of Termination Value then due and payable under such
    Facility Lease.

         SECTION 4.3 SENIOR RENT PAYMENT ACCOUNT Subject to Section 4.13 hereof,
on any Rent Payment Date for a Facility Lease, the Collateral Agent shall
transfer from funds on deposit in the applicable subaccount of the Senior Rent
Payment Account to the Security Agent on behalf of the applicable

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       16
<Page>

Owner Lessor, the amount certified by the Facility Lessee in the Request Letter
delivered in connection with such Rent Payment Date to be payable with respect
to the Senior Rent and all Supplemental Rent (other than Excepted Payments)
under such Facility Lease on such date.

         SECTION 4.4 RESERVE ACCOUNT. Subject to Sections 4.13 and 4.1(b) hereof
and so long as no Lease Event of Default (other than a Rent Default Event) then
exists, on any Rent Payment Date for a Facility Lease, the Collateral Agent
shall transfer to the applicable Owner Lessor from funds on deposit in the
applicable subaccount of the Reserve Account the amount certified by the
Facility Lessee to be equal to the difference, if positive, between the amounts
payable with respect to the Component A of Basic Lease Rent under such Facility
Lease on such Rent Payment Date and the amounts that would be available under
Section 4.8, if any (and whether or not the conditions have been met under
Section 6.9 of the applicable Participation Agreement), after giving effect to
any transfers (with respect to such subaccount) to be made on such date pursuant
to Section 4.1 hereof for use in making payments with respect to the Component A
of Basic Lease Rent in accordance with the applicable Operative Documents.

         SECTION 4.5 LD ACCOUNT; NOx RESERVE ACCOUNT. During the NOx Reserve
Period, subject to Section 4.13 hereof, on each Business Day specified in the
Request Letter, the Collateral Agent shall transfer to the Facility Lessee from
the funds on deposit in the applicable subaccount of the LD Account and the NOx
Reserve Account respectively, the amount certified in such Request Letter to be
the aggregate amount then due and payable in respect of emission allowances
required to be acquired by the Facility Lessee from time to time during such
period. The transfers shall be made from the applicable subaccounts of the LD
Account and the NOx Reserve Account in the following order of priority: first,
the applicable subaccount of the LD Account and second, the applicable
subaccount of the NOx Reserve Account. Subject to Section 4.13, on the first
Monthly Transfer Date following the end of the NOx Reserve Period the balance
remaining in each subaccount of the LD Account and the NOx Reserve Account shall
be transferred into the Equity Account.

         SECTION 4.6 PERMITTED INDEBTEDNESS ACCOUNT. (a) Subject to Section 4.13
hereof, on any date on which any payment is due and payable in respect of
Permitted Indebtedness, after giving effect to all transfers to be made on such
date pursuant to Section 4.1, the Collateral Agent shall transfer to the Persons
that provide each class of Permitted Indebtedness, from the funds on deposit in
the Permitted Indebtedness Account, the aggregate amount of principal, premium,
fees, indemnities, costs and expenses then due and payable to the Persons that
provide

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       17
<Page>

each such class of Permitted Indebtedness, as certified in the Request Letters
delivered in connection with such Monthly Transfer Date.

                  (b) Subject to Section 4.13 hereof, on any date on which an
Additional Amount is required to be paid under the SocGen Instrument, after
giving effect to all transfers to be made on such date pursuant to Section 4.1,
the Collateral Agent shall transfer to the counterparty under the SocGen
Instrument, from the funds on deposit in the Permitted Indebtedness Account, the
amount required to be deposited on such date, as certified in the Request Letter
delivered in connection with such deposit; PROVIDED HOWEVER, that no funds shall
be transferred on such date for making of a deposit under the SocGen Instrument
unless after giving effect to such transfer there are sufficient funds remaining
to make in full transfers required pursuant to clause THIRD of Section 4.7
hereof, as certified in the Request Letter. If on any Rent Payment Date on which
an Additional Amount is required to be paid under the SocGen Instrument the
conditions set forth in the proviso immediately above are not satisfied, then an
amount equal to the sum of deposits made into the Permitted Indebtedness Account
since the immediately preceding Rent Payment Date pursuant to clause FIFTH (A)
of Section 4.1(a) hereof in respect of Additional Amount shall be transferred
from the Permitted Indebtedness Account into the Equity Account following the
payment pursuant to clause (a) of this Section 4.6.

         SECTION 4.7 EQUITY ACCOUNT.

                 (a) Subject to Section 4.13, on the date specified below the
Collateral Agent shall transfer, from the funds on deposit in each subaccount of
the Equity Account, the amount certified by the Facility Lessee in the Request
Letter delivered in connection with such date the following amounts in the
following order of priority:

         FIRST, after giving effect to all transfers made pursuant to Section
    4.1 hereof, on each Monthly Transfer Date either (a) which is also a
    Restricted Payment Blockage Date occurring prior to the Additional Reserve
    Period or (b) which occurs during the Additional Reserve Period, into the
    applicable subaccount of the Supplemental Account, the amount, if any, by
    which the sum of the balance in the applicable subaccount of the Senior Rent
    Payment Account and the balance in the applicable subaccount of the Equity
    Account (immediately prior to giving effect to the transfer contemplated by
    this clause FIRST) exceeds the applicable Senior Rent Reserve Amount;

         SECOND, on each Monthly Transfer Date either (a) which is also a
    Restricted Payment Blockage Date occurring prior to the Additional Reserve
    Period or (b) which occurs during the Additional Reserve Period, into the

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       18
<Page>

    applicable subaccount of the Additional Reserve Account the amount by which
    the sum of (1) the Owner Lessor's Percentage of the balance in the Revenue
    Account and (2) the balances in the applicable subaccounts of the Senior
    Rent Payment Account, the Equity Account (immediately prior to giving effect
    to the transfer contemplated by this clause SECOND) and the Recovery Event
    Proceeds Account exceeds the sum of all the Basic Lease Rent and
    Supplemental Lease Rent due and unpaid on that date and the average of the
    next two aggregate payments of the Basic Lease Rent, in each case, under the
    applicable Facility Lease minus the Owner Lessor's Percentage of $1 million,
    as certified in the Request Letter;

         THIRD, on each Restricted Payment Date which does not occur during the
    Additional Reserve Period if the conditions to the payments of the Component
    A of Basic Lease Rent are satisfied pursuant to Section 6.9 of the
    applicable Participation Agreement, into the applicable subaccount of the
    Subordinated Rent Payment Account, an amount payable with respect to the
    Component A of Basic Lease Rent plus all Excepted Payments, if any, due and
    payable under the applicable Facility Lease on the Restricted Payment Date,
    together with the amount of all deficiencies, if any, with respect to all
    payments required in all prior months, as certified in the Request Letter;
    PROVIDED THAT on each Restricted Payment Date that is not a Rent Payment
    Date if the SocGen Instrument is not in effect through the following two
    Restricted Payment Dates than the Collateral Agent shall deposit 1/2 of the
    amount of Component A of Basic Lease Rent due and payable on the Rent
    Payment Date following such Restricted Payment Date;

         FOURTH, on each Restricted Payment Date which does not occur during the
    Additional Reserve Period if the conditions to the payment of the Component
    A of Basic Lease Rent set forth in Section 6.9 of the applicable
    Participation Agreement are satisfied, into the applicable subaccount of the
    Subordinated Reserve Account, an amount equal to the difference, if
    positive, between the Reserve Requirement under the applicable Facility
    Lease and the sum of the balances on deposit in the applicable subaccounts
    of the Reserve Account and the Subordinated Reserve Account;

         FIFTH, on each Restricted Payment Date which occurs during the NOx
    Reserve Period which is not also the Additional Reserve Period if the
    conditions to the payment of the Component A of Basic Lease Rent set forth
    in Section 6.9 of the applicable Participation Agreement are satisfied, the
    balance remaining in the applicable subaccount of the Equity Account into
    the applicable subaccount of the NOx Reserve Account the amount equal to
    such Owner Lessor's Percentage of the NOx Reserve Requirement;

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       19
<Page>

         SIXTH, on each Restricted Payment Date which does not occur during the
    Additional Reserve Period if the conditions to the payment of the Component
    A of Basic Lease Rent set forth in Section 6.9 of the applicable
    Participation Agreement are satisfied, the balance remaining in the
    applicable subaccount of the Equity Account, either into the Distributions
    Account or any other account designated by the Facility Lessee for the
    making of Restricted Payments if the conditions to making these payments as
    set forth in Section 6.10 of the applicable Participation Agreement are
    satisfied or into the applicable subaccount of the Suspended Distributions
    Account if such conditions in Section 6.10 of the applicable Participation
    Agreement are not satisfied; and

         SEVENTH, on each Monthly Transfer Date either (a) which is not a
    Restricted Payment Blockage Date occurring prior to the Additional
    Reserve Period and (b) which does not occur during the Additional Reserve
    Period, into the applicable subaccount of the Supplemental Account the
    amount by which the sum of (1) the Owner Lessor's Percentage of the
    balance in the Revenue Account and (2) the balances in the applicable
    subaccounts of the Senior Rent Payment Account, the Equity Account and
    the Recovery Event Proceeds Account exceeds the sum of all the Basic
    Lease Rent and Supplemental Lease Rent due and unpaid on that date and
    the average of the next two aggregate payments of the Basic Lease Rent,
    in each case, under the applicable Facility Lease minus the Owner
    Lessor's Percentage of $1 million, as certified in the Request Letter.

                 (b) The amount withdrawn from the applicable subaccounts of the
Equity Account, the Supplemental Account or the Additional Reserve Account shall
be in the manner and priority provided herein:

                        (i) First, upon the occurrence and during the
    continuance of a Rent Default Event under a Facility Lease, the applicable
    Owner Lessor may from time to time request and the Collateral Agent shall
    transfer from the applicable subaccounts (in the following order of
    priority) of the Supplemental Account, the Equity Account and the Additional
    Reserve Account (the "Letter of Credit Accounts") to such Owner Lessor, to
    the extent then on deposit in such subaccount, an amount equal to the
    Component A of Basic Lease Rent under such Facility Lease then past due (the
    "OVERDUE RENT"); PROVIDED, that (i) as a condition to such transfer, such
    Owner Lessor shall cause to be delivered to the Collateral Agent a standby
    letter of credit with respect to such Facility Lease in form reasonably
    satisfactory to the parties hereto (the "COMPONENT A LETTER OF CREDIT")

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       20
<Page>

    issued in favor of the Collateral Agent by an Acceptable Credit Provider for
    the account of a party other than Homer City or any of the Owner Lessors in
    the face amount equal the amount requested to be withdrawn, PROVIDED,
    FURTHER, that any transfer of funds from such subaccount of the relevant
    Letter of Credit Accounts pursuant to this Section 4.7(b) shall not be
    deemed to constitute any payment of Rent. If at any time after the delivery
    of a Component A Letter of Credit the amount the Collateral Agent is then
    directed to transfer from such subaccount of the Equity Account pursuant to
    the terms of this Agreement exceeds cash then on deposit in such subaccount
    of the Letter of Credit Account (such excess amount, the "SHORTFALL
    AMOUNT"), then the Collateral Agent shall draw on the Component A Letter of
    Credit in an amount equal to the lesser of the Shortfall Amount and the
    undrawn face amount of the Component A Letter of Credit and shall deposit
    the proceeds of such drawing into the applicable subaccounts of the relevant
    Letter of Credit Account (for application in accordance with the terms of
    this Security Deposit Agreement). If pursuant to the terms thereof the
    Component A Letter of Credit becomes drawable as a result of the failure of
    such Component A Letter of Credit to be extended or failure to provide a
    replacement letter of credit within 30 days of a downgrade of the applicable
    Acceptable Credit Provider, the Collateral Agent shall draw on the Component
    A Letter of Credit in an amount equal to the undrawn face amount of the
    Component A Letter of Credit and shall deposit the proceeds of such drawing
    into the applicable subaccount of the relevant Letter of Credit Accounts
    (for application in accordance with the terms of this Security Deposit
    Agreement).

                        (ii) Second, so long as no Lease Event of Default has
    occurred and is continuing and distributions are not blocked pursuant to
    Section 6.10 (b)(ii) or (iii) of each Participation Agreement, the Facility
    Lessee may from time to time request and the Collateral Agent shall transfer
    from the applicable subaccount of the Equity Account to the Facility Lessee,
    to the extent cash is then on deposit in such subaccount, an amount equal to
    the funds specified in such request; PROVIDED, that (i) as a condition to
    such transfer, the Facility Lessee shall cause to be delivered to the
    Collateral Agent a standby letter of credit in form reasonably satisfactory
    to the Collateral Agent (the "FACILITY LESSEE PROVIDED LETTER OF CREDIT")
    issued in favor of the Collateral Agent by an Acceptable Credit Provider for
    the account of a party other than the Facility Lessee or any of the Owner
    Lessors in the face amount equal to the amount

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       21
<Page>

    requested to be withdrawn. If at any time after the delivery of a Facility
    Lessee Provided Letter of Credit the amount the Collateral Agent is then
    directed to transfer from such subaccount of the Equity Account pursuant to
    the terms of this Security Deposit Agreement exceeds cash then on deposit in
    such subaccount of the Equity Account, as applicable (such excess amount,
    the "FACILITY LESSEE PROVIDED SHORTFALL AMOUNT"), then the Collateral Agent
    shall draw on the Facility Lessee Provided Letter of Credit in an amount
    equal to the lesser of the Facility Lessee Provided Shortfall Amount and the
    undrawn face amount of the Facility Lessee Provided Letter of Credit and
    shall deposit the proceeds of such drawing into such subaccount of the
    Equity Account, as required (for application in accordance with the terms of
    this Security Deposit Agreement). If pursuant to the terms thereof the
    Facility Lessee Provided Letter of Credit becomes drawable as a result of
    the failure of such Facility Lessee Provided Letter of Credit to be extended
    or failure to provide a replacement letter of credit within 30 days of a
    downgrade of the applicable Acceptable Credit Provider, the Collateral Agent
    shall draw on the Facility Lessee Provided Letter of Credit in an amount
    equal to the undrawn face amount of the Facility Lessee Provided Letter of
    Credit and shall deposit the proceeds of such drawing into such applicable
    subaccount of the Equity Account or in such applicable subaccount of the
    Equity Account (for application in accordance with the terms of this
    Security Deposit Agreement).

                 (c) In addition, the Collateral Agent shall make transfers from
the funds on deposit in each subaccount of the Equity Account in accordance with
Sections 4.1(b) and 4.13(b).

                 (d) If, on any Restricted Payment Date the funds on deposit in
the applicable subaccount of the Equity Account are insufficient to make in full
any transfer required pursuant to clause THIRD of Section 4.7(a) and the
conditions to the payments of Component A of Basic Rent are satisfied pursuant
to Section 6.9 of the applicable Participation Agreement, the Collateral Agent
shall transfer into the applicable subaccount of the Subordinated Rent Account
the amount of such shortfall after giving effect to any transfer pursuant to
Section 4.4 from funds then on deposit (in the following order of priority) in
the applicable subaccount of each of the Supplement Account, the Subordinated
Reserve Account or the Suspended Distributions Account, as available.

                 (f) The Reserve Requirement may be satisfied by Qualifying
Credit Support.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       22
<Page>

         SECTION 4.8 SUPPLEMENTAL ACCOUNT AND ADDITIONAL RESERVE ACCOUNT. (a)
Subject to Sections 4.13 and 4.1(b) hereof, on each Monthly Transfer Date or
Restricted Payment Date as applicable, the Collateral Agent shall make transfers
from the funds on deposit in the applicable subaccount of each of the
Supplemental Account and the Additional Reserve Account in accordance with
Sections 4.1(b) and 4.7(d).

                 (b) On each Monthly Transfer Date and immediately prior to
making the transfers contemplated by Section 4.7, the Collateral Agent shall
transfer all funds on deposit in each subaccount of the Supplemental Account and
the Additional Reserve Account into the applicable subaccount of the Equity
Account.

                 (c) On the Lien Release Date, all amounts on deposit in the
subaccounts of the Additional Reserve Account shall be transferred to the Equity
Account.

                 (d) After giving effect to all transfers contemplated by
Section 4.7, on each Restricted Payment Date which occurs during the Additional
Reserve Period, from funds on deposit in the applicable subaccount of the
Supplemental Account, the amount certified by the Facility Lessee in the Request
Letter delivered in connection with such date the following amounts in the
following order of priority:

                      FIRST, on each Restricted Payment Date if (a) such
Restricted Payment Date does not occur during a Restricted Payment Blockage
Period and (b) the conditions to the payments of Component A of Basic Lease Rent
are satisfied pursuant to Section 6.9 of the applicable Participation Agreement,
into the applicable subaccount of the Subordinated Rent Payment Account, an
amount payable with respect to the Component A of Basic Lease Rent plus all
Excepted Payments, if any, due and payable under the applicable Facility Lease
on the Restricted Payment Date, together with the amount of all deficiencies, if
any, with respect to all payments required in all prior months, as certified in
the Request Letter;

                      SECOND, on each Restricted Payment Date if (a) such
Restricted Payment Date does not occur during a Restricted Payment Blockage
Period and (b) the conditions to the payment of Component A of Basic Lease Rent
set forth in Section 6.9 of the applicable Participation Agreement are
satisfied, into the applicable subaccount of the Subordinated Reserve Account,
an amount equal to the difference, if positive, between the Reserve Requirement
under the applicable Facility Lease and the sum of the balances on deposit in
the applicable subaccounts of the Reserve Account and the Subordinated Reserve
Account; and

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

                                       23
<Page>

                      THIRD, on each Restricted Payment Date if (a) such
Restricted Payment Date does not occur during a Restricted Payment Blockage
Period and (b) the conditions to the payment of Component A of Basic Lease Rent
set forth in Section 6.9 of the applicable Participation Agreement are
satisfied, the balance remaining in the applicable subaccount of the Equity
Account, either into the applicable subaccount of the Distributions Account for
the making of Restricted Payments if the conditions to making these payments as
set forth in Section 6.10 of the applicable Participation Agreement are
satisfied or into the applicable subaccount of the Suspended Distributions
Account if such conditions in Section 6.10 of the applicable Participation
Agreement are not satisfied.

         SECTION 4.9 SUBORDINATED RENT PAYMENT ACCOUNT. Subject to Sections 4.13
and 4.1(b) hereof, if the conditions to the payments of Component A Portion of
the Basic Lease Rent are satisfied pursuant to Section 6.9 of the applicable
Participation Agreement, on each Restricted Payment Date under such
Participation Agreement, after giving effect to all transfers to be made on such
date pursuant hereto, the Collateral Agent shall transfer to the applicable
Owner Lessor, from funds on deposit in the applicable subaccount of the
Subordinated Rent Payment Account, the amount certified by the Facility Lessee
in the Request Letter delivered in connection with such payment to be (i)
payable with respect to the Component A of the Basic Lease Rent and all Excepted
Payments under the applicable Facility Lease and (ii) available for use in
making such payments on account of the Component A of Basic Lease Rent and
Excepted Payments in accordance with the terms of the applicable Operative
Documents.

         SECTION 4.10 SUBORDINATED RESERVE ACCOUNT. Subject to Sections 4.13 and
4.1(b) hereof and so long as no Lease Event of Default (other than a Rent
Default Event) then exists on each Restricted Payment Date under such
Participation Agreement, following a distribution in accordance with the terms
of Sections 4.8 and 4.4 hereof, if any (and whether or not the conditions have
been met under Section 6.9 of the applicable Participation Agreement), the
Collateral Agent shall transfer to the applicable Owner Lessor, from funds on
deposit in the applicable subaccount of the Subordinated Reserve Account, the
amount certified by the Facility Lessee in the Request Letter delivered in
connection with such Restricted Payment Date to be equal to the difference, if
positive, between the aggregate amount of the Component A of Basic Lease Rent
and Excepted Payments under the applicable Facility Lease due and the aggregate
amount of payments, if any, made on such Restricted Payment Date pursuant to
Sections 4.8 and 4.4 hereof.

         SECTION 4.11 SUSPENDED DISTRIBUTIONS ACCOUNT. Subject to Section 4.13
hereof, on each Monthly Transfer Date or Restricted Payment Date (as
applicable), the Collateral Agent shall make transfers from the funds on deposit
in

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       24
<Page>

the applicable subaccount of the Suspended Distributions Account in
accordance with Sections 4.1(b) and 4.7(d). Following the end of the Lease Term
of the applicable Facility Lease and the payment in full of all Rent,
Termination Value and other amounts due and owing from the Facility Lessee under
such Facility Lease and the other Operative Documents, the Collateral Agent
shall transfer, all the funds on deposit in the applicable subaccount of the
Suspended Distributions Account to the Facility Lessee.

         SECTION 4.12 DELIVERY OF REQUEST LETTERS. Each Request Letter to be
delivered by the Facility Lessee pursuant to this Article IV shall be delivered
to the Collateral Agent not later than one day prior to the date that the
Collateral Agent is required to make any transfer specified therein. At the time
the Facility Lessee delivers to the Collateral Agent any Request Letter or other
written communication relating to any Account or subaccount of the Accounts, the
Facility Lessee shall deliver a copy thereof to each Owner Lessor and its
applicable Lease Indenture Trustee, Owner Participant and such Owner Lessor's
Representative.

         SECTION 4.13 SHORTFALL NOTICES. Not later than the Business Day
preceding each date on which any transfer is to be made pursuant to this Article
IV, the Collateral Agent shall notify the applicable Owner Lessor and its
applicable Owner Participant if the amounts requested to be transferred on such
date in the Request Letter delivered in connection therewith exceed the funds
available in the applicable subaccounts of the relevant Accounts.

         SECTION 4.14 TRANSFERS FROM ACCOUNTS DURING A DEFAULT PERIOD.

                 (a) During a Default Period under a Facility Lease, the
Facility Lessee shall be entitled to issue Request Letters and otherwise direct
the transfer of funds from the applicable Accounts or subaccounts of the
Accounts pursuant to the other provisions of this Article IV until the
Collateral Agent receives a Notice of Action directing that action be taken
pursuant to Section 4.13(b).

                 (b) At any time after the Collateral Agent receives a Notice of
Action specifying that action be taken pursuant to this Section 4.13(b), the
Collateral Agent shall transfer (from the Accounts or applicable subaccounts in
the order set forth in Section 4.13(c)) the following amounts in the following
order of priority:

         FIRST, to the Collateral Agent, the amount certified by the Collateral
    Agent to be the sum of the unpaid fees, indemnities, costs and expenses then
    due and payable for its services in such capacity;

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       25
<Page>

         SECOND, pro rata to (i) the applicable Owner Lessor, the amount
    certified by such Owner Lessor to be the aggregate amount (including premium
    and interest, if any) then due and payable in respect of Senior Rent and
    Supplemental Lease Rent (other than Excepted Payments) under the applicable
    Operative Documents and (ii) to extent that the applicable Owner Lessor's
    Percentage of amounts then on deposit in the Permitted Indebtedness Account
    are insufficient to pay such amounts, to any Person who has provided
    Permitted Indebtedness in the aggregate amount of the applicable Owner
    Lessor's Percentage of such Permitted Indebtedness (including premium and
    interest, if any) then due and payable;

         THIRD, to the applicable Owner Lessor, the amount certified by such
    Owner Lessor to be the aggregate amount of the Component A of Basic Lease
    Rent , Component A of Termination Value and all other fees and indemnities
    in respect thereof then due and payable in respect of such Component A of
    Basic Lease Rent or Component A of Termination Value under the applicable
    Facility Lease;

         FOURTH, pro rata, to the Persons entitled thereto, an amount equal to
    all other Supplemental Rent under the applicable Facility Lease then due and
    payable to such Persons and all other sums due and owing by the Facility
    Lessee to such Persons under any of the applicable Operative Documents (as
    certified in writing by such Persons); and

         FIFTH, any surplus then remaining after the termination of the
    applicable Facility Lease in accordance with its terms and the satisfaction
    of all rents and fees thereunder, shall be paid to the Facility Lessee or
    its successors or assigns or to whomsoever may be lawfully entitled to
    receive the same or as a court of competent jurisdiction may direct.

                 (c) The amounts to be distributed pursuant to Section 4.13(b)
with respect to any Facility Lease shall be debited from the subaccounts in the
following order of priority:

         FIRST, from the applicable subaccount of the Suspended Distributions
    Account;

         SECOND, from the applicable subaccount of the Subordinated Reserve
    Account;

         THIRD, from the applicable subaccount of the Supplemental Account;

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       26
<Page>

         FOURTH, from the applicable subaccount of the Subordinated Rent Payment
    Account;

         FIFTH; from the applicable subaccount of the Reserve Account;

         SIXTH, from the applicable subaccount of the Additional Reserve
    Account;

         SEVENTH, from the applicable subaccount of the Equity Account;

         EIGHTH, from the applicable subaccount of the Senior Rent Payment
    Account;

         NINTH, solely with respect to amounts distributed pursuant to clauses
    FIRST through FOURTH of Section 4.13(b) above, up to an amount equal to the
    amount then on deposit therein, from the applicable subaccount of the
    Recovery Event Proceeds Account; and

         TENTH, solely with respect to amounts distributed pursuant to clauses
    FIRST through FOURTH of Section 4.13(b) above, up to an amount equal to such
    Owner Lessor's Percentage of the amount then on deposit therein, from the
    Revenue Account.

It is understood and agreed that no amount on deposit in any other subaccount of
any of the Accounts (nor, except as provided in clauses seventh and eighth
above, amounts on deposit in the Revenue Account or the applicable subaccount of
the Recovery Event Proceeds Account) shall be available for distributions to be
made pursuant to Section 4.13(b) with respect to such Facility Lease and the
applicable Operative Documents.

         SECTION 4.15 COLLATERAL AGENT'S CALCULATIONS. In making the
determinations and allocations required by Section 4.13, the Collateral Agent
may rely upon information specified in any Request Letter and any certificate of
the applicable Owner Lessor delivered to it, as applicable, and the Collateral
Agent shall have no liability to any of the Secured Parties for actions taken in
reliance on such information. All transfers and releases made by the Collateral
Agent pursuant to Section 4.13 shall be (subject to any decree of any court of
competent jurisdiction) final, and the Collateral Agent shall have no duty to
inquire as to the application by any Secured Party of any amounts distributed to
them.

         SECTION 4.16 INSUFFICIENT AMOUNTS. Except as provided in Sections
4.1(b) and 4.7(d) hereof, to the extent the applicable Owner Lessor Percentage
of the amounts on deposit in any Account (or, if the Account has

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       27
<Page>

subaccounts, in the applicable subaccount) are insufficient to fully satisfy any
transfer requirement from such Account (or, if the Account has subaccounts, the
applicable subaccount) under this Article IV, such transfer shall be made to the
extent of the amounts on deposit in such Account (or, if the Account has
subaccounts, the applicable subaccount). In addition, if (i) any transfer
requirements from any Account (or, if the Account has subaccounts, the
applicable subaccount) in this Article IV share the same level of priority and
(ii) the funds equal to the applicable Owner Lessor Percentage of the funds in
such Account (or, if the Account has subaccounts, the funds in the applicable
subaccount) are insufficient to satisfy in full all such transfer requirements
which share such level of priority, such transfers shall be made on a pro rata
basis to the extent of the amounts on deposit in such Account (or, if the
Account has subaccounts, the funds in the applicable subaccount).

                                   ARTICLE V
                                   ---------

                                   INVESTMENT

         Cash held by the Collateral Agent in the Accounts shall not be invested
or reinvested except as provided below:

                 (a) cash held in the Accounts or applicable subaccounts shall
be invested and reinvested in Permitted Investments by the Collateral Agent who
shall make such Permitted Investments (i) except during a Default Period, at the
written direction of the Facility Lessee and (ii) during a Lease Default or
Lease Event of Default under a Facility Lease, in Permitted Investments selected
by the Collateral Agent unless specific investment instructions are given to the
Collateral Agent by the applicable Owner Lessor and in such case, to the extent
of amounts credited to applicable subaccounts;

                 (b) the Collateral Agent shall sell or liquidate all or any
designated part of the Permitted Investments held in any Account to the extent
credited to any subaccount at any time the proceeds thereof are required to make
a release from any such subaccount or any transfer between subaccounts pursuant
to Article IV hereof; and

                 (c) all such Permitted Investments, the interest thereon, and
the net proceeds of the sale, liquidation or payment thereof, shall be held in
the appropriate Account and credited to the applicable subaccounts for the same
purposes as the cash used to purchase such Permitted Investments.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       28
<Page>

                  The Collateral Agent shall take such action as may be
necessary to perfect the security interest created by this Agreement in all
Permitted Investments held in any Pledged Account.

                                   ARTICLE VI
                                   ----------

                                COLLATERAL AGENT

         SECTION 6.1 RIGHTS, DUTIES, ETC. The acceptance by the Collateral Agent
of its respective duties hereunder is subject to the following terms and
conditions which the parties to this Agreement hereby agree shall govern and
control with respect to the rights, duties, liabilities and immunities of the
Collateral Agent:

                 (a) it shall not be responsible or liable in any manner
whatever for soliciting any funds or for the sufficiency, correctness,
genuineness or validity of any funds or securities deposited with or held by it;

                 (b) it shall be protected in acting or refraining from acting
upon any written notice, certificate, instruction, request or other paper or
document, as to the due execution thereof and the validity and effectiveness of
the provisions thereof and as to the truth of any information therein contained,
which it in good faith believes to be genuine;

                 (c) it shall not be liable for any error of judgment or for any
act done or step taken or omitted except in the case of its gross negligence,
willful misconduct or bad faith;

                 (d) it may consult with and obtain advice from counsel of its
own choice in the event of any dispute or question as to the construction of any
provision hereof;

                 (e) it shall have no duties hereunder, except those which are
expressly set forth herein and in any modification or amendment hereof;
provided, however, that no such modification or amendment hereof shall affect
its duties unless it shall have given its prior written consent thereto;

                 (f) it may execute or perform any duties hereunder either
directly or through administrative agents or attorneys selected with reasonable
care;

                 (g) it may engage or be interested in any financial or other
transactions with any party hereto and may act on, or as depositary, collateral
agent

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       29
<Page>

or administrative agent for, any committee or body of holders of obligations
of such Persons as freely as if it were not Collateral Agent hereunder; and

                 (h) it shall not be obligated to take any action which in its
reasonable judgment would involve it in expense or liability unless it has been
furnished with reasonable indemnity.

         SECTION 6.2 RESIGNATION OR REMOVAL. The Collateral Agent may resign or
be removed as set forth in Section 6.5 of the Amended and Restated Guarantee and
Collateral Agreement.

                                  ARTICLE VII
                                  -----------

                                 DETERMINATIONS

                  In the event of any dispute as to any amount to be distributed
or paid by the Collateral Agent from the Accounts (or subaccounts), the
Collateral Agent is authorized and directed to retain in its possession without
liability to anyone all or any part of the amounts then on deposit in the
Accounts or subaccounts, until such dispute shall have been settled by mutual
agreement of the disputing parties or by a final order, decree or judgment of a
Federal or State court of competent jurisdiction located in the State of New
York (with respect to disputes in connection with amounts on deposit in the
Accounts or subaccounts), and time for an appeal has expired and no appeal has
been perfected, but the Collateral Agent shall be under no duty whatsoever to
institute or defend any such proceedings.

                                  ARTICLE VIII
                                  ------------

                                  MISCELLANEOUS

         SECTION 8.1 INDEMNIFICATION OF COLLATERAL AGENT. The Facility Lessee
assumes liability for, and agrees to indemnify, protect, save and keep harmless
each Owner Lessor, each Owner Lessor's Representative, each Owner Participant,
the Security Agent and the Collateral Agent and their respective successors,
assigns, agents and servants from and against, any and all claims, liabilities,
obligations, losses, damages, taxes, penalties, costs and expenses (including
reasonable attorneys' fees) that may be imposed on, incurred by, or asserted
against, at any time, such Owner Lessor, such Owner Lessor's Representative,
such Owner Participant, the Security Agent or the Collateral Agent and in any
way relating to or arising out of the execution and delivery of this Agreement,
the establishment of the Accounts and subaccounts, the acceptance of

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       30
<Page>

deposits, the purchase or sale of Permitted Investments, the retention of cash
and Permitted Investments or the proceeds thereof and any payment, transfer or
other application of cash or Permitted Investments in accordance with the
provisions of this Agreement, or as may arise by reason of any act, omission or
error of the Collateral Agent made in good faith in the conduct of its duties;
except that the Facility Lessee shall not be required to indemnify, protect,
save and keep harmless the Collateral Agent or any Owner Lessor, against its own
gross negligence or willful misconduct. The indemnities contained in this
Section 8.1 shall survive the termination of this Agreement.

         SECTION 8.2 WAIVER OF RIGHT OF SET-OFF. The Collateral Agent waives,
with respect to all of its existing and future claims against the Facility
Lessee, all existing and future rights of set-off and banker's liens against the
Accounts and subaccounts and all items (and proceeds thereof) that come into its
possession in connection with the Accounts.

         SECTION 8.3 TERMINATION. The provisions of Articles III and IV with
respect to the applicable Accounts or subaccounts shall terminate on the date on
which the applicable Facility Lease shall terminate in accordance with its terms
and the Obligations under the applicable Transaction Documents shall have been
paid in full. Promptly after such termination, the applicable Owner Lessor shall
notify the Collateral Agent of such termination and the Collateral Agent hereby
agrees that at the time of such termination (x) the Owner Lessor's Percentage of
amounts or Permitted Investments in the Accounts or amounts and Permitted
Investments in the applicable subaccounts, as applicable, shall be liquidated as
soon as commercially prudent, (y) a reconciliation shall be made of the
distributions made from the applicable Accounts or subaccounts and any necessary
adjustments to the balances of such applicable Accounts or subaccounts as a
result of such reconciliation shall be made and (z) the applicable portion of
Owner Lessor's Percentage of the moneys in the applicable Accounts, subject to
the other Transaction Documents, or subaccounts (after giving effect to such
liquidation and such adjustments) shall, subject to other Transaction Documents,
be distributed to the Facility Lessee or as it may direct.

         SECTION 8.4 SEVERABILITY. If any one or more of the covenants or
agreements provided in this Agreement on the part of the parties hereto to be
performed should be determined by a court of competent jurisdiction to be
contrary to law, such covenant or agreement shall be deemed and construed to be
severable from the remaining covenants and agreements herein contained and shall
in no way affect the validity of the remaining provisions of this Agreement.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       31
<Page>

         SECTION 8.5 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute one and the same instrument.

         SECTION 8.6 AMENDMENTS. The provisions of this Agreement and other
Transaction Documents may be amended, modified or waived if such amendment,
modification or waiver is in writing and is entered into in accordance with the
provisions of the Participation Agreement.

         SECTION 8.7 APPLICABLE LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
REGARDLESS OF ANY OTHER PROVISION IN ANY OTHER AGREEMENT, FOR PURPOSES OF THE
NEW YORK UCC, NEW YORK SHALL BE DEEMED TO BE THE SECURITIES INTERMEDIARY'S
JURISDICTION AND THE ACCOUNTS (AS WELL AS THE SECURITIES ENTITLEMENTS RELATED
THERETO) SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

         SECTION 8.8 NOTICES. Except as otherwise specifically provided herein,
all notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be in writing and shall be deemed to have been duly given or made
when delivered if delivered by hand or courier or when received if sent by mail
or telecopy, in each case addressed to the party to which such notice is
required or permitted to be given or made hereunder set forth below its
signature hereto, or such other address as may be specified from time to time by
such party in a notice to the other parties hereto.

         SECTION 8.9 BENEFIT OF SECURITY DEPOSIT AGREEMENT

                 (a) This Security Deposit Agreement shall inure to the benefit
of, and be enforceable by, the parties hereto and their respective successors
and permitted assigns, and no other Person shall be entitled to any of the
benefits of this Security Deposit Agreement.

                 (b) Notwithstanding the foregoing, in order to secure the
Lessor Notes of each Owner Lessor, such Owner Lessor will assign and grant a
first priority security interest in favor of its applicable Lease Indenture
Trustee in and to all of such Owner Lessor's right, title and interest in, to
and under this Security Deposit Agreement (other than to the extent relating to
Excepted Payments and the rights to enforce and collect the same). The Facility
Lessee hereby consents to such assignment and to the creation of such Lien and
security interest and acknowledges

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       32
<Page>

receipt of copies of the Lease Indenture, it being understood that such consent
shall not affect any requirement or the absence of any requirement for any
consent of the Facility Lessee under any other circumstances. Unless and until
the Collateral Agent shall have received written notice from the Lease Indenture
Trustee that the Lien of the applicable Lease Indenture has been fully
discharged, the applicable Security Agent shall have the right (i) to directly
receive for application in accordance with the terms of the applicable Lease
Indenture all amounts payable or otherwise distributable under this Agreement to
the applicable Owner Lessor (other than in respect of the Excepted Payments) and
(ii) to exercise the rights of such Owner Lessor under this Security Deposit
Agreement (other than with respect to Excepted Payments and the rights to
enforce and collect the same) to the extent set forth in and subject to the
exceptions set forth in the applicable Lease Indenture.

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       33
<Page>

         IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed by their duly authorized officers, all as of the day and
year first above written.

                                 EME HOMER CITY GENERATION L.P.

                                 By:

                                 By:
                                    -------------------------------------------
                                     Name:
                                     Title:

                                 Address for Notices:

                                 18101 Von Karman Avenue
                                 Suite 1700
                                 Irvine, California 92612-1046

                                 THE BANK OF NEW YORK, as Collateral Agent

                                 By:
                                    -------------------------------------------
                                     Name:
                                     Title:

                                 THE BANK OF NEW YORK, as
                                 Securities Intermediary

                                 By:
                                    -------------------------------------------
                                     Name:
                                     Title:

                                 Address for Notices:

                                 114 West 47th Street
                                 25th Floor
                                 New York, New York  10036

                           SECURITY DEPOSIT AGREEMENT
                           --------------------------

                                       34<Page>

                                                                EXHIBIT 10.20.4

            AMENDED AND RESTATED INTERCOMPANY LOAN SUBORDINATION AGREEMENT (this
"AGREEMENT"), dated as of December __, 2001, among (i) EDISON MISSION HOLDINGS
CO., a California corporation ("EME HOLDINGS"), (ii) EDISON MISSION FINANCE CO.,
a California corporation ("EDISON MISSION FINANCE"), (iii) HOMER CITY PROPERTY
HOLDINGS, INC., a California corporation ("HOMER CITY HOLDINGS"), (iv) CHESTNUT
RIDGE ENERGY CO., a California corporation ("CHESTNUT RIDGE"), (v) MISSION
ENERGY WESTSIDE, INC., a California corporation ("MEW"), (vi) EME HOMER CITY
GENERATION L.P., a Pennsylvania limited partnership ("HOMER CITY" or the
"FACILITY LESSEE" and, together with EME Holdings, Edison Mission Finance, Homer
City Holdings, Chestnut Ridge and MEW, the "LOAN PARTIES"), and (vii) THE BANK
OF NEW YORK, as successor to UNITED STATES TRUST COMPANY OF NEW YORK, as
collateral agent for the holders of the Initial Lessor Notes (as such term is
defined in the Participation Agreement) (in such capacity, the "COLLATERAL
AGENT").

                                    RECITALS

            WHEREAS, contemporaneously herewith Homer City, a wholly owned
subsidiary of Edison Mission Midwest Holdings Co. ("HOLDINGS"), will enter into
a transaction pursuant to the eight Participation Agreements, in each case, by
and among Homer City, the Owner Lessor (as defined therein), Wells Fargo Bank
Northwest, National Association, not in its individual capacity but solely as
Owner Manager, the Owner Participant (as defined therein), Homer City Funding
LLC, as Lender and the Collateral Agent, as Indenture Trustee, Bondholder
Trustee and Security Agent (as amended, modified and supplemented and in effect
from time to time, each a "PARTICIPATION AGREEMENT") whereby Homer City shall
sell certain of its generating assets to the Owner Lessors and the Owner Lessors
shall lease such generating assets to Homer City under each Facility Lease;

            WHEREAS, the holders of the Initial Lessor Notes (as such term is
defined in the Participation Agreement) have purchased the Initial Lessor Notes
from the Owner Lessor and have been granted a security interest in the Facility
Lease as collateral for the Initial Lessor Notes;

            WHEREAS, Edison Mission Finance has entered into a Subordinated Loan
Agreement, dated as of March 18, 1999 (the "HOLDINGS LOAN AGREEMENT"), with EME
Holdings, pursuant to which EME Holdings has agreed to make loans ("HOLDINGS
LOANS") to Edison Mission Finance from time to time with the proceeds of the
Holdings Loans on the terms and subject to the conditions contained in the
Holdings Loan Agreement.

            WHEREAS, EME Homer City has entered into the Subordinated Loan
Agreement, dated as of March 18, 1999 (the "FINANCE LOAN AGREEMENT"), with
Edison Mission Finance, pursuant to which Edison Mission Finance has agreed to
make loans ("FINANCE LOANS") to EME Homer City from time to time with the
proceeds of the

<Page>

Holdings Loans on the terms and subject to the conditions contained in the
Finance Loan Agreement.

            WHEREAS, EME Homer City has entered into the Subordinated Revolving
Loan Agreement, dated as of March 18, 1999 (the "REVOLVING LOAN AGREEMENT"),
with Edison Mission Finance, pursuant to which Edison Mission Finance has agreed
to make loans ("REVOLVING LOANS") to EME Homer City from time to time on the
terms and subject to the conditions contained in the Revolving Loan Agreement.

            WHEREAS, in connection with the transactions contemplated by the
Participation Agreements, the parties hereto will agree to subordinate certain
claims against Homer City under the Holdings Loans, Finance Loans and Revolving
Loans to the rights of holders of the Obligations (as defined herein); and

            WHEREAS, the execution and delivery of this Agreement is a condition
precedent to each of the Participation Agreements.

            NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, each of the parties hereto hereby agrees to amend and restate the
Intercompany Loan Subordination Agreement between the Loan Parties and the
Collateral Agent, dated as of March 18, 1999 (the "INTERCOMPANY LOAN
SUBORDINATION AGREEMENT") in its entirety as follows:

                                       2
<Page>

                                   ARTICLE I
                     DEFINITIONS; PRINCIPLES OF CONSTRUCTION

            SECTION 1.1 DEFINITIONS. (a) Unless otherwise expressly provided
herein, capitalized terms used but not defined in this Agreement, including in
the Preamble and the Recitals, shall have the meanings given to such terms in
each Participation Agreement.

                  (b) OTHER DEFINED TERMS. The following terms, when used
herein, shall have the following meanings:

            "Intercompany Borrower" shall mean any Loan Party in its capacity as
borrower under any Intercompany Loan Agreement.

            "Intercompany Loans" shall mean any indebtedness by any Loan Party
relating to an Intercompany Loan Agreement.

            "Intercompany Loan Agreement" shall mean the [Holdings Loan
Agreement], the Finance Loan Agreement, the Revolving Loan Agreement and any
other loan agreement to be entered into from time to time by an Intercompany
Borrower and a Subordinated Party.

            "Obligations" shall mean (i) all obligations of Homer City owed now
or hereafter under each of the Participation Agreements, and related Operative
Documents, including without limitation Basic Lease Rent, Termination Value, any
Supplemental Rent (whether for indemnities, costs, expenses or otherwise) now or
hereafter owed by Homer City to the Owner Lessor, the Security Agent, the Lease
Indenture Trustee, the Lender or the Bondholder Trustee under the Operative
Documents and (ii) obligations owed now or hereafter by Homer City with respect
to or on account of Permitted Indebtedness.

            "Proceeding" shall have the meaning given to such term in Section
3.2.

            "Secured Party" shall mean any party to whom Homer City owes an
Obligation.

            "Senior Claims" shall have the meaning given to such term in Section
2.1(a).

            "Subordinated Claims" shall have the meaning given to such term in
Section 2.1(a).

            "Subordinated Notes" shall have the meaning given to such term in
Section 2.1(c).

                                       3
<Page>

            "Subordinated Party" shall mean any Loan Party in its capacity as
lender under an Intercompany Loan Agreement.

            SECTION 1.2 PRINCIPLES OF CONSTRUCTION. Unless otherwise expressly
provided herein, the principles of construction set forth in the Participation
Agreement shall apply to this Agreement.

                                       4
<Page>

                                   ARTICLE II
                            SUBORDINATION PROVISIONS

            SECTION 2.1 SUBORDINATION OF INTERCOMPANY LOANS. Until all
Obligations shall have been indefeasibly paid in full and the Facility Lease,
the other Operative Documents and any agreement relating to Permitted
Indebtedness have terminated in accordance with their terms:

                  (a) (i) all principal of, premium, if any, interest and any
other amounts owing on any Intercompany Loan made by any Loan Party, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred or created ("SUBORDINATED CLAIMS") shall be
subordinate to the prior payment of and junior in right of payment to all
principal of, premium, if any, and interest (including default interest and
interest accruing after the initiation of any Proceeding whether or not allowed
as a claim in such a Proceeding) owing in respect of all other Obligations owed
by Homer City under the Operative Documents and under any Permitted Indebtedness
(collectively, "SENIOR CLAIMS")

                  (b) no Loan Party shall, directly or indirectly, make any
payment of principal or interest on account of, or transfer any collateral for
any part of, any Subordinated Claims; provided, however, that the Loan Parties
may make regularly scheduled payments of interest and principal on account of
Subordinated Claims so long as at such time Restricted Payments are permitted to
be made pursuant to the terms of the Amended and Restated Security Deposit
Agreement;

                  (c) the Subordinated Parties shall not demand, sue for or
accept any payment or collateral in respect of any Subordinated Claims, or take
any other action to enforce their rights or exercise any remedies in respect of
any Subordinated Claims (whether upon the occurrence or during the continuation
of an event of default under the related Intercompany Loan Agreement or an event
of default under any promissory notes evidencing Subordinated Claims
(collectively, "SUBORDINATED NOTES" or otherwise), or cancel, set off or
otherwise discharge any part of any Subordinated Claims; and

                  (d) no Intercompany Borrower or Subordinated Party shall
otherwise take any action prejudicial to or inconsistent with the priority
position of the Secured Parties over the Subordinated Parties created by this
Section 2.1.

            SECTION 2.2 RELIANCE. All Senior Claims shall conclusively be deemed
to have been created, contracted or incurred in reliance on the subordination
provisions contained in this Agreement and all dealings between the Loan Parties
and each of the holders of Senior Claims shall be deemed to have been
consummated in reliance upon the subordination provisions contained herein.

            SECTION 2.3 OTHER HOLDERS. The subordination provisions set forth in
this Agreement shall be binding upon transferees or assignees of the
Subordinated Parties and

                                       5
<Page>

upon each other holder of Subordinated Claims and shall inure to the benefit of
transferees or assignees of the holders of the Initial Lessor Notes and every
other holder of Senior Claims.

                                       6
<Page>

                                  ARTICLE III
                              WRONGFUL COLLECTIONS

            SECTION 3.1 TURNOVER. Should any payment on account of, or any
collateral for any part of, any Subordinated Claims be received by the
Subordinated Parties in violation of this Agreement, such payment or collateral
shall be delivered forthwith to the Collateral Agent for application in
accordance with the Amended and Restated Security Deposit Agreement and the
other Security Documents. The Collateral Agent is irrevocably authorized to
supply any required endorsement or assignment which may have been omitted. Until
so delivered, any such payment or collateral shall be held by the Subordinated
Parties in trust for the Secured Parties and shall not be commingled with other
funds or property of the Subordinated Parties.

            SECTION 3.2 SURVIVAL OF OBLIGATION. The obligation of the
Subordinated Parties to deliver to the Collateral Agent any payment or
collateral received in connection with any Subordinated Claims, set forth in
Section 3.1, shall survive and shall not be in any way affected by the result of
any (a) insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition or other similar proceeding relating to any
Intercompany Borrower, its property or its creditors as such, (b) proceeding for
any liquidation, dissolution or other winding-up of any Intercompany Borrower,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (c) assignment for the benefit of creditors, (d) other marshalling
of the assets of any Intercompany Borrower or (e) general meeting of creditors
of any Intercompany Borrower, in each case, under the laws of the United States
or any other jurisdiction (any such event, a "PROCEEDING").

                                   ARTICLE IV
                                   PROCEEDINGS

            SECTION 4.1 COMMENCEMENT OF PROCEEDINGS. No Subordinated Party shall
commence, or join with any other creditor or creditors of any Intercompany
Borrower in commencing, any Proceeding against such Intercompany Borrower.

            SECTION 4.2 PAYMENTS AND DISTRIBUTIONS. In the event of any
Proceeding, until all Obligations shall have been indefeasibly paid in full, any
payment or distribution of any kind or character, whether in cash, property or
securities, which, but for the subordination provisions of this Agreement would
otherwise be payable or deliverable upon or in respect of Subordinated Claims,
shall instead be paid over or delivered to the Collateral Agent in accordance
with Article III and no holder of Subordinated Claims shall receive any such
payment or distribution or any benefit therefrom.

                                       7
<Page>

            SECTION 4.3 ENFORCEMENT OF SUBORDINATED CLAIMS. (a) Enforcement by
the Secured Parties. At any Proceeding, until all Obligations shall have been
indefeasibly paid in full, the Secured Parties (or the Collateral Agent on
behalf of the Secured Parties) are hereby irrevocably authorized (but not
required) to:

               (i) enforce claims comprising Subordinated Claims in the name of
      the Subordinated Parties by proof of debt, proof of claim, suit or
      otherwise;

               (ii) collect any assets of any Intercompany Borrower distributed,
      divided or applied by way of dividend or payment, and any securities
      issued, in each case, on account of Subordinated Claims and apply the
      same, or the proceeds of any realization upon the same that the Secured
      Parties in their discretion elect to effect, to Senior Claims until all
      Obligations shall have been indefeasibly paid in full, PROVIDED, HOWEVER,
      that the Secured Parties shall render any surplus to the Subordinated
      Parties or their Affiliates, as their interests appear, or interplead such
      surplus with a court of competent jurisdiction;

               (iii) vote claims comprising Subordinated Claims to accept or
      reject any plan of partial or complete liquidation, reorganization,
      arrangement, composition or extension; and

               (iv) take generally any action in connection with any such
      Proceeding which the Subordinated Parties might otherwise take.

                  (b) COOPERATION. The Subordinated Parties shall cooperate
fully with the Secured Parties and perform all acts requested by the Secured
Parties to enable the Secured Parties to enforce any Subordinated Claims
pursuant to clause (a) above, including, without limitation, filing appropriate
proofs of claim and executing and delivering all necessary powers of attorney,
assignments or other instruments.

                  (c) ENFORCEMENT BY THE SUBORDINATED PARTIES. After the
commencement of any Proceeding, the Subordinated Parties may inquire in writing
of the Secured Parties whether the Secured Parties intend to exercise their
rights set forth in clause (a) above with respect to any Subordinated Claims.
Should the Secured Parties fail, within a reasonable time after receipt of such
inquiry, either to file a proof of claim with respect to any Subordinated Claims
and to furnish a copy thereof to the Subordinated Parties, or to inform the
Subordinated Parties in writing that the Secured Parties intend to exercise
their rights to assert such Subordinated Claims in the manner provided in clause
(a) above, the Subordinated Parties may (but shall not be required to) proceed
to file a proof of claim with respect to such Subordinated Claims and take such
further steps with respect thereto, not inconsistent with this Agreement, as the
Subordinated Parties may deem proper.

                  (d) SUBROGATION. The Subordinated Parties shall not have any
subrogation or other rights as holders of Senior Claims, and each Subordinated
Party

                                       8
<Page>

hereby irrevocably waives all such rights of subrogation and all rights of
reimbursement or indemnity whatsoever and all rights of recourse to any security
for any Senior Claims, until such time as all Obligations shall have been
indefeasibly paid in full. Subject to and from and after the indefeasible
payment in full of all Obligations, the Subordinated Parties shall be subrogated
to any rights of the Secured Parties to receive payments or distributions of
cash, property or securities of any Intercompany Borrower applicable to any
Subordinated Claims until all amounts owing on such Subordinated Claims shall be
paid in full.

                                   ARTICLE V
                              LIMITATION ON ACTIONS

            SECTION 5.1 ACTIONS PROHIBITED. Until all Obligations shall have
been indefeasibly paid in full, the Subordinated Parties shall not, without the
prior written consent of the Secured Parties:

                  (a) take, obtain or hold (or permit anyone acting on its
behalf to take, obtain or hold) any assets of any Intercompany Borrower, whether
as a result of any administrative, legal or equitable action, or otherwise, in
violation of the subordination provisions contained in this Agreement;

                  (b) accelerate payment of any Subordinated Claims or otherwise
require such Subordinated Claims to be paid prior to their stated or scheduled
maturity date;

                  (c) commence, prosecute or participate in (i) any
administrative, legal or equitable action against or involving any Intercompany
Borrower relating to any Subordinated Claims, including, without limitation, any
Proceeding, or (ii) any administrative, legal or equitable action to (a) enforce
or collect any judgment obtained in respect of any Subordinated Claims, (b)
enforce or exercise remedies arising under or pursuant to any Subordinated
Claims, (c) enforce or exercise remedies under or pursuant to any lien or other
security interest securing any Subordinated Claims or (d) enforce or exercise
remedies with respect to any covenant, agreement, representation or other
undertaking contained in any Subordinated Notes; or

                  (d) exercise any other rights or remedies to enforce any
Subordinated Claims, any collateral security provided with respect to such
Subordinated Claims or any covenant, agreement, representation or other
undertaking contained in any Subordinated Notes.

                                       9
<Page>

            SECTION 5.2 DEFENSE IN ACTION. If the Subordinated Parties, in
violation of the provisions herein set forth, shall commence, prosecute or
participate in any suit, action, case or Proceeding referred to in Section 5.1,
the related Intercompany Borrower may interpose as a defense or plea the
provisions set forth herein, and any holder of any Senior Claims may intervene
and interpose such defense or plea in its own name or in the name of such
Intercompany Borrower, and shall, in any event, be entitled to restrain the
enforcement of the provisions of any Subordinated Claims in its own name or in
the name of such Intercompany Borrower, as the case may be, in the same suit,
action, case or Proceeding or in any independent suit, action, case or
Proceeding.

                                   ARTICLE VI
                             SUBORDINATION ABSOLUTE

            SECTION 6.1 SURVIVAL OF RIGHTS. The rights under this Agreement of
the holders of Senior Claims as against the Subordinated Parties shall remain in
full force and effect without regard to, and shall not be impaired or affected
by:

                  (a) any act or failure to act on the part of any Intercompany
Borrower;

                  (b) any extension or indulgence in respect of any payment or
prepayment of any Senior Claims or any part thereof or in respect of any other
amount payable to any holder of any Senior Claims;

                  (c) any amendment, modification or waiver of, or addition or
supplement to, or deletion from, or compromise, release, consent or other action
in respect of, any of the terms of any Senior Claims or the Financing Documents;

                  (d) (i) any exercise or non-exercise by the holder of any
Senior Claims of any right, power, privilege or remedy under or in respect of
such Senior Claims, the Financing Documents or the subordination provisions
contained herein, (ii) any waiver by the holder of any Senior Claims of any
right, power, privilege or remedy or of any default in respect of such Senior
Claims, the Financing Documents or the subordination provisions contained herein
or (iii) any receipt by the holder of any Senior Claims or any failure by such
holder to perfect a security interest in, or any release by such holder of, any
security for the payment of such Senior Claims;

                  (e) any merger or consolidation of any Intercompany Borrower
or any of its subsidiaries into or with any other Person, or any sale, lease or
transfer of any or all of the assets of any Intercompany Borrower or any of its
subsidiaries to any other Person;

                  (f) any payment or other distribution to any holder of any
Senior Claims in any Proceeding;

                                       10
<Page>

                  (g) absence of any notice to, or knowledge by, the
Subordinated Parties of the existence or occurrence of any of the matters or
events set forth in the foregoing clauses (a) through (f); or

                  (h) any other circumstance.

            SECTION 6.2 WAIVERS. (a) WAIVER OF DEFENSES. Each Subordinated Party
hereby irrevocably waives, in any proceeding by the Secured Parties to enforce
their rights under this Agreement, (i) any defense based on the adequacy of a
remedy at law which might be asserted as a bar to the remedy of specific
performance of this Agreement and (ii) the defense that claims asserted by the
holders of the Initial Lessor Notes pursuant to this Agreement are res judicata
as a result of any decision rendered in any prior Proceeding.

                  (b) OTHER WAIVERS. Each Subordinated Party hereby irrevocably
waives (i) notice of any of the matters referred to in Section 6.1, (ii) all
notices which may be required, whether by statute, rule of law or otherwise, to
preserve intact any rights of any holder of any Senior Claims against any
Intercompany Borrower, including, without limitation, any demand, presentment
and protest, or any proof of notice of nonpayment under any document evidencing
such Senior Claims or under the Financing Documents, (iii) notice of the
acceptance of or reliance on this Agreement by the Secured Parties, (iv) notice
of any renewal, extension or accrual of any Senior Claims, or any loans made or
other action taken in reliance on this Agreement, (v) any right to the
enforcement, assertion or exercise by any holder of any Senior Claims of any
right, power, privilege or remedy conferred in any document evidencing such
Senior Claims or in the Financing Documents, or otherwise, (vi) any requirement
of diligence on the part of any holder of any Senior Claims, (vii) any
requirement on the part of any holder of any Senior Claims to mitigate damages
resulting from any default under any documents evidencing such Senior Claims or
under the Financing Documents and (viii) any notice of any sale, transfer or
other disposition of any Senior Claims by any holder thereof.

            SECTION 6.3 ASSENT. Each Subordinated Party hereby irrevocably
assents to (a) any renewal, extension or postponement of the time of payment of
any Senior Claims or any other indulgence with respect thereto, (b) any increase
in the amount of any Senior Claims, (c) any substitution, exchange or release of
collateral for any Senior Claims, (d) the addition or release of any Person
primarily or secondarily liable for any Senior Claims and (e) the provisions of
any instrument, security or other writing evidencing any Senior Claims.

                                  ARTICLE VII
                        INTERCOMPANY BORROWER OBLIGATIONS

            The provisions of this Agreement are intended solely for the purpose
of defining the relative rights and obligations of the Subordinated Parties and
the Secured

                                       11
<Page>

Parties. Nothing contained herein (a) is intended to or shall impair, as among
any Intercompany Borrower, its creditors and the related Subordinated Party, the
obligation of such Intercompany Borrower, which is absolute and unconditional,
to pay to such Subordinated Party, as and when the same shall become due and
payable in accordance with its terms, all amounts payable in respect of any
Subordinated Claims, or (b) is intended to affect the relative rights of such
Subordinated Party and creditors of such Intercompany Borrower other than the
Secured Parties.

                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

            SECTION 8.1 WAIVERS, AMENDMENTS. (a) The provisions of this
Agreement may from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and consented to by each of the
parties hereto, the holders of the Initial Lessor Notes, each of the Owner
Lessors and each of the Owner Participants.

                  (b) No failure or delay in exercising any power or right under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on any party in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval under this Agreement
shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.

            SECTION 8.2 NOTICES. Except as otherwise specifically provided
herein, all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof to be given to
any Person shall be in writing and shall be deemed to have been duly given or
made when delivered if delivered by hand or courier or when received if sent by
mail or telecopy, in each case addressed to the party to which such notice is
required or permitted to be given or made hereunder set forth below its
signature hereto, or such other address as may be specified from time to time by
such party in a notice to the other parties hereto.

            SECTION 8.3 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

            SECTION 8.4 HEADINGS. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof or thereof.

                                       12
<Page>

            SECTION 8.5 EXECUTION IN COUNTERPARTS, EFFECTIVENESS. This Agreement
may be executed by the parties hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement.

            SECTION 8.6 GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK. This Agreement constitutes the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.

            SECTION 8.7 SUCCESSORS AND ASSIGNS. (a) This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

            (b) Notwithstanding the foregoing, in order to secure the Lessor
Notes of each Owner Lessor, such Owner Lessor will assign and grant a first
priority security interest in favor of its applicable Lease Indenture Trustee in
and to all of such Owner Lessor's right, title and interest in, to and under
this Agreement (other than to the extent relating to Excepted Payments and the
rights to enforce and collect the same). Each of the parties hereto hereby
consents to such assignment and to the creation of such Lien and security
interest and acknowledges receipt of copies of the Lease Indenture, it being
understood that such consent shall not affect any requirement or the absence of
any requirement for any consent of such party under any other circumstances.
Unless and until the Collateral Agent shall have received written notice from
the Lease Indenture Trustee that the Lien of the applicable Lease Indenture has
been fully discharged, the applicable Security Agent shall have the right (i) to
directly receive for application in accordance with the terms of the applicable
Lease Indenture all amounts payable or otherwise distributable under this
Agreement to the applicable Owner Lessor (other than in respect of the Excepted
Payments) and (ii) to exercise the rights of such Owner Lessor under this
Agreement (other than with respect to Excepted Payments and the rights to
enforce and collect the same) to the extent set forth in and subject to the
exceptions set forth in the applicable Lease Indenture.

            SECTION 8.8 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. EACH PARTY HERETO
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND

                                       13
<Page>

OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR
THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF NEW YORK. EACH PARTY HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY PARTY HERETO HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, SUCH PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.

            SECTION 8.9 WAIVER OF JURY TRIAL. EACH PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. EACH
PARTY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE OTHER PARTIES ENTERING INTO THIS AGREEMENT.

                                       14
<Page>

            IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.

                              EDISON MISSION HOLDINGS CO.

                              By: ____________________________
                                  Name:  Kevin M. Smith
                                  Title: Vice President and Treasurer

                              Address for Notices:

                              18101 Von Karman Avenue
                              Suite 1700
                              Irvine, California 92612-1046

                              EDISON MISSION FINANCE CO.

                              By: ____________________________
                                  Name:  Kevin M. Smith
                                  Title: Vice President and Treasurer

                              Address for Notices:

                              18101 Von Karman Avenue
                              Suite 1700
                              Irvine, California 92612-1046

                              HOMER CITY PROPERTY HOLDINGS, INC.

                              By: ____________________________
                                  Name:  Kevin M. Smith
                                  Title: Vice President and Treasurer

                              Address for Notices:

                              18101 Von Karman Avenue
                              Suite 1700
                              Irvine, California 92612-1046

                                       15
<Page>

                              CHESTNUT RIDGE ENERGY CO.

                              By: ____________________________
                                  Name:  Kevin M. Smith
                                  Title: Vice President and Treasurer

                              Address for Notices:

                              18101 Von Karman Avenue
                              Suite 1700
                              Irvine, California 92612-1046

                              MISSION ENERGY WESTSIDE, INC.

                              By: ____________________________
                                  Name:  Kevin M. Smith
                                  Title: Vice President and Treasurer

                              Address for Notices:

                              18101 Von Karman Avenue
                              Suite 1700
                              Irvine, California 92612-1046

                              EME HOMER CITY GENERATION L.P.

                              By:  Mission Energy Westside, Inc.,
                                     its General Partner

                              By: ____________________________
                                  Name:  Kevin M. Smith
                                  Title: Vice President and Treasurer

                              Address for Notices:

                              18101 Von Karman Avenue
                              Suite 1700
                              Irvine, California 92612-1046

                                       16
<Page>

                              UNITED STATES TRUST COMPANY
                                OF NEW YORK, as Collateral Agent

                              By: ____________________________
                                  Name:  CHRISTOPHER J. GRELL
                                  Title: Assistant Vice President

                              Address for Notices:

                              114 West 47th Street
                              25th Floor
                              New York, New York 10036

                                       17

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