Message-ID: <13049402.1075859605946.JavaMail.evans@thyme> Date: Wed, 9 May 2001 09:37:00 -0700 (PDT) From: rachel.bryant@enron.com To: elizabeth.sager@enron.com Subject: Sysco Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Rachel Bryant X-To: Elizabeth Sager X-cc: X-bcc: X-Folder: \Elizabeth_Sager_Jun2001\Notes Folders\Notes inbox X-Origin: Sager-E X-FileName: esager.nsf Please review contracts. This deal is closing fast. Thanks, Rachel ---------------------- Forwarded by Rachel Bryant/HOU/EES on 05/09/2001 04:34 PM --------------------------- Enron Energy Services From: Richard L Zdunkewicz 05/09/2001 04:14 PM To: Don Black/HOU/EES@EES cc: Subject: Sysco Don, here it is. RZ ---------------------- Forwarded by Richard L Zdunkewicz/HOU/EES on 05/09/2001 04:14 PM --------------------------- Deborah Asmus 05/08/2001 08:23 PM To: Hector Gutierrez/HOU/EES@EES, Chuck Randall/HOU/EES@EES, Richard L Zdunkewicz/HOU/EES@EES, James M Wood/HOU/EES@EES, Sean A Holmes/HOU/EES@EES, Michael Moore/HOU/EES@EES, Gayle W Muench/HOU/EES@EES, Christopher Riley/HOU/EES@EES cc: Michael Mann/HOU/EES@EES, Mike D Smith/HOU/EES@EES, Deborah Culver/HOU/EES@EES Subject: Sysco Attached below is the Sysco contract revised as discussed together with a redlined version marked to show the changes from the version sent to Sysco. The revisions reflect the points negotiated with Sysco and "lessons learned" from the current situation in California. Sysco has not yet seen these revisions. The following list summarizes the significant issues for presentation to the organization (including Don Black and Sean Holmes) and/or reflect differences from the standard form. Section 3.4 has been revised to make it bilateral except for subsection (d) which remains applicable only to EESI. The standard form permitted only EESI to exercise a right of termination. Accordingly, subsection (a) has been revised to delete the phase addressing the tariff risks which is now addressed in the revised definitions for Distribution Charges, Transition Charges and Special Utility Charges. Revised Section 3.4 provides that a change in "Utility rates or Taxes is not a change that allows a party to invoke the provision. Revised Section 3.4 provides the parties with a right to terminate the contract for convenience after the 36th month. An Early Termination payment based on the "cost to cover" is applicable. Sysco is permitted to close a facility under new Section 3.5 and pay the Early Termination Payment applicable to the closed facility based on the "cost to cover." Sysco is permitted to substitute facilities under new Section 3.6 and transfer the consumption volumes applicable to a facility that is Closed, Disposed, or Non-Controlled as long as the substituted facility has, in EESI's reasonable opinion, substantially similar load profile and consumption of, and demand charges for power as the facility for which it is being substituted, and is served by the same utility. Consistent with the form, Sysco's consumption outside of the 90%-110% Anticipated Usage band would result in Sysco's paying the additional costs resulting from the difference between the contract price and the market price. However, under the revised contract (Sections 2.2.1 and 2.2.2), if the price difference results in cost savings, a credit will be issued to Sysco. We should confirm that we have the capability to make these calculations. Also under the revised contract, the 90%-110% band is calculated for groups of facilities served by the same utility (the Facility Group). Section 4.5 has been revised to obligate Sysco to post a letter of credit (at EESI's request) if Sysco Corporation's credit rating falls below investment grade. The letter of credit would be in an amount equal to (i) the amount equivalent to the Early Termination Payment as of the date of the requested letter of credit; plus (ii) three months receivables. Please do not hesitate to contact either Mike Smith or me with questions. dwa