Amended And Restated Intercompany Loan Subordination Agreement

EXHIBIT 10.20.4


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


RECITALS


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


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


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


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


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


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


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


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


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


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ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION


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


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


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


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


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


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


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


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


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


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


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


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


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


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ARTICLE II
SUBORDINATION PROVISIONS


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


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


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


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


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


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


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


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


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ARTICLE III
WRONGFUL COLLECTIONS


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


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


ARTICLE IV
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