GUARANTY
--------
The undersigned, EDISON MISSION ENERGY, a California corporation
("Guarantor"), is executing this Guaranty in favor of THE FUJI BANK, LIMITED,
---------
LOS ANGELES AGENCY, as Agent for the equal and ratable benefit of the parties
listed in Schedule A hereto (in such capacity, together with its successors and
----------
assigns in such capacity, the "Agent" and, collectively with the other parties
-----
listed on Schedule A, the "Beneficiaries") to induce the Beneficiaries to enter
-------------
into that certain Defeasance Agreement of even date herewith (the "Defeasance
----------
Agreement") with Camino Energy Company (the "Borrower"), a wholly owned
--------- --------
subsidiary of Guarantor. The Banks, the Security Representative, the Fronting
Bank (as each such party is identified on Schedule A), the Agent and the
Borrower are each party to a Project Loan and Credit Agreement dated as of
August 27, 1987, as amended to the date hereof (the "Credit Agreement"),
----------------
pursuant to which the Banks and the Fronting Bank made a credit facility
available to the Borrower in the original maximum amount of $140,000,000 to
finance the Borrower's obligations relating to a cogeneration facility in
Carson, California (the "Project"). The only remaining extensions of credit
-------
outstanding under such credit facility as of the date hereof are direct-pay
letters of credit ("LOCs") issued by the Fronting Bank and participated in by
----
the Banks, which LOCs provide credit enhancement and liquidity support for
medium-term notes ("Medium-Term Notes") issued by the Borrower. The Borrower
-----------------
now wishes to refinance its obligations with respect to the Project and to
defease the outstanding Medium-Term Notes, the aggregate principal amount of
which is $30,000,000. Pursuant to the Defeasance Agreement, the Borrower has
agreed to deposit funds into various accounts ("Defeasance Accounts") maintained
-------------------
by the Depositary (as identified on Schedule A) to defease its respective
obligations to each of the Beneficiaries. The Beneficiaries are willing to
enter into the Defeasance Agreement on the condition that Guarantor
unconditionally guaranty the Borrower's obligations thereunder until the
Beneficiaries are able to obtain assurance that amounts deposited by the
Borrower into the Defeasance Accounts would not be subject to recovery by the
Borrower's estate in the event of the Borrower's bankruptcy, insolvency,
reorganization or other like proceeding. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Defeasance Agreement
(including the cross-reference therein to terms defined in the Credit
Agreement).
1. Guaranty. Guarantor unconditionally and irrevocably
--------
guarantees to the Agent, for the equal and ratable benefit of
the Beneficiaries, the full and punctual payment and
performance of the Borrower's obligations to make irrevocable
and indefeasible payments (in cash and/or securities) to the
Depositary for deposit into the Defeasance Accounts pursuant
to the Credit Agreement and Defeasance Agreement. In the
event the Borrower, any trustee in bankruptcy for the Borrower
or any other Person shall take any action seeking to avoid or
challenge the transfer by the Borrower of any cash or
securities delivered by the Borrower to the Depositary
pursuant to the Defeasance Agreement (any such action shall be
referred to as a "Challenge" and the property subject to such
---------
Challenge shall be referred to as the "Challenged Assets"),
-----------------
Guarantor shall forthwith deliver cash and/or securities to
the Agent (which shall in turn forthwith deliver the same to
the Depositary for deposit into the appropriate Defeasance
Accounts in accordance with the terms of the Defeasance
Agreement) of such value and of such maturities so as to
satisfy the Borrower's obligations under the Defeasance
Agreement (including, without limitation, the obligation to
obtain a certificate of the Accountant pursuant to Section
2(c), 3(c), 4(c), 5(c), 6(c) and/or 7(c) of the Defeasance
Agreement, as applicable) without including the Challenged
Assets as available to satisfy the Borrower's obligations.
Such obligations of Guarantor are referred to in this Guaranty
as the "Shortfall" and will be payable by Guarantor to the
---------
Agent immediately upon demand in the event of any Challenge.
2. Termination of Guaranty. This Guaranty and the
-----------------------
obligations of Guarantor hereunder shall terminate on the date
which is the later of: (a) the date on which the Agent shall
--------
receive, in form and substance satisfactory to the Agent, (i)
a certificate of an authorized officer of each of Guarantor
and the Borrower, dated as of a date not earlier than one
hundred (100) days after the Defeasance Date, that no
voluntary or involuntary bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution,
liquidation or other like filing has been made with respect to
the Borrower and that no action by any Person seeking to avoid
or challenge the transfer by the Borrower of any cash or
securities delivered by the Borrower to the Depository has
occurred; and (ii) a certified national bankruptcy filing
search by a nationally recognized search service acceptable to
the Agent, dated as of a date not earlier than one hundred
(100) days after the Defeasance Date, showing that no
voluntary or involuntary bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution,
liquidation or other like filing has been made with respect to
the Borrower; and (b) the date on which Guarantor shall have
---
fully and indefeasibly satisfied any and all of its
obligations hereunder that may have arisen on or prior to the
date specified in Section 2(a).
3. Rights of Beneficiaries. Guarantor authorizes the
-----------------------
Beneficiaries at any time in their discretion to alter any of
the terms of the Defeasance Agreement, the Credit Agreement,
the Facility Agreement, the Depositary Agreement or any other
Operative Agreement in accordance with the terms thereof, to
take and hold any security for the obligations thereunder and
to accept additional or substituted security, to subordinate,
compromise or release any security, to release the Borrower
from its liability for all or any part of such obligations, to
release, substitute or add any one or more guarantors or
endorsers, and to assign to their successors and assigns under
the Defeasance Agreement, the Credit Agreement, the Facility
Agreement, the Depositary Agreement or any other Operative
Document this Guaranty in whole or in part. The Beneficiaries
may take any of the foregoing actions upon any terms and
conditions as the Beneficiaries may elect, without giving
notice to Guarantor or obtaining the consent of Guarantor and
without affecting the liability of Guarantor hereunder.
4. Independent Obligation. Guarantor's obligation to pay
----------------------
the Shortfall under this Guaranty is independent of the
obligations of the Borrower. Agent may bring a separate
action against Guarantor without first proceeding against the
Borrower or any other Person or any security held by the Agent
and without pursuing any other remedy.
5. Obligations Absolute. The obligations of Guarantor
--------------------
hereunder shall be absolute, unconditional and continuing and
shall remain in full force and effect until terminated in
accordance with Section 2 and without regard to, and shall not
be affected or impaired by the following, any of which may
occur without the consent of, or notice to, Guarantor, nor
shall any of the following give Guarantor any recourse or
right of action against the Agent or any other Beneficiary:
(a) any lack of validity or enforceability
of, or any release or discharge of the
Borrower or any other guarantor from
liability under, the Defeasance Agreement or
any other Operative Agreement;
(b) any change in the time, manner or
place of payment of, or in any other term
of, all or any of the obligations guaranteed
hereunder or any other amendment or waiver
of, or any consent to departure from, the
Defeasance Agreement or any other Operative
Agreement;
(c) any subordination, compromise,
exchange, release, nonperfection or
liquidation of any collateral, or any
release, amendment or waiver of, or consent
to departure from, any other guaranty, for
any or all of the obligations guaranteed
hereunder;
(d) any express or implied amendment,
modification, renewal, addition, supplement,
extension (including, without limitation,
extensions beyond the original term) or
acceleration of the obligations guaranteed
hereunder, the Defeasance Agreement or any
other Operative Agreement;
(e) any exercise or nonexercise by the
Agent or any other Beneficiary of any right
or privilege under this Guaranty, the
Defeasance Agreement or any of the other
Operative Agreements;
(f) any bankruptcy, insolvency,
reorganization, composition, adjustment,
dissolution, liquidation or other like
proceeding relating to Guarantor, the
Borrower, or any other guarantor of the
obligations guaranteed hereunder or any
action taken with respect to this Guaranty
by any trustee, receiver or court in an
such proceeding, whether or not Guarantor
shall have had notice or knowledge of any of
the foregoing;
(g) any assignment or other transfer by
the Agent, in whole or in part, of the
obligations guaranteed hereunder or this
Guaranty, the Defeasance Agreement or any of
the other Operative Agreements;
(h) any acceptance of partial performance of
the obligations guaranteed hereunder;
(i) any consent to the transfer of, or any
bid or purchase at sale of, any collateral
for the obligations guaranteed hereunder;
(j) the failure of any party or parties to
execute this Guaranty or any other document
relating to the obligations guaranteed
hereunder; or
(k) any other circumstance that might
otherwise constitute a defense available to,
or a discharge of, the Borrower, Guarantor
or any other guarantor of the obligations
guaranteed hereunder.
6. Waivers of Defenses. To the extent permitted by law,
-------------------
Guarantor hereby waives and relinquishes all rights and
remedies accorded by applicable law to sureties or guarantors
and agrees not to assert or take advantage of any such rights
or remedies, including without limitation (a) any right to
require the Agent to proceed against the Borrower or any other
Person or to proceed against or exhaust any security held by
the Agent at any time or to pursue any other remedy in the
Agent's power before proceeding against Guarantor, (b) the
defense of the statute of limitations in any action hereunder
or in any action for the collection or performance of the
obligations hereby guaranteed, (c) any defense that may arise
by reason of the incapacity, lack of authority or disability
of the Borrower or any other Person, (d) demand, presentment,
protest and notice of any kind, including without limitation
notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-
action on the part of the Borrower, the Agent, any endorser or
creditor of the Borrower or Guarantor or on the part of any
other Person under this or any other instrument in connection
with any obligation or evidence of indebtedness held by the
Agent as collateral or in connection with the obligation
hereby guaranteed, (e) any defense based upon an election of
remedies by the Agent, including without limitation an
election to proceed by non-judicial rather than judicial
foreclosure, which destroys or otherwise impairs the
subrogation rights of Guarantor, the right of Guarantor to
proceed against the Borrower for reimbursement, or both,
(f) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than
that of the principal, (g) any duty on the part of the Agent
to disclose to Guarantor any facts the Agent may now or
hereafter know about the Borrower, regardless of whether the
Agent has reason to believe that any such facts materially
increase the risk beyond that which Guarantor intends to
assume, or has reason to believe that such facts are unknown
to Guarantor, or has a reasonable opportunity to communicate
such facts to Guarantor, (h) any defense arising under Section
364 of the Federal Bankruptcy Code and (i) any claims of any
nature whatsoever against the Agent or the other Beneficiaries
arising out of or related to the sale or transfer of any
collateral or the resolution or settlement of any dispute
arising under any Operative Agreement, notwithstanding that
such sale or transfer or resolution or settlement occurred at
such time or in such a manner as to directly or indirectly
increase the amount of the Shortfall obligation to be paid by
the Guarantor hereunder. Without limiting the generality of
the foregoing, Guarantor hereby expressly waives, to the
extent permitted by applicable law, any and all benefits which
might otherwise be available to Guarantor under California
Civil Code Sections 2809, 2810, 2819, 2839, 2845 through 2847,
2849, 2850, 2899 and 3433, and California Code of Civil
Procedure Sections 580a, 580b, 580d and 726.
7. No Dissolution or Transfer of the Borrower. Guarantor
------------------------------------------
hereby (i) agrees that, so long as any amounts remain owing
under the Credit Agreement or the other Operative Agreements,
it will not take any action or cause the Borrower to take any
action to file for bankruptcy, reorganization, composition,
adjustment, dissolution or liquidation or to sell or transfer
any stock of the Borrower and (ii) confirms and agrees that
all payment obligations of the Borrower to Guarantor shall be
subject to the provisions of Exhibit 7 to the Credit Agreement
---------
(including, without limitation, any obligation to pay
principal and interest on any loans made to the Borrower by
Guarantor).
8. Borrower's Financial Condition. Guarantor assumes full
------------------------------
responsibility for keeping fully informed of the financial
condition of the Borrower and all other circumstances
affecting the Borrower's ability to perform its obligations to
the Beneficiaries, and agrees that the Beneficiaries will have
no duty to report to Guarantor any information which the
Beneficiaries receive about the Borrower's financial condition
or any circumstances bearing on its ability to perform its
obligations to the Beneficiaries.
9. Impairment of Subrogation Rights. Upon a default of the
--------------------------------
Borrower, the Agent may elect to nonjudicially or judicially
foreclose against any real or personal property security it
holds for the Shortfall, or any other of the Obligations owing
to the Beneficiaries by the Borrower, or any part thereof, or
to exercise any other remedy against the Borrower or any
security. No such action by the Agent will release or limit
the liability of Guarantor to the Beneficiaries, even if the
effect of that action is to deprive Guarantor of the right to
collect reimbursement from the Borrower for any sums paid
hereunder.
10. Right of Setoff. In the event Guarantor fails to pay
---------------
the Shortfall within three (3) Business Days after receipt by
Guarantor of the Agent's demand, in addition to all rights of
setoff or lien against any moneys, securities or other
property of Guarantor given to the Beneficiaries by law, the
Beneficiaries shall have a right of setoff against all moneys,
securities and other property of Guarantor now or hereafter in
the possession of or on deposit with the Beneficiaries,
whether held in a general or special account or deposit, or
for safekeeping or otherwise; and every such right of setoff
may be exercised without demand upon or notice to Guarantor.
No right of setoff shall be deemed to have been waived by any
act or conduct on the part of any of the Beneficiaries, or by
any neglect to exercise such right of setoff, or by any delay
in doing so; and every right of setoff shall continue in full
force and effect until specifically waived or released by an
instrument in writing executed by the Beneficiaries.
11. Default. The Agent may declare Guarantor in default
-------
under this Guaranty if Guarantor breaches any of its
covenants, agreements or undertakings contained hereunder,
fails to pay the Shortfall within three (3) Business Days of
Guarantor's receipt of demand therefor or Guarantor shall
commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become due,
or shall take any action to authorize any of the foregoing or
an involuntary case or other proceeding shall be commenced
against Guarantor seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of Guarantor or any
substantial part of its property and such involuntary case or
other proceeding shall remain undismissed and unstayed for a
period of ninety (90) days; or an order for relief shall be
entered against Guarantor under the federal bankruptcy laws as
now or hereafter in effect.
12. Due Authority. Guarantor represents and warrants that
-------------
it has the corporate power to enter into this Guaranty and has
taken all necessary action to authorize the execution,
delivery and performance of this Guaranty. Any authorization,
consent or approval of any governmental body required for the
valid execution, delivery and performance by Guarantor of this
Guaranty has been obtained and is in full force and effect.
13. Enforceable Agreement. Guarantor represents and
---------------------
warrants that this Guaranty constitutes the legal, valid and
binding obligation of Guarantor enforceable in accordance with
its terms (except as the enforceability thereof may be limited
by applicable bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and subject to general equitable principles).
14. No Violation. Guarantor represents and warrants that
------------
the execution, delivery and performance of this Guaranty will
not violate any law, rule or regulation or any order, judgment
or decree applicable to it or any agreement binding upon it.
15. Financial Condition. Guarantor represents and warrants
-------------------
that the balance sheet of Guarantor as at September 30, 1996
and the related consolidated statements of income, retained
earnings and changes in financial position of Guarantor for
the quarter ended on said date, and the audited balance sheet
of Guarantor as at December 31, 1995 with the opinion thereon
of Xxxxxx Xxxxxxxx LLP and the related consolidated statements
of income, retained earnings and changes in financial position
of Guarantor for the fiscal year ended on such date,
heretofore furnished to the Agent are complete and correct and
fairly present the financial condition of Guarantor as at said
dates and the results of its operations for the quarter and
fiscal year ended on said dates (subject, in the case of such
financial statements as at September 30, 1996, to normal year-
end audit adjustments), all in accordance with generally
accepted accounting principles applied on a consistent basis.
Guarantor had on said dates no material contingent
liabilities, liabilities for taxes, unusual forward or long-
term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or
provided for in said balance sheets and financial reports as
at said dates. Since September 30, 1996, there has been no
change in the financial condition or operations, or the
prospects or business taken on a whole, of Guarantor from that
set forth in said financial statements as at said date, which
could reasonably be expected to have a material adverse effect
on Guarantor's ability to perform its obligations hereunder.
16. Costs and Expenses. Guarantor agrees to pay the Agent's
------------------
reasonable out-of-pocket costs and expenses, including but not
limited to legal fees and disbursements, incurred in any
effort to collect or enforce payment of the Shortfall or this
Guaranty, whether or not any lawsuit is filed. Until paid to
the Agent, such sums will bear interest at the then Applicable
Rate plus two percentage points per annum.
17. Delay; Cumulative Remedies. No delay or failure by the
--------------------------
Agent to exercise any right or remedy against the Borrower or
Guarantor will be construed as a waiver of that right or remedy.
To the extent permitted by applicable law, all remedies of the
Agent against the Borrower and Guarantor are cumulative.
18. Miscellaneous. The invalidity or unenforceability of any
-------------
one or more provisions of this Guaranty will not affect any
other proven. This Guaranty will be governed by California law
(without reference to choice-of-law principles), and may be
amended only by a written instrument executed by Guarantor and
the Agent. The provisions of this Guaranty will bind and
benfit the successors and assigns of Guarantor and the
Beneficiaries. Whenever the context requires, all terms used in
the singular will be construed in the plural and vice versa, and
each gender will include each other gender. The term "Borrower"
will mean both the named Borrower and any other person or entity
at any time assuming or otherwise becoming primarily liable for
payment of all or any part of the Borrower's obligations under
the Defeasance Agreement and the other Operative Agreements.
Dated as of December 20, 1996.
EDISON MISSION ENERGY,
a California corporation
By: Xxxxx X. Xxxxx
------------------------------
Title: V.P. and Treasurer
------------------------------
SCHEDULE A
----------
TO GUARANTY
-----------
List of Beneficiaries
---------------------
The "Agent," the "Security Representative" and the "Fronting Bank":
------------------------------------------------------------------
The Fuji Bank, Limited
Los Angeles Agency
000 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
The "Banks":
-----------
The Fuji Bank, Limited
Los Angeles Agency
000 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
ABN AMRO Bank N.V.
Los Angeles International Branch
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Commerzbank Aktiengesellschaft
Los Angeles Branch
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Istituto Bancario San Paolo di Torino
000 Xxxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention:: Xxxxxxx Xxxxxxxx
Banca CRT S.p.A.
New York Branch
c/o 000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
The "Depositary":
----------------
The Fuji Bank and Trust Company
Two World Trade Center
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
