Subject: FW: Definitions of Eligible Contract Participant and EligibleCommercial Entity
From: [email-masked]
To: [email-masked], [email-masked]
Date: Mon, 16 Jul 2001 16:01:27 -0700 (PDT)

As requested.

-----Original Message-----
From: Marissa L. Morelle [mailto:[email-masked]]
Sent: Friday, June 29, 2001 9:37 AM
To: Mann, Kay
Cc: David Mitchell
Subject: Definitions of Eligible Contract Participant and
EligibleCommercial Entity

     Pursuant to your telephone conversation with David Mitchell, please
find below a description of the definitions of "eligible contract
participant" ("ECP") and "eligible commercial entity" ("ECE") which appear
in Sections 1a(11) and 1a(12), respectively, of the Commodity Exchange Act,
as amended (the "Act").  We also have set forth certain additional
representations and warranties which we believe EPMI should consider
requesting from the Mississippi cities with which it will be doing
business.

     Under the Act, with certain exceptions not here relevant, a
municipality is an ECP only if it (i) is an ECE or (ii) owns and invests on
a discretionary basis at least $25,000,000 or more in investments.
Assuming that the Mississippi cities do not have a $25,000,000 investment
portfolio, each will have to qualify as an ECE in order to be an ECP.  In
order for a municipal entity to be an ECE, it must, in connection with its
business, (i) have a demonstrable ability, directly or through separate
contractual arrangements, to make or take delivery of the underlying
commodity; or (ii) incur risk, in addition to price risk, related to the
commodity; or (iii) be a dealer.  Thus, it would be prudent to obtain a
representation from the municipality that it has the demonstrable ability
to make or take delivery of the underlying commodity in the transaction.

     Additional representations that EPMI may want to request of each city
are as follows:

   the city will engage in all Transactions as principal and accordingly,
   the city will determine the appropriateness for it of such Transactions
   and address any legal, tax or accounting considerations applicable to
   it;
   the city is knowledgeable of and experienced in the risks of entering
   into Transactions its engages in, is capable of evaluating the merits
   and risks of Transactions and is able to bear their economic risks;
   the person who is executing this Agreement on the city's behalf is duly
   authorized to sign this Agreement in the city's name;
   no advice furnished to the city by EPMI shall form a primary basis for
   any decision by the city;
   EPMI is not a fiduciary or adviser with respect to the city unless it
   has agreed otherwise in a written agreement under which EPMI receives
   compensation specifically identified as consideration for EPMI acting as
   a fiduciary or adviser;
   any trading recommendations and market or other information communicated
   to the city by EPMI are incidental to the conduct of EPMI's business as
   a dealer and do not constitute an offer to sell or the solicitation of
   an offer to buy any product; and/or
   such information provided by EPMI, although based upon information
   obtained from sources believed by EPMI to be reliable, may be
   incomplete, may not be verified, and may be changed without notice to
   the city.

     Please feel free to call David Mitchell (212-504-6285) or, in his
absence, Marissa Morelle (212-504-6150) with any questions.

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