Re: Customer Rep in Edison

Mark, this is the issue I need your help on.

Thanks in advance.

Melinda Winn
3.5940
---------------------- Forwarded by Melinda Winn/HOU/EES on 06/07/2000 09:35
AM ---------------------------

James E Keller
06/06/2000 07:57 PM
To: Melinda Winn/HOU/EES@EES
cc: Marianne Castano/HOU/EES@EES
Subject: Re: Customer Rep in Edison

This is a question for Mark Taylor (or someone in his group). Please let me
know the answer (circulate to all commodity attorneys)

Jim

Melinda Winn
06/06/2000 02:54 PM
To: James E Keller/HOU/EES@EES
cc: Marianne Castano/HOU/EES@EES
Subject: Customer Rep in Edison

We have a mid-market Edison customer (trained as a lawyer) asking if we will
insert the word "market" in (d)(i) in the provision set out below. Customer
believes his business (10 Burger King franchises in NJ) is worth more than
$10MM but does not have a book value of that much. I have asked for but have
not yet seen his financials so I don't know what they show, whether they're
prepared in accordance with GAAP, etc. One of EES's GAAP experts tells me
that she thinks "value" for purposes of GAAP means fair market value and that
GAAP does not define "tangible net worth".

I know we can't just change this language. Neither John Maas nor Ken Fenelon
know any details about the provision or the regulations from which it was
crafted. Pricing on this deal expires tomorrow. Client says Customer is
uncomfortable signing until he knows what these terms mean.

Any suggestion on how to handle?

Additional Representations and Warranties of Customer. Customer further
represents and warrants that (a) it has entered into this Agreement based
solely upon the express representations and warranties set forth in this
Agreement; (b) it has received a notice from EESI with respect to the
disclosure of certain customer information to EESI by Utility(ies) and has no
objection to such disclosure; © whenever EESI exercises an EESI Energy
Sales Option, Customer shall purchase energy from EESI to satisfy the energy
requirements of each Facility and shall not resell any portion of such energy
to any third party; (d) it either (i) owns assets with a value in excess of
ten million dollars ($10,000,000) or (ii) has a tangible net worth in excess
of one million dollars ($1,000,000), in each case calculated according to
generally accepted accounting principles consistently applied; and (e) it is
a producer, processor, commercial user of, or merchant handling the commodity
subject to this Agreement or the product or by-products thereof, and it has
entered into this Agreement solely for non-speculative purposes related to
its business as such.