Document:

Exhibit
10.3

Execution
Version

SECOND
AMENDED AND RESTATED SEVERANCE AGREEMENT

THIS
SECOND AMENDED AND RESTATED SEVERANCE AGREEMENT (this “Agreement”)
is made and entered into as of June 15, 2006, by and between National
Mercantile Bancorp, a California corporation (the “Company”),
and David R. Brown (“Officer”) with
reference to the following facts:

A.            Officer is an officer of the Company
and/or one or more subsidiaries of the Company; and

B.            In order to induce Officer to remain
employed by the Company and/or its subsidiaries, the Company is willing to
agree to pay severance to Officer under certain circumstances.

C.
           This Agreement amends and
restates in its entirety the Severance Agreement dated November 14, 2002,
and the Amended and Restated Severance Agreement dated May 3, 2005, in
each case by and between the Company and Officer.

NOW,
THEREFORE, in consideration of the foregoing and of the respective covenants
and agreements of the parties herein contained, it is agreed as follows:

1.             Definitions.
For purposes of this Agreement, the following terms when used in this Agreement
shall have the meanings set forth below:

1.1           “Board” shall mean the Board of Directors of the Company.

1.2           “Cause” shall mean Officer, after the date
of this Agreement, (i) has been convicted by a court of competent
jurisdiction of any felony or any criminal offense involving dishonesty, breach
of trust or misappropriation, or has entered a plea of nolo  contendere
to such an offense; or (ii) has committed an act of fraud, embezzlement,
theft, dishonesty or any act which would cause termination of coverage under
the Company’s Banker’s Blanket Bond as to Officer (as distinguished from
termination of coverage as to the Company as a whole); or (iii) has
committed a willful violation of the Code of Conduct of any member of the
Company Group or any law, rule or regulation governing the operation of
the Company Group which the Board determines in good faith will likely have or
has had a material adverse effect on the business, interests or reputation of
the Company Group or any Member thereof; or (iv) has willfully refused to
perform the duties assigned to him; or (v) has committed a willful and
unauthorized disclosure of material confidential information regarding the
Company Group, which disclosure the Board determines in good faith will likely
have or has had a material adverse effect on the Company Group or any member
thereof.

1.3           “Change of Control” shall mean any
transaction or series of related transactions as a result of which:

 

(i)            the
Company consummates a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of its assets (each a “Business Combination”), in each case unless immediately following the consummation of such
Business Combination all of the following conditions are satisfied:

(A)  Persons, who, immediately prior to such
Business Combination, were the beneficial owners of the Outstanding Voting
Securities of the Company, beneficially own (within the meaning of Rule 13d-3
promulgated under the Exchange Act, directly or indirectly, more than 50% of
the combined voting power of the then Outstanding Voting Securities of the
entity (the “Resulting Entity”) resulting from
such Business Combination (including, without limitation, an entity which as a
result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries);

(B)  no Person, other than the Existing
Shareholder Group, beneficially owns (within the meaning of Rule l3d-3),
directly or indirectly, more than: (i) 20% of the then outstanding
combined voting power of the Outstanding Voting Securities of the Resulting
Entity, except to the extent that such Person’s beneficial ownership of the
Company immediately prior to the Business Combination exceeded such threshold,
and (ii) beneficially owns more the Existing Shareholder Group;

(C)  at least one-half of the members of the
board of directors of the Resulting Entity were members of the Board at the
time the Board authorized the Company to enter into the definitive agreement
providing for such Business Combination;

(ii)           any
Person acquires beneficial ownership (within the meaning of Rule 13d-3)
of more than 20% of the combined voting power (calculated as provided in Rule l3d-3
in the case of rights to acquire securities) of the then Outstanding Voting
Securities of the Company and has greater beneficial ownership than the
Existing Shareholder Group; provided, however, that for purposes of this clause, the following
acquisitions shall not constitute a Change of Control:  (x) any acquisition directly from the
Company, (y) any acquisition by the Company, (z) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any entity controlled by the Company; or (zz) any acquisition by the
Existing Shareholder Group; or

(iii)          the
Company consummates the transactions contemplated by that certain Agreement and
Plan of Merger, dated as of the date hereof, among the Company, the Company’s
wholly-owned subsidiary and FCB Bancorp, a California corporation.

1.4           “Company Group” shall mean at any time the Company and each
subsidiary of the Company at such time which is consolidated with the Company
for financial reporting purposes.

1.5           “Disability of Officer” shall mean if
Officer is Disabled and such disability continues for a period of any
six months out of a one-year period. “Disabled”
shall mean Officer’s inability, through physical or mental illness or other
cause, to perform normal and customary duties which Officer is required to
perform for the Company. In determining

 2
 

 

whether Officer is Disabled, the Company may rely upon
the written statement provided by a licensed physician acceptable to the
Company. Officer shall allow examination from time to time by any licensed
physician selected by the Company and agreed to by Officer. All such
examinations will be conducted within a reasonable time period.

1.6           “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended, or any successor statute.

1.7           “Existing Shareholder Group” shall mean Carl R. Pohlad,
members of the immediate family of Carl R. Pohlad, and any affiliated Person of
Carl R. Pohlad or any member of his immediate family.

1.8           “Outstanding Voting Securities” of any Person means the
outstanding securities of such Person entitling the holders thereof to vote
generally in the election of directors of such Person.

1.9           “Person” shall have the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act, which definition
shall include a “person” within the meaning of Section 13(d)(3) of
the Exchange Act.

1.10         “Without Cause” shall mean any termination
of Officer’s employment by the Company except for a termination (i) for
Cause, (ii) as a result of the death of Officer, or (iii) as a result
of the Disability of Officer.

2.             Severance
Payment.

2.1           Except
as provided in Section 2.2, if within one year following a Change of
Control, either Officer terminates employment with all members of the Company
Group voluntarily or the Company terminates Officer’s employment Without Cause,
the Company will pay Officer in a lump sum (except as provided below) an amount
(the “Severance Payment”) equal to
the sum of: (i) fifteen times Officer’s base monthly salary as in effect
at the time of termination or, if greater, immediately prior to the effective
date of the Change of Control; and (ii) twice the amount of the greater of
(x) the bonus, if any, paid (or payable) to Officer for the fiscal year
immediately preceding the fiscal year in which Officer’s employment terminates
and (y) $85,000. The Severance Payment shall be reduced by required
deductions for applicable taxes and other withholdings and for any outstanding
obligations owed by Officer to the Company that are then due and payable, which
deductions and withholdings are specifically authorized by Officer. The
Severance Payment shall be in lieu of any other severance payments to which
Officer would be entitled under the plans or policies of the Company and any of
its subsidiaries. If Officer’s employment is terminated by the Company Without
Cause, the Severance Payment shall be paid at the time of termination of the
Officer’s employment with the Company. If Officer’s employment is terminated
voluntarily by Officer, the Severance Payment shall be paid within 30 days
following termination. Notwithstanding the foregoing, if as of the date the
Severance Payment is due Officer’s bonus for the preceding fiscal year has not
been determined, the Company shall defer payment of the bonus component of the
Severance Payment until such time as Officer’s bonus shall have been
determined, but in no event later than 90 days following the end of

 3
 

 

such preceding fiscal year. Each Change of Control
shall give Officer a separate right to give the notice set forth in the first
sentence of this Section 2; provided that in no event shall Officer be
entitled to more than one Severance Payment.

2.2           Notwithstanding
any other provision of this Agreement, the Company shall have no obligation to
make the Severance Payment if such Severance Payment is prohibited by
applicable federal or state law, including without limitation Part 359 of
the regulations of the Federal Deposit Insurance Corporation (12 CFR § 359 et seq.) or any successor provision.

2.3           As
a condition to the obligation of the Company to pay the Severance Payment, the
Officer must execute and deliver a release in form and substance satisfactory
to the Company releasing the Company Group and its directors, officers,
employees and agents (“Released Parties”)
from any and all claims the Officer may have against the Released Parties,
whether such claims are known or unknown, absolute or contingent, other than
claims under this Agreement, claims for salary and other compensation and
benefits accrued prior to termination, claims for indemnification under
applicable law, the Bylaws of the Company or any Indemnification Agreement
between the Officer and the Company, and rights of Officer under employee
benefit plans.

2.4           As
a condition to the obligation of the Company to pay the Severance Payment under
circumstances where the Officer terminates employment voluntarily within a year
following a Change of Control, the Officer shall not, for a period of one year
subsequent to the date of termination, whether alone or as a member, employee
or agent of any partnership, or as an officer, agent, employee, director or
stockholder of any other corporation, whether directly or indirectly, (a) solicit
any then existing customer of the Company and its subsidiaries for the opportunity
to provide any services of the kind offered to or provided to that customer by
the Company or any of its subsidiaries, or (b) solicit for employment any
person employed by the Company or any of its subsidiaries, or encourage or
induce any such person to terminate his or her employment with the Company or
any of its subsidiaries.

3.             IRC
Provisions. Notwithstanding any other provision of this Agreement,
if the Company reasonably determines that the payment of the Severance Payment
to Officer would be nondeductible by the Company for federal income tax
purposes because of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), the Severance Payment
shall be reduced to an amount which maximizes the Severance Payment without
causing any portion of the same to be nondeductible by the Company because of Section 280G
of the Code. Any such reduction shall be applied to the Severance Payment or
the other amounts due to Officer in such manner as Officer may reasonably
specify within 30 days following notice from the Company of the need for such
reduction or, if Officer fails to so specify timely, as determined by the
Company.

4.             Employee
Benefits. All employee benefits provided by the Company shall cease
upon termination of Officer’s employment for any reason, and the Company shall
have no further responsibility with respect thereto after such termination; provided, however,
that: (a) nothing contained in this Agreement shall affect any right
Officer may have pursuant to

 4
 

 

the federal entitlement to continued group health care
coverage as provided in the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”) or any successor legislation or
comparable state law; (b) if Officer is entitled to receive a Severance
Payment pursuant to Section 2 hereof, and if Officer elects under COBRA to
continue to receive any benefits thereunder, the Company shall reimburse
Officer for the amount of such Officer’s COBRA payments for the first fifteen
months after such termination subject to a delay in the start of reimbursement
until the first day after six months have elapsed from the date of termination;
and (c) nothing shall alter or modify the post termination rights of
Officer under the Executive Deferred Compensation Plan (except for amendments
to conform to Section 409A of the Code) or any employee benefit plan (such
as the right to exercise vested options for a specified period under the Stock
Incentive Plan).

5.             Term.
The Agreement shall commence on the date set forth above and shall terminate
upon 12 months prior written notice to the Officer.

6.             Employment
“At Will”. Neither this Agreement nor the Severance Payment payable
hereunder shall be deemed to limit, replace or otherwise affect the “at will”
nature of Officer’s employment with the Company Group. Officer’s employment
with any member of the Company Group continues to be for an unspecified term
and may be terminated at will at any time with or without cause or notice by
such member of the Company Group or by Officer (but in the case of Officer,
without the written consent of the Company Officer must terminate his
employment with all members of the Company Group). This employment “at-will”
relationship cannot be changed absent an express intent as set forth in an
individualized written employment contract signed by both Officer and the Chief
Executive Officer of the Company.

7.             Mitigation.
Officer shall have no obligation to mitigate damages based upon Officer’s
termination pursuant to Section 2 of this Agreement, and the Severance
Payment shall not be reduced as a result of Officer obtaining other employment
within fifteen months of Officer’s termination.

8.             Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which, together, shall constitute one
and the same instrument.

9.             Partial
Invalidity. Any provision of this Agreement which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof, and such other provisions shall remain in full force and
effect.

10.           Governing
Law. The terms and provisions of this Agreement shall be governed
and construed pursuant to the laws of the State of California except to the
extent governed by federal law.

11.           Construction.
Headings at the beginning of each section are solely for the convenience of the
parties and are not a part of this Agreement. Whenever required by the context
of this Agreement, the singular shall include the plural and the masculine
shall include the feminine and vice versa. This Agreement shall not be
construed as if it had been prepared

 5
 

 

by one of the parties, but rather as if both parties
had prepared the same. Unless otherwise indicated, all references to sections
are to this Agreement.

12.           Integration.
This Agreement represents the entire and integrated agreement between the
Company and Officer regarding the subject matter hereof and supersedes all
prior negotiations, representations or agreements, either written or oral.

13.           Successors
and Assigns. The terms, covenants and conditions herein contained
shall be binding upon and shall inure to the benefit of the heirs, successors
and assigns of the parties hereto.

14.           Key
Employee Payment Deferral. Notwithstanding the timing of payments
set forth in this Agreement, if the Company determines that you are a “specified
employee” within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended, and that, as a result of such status, any portion of the
payment under this Agreement would be subject to additional taxation, the
Company will delay paying any portion of such payment until the earliest
permissible date on which payments may commence without triggering such
additional taxation (with such delay not to exceed six months), with the first
such payment to include the amounts that would have been paid earlier but for
the above delay.

15.           No
Waiver. No waiver by either party of any breach or default hereunder
shall be deemed a waiver of any other breach or default, and no delay or
forbearance by either party hereunder in enforcing any of its rights or
remedies shall be deemed a waiver of any such rights or remedies, unless such
waiver is embodied in a writing signed by the authorized representative of the
party to be bound.

IN WITNESS WHEREOF, this Agreement has been executed
effective on the day and year hereinabove set forth.

	
  THE “COMPANY”

  	
   

  	
  NATIONAL MERCANTILE BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott A. Montgomery

  
	
   

  	
   

  	
  Scott A. Montgomer

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “OFFICER”

  	
   

  	
  /s/ David R. Brown

  
	
   

  	
   

  	
  David R. Brown

  

 

 6Exhibit 10.1
  EXECUTION COUNTERPART
 

 

CREDIT
AGREEMENT

dated
as of June 15, 2006

among

EDISON
MISSION ENERGY

and

THE
LENDERS REFERRED TO HEREIN

and

THE
ISSUING LENDERS REFERRED TO HEREIN

and

CITICORP
NORTH AMERICA, INC.,

as Administrative Agent for the Lenders

CITIGROUP GLOBAL MARKETS INC. and

UNION BANK OF CALIFORNIA, N.A.,

as Joint Lead Arrangers

CITIGROUP GLOBAL MARKETS INC. and

UNION BANK OF CALIFORNIA, N.A.,

as Joint Bookrunners

UNION BANK OF CALIFORNIA, N.A.,

as Syndication Agent

CREDIT
SUISSE, CAYMAN ISLANDS BRANCH,

JP MORGAN CHASE BANK, N.A. and

KBC BANK, N.V.,

as Co-Documentation Agents

 

   
 

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  	
   

  
	
  ARTICLE I
  DEFINITIONS AND ACCOUNTING TERMS

  	
   

  	
  1

  	
   

  
	
  SECTION 1.1 Defined Terms

  	
   

  	
  1

  	
   

  
	
  SECTION 1.2 Use of Defined Terms

  	
   

  	
  25

  	
   

  
	
  SECTION 1.3 Cross-References

  	
   

  	
  25

  	
   

  
	
  SECTION 1.4 Accounting and Financial Determinations

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II
  COMMITMENTS AND BORROWING PROCEDURES

  	
   

  	
  26

  	
   

  
	
  SECTION 2.1 Commitments

  	
   

  	
  26

  	
   

  
	
  SECTION 2.2 Loans.

  	
   

  	
  26

  	
   

  
	
  SECTION 2.2.1 Obligations of Lenders

  	
   

  	
  26

  	
   

  
	
  SECTION 2.2.2 Type of Loans

  	
   

  	
  26

  	
   

  
	
  SECTION 2.2.3 Minimum Amounts; Limitation on
  Number of Loans

  	
   

  	
  26

  	
   

  
	
  SECTION 2.2.4 Limitations on Interest Periods

  	
   

  	
  26

  	
   

  
	
  SECTION 2.2.5 Reduction of Total Commitment
  Amount

  	
   

  	
  26

  	
   

  
	
  SECTION 2.3 Borrowing Procedure

  	
   

  	
  27

  	
   

  
	
  SECTION 2.4 Continuation and Conversion
  Elections

  	
   

  	
  27

  	
   

  
	
  SECTION 2.5 Funding

  	
   

  	
  28

  	
   

  
	
  SECTION 2.6 Letters of Credit

  	
   

  	
  28

  	
   

  
	
  SECTION 2.6.1 General

  	
   

  	
  28

  	
   

  
	
  SECTION 2.6.2 Notice of Issuance, Amendment,
  Renewal or Extension

  	
   

  	
  29

  	
   

  
	
  SECTION 2.6.3 Limitations on Amounts

  	
   

  	
  29

  	
   

  
	
  SECTION 2.6.4 Expiration Date

  	
   

  	
  29

  	
   

  
	
  SECTION 2.6.5 Participations

  	
   

  	
  29

  	
   

  
	
  SECTION 2.6.6 Reimbursement

  	
   

  	
  30

  	
   

  
	
  SECTION 2.6.7 Obligations Absolute

  	
   

  	
  30

  	
   

  
	
  SECTION 2.6.8 Disbursement Procedures

  	
   

  	
  32

  	
   

  
	
  SECTION 2.6.9 Interim Interest

  	
   

  	
  32

  	
   

  
	
  SECTION 2.6.10 LC Disbursement Denomination

  	
   

  	
  32

  	
   

  
	
  SECTION 2.6.11 Addition and Replacement of Issuing
  Lenders

  	
   

  	
  32

  	
   

  
	
  SECTION 2.6.12 Offshore Currencies and Agreed
  Alternate Currencies

  	
   

  	
  33

  	
   

  
	
  SECTION 2.6.13 Cash Collateralization

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

  	
   

  	
  34

  	
   

  
	
  SECTION 3.1 Repayments and Prepayments

  	
   

  	
  34

  	
   

  
	
  SECTION 3.1.1 Optional Prepayments and
  Commitment Reductions

  	
   

  	
  34

  	
   

  
	
  SECTION 3.1.2 Mandatory Prepayments

  	
   

  	
  35

  	
   

  
	
  SECTION 3.1.3 Acceleration; Penalty

  	
   

  	
  36

  	
   

  
	
  SECTION 3.2 Interest Provisions

  	
   

  	
  37

  	
   

  
	
  SECTION 3.2.1 Rates

  	
   

  	
  37

  	
   

  
	
  SECTION 3.2.2 Default Rates

  	
   

  	
  37

  	
   

  
	
  SECTION 3.2.3 Payment Dates

  	
   

  	
  37

  	
   

  
	
  SECTION 3.2.4 Interest Rate Determination

  	
   

  	
  38

  	
   

  

 

 

 

	
  SECTION 3.3 Fees.

  	
   

  	
  38

  	
   

  
	
  SECTION 3.3.1 Commitment Fee

  	
   

  	
  38

  	
   

  
	
  SECTION 3.3.2 Letter of Credit Fees

  	
   

  	
  38

  	
   

  
	
  SECTION 3.3.3 Other Fees

  	
   

  	
  39

  	
   

  
	
  SECTION 3.3.4 Payment of Fees

  	
   

  	
  39

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV
  CERTAIN LIBO RATE AND OTHER PROVISIONS

  	
   

  	
  39

  	
   

  
	
  SECTION 4.1 LIBO Rate Lending Unlawful

  	
   

  	
  39

  	
   

  
	
  SECTION 4.2 Inability to Determine Rates

  	
   

  	
  39

  	
   

  
	
  SECTION 4.3 Increased LIBO Rate Loan Costs

  	
   

  	
  39

  	
   

  
	
  SECTION 4.4 Obligation to Mitigate

  	
   

  	
  40

  	
   

  
	
  SECTION 4.5 Funding Losses

  	
   

  	
  41

  	
   

  
	
  SECTION 4.6 Increased Capital Costs

  	
   

  	
  41

  	
   

  
	
  SECTION 4.7 Taxes

  	
   

  	
  41

  	
   

  
	
  SECTION 4.8 Payments, Computations

  	
   

  	
  42

  	
   

  
	
  SECTION 4.9 Sharing of Payments

  	
   

  	
  43

  	
   

  
	
  SECTION 4.10 Setoff

  	
   

  	
  43

  	
   

  
	
  SECTION 4.11 Replacement of Lender

  	
   

  	
  44

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V
  CONDITIONS TO LOANS

  	
   

  	
  44

  	
   

  
	
  SECTION 5.1 Conditions to Effectiveness

  	
   

  	
  44

  	
   

  
	
  SECTION 5.1.1 Delivery of Loan Documents

  	
   

  	
  45

  	
   

  
	
  SECTION 5.1.2 Officer’s Certificates

  	
   

  	
  45

  	
   

  
	
  SECTION 5.1.3 Resolutions

  	
   

  	
  45

  	
   

  
	
  SECTION 5.1.4 Opinions of Counsel

  	
   

  	
  45

  	
   

  
	
  SECTION 5.1.5 Closing Fees, Expenses

  	
   

  	
  45

  	
   

  
	
  SECTION 5.1.6 Financial Statements

  	
   

  	
  46

  	
   

  
	
  SECTION 5.1.7 Solvency

  	
   

  	
  46

  	
   

  
	
  SECTION 5.1.8 Repayment of Existing
  Indebtedness

  	
   

  	
  46

  	
   

  
	
  SECTION 5.1.9 Lien Search; Recordings and
  Filings

  	
   

  	
  46

  	
   

  
	
  SECTION 5.1.10 Conditions to Other Financings

  	
   

  	
  46

  	
   

  
	
  SECTION 5.1.11 Calculation Certificate

  	
   

  	
  47

  	
   

  
	
  SECTION 5.2 All Credit Extensions

  	
   

  	
  47

  	
   

  
	
  SECTION 5.2.1 Representations and Warranties;
  No Default

  	
   

  	
  47

  	
   

  
	
  SECTION 5.2.2 Borrowing Request

  	
   

  	
  47

  	
   

  
	
  SECTION 5.2.3 Satisfactory Legal Form

  	
   

  	
  47

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  48

  	
   

  
	
  SECTION 6.1 Organization; Power; Compliance
  with Law and Contractual Obligations

  	
   

  	
  48

  	
   

  
	
  SECTION 6.2 Due Authorization;
  Non-Contravention

  	
   

  	
  48

  	
   

  
	
  SECTION 6.3 Governmental Approval; Regulation

  	
   

  	
  48

  	
   

  
	
  SECTION 6.4 Validity

  	
   

  	
  49

  	
   

  
	
  SECTION 6.5 Financial Information

  	
   

  	
  49

  	
   

  
	
  SECTION 6.6 No Material Adverse Change

  	
   

  	
  49

  	
   

  
	
  SECTION 6.7 Litigation

  	
   

  	
  49

  	
   

  
	
  SECTION 6.8 Ownership of Properties

  	
   

  	
  49

  	
   

  
	
  SECTION 6.9 Taxes

  	
   

  	
  49

  	
   

  
	
  SECTION 6.10 Pension and Welfare Plans

  	
   

  	
  50

  	
   

  
	
  SECTION 6.11 Environmental Warranties

  	
   

  	
  50

  	
   

  
	
  SECTION 6.12 Regulations T, U and X

  	
   

  	
  51

  	
   

  
	
  SECTION 6.13 Accuracy of Information

  	
   

  	
  51

  	
   

  

 

 ii
 

 

 

	
  ARTICLE VII COVENANTS

  	
   

  	
  51

  	
   

  
	
  SECTION 7.1 Affirmative Covenants

  	
   

  	
  51

  	
   

  
	
  SECTION 7.1.1 Financial Information, Reports,
  Notices

  	
   

  	
  51

  	
   

  
	
  SECTION 7.1.2 Compliance with Laws

  	
   

  	
  53

  	
   

  
	
  SECTION 7.1.3 Maintenance of Properties

  	
   

  	
  53

  	
   

  
	
  SECTION 7.1.4 Insurance

  	
   

  	
  54

  	
   

  
	
  SECTION 7.1.5 Books and Records

  	
   

  	
  54

  	
   

  
	
  SECTION 7.1.6 Environmental Covenant

  	
   

  	
  54

  	
   

  
	
  SECTION 7.1.7 Conduct of Business and
  Maintenance of Existence

  	
   

  	
  55

  	
   

  
	
  SECTION 7.1.8 Use of Proceeds

  	
   

  	
  55

  	
   

  
	
  SECTION 7.2 Negative Covenants

  	
   

  	
  55

  	
   

  
	
  SECTION 7.2.1 Restrictions on Indebtedness

  	
   

  	
  55

  	
   

  
	
  SECTION 7.2.2 Liens

  	
   

  	
  56

  	
   

  
	
  SECTION 7.2.3 Investments

  	
   

  	
  57

  	
   

  
	
  SECTION 7.2.4 Consolidation, Merger

  	
   

  	
  58

  	
   

  
	
  SECTION 7.2.5 Asset Dispositions

  	
   

  	
  58

  	
   

  
	
  SECTION 7.2.6 Transactions with Affiliates

  	
   

  	
  59

  	
   

  
	
  SECTION 7.2.7 Restricted Payments

  	
   

  	
  59

  	
   

  
	
  SECTION 7.2.8 Restrictive Agreements

  	
   

  	
  59

  	
   

  
	
  SECTION 7.2.9 Interest Coverage

  	
   

  	
  60

  	
   

  
	
  SECTION 7.2.10 Corporate Debt to Corporate
  Capital Ratio

  	
   

  	
  60

  	
   

  
	
  SECTION 7.2.11 ERISA

  	
   

  	
  60

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  EVENTS OF DEFAULT

  	
   

  	
  60

  	
   

  
	
  SECTION 8.1 Listing of Events of Default

  	
   

  	
  60

  	
   

  
	
  SECTION 8.1.1 Non-Payment of Obligations

  	
   

  	
  60

  	
   

  
	
  SECTION 8.1.2 Breach of Warranty

  	
   

  	
  61

  	
   

  
	
  SECTION 8.1.3 Non-Performance of Certain
  Covenants and Obligations

  	
   

  	
  61

  	
   

  
	
  SECTION 8.1.4 Non-Performance of Other
  Covenants and Obligations

  	
   

  	
  61

  	
   

  
	
  SECTION 8.1.5 Default on Other Indebtedness

  	
   

  	
  61

  	
   

  
	
  SECTION 8.1.6 Judgments

  	
   

  	
  61

  	
   

  
	
  SECTION 8.1.7 Pension Plans

  	
   

  	
  62

  	
   

  
	
  SECTION 8.1.8 Bankruptcy, Insolvency

  	
   

  	
  62

  	
   

  
	
  SECTION 8.1.9 Substantive Consolidation

  	
   

  	
  63

  	
   

  
	
  SECTION 8.1.10 Unenforceability of Documents

  	
   

  	
  63

  	
   

  
	
  SECTION 8.2 Action if Bankruptcy

  	
   

  	
  63

  	
   

  
	
  SECTION 8.3 Action if Other Event of Default

  	
   

  	
  63

  	
   

  
	
  SECTION 8.4 Rescission of Declaration

  	
   

  	
  63

  	
   

  

 

 iii
 

 

 

	
  ARTICLE IX THE
  ADMINISTRATIVE AGENT

  	
   

  	
  64

  	
   

  
	
  SECTION 9.1 Actions

  	
   

  	
  64

  	
   

  
	
  SECTION 9.2 Funding Reliance

  	
   

  	
  65

  	
   

  
	
  SECTION 9.3 Exculpation

  	
   

  	
  65

  	
   

  
	
  SECTION 9.4 Successor

  	
   

  	
  65

  	
   

  
	
  SECTION 9.5 Loans by CNAI

  	
   

  	
  66

  	
   

  
	
  SECTION 9.6 Reliance by Administrative Agent

  	
   

  	
  66

  	
   

  
	
  SECTION 9.7 Notice of Default

  	
   

  	
  66

  	
   

  
	
  SECTION 9.8 Credit Decisions

  	
   

  	
  67

  	
   

  
	
  SECTION 9.9 Copies

  	
   

  	
  67

  	
   

  
	
  SECTION 9.10 Collateral

  	
   

  	
  67

  	
   

  
	
  SECTION 9.11 Joint Lead Arrangers, Joint
  Bookrunners, Syndication Agent and Co-Documentation Agents

  	
   

  	
  67

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X
  MISCELLANEOUS PROVISIONS

  	
   

  	
  68

  	
   

  
	
  SECTION 10.1 Waivers, Amendments

  	
   

  	
  68

  	
   

  
	
  SECTION 10.2 Notices

  	
   

  	
  69

  	
   

  
	
  SECTION 10.3 Payment of Costs and Expenses

  	
   

  	
  69

  	
   

  
	
  SECTION 10.4 Indemnification

  	
   

  	
  70

  	
   

  
	
  SECTION 10.5 Survival

  	
   

  	
  71

  	
   

  
	
  SECTION 10.6 Severability

  	
   

  	
  71

  	
   

  
	
  SECTION 10.7 Headings

  	
   

  	
  71

  	
   

  
	
  SECTION 10.8 Execution in Counterparts

  	
   

  	
  71

  	
   

  
	
  SECTION 10.9 Governing Law; Entire Agreement

  	
   

  	
  71

  	
   

  
	
  SECTION 10.10 Successors and Assigns

  	
   

  	
  72

  	
   

  
	
  SECTION 10.11 Sale and Transfer of Loans;
  Participations in Loans

  	
   

  	
  72

  	
   

  
	
  SECTION 10.11.1 Assignments

  	
   

  	
  72

  	
   

  
	
  SECTION 10.11.2 Participations

  	
   

  	
  74

  	
   

  
	
  SECTION 10.12 USA Patriot Act

  	
   

  	
  75

  	
   

  
	
  SECTION 10.13 Other Transactions

  	
   

  	
  75

  	
   

  
	
  SECTION 10.14 Submission To Jurisdiction;
  Waivers

  	
   

  	
  75

  	
   

  
	
  SECTION 10.15 WAIVERS OF JURY TRIAL

  	
   

  	
  76

  	
   

  
	
  SECTION 10.16 Non-Recourse Persons

  	
   

  	
  76

  	
   

  
	
  SECTION 10.17 Acknowledgments

  	
   

  	
  76

  	
   

  
	
  SECTION 10.18
  Confidentiality

  	
   

  	
  77

  	
   

  

 

 iv
 

 

SCHEDULES

1.1(a)                   —        Commitments

1.1(b)                  —        Addresses
for Notices and Lending Offices

1.1(c)                   —        Maximum
Issuing Lender Amount

1.1(d)                  —        Collins
Leases

2.6.12                  —        Agreed
Alternate Currency Letters of Credit

3.2.1                        —        Pricing
Grid

7.2.1                        —        Liens

EXHIBITS

A                                      —        Form of
Borrowing Request

B                                        —        Form of
Continuation/Conversion Notice

C                                        —        Form of
Assignment Agreement

D                                       —        Form of
Borrower Security Agreement

E-1                               —        Form of
Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, Special New York
Counsel to the Borrower

E-2                               —        Form of
Opinion of Internal Counsel to the Borrower

F                                         —        Form of
Communications Agreement

G                                        —        Form of
Account Control Agreement

H                                       —        Form of
Terms of Subordination

 

 v

CREDIT AGREEMENT dated as of June 15, 2006 among
EDISON MISSION ENERGY, a corporation duly organized and validly existing under
the laws of Delaware (the “Borrower”), the various financial
institutions as are or may become parties hereto (collectively, the “Lenders”),
the Issuing Lenders as are or may become parties hereto and CITICORP NORTH
AMERICA, INC. (“CNAI”), as administrative agent for the Lenders and the
Issuing Lenders party hereto.

RECITALS

A. The Borrower has requested that the Lenders
establish a credit facility to make revolving loans and to issue letters of
credit from time to time for general corporate purposes of the Borrower, as
further described herein, and to pay certain fees and expenses associated with
this Agreement and the Loans as further described herein; and

B. The Lenders are willing to make such credit
facility available upon and subject to the terms and conditions hereinafter set
forth.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND
ACCOUNTING TERMS

SECTION 1.1 Defined Terms. The following terms
(whether or not underscored) when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise requires, have
the following meanings (such meanings to be equally applicable to the singular
and plural forms thereof):

“Account
Control Agreement” means the Account Control Agreement dated as of June 15,
2006 between the Borrower, the Administrative Agent and Citibank, N.A., as
Depositary Bank, substantially in the form of Exhibit G, as
amended, supplemented, amended and restated or otherwise modified and in effect
from time to time.

“Administrative Agent” means CNAI in its
capacity as administrative agent for the Lenders hereunder, and includes each
other Person as may have subsequently been appointed as the successor
Administrative Agent pursuant to Section 9.4.

“Affiliate” of any Person means any other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such Person (excluding any trustee under, or any committee
with responsibility for administering, any Pension Plan or Welfare Plan). A
Person shall be deemed to be “controlled by” any other Person if such other
Person possesses, directly or indirectly, power to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.

 

“Affiliate Bankruptcy Event” means, with
respect to Edison International or any of its Subsidiaries (other than the
Borrower), such Person shall:

(a) 
apply for, consent to, or acquiesce in, or suffer to exist, the appointment of
a trustee, receiver, sequestrator or other custodian for such Person or a
substantial portion of its property, or make a general assignment for the
benefit of creditors; or

(b) 
permit or suffer to exist the commencement of any bankruptcy, reorganization,
debt arrangement or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution, winding up or liquidation proceeding, in respect of
such Person.

“Agent-Related Persons” means CNAI and each
other Person as may have subsequently been appointed as the successor
Administrative Agent pursuant to Section 9.4, together with their
respective Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of CNAI, each such other Person and such Affiliates.

“Agreed Alternate Currency” shall mean the
currencies listed on Schedule 2.6.12, pursuant to the procedures
specified in Section 2.6.12(b).

“Agreed Alternate Percentage” shall mean the
percentages listed opposite the Agreed Alternate Currencies on Schedule 2.6.12,
pursuant to the procedures specified in Section 2.6.12(b).

“Agreement” means, on any date, this Credit
Agreement as originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or otherwise modified
and in effect on such date.

“Alternate Base Rate”
means, on any date and with respect to all Base Rate Loans, a fluctuating rate
of interest per annum equal to the highest of:

(a)  the rate of interest
announced publicly by Citibank in New York, New York, from time to time, as
Citibank’s “base rate”; and

(b)  1/2 of 1% per annum above
the Federal Funds Effective Rate.

Each change in any interest rate provided for herein
based upon the Alternate Base Rate resulting from a change in the Alternate
Base Rate shall take effect at the time of such change in the Alternate Base
Rate.

“Applicable Margin” means, for any day with
respect to any LIBO Rate Loans, the LIBOR Applicable Margin and for any day with
respect to Base Rate Loans, the Base Rate Applicable Margin.

“Approved Funds” means, with respect to any
Lender that is a fund that invests in commercial loans, any other fund that
invests in commercial loans and is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.

 2
 

 

“Assignee” has the meaning set forth in Section 10.11.1.

“Assignment Agreement” means an Assignment
Agreement substantially in the form of Exhibit C.

“Assignor” has the meaning set forth in Section 10.11.1.

“Authorized Representative” means, relative to
any Person, those of its officers and employees whose signatures and incumbency
shall have been certified to the Administrative Agent and the Lenders pursuant
to Section 5.1.3.

“Availability Period” means the period from and
including the Effective Date to but excluding the earlier of the Maturity Date
and the date of termination of the Commitments.

“Base Rate Applicable Margin” means for any day
the rate per annum in effect for Base Rate Loans for such day based on the
Borrower’s Debt Rating for such day determined as provided in the Pricing Grid.

“Base Rate Loan” means a Loan bearing interest
at a fluctuating rate of interest per annum determined by reference to the
Alternate Base Rate plus the Base Rate Applicable Margin from time to
time in effect.

“Board of Directors” means (a) with
respect to a corporation, the board of directors of the corporation; (b) with
respect to a partnership, the general partners or the management committee of
the partnership; or (c) with respect to any other Person, the board or
committee of such Person serving a similar function.

“Borrower” has the meaning set forth in the preamble.

“Borrower Security Agreement” means the
Security Agreement dated as of June 15, 2006 between the Borrower and the
Administrative Agent, substantially in the form of Exhibit D, as
amended, supplemented, amended and restated or otherwise modified and in effect
from time to time.

“Borrowing” means Loans of the same type and,
in the case of LIBO Rate Loans having the same Interest Period, made by all
Lenders on the same Business Day and pursuant to the same Borrowing Request in
accordance with Section 2.3.

“Borrowing Request” means a loan request and
certificate duly executed by an Authorized Representative of the Borrower,
substantially in the form of Exhibit A.

“Business Day”
means:

(a) 
any day which is neither a Saturday or Sunday nor a legal holiday on which the
Lenders are authorized or required to be closed in New York, New York; and

 3
 

 

(b) 
relative to the making, continuing, prepaying or repaying of any LIBO Rate
Loans, any day on which dealings in Dollars are carried on in the London
interbank market.

“Capital Stock”
means

(a)  in the case of a
corporation, corporate stock;

(b)  in the case of an
association or business entity, any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock;

(c)  in the case of a
partnership or limited liability company, partnership interests (whether
general or limited) or membership interests; and

(d)  any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person,

but
excluding from all of the foregoing any debt securities convertible into
Capital Stock, whether or not such debt securities include any right of
participation with Capital Stock.

“Capitalized Lease Liabilities” of any Person
means all monetary obligations of such Person under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as capitalized
leases, and, for purposes of each Loan Document, the amount of such obligations
shall be the capitalized amount thereof, determined in accordance with GAAP.

“Cash Collateralize” means to pledge and
deposit with or deliver to the Administrative Agent in accordance with Section 2.6.13,
for the ratable benefit of the Administrative Agent, the Issuing Lenders and
the Lenders, as collateral for the LC Exposure, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the Issuing Lenders.

“Cash Equivalent
Investment” means, at any time:

(a) 
any evidence of Indebtedness, maturing not more than one year after such time,
issued or guaranteed by the United States government or an agency thereof;

(b)  other
investments in securities or bank instruments rated at least “A” by S&P or “A2”
by Moody’s or “A-1” by S&P or “P-1” by Moody’s and with maturities
of not more than one year; or

(c)  money
market funds that (i) comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, as amended, and (ii) have portfolio assets of at least $1,000,000,000.

“CERCLIS” means the Comprehensive Environmental
Response Compensation Liability Information System List.

“CGMI” means Citigroup Global Markets Inc.

 4
 

 

“Citibank” means Citibank, N.A., a national
banking association.

“CNAI” has the meaning set forth in the preamble.

“Code” means the Internal Revenue Code of 1986,
as amended.

“Collateral” has the meaning set forth in the
Borrower Security Agreement.

“Collateral Parties” means, collectively,
Anacapa Energy Company, a California corporation, Silverado Energy Company, a
California corporation, Viejo Energy Company, a California corporation, Del Mar
Energy Company, a California corporation, Mission del Cielo, Inc., a
Delaware corporation, Edison Mission Holdings Co., a California corporation,
Midwest Generation EME, LLC, a Delaware limited liability company, Camino
Energy Company, a California corporation, Southern Sierra Energy Company, a
California corporation, San Joaquin Energy Company, a California corporation
and Western Sierra Energy Company, a California corporation.

“Collins Lease” means each of the Facility
Leases identified on Schedule 1.1(d).

“Commitment” means, with respect to each
Lender, the commitment, if any, of such Lender to make Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Credit Exposure
hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.2.5 or Section 3.1 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.11.1. The initial amount of each Lender’s
Commitment is set forth on Schedule 1.1(a), or in the Assignment
Agreement pursuant to which such Lender shall have assumed its Commitment, as applicable.

“Commitment Amount” means $500,000,000, as the
same may be reduced in accordance with Section 2.2.5 or Section 3.1.

“Communications Agreement” means the
Communications Agreement dated as of June 15, 2006 between the Borrower
and the Administrative Agent, substantially in the form of Exhibit F,
as amended, supplemented, amended and restated or otherwise modified and in
effect from time to time.

“Computation Date” has the meaning specified in
Section 2.6.12.

“Consolidated Net Tangible Assets” means, as of
the date of determination thereof, the total amount of all the Borrower’s
assets, determined on a consolidated basis in accordance with GAAP as of such
date, less the sum of (a) the Borrower’s consolidated current liabilities
determined in accordance with GAAP and (b) the Borrower’s assets properly
classified as intangible assets in accordance with GAAP, except for any
intangible assets that are distribution or related contracts with an assignable
value.

 5
 

 

“Consolidated Net Worth” means, at any date,
the consolidated stockholders’ equity of the Borrower determined as of such
date without giving effect to (a) any non-cash charges relating to
cumulative changes in accounting or the effect on shareholders’ equity from the
restatement of prior periods resulting from the adoption of new accounting
standards or interpretations after the Effective Date and (b) accumulated
other comprehensive gain or loss plus, to the extent not otherwise included
therein, (i) the liquidation preference at such date of non-redeemable
preferred stock of the Borrower and (ii) to the extent not included
therein, Equity Preferred Securities; provided that Consolidated Net Worth
shall be increased by (a) the after tax loss incurred on the termination of the Collins Leases and
(b) an amount equal to the amount distributed by the Borrower to MEHC
after the Effective Date and used by MEHC to repay the principal of, or to pay
the premium on, MEHC’s 13.50% Senior Secured Notes due 2008.

“Contingent Liability” means any agreement,
undertaking or arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a
creditor against loss) the indebtedness, obligation or any other liability of
any other Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of any Person’s obligation under any
Contingent Liability shall (subject to any limitation set forth therein) be
deemed for purposes of this Agreement to be the outstanding principal amount of
the debt, obligation or other liability guaranteed thereby; provided, however,
that if the maximum amount of the debt, obligation or other liability
guaranteed thereby has not been established, the amount of such Contingent
Liability shall be the maximum reasonably anticipated amount of the debt,
obligation or other liability; provided, further, however,
that any agreement to limit the maximum amount of such Person’s obligation
under such Contingent Liability shall not, of and by itself, be deemed to
establish the maximum reasonably anticipated amount of such debt, obligation or
other liability.

“Continuation/Conversion Notice” means a notice
of continuation or conversion and certificate duly executed by an Authorized
Representative of the Borrower, substantially in the form of Exhibit B.

“Contractual Obligation” means, as to any
Person, any provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.

“Contractual Restrictions” mean Contractual
Obligations of the Borrower or any Collateral Party (or any Subsidiary of a
Collateral Party) limiting or restricting any of the following activities of
the Borrower or any Collateral Party (or any Subsidiary of a Collateral
Party):  (a) Restricted Payments, (b) the
repayment or prepayment of intercompany notes or other intercompany obligations
or reimbursements of management and other intercompany charges, expenses or
accruals or other returns on investment, (c) disposition of assets, (d) incurrence
of Indebtedness, (e) issuance of equity or (f) activities related to
the foregoing.

“Controlled Group” means all members of a
controlled group of corporations and all members of a controlled group of
trades or businesses (whether or not incorporated) under common control which,
together with the Borrower, are treated as a single employer under Section 414(b) or
414(c) of the Code or Section 4001 of ERISA.

 6
 

 

“Corporate Debt” means EME Corporate Debt and
Midwest Corporate Debt.

“Corporate Debt to Corporate Capital Ratio”
means, on any date, the ratio of:  (a) the
Corporate Debt on such date to (b) the sum on such date of (i) Consolidated
Net Worth on such date plus (ii) Corporate Debt on such date.

“Correlative Financing Provisions” means (a) with
respect to each Financed Enterprise with respect to any provision in Section 7.2,
the most restrictive correlative provision or provisions in the Effective Date
Financing Documentation or in the documentation governing any Permitted Refinancing
Indebtedness refinancing or replacing such Effective Date Financing
Documentation and (b) with respect to each Financed Enterprise with
respect to any other provision (other than any provision in Section 7.2)
in this Agreement, the most restrictive correlative provision or provisions in
the Effective Date Financing Documentation or in the documentation governing
any Permitted Refinancing Indebtedness refinancing or replacing such Effective
Date Financing Documentation, as the same may from time to time be amended,
supplemented, amended and restated or otherwise modified and in effect on such
date.

“Credit Exposure” means, with respect to a
Lender at any time, the sum of the outstanding principal amount of such
Lender’s Loans and LC Exposure at such time.

“Credit Extension” means and includes (a) any
Borrowing and (b) any Issuance of, or participation in, any Letters of
Credit.

“Current Disposition” shall have the meaning
set forth in Section 3.1.2(a).

“Debt Rating” means, with respect to any Person,
a rating of such Person’s long-term debt which is not secured or supported by a
guarantee, letter of credit or other form of credit enhancement. If Moody’s or
S&P shall have changed its system of classifications after the date hereof,
a Debt Rating shall be considered to be at or above a specified level if it is
at or above the new rating which most closely corresponds to the specified
level under the old rating system.

“Default” means any Event of Default or any
condition, occurrence or event which, after notice or lapse of time or both,
would constitute an Event of Default.

“Derivatives Obligations” of any Person means
all obligations of such Person in respect of any rate swap transaction, basis
swap, forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction,
collar transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of the foregoing transactions) or any combination of
the foregoing transactions. For purposes of determining the Corporate Debt to
Corporate Capital Ratio on any date, the Derivatives Obligations of the
Borrower shall be determined on a “mark to market” basis on such date.

 7
 

 

“Disposition” means any sale, assignment,
transfer or other disposition of all or any substantial part of its property
(whether now owned or hereafter acquired) by the Borrower or any Collateral
Party (or any Subsidiary of a Collateral Party) to any other Person. The verb “Dispose”
shall have a correlative meaning. Notwithstanding the foregoing, the following
items shall not be deemed to be Dispositions:

(a)  any assignment of property
for security purposes to the extent not prohibited by this Agreement;

(b)  any sale, assignment,
transfer or other disposition of any property sold or disposed of in the
ordinary course of business and on ordinary business terms;

(c)  any single transaction or
series of related transactions that involve assets having a fair market value
of less than $15,000,000;

(d)  the sale or other
disposition of cash or Cash Equivalent Investments;

(e)  the incurrence of Liens
permitted pursuant to Section 7.2.2 and the disposition of assets
related thereto by the secured party pursuant to a foreclosure;

(f)  an Investment that is
permitted pursuant to Section 7.2.3;

(g)  any sale or lease of
obsolete equipment or other assets that are no longer being used by the
Borrower or any of its Subsidiaries; and

(h)  a disposition resulting
from the exercise by a governmental authority of its claimed or actual power of
eminent domain, in each case without compensation.

“Distributions” means, with respect to any
period (computed without duplication) each of the following to the extent
received by the Borrower or a Collateral Party (in the case of a Collateral
Party, to the extent that such items are freely available to be distributed by
such Collateral Party to the Borrower in accordance with the documents
governing the Financings (if any) of such Collateral Party and otherwise in
accordance with applicable Requirement of Law): 
(a) interest income paid by Subsidiaries on intercompany loans to
Subsidiaries, (b) cash principal payments on intercompany loans to
Subsidiaries extended in prior periods, (c) the proceeds of new
intercompany loans made by Subsidiaries subsequent to March 31, 2006 in
lieu of a distribution or dividend where such Subsidiary would otherwise be
permitted to make a distribution or dividend under clauses (d) or (e) below,
(d) distributions or dividends constituting a return on capital, (e) distributions,
dividends or other payments constituting a return of capital to the extent the
same relates to costs and expenses directly or indirectly incurred by the
Borrower in the development or construction of electric generation facilities
or oil and gas properties that are subsequently financed by Indebtedness
secured by such facilities or properties and (f) management fees paid in
cash.

“Dollar” and the sign “$” mean lawful
money of the United States.

“Dollar Equivalent” means, at any time, (a) as
to any amount denominated in Dollars, the amount thereof at such time and (b) as
to any amount denominated in any Offshore Currency or Agreed Alternate
Currency, the equivalent amount in Dollars as determined at such time on the
basis of the Spot Rate for the purchase of Dollars with such Offshore Currency
or Agreed Alternate Currency on the most recent Computation Date.

 8
 

 

“Domestic Office” means, relative to any
Lender, the office of such Lender designated on Schedule 1.1(b) or
designated in the Assignment Agreement pursuant to which such Lender became a
Lender hereunder or such other office of a Lender (or any successor or assign
of such Lender) as may be designated from time to time by notice from such
Lender to the Borrower and the Administrative Agent pursuant to Section 4.4
or otherwise (subject to Section 4.4), within the United States,
which shall be making, maintaining or continuing, as the case may be, Base Rate
Loans or LC Exposure. A Lender may have separate Domestic Offices for
purposes of making, maintaining or continuing, as the case may be, Base Rate
Loans or LC Exposure.

“Edison International” means Edison
International, a California corporation.

“Edison Mission Group” means Edison Mission
Group, a California corporation.

“Effective Date” means the date this Agreement
becomes effective pursuant to Section 5.1.

“Effective Date Financing Documentation” means,
with respect to each Financed Enterprise, documentation governing each
Financing of such Financed Enterprise as in effect on the Effective Date.

“EME Corporate Debt” means, on any date, the
sum (without duplication) of the following indebtedness of the Borrower:  (a) all indebtedness for borrowed money
other than Subordinated Debt; (b) all guarantees for (i) indebtedness
of the Subsidiaries and (ii) rental expenses of the Subsidiaries; (c) all
reimbursement obligations with respect to surety bonds, letters of credit (to
the extent not collateralized with cash or Cash Equivalent Investments),
bankers’ acceptances and similar instruments (in each case, whether or not
matured); (d) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; and (e) Derivative
Obligations. For purposes of the foregoing, (i) indebtedness of the
Borrower shall exclude, to the extent included, (A) indebtedness of the
Borrower evidenced by the Powerton/Joliet Intercompany Notes for so long as
amounts payable thereunder are subject to setoff against amounts paid under the
Powerton/Joliet Guarantees in accordance with the terms of the Powerton/Joliet
Intercompany Notes; and (B) indebtedness of the Borrower under guarantees
of rental expenses to the extent attributable to lease indebtedness provided by
Subsidiaries under leasing transactions; and (ii) the amount of
indebtedness of the Borrower under guarantees of rental expenses of the
Subsidiaries on any date of determination shall be the termination value under
the related lease on such date of determination plus reasonably
anticipated indemnity or other similar payments as of such date of
determination; provided that the amount of indebtedness of the Borrower
under each Powerton/Joliet Guarantee on any date of determination shall be the
Termination Value (or, if applicable, Special Termination Value) as defined in
such Powerton/Joliet Guarantee on such date of determination plus
reasonably anticipated indemnity or other similar payments as of such date of
determination.

 9
 

 

“EME Notes” means, collectively, the 7.75%
Senior Notes due 2016 and the 7.50% Senior Notes due 2013 in an aggregate principal
amount of $1,000,000,000 issued on the date of and pursuant to the Indenture,
dated as of June 6, 2006, among the Borrower and Wells Fargo Bank,
National Association, as trustee.

“EMMT” means Edison Mission Marketing &
Trading, Inc., a Delaware corporation.

“Environmental Laws” means all applicable
Federal, state or local statutes, laws, ordinances, codes, rules, regulations
and guidelines (including consent decrees and administrative orders) relating
to Hazardous Materials and/or to public health and protection of the
environment, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the Resource Conservation and
Recovery Act, as amended.

“Equity Preferred Securities” means securities
issued by the Borrower (a) that are not subject to mandatory redemption or
the underlying securities, if any, of which are not subject to mandatory
redemption, (b) that are perpetual or mature no less than 30 years from
the date of issuance, (c) the indebtedness issued in connection with
which, including any guaranty, is subordinate in right of payment to the
unsecured and unsubordinated indebtedness of the issuer of such indebtedness or
guaranty, and (d) the terms of which permit the deferral of payment of
interest or distributions thereon to the date occurring after the Maturity
Date.

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in effect from time
to time. References to sections of ERISA also refer to any successor sections.

“Event of Default” has the meaning set forth in
Section 8.1.

“Excluded Taxes” means, with respect to the
Administrative Agent, the Issuing Lenders or any Lender or any other recipient
of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise Taxes imposed on (or measured by) its
net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits Taxes imposed by the United States of
America or any similar Tax imposed by any other jurisdiction in which it is
located (other than a jurisdiction in which it is treated as being located
solely by reason of its participation in transactions contemplated by the Loan
Documents), (c) in the case of a Non-U.S. Lender, any Tax that is imposed
on amounts payable to such Non-U.S. Lender at the time such Non-U.S. Lender
becomes a party to this Agreement, except to the extent that such
Non-U.S. Lender’s assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to
such Tax pursuant to Section 4.7(a) and (d) in the case
of a Non-U.S. Lender, any Tax that is attributable to such Non-U.S. Lender’s
failure or inability to comply with Section 4.7(e).

 10
 

 

“Existing Credit Agreement” means the Credit
Agreement dated as of April 27, 2004 among the Borrower, the lenders from
time to time party thereto, the issuing lenders party thereto and CNAI, as
administrative agent for the lenders, as amended, restated, amended and
restated or otherwise modified and in effect from time to time.

“Existing Lenders” shall have the meaning
assigned to the term “Lenders” in the Existing Credit Agreement.

“Federal Funds Effective Rate” means, for any
day, the weighted average (rounded upwards, if necessary, to the next 1/100 of
1%) of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three (3) Federal
funds brokers of recognized standing selected by it.

“Fee Letters” means (a) the Fee Letter
dated as of May 10, 2006 among the Borrower, CNAI, UBoC and CGMI, as
amended, supplemented, amended and restated or otherwise modified and in effect
from time to time and (b) each Fee Letter between the Borrower and any
Issuing Lender, as each such Issuing Lender Fee Letter may be amended,
supplemented, amended and restated or otherwise modified and in effect from
time to time.

“Financed Enterprise” means, individually, each
Financed Subsidiary and each Joint Enterprise.

“Financed Subsidiary” means as of the Effective
Date, each Collateral Party and each Subsidiary of a Collateral Party with a
Financing.

“Financing” means, with respect to any Person,
either Indebtedness of such Person or Lease Obligations of such Person, or a
combination of both.

“Fiscal Quarter” means any quarter of a Fiscal
Year.

“Fiscal Year” means any period of twelve
consecutive calendar months ending on December 31; references to a Fiscal
Year with a number corresponding to any calendar year (e.g., the “2006
Fiscal Year”) refers to the Fiscal Year ending on December 31
occurring during such calendar year.

“Fitch” means Fitch, Inc.

“F.R.S. Board” means the Board of Governors of
the Federal Reserve System or any successor thereto.

 11
 

 

“Funds Flow Available for Interest” means, for
any period, the sum of the following (computed without duplication) (a) Distributions
during such period except Distributions from EMMT plus (b) realized income
from Permitted Trading Activities of the Borrower and EMMT during such period
less (c) realized losses from Permitted Trading Activities of the Borrower
and EMMT during such period plus (d) cash received (if any) by the
Borrower during such period pursuant to Tax Sharing Agreements less (e) cash
paid (if any) by the Borrower during such period pursuant to Tax Sharing
Agreements plus (f) tax payments received from Subsidiaries pursuant to
Tax Sharing Agreements plus (g) cash received (if any) as tax refunds on
foreign, federal or state income taxes less (h) cash paid (if any) on
foreign, federal or state income tax obligations plus (i) Interest Income
of the Borrower for such period to the extent the same does not reduce Interest
Expense for such period as contemplated by the definition of “Net Interest
Expense” plus (j) interest
income of EMMT for such period to extent not included in clauses (b) or
(c) above less (k) Operating Expenses during such period.

 “GAAP”
has the meaning set forth in Section 1.4.

“Governmental Approval” means any
authorization, consent, approval, license, permit, exemption, filing or
registration with any Governmental Authority.

“Governmental Authority” means any nation or
governmental, any state, provincial or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

“Granting Lender” has the meaning set forth in Section 10.11.1(e).

“Hazardous Material”
means:

(a) 
any “hazardous substance”, as defined by any Environmental Law;

(b) 
any “hazardous waste”, as defined by any Environmental Law;

(c) 
any petroleum product (including crude oil or any fraction thereof); or

(d) 
any pollutant or contaminant or hazardous, dangerous or toxic chemical, material,
force or substance (including polychlorinated biphenyls, urea-formaldehyde
insulation, asbestos or radioactivity) that is regulated pursuant to or could
give rise to liability under any Environmental Law.

“herein”, “hereof”, “hereto”, “hereunder”
and similar terms contained in any Loan Document refer to such Loan Document as
a whole and not to any particular Section, paragraph or provision of such Loan
Document.

“Homer City” means EME Homer City Generation L.P., a
Pennsylvania limited partnership.

“including” means including without limiting
the generality of any description preceding such term, and, for purposes of
each Loan Document, the parties thereto agree that the rule of ejusdem
generis shall not be applicable to limit a general statement, which is
followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.

“Indebtedness” of
any Person means, without duplication:

(a) 
all indebtedness for borrowed money;

 12
 

 

(b) 
all obligations issued, undertaken or assumed as the deferred purchase price of
property or services which purchase price is due more than six months from the
date of incurrence of the obligation in respect thereof or is evidenced by a
note or other instrument, except trade accounts arising in the ordinary course
of business;

(c) 
all reimbursement obligations with respect to surety bonds, letters of credit
(to the extent not collateralized with cash or Cash Equivalent Investments),
bankers’ acceptances and similar instruments (in each case, whether or not
matured);

(d) 
all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses;

(e) 
all indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property);

(f) 
all Capitalized Lease Liabilities;

(g) 
all net obligations with respect to interest cap arrangements, interest rate
swaps agreements, sales of foreign exchange options and other similar hedging
agreements or arrangements;

(h) 
all indebtedness referred to in clauses (a) through (g) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness; and

(i) 
all Contingent Liabilities.

For all purposes of this Agreement, the Indebtedness of
any Person shall include the Indebtedness of any partnership or joint venture
in which such Person is a general partner or a joint venturer.

“Indemnified Liabilities” has the meaning set
forth in Section 10.4(a).

“Indemnified Parties” has the meaning set forth
in Section 10.4(a).

“Indemnified Taxes” means Taxes other than
Excluded Taxes.

“Initial Issuing Lender” means CNAI.

 13
 

 

“Interest Coverage Ratio” means, for any
period, the ratio of (a) Funds Flow Available for Interest during such
period to (b) Net Interest Expense for such period, provided that,
upon the occurrence and continuation of a Significant Collateral Party Event
subsequent to the commencement of the period for which the Interest Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Interest Coverage Ratio is made, then the Interest
Coverage Ratio will be calculated giving Pro Forma effect to the assumption
that no Distributions were made or available to be made to the Borrower by each
Collateral Party or any Subsidiary of a Collateral Party that gives rise to a
Significant Collateral Party Event, as if the same had occurred at the
beginning of such period.

“Interest Expense” means the accrued interest
expense (including any such interest expense capitalized under GAAP) of (a) EME
Corporate Debt and (b) the Powerton-Joliet Intercompany Notes, but shall
exclude any intercompany obligation on which interest or the equivalent is
received by the Borrower. Interest Expense shall exclude, to the extent
included, (x) any premiums, fees, discounts or other charges incurred in
connection with the related financing and (y) losses incurred in
connection with the early extinguishment of indebtedness.

“Interest Income” means, for any period,
accrued interest income received or available to be received by the Borrower
for such period.

“Interest Period” means, relative to any LIBO
Rate Loan, the period beginning on (and including) the date on which such LIBO
Rate Loan is made or continued as, or converted into, a LIBO Rate Loan pursuant
to Section 2.3 or 2.4 and shall end on (but exclude) the day
which numerically corresponds to such date one, two, three or six months
thereafter (or, if such month has no numerically corresponding day, on the last
Business Day of such month), in either case as the Borrower may select in its
relevant notice pursuant to Section 2.3 or 2.4; provided,
however, that (a) if such Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall end on the next
following Business Day (unless, if such Interest Period applies to LIBO Rate
Loans, such next following Business Day is the first Business Day of a calendar
month, in which case such Interest Period shall end on the Business Day next
preceding such numerically corresponding day) and (b) no Interest Period
may end later than the “Maturity Date”.

“Investment” means, relative to any Person:

(a) 
any loan or advance made by such Person to any other Person (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business);

(b) 
any Contingent Liability of such Person; and

(c) 
any ownership or similar interest held by such Person in any other Person.

The amount of any Investment shall be the original
principal or capital amount thereof less all returns of principal or equity
thereon (and without adjustment by reason of the financial condition of such
other Person) and shall, if made by the transfer or exchange of property other
than cash, be deemed to have been made in an original principal or capital
amount equal to the fair market value of such property.

 14

 

“ISP” means the International Standby Practices
as set forth in the International Chamber of Commerce Publication No. 590,
or such later revision thereof in effect at the time of an Issuance of a Letter
of Credit.

“Issuance Date” means the date on which a Letter
of Credit is Issued pursuant to Section 2.6.

“Issue” means, with respect to any Letter of
Credit, to issue or to extend the expiry of, to amend or to renew or to
increase the amount of, such Letter of Credit; and the terms “Issued”, “Issuing”
and “Issuance” have corresponding meanings.

“Issuing Lenders” means the Initial Issuing
Lender and each other Person as may have subsequently been appointed as a
successor or an additional Issuing Lender pursuant to Section 2.6.11.

“Joint Enterprise” means a general partnership,
limited partnership, joint venture or similar entity in which a Collateral
Party or a Subsidiary of a Collateral Party is a partner, joint venturer or
equity participant. The term “Joint Enterprise” shall exclude, to the extent
included, partnerships or other business entities included in the definition of
“Subsidiary”.

“LC Collateral Account” means an account
established in the name of the Borrower but under the exclusive dominion and
control of the Administrative Agent, which shall be a “securities account” (as
defined in Section 8-501(a) of the UCC) and, to the extent that
credit balances not constituting “financial assets” (as defined in Section 8-102(a)(9) of
the UCC) are credited thereto, a “deposit account” (as defined in Section 102(a)(29)
of the UCC).

“LC Disbursement” means a payment made by any
Issuing Lender pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the
Required Commitment Amount at such time minus (for purposes of Section 3.3.2
only) any Cash Collateralized amounts. The LC Exposure of any Lender at any
time shall be its Percentage of the total LC Exposure at such time.

“Lease Obligations” means rent, supplemental
rent, termination value, or a similar monetary obligation under, or pursuant
to, a lease or related documents in connection with a leveraged lease
transaction (including Contingent Liabilities related thereto).

“Lenders” has the meaning set forth in the preamble.

“Letter of Credit” means any letter of credit
issued pursuant to this Agreement.

“Letter of Credit Application” has the meaning
set forth in Section 2.6.2.

“Letter of Credit Documents” means, with
respect to any Letter of Credit, collectively, any application therefor and any
other agreements, instruments, guarantees or other documents (whether general
in application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned or
at risk with respect to such Letter of Credit or (b) any collateral
security for any of such obligations, each as the same may be amended,
supplemented, amended and restated or otherwise modified and in effect from
time to time.

 15
 

 

“Leveraged Lease Basic Documents” means the
Basic Documents as defined in the Leveraged Lease Participation Agreement.

“Leveraged Lease Participation Agreement”
means, collectively (a) the Participation Agreement dated as of August 17,
2000 by and among Midwest, the Borrower, Nesbitt Asset Recovery, Series P-1,
Nesbitt Asset Recovery LLC, Series P-1, Wachovia Bank, N.A., as Owner
Trustee, United States Trust Company of New York, as Lease Indenture Trustee
and United States Trust Company of New York, as Pass Through Trustee; (b) the
Participation Agreement dated as of August 17, 2000 by and among Midwest,
the Borrower, Powerton Trust II, Powerton Generation II, LLC, Wachovia
Bank, N.A., as Owner Trustee, United States Trust Company of New York, as Lease
Indenture Trustee and United States Trust Company of New York, as Pass Through
Trustee; (c) the Participation Agreement dated as of August 17, 2000
by and among Midwest, the Borrower, Nesbitt Asset Recovery, Series J-1,
Nesbitt Asset Recovery LLC, Series J-1, Wachovia Bank, N.A., as
Owner Trustee, United States Trust Company of New York, as Lease Indenture
Trustee and United States Trust Company of New York, as Pass Through Trustee;
and (d) the Participation Agreement dated as of August 17, 2000 by
and among Midwest, the Borrower, Joliet Trust II, Joliet
Generation II, LLC, Wachovia Bank, N.A., as Owner Trustee, United States
Trust Company of New York, as Lease Indenture Trustee and United States Trust
Company of New York, as Pass Through Trustee, in each case, as amended,
supplemented, amended and restated or otherwise in effect from time to time.

“Leveraged Lease Transaction” means the
transaction consummated pursuant to the Leveraged Lease Participation Agreement
and the Leveraged Lease Basic Documents.”

“LIBO Rate” means, for each day during each
Interest Period for each LIBO Rate Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on
Telerate Service Page 3750 as of 11:00 a.m., London time, two (2) Business
Days prior to the beginning of such Interest Period. In the event that such
rate does not appear on Telerate Service Page 3750, the “LIBO Rate”
shall be determined by reference to such other comparable publicly available
service for displaying eurodollar rates as may be selected by the Administrative
Agent or, in the absence of such availability, by reference to the rate at
which the Administrative Agent is offered Dollar deposits at or about 11:00 a.m.,
New York City time, two (2) Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being conducted for delivery
on the first day of such Interest Period for the number of days comprised
therein. Notwithstanding any other provision hereof, at such time as there
shall exist for any Lender a LIBOR Reserve Percentage which is greater than
zero, the LIBO Rate used in the determination of LIBO Rate Loans made by such
Lender shall be the LIBO Rate (Reserve Adjusted).

“LIBO Rate Loan” means a Loan bearing interest,
at all times during an Interest Period applicable to such Loan at a fixed rate
of interest per annum determined by reference to the LIBO Rate plus the
LIBOR Applicable Margin from time to time in effect.

 16
 

 

“LIBO Rate (Reserve Adjusted)” means, relative
to any Loan to be made, continued or maintained as, or converted into, a LIBO
Rate Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of l/100 of 1%) determined pursuant to
the following formula:

LIBO Rate (Reserve Adjusted)  
=                                                                                                             LIBO
Rate                                               
                           1.00 - LIBOR
Reserve Percentage

The LIBO Rate (Reserve Adjusted) for any Interest
Period for LIBO Rate Loans will be determined by the Administrative Agent on
the basis of the LIBOR Reserve Percentage in effect on, and the applicable
rates furnished to and received by the Administrative Agent, two (2) Business
Days before the first day of such Interest Period.

“LIBOR Applicable Margin” means for any day the
rate per annum in effect for LIBOR Rate Loans for such day based on the
Borrower’s Debt Rating for such day determined as provided in the Pricing Grid.

“LIBOR Office” means, relative to any Lender,
the office of such Lender designated as such on Schedule 1.1(b) or
designated in the Assignment Agreement or such other office of a Lender (or any
successor or assign of such Lender) as designated from time to time by notice
from such Lender to the Borrower and the Administrative Agent pursuant to Section 4.4
or otherwise (subject to Section 4.4), whether or not outside the
United States, which shall be making or maintaining LIBO Rate Loans of such
Lender hereunder.

“LIBOR Reserve Percentage” means, relative to
any Interest Period for LIBO Rate Loans, the reserve percentage (expressed as a
decimal) equal to the aggregate reserve requirements (including all basic,
emergency, supplemental, marginal and other reserves and taking into account
any transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to time by the
F.R.S. Board and then applicable to assets or liabilities consisting of and
including “Eurocurrency Liabilities”, as currently defined in Regulation D of
the F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.

“Lien” means any security interest, mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property, in each case
of any kind, to secure payment of a debt or performance of an obligation.

“Loan” has the meaning set forth in Section 2.1.

“Loan Documents” means (a) this Agreement,
(b) the Borrower Security Agreement, (c) the Account Control
Agreement, (d) the Communications Agreement, (e) the Fee Letters, (f) the
Letter of Credit Documents and (g) the other agreements, documents and
instruments delivered in connection with this Agreement, including each
Borrowing Request and each Continuation/Conversion Notice.

 17
 

 

“Material Adverse Effect” means any event, development
or circumstance that has had or would reasonably be expected to have a material
adverse effect on (a) the business, assets, property, condition (financial
or otherwise) or operations of the Borrower and its Subsidiaries, taken as a
whole since the Effective Date, (b) the ability of the Borrower to perform
its obligations under any of the Loan Documents or (c) the aggregate value
of the Collateral or the validity, enforceability or priority of the security
interests granted in favor of the Lenders pursuant to the Borrower Security
Agreement granting a security interest in the Collateral.

“Maturity Date” means June 15, 2012.

“Maximum Issuing Lender Amount” means (a) with
respect to any Initial Issuing Lender, the amount set forth opposite the name
of such Initial Issuing Lender on Schedule 1.1(c) (as such amount
may be varied by written agreement with the Borrower from time to time) and (b) with
respect to any other Issuing Lender, an amount agreed to with the Borrower in
writing at the time of appointment (as such amount may be varied by written
agreement with the Borrower from time to time).

“MEHC” means Mission Energy Holding Company, a
Delaware corporation.

“Midwest” means Midwest Generation, LLC, a
Delaware limited liability company.

“Midwest Corporate Debt” means, on any date,
the sum (without duplication of EME Corporate Debt) of the following
indebtedness of Midwest:  (a) all
indebtedness for borrowed money other than subordinated unsecured intercompany
loans between Midwest and its Subsidiaries which are permitted by the Effective
Date Financing Documentation of Midwest; (b) all guarantees for (i) indebtedness
of Subsidiaries of Midwest and (ii) rental expenses of its Subsidiaries; (c) all
reimbursement obligations with respect to surety bonds, letters of credit (to
the extent not collateralized with cash or Cash Equivalent Investments),
bankers’ acceptances and similar instruments (in each case, whether or not
matured); and (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses.

“Moody’s” means Moody’s Investors Service, Inc.,
and its successors and assigns.

“Net Cash Proceeds” means, in connection with
any Disposition of a Collateral Party or of the assets or property of a
Collateral Party (or a Subsidiary of a Collateral Party), the cash proceeds (or
proceeds consisting of Cash Equivalent Investments) received by such Person
from such Disposition, reduced by (a) the amount of any legal, title, and
recording tax expenses, commissions and other fees, costs and expenses directly
or indirectly incurred by such Person as a result of such Disposition, (b) the
amount of any Taxes, incurred by such Person by reason of such Disposition and,
in the case of any Subsidiary of the Borrower, after reduction by the amount of
any Taxes incurred by such Subsidiary by reason of the transfer of such
proceeds directly or indirectly to the Borrower or the receipt of such
proceeds, and (c) repayments of Indebtedness to the extent that the
transferee of (or holder of a Lien on) the property subject to such Disposition
requires that such Indebtedness be repaid as a condition to the Disposition of
such property.

 18
 

 

“Net Interest
Expense” means, for any period, the excess of (a) Interest Expense for
such period over (b) Interest Income for such period; provided that
Interest Income shall be disregarded for any period in which the cash and Cash
Equivalent Investments on hand of the Borrower for such period is less than
$100,000,000 as of the end of such period.

“Non-Recourse Debt” means Indebtedness which
the Borrower is not directly or indirectly obligated to repay.

“Non-Recourse Persons” means the Affiliates of
the Borrower, including Edison Mission Group, Edison International, MEHC and
Southern California Edison Company, and the officers, directors, employees,
shareholders, agents, Authorized Representatives and other controlling persons
of the Borrower or any of its Affiliates, provided that in no event
shall the Borrower be deemed to be a Non-Recourse Person.

“Non-U.S. Lender” has the meaning set forth in Section 4.7(e).

“Obligations” means with respect to any
Indebtedness of any Person (collectively, without duplication):  (i) all debt, financial liabilities and
obligations of such Person of whatsoever nature and howsoever evidenced
(including, but not limited to, principal, interest, fees, reimbursement
obligations, cash cover obligations, penalties, indemnities and legal and other
expenses, whether due after acceleration or otherwise) to the providers or
holders of such Indebtedness or to any agent, trustee or other representative
of such providers or holders of such Indebtedness under or pursuant to each
agreement, document or instrument evidencing, securing, guaranteeing or
relating to such Indebtedness, financial liabilities or obligations relating to
such Indebtedness (including, without limitation, Loan Documents applicable to
such Indebtedness (if any)), in each case, direct or indirect, primary or
secondary, fixed or contingent, now or hereafter arising out of or relating to
any such agreement, document or instrument; (ii) any and all sums advanced
by the Administrative Agent or any other Person in order to preserve the
Collateral or any other collateral securing such Indebtedness or to preserve
the Liens and security interests in the Collateral or any other collateral,
securing such Indebtedness; and (iii) the costs and expenses of collection
and enforcement of the obligations referred to in clauses (i) and (ii) (including,
without limitation, (A) the costs and expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
any Collateral or any other collateral, (B) the costs and expenses of any
exercise by the Administrative Agent or any other Person of its rights under
the Borrower Security Agreement or any other security documents and (C) reasonable
attorneys’ fees and court costs).

“Offshore Currency” means at any time
Australian dollars, English pounds sterling, Euros and New Zealand dollars.

“Operating Expenses” means, for any period, all amounts accrued by the Borrower and EMMT in the conduct of their respective
business during such period for accrued general and administrative expenses,
including utilities, employee salaries, wages and other employment-related
costs, fees for letters of credit, surety bonds and performance bonds; provided,
however, that such general and administrative expenses shall be reduced
by accrued amounts for reimbursement of such expenses, without duplication,
from Affiliates of the Borrower. Operating Expenses do not include federal and
state Taxes, depreciation or amortization, and other non-cash charges.

 19
 

 

“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; with respect to any Person
that is a limited liability company, its certificate of formation and its
limited liability agreement, and, with respect to a private limited liability
company, its deed of incorporation, its articles of association, all
shareholders agreements, if any, and the shareholders register in each case, as
from time to time amended, supplemented, amended and restated, or otherwise
modified and in effect from time to time.

“Other Taxes” means any and all present or
future stamp or documentary Taxes or any other excise or property Taxes, charges
or similar levies arising from any payment made under any Loan Document or from
the execution, delivery or enforcement of, or otherwise with respect to, any
Loan Document.

“Participant” has the meaning set forth in Section 10.11.2.

“Partnership” means a general partnership,
limited partnership, joint venture or similar entity in which the Borrower or a
Subsidiary is a partner, joint venturer or equity participant. The term “Partnership”
shall exclude, to the extent included, partnerships or other business entities
included in the definition of “Subsidiary”.

“PBGC” means the Pension Benefit Guaranty
Corporation and any entity succeeding to any or all of its functions under
ERISA.

“Pension Plan” means a “pension plan”, as such
term is defined in Section 3(2) of ERISA, which is subject to Title
IV of ERISA (other than a multiemployer plan as defined in Section 4001(a)(3) of
ERISA), and to which the Borrower or any corporation, trade or business that
is, along with the Borrower, a member of a Controlled Group, has any liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under Section 4069
of ERISA.

“Percentage” means, at the time of
determination, the sum of the amount of such Lender’s Loans, LC Exposure
and unused Commitments divided by the sum of the total amount of
Loans, LC Exposure and unused Commitments.

“Permitted Guarantees” means guarantees,
whether unsecured or permitted to be secured pursuant to Section 7.2.2(g),
by the Borrower, any Collateral Party, any Subsidiary of a Collateral Party or
any Joint Enterprise in connection with non-speculative Permitted Trading
Activities of the Borrower, its Subsidiaries and Joint Enterprises.

“Permitted Intercompany Indebtedness” means
unsecured Indebtedness between the Collateral Parties and their Subsidiaries or
of the Collateral Parties and their Subsidiaries to the Borrower and its Subsidiaries
(other than the Collateral Parties and their Subsidiaries) in each case for
money borrowed, which is subordinated in right of payment to the payment in
full in cash of all Obligations pursuant to the terms of subordination
substantially in the form of Exhibit H hereto. Permitted
Intercompany Indebtedness shall exclude, to the extent included, Indebtedness
of Collateral Parties to any Subsidiary of the Borrower that is not a
Collateral Party or a Subsidiary of a Collateral Party in excess of $20,000,000
in the aggregate.

 20
 

 

“Permitted Refinancing Indebtedness” means,
with respect to any Person, any refinancing of a Financing of such Person
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund (collectively, “refinance”)
other Financings of such Person; provided, that (a) the aggregate
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the aggregate principal amount (or
accreted value, if applicable) of the Financing being refinanced (plus
all accrued interest thereon and the amount of all expenses and premiums in
connection therewith), (b) the maturity date of the Permitted Refinancing
Indebtedness is no earlier than the maturity date of the Financing being
refinanced and such Permitted Refinancing Indebtedness has a weighted average
life to maturity equal to or greater than the weighted average life to maturity
of the Financing being refinanced, (c) subject to clause (d) below,
any Contractual Restrictions incurred in connection with such Permitted
Refinancing Indebtedness are (as determined in good faith by the Borrower’s
Board of Directors, the determination of which shall be evidenced by a
resolution of such Board of Directors) no more restrictive on such Person or
its Subsidiaries or Affiliates than the Financing being refinanced taken as a
whole and (d) with respect to any refinancings within 12 months of the
maturity date of such Financing, such Permitted Refinancing Indebtedness may
contain Contractual Restrictions that are in the written opinion of the
Borrower’s chief executive officer or chief financial officer required by the
lenders in order to obtain such refinancings, are customary for such
refinancings and apply only to the assets of or revenues of the Person which is
the subject of the refinancing.

“Permitted Trading Activities” means (a) the
daily or forward purchase and/or sale, or other acquisition or disposition, of
wholesale or retail electric energy, capacity, ancillary services, transmission
rights, emissions allowances, weather derivatives and/or related commodities,
in each case, whether physical or financial, (b) the daily or forward
purchase and/or sale, or other acquisition or disposition, of fuel, mineral
rights and/or related commodities, including swaps, options and swaptions, in
each case, whether physical or financial, (c) electric energy-related
tolling transactions, as seller of tolling services, (d) price risk
management activities or services, (e) other similar electric industry
activities or services, or (f) additional services as may be consistent
with Prudent Industry Practice from time to time to support the marketing and
trading related to the Subsidiaries of the Borrower and Joint Enterprises, in
each case, consistent with the energy and fuel risk management policies of such
Subsidiary or Joint Enterprise (or, if the relevant Subsidiary or Joint
Enterprise does not have any such policies, the energy and fuel risk management
policies of the Borrower).

“Person” means any natural person, corporation,
partnership, limited liability company, firm, association, trust, government,
governmental agency or any other entity, whether acting in an individual,
fiduciary or other capacity.

 21
 

 

                                “Powerton/Joliet
Guarantees” means, collectively, (a) the Guaranty Agreement dated as
of August 17, 2000 made by the Borrower in favor of Nesbitt Asset
Recovery, Series P-1 that, among other things, guarantees the
payment by Midwest of certain liabilities payable to Nesbitt Asset Recovery, Series P-1,
(b) the Guaranty Agreement dated as of August 17, 2000 made by the
Borrower in favor of Powerton Trust II that, among other things,
guarantees the payment by Midwest of certain liabilities payable to Powerton
Trust II, (c) the Guaranty Agreement dated as of August 17, 2000
made by the Borrower in favor of Nesbitt Asset Recovery, Series J-1
that, among other things, guarantees the payment by Midwest of certain
liabilities payable to Nesbitt Asset Recovery, Series J-1 and (d) the
Guaranty Agreement dated as of August 17, 2000 made by the Borrower in
favor of Joliet Trust II that, among other things, guarantees the payment
by Midwest of certain liabilities payable to Joliet Trust II.

“Powerton/Joliet Intercompany Notes” means the
promissory notes of the Borrower dated as of August 24, 2000 having a
stated aggregate principal amount equal to $1,367,000,000, as such amount may
be reduced from time to time pursuant to the terms thereof, evidencing in each
case a loan from Midwest to the Borrower.

“Pricing Grid” means the pricing grid set forth
on Schedule 3.2.1.

“Pro Forma” means, with respect to a
calculation, that such calculation is made in accordance with Regulation S-X
under the Securities Act and gives effect to all relevant modifications to
contractual arrangements that have been made prior to, or are being made on,
the calculation date; provided, that in the case of a calculation for
any period occurring prior to the Effective Date, all contractual arrangements
in effect on the Effective Date shall be deemed to have been in effect for the
entirety of such period.

“Prudent Industry Practice” means, at a
particular time, (a) any of the practices, methods and acts engaged in or
approved by a significant portion of the competitive electric generating
industry at such time, or (b) with respect to any matter to which clause (a) does
not apply, any of the practices, methods and acts which, in the exercise of
reasonable judgment at the time the decision was made, could have been expected
to accomplish the desired result at a reasonable cost consistent with good
business practices, reliability, safety and expedition. “Prudent Industry
Practice” is not intended to be limited to the optimum practice, method or act
to the exclusion of all others, but rather to be a spectrum of possible
practices, methods or acts having due regard for, among other things,
manufacturers’ warranties and the requirements of any Governmental Authority of
competent jurisdiction.

“Quarterly Payment Date” means the last day of
each March, June, September, and December or, if any such day is not a
Business Day, the next succeeding Business Day.

“Register” has the meaning set forth in Section 10.11.1(b).

“Required Commitment Amount” means, at any
time, (a) 100% of the aggregate undrawn amount of all outstanding Dollar
denominated Letters of Credit, (b) 110% of the Dollar Equivalent of the
aggregate undrawn amount of all outstanding Offshore Currency denominated
Letters of Credit, (c) the sum of the Dollar Equivalent of the undrawn
amount of each Agreed Alternate Currency denominated Letters of Credit each
multiplied by its respective Agreed Alternate Percentage, (d) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by
or on behalf of the Borrower at such time and (e) all other amounts
payable to an Issuing Lender under the Letter of Credit Documents.

 22
 

 

“Required Lenders” means, at any time, Lenders
having Credit Exposures and unused Commitments representing at least 50.01% of
the sum of the total Credit Exposures and unused Commitments at such
time.

“Requirement of Law” means, as to any Person,
the Organic Documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other authority, in
each case, applicable to or binding upon such Person or any of its Property or
to which such Person or any of its property is subject.

“Restricted Payment” means any dividend (other
than a dividend of the Borrower payable solely in common stock of the Borrower)
on, or any payment on account of, or setting apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of capital stock of or other
ownership interest of the Borrower or any warrants or options to purchase any
such stock or ownership interest, whether now or hereafter outstanding, or
making of any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the Person making
such dividend or payment.

“Restrictive Financing Documents” has the
meaning set forth in Section 7.2.8.

“S&P” means Standard & Poor’s
Ratings Services and its successors and assigns.

“Significant Collateral Party Event” means the
occurrence of a default in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any Indebtedness of a
Collateral Party or a Subsidiary of a Collateral Party or a default shall occur
in the performance or observance of any obligation or condition with respect to
such Indebtedness if the effect of such default is to accelerate the maturity
of any such Indebtedness or such default shall continue unremedied for any
applicable period of time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity, in
either case, such Indebtedness
having a principal amount, individually or in the aggregate, in excess
of $20,000,000; provided that a cure by such Financed Enterprise or a waiver of
such default (which such waiver shall not impose more restrictive conditions
than the Correlative Financing Provisions (on such Financed Enterprise) by the
holders of such Indebtedness shall constitute a waiver or a cure of such
default for the purposes of this Agreement.

“Solvent” means, with respect to any Person, on
any date of determination:  (a) the
fair market value of its assets is in excess of the total amount of its
liabilities (including net contingent liabilities); (b) it is then able
and expects to be able to pay its debts as they mature; and (c) it has
capital sufficient to carry on its business as conducted and as proposed to be
conducted. For purposes of the foregoing the amount of contingent liabilities
at any time shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, can reasonably be expected to become an
actual or matured liability.

“Southern California Edison Company” means
Southern California Edison Company, a California corporation.

“SPC” has the meaning set forth in Section 10.11.1(e).

 23
 

 

“Spot Rate” for a currency means (a) for
determining the Dollar Equivalent pursuant to Section 2.6.10, the
rate quoted by an Issuing Lender as the spot rate for the purchase by such
Issuing Lender of such currency with another currency through its foreign
exchange trading desk at approximately 11:00 a.m., New York City time, on
the date as of which the foreign exchange computation is made and (b) for
all other calculations, the rate quoted by Citibank as the spot rate for the
purchase by Citibank of such currency with another currency through its FX
Dealing Desk at approximately 11:00 a.m., New York City time, on the date as
of which the foreign exchange computation is made.

“Subordinated Debt” means all unsecured
Indebtedness of the Borrower for money borrowed which is subordinated, upon
terms (including the terms applicable to the payment, prepayment, redemption,
purchase or defeasance thereof) satisfactory to the Required Lenders, in right
of payment to the payment in full in cash of all Obligations.

“Subsidiary” means, with respect to any
Person:  (a) any corporation,
association or other business entity of which more than 50% of the outstanding
Capital Stock having ordinary voting power to elect a majority of the
directors, managers or trustees of such corporation (irrespective of whether at
the time capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency) is at the
time directly or indirectly owned by such Person, by such Person and one or
more other Subsidiaries of such Person, or by one or more other Subsidiaries of
such Person; and (b) any partnership (i) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (ii) the only general partners of which are such Person or one
or more Subsidiaries of such Person (or any combination thereof).

“Subsidiary Payments” has the meaning set forth
in Section 7.2.8.

“Tax” or “Taxes” means, with respect to
any Person, any present or future taxes (including income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value-added,
ad valorem, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever), levies, imposts, duties, fees or charges imposed by any government
or any governmental agency or instrumentality or any international or
multinational agency or commission, including any interest, penalty, or
addition thereto, whether disputed or not for which such Person may be liable
(including any such Tax related to any other Person for which such Person is
liable, by contract, as transferee or successor, by law or otherwise).

“Tax Sharing Agreements” means (a) the Tax
Allocation Agreement, dated July 2, 2001, by and between MEHC and the
Borrower, (b) the Administrative Agreement Re Tax Allocation Payments,
dated July 2, 2001, among Edison International and subsidiary parties, (c) the
Edison Mission Energy Subgroup Tax Allocation Agreement, dated effective as of January 1,
2002, by and among the Borrower and certain of its subsidiaries as are party
thereto, and (d) the Edison Mission Energy and Subsidiaries Tax Allocation
Agreement, dated effective as of January 1, 2002, by and among certain
Affiliates of the Borrower, in each case as such agreements shall be amended,
supplemented, amended and restated or otherwise modified and in effect from
time to time.

 24
 

 

“type” means, relative to any Loan, the portion
thereof, if any, being maintained as a Base Rate Loan or a LIBO Rate Loan.

“UBoC” means Union Bank of California, N.A., a
national banking association.

“UCP” means the Uniform Customs and Practice
for Documentary Credits, 1993 Revision, as set forth in the International
Chamber of Commerce Publication No. 500, or such later revision thereof in
effect at the time of an Issuance of a Letter of Credit.

“Uniform Commercial Code” or “UCC” means
the Uniform Commercial Code as in effect from time to time in the State of New
York.

“United States” or “U.S.” means the
United States of America, its fifty States and the District of Columbia.

“United States Person” has the meaning given to
such term in Section 7701(a)(30) of the Code.

“Welfare Plan” means a “welfare plan”, as such
term is defined in Section 3(1) of ERISA.

“Westside Entities” means Anacapa Energy
Company, Silverado Energy Company, Viejo Energy Company, Del Mar Energy Company
and each Subsidiary of the foregoing.

SECTION 1.2 Use of Defined Terms. Unless
otherwise defined or the context otherwise requires, terms for which meanings
are provided in this Agreement shall have such meanings when used in each
Borrowing Request, Continuation/Conversion Notice, Loan Document, notice and
other communication delivered from time to time in connection with any Loan
Document.

SECTION 1.3 Cross-References. Unless otherwise
specified, references in this Agreement to any Article, Section, Annex, Exhibit or
Schedule are references to such Article, Section, Annex, Exhibit or
Schedule of or to this Agreement, and, unless otherwise specified, references
in any Article, Section or definition to any clause are references to such
clause of such Article, Section or definition.

SECTION 1.4 Accounting and Financial Determinations.
Unless otherwise specified, all accounting terms used in any Loan Document
shall be interpreted, all accounting determinations and computations hereunder
or thereunder shall be made, and all financial statements required to be
delivered hereunder or thereunder shall be prepared in accordance with, those
generally accepted accounting principles in effect from time to time in the
United States (“GAAP”) applied in the preparation of the financial
statements referred to in Section 6.5, except that quarterly
financial statements are not required to contain footnotes.

 25
 

 

ARTICLE II

COMMITMENTS AND BORROWING
PROCEDURES

SECTION 2.1 Commitments. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, to make revolving
loans (each, a “Loan”) to the Borrower from time to time on any Business
Day during the Availability Period in an aggregate amount at any one time
outstanding not to exceed at any one time the amount of such Lender’s
Commitment; provided that in no event shall any Loan be made by any
Lender if, after giving effect thereto, such Lender’s Credit Exposure would
exceed the amount of its Commitment or the total Credit Exposures would exceed
the total Commitments. Loans may from time to time be LIBO Rate Loans or Base
Rate Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.3 and 2.4. The Borrower
may from time to time borrow, repay, in whole or in part, and reborrow Loans. Commitments
shall terminate automatically on the Maturity Date.

SECTION 2.2  Loans.

SECTION 2.2.1 Obligations of Lenders. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.

SECTION 2.2.2 Type of Loans. Subject to Section 4.2,
each Loan shall be constituted entirely of Base Rate Loans or of LIBO Rate
Loans as the Borrower may request in accordance herewith. Each Lender at its
option may make any LIBO Rate Loans by causing any domestic or foreign branch
or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.

SECTION 2.2.3 Minimum Amounts; Limitation on Number
of Loans. Each Loan shall be in an aggregate amount of $5,000,000 or a
larger multiple of $1,000,000; provided that a Base Rate Loan may be in
an aggregate amount that is equal to the entire unused balance of the total
Commitments or, in the case of a Loan that is required to finance, in an amount
not less than $5,000,000, the amount of the reimbursement of an LC Disbursement
as contemplated by Section 2.6.6. Loans of more than one type may
be outstanding at the same time; provided that there shall not at any
time be more than a total of ten (10) LIBO Rate Loans outstanding.

SECTION 2.2.4 Limitations on Interest Periods. Notwithstanding
any other provision of this Agreement, the Borrower shall not be entitled to
request (or to elect to convert to or continue as a LIBO Rate Loan) any Loan if
the Interest Period requested therefor would end after the Maturity Date.

SECTION 2.2.5 Reduction of Total Commitment
Amount. The Borrower may, from time to time on any Business Day occurring after
the Effective Date, voluntarily reduce the Commitment Amount without premium or
penalty (subject, however, to Section 4.5); provided, however,
that all such reductions shall require at least three (3) Business Days’
prior notice to the Administrative Agent and shall be permanent, and any
partial reduction of the Commitment Amount shall be in a minimum amount of
$5,000,000 and in an integral multiple of $1,000,000 in excess thereof; and, provided,
further, that the Commitment Amount may not be reduced to an amount less
than the total Credit Exposures of all Lenders.

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SECTION 2.3 Borrowing Procedure.

(a)  Each Borrowing of Loans shall be made on
notice, given not later than (i) 12:00 Noon, New York City time, on
the third Business Day prior to the date of the proposed Borrowing (in the case
of a Borrowing of Loans to consist of LIBO Rate Loans) and (ii) 12:00 Noon,
New York City time, on the Business Day of the proposed Borrowing (in the case
of a Borrowing of Loans to consist of Base Rate Loans), by the Borrower to the
Administrative Agent, which shall give to each Lender prompt notice thereof by
facsimile transmission. Each such notice of a Borrowing of Loans shall be made
in writing, in substantially the form of a Borrowing Request, specifying
therein (i) the requested date of such Borrowing (which shall be a
Business Day), (ii) whether such Borrowing is to be a LIBO Rate Loan or a
Base Rate Loan, (iii) the requested aggregate amount of such Borrowing, (iv) in
the case of a LIBO Rate Loan, the initial Interest Period therefor and (v) the
location and number of the Borrower’s account to which funds are to be
disbursed.

(b)  Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 2:00 p.m., New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower and designated by the Borrower in the applicable
Borrowing Request; provided that Borrowings made to finance the
reimbursement of an LC Disbursement as provided in Section 2.6.6
shall be remitted by the Administrative Agent to the Issuing Lender specified
in Section 2.6.6.

(c)  If no election as to the type of a Loan is
specified, then the requested Loan shall be a Base Rate Loan. If no Interest
Period is specified with respect to any requested LIBO Rate Loan, then the
requested Loan shall be made instead as a Base Rate Loan.

SECTION 2.4 Continuation and Conversion Elections.
By delivering a Continuation/Conversion Notice to the Administrative Agent on
or before 12:00 Noon, New York City time, on a Business Day, the Borrower
may from time to time irrevocably elect that all, or any portion in an
aggregate minimum amount of $5,000,000 and an integral multiple of $1,000,000
in excess thereof, of any Loans be (a) on not less than three (3) Business
Days’ notice, converted into, or continued as, LIBO Rate Loans, or (b) on
the same Business Day, be converted into, Base Rate Loans. In the absence of
delivery of a Continuation/Conversion Notice with respect to any LIBO Rate
Loan, such LIBO Rate Loan shall automatically be continued as a LIBO Rate
Loan with an Interest Period of the same duration as the then expiring Interest
Period; provided, however, that (i) each such conversion or
continuation shall be pro rated among the applicable outstanding Loans of all
Lenders, (ii) a LIBO Rate Loan may not be converted at any time other than
the last day of the Interest Period applicable thereto and (iii) no
portion of the outstanding principal amount of any Loans may be continued as,
or be converted into, LIBO Rate Loans when any Default or Event of Default has
occurred and is continuing. Each delivery of a Continuation/Conversion Notice
shall constitute a certification and warranty by the Borrower that on the date
of delivery of such notice no Default has occurred and is continuing. If prior
to the time of such continuation or conversion any matter certified to by the
Borrower by reason of the immediately preceding sentence will not be true and
correct at such time if then made, the Borrower will immediately so notify the
Administrative Agent. Except to the extent, if any, that prior to the time of
such continuation or conversion the Administrative Agent shall have received
written notice to the contrary from the Borrower, such certification and
warranty shall be deemed to be made at the date of such continuation or
conversion as if then made. Upon the occurrence and during the continuance of
any Event of Default under Section 8.1.1, each LIBO Rate Loan shall
convert automatically to a Base Rate Loan at the end of the Interest Period
then in effect for such LIBO Rate Loan.

 27
 

 

SECTION 2.5 Funding. Each Lender may, if it so
elects, fulfill its obligation to make, continue or convert LIBO Rate Loans
hereunder by causing one of its foreign branches or Affiliates (or an
international banking facility created by such Lender) to make or maintain such
LIBO Rate Loan; provided, however, that such LIBO Rate Loan shall
nonetheless be deemed to have been made and to be held by such Lender, and the
obligation of the Borrower to repay such LIBO Rate Loan shall nevertheless be
to such Lender for the account of such foreign branch, Affiliate or
international banking facility. In addition, the Borrower hereby consents and
agrees that, for purposes of any determination to be made for purposes of Section 4.1,
4.2, 4.3, 4.4, or 4.5, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
deposits in its LIBOR Office’s interbank eurodollar markets. Notwithstanding
the foregoing, such foreign branch or Affiliate shall satisfy the requirements
of Section 4.7(e).

SECTION 2.6 Letters of Credit.

SECTION 2.6.1 General. Subject to the terms and
conditions set forth herein, in addition to the Loans provided for in Section 2.1,
the Borrower may request an Issuing Lender to Issue, at any time and from time
to time, on any Business Day during the Availability Period until the date
which is ten Business Days prior to the Maturity Date, Letters of Credit for
its own account in such form as is acceptable to such Issuing Lender in its
reasonable determination. Letters of Credit Issued hereunder shall constitute
utilization of the Commitments; provided that (a) no Issuing Lender
shall be obligated to Issue any Letter of Credit in the event that the face
amount of such Letter of Credit, when taken together with the maximum available
face amount of all other Letters of Credit Issued by such Issuing Lender, would
exceed such Issuing Lender’s Maximum Issuing Lender Amount and (b) the
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, within the Availability Period, obtain Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
and subsequently reimbursed. The Borrower
agrees that an Issuing Lender shall Issue all Letters of Credit subject to
either the UCP or the ISP. The UCP or the ISP, as applicable, shall serve as
evidence of general banking usage with respect to the subject matter thereof. The
Borrower agrees that, for matters not addressed by the UCP or the ISP, each
Letter of Credit shall be subject to and governed by the laws of the state of
New York and applicable U.S. Federal laws or, if, at the Borrower’s request and
with an Issuing Lender’s consent, a Letter of Credit expressly chooses a state
or country law other than New York, or applicable U.S. Federal laws, such
other law; provided  further that such Issuing Lender shall not be
liable for any payment, cost, expense or loss resulting from any action or
inaction taken by such Issuing Lender if such action or inaction is justified
under UCP, ISP, New York law or the law governing the Letter of Credit and the
Borrower shall promptly reimburse such Issuing Lender for any such payment,
cost, expense or loss in accordance with Section 10.4 (a).

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SECTION 2.6.2 Notice of Issuance, Amendment,
Renewal or Extension. To request the Issuance of a Letter of Credit (or the
amendment, renewal or extension of an outstanding Letter of Credit), the
Borrower shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for doing so
have been approved by such Issuing Lender) to an Issuing Lender and the
Administrative Agent at least three (3) Business Days (or such shorter
time as such Issuing Lender may agree in a particular instance in its sole
discretion) prior to the requested Issuance Date a notice (a “Letter of
Credit Application”) requesting the Issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the Issuing Lender for such Letter of Credit, the Issuance Date
(which shall be a Business Day), the date on which such Letter of Credit is to
expire (which shall comply with Section 2.6.4), the amount of such
Letter of Credit, the denomination of a Letter of Credit in Dollars, Offshore
Currency or Agreed Alternate Currency, the name and address of the beneficiary
thereof, all other terms and conditions regarding such Letter of Credit and
such other information as shall be necessary to prepare, amend, renew or extend
such Letter of Credit. If requested by an Issuing Lender, the Borrower also
shall submit a Letter of Credit Application on such Issuing Lender’s standard
form in connection with any request for a Letter of Credit. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of Letter of Credit Application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, an Issuing
Lender relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

SECTION 2.6.3 Limitations on Amounts. A Letter
of Credit shall be Issued, amended, renewed or extended only if (and upon
Issuance of each Letter of Credit the Borrower shall be deemed to represent and
warrant that), after giving effect to such Issuance the total Credit Exposures
shall not exceed the Commitment Amount.

SECTION 2.6.4 Expiration Date. Each Letter of
Credit shall expire at or prior to the close of business on the earlier of (a) the
date set forth in the Letter of Credit Application and (b) the date that
is five (5) Business Days prior to the Maturity Date.

SECTION 2.6.5 Participations. By the Issuance
of a Letter of Credit (or an amendment to a Letter of Credit increasing the
amount thereof) by an Issuing Lender, and without any further action on the
part of such Issuing Lender or the Lenders, such Issuing Lender hereby grants
to each Lender, and each Lender hereby acquires from such Issuing Lender, a
participation in such Letter of Credit equal to such Lender’s Percentage of the
aggregate amount available to be drawn under such Letter of Credit. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or Event of Default or reduction or termination of the
Commitments.

 29

 

In consideration and in furtherance of the foregoing,
each Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of an Issuing Lender, such Lender’s
Percentage of the Dollar Equivalent (determined in accordance with Section 2.6.10)
of each LC Disbursement made by such Issuing Lender promptly upon the request
of such Issuing Lender at any time from the time of such LC Disbursement until
such LC Disbursement is reimbursed by the Borrower or at any time after any
reimbursement payment is required to be refunded to the Borrower for any reason.
Such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Each such payment shall be made in the same manner as
provided in Section 2.3(b) with respect to Loans made by such
Lender (and Section 2.3(b) shall apply, mutatis  mutandis,
to the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the relevant Issuing Lender the amounts so received by it from
the Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to Section 2.6.6, the
Administrative Agent shall distribute such payment to the relevant Issuing
Lender or, to the extent that the Lenders have made payments pursuant to this
paragraph to reimburse such Issuing Lender, then to such Lenders and such
Issuing Lender as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse an Issuing Lender for any LC Disbursement
shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.

SECTION 2.6.6 Reimbursement. If an Issuing
Lender shall make any LC Disbursement in respect of a Letter of Credit, the
Borrower shall reimburse such Issuing Lender in respect of such LC Disbursement
by paying to the Administrative Agent in Dollars an amount equal to the Dollar
Equivalent (determined in accordance with Section 2.6.10) of such
LC Disbursement and any interest accrued pursuant to Section 2.6.9
not later than 2:00 p.m., New York City time, four Business Days after the
Business Day on which the Borrower receives notice of such LC Disbursement, provided
that, if such LC Disbursement is less than the minimum borrowing specified in Section 2.2.3,
the Borrower may, subject to the conditions to borrowing set forth herein,
request, subject to Section 2.2.3, in accordance with Section 2.3
that such LC Disbursement be financed with a portion of a Borrowing of Loans
and, to the extent so financed, the Borrower’s obligation to reimburse such LC
Disbursement shall be discharged and replaced by the resulting Loan.

If the Borrower fails to make such payment when due,
the Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender’s
Percentage thereof.

SECTION 2.6.7 Obligations Absolute.

(a)  The Borrower’s obligation to reimburse LC
Disbursements as provided in Section 2.6.6 shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter
of Credit, or any term or provision therein, (ii) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in
any respect, (iii) payment by an Issuing Lender under a Letter of Credit
against presentation of a draft or other document that does not comply strictly
with the terms of such Letter of Credit, and (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.6, constitute a
legal or equitable discharge of the Borrower’s obligations hereunder.

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(b)  Neither the Administrative Agent, the
Lenders nor the Issuing Lenders, nor any of their respective directors,
officers, employees, agents or advisors, shall have any liability or
responsibility by reason of or in connection with the Issuance or transfer of
any Letter of Credit by an Issuing Lender or any payment or failure to make any
payment thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a drawing
thereunder), any error in interpretation of technical terms or any consequence
arising from causes beyond the control of an Issuing Lender; provided
that the foregoing shall not be construed to excuse any Issuing Lender from
liability to the Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by such Issuing Lender’s gross negligence or willful misconduct
when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that:

(i) 
each Issuing Lender may accept documents that appear on their face to be in
substantial compliance with the terms of a Letter of Credit without
responsibility for further investigation, regardless of any notice or
information to the contrary, and may make payment upon presentation of
documents that appear on their face to be in substantial compliance with the
terms of such Letter of Credit;

(ii) 
each Issuing Lender shall have the right, in its sole discretion, to decline to
accept such documents and to make such payment if such documents are not in
strict compliance with the terms of such Letter of Credit; and

(iii) 
this sentence shall establish the standard of care to be exercised by each
Issuing Lender when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof (and the parties hereto
hereby waive, to the extent permitted by applicable law, any standard of care
inconsistent with the foregoing).

(c)  Each Issuing Lender shall act on behalf of
the Lenders with respect to any Letters of Credit Issued by it and the
documents associated therewith until such time and except for so long as the
Administrative Agent may agree at the request of the Required Lenders to act
for such Issuing Lender with respect thereto; provided, however,
that each Issuing Lender shall have all of the benefits and immunities (i) provided
to the Administrative Agent in Article IX with respect to any acts
taken or omissions suffered by each Issuing Lender in connection with Letters
of Credit Issued by it or proposed to be Issued by it and the Letter of Credit
Documents mutatis  mutandis as
if set forth in full therein as if the term “Administrative Agent”, as used in Article IX,
included each Issuing Lender with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to each Issuing Lender.

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SECTION 2.6.8 Disbursement Procedures. Each
Issuing Lender shall, within a reasonable time following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit. Each Issuing Lender shall promptly after such examination
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether such Issuing Lender has made
or will make an LC Disbursement thereunder; provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse such Issuing Lender and the Lenders with respect to any
such LC Disbursement.

SECTION 2.6.9 Interim Interest. If an Issuing
Lender shall make any LC Disbursement, then, unless the Borrower shall
reimburse such LC Disbursement in full on the date such LC Disbursement is
made, the Dollar Equivalent (determined in accordance with Section 2.6.10)
of the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the Borrower reimburses such LC Disbursement pursuant to Section 2.6.6,
at a rate equal to the Alternate Base Rate, in effect from time to time, plus
the Base Rate Applicable Margin; provided that, if the Borrower fails to
reimburse such LC Disbursement when due pursuant to Section 2.6.6,
then the Dollar Equivalent of such overdue amount shall bear additional
interest (after as well as before judgment) at a rate equal to 2% per annum. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing
Lender, except that interest accrued on and after the date of payment by any
Lender pursuant to Section 2.6.6 to reimburse such Issuing Lender
shall be for the account of such Lender to the extent of such payment.

SECTION 2.6.10 LC Disbursement Denomination. The
obligations of the Borrower to reimburse LC Disbursements shall be in Dollars
and, to the extent an LC Disbursement is made in an Offshore Currency or Agreed
Alternate Currency, the Issuing Lender making such LC disbursement shall
determine the Dollar Equivalent of such LC Disbursement on the date such
Issuing Lender makes such LC Disbursement.

SECTION 2.6.11 Addition and Replacement of Issuing
Lenders. Any Lender may become an Issuing Lender at any time by written
agreement between the Borrower, the Administrative Agent, and such Lender. Any
Issuing Lender may be replaced by a Lender at any time by written agreement
between the Borrower, the Administrative Agent, the replaced Issuing Lender and
such Lender. The Administrative Agent shall notify the Lenders of any such
change of an Issuing Lender. At the time any such change shall become
effective, the Borrower shall pay all unpaid fees accrued for account of the
replaced Issuing Lender pursuant to Section 3.3.2. From and after
the effective date of any such change, (a) the Lender becoming an Issuing
Lender shall have all the rights and obligations of an Issuing Lender under
this Agreement with respect to Letters of Credit to be Issued thereafter and (b) references
herein to the term “Issuing Lender” shall be deemed to refer to such new or to
any previous Issuing Lender, or to such new and all previous Issuing Lenders,
as the context shall require. After the replacement of an Issuing Lender
hereunder, the replaced Issuing Lender shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Lender under this
Agreement with respect to Letters of Credit Issued by it prior to such
replacement, but shall not be required to Issue additional Letters of Credit.

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SECTION 2.6.12 Offshore Currencies and Agreed
Alternate Currencies.

(a)  Each Issuing Lender shall be under no
obligation to Issue any Letter of Credit denominated in an Offshore Currency if
such Issuing Lender cannot Issue in such requested Offshore Currency, in which
event such Issuing Lender will give prompt notice to the Borrower no later than
two (2) Business Days after the submission of a Letter of Credit
Application that the Issuance of a Letter of Credit in the requested Offshore
Currency is not then available. If such Issuing Lender shall have so notified
the Borrower, such Letter of Credit Application shall be deemed withdrawn.

(b)  The Borrower shall be entitled to request
that Letters of Credit hereunder also be permitted to be Issued in any other
lawful foreign currency, that, in the opinion of all Lenders and an Issuing
Lender, is at such time, freely traded in the offshore interbank foreign
exchange markets and is freely transferable and freely convertible into Dollars
(an “Agreed Alternate Currency”). The Borrower shall deliver to the
Administrative Agent any request for the Issuance of a Letter of Credit in an
Agreed Alternate Currency by not later than 11:00 a.m., New York City
time, at least seven Business Days in advance of the date of any Letter of
Credit proposed to be Issued in such Agreed Alternate Currency. Upon receipt of
any such request the Administrative Agent will promptly notify the Lenders and
such Issuing Lender thereof, and each Lender and such Issuing Lender will use
its best efforts to respond to such request within two (2) Business Days
of receipt thereof. Each Lender and such Issuing Lender may reject or accept
such request in its sole discretion and, if any Lender or Issuing Lender shall
reject such request, the request shall be deemed rejected by all Lenders and
Issuing Lenders. The Administrative Agent will promptly notify the Borrower of
the acceptance or rejection of any such request, and the Lender’s determination
of the percentage of the Dollar Equivalent face amount of such Agreed Alternate
Currency denominated Letter of Credit (the “Agreed Alternate Percentage”)
of available Commitments required to cover such Alternate Currency denominated
Letter of Credit. If the Borrower agrees with the Agreed Alternate Percentage,
the Administrative Agent will circulate to each party to this Agreement a
revised Schedule 2.6.12, setting forth the Agreed Alternate
Currency denominated Letter of Credit to be Issued and the Agreed Alternate
Percentage applicable to such Letter of Credit.

(c) The Administrative Agent will determine the
Dollar Equivalent amount and the Required Commitment Amount on (i) the
Issuance Date with respect to any Issuances of Letters of Credit, (ii) any
date an LC Disbursement is made by an Issuing Lender in an  Offshore Currency or an Agreed Alternate
Currency, (iii) any date on which any Commitments are reduced pursuant to Section 2.2.5
or Section 3.1, (iv) the last Business Day of each calendar
month, (v) any other date that the Administrative Agent, in it sole
discretion determines and (vi) any other day the Borrower requests (each
such date, a “Computation Date”).

(d)  Subject to Section 4.5, if on
any Computation Date the Administrative Agent shall have determined that the
aggregate Credit Exposures exceed the total Commitment Amount, due to a change
in applicable rates of exchange between Dollars and Offshore Currencies, then
the Administrative Agent shall give notice to the Borrower that a prepayment is
required under this Section 2.6.12(d), and the Borrower agrees
thereupon promptly to make prepayments of Loans pursuant to Section 3.1.2
and/or Cash Collateralize LC Exposure pursuant to Section 2.6.13 such
that, after giving effect to such prepayment or Cash Collateralization, the
aggregate Credit Exposures (less the aggregate LC Exposure Cash Collateralized
in accordance with this Section 2.6.12 and Section 2.6.13)
do not exceed the total Commitment Amount.

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SECTION 2.6.13 Cash Collateralization.

(a)  If an Event of Default shall occur and be
continuing and the Borrower receives notice from the Administrative Agent or
the Required Lenders demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall immediately deposit into the LC Collateral
Account an amount in cash equal to the LC Exposure as of such date plus
any accrued and unpaid interest thereon; provided that the Borrower’s
obligation to Cash Collateralize shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other
notice of any kind upon the occurrence of any Event of Default with respect to
the Borrower described in Section 8.1.8.

(b)  If the Borrower is required to Cash
Collateralize Letters of Credit pursuant to Section 2.6.12, the
Borrower shall immediately deposit into the LC Collateral Account the amount
specified in Section 2.6.12.

(c)  If the Borrower is required to Cash
Collateralize Letters of Credit pursuant to Section 3.1.2, the
Borrower shall immediately deposit into the LC Collateral Account the amount
specified in Section 3.1.2.

(d)  Cash Collateralized amounts shall be held by
the Administrative Agent in the first instance for the LC Exposure under this
Agreement and thereafter for the payment of Obligations and, for these
purposes, the Borrower hereby grants a security interest to the Administrative
Agent for the benefit of the Lenders in the LC Collateral Account and in any “financial
assets” (as defined in Section 8-102(a)(9) of the UCC) or other
property held therein.

ARTICLE III

REPAYMENTS, PREPAYMENTS,
INTEREST AND FEES

SECTION 3.1 Repayments and Prepayments. The
Loans shall mature, and the Borrower hereby unconditionally promises to pay in
full the unpaid principal amount and all amounts outstanding and unpaid in
respect of the Loans to the Administrative Agent for the account of each
Lender, on the Maturity Date.

SECTION 3.1.1 Optional Prepayments and Commitment
Reductions. At any time, and from time to time, the Borrower may, on any
Business Day, make a voluntary prepayment or permanent commitment reduction, in
whole or in part, of the outstanding principal amount of the Loans or the
Commitments; provided, however, that:

(a)  any such prepayment or commitment reduction
shall be applied pro  rata among the Lenders in accordance with
the respective unpaid principal amounts of the Loans and Commitments held by
them; provided, that the Commitments shall not be reduced to an amount
that is less than the aggregate Credit Exposures then in effect;

 34
 

 

(b)  any such prepayment or commitment reduction
made shall be applied pro  rata among Loans and Commitments, if
applicable, having the same Interest Period;

(c)  any such prepayment of any LIBO Rate Loan
made on any day other than the last day of the Interest Period for such Loan
shall be subject to the provisions of Section 4.5;

(d)  any such prepayment of LIBO Rate Loans shall
require at least two (2) Business Days’ prior written notice to the
Administrative Agent and any such prepayment of Base Rate Loans may be made on
same day’s written notice to the Administrative Agent; and

(e)  any such partial prepayment of Loans shall
be in an aggregate minimum amount of $5,000,000 and an integral multiple of
$1,000,000 in excess thereof.

SECTION 3.1.2 Mandatory Prepayments.

(a)  Dispositions of Collateral. In the
event (a “Mandatory Prepayment Trigger Event”) that (x) the sum of
Net Cash Proceeds of (i) any Disposition with respect to the Collateral
Parties (and the Subsidiaries of the Collateral Parties) (the “Current
Disposition”), plus (ii) all prior Dispositions with respect to the
Collateral Parties (or a Subsidiary of a Collateral Party) as to which a
prepayment has not yet been made under this paragraph, shall exceed
$100,000,000 and (y) within twelve (12) months after the receipt of Net
Cash Proceeds from the Current Disposition, the Borrower or such Collateral
Party (or a Subsidiary of a Collateral Party) does not apply such Net Cash
Proceeds or any portion thereof to make Investments permitted pursuant to clauses
(d) or (f) of  Section 7.2.3
(or, in the case of Net Cash Proceeds that are not so applied within such
twelve (12) months, the Borrower or such Collateral Party (or a Subsidiary of a
Collateral Party) has not entered into a binding commitment to apply such Net
Cash Proceeds to make such Investments within twelve (12) months thereafter),
then, no later than five (5) Business Days following the 12 month or 24
month anniversary of the Current Disposition, as the case may be, the Borrower
will deliver a Mandatory Prepayment Notice pursuant to, and as defined in, Section 3.1.2(d) with
respect to the related Mandatory Prepayment Amount (as defined in Section 3.1.2(d)).
At the option of any Electing Lender (as defined in Section 3.1.2(d))
electing to receive its portion of the mandatory prepayments and/or Commitment
reductions pursuant to Section 3.1.2(d) with respect to a
Mandatory Prepayment Amount, on the related Mandatory Prepayment Date (as
defined in Section 3.1.2(d)), the Borrower will prepay the Loans
(and/or Cash Collateralize LC Exposure) and/or reduce the Commitments in an
amount equal to the amount elected by each Electing Lender and in the manner
set forth in Section 3.1.2(c).

(b)  Currency Fluctuations. The
Borrower shall, on each date when a prepayment is required pursuant to Section 2.6.12(c),
prepay the Loans (and/or Cash Collateralize LC Exposure) in
the amount specified in Section 2.6.12(d).

(c)  Application. Prepayments and/or
reductions of Commitments pursuant to Section 3.1.2(a) shall
be applied to reduce the aggregate amount of the Commitments (and to the extent
that, after giving effect to such reduction, the total Credit Exposures would
exceed the total Commitments, the Borrower shall, first, prepay Loans and
second, Cash Collateralize LC Exposure in an aggregate amount equal to such
excess).

 35
 

 

(d)  Certain Mandatory Prepayment
Mechanics. No later than five (5) Business Days following a Mandatory
Prepayment Trigger Event, the Borrower will deliver to the Administrative Agent
notice (as to such Mandatory Prepayment Trigger Event, the “Mandatory
Prepayment Notice”), certified by an Authorized Representative of the
Borrower, in form and detail reasonably satisfactory to the Administrative
Agent, of the amount of Net Cash Proceeds of the Current Disposition and of all
such prior Dispositions and any such amounts not reinvested pursuant to Section 3.1.2(a)(y) above
and not otherwise subject to an earlier Mandatory Prepayment Notice (as to such
Mandatory Prepayment Notice, the “Mandatory Prepayment Amount”), which
Mandatory Prepayment Notice shall be irrevocable and shall specify the date on
which the prepayment and/or reductions of Commitments in connection with such
Mandatory Prepayment Trigger Event will be made (as to such Mandatory
Prepayment Notice, the “Mandatory Prepayment Date”) (such date to be no
later than 30 Business Days after the occurrence of such Mandatory Prepayment
Trigger Event). Each Lender electing to receive the mandatory prepayment and/or
Commitment reduction offered in the Mandatory Prepayment Notice shall notify
the Administrative Agent five (5) Business Days prior to the Mandatory
Prepayment Date (the “First Election Date”). Each Lender that does not
notify the Administrative Agent by the First Election Date will be deemed not
to have elected to receive the mandatory prepayment and/or Commitment reduction
specified in the Mandatory Prepayment Notice. Within three
(3) Business Days after the First Election Date, the Administrative
Agent shall furnish notice to the Lenders advising the Lenders of the aggregate
amount of the mandatory prepayments and/or Commitment reductions elected by the
Lenders by the First Election Date (the “First Election Notice”). Each
Lender that elected the mandatory prepayment and/or Commitment reduction by the
First Election Date (such Lender, an “Electing Lender”) may elect to
receive an additional mandatory prepayment and/or Commitment reduction (in
amounts not exceeding such Electing Lender’s ratable share of the excess of (i) the
amount available for mandatory prepayment set forth in the Mandatory Prepayment
Notice over (ii) the amount of mandatory prepayments and/or
Commitment Reductions elected by the Electing Lenders by the First Election
Date set forth in the First Election Notice) by notice to the Administrative
Agent by five (5) Business Days prior to the Mandatory
Prepayment Date (the “Second Election Date”). Each Electing Lender that
does not notify the Administrative Agent by the Second Election Date will be
deemed not to have elected to receive any additional mandatory prepayment
and/or Commitment Reduction. The Administrative Agent shall notify the
Borrower three (3) Business Days prior to the Mandatory Prepayment Date of
each Lender that has elected to receive prepayment and/or Commitment reduction
of its portion of the amount specified in the Mandatory Prepayment Notice based
on each such Lender’s pro rata portion of the Loans and Commitments.

SECTION 3.1.3 Acceleration; Penalty.

(a)  The Borrower shall immediately upon any
acceleration of any Loans pursuant to Section 8.2 or Section 8.3,
repay all Loans, unless, pursuant to Section 8.3, only a portion of
all Loans is so accelerated (in which event the Borrower shall repay the
portion of the Loans so accelerated).

(b)  Each prepayment of Loans made pursuant to Section 3.1
shall be accompanied by accrued interest to the date of such prepayment on the
amount prepaid, but shall be without premium or penalty, except as may be
required by Section 4.5. No prepayment of principal of any Loan
pursuant to Section 3.1.1 or Section 3.1.2(b) shall
cause a reduction in the total Commitment Amount. Prepayment of principal of
any Loan pursuant to Section 3.1.2(a) shall cause a permanent
reduction in such Loan prepaid and the corresponding Commitment.

 36
 

 

SECTION 3.2 Interest Provisions. Interest on
the outstanding principal amount of Loans shall accrue and be payable in
accordance with this Section 3.2.

SECTION 3.2.1 Rates.

(a)  Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the Borrower may elect
that the Loans or a portion of the Loans pursuant to Section 2.3
accrue interest at a rate per annum:

(i) 
on that portion maintained from time to time as a Base Rate Loan, equal to the sum
of the Alternate Base Rate from time to time in effect plus the Base
Rate Applicable Margin from time to time in effect; and

(ii) 
on that portion maintained as a LIBO Rate Loan, during each Interest Period
applicable thereto, equal to the sum of the LIBO Rate for such Interest
Period plus the LIBOR Applicable Margin from time to time in effect.

(b)  All LIBO Rate Loans shall bear interest from
and including the first day of the applicable Interest Period to (but not
including) the last day of such Interest Period at the interest rate determined
as applicable to such LIBO Rate Loan.

SECTION 3.2.2 Default Rates. Upon the
occurrence and during the continuance of any Event of Default, the Borrower
shall pay, but only to the extent permitted by law, in addition to the
applicable Alternate Base Rate or LIBO Rate plus the Applicable Margin
on each such Loan, then payable on the Loans, additional interest (after as
well as before judgment) on the Loans at 2% per annum until such Event of
Default is cured.

SECTION 3.2.3 Payment
Dates. Interest accrued on each Loan shall be payable, without duplication:

(a) 
on the Maturity Date;

(b) 
on the date of any payment or prepayment, in whole or in part, of principal
outstanding on such Loan, provided that upon a payment or prepayment in
part, only the interest accrued on such portion shall be payable;

(c) 
with respect to Base Rate Loans, on each Quarterly Payment Date occurring after
the Effective Date;

(d) 
with respect to LIBO Rate Loans, the last day of each applicable
Interest Period (and, if such Interest Period shall exceed three months, on the
day three months after such Loan is made or continued); and

 37
 

 

(e) 
on that portion of any Loans which is accelerated pursuant to Section 8.2
or Section 8.3, immediately upon such acceleration.

Interest accrued on Loans or other monetary
Obligations after the date such amount is due and payable (whether on the
related Maturity Date, upon acceleration or otherwise) shall be payable upon
demand.

SECTION 3.2.4 Interest Rate Determination. The
Administrative Agent shall determine the interest rate applicable to Loans and
shall give prompt notice to the Borrower and the Lenders of such determination,
and its determination thereof shall be conclusive in the absence of manifest error.

SECTION 3.3  Fees.

SECTION 3.3.1 Commitment Fee. The Borrower
agrees to pay to the Administrative Agent for account of each Lender a
commitment fee, which shall accrue on the average daily unused amount of the
Commitment of such Lender during the period from and including the Effective
Date to but excluding the earlier of the date such Commitment terminates and
the Maturity Date at a rate per annum based on the “Borrower’s Debt Rating” for
such day determined as provided in the Pricing Grid. Accrued commitment fees
shall be payable on each Quarterly Payment Date and on the Maturity Date,
commencing on the first such date to occur after the date hereof. All
commitment fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). For purposes of computing commitment fees, the
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Loans and LC Exposure (as such LC Exposure is adjusted on each
Computation Date) of such Lender.

SECTION 3.3.2 Letter of Credit Fees. The
Borrower agrees to pay (a) to the Administrative Agent for account of each
Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at a rate per annum equal to the LIBOR Applicable
Margin on the average daily amount of such Lender’s LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date on which such Lender’s Commitment terminates and the date on which such
Lender ceases to have any LC Exposure, and (b) to each Issuing Lender a
fronting fee, which shall accrue at the rate of 0.125% per annum (or such
lesser amount as shall have been agreed from time to time between the Borrower
and an Issuing Lender) on the average daily amount of the LC Exposure (as such
LC Exposure is adjusted on each Computation Date) of each such Issuing Lender
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Commitments and the date on which there
ceases to be any LC Exposure, as well as each such Issuing Lender’s standard
fees with respect to the Issuance, of any Letter of Credit or processing of
drawings thereunder. Participation fees and fronting fees accrued through and
including each Quarterly Payment Date shall be payable on such Quarterly
Payment Date, commencing on the first such date to occur after the Effective
Date; provided that all such fees shall be payable on the date on which
the Commitments terminate and any such fees accruing after the date on which
the Commitments terminate shall be payable on demand. Any other fees payable to
an Issuing Lender pursuant to this paragraph shall be payable within ten (10) days
after demand. All participation fees and fronting fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

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SECTION 3.3.3 Other Fees. The Borrower agrees
to pay to the Administrative Agent, for (a) its own account, (b) the
account of each of CGMI, CNAI and UBoC, (c) the account of the Issuing
Lenders and (d) the account of the Lenders, the respective fees as agreed
to in the Fee Letters.

SECTION 3.3.4 Payment of Fees. All fees payable
hereunder shall be paid on the dates due, in immediately available funds, to
the Administrative Agent (or to the Issuing Lenders, in the case of fees
payable to it) for distribution, in the case of facility fees and participation
fees, to the Lenders entitled thereto. Fees paid shall not be refundable under
any circumstances.

ARTICLE IV

CERTAIN LIBO RATE AND
OTHER PROVISIONS

SECTION 4.1 LIBO Rate Lending Unlawful. If any
Lender shall reasonably determine (which determination shall, upon notice
thereof to the Borrower and the Administrative Agent, be conclusive and binding
on the Borrower absent manifest error) that the introduction of or any change
in or in the interpretation of any law, rule or regulation makes it
unlawful, or any central bank or other Governmental Authority or comparable
agency asserts that it is unlawful, for such Lender to make, continue or
maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan, the
obligations of such Lender to make, continue, maintain or convert any such
Loans shall, upon such determination, forthwith be suspended until such Lender
shall notify the Administrative Agent that the circumstances causing such
suspension no longer exist, and all LIBO Rate Loans of such Lender shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.

SECTION 4.2 Inability to Determine Rates. If
the Administrative Agent shall have determined that by reason of circumstances
affecting the Administrative Agent’s relevant market, adequate means do not
exist for ascertaining the interest rate applicable hereunder to LIBO Rate
Loans, then, upon notice from the Administrative Agent to the Borrower and the
Lenders, the obligations of all Lenders under Section 2.3 and Section 2.4
to make or continue any Loans as, or to convert any Loans into, LIBO Rate Loans
shall forthwith be suspended until the Administrative Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist.

SECTION 4.3 Increased LIBO Rate Loan Costs. If
after the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its LIBOR Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall increase the cost to such Lender of, or result in any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans, then the Borrower agrees to pay to the
Administrative Agent for the account of such Lender the amount of any such
increase or reduction. Such Lender shall promptly notify the Administrative
Agent and the Borrower in writing of the occurrence of any such event, such
notice to state, in reasonable detail, the reasons therefor and the additional
amount required to compensate fully such Lender for such increased cost or
reduced amount. Such additional amounts shall be payable by the Borrower
directly to such Lender within ten (10) Business Days of its receipt of
such notice, and such notice shall be binding on the Borrower absent clear and
convincing evidence to the contrary.

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SECTION 4.4 Obligation to Mitigate. Each Lender
agrees that as promptly as practicable after it becomes aware of the occurrence
of an event that would entitle it to give notice pursuant to Section 4.l,
4.3 or 4.6 or to receive additional amounts pursuant to Section 4.7,
and in any event if so requested by the Borrower, such Lender shall use
reasonable efforts to make, fund or maintain its affected Loans through another
lending office if as a result thereof the increased costs would be avoided or
materially reduced or the illegality would thereby cease to exist and if, in
the reasonable opinion of such Lender, the making, funding or maintaining of
such Loans through such other lending office would not in any material respect
be disadvantageous to such Lender, contrary to such Lender’s normal banking
practices or violate any applicable law or regulation. No change by a Lender in
its Domestic Office or LIBOR Office made for such Lender’s convenience shall
result in any increased cost to the Borrower. The Borrower shall not be
obligated to compensate any Lender for the amount of any additional amount
pursuant to Section 4.1, 4.3 or 4.6 accruing prior to
the date which is 90 days before the date on which such Lender first notifies
the Borrower that it intends to claim such compensation; it being understood
that the calculation of the actual amounts may not be possible within such
period and that such Lender may provide such calculation as soon as reasonably
practicable thereafter without affecting or limiting the Borrower’s payment
obligation thereunder. If any Lender demands compensation pursuant to Section 4.1,
4.3 or 4.6 with respect to any LIBO Rate Loan, the Borrower may,
at any time upon at least one Business Day’s prior notice to such Lender
through the Administrative Agent, elect to convert such Loan into a Base Rate
Loan. Thereafter, unless and until such Lender notifies the Borrower that the
circumstances giving rise to such notice no longer apply, all such LIBO Rate
Loans by such Lender shall bear interest as Base Rate Loans, notwithstanding
any prior election by the Borrower to the contrary. If such Lender notifies the
Borrower that the circumstances giving rise to such notice no longer apply, the
Borrower may elect that the principal amount of each such Loan again bear
interest as LIBO Rate Loans in accordance with this Agreement, on the first day
of the next succeeding Interest Period applicable to the related LIBO Rate
Loans of other Lenders. Additionally, the Borrower may, at its option, upon at
least five (5) Business Days’ prior notice to such Lender, elect to prepay
in full, without premium or penalty, such Lender’s affected LIBO Rate Loans. If
the Borrower elects to prepay any Loans pursuant to this Section 4.4,
the Borrower shall pay within ten (10) Business Days after written demand
any additional increased costs of such Lender accruing for the period prior to
such date of prepayment. If such conversion or prepayment is made on a day
other than the last day of the current Interest Period for such affected LIBO
Rate Loans, such Lender shall be entitled to make a request for, and the
Borrower shall pay, compensation under Section 4.5.

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SECTION 4.5 Funding Losses. In the event any
Lender shall incur any loss or expense (including any loss or expense incurred
by reason of the liquidation or redeployment of deposits or other funds
acquired by such Lender to make, continue or maintain any portion of the
principal amount of any Loan as, or to convert any portion of the principal
amount of any Loan into, a LIBO Rate Loan) as a result of:

(a)  any conversion or repayment or prepayment of
the principal amount of any LIBO Rate Loans on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to Section 3.1
or otherwise; or

(b)  any Loans not being continued as, or
converted into, LIBO Rate Loans in accordance with the Continuation/Conversion
Notice therefor;

then, upon the written notice of such Lender to the
Borrower (with a copy to the Administrative Agent), the Borrower shall, within
ten (10) Business Days of its receipt thereof, pay to the Administrative
Agent for the account of such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense. Such
written notice (which shall include calculations in reasonable detail) shall be
binding on the Borrower absent manifest error.

SECTION 4.6 Increased Capital Costs. If after
the date hereof any change in, or the introduction, adoption, effectiveness,
interpretation, reinterpretation or phase-in of, any applicable law or
regulation, directive, guideline, decision or request (whether or not having
the force of law) of any court, central bank, regulator or other Governmental
Authority affects the amount of capital required to be maintained by any Lender
or any Issuing Lender, and such Lender or such Issuing Lender reasonably
determines that the rate of return on its capital as a consequence of its Loans
or participating in issuing or maintaining any Letter of Credits as the case
may be, made by such Lender or such Issuing Lender is reduced in a material
amount to a level below that which such Lender or such Issuing Lender could
have achieved but for the occurrence of any such circumstance, then, in any
such case upon notice from time to time by such Lender or such Issuing Lender
to the Borrower, the Borrower shall pay within ten (10) Business Days
after such demand directly to such Lender or such Issuing Lender additional
amounts sufficient to compensate such Lender or such Issuing Lender for such
reduction in rate of return. A statement of such Lender or such Issuing Lender
as to any such additional amount or amounts (including calculations thereof in
reasonable detail) shall be binding on the Borrower absent manifest error.

SECTION 4.7 Taxes.

(a)  Payments Free of Taxes. Any and all
payments by or on account of any obligation of the Borrower hereunder or under
any other Loan Document shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; provided that if the Borrower
shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent,
Issuing Lender or Lender as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

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(b)  Payment of Other Taxes by the Borrower.
In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(c)  Indemnification by the Borrower. The
Borrower shall indemnify the Administrative Agent, each Issuing Lender and each
Lender, within ten (10) days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) paid by the Administrative Agent, such Issuing Lender or
such Lender, as the case may be, and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender, by an Issuing
Lender or by the Administrative Agent on its own behalf or on behalf of a
Lender or an Issuing Lender, shall be conclusive absent manifest error.

(d)  Evidence of Payments. As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

(e)  Foreign Lenders. Each Lender that is
not a United States Person (a “Non-U.S. Lender”), to the extent
that it is legally able to do so, shall deliver to the Borrower and the
Administrative Agent two copies of U.S. Internal Revenue Service Form W-8ECI,
Form W-8BEN or Form W-8IMY (with supporting
documentation), or any subsequent versions thereof or successors thereto
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on all
payments of interest by the Borrower under the Loan Documents. Such forms shall
be delivered by each Non-U.S. Lender on or before the date it becomes a party
to this Agreement. In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered
by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the
Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).

SECTION 4.8 Payments, Computations. Unless
otherwise expressly provided, all payments by the Borrower pursuant to any Loan
Document shall be made by the Borrower to the Administrative Agent for the pro
rata account of the Lenders entitled to receive such payment. All such
payments required to be made to the Administrative Agent shall be made, without
setoff, deduction or counterclaim, not later than 12:00 Noon, New York
City time, on the date due, in immediately available funds, to such account as
the Administrative Agent shall specify from time to time by notice to the
Borrower; provided that such payment shall be deemed made timely if made
by wire transfer and by such time as an Authorized Representative has advised
the Administrative Agent of the applicable Federal Reserve System wire transfer
confirmation number. Funds received after that time shall be deemed to have been
received by the Administrative Agent on the next succeeding Business Day. The
Administrative Agent shall promptly remit in immediately available funds to
each Lender its share, if any, of such payments received by the Administrative
Agent for the account of such Lender. All interest and fees shall be computed
on the basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which such interest or
fee is payable over a year comprised of 360 days (or, in the case of interest
on a Base Rate Loan, 365 days or, if appropriate, 366 days). Whenever any
payment to be made shall otherwise be due on a day which is not a Business Day,
such payment shall (except as otherwise required by clause (a) of
the definition of the term “Interest Period” with respect to LIBO Rate
Loans) be made on the next succeeding Business Day and such extension of time
shall be included in computing interest and fees, if any, in connection with
such payment.

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SECTION 4.9 Sharing of Payments. If any Lender
shall obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of any Loan or LC Disbursement
(other than pursuant to the terms of Sections 4.3, 4.4, 4.5,
4.6, 4.7 and 4.11) in excess of its pro rata share of
payments then or therewith obtained by all Lenders holding Loans of such type,
such Lender shall purchase from the other Lenders such participations in Loans
and LC Disbursements made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of
the excess payment or other recovery is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and each Lender which has
sold a participation in any Loan or LC Disbursement to the purchasing Lender
shall repay to the purchasing Lender the purchase price to the ratable extent
of such recovery together with an amount equal to such selling Lender’s ratable
share (according to the proportion of (a) the amount of such selling
Lender’s required repayment to the purchasing Lender to (b) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 4.9 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
pursuant to Section 4.10) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.

If under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a setoff to
which this Section 4.9 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.9
to share in the benefits of any recovery on such secured claim.

SECTION 4.10 Setoff. Each of the Lenders and
the Issuing Lenders shall, upon the occurrence of any Event of Default
described in clause (a) or (b) of Section 8.1.8
and, upon the occurrence of any Default described in clauses (c) and
(d) of Section 8.1.8 
or, with the consent of the Required Lenders, upon the occurrence and
continuance beyond the expiration of the applicable grace period, if any, of
any other Event of Default, have the right to appropriate and apply to the
payment of the Obligations owing to it (whether or not then due); provided,
however, that any such appropriation and application shall be subject to
the provisions of Section 4.9.

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Each Lender agrees promptly to notify the Borrower and
the Administrative Agent after any such setoff and application made by such
Lender; provided, however, that the failure to give such notice
shall not affect the validity of such setoff and application.

The rights of each Lender under this Section 4.10
are in addition to other rights and remedies (including other rights of setoff
under applicable law or otherwise) which such Lender may have.

SECTION 4.11 Replacement of Lender. The
Borrower shall be permitted to replace (with one or more replacement Lenders)
any Lender:  (a) that does not
consent to a waiver, amendment or modification pursuant to Section 10.1
that requires a vote of holders of 100% of the Lenders (provided, that,
such replacement Lender consents to such waiver, amendment or modification) or (b) which
requests reimbursement for, or is otherwise entitled to, amounts owing pursuant
to Section 4.1, 4.3, 4.6 or 4.7; provided
that (i) such replacement does not conflict with any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to the Borrower or such Lender or to which
the Borrower or such Lender or any of their respective property is subject, (ii) no
Default, Event of Default or Significant Collateral Party Event shall have
occurred and be continuing at the time of such replacement (other than, in the
case of a replacement predicated upon clause (a) above, the
Default, Event of Default or Significant Collateral Party Event that is the subject
of the vote referred to in clause (a) above), (iii) the
replacement bank or institution shall purchase, at par all Loans and other
amounts owing to such replaced Lender prior to the date of replacement, (iv) the
Borrower shall be liable to such replaced Lender under Section 4.5
if any LIBO Rate Loan owing to such replaced Lender shall be prepaid (or
purchased) other than on the last day of the Interest Period relating thereto, (v) the
replacement Lender shall be reasonably satisfactory to the Administrative Agent
and the Issuing Lenders, (vi) the replaced Lender shall be obligated to
make such replacement in accordance with the provisions of Section 10.11.1
(provided that the Borrower or replacement Lender shall be obligated to
pay the registration and processing fee), (vii) until such time as such
replacement shall be consummated, the Borrower shall pay all additional amounts
(if any) required pursuant to Section 4.1, 4.3, 4.6
or 4.7, as the case may be, (viii) any such replacement shall not
be deemed to be a waiver of any rights which the Borrower, the Administrative
Agent, any Issuing Lender or any other Lender shall have against the replaced
Lender, (ix) if such replacement bank or institution is not already a
Lender, the Borrower shall pay to the Administrative Agent an administrative
fee of $3,500 and (x) in the case of a replacement predicated upon clause (a) above,
for the related vote referred to in clause (a) above, no more
Lenders than Lenders holding 20% or more of the aggregate outstanding principal
amount of the Loans shall be replaced by the Borrower (provided that the
Borrower may replace a single Lender holding greater than 20% of the aggregate
outstanding principal amount of the Loans).

ARTICLE V

CONDITIONS TO LOANS

SECTION 5.1 Conditions to Effectiveness. This
Agreement shall become effective, as between all parties hereto, upon the
satisfaction of each of the conditions precedent set forth in this Section 5.1.

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SECTION 5.1.1 Delivery of Loan Documents. The
Administrative Agent shall have received:

(a)  this Agreement, duly
executed and delivered by an Authorized Representative of the Borrower, with a
counterpart for each Lender party hereto on the Effective Date;

(b)  the Borrower Security
Agreement, duly executed and delivered by an Authorized Representative of the
Borrower;

(c)  the Account Control
Agreement, duly executed and delivered by an Authorized Representative of the
Borrower; and

(d)  the Communications
Agreement, duly executed and delivered by an Authorized Representative of the
Borrower.

SECTION 5.1.2 Officer’s Certificates. The
Administrative Agent shall have received a certificate from an Authorized
Representative of the Borrower (a) certifying that all representations and
warranties made by it in this Agreement and each of the Loan Documents to which
it is a party are true and correct in all material respects on and as of the
Effective Date (except with respect to representations and warranties made as
of a prior specific date) and (b) certifying that no Default or Event of Default,
has occurred and is continuing.

SECTION 5.1.3 Resolutions.
The Administrative Agent shall have received from the Borrower a certificate
dated the Effective Date of its Secretary, Assistant Secretary or Authorized
Representative as to:

(a) 
resolutions of its Board of Directors then in full force and effect authorizing
the execution, delivery and performance of each Loan Document to be executed by
it;

(b) 
the incumbency and signatures of those of its officers and representatives
authorized to act with respect to each Loan Document executed by it; and

(c) 
its Organic Documents.

The Administrative Agent and each Lender may
conclusively rely upon such certificate until it shall have received a further
certificate of the Secretary, Assistant Secretary or other Authorized
Representative of the Borrower canceling or amending such prior certificate.

SECTION 5.1.4 Opinions of Counsel. The
Administrative Agent shall have received opinions, dated the Effective Date and
addressed to the Administrative Agent, the Issuing Lenders and the Lenders,
from Skadden, Arps, Slate, Meagher & Flom LLP and internal counsel to
the Borrower reasonably acceptable to the Administrative Agent, substantially
in the form of Exhibits E-1 and E-2 and given
upon the express instruction of the Borrower.

SECTION 5.1.5 Closing Fees, Expenses. The
Administrative Agent shall have received (a) for the account of the
Existing Lenders with respect to the Existing Credit Agreement, in each case,
all accrued fees through the Effective Date and all fees otherwise payable to
the Existing Lenders pursuant to Section 3.3 of the Existing Credit
Agreement and (b) for its own account, or for the account of each Lender,
as the case may be, all fees due and payable pursuant to Sections 3.3
and 10.3, and all costs and expenses for which invoices have been
presented.

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SECTION 5.1.6 Financial Statements. The
Administrative Agent shall have received:

(a) 
an audited consolidated balance sheet of the Borrower at December 31,
2005;

(b) 
an audited consolidated income statement of the Borrower for the year ended December 31,
2005; and

(c) 
the 10-Q of the Borrower filed with the Securities and Exchange
Commission for the first fiscal quarter of the 2006 fiscal year of the
Borrower.

SECTION 5.1.7 Solvency. The Administrative
Agent shall have received a certificate, in form and substance reasonably
satisfactory to the Administrative Agent, from the chief financial officer or
treasurer of the Borrower to the effect that the Borrower together with its
Subsidiaries, taken as a whole, will be Solvent as of the Effective Date.

SECTION 5.1.8 Repayment of Existing Indebtedness.
The Administrative Agent shall have received satisfactory evidence that the
upon the Effective Date, the Borrower will have repaid in full and terminated
all commitments under the Credit Agreement dated as of April 27, 2004
among the Borrower, the Administrative Agent, the Issuing Lender party thereto
and the lenders referred to therein party thereto, as amended, supplemented,
amended and restated or otherwise in modified and in effect from time to time.

SECTION 5.1.9 Lien Search; Recordings and Filings.

(a)  The Administrative Agent shall have received
results of a recent search by a Person satisfactory to the Administrative Agent
that there are no UCC, judgment or Tax lien filings on any of the assets of the
Borrower in each relevant jurisdiction except for (i) Liens pursuant to
the Loan Documents or permitted by Section 7.2.2 and (ii) Liens to be
discharged on or prior to the Effective Date pursuant to documentation
reasonably satisfactory to the Administrative Agent.

(b)  Arrangements reasonably satisfactory to the
Administrative Agent shall have been made for filing, registration or
recordation of all financing statements and other documents required to be
filed, registered or recorded in order to create, in favor of the
Administrative Agent for the benefit of the Lenders, a perfected, first
priority lien in each office in each jurisdiction in which such filings,
registrations and recordations are required to perfect the security interests
created by the Borrower Security Agreement, and any other action required in
the judgment of the Administrative Agent to perfect such security interests as
such first priority liens.

SECTION 5.1.10 Conditions to Other Financings. The
Administrative Agent shall have received confirmation from an Authorized
Representative of the Borrower that (a) the amendments to the indentures
governing the Borrower’s 10% Senior Notes due August 15, 2008 and 9.875%
Senior Notes due April 15, 2011, as described in the Borrower’s Offer to
Purchase and Consent Solicitation Statement dated May 5, 2006 have become
effective and (b) all of the conditions precedent to the closing and
funding of the EME Notes have been satisfied or waived in accordance with their
respective terms.

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SECTION 5.1.11 Calculation Certificate. The
Administrative Agent shall have received a certificate from an Authorized
Representative of the Borrower calculating the Interest Coverage Ratio for the
immediately preceding four Fiscal Quarters and the Corporate Debt to Corporate
Capital Ratio as of March 31, 2006.

SECTION 5.2 All Credit Extensions. The
obligation of each Lender and each Issuing Lender to make any Credit Extension
(including the initial Credit Extension) shall be subject to the satisfaction
of each of the conditions precedent set forth in this Section 5.2.

SECTION 5.2.1 Representations and Warranties; No
Default. Both before and after giving effect to any Credit Extension (but,
if any Default of the nature referred to in Section 8.1.5 or
Significant Collateral Party Event shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of such Credit Extension), the following statements
shall be true and correct:

(a) 
the representations and warranties set forth in Article VI shall be
true and correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date); and

(b) 
no (i) Default, (ii) Event of Default or (iii) Significant
Collateral Party Event has occurred and is continuing or would result from such
Credit Extension.

SECTION 5.2.2 Borrowing Request. The
Administrative Agent shall have received, in the case of Loans, a Borrowing
Request or, in the case of a Letter of Credit, a Letter of Credit Application
for such Credit Extension. Each of the delivery of a Borrowing Request or
Letter of Credit Application and the acceptance by the Borrower of the proceeds
of such Credit Extension shall constitute a representation and warranty by the
Borrower that on the date of such Credit Extension (both immediately before and
after giving effect to such Credit Extension and the application of the
proceeds thereof) the statements made in Section 5.2.1 are true and
correct.

SECTION 5.2.3 Satisfactory Legal Form. All
documents executed or submitted pursuant hereto by or on behalf of the Borrower
shall be satisfactory in form and substance to the Administrative Agent and its
counsel.

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ARTICLE VI

REPRESENTATIONS AND
WARRANTIES

In order to induce the
Administrative Agent and each Lender to enter into this Agreement and to make
Loans hereunder, the Borrower represents and warrants, with respect to itself
and with respect to the Collateral Parties, unto the Administrative Agent and
each Lender as set forth in this Article VI.

SECTION 6.1 Organization; Power; Compliance with
Law and Contractual Obligations. Each of the Borrower and the Collateral
Parties (and each Subsidiary of a Collateral Party) (a) is a corporation
or limited liability company validly organized and existing and in good
standing under the laws of the state of its incorporation or organization, (b) is
duly qualified to do business and is in good standing as a foreign corporation
or limited liability company in each jurisdiction where the nature of its
business requires such qualification, (c) in the case of the Borrower, has
all requisite corporate or limited liability company power and authority and
holds all material requisite governmental licenses, permits and other approvals
to enter into and perform its Obligations under each Loan Document and to
conduct its business substantially as currently conducted by it and (d) is
in compliance with all laws, governmental regulations (including ERISA and Federal Reserve
regulations), court decrees, orders and Contractual Obligations
applicable to it, except, with respect to clauses (b), (c) and
(d) to the extent that the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

SECTION 6.2 Due
Authorization; Non-Contravention. The execution, delivery and performance
by the Borrower of each Loan Document are within the Borrower’s corporate
powers, have been duly authorized by all necessary corporate action, and do
not:

(a) 
contravene the Borrower’s Organic Documents;

(b) 
contravene any law, governmental regulation, court decree or order or material
Contractual Obligation binding on or affecting the Borrower; or

(c) 
result in, or require the creation or imposition of, any Lien on any of the
Borrower’s properties other than Liens permitted pursuant to Section 7.2.2.

SECTION 6.3 Governmental Approval; Regulation.

(a)  No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
authority or regulatory body (“Governmental Approval”) is required for
the Borrower to execute and perform its obligations under each Loan Document to
which it is a party, except for those which have been duly obtained or effected.
No material Governmental Approval is required for the Borrower and each
Collateral Party (and each Subsidiary of a Collateral Party) to carry on its
business, except for those which have been duly obtained or effected.

 48
 

 

(b)  The Borrower is not subject to any
regulation as an “investment company” subject to the Investment Company Act of
1940, as amended, or subject to regulation under the Public Utility Holding
Company Act of 2005, as amended (“PUHCA”) that would have the effect of
preventing the execution and performance of its obligations under each Loan
Document to which it is a party. The Borrower is not otherwise subject to any
regulation as a “public utility” under any other applicable law, rule or
regulation, which would have a Material Adverse Effect.

SECTION 6.4 Validity. Each Loan Document
constitutes the legal, valid and binding obligation of the Borrower enforceable
in accordance with its respective terms (except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors’ rights generally and general principles of equity).

SECTION 6.5 Financial
Information. The most recent annual and most recent quarterly consolidated
balance sheets of the Borrower and the related consolidated statements of
income and cash flows of the Borrower, copies of which have been furnished to
the Administrative Agent pursuant to Section 5.1.6, or Section 7.1.1(a) or
7.1.1(b), as the case may be, have been prepared in accordance with GAAP
consistently applied, and present fairly in all material respects the
consolidated financial condition of the Borrower and its Subsidiaries as at the
dates thereof and the results of their operations for the periods then ended.

SECTION 6.6 No Material Adverse Change. There
has not occurred any event or condition having a Material Adverse Effect since December 31,
2005.

SECTION 6.7 Litigation. There is no pending or,
to the knowledge of the Borrower, threatened litigation, action, proceeding, or
labor controversy affecting the Borrower or the Collateral Parties (and each
Subsidiary of a Collateral Party), or any of its properties, businesses, assets
or revenues, which, if adversely determined (taking into account any insurance
proceeds payable under a policy where the insurer has accepted coverage without
any reservations), would have a Material Adverse Effect or which purports to
adversely affect the legality, validity or enforceability of this or any Loan
Document.

SECTION 6.8 Ownership of Properties. The
Borrower owns good and marketable title to, or a valid leasehold interest in or
other enforceable interest in all properties and assets, real and personal,
tangible and intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights) purported to be owned,
leased or held by it, free and clear of all Liens, charges or claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 7.2.2.

SECTION 6.9 Taxes. Each of the Borrower and the
Collateral Parties (and each Subsidiary of a Collateral Party) has filed all
tax returns and reports required by law to have been filed by it and has paid
all Taxes thereby shown to be owing, except any such Taxes which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.

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SECTION 6.10 Pension and Welfare Plans. During
the consecutive twelve-month period prior to the date of the execution and
delivery of this Agreement and prior to the date of any Borrowing hereunder, no
steps have been taken to terminate any Pension Plan, and no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA. No condition exists or event or
transaction has occurred with respect to any Pension Plan which could
reasonably be expected to result in the incurrence by the Borrower or any
member of the Controlled Group of any material liability (other than
liabilities incurred in the ordinary course of maintaining the Pension Plan),
fine or penalty. Neither the Borrower nor any member of the Controlled Group
has any contingent liability with respect to any post-retirement benefit under
a Welfare Plan which could reasonably be expected to have a Material Adverse
Effect, other than liability for continuation coverage described in Part 6
of Title I of ERISA.

SECTION 6.11 Environmental Warranties.

(a)  All facilities and property owned or leased
by the Borrower or any of its Subsidiaries or Partnerships have been, and
continue to be, owned or leased by the Borrower and its Subsidiaries in
compliance with all Environmental Laws, except where the failure so to comply
would not have, or be reasonably expected to have, a Material Adverse Effect.

(b)  There are no
pending or, to the knowledge of the Borrower, threatened:

(i) 
claims, complaints, notices or requests for information received by the
Borrower or any of the Collateral Parties (and each Subsidiary of a Collateral
Party) from governmental authorities with respect to any alleged violation by
the Borrower or any of the Collateral Parties (and each Subsidiary of a
Collateral Party) or Joint Enterprises of any Environmental Law that, singly or
in the aggregate, have, or may reasonably be expected to have, a Material
Adverse Effect; or

(ii) 
complaints, notices or inquiries to the Borrower or any of the Collateral
Parties (and each Subsidiary of a Collateral Party) from governmental
authorities regarding potential liability under any Environmental Law that,
singly or in the aggregate, have, or may reasonably be expected to have, a
Material Adverse Effect.

(c)  There have been no Releases (as defined
under any Environmental Law) of Hazardous Materials at, on or under any
property now or previously owned or leased by the Borrower or any of the
Collateral Parties (and each Subsidiary of a Collateral Party) that, singly or
in the aggregate, have, or may reasonably be expected to have, a Material
Adverse Effect.

(d)  The Borrower or each of the Collateral
Parties (and each Subsidiary of a Collateral Party) has obtained and is in
compliance with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary for the Person’s
business, except where the failure to obtain, maintain or comply with such
permits, certificates, approvals, licenses or other authorizations would not
have, or be reasonably expected to have, a Material Adverse Effect.

(e)  To the reasonable knowledge of the Borrower,
no property now or previously owned or leased by each of the Borrower or any of
the Collateral Parties (and each Subsidiary of a Collateral Party) or Joint
Enterprises is listed or proposed for listing (with respect to owned property
only) on the National Priorities List pursuant to any Environmental Law, on the
CERCLIS or on any similar state list of sites requiring investigation or
clean-up.

 50

 

(f)  No conditions exist at, on or under any
property now or previously owned or leased by each of the Borrower or any of
the Collateral Parties (and each Subsidiary of a Collateral Party) which, with
the passage of time, or the giving of notice or both, would give rise to
liability under any Environmental Law which liability would have, or may
reasonably be expected to have, a Material Adverse Effect.

SECTION 6.12 Regulations T, U and X. Neither
the Borrower nor any of the Collateral Parties is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock, and no
proceeds of any Loans will be used for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation T, U or X. Terms for which meanings
are provided in F.R.S. Board Regulation T, U or X or any regulations
substituted therefor, as from time to time in effect, are used in this Section 6.12
with such meanings.

SECTION 6.13 Accuracy of Information. All
material factual information heretofore or contemporaneously furnished by the
Borrower in writing to the Administrative Agent or any Lender for purposes of
or in connection with this Agreement or any transaction contemplated hereby
(other than projections and other “forward-looking” information which have been
prepared on a reasonable basis and in good faith by the Borrower) is, and all other such written factual
information hereafter furnished by the Borrower in writing to the
Administrative Agent or any Lender will be, true and materially accurate
in every material respect on the date as of which such information is dated or
certified and as of the date of execution and delivery of this Agreement by the
Administrative Agent and such Lender, and such information is not, or shall not
be, as the case may be, incomplete by omitting to state any material fact
necessary to make such information not materially misleading.

ARTICLE VII

COVENANTS

SECTION 7.1 Affirmative Covenants. The Borrower
agrees with the Administrative Agent and each Lender that, until all
Commitments have terminated and all Obligations have been paid and performed in
full, the Borrower will, and will cause each of the Collateral Parties and its
Joint Enterprises to perform the obligations set forth in this Section 7.1.

SECTION 7.1.1 Financial Information, Reports,
Notices. The Borrower will furnish, or will cause to be furnished, to the
Administrative Agent copies of the following financial statements, reports,
notices and information:

(a) 
as soon as available and in any event within 60 days after the end of each of
the first three Fiscal Quarters of each Fiscal Year of each of the Borrower,
Midwest and Homer City, consolidated balance sheets of each such Person as of
the end of such Fiscal Quarter and consolidated statements of income and cash
flows of each such Person for such Fiscal Quarter and for the period commencing
at the end of the previous Fiscal Year and ending with the end of such Fiscal
Quarter, certified by an Authorized Representative with responsibility for
financial matters;

 51
 

 

(b) 
as soon as available and in any event within 120 days after the end of each
Fiscal Year of each of the Borrower, Midwest and Homer City, commencing with
the 2006 Fiscal Year of each such Person, a copy of the annual audit report for
such Fiscal Year for each such Person, including therein consolidated balance
sheets of each such Person as of the end of such Fiscal Year and consolidated
statements of income and cash flows of each such Person for such Fiscal Year,
and accompanied by the unqualified opinion of Pricewaterhouse Coopers LLP or
other internationally recognized independent auditors selected by such Person
which report shall state that such consolidated financial statements present
fairly in all material respects the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior
periods;

(c)  concurrently with the
delivery of financial statements of the Borrower referred to in Sections 7.1.1.(a) and
7.1.1 (b), a certificate, executed by the controller, treasurer
or chief financial officer of the Borrower, showing (in reasonable detail and
with appropriate calculations and computations in all respects satisfactory to
the Administrative Agent) compliance with the financial covenants set forth in Section 7.2.9
and Section 7.2.10;

(d) 
as soon as possible and in any event within five (5) Business Days after
any Authorized Representative of the Borrower obtains knowledge of the
occurrence of each Default, a statement of such Authorized Representative setting
forth details of such Default and the action which the Borrower has taken and
proposes to take with respect thereto;

(e) 
as soon as possible and in any event within five (5) Business Days after (x) the
occurrence of any material adverse development with respect to any litigation,
action, proceeding, or labor controversy of the type described in Section 6.7
or (y) the commencement of any labor controversy, litigation, action,
proceeding of the type described in Section 6.7, notice thereof
and, upon request of the Administrative Agent, copies of all non-privileged
documentation relating thereto;

(f) 
promptly after the sending or filing thereof, copies of all reports and
registration statements which the Borrower or any Collateral Party (and
each Subsidiary of a Collateral Party) files with the
Securities and Exchange Commission or any national securities exchange;

(g) 
immediately upon becoming aware of the institution of any steps by the Borrower
or any other Person to terminate any Pension Plan (other than a standard
termination under ERISA Section 4041(b)), or the failure to make a
required contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under Section 302(f) of ERISA, or the taking of any
action with respect to a Pension Plan which could result in the requirement
that the Borrower furnish a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event with respect to any Pension Plan which
could result in the incurrence by the Borrower or any member of the Controlled
Group of any material liability (other than liabilities incurred in the
ordinary course of maintaining the Pension Plan), fine or penalty, or any
increase in the contingent liability of the Borrower with respect to any
post-retirement Welfare Plan benefit which has a Material Adverse Effect,
notice thereof and copies of all documentation relating thereto;

 52
 

 

(h) 
as soon as known, any changes in Borrower’s Debt Rating by Moody’s or S&P
or any other rating agency which maintains a Debt Rating on the Borrower;

(i) 
as soon as known, the occurrence of any Affiliate Bankruptcy Event;

(j)  as soon as possible and in
any event within five (5) Business Days after any Authorized Officer of
the Borrower obtains knowledge of the occurrence of each Significant Collateral
Party Event, a statement of such Authorized Representative setting forth the
details of such Significant Collateral Party Event and a calculation of the
Interest Coverage Ratio on a Pro Forma basis as required by Section 7.2.9;

(k) 
copies of the documents governing Permitted Refinancing Indebtedness of each
Financed Subsidiary referred to in the definition of “Correlative Financing
Provisions” and all amendments, supplements and modifications thereto; and

(l) 
other information reasonably requested by the Administrative Agent.

SECTION 7.1.2 Compliance with Laws. The
Borrower will, and will cause each of the Collateral Parties (and each
Subsidiary of a Collateral Party) and will use reasonable efforts to cause each
of the Joint Enterprises (to the extent consistent with its obligations to
other members of such Joint Enterprise) to, comply in all material respects
with all applicable laws,
rules, regulations and orders, such compliance to include the payment, before
the same become delinquent, of all Taxes imposed upon it or upon its property
(except to the extent non-compliance would
not reasonably be expected to have a Material Adverse Effect and to the extent
that such Taxes are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books); provided that, in the case of each
Financed Enterprise, compliance with the Correlative Financing Provisions shall
be deemed to be compliance by such Financed Enterprise with this Section 7.1.2
(provided that, in the event that the Financed Enterprise shall not be
in compliance with the Correlative Financing Provisions, this Section 7.1.2
will apply to such Financed Enterprise without giving effect to the Correlative
Financing Provision).

SECTION 7.1.3 Maintenance of Properties. The
Borrower will, and will use reasonable efforts to cause each of the Collateral
Parties (and each Subsidiary of a Collateral Party) to, maintain, preserve,
protect and keep its property and equipment in good repair, working order and
condition (ordinary wear and tear excepted), and make necessary and proper
repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times unless the Borrower
determines in good faith that the continued maintenance of any of its
properties or equipment is no longer economically desirable and except where
the failure so to do would not have a Material Adverse Effect; provided
that, in the case of each Financed Enterprise, compliance with the Correlative
Financing Provisions shall be deemed to be compliance by such Financed
Enterprise with this Section 7.1.3 (provided that, in the
event that the Financed Enterprise shall not be in compliance with the
Correlative Financing Provisions, this Section 7.1.3 will apply to
such Financed Enterprise without giving effect to the Correlative Financing
Provision).

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SECTION 7.1.4 Insurance. The Borrower will, and
will cause each of the Collateral Parties (and each Subsidiary of a Collateral
Party) and will use reasonable efforts to cause each of its Joint Enterprises
(to the extent consistent with its obligations to other members of such Joint
Enterprise) to maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and in a similar geographic region.
In the case of each Financed Enterprise, compliance with the Correlative
Financing Provisions shall be deemed to be compliance by such Financed
Enterprise with this Section 7.1.4 (provided that, in the
event that the Financed Enterprise shall not be in compliance with the
Correlative Financing Provisions, this Section 7.1.4 will apply to
such Financed Enterprise without giving effect to the Correlative Financing
Provision).

SECTION 7.1.5 Books and Records. The Borrower
will, and will cause each of the Collateral Parties (and each Subsidiary of a
Collateral Party) to, keep books and records which accurately reflect all of
its business affairs and transactions and permit the Administrative Agent and
each Lender or any of their respective representatives (at the Administrative
Agent’s or such Lender’s expense), at reasonable times and intervals upon
reasonable prior notice, to visit all of the Borrower’s offices, to discuss the
Borrower’s financial matters with its officers and independent public
accountant. The Borrower will at any reasonable time and from time to time upon
reasonable prior notice, permit the Administrative Agent and the Lenders or any
of their respective agents or representatives to examine and make copies of and
abstracts from the records and books of account of the Borrower (at the
Administrative Agent’s or such Lender’s expense); provided that by
virtue of this Section 7.1.5 the Borrower shall not be deemed to
have waived any right to confidential treatment of the informational obtained,
subject to the provisions of applicable law or court order.

SECTION 7.1.6 Environmental
Covenant. The Borrower will, and will use reasonable efforts to cause each
of the Collateral Parties (and each Subsidiary of a Collateral Party) to:

(a) 
use and operate all of its facilities and properties in compliance with all
Environmental Laws, keep all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all Hazardous Materials
in material compliance with all applicable Environmental Laws, in each case
where the failure to do so may reasonably be expected to have a Material
Adverse Effect;

(b) 
promptly cure and have dismissed with prejudice to the reasonable satisfaction
of the Administrative Agent any actions and proceedings relating to compliance
with Environmental Laws where such action or proceeding may reasonably be
expected to have a Material Adverse Effect; provided that the Borrower
or such Collateral Party (or Subsidiary of a Collateral Party) may postpone
such cure and dismissal during any period in which it is diligently pursuing
any available administrative review proceedings, remedial actions or appeals
with respect to such action or proceeding so long as such postponement would
not be reasonably likely to have a Material Adverse Effect; and

 54
 

 

(c) 
provide such non-privileged information as the Administrative Agent may
reasonably request from time to time to evidence compliance with this Section 7.1.6.

SECTION 7.1.7 Conduct of Business and Maintenance
of Existence. The Borrower will, and will cause each of the Collateral
Parties (and each Subsidiary of a Collateral Party) and will use reasonable
efforts to cause each of its Joint Enterprises (to the extent consistent with
its obligations to other members of such Joint Enterprise) to, continue to
engage in business of the same type as now conducted by it and preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain all material rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 7.2.4; provided
that, in the case of each Financed Enterprise, compliance with the Correlative
Financing Provisions shall be deemed to be compliance by such Financed
Enterprise with this Section 7.1.7 (provided that, in the
event that the Financed Enterprise shall not be in compliance with the
Correlative Financing Provisions, this Section 7.1.7 will apply to
such Financed Enterprise without giving effect to the Correlative Financing
Provision).

SECTION 7.1.8 Use of Proceeds. Any proceeds of
Loans will be used, from time to time, for general corporate purposes and
working capital requirements of the Borrower; provided, that if a
Default or Event of Default has occurred and is continuing, the Borrower will
not use such proceeds to make Restricted Payments.

SECTION 7.2 Negative Covenants. The Borrower
agrees with the Administrative Agent and each Lender that, until all
Commitments have terminated and all Obligations have been paid and performed in
full, the Borrower will, and will cause each of the Collateral Parties and each
Subsidiary of a Collateral Party to perform the obligations set forth in this Section 7.2.

SECTION 7.2.1 Restrictions on Indebtedness.

(a)  The Borrower will not create, incur, assume
or suffer to exist any secured Indebtedness other than (i) Capitalized
Lease Liabilities, (ii) other secured Indebtedness of any kind whatsoever
existing on the Effective Date, (iii) Non-Recourse Debt with respect to
which the Borrower has pledged the stock of a Subsidiary in order to secure
initial project financing (or a refinancing of such initial project financing)
obtained or being obtained after the Effective Date hereof by such Subsidiary
(or the Partnership in which such Subsidiary is a partner), (iv) other secured
Indebtedness provided that (when taken together with liens relating to this
Agreement) such liens do not exceed 10% of Consolidated Net Tangible Assets
or (v) Permitted Guarantees.

(b)  The Borrower will not permit the Collateral
Parties (and each Subsidiary of a Collateral Party) and will use reasonable
efforts to not permit its Joint Enterprises (to the extent consistent with such
Collateral Party’s or such Subsidiary of a Collateral Party’s obligations to
other members of such Joint Enterprise) to create, incur, assume or suffer to
exist any Indebtedness other than:

(i)  Indebtedness of the
Collateral Parties, each Subsidiary of a Collateral Party or its Joint
Enterprises of any kind whatsoever existing on the Effective Date;

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(ii)  Permitted Refinancing
Indebtedness;

(iii)  Permitted Intercompany
Indebtedness;

(iv)  interest rate hedging
obligations with respect to Indebtedness of the Borrower, the Collateral
Parties, any Subsidiary of a Collateral Party or any Joint Enterprise; and

(v)  Indebtedness secured by
Liens set forth on Schedule 7.2.1;

provided that, in the case of each
Financed Enterprise, compliance with the Correlative Financing Provisions shall
be deemed to be compliance by such Financed Enterprise with this Section 7.2.1
(provided that, in the event that the Financed Enterprise shall not be
in compliance with the Correlative Financing Provisions, this Section 7.2.1
will apply to such Financed Enterprise without giving effect to the Correlative
Financing Provision).

SECTION 7.2.2 Liens. The Borrower will not, and
will not permit the Collateral Parties (and each Subsidiary of a Collateral Party),
and will use reasonable efforts to not permit its Joint Enterprises (to the
extent consistent with its obligations to other members of such Joint
Enterprise) to, create, incur, assume or suffer to exist any Lien upon any of
its property, revenues or assets, whether now owned or hereafter acquired,
except:

(a) 
any Lien existing on the property of the Borrower, the Collateral
Parties, each Subsidiary of a Collateral Party and each Joint Enterprise on the
Effective Date or Liens securing Permitted Refinancing
Indebtedness of the Borrower, the Collateral Parties, each Subsidiary of a
Collateral Party and each Joint Enterprise; provided however, that the
new Lien shall be limited to all or part of the same property and assets that
secured the Indebtedness being refinanced (plus repairs, improvements and
additions to such property or assets);

(b) 
Liens for Taxes not at the time delinquent or thereafter payable without
penalty or which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books;

(c) 
Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred
in the ordinary course of business for sums not overdue or which are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;

(d) 
Liens incurred in the ordinary course of business in connection with workmen’s
compensation, unemployment insurance or other forms of governmental insurance
or benefits, or to secure performance of tenders, statutory obligations, leases
and contracts (other than for borrowed money) entered into in the ordinary
course of business or to secure obligations on surety or appeal bonds;

(e) 
judgment Liens in existence less than 30 days after the entry thereof or with
respect to which execution has been stayed or the payment of which is covered
in full (subject to a customary deductible) by insurance maintained with
responsible insurance companies;

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(f) 
Liens to secure Indebtedness permitted by clause (a)(iii) or clause
(a)(iv) of Section 7.2.1; and

(g)  Liens on cash and short-term investments (i) deposited
by the Borrower in margin accounts with or on behalf of futures contract
brokers or paid over to other counterparties or (ii) pledged or deposited
as collateral to a contract counterparty or issuer of surety bonds by the
Borrower, in the case of clause (i) or (ii), to secure
obligations with respect to Permitted Trading Activities of the Borrower, its
Subsidiaries or Joint Enterprises;

provided that (i) in the case
of each Financed Enterprise, compliance with the Correlative Financing
Provisions shall be deemed to be compliance by such Financed Enterprise with
this Section 7.2.2 (provided that, in the event that the
Financed Enterprise shall not be in compliance with the Correlative Financing
Provisions, this Section 7.2.2 will apply to such Financed
Enterprise without giving effect to the Correlative Financing Provision) and (ii) notwithstanding
anything to the contrary in this Section 7.2.2, no intercompany
note or other intercompany obligation payable to the Borrower or a Collateral
Party will be pledged, encumbered or otherwise transferred (except as pledged
or encumbered under, and pursuant to, the Borrower Security Agreement).

SECTION 7.2.3 Investments.
The Borrower will not permit any of the Collateral Parties (and each Subsidiary
of a Collateral Party) to, and will use reasonable efforts to not permit its
Joint Enterprises (to the extent consistent with its obligations to other
members of such Joint Enterprise) to, make, incur, assume or suffer to exist
any Investment in any other Person, except:

(a) 
Investments existing on the Effective Date;

(b) 
Cash Equivalent Investments;

(c) 
without duplication, Investments permitted as Indebtedness pursuant to Section 7.2.1;

(d) 
Investments in the Collateral Parties, Subsidiaries of a Collateral Party or
its Joint Enterprises in the ordinary course of business;

(e) 
Investments permitted pursuant to Section 7.2.4(b);

(f) 
Investments in the Collateral Parties, Subsidiaries of a Collateral Party or
its Joint Enterprises that are primarily engaged in the power generation, power
sales or power transmission business; and

(g) 
Permitted Guarantees.

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provided that, in the case of each
Financed Enterprise, compliance with the Correlative Financing Provisions shall
be deemed to be compliance by such Financed Enterprise with this Section 7.2.3
(provided that, in the event that the Financed Enterprise shall not be
in compliance with the Correlative Financing Provisions, this Section 7.2.3
will apply to such Financed Enterprise without giving effect to the Correlative
Financing Provision).

SECTION 7.2.4 Consolidation,
Merger. The Borrower will not, and will not permit any of the Collateral
Parties (and each Subsidiary of a Collateral Party) to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) except:

(a)  any such Collateral Party or Subsidiary
of a Collateral Party may liquidate or dissolve voluntarily into, and may merge
with and into, the Borrower or any other Collateral Party or Subsidiary of a
Collateral Party, and the assets or stock of any Collateral Party or Subsidiary
of a Collateral Party may be purchased or otherwise acquired by the Borrower or
any other Collateral Party or Subsidiary of a Collateral Party;

(b)  so long as no Default or
Significant Collateral Party Event has occurred and
is continuing or would occur after giving effect thereto, the Borrower or any
Collateral Party or Subsidiary of a Collateral Party may purchase all or
substantially all of the assets of any Person, or (in the case of any such
Collateral Party or Subsidiary of a Collateral Party) acquire such person by
merger; and

(c)  so long as no Default or
Significant Collateral Party Event has occurred and
is continuing or would occur after giving effect thereto, the Borrower may
consolidate with or merge into any other Person, or convey, transfer or lease
its properties and assets substantially as an entirety to any person, or permit
any Person to merge into or consolidate with the Borrower if (i) the
Borrower is the surviving corporation or the surviving corporation or purchaser
or lessee is a corporation incorporated under the laws of the United States of
America or Canada and assumes the Obligations and (ii) the
surviving corporation has Debt Ratings equal to or better than the Debt Rating
of the Borrower immediately prior to such consolidation or merger.

SECTION 7.2.5 Asset Dispositions. The Borrower
will not, will not permit the Collateral Parties (and each Subsidiary of a
Collateral Party) to and will use reasonable efforts to not permit its Joint
Enterprises (to the extent consistent with its obligations to other members of
such Joint Enterprise) to, Dispose of, lease, contribute or otherwise convey,
or grant options, warrants or other rights with respect to, all or any
substantial part of its assets (including accounts receivable and capital stock
of Subsidiaries) to any Person, unless:

(a)  such Disposition, lease,
contribution, conveyance or grant is to an unaffiliated third party on an arm’s-length
basis; and

(b) 
at least 75% of the consideration to be received is paid in cash or Cash
Equivalent Investments and such remaining 25% is not a debt instrument of the
Borrower or any of its Affiliates (provided that for purposes of this
provision, (i) any amounts deposited into an escrow or other type of
holdback account and any consideration in the form of readily marketable
securities shall be deemed to be cash, (ii) customary purchase price
adjustments may be settled on a non-cash basis and (iii) the assumption of
Indebtedness relating to the asset being Disposed shall be disregarded for the
purposes of this provision);

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provided that, in the case of each
Financed Enterprise, compliance with the Correlative Financing Provisions shall
be deemed to be compliance by such Financed Enterprise with clauses (a) and
(b) this Section 7.2.5 (provided that, in the event
that the Financed Enterprise shall not be in compliance with the Correlative
Financing Provisions, this Section 7.2.5 will apply to such Financed
Enterprise without giving effect to the Correlative Financing Provision).

SECTION 7.2.6 Transactions with Affiliates. The
Borrower will not enter into, or cause, suffer or permit to exist any
arrangement or contract with any of its Affiliates unless such arrangement or
contract is fair and equitable to the Borrower and is an arrangement or
contract of the kind which would be entered into by a prudent Person in the
position of the Borrower with a Person which is not one of its Affiliates; provided
that, (a) the Leveraged Lease Transaction and the Leveraged Lease Basic
Documents and (b) any other arrangement or contract between the Borrower
and any of its Affiliates existing on the Effective Date shall be deemed not to
be contracts or arrangements with an Affiliate for the purposes of this Section 7.2.6;
provided  further that, procurement, sales and trading
transactions between the Borrower and EMMT or any other Affiliate engaged in
the business of marketing and trading fuel, emissions credits, electric
generation or any transaction related thereto, in each case, shall be deemed
not to be a Transaction with an Affiliate for the purposes of this Section 7.2.6.

SECTION 7.2.7 Restricted Payments. The Borrower
will not, and will not permit the Collateral Parties, to make a Restricted
Payment if an Event of Default has occurred and is continuing after giving
effect to such Restricted Payment.

SECTION 7.2.8 Restrictive Agreements. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any agreement (excluding any Loan Document) prohibiting:

(a) 
the ability of the Borrower to amend or otherwise modify any Loan Document; or

(b)  the ability of any Collateral Party or
Subsidiary of a Collateral Party to make any payments, directly or indirectly,
to the Borrower by way of dividend, advances, repayments of loans or advances,
reimbursements of management and other intercompany charges, expenses and
accruals or other returns on investments (“Subsidiary Payments”), or any
other agreement or arrangement which restricts the ability of any such
Collateral Party or Subsidiary of a Collateral Party to make any payment,
directly or indirectly, to the Borrower where such prohibition or restriction
has a Material Adverse Effect.

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The restriction set forth in clause (b) above
shall not apply to prohibitions or restrictions on Subsidiary Payments directly
or indirectly to the Borrower set forth in any agreement entered into in
connection with a refinancing of any Indebtedness of the Borrower or any of the
Collateral Parties (and each Subsidiary of a Collateral Party) (each such
agreement entered into after the Effective Date, a “Restrictive Financing
Document”) if, prior to entering into such Restrictive Financing Document,
the Borrower shall have delivered to the Administrative Agent:  (A) a certificate of an Authorized
Representative stating that the projected financial or coverage ratios of the
affected Person as calculated on the basis of the pro forma financials prepared
in good faith on the basis of reasonable assumptions in connection with, and
after giving effect to, the transactions contemplated by such Restrictive
Financing Document will, during the remaining life to maturity of the
Obligations, equal or exceed the financial or coverage ratios, if any, required
for the affected Person to make any Subsidiary Payments directly or indirectly
to the Borrower in accordance with such Restrictive Financing Document; or (B) letters
from Moody’s and S&P confirming the then current Debt Rating.

SECTION 7.2.9 Interest Coverage. The Borrower
will (a) at the end of each of its Fiscal Quarters and (b) after the
occurrence of any Significant Collateral Party Event (after recalculating the
Interest Coverage Ratio give Pro Forma effect to each Significant Collateral
Party Event that has occurred and continuing), maintain an Interest Coverage
Ratio for the immediately preceding four consecutive Fiscal Quarters of the
Borrower of not less than 1.2 to 1.00; provided, that, at any time the
Administrative Agent receives notice from the Borrower (or otherwise becomes
aware) that any such Significant Collateral Party Event is no longer continuing
or as directed by the Required Lenders, the Interest Coverage Ratio shall be
recalculated giving Pro Forma effect to such Significant Collateral Party Event
no longer continuing.

SECTION 7.2.10 Corporate Debt to Corporate Capital
Ratio. The Borrower will at the end of each of its Fiscal Quarters maintain
a Corporate Debt to Corporate Capital Ratio of not more than 0.75 to 1.00.

SECTION 7.2.11 ERISA. The Borrower will not
engage in any prohibited transactions under Section 406 of ERISA or under Section 4975
of the Internal Revenue Code, which would subject the Borrower to any tax,
penalty or other liabilities having a Material Adverse Effect.

ARTICLE VIII

EVENTS OF DEFAULT

SECTION 8.1 Listing of Events of Default. Each
of the following events or occurrences described in this Section 8.1
shall constitute an “Event of Default”.

SECTION 8.1.1 Non-Payment of Obligations. (a) The Borrower shall default in
the payment when due of principal of any
Loan or LC Exposure or the Borrower shall
fail to Cash Collateralize its LC Exposure when due or (b) the Borrower shall default (and
such default shall continue unremedied for a period of five (5) Business
Days) in the payment when due of interest
on any Loan or LC Exposure, any fees pursuant to Section 3.3
or of any other Obligation.

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SECTION 8.1.2 Breach of Warranty. Any
representation or warranty of the Borrower made or deemed to be restated or
remade in any Loan Document or any other writing or certificate furnished by or
on behalf of the Borrower to the Administrative Agent or any Lender for the
purposes of or in connection with any Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made
or deemed made in any material respect.

SECTION 8.1.3 Non-Performance of Certain Covenants
and Obligations. The Borrower shall default in the due performance and
observance of any of its obligations under Section 7.2 (other than Sections 7.2.3
and 7.2.6).

SECTION 8.1.4 Non-Performance of Other Covenants
and Obligations. The Borrower shall default in the due performance and
observance of any other covenant or agreement contained in any Loan Document,
and such default shall continue unremedied for a period of 30 days after
written notice thereof shall have been given to the Borrower by the Administrative
Agent.

SECTION 8.1.5 Default on Other Indebtedness. A
default shall occur in the payment when due (subject to any applicable grace
period), whether by acceleration or otherwise, of any Indebtedness of the
Borrower or a default shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness if the effect of such
default is to accelerate the maturity of any such Indebtedness or such default
shall continue unremedied for any applicable period of time sufficient to
permit the holder or holders of such Indebtedness, or any trustee or agent for
such holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity, in either case, such Indebtedness having a principal amount, individually or in the
aggregate, in excess of $20,000,000 (other than Indebtedness described in Section 8.1.1).

SECTION 8.1.6 Judgments. Any judgment or order
for the payment of money in excess of $20,000,000 (taking into account any
insurance proceeds payable under a policy where the insurer has accepted
coverage without reservation) shall be rendered against the Borrower, a
Collateral Party or a Subsidiary of a Collateral Party and either:

(a) 
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order; or

(b) 
there shall be any period of ninety (90)
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect.

provided that, with respect to any
of the Westside Entities, none of the events described in clauses (a) and
(b) shall constitute a Default or an Event of Default unless such
event has a Material Adverse Effect.

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SECTION 8.1.7 Pension
Plans. Any of the following events shall occur with respect to any Pension
Plan:

(a) 
the institution of any steps by the Borrower, any member of its Controlled
Group or any other Person to terminate a Pension Plan if, as a result of such
termination, the Borrower or any such member could be required to make a contribution
to such Pension Plan, or would reasonably expect to incur a liability or
obligation to such Pension Plan, in excess of $20,000,000; or

(b) 
a contribution failure occurs with respect to any Pension Plan sufficient to
give rise to a Lien under Section 302(f) of ERISA.

SECTION 8.1.8 Bankruptcy,
Insolvency. The Borrower, a Collateral Party or a Subsidiary of a
Collateral Party shall:

(a) 
become insolvent or generally fail to pay, or admit in writing its inability or
unwillingness to pay, debts as they become due;

(b) 
apply for, consent to, or acquiesce in, the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower, a Collateral Party or
a Subsidiary of a Collateral Party or a substantial
portion of its property, or make a general assignment for the benefit of
creditors;

(c) 
in the absence of such application, consent or acquiescence, permit or suffer
to exist the appointment of a trustee, receiver, sequestration or other
custodian for the Borrower, a Collateral Party or a Subsidiary of a
Collateral Party or for a substantial part of its property, and
such trustee, receiver, sequestration or other custodian shall not be
discharged within 60 days, provided that nothing in the Loan Documents
shall prohibit or restrict any right the Administrative Agent or any Lender may
have under applicable law to appear in any court conducting any relevant
proceeding during such 60-day period to preserve, protect and defend its
rights under the Loan Documents (and the Borrower, a Collateral Party or
a Subsidiary of a Collateral Party, as applicable, shall not object
to any such appearance);

(d) 
permit or suffer to exist the commencement of any bankruptcy, reorganization,
debt arrangement or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution, winding up or liquidation proceeding, in respect of
the Borrower, a Collateral Party or a Subsidiary of a Collateral Party,
and, if any such case or proceeding is not commenced by the Borrower, a
Collateral Party or a Subsidiary of a Collateral Party, such case or
proceeding shall be consented to or acquiesced in by the Borrower, a
Collateral Party or a Subsidiary of a Collateral Party or shall result
in the entry of an order for relief or shall remain for 60 days undismissed, provided
that nothing in the Loan Documents shall prohibit or restrict any right the
Administrative Agent or any Lender may have under applicable law to appear in
any court conducting any such case or proceeding during such 60-day
period to preserve, protect and defend its rights under the Loan Documents (and
the Borrower, a Collateral Party or a Subsidiary of a Collateral Party
shall not object to any such appearance); or

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(e) 
take any corporate action authorizing, or in furtherance of, any of the foregoing;

provided that, with respect to any
Collateral Party or Subsidiary of a Collateral Party (except for Midwest and
Homer City), none of the events described in clauses (a) through (e) shall
constitute a Default or an Event of Default unless such event has a Material
Adverse Effect.

SECTION 8.1.9 Substantive Consolidation. In
connection with an Affiliate Bankruptcy Event, any Person shall seek (whether
by adversarial proceeding, motion or otherwise) the substantive consolidation
of any part of the assets, properties, estate or liabilities of the Borrower
with the estate or liabilities of any Person subject of such Affiliate
Bankruptcy Event and such application shall be consented to or acquiesced in by
the Borrower or shall result in an order for such substantive consolidation or
shall remain for 60 days undismissed, provided that nothing in the Loan
Documents shall prohibit or restrict any right the Administrative Agent or any
Lender may have under applicable law to appear in any court conducting any such
case or proceeding during such 60-day period to preserve, protect and
defend its rights under the Loan Documents (and the Borrower shall not object
to any such appearance).

SECTION
8.1.10 Unenforceability
of Documents.
(a) Any of the Loan Documents shall become
unenforceable or the enforceability thereof shall be contested by the Borrower
or (b) any Liens against any of the Collateral shall cease to be a first
priority, perfected security interest in favor of the Administrative Agent or
the enforceability thereof shall be contested by the Borrower or (c) the
Borrower or any Affiliate shall enter into any agreements prohibiting the
Borrower to amend or otherwise modify the Loan Documents.

SECTION 8.2 Action if Bankruptcy. If any Event
of Default described in clauses (a) through (e) of
Section 8.1.8 shall occur with respect to the Borrower, the
Commitments (if not theretofore terminated) shall automatically terminate and
the outstanding principal amount of all outstanding Loans and all other
monetary Obligations shall automatically be and become immediately due and
payable, without notice or demand.

SECTION 8.3 Action if Other Event of Default. If
any Event of Default (other than any Event of Default described in clauses (a) through
(e) of Section 8.1.8 with respect to the Borrower)
shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by written notice to the Borrower declare all or any portion of
the outstanding principal amount of the Loans and other monetary Obligations to
be due and payable and/or the Commitments (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment
and/or, as the case may be, the Commitments shall terminate. The rights
provided for in the Loan Documents are cumulative and are not exclusive of any
other rights, powers, privileges or remedies provided by law or in equity, or
under any other instrument, document or agreement now existing or hereafter
arising.

SECTION 8.4 Rescission of Declaration. Any
declaration made pursuant to Section 8.3 may, should the Required
Lenders in their sole and absolute discretion so elect, be rescinded by written
notice to the Borrower at any time after the principal of the Loan shall have
become due and payable, but before any judgment or decree for the payment of
the monies so due, or any part thereof, shall have been entered; provided
that the Borrower shall have paid all arrears of interest upon the Loans and
all other amounts then owed to the Administrative Agent and the Lenders
including all costs, expenses and liabilities incurred by the Administrative
Agent and the Lenders in respect of such declaration and all consequences
thereof (except the principal of the Loans which by such declaration shall have
become payable) and every other Event of Default shall have been made good,
waived or cured; provided that no such rescission or annulment shall
extend to or affect any subsequent Event of Default or impair any right
consequent thereon.

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ARTICLE IX

THE ADMINISTRATIVE AGENT

SECTION 9.1 Actions.

(a)  Each Lender and each Issuing Lender hereby
appoints CNAI as its Administrative Agent under and for purposes of each Loan
Document. Each Lender and each Issuing Lender authorizes the Administrative
Agent to act on its behalf under each Loan Document and, in the absence of
other written instructions from the Required Lenders received from time to time
by the Administrative Agent (with respect to which the Administrative Agent
agrees that it will comply, except as otherwise provided in this Section or
as otherwise advised by counsel), to exercise such powers hereunder and
thereunder as are specifically delegated to or required of the Administrative
Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in any Loan Document, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Issuing Lender or any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into any Loan Document or otherwise exist against the Administrative Agent. Without
limiting the generality of the foregoing sentence, the use of the term “agent”
in this Agreement with reference to the Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.

(b)  Each Lender hereby agrees to indemnify
(which indemnity shall survive any termination of this Agreement) the
Agent-Related Persons pro  rata according to such Lender’s
Percentage, from and against any and all liabilities, obligations, losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may
at any time be imposed on, incurred by, or asserted against, the Agent-Related
Persons in any way relating to or arising out of any Loan Document, including
reasonable attorneys’ fees, and as to which the Administrative Agent is not
reimbursed by the Borrower; provided, however, that no Lender
shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, claims, costs or expenses which are determined by
a court of competent jurisdiction in a final proceeding to have resulted from
the Agent-Related Person’s gross negligence or willful misconduct. No
Agent-Related Persons shall be required to take any action under any Loan
Document, or to prosecute or defend any suit in respect of or any Loan
Document, unless it is indemnified hereunder to its satisfaction. If any
indemnity in favor of the Administrative Agent shall be or become, in its
determination, inadequate, the Agent-Related Person may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.

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SECTION 9.2 Funding Reliance. Unless the
Administrative Agent shall have been notified by telephone, confirmed in
writing, by any Lender by 12:00 Noon, New York City time, on the Business
Day prior to the Effective Date that such Lender will not make available the
amount which would constitute its Percentage of the Borrowing on the Effective
Date, the Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent and, in reliance upon such assumption,
may, but shall not be required to, make available to the Borrower a
corresponding amount. If and to the extent that such Lender shall not have made
such amount available to the Administrative Agent, such Lender and the Borrower
severally agree to repay the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Administrative Agent made such amount available to the Borrower to the date
such amount is repaid to the Administrative Agent, at the interest rate
applicable at the time to Loans comprising such Borrowing; provided that
if such Lender makes available the amount which is its Percentage of the
Borrowing on or before the next Business Day following the day when due, the
interest rate payable on such amount shall be the Federal Funds Effective Rate.

SECTION 9.3 Exculpation. No Agent-Related
Person shall be liable to any Lender for any action taken or omitted to be
taken by it under or any Loan Document, or in connection therewith, except for
its own willful misconduct or gross negligence, nor responsible for any
recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of any Loan Document, nor to make any
inquiry respecting the performance by the Borrower of its obligations under any
Loan Document. Any such inquiry which may be made by the Administrative Agent
shall not obligate it to make any further inquiry or to take any action. Each
Agent-Related Person shall be entitled to rely upon advice of counsel
concerning legal matters and upon any notice, consent, certificate, statement
or writing which the Administrative Agent believes to be genuine and to have
been presented by a proper Person.

SECTION 9.4 Successor. The Administrative Agent
may resign as such at any time upon at least 30 days’ prior notice to the
Borrower, all Lenders and all Issuing Lenders. If the Administrative Agent at
any time shall resign, the Required Lenders may, within ten days after such
notice and with the consent of the Borrower (not to be unreasonably withheld),
appoint another Lender as a successor Administrative Agent which shall
thereupon become the Administrative Agent hereunder. If no successor Administrative
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent’s giving notice of resignation, then the retiring Administrative Agent
may, on behalf of the Lenders, after notice to and consultation with the
Borrower, appoint a successor Administrative Agent, which shall be one of the
Lenders or an Assignee, and shall have a combined capital and surplus of at
least $250,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall be entitled to receive from the retiring
Administrative Agent such documents of transfer and assignment as such
successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under this Agreement. After the
effective date of any retiring Administrative Agent’s resignation hereunder as
the Administrative Agent, the provisions of (a) this Article IX
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Administrative Agent under this Agreement; and (b) Section 10.3
and Section 10.4 shall continue to inure to its benefit.

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SECTION 9.5 Loans by CNAI. CNAI shall have the
same rights and powers with respect to the Loans made by it or any of its
Affiliates as any other Lender and may exercise the same as if it were not the
Administrative Agent. CNAI and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with the Borrower or any
Subsidiary or Affiliate of the Borrower as if CNAI were not the Administrative
Agent hereunder.

SECTION 9.6 Reliance by Administrative Agent.

(a)  The Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Borrower or any of its Affiliates), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under any
Loan Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under any Loan Document in
accordance with a request or consent of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.

(b)  For purposes of determining compliance with
the conditions specified in Section 5.1, each Lender that has
executed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter either sent by
the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction,
or required thereunder to be consented to or approved by or acceptable or
satisfactory to the Lender.

SECTION 9.7 Notice of Default. The
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default, Event of Default or Significant Collateral Party
Event, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Lenders, unless the Administrative Agent shall have received written notice
from a Lender or the Borrower referring to this Agreement, describing such
Default, Event of Default or Significant Collateral Party Event and stating
that such notice is a “notice of default”. The Administrative Agent will notify
the Lenders of its receipt of any such notice. The Administrative Agent shall
take such action with respect to such Default, Event of Default as may be
requested by the Required Lenders in accordance with Article VIII; provided,
however, that unless and until the Administrative Agent has received any
such request, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable or in the best interest of the
Lenders.

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SECTION 9.8 Credit Decisions. Each Lender
acknowledges that it has, independently of the Agent-Related Person and each
other Lender, and based on such Lender’s review of the financial information of
the Borrower, the Loan Documents (the terms and provisions of which being
satisfactory to such Lender) and such other documents, information and
investigations as such Lender has deemed appropriate, made its own credit
decision to extend its Commitments. Each Lender also acknowledges that it will,
independently of the Administrative Agent and each other Lender, and based on
such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under any Loan Document.

SECTION 9.9 Copies. The Administrative Agent
shall give prompt notice to each Lender of each notice or request required or
permitted to be given to the Administrative Agent by the Borrower pursuant to
the terms of this Agreement (unless concurrently delivered to the Lenders by
the Borrower). The Administrative Agent will distribute to each Lender each
document or instrument (including each document or instrument delivered by the
Borrower to the Administrative Agent pursuant to Articles V and VII)
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.

SECTION 9.10 Collateral. Except as otherwise
provided in Section 10.1(a) with respect to this Agreement,
the Administrative Agent may, with the prior consent of the Required Lenders
(but not otherwise), consent to any modification, supplement or waiver under
any of the Loan Documents to which it is a party; provided that, without
the prior consent of each Lender, the Administrative Agent shall not (except as
provided herein or in the Borrower Security Agreement) release any Collateral
or otherwise terminate any Lien under the Borrower Security Agreement, agree to
additional obligations being secured by the Collateral (unless the Lien for
such additional obligations shall be junior to the Lien in favor of the other
obligations secured by the Borrower Security Agreement, in which event the
Administrative Agent may consent to such junior Lien, provided that it
obtains the consent of the Required Lenders thereto), alter the relative
priorities of the obligations entitled to the benefits of the Liens created
under the Borrower Security Agreement, except that no such consent shall be
required, and the Administrative Agent is hereby authorized, to release any
Lien covering property that is the subject of either a disposition of property
permitted hereunder or a disposition to which the Required Lenders have
consented.

SECTION 9.11 Joint Lead Arrangers, Joint
Bookrunners, Syndication Agent and Co-Documentation Agents. Notwithstanding
anything herein to the contrary, the Joint Lead Arrangers, the Joint
Bookrunners, the Syndication Agent and the Co-Documentation Agents named on the
cover page of this Agreement shall not have any duties or liabilities
under this Agreement, except in their capacity, if any, as Lenders or Issuing
Lenders.

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ARTICLE X

MISCELLANEOUS PROVISIONS

SECTION 10.1 Waivers, Amendments.

(a)  The provisions of each Loan Document may
from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by the Borrower and the
Required Lenders; provided, however, that no such amendment,
modification or waiver shall (i) forgive or reduce the principal amount or
extend the final scheduled date of maturity of any Loan or LC Disbursement,
reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof, or increase the amount or extend the
expiration date of any Lender’s Commitment without the consent of each Lender
directly affected thereby; (ii) amend, modify or waive any provision of
this Section 10.1, or any percentage specified in the definition of
“Required Lenders”, or consent to the assignment or transfer by the Borrower of
any of its rights and obligations under the Loan Documents, in each case
without the written consent of all Lenders; (iii) amend, modify or waive
any pro  rata provision of Section 4.8 or 4.9,
or any provision in the Loan Documents which provides for amounts paid in
respect of the Obligations to be shared among the Lenders ratably, without the
consent of all Lenders; (iv) except as provided in Section 9.10,
provide for any material release of Collateral without the consent of all
Lenders; or affect the interests, rights or obligations of the Administrative
Agent qua the Administrative Agent or the Issuing Lenders qua the
Issuing Lenders shall be made without consent of the Administrative Agent or
the Issuing Lenders, as the case may be. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Borrower, the Lenders, the Administrative
Agent, the Issuing Lenders and all future holders of the Loans. In the case of
any waiver, the Borrower and its Subsidiaries, the Lenders and the
Administrative Agent shall be restored to their former position and rights and
under the Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.

(b)  No failure or delay by the Administrative
Agent, any Issuing Lender or any Lender in exercising any power or right under
any Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right, or any abandonment or
discontinuance of steps to enforce such power or right, preclude any other or
further exercise thereof or the exercise of any other power or right. The
rights and remedies of the Administrative Agent, the Issuing Lenders and the
Lenders hereunder are cumulative and are not exclusive of any rights or
remedies they would otherwise have. No notice to or demand on the Borrower in
any case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by the Administrative Agent, any Issuing
Lender, or any Lender under any Loan Document shall, in any event, be effective
unless the same is permitted by paragraph (a) of this Section 10.1,
and 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.

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SECTION 10.2 Notices. All notices and other
communications provided to any party hereto under any Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party
at its address or facsimile number set forth on the signature pages hereof
or Schedule 1.1(b) or set forth in the Assignment Agreement or
at such other address or facsimile number as may be designated by such party in
a written notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid shall be effective five (5) Business Days
after being sent or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by facsimile,
shall be deemed given when transmitted (if confirmed). Each Lender acknowledges
and accepts the terms of the Communications Agreement and agrees that
Communications (as defined in the Communications Agreement) may be made
available to such Lender as provided in the Communications Agreement.

SECTION 10.3 Payment of Costs and Expenses.

(a)  The Borrower agrees to pay promptly on
demand all reasonable out-of-pocket costs and expenses of the Administrative
Agent and the Issuing Lenders and their respective Affiliates (including the
reasonable fees and out-of-pocket costs and expenses of special New York
counsel and relevant local counsel to the Administrative Agent) in connection
with:

(i) 
the negotiation, preparation, execution, delivery and administration of each
Loan Document, including schedules and exhibits, and any amendments, waivers,
consents, supplements or other modifications to any Loan Document as may from
time to time hereafter be required;

(ii) 
the preparation and review of the form of any document or instrument relevant
to any Loan Document; provided, however, that the Borrower shall
have no obligation to pay for the cost of the documentation of assignments or
participations as provided in Section 10.11 (unless such assignment
is made pursuant to Section 4.11); and

(iii) 
in the case of the Issuing Lenders, all out-of-pocket expenses incurred by any
Issuing Lender in connection with the Issuance of any Letter of Credit or any
demand for payment thereunder;

in each case, upon presentation of statement of
account in reasonable detail, whether or not the transactions contemplated
hereby are consummated.

(b)  Without duplication of the Borrower’s
obligations under Section 4.7, the Borrower further agrees to pay
upon demand, and to save the Administrative Agent, the Issuing Lenders and the
Lenders harmless from all liability for all costs, expenses, assessments, or other
charges, and any stamp or other similar Taxes which may be payable in
connection with the execution, delivery or enforcement of any Loan Document,
the Loans or any Letter of Credit hereunder or any filing, registration,
recording or perfection of any security interest contemplated by the Borrower
Security Agreement. The Borrower also agrees to reimburse the Administrative
Agent, each Issuing Lender and each Lender, as applicable, promptly upon demand
upon presentation of a statement of account in reasonable detail for (i) all
reasonable out-of-pocket costs and expenses (including fees and out-of-pocket
expenses of counsel) incurred by the Administrative Agent, each Issuing Lender
and each Lender in connection with the enforcement or protection of the rights
in connection with this Agreement and the other Loan Documents, including its
rights under this Section and including the negotiation of any
restructuring or work-out, whether or not consummated, of any Obligations and (ii) all
out-of-pocket costs and expenses (including fees and out-of-pocket costs and
expenses of counsel) by the Administrative Agent, each Issuing Lender and each
Lender in connection with the enforcement of any Obligations after an Event of
Default or in connection with any insolvency proceedings; provided that,
in either case, the Borrower shall not be obligated to reimburse such costs and
expenses that are found in a final judgment by a court of competent
jurisdiction to have been incurred in an attempt to enforce such rights and remedies
that were pursued by such Administrative Agent or Lender in bad faith and
without any reasonable basis in fact or law.

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SECTION 10.4 Indemnification.

(a)  In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments
and the Loans, the Borrower hereby indemnifies, exonerates and holds the
Administrative Agent, each Issuing Lender and each Lender and each of their
respective Affiliates, officers, directors and employees (collectively, the “Indemnified
Parties”) free and harmless from and against any and all losses, costs,
actions, causes of action, suits, liabilities and damages, and expenses
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
including any amounts paid to any Agent-Related Person pursuant to Section 9.1(b) and
reasonable attorneys’ fees and disbursements but excluding claims for lost
profits (collectively, the “Indemnified Liabilities”), joint or several,
that may be incurred by or asserted or awarded against any Indemnified Party,
in each case arising out of or in connection with or relating to:

(i) 
any transaction financed or to be financed in whole or in part, directly or indirectly,
with the proceeds of any Loan or Letter of Credit (including any refusal by any
Issuing Lender to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit;

(ii) 
the entering into and performance of any Loan Document by any of the
Indemnified Parties (including any action brought by or on behalf of the
Borrower as the result of any determination by the Required Lenders pursuant to
Article VI not to fund any Loan);

(iii) 
any investigation, litigation, proceeding, or obligation related to any
Environmental Law or other matter in any case arising out of the relationship
of the parties under this Agreement; or

(iv) 
the presence, or alleged presence, on or under, or the escape, seepage,
leakage, spillage, discharge, emission or release from, any real property
owned, leased or operated by the Borrower or any of its Subsidiaries thereof of
any Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law), or
at any other locations regardless of whether caused by, or within the control
of the Borrower, where such claim or liability arises out of the relationship
of the parties under this Agreement;

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whether or not such investigation, litigation or
proceeding is brought by the Borrower or its Affiliates, any of their
respective shareholders or creditors, an Indemnified Party or any other person,
or an Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated, except for any such
Indemnified Liabilities arising for the account of a particular Indemnified
Party by reason of the relevant Indemnified Party’s (A) gross negligence
or willful misconduct or (B) breach of such Indemnified party’s
obligations under this Agreement. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.

(b)  To the extent permitted by applicable law,
no Indemnified Party shall have any liability to the Borrower or its Affiliates
or any of their respective shareholders or creditors under any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, any Loan
or the use of the proceeds thereof.

SECTION 10.5 Survival. The obligations of the
Borrower under Sections 2.6.7, 4.3, 4.5, 4.6, 4.7,
10.3 and 10.4, and the obligations of the Lenders under Sections 9.1
and 2.6.7, shall in each case survive any termination of this Agreement,
the payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by the Borrower in each Loan Document to
which it is a party shall survive the execution and delivery of such Loan
Document.

SECTION 10.6 Severability. Any provision of any
Loan Document 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 such Loan Document or affecting the validity or enforceability of
such provision in any other jurisdiction.

SECTION 10.7 Headings. The various headings and
table of contents of each Loan Document are inserted for convenience only and
shall not affect the meaning, construction or interpretation of this Agreement
or any other Loan Document or any provisions hereof or thereof.

SECTION 10.8 Execution in Counterparts. This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be executed by the Borrower and the Administrative Agent and be
deemed to be an original and all of which shall constitute together but one and
the same agreement.

SECTION 10.9 Governing Law; Entire Agreement. This
Agreement, and the rights and obligations of the parties under this Agreement,
shall be governed by, and construed and interpreted in accordance with, the law
of the state of New York. The Loan Documents represent the agreement of the
Borrower, the Administrative Agent, the Issuing Lenders and the Lenders and
supersede any and all prior agreements and understandings, oral or written,
relative or with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent, any Issuing Lender or any Lender relative to subject matter hereof not
expressly set forth or referred to in the Loan Documents.

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SECTION 10.10 Successors and Assigns. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however,
that:

(a) 
the Borrower may not assign or transfer its rights or obligations hereunder
without the prior written consent of the Administrative Agent, all Issuing
Lenders and all Lenders; and

(b) 
the rights of sale, assignment and transfer of the Lenders are subject to Section 10.11.

SECTION 10.11 Sale and Transfer of Loans;
Participations in Loans. Each Lender may assign, or sell participations in,
its Loans to one or more other Persons in accordance with this Section 10.11.

SECTION 10.11.1 Assignments.

(a)  Any Lender (an “Assignor”) may, in
accordance with applicable law, at any time and from time to time assign to any
Person (an “Assignee”), with the consent of the Administrative Agent,
each Issuing Lender and, except at any time a Default or Event of Default shall
have occurred and be continuing, the Borrower (which consent, in each case,
shall not be unreasonably withheld or delayed), all or any part of its rights
and obligations under this Agreement pursuant to an Assignment Agreement,
executed by such Assignee, such Assignor and any other Person whose consent is
required pursuant to this paragraph, and delivered to the Administrative Agent
for its acceptance and recording in the Register; provided that no such
assignment to an Assignee (other than any Lender or any Affiliate or Approved
Fund thereof) shall be in an aggregate principal amount of less than $3,000,000
(other than in the case of an assignment of all of a Lender’s interests under
this Agreement and treating simultaneous assignments to and from Approved Funds
of a single Lender as one assignment), unless otherwise agreed by the Borrower,
the Administrative Agent and each Issuing Lender and; provided, further,
that after giving effect to any such assignment the assigning Lender shall have
Loans or Commitments remaining of at least $3,000,000 in the aggregate amount
(other than in the case of an assignment of all of a Lender’s interests under
this Agreement and treating simultaneous assignments to and from Approved Funds
of a single Lender as one assignment). Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment Agreement, (i) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment Agreement, have the
rights and obligations of a Lender hereunder with Loans and Commitments as set
forth therein, and (ii) the Assignor thereunder shall, to the extent
provided in such Assignment Agreement, be released from its obligations under
this Agreement (and, in the case of an Assignment Agreement covering all of an
Assignor’s rights and obligations under this Agreement, such Assignor shall
cease to be a party hereto). Any assignment or sale that does not comply with
this clause (a) shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 10.11.2.

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(b)  The Administrative Agent shall, on behalf of
the Borrower, maintain at its address referred to on Schedule 1.1 (b) a copy of
each Assignment Agreement delivered to it and a register (the “Register”)
for the recordation of the names and addresses of the Lenders and the
Commitment of, and the principal amount of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence
of manifest error, and the Borrower, the Administrative Agent, the Issuing
Lenders and the Lenders shall treat each Person whose name is recorded in the
Register as the owner of the Loans or the Commitments, as the case may be,
recorded therein for all purposes of this Agreement notwithstanding notice to
the contrary. Any assignment of any Loan or any Commitment shall be effective
only upon appropriate entries with respect thereto being made in the Register.

(c)  Upon its receipt of an Assignment Agreement
executed by an Assignor, an Assignee and any other Person whose consent is
required by Section 10.11.1(a), together with payment to the
Administrative Agent of a registration and processing fee of $3,500 (unless
waived by the Administrative Agent in its discretion and provided that
only one such fee shall be payable in the case of simultaneous assignments to
two or more Approved Funds of a single Lender), the Administrative Agent shall (i) promptly
accept such Assignment Agreement and (ii) record the information contained
therein in the Register on the effective date determined pursuant thereto.

(d)  For avoidance of doubt, the parties to this
Agreement acknowledge that the provisions of this Section 10.11.1
concerning assignments of Loans and Commitments relate only to absolute
assignments and that such provisions do not prohibit assignments creating
security interests, including any pledge or assignment by a Lender of any Loan
to any Federal Reserve Bank in accordance with applicable law; provided,
that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such assignee for such
Lender as a party hereto.

(e)  Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a special
purpose funding vehicle (an “SPC”), identified as such in writing from
time to time by the Granting Lender to the Administrative Agent and the
Borrower, the option to provide to the Borrower all or any part of any Loan
that such Granting Lender would otherwise be obligated to make to the Borrower
pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan and (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the related Commitment of the Granting Lender to the same extent, and
as if, such Loan were made by such Granting Lender. Each party hereto hereby
agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement) that,
prior to the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such
SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this Section 10.11.1,
any SPC may (A) with notice to, but without the prior written consent of,
the Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (B) disclose
on a confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC. This Section 10.11.1(e) may
not be amended without the written consent of each SPC. The Granting Lender,
such SPC and any assignee of such SPC shall comply with the requirements of Section 4.7
as Lender.

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SECTION 10.11.2 Participations. With notice to
the Borrower and the Administrative Agent, any Lender may at any time sell to
one or more Persons (each of such Persons being herein called a “Participant”)
participating interests in any of the Loans, Commitments or other interests of
such Lender hereunder; provided, however, that:

(a)  no participation contemplated in this Section 10.11.2
shall relieve such Lender from its Loans, Commitments or other obligations
under any Loan Document;

(b)  such Lender shall remain solely responsible
for the performance of its Loans, Commitments and such other obligations;

(c)  the Borrower, the Administrative Agent and
the Issuing Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under each of the Loan
Documents;

(d)  no Participant, unless such Participant is
an Affiliate of such Lender, or is itself a Lender, shall be entitled to
require such Lender to take or refrain from taking any action under any Loan
Document, except as provided in clause (f) of this Section 10.11.2;

(e)  the Borrower shall not be required to pay
any amount under Sections 2.6.7, 4.3, 4.4, 4.5,
4.6, 4.7, 4.8, 4.9, 10.3 and 10.4,
that is greater than the amount which it would have been required to pay had no
participating interest been sold;

(f)  in no event shall any Participant under any
such participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Loans or any fees payable
hereunder, extend the due date of such principal, interest or fee payments or
increase the amount or extend the Maturity Date of such Loans or Commitments,
in each case to the extent subject to such participation;

(g)  the Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 4.10
as fully as if it were a Lender hereunder; and

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(h)  the Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 4.3, 4.6
and 4.7 with respect to its participation in the Loans and Commitments
outstanding from time to time as if it was a Lender; provided that, in
the case of Section 4.7, such Participant shall have complied with
the requirements of said Section, as if it were a Lender and provided,
further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.

SECTION 10.12 USA Patriot Act. Each Lender
hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender
to identify the Borrower in accordance with the Act.

SECTION 10.13 Other Transactions. Nothing
contained herein shall preclude the Administrative Agent, any Issuing Lender or
any other Lender from engaging in any transaction, in addition to those
contemplated by any Loan Document, with the Borrower or any of its Affiliates
in which the Borrower or such Affiliate is not restricted hereby from engaging
with any other Person.

SECTION 10.14 Submission
To Jurisdiction; Waivers. Each of the Borrower, the Administrative Agent,
the Issuing Lenders and the Lenders hereby irrevocably and unconditionally:

(a)  submits for itself and its property in any
legal action or proceeding relating to the Loan Documents to which it is a
party, or for recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States for the Southern District of New York,
and appellate courts from any thereof;

(b)  consents that any such action or proceeding
may be brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;

(c)  agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
such Person at its address set forth on Schedule 1.1(b) or at
such other address of which the Administrative Agent shall have been notified
pursuant to Section 10.2;

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(d)  agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and

(e)  waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, indirect,
exemplary, punitive or consequential damages.

SECTION 10.15 WAIVERS OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 10.16 Non-Recourse Persons. The Lenders
acknowledge that no Non-Recourse Person shall have any responsibility or
liability for the Obligations.

SECTION 10.17 Acknowledgments.
The Borrower hereby acknowledges that:

(a)  it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents;

(b)  neither the Administrative Agent, any
Issuing Lender nor any Lender has any fiduciary relationship with or duty to
the Borrower arising out of or in connection with any of the Loan Documents,
and the relationship between Administrative Agent, the Issuing Lenders and
Lenders, on one hand, and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

(c)  no joint venture is created by any of the
Loan Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.

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SECTION 10.18 Confidentiality. Each of the
Administrative Agent, each Issuing Lender and each Lender agrees to keep
confidential all non-public information provided to it by the Borrower pursuant
to this Agreement; provided that nothing herein shall prevent the
Administrative Agent, any Issuing Lender or any Lender from disclosing any such
information (a) to the Administrative Agent, any Issuing Lender, any other
Lender or any Affiliate of any Lender, (b) to any transferee or
prospective transferee that agrees to comply with the provisions of this Section 10.18,
(c) to its employees, directors, agents, attorneys, accountants and other
professional advisors or those of any of its Affiliates, (d) upon the request
or demand of any Governmental Authority, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required to do so
in connection with any litigation or similar proceeding, (g) that has been
publicly disclosed, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender’s investment
portfolio in connection with ratings issued with respect to such Lender, or (i) in
connection with the exercise of any remedy under any Loan Document. Notwithstanding anything herein to the contrary,
the Borrower, Administrative Agent, each Issuing Lender and each Lender (and
their Affiliates and their respective partners, officers, directors, employees,
accountants, attorneys and other advisors, agents and other representatives)
may disclose to any and all Persons, without limitation of any kind, any information
with respect to the U.S. federal tax treatment and any facts that may be
relevant to the U.S. federal tax structure of the transactions contemplated
hereby and all materials of any kind (including opinions and other tax
analyses) that are provided to any of them relating to such treatment and tax
structure; provided, however, that none of them shall disclose
any other information, the disclosure of which is otherwise limited, that is
not relevant to understanding the U.S. federal tax treatment or U.S. federal
tax structure of the transaction (including the identity of any party and
information that could lead another to determine the identity of any party), or
any other information to the extent that such disclosure could result in a
violation of any federal or state securities law.

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

	
  

  	
   

  	
  EDISON MISSION ENERGY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Steven D. Eisenberg

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Steven D. Eisenberg

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Vice President and

  
	
   

  	
   

  	
   

  	
   

  	
            Associate
  General Counsel

  

 

Address for Notices:

18101 Von Karman Avenue

Suite 1700

Irvine, CA  92612

Attention:  General Counsel

Telecopier No.:  (949) 752-1420

Taxpayer Identification Number:  95-4031807

 

 

	
  

  	
   

  	
  CITICORP
  NORTH AMERICA, INC.,
as Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Nietzsche Rodricks

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Nietzsche
  Rodricks

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  

 

Address for
Notices:

2 Penns Way

New Castle, DE  19720

Attention: Lisa Rodriguez
Telecopier No: (212) 994-0961

 

 

	
  

  	
   

  	
  CITICORP
  NORTH AMERICA, INC.,
as Issuing Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Nietzsche Rodricks

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Nietzsche
  Rodricks

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  

 

Address for Notices:

388 Greenwich Street

New York, NY 10013

Attention:  Neitzsche Rodricks
Telecopier No.:  (212) 816-8098

 

 

	
  

  	
   

  	
  LENDERS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CITICORP
  NORTH AMERICA, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Nietzsche Rodricks

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Nietzsche
  Rodricks

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  

 

Address for Notices:

2 Penns Way

New Castle, DE  19720

Attention: Lisa Rodriguez
Telecopier No: (212) 994-0961

 

 

	
  

  	
   

  	
  CITY
  NATIONAL BANK

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Aaron Cohen

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Aaron
  Cohen

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Senior
  Vice President

  

 

Address for Notices:

555 S. Flower Street

16th Floor

Los Angeles, CA  90071

Attention:  Aaron Cohen

Telecopier No.:  (213) 673-9801

 

 

	
  

  	
   

  	
  CREDIT
  SUISSE, CAYMAN ISLANDS BRANCH

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Brian T. Caldwell

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Brian
  T. Caldwell

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Gregory S. Richards

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Gregory
  S. Richards

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   
  Associate

  

 

Address for Notices:

Eleven Madison Avenue

New York, NY  10010

Attention:  Brian Caldwell
Telecopier No.:  (212) 743-2042

 

 

	
  

  	
   

  	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Marcus M. Tarkington

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Marcus
  M. Tarkington

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   
  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Paul O’Leary

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Paul O’Leary

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  

 

Address for Notices:

60 Wall Street

NYC 60-4405

New York, N.Y. 10005

Attn:  Marcus Tarkington

Telecopier No.:  (212) 797-0070

 

 

	
  

  	
   

  	
  GOLDMAN SACHS CREDIT PARTNERS
  L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ William W. Archer

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  William
  W. Archer

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   
  Managing Director

  

 

Address for Notices:

30 Hudson Street, 17th Floor

Jersey City, NJ 07302
Attention:  Philip Green

Telecopier No.:  (212) 357-4597

 

	
  

  	
   

  	
  JPMORGAN CHASE BANK,
  N.A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Thomas L. Casey

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Thomas
  L. Casey

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  

 

Address for Notices:

270 Park Avenue , Floor 4

New York, NY  10017

Attention:  Thomas Casey

Telecopier No.:  (212) 270-3089

 

 

	
  

  	
   

  	
  KBC BANK, N.V.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Eric Raskin

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Eric
  Raskin

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Robert Snauffer

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Robert
  Snauffer

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   
  First Vice President

  

 

Address for Notices:

125 West 55th Street, 10th Floor

New York, NY  10019

Attention:  Rose Pagan/Robert Pacifici

Telecopier No.:  (212) 956-5580/5581

 

 

	
  

  	
   

  	
  LEHMAN COMMERCIAL PAPER INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Frank P. Turner

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Frank
  P. Turner

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  

 

Address
for Notices:

745
7th Avenue, 5th Floor

New York, NY  10019

Attention:  Frank Turner

Telecopier No.:  (646) 758-1986

 

 

	
  

  	
   

  	
  MERRILL LYNCH CAPITAL
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Carol J.E. Feeley

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Carol
  J.E. Feeley

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  

 

Address
for Notices:

4
World Financial Center

22nd Floor

New York, NY  10080

Attention:  Carol JE. Feeley

Telecopier No.:  (212) 738-1186

 

 

	
  

  	
   

  	
  THE ROYAL BANK OF
  SCOTLAND PLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Michael Canavan

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Michael
  Canavan

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   
  Senior Vice President

  

 

Address
for Notices:

101
Park Avenue

New York, NY  10178

Attention:  Michael Keating

Telecopier No.:  (212) 401-3456

 

 

	
  

  	
   

  	
  SOCIÉTÉ GÉNÉRALE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ R. Wayne Hutton

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  R.
  Wayne Hutton

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   
  Managing Director

  

 

Address for Notices:

1221 Avenue of the
Americas

New York, NY 10020

Attention:  Wayne Hutton

Telecopier No.:  (212) 278-7862

 

 

	
  

  	
   

  	
  UBS LOAN FINANCE LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Richard L. Tavrow

  
	
   

  	
   

  	
   

  	
   

  	
  Name:     Richard
  L. Tavrow

  
	
   

  	
   

  	
   

  	
   

  	
  Title:       Director,

  
	
   

  	
   

  	
   

  	
   

  	
                  Banking
  Products Services, US

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Irja R. Otsa

  
	
   

  	
   

  	
   

  	
   

  	
  Name:     Irja
  R. Otsa

  
	
   

  	
   

  	
   

  	
   

  	
  Title:       Associate
  Director,

  
	
   

  	
   

  	
   

  	
   

  	
                  Banking
  Products Services, US

  

 

Address
for Notices:

677
Washington Blvd

6th Floor So.

Stamford, CT  06901

Attention:  Deborah Porter

Telecopier No.:  (203) 719-3888

 

 

	
  

  	
   

  	
  UNION BANK OF CALIFORNIA, N.A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Robert J. Cole

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Robert
  J. Cole

  
	
   

  	
   

  	
   

  	
   

  	
  Title:    Vice
  President

  

 

Address for Notices:

445 S. Figueroa Street,
15th Floor

Los Angeles, CA  90071

Attention:  Dennis Blank

Telecopier No.:  (213) 236-4096

 

 

	
  

  	
   

  	
  WELLS FARGO BANK, N.A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Peta Swidler

  
	
   

  	
   

  	
   

  	
   

  	
  Name:  Peta
  Swidler

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   
  Senior Vice President

  

 

Address for Notices:

333 So. Grand Ave., 12th Floor

MAC E2064-12B

Los Angeles, CA  90071

Attention:  Vanessa Sheh Meyer

Telecopier No.:  (213) 253-7302

 

 

SCHEDULE 1.1(a)

to Credit Agreement

COMMITMENTS

	
  Name of Lender

  	
   

  	
   

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Citicorp North
  America, Inc.

  	
   

  	
  $

  	
  55,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Credit Suisse,
  Cayman Islands Branch

  	
   

  	
  $

  	
  55,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Union Bank of
  California, N.A.

  	
   

  	
  $

  	
  55,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Merrill Lynch
  Capital Corporation

  	
   

  	
  $

  	
  55,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Goldman Sachs
  Credit Partners L.P.

  	
   

  	
  $

  	
  55,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan Chase
  Bank, N.A.

  	
   

  	
  $

  	
  55,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Deutsche Bank
  Trust Company Americas

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  KBC Bank, N.V.

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lehman
  Commercial Paper Inc.

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Royal Bank
  of Scotland plc

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  UBS Loan Finance
  LLC

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Société Générale

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo
  Bank, N.A.

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  City National
  Bank

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

 

SCHEDULE 1.1(b)

to Credit Agreement

LENDING
OFFICES

	
  Name of Lender

  	
   

  	
  Domestic Office

  	
   

  	
  Eurodollar Office

  
	
  Citicorp North
  America, Inc.

  	
   

  	
  388 Greenwich
  Street

  New York, NY 10013

  	
   

  	
  388 Greenwich
  Street

  New York, NY 10013

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  City National
  Bank

  	
   

  	
  555 S. Flower Street

  Los Angeles, CA 90071

  	
   

  	
  555 S. Flower Street

  Los Angeles, CA 90071

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Suisse,
  Cayman Islands Branch

  	
   

  	
  Eleven Madison
  Avenue

  New York, NY 10010

  	
   

  	
  Eleven Madison
  Avenue

  New York, NY 10010

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Deutsche Bank
  Trust Company Americas

  	
   

  	
  60 Wall Street

  New York, NY 10005

  	
   

  	
  60 Wall Street

  New York, NY 10005

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Goldman Sachs
  Credit Partners L.P.

  	
   

  	
  1 New York Plaza, 42nd Floor

  New York, NY 10004

  	
   

  	
  1 New York Plaza, 42nd Floor

  New York, NY 10004

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan Chase
  Bank, N.A.

  	
   

  	
  270 Park Avenue

  New York City, NY 10017

  	
   

  	
  1111 Fannin Street, 10th Fl

  Houston, Texas 77002

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KBC Bank, N.V.

  	
   

  	
  125 West 55th Street, 10th Floor

  New York, NY 10019

  	
   

  	
  125 West 55th Street, 10th Floor

  New York, NY 10019

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lehman
  Commercial Paper Inc.

  	
   

  	
  745 7th Avenue, 5th Floor

  New York, NY 10019

  	
   

  	
  745 7th Avenue, 5th Floor

  New York, NY 10019

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Merrill Lynch
  Capital Corporation

  	
   

  	
  4 World Financial Center

  22nd Fl

  New York, N.Y. 10080

  	
   

  	
  4 World Financial Center

  22nd Fl

  New York, N.Y. 10080

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Royal Bank
  of Scotland plc

  	
   

  	
  101 Park Avenue

  New York, NY 10178

  	
   

  	
  101 Park Avenue

  New York, NY 10178

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Société Générale

  	
   

  	
  1221 Avenue of the Americas

  New York, NY 10020

  	
   

  	
  1221 Avenue of the Americas

  New York, NY 10020

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UBS Loan Finance
  LLC

  	
   

  	
  677 Washington Blvd

  6th Floor

  So. Stamford, CT 06901

  	
   

  	
  677 Washington Blvd

  6th Floor So.

  Stamford, CT 06901

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Union Bank of
  California, N.A.

  	
   

  	
  445 S. Figueroa Street

  15th Floor

  Los Angeles, CA 90071

  	
   

  	
  445 S. Figueroa Street

  15th Floor

  Los Angeles, CA 90071

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo
  Bank, N.A.

  	
   

  	
  201 Third
  Street, 8th Floor

  MAC A0187-080

  San Francisco, CA 94103

  	
   

  	
  201 Third
  Street, 8th Floor

  MAC A0187-080

  San Francisco, CA 94103

  

 

 

 

SCHEDULE 1.1(c)

to Credit Agreement

MAXIMUM
ISSUING LENDER AMOUNT

	
  Name of Issuing Lender

  	
   

  	
   

  	
   

  	
  Maximum Issuing Lender Amount

  
	
   

  	
   

  	
   

  
	
  Citicorp North
  America, Inc.

  	
   

  	
  $250,000,000

  

 

 

 

SCHEDULE 1.1(d)

to Credit Agreement

Collins
Facility Lease Agreements

1.                  Facility
Lease Agreement (T1), dated as of December 15, 1999 (as amended, supplemented
or otherwise modified), between Collins Holdings EME, LLC and Nesbitt Asset
Recovery, Series C-1 (formerly known as Collins Trust I).

2.                  Facility
Lease Agreement (T2), dated as of December 15, 1999 (as amended, supplemented
or otherwise modified), between Collins Holdings EME, LLC and Nesbitt Asset
Recovery, Series C-2 (formerly known as Collins Trust II).

3.                  Facility
Lease Agreement (T3), dated as of December 15, 1999 (as amended,
supplemented or otherwise modified), between Collins Holdings EME, LLC and
Nesbitt Asset Recovery, Series C-3 (formerly known as Collins Trust
III).

4.                  Facility
Lease Agreement (T4), dated as of December 15, 1999 (as amended, supplemented
or otherwise modified), between Collins Holdings EME, LLC and Nesbitt Asset
Recovery, Series C-4 (formerly known as Collins Trust IV).

 

 

SCHEDULE 2.6.12

to Credit Agreement

Agreed Alternate
Currency Letters of Credit

 

None

 

 

SCHEDULE 3.2.1

to Credit Agreement

Pricing Grid

	
  BASIS FOR PRICING

  	
   

  	
  LEVEL 1

  Two of the Three

  Implied Debt Ratings

  At Least:

  BB+ By S&P 

  Ba1 By Moody’s

  BB+ By Fitch

  	
   

  	
  LEVEL 2

  Two of the Three

  Implied Debt Ratings

  Less Than Level 1

  But At Least:

  BB By S&P 

  Ba2 By Moody’s

  BB By Fitch

  	
   

  	
  LEVEL 3

  Two of the Three

  Implied Debt Ratings

  Less Than Level 2

  But At Least:

  BB- By S&P 

  Ba3 By Moody’s

  BB- By Fitch

  	
   

  	
  LEVEL 4

  Implied Debt

  Ratings Less 

  Than Level 3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commitment
  Fee(1)

  	
   

  	
  25
  bps

  	
   

  	
  37.5
  bps

  	
   

  	
  37.5
  bps

  	
   

  	
  50
  bps

  	
   

  
	
  Base
  Rate Applicable Margin

  	
   

  	
  25
  bps

  	
   

  	
  50
  bps

  	
   

  	
  75
  bps

  	
   

  	
  100
  bps

  	
   

  
	
  LIBOR Applicable Margin

  	
   

  	
  125 bps

  	
   

  	
  150 bps

  	
   

  	
  175 bps

  	
   

  	
  200 bps

  	
   

  

bps = basis points per annum

(1)   Paid quarterly in arrears on each bank’s
average daily unused commitment.

As used in this Schedule 3.2.1, the term “Implied
Debt Rating” means, with respect to any Debt Rating, one “notch” above such
Debt Rating. For example, if a Debt Rating by S&P is BB, the Implied Debt
Rating shall be BB+.

 

 

SCHEDULE 7.2.1

to Credit Agreement

Liens

 

None

 

EXHIBIT A

to Credit Agreement

[FORM OF]

NOTICE OF BORROWING OF
LOANS

[Date]

Citicorp North
America, Inc., as
  Administrative Agent
  for the Lenders and Issuing Lenders
party
  to the Credit Agreement
  referred to below

Attention:  [                        ]

Fax:         [                      ]

Ladies and
Gentlemen:

The undersigned, Edison Mission Energy (the “Borrower”),
refers to the Credit Agreement dated as of June 15, 2006, as amended,
supplemented, amended and restated or otherwise modified and in effect from
time to time, (the “Credit Agreement”), among the Borrower, Citicorp
North America, Inc., as Administrative Agent, the various financial
institutions as are, or shall from time to time become, parties thereunder, and
the Issuing Lenders party thereto. The terms defined in the Credit Agreement
are used herein as defined therein.

Pursuant to Section 2.3(a) of the
Credit Agreement, the undersigned hereby requests a Borrowing of Loans under
the Credit Agreement (the “Proposed Borrowing”), as follows:

(1)                                  The
Business Day of the Proposed Borrowing is                         ,
            .

(2)                                  The
Proposed Borrowing is to be comprised of [Base Rate Loans] [LIBO Rate Loans].

(3)                                  The
aggregate amount of the Proposed Borrowing is $                        (1).

 

 

 

 

 

 

 

 

 

 

(1) Insert an
amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.

 

(4)                                  The
account of the Borrower to which the proceeds of the Proposed Borrowing are to
be made available is as follows:

Bank
Name:                                                                                 _______________________

Bank
Address:                                                                 _______________________

ABA
Number:                                                                    _______________________

Account
Number:                                                 _______________________

Attention:                                                                                         _______________________

Reference:                                                                                        _______________________

[(5)                              The
initial Interest Period of the Proposed Borrowing is               
month[s].](1)

The Borrower hereby represents and warrants that:

(a)  the conditions precedent to the Proposed
Borrowing set forth in Section 5.2 of the Credit Agreement have
been satisfied; and

(b)  no event has occurred and is continuing, or
would result from the Proposed Borrowing or from the application of the
proceeds therefrom, that constitutes a Default, an Event of Default or
Significant Collateral Party Event.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  Edison Mission
  Energy

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) To be inserted
for a Borrowing consisting of LIBO Rate Loans.

 2

 

 

EXHIBIT B

to Credit Agreement

[FORM OF]

CONTINUATION/CONVERSION NOTICE

Citicorp North America, Inc.,
       as Administrative Agent

Attention:              [_________]

EDISON
MISSION ENERGY

Ladies and Gentlemen:

This Continuation/Conversion Notice is delivered to
you pursuant to Sections 2.4 and 3.2.1 of the Credit Agreement,
dated as of June 15, 2006, as amended, supplemented, amended and restated
or otherwise modified and in effect from time to time, among Edison Mission
Energy, a Delaware corporation, (the “Borrower”), Citicorp North America, Inc.,
as Administrative Agent, the various financial institutions as are, or shall
from time to time become, parties thereunder, and the Issuing Lenders party
thereto. Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Credit Agreement.

The Borrower hereby requests that on __________, ____,

(1)           $_________ of the presently
outstanding principal amount of the Loans originally made on ________, ____,

(2)           and all presently being maintained as
[Base Rate Loans] [LIBO Rate Loans],

(3)           be [continued as] [converted into],

(4)           [LIBO Rate Loans having an Interest
Period of months] [Base Rate Loans].

The Borrower has caused this Continuation/Conversion
Notice to be executed and delivered by its Authorized Representative this ___
day of _________, ____.

	
   

  	
  EDISON MISSION ENERGY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

EXHIBIT C

to Credit Agreement

[FORM OF]

ASSIGNMENT AGREEMENT

To:          EDISON MISSION ENERGY

To:          Citicorp North America, Inc.,

                    as Administrative Agent

EDISON
MISSION ENERGY

Ladies and Gentlemen:

We refer to clause (a) of Section 10.11.1
of the Credit Agreement, dated as of June 15, 2006, as amended,
supplemented, amended and restated or otherwise modified and in effect from
time to time (the “Credit Agreement”), among Edison Mission Energy, a
Delaware corporation (the “Borrower”), Citicorp North America, Inc.,
as administrative agent  “Administrative
Agent”), the various financial institutions as are, or shall from time to
time become, parties thereunder, and the Issuing Lenders party thereto. Unless
otherwise defined herein or the context otherwise requires, terms used herein
have the meanings provided in the Credit Agreement.

This Agreement is delivered to you pursuant to clause (a) of
Section 10.11.1 of the Credit Agreement and also constitutes notice
to each of you of the assignment and delegation to [          ]
(the “Assignee”) of the interests set forth under the heading ASSIGNED
INTEREST below.

The Assignor (a) represents and warrants that it
is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; (b) makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Loan Documents or the execution, legality,
validity, enforceability or genuineness of sufficiency or value of the Credit
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant thereto; and (c) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto.

Upon acceptance and recording of this notice by the
Administrative Agent, from and after the date hereof, the Administrative Agent
shall make all payments in respect of the Loans and Commitments assigned hereby
(including all payments of principal, interest and other amounts) to the
Assignor for amounts which have accrued to the date hereof and to the Assignee
for amounts which have accrued subsequent to the date hereof. The Assignor and
the Assignee shall make all appropriate adjustments in payments by the Administrative
Agent for periods prior to the date hereof or with respect to the making of
this assignment directly between themselves.

 

The Assignee (a) acknowledges and confirms that
it has received a copy of the Credit Agreement and the exhibits related thereto,
together with copies of the documents which were required to be delivered under
the Credit Agreement as a condition to the making of the Loans thereunder and
such other documents and information as it has deemed appropriate to make its
own credit analysis agrees that it will, independently and without reliance
upon the Administrative Agent, the Issuing Lenders, the Borrower or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement and (b) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement or the other Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto. The Assignee further confirms and
agrees that in becoming a Lender and in making its Commitments under the Credit
Agreement, such actions have and will be made without recourse to, or
representation or warranty by the Administrative Agent.

Except as otherwise
provided in the Credit Agreement, effective as of the date of acceptance hereof
by the Administrative Agent:

(i)            the
Assignee:

(A)          shall
be deemed automatically to have become a party to the Credit Agreement, have
all the rights and obligations of a “Lender” under the Credit Agreement and the
other Loan Documents as if it were an original signatory thereto to the extent
specified in the second paragraph hereof; and

(B)           agrees
to be bound by the terms and conditions set forth in the Credit Agreement and
the other Loan Documents as if it were an original signatory thereto; and

(ii)           the
Assignor shall relinquish its rights (but shall continue to be entitled to the
benefits of Sections 4.7, 10.3 and 10.4) and be
released from its obligations under the Credit Agreement and the other Loan
Documents to the extent specified in the second paragraph hereof.

This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York.

The Assignee hereby advises each of you of the
following administrative details with respect to the assigned interests and
requests the Administrative Agent to acknowledge receipt of this document:

 2
 

 

1.             Address
for Notices:

Institution
Name:

Attention:

Domestic Office:

Telephone:

Facsimile:

Telex (Answerback):

LIBOR Office:

Telephone:

Facsimile:

2.             Payment
Instructions:

The Assignee agrees to furnish the tax form required
by paragraph (e) of Section 4.7 (if so required) of the
Credit Agreement no later than the date of acceptance hereof by the
Administrative Agent.

This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement. Delivery
of an executed counterpart of this Agreement by telecopier shall be effective
as delivery of a manually executed counterpart of this Agreement.

 3
 

 

IN WITNESS WHEREOF, the Assignor and the Assignee have
caused this Agreement to be executed by their officers thereunto duly
authorized as of the date specified thereon.

ASSIGNED
INTEREST:

	
  Aggregate Amount of

  Commitments/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitments/Loans

  	
   

  	
  Percentage Assigned of

  Commitments/Loans

  	
   

  
	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  	
   

  
							

 

	
   

  	
   

  	
  [ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

 

	
  Accepted and Acknowledged

  	
   

  
	
  this     
  day of
                    ,
          

  	
   

  
	
   

  	
   

  	
   

  
	
  CITICORP NORTH AMERICA, INC.,

  	
   

  
	
  as
  Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
  [                                      ],

  	
   

  
	
  as Issuing Lender

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 4
 

 

 

	
  EDISON MISSION ENERGY (1)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Insert
for Borrower in the event of an assignment of a Lender’s Commitment provided that no Default or Event of Default
has occurred and is continuing.

 

 5

 

 

EXHIBIT D

to Credit Agreement

[FORM OF]

BORROWER SECURITY AGREEMENT

 

 

 

EXHIBIT E-1

to Credit Agreement

[FORM OF]

OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, SPECIAL NEW
YORK COUNSEL TO THE BORROWER

 

 

 

EXHIBIT E-2

to Credit Agreement

[FORM OF]

OPINION OF INTERNAL COUNSEL TO THE BORROWER

 

 

EXHIBIT F

to Credit Agreement

[FORM OF]

COMMUNICATIONS AGREEMENT

Reference is made to Credit Agreement dated as of June 15,
2006, as amended, supplemented, amended and restated or otherwise modified and
in effect from time to time (the “Credit Agreement”), among Edison
Mission Energy (the “Borrower”), Citicorp North America, Inc. (“Citicorp”),
as administrative agent (the “Administrative Agent”), the various
financial institutions as are, or shall from time to time become, parties
thereunder, and the Issuing Lenders party thereto. Capitalized terms used and
not defined herein shall have the meanings given to them in the Credit
Agreement.

The Borrower hereby agrees that it will use its
commercially reasonable best efforts to transmit to the Administrative Agent
all information, documents and other materials that it is obligated to furnish
to the Administrative Agent pursuant to the Loan Documents, including all
notices, requests, financial statements, financial and other reports,
certificates and other information materials, but excluding any such
communication that (i) relates to a request for a new, or a conversion of
an existing, borrowing or other extension of credit (including any election of
an interest rate or interest period relating thereto), (ii) relates to the
payment of any principal or other amount due under the Credit Agreement prior
to the scheduled date therefor, (iii) provides notice of any Default,
Event of Default or Significant Collateral Party Event under the Credit
Agreement or (iv) is required to be delivered to satisfy any condition
precedent to the effectiveness of the Credit Agreement and/or any borrowing or
other extension of credit thereunder (all such non-excluded communications
being referred to herein collectively as “Communications”), by
transmitting the Communications in an electronic/soft medium in a format
acceptable to the Administrative Agent to oploanswebadmin@citigroup.com (or to
such other address as the Administrative Agent may specify in writing). In
addition, the Borrower agrees to continue to provide the Communications to the
Administrative Agent in the manner specified in the Loan Documents but only to
the extent requested by the Administrative Agent.

The Borrower further agrees that the Administrative
Agent may make the Communications available to the Lenders by posting the
Communications on Intralinks or a substantially similar electronic transmission
system (the “Platform”). The Borrower acknowledges that the distribution
of material through an electronic medium is not necessarily secure and that
there are confidentiality and other risks associated with such distribution.

 

THE PLATFORM IS
PROVIDED “AS IS” AND “AS AVAILABLE”. THE ADMINISTRATIVE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY
KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE ADMINISTRATIVE AGENT
PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT
SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, “ADMINISTRATIVE AGENT PARTIES”) HAVE ANY LIABILITY TO THE
BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING
DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR
EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S
OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE
INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY ADMINISTRATIVE AGENT PARTY
IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH ADMINISTRATIVE AGENT PARTY’S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

Without duplication of
the Borrower’s obligations under Section 10.4 of the Credit
Agreement, the Borrower shall indemnify and hold harmless each Administrative
Agent Party from and against any and all claims, damages, losses, liabilities
and expenses (including fees and disbursements of counsel), joint or several,
that may be incurred by or asserted or awarded against any Administrative Agent
Party (including in connection with any investigation, litigation or proceeding
or the preparation of a defense in connection therewith), in each case arising
out of or in connection with or by reason of, directly or indirectly, this
Agreement or the use of the Platform as contemplated herein, except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
primarily from such Administrative Agent Party’s gross negligence or willful
misconduct. In the case of an investigation, litigation or other proceeding to
which the indemnity in this paragraph applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is
brought by the Borrower, any of its directors, security holders or creditors,
an Administrative Agent Party or any other person or an Administrative Agent
Party is otherwise a party thereto.

The Administrative Agent agrees that the receipt of
the Communications by the Administrative Agent at its e-mail address set forth
above shall constitute effective delivery of the Communications to the
Administrative Agent for purposes of the Loan Documents.

Nothing herein shall prejudice the right of the
Administrative Agent or any Lender to give any notice or other communication
pursuant to any Loan Document in any other manner specified in such Credit
Document.

Except as modified hereby, the Loan Documents shall
remain in full force and effect, including Section 10.18 of the
Credit Agreement. The parties hereto hereby acknowledge that all materials
provided by the Borrower to the Administrative Agent pursuant to this
Communications Agreement have been provided in reliance on Section 10.18
of the Credit Agreement.

This Agreement shall terminate on the date that
neither Citicorp nor any of its affiliates is the Administrative Agent under
the Credit Agreement.

 2
 

 

This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York.

In witness whereof, the undersigned have executed this
Agreement as of June 15, 2006.

	
   

  	
  CITICORP NORTH AMERICA, INC.,

  
	
   

  	
   

  	
  as
  Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	 

	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EDISON MISSION
  ENERGY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 3

 

 

EXHIBIT G

to Credit Agreement

[FORM OF]

ACCOUNT CONTROL AGREEMENT

 

EXHIBIT H

to Credit Agreement

[FORM OF]

TERMS OF SUBORDINATION

SECTION 1.   Definitions. Terms defined in
the Credit Agreement are used herein as defined therein. In addition, as used
herein:

“Permitted Refinancing” means any extension,
renewal, refunding or refinancing, or any restructuring, or any other
modification (collectively, a “Refinancing”), of any Senior Debt at any
time outstanding under the Credit Agreement or any document or instrument
evidencing a Permitted Refinancing thereof.

“Proceeding” means
any:  (a) insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition or other
similar proceeding, whether voluntary or involuntary, of or against the
Subordinated Borrower, its property or its creditors as such; (b) proceeding
for any liquidation, dissolution or other winding-up of the Subordinated
Borrower, whether voluntary or involuntary, and whether or not involving
insolvency, receivership or bankruptcy proceedings; (c) general assignment
for the benefit of creditors of the Subordinated Borrower; or (d) other
marshalling of the assets of the Subordinated Borrower.

“Reorganization Debt Securities” means, with
respect to each Subordinated Borrower, debt or equity securities of such
Subordinated Borrower as reorganized or readjusted, or debt or equity
securities of such Subordinated Borrower (or any other company, trust or
organization provided for by a plan of reorganization or readjustment
succeeding to the assets and liabilities of such Subordinated Borrower), that are
subordinated, to at least the same extent as the Subordinated Debt, to the
payment of all Senior Debt that will be outstanding after giving effect to such
plan of reorganization or readjustment, so long as (a) the rate of
interest on such debt securities shall not exceed the effective rate of
interest on the Subordinated Debt on the date hereof, (b) such debt
securities shall not be entitled to the benefits of covenants or defaults
materially more beneficial to the holders of such debt securities than those in
effect with respect to the Subordinated Debt on the date hereof (or the Senior
Debt, after giving effect to such plan of reorganization or readjustment) and (c) such
debt securities shall not provide for amortization (including sinking fund and
mandatory prepayment provisions) commencing prior to the date six months
following the final scheduled maturity date of the Senior Debt (as modified by
such plan of reorganization or readjustment).

“Senior Debt” means, collectively, the
following indebtedness and obligations of the Borrower:

(a)           all
indebtedness and other obligations of the Borrower under the Credit Agreement
and the other Loan Documents, including all interest, expenses, indemnities and
penalties and all commitment and agency fees payable from time to time under
such documents; and

 

(b)           any Permitted
Refinancing.

The term “Senior
Debt” shall include any interest accruing after the date of any filing by the
Borrower of any petition in bankruptcy or the commencing of any bankruptcy,
insolvency or similar proceedings with respect to the Borrower, whether or not
such interest is allowable as a claim in any such proceeding. Notwithstanding
the foregoing, “Senior Debt” shall not include any obligations or other
indebtedness of the Borrower that by its terms is expressly stated not to be
superior in right of payment to the Subordinated Debt.

“Senior Parties” means
the holders from time to time of the Senior Debt, including any transferee or
assignee of any such holder.

“Subordinated Borrower” means any Collateral
Party and any Subsidiary of a Collateral Party, in each case, that is directly
and primarily liable in respect of Permitted Intercompany Indebtedness that is
subject to these Terms of Subordination.

“Subordinated Creditors” means
the holders from time to time of the Subordinated Debt, including any
transferee or assignee of any such holder, which shall, for the avoidance of
doubt, exclude the Collateral Parties and Subsidiaries of Collateral Parties.

“Subordinated Debt” means any and all
Indebtedness, liabilities and other obligations, whether for principal,
interest, premium, fees, costs, expenses, reimbursements, indemnities or other
amounts (including any amounts owing in respect of a breach of the
representations, warranties or covenants thereunder) in respect of Permitted
Intercompany Indebtedness and rights of subrogation against the Subordinated
Borrower obtained under any Loan Document, now or hereafter owing by the
Subordinated Borrower to any of its Affiliates that is a Subsidiary of the Borrower
and not a Collateral Party or a Subsidiary of a Collateral Party, including
interest on any thereof accruing after the date of any filing by the
Subordinated Borrower of any petition in bankruptcy or the commencement of any
bankruptcy, reorganization, insolvency or similar proceedings with respect to
the Subordinated Borrower.

“Termination
Date” means the date upon which all of the Senior Debt shall have
been indefeasibly paid in cash.

“Terms of
Subordination” means the terms of subordination set out in this Exhibit H.

SECTION 2.   Subordination.

SECTION 2.01       Subordination of Subordinated
Debt. Each Subordinated Borrower, for itself and its successors and
assigns, covenants and agrees, and the Subordinated Creditors, on each of their
own behalf and on behalf of each subsequent holder of Subordinated Debt,
likewise covenant and agree, that, to the extent and in the manner set forth in
these Terms of Subordination, the Subordinated Debt, and the payment from
whatever source of the principal of, and interest and premium (if any) on, the
Subordinated Debt, are hereby expressly made subordinate and subject in right
of payment to the prior payment in full in cash of all Senior Debt.

 2
 

 

SECTION 2.02       Payment of Proceeds Upon
Dissolution. In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to any Subordinated Borrower or to
its creditors, as such, or to its assets, or (b) any liquidation,
dissolution or other winding up of any Subordinated Borrower, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of any Subordinated Borrower, then and in any such event:

(1)           the Senior
Parties shall be entitled to receive payment in full in cash of all amounts due
or to become due on or in respect of all Senior Debt, or provision shall be
made for such payment, before the Subordinated Creditors shall be entitled to
receive any payment on account of principal of, or interest or premium (if any)
on, the Subordinated Debt;

(2)           any payment
or distribution of assets of such Subordinated Borrower of any kind or
character, whether in cash, property or securities, by set-off or
otherwise, to which the Subordinated Creditors would be entitled but for the
provisions of these Terms of Subordination, including any such payment or
distribution that may be payable or deliverable by reason of the payment of any
other indebtedness of such Subordinated Borrower being subordinated to the
payment of the Subordinated Debt (other than Reorganization Debt Securities),
shall be paid by the liquidating trustee or agent or other Person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the Administrative Agent, to be
paid to the Senior Parties, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, and interest and premium (if
any) on, the Senior Debt held or represented by any Senior Party, to the extent
necessary to make payment in full in cash of all Senior Debt remaining unpaid,
after giving effect to any concurrent payment or distribution to the Senior Parties;

(3)           in the event
that, notwithstanding the foregoing provisions of this Section 2.02, any
of the Subordinated Creditors shall have received, before all Senior Debt is
paid in full in cash or payment thereof provided for, any such payment or
distribution of assets of such Subordinated Borrower of any kind or character,
whether in cash, property or securities (other than Reorganization Debt
Securities), including any such payment or distribution arising out of the
exercise by the Subordinated Creditors of a right of set-off or
counterclaim and any such payment or distribution received by reason of any
other indebtedness of such Subordinated Borrower being subordinated to the
Subordinated Debt, then, and in such event, such payment or distribution shall
be held in trust for the benefit of, and shall be immediately paid over or
delivered to, the Administrative Agent, to be paid to the Senior Parties,
ratably according to the aggregate amounts remaining unpaid on account of the
principal of, and interest and premium (if any) on, the Senior Debt held or
represented by each Senior Party, to the extent necessary to make payment in
full in cash of all Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the Senior Parties; and

 3
 

 

(4)           if any of the
Subordinated Creditors shall have failed to file claims or proofs of claim with
respect to the Subordinated Debt earlier than 30 days prior to the deadline for
any such filing, each such Subordinated Creditor shall execute and deliver to
the Administrative Agent such powers of attorney, assignments or other
instruments as the Administrative Agent may reasonably request to file such
claims or proofs of claim.

SECTION 2.03       No Payment of Subordinated Debt.
In the event that any default with respect to any Senior Debt shall have
occurred and be continuing permitting the Senior Parties to declare such Senior
Debt due and payable prior to the date on which it would otherwise have become
due and payable, then no payment on account of the principal of, or interest or
premium (if any) on, the Subordinated Debt or any judgment with respect thereto
(and no payment on account of the purchase or redemption or other acquisition
of the Subordinated Debt) shall be made by or on behalf of any Subordinated
Borrower unless and until such payment shall have been made or the Senior
Parties have waived the benefits of this Section 2.03 in respect of such
default.

Immediately upon the expiration of any period under
this Section 2.03 during which no payment may be made on account of the
Subordinated Debt, the Subordinated Borrowers may resume making any and all
payments of principal of, and interest and premium (if any) on, the
Subordinated Debt (including any payment of principal, interest or premium missed
during such period).

If (a) any Senior Debt shall have been
accelerated, (b) the maturity of the Subordinated Debt shall have been
accelerated pursuant to any document or instrument relating thereto, (c) no
default shall have occurred and be continuing on the date of such acceleration
other than by reason of a default based upon the acceleration of the maturity
of such Senior Debt, (d) after the date of such acceleration the holders
of such Senior Debt shall duly rescind and annul an acceleration of the maturity
of such Senior Debt previously effected by them in accordance with the terms of
the Credit Agreement (or the comparable provisions of any instrument evidencing
or relating to any other Senior Debt), and (e) on the date of such
rescission and annulment, no default shall have occurred and be continuing in
respect of the Subordinated Debt other than by reason of a default based upon
the acceleration of the maturity of such Senior Debt, then such acceleration of
the maturity of the Subordinated Debt shall thereupon be deemed rescinded and
annulled without action on the part of the Subordinated Creditors, but such
rescission and annulment shall not affect the rights of the Subordinated
Creditors with respect to any subsequent or other default that may occur.

In the event that, notwithstanding the foregoing
provisions of this Section 2.03, the Subordinated Creditors shall have
received any payment prohibited by the foregoing provisions of this Section 2.03,
including, without limitation, any such payment arising out of the exercise by
the Subordinated Creditors of a right of set-off or counterclaim and any
such payment received by reason of other indebtedness of such Subordinated
Borrower being subordinated to the Subordinated Debt, then, and in any such
event, such payment shall be held in trust for the benefit of, and shall be
immediately paid over or delivered to, the Administrative Agent, to be paid (x) to
the Senior Parties any amounts due and payable on, or in respect of, the Senior
Debt (y) prior to acceleration of the Senior Debt, to the Subordinated
Borrower and (z) upon acceleration of the Senior Debt, to the Senior
Parties, ratably according to the aggregate amounts remaining unpaid on account
of the principal of, and interest and premium (if any) on, the Senior Debt held
or represented by each Senior Party, for application to such Senior Debt
remaining unpaid, whether or not then due and payable.

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The provisions of this Section 2.03 shall not
alter the rights of the holders of Senior Debt under the provisions of Section 2.02.

SECTION 2.04       Payment Permitted if No Default.
Nothing contained in these Terms of Subordination or in any of the documents or
instruments relating to the Subordinate Debt shall affect the obligation of any
Subordinated Borrower to make (or prevent any Subordinated Borrower from
making) regularly scheduled payments of principal of, or interest and premium
(if any) on, the Subordinated Debt or any other amount payable by such
Subordinated Borrower under any of the documents or instruments relating to the
Subordinate Debt except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
creditors or other marshalling of assets and liabilities of such Subordinated
Borrower referred to in Section 2.02, or under the conditions described in
Section 2.03.

SECTION 2.05       Provisions Solely to Define
Relative Rights. The provisions of this Section 2 are and are intended
solely for the purpose of defining the relative rights of the Subordinated
Creditors on the one hand and the Senior Parties on the other hand. Nothing
contained in this Section 2 or elsewhere in these Terms of Subordination
or in any of the documents or instruments relating to the Subordinate Debt is
intended to or shall:

(a)           impair, as
among any Subordinated Borrower, its creditors other than the Senior Parties
and the Subordinated Creditors, the obligation of such Subordinated Borrower,
which is absolute and unconditional, to pay to the Subordinated Creditors the
principal of and interest on the Subordinated Debt as and when the same shall
become due and payable in accordance with its terms;

(b)           affect the
relative rights against such Subordinated Borrower of the Subordinated
Creditors and creditors of such Subordinated Borrower other than the Senior
Parties;

(c)           vitiate the
occurrence of a default under any of the documents or instruments relating to
the Subordinated Debt to the extent that any failure to make a payment of
principal of, or interest or premium (if any) on, any Subordinated Debt by
reason of the conditions specified in Section 2.02 or 2.03 would
otherwise constitute such a default; or

(d)           prevent the
Subordinated Creditors from exercising all remedies otherwise permitted by
applicable law upon default under these Terms of Subordination or any of the
documents or instruments relating to the Subordinate Debt, subject to the
rights, if any, under this Section 2 of the Senior Parties (i) in any
case, proceeding, dissolution, liquidation or other winding up, assignment for
the benefit of creditors or other marshalling of assets and liabilities of such
Subordinated Borrower referred to in Section 2.02, to receive, pursuant to
and in accordance with Section 2.02, cash, property and securities
otherwise payable or deliverable to the Subordinated Creditors, or (ii) under
the conditions specified in Section 2.03, to prevent any payment
prohibited by Section 2.03.

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SECTION 2.06       No
Waiver of Subordination Provisions. (a)  No right of the
Administrative Agent or any Senior Party to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of any Subordinated Borrower or by any act or
failure to act, in good faith, by the Administrative Agent or any Senior Party,
or by any non-compliance by any Subordinated Borrower with the terms,
provisions and covenants of these Terms of Subordination, regardless of any knowledge thereof the
Administrative Agent or any Senior Party may have or be otherwise charged with.

(b)           Without in
any way limiting the generality of the foregoing paragraph, the occurrence of
any one or more of the following (with or without the consent of or notice to
any Subordinated Creditor), shall not cause any Senior Party to incur any obligation
to any Subordinated Creditor and shall not impair or release the subordination
provided in these Terms of Subordination or the obligations hereunder of any
Subordinated Creditor to the Senior Parties, even if any right of reimbursement
or subrogation or other right or remedy of the Subordinated Creditors is
extinguished, affected or impaired thereby:

(i)                                     at
any time or from time to time, the time for any performance of or compliance
with any Subordinated Debt or any Senior Debt shall be extended, or such
performance or compliance shall be waived;

(ii)                                  the
terms, covenants or obligations relating to any Senior Debt are in any way
amended, modified or supplemented (including pursuant to any amendment,
modification or supplement to any Financing Document or any document or
instrument relating to any of the foregoing);

(iii)                               the
maturity of any Subordinated Debt or any Senior Debt shall be accelerated, or
any Subordinated Debt shall be modified, supplemented or amended in any respect
(regardless of whether the consent of the Senior Parties shall be given
pursuant to Section 9 below);

(iv)                              any
Lien or Guarantee shall be granted to, or in favor of, any Senior Party as
security for any Senior Debt (regardless of whether any such Lien shall be
perfected or whether any such Guarantee shall be valid or shall at any time be
released);

(v)                                 any
Lien shall be granted to, or in favor of, any Subordinated Creditor as security
for any Subordinated Debt (regardless of whether any such Lien shall be
perfected);

(vi)                              the
assignment or transfer of any Senior Party’s rights under or interest in any
Senior Debt; or

 6
 

 

(vii)                           any
other circumstance which might otherwise constitute a defense available to, or
a discharge of, the Subordinated Borrower or any Subordinated Creditor.

(c)           Without in
any way limiting the generality of the foregoing paragraph (b), any
Senior Party may, at any time and from time to time, without the consent of or
notice to the Subordinated Creditors, without incurring any obligation to the
Subordinated Creditors, and without impairing or releasing the subordination
provided herein or the obligations hereunder of the Subordinated Creditors, do
any one or more of the following, even if any right of reimbursement or
subrogation or other right or remedy of the Subordinated Creditors is
extinguished, affected or impaired thereby:

(i)                                     change
the manner, place or terms of payment of or extend the time of payment of, or
renew or alter, Senior Debt owed to it or any collateral security or guarantee
therefor, or otherwise amend or supplement in any manner, or enter into any
compromise or settlement in respect of, the Senior Debt owed to it or any
instrument evidencing the same or any agreement under which any Senior Debt
owed to them are outstanding;

(ii)                                  sell,
exchange, release, enforce, delay in enforcing, or otherwise deal with any
property pledged, mortgaged or otherwise securing any Senior Debt owed to it;

(iii)                               release
any Person liable in any manner for any Senior Debt owed to it (including any
guarantor thereof); and

(iv)                              exercise
or refrain from exercising any rights against the Subordinated Borrower and any
other Person.

(d)           Waiver of
Notice. Each Subordinated Creditor unconditionally waives notice of the
incurring of any Senior Debt or any part thereof.

SECTION 2.07       Notice to Subordinated
Creditors. The Subordinated Creditors shall be entitled to rely on the
delivery to each of a written notice by a Person representing itself to be a
Senior Party (or a trustee, fiduciary or agent therefor) to establish that such
notice has been given by a Senior Party (or a trustee, fiduciary or agent
therefor). In the event that any Subordinated Creditor determines in good faith
that further evidence is required with respect to the right of any Person as a
Senior Party to participate in any payment or distribution pursuant to this Section 2,
such Subordinated Creditor may request such Person to furnish evidence to the
reasonable satisfaction of such Subordinated Creditors as to the amount of
Senior Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Section 2 and if such evidence is not
furnished, such Subordinated Creditor may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

 7
 

 

SECTION 2.08       Reliance on Judicial Order or
Certificate of Liquidation Agent. Upon any payment or distribution of
assets of any Subordinated Borrower referred to in this Section 2, the
Subordinated Creditors shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or
similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Subordinated Creditors, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
Senior Debt and other indebtedness of such Subordinated Borrower, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Section 2.

SECTION 3.           Certain Agreements Relating
to Subordinated Debt. Each Subordinated Creditor hereby agrees that it will
not, without the prior written consent of the Senior Parties, amend, modify,
supplement or otherwise alter any Subordinated Debt or any document or
instrument relating thereto.

SECTION 4.           Reinstatement. The
obligations of the Subordinated Creditors under these Terms of Subordination
shall continue to be effective, or be reinstated, as the case may be, if at any
time any payment in respect of any Senior Debt, or any other payment to any
Senior Party in its capacity as such, is rescinded or must otherwise be
restored or returned by the holder of such Senior Debt upon the occurrence of
any Proceeding, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the
Subordinated Borrower or any substantial part of its property, or otherwise,
all as though such payment had not been made.

SECTION 5.           Bankruptcy. These Terms
of Subordination shall remain in full force and effect as between the
Subordinated Creditors and Senior Parties notwithstanding the occurrence of any
Proceeding affecting the Subordinated Borrower.

SECTION 6.           Rights Acquired by Virtue
of Subrogation. Subject to (a) (and only after) the occurrence of the
Termination Date, (b) the final sentence of this paragraph and (c) any
similar rights held by any guarantor of the Senior Debt, the Subordinated
Creditors shall be subrogated (equally and ratably with the holders of all
indebtedness of the Subordinated Borrower that by its express terms is
subordinated to the Senior Debt to the same extent as the Subordinated Debt are
subordinated thereto and that is entitled to like rights of subrogation) to the
rights of the Senior Parties to receive payments and distributions of cash,
property and securities applicable to the Senior Debt until the principal of,
and interest and premium (if any) on, the Subordinated Debt shall be paid in
full in cash. For purposes of such subrogation, no payments or distributions to
the Senior Parties of any cash, property or securities to which the
Subordinated Creditors would be entitled except for the provisions of these
Terms of Subordination, and no payments pursuant to the provisions of these
Terms of Subordination to the Senior Parties by the Subordinated Creditors,
shall, as among the Subordinated Borrower, its creditors other than the Senior
Parties, and the Subordinated Creditors, be deemed to be a payment or
distribution by the Subordinated Borrower to or on account of the Senior Debt. No
payment or distribution to the Senior Parties pursuant to these Terms of
Subordination shall entitle the Subordinated Creditors to exercise any rights
acquired directly or indirectly by virtue of assignment, subrogation or
otherwise in respect of the Subordinated Debt until the termination of the
Credit Agreement.

 8
 

 

SECTION 7.           Amendments. Notwithstanding anything to the contrary in these
Terms of Subordination or any agreement into which they are incorporated, these
Terms of Subordination may be waived, modified, amended or otherwise changed
only by a written agreement signed by the parties hereto and Senior Parties
holding at least 50.01% of the Senior Debt (calculated as if such Senior Debt
facility were fully drawn) at the time of such modification, amendment or other
change.

SECTION 8.           Submission to Jurisdiction;
Waivers. Each Subordinated Creditor and each Senior Party hereby irrevocably
and unconditionally:

(a)           submits for
itself and its property in any legal action or proceeding relating to the
Financing Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction
of the courts of the State of New York, the courts of the United States for the
Southern District of New York, and appellate courts from any thereof; and

(b)           consents that
any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same.

SECTION 9.           WAIVERS OF JURY TRIAL. EACH
SUBORDINATED CREDITOR, EACH SUBORDINATED BORROWER AND EACH SENIOR PARTY HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THESE TERMS OF SUBORDINATION OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH SUBORDINATED
CREDITOR, EACH SUBORDINATED BORROWER AND EACH SENIOR PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THESE TERMS OF
SUBORDINATION BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.

SECTION 10.         Notices. All notices,
requests, consents and demands hereunder shall be in writing and telecopied or
delivered to the intended recipient as specified in Section 10.2 of the
Credit Agreement or, if such recipient is not party to the Credit Agreement, at
the “Address for Notices” specified beneath its name on the signature pages to
the agreement containing these Terms of Subordination or, as to any party, at
such other address as shall be designated by such party in a notice to each
other party. Except as otherwise provided in these Terms of Subordination, all
such communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or
addressed as aforesaid.

 9
 

 

SECTION 11.         Service of Process. Each
Subordinated Creditor irrevocably consents to service of process in the manner
provided for notices in Section 17. Each Subordinated Creditor not
organized in the United States of America or a State thereof (each such
Subordinated Creditor, a “Foreign Party”) hereby irrevocably appoints
[CT Corporation System (the “Process Agent”) with an office on the date
hereof at 111 Eighth Street, 13th Floor, New York, New York 10011, United
States], as its agent to receive on behalf of such Foreign Party and its
property service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding. Such service may be made by
mailing or delivering a copy of such process to such Foreign Party in care of
the Process Agent at the Process Agent’s above address, and such Foreign Party
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. As an alternative method of service, each Foreign Party
also irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to such Foreign
Party at its address specified pursuant to Section 10 (such service to be effective seven
days after mailing thereof). Each Foreign Party covenants and agrees that it
shall take any and all reasonable action, including
the execution and filing of any and all documents, that may be necessary to
continue the designation of the Process Agent above in full force and effect,
and to cause the Process Agent to continue to act as such. Nothing in these
Terms of Subordination will affect the right of any party under these Terms of
Subordination to serve process in any other manner permitted by law.

SECTION 12.         Governing Law. These
Terms of Subordination, and the rights and obligations of the parties under
these Terms of Subordination, shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York without regard
to the conflicts of law rules thereof that would require the application
of the law of another jurisdiction.

SECTION 13.         No Responsibility. The
Senior Parties shall not incur any responsibility or liability to the
Subordinated Creditors or the Subordinated Borrower for any loss whatsoever
which either such party may suffer arising out of or in any way in connection
with the Subordinated Debt or these Terms of Subordination.

 

 10

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