Document:

Exhibit 10.2

DISCRETIONARY INVESTMENT MANAGEMENT AGREEMENT

Discretionary investment management agreement (the “Agreement”) dated as of November 28, 2011 between SPABRA Ltd. (“Client”) and Tamino Capital LLC (“Advisor”).  Pursuant to this Agreement, Client retains Advisor to provide discretionary investment management services to Client on the following terms:

Section 1.

Investment Management Services.  Client hereby appoints Advisor as attorney-in-fact with power to supervise and direct, on a fully discretionary basis and without first consulting Client, the investment of the securities and cash in Client’s investment account (the “Account”) established initially at JP Morgan Clearing Corporation, which is the Account’s initial qualified custodian (the “Custodian”), with Concept Capital Markets LLC as introducing broker,.  Advisor will not have custody over the assets of the Account at any time.  Any income generated with respect to the Account shall be added to the principal of the Account and be re-invested in accordance with the terms herein.  The Account may be increased by new contributions by Client, from time to time, as discussed in this Agreement.  The Account will be funded initially in the amount of $5,000,000, subject to the contribution and withdrawal rights as set forth in Section 8 herein and on Exhibit D - Lock Up Provisions.  The date on which an amount equal to $5,000,000 is in the Account is referred to as the “Funding Date.”

Advisor shall use its best efforts to invest the Account assets in accordance with the investment objectives, guidelines and other information provided in Exhibit A.  Exhibit A may be revised from time to time by Advisor with prior written notice to Client.  The Advisor and the Client hereby acknowledge and agree that, following the date hereof, it is the intent of the Advisor to form a collective investment vehicle which will invest the assets of third parties following the same investment objectives and guidelines as set forth in Exhibit A and that it is the intent of the Client to transfer the amounts invested in the Account to an investment in such vehicle, subject to the review and approval by the Client of such vehicle’s offering documents.

The power-of-attorney granted hereof is a continuing power and shall remain in full force and effect until revoked by Client in writing but any such revocation shall not affect any transaction initiated prior to receipt of such notice of revocation.  Client agrees to provide Advisor such additional information as Advisor may request from time to time to assist it in managing the Account.  It is the intent of this Agreement that only Advisor shall have authority to trade the Account assets on behalf of Client.  

In furtherance of the foregoing, Advisor is authorized:

(a)

with respect to the assets comprising the Account, to make all decisions relating to the manner, method and timing of any and all investments;

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(b)

to buy, sell, exchange, transfer, pledge as collateral and otherwise trade in property of all kinds as discussed on Exhibit A, either in Client’s name or in nominee name on Client’s behalf;

(c)

to direct custodians to deliver funds or securities for the purpose of investing Client’s assets, and to instruct custodians to exercise or abstain from exercising any privilege or right attaching to such assets;

(d)

subject to Section 2, to select the brokers and/or dealers through whom orders shall be executed and Client authorizes Advisor to execute orders and to clear and settle transactions through such brokers and/or dealers;

(e)

to borrow and secure the repayment of any money so borrowed against the assets of Client;

(f)

to make and execute, in the name and on behalf of Client, all such documents (including, without limitation, subscription agreements, customer agreements, brokerage agreements, and other documents in connection with the establishment and maintenance of accounts and investments) and to take all such other actions which Advisor considers necessary or advisable to carry out its investment management duties hereunder; 

(g)

to assist Client’s auditors and others in the performance of all accounting and administrative services which may be required by Client; and

(h)

to retain the services of any person (including affiliates and subsidiaries) to accomplish any of the foregoing. 

Section 2.

 Execution of Investment Account Transactions.  With respect to Account investments made by Advisor, in selecting a broker or dealer, Advisor may consider, among other things, the broker or dealer’s execution capabilities, reputation and access to the markets for the securities being traded and generally will seek competitive commission rates but will not necessarily attempt to obtain the lowest possible commission rate for transactions for the Account.  Client understands and accepts this.  Consistent with obtaining best execution, transactions for Client’s Account may be directed to brokers in return for research or brokerage services furnished by them to Advisor.  Such research generally will be used to service all of Advisor’s clients, but brokerage commissions paid by Client may be used to pay for research that is not used in managing Client’s Account.  Advisor may, in its discretion, cause the Account to pay brokers a commission greater than another qualified broker may charge to effect the same transaction where Advisor determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services received.  All brokerage commissions, stock transfer fees, and other similar charges incurred in connection with transactions for the Account will be paid out of the assets in the Account and are in addition to the fees set forth herein.

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Advisor may combine or “batch” such orders to obtain best execution, to negotiate more favorable commission rates or to allocate equitably among Advisor’s clients (including Client) differences in prices that might have been obtained had such orders been placed independently.  Under this procedure, such publicly traded securities transactions will be averaged as to price and transaction costs and will be allocated among Advisor’s clients (including Client) in proportion to the purchase and sale orders actually placed for each client account on any given day.  Advisor may give a copy of this Agreement to any broker, dealer or other party to a transaction for the Account, as evidence of Advisor’s authority to act for Client.

Section 28(e) of the United States Securities Exchange Act of 1934, as amended, establishes a safe harbor (the “Section 28(e) safe harbor” or “safe harbor”) allowing investment managers to use client funds, by  way of commission dollars, to purchase certain “brokerage and research services.”  Pursuant to such safe harbor, the brokerage and research services must provide lawful and appropriate assistance to the investment manager in the performance of its investment decision-making responsibilities.  Further, the amount of commissions paid by the investment manager must be reasonable in light of the value of the brokerage or research services offered, taking into account various factors, including commission rates, financial responsibility and strength and ability of the broker to efficiently execute transactions.  Accordingly, if Advisor determines in good faith that the amount of commissions charged by a broker is reasonable in relation to the value of the brokerage or research services provided by such broker, Advisor may cause the Account to pay commissions to such broker in an amount greater than the amount another broker might charge.  Advisor intends to use soft dollars to acquire research services.  

Soft dollar items within and outside of the Section 28(e) safe harbor of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether provided directly or indirectly, may be utilized for the benefit of Advisor.  With respect to soft dollar items outside the safe harbor, items include certain research reports, third party investment consultants, Bloomberg service  and terminals, and investment related travel.

Section 3.

No Guaranty of Profitability.  Client understands and acknowledges that Advisor cannot make and is not making any guaranty or representation that the Account will generate profits or that Client will not incur loss of invested capital, and Advisor cannot make and is not making any guaranties regarding the performance or success of the Account.

Section 4.

Net Asset Value Calculation.  The Account’s assets will be valued by the Custodian in accordance with Exhibit C.  

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Section 5.

Fees; Expenses.  (a) Client agrees to pay Advisor fees pursuant to the fee schedule (the "Fee Schedule") which is attached hereto and made a part hereof as Exhibit B.  Client agrees to instruct the Custodian to pay such fees from the Account’s assets.  

(b)

Unless otherwise provided in the Fee Schedule, Client shall pay for, provide for and/or reimburse Advisor for, all expenses of the Account, including but not limited to: (i) all costs and expenses of transferring the assets to the Account; (ii) all taxes and governmental fees and charges incurred by the Account (including all withholding taxes); (iii) all brokerage commissions and other trading costs and fees, underwriting discounts, sales loads, spreads and other similar charges; (iv) all charges of U.S. Depositories and of any custodian and/or other service providers (collectively, “Operating Expenses”).

(c)

The accounting and administration of the Account will be performed by Client and the Custodian (as the case may be).  Client will inform Advisor of any changes in administration in writing.     

Section 6.

Confidentiality.

(a)  Client agrees to hold confidential any non-public or proprietary information, analyses, advice or recommendations of Advisor supplied in connection with the opening of the Account and the trading of the assets of the Account, and Client agrees to keep confidential any methodologies or models utilized in trading the Account.  Client further acknowledges that Client may come into contact with information concerning Advisor or one or more of its clients, affiliates and/or personnel and Client agrees that Client will not communicate, disclose or utilize for Client’s own benefit or for the benefit of any other entity or persons, any and all information that is not in the public domain with regard to Advisor and/or its affiliates, clients and/or or personnel, including without limitation, any or all procedures or techniques related to investment strategies, essential ideas and principles underlying such procedures, and securities transactions effected for positions held by the Account.  All of the foregoing referred to in this Section 6(a) above shall be collectively referred to as “Confidential Information.” 

(b)

Client agrees that Client will not (i) use such Confidential Information except in connection with investment activities for Client’s own account or (ii) disclose any Confidential Information without Advisor’s consent to any third person other than to Client’s advisors and consultants (unless required to do so by law, regulation or the request of any regulatory or self-regulatory authority).  

(c)

Notwithstanding anything herein to the contrary, Client agrees that Advisor may disseminate or include the Account's track record (with respect to Advisor's performance) and may indicate that Advisor provides investment management services to Client in any filings and/or marketing materials without restriction to the extent required by law.

(d)

It is expressly agreed that among the various remedies for violation of this Section 6 shall be specific performance and injunctive relief issued by any court having jurisdiction over these matters.

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Section 7.

Deposits; Withdrawals.  During the term of this Agreement, Client may (i) make deposits into the Account as of the first business day of a calendar month, or at such other times as agreed to by Advisor, upon 5 days’ prior written notice of the date and amount of the deposit and (ii) subject to the lock up provisions set forth on Exhibit D - Lock Up Provisions, make withdrawals from the Account as of the last business day of a calendar month, or at such other times as agreed to by Advisor, upon 180 days’ prior written notice of the date and amount of the withdrawal, provided that withdrawals from the Account are subject to the liquidity of the Account’s investments.  Notwithstanding Section 7(ii) above, Client understands that investments may not be saleable within such notice period and/or as of any withdrawal date and, as such, Advisor, with the consent of Client, may decide to distribute securities or other property of the Account in lieu of cash.  A “business day” means any day other than a Saturday, Sunday or a U.S. banking holiday.

Section 8.

Standard of Liability; Indemnification.

(a)

Standard of Liability.  Advisor and each Advisor Affiliate (as defined in Section 8(b) below) shall not be liable to Client, and its shareholders, members, partners, managers, directors, officers, employees, principals, affiliates, and agents for any error of judgment or for any loss suffered by Client in connection with the subject matter of this Agreement howsoever any such loss may have occurred unless such loss arises from gross negligence, willful misconduct or fraud (as finally judicially determined in a court of lawful jurisdiction) in the performance or non-performance by Advisor or persons designated by it of its obligations or duties.

(b)

Client’s Agreement to Indemnify. Client shall, to the extent permitted by law, indemnify and defend Advisor and its affiliates, employees, members, managers, directors, officers, and agents, and each person who, directly or indirectly controls, is controlled by or under common control with Advisor (each an “Advisor Party”) and hold such persons harmless from and against (i) any and all claims, demands, proceedings, suits and actions against such persons and (ii) any and all losses, liabilities, damages, expenses and costs (including but not limited to reasonable attorneys' fees and costs of investigation or preparation of defense) (collectively items (i) and (ii), the “Losses”) suffered by such persons, which arise out of or in connection with: (a) this Agreement, (b) Advisor’s activities on behalf of Client, (c) any material breach by Client of Client’s duties or obligations under this Agreement, and/or (d) any material inaccuracy or misrepresentation in, or breach of, any of the warranties, representations, covenants or agreements made by Client therein, provided that such Losses did not arise from Advisor’s gross negligence, willful misconduct or fraud (as finally judicially determined in a court of lawful jurisdiction).  In addition, if Advisor or any Advisory Party is made party to any claim, dispute, litigation or otherwise incurs any Losses as a result of or in connection with the activities or claimed activities of Client unrelated to Client’s duties to Advisor under this Agreement, Client will indemnify and hold harmless Advisor and each Advisor Party against any such Losses incurred in connection therewith.

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(c)

If the Advisor or any Advisor Party (the “Indemnitee”) is or becomes a party to any action or proceeding in respect of which it may be entitled to seek indemnification from Client (the “Indemnitor”), the Indemnitee shall promptly notify the Indemnitor thereof.  The Indemnitor shall be entitled to participate in any such suit or proceeding and, to the extent that it may wish, assume the defense thereof with counsel reasonably satisfactory to the Indemnitee.  After notice of an election by the Indemnitor so to assume the defense thereof, the Indemnitor will not be liable to the Indemnitee hereunder for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof other than reasonable costs of investigation or reasonable legal expenses incurred as a result of (i) potential conflicts of interest between the Indemnitee and Indemnitor or (ii) the protection of proprietary or privacy interests of other clients of the Indemnitee.  The Indemnitor shall advance to the Indemnitee the reasonable costs and expenses of investigating and/or defending such claim, subject to receiving a written undertaking from the Indemnitee to repay such amounts if and to the extent that a court or other tribunal of competent jurisdiction subsequently determines that the Indemnitee was not entitled to indemnification hereunder.  The Indemnitor shall not be liable hereunder for any settlement of any action or claim effected without its written consent thereto. 

(d)

Notwithstanding any provision of this Section 8 to the contrary, if in any action or claim as to which indemnity is or may be available an indemnified party shall determine that its interests are or may be adverse, in whole or in part, to the interests of the indemnifying party or that there may be legal defenses available to the indemnified party which are or may be different from, in addition to, or inconsistent with the defenses available to the indemnifying party, the indemnified party may retain its own counsel in connection with such action or claim, in which case the indemnified party shall be responsible for any legal, accounting, and other fees and expenses  reasonably incurred by or on behalf of it in connection with investigating or defending such action or claim.  Save as aforesaid, in no event shall an indemnifying party be liable for the fees and expenses of more than one counsel for all indemnified parties in connection with any or claim or in connection with separate but similar or related actions or claims in the same jurisdiction arising out of the same general allegations.  An indemnifying party shall not be liable for a settlement of any such action or claim effected without its written consent, but if any such action or claim shall be settled with the written consent of an indemnifying party or if there shall be a final judgment for the plaintiff in any such action or claim, the indemnifying party shall indemnify, hold harmless, and defend an indemnified party from and against any loss, liability, or expense in accordance with this Section 8 by reason of such settlement or judgment. 

(e)

Any indemnity expressly given to Advisor in this Agreement is in addition to and without prejudice to any indemnity provided by law.  In addition, notwithstanding any of the foregoing to the contrary, the provisions of this Section 8 shall not be construed so as to relieve (or attempt to relieve) Advisor (or any delegatee) of any liability to the extent (but only to the extent) that such liability may not be waived, modified or limited under applicable law (including liability under U.S. securities laws which, under certain circumstances, impose liability even on persons acting in good faith), but shall be construed so as to effectuate the provisions of this Section to the fullest extent permitted by law. In the opinion of the U.S. Securities and Exchange Commission, indemnification for liabilities arising under the U.S. Securities Act of 1933, as amended, is against public policy and, therefore, unenforceable.  Accordingly, the Advisor may be entitled to a more limited right of action than it would otherwise be entitled absent such limitation.

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Section 9.

Conflicts of Interest; Other Accounts.

(a)

Client acknowledges that the services which Advisor renders to Client hereunder are not exclusive.  Advisor and any Advisor Party (collectively for purpose of this Section 9, “Advisor”) advise and will continue to advise other clients.  In addition, Advisor may serve as the general partner of limited partnerships or investment advisor or in such other capacity for other clients and/or pooled investment vehicles engaged in investment activities, and Advisor may invest its own funds in one or more such partnerships or investment vehicles.  Advisor may form other such investment vehicles in the future.  All benefits received by Advisor from such vehicles and activities shall belong to Advisor and not Client and shall not constitute an adjustment with regard to any amount due Advisor hereunder except as discussed herein. 

(b)

Client understands that Advisor furnishes and will continue to furnish investment management and advisory service to others.  Advisor may make recommendations to and take actions on behalf of others (including any fund managed by Advisor), which may be the same as or different from those made or taken on behalf of the Account.  Nothing in this Agreement shall be deemed to impose on Advisor or any of its affiliates any obligation to make any trade, purchase or sale for Client regarding any security or option thereon which Advisor or any of its affiliates may recommend purchase or sale for its own account or for the account of any other client, nor shall anything in this Agreement be deemed to impose upon Advisor any obligation to give Client the same advice as may be given to any other client.  Nothing in this Agreement shall limit the freedom of Advisor to act as investment adviser, manager or custodian to any other client. In certain circumstances, Advisor may form other pooled investment vehicles for the purpose of making a particular investment, and may cause the Account and/or certain of its other accounts to invest in such investment vehicles.  Client acknowledges that Advisor and its members, managers, officers, directors, and/or employees may from time to time have positions in or transact in securities and other investments recommended to clients, including Client.  Such transactions may differ from or be inconsistent with the advice given, or the timing or nature of Advisor’s action or actions with respect to Client.  Advisor may aggregate the Account’s orders with orders of its proprietary accounts and/or orders of other Clients.  Such aggregation may operate on some occasions to the advantage, and on other occasions to the disadvantage, of the Account.

(c)

Advisor may engage in transactions in which Advisor causes the Account to purchase securities or other instruments from, or sell securities or other instruments to, other accounts managed by Advisor and/or its affiliates (“Cross-Trades”).  Advisor and/or its affiliates will not take brokerage commissions or otherwise be compensated for effecting any such Cross-Trades.  All Cross-Trades will reflect the market value of the security or other instrument being purchased or sold and Advisor and/or its affiliates, as applicable, will always seek best execution. 

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(d)

Nothing herein contained shall prevent Advisor from dealing with Client as beneficial owner on the sale or purchase of securities or assets to or from Client or otherwise dealing with Client as principal provided that the transaction must be carried out on normal commercial terms negotiated at arm's length and pursuant to applicable law. 

(e)

Client acknowledges that incentive-based compensation may create an incentive for Advisor to make investments that are riskier or more speculative than would otherwise be the case in the absence of incentive-based compensation. 

Section 10.  Representations and Warranties.  (a) Advisor represents and warrants to Client as follows:

(i)

Advisor is a Delaware limited liability company.

(ii)

Advisor has full corporate power and authority to perform its obligations under this Agreement.

(iii)

Advisor will promptly notify Client of any material changes in any of the representations and warranties made herein.

(iv)

The execution of this Agreement by Advisor has been duly authorized by all necessary corporate or other legal action, this Agreement is binding on Advisor in accordance with its terms, and the terms hereof do not violate any obligation by which Advisor is bound, whether arising by contract, operation of law or otherwise.

(b)

Client represents and warrants to Advisor as follows:

(i)

Client is an Irrevocable Trust, formed in the State of Maryland.

(ii)

Client has had an opportunity to discuss the trading program described herein and in the investment guidelines on Exhibit A with Advisor and fully understands such program and the risks attendant to it.

(iii)

Client is the beneficial owner of the Account.

(iv)

The execution of this Agreement by Client has been duly authorized by all necessary corporate or other legal action, this Agreement is binding on Client in accordance with its terms, and the terms hereof do not violate any obligation by which Client is bound, whether arising by contract, operation of law or otherwise.

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(v)

Client is validly existing under the laws of the jurisdiction of incorporation and is qualified to do business and is in good standing in each other jurisdiction in which the nature of conduct of its business requires such qualification and in which the failure to so qualify would materially adversely affect its ability to conduct its business activities.

(vi)

Client will promptly notify Advisor of any material changes regarding client of which Client is aware that make any of the foregoing representations and warranties inaccurate or untrue.

(vii)

The execution of this Agreement by Client has been duly authorized by all necessary corporate or other legal action, this Agreement is binding on Client in accordance with its terms, and the terms hereof do not violate any obligation by which Client is bound, whether arising by contract, operation of law or otherwise.

(viii)

Client has full corporate power and authority to perform the obligations under this Agreement.

(ix)

Client is aware of the highly speculative nature of, and risks of loss inherent in, the investments contemplated herein and is financially capable of engaging in such trading and has sufficient assets beyond the value of the Account (including any funds that may in the future be committed to the Account).

(x)

Client is familiar with Financial Industry Regulatory Authority (“FINRA”) Rule 5130, as the same may be amended, supplemented or replaced from time to time (“FINRA Rule 5130”), and FINRA Rule 5131, as the same may be amended, supplemented or replaced from time to time (“FINRA Rule 5131”), and their respective provisions.  The Client is eligible to purchase new issues, as that term is defined in the FINRA Rule 5130, in compliance with the FINRA Rule 5130.  The basis for Client’s eligibility to purchase new issues is the fact that no person having a beneficial interest (as defined in the FINRA Rule 5130) in Client is a restricted person (as defined in the FINRA Rule 5130) or, if a person holding a beneficial interest could be considered a restricted person, such person otherwise falls within the exemptions stated in the FINRA Rule 5130.  In addition, Client is not an executive officer or director or a person materially supported by an executive officer or director of a public company or a “covered non-public company” under FINRA Rule 5131.  Client agrees to promptly notify Advisor if either of the foregoing representations becomes inaccurate and further agrees to provide any information requested by a broker providing execution or clearing services hereunder in compliance with its obligations under FINRA Rule 5131.

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(xi)

Client is a “qualified client” as that term is defined in the Investment Advisers Act of 1940, as amended (the “Advisers Act”) (see Exhibit E attached hereto).

(xii)

The beneficial owner of the Account is not subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the “Plan Asset Regulations” promulgated by the U.S. Department of Labor or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”).  The Account’s assets will not become “plan assets” without Advisor’s consent.

(c)

The foregoing representations and warranties set forth in Sections 10(a) and 10(b) above shall be continuing during the term of this Agreement, and if at any time during the term of this Agreement any event has occurred which would make any of the foregoing representations and warranties untrue or inaccurate in any material respect, the appropriate party promptly will notify the other of such event and the parts related thereto.

Section 11.

Proxy Voting.  Client hereby authorizes Advisor to vote proxies relating to securities held in the Account.  

Section 12.

Term, Termination, Renewal, and Notice.  Following the lock up provisions set forth in Section 7 and Exhibit D – Lock Up Provisions, the term of this Agreement shall continue in full force and effect until terminated by (i) Client as of the last business day of any month upon at least 180 days’ prior written notice to Advisor or (ii) Advisor at any time upon at least 30 days’ prior written notice to Client.   Upon termination, Client understands that investments may not be saleable within such notice period and as such, Advisor, with the consent of Client, may decide to distribute securities or other property of the Account in lieu of cash.  The following Sections shall survive termination of this Agreement: 5 (with respect to accrued but unpaid fees), 6, 8, 12, 14, 16 and 18.

Section 13.

Client Authority.  The person signing this Agreement for Client represents that he or she has been authorized to do so by appropriate agency, authority or government action and that Client, has authority to engage in the type of investing to be done in the Account.  Client agrees to provide Advisor with any necessary documents to evidence both the authority of Client to engage in the activities herein described, and the authority of the signatory to sign documents and give instructions binding on Client.  Client will inform Advisor of any event which might affect this authority or the propriety of this Agreement.

Section 14.

Notices.  Any notice, delivery, request, or other communication made with respect to this Agreement shall be in writing and shall be deemed to have been properly given or made if sent by hand delivery, overnight mail, courier, certified mail, facsimile or e-mail, to the parties at the following addresses and shall be effective upon receipt:

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As to Advisor:

As to Client:

Tamino Capital LLC

SPABRA Ltd.

245 East 80th Street, Apt. 4F

c/o Koppel Kessler Julie, LLC

New York, NY 10075

551 Fifth Avenue – 24th Floor

Attention: Vitor Cepelowicz

New York, NY 10176

E-mail: vitorcep@gmail.com

Email:bkessler@kkjllp.com; fjulie@kkjllp.com

Section 15.

Binding Agreement; Assignment.  This Agreement will bind and be for the benefit of the parties to the Agreement and their successors and permitted assigns.  This Agreement may not be assigned (within the meaning of the Advisers Act) by either party without the prior consent of the other party hereto.

Section 16.

Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of New York without giving effect to any conflict or choice of law provisions of that State.

Section 17.

Stockholders’ Rights.  Advisor may sell, purchase, exchange, exercise, or refuse to exercise, without notifying Client, any stockholders’ rights (such as options, warrants, subscription rights and the like) which may be issued on securities in the Account.  Advisor has the right to vote securities on Client’s behalf.

Section 18.

 Legal Action by Advisor.  Advisor will not advise Client or act for Client in connection with any legal proceedings, including bankruptcies, involving securities held or previously held by the Account or the issuers of these securities unless specifically requested to do so by Client and agreed to by Advisor.  Advisor shall not be required to take any legal action on behalf of the Account or otherwise on Client’s behalf unless fully indemnified to its reasonable satisfaction for all costs and liabilities that may be incurred or suffered by Advisor in connection therewith and if Client requests Advisor to take any action of whatsoever nature which in the reasonable opinion of Advisor might make Advisor liable for the payment of money or liable in any other way Advisor shall be and be kept indemnified in any reasonable amount and form satisfactory to Advisor as prerequisite to taking such action.

Section 19.

No Partnership. It is understood and agreed that Advisor shall be deemed to be an independent contractor of Client and, except as otherwise set forth herein, that Advisor shall not have authority to act for or represent Client in any way and shall not otherwise be deemed to be Client’s agent.  Nothing contained herein shall create or constitute Client and Advisor as members of any partnership, joint venture, association, syndicate, unincorporated business, or other separate entity, nor shall be deemed to confer on any of them any express, implied, or apparent authority to incur any obligation or liability on behalf of any other such entity.

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Section 20.

Miscellaneous.  If any provision of this Agreement is or should become inconsistent with any law or rule of any governmental or regulatory body having jurisdiction over the subject matter of this Agreement, the provisions will be deemed to be rescinded or modified in accordance with any such law or rule.  In all other respects, this Agreement will continue and remain in full force and effect.  No term or provision of this Agreement may be waived or changed except in writing signed by the party against whom such waiver or change is sought to be enforced.  Advisor’s failure to insist at any time upon strict compliance with this Agreement or with any of the terms of the Agreement or any continued course of such conduct on its part will not constitute or be considered a waiver by Advisor of any of its rights or privileges.  The captions appearing in this Agreement are inserted as a matter of convenience and for reference only and shall not define, limit, or describe the scope and intent of this Agreement or any of the provisions thereof.  This Agreement contains the entire understanding between Client and Advisor concerning the subject matter of this Agreement and supersedes all prior agreements and understandings (written or oral) of the parties in connection herewith.

Section 21.  Non-Disparagement.  Client hereby agrees that it shall not at any time say, write or cause to be said or written, directly or indirectly, any statement that may be considered defamatory, derogatory or disparaging with respect to Advisor.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

Advisor:

Tamino Capital LLC

By:  _____________________________

Name: Vitor Cepelowicz

Title: Managing Member

Client: SPABRA LTD.

By:  ________________________________

Name: Barry Kessler

Title: Director

By:  ________________________________

Name: Franklin H. Julie

Title: Director

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On the ______________day, of ____________, 20___, before me personally appeared ____________________________ personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s)is/are subscribed to the within instrument and acknowledged to me that he/she executed the same in their capacities, and that by their signatures on the instrument, the individuals, or the person upon behalf of which the individuals acted, executed the instrument.

____________________________

Notary Public

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Exhibit A

Investment Guidelines

All capitalized terms used in this Exhibit A and not expressly defined herein shall have the same respective meanings as set forth in the Agreement to which this Exhibit A is attached (including the other Exhibits thereto).

Advisor is committed to pursuing and identifying attractive investment opportunities for meaningful long term appreciation.  These opportunities might opportunistically present themselves due to market conditions, minimal coverage or institutional following, regulatory changes, legal events, shareholder activism, corporate events (such as listing, M&A activity, spinoffs, restructurings, and management changes), operational improvements, and changes in the capital structure or policy (such as dividends and share buybacks), among others.  

Advisor expects that one area of research focus will consist of deep value special situations, where Advisor will seek to identify companies that he believes offer compelling valuation with limited downside and at the same time present some sort of catalyst for potential share revaluation. 

Given the opportunistic nature of the investment process, Advisor will source ideas across various industries, geographies (ie., US and non-US securities) and parts of the capital structure (such as equity and credit).  It could also imply in smaller capitalization companies and/or situations with less liquidity. 

The quality of ideas will dictate how invested Advisor will be.

In furtherance of the foregoing, Advisor expects to invest in the following types of instruments and use the following techniques:  

(i)  Advisor will invest the assets of the Account in property of all kinds, including, but not limited to direct investments in: U.S. and non-U.S. securities such as equities (stock, preferred stock), “new issues”, exchanged traded funds, fixed income instruments (such as bonds and treasuries), options (including, without limitation, put options, call options and any combination thereof), and partnership interests.

(ii)  Advisor may further utilize a variety of investment techniques including, but not limited to, short selling, purchase and sale writing of options on securities (both covered and naked options), and the use of borrowed funds for investment purposes (i.e., leverage).

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Exhibit B

Fee Schedule

All capitalized terms used in this Exhibit B and not expressly defined herein shall have the same respective meanings as set forth in the Agreement to which this Exhibit B is attached (including the other Exhibits thereto).

Advisor charges, and Client agrees to pay, the following fees: a quarterly management fee equal to two percent (2.0%) per annum  of the  Account’s net asset value  (the “Management Fee”); and an annual incentive fee equal to twenty percent (20%) of “Net Appreciation” (as defined below)  (the “Incentive Fee”).  The net asset value means the assets of the Account (which includes the Investment Amount) less liabilities of the Account.  The Management Fee is payable quarterly in advance as of the first business day of each quarter, and upon termination of this Agreement, and will be pro rated for partial periods for changes (if any) to the Investment Amount during a calendar month.  The Incentive Fee is payable at the end of each calendar year (the “Incentive Calculation Period”) and upon termination of this Agreement and at anytime there is a partial withdrawal from the account. 

Advisor will send to Client an invoice for Management Fees and/or Incentive Fees that are due.  Such invoice shall be approved by Client and written approval from Client shall be forwarded to Custodian who will pay such fees directly to Advisor by Client outside of the Account.  Any such payment due will be forwarded to Advisor within fifteen (15) days of receipt of invoice. 

“Net Appreciation” shall mean the aggregate net investment profits, both realized and unrealized in the Account, excluding any interest income earned on assets invested in short-term, low risk interest-bearing accounts and U.S. Treasury Bills, during the Incentive Calculation Period (after deduction for brokerage fees, Management Fees and other expenses (as defined below) payable, but before deducting Advisor’s incentive fees payable), less any “Carryforward Loss” (as defined below) from a previous Incentive Calculation Period.  If the Account experiences aggregate net investment losses (both realized and unrealized) for any Incentive Calculation Period, such losses (the “Carryforward Loss”) shall be deducted from Net Appreciation for each succeeding Incentive Calculation Period for the purpose of determining the incentive fee for each such Incentive Calculation Period until the full amount of the Carryforward Loss has been offset by Net Appreciation.  

Client shall pay for, provide for and/or reimburse Advisor for, all Operating Expenses of the Account.

16

Exhibit C

Net Asset Valuation

1.

Securities, other than options, that are listed or admitted to trading on one or more
securities exchanges will be valued at the last sales price on the exchange selected by
Advisor, acting in good faith, or based on prices provided by a dealer whom Advisor, acting in good faith, determines to be a reputable dealer, on the relevant valuation date or, if no sales took place on such Date, at the mean between the “bid” and “asked” prices at the close of trading on the exchange selected by Advisor, acting in good faith, on the relevant valuation date. Securities that are not listed or admitted to trading on an exchange, including, without limitation, “Brady Bonds,” or that are listed on an exchange which Advisor, in good faith believes does not accurately represent such securities’ true value, will be valued at the mean between the bid and asked prices provided by a dealer whom Advisor, acting in good faith, determines to be a reputable dealer.

2.

Options and warrants that are listed or admitted to trading on one or more exchanges will be valued at the last sales price, if such price is equal to or is between, the “bid” and the “asked” prices (otherwise, the mean between the “bid” and “asked” prices will be used), on the exchange selected by Advisor, acting in good faith, on the relevant valuation date.  Options and warrants that are not listed or admitted to trading on an exchange or that are listed on an exchange which Advisor, in good faith believes does not accurately represent such securities’ true value, will be valued at the mean between the bid and asked prices provided by a dealer whom Advisor,  acting in good faith, determines to be a reputable dealer.  Advisor, acting in good faith, may also value options and warrants according to a valuation model or volatility formula based on volatility levels provided by dealers deemed to be reputable by Advisor.  

3.

Illiquid, thinly-traded or hard to value securities and other securities for which no such market prices are available will be generally carried at fair value as reasonably determined by Advisor.

17

Exhibit D

Lock Up Provisions

Lock Up Period.

Client will initially be subject to a twelve (12) month lock-up in respect of the assets comprising the Account as of the Funding Date (the “Lock-up Period”).  Client shall not be permitted to withdraw all or a portion of the assets comprising the Account (including any appreciation thereon) during the Lock-Up unless a Withdrawal Event, as defined below, occurs.  

Withdrawal Event.  

Client will have the right, at its election, to withdraw the assets comprising the Account prior to the expiration of the Lock-Up Period, in accordance with the withdrawal provisions set forth in Section 7 hereof, upon the occurrence of the following (a “Withdrawal Event”): 

Decrease in the Net Asset Value (as defined on Exhibit C) of the Account as follows: If, on any business day, the Net Asset Value of the assets comprising the Account (adjusted for any withdrawals and/or subscriptions) falls by 30% or more when compared to the Net Asset Value of the assets comprising the Account (adjusted for any withdrawals and/or subscriptions) on the Funding Date. 

 

18

Exhibit E

A qualified client is:

1.

Any natural person or company1 that immediately after entering into the Discretionary Investment Management Agreement has at least $1,000,000 under the management of Tamino Capital LLC (“Tamino”).

2.

Any natural person or company (other than a company that is required to be registered under the Investment Company Act of 1940, as amended (the “Company Act”) but is not registered, or a private investment company pursuant to 5 below) that has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than $2,000,000.

3.

A natural person who is an executive officer, director, trustee, general partner, or person serving in a similar capacity, of Tamino, or an employee of Tamino (other than an employee performing solely clerical, secretarial or administrative functions with regard to Tamino) who, in connection with his or her regular functions or duties, participates in the investment activities of Tamino, provided that such employee has been performing such functions and duties for or on behalf of Tamino, or substantially similar functions or duties for or on behalf of another company for at least twelve (12) months.

4.

Any natural person or company (other than a company that is required to be registered under the Company Act but is not registered) that is a "qualified purchaser" as defined in Rule 2(a)(51) of the Company Act and reflected below.

5.

A private investment company, such that the company would be defined as an investment company under section 3(a) of the Company Act, but for the exception provided from that definition by section 3(c)(1) of the Company Act, an investment company registered under the Company Act or a business development company as defined in the Company Act, and each equity owner of such entity satisfies one of the above conditions.

A qualified purchaser is one of the following:

1.

Any natural person who owns not less than $5,000,000 in Investments (as defined below), including any Investments held jointly, in community property or other similarly shared ownership interest with that person’s spouse, including the amount of such person’s Investments held in an individual retirement account or similar account and the Investments of which are directed by and held for the benefit of such person;2

2.

Any company that owns not less than $5,000,000 in Investments, and that is owned directly or indirectly by or for two or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants or ancestors by birth or adoption, or spouses of such descendants or ancestors (each, a “Related Person”), the estates of such persons, or foundations, charitable organizations, or trusts established by or for the benefit of such persons (a “Family Company”);

1    "Company" means a corporation, a partnership, an association, a joint-stock company, a trust, a fund, or any organized group of persons whether incorporated or not; or any receiver, trustee in bankruptcy or similar official or any liquidating agent for any of the foregoing, in his capacity as such.

 

2    In determining whether spouses who are making a joint investment are qualified purchasers, there may be included in the amount of each spouse’s Investments any Investments owned by the other spouses (whether or not such Investments are held jointly).

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3.

Any trust that is not covered by requirement (2) above, that was not formed for the specific purpose of acquiring the securities offered, as to which the trustee or other person authorized to make decisions with respect to the trust, and each settlor or other person who has contributed assets to the trust, are qualified purchasers (as defined herein);

4.

Any other person acting for its own account or the accounts of other qualified purchasers, who in the aggregate owns and invests on a discretionary basis, not less than $25,000,000 in Investments (“Institutional Investors”);

5.

Any qualified institutional buyer as defined in Rule 144A under the Securities Act, acting for its own account, the account of another qualified institutional buyer, or the account of a qualified purchaser, provided that (i) a dealer described in paragraph (a)(1)(ii) of Rule 144A shall own and invest on a discretionary basis at least $25,000,000 in securities of issuers that are not affiliated persons of the dealer; and (ii) a plan referred to in paragraph (a)(1)(D) or (a)(1)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(F) of Rule 144A that holds the assets of such a plan, will not be deemed to be acting for its own account if investment decisions with respect to the plan are made by the beneficiaries of the plan, except with respect to investment decisions made solely by the fiduciary, trustee or sponsor of such plan;

6.

Any company that, but for the exceptions provided for in Sections 3(c)(1) or 3(c)(7) under the Company Act, would be an investment company (hereafter in this paragraph referred to as an “excepted investment company”), provided that all beneficial owners of its outstanding securities (other than short-term paper), determined in accordance with Section 3(c)(1)(A) thereunder, that acquired such securities on or before April 30, 1996 (hereafter in this paragraph referred to as “pre-amendment beneficial owners”), and all pre-amendment beneficial owners of the outstanding securities (other than short-term paper) or any excepted investment company that, directly or indirectly, owns any outstanding securities of such excepted investment company, have consented to its treatment as a qualified purchaser;

7.

Any natural person who is deemed to be a “knowledgeable employee” as such term is defined in Rule 3c-5(4) of the Company Act; or

8.

Any company, if each beneficial owner of the company’s securities is a qualified purchaser.

For purposes of the foregoing description of qualified purchasers, the term Investments means:

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1.

Securities (as defined by Section 2(a)(1) of the Securities Act of 1933, as amended (the “Securities Act”)), other than securities of an issuer that controls, is controlled by, or is under common control with, the prospective qualified purchaser that owns such securities, unless the issuer of such securities is:

(i)

an investment company as defined under Section 3(c)(1) of the Company Act, a company that would be an investment company but for the exclusions provided by Sections 3(c)(1) through 3(c)(9) of the Company Act, or the exemptions provided by Rule 3a-7 under the Company Act for issuers of asset-backed securities or a commodity pool as defined under the Commodity Exchange Act (the “CEA”);

(ii)

a company that either files reports pursuant to Sections 13 or 15(d) of the Exchange Act (a “Public Company”) or has a class of securities that are listed on a “designated offshore securities market” as such term is defined by Regulation S under the Securities Act; or

(iii)

a company with shareholders’ equity of not less than $50,000,000 (determined in accordance with generally accepted accounting principles) as reflected in such a company’s most recent financial statements, provided that such financial statements present the information as of a date within sixteen (16) months preceding the date on which the prospective qualified purchaser acquires the securities of a Section 3(c)(7) fund;

2.

Real estate held for investment purposes;3

3.

Commodity futures contracts, options on commodity futures contracts, and options on any physical commodity traded on or subject to the rules of any contract market designated for trading such transactions under the CEA, any board of trade or exchange outside the United States (“Commodity Interests”), entered into for investment purposes;

4.

Any physical commodity with respect to which a commodity interest is traded on a market specified in paragraph (3) above (“Physical Commodities”), and held for investment purposes;

5.

To the extent not securities as defined in paragraph (1) above, financial contracts (as defined in Section 3(c)(2)(B)(ii) of the Company Act) entered into for investment purposes;4

3    Real estate shall not be considered to be held for investment purposes by a prospective purchaser if it is used by the prospective purchaser or a Related Person (as defined herein) for personal purposes or as a place of business, or in connection with the conduct of the trade or business of the prospective purchaser or a Related Person, provided that real estate owned by a prospective purchaser who is engaged primarily in the business of investing, trading or developing real estate in connection with such business may be deemed to be held for investment purposes.  Residential real estate shall not be deemed to be used for personal purposes if deductions with respect to such real estate are not disallowed by section 280A of the Code.

4    For purposes of calculating Investments as described in paragraphs (3) through (5) above, a Commodity Interest or a Physical Commodity owned, or a financial contract entered into, by the prospective purchaser who is engaged primarily in the business of investing, reinvesting, or trading in commodity interest, physical commodities or financial contracts in connection with such business may be deemed to be held for investment purposes.

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6.

In the case of a prospective investor that is a qualified purchaser, a company that would be an investment company under the Company Act but for the exclusion provided by Section 3(c)(1) thereunder, or a commodity pool under the CEA, any amounts payable to such prospective investor pursuant to a firm agreement or a similar binding commitment pursuant to which a person has agreed to acquire an interest in, or make capital contributions to, the prospective investor upon its demand therefor; and

7.

Cash or cash equivalents (including foreign currencies) held for investment purposes, including bank deposits, certificates of deposit, bankers acceptances and similar bank instruments held for investment purposes, as well as net cash surrender value of an insurance policy.

For purposes of determining whether a prospective qualified purchaser is a qualified purchaser, the aggregate amount of Investments owned and invested on a discretionary basis by the prospective qualified purchaser shall be the Investments’ fair market value on the most recent practicable date or their cost, provided that:

(a)

In the case of Commodity Interests, the amount of Investments shall be the value of the initial margin or option premium deposited in connection with such commodity interests; and

(b)

The following amounts, as applicable, shall be deducted from the amount of Investments owned by the prospective qualified purchaser:

(i)

the amount of any outstanding indebtedness incurred to acquire or for the purpose of acquiring the Investments owned by such prospective qualified purchaser; and

(ii)

in determining whether a Family Company is a qualified purchaser, there shall also be deducted any outstanding indebtedness incurred by an owner of the Family Company to acquire Investments.

22Exhibit 10.1

 

EXECUTION VERSION

 

TRANSACTION SUPPORT AGREEMENT

 

This TRANSACTION SUPPORT AGREEMENT (this “Agreement”) is made and entered into as of December 16, 2012, by and among Edison Mission Energy (the “Company”), on behalf of itself and its subsidiaries, Edison International (“EIX”), for itself and its subsidiaries that directly or indirectly own the Company (the “EIX Subsidiaries”), and the undersigned Noteholders (as defined herein) (together with their respective permitted successors and assigns, each, a “Consenting Noteholder”).  Each of the Company, EIX, and the Consenting Noteholders is referred to as a “Party” and collectively as the “Parties.”  EIX shall mean EIX and the EIX Subsidiaries unless otherwise indicated herein.

 

Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Equity Term Sheet attached hereto as Exhibit A, which term sheet is expressly incorporated by reference herein and made a part of this Agreement as if fully set forth herein (as such term sheet may be amended or modified in accordance with Section 18 hereof, the “Equity Term Sheet”), or the Restructuring Term Sheet attached hereto as Exhibit B, which term sheet is expressly incorporated by reference herein and made a part of this Agreement as if fully set forth herein (as such term sheet may be amended or modified in accordance with Section 18 hereof, the “Restructuring Term Sheet,” together with the Equity Term Sheet, the “Term Sheets,” and each a “Term Sheet”).  The terms of this Agreement and the Term Sheets shall whenever possible be read in a complementary manner; provided that, to the extent there is a conflict between the body of this Agreement and either Term Sheet, this Agreement shall control and govern.

 

RECITALS

 

WHEREAS, the Parties have engaged in arm’s-length, good faith discussions regarding the agreed turnover of the equity interests in the Company and the mutual release of claims on the terms set forth in the Equity Term Sheet (the “Settlement Transaction”);

 

WHEREAS, the Company and the Consenting Noteholders have engaged in arm’s-length, good faith discussions regarding a restructuring of the Company, including the Company’s obligations outstanding under the Indentures(1)  (the “Restructuring”);

 

WHEREAS, to effectuate the Settlement Transaction and Restructuring, the Company and certain of its domestic subsidiaries (collectively with the Company, the “Debtors”) propose to commence voluntary cases under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the Bankruptcy Court;

 

(1)   As used herein, the “Indentures” mean:  (a) that certain Indenture, dated as of June 6, 2006 (as amended, modified, waived, or supplemented through the date hereof, the “2006 Indenture”), providing for the issuance of 7.50% Senior Fixed Rate Notes due 2013 and 7.75% Senior Fixed Rate Notes due 2016 and (b) that certain Indenture, dated as of May 7, 2007 (as amended, modified, waived, or supplemented through the date hereof, the “2007 Indenture,” and with the 2006 Indenture, the “Indentures”), providing for the issuance of 7.00% Senior Fixed Rate Notes due 2017, 7.20% Senior Fixed Rate Notes due 2019, and 7.625% Senior Fixed Rate Notes due 2027 (such notes issued under the Indentures, the “Notes,” and the holders of such Notes, the “Noteholders”), by and among the Company and Wells Fargo Bank, N.A., as trustee (in such capacity, the “Indenture Trustee”).

 

 

WHEREAS, the Settlement Transaction shall be implemented during the Chapter 11 Cases in accordance with the terms of this Agreement and the Equity Term Sheet;

 

WHEREAS, the Restructuring shall be implemented through the Plan; and

 

WHEREAS, subject to the execution of definitive documentation and necessary approvals by the Bankruptcy Court, the following sets forth the agreement among the Parties concerning their respective obligations;

 

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Party, intending to be legally bound hereby, agrees as follows:

 

AGREEMENT

 

1.             Representations and Warranties.

 

a.             Representations and Warranties of the Company.  The Company (on behalf of itself and its subsidiaries) represents and warrants to EIX and the Consenting Noteholders that, as of the date hereof:

 

i.              Power and Authority; Non-Contravention.  It has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its obligations under, this Agreement, and the execution, delivery and performance by it of this Agreement will not contravene any applicable provision of any law, statute, rule or regulation, or any order writ, injunction, or decree of any court or governmental instrumentality or violate any provision of its organizational documents or those of its subsidiaries.

 

ii.             Authorization.  The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.

 

iii.            Binding Obligation.  This Agreement is the legally valid and binding obligation of the Company and its subsidiaries and is enforceable against the Company and its subsidiaries, as applicable, in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

iv.            Governmental Consents.  Except as expressly provided in this Agreement, the execution, delivery, and performance by it of this Agreement do not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with or by, any federal, state, or other governmental authority or regulatory body other than, solely with respect to its performance hereunder, the Bankruptcy Court, the Securities and

 

2

 

Exchange Commission, and the Federal Energy Regulatory Commission (as applicable).

 

b.             Representations and Warranties of EIX.  EIX represents and warrants to the Company and the Consenting Noteholders that, as of the date hereof:

 

i.              Power and Authority; Non-Contravention.  It has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its obligations under, this Agreement, and the execution, delivery and performance by it of this Agreement will not contravene any applicable provision of any law, statute, rule or regulation, or any order writ, injunction, or decree of any court or governmental instrumentality or violate any provision of its organizational documents or those of the EIX Subsidiaries.

 

ii.             Authorization.  The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.

 

iii.            Binding Obligation.  This Agreement is the legally valid and binding obligation of EIX and is enforceable against EIX in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

iv.            Governmental Consents.  Except as expressly provided in this Agreement, the execution, delivery, and performance by it of this Agreement do not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with or by, any federal, state, or other governmental authority or regulatory body other than, solely with respect to its performance hereunder, the Securities and Exchange Commission and the Federal Energy Regulatory Commission (as applicable).

 

c.             Representations and Warranties of Consenting Noteholders.  Each Consenting Noteholder (solely on its own behalf and not on behalf of any other Noteholder) represents and warrants on a several (but not joint) basis to the Company and EIX, as of the date hereof:

 

i.              such Consenting Noteholder (A) either (1) is the sole beneficial owner of the principal amount of Notes set forth in a separate letter to the Company and EIX delivered by counsel to the Consenting Noteholders simultaneously with this Agreement, or (2) has sole investment or voting discretion with respect to the principal amount of claims under the Notes (any such claims, the “Notes Claims”) set forth on in such letter and has the power and authority to bind the beneficial owner(s) of such Notes Claims to the terms of this Agreement and (B) has full power and

 

3

 

authority to act on behalf of, vote, and consent to matters concerning such Notes Claims and to dispose of, exchange, assign, and transfer such Notes Claims, including the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

 

ii.             such Consenting Noteholder has made no assignment, sale, participation, grant, conveyance, pledge, or other transfer of, and has not entered into any other agreement to assign, sell, use, participate, grant, convey, pledge, or otherwise transfer, in whole or in part, any portion of its right, title, or interests in any Notes Claims that are subject to this Agreement that conflict with the representations and warranties of such Consenting Noteholder herein or would render such Consenting Noteholder otherwise unable to comply with this Agreement and perform its obligations hereunder;

 

iii.            such Consenting Noteholder (A) has the requisite knowledge and experience in financial and business matters of this type such that it is capable of evaluating the merits and risks of entering into this Agreement and of making an informed investment decision and has conducted an independent review and analysis of the business and affairs of the Company and its subsidiaries that it considers sufficient and reasonable for purposes of entering into this Agreement and (B) is an “accredited investor” (as defined by Rule 501 of the Securities Act of 1933, as amended);

 

iv.            this Agreement constitutes the legally valid and binding obligation of each such Consenting Noteholder thereto, as applicable, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability; and

 

v.             such Consenting Noteholder does not have actual knowledge of the occurrence of any event that, due to any fiduciary or similar duty to any other person, would prevent it from taking any action required of it under this Agreement.

 

2.             Covenants of EIX.

 

Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, EIX agrees (and to cause the EIX Subsidiaries and each of its and their representatives, agents, and employees) to, as applicable:

 

a.             support, and take all reasonable actions necessary or reasonably requested by the Debtors, to obtain approval of the Shared Services Motion and Shared Services Order (and related motions in form and substance reasonably acceptable to EIX and filed by the Debtors) by the dates set forth in the Equity Term Sheet and this

 

4

 

Agreement and to provide the intercompany and shared services to the Debtors as set forth and approved therein;

 

b.             use its best efforts to negotiate definitive documentation of the Settlement Transaction (including the MRA and the MRA Agreements), and support entry of an order of the Bankruptcy Court approving the Settlement Transaction, including approval of the MRA and the MRA Agreements and assumption of this Agreement and the Tax Sharing Agreements, by the dates set forth in the Equity Term Sheet and this Agreement;

 

c.             not seek or support the appointment of an official committee of equity interest holders in the Chapter 11 Cases;

 

d.             perform its obligations under the Equity Term Sheet, including under the Tax Sharing Agreements, in a manner consistent with the terms set forth in the Equity Term Sheet during the period between the Petition Date and a decision by the Bankruptcy Court on approval of the Settlement Transaction;

 

e.             act in good faith to provide reasonable diligence to the advisors to the Noteholders and independent advisors to the Company about tax and financial information relevant to the Settlement Transaction to the extent EIX reasonably can and subject to confidentiality and legal requirements.;

 

f.             not directly or indirectly (i) seek, solicit, support, encourage, or vote its Claims or other claims or interests (including, for the avoidance of doubt, any claims or interests on behalf of any equity interests in any of the Debtors) for, consent to, encourage, or participate in any discussions regarding the negotiation or formulation of any plan of reorganization, proposal, offer, dissolution, winding up, liquidation, reorganization, merger, consolidation, business combination, joint venture, partnership, sale of assets, or restructuring for any of the Debtors other than the Plan; (ii) take any other action that is inconsistent with, or that would delay or obstruct the proposal, solicitation, confirmation, or consummation of the Plan or the Settlement Transaction; or (iii) otherwise support any plan or sale process proposed by any entity other than the Debtors following the entry of an order in the Chapter 11 Cases terminating the Debtors’ exclusive right to file a plan of reorganization pursuant to section 1121 of the Bankruptcy Code that is inconsistent with this Agreement and the Term Sheets; and

 

g.             not take any action that is (i) inconsistent with the satisfaction of the conditions precedent set forth in this Agreement and the Term Sheets, (ii) inconsistent with, or that would delay or obstruct the proposal, solicitation, confirmation, or consummation of the Plan or the Settlement Transaction, or (iii) inconsistent with, or is intended or is likely to interfere with approval and consummation of, the Settlement Transaction, the Plan, or other transactions set forth in this Agreement and the Term Sheets;

 

5

 

provided, however, that, except as otherwise expressly set forth in this Agreement, the foregoing provisions will not limit the rights of EIX to appear and participate as a party in interest in any matter to be adjudicated in any case under the Bankruptcy Code (or otherwise) concerning the Debtors, so long as such appearance and the positions advocated in connection therewith are not inconsistent with this Agreement, the Term Sheets, the Settlement Transaction, or the Plan.

 

3.             Covenants of the Consenting Noteholders.

 

Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, each Consenting Noteholder (solely on its own behalf and not on behalf of any other Noteholder) hereto agrees, severally and not jointly to, as applicable:

 

a.             not object to or oppose the Shared Services Motion and Shared Services Order (so long as such Shared Services Motion and Shared Services Order are consistent in all material respects with the form of the Shared Services Motion and Shared Services Order provided to the Consenting Noteholders’ professional advisors prior to the Petition Date);

 

b.             use its best efforts to negotiate definitive documentation of the Settlement Transaction (including the MRA and the MRA Agreements) and support entry of an order of the Bankruptcy Court approving the Settlement Transaction, including approval of the MRA and the MRA Agreements and assumption of this Agreement and the Tax Sharing Agreements, by the dates set forth in the Equity Term Sheet and this Agreement;

 

c.             support performance of the obligations under the Equity Term Sheet, including under the Tax Sharing Agreements, in a manner consistent with the terms set forth in the Equity Term Sheet during the period between the Petition Date and a decision by the Bankruptcy Court on approval of the Settlement Transaction;

 

d.             not directly or indirectly (i) seek, solicit, support, encourage, or vote its Notes Claims or other claims or interests (including, for the avoidance of doubt, any claims or interests on behalf of any equity interests in any of the Debtors) for, consent to, encourage, or participate in any discussions regarding the negotiation or formulation of any plan of reorganization, proposal, offer, dissolution, winding up, liquidation, reorganization, merger, consolidation, business combination, joint venture, partnership, sale of assets, or restructuring for any of the Debtors that is inconsistent with this Agreement and the Term Sheets; (ii) take any other action that would delay or obstruct the approval of the Settlement Transaction; or (iii) otherwise support any plan or sale process proposed by any entity other than the Debtors following the entry of an order in the Chapter 11 Cases terminating the Debtors’ exclusive right to file a plan of reorganization pursuant to section 1121 of the Bankruptcy Code that is inconsistent with this Agreement and the Term Sheets; and

 

6

 

e.             subject to the terms of this Agreement and the Term Sheets, not take any action that is (i) inconsistent with the satisfaction of the conditions precedent set forth in this Agreement and the Term Sheets, (ii) inconsistent with, or is intended or is likely to interfere with approval and consummation of, the Settlement Transaction, the Restructuring, or other transactions set forth in this Agreement and the Term Sheets, or (iii) inconsistent with this Agreement and the Term Sheets, including supporting any chapter 11 plan that does not incorporate the terms and conditions set forth in this Agreement and such Term Sheets;

 

provided, however, that, except as otherwise expressly set forth in this Agreement, the foregoing provisions will not limit the rights of any Party under the Indentures or applicable law to appear and participate as a party in interest in any matter to be adjudicated in any case under the Bankruptcy Code (or otherwise) concerning the Debtors, so long as such appearance and the positions advocated in connection therewith are not inconsistent with this Agreement, the Term Sheets, or the Settlement Transaction.

 

If any Consenting Noteholder is appointed to and serves on an official committee in the Chapter 11 Cases, the terms of this Agreement shall not be construed so as to limit such Consenting Noteholder’s exercise of its fiduciary duties to any person arising from its service on such committee, and any such exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement; provided, however, that fulfillment of such Party’s fiduciary duties in its capacity as a member of such committee shall not release or excuse such Party from its obligations under this Agreement; provided, further, however, that nothing in this Agreement shall be construed as requiring any Consenting Noteholder to serve on any official committee in the Chapter 11 Cases.

 

4.             Covenants of the Company.

 

Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with its terms, the Company (on behalf of itself and its subsidiaries) agrees that it shall:

 

a.             support, and take all reasonable actions necessary to obtain Bankruptcy Court approval of the Shared Service Motion and Shared Services Order (and related motions filed by the Debtors), in each case in form and substance reasonably acceptable to EIX and the Consenting Noteholders, by the dates set forth in the Equity Term Sheet and this Agreement and to provide the intercompany and shared services as set forth and approved therein;

 

b.             use its best efforts to negotiate definitive documentation of the Settlement Transaction (including the MRA and the MRA Agreements) and support and take all reasonable actions necessary to obtain entry of a final order of the Bankruptcy Court approving the Settlement Transaction, including approval of the MRA and the MRA Agreements and assumption of this Agreement and the Tax Sharing Agreements, by the dates set forth in the Equity Term Sheet and this Agreement;

 

7

 

c.             perform its obligations under the Term Sheets, including under the Tax Sharing Agreements, in a manner consistent with the terms set forth in such Term Sheets during the period between the Petition Date and a decision by the Bankruptcy Court on approval of the Settlement Transaction;

 

d.             use its  best  efforts to (i) support, complete, and satisfy the conditions to the consummation of the Settlement Transaction and Restructuring or other transactions set forth in this Agreement, and confirm and take effective the Plan under the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and the Local Rules of the Bankruptcy Court (the “Local Rules”) within the timeframes set forth herein and in the Term Sheets, and (ii) obtain any and all required regulatory and/or third-party approvals for the Settlement Transaction, Restructuring, or other transactions set forth in this Agreement;

 

e.             timely file a formal objection to any motion filed with the Bankruptcy Court by a third party seeking the entry of an order (i) directing the appointment of an examiner with expanded powers or a trustee, (ii) converting the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code, or (iii) dismissing the Chapter 11 Cases;

 

f.             timely file a formal objection to any motion filed with the Bankruptcy Court by a third party seeking the entry of an order modifying or terminating the Company’s exclusive right to file and/or solicit acceptances of a plan of reorganization;

 

g.             not take any action that is (i) inconsistent with the satisfaction of the conditions precedent set forth in this Agreement, (ii) inconsistent in any material respect with this Agreement, the Term Sheets, the Settlement Transaction, or, after the Plan is filed, the Plan, or (iii) inconsistent with, or is intended or is likely to interfere with approval and consummation of the Settlement Transaction, Restructuring, or other transactions set forth in this Agreement;

 

h.             timely pay, without any requirement for the filing of fee applications, the reasonable and documented fees and expenses of the financial and legal advisors to the Consenting Noteholders following entry of the order (if required) of the Bankruptcy Court granting authority to assume such advisors’ respective payment letters; and

 

i.              comply with all of its obligations under this Agreement unless compliance is waived in writing by the parties hereto.

 

5.             Fiduciary Duty of the Company.

 

Nothing in this Agreement shall prevent the Company (on behalf of itself and its subsidiaries) from taking or failing to take any action that the Company is obligated to take (or obligated to fail to take) on behalf of itself or its subsidiaries in the performance of any fiduciary or similar duty which the Company or its subsidiaries, as applicable, owes or owe to any other person or entity under applicable law, provided, that it is agreed that such act may result in an

 

8

 

EIX Termination Event, a Required Consenting Noteholder Termination Event, or a Company Termination Event (each as defined below).  The Company shall give prompt written notice of any determination made in accordance with this Section 5.  The Company (on behalf of itself and its subsidiaries) represents to EIX and the Consenting Noteholders that as of the Agreement Effective Date (as defined herein), based on the facts and circumstances actually known by the Company as of the Agreement Effective Date, the Company’s entry into this Agreement is consistent with its fiduciary duties and those of its subsidiaries.

 

6.             Transfer of Notes Claims or Other Claims or Interests.

 

Each Consenting Noteholder agrees that, so long as this Agreement has not been terminated in accordance with its terms, it shall not (a) grant any proxies to any person in connection with its Note Claims, or other claims against or interests in any Debtor, to vote on the Plan or (b) sell, loan, issue, pledge, hypothecate, assign, transfer, or otherwise dispose of (including by participation) (the “Transfer”), directly or indirectly, in whole or in part, any Notes Claim, or any option thereon or any right or interest therein, unless (i) the transferee is a Party to this Agreement or (ii) if the transferee is not to a Party to this Agreement prior to the effectiveness of the Transfer, such transferee delivers to the Company, at or prior to the time of the proposed Transfer, an executed copy of a transfer agreement in the form of Exhibit C attached hereto, in which event the transferee shall be deemed to be a Consenting Noteholder hereunder and the transferor shall be deemed to relinquish its rights (and be released from its obligations) under this Agreement to the extent of such transferred rights and obligations.  Each Consenting Noteholder agrees that any Transfer or purported Transfer that does not comply with this Agreement shall be deemed void ab initio.  For the avoidance of doubt, this Agreement shall in no way be construed to preclude any holder of Notes Claims from acquiring additional Notes or any other interests in any of the Debtors; provided, that any such additional Notes or other interests in such Debtor shall, upon acquisition, automatically be deemed to be subject to all the terms of this Agreement.  For the avoidance of doubt, the Parties agree that credit default swaps shall not be deemed or construed to be claims or interests in the Debtors.

 

Notwithstanding anything herein to the contrary (i) a Consenting Noteholder may Transfer or participate any right, title or interest in Note Claims to an entity that is acting in its capacity as a Qualified Marketmaker without the requirement that the Qualified Marketmaker be or become a Consenting Noteholder, provided that any subsequent Transfer by such Qualified Marketmaker of the right, title or interest in such Note Claims shall only be valid if the transferee is or becomes a Consenting Noteholder by executing and delivering a Transfer Agreement, and (ii) to the extent that a Consenting Noteholder is acting in its capacity as a Qualified Marketmaker, it may Transfer or participate any right, title or interest in any Notes that the Qualified Marketmaker acquires from a holder of the Notes who is not a Consenting Noteholder without the requirement that the transferee be or become a Consenting Noteholder.  For avoidance of doubt, a Qualified Marketmaker may purchase, transfer or participate any claims against or interests in the Debtors other than Note Claims without any requirement that the transferee be or become subject to this Agreement.

 

For purposes of this paragraph, “Qualified Marketmaker” means an entity that (i) holds itself out to the market as standing ready in the ordinary course of its business to purchase from

 

9

 

customers and sell to customers claims against the Company and its affiliates (including debt securities, the Notes or other debt) or enter with customers into long and short positions in claims against the Company and its affiliates (including debt securities, the Notes or other debt), in its capacity as a dealer or market maker in such claims against the Company and its affiliates and (ii) is in fact regularly in the business of making a market in claims against issuers or borrowers (including debt securities or other debt).

 

7.             Termination by EIX.

 

This Agreement shall terminate, and all obligations of EIX shall immediately terminate and be of no further force and effect as to EIX, at 11:59 p.m., prevailing Eastern Time, on the date that is five (5) business days from the date that the Company and the professional advisors to the Consenting Noteholders receive written notice from EIX of the occurrence of any of the events listed below (each, an “EIX Termination Event”), unless the EIX Termination Event is (A) waived by EIX or (B) previously consented to in writing by the Company, EIX, and the Required Consenting Noteholders (as defined herein):

 

a.             (i) any Debtor has breached any material provision of this Agreement or the Term Sheets, including the representations, warranties, and covenants contained herein; or (ii) failure of the Required Consenting Noteholders to materially comply with this Agreement or the Term Sheets, including the representations, warranties and covenants contained herein;

 

b.             any modification is made to the Equity Term Sheet that is not in form and substance satisfactory to EIX;

 

c.             any of the definitive documents, including the MRA, the MRA Agreements, and the Plan, is filed with the Bankruptcy Court by the Debtors and is inconsistent with the Equity Term Sheet in any material respect;

 

d.             any court has entered a final, non-appealable judgment or order declaring this Agreement or any material portion hereof to be unenforceable, or the filing of a motion by the Debtors to reject this Agreement;

 

e.             the Debtors or the Consenting Noteholders, subject to any applicable thresholds, fail to comply with the deadlines and conditions set forth in the Settlement Term Sheet, including:  (i) the Shared Services Motion shall not have been filed on the Petition Date; (ii) the Shared Services Motion and Shared Services Order shall not have received interim approval within thirty (30) calendar days after the Petition Date; (iii) the Shared Services Motion and Shared Services Order shall not have received final approval within sixty (60) calendar days after the Petition Date; (iv) failing to use their best efforts to negotiate and document the final forms of the MRA and MRA Agreements within ninety (90) calendar days after the Petition Date or, in the case of the Company, failing to use its best efforts to provide EIX with a draft of the Approval Motion and related exhibits within one hundred twenty (120) calendar days after the Petition Date; (v) a motion, in form and substance reasonably acceptable to EIX, to approve the Settlement Transaction,

 

10

 

including approval of the MRA and the MRA Agreements and assumption of this Agreement and the Tax Sharing Agreements, shall not have been filed by one-hundred fifty (150) calendar days after the Petition Date; or (vi) an order of the Bankruptcy Court, in form and substance reasonably acceptable to EIX, approving the Settlement Transaction, the MRA and MRA Agreements, and assumption of this Agreement and the Tax Sharing Agreements as modified by the MRA and MRA Agreements, shall not have been entered by two-hundred ten (210) calendar days after the Petition Date;

 

f.             there shall have been issued any order, decree or ruling by any court or governmental body having jurisdiction that materially adversely affects the benefits intended to be received by EIX hereunder, or that restrains, enjoins, prevents, or renders illegal,  the consummation of the Settlement Transaction or other transactions set forth in this Agreement and the Term Sheets and (A) such proceeding or order was issued or reinstated at the request or with the acquiescence of the Company or any of its affiliates or (B) in all other circumstances, such order is not stayed, reversed, or vacated within fifteen (15) calendar days after such issuance;

 

g.             Consenting Noteholders representing a majority of the outstanding principal amount of Notes shall not have entered into this Agreement prior to the Petition Date, or this Agreement ceases to remain in effect at such date with respect to such a majority;

 

h.             Consenting Noteholders representing a majority of the outstanding principal amount of Notes shall not have agreed to the terms of the MRA and MRA Agreements within one-hundred fifty (150) calendar days after the Petition Date, or the MRA and MRA Agreements cease to be agreed to at such date with respect to such a majority;

 

i.              any Debtor shall (A) modify or revoke the Shared Services Order or withdraw the Shared Services Motion, motion to approve the Settlement Transaction without the consent of EIX, (B) publicly announce its intention not to support or pursue the Settlement Transaction or the Plan, or (C) propose, accept, or file a motion or Disclosure Statement with the Bankruptcy Court seeking approval of a plan of reorganization under chapter 11 of the Bankruptcy Code or other transaction concerning the Debtors that is inconsistent with the Settlement Transaction and the Term Sheets;

 

j.              the entry of an order in the Chapter 11 Cases terminating the Debtors’ exclusive right to file a plan of reorganization pursuant to section 1121 of the Bankruptcy Code;

 

k.             the Bankruptcy Court shall have entered an order (i) appointing an examiner with expanded powers or a trustee shall have been appointed in any of the Chapter 11 Cases, (ii) converting the Company’s Chapter 11 Case to a case under chapter 7; (iii) dismissing the Chapter 11 Cases; (iv) granting standing to a party other than

 

11

 

the Debtor to pursue claims against EIX or its representatives and affiliates with respect to any claim or cause of action inconsistent with the Settlement Transaction and Term Sheets; or (v) subordinating the Claims of EIX under section 510 of the Bankruptcy Code;

 

l.                                          the commencement of an adversary proceeding, civil action, or similar proceeding by the Debtors against EIX or its representatives or affiliates with respect to any claim or cause of action inconsistent with the Settlement Transaction and Term Sheets; or

 

m.                                  the effective date of the Plan does not occur on a date in conformity with the Term Sheets.

 

8.                                      Termination by Consenting Noteholders.

 

This Agreement shall terminate, and all obligations of the Consenting Noteholders shall immediately terminate and be of no further force and effect as to the Consenting Noteholders, at 11:59 p.m., prevailing Eastern Time, on the date that is five (5) business days from the date that the Company and EIX receive written notice from Consenting Noteholders representing at least 75% of the outstanding principal amount of Notes held by all Consenting Noteholders (such holders, the “Required Consenting Noteholders”) of the occurrence of any of the events listed below (each, a “Required Consenting Noteholder Termination Event”), unless the Required Consenting Noteholder Termination Event is (A) waived by the Required Consenting Noteholders or (B) previously consented to in writing by the Company, EIX, and the Required Consenting Noteholders:

 

a.                                      either EIX or the Company has breached any material provision of this Agreement or the Term Sheets, including the representations, warranties, and covenants contained herein;

 

b.                                      any modification is made to the Term Sheets that is not in form and substance satisfactory to the Required Consenting Noteholders;

 

c.                                       any definitive document, including the MRA, the MRA Agreements, and the Plan, is filed with the Bankruptcy Court by the Debtors and is inconsistent with the Term Sheets in any material respects;

 

d.                                      any court has entered a final, non-appealable judgment or order declaring this Agreement or any material portion hereof to be unenforceable, or the filing of a motion by the Debtors to reject this Agreement;

 

e.                                       either EIX  or the Company fails to comply with the deadlines and conditions set forth in the Term Sheets, including:  (i) the Shared Services Motion shall not have been filed on the Petition Date; (ii) the Shared Services Motion and Shared Services Order shall not have received interim approval within thirty (30) calendar days after the Petition Date; (iii) the Shared Services Motion and Shared Services Order shall not have received final approval within sixty (60) calendar days after the Petition Date; (iv) the Debtors or EIX failing to use their best efforts

 

12

 

to negotiate and document the final forms of the MRA and MRA Agreements within ninety (90) calendar days after the Petition Date or, in the case of the Company, failing to use its best efforts to provide the advisors to the Consenting Noteholders with a draft Approval Motion and related exhibits within one hundred twenty (120) calendar days after the Petition Date; (v) a motion, in form and substance reasonably acceptable to the Required Consenting Noteholders, to approve the Settlement Transaction, including approval of the MRA and the MRA Agreements and assumption of this Agreement and the Tax Sharing Agreements, shall not have been filed by one-hundred fifty (150) calendar days after the Petition Date; or (vi) an order of the Bankruptcy Court, in form and substance reasonably acceptable to the Required Consenting Noteholders, approving the Settlement Transaction, the MRA and MRA Agreements, and assumption of this Agreement and the Tax Sharing Agreements as modified by the MRA and MRA Agreements, shall not have been entered by two-hundred ten (210) calendar days after the Petition Date;

 

f.                                        there shall have been issued any order, decree, or ruling by any court or governmental body having jurisdiction that materially adversely affects the benefits intended to be received by the Required Consenting Noteholders hereunder, or that restrains, enjoins, prevents, or renders illegal, the consummation of the Settlement Transaction or other transactions set forth in this Agreement and the Term Sheets and (A) such proceeding or order was issued or reinstated at the request or with the acquiescence of the Company or any of its affiliates or (B) in all other circumstances, such order is not stayed, reversed, or vacated within fifteen (15) calendar days after such issuance;

 

g.                                       any Debtor shall have filed a plan of reorganization, a disclosure statement for the Plan, or any other documents related to the Plan without confirmation that such document is in form and substance satisfactory to the Required Consenting Noteholders;

 

h.                                      the Parties shall not have agreed to the terms of the MRA and MRA Agreements within one-hundred fifty (150) calendar days after the Petition Date;

 

i.                                          any Debtor shall (A) publicly announce its intention not to support or pursue the Plan or (B) propose, accept, or file a motion or Disclosure Statement with the Bankruptcy Court seeking approval of a plan of reorganization under chapter 11 of the Bankruptcy Code or other transaction concerning the Debtors other than on the terms set forth herein;

 

j.                                         the entry of an order in the Chapter 11 Cases terminating the Debtors’ exclusive right to file a plan of reorganization pursuant to section 1121 of the Bankruptcy Code;

 

k.                                      the Bankruptcy Court shall have entered an order (A) appointing an examiner with expanded powers or a trustee shall have been appointed in any of the Chapter

 

13

 

11 Cases; (B) converting the Company’s Chapter 11 Case to a case under chapter 7; or (C) dismissing the Chapter 11 Cases;

 

l.                                          the Debtors shall have failed to:  (A) file a motion within thirty (30) days of the Petition Date seeking Bankruptcy Court authority to pay, without the filing of fee applications, the reasonable and documented fees and expenses of the financial and legal advisors to the Consenting Noteholders and assume the Parties’ respective payment letters, or to obtain a final Bankruptcy Court hearing on such motion within sixty (60) calendar days of the Petition Date; (B) use reasonable best efforts to seek Bankruptcy Court approval of such motion; or (C) timely pay such fees and expenses once such motion is approved; or

 

m.                                  the effective date of the Plan does not occur on a date in conformity with the Term Sheets.

 

9.                                      Termination by the Company.

 

This Agreement shall terminate, and all obligations of the Company shall immediately terminate and be of no further force and effect as to the Company, at 11:59 p.m., prevailing Eastern Time, on the date that is five (5) business days from the date that EIX and the professional advisors to the Consenting Noteholders receive written notice from the Company of the occurrence of any of the events listed below (each, a “Company Termination Event”), unless the Company Termination Event is (A) waived by the Company or (B) previously consented to by the Company, EIX, and the Required Consenting Noteholders:

 

a.                                      EIX has breached any material provision of this Agreement or the Term Sheets, including the representations, warranties, and covenants contained herein;

 

b.                                      the failure of Required Consenting Noteholders to materially comply with this Agreement or the Term Sheets, including the representations, warranties, and covenants contained herein or therein, as the case may be;

 

c.                                       the Board of Directors of the Company has reasonably determined that proceeding with the transactions set forth in the Term Sheets and this Agreement and the Plan would be inconsistent with the continued exercise of its fiduciary duties, as provided in Section 5 above; or

 

d.                                      unless such proceeding or order was issued or reinstated at the request or with the acquiescence of the Company or any of its affiliates, there shall have been issued any order, decree or ruling by any court or governmental body having jurisdiction that materially adversely affects the benefits intended to be received by the Company or its subsidiaries hereunder, or that restrains, enjoins, prevents, or renders illegal,  the consummation of the Settlement Transaction or other transactions set forth in this Agreement and the Term Sheets and in all other circumstances, such order is not stayed, reversed, or vacated within fifteen (15) calendar days after such issuance;

 

14

 

provided, that, notwithstanding anything to the contrary herein, except with respect to Section 9(c) hereof, no notice of termination from any Party shall be valid if the applicable event giving rise to such Party’s right to terminate this Agreement results from such Party failing to comply with its obligations under this Agreement in any material respect.  For the avoidance of doubt and notwithstanding the foregoing, no notice of termination from the Company (on behalf of itself and/or its subsidiaries) shall be limited or deemed invalid in any respect on account of any director of the Company having agreed with, or voted to approve, the Company’s exercising (or taking actions to exercise) any of their rights to terminate this Agreement.

 

10.                               Additional Termination Events.

 

This Agreement shall terminate and all obligations of the Parties shall terminate and be of no further force and effect:

 

a.                                      upon consummation of the Restructuring contemplated in this Agreement and the occurrence of the effective date of the Plan, which Plan shall supersede and replace this Agreement provided the Plan is consistent with the Settlement Transaction, MRA, and MRA Agreements; or

 

b.                                      by written agreement signed by (i) the Company (on behalf of itself and its subsidiaries); (ii) EIX (on behalf of itself and the EIX Subsidiaries); and (iii) the Consenting Noteholders.

 

11.                               Effect of Termination and Automatic Stay.

 

a.                                      Upon termination of this Agreement in accordance with its terms, this Agreement shall forthwith become void and of no further force or effect as to the Party or Parties for which termination is effective under Sections 7, 8, 9, and 10 (each a “Terminated Party”), each Terminated Party shall be released from its respective commitments, undertakings, and agreements under or related to this Agreement, and there shall be no liability or obligation on the part of the Terminated Party; provided that in no event shall any such termination relieve a Party from liability for its breach or non-performance of its obligations hereunder prior to the date of such termination.

 

b.                                      The Parties (on behalf of themselves and subsidiaries and affiliates) acknowledge and agree and shall not dispute that after the Petition Date, the giving of notice of termination of this Agreement, or waiver of a right of termination, shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code (and the Company, on behalf of itself and the other Debtors, hereby waives, to the greatest extent possible, the applicability of the automatic stay to the giving of such notice); provided, however, nothing herein shall prejudice any Party’s rights to argue that the termination was not proper under the terms of this Agreement.

 

12.                               Publicity and Disclosure.

 

a.                                      Except as required by law (as determined by outside counsel to the Company) and with reasonable prior notice to EIX and the Consenting Noteholders taking into

 

15

 

account the circumstances, the Company and EIX shall not and will cause their respective subsidiaries to not (a) use the name of the Indenture Trustee or any Consenting Noteholder in any press release without such Party’s prior written consent, (b) disclose to any person other than legal and financial advisors to the Company the principal amount or percentage of any Notes Claims or any other securities of the Company or its subsidiaries held by any Consenting Noteholder; provided that the Company shall be permitted to disclose at any time the aggregate principal amount of and aggregate percentage of the Notes Claims held by the Consenting Noteholders; or (c) disclose information from EIX without EIX’s prior written consent or a mutually acceptable confidentiality agreement.

 

b.                                      Subject to the preceding clause 12.a. and the terms and conditions of the confidentiality and non-disclosure agreements between or among the Company, EIX, and the Consenting Noteholders and their legal and financial advisors, the Company may elect to publicly disclose (i) this Agreement (including exhibits hereto) and the material terms of the Term Sheets on or after the Agreement Effective Date; (ii) any material amendment to this Agreement and/or the Term Sheets on or after the effective date of such amendment; and (iii) any other information, including projections, anticipated to be included in the Disclosure Statement or provided to the Consenting Noteholders in connection with the Restructuring, to the extent that the failure to make such information public would result in any Consenting Noteholder, based upon the advice of such Noteholder’s counsel, being restricted (by contract, law, or otherwise) in buying or selling any of the Notes Claims.

 

c.                                       Subject to the preceding clause 12.a. and the terms and conditions of the confidentiality and non-disclosure agreements between or among the Company, EIX, and the Consenting Noteholders and their legal and financial advisors, EIX may elect to publicly disclose (i) this Agreement (including exhibits hereto) and the material terms of the Term Sheets on or after the Agreement Effective Date, and (ii) any material amendment to this Agreement and/or the Term Sheets on or after the effective date of such amendment.  Further, nothing in this Agreement shall limit or restrict the ability of EIX to disclose information that EIX has provided to the Company or the Consenting Noteholders or either of their legal and financial advisors.

 

13.                               Specific Performance.

 

It is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to seek specific performance and injunctive or other equitable relief, including attorneys’ fees and costs, as a remedy of any such breach, and each Party agrees to waive any requirement for the securing or posting of a bond in connection with such remedy, in addition to any other remedy to which such non-breaching Party may be entitled, at law or in equity.  Notwithstanding anything to the contrary in this Agreement, and except as provided in the MRA and the MRA Agreements, the Parties agree that the remedy of specific performance shall be the sole and

 

16

 

exclusive remedy of the Parties under this Agreement in the event of a breach of this Agreement by another Party hereto.

 

14.                               Cooperation.

 

In addition to any obligations under this Agreement or the Term Sheets, the Company, on behalf of the Debtors, shall provide draft copies of all “first day” motions or applications and other documents the Debtors intend to file with the Bankruptcy Court to EIX and the professional advisors to the Consenting Noteholders before the date when the Debtors intend to file such document and shall consult in good faith with counsel regarding the form and substance of any such proposed filing with the Bankruptcy Court.  The Shared Services Motion and Order (and related motions filed by the Debtors) shall be reasonably acceptable to EIX and the professional advisors to the Consenting Noteholders.  In addition to any obligations under this Agreement or the Term Sheets, the Company, on behalf of the Debtors, shall use its reasonable commercial efforts to provide draft copies of all material pleadings they intend to file with the Bankruptcy Court or any material press releases or filings with the Securities and Exchange Commission to counsel to EIX and the professional advisors to the Consenting Noteholders within a reasonable time prior to filing or making public such documents and shall consult in good faith with such counsel regarding the form and substance of any such proposed filing or publication.

 

15.                               [INTENTIONALLY OMITTED.]

 

16.                               Relationship Among Parties; Exculpation.

 

Notwithstanding anything herein to the contrary, the duties and obligations of the Parties under this Agreement shall be several, not joint.  It is understood and agreed that any Party may trade in Notes Claims or other claims against or securities of the Debtors without the consent of the Debtors or any other Party, subject to applicable securities laws and Section 6 above.  No Party shall have any responsibility for any such trading by any other entity by virtue of this Agreement.  No prior history, pattern or practice of sharing confidences among or between the Parties shall in any way affect or negate this understanding and agreement.  No Party shall be liable for monetary or other damages to any other Party, or any other creditor or equity interest holder of the Debtors, arising out of the negotiations, execution and/or performance of this Agreement.

 

17.                               Entire Agreement; Prior Negotiations.

 

This Agreement, including Exhibits A, Exhibit B, and  Exhibit C annexed hereto (inclusive of exhibits thereto), constitutes the entire agreement of the Parties and supersedes all prior agreements (oral or written), negotiations, and documents reflecting such prior negotiations between and among the Parties (and their respective advisors), with respect to the subject matter hereof.

 

18.                               Amendments.

 

Except as otherwise provided herein, this Agreement, the Term Sheets or any annexes thereto may not be modified, amended, or supplemented without prior written agreement signed

 

17

 

by (a) the Company; (b) EIX; and (c) the Required Consenting Noteholders, except that a modification, amendment, or supplement of the Restructuring Term Sheet that is not inconsistent with the Equity Term Sheet, to be determined in EIX’s reasonable discretion, shall not require the prior written agreement of EIX.

 

19.                               Independent Analysis.

 

Each Party hereby acknowledges and confirms that it has made its own decision to execute this Agreement based upon its own independent assessment of any documents and information available to it, as it deemed appropriate.

 

20.                               Further Assurances.

 

The Parties agree to execute and deliver such other instruments and perform such acts, in addition to the matters herein specified, as may be reasonably appropriate or necessary, from time to time, to effectuate the agreements and understandings of the Parties, whether the same occurs before or after the date of this Agreement.

 

21.                               Governing Law.

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York applicable to contracts made and to be performed in such state, without giving effect to the conflicts of law principles thereof (except for section 5-1401 of the New York General Obligations Law).  By its execution and delivery of this Agreement, each of the Parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit, or proceeding against it with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit, or proceeding, may be brought in either a state or federal court of competent jurisdiction in the State of New York.  By execution and delivery of this Agreement, each of the Parties hereto hereby irrevocably accepts and submits itself to the nonexclusive jurisdiction of each such court, generally and unconditionally, with respect to any such action, suit, or proceeding.  Notwithstanding the foregoing consent to jurisdiction in either a state or federal court of competent jurisdiction in the State of New York, upon the commencement of the Chapter 11 Cases, each of the Parties hereto hereby agrees that, if the petitions have been filed and the Chapter 11 Cases are pending, the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement.

 

22.                               Effective Date; Conditions to Effectiveness.

 

This Agreement shall become effective and binding upon each of the Parties at 12:01 a.m., prevailing Eastern Time, on the date on which all of the following conditions are satisfied (the “Agreement Effective Date”):

 

a.                                      the Company, EIX, and the professional advisors to the Consenting Noteholders shall have received duly executed signature pages for this Agreement signed by the Company (on behalf of itself and its subsidiaries) and EIX (on behalf of itself and the EIX Subsidiaries); and

 

18

 

b.                                      the Company and EIX shall have received duly executed signature pages for this Agreement from the Consenting Noteholders holding a majority in amount of the total indebtedness outstanding under the Indentures.

 

Upon the Agreement Effective Date, the Term Sheets shall be deemed effective for the purposes of this Agreement, and thereafter the terms and conditions therein may only be amended, modified, waived, or otherwise supplemented as set forth in Section 18 above.

 

23.                               No Solicitation.

 

Notwithstanding anything to the contrary, this Agreement is not and shall not be deemed to be (a) a solicitation of consents to the Plan or any chapter 11 plan or (b) an offer for the issuance, purchase, sale, exchange, hypothecation, or other transfer of securities or a solicitation of an offer to purchase or otherwise acquire securities for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended.  The acceptance of the Noteholders will not be solicited until they, as applicable, have received the Disclosure Statement and related ballot, as approved by the Bankruptcy Court.

 

24.                               Third-Party Beneficiary.

 

This Agreement is intended for the benefit of the Parties hereto and no other person shall have any rights hereunder.

 

25.                               Several, Not Joint, Obligations.

 

Except as otherwise expressly set forth herein, the agreements, representations, and obligations of the Parties under this Agreement are, in all respects, several and not joint.

 

26.                               Counterparts.

 

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement.  Execution copies of this agreement may be delivered by electronic mail (in “.pdf” or “.tif” format), facsimile or otherwise, which shall be deemed to be an original for the purposes of this Agreement.

 

27.                               Headings.

 

The Section headings of this Agreement are for convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement.

 

28.                               Settlement Discussions.

 

This Agreement and the Term Sheets are part of a proposed settlement of matters that could otherwise be the subject of litigation among the Parties hereto.  Nothing herein shall be deemed an admission of any kind and this Agreement and the Terms Sheets shall not be treated as an admission of liability.  Pursuant to Federal Rule of Evidence 408 and any applicable state rules of evidence, this Agreement and all communications and negotiations between and/or

 

19

 

among the Parties, their counsel, and/or their respective representatives relating to, concerning, or in connection with this Agreement, or the matters covered hereby and thereby, shall be protected to the fullest extent permitted by law and shall not be admissible into evidence in any proceeding other than a proceeding to enforce the terms of this Agreement.

 

29.                               No Waiver of Participation and Preservation of Rights.

 

Except as provided in this Agreement, nothing herein is intended to, does, or shall be deemed in any manner to waive, limit, impair, or restrict the ability of EIX and each of the Consenting Noteholders to protect and preserve its rights, remedies, and interests, including, but not limited to, its claims against any of the Debtors, any liens or security interests it may have in any assets of any of the Debtors, or its full participation in the Chapter 11 Cases.  In particular, the economic arrangements and assumptions expressly or implicitly included in the Term Sheets, shall not be binding upon any Party or result in any Party’s waiver of any rights or defenses, except to the extent they are covenants under this Agreement, the Settlement Transaction, the Plan, or the Restructuring.  Without limiting the foregoing sentence in any way, if this Agreement is terminated in accordance with its terms for any reason, the Parties each fully reserve any and all of their respective rights, remedies, and interests, subject to Section 13 above in the case of any claim for breach of this Agreement arising prior to termination.

 

30.                               Consideration.

 

The Parties hereby acknowledge that no consideration, other than that specifically described herein and in the Plan and the Term Sheets shall be due or paid to any Party for its agreement to vote to accept the Plan in accordance with the terms and conditions of this Agreement.

 

31.                               Notices.

 

All notices hereunder shall be deemed given if in writing and delivered, if sent by facsimile, courier or by registered or certified mail (return receipt requested) to the following addresses and facsimile numbers (or at such other addresses or facsimile numbers as shall be specified by like notice):

 

If to the Company or any Debtor, to counsel at the following address:

 

Kirkland & Ellis LLP

300 North LaSalle Street

Chicago, Illinois 60654

Attn:  James H.M. Sprayregen, P.C. and David R. Seligman, P.C.

Fax:  (312) 862-2200

 

-and-

 

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attn.:  Joshua A. Sussberg

 

20

 

Fax: (212) 446-4900

 

If to EIX, to counsel at the following address:

 

Munger Tolles & Olson LLP

355 South Grand Ave.

Attn.:  Thomas B. Walper

Los Angeles, California 90071

Fax: (213) 687-3702

 

If to any Consenting Noteholder, the address set forth in the separate letter to the Company and EIX delivered by counsel to the Consenting Noteholders simultaneously with this Agreement.

 

If to counsel to the ad hoc committee of Noteholders, to:

 

Ropes & Gray LLP

1211 Avenue of the Americas 

New York, New York 10036

Attn.:  Keith Wofford

Fax:  (212) 596-9090

 

-and-

 

Ropes & Gray LLP

800 Boylston Street

Boston, Massachusetts 02199 

Attn.:  Stephen Moeller-Sally

Fax:  (617) 951-7050

 

21

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers or other agents, solely in their respective capacity as officers or other agents of the undersigned and not in any other capacity, as of the date first set forth above.

 

 

	
 
    	
EDISON INTERNATIONAL
    
	
 
    	
on behalf of itself and the EIX Subsidiaries
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William Scilacci
    
	
 
    	
Name:
    	
William   Scilacci
    
	
 
    	
Title:
    	
Executive   Vice President, Chief Financial
    
	
 
    	
 
    	
Officer   and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
EDISON MISSION ENERGY
    
	
 
    	
on behalf of itself and its subsidiaries
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Maria Rigatti
    
	
 
    	
Name:
    	
Maria   Rigatti
    
	
 
    	
Title:
    	
Senior   Vice President and Chief Financial
    
	
 
    	
 
    	
Officer
    

 

 

[Signature Page to Transaction Support Agreement]

 

 

AGREED BY EACH OF THE 
 FOLLOWING SENIOR NOTEHOLDERS

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
AllianceBernstein LP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Sohr
    
	
 
    	
Name:
    	
Michael E. Sohr
    
	
 
    	
Title:
    	
Senior Vice President
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Arrowgrass Distressed Opportunities Fund Limited
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stephen C. Ellwood
    
	
 
    	
Name:
    	
Stephen C. Ellwood
    
	
 
    	
Title:
    	
Chief Compliance Officer
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Arrowgrass Master Fund LTD
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stephen C. Ellwood
    
	
 
    	
Name:
    	
Stephen C. Ellwood
    
	
 
    	
Title:
    	
Chief Compliance Officer
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Avenue Investments, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 /s/   Sonia Gardner
    
	
 
    	
Name:
    	
Sonia Gardner
    
	
 
    	
Title:
    	
Member
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Barclays Capital Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Peter Benoist
    
	
 
    	
Name:
    	
Peter Benoist
    
	
 
    	
Title:
    	
Managing Director
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
BlueMountain Capital Management, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul A. Friedman
    
	
 
    	
Name:
    	
Paul A. Friedman
    
	
 
    	
Title:
    	
Head of US Legal
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Canyon Capital Advisors LLC, the Investment   Advisor of the Consenting Noteholders holding the below referenced amounts
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jonathan M. Kaplan
    
	
 
    	
Name:
    	
Jonathan M. Kaplan
    
	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
 
    	
Cincinnati High Yield Group of J.P. Morgan   Investment Management Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ James P. Shanahan, Jr.
    
	
 
    	
 
    	
Name:
    	
James P. Shanahan, Jr.
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
 
    	
Citi Capital Advisors, acting through its   Distressed Debt Strategies Group
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ James Duplessie
    
	
 
    	
 
    	
Name:
    	
James Duplessie
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
 
    	
Claren Road Asset Management, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Albert Marino
    
	
 
    	
 
    	
Name:
    	
Albert Marino
    
	
 
    	
 
    	
Title:
    	
Chief Operating Officer
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
 
    	
Credit Value Partners, LP, as agent for funds   and accounts under its management
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Michael Geroux
    
	
 
    	
 
    	
Name:
    	
Michael Geroux
    
	
 
    	
 
    	
Title:
    	
Partner
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

The signature of the Distressed Debt Trading Desk of Citigroup Global Markets Inc. shall not be deemed to bind or create any obligations with respect to any other desk or affiliate of Citigroup Global Markets Inc. including, but not limited to Citibank, N.A. and Citigroup, Inc.  Citigroup Global Markets Inc. shall be responsible for ensuring that the Distressed Debt Trading Desk meets its obligations hereunder.

 

 

	
 
    	
 
    	
The Distressed Debt Trading Desk of Citigroup   Global Markets Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Brian Blessing
    
	
 
    	
 
    	
Name:
    	
Brian Blessing
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
 
    	
ICE Canyon LLC, the Investment Advisor of the   Consenting Noteholders holding the below referenced amount
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Jonathan M. Kaplan
    
	
 
    	
 
    	
Name:
    	
Jonathan M. Kaplan
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
 
    	
Jefferies High Yield Trading, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Paul J. Loomis
    
	
 
    	
 
    	
Name:
    	
Paul J. Loomis
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
 
    	
Litespeed Master Fund Ltd.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Charles Murphy
    
	
 
    	
 
    	
Name:
    	
Charles Murphy
    
	
 
    	
 
    	
Title:
    	
 
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Nomura Corporate Research and Asset   Management, Inc., as investment advisor for and on behalf of the   Noteholders with holdings as listed below
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Derek Leung
    
	
 
    	
Name:
    	
Derek Leung
    
	
 
    	
Title:
    	
Vice President
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
OZ Management LP (on behalf of certain of its   investment funds)
    
	
 
    	
By:   Och-Ziff Holding Corporation, its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Joel Frank
    
	
 
    	
Name:
    	
Joel Frank
    
	
 
    	
Title:
    	
Chief Financial   Officer
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
River   Birch Master Fund, LP
    
	
 
    	
By:   River Birch Capital GP, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Matthew   Gilmartin
    
	
 
    	
Name:
    	
Matthew Gilmartin
    
	
 
    	
Title:
    	
Chief Financial   Officer
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Strategic   Value Master Fund, Ltd.
    
	
 
    	
by:   Strategic Value Partners, LLC, its Investment Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Edward C. Kelly
    
	
 
    	
Name:
    	
Edward C. Kelly
    
	
 
    	
Title:
    	
Chief Operating   Officer
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Strategic   Value Special Situations II, L.P.
    
	
 
    	
by:   SVP Special Situations GP II, LLC, its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Edward C. Kelly
    
	
 
    	
Name:
    	
Edward C. Kelly
    
	
 
    	
Title:
    	
Chief Operating   Officer
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
Strategic   Value Special Situations Feeder Fund II-A, Ltd.
    
	
 
    	
by: SVP Special Situations Administrator GPII   LLC, its Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Edward C. Kelly
    
	
 
    	
Name:
    	
Edward C. Kelly
    
	
 
    	
Title:
    	
Chief Operating   Officer
    

 

[Signature Page to Transaction Support Agreement]

 

 

	
CONSENTING   NOTEHOLDER
    
	
 
    
	
TCW Investment Management Company (“TIMCO”),   solely as investment advisor on behalf of the following accounts it manages: PF# 3717, 3722.
    
	
 
    
	
 
    
	
By:
    	
/s/ James S.   Farnham
    	
 
    	
By:
    	
/s/ Sean Plater
    
	
Name:
    	
James S. Farnham
    	
 
    	
Name: 
    	
Sean Plater
    
	
Title:
    	
Managing Director
    	
 
    	
Title: 
    	
Senior Vice   President
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
TCW Asset Management   Company (“TAMCO”), solely as investment advisor on behalf of the following   accounts it manages: PF# 3009.
    
	
 
    
	
By:
    	
/s/ James S.   Farnham
    	
 
    	
By:
    	
/s/ Sean Plater
    
	
Name:
    	
James S. Farnham
    	
 
    	
Name: 
    	
Sean Plater
    
	
Title:
    	
Managing Director
    	
 
    	
Title:
    	
Senior Vice   President
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Metropolitan West Asset   Management, LLC (“MWAM”), solely as investment advisor on behalf of the   following accounts it manages: SMS 314, 705, 769, 773, 775, 777, 778,   781.
    
	
 
    
	
By: 
    	
/s/ Laird R. Landmann
    	
 
    	
 
    	
 
    
	
Name:
    	
Laird R. Landmann
    	
 
    	
 
    	
 
    
	
Title:
    	
President
    	
 
    	
 
    	
 
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

	
 
    	
VISIUM CATALYST CREDIT MASTER FUND, LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Brad Levie
    
	
 
    	
Name:
    	
Brad Levie
    
	
 
    	
Title:
    	
Director
    

 

[Signature Page to Transaction Support Agreement]

 

 

CONSENTING NOTEHOLDER

 

 

	
 
    	
York Capital Management Global Advisors, LLC, on   behalf of certain funds and accounts managed by it and its affiliates
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard P.   Swanson
    
	
 
    	
Name:
    	
Richard P. Swanson
    
	
 
    	
Title:
    	
General Counsel
    

 

[Signature Page to Transaction Support Agreement]

 

 

EXHIBIT A

 

Equity Term Sheet

 

 

EDISON MISSION ENERGY

 

EQUITY TERM SHEET

 

DECEMBER 16, 2012

 

THIS TERM SHEET (THIS “TERM SHEET”) DESCRIBES CERTAIN MATERIAL TERMS OF A PROPOSED TRANSACTION (THE “TRANSACTION”) BETWEEN (A) EDISON INTERNATIONAL (“EIX”), FOR ITSELF AND ITS SUBSIDIARIES THAT DIRECTLY OR INDIRECTLY OWN EDISON MISSION ENERGY (THE “EIX SUBSIDIARIES”), (B) EDISON MISSION ENERGY (“EME”), FOR ITSELF AND CERTAIN OF ITS DOMESTIC SUBSIDIARIES (COLLECTIVELY WITH EME, THE “DEBTORS”), AND (C) CERTAIN HOLDERS OF EME’S SENIOR UNSECURED NOTES (COLLECTIVELY, THE “NOTEHOLDERS”).  EIX SHALL MEAN EIX AND THE EIX SUBSIDIARIES UNLESS OTHERWISE INDICATED HEREIN.

 

THIS TERM SHEET SHALL NOT CONSTITUTE AN OFFER OR A LEGALLY BINDING OBLIGATION TO BUY OR SELL, NOR DOES IT CONSTITUTE A SOLICITATION OF AN OFFER TO BUY OR SELL, ANY OF THE SECURITIES REFERRED TO HEREIN.  THIS TERM SHEET DOES NOT CONSTITUTE A SOLICITATION OF THE ACCEPTANCE OR REJECTION OF ANY PLAN OF REORGANIZATION FOR PURPOSES OF SECTIONS 1125 AND 1126 OF TITLE 11 OF THE UNITED STATES CODE (THE “BANKRUPTCY CODE”).

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
Transaction Structure
    	
 
    	
·                  Before the date (the “Petition Date”)   on which the Debtors commence cases under chapter 11 of title 11 of the   United States Code (the “Bankruptcy Code”)   (such cases, the “Chapter 11 Cases”)   in the United States Bankruptcy Court for the Northern District of Illinois   (the “Bankruptcy Court”)   (a) EME (on behalf of itself and its subsidiaries), (b) EIX (on   behalf of itself and the EIX Subsidiaries) and (c) the holders of at   least a majority in principal amount of the outstanding Notes, shall each   execute an agreement to support, pursue, and implement the Transaction as   contemplated in this Term Sheet (the “Transaction Support   Agreement”). In connection with entry into the Transaction   Support Agreement, EIX shall consent to the entry of a mutually acceptable   customary “first day equity trading order” regarding transfers of existing   equity securities of EME.

 

·                  Within 150 days after the Petition Date, the Debtors will seek entry   of a Bankruptcy Court order authorizing, pursuant to:
    

 

1

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a) section   363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of   Bankruptcy Procedure, the Debtors’ entry into a master restructuring   agreement with EIX and holders of a majority in principal amount of the   outstanding Notes (together with the MRA Agreements (as defined below), the “MRA”), which shall provide for   and include, among other things: (a) the Debtors’ entry into the MRA   Agreements and (b) the releases described below under “Release” (the “Release”), which Release shall be   contained (along with the other provisions of this Term Sheet) in the   Debtors’ chapter 11 plan of reorganization (the “Plan”).   The Debtors and Noteholders shall look solely to EIX (and not to subsidiaries   of EIX that may perform some of the services or other EIX obligations covered   by the MRA) for performance of the MRA, and EIX shall be responsible under   the MRA for services or other EIX obligations that may be performed by such   subsidiaries. The Release shall be approved and (except to the   extent set forth under “Release”), effective upon entry of a final order as   part of the Bankruptcy Court’s approval of the MRA and shall be subject to   revocation only during the period between approval of the Release and the   earlier of (i) December 31, 2014 and (ii) the effective date   (the “Effective Date”) of the Plan (such period, the “Interim Period”) after   notice delivered within a reasonable time after discovery of such breach and   an opportunity to cure, as set forth in the MRA, and the Bankruptcy Court   determines after motion and a hearing that a party has failed to perform its   obligations under the MRA during the Interim Period, including EIX making, or   causing its subsidiaries to make, any and all payments due under the Tax   Sharing Agreements (as defined herein) as required thereunder; provided,   that, revocation of the Release during the Interim Period shall result in a   termination of the parties’ respective obligations under this Term Sheet and   the MRA, including, without limitation, a full and complete restoration of   any and all claims otherwise released pursuant to the Release, and this Term   Sheet, the MRA and the Release shall be void ab initio, and nothing herein   shall thereafter impair or otherwise waive the rights of any party to assert   such claims, including, and without prejudice to, any claims or causes of   action waived or
    

 

2

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
otherwise   released or liabilities assumed in connection with the assumption of the Tax   Sharing Agreements (as modified or amended by the MRA) and such claims,   liabilities, or causes of action shall be restored to their prior status; and

 

(b) section   365 of the Bankruptcy Code, the Debtors’ assumption of the Transaction   Support Agreement and Tax Sharing Agreements.

 

·                  If the MRA is not approved by a final order of the Bankruptcy Court,   and the Transaction Support Agreement and Tax Sharing Agreements are not   assumed by a final order of the Bankruptcy Court, in each case within 210   days after the Petition Date (the “Outside Date”),   the Transaction Support Agreement and this Term Sheet shall terminate and no   party shall have any obligations thereunder absent agreement by the parties   to continue the Transaction Support Agreement.

 

·                  The parties shall use their   best efforts to negotiate and document the final form of the MRA and   the following agreements related to the MRA, which shall be attached as exhibits to the MRA and   approved as part of the MRA: (a) the   Shared Services Agreement; (b) the Tax Settlement, Separation, and Administration Agreement,   and (c) the Form of   Assumption of Assumed Liabilities (as   each is defined and described   below) (collectively, the “MRA Agreements”), within 90 days   after the Petition Date.  The forms of the MRA and the MRA Agreements,   which will be attached to the motion seeking approval of, among other things,   entry into the MRA (the “Approval Motion”),   will be subject to Bankruptcy Court, EME and EIX board and Noteholder   approvals. EME shall use best efforts to provide EIX and the advisors to the   Noteholders with the draft Approval Motion (and related exhibits) within 120   days after the Petition Date.

 

·                  The MRA shall also provide that on the Effective Date, EIX’s equity   interest in EME will be cancelled.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
·                  All consideration to be provided, and obligations undertaken, by EIX   as part of the Transaction shall be conditioned on: (a) EME (on behalf   of itself and its 
    

 

3

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
subsidiaries) and the Noteholders providing   the Release on the terms set forth herein, (b) Bankruptcy Court approval   of the Release, and (c) EME and the Noteholders performing and   undertaking all actions and obligations contemplated under this Term Sheet.

 

·                  All consideration to be provided, and obligations undertaken, by EME   and its subsidiaries and the Noteholders as part of Transaction shall be   conditional on EIX providing any consideration and performing any actions   that they are required to provide or perform, as the case may be, under this   Term Sheet.
    
	
 
    	
 
    	
 
    
	
Extension of Tax Sharing Agreements
    	
 
    	
·                  The MRA shall provide for the contemporaneous execution and approval   of a Tax Settlement, Separation, and Administration Agreement (the “TSSAA”). The TSSAA shall provide   for the Tax Sharing Agreements(1) to continue with respect to EME and   its subsidiaries through the earlier of December 31, 2014 and the   Effective Date. EIX shall not, before December 31, 2014, terminate,   create, or modify other tax sharing agreements with and among its affiliates   in any way adverse to the interests of EME, except to the extent required as   a result of a change in applicable law or decisions or administrative actions   thereunder, provided that EIX will use its   best efforts not to directly or indirectly propose any such regulations that   could require EIX to terminate or modify such agreements. EIX shall not,   prior to the earlier of December 31, 2014 and the Effective Date, sell,   convey, or otherwise dispose of its direct or indirect equity interest in EME   or take action to effect a deconsolidation for federal income tax purposes   (or deconsolidation, cessation of unitary or combined group, or similar   status for state tax purposes) of EME or any EIX Subsidiary. Except as   provided under “Tax Audit Liability,” for purposes of
    

 

(1)         The term “Tax Sharing Agreements” means the following agreements, as each may have been amended, modified, waived, or supplemented through the date hereof:  (a) that certain Edison Mission Group and First Tier Subsidiaries Amended and Restated Tax Allocation Agreement, dated as of February 13, 2012, among Edison Mission Group, Edison Capital, Edison Enterprises, Edison O&M Services, Mission Energy Holding Company, and Mission Land Company; and (b) that certain Mission Energy Holding Company Amended and Restated Tax Allocation Agreement, dated as of February 13, 2012, among Mission Energy Holding Company, EME, and Capitstrano Wind Holdings, Inc.  References in this Term Sheet to “termination” of the Tax Sharing Agreements shall mean termination of the Tax Sharing Agreements with respect to EME and its subsidiaries.

 

4

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
calculating amounts due under the Tax   Sharing Agreements, no adjustments will be made for or in contemplation of   the tax deconsolidation of EME or for or in contemplation of the termination   of the Tax Sharing Agreements with respect to EME (or, for the avoidance of   doubt, any deductions under section 165(g) of the Internal Revenue Code   or any comparable provisions of state or local law). At the time of EME’s tax   deconsolidation, each party to the Tax Sharing Agreements shall retain its   respective remaining tax attributes as determined pursuant to federal income   tax regulations and applicable state tax rules, with no party having any   further liability to any other for the consequences of tax deconsolidation   (such as, by way of example only, any gains, losses, or adjustments to basis   resulting from or upon the cancellation of 100% of the EME stock), subject to   the mutuality and tax audit provisions below.  Subject to the   limitations set forth in “Affiliate Rules” below and terms of a customary   confidentiality agreement, EIX will provide EME and the Noteholders’   professional advisors (until the earlier of December 31, 2014 and the   Effective Date) with reasonable access consistent with past practice to all   tax returns, work papers, and other information for the tax years through   December 31, 2014, and any other year in which EIX realizes a net tax   benefit as a result of audit adjustments as described below, to the extent   relevant to such benefit, used to calculate amounts due to or from EME under   the Tax Sharing Agreements and the reasonable opportunity to verify such   calculations. From and after the Petition Date, at EME’s or the Noteholders’   reasonable request, EIX shall endeavor in good faith to have PwC (or another   mutually agreed upon nationally recognized independent accounting firm)   confirm such calculations no later than 60 days after such request (with   costs for such calculations to be shared equally by EME and EIX). Until EME’s   tax deconsolidation from the EIX consolidated tax group, EIX will prepare and   file all consolidated tax returns in good faith and in a manner consistent with   past practice. Subject to the “No Guaranty” provision in this Term Sheet, EIX   shall take no extraordinary actions for the purpose of depriving EME or the   Noteholders of the benefits of the Tax Sharing Agreements. EME will provide   EIX with reasonable access to personnel and to all books and records required
    

 

5

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
to prepare and file such returns.

 

·                  The TSSAA shall provide that, if for any reason EME remains part of   the EIX consolidated tax group in any year following termination of the Tax   Sharing Agreements with respect to EME, then for taxable years commencing   after such termination, (a) EME shall be liable for, and shall indemnify   EIX and/or its subsidiaries against, any taxes with respect to EME and its   subsidiaries, calculated as if EME is a stand-alone taxpayer, and   (b) EIX shall not compensate EME for the EIX consolidated group’s use of,   or benefit from, in each case in such taxable years commencing after such   termination, tax attributes attributable to EME and its subsidiaries   regardless of the year of origin of such tax attributes.  For the   avoidance of doubt, EME shall not be liable for any portion of the EIX   group’s consolidated tax liability in excess of its stand-alone liability   calculated in the manner described in the preceding sentence. In the event   that termination of the Tax Sharing Agreements occurs prior to the Effective   Date, then upon EME’s request, EME, EIX and the Noteholders will work   cooperatively with one another to endeavor in good faith to take steps to   cause a tax deconsolidation of EME through the divestiture or other   disposition of 100% of the EME stock, together with termination of the Shared   Services Agreement and assumption of the Assumed Liabilities, as soon as   reasonably possible prior to the commencement of EME’s next tax year, subject   in all instances to approval of the Bankruptcy Court.
    
	
 
    	
 
    	
 
    
	
Mutuality / Reciprocity
    	
 
    	
The TSSAA shall provide that the rights and   obligations of the parties to the Tax Sharing Agreements for tax years   through the tax year of termination of the Tax Sharing Agreements with   respect to EME will survive such termination (by way of illustration only,   any obligations for amounts payable, or for tax audits concluded, after   termination of the Tax Sharing Agreements with respect to tax years   commencing prior to termination of the Tax Sharing Agreements with respect to   EME shall survive). The parties to the Tax Sharing Agreements shall   reciprocally perform their respective obligations under the Tax Sharing   Agreements, including the SCE priority provisions, carryback loss payment   obligations, EME’s obligations for Edison Mission Energy Taupo Ltd. audit   liability, and any other 
    

 

6

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
liabilities of any party for audit liability   for tax years through the tax year of termination.
    
	
 
    	
 
    	
 
    
	
Assumed Pension and PBOP Liabilities Upon   Separation
    	
 
    	
The MRA shall provide that, subject to   (a) approval of the Release under the MRA and (b) the Effective   Date, EIX shall assume the Assumed Liabilities by executing the Form of   Assumption of Assumed Liabilities to be approved as part of the MRA and, after   such assumption, EIX may amend, modify, freeze, or terminate any plan related   to Assumed Liabilities; provided that   EIX indemnifies EME for any costs or losses incurred by EME on account of   such amendment, modification, freeze, or termination. In connection with its   assumption of the Assumed Liabilities, on the Effective Date, EIX shall   assign to EME any and all claims that are assertable against EME or its   subsidiaries on account of the Assumed Liabilities (or otherwise) at no cost   to and with no ongoing obligations to EIX, provided that no such assignment   shall take place if it results in any liability, whether threatened,   contingent or otherwise, to EIX (in which case EIX shall agree to release or   not to assert such claims).

 

“Assumed Liabilities”   means any liability on account of:

 

·                  pension liability for service of employees of EME and its   subsidiaries as of the Effective Date; provided that   EME may determine the retirement benefits for service of its employees after   such date without cost to EIX and its subsidiaries;

 

·                  executive pension and executive deferred compensation plan   liabilities for retirees of EME and its subsidiaries under the executive   pension and executive deferred compensation plans as of the Effective Date;   and

 

·                  post-retirement benefits other than pension (“PBOP”)   liabilities to retirees and retiree eligible employees of EME and its   subsidiaries, other than employees of EME Homer City Generation L.P., as of   the Effective Date; provided,   that EME may determine PBOP benefits for other employees without cost to EIX   and its subsidiaries.

 

Pursuant to the Shared Services Order (as   defined below), during the Chapter 11 Cases, EME, consistent with past   practice, will continue to fund the Assumed Liabilities, and EIX (subject to 
    

 

7

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
such funding), consistent with past   practice, will continue to allow employees and retirees of EME and its   subsidiaries to participate in the EIX plans currently providing such   benefits, subject to EIX’s right to modify or amend such plans; provided, however, that   EIX and EME shall use their commercially reasonable efforts to negotiate   arrangements for the separate treatment of EME with respect to any such   modifications or amendments and:

 

·                  no such modification or amendment to any pension or deferred   compensation plan shall materially increase costs to EME or its subsidiaries   or discriminate against the employees of EME or its subsidiaries;

 

·                  no such modification or amendment to any other employee benefit plan   shall discriminate against the employees of EME or its subsidiaries; and

 

·                  EIX and EME shall work cooperatively, in consultation with the   Noteholders’ advisors, and use their commercially reasonable efforts to   evaluate, and if they agree it is advisable, to effect changes to facilitate   separate treatment of the employees of EME and its subsidiaries under such   plans within 90 days after the Petition Date.
    
	
 
    	
 
    	
 
    
	
No Guaranty
    	
 
    	
Neither EIX nor any of its subsidiaries will   guarantee or assure taxable income of the group or the recovery of tax   benefits.
    
	
 
    	
 
    	
 
    
	
Tax Audit Liability
    	
 
    	
To   the extent EIX realizes a net tax benefit as a result of audit adjustments   relating to EME or any of its subsidiaries (and EME pays or otherwise   satisfies any liabilities arising or resulting from such adjustments), EIX   will pay such net tax benefit (but not in excess of the liability actually   paid or otherwise satisfied by EME) to EME as and when such net tax benefit   (including any additional benefits resulting from payment of such net tax   benefit) is actually received (for example, as a reduction of estimated or   other tax payments or receipt of a refund).
    
	
 
    	
 
    	
 
    
	
Control of Tax Audits
    	
 
    	
·                  Except as set forth below under Taupo Audit, EIX shall retain the   taxpayer’s control of any audit or contest of any EME tax liability with   respect to any period for which EME is included in any tax return as part of   EIX’s consolidated group (excluding, however, any audit or contest pertaining   to any separate returns of EME that does not involve EIX); provided that EIX shall agree to
    

 

8

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
consult with EME and its tax counsel and   provide EME and its tax counsel with active participation and consent rights   with respect to such audit or contest, including, without limitation,   discussions and negotiations with the IRS and any settlement of such audit or   contest, it being agreed that EIX may not settle an EME audit issue, or   advocate against the audit position of EME regarding an EME issue involving   amounts (including interest and penalties) in excess of $1 million (except to   the extent EIX or any of its other subsidiaries has a tax position with   respect to a tax item of EIX or any of its subsidiaries that is adverse to   such audit position of EME), without either (a) obtaining EME’s consent   (which with respect to any EME audit or contest, other than with respect to   the EME Taupo Ltd. audit or contest, involving amounts in excess of $1   million, may be granted or withheld to the extent specified in the TSSAA), or   (b) waiving its indemnity from EME and indemnifying EME for its tax   liability at issue.

 

·                  Taupo Audit: EME shall have sole and absolute discretion  to   settle the EME Taupo Ltd. audit or contest. At the request of EME, EIX shall   contest by petition to a trial court any adjustment to tax liability with   respect to the EME Taupo Ltd. audit, provided that   (a) EIX receives an opinion of independent tax counsel to EME to the   extent specified in the TSSAA, (b) such petition shall be brought in the   U.S. Tax Court, unless EIX chooses to contest in court issues for the same   taxable year which relate to EIX or its subsidiaries other than EME and its subsidiaries,   in which case the choice of forum shall be at the discretion of EIX, after   good faith consultation with EME and its tax counsel, and (c) EIX shall   not be required to contest any such adjustment beyond the trial court level   unless it receives an opinion of independent tax counsel to EME to the extent   specified in the TSSAA. If the EME Taupo Ltd. audit or contest is not resolved and paid by EME on or before termination of the Tax   Sharing Agreements with respect to EME, then EME will (a) provide   reasonably acceptable first priority security, pari passu   with EME’s most senior indebtedness or (b) maintain on deposit with the   relevant taxing authorities at all relevant times an amount sufficient to   discharge the entire liability.
    

 

9

 

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
·                  Contest of Other Audit Items:  At the request of EME, EIX   shall contest any other adjustment to tax liability of EME involving amounts   (including penalties and interest) in excess of $1 million, provided that (a) EIX   shall not be required to so contest such other adjustment unless it receives   an opinion of independent tax counsel to EME to the extent specified in the   TSSAA and (b) EIX shall be entitled, after consulting in good faith with   EME, to select the forum for any contest at a trial court level.  At EME’s request, EIX shall file an   affirmative or refund claim with the appropriate taxing authority, provided   that EIX shall not be required to make such claim unless it receives an   opinion of independent tax counsel to EME to the extent specified in the   TSSAA.  If an audit or contest, other than the EME Taupo Ltd. audit or   contest, is not resolved and   paid by EME on or before termination of the Tax Sharing Agreements with   respect to EME, then EME will (a) provide security in form and   substance reasonably acceptable to EIX in its good faith discretion, or (b) maintain on deposit with the relevant taxing authorities at   all relevant times an amount sufficient to discharge the entire liability or   liabilities.

 

EME will   pay the cost of any audit or contest related to EME, including the EME   Taupo Ltd. audit or contest.  Any deposits, payments, or bonds required   to be made or posted to contest any tax liability with respect to EME shall   be borne by EME.
    
	
 
    	
 
    	
 
    
	
EIX and EME Indemnities
    	
 
    	
·                  The MRA and Plan shall provide that EIX will indemnify EME and its   subsidiaries against the EIX group’s liabilities not related to the business   operations of EME and its subsidiaries, including (a) any   indemnification obligations of EME for any claims against directors,   officers, employees, or agents of EME and its subsidiaries acting in a   capacity not related to the business operations of EME and its subsidiaries   and (b) for periods following termination of the Tax Sharing Agreements   with respect to EME, any liability for taxes attributable to a member of the   EIX consolidated tax group other than EME or its subsidiaries under Treasury   Regulation 1.1502-6 (or any similar provision of state, local, or non-U.S.   law).

 

·                  The MRA and Plan shall provide that EME will 
    

 

10

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
indemnify EIX and its subsidiaries against   the EIX group’s liabilities related to the business operations of EME and its   subsidiaries, including any indemnification obligations of EIX for any claims   against directors, officers, employees, or agents of EIX and of EME and its   subsidiaries acting in a capacity related to the business operations of EME   and its subsidiaries.
    
	
 
    	
 
    	
 
    
	
Shared Services and   Overhead Allocations 
    	
 
    	
After the Petition Date, and pending   execution of the Shared Services Agreement (as defined herein), EIX and its   subsidiaries (other than EME and its subsidiaries) will continue to provide   corporate support services to EME and its subsidiaries, and EME will continue   to compensate EIX for such services, in each case consistent with current EIX   policies, procedures, and practices.    In addition, after the Petition Date, and pending execution of the   Shared Services Agreement, EME will continue to provide corporate support   services to EIX and its subsidiaries, and EIX will continue to compensate EME   for such services, in each case consistent with current EME policies,   procedures and practices.  On the   Petition Date, the Debtors will file a motion (the “Shared   Services Motion”) seeking an order (the “Shared   Services Order”) granting authority to continue, in the   ordinary course of business, satisfying any obligations for corporate support   services provided by EIX and its subsidiaries, including funding of payroll   and benefits for employees and executives of EME and its subsidiaries   administered by EIX and its subsidiaries, subject in each case to EIX’s   ability to modify or amend any such benefit plans.  Subject to EME’s funding such payroll and   benefits:

 

·                  no such modification or amendment to any pension or deferred   compensation plan shall materially increase costs to EME or its subsidiaries   or discriminate against the employees of EME or its subsidiaries;

 

·                  no such modification or amendment to any other employee benefit plan   shall discriminate against the employees of EME or its subsidiaries; and

 

·                  EIX and EME, in consultation with the Noteholders’ advisors, shall   work cooperatively and use their commercially reasonable efforts to evaluate,   and if they agree it is advisable, to effect changes to facilitate separate   treatment of the employees of EME and its subsidiaries under such plans   within 90 days after the Petition Date.
    

 

11

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Shared Services Motion and Shared   Services Order shall be reasonably acceptable to EIX and the Noteholders and   attach both EIX’s Intercompany Billing and Payment Policy and EIX’s   Intercompany Payment Terms and Procedures for EME and each of its   subsidiaries.  The Shared Services   Motion and Shared Services Order shall also provide that the EIX’s obligation   to provide corporate support services terminates on December 31, 2013   unless the MRA is approved by a final non-appealable order of the Bankruptcy   Court by the Outside Date.  If the   Shared Services Motion is not filed on the Petition Date or the Shared   Services Order is not approved on an interim basis within 30 days after the   Petition Date or a final basis within 60  days after   the Petition Date, EIX shall have no obligation to provide the shared   services.

 

The MRA shall provide for contemporaneous   approval and execution of a shared services agreement (the “Shared Services Agreement”) that   will provide, among other things, for EIX and its subsidiaries (other than   EME and its subsidiaries) to continue to provide corporate support services   to EME and its subsidiaries consistent with current EIX policies, procedures   and practices during the Chapter 11 Cases, subject to the following basic   terms:

 

·                  Term:  through the Effective   Date of the Plan;

 

·                  EIX and EME will engage in good faith discussions regarding the   terms of the Transition Agreement (as defined herein); and

 

·                  EIX and its subsidiaries (other than EME and its subsidiaries) shall   continue to provide corporate support services to EME and its subsidiaries as   mutually agreed to by EIX and EME, and EME shall continue to compensate EIX   for such services, in each case consistent with current EIX policies,   procedures and practices, and the following:

 

·                  EME to continue to reimburse EIX for directly requested services and   costs incurred by EIX for EME and its subsidiaries;

 

·                  EIX to cooperate with EME to reduce corporate support services by   EIX and facilitate the orderly transfer of such services to other parties as 
    

 

12

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
determined by EME,   except EME shall provide EIX with two months’ advance notice of any   directly requested or shared services to be discontinued; and

 

·                  EIX shall cease to make a corporate overhead allocation to EME for   certain agreed upon EIX corporate overhead items upon the commencement of the   Chapter 11 Cases (currently estimated at    approximately $6 million per year), provided that the parties will   review in good faith the utilization of such overhead items by EME.

 

·                  EME shall continue to provide corporate support services to EIX as   mutually agreed to by EME and EIX, and EIX to continue to compensate EME for   such services, in each case consistent with current EME policies, procedures   and practices; provided that EME shall provide EIX with two months’ advance   notice of termination of such support services.
    
	
 
    	
 
    	
 
    
	
Transition Arrangements
    	
 
    	
The MRA shall provide for the inclusion in   the Plan, and effective on the Effective Date, of a transition agreement   (the “Transition Agreement”)   between EIX and EME.  Pursuant to the   Transition Agreement, the parties will work cooperatively to establish EME   and its subsidiaries as a stand-alone business enterprise unaffiliated with   and not reliant upon the EIX group on the following basic terms:

 

·                  the continued use of certain to be mutually agreed upon assets or   shared assets of EIX and its affiliates (including certain intellectual   property, licenses, and permits) by EME after the Effective Date, it being   understood, however, that conditions of such use of intellectual property,   licenses, and permits will be in the reasonable and good faith discretion of   EIX.  EIX shall not be required to permit   EME’s and its subsidiaries’ use of any name, logo, mark, tradename, or   trademark of EIX or its subsidiaries, other than “Mission Energy” (subject to   EIX’s confirmation that such permission does not impair any other names,   logos, marks, tradenames, or trademarks);

 

·                  the transfer of licenses and permits required to operate the 
    

 

13

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Debtors’ businesses to entities owned or   controlled by the reorganized Debtors on or as soon as reasonably practicable   after the Effective Date, to the extent EIX or its affiliates have any such   licenses and permits and are legally permitted to transfer such licenses and   permits, and such licenses and permits are not used by EIX or its affiliates   for purposes other than the operation of the Debtors’ businesses;

 

·                  all books and records maintained by EME and its subsidiaries will be   retained by EME;

 

·                  EME will reasonably cooperate (subject to customary nondisclosure   and/or nonuse agreements) with EIX in (a) making EME records relating to   the EME business prior to the Effective Date available to EIX on an ongoing   basis and (b) making available its personnel and legal and accounting   advisors during regular business hours for that purpose; and

 

·                  EIX will reasonably cooperate (subject to customary nondisclosure   and/or nonuse agreements) with EME in (a) making EIX records relating to   the EME business prior to the Effective Date available to EME on an ongoing   basis and (b) making available its personnel and legal and accounting   advisors during regular business hours for that purpose.
    
	
 
    	
 
    	
 
    
	
Insurance
    	
 
    	
As part of the Shared Services Motion and   the Shared Services Order and the Shared Services Agreement, EME shall   continue to be covered under current EIX insurance policies after the   Petition Date until those policies expire, unless EME requests coverage under   a separate insurance policy.  After the   expiration of those policies, EIX will assist EME in procuring insurance   coverage (e.g., property and casualty, general liability, business interruption,   D&O, etc.) of the EME business during the Chapter 11 Cases, in   consultation with EME, and subject in all respects to approval by EME and the   consent of the Noteholders’ advisors, such consent not to be unreasonably   withheld, delayed, or conditioned.    Under the Transition Agreement, EIX will provide reasonable assistance   as may be reasonably required for EME to procure separate insurance policies   upon or after the Effective Date if separate insurance has not been   previously procured.
    

 

14

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
Release
    	
 
    	
Pursuant and in all respects subject to the   terms set forth herein, the MRA and Plan shall provide that the Debtors and   the Noteholders shall release EIX and its subsidiaries (other than EME and   its subsidiaries) and their respective directors, officers, employees, and   agents of all claims and that EIX, and Edison Mission Group and is   subsidiaries (other than EME and its subsidiaries) (the “EMG   Subsidiaries”) shall release all claims against and interests   in EME and its subsidiaries and the Noteholders (in their capacity as such)   and their respective directors, officers, employees, and agents, other than   (a) claims under the MRA and (b) claims arising from past,   existing, and future commercial relationships between any subsidiary of EIX   (other than EME and its subsidiaries) and EME or any of its   subsidiaries.  The release by the   Debtors and the Noteholders shall be effective with respect to EIX and the   EIX Subsidiaries upon entry of a final order as part of the Bankruptcy Court’s   approval of the MRA (subject to revocation as set forth under “Transaction   Structure”), and with respect to other subsidiaries of EIX upon the Effective   Date.  The release by EIX and EMG   Subsidiaries shall be effective with respect to the Debtors and Noteholders   upon entry of a final order as part of the Bankruptcy Court’s approval of the   MRA (subject to revocation as set forth under “Transaction Structure”), and   shall be effective with respect to other subsidiaries of EME upon the   Effective Date.
    
	
 
    	
 
    	
 
    
	
Affiliate Rules
    	
 
    	
Both during the pendency of the Chapter 11   Cases and after the Effective Date, EME and its subsidiaries will comply with   all  applicable rules, regulations, and   decisions, if any, of the Federal Energy Regulatory Commission (“FERC”) and California Public   Utilities Commission (“CPUC”)   related to EME’s affiliation with SCE through EIX common ownership, to the   extent the same are applicable, including without limitation FERC’s Code of   Conduct and Standards of Conduct, the CPUC’s Affiliate Transaction Rules, and   the CPUC’s decision authorizing EIX to be the holding company of SCE, as well   as any implementing policies adopted from time to time by EIX or its   subsidiaries and filed with the CPUC.
    

 

15

 

	
Term
    	
 
    	
Description
    
	
 
    	
 
    	
 
    
	
Plan Support
    	
 
    	
The MRA shall provide for EIX to agree to   support the Plan, provided it is consistent with the Transaction Support   Agreement, this Term Sheet, and the MRA.
    

 

16

 

 

EXHIBIT B

 

Restructuring Term Sheet among the Company and the Consenting Noteholders

 

 

EDISON MISSION ENERGY, ET AL.

SENIOR NOTEHOLDER RESTRUCTURING TERM SHEET

 

THIS TERM SHEET (THIS “NOTEHOLDER TERM SHEET”)(1) DESCRIBES CERTAIN MATERIAL TERMS OF A PROPOSED TRANSACTION INVOLVING EDISON MISSION ENERGY AND CERTAIN OF ITS DOMESTIC SUBSIDIARIES, THE TERMS OF WHICH WILL BE EFFECTUATED THROUGH THE COMMENCEMENT OF CASES UNDER CHAPTER 11 OF THE BANKRUPTCY CODE IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS PURSUANT TO A PLAN OF REORGANIZATION CONFIRMED IN THE DEBTORS’ VOLUNTARY, PREARRANGED CHAPTER 11 CASES.

 

THIS NOTEHOLDER TERM SHEET DOES NOT CONSTITUTE AN OFFER OF SECURITIES OR A SOLICITATION OF THE ACCEPTANCE OR REJECTION OF A CHAPTER 11 PLAN FOR PURPOSES OF SECTIONS 1125 AND 1126 OF THE BANKRUPTCY CODE.  ANY SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE.

 

	
GENERAL PROVISIONS
    
	
 
    	
 
    	
 
    
	
Postpetition   Financing
    	
 
    	
The   Debtors may determine to enter into a debtor in possession financing   facility, subject to the consent of the Consenting Noteholders (not to be   unreasonably withheld). 
    
	
 
    	
 
    	
 
    
	
Powerton and Joliet
    	
 
    	
Subject   to the consent of the Consenting Noteholders (not to be unreasonably   withheld), the Debtors may:    (a) pursue restructuring options with respect to the leveraged   leases of the Powerton Generating Station, located in Pekin, Illinois,   and Units 7 and 8 of the Joliet Generating Station, located in   Joliet, Illinois, and (b) make material capital expenditures or   payments with respect to the Powerton and Joliet facilities during the   Chapter 11 Cases.

 

Notwithstanding   anything to the contrary herein, the Consenting Noteholders reserve all   rights during the Chapter 11 Cases with respect to Midwest Generation, LLC   and the Powerton and Joliet leveraged leases.
    

 

(1)         Capitalized not otherwise defined herein shall have the meanings ascribed to them in that certain Transaction Support Agreement (the “Transaction Support Agreement”), dated as of December 16, 2012, among the Company, EIX, and the Consenting Noteholders, or that certain Term Sheet for Discussion of Equity Turnover, dated as of December 16, 2012, among the Company, EIX, and the Consenting Noteholders, attached to the Transaction Support Agreement as Exhibit A.

 

 

	
GENERAL PROVISIONS
    
	
 
    
	
Diligence
    	
 
    	
The   Company will respond promptly to the reasonable diligence requests of the   professional advisors to the Consenting Noteholders (the “Noteholder   Advisors”) during the Chapter 11 Cases.

 

In   the event that diligence contemplated by the term sheet is not received by   the Debtors or the Consenting Noteholders, the Company and the Consenting   Noteholders agree to seek such information on an expedited basis through   Rule 2004 and any other appropriate means.
    
	
 
    	
 
    	
 
    
	
Consenting Noteholder Consultations
    	
 
    	
After   the Petition Date, the Company shall consult in good faith with the   Noteholder Advisors regarding material decisions with respect to the   Chapter 11 Cases.  The Company   also shall provide drafts of the MRA and MRA Agreements to the Noteholder   Advisors and consult with such Advisors regarding such drafts.  
    
	
 
    	
 
    	
 
    
	
Employee Benefits and Obligations
    	
 
    	
Any   chapter 11 plan of reorganization will provide that the reorganized Debtors   will honor and continue all employee benefits, severance, and other programs.
    
	
 
    	
 
    	
 
    
	
Consenting Noteholder Professional Fees
    	
 
    	
The   Company will pay the reasonable and documented fees and expenses of the   Noteholder Advisors during the Chapter 11 Cases.  The Company will seek Bankruptcy Court   approval to pay such fees pursuant to the terms of the Transaction Support   Agreement.
    
	
 
    	
 
    	
 
    
	
Control of Taupo Audit
    	
 
    	
The   Company shall not settle the EME Taupo Ltd. audit or contest without the   prior written consent of the Consenting Noteholders, such consent not to be   unreasonably withheld.  The Company   shall provide diligence and other information (including status updates   regarding the Company’s discussions with the Internal Revenue Service) regarding   any potential settlement of the EME Taupo Ltd. audit or contest to the   Noteholder Advisors.
    

 

 

	
GENERAL PROVISIONS
    
	
 
    
	
Inquiry
    	
 
    	
The   Company shall confer with the Noteholder Advisors in connection with its   inquiry (the “Inquiry”) regarding the Release (as defined in the   Equity Term Sheet) and other aspects of the Settlement Transaction.  The Company shall provide the Noteholder   Advisors with regular updates regarding the status of the Inquiry and   contemplated next steps.  The Company   shall:  (a) consult with the   Noteholder Advisors regarding topics and search terms that may reasonably   augment the Inquiry, (b) provide the Noteholder Advisors with prior   written notice of all interviews conducted in the Inquiry, and   (c) promptly provide documents received by the Company that are related   to the Inquiry.  The Company shall   provide the Noteholder Advisors with a draft report or other summary   preliminary findings reasonably in advance of the filing of the motion   seeking authority to, among other things, enter into the MRA.  The Company shall provide to the Noteholder   Advisors copies of any documents provided to the advisors to the official   committee of the Company’s unsecured creditors in connection with the Inquiry   at the time such documents are provided to any such committee or its   advisors.  
    
	
 
    	
 
    	
 
    
	
Reservation of Rights
    	
 
    	
The   Consenting Noteholders reserve rights with respect to all claims against each   Debtor, including administrative or priority claims.
    
	
 
    	
 
    	
 
    
	
CORPORATE GOVERNANCE
    
	
 
    	
 
    	
 
    
	
Fiduciary Out
    	
 
    	
Notwithstanding   anything to the contrary herein, the Debtors shall be entitled to take any   action, or to refrain from taking any action, including a decision to pursue   an alternative restructuring transaction, which the Debtors determine is   consistent with their fiduciary obligations in accordance with section 5 of   the Transaction Support Agreement.
    

 

 

EXHIBIT C

 

Form of Transfer Agreement

 

The undersigned (the “Transferee”) hereby acknowledges that it has reviewed the Transaction Support Agreement, dated as of December 16, 2012 (the “Agreement”), by and among Edison International, Edison Mission Energy (the “Company”), certain of the Company’s domestic subsidiaries (together with the Company, the “Debtors”),(2) [Transferor’s Name] (the “Transferor”), and the other holders of claims against the Debtors signatory thereto, and agrees to be bound by the terms and conditions thereof binding on the Consenting Noteholders to the extent the Transferor was thereby bound, without modification and shall be deemed a Consenting Noteholder  under the Agreement.

 

	
Date:   [            ],   201[  ]
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[Transferee’s Name]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Principal   amount of Notes held:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
$                                    of 7.50% Notes due 2013.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
$                                    of 7.75% Notes due 2016.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
$                                    of 7.00% Notes due 2017.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
$                                    of 7.20% Notes due 2019.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
$                                    of 7.625% Notes due 2027.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
 
    

 

(2)         As of the date hereof, the Debtors are contemplated to include the following subsidiaries of the Company: Camino Energy Company; Chestnut Ridge Energy Company; Edison Mission Energy Fuel Services, LLC; Edison Mission Fuel Resources, Inc.; Edison Mission Fuel Transportation, Inc.; Edison Mission Holdings Co.; Edison Mission Midwest Holdings Co.; Midwest Finance Corp.; Midwest Generation EME, LLC; Midwest Generation, LLC; Midwest Generation Procurement Services, LLC; Midwest Peaker Holdings, Inc.; Mission Energy Westside, Inc.; San Joaquin Energy Company; Southern Sierra Energy Company; and Western Sierra Energy Company.

 

	
 
    	
 
    	
[Address]
    
	
 
    	
 
    	
Attention:
    
	
 
    	
 
    	
Fax:
    
	
 
    	
 
    	
Email:

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