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Exhibit 10.93  

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended. 

EDISON INTERNATIONAL

EDISON MISSION ENERGY
  Offer to Exchange

Cash and Stock Equivalent Units

For Affiliate Options of

Edison Mission Energy

EXCHANGE OFFER CIRCULAR  

        Edison International ("EIX") and Edison Mission Energy ("EME") are offering (the "Exchange Offer"), upon the terms and conditions set forth in
this Exchange Offer Circular (this "Circular"), to exchange (the "Exchange") cash and stock equivalent units ("SEUs") related to shares of EIX common stock for options held by current and former
employees with respect to "phantom" units of EME ("Affiliate Options"). 

        The
consideration being offered in the Exchange is calculated based on the difference between $425 per each unit underlying your Affiliate Options and the Exercise Price (as defined
under "Summary" below) applicable to that unit. $50.00 of the consideration per unit generally will be granted in the form of SEUs. The value of the SEUs generally will be paid in cash on the first or
third anniversary of the date of the Exchange, whichever you elect. The balance of the consideration generally will be paid in cash on March 13, 2001. However, the consideration being offered
in the Exchange will remain subject to the vesting schedule applicable to the underlying Affiliate Options and will not be paid earlier than the date that the underlying Affiliate Options would have
vested. 

        EME
is giving you an individualized statement setting forth the consideration being offered to you and showing the calculation of this consideration (your "Individualized Statement").
Your Individualized Statement is included with this Circular. 

        Completion
of the Exchange is subject to: (1) acceptance of the Exchange Offer by Affiliate Option holders entitled to receive at least 80% of the aggregate Exchange Price (as
defined under "Summary—Payment Terms" below) for all outstanding EME Affiliate Options, and (2) receipt by the Board of Directors of EIX of an opinion from its financial advisor
supporting the conclusion that the
Exchange Offer is fair to EIX and its shareholders. You release all of your rights (other than your right to receive the consideration contemplated by the Exchange Offer) with respect to your
Affiliate Options if you accept the Exchange Offer and if the Exchange is completed. 

        For
details of the Exchange Offer, see "Questions and Answers about the Exchange Offer" in this Circular. The Exchange Offer will expire at 5:00 p.m., Pacific Time, on
August 7, 2000, unless extended by EIX and EME in their sole discretion. Capitalized terms used in this Circular have the meanings given to them herein. An index of defined terms is attached as
Attachment A to this Circular. 

The
Date of this Circular is July 3, 2000. 

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	Page

	Summary	 	1
	

Risk Factors	
 	

4
	

Questions and Answers About the Exchange Offer	
 	

7
	

 	
 	

General	
 	

7
	

 	
 	

The Exchange Price	
 	

11
	

 	
 	

EIX Stock Equivalent Units	
 	

17
	

 	
 	

Other Provisions; Administration	
 	

21
	

 	
 	

Federal Income Tax and Social Security Consequences	
 	

23
	

 	
 	

Section 16 Consequences	
 	

26
	

 	
 	

Effect on Retirement Plan Benefits	
 	

26
	

Additional Information; Incorporation of Documents by Reference	
 	

27
	

Attachments:	
 	

 
	

 	
 	

A.	
 	

Index of Defined Terms	
 	

A-1
	

 	
 	

B.	
 	

Prospectus for EIX Equity Compensation Plan	
 	

B-1
	

 	
 	

C.	
 	

Form of SEU Award Certificate/Statememnt of Terms and Conditions	
 	

C-1
	

The following other documents are enclosed with this Circular:	
 	

 
	

 	
 	

A.	
 	

Your Individualized Statement.	
 	

 
	

 	
 	

B.	
 	

An Election Form and Release Agreement.	
 	

 
	

 	
 	

C.	
 	

If you may be eligible to elect a deferral, a package of deferred compensation plan materials. See the response to Question 13 in this Circular.	
 	

 

i

  

 
 

SUMMARY    
  

        The Exchange Offer.    If you accept the Exchange Offer, your outstanding Affiliate Options will
terminate and EME will pay you cash and EIX will grant you SEUs. You will be paid all in cash, however, if you are not an employee of the Company on the Exchange Date. (The term "Company" is used in
this Circular to mean EIX, EME, and/or any other corporation or entity the majority of the voting stock or voting power of which is owned, directly or indirectly, by EIX, as the context requires.)
Certain other special rules, described in the response to Question 14 below, and generally not discussed in this section, also apply if you are not an employee of the Company on the Exchange Date. You
should read that response if you hold Affiliate Options but are no longer an employee of the Company. Even if you are currently employed by the Company, you should read that response so that you are
aware of the effects that a termination of your employment before the Exchange Date would have on the amount and time of payment of your Exchange consideration. 

        The
Exchange Date will be August 8, 2000; provided that the EIX Board of Directors or its delegate determines that the conditions to the completion of the Exchange, described
below, have been satisfied on or before that date. If the EIX Board of Directors or its delegate has not determined, on or before August 8, 2000, that the conditions to the completion of the
Exchange have been satisfied, the Exchange Date will be the date that the EIX Board of Directors or its delegate determines that the conditions to the completion of the Exchange have been satisfied. 

        The
consideration being offered to you in the Exchange for each of your outstanding Affiliate Options (the "Exchange Price") is calculated based on the difference between $425 per unit
underlying that Affiliate Option and the Exercise Price applicable to that unit. For purposes of this Circular, the "Exercise Price" of a unit is the year 2000 exercise price of that Affiliate Option,
as reflected in the chart in the response to Question 11 below. For details of the Exchange Offer, see the "Questions and Answers about the Exchange Offer" section of this Circular generally. 

        Reasons for the Exchange Offer.    The EME Board of Directors, together with the EIX Board of Directors,
believes it is important that all managers and employees of EIX and its affiliates share a common interest with the EIX shareholders in the integrated operations of the enterprise as reflected in
EIX's common stock price. Because the operations of EME now contribute a significant percentage of EIX's earnings and are increasingly reflected in the trading price of EIX common stock, maintenance
of a
separate long-term incentive award structure at EME is no longer considered by the EME and EIX Boards of Directors to be necessary or desirable to motivate managers and employees of EME.
For a more detailed explanation of the reasons for the Exchange Offer, see the response to Question 1 below. The decision to accept or reject the Exchange Offer is entirely voluntary on your part. The
EME and EIX Boards of Directors, and the Company, make no recommendation as to whether you should accept or reject the Exchange Offer. In making your decision, be sure to bear in mind the factors
described under "Risk Factors" below. 

        Payment Terms.    As noted above, if you accept the Exchange Offer, the Exchange Price to be paid to you
in exchange for your Affiliate Options will consist of a cash component and, with certain exceptions noted below, SEUs. All payments will be subject to applicable tax withholding requirements. 

        SEUs.    $50.00 of the Exchange Price per unit will be granted to you in the form of SEUs if you are employed by the Company on the
Exchange Date. The
balance of the Exchange Price will be paid to you in cash as described below. If you are not employed by the Company on the Exchange Date, the value otherwise to be granted to you in SEUs also will be
paid in cash. 

        SEUs
will be bookkeeping entries, the payment of which will be determined with respect to the market value of an equivalent number of shares of EIX common stock. Dividends on the
corresponding shares of EIX common stock will be treated as paid and reinvested in additional SEUs based on the then-market price of EIX common stock. 

1

 

        The
value of your SEUs will become payable to you on the first or third anniversary of the Exchange Date, whichever you elect (unless you are eligible and make a deferral election, as
described below). To the extent that your SEUs relate to unvested Affiliate Options, however, payment with respect to those SEUs will not be made earlier than the date that the underlying Affiliate
Options would have vested had you not accepted the Exchange Offer. 

        The
SEUs are described below under "EIX Stock Equivalent Units" and in the Prospectus attached to this Circular as Attachment B. You should read each of those descriptions in its
entirety. 

         Cash Component.    The cash component of the Exchange Price generally will be paid to you, with interest, on March 13, 2001
(unless you are
eligible and make a deferral election, as described below). To the extent the cash component of the Exchange Price relates to unvested Affiliate Options, however, payment of that portion of the
Exchange Price and related interest will not be made earlier than the date that the underlying Affiliate Options would have vested had you not accepted the Exchange Offer. 

        The
cash component of the Exchange Price (to the extent not deferred, if you are eligible and elect a deferral) will earn interest as follows: (1) the portion that relates to
vested Affiliate Options and Affiliate Options that are scheduled to vest in January 2001 will earn interest at an annual rate of 6.3% from the Exchange Date through the date of payment, and
(2) the portion that relates to Affiliate Options that are scheduled to vest in January 2002 or January 2003 will earn interest at an annual rate equal to the 120%
10-Year Rate, described below, from the Exchange Date through the date of payment. 

        The
6.3% annual rate of interest is based on an average of short-term rates of interest for primary issuances of certificates of deposit by major New York banks. The "120%
10-Year Rate" is an annual rate of interest equal to 120% of the 120-month average annual rate of 10-year U.S. Treasury Notes determined as of October 15 of
the preceding year. The 120% 10-Year Rate is 8% for the year 2000. The 120% 10-Year Rate is a long-term-based rate that applies to payments that are
expected to occur on or after March 13, 2001. 

        Deferred Compensation Alternatives.    You may be eligible to elect that your payments (including the value of your SEUs) be
deferred under a new
deferred compensation plan. Eligibility for the deferred compensation plan is described generally in the response to Question 13 below. This Circular describes how the Exchange Price will be paid, if
you accept the Exchange Offer and the Exchange is completed, assuming that you do not make any deferral election. If you are eligible and want to elect that all or a portion of your payments be
deferred, you should read this Circular and the Summary of Deferred Compensation Alternatives document that was, if you are potentially eligible to elect a deferral, included with this Circular. Your
Individualized Statement will indicate if you are not eligible to elect a deferral. 

        Value of Your Affiliate Options.    The Exchange Price has been calculated to give a current value to
all your Affiliate Options, whether vested or unvested, based on the difference between $425 per underlying unit and the Exercise Price applicable to that unit. This value has been assumed solely for
purposes of the Exchange Offer. For an explanation of the calculation of the Exchange Price, see the response to Question 9 below. Your Individualized Statement is included with this Circular and sets
forth the consideration being offered to you and how the amount of that consideration was calculated. Be sure to read and confirm the information in your Individualized Statement. 

        Treatment of Unvested Options.    Any component of the Exchange Price payable to you with respect to the
unvested portion of your 1998 and 1999 Affiliate Options (which are currently 50% and 25% vested, respectively) will remain subject to a vesting schedule. The vesting schedule will reflect the vesting
schedule applicable to the exchanged Affiliate Options. The effect of the vesting requirement is 

2

 

that the amount otherwise payable to you on March 13, 2001 (or, with respect to the SEUs, on the first or third anniversary of the Exchange Date) with respect to the unvested portion of your
1998 and 1999 Affiliate Options will be paid only if and when that portion of your 1998 and 1999 Affiliate Options
would have vested had you not accepted the Exchange Offer. As noted above, if the payment of the cash portion of the Exchange Price is delayed past March 13, 2001 because it relates to unvested
Affiliate Options, the unpaid amount will earn interest at the 120% 10-Year Rate (as opposed to an annual rate of 6.3%) from the Exchange Date through the date of payment. If the payment
of SEUs is delayed past the first anniversary of the Exchange Date, the value represented by the unpaid SEUs will continue to be subject to changes in the market value of EIX common stock. If your
employment by the Company terminates, you will forfeit the unpaid cash (and interest thereon) and unpaid SEUs that relate to your unvested Affiliate Options to the same extent that you would have
forfeited the Affiliate Options had you not accepted the Exchange Offer. (See the response to Question 12 below.) 

        Exchange of all Affiliate Options; Release.    To accept the Exchange Offer, you must: (1) agree
to exchange all of your outstanding Affiliate Options for the Exchange Price; and (2) release all of your rights and remedies with respect to all of your Affiliate Options except the right to
receive the Exchange Price as described in this Circular. Your release will be void if the Exchange is not completed. 

        Expiration Time.    The Exchange Offer will expire at 5:00 p.m., Pacific Time, on
August 7, 2000 (the "Expiration Time"), unless the Expiration Time is extended by EIX and EME in their sole discretion. If you want to accept the Exchange Offer for your outstanding Affiliate
Options, your election to that effect must be received by EME prior to the Expiration Time; otherwise, you will be deemed to have rejected the Exchange Offer. Your election to accept or reject the
Exchange Offer must be made on the Election Form and Release Agreement included with this Circular and will be irrevocable once it is made. 

        Conditions to the Completion of the Exchange.    The completion of the Exchange is subject to
(1) acceptance of the Exchange Offer by Affiliate Option holders entitled to receive at least 80% of the aggregate Exchange Price for all outstanding EME Affiliate Options, and
(2) receipt by the Board of Directors of EIX of an opinion from its financial advisor supporting the conclusion that the Exchange Offer is fair to EIX and its shareholders. The EIX and EME
Boards of Directors retain the right in their sole discretion to waive any or all of the foregoing conditions. The Company may not withdraw the Exchange Offer, unless one of the conditions described
above is not satisfied. Similarly, if the Exchange is completed, the Company may not later revoke or rescind the Exchange. 

        Consequences of Not Accepting the Exchange Offer.    You may decline to accept the Exchange Offer. If
you do so, or if you do not timely return an election to accept the Exchange Offer, your Affiliate Options will remain outstanding on their terms and you will be subject to uncertainties and risks
going forward relating to the future valuation of Affiliate Options and the EIX Board of Director's right to terminate your Affiliate Options for cash in an amount that it determines to be
"substantially equivalent in value" to the Affiliate Options. For a description of these risks, see "Risk Factors" below and the response to Question 8 below. You should read that section and that
response in their entirety. The EME and EIX Boards of Directors, and the Company, make no recommendation as to whether you should accept or reject the Exchange Offer. 

        Additional Information.    After reading this Circular, if you have any questions with respect to the
Exchange Offer or your eligibility to defer all or a portion of the Exchange Price if you accept the
Exchange Offer, or if you disagree with the data reflected in your Individualized Statement, please contact EIX Executive Compensation. EIX Executive Compensation has established a special Exchange
Offer telephone line (626/302-5675) and e-mail address (exchange@Edison.com) for you to use. 

3

  

 
 

RISK FACTORS    
  

        The value of your Affiliate Options (in the 2000 or any future Affiliate Option exercise window or should your Affiliate Options be
cashed-out as described below) may be greater or lesser than the Exchange Price.

        Valuation Risks.    The Exchange Price was determined in the manner and based on the assumptions described in the response to
Question 9 below. The actual value of the EME portfolio could be less than, more than, or equal to the net present value that has been assumed for purposes of calculating the Exchange Price. 

        Various
estimates of the value of EME's portfolio have been prepared recently using various assumptions as to future cash flows, financing costs, discount rates and other factors. Some
of these estimates are substantially above the $4,245,000,000 net present value assumed for purposes of determining the Exchange Price. The Company nevertheless believes that the Exchange Price is
appropriate as a means of accomplishing the objectives described above and giving the optionees a choice so they could elect to obtain value certainty and a potential upside for those who receive
SEUs. 

        Furthermore,
the net present value used for determining the Exchange Price should be viewed in the context of the alternative methods by which optionees could receive payments on account
of their options (future exercise windows and/or a "cash out"). If you do not timely accept the Exchange Offer, your risks will also be affected by whether the Affiliate Options are subject to one or
more window valuations, or whether the Board of Directors of EIX instead decides to terminate your Affiliate Options and substitute cash in an amount that it determines to be "substantially equivalent
in value" for your Affiliate Options. The risks associated with each alternative are discussed below. 

        Exercise Windows.    If you do not timely accept the Exchange Offer, your Affiliate Options will remain outstanding as described
in the response to Question 8 below. Depending upon the future activity of EME, the performance of the plants owned by EME (particularly the 1999 merchant plants and Paiton), whether EME acquires any
new plants (and the performance of those plants), and the timing of any election you make to exercise your Affiliate Options, the value realized by you if you retain your Affiliate Options and do not
participate in the Exchange Offer could equal, be more than, or be less than the Exchange Price. You should not assume that the merchant plants (i.e.,
plants having a projected net present value that is not primarily derived from long-term power plant purchase contracts) will be valued for purposes of the 2000 or any future exercise
window (or for purposes of any cash-out,
as described below) at the same amount as the approximate value that has been assumed for purposes of determining the Exchange Price. Indeed, these projects may be valued at a lesser amount than the
approximate value that has been assumed for purposes of determining the Exchange Price. 

        Phase-In of Project Valuation.    The Compensation and Executive Personnel Committee of EIX (the "Committee") has
the authority to administer the Affiliate Options by the terms of the executive compensation plans under which the Affiliate Options have been granted. For purposes of the 2000 and subsequent exercise
windows, the Committee has determined that, in respect to EME's 1999 and subsequent merchant plant acquisitions, the portion of each investment's net present value attributable to cash flows from
merchant sources ("Merchant NPV") should be treated separately from the portion of the investment's net present value attributable to cash flows from other sources. The Merchant NPV would be phased
into the portfolio valuation over a five-year period on a cumulative, 20% per year, basis. These percentages would be applied to the Merchant NPV as determined for that year. The Committee
has also determined that, to count as one of the five phase-in years for a particular investment, the investment's cash flow from merchant sources must generally be at least 50% of the
investment's total cash flow for the year. The Committee has the discretion to modify these guidelines on a general or project specific basis, including the discretion to adopt a longer or shorter
phase-in period and to reduce the level of merchant cash flows required to consider a year as a phase-in year. 

4

 

        A
five-year phase-in for the valuation of EME's 1999 merchant plant investments (as described above) would result in the inclusion of a valuation number for those
investments in the 2000 exercise window that is less than the valuation number assumed for purposes of determining the Exchange Price. This does not necessarily mean, however, that the value that
might ultimately be included on account of those investments for exercise window purposes over the duration of the phase-in period would be less than the value assumed for those
investments for purposes of determining the Exchange Price. 

        Increasing Exercise Price.    The Exercise Price of outstanding Affiliate Options will continue to escalate each year in
accordance with the terms of the Affiliate Options. Thus, if the net present value of the EME portfolio as calculated for purposes of the exercise windows does not increase at a rate that offsets the
amount of the annual percentage increase in the Exercise Price, the amount that you could realize by exercising your Affiliate Options will decrease each year. Thus, you should balance the probability
that the net present value of the EME portfolio (as determined each year for exercise window purposes) could increase from year to year, and the magnitude of any such increases, against the annual
Exercise Price increases. 

        Cash-Out of Affiliate Options.    The Board of Directors of EIX has the right, in its absolute discretion, to
terminate your Affiliate Options and substitute cash in an amount that it determines to be "substantially equivalent in value" for the 1995-1999 Affiliate Options in accordance with the
award agreements for the 1994 Affiliate Options and the "Statement of Terms and Conditions" applicable to the 1995-1999 Affiliate Options. The Board of Directors has not made any decision,
as of the date of this Circular, to terminate Affiliate Options that remain outstanding after the Exchange and substitute cash that it determines to be "substantially equivalent in value" for the
Affiliate Options. However, the
Board could decide to take such action and terminate your Affiliate Options before their scheduled termination date. A cash-out could occur before or after the 2000 exercise window. The
Exchange Price for each unit used in the Exchange Offer is not necessarily "substantially equivalent in value" for this purpose. If the EIX Board of Directors decides to substitute cash that it
determines to be "substantially equivalent in value" for an outstanding Affiliate Option: (1) the value of the equivalent could be more than, less than, or equal to the Exchange Price; and
(2) there may be no deferral opportunity (such as the deferral opportunity described in the response to Question 13 below) available in such circumstances. 

        No Assurances or Adjustments.    There can be no assurance that, upon a subsequent exercise of your Affiliate Options or any
cash-out thereof, you will realize value for your Affiliate Options equal to or greater than the Exchange Price. If you accept the Exchange Offer you release all of your rights with
respect to, and you will not be entitled to receive, any additional payment, adjustment or other benefit should the value of EME increase in the future (including if a greater value is used for
purposes of any Affiliate Option exercise window or for purposes of any other termination or settlement of Affiliate Options). 

        Termination of Employment.    In accordance with the terms of your Affiliate Options, if your employment by the Company
terminates due to any reason other than your death, Retirement, or following your Total Disability (as such terms are defined in the response to Question 12 below), your Affiliate Options will remain
outstanding no longer than through the end of the first 60-day exercise window that follows your termination. For example, if your employment terminated (other than for the reasons noted
above) before the 2000 exercise window, you would have to exercise your Affiliate Options in the 2000 exercise window or they would terminate unexercised. As noted above, the value of the EME
portfolio in the 2000 exercise window may be less than the value that has been assumed for purposes of the Exchange Offer. Thus, you must balance (1) any possible value of the Affiliate Options
in any future exercise window, with (2) the Exchange Price and the chance that your employment could terminate and you would have to exercise your Affiliate Options sooner than you anticipate
(possibly 

5

 

during an exercise window during which the value of your Affiliate Options is less than the Exchange Price). If your employment by the Company terminates due to your death, Retirement, or following
your Total Disability, your Affiliate Options generally provide that the vested Affiliate Options will remain exercisable for the balance of their terms. 

        Solvency of EME and EIX.    Your rights to the Exchange Price (including any portion of the Exchange
Price that you may elect to defer) are only those of a general unsecured creditor of EME and EIX (EIX has guaranteed EME's payment obligations). The payment of the Exchange Price (including any
portion of the Exchange Price that you may elect to defer) is subject to those entities' continued solvency. 

        The Release.    If you accept the Exchange Offer and the Exchange is completed, your Affiliate Options
terminate and, as described in more detail in the response to Question 3 below, you release all of your rights with respect to your Affiliate Options except the right to receive the Exchange Price. 

        Earnings-Related Risk.    The cash portion of the Exchange Price will earn interest for a period of time
at an annual interest rate of 6.3%, or the 120% 10-Year Rate, as described above. The 6.3% rate is fixed. The 120% 10-Year Rate is determined on an annual basis and fixed for
that year. Interest rates on the open market are subject to frequent increases or decreases. You must therefore weigh the opportunity costs and benefits, in your own specific case, between the
following two alternatives: (1) accepting the Exchange Offer and having interest credited on the cash portion of the Exchange Price at a fixed rate of 6.3% or the annually-fixed 120%
10-Year Rate, as applicable, and receiving a grant of SEUs (unless you are not employed by the Company on the Exchange Date, in which case you will be paid the Exchange Price all in cash);
or (2) exercising your Affiliate Options (or holding them if and until they are cashed-out) and investing the net after-tax proceeds in alternative investments, which
could produce a rate of return that is greater than or less than the interest rate(s) applicable to the cash portion of the Exchange Price and any return on your SEUs. 

        Stock-Related Risks.    The economic effect of SEUs is similar to an investment in EIX common stock.
However, unlike a shareholder, you cannot sell or pledge your SEUs and your SEUs do not carry any voting or other shareholder rights. 

        SEUs
are non-transferable and illiquid and thus their "value" is at full market risk until they are (1) paid out or (2) converted as described in the Summary of
Deferred Compensation Alternatives (if you are eligible to elect a deferral). You may lose value to the extent of any decline in the fair market value of the EIX common stock or its failure to
increase at a rate commensurate with lost opportunities. Neither appreciation nor return on your SEUs can be assured. 

6

  

 
 

QUESTIONS AND ANSWERS    
    
    ABOUT THE EXCHANGE OFFER    
  

        Generally, the topics discussed in this section assume that (1) you will be employed by the Company on the Exchange Date, and
(2) you do not elect a deferral. Certain special rules, described in the response to Question 14 below and generally not discussed in this section, apply if you are not an employee of the
Company on the Exchange Date. You should read that response if you hold Affiliate Options but are no longer an employee of the Company. Even if you are currently an employee of the Company, you should
read that response so that you are aware of the effects that a termination of your employment before the Exchange Date would have on the amount and time of payment of the Exchange Price. Your ability
to elect a deferral under the deferred compensation plan, and the consequences of such a deferral, are described in the response to Question 13 below and in the Summary of Deferred Compensation
Alternatives document referenced in that response.

General  

	1.
	Why are EME and EIX making the Exchange Offer?

The
Boards of Directors of EME and EIX have determined that the Affiliate Options, while appropriate during the establishment and initial expansion of EME's business, have since become inconsistent
with the best interests of EIX and its shareholders. Among the factors considered by the Boards of Directors in approving the Exchange Offer were the following: 

	•
	The
future success of EME and EIX depends on the managers and employees of EME sharing a common interest with EIX shareholders, as reflected in the price of
EIX common stock.

	•
	In
1999, EME had consolidated income of $130 million, representing 20.9% of EIX's consolidated income. At December 31, 1999, it had
consolidated total assets of $15.534 billion, representing 42.9% of EIX's consolidated total assets. Unlike the situation when the Affiliate Options were first granted, the earnings from EME
now constitute a significant portion of EIX's consolidated income, so that the prevailing trading price of EIX common stock is significantly affected by EME's operations. Maintenance of a separate
long-term incentive award structure at the EME level is therefore no longer thought by the Boards of Directors of EIX and EME to be necessary or desirable to motivate EME's managers and
employees.

	•
	The
variable accounting treatment accorded the Affiliate Options causes substantial earnings charges for EIX that could be avoided through certain other
incentive compensation plan structures (such as the grant of stock options).

	•
	Administration
of the Affiliate Options is expensive and consumes a large amount of time and resources of management and employee benefit plan
administrators. 

For
these reasons, the Boards of Directors have concluded that a current exchange of the outstanding Affiliate Options is in the best interests of EME and EIX and have authorized the implementation of
the Exchange Offer. 

	2.
	How can I accept the Exchange Offer?

You
may accept, under the terms and subject to the conditions set forth herein, the Exchange Offer at any time prior to the Expiration Time. If you accept the Exchange Offer, you accept it with
respect to all of your outstanding Affiliate Options. You may not accept the Exchange Offer with respect to only a portion of your Affiliate Options. 

7

 

To
accept the Exchange Offer, you must: (1) sign and date the Election Form and Release Agreement included with this Circular (also referred to as the "Election Form"); (2) indicate on
the Election Form that you accept the Exchange Offer and agree to the terms of the release set forth in the Election Form; and (3) mail, telecopy, or hand deliver the Election Form to EME at
the following address for receipt prior to the Expiration Time: 

Attn:
Lynn Gardner, Vice President

Edison Mission Energy

18101 Von Karman Avenue, Suite 1700

Irvine, California 92612-1046

Facsimile: (949) 263-9162 

If
the Election Form is signed by trustees, executors, administrators, guardians, attorneys-in-fact or others acting in a fiduciary or representative capacity, such persons
should so indicate when signing, and unless waived by EME, submit evidence satisfactory to EME of their authority to act in this capacity. 

Your
election to accept or reject the Exchange Offer is irrevocable by you once your Election Form is filed. 

If
you are employed in a non-U.S. jurisdiction, your Election Form (or a supplement thereto) may contain other terms and conditions, not described in this Circular, that will apply if you
accept the Exchange Offer. Be sure to read your Election Form. 

	3.
	What is the release that is set forth in the Election Form?

By
signing your Election Form and indicating that you accept the Exchange Offer, you agree to the provisions of a release set forth in Section D of the Election Form. The release will operate
as an unconditional release by you and your trustees, executors, administrators, guardians, attorneys-in-fact or others acting in a fiduciary or representative capacity of all
rights and remedies relating to all of your Affiliate Options. That is, by agreeing to the release you agree that your Affiliate Options, and all of your rights with respect to your Affiliate Options,
automatically terminate on the Exchange Date. (Of course, your right to receive payment of the Exchange Price is not being waived.) For example and without limiting the generality of the release, if
you accept the Exchange Offer you release all of your rights with respect to, and you will not be entitled to receive, any additional payment, adjustment or other benefit should the value of EME
increase in the future (including if a greater value is used for purposes of any Affiliate Option exercise window or for purposes of any other termination or settlement of Affiliate Options). 

By
signing your Election Form, you also agree that any dispute or controversy related to or arising out of the Exchange will be submitted to arbitration in accordance with the terms set forth in
Section E of the Election Form. 

	4.
	What happens if I accept the Exchange Offer and the Exchange is completed?

If
you decide to accept the Exchange Offer and timely return a valid Election Form to that effect, and the other conditions to the completion of the Exchange described herein have been satisfied, the
Exchange Price will be credited to you on the Exchange Date as described in the next paragraph. You will have no further rights with respect to your Affiliate Options. The Company will sign and return
a copy of your Election Form to you after the Exchange Date to evidence the completion of the Exchange. 

$50.00
of the Exchange Price per unit will be granted to you in the form of SEUs, as described in the response to Question 10 below. All SEUs will be issued under the EIX Equity Compensation Plan (the
"ECP"). For more information on the SEUs, see the "EIX 

8

 

Stock Equivalent Units" section below and the Prospectus attached to this Circular as Attachment B. The remainder of the Exchange Price for your Affiliate Options will be paid to you in cash on
March 13, 2001 (except as described in the next paragraph or if you are eligible and make a deferral election). 

As
described above under "Summary—Treatment of Unvested Options," any component of the Exchange Price payable to you with respect to the unvested portion of your 1998 and 1999 Affiliate
Options will remain subject to the vesting schedule applicable to the unvested portion of your exchanged Affiliate Options and will not be paid earlier than the applicable vesting date. 

	5.
	Can the Exchange Offer be revoked?

No.
If you accept the Exchange Offer, the completion of the Exchange and the payment of the Exchange price will be a binding obligation of EIX and EME, subject only to the conditions set forth above
under "Summary—Conditions to the Completion of the Exchange." You will be notified if and when the EIX Board of Directors or its delegate determines that the conditions to the Exchange
have been satisfied. The Company may not revoke or withdraw the Exchange Offer, unless one of the described conditions to the Exchange is not satisfied. Similarly, if the conditions to the Exchange
have been satisfied, the Company may not later revoke or rescind the Exchange. If the conditions to the Exchange are not satisfied by August 31, 2000, you will be given an opportunity to
withdraw your election to accept the Exchange Offer, if you have made such an election. 

If
you accept the Exchange Offer and the Exchange is completed, the amount or payment of the Exchange Price will not be subject to future EIX or EME performance, EME asset performance, or changes in
macroeconomic conditions; except: (1) the Company's payment obligations are subject to the solvency of EIX and EME as described under "Risk Factors" above, (2) the value represented by
outstanding SEUs will fluctuate with changes in the market price of EIX common stock and any changes in EIX's dividend policy, and (3) changes in market interest rates will affect the annual
determination of the 120% 10-Year Rate. 

	6.
	Do the terms of my Affiliate Options apply to the Exchange?

No.
The Exchange Offer is made outside the scope of any Company incentive compensation plan. The terms of any such plan and your Affiliate Options therefore do not apply to the Exchange Offer or to
the payment of the Exchange Price. The SEUs will, however, be granted under and subject to the terms of the ECP. 

	7.
	What happens if I accept the Exchange Offer but the Exchange is not completed?

If
you accept the Exchange Offer but the Exchange is not completed, the release that you gave in accepting the Exchange Offer will be void and your Affiliate Options will remain outstanding in
accordance with their terms. 

If
you do not accept the Exchange Offer, or if the Exchange is not completed, EME reserves the right in its sole discretion to purchase or make exchange offers for Affiliate Options outstanding
subsequent to the Expiration Time, or otherwise terminate such Affiliate Options in accordance with their terms. At this time, no decision has been made whether to do so. The terms of any such
purchases, offers or terminations could differ from the terms of the Exchange Offer. Also see the response to Question 8 below. 

	8.
	What will happen to my Affiliate Options if I do not accept the Exchange Offer?

Voluntary Nature of Participation.    Participation in the Exchange Offer is entirely voluntary. You should consult with your legal, financial
and tax advisors in making your decision on what 

9

 

action to take, and neither the Boards of Directors of EME and EIX, nor the Company, takes a position with respect to the advisability in your particular case of the Exchange Offer. If you do not
accept the Exchange Offer, your Affiliate Options will remain outstanding until such time as (1) you exercise your Affiliate Options in accordance with their terms; (2) the Board of
Directors of EIX, in its absolute discretion, decides to terminate your Affiliate Options and substitute cash in an amount that it determines to be "substantially equivalent in value" for your
Affiliate Options in accordance with the "Statement of Terms and Conditions" applicable to your Affiliate Options; or (3) your Affiliate Options terminate in accordance with their terms or your
agreement. The Board of Directors has not made any decision, as of the date of this Circular, to terminate Affiliate Options that remain outstanding after the Exchange and substitute cash that it
determines to be "substantially equivalent in value" for the Affiliate Options. The Exchange Price for each unit used in the Exchange Offer (i.e., $425
less the Exercise Price applicable to that unit) is not necessarily "substantially equivalent in value" for this purpose. If the EIX Board of Directors decides to substitute cash that it determines to
be "substantially equivalent in value" for an outstanding Affiliate Option, the value of the equivalent could be more or less than the Exchange Price. 

Future Exercise Payments.    Affiliate Options that remain outstanding after the Exchange can still be exercised, to the extent then vested,
in any future window period. However, the Board of Directors of EIX retains the right, in its absolute discretion, to terminate your Affiliate Options and substitute cash in an amount that it
determines to be "substantially equivalent in value" for your Affiliate Options. There can be no assurance that, upon a subsequent exercise of your Affiliate Options or any cash-out
thereof by the Board of Directors, you will realize value for your Affiliate Options equal to or greater than the Exchange Price. 

The
Committee has the authority to administer the Affiliate Options by the terms of the executive compensation plans under which the Affiliate Options have been granted. For purposes of the 2000 and
subsequent exercise windows, the Committee has determined that, in respect to EME's 1999 and subsequent merchant plant acquisitions, the Merchant NPV should be treated separately from the portion of
the investment's net present value attributable to cash flows from other sources. The Merchant NPV would be phased into the portfolio valuation over a five-year period on a cumulative, 20%
per year, basis. These percentages would be applied to the Merchant NPV as determined for that year. The Committee has also determined that, to count as one of the five phase-in years for
a particular investment, the investment's cash flow from merchant sources must generally be at least 50% of the investment's total cash flow for the year. The Committee has the discretion to modify
these guidelines on a general or project specific basis, including the discretion to adopt a longer or shorter phase-in period and to reduce the level of merchant cash flows required to
consider a year as a phase-in year. 

A
five-year phase-in for the valuation of EME's 1999 merchant investments (as described above) would result in the inclusion of a valuation number for those investments in the
2000 exercise window that is less than the valuation number assumed for purposes of determining the Exchange Price. This does not necessarily mean, however, that the value that might ultimately be
included on account of those investments for exercise window purposes over the duration of the phase-in period would be less than the value assumed for those investments for purposes of
determining the Exchange Price. 

In
any event, you should not assume that the merchant plants will be valued for purposes of any future exercise window at the same amount as the approximate value that has been assumed for purposes of
determining the Exchange Price. Indeed, these projects may be valued at a lesser amount (before or after giving effect to the phase-in) than the approximate value that has been assumed for
purposes of determining the Exchange Price. Similarly, the 

10

 

other projects in the EME portfolio (including Paiton) will be revalued each year for any Affiliate Options that remain outstanding after the Exchange. Assuming no other changes, a lower valuation of
the projects in the EME portfolio would reduce the amount payable upon an exercise of your Affiliate Options. 

In
addition, the Exercise Price of outstanding Affiliate Options will continue to escalate each year in accordance with the terms of the Affiliate Options. 

The Exchange Price  

	9.
	How has the aggregate Exchange Price applicable to my Affiliate Options been calculated?

If
you timely accept the Exchange Offer, and the other conditions to the completion of the Exchange described herein have been satisfied, you will be entitled to receive the Exchange Price, as set
forth herein. The Exchange Price was determined as follows: 

The
starting point was the January 1, 1999 valuation of the EME portfolio used for the 1999 exercise window ($3,068,250,000). A 9% rate of appreciation was applied to the January 1, 1999
valuation through December 31, 1999, producing a total of $3,344,390,000. Next, this appreciated value was subject to the following adjustments for purposes of determining the Exchange Price: 

	•
	an
increase of $199 million with respect to ISAB;

	•
	an
increase of $109 million with respect to Doga;

	•
	a
decrease of $150 million with respect to Paiton;

	•
	an
increase of $112 million for the 4 Star adjustment;

	•
	an
increase of $100 million for the SRAC adjustment; and

	•
	an
increase of $31 million for certain other project developments after January 1, 1999. 

Thus,
solely for purposes of determining the Exchange Price, the appreciated net present value of the EME portfolio is assumed to be $3,745,390,000. 

Next,
the $3,745,390,000 value was increased by $500 million to give an approximate net present value to the 1999 merchant plants (Homer City, the Illinois plants, Contact Energy, and the
Fiddler's Ferry and Ferrybridge merchant plants). The $500 million value assigned to the 1999 merchant plants was solely for purposes of the Exchange Offer and (1) is based on a review
of events that occurred and information available through the date of this Circular, and (2) reflects a determination that there are substantially higher uncertainties with respect to
approximating the net present values of those plants than there are for other elements of the EME portfolio. Thus, solely for purposes of determining the Exchange Price, the appreciated net present
value of the EME portfolio is assumed to be $4,245,390,000 ($3,745,390,000 + $500 million). 

The
Affiliate Option program for EME assumes that EME has 10,000,000 hypothetical or "phantom" ownership units outstanding. Thus, the $4,245,390,000 valuation creates a per unit value, rounded to the
nearest whole dollar, of $425 ($4,245,390,000 divided by 10,000,000). The per Affiliate Option consideration being offered in the Exchange Offer is therefore based on the difference between the per
unit value of $425 and the Exercise Price applicable to that unit. 

11

 

	10.
	If the Exchange is completed, how will the components of the Exchange Price payable to me be determined?

SEUs.    If you are employed by the Company on the Exchange Date, $50.00 of the Exchange Price per unit will be granted to you in the form of
SEUs. The $50.00 per unit amount relates to the approximate value of the 1999 merchant plants assumed for purposes of the Exchange Offer as follows: $500 million divided by the 10,000,000 units
assumed to be outstanding equals $50.00 per unit. 

The
number of SEUs granted to you will equal $50.00 per unit divided by $20.50. $20.50 was the closing price of a share of EIX common stock on June 30, 2000 on the New York Stock Exchange. 

The
percentage of the Exchange Price granted to you in SEUs will vary depending on the number and grant date of the Affiliate Options you hold, and the value of these SEUs will rise and fall with
fluctuations in the price of the underlying shares of EIX common stock and any changes in EIX's dividend policy. 

The
value of your SEUs will be paid to you, as described in more detail in the responses to Questions 21 and 22 below, on the first or third anniversary of the Exchange Date, whichever you elect
(except as noted in the response to Question 4 above with respect to the SEUs that relate to unvested Affiliate Options, or if you are eligible and make a deferral election). 

Cash Payments.    The balance of the Exchange Price (the total Exchange Price less the $50.00 per unit to be granted in the form of SEUs) will
be paid to you in a lump-sum on March 13, 2001 (except as noted in the response to Question 4 above with respect to the portion that relates to unvested Affiliate Options, or if you
are eligible and make a deferral election). 

The
cash component of the Exchange Price will earn interest as follows: (1) the portion that relates to vested Affiliate Options and Affiliate Options that are scheduled to vest in
January 2001 (which portion will be paid in March 2001) will earn interest at an annual rate of 6.3% from the Exchange Date through the date of payment, and (2) the portion that
relates to Affiliate Options that are scheduled to vest and be paid in January 2002 or January 2003 will earn interest at an annual rate equal to the 120% 10-Year Rate from
the Exchange Date through the date of payment. 

12

 

	11.
	How would the Exchange Offer work for a hypothetical Affiliate Optionee?

Set
forth below is an illustration of how the Exchange Offer would operate for a hypothetical Affiliate Optionee employed by the Company on the Exchange Date. See your Individualized Statement for the
calculation of the consideration being offered you. 

	Year of Award
 
	 	1994
	 	1995
	 	1996
	 	1997
	 	1998
	 	1999
	 	Total

	Total Award	 	 	500 units	 	 	1,000 units	 	 	1,000 units	 	 	750 units	 	 	750 units	 	 	500 units	 	 	4,500 units
	Exercised	 	 	0	 	 	0	 	 	0	 	 	0	 	 	0	 	 	0	 	 	0
	Cancelled	 	 	0	 	 	0	 	 	0	 	 	0	 	 	0	 	 	0	 	 	0
	Now Vested	 	 	500 units	 	 	1,000 units	 	 	1,000 units	 	 	750 units	 	 	375 units	 	 	125 units	 	 	3,750 units
	Now Unvested	 	 	0	 	 	0	 	 	0	 	 	0	 	 	375 units	 	 	375 units	 	 	750 units
	Year 2000 Exercise Price	 	$	169.2742	 	$	154.2317	 	$	181.0666	 	$	226.6772	 	$	313.8153	 	$	334.4392	 	 	N/A
	Per Unit Value Assumed for Exchange Offer	 	$	425.00	 	$	425.00	 	$	425.00	 	$	425.00	 	$	425.00	 	$	425.00	 	 	N/A
	Exchange Price/Unit	 	$	255.7258	 	$	270.7683	 	$	243.9334	 	$	198.3228	 	$	111.1847	 	$	90.5608	 	 	N/A
	Aggregate Exchange Price(1)	 	$	127,862.90	 	$	270,768.30	 	$	243,933.40	 	$	148,742.10	 	$	83,388.53	 	$	45,280.40	 	$	919,975.63
	Vested Portion to be Granted in SEUs ($50.00 per Unit)(2)	 	$	25,000.00	 	$	50,000.00	 	$	50,000.00	 	$	37,500.00	 	$	18,750.00	 	$	6,250.00	 	$	187,500.00
	Vested Portion Payable in Cash	 	$	102,862.90	 	$	220,768.30	 	$	193,933.40	 	$	111,242.10	 	$	22,944.27	 	$	5,070.10	 	$	656,821.07
	Total Vested Portion of Exchange Price	 	$	127,862.90	 	$	270,768.30	 	$	243,933.40	 	$	148,742.10	 	$	41,694.27	 	$	11,320.10	 	$	844,321.07
	 	Unvested Portion to be Granted in SEUs ($50.00 per Unit)	 	 	 	 	 	 	 	 	 	 	 	 	 	$	18,750.00	(3)	$	18,750.00	(4)	$	37,500.00
	 	Unvested Portion Payable in Cash	 	 	 	 	 	 	 	 	 	 	 	 	 	$	22,944.26	(5)	$	15,210.30	(6)	$	38,154.56
	 	Total Unvested Portion of Exchange Price	 	 	 	 	 	 	 	 	 	 	 	 	 	$	41,694.26	 	$	33,960.30	 	$	75,654.56

	(1)
	The
aggregate Exchange Price ($919,975.63) would be payable as follows:

	•
	$50.00
of the Exchange Price per unit will be granted in the form of SEUs. With 4,500 units, the Affiliate Optionee would receive $225,000.00 of the Exchange
Price in the form of SEUs ($187,500.00 attributable to vested units plus $37,500.00 attributable to unvested units). The actual number of SEUs to be issued to the Affiliate Optionee would equal
10,975.61, which is $225,000.00 divided by $20.50 (as described in the response to Question 10 above).

	•
	The
remainder of the Exchange Price, $694,975.63 ($656,821.07 attributable to vested units plus $38,154.56 attributable to unvested units), would be paid in
cash on March 13, 2001 (except as described below with respect to the portion that relates to unvested Affiliate Options, or if the Affiliate Optionee was eligible and elected a deferral). 

	(2)
	As
indicated in Note 1, above, the Affiliate Optionee would be granted a total of 10,975.61 SEUs. The vested portion of the Exchange Price to be granted in the form of SEUs is
$187,500.00. Thus, 9,146.34 ($187,500.00 divided by $20.50) of the Affiliate Optionee's SEUs relate to vested Affiliate Options and would be vested on the Exchange Date.

	(3)
	The
portion of the Exchange Price attributable to the unvested 1998 Affiliate Options and to be granted in the form of SEUs is $18,750.00. Thus, 914.64 ($18,750.00 divided by $20.50)
of the Affiliate Optionee's SEUs relate to the unvested portion of the 1998 Affiliate Options. Those SEUs are scheduled to vest in two equal installments on January 2, 2001 and
January 2, 2002. The vesting dates correspond to the remaining scheduled vesting dates of the 1998 Affiliate Options.

	(4)
	The
portion of the Exchange Price attributable to the unvested 1999 Affiliate Options and to be granted in the form of SEUs is $18,750.00. Thus, 914.63 ($18,750.00 divided by $20.50)
of the Affiliate Optionee's SEUs relate to the unvested portion of the 1999 Affiliate Options. Those SEUs are scheduled to vest in three equal installments on January 2, 2001, January 2,
2002 and January 2, 2003. The vesting dates correspond to the remaining scheduled vesting dates of the 1999 Affiliate Options. 

13

 
	(5)
	The
cash portion of the Exchange Price attributable to the unvested 1998 Affiliate Options is $22,944.26. Of this amount, $11,472.13 (50%) is scheduled to vest on January 2,
2001 and be paid on March 13, 2001, and $11,472.13 (50%) is scheduled to vest and be paid on January 2, 2002. The vesting dates correspond to the remaining scheduled vesting dates of the
1998 Affiliate Options.

	(6)
	The
cash portion of the Exchange Price attributable to the unvested 1999 Affiliate Options is $15,210.30. Of this amount, $5,070.10 (1/3) is schedule to vest on
January 2, 2001 and be paid on March 13, 2001, $5,070.10 (1/3) is scheduled to vest and be paid on January 2, 2002, and $5,070.10 (1/3) is scheduled
to vest and be paid on January 2, 2003. The vesting dates correspond to the remaining scheduled vesting dates of the 1999 Affiliate Options. 

The following example illustrates how the Company will pay the Exchange Price to the hypothetical Affiliate Optionee referenced in the above chart. 

For Example:    This example assumes that the Affiliate Optionee was not eligible or did not elect to make a deferral election. If you are
eligible and want to elect a deferral, examples that include the effects of a deferral election are contained in the Summary of Deferred Compensation Alternatives. For ease of illustration, this
example ignores the effects of tax withholding. (See the responses to Question 36 below for information on the effects of tax withholding.) Note that "scheduled" payments would not be made if the
Affiliate Optionee's employment terminated and such amounts were not vested or did not vest in connection with the termination. 

	•
	The
Affiliate Optionee will be paid $656,821.07 (plus interest at 6.3% from the Exchange Date through the date of payment) on March 13, 2001. This
amount represents the cash portion of the Exchange Price that is vested on the Exchange Date.

	•
	$16,542.23
(plus interest at 6.3% from the Exchange Date through the date of payment) is scheduled to vest in January 2001 and also be paid on
March 13, 2001 (in addition to the $656,821.07 described above). This amount represents the cash portion of the Exchange Price attributable to the January 2001
vesting installments of the Affiliate Optionee's 1998 and 1999 Affiliate Options ($11,472.13 + $5,070.10 = $16,542.23).

	•
	$16,542.23
(plus interest at the 120% 10-Year Rate from the Exchange Date through the date of payment) is scheduled to vest and be paid on
January 2, 2002. This amount represents the cash portion of the Exchange Price attributable to the January 2002 vesting installments of the Affiliate Optionee's 1998 and 1999 Affiliate
Options ($11,472.13 + $5,070.10 = $16,542.23).

	•
	$5,070.10
(plus interest at the 120% 10-Year Rate from the Exchange Date through the date of payment) is scheduled to vest and be paid on
January 2, 2003. This amount represents the cash portion of the Exchange Price attributable to the January 2003 vesting installment of the Affiliate Optionee's 1999 Affiliate Options.

	•
	EIX
will grant 10,975.61 SEUs to the Affiliate Optionee on the Exchange Date. This number is determined by dividing $225,000.00 (the total portion of the
Exchange Price to be granted in the form of SEUs, or $187,500.00 + $37,500.00) by $20.50. As indicated in Notes 2, 3, and 4 above, the SEUs will remain subject to the same vesting
schedule as the related Affiliate Options. As described in more detail below under "EIX Stock Equivalent Units," vested SEUs generally will become payable on the first or third anniversary of the
Exchange Date, whichever the Affiliate Optionee elected. 

14

 

	12.
	What happens if I accept the Exchange Offer and my employment terminates after the Exchange Date?

The
following rules apply if you accept the Exchange Offer and your employment by the Company terminates after the Exchange Date: 

	(1)
	If
your employment terminates due to your Retirement, Total Disability, or death you will become vested in a pro rata portion of the cash payable and SEUs that are attributable to
your unvested Affiliate Options (the Affiliate Options provide for pro rata vesting in connection with Retirement, Total Disability, or death), and you will forfeit the remaining unvested amounts and
unvested SEUs;

	(2)
	If
your employment by the Company terminates for any other reason, you will forfeit the cash payable that was attributable to your unvested Affiliate Options and the unvested SEUs
attributable to your unvested Affiliate Options (for this purpose, your unvested Affiliate Options are those Affiliate Options that, had they remained outstanding after the Exchange, would not have
vested prior to the termination of your employment);

	(3)
	Any
portion of the cash component of the Exchange Price that vests in connection with the termination of your employment will be paid following the later of March 13, 2001 or a
date no later than 60 days after your employment terminates; and

	(4)
	The
value of your vested SEUs will be paid as described in the response to Question 21 below. 

For
purposes of the Exchange, "Retirement" or "Retire" generally means that you terminate employment with the Company at age 55 or later with at least five years of service to the Company. For
purposes of the Exchange, EIX's Benefits Committee will determine whether you are "Totally Disabled" in its discretion. 

If
you are entitled to pro rata vesting, you will become vested in an additional cash portion of the Exchange Price so that the aggregate cash portion of the Exchange Price that you are vested in, and
the total number of SEUs that you are vested in, with respect to Affiliate Options granted for a particular year equals X%, where X is obtained by dividing (1) the completed months that have
elapsed between the date those Affiliate Options were granted and the date that your employment by the Company terminates, by (2) 48. 

The
Affiliate Options also provide for automatic vesting in connection with certain mergers, consolidations or other corporate events if a "Distribution Date" occurs under the Rights Agreement
approved by the EIX Board of Directors on November 20, 1996, as amended. The Exchange Price also will become fully vested in such events if a "Distribution Date" occurs under such Rights
Agreement. 

	13.
	Can I elect a deferral?

Certain
persons may be eligible to elect that all or a portion of the cash component of the Exchange Price be deferred under a deferred compensation plan, and/or that the payment of their SEUs be
deferred under a deferred compensation plan. If EIX and EME determined that you may be eligible to elect a deferral, you were given a copy of the Summary of Deferred Compensation Alternatives document
with your copy of this Circular. If you are eligible, you should read the Summary of Deferred Compensation Alternatives before you elect a deferral. That summary describes the deferred compensation
plan and the effect that a deferral election will have on the payment of the Exchange Price. 

EIX
and EME had to limit eligibility for the deferred compensation plan because of applicable requirements under the Employee Retirement Income Security Act of 1974, as 

15

 

amended ("ERISA"). Your Individualized Statement will indicate if you are not eligible to participate in the deferred compensation plan. 

There
is a second test, required under applicable securities laws, that you also must satisfy if you want to elect a deferral. This test requires that, to be eligible to make a deferral election, you
must (1) have individual income in excess of $200,000 in each of the two most recent years or joint income with your spouse in excess of $300,000 in each of the two most recent years and
reasonably expect to reach the same level this year, or (2) have an individual net worth or a joint net worth with your spouse in excess of $1,000,000. These requirements are described in more
detail in the Summary of Deferred Compensation Alternatives. 

EIX's
and EME's determination of whether you are eligible to elect a deferral was based solely on the ERISA test. Even if EIX and EME determined that you are eligible under the ERISA test and gave you
a copy of the Summary of Deferred Compensation Alternatives, the Company has made no determination of whether you satisfy the securities law requirement for eligibility described above. Thus, even if
it was determined that you are eligible, you must attest when you elect a deferral to the fact that you satisfy one of the above income or net worth requirements under the securities test; otherwise,
your deferral election will not be effective. 

16

  

	14.
	What special rules apply if I am not employed by the Company on the Exchange Date?

The
following special rules apply if you accept the Exchange Offer and you are not employed by the Company on the Exchange Date: 

	•
	Your
outstanding Affiliate Options will terminate and you will only be paid for your Affiliate Options that vested prior to the termination of your
employment and, if your employment by the Company terminated due to your Retirement, Total Disability, or death, for any Affiliate Options that vested in connection with the termination of your
employment.

	•
	You
will be paid the Exchange Price all in cash.

	•
	$50.00
of the Exchange Price per vested unit (plus interest at an annual rate of 6.3% from the Exchange Date through the date of payment) will be paid on the
first anniversary of the Exchange Date (expected to be August 8, 2001). $50.00 is the portion of the Exchange Price per unit that otherwise would have been granted in the form of SEUs. The
first anniversary of the Exchange Date is the earliest date that your SEUs would have been paid had you been granted SEUs.

	•
	The
balance of the Exchange Price for your vested units (plus interest at an annual rate of 6.3% from the Exchange Date through the date of payment) will be
paid on March 13, 2001.

	•
	You
may make a deferral election, if you are otherwise eligible as described in the response to Question 13, only if your employment by the Company
terminated due to your Retirement or Total Disability. If you are eligible and elect a deferral, the portion of the Exchange Price that you elect to defer will be credited under, and will begin to
earn interest at the rate described in the Summary of Deferred Compensation Alternatives, as of the Exchange Date. 

EIX Stock Equivalent Units  

EIX
maintains the ECP to provide participants with a financial incentive that reinforces and recognizes long-term corporate, organizational and individual performance and accomplishments.
Persons who accept the Exchange Offer and who are employed by the Company on the Exchange Date will receive a portion of their consideration in the form of a grant of SEUs under the ECP. Generally, an
SEU is a non-voting unit of measurement that is deemed for bookkeeping purposes to be equivalent to one outstanding share of EIX common stock. When an SEU becomes payable, the holder will
be paid a cash amount determined with reference to the then fair market value of a share of EIX common stock, as described in the response to Question 22 below. 

This
section provides important information regarding the SEUs to be granted as part of the Exchange Offer. The information presented in this section is qualified in its entirety by the more detailed
information set forth in the form of SEU Award Certificate and SEU Statement of Terms and Conditions that will evidence each grant of SEUs (collectively, the "Award Certificate") and by the more
detailed information set forth in the ECP. A copy of the ECP is included in the Prospectus attached as Attachment B to this Circular. A copy of the Award Certificate is attached as Attachment C to
this Circular. 

The
ECP or the Award Certificate controls if any discrepancy exists between the information presented in this Circular with respect to the SEUs and the terms of the ECP or the Award Certificate. 

17

 

	15.
	Can I opt out of the SEUs or elect that a greater portion of my Exchange Offer consideration be granted in the form of SEUs?

No.
If you accept the Exchange Offer, the number of SEUs that you will be granted per unit is fixed and will be calculated as described in the response to Question 10 above. You may not elect to
receive cash or other benefits in lieu of the SEUs. Similarly, you may not elect to increase the portion of your Exchange Offer consideration that will be granted in the form of SEUs. 

	16.
	What is an SEU?

An
SEU is a bookkeeping entry and evidences a right to receive a cash payment determined with reference to the fair market value of a share of EIX common stock, as described in the response to
Question 22 below. This right, however, is subject to certain terms and conditions contained in the applicable Award Certificate and generally described in this Circular. The time of payment of your
SEUs is described in the response to Question 21 below. 

In
accordance with the ECP, the Committee, to the extent it deems equitable and appropriate, may adjust the number of SEUs referenced in an award in the event of certain reorganizations, mergers,
combinations, consolidations, recapitalizations, stock splits, stock dividends, reverse stock splits, stock consolidations and other similar events that change the number or kind of shares of EIX
common stock outstanding. 

	17.
	How are SEUs credited?

EIX
will maintain a SEU bookkeeping account for each participant who accepts the Exchange Offer. Your SEUs will be credited to the bookkeeping account maintained in your name. 

	18.
	Will dividend equivalents be credited on the SEUs credited to my account?

Yes.
SEUs accrue dividend equivalents as EIX declares dividends on its common stock. Dividend equivalents are credited on the ex-dividend date, based on the average of the high and low
prices of a share of EIX common stock on the New York Stock Exchange on that date, in the form of additional SEUs to your account. 

For Example:    Assume that you have 1,000 SEUs. Assume that EIX declares a $0.25 cash dividend per share of its common stock and that the
ex-dividend date average of the high and low prices of a share of EIX common stock on the New York Stock Exchange is $25. Your account will be credited, on the ex-dividend
date, with an additional 10 SEUs (1,000 SEUs multiplied by $0.25 equals $250; $250 divided by the share value of $25 equals 10). 

SEUs
credited as dividend equivalents are subject to the same vesting schedule as your other SEUs. 

	19.
	When will the SEUs vest?

To
the extent that your SEUs relate to vested Affiliate Options, your SEUs will be vested on the Exchange Date. To the extent that your SEUs relate to unvested Affiliate Options, your SEUs will be
subject to the same vesting schedule as the underlying Affiliate Option. If your employment terminates due to your Retirement, death, or following your Total Disability, you will be entitled to pro
rata vesting as described in the response to Question 12 above. You will forfeit the SEUs to the extent that they are not vested (or do not become vested) in such circumstances. If your employment
terminates for any other reason, you will forfeit your SEUs to the extent that they are not vested. 

For Example:    If you Retire on July 15, 2001, you would be only 62.5% vested in your 1999 Affiliate Options. If you accept the
Exchange Offer and Retire on July 15, 2001, a 

18

 

total of 62.5% of the SEUs that relate to your 1999 Affiliate Options will be vested. You will forfeit the remainder. (This rule also would apply to your SEUs that relate to 1998 Affiliate Options,
except that you would be 87.5% vested in your 1998 Affiliate Options if you Retired on July 15, 2001. Your Affiliate Options from 1997 or earlier are fully vested. Therefore, your SEUs related
to those Affiliate Options will be fully vested on the Exchange Date.) 

	20.
	Do I have to make an SEU payment election?

Yes.
The value of your vested SEUs generally will become payable on the first or third anniversary of the Exchange Date, whichever you elect (unless you are eligible and make an SEU deferral
election). You must indicate your SEU payment election on your Election Form at the time you accept the Exchange Offer. If you do not make an election on your Election Form, you will be deemed to have
elected payment on (or as soon as administratively practical after) the third anniversary of the Exchange Date. For tax reasons, you may not change your election after your Election Form is filed. 

The
effect of electing a third anniversary payment is that the value of your SEUs will continue to be subject to changes in the market value of EIX common stock for a longer period of time, and you
will defer taxation for a longer period of time, than if you had elected a first anniversary payment. 

	21.
	When will the value of my SEUs be paid?

Subject
to the exceptions described below, the value of your vested SEUs will be paid as soon as administratively practical after the first or third anniversary of the Exchange Date, whichever you
elect. In addition, the payment rules described in this response are subject to any SEU deferral election that you may make (if you are eligible to defer payment of your SEUs). 

To
the extent that your SEUs relate to unvested Affiliate Options, the value of your SEUs will not be paid until the date that the underlying Affiliate Options would have vested had you not accepted
the Exchange Offer. 

The
termination of your employment could trigger payment of your SEUs earlier than the payment date that you elected. If your employment terminates before the first anniversary of the Exchange Date,
the value of your vested SEUs will become payable on the first anniversary of the Exchange Date. If your employment terminates on or after the first anniversary of the Exchange Date, the value of your
vested outstanding SEUs will become payable on the date your employment terminates. 

The
following examples illustrate these payment rules. 

Example (1):    Assume that you are granted 1,200 SEUs. 900 are attributable to vested Affiliate Options and are vested on the Exchange Date.
300 are attributable to unvested Affiliate Options and are scheduled to vest as follows: 200 are scheduled to vest on January 2, 2001, 50 are scheduled to vest on January 2, 2002, and 50
are scheduled to vest on January 2, 2003. Assuming that you remain employed by the Company through the applicable vesting dates and that you elect a first anniversary payout, your 1,100 vested
SEUs (the 900 vested on the Exchange Date plus the 200 that are scheduled to vest on January 2, 2001) would become payable on the first anniversary of the Exchange Date, the 50 SEUs that are
scheduled to vest on January 2, 2002 would become payable on that date, and the 50 SEUs that are scheduled to vest on January 2, 2003 would become payable on that date. 

19

 

Example (2):    Assume the same facts as in Example (1) except that you elect a third anniversary payout. In this case, all 1,200 SEUs
would become payable on the third anniversary of the Exchange Date. 

Example (3):    Assume the same facts as in Example (1) except that you elect a first anniversary payout and your employment terminates
prior to the first anniversary of the Exchange Date. In this case, your vested SEUs (900 plus an additional 200 if you are employed through January 2, 2001) would become payable on the first
anniversary of the Exchange Date. 

Example (4):    Assume the same facts as in Example (1) except that that you elect a third anniversary payout but that your employment
terminates February 1, 2002. Your 1,150 vested SEUs (900, plus the 200 that are scheduled to vest on January 2, 2001, plus the 50 that are scheduled to vest on January 2, 2002)
would become payable following the date your employment terminated. 

	22.
	How is an SEU payment calculated?

An
SEU represents the right to receive a payment determined with respect to the fair market value of a share of EIX common stock (less required tax withholding). The amount that you will be paid for
each of your SEUs that vests will equal the "Per SEU Payment Amount" determined at the time the SEU becomes payable. You have no further right with respect to an SEU once you receive payment with
respect to that SEU. 

Fixed Vesting Date.    If payment of your SEUs is triggered by a fixed payment or vesting date (the first or third anniversary of the Exchange
Date or the scheduled vesting date of the underlying Affiliate Option), the Per SEU Payment Amount equals: (1) the sum of the daily average of the high and low trading prices of a share of EIX
common stock on the New York Stock Exchange for each of the 20 trading days preceding the payment trigger date; (2) divided by 20. Payment will actually be made on or as soon as
administratively practicable after the payment trigger date. 

For Example:    Assume that you elect a first anniversary payment, that 1,000 of your SEUs are vested on the first anniversary of the Exchange
Date, and that the Per SEU Payment Amount is $25 on that date. The Company will make a lump-sum cash payment of $25,000 (1,000 multiplied by $25), less required tax withholding, to you on
or as soon as administratively practicable after that date. 

Termination of Employment.    If vesting and payment of your SEUs is triggered by the termination of your employment with the Company after
the first anniversary of the Exchange Date, the Per SEU Payment Amount will equal the average of the high and low prices of a share of EIX common stock on the New York Stock Exchange on the date your
employment terminates (or, if that day is not a trading day, determined as of the immediately preceding trading day). Payment will actually be made as soon as administratively practicable after the
date your employment terminates. 

	23.
	Do my SEUs carry any shareholder rights?

No.
Your SEU rights are only those contractual rights evidenced by your SEU Award Certificate. You have no rights as a shareholder of the Company with respect to your SEUs (including, without
limitation, dividend and voting rights, except to the extent that dividend equivalent rights have been provided as discussed in this section of the Circular). You have no rights as a holder of an SEU
to participate in or affect (without limitation): (1) the management or control of the Company, (2) fundamental changes in the business or existence of the Company, or (3) the
issuance of additional securities by the Company. 

20

 

The
Company does not, with respect to the ECP and SEUs, have or assume any trust or fiduciary relationship of any kind with any SEU holder. 

	24.
	Is the ECP a "qualified" plan?

No.
The ECP is not subject to ERISA and is not qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended. 

	25.
	Can the ECP be amended or terminated?

EIX
generally may amend the ECP at any time. Generally, you must consent to any amendment (other than an adjustment described in the next sentence) that is materially adverse to your rights or
benefits under your SEUs. EIX may, without your consent, adjust your SEUs after they have been granted in certain circumstances (for example, in connection with stock splits, exchanges of stock,
mergers and other reorganizations or extraordinary corporate transactions). 

	26.
	How will the SEUs be administered?

The
Committee administers the ECP. The EIX Board of Directors appoints the members of the Committee and has the right to change the membership of the Committee at any time. The Committee has the
authority to make and enforce all rules and regulations for the administration of the ECP and to decide or resolve any and all questions, including interpretations of the ECP, as may arise in
connection with the ECP. 

Decisions
of the Committee with respect to the ECP and/or amounts payable under the ECP are final, conclusive and binding on all parties. 

Other Provisions; Administration  

	27.
	Can I name a beneficiary?

Yes.
You may name a beneficiary to receive any portion of the Exchange Price that is payable to you in the event of your death. You can name any individual or entity you wish as your beneficiary,
subject to
your spouse's consent if you are married and do not name your spouse as your sole primary beneficiary. Your beneficiary designation must be on a form approved by the Committee. If you do not name a
beneficiary, your beneficiary will be your surviving spouse, if your spouse survives you; otherwise, your beneficiary will be your estate. 

You
may change your beneficiary designation by filing a new beneficiary designation form with the Committee, subject to the spousal consent requirement described above. The Committee will rely on the
last valid beneficiary designation that you file and it receives before the date of your death. 

A
beneficiary designation form is included with this Circular. Additional beneficiary designation forms are available from EIX Executive Compensation at the telephone number or e-mail
address given on page 4, or at (626) 302-1025 or (626) 302-7568. 

Your
beneficiary designation will automatically be revoked if you marry or divorce after the date of the designation (unless, in the case of marriage, your new spouse was already named as your sole
primary beneficiary or, in the case of divorce, your prior spouse was not named as a beneficiary). Therefore, you should file a new beneficiary designation following either of such events. 

21

 

	28.
	What happens if I die before EME pays me the cash component of the Exchange Price and/or before my SEUs are paid?

If
you accept the Exchange Offer and you die before payment of the cash portion of the Exchange Price and/or before the value of your SEUs are paid, EME will pay your beneficiary the vested amount
that you would otherwise be paid. 

	29.
	Can I transfer my right to payment or my SEUs?

You
generally cannot transfer your rights to payment or your SEUs. Payment of the cash portion of the Exchange Price and any payment with respect to your SEUs will be made only to you or (1) in
the event of your divorce, to your spouse pursuant to a domestic relations order that requires payment be made to your spouse, or (2) if you die, to your estate. 

	30.
	Does the Company have any right to further delay the payment of the Exchange Price or the payment with respect to my SEUs?

The
Company may delay the date of your payment if you are an officer described in the next paragraph and the Company's ability to deduct its payment to you would otherwise be lost. 

The
Company's ability to deduct compensation in excess of $1 million per year to certain of its officers is limited by Section 162(m) of the Internal Revenue Code. Section 162(m)
is, however, very limited in its application. It generally only applies to an officer in a year in which the officer constitutes one of the five EIX executive officers whose compensation is listed in
the Proxy Statement prepared for the following year. These five persons may be officers of an EIX affiliate in some circumstances. 

If
the Committee determines that the Company's ability to deduct amounts otherwise payable to one of these five officers in a year is or reasonably could be limited by Section 162(m) because
the officer is or reasonably could be a Section 162(m) officer (as described above) in that year, the Company may delay the payment to that officer until a year in which the Committee
determines that the Company's tax deduction for that amount is not or is not reasonably expected to be limited by Section 162(m). If the payment is deferred, the deferred amount will earn
interest at an annual rate equal to the 120% 10-Year Rate. 

	31.
	Does the Exchange Offer give me any rights to continued employment by the Company?

No.
The Exchange Offer does not have any effect on your employment status or give you any rights to continued employment with the Company or its affiliates. 

	32.
	How do I make a claim for payment?

If
you accept the Exchange Offer, you generally will not have to take any other actions to receive the consideration payable to you. If, however, you believe that you are being denied a benefit to
which you are entitled to, you should file a written request with the Committee. The request should set forth the reasons for your claim. Any communication to the Committee should be sent to
the Committee, care of EIX's Secretary to the following address: 

Corporate
Secretary, Edison International

2244 Walnut Grove Avenue, P.O. Box 800

Rosemead, California 91170 

Claims
also may be submitted to arbitration as provided in the Election Form and in the SEU Award Certificate. 

	33.
	Who pays the costs of administering the Exchange?

The
Company pays the expenses of administering the Exchange and the SEUs. 

22

 

Federal Income Tax and Social Security Consequences  

        Questions 34 through 38 below discuss the material United States federal income tax and Social Security considerations that relate to the
Exchange. Question 39 comments on state, local and foreign tax matters. This section does not address the effects of a deferral election, if you are eligible and make a deferral election. If you are
eligible to make a deferral election, see the Summary of Deferred Compensation Alternatives for the tax consequences of a deferral.

The information in this section has been prepared based on the advice of the Company's tax advisors. The Company cannot and does not guarantee any particular tax consequences.
You should consult your own tax advisors.

The Company may withhold any amounts required by law (including U.S. federal, state or local, or foreign, income, employment or other taxes) to be withheld from amounts
credited in respect of the SEUs or payments of the Exchange Price. In the event that the Company does not elect for any reason to withhold amounts necessary to satisfy any applicable tax withholding
obligations that arise, the Company may withhold such amounts from compensation otherwise payable to you or you must pay or provide for the payment of such amounts to the Company. The amount of tax
withheld by the Company may not be sufficient to pay the actual tax liability due, and you will be responsible for any shortfall.

	34.
	If I accept the Exchange Offer, what will be the tax consequences of the cash component of the Exchange Price?

The
cash portion of the Exchange Price, including interest paid by EME on the cash portion, will be taxable as ordinary income in the year that it is paid to you. You will pay federal income tax based
on the tax rates in effect for the year in which you receive a payment, rather than based on the tax rates in effect for the year 2000. 

	35.
	What is the income tax effect of the SEU grants?

The
portion of the Exchange Price granted to you in the form of SEUs will not be taxed for income tax purposes until the year in which payment is actually made with respect to your SEUs. In addition,
additional SEUs credited as dividend equivalents will not be taxed in the year that they are credited. 

You
will recognize taxable income when the value of your SEUs (including SEUs credited as dividend equivalents) is paid in cash. The amount of income that you recognize will equal the amount of cash
that you receive and it will constitute ordinary income, not capital gain. 

You
will pay federal income tax based on the tax rates in effect for the year in which you receive a payment, rather than based on the tax rates in effect for the year 2000. 

	36.
	What are the tax withholding requirements with respect to the payments?

General Tax Withholding Rules.    The Federal Insurance Contributions Act ("FICA") imposes two types of taxes—Social Security tax
(at 6.2%) and Medicare tax (at 1.45%)—on both employers and employees for wages paid to employees. The Social Security tax is a percentage of wages up to the Social Security wage base
limitation, which is $76,200 for the year 2000. The Social Security wage base is adjusted annually. Once you have paid Social Security tax for a given year on an amount of wages from a particular
employer equal to the wage base limitation, no further Social Security tax is payable on that year's wages from that employer. Currently, there is no wage base limitation for Medicare tax purposes.
Thus, all wages paid to you are subject to Medicare tax. 

Income
tax withholding is also required on wages paid to employees. The Company will withhold federal income taxes from payments of the Exercise Price at the supplemental wage withholding rate
(currently 28%). State and local income tax withholding also may be 

23

 

required, depending on your state of employment. For purposes of the following illustration, the state tax withholding rate is assumed to be 6%. (The California supplemental wage withholding rate is
6%.) 

The
Exchange Price (including interest paid by EME on the cash portion and any amounts attributable to appreciation in the value of your SEUs) will be treated as wages received for FICA and income tax
purposes. Income taxes will be withheld at the time(s) of payment. FICA taxes also will be withheld at the time(s) of payment, except as noted below under "Special FICA Withholding Rule." 

For Example:    Assume that $1,000,000 of the Exchange Price (including interest) becomes payable to you on March 13, 2001. The actual
amount paid to you will be approximately $640,775.60. This amount represents the $1,000,000, less Social Security tax at 6.2% up to the wage base limitation ($4,724.40, assuming the wage base
limitation is the same as in 2000 and had not been offset by other compensation paid to you in 2001), Medicare tax at 1.45% ($14,500), federal income taxes at 28% ($280,000), and state income taxes at
an assumed rate of 6% ($60,000). This example assumes no other state or local tax withholding is required. The actual amount of your payment would be less if other withholding was required. 

The
cash portion of your 2002 and 2003 vesting installments of the Exchange Price, and (except as noted below) any payment with respect to SEUs, also generally will be subject to tax withholding, at
the time of payment, in the manner described above. 

Special FICA Withholding Rule.    A special FICA tax withholding rule applies with respect to: (1) SEUs that are vested on the Exchange
Date; (2) any other SEUs that become vested in 2000 (for example, in connection with your termination of employment due to your death, Retirement, or following your Total Disability); and
(3) if you elect a third anniversary payment date for your SEUs (see the response to Question 20 above), any of your SEUs that become vested in 2001 or 2002. SEUs that are vested on the
Exchange Date or that become vested in 2000 will be subject to FICA tax withholding in 2000 (but will not be subject to income tax withholding until the value of the SEUs becomes payable). If you
elect a third anniversary payment date for your SEUs, any of your SEUs that become vested in 2001 or 2002 will be subject to FICA tax withholding in 2001 or 2002, respectively (but will not be subject
to income tax withholding until the value of the SEUs becomes payable). Any of your SEUs that become vested in 2003, and any of your SEUs that become vested in 2001 or 2002 if you elect a first
anniversary payment date for your SEUs, are subject to the general income and FICA tax withholding rules described under "General Tax Withholding Rules" above. 

For Example:    You are vested in 1,000 SEUs on the Exchange Date. You are subject to FICA tax on the value of 1,000 SEUs in the year 2000. If
the average of the high and low prices of a share of EIX common stock on the last day preceding the date that tax withholding occurs is $25, you will recognize $25,000 of taxable income in 2000 for
FICA purposes. Any payment with respect to those SEUs will be subject to income tax withholding as described in the general tax withholding rules described above, but will not be subject to additional
FICA tax withholding. 

A
tax rule allows the Company to elect to defer the date that FICA taxes are triggered with respect to your vested SEUs from the vesting date to December 31 of the year of vesting. The Company
expects that it will satisfy its FICA tax withholding obligation with respect to your SEUs that are vested on the Exchange Date or that vest in 2000 by reducing the number of your outstanding vested
SEUs by a number equal in value to the amount of the withholding obligation. The reduction to the number of your vested SEUs will, however, be treated as a 

24

 

taxable distribution to you that, as illustrated below, will also be subject to income tax withholding. 

For Example:    Using the facts of the last example, you are subject to FICA tax on the value of 1,000 SEUs on December 31, 2000. If
the average of the high and low prices of a share of EIX common stock on December 31, 2000 is $25, you will recognize $25,000 of taxable income at that time for FICA purposes. The required FICA
withholding will equal $362.50 (this amount is calculated at a rate of 1.45% and assumes that you had reached the Social Security wage base limitation for 2000). The Company will satisfy its
withholding obligation by reducing the number of your outstanding vested SEUs by the required withholding amount. As noted above, the reduction to the number of your vested SEUs will be treated as a
taxable distribution to you that will also be subject to income tax withholding. Therefore, the actual amount required to be withheld will be greater than $362.50 and will equal (1) the
original $362.50, plus (2) the income tax withholding due with respect to the reduction of your SEUs. The actual withholding amount will be approximately $549.24 (assuming a federal withholding
rate of 28% and a state withholding rate of 6%) and will be ordinary taxable income to you. If the average of the high and low prices of a share of EIX common stock on December 31, 2000 is $25,
the Company will reduce your outstanding vested SEUs by 21.9696 units ($549.24 divided by $25) and you will continue to hold 978.0304 vested SEUs. (Note that if you had not reached the Social Security
wage base limitation, the Company would also withhold Social Security tax (at 6.2%) until the limitation had been reached, which would increase the amount required to be withheld.) Any payment with
respect to the 978.0304 SEUs will be subject to income tax withholding, but will not be subject to additional FICA tax withholding, at the time of payment. 

To
the extent that the Company is required to withhold FICA taxes with respect to any of your SEUs that become vested in 2001 or 2002, the Company will settle the withholding amount, to the extent
possible, by reducing any portion of the Exchange Price that is then payable to you in cash. To the extent that the Company cannot satisfy the withholding obligation in that manner, it will reduce the
number of your outstanding SEUs, as described above, to the extent necessary to satisfy the withholding obligation. 

The
Company fully expects to satisfy its tax withholding obligations in the manner described above. Thus, the Company's tax withholding obligations (1) should not affect other compensation
payable by the Company to you, and (2) should not require you to make a payment to the Company. 

	37.
	Are amounts paid to my beneficiary taxable to my beneficiary?

Any
amounts payable to your beneficiary upon or following your death are taxable to your beneficiary as income and, under certain circumstances, may be subject to estate taxes as part of your estate.
Your tax advisor can provide you with more information on this topic. 

	38.
	Could a change in tax law affect my benefits?

Yes.
The foregoing discussion is based on current law. Congress may change the relevant tax and Social Security law at any time, and such changes may be retroactive to before the date of enactment.
Such changes may have a material effect on the benefit you expect to receive. 

For
example, Congress may change the rates of federal income tax in the future. If federal income tax rates increase, you may pay more income tax when amounts are paid than you would have if those
amounts had been taxed currently. 

25

 

	39.
	What are (1) the local income tax and (2) the foreign income tax consequences of my payments and the SEUs?

EIX
and EME are unaware of any state and local income tax consequences in the United States of the payment of the Exchange Price (including the grant and payment of SEUs) that differ from the United
States federal income tax consequences described above. 

EIX
and EME are unaware of any foreign jurisdiction (other than Singapore, as noted below) in which you may now be employed by EME in which the income tax consequences to you in that country would be
different than those United States federal income tax consequences described above. Taxation is, however, different in Singapore. EIX and EME are distributing a supplement to this Circular to
participants who are employed in Singapore. 

Section 16 Consequences  

	40.
	What are the Section 16 reporting and matching liability consequences of the SEUs?

Under
Section 16 of the Securities Exchange Act of 1934, as amended, an insider is required to report the acquisition of SEUs (on Form 4 or 5), the granting of additional SEUs as
dividend equivalents (on Form 4 or Form 5), any forfeiture of SEUs (on Form 4 or 5), and the payment of SEUs (on Form 4). Executive officers of EIX and members of the EIX
Board of Directors are considered "insiders." An executive officer of an EIX affiliate may be deemed an EIX executive officer, and therefore considered an insider, for this purpose. 

The
grant, forfeiture and/or payment of SEUs (including dividend equivalent SEUs) should be exempt from Section 16 matching liability. SEU payment elections contemplated by the Exchange Offer
should also be exempt from Section 16 matching liability. If you are an insider, and you are eligible and elect a deferral of your SEUs, you should also read the Section 16 discussion in
the Summary of Deferred Compensation Alternatives. 

EIX
has implemented a compliance program to assist insiders with their reporting obligations and avoidance of Section 16 liability. You may contact the EIX Corporate Secretary if you are
uncertain whether EIX considers you to be an insider. However, compliance with Section 16 is the sole responsibility of the individual insider, and you should contact your personal attorney as
appropriate. 

Effect on Retirement Plan Benefits  

	41.
	If I accept the Exchange Offer, how will the payment of the Exchange Price affect my benefits under Company-sponsored retirement plans?

It
will not. Income that you would have recognized if you had exercised your Affiliate Options in the ordinary course would have been excluded from your compensation for purposes of determining your
benefits under other Company-sponsored retirement plans. Similarly, income recognized in connection with the Exchange will be excluded from your compensation for purposes of determining your benefits
under Company-sponsored retirement plans. 

26

 

 
 

ADDITIONAL INFORMATION;    
    
    INCORPORATION OF DOCUMENTS BY REFERENCE    
  

        If you have any questions with respect to the Exchange Offer, the SEUs, or any other matters discussed in this Circular, please contact EIX Executive
Compensation, at (626) 302-5675 (or e-mail EIX Executive Compensation at exchange@Edison.com), or at the following address: 

Executive
Compensation

Edison International

2244 Walnut Grove Avenue, P.O. Box 800

Rosemead, California 91770 

        After
the Exchange Date, you may also contact EIX Executive Compensation at (626) 302-1025 or (626) 302-7568. 

        EIX
and EME are reporting companies under the Securities Exchange Act of 1934, as amended, and are required to file periodic and other reports with the Securities and Exchange Commission
(the "SEC"). These reports include financial material and other information about EIX and EME. 

        The
following documents filed by EIX with the SEC are incorporated by reference into this Circular: 

	•
	EIX's
Annual Report on Form 10-K for the year ended December 31, 1999; and

	•
	EIX's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000. 

        The
following documents filed by EME with the SEC are incorporated by reference into this Circular: 

	•
	EME's
Annual Report on Form 10-K for the year ended December 31, 1999, as amended by EME's Form 10-K/A filed
with the SEC on June 12, 2000; and

	•
	EME's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000. 

        Copies
of the foregoing reports can be inspected and copied at: 

	•
	the
Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549;

	•
	the
SEC's Regional Office at 7 World Trade Center, 13th Floor, New York, New York 10048; and

	•
	the
SEC Midwest Regional Office, CitiCorp Center, 500 West Madison, Suite 1400, Chicago, Illinois 60061. 

        Copies
of such materials can also be obtained by mail at prescribed rates from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. 

        Reports,
proxy statements and other information concerning EIX can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, 18th Floor, New York,
New York 1005, and at the offices of the Pacific Stock Exchange, Inc., 301 Pine Street, San Francisco, California 94104. 

        You
also may view incorporated documents at the SEC's internet web site at: http://www.sec.gov. 

        You
may also obtain without charge, upon oral or written request, a copy of any document that has been incorporated by reference (except the exhibits to any such document) into this
Circular or any other report or document required to be given to you under SEC Rule 428(b). 

27

 

        Please
mail your written request for EIX documents to: 

Law
Department, Attn: Corporate Governance

Edison International

2244 Walnut Grove Avenue, P.O. Box 800

Rosemead, California 91770 

        Please
mail your written request for EME documents to: 

Corporate
Secretary

Edison Mission Energy

18101 Von Karman Avenue, Suite 1700

Irvine, California 92612 

        Telephone
requests may be directed to EIX Corporate Governance at (626) 302-6816 or the EME Corporate Secretary at (949) 798-7895. 

28

  

 
 

ATTACHMENT A    
    
    INDEX OF DEFINED TERMS    
  

	 
	 	Page

	Affiliate Options	 	Cover page
	Award Certificate	 	22
	Circular	 	Cover page
	Committee	 	5
	Company	 	1
	ECP	 	11
	EIX	 	Cover page
	Election Form	 	10
	EME	 	Cover page
	ERISA	 	20
	Exchange	 	Cover page
	Exchange Date	 	1
	Exchange Offer	 	Cover page
	Exchange Price	 	1
	Exercise Price	 	1
	Expiration Time	 	3
	FICA	 	29
	Individualized Statement	 	Cover Page
	Per SEU Payment Amount	 	25
	Retirement/Retire	 	19
	SEC	 	34
	SEU	 	Cover page
	Totally Disabled	 	19
	120% 10-Year Rate	 	2

A-1

  

 
 

ATTACHMENT B    
    
    PROSPECTUS FOR EIX EQUITY COMPENSATION PLAN    
  

B-1

  

[EDISON INTERNATIONAL LOGO]

EDISON INTERNATIONAL

EQUITY COMPENSATION PLAN  

  
 

    PROSPECTUS    
  

THIS DOCUMENT CONSTITUTES PART OF A

PROSPECTUS COVERING SECURITIES THAT

HAVE BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933.  

 Dated: April 17, 1998  

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TABLE OF CONTENTS    
  

	 
	 	Page

	Description of the Plan	 	B-4
	 	General	 	B-4
	 	Securities Offered Through the Plan	 	B-5
	 	Eligibility and Award Determination	 	B-5
	Description of Awards	 	B-6
	 	Statutory Stock Options	 	B-6
	 	 	Tax Considerations	 	B-6
	 	Nonqualified Stock Options	 	B-7
	 	 	Tax Considerations	 	B-8
	 	Dividend Equivalents	 	B-8
	 	 	Tax Considerations	 	B-8
	 	Stock Appreciation Rights	 	B-9
	 	 	Tax Considerations	 	B-9
	 	Performance Awards	 	B-10
	 	 	Tax Considerations	 	B-10
	 	Stock Payment	 	B-10
	 	Section 83 Tax Considerations	 	B-11
	Award Gain Deferrals	 	B-11
	Administration of the Plan	 	B-11
	Termination of Employment	 	B-12
	Amendment and Termination of the Plan	 	B-12
	Restrictions on Resale	 	B-13
	Other Terms and Conditions	 	B-13
	Additional Matters	 	B-14

B-3

  

 
 

DESCRIPTION OF THE PLAN    
  

General  

        The Edison International Board of Directors ("Board") has adopted, subject to Edison International shareholder approval, the Edison International Equity
Compensation Plan (the "Plan"). The purpose of the Plan is to promote the interests of Edison International and its shareholders by improving the long-term financial and operational
performance of Edison International and its affiliated companies (collectively, the "Companies," and each individually, a "Company") by providing eligible participants a financial incentive which
reinforces and recognizes long-term corporate, organizational and individual performance and accomplishments. The Plan will help to attract, retain and motivate qualified Directors and
employees for the Companies by providing them with competitive equity-based financial incentives that link their interests with the interests of Edison International shareholders. 

        If
approved by the shareholders of Edison International, the Plan will replace the Long-Term Incentive Compensation Program (the "Prior Program") which was adopted by the
shareholders in 1992 and consists of (1) the Officer Long-Term Incentive Compensation Plan, (2) the Management Long-Term Incentive Compensation Plan, and
(3) the Director Incentive Compensation Plan. No new awards will be made under the Prior Program after approval of the Plan by shareholders; however, it will remain in effect as long as any
awards remain outstanding under the Prior Program. 

        To
accomplish its purposes, the Plan authorizes the granting of awards ("Awards") to Executive Officers and Key Management Employees of the Companies in the following forms:
(i) options to purchase shares of Edison International Common Stock, which may be in the form of statutory or nonqualified stock options, (ii) stock appreciation rights,
(iii) performance awards, (iv) dividend equivalents, and (v) stock payments. The Plan also authorizes awards to Directors of stock grants or nonqualified stock options. The
optional forms of Awards and the tax effects associated with each of them are described below under "Description of Awards." 

        The
Plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974 and it is not qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). 

        Capitalized
terms used and not otherwise defined in this Prospectus will have the meanings given them in the Plan. All of the descriptions of the terms and conditions of the Plan
contained in this Prospectus are qualified in their entirety by the complete text of the Plan as modified or amended from time to time in accordance with its terms. 

        The
Plan Administrator is the Compensation and Executive Personnel Committee of the Board (excluding any member who would not be considered (i) an "outside director" for purposes
of Section 162(m) of the Code and the regulations thereunder or (ii) a "non-employee director" within the meaning of Rule 16b-3(b)(3) of the Securities
Exchange Act of 1934 ("Exchange Act")). Notwithstanding the foregoing, the Board is the Administrator with respect to any Awards made to Directors. Company Management will select recipients of Awards
made to its participants other than those considered to be Edison International Executive Officers under Section 16 of the Securities and Exchange Act of 1934, as amended. 

        The
current members of the Compensation and Executive Personnel Committee serving as the Plan Administrator are Charles D. Miller (Chair), Luis G. Nogales, James M. Rosser, Robert H.
Smith, Thomas C. Sutton and Daniel M. Tellep. For additional information about the Plan and its administrators, participants may write to Edison International Equity Compensation Plan, 2244 Walnut
Grove Avenue, P.O. Box 800, Rosemead, California 91770; or an oral inquiry may be made to the Director of Compensation and Benefits at (626) 302-5023. 

B-4

 

Securities Offered Through the Plan  

        Shares of Edison International Common Stock, no par value ("Common Stock"), may be issued or transferred pursuant to Awards. To meet the requirements of the Plan,
the Board has authorized the annual issuance of shares equal to one percent of the number of issued and outstanding shares of Common Stock as of December 31 of the prior year. This
authorization is cumulative so that to the extent shares are not needed to meet Plan requirements in any year, the excess authorized shares will carry over to subsequent years until Plan termination.
One percent of the issued and outstanding Common Stock on December 31, 1997, was 3,757,644 shares. If any Award expires, is forfeited, is canceled, or otherwise terminates for any reason (other
than upon exercise or payment), the shares of Common Stock (provided the participant receives no benefit of ownership) or equivalent value that could have been delivered will not be charged against
the foregoing limitations and may again be made subject to Awards. 

        Except
for the adjustments described below, or as otherwise provided in "Amendment and Termination of the Plan" below, Awards of stock options to an individual employee during any
calendar year may not exceed 500,000 shares of Common Stock. Stock grants to a Director during any calendar year may not exceed 2,500 shares of Common Stock, and awards of nonqualified stock options
to a Director during any calendar year may not exceed 12,500 shares. 

        The
number and kind of shares issuable pursuant to the Plan or subject to outstanding Awards, and the price thereof, may be adjusted under certain circumstances including an increase,
decrease or exchange of the outstanding shares of Common Stock, or if additional shares or new or different shares or other securities are distributed with respect to such shares of Common Stock or
other securities, through a merger, consolidation, sale of assets, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distribution with
respect to such shares of Common Stock or other securities. Outstanding Awards may also fully vest and become immediately exercisable under certain circumstances, including a dissolution, liquidation,
reorganization, merger, consolidation or sale of assets, unless provisions are made in connection with such transaction for the continuance of the Plan and the assumption of or the substitution for
such Awards of new awards covering the stock of a successor employer corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices. Any of
the above-described adjustments will be made by the Compensation and Executive Personnel Committee, whose determination as to what adjustments will be made and the extent thereof will be final,
binding and conclusive. (See "Administration of the Plan" below.) Notwithstanding the foregoing, upon a change of control of Edison International following the occurrence of a Distribution Date, as
that term is defined in the Rights Agreement approved by the Board on November 20, 1996, the Awards will vest and will remain exercisable for at least two years following the Distribution Date,
or through the first exercise period occurring at least two years after such date. During that period, (i) the Plan may not be terminated, (ii) Awards may not be cashed out, terminated,
or modified without the participant's consent, and (iii) valuation procedures and exercise periods will occur on a basis consistent with past practice. 

        The
shares of Common Stock to be issued under the Plan will be made available, at the discretion of Edison International, either from authorized but unissued shares of Common Stock or
from previously issued shares of Common Stock reacquired by or on behalf of Edison International, including shares purchased on the open market. The Board has authorized the Edison International Chief
Executive Officer or Chief Financial Officer (or such other person or persons as they may designate) to make this determination. 

Eligibility and Award Determination  

        Executive Officers, Key Management Employees and non-employee Directors are eligible to receive Awards under the Plan. The Administrator may grant any
Award except Stock Grants to 

B-5

 

eligible Executive Officers and Key Management Employees. The Administrator may grant only Nonqualified Stock Options or Stock Grants to Directors. Each Award will be evidenced by a written
instrument specifying the date of grant and may include or incorporate by reference any additional
terms and conditions consistent with the Plan as determined in the discretion of the Administrator. The Administrator may grant any Award permitted under the Plan which is otherwise payable in Common
Stock in the form of a cash equivalent award. 

        The
Administrator has sole discretion under the Plan to determine the type of Awards to be granted, the number of shares of Common Stock or the amount of cash subject to Awards, and the
prices of Awards. The Administrator will allocate a portion of the total number of Awards authorized to be made to Key Management Employees to each Company. The management of each Company will then
have the sole discretion to determine and designate from time-to-time the Key Management Employees to whom Awards will be granted, the times at which the Awards will be granted
and the amount of the individual Awards. The Administrator will determine those Executive Officers who are to be granted Awards, the amount of any Award, and the times at which Awards will be granted.
Director Awards are determined in the discretion of the Board. 

        Each
participant in the Plan will receive an annual statement showing the outstanding Awards made to the participant and other pertinent information. 

 
 

DESCRIPTION OF AWARDS    
  

        The Plan provide for various kinds of Awards to be made to eligible participants in the discretion of the Administrator. These Awards and the tax considerations
relevant to each of them are discussed below. 

Statutory Stock Options  

        The Plan authorizes the Administrator to grant Statutory Stock Options. A Statutory Stock Option (also known as an incentive stock option) is a stock option that
satisfies the requirements of Section 422 of the Code. 

        Statutory
Stock Options under the Plan will be for a term of not more than 10 years after the date the Option is granted. Options become exercisable as they vest in accordance
with the terms determined by the Administrator. The term of an Option is subject to the exceptions discussed under "Termination of Employment" below. 

        An
Statutory Stock Option may be exercised in whole or in part by giving written notice to Edison International. Payment of the exercise price of a Statutory Stock Option must be made in
full at the time of exercise in cash and/or its equivalent, such as Common Stock, acceptable to Edison
International. If payment is made, in whole or part, in shares of Common Stock, the Common Stock will be valued at its fair market value on the exercise date. 

        The
Plan provides that the option price per share of Common Stock will be at least equal to the fair market value of a share of Common Stock on the date of the grant. The option price is
established by the Administrator. There are currently no Statutory Stock Options outstanding under the Plan. 

 Tax Considerations  

        To the extent that the aggregate fair market value of all shares of Common Stock with respect to which Statutory Stock Options are exercisable for the first time
by an individual in any calendar year exceeds $100,000, such Options will not be treated as Statutory Stock Options. This limit does not apply to, or affect the amount of shares subject to,
Nonqualified Stock Options that may be granted to an individual. 

B-6

 

        A
participant will not be treated as receiving taxable income upon the grant of a Statutory Stock Option or upon the exercise of a Statutory Stock Option pursuant to the terms of the
Plan. However, any appreciation in Common Stock value since the date of grant will be an item of tax preference at the time of exercise in determining liability for the alternative minimum tax.
Provided that Common Stock acquired pursuant to a Statutory Stock Option is not sold or otherwise disposed of within two years from the date of grant of the Statutory Stock Option and is held for at
least one year after the date of exercise of the Statutory Stock Option, any gain or loss resulting from such sale or disposition will be treated as long-term capital gain or loss. If
Common Stock acquired upon exercise of a Statutory Stock Option is disposed of prior to the expiration of such holding periods, the optionee will realize ordinary income in the year of such
disposition in an amount equal to the excess of the fair market value of the Common Stock on the date of exercise over the exercise price. Any gain in excess of such ordinary income amount generally
will be taxed at capital gains rates. However, under a special rule, the ordinary income realized upon a disqualifying disposition will not exceed the amount of the optionee's gain upon such
disposition. 

        Common
Stock acquired upon exercise of a Statutory Stock Option following the optionee's death will, under certain circumstances, receive the favorable tax treatment described herein
without regard to the one-year or two-year holding period requirements. 

        In
the event an optionee exercises a Statutory Stock Option using Common Stock acquired by a previous exercise of a Statutory Stock Option, such exchange will be deemed a premature
disposition of
the Common Stock exchanged unless the Common Stock exchange occurs after the required holding periods. 

        Edison
International will not be entitled to any tax deduction as a result of the grant or exercise of a Statutory Stock Option, or on a later disposition of the Common Stock received,
except that in the event of a disqualifying disposition, Edison International will be entitled to a tax deduction equal to the amount of ordinary income realized by the optionee. 

Nonqualified Stock Options  

        The Plan authorizes the Administrator to grant Nonqualified Stock Options. A Nonqualified Stock Option is a stock option that does not qualify as a Statutory
Stock Option under Section 422 of the Code. 

        Nonqualified
Stock Options under the Plan will be for a term of not more than 10 years after the date the Option is granted and become exercisable as they vest in accordance with
the terms determined by the Administrator. The term of the Option is subject to the exceptions discussed under "Termination of Employment" below. 

        A
Nonqualified Stock Option may be exercised in whole or in part by giving written notice to Edison International. Payment of the exercise price of an Nonqualified Stock Option must be
made in full at the time of exercise in cash and/or its equivalent, such as Common Stock, acceptable to Edison International. If payment is made, in whole or part, in shares of Common Stock, the
Common Stock will be valued at its fair market value on the exercise date. To the extent permitted by the terms and conditions of the Award, eligible participants may alternatively exercise a
Nonqualified Stock Option and have the gain that would otherwise be realized upon exercise deferred in the form of stock units under the Edison International Option Gain Deferral Program, subject to
the terms and conditions of that program. See the discussion below entitled "Award Gain Deferrals". 

        The
Plan provides that the option price per share of Common Stock will be at least equal to the fair market value of a share of Common Stock on the date of the grant. The option price is
established by the Administrator. 

B-7

 

 Tax Considerations  

        No taxable income will be realized by a participant upon the grant of a Nonqualified Stock Option. Upon exercise of a Nonqualified Stock Option, the optionee will
realize ordinary income in an amount equal to the excess of the fair market value of the Common Stock on the date of exercise over the option price, and Edison International then will be entitled to a
corresponding tax deduction, provided Edison International deducts and withholds taxes from amounts paid to the optionee. Eligible participants may alternatively exercise a Nonqualified Stock Option
and have the gain that would otherwise be realized and taxable upon exercise deferred in the form of stock units under the Edison International Option Gain Deferral Program, subject to the terms and
conditions of that program. See the discussion below entitled "Award Gain Deferrals". 

        In
the case of a participant subject to Section 16(b) of the Exchange Act (see "Restrictions on Resale" below) who exercises a Nonqualified Stock Option within six months of the
date of grant, the Common Stock received is generally treated as "restricted property" for purposes of Section 83 of the Code. See "Section 83 Tax Considerations" for further information
concerning the tax treatment of restricted property and the rules to be followed in making an election under Section 83(b) of the Code. 

        Upon
a subsequent disposition of Common Stock acquired through exercise of a Nonqualified Stock Option, the participant will realize short-term or long-term
capital gain or loss to the extent of any intervening appreciation or depreciation. However, Edison International will not be entitled to any further tax deduction at that time. 

Dividend Equivalents  

        The Administrator is authorized to grant Dividend Equivalents under the Plan, at no additional cost to the participant, based on the dividends declared on the
Common Stock on ex-dividend dates during the period between the date an Award is granted and the date such award is exercised or paid. Dividend Equivalents will be converted to cash or
additional shares of Common Stock by such formula and at such times as may be determined by the Administrator. However, if the written instrument evidencing any Dividend Equivalent award states that
the Award will be paid in cash, the Award will be paid only in cash. To the extent permitted by the terms and conditions of the Award, eligible participants may alternatively exercise a Dividend
Equivalent and have the gain that would otherwise be realized upon exercise deferred under the Edison International Executive Deferred Compensation Plan, subject to the terms and conditions of that
plan. See the discussion below entitled "Award Gain Deferrals". 

        Dividend
Equivalents will be computed with respect to the number of shares under the Award not issued during the period prior to the ex-dividend date. 

 Tax Considerations  

        A recipient of a Dividend Equivalent will not realize taxable income at the time of grant, and Edison International will not be entitled to a tax deduction at
that time. Instead, the participant will realize ordinary income when the Dividend Equivalent is received. 

        If
a Dividend Equivalent is payable in Common Stock pursuant to its terms, the provisions of Section 16(b) of the Exchange Act may apply to any Common Stock received (see
"Restrictions on Resale" below). All or a portion of the Common Stock received pursuant to a Dividend Equivalent award by a participant subject to Section 16(b) is generally treated as
"restricted property" for purposes of Section 83 of the Code. See "Section 83 Tax Considerations" for further information concerning the tax treatment of restricted property and the
rules to be followed in making an election under Section 83(b). 

B-8

 

        To
the extent permitted by the Award terms and conditions, eligible participants may alternatively exercise a dividend equivalent and have the gain that would otherwise be received in
cash upon exercise deferred under the Edison International Executive Deferred Compensation Plan, subject to the terms and conditions of that plan. See the discussion below entitled "Award Gain
Deferrals". 

        Edison
International will be entitled to a tax deduction in the same amount as and at the time that the participant recognizes the ordinary income. However, to receive that deduction,
Edison International must deduct and withhold taxes from amounts paid to the participant. 

        The
amount included as ordinary income in the participant's taxable income becomes the participant's tax basis for determining gains or losses on the subsequent disposition of the Common
Stock. 

Stock Appreciation Rights  

        The Administrator may award a Stock Appreciation Right ("SAR") under the Plan in conjunction with any Option granted pursuant to the Plan. SARs may also be
granted separate from an Option. An SAR allows the participant to receive a number of shares of Common Stock, or at the election of the Administrator, cash or a combination of cash and shares of
Common Stock, based on the increase in the fair market value of the Option shares subject to the SAR or based on the increase in the fair market value of the shares used to measure the SAR. If an SAR
is issued in connection with an
Option, the exercise of either the Option or the SAR will reduce the shares of Common Stock subject to the remaining SAR or Option. 

        An
SAR granted in connection with an Option entitles the participant to surrender the Option unexercised, or any portion thereof, in exchange for the number of shares of Common Stock
having an aggregate value equal to the excess of the fair market value of one share on the date the SAR is exercised, over the purchase price per share specified in the Option, times the number of
shares called for in the Option, or portion thereof, so surrendered. Upon exercise of an SAR issued independently of an Option, the participant will receive payment in the same manner as described for
an SAR issued pursuant to an Option, unless Fair Market Value is used or if the Administrator specified another measure to be used. 

        SARs
may be subject to any conditions as the Administrator may impose not inconsistent with the Plan, including the limitation that an SAR granted pursuant to an Option will be
exercisable only to the extent the underlying Option is exercisable. 

 Tax Considerations  

        At the time an SAR is received, the participant will not recognize any taxable income. Likewise, Edison International will not be entitled to a tax deduction for
the SAR. Upon the exercise of an SAR, the participant must recognize ordinary income in an amount equal to the cash and the fair market value of the shares received. 

        All
or a portion of any Common Stock received by participants who are subject to Section 16(b) of the Exchange Act (see "Restrictions on Resale" below) upon exercise of an SAR is
generally treated as "restricted property" for purposes of Section 83 of the Code. See "Section 83 Tax Considerations" below for further information concerning the tax treatment of
restricted property and the rules to be followed in making an election under Section 83(b). 

        Edison
International will be entitled to a tax deduction in the same amount as and at the time that the participant recognizes the ordinary income. However, to receive that tax deduction
Edison International must deduct and withhold taxes from amounts paid to the participant. 

B-9

 

        The
amount included as ordinary income in the participant's taxable income becomes the participant's tax basis for determining gains or losses on the subsequent disposition of such
Common Stock. 

Performance Awards  

        The Administrator may approve Performance Awards to eligible participants under the Plan. The Awards may be based on Common Stock performance over a period
determined in advance by the Administrator, on hypothetical stock of a Company or any other measures as determined appropriate by the Administrator. At the end of the award period, payment will be
made in cash unless replaced by payment in full or in part by Common Stock as determined by the Administrator. To the extent permitted by the Award terms and conditions, eligible participants may
alternatively exercise a Performance Award and have the gain that would otherwise be realized upon exercise deferred under the Edison International Executive Deferred Compensation Plan, subject to the
terms and conditions of that plan. See the discussion below entitled "Award Gain Deferrals". 

 Tax Considerations  

        A participant who has been granted a Performance Award will not realize taxable income at the time of grant, and Edison International will not be entitled to a
tax deduction at that time. The participant must recognize ordinary income in an amount equal to the cash and the fair market value of the shares at the time of receipt. Regardless of whether a
Performance Award is paid in cash or Common Stock, the participant will have ordinary income. The measure of such income will be the amount of cash and the fair market value of the Common Stock at the
time the Performance Awards are paid out. To the extent permitted by the Award terms and conditions, eligible participants may alternatively exercise a Performance Award and have the gain that would
otherwise be taxed upon exercise deferred under the Edison International Executive Deferred Compensation Plan, subject to the terms and conditions of that plan. See the discussion below entitled
"Award Gain Deferrals". 

        In
the event all or part of the Performance Award is paid in Common Stock, the provisions of Section 16(b) of the Exchange Act may apply (see "Restrictions on Resale" below). All
or a portion of the Common Stock received by a participant who is subject to Section 16(b) is generally treated as "restricted property" for purposes of Section 83 of the Code. See
"Section 83 Tax Considerations" for further information concerning the tax treatment of restricted property and the rules to be followed in making an election under Section 83(b). 

        Edison
International will be entitled to a tax deduction in the same amount as and at the time that the participant recognizes ordinary income. However, with regard to receipt of Common
Stock, to receive that tax deduction, Edison International must deduct and withhold taxes from amounts paid to the participant. 

        The
amount included as ordinary income in the participant's taxable income with respect to Performance Awards paid in Common Stock becomes the participant's tax basis for determining
gains and losses on the subsequent disposition of such Common Stock. 

Stock Payment  

        The Administrator is authorized under the Plan to structure any award so that it is paid solely in cash, solely in Common Stock, or in a combination of Common
Stock and cash. However, if the written instrument evidencing any Award states that the Award will be paid in cash, the Award will be paid only in cash. 

B-10

 

Section 83 Tax Considerations  

        A recipient of restricted property will recognize ordinary income equal to the fair market value of the Common Stock received pursuant to the Award at the time
the restrictions lapse unless the recipient elects to report the fair market value of the Common Stock as ordinary income at the time awarded pursuant to Section 83(b) of the Code. Edison
International may deduct the amount of income recognized by the recipient at such time as the recipient recognizes the income, provided Edison International withholds tax on the recipient's recognized
income. Common Stock issued to individuals subject to the provisions of Section 16(b) of the Exchange Act will be considered restricted for these purposes and the restrictions of
Section 16 will lapse in accordance with such Section. 

        Section 83(b)
of the Code allows the recipient of restricted property, including a recipient of Common Stock subject solely to the restrictions of Section 16(b) of the
Exchange Act (see "Restrictions on Resale" below), to report the fair market value of the Common Stock as ordinary income at the time of receipt. Such an election is made by filing a written notice
with the Internal Revenue Service office with which the recipient files his Federal income tax return. A copy of the election must also be filed with Edison International. The notice must be filed
within 30 days of receipt of the Common Stock and must meet certain Internal Revenue Service technical requirements. 

        The
tax treatment of the disposition of restricted property will depend upon whether the recipient has made an election to include the value of the Common Stock in income when received.
If the recipient makes such an election, any disposition thereafter will result in a long-term or short-term capital gain depending upon the period the restricted property is
held. If no election is made, the disposition prior to the lapse of the restrictions will result in ordinary income to the recipient equal to the amount received on disposition. Edison International
may deduct such amount if it withholds the necessary tax. 

 
 

AWARD GAIN DEFERRALS    
  

        Award gains of some participants may be deferred under the Edison International Award Gain Deferral Program (the "Program"). The Program consists of the Option
Gain Deferral Plan (the "OGDP") for deferral of Edison International stock option gains and the Award deferral provisions of the Edison International Executive Deferred Compensation Plan (the "EDCP")
for deferral of Award gains payable in cash. The individuals eligible to defer Award gains are those employees who hold qualifying Awards and who are otherwise currently eligible to defer salary or
bonus under the EDCP. Retired or terminated employees are not eligible to defer Award gains under the Program. 

        A
Supplemental Prospectus provides a detailed summary of the Award gain deferral provisions under the Program. Each eligible person is advised to read the Supplemental Prospectus, the
OGDP and EDCP plan documents, the applicable provisions of the Equity Compensation Plan, and the applicable OGDP and EDCP agreements. 

        An
election to defer Award gains significantly limits the Award exercise flexibility. Elections are irrevocable. Participants electing to defer Award gains incur certain tax and other
risks, otherwise not normally associated with the Awards. Eligible Persons are advised to seek such tax and financial counsel as he or she deems appropriate before electing to defer Award gains. 

 
 

ADMINISTRATION OF THE PLAN    
  

        The Administrator has the sole authority for the Plan to determine the type of Awards to be granted, the number of shares of Common Stock to be awarded, the
objectives, goals and performance criteria utilized to measure the value of Awards, the form of payment (cash or Common Stock or a combination thereof) payable upon the event or events giving rise to
payment of an Award, the vesting schedule of any Award, the term of any Award, and such other terms and conditions as the 

B-11

 

Administrator may determine. The Administrator will allocate a portion of the total number of Awards authorized to each Company for Key Management Employee Awards. The management of each Company will
then have the sole discretion to determine and designate from time-to-time the management employees to whom Awards will be granted, the times at which the Awards will be
granted and the amount of the individual Awards. The Administrator will determine the Edison International Executive Officers who are to be granted Awards, the amount of any Award, and the times at
which Awards will be granted. The Board will determine the terms and conditions of Director awards. The Administrator will interpret the Plan, determine the terms and provisions of Award agreements
and make all determinations necessary or advisable for the administration of the Plan. Actions of the Administrator with respect to the administration of the Plan are taken pursuant to a majority vote
or by the unanimous written consent of its members; and all interpretations, determinations and actions by the Administrator are final, conclusive and binding upon all parties. The Administrator may
delegate to one or more agents nondiscretionary duties. 

 
 

TERMINATION OF EMPLOYMENT    
  

        The Administrator will provide in the Award terms and conditions the extent to which termination of employment or termination of service as a Director will
shorten the period for exercising an Award. 

        In
the event a holder of an Award ceases to be an employee, the individual must have been a participant for the entire period to which the Award applies in order to be eligible for the
full amount of any such Award. Pro-rata awards may be distributed to participants who are discharged or who terminate their employment for reasons other than incompetence, misconduct or
fraud, or who retired or became disabled during the incentive period, or who were participants for less than the full incentive period. A pro-rata award may be made to a participant's
designated beneficiary in the event of death of a participant during an incentive period prior to an award being made. 

        The
Administrator may in its sole discretion determine with respect to an Award that any holder who is on a leave of absence for any reason will be considered as still an employee,
provided that rights to such Award during an unpaid leave of absence will be limited to the extent to which such right was earned or vested at the commencement of such leave of absence. 

        The
Administrator may vary the Plan provisions with respect to the impact of employment termination on Awards at the time of grant, or on a case-by-case basis
thereafter, as it deems appropriate and in the best interests of Edison International. Among other things, the Administrator may accelerate vesting or extend the exercise periods to as long as the
maximum term provided in the original Award agreement. 

        Nothing
in the Plan or in any instrument executed pursuant to the Plan will confer upon any employee any right to continue in the employ of the Companies or affect any right of the
Companies to terminate the employment of any employee at any time with or without cause. 

 
 

AMENDMENT AND TERMINATION OF THE PLAN    
  

        The Board will have the power, in its discretion, to amend, suspend or terminate the Plan at any time it determines it is in the best interests of Edison
International to do so, subject to the provisions described above in the third paragraph under "Description of the Plan—Securities Offered Through the Plan." Subject to those provisions,
no amendment may be adopted without the approval of the shareholders of Edison International to the extent required by law or the rules of any exchange on which the Common Stock is listed, that would
materially increase the number of securities which may be issued under the Plan, the maximum individual award or the duration of the Plan. Unless previously terminated by the Board, no Awards will be
issued after December 31, 2007. 

B-12

 

        No
amendment, suspension or termination of the Plan will, without the consent of the Holder, alter, terminate, impair or adversely affect any right or obligation under any Award
previously granted under the Plan. The Administrator may, with the consent of the Holder, make such modifications in the terms and conditions of any Award as it deems advisable or cancel the Award
(with or without consideration). 

 
 

RESTRICTIONS ON RESALE    
  

        Participants in the Plan who are deemed to be "affiliates" of Edison International, as that term is defined in the rules and regulations under the Securities Act
of 1933 (the "Securities Act"), may not offer or sell the shares of Common Stock they acquire under the Plan unless the offers and sales are made pursuant to an effective registration statement and
prospectus under the Securities Act or pursuant to an appropriate exemption from the registration requirements of the Securities Act, such as that provided by Rule 144 thereunder. Participants
in the Plan who are subject to Section 16 of the Exchange Act will be required to report to the Securities and Exchange Commission (the "Commission") on prescribed forms any acquisitions or
dispositions of Common Stock and "derivative securities" (as that term is defined in the rules and regulations under the Exchange Act), which may include any Award, and may also be held liable to give
up any profits made on any purchases and sales of Common Stock or derivative securities occurring within any six-month period, unless an exemption is determined to be available.
Participants are urged to consult with legal counsel regarding the applicability of the Securities Act and the Exchange Act to their particular circumstances, as well as for further information
regarding the tax considerations relevant to the Awards. 

        No
Award and no right under the Plan, contingent or otherwise, will be assignable or subject to any encumbrance, pledge, or charge of any nature or otherwise transferable (meaning, among
other things, that such Award or right is exercisable during the Holder's lifetime only by him or her or by his or her guardian or legal representative) except that, under such rules and regulations
as may be established pursuant to the terms of the Plan, a beneficiary may be designated with respect to an Award in the event of death of a Holder of the Award, and Awards may be transferred pursuant
to a domestic relations order. In addition, the Administrator may, to the extent permitted by applicable law, permit a Holder to assign the rights to exercise Awards to immediate family members or to
a trust, limited liability corporation, family limited partnership or other equivalent vehicle for their exclusive benefit, subject to applicable provisions of the Code as specified in the Plan and
any other conditions the Administrator may impose. 

        No
shares of Common Stock will be issued or transferred pursuant to an Award unless and until all then-applicable requirements imposed by federal and state securities and
other laws, rules and regulations, by any regulatory agencies having jurisdiction and by any stock exchanges upon which the Common Stock may be listed, have been fully met. As a condition precedent to
the issue of shares
pursuant to the grant or exercise of an Award, a Holder may be required to take any reasonable action to meet such requirements. 

 
 

OTHER TERMS AND CONDITIONS    
  

        The Plan permits granting Awards that are transferable by the participant during his or her lifetime to the participant's spouse, children or grandchildren, or to
a trust or other vehicle established for their benefit. Statutory stock options may be transferred only if permitted at that time under the Code. In addition, notwithstanding the term of an Award, the
Compensation and Executive Personnel Committee may approve delayed payment or delivery of cash or shares otherwise payable to a participant under the Plan. No fractional shares will be issued under
the Plan. Cash will be paid for any fractional share payable. 

B-13

 

 
 

ADDITIONAL MATTERS    
  

        Edison International has filed with the Commission a registration statement incorporating by reference certain documents, including Edison International's latest
annual report and all other reports since the end of the fiscal year covered by such annual report, which have been filed by Edison International pursuant to Sections 13(a) or 15(d) of the Exchange
Act. Such annual and other reports are also incorporated by reference in this Prospectus. Such documents, and any other documents required to be delivered by Edison International pursuant to
Rule 428(b) under the Securities Act, are available without charge upon written or oral request to Manager of Investor Relations, 2244 Walnut Grove Avenue, P.O. Box 800, Rosemead,
California 91770; telephone number (626) 302-2515. 

        The
summaries herein of the Plan do not purport to be complete, and reference is made to the Plan for a full and complete statement of the terms and provisions thereof. 

B-14

  

 
 

ATTACHMENT C    
    
    FORM OF SEU AWARD CERTIFICATE /
  STATEMENT OF TERMS AND CONDITIONS    
  

C-1

  

 
 

EDISON INTERNATIONAL EQUITY COMPENSATION PLAN
  STOCK EQUIVALENT UNIT AWARD CERTIFICATE    
  

        This award is made by Edison International to
                         as of
                        , 2000, pursuant to
the Affiliate Option Exchange Offer. Edison International hereby grants to                         , as a matter of
separate agreement and not in lieu of salary or any other
compensation for services, the right to                          Edison International Stock Equivalent Units. 

        This
award is made subject to the conditions contained in the Edison International Equity Compensation Plan and the Edison International Equity Compensation Plan Stock Equivalent Unit
Award Agreement, the terms of which are incorporated herein by reference. 

	 	 	EDISON INTERNATIONAL
	

 	
 	

    
 John H. Kelly, Senior Vice President

C-2

  

 
 

EDISON INTERNATIONAL EQUITY COMPENSATION PLAN    
    
    Statement of Terms and Conditions of Stock Equivalent Unit Awards
  Granted under the Affiliate Option Exchange Offer    
  

        1.    Summary.    

        Under
the terms of the Exchange Offer Circulars, holders of Affiliate Options of Edison Mission Energy and Edison Capital may elect to exchange their Affiliate Options for cash and Stock
Equivalent Units, granted under the Edison International Equity Compensation Plan. Each Stock Equivalent Unit is a non-voting unit of measurement that is deemed for bookkeeping purposes to
be equivalent to one outstanding share of Edison International common stock. When a Stock Equivalent Unit becomes payable, the holder of such Stock Equivalent Unit will be paid a cash amount
determined with reference to the then fair market value of a share of Edison International common stock. Stock Equivalent Units granted under the Affiliate Option Exchange Offer are subject to the
following terms and conditions. 

        2.    Definitions.    

        Whenever
the following words or phrases are used in this Statement of Terms and Conditions with the first letter capitalized, they shall have the meanings specified below: 

        Account means the account established for each Holder for bookkeeping purposes to which SEUs are credited in accordance with
Section 4. 

        Administrator means the Administrator of the ECP as determined under Article 3 of the ECP. 

        Affiliate means EIX or any corporation or entity which, along with EIX, is a component member of a "controlled group of corporations"
within the meaning of Section 414(b) of the Code. 

        Affiliate Option means an Edison Mission Energy or Edison Capital affiliate option performance award granted to an individual pursuant to
the terms of the EIX Officer Long-Term Incentive Compensation Plan, the EIX Management Long-Term Incentive Compensation Plan or the ECP. 

        Affiliate Option Exchange Offer or Exchange Offer means the offers by EIX, Edison Mission
Energy and Edison Capital which expire on August 7, 2000, to exchange all outstanding Affiliate Options for cash and SEUs under the terms and conditions of the Exchange Offer Circulars. 

        Beneficiary means the person or persons, or entity, entitled in accordance with Section 10 to receive all or a portion of a
Holder's SEU benefits upon the Holder's death. 

        Change in Control means any event that triggers a "Distribution Date" as set forth under the Rights Agreement approved by the EIX Board of
Directors on November 20, 1996, as amended on September 16, 1999. 

        Code means the Internal Revenue Code of 1986, as amended from time to time. 

        DCP means the EIX Affiliate Option Deferred Compensation Plan, as amended from time to time. 

        DCP Conversion Election means a Holder's written election, filed on a form and in a manner prescribed by the Administrator of the DCP for
this purpose, to convert all of the Holder's vested SEUs into a dollar credit to the Holder's DCP Deferral Account in accordance with the terms and conditions of the DCP. 

        DCP Deferral Account means the notional account for each participant in the DCP established for recordkeeping purposes to which amounts
deferred under the DCP, denominated in cash, and interest thereon, are allocated. 

C-3

 

        ECP means the EIX Equity Compensation Plan, as amended from time to time. 

        EIX means Edison International or any successor corporation. 

        Exchange Date means the date the Affiliate Option Exchange Offer becomes effective and Affiliate Options are exchanged for cash and SEUs. 

        Exchange Offer Circular means either the document describing the offer to exchange Edison Mission Energy Affiliate Options, dated
July 3, 2000, or the document describing the offer to exchange Edison Capital Affiliate Options, dated July 3, 2000. 

        Holder means any individual who has accepted the Affiliate Option Exchange Offer and received a grant of SEUs in accordance with the terms
of the Exchange Offer. 

        120% 10-Year Rate means an annual interest rate effective for a calendar year equivalent to 120% of the 120-month
average annual rate of 10-year U.S. Treasury Notes determined as of October 15 of the preceding year. 

        Payment Election means a Holder's written election, on a form prescribed by the Administrator for this purpose, specifying when the Holder
wishes to receive payment with respect to the vested SEUs in such Holder's Account. 

        Retirement means a Holder's termination of employment with the Affiliate after attainment of age 55 and after completion of at least five
years of service with the Affiliate, as determined by the Administrator. 

        Scheduled Withdrawal means a distribution of all or a portion of a Holder's vested DCP Account as elected by the Holder in accordance with
Section 9.1 of the DCP. 

        SEU means a Stock Equivalent Unit granted to an individual as a result of the individual's acceptance of the Affiliate Option Exchange
Offer. 

        Stock Equivalent Unit means a non-voting unit of measurement that is deemed for bookkeeping purposes to be equivalent to one
outstanding share of EIX common stock. 

        Total Disability means the permanent and total disability of a Holder as determined by the Benefits Committee of EIX, in its discretion. 

        3.    Grant.    

        The
number of SEUs granted to each Holder shall be determined under the terms of the Exchange Offer. 

        4.    Accounts.    

        EIX
will maintain an SEU bookkeeping account for each Holder. SEUs granted to a Holder in exchange for Affiliate Options under the terms of the Exchange Offer will be credited to the
Holder's Account as of the Exchange Date. Additional SEUs will be credited to a Holder's Account as dividend equivalents in accordance with Section 6. The Administrator may subdivide a Holder's
Account into separate sub-accounts to keep track of the portions of the Holder's Account balance that are subject to different vesting schedules. 

        5.    Vesting and Termination of SEUs.    

        (a)    General.    SEUs granted with respect to Affiliate Options that have become fully vested prior to the Exchange
Date shall be vested on the Exchange Date. SEUs granted with respect to any Affiliate Option that has not become fully vested on the Exchange Date shall be vested on the Exchange Date in the same
proportion as the underlying Affiliate Option and the remainder of such SEUs shall be subject to the same vesting schedule as the underlying Affiliate Option. 

C-4

 

        (b)    Certain Terminations of Employment Prior to Full Vesting.    If a Holder's employment by the Affiliate
terminates on account of the Holder's Retirement, death, or following his or her Total Disability but prior to vesting of all of the Holder's SEUs, the Holder will become vested in an additional
portion of the SEUs granted with respect to each Affiliate Option so that the aggregate percentage of such SEUs in which the Holder is vested shall equal X%, where X is obtained by dividing
(i) the completed months that have elapsed between the date the underlying Affiliate Option was granted and the date of the
termination of the Holder's employment with the Affiliate, by (ii) 48. Unvested SEUs will terminate (without payment and to the extent that they do not become vested in accordance with the
preceding provisions of this Section 5(b)) on the date that the Holder's employment by the Affiliate terminates. 

        (c)    Change in Control.    Holders shall be 100% vested in the SEUs credited to their Accounts upon a Change in
Control. 

        (d)    Termination of SEUs Upon Payment or Conversion.    An SEU will terminate upon the payment of that SEU, or the
conversion of that SEU to a dollar credit to the Holder's account under the DCP, in accordance with the terms hereof, and the Holder shall have no further rights with respect to such SEU. 

        6.    Dividend Equivalents.    

        SEUs
shall accrue dividend equivalents as EIX declares dividends on its common stock. The Administrator shall credit dividend equivalents to a Holder's Account in the form of additional
SEUs on the ex-dividend date in accordance with the following formula: the number of SEUs granted to a Holder as dividend equivalents will equal (a) the amount of the dividend
declared by EIX on a share of its common stock multiplied by the number of SEUs credited to the Holder's Account on the ex-dividend date (before the crediting of additional SEUs as
dividend equivalents), divided by (b) the average of the high and low prices of a share of EIX common stock on the New York Stock Exchange on the ex-dividend date. SEUs credited to
each Holder as dividend equivalents are subject to the same vesting schedule as the related SEUs credited to the Holder's Account. 

        7.    Other Adjustments.    

        If
the outstanding shares of EIX common stock are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or
different shares or other securities are distributed with respect to such shares of EIX common stock or other securities, through merger, consolidation, sale of all or substantially all of the
property of EIX, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distribution with respect to such shares of EIX common stock or other
securities, the number of SEUs credited to each Holder's Account may be adjusted in accordance with the terms of the ECP. 

        8.    Payment and Conversion Elections.    

        (a)    General.    Unless a Holder makes a deferral election under the DCP, an SEU Payment Election must be filed with
the Administrator, in the manner prescribed by the Administrator, no later than August 7,
2000. A Holder's SEU Payment Election is irrevocable once it is filed. Except as otherwise provided in Sections 10 and 11, if a Holder does not make a valid SEU Payment Election and does not make a
deferral election under the DCP, the Holder will receive a payment with respect to his or her vested SEUs as soon as administratively practicable after the third anniversary of the Exchange Date.
Payment of the value of each vested SEU shall be made in an amount determined in accordance with Section 9(a). 

        (b)    Holders Who Are Not DCP Participants.    Except as otherwise provided in Section 10 and 11, each Holder
who is ineligible to participate in the DCP, or who elects not to defer payment of his or her SEUs under the DCP, may elect to receive payment of the value of his or her SEUs as soon as 

C-5

 

administratively practicable after: (i) the third anniversary of the Exchange Date, or (ii) the first anniversary of the Exchange Date with respect to the SEUs that are vested as of
such date and the scheduled vesting date with respect to the remaining SEUs. Payment of the value of each vested SEU shall be made in an amount determined in accordance with Section 9(a). 

        (c)    Holders Who Are DCP Participants and Who Elect to Defer Payment of Their SEUs.    

          (i)  General. A Holder who elects to defer payment of his or her SEUs under the DCP will receive payment of his or her DCP
Deferral Accounts (including the amounts credited thereto in respect of his or her SEUs) in the manner specified in his or her DCP Participation Election and/or under the terms of the DCP. 

        (ii)  Conversion Elections. A Holder who elects to defer the payment of his or her SEUs may file a DCP Conversion
Election, to convert all of the vested SEUs then credited to his or her Account into their monetary equivalent as a credit to the Holder's DCP Deferral Account. Such an election may be made at any
time (A) after the first anniversary of the Exchange Date, and (B) before the earlier of the third anniversary of the Exchange Date or the date the Holder terminates employment with the
Affiliate. In such event, the dollar amount to be credited to the Holder's DCP Deferral Account in respect of each converted SEU shall be determined in accordance with Section 9(c). A Holder
may make additional elections under this Section 8(c)(ii) as additional SEUs become vested. 

        (iii)  Automatic Conversions Upon Termination of Employment Prior to Third Anniversary. In the event that a Holder's
employment with the Affiliate terminates prior to the third anniversary of the Exchange Date, all of the vested SEUs remaining credited to such Holder's Account shall automatically convert into their
monetary equivalent as a credit to the Holder's DCP Deferral Account as of the later of the first anniversary of the Exchange Date or the date the Holder's employment with the Affiliate terminates.
The dollar amount to be credited to the Holder's DCP Deferral Account in respect of each converted SEU shall be determined in accordance with Section 9(d). 

        (iv)  Automatic Conversions Upon Third Anniversary. Any vested SEUs remaining credited to a Holder's Account as of the third
anniversary of the Exchange Date shall automatically convert into their monetary equivalent as a credit to such Holder's DCP Deferral Account as of that date. The dollar amount to be credited to the
Holder's DCP Deferral Account in respect of each converted SEU shall be determined in accordance with Section 9(e). 

        (v)  DCP Scheduled Withdrawal Conversions. If a Holder elects both a Scheduled Withdrawal under the DCP and the deferral of
his or her SEU payments, and at the time such DCP Scheduled Withdrawal payment is to be made, the Holder's vested balance in his or her DCP Deferral Account is not sufficient to satisfy the entire
amount of the Scheduled Withdrawal that the Holder elected, then any vested SEUs then credited to the Holder's Account shall automatically be converted into their monetary equivalent as a credit to
the Holder's DCP Deferral Account to the extent necessary to allow the Affiliate to pay the amount that the Holder elected to receive as a Scheduled Withdrawal. In such event, the dollar amount to be
credited to the Holder's DCP Deferral Account in respect of each converted SEU shall be determined in accordance with Section 9(f). 

        9.    Valuation.    

        Each
SEU represents the right to receive a payment determined with respect to the fair market value of a share of EIX common stock on or about the date of payment. A Holder's benefit
with respect to each SEU credited to his or her Account shall be calculated in accordance with clause (a), (b), (c), (d), (e) or (f) below, as applicable. 

C-6

 

        (a)    Fixed or Vesting Date Payment.    If the SEU payment is triggered by a fixed payment date or a vesting date
(that is, the first or third anniversary of the Exchange Date or the scheduled vesting date of the underlying Affiliate Option), the payment amount with respect to such SEU will equal (i) the
sum of the daily average of the high and low trading prices of a share of EIX common stock on the New York Stock Exchange for each of the 20 trading days preceding the payment trigger date, divided by
(ii) 20. 

        (b)    Termination of Employment Payment.    If the SEU payment is triggered by the termination of the Holder's
employment pursuant to Section 10 after the first anniversary of the Exchange Date, the payment amount with respect to such SEU will equal the average of the high and low prices of a share of
EIX common stock on the New York Stock Exchange on the date of such termination, or if that day is not a trading day, the immediately preceding trading day. If the SEU payment is triggered by the
termination of the Holder's employment pursuant to Section 10 prior to the first anniversary of the Exchange Date, the payment amount shall be determined as of the first anniversary of the
Exchange Date as described in Section 9(a). 

        (c)    DCP Deferral—Elective Conversion.    If the SEU conversion is triggered by the Holder's DCP
Conversion Election pursuant to Section 8(c)(ii), then the conversion amount with respect to that SEU will equal the closing price of a share of EIX common stock on the New York Stock Exchange
on the date that the Affiliate receives the Holder's DCP Conversion Election or, if that day is not a trading day, the immediately preceding trading day. 

        (d)    DCP Deferral—Automatic Conversion Upon Termination of Employment.    If the SEU conversion is
triggered by the termination of the Holder's employment on or after the first anniversary of the Exchange Date but before the third anniversary of the Exchange Date, then the conversion amount with
respect to that SEU will equal the closing price of a share of EIX common stock on the New York Stock Exchange on the date the Holder's employment terminates. If the SEU conversion is triggered by the
termination of Holder's employment pursuant to Section 10 prior to the first anniversary of the Exchange Date, the conversion amount with respect to that SEU will equal (i) the sum of
the daily average of the high and low trading prices of a share of EIX common stock on the New York Stock Exchange for each of the 20 trading days preceding the first anniversary of the Exchange Date,
divided by (ii) 20. 

        (e)    DCP Deferral—Automatic Conversion on the Third Anniversary of the Exchange Date.    If the SEU
conversion is triggered by the third anniversary of the Exchange Date, the conversion amount with respect to that SEU will equal the (i) the sum of the daily average of the high and low trading
prices of a share of EIX common stock on the New York Stock Exchange for each of the 20 trading days preceding the conversion trigger date, divided by (ii) 20. 

        (f)    DCP Deferral—Automatic Conversion Pursuant to a Scheduled Withdrawal.    If the SEU conversion is
triggered by the Holder's DCP Scheduled Withdrawal election pursuant to Section 8(c)(iv), then the conversion amount with respect to that SEU will equal the closing price of a share of EIX
common stock on the New York Stock Exchange on the last trading day before the Scheduled Withdrawal date. 

        10.    Payment upon Termination; Beneficiaries.    

        (a)    Payment.    Upon the termination of employment for any reason, including death or following a Total Disability,
of a Holder who was ineligible to participate in the DCP or who elected not to defer payment of his or her SEUs under the DCP, the vested SEUs credited to the Holder's Account will become payable to
the Holder or, in the case of death, the Holder's Beneficiary. Payment of each vested SEU will be made in a single lump sum as soon as administratively practicable after the later of the first
anniversary of the Exchange Date or the Holder's termination of employment in an amount determined under Section 9(a) or (b), as applicable. 

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        (b)    Beneficiaries.    Each Holder will have the right, at any time, to designate any person or persons as
Beneficiaries (both primary and contingent) to whom payment with respect to the SEUs credited to such Holder's Account will be made in the event of the Holder's death. The Beneficiary designation will
be effective when it is received in writing by the Administrator during the Holder's lifetime on a form prescribed by the Administrator. 

        The
receipt of a new valid Beneficiary designation by the Administrator will cancel all prior Beneficiary designations. Any finalized divorce or marriage of a Holder subsequent to the
date of a Beneficiary designation will revoke such designation, unless in the case of divorce the previous spouse was not designated as Beneficiary, and unless in the case of marriage the Holder's new
spouse previously was designated as Beneficiary. The spouse of a married Holder must consent in writing to any designation of a Beneficiary other than the spouse. 

        If
a Holder fails to validly designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new
designation, or if every person designated as Beneficiary predeceases the Holder or dies prior to the complete distribution of the Holder's SEU benefits, then the Administrator will direct the payment
of the Holder's remaining benefits to the Holder's surviving spouse, or if there is no surviving spouse, to the Holder's estate. If a Beneficiary dies after commencement of payment of the Holder's
benefits to such Beneficiary, a lump sum of any remaining payments will be paid to such Beneficiary's beneficiary, if one has been designated, or to such Beneficiary's estate. 

        11.    Deferral of Payment.    

        If
the ECP Administrator determines that EIX's ability to take a tax deduction for payments made with respect to one or more SEUs is, or reasonably could be, limited by Code
Section 162(m), EIX may elect to defer such payment(s) until a year in which the ECP Administrator determines that EIX's tax deduction for such payment(s) is not, or is reasonably not expected
to be, limited by Code Section 162(m). During any such period of deferral, unpaid SEUs will continue to earn dividend equivalents and be subject to changes in the fair market value of EIX
common stock until they are paid; provided, however, that as of the third anniversary of the Exchange Date, any such deferred SEUs shall be converted into their monetary equivalent using the valuation
method described in Section 9(a) and such monetary amount shall earn interest at an annual rate equal to the 120% 10-Year Rate, as in effect from time to time, until paid. 

        12.    Transfer.    

        SEU
awards may not be alienated, assigned, transferred, pledged or hypothecated by the Holder to any person or entity at any time in any manner whatsoever. During the lifetime of the
Holder, SEU awards may only be exercised by the Holder. Notwithstanding the foregoing, upon the divorce of a Holder, SEU awards may be transferred to the Holder's former spouse pursuant to a domestic
relations order issued by a court of competent jurisdiction. 

        13.    Shareholder Rights.    

        Holders
have no rights as shareholders of EIX with respect to the SEUs credited to their Accounts or this Statement of Terms and Conditions, including, but not limited to:
(a) voting rights, (b) dividend rights (other than dividend equivalent rights set forth in Section 6), (c) the right to participate in or affect the management, control or
fundamental changes in the business or existence of EIX, and (d) the right to participate in or affect the issuance of additional securities by EIX. 

        14.    Claims Procedure.    

        (a)    Initial Claim.    If a Holder believes that he or she is being denied an SEU benefit to which he or she is
entitled, such Holder should file a written request with the Administrator setting forth the basis of his or her claim. The Administrator will notify the Holder in writing of its decision with
respect 

C-8

 

to such Holder's claim, within 90 days after the claim is received by the Administrator. If the claim is denied, the Administrator's notice will set forth: (i) the specific reasons for
the denial, (ii) a specific reference to the provisions of the ECP or this Statement of Terms and Conditions on which the denial is based, (iii) a description of any additional
information or material necessary for the Holder to perfect his or her claim and a description of why it is needed, and (iv) an explanation of the claims review procedures set forth in this
Statement of Terms and Conditions and other appropriate information as to the steps to be taken if the Holder wishes to have the claim denial reviewed. If the Administrator determines that there are
special circumstances requiring additional time to make a decision, the Administrator will notify the Holder of the special circumstances and the date by which a decision is expected to be made, and
may extend the time for up to an additional 90-day period. 

        (b)    Review of Claim Denial.    If a Holder's claim for SEU benefits is denied or if the Holder believes that he or
she is entitled to greater or different SEU benefits, the Holder will have the opportunity to have the claim denial reviewed by the Administrator by filing a petition for review with the Administrator
within 60 days after receipt of the claim denial notice issued by the Administrator. Said petition will state the specific reasons which the Holder believes entitle him or her to SEU benefits
or to greater or different SEU benefits. Within 60 days after receipt by the Administrator of the petition, the Administrator will afford the Holder (and counsel, if any) an opportunity to
present his or her position to the Administrator orally or in writing, and the Holder (or counsel) will have the right to review any pertinent documents. The Administrator will notify the Holder of
its decision in writing within the 60-day period, stating specifically the basis for its decision, written in a manner calculated to be understood by the Holder and the specific provisions
of the ECP or this Statement of Terms and Conditions on which the decision is based. If, because of special circumstances, the 60-day period is insufficient, the decision may be deferred
for up to another 60-day period at the election of the Administrator and notice of this deferral will be given to the Holder. In the event of the death of the Holder, the same procedures
will apply to the Holder's Beneficiaries. 

        15.    Dispute Arbitration.    

        If
a Holder or Beneficiary is dissatisfied with the Administrator's decision on review, the matter shall be resolved through final and binding arbitration in Los Angeles, California,
pursuant to California Civil Procedure Code Sections 1282-1284.2 (excluding Sections 1283 and 1283.05). The arbitration shall be before a single neutral arbitrator mutually agreed
upon by the parties. In the event that the parties are unable to agree upon an arbitrator, the arbitrator shall be selected pursuant to California Civil Procedure Code Section 1281.6. If a
Holder or Beneficiary does not submit a request for arbitration within 30 days of receipt of the Administrator's written decision on review, the Holder or Beneficiary will be bound by the
Administrator's determination on review and may not thereafter be entitled to a review of the Administrator's determination by an arbitrator or a court. 

        16.    Employment Rights.    

        Nothing
in the award certificate or this Statement of Terms and Conditions, nor the existence of SEUs credited to a Holder's Account, shall confer upon any Holder any right to continue
in the employ of the Affiliate, constitute any contract or agreement of employment or affect any Holder's status as an employee at will, nor shall interfere in any way with the right of the Affiliate
to change any Holder's compensation or other benefits, or to terminate any Holder's employment with or without cause. Nothing in this Section 16, however, is intended to adversely affect any
express independent right of such person under a separate employment contract. 

        Amounts
payable in respect of the SEUs will be payable from the general assets of EIX and no special or separate reserve, fund or deposit will be made to assure payment of such amounts.
No Holder, Beneficiary or other person will have any right, title or interest in any fund or in any specific asset of EIX by reason of any SEU or this Statement of Terms and Conditions. Neither the
provisions of this Statement of Terms and Conditions (or of any related documents), nor the creation or adoption 

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of the ECP, nor any action taken pursuant to the provisions of the ECP or this Statement of Terms and Conditions will create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Affiliate and any Holder, Beneficiary or other person. To the extent that a Holder, Beneficiary or other person acquires a right to receive payment pursuant to any SEU, such
right will be no greater than the right of any unsecured general creditor of EIX. 

        17.    Tax Withholding.    

        The
Administrator may reduce the amount of any payments under this Statement of Terms and Conditions by the amount of any federal, state or local income tax withholding requirements and
Social Security, Medicare or other employee tax requirements applicable to the payment. To the extent the
Administrator can not or does not satisfy such withholding obligations in that manner, Holders and Beneficiaries will make appropriate arrangements, as a condition to receipt of the payment, with the
Administrator for satisfaction of any such withholding obligation. 

        18.    Continued Service.    

        The
vesting schedule applicable to unvested SEUs requires continued service through each applicable vesting date as a condition to the vesting of the applicable installment of the SEUs
and the rights and benefits under this Statement of Terms and Conditions. Partial service, even if substantial, during any vesting period will not entitle a Holder to any proportionate vesting or
avoid or mitigate a termination of rights and benefits upon or following a termination of employment as provided in Section 5, except as otherwise expressly provided in Section 5(b) or
5(c). 

        19.    Captions.    

        The
captions of the sections of this Statement of Terms and Conditions are for convenience only and will not control or affect the meaning or construction of any of its provisions. 

        20.    Validity.    

        If
any provision of this Statement of Terms and Conditions is held invalid, void or unenforceable, the same will not affect, in any respect whatsoever, the validity of any other
provisions of this Statement of Terms and Conditions. 

        21.    Applicable Law.    

        The
terms and conditions of the SEUs will be governed and construed in accordance with the laws of California. 

        22.    Expenses.    

        Expenses
and fees incurred in connection with administering SEU awards shall be paid by EIX. The Administrator is authorized to employ such legal counsel and consultants as it may deem
advisable to assist in the performance of its administrative duties. 

        23.    Notice.    

        Any
notice or filing required or permitted to be given to EIX will be sufficient if made in writing and hand-delivered, or sent by first class mail to the following address: 

        Corporate
Secretary, Edison International 

        2244
Walnut Grove Avenue, P.O. Box 800 

        Rosemead,
CA 91170 

        The
notice will be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark. 

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        24.    Coordination with the ECP.    

        All
SEUs are granted under, and are subject to the terms of, the ECP. Accordingly, at the discretion of the ECP Administrator, any issues related to SEUs that are not addressed in this
Statement of Terms and Conditions, shall be resolved by reference to the documents and/or rules governing the ECP, including, but not limited to, the amendment, termination and administrative
provisions of the ECP which are incorporated by reference herein. The ECP shall control in the event of any conflict between the ECP and this Statement of Terms and Conditions. 

        25.    Amendment.    

        This
Statement of Terms and Conditions may be amended in accordance with the terms of the ECP. Any such amendment must be in writing and signed by EIX. The terms and conditions of SEUs
may not be restricted or limited by any amendment of this Statement of Terms and Conditions or the ECP without the Holder's consent. EIX may, however, unilaterally waive any provision hereof in
writing to the extent such waiver does not adversely affect the interests of any Holder hereunder, but no such
waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. 

	

[John H. Kelly]
 John H. Kelly, Senior Vice President	
 	

 

C-11

QuickLinks

TABLE OF CONTENTS

SUMMARY

RISK FACTORS

QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER

ADDITIONAL INFORMATION; INCORPORATION OF DOCUMENTS BY REFERENCE

ATTACHMENT A INDEX OF DEFINED TERMS

ATTACHMENT B PROSPECTUS FOR EIX EQUITY COMPENSATION PLAN

PROSPECTUS

TABLE OF CONTENTS

DESCRIPTION OF THE PLAN

DESCRIPTION OF AWARDS

AWARD GAIN DEFERRALS

ADMINISTRATION OF THE PLAN

TERMINATION OF EMPLOYMENT

AMENDMENT AND TERMINATION OF THE PLAN

RESTRICTIONS ON RESALE

OTHER TERMS AND CONDITIONS

ADDITIONAL MATTERS

ATTACHMENT C FORM OF SEU AWARD CERTIFICATE / STATEMENT OF TERMS AND CONDITIONS

EDISON INTERNATIONAL EQUITY COMPENSATION PLAN STOCK EQUIVALENT UNIT AWARD CERTIFICATE

EDISON INTERNATIONAL EQUITY COMPENSATION PLAN Statement of Terms and Conditions of Stock Equivalent Unit Awards Granted under the Affiliate Option Exchange OfferQuickLinks
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Exhibit 10.94  

        EDISON INTERNATIONAL

EDISON MISSION ENERGY
  Offer to Exchange

Cash and Stock Equivalent Units

For Affiliate Options of

EDISON MISSION ENERGY  

 SUMMARY OF DEFERRED COMPENSATION ALTERNATIVES  

        Edison International ("EIX") and Edison Mission Energy ("EME") are offering (the "Exchange Offer") to exchange (the "Exchange") cash and stock
equivalent units related to shares of EIX common stock for options held by current and former employees with respect to "phantom" units of EME. The terms of the Exchange are set forth in the
accompanying Exchange Offer Circular (the "Circular"). 

        Certain
persons who accept the Exchange Offer may elect to defer, under the Edison International Affiliate Option Deferred Compensation Plan (the "DCP"), payment of all or a portion of
the consideration that they are otherwise entitled to receive in the Exchange. This Summary of Deferred Compensation Alternatives ("DCP Summary") describes the DCP and the terms under which payment of
the Exchange consideration may be deferred under the DCP. 

        For
details of the Exchange Offer, see the Circular. This DCP Summary should be read in conjunction with the Circular. Capitalized terms used in this DCP Summary have the meanings given
to them herein or, if not defined herein, in the Circular. 

The
Date of this DCP Summary is July 3, 2000. 

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	Page

	Introduction	 	1
	

Risk Factors	
 	

3
	

Questions and Answers about the DCP	
 	

5
	

 	
 	
Participation—General Provisions	
 	

5
	 	 	Converting Your SEUs	 	13
	 	 	Distributions	 	14
	 	 	Payment Security—Rights of Participants	 	19
	 	 	Plan Administration	 	20
	 	 	Federal Income Tax and Social Security Considerations	 	21
	 	 	Effect on Retirement Plan Benefits	 	26
	 	 	Section 16 Consequences	 	26
	

Additional Information	
 	

27
	

Attachments:	
 	

 
	

 	
 	

A.	
 	

Deferred Compensation Plan Document	
 	

A-1
	

Other Enclosures:	
 	

 
	

 	
 	

A.	
 	

A Deferral Election Form is included with this DCP Summary.	
 	

 

  

 
 

INTRODUCTION    
  

        The DCP is a new deferred compensation plan that was adopted by EIX, EME, and Edison Capital ("EC") to give certain eligible persons flexibility to elect a
deferred payment of the consideration otherwise payable in the Exchange. Participation in the DCP is entirely voluntary.

        The
information presented in this DCP Summary is qualified in its entirety by the terms of the DCP. A copy of the DCP document is attached as Attachment A to this DCP Summary. The DCP
document controls if any discrepancy exists between the information presented in this DCP Summary and the terms of the DCP document. 

        Deferrals.    If you accept the Exchange Offer and you are eligible to participate in the DCP, you may
elect (1) to defer all or a portion of the cash component of the Exchange Price otherwise payable to you, and/or (2) to defer the payment date of your SEUs (if you are granted SEUs in
accordance with the terms of the Exchange). Eligibility for the DCP is described in the response to Question 1 below. If you are eligible and want to elect a deferral, your deferral election must be
made on the Deferral Election Form included with this DCP Summary and returned to EME with your Election Form (the form that you must use to accept the Exchange Offer). 

        Cash Portion of the Exchange Price.    If you elect to defer all or a portion of the cash component of
the Exchange Price, the deferred amount will be credited under the DCP and paid as described in this DCP Summary (rather than being paid as described in the Circular). 

        SEUs.    As described in the Circular, the value of your SEUs generally will become payable on the first
or third anniversary of the Exchange Date, whichever you elect. However, if you elect to defer the payment date of your SEUs, your SEUs will remain outstanding until they are "converted" under the
DCP. (See the responses to Questions 17 and 18 below.) Once your SEUs are converted, the value of the SEUs will no longer be subject to changes in the value of EIX common stock but will be credited as
a fixed dollar amount and earn interest under the DCP. If you elect to defer the payment date of your SEUs: 

	(1)
	you
generally may elect to convert your vested SEUs (unvested SEUs may not be converted until they vest) to a fixed dollar credit under the DCP at any time between the first and third
anniversaries of the Exchange Date; and

	(2)
	any
of your outstanding vested SEUs will automatically be converted to 4a fixed dollar credit under the DCP on the earlier of
(a) the third anniversary of the Exchange Date, or (b) the later of the first anniversary of the Exchange Date or the day after the
termination of your employment with the Company. 

Thus,
your SEUs may not be converted until they are vested and they may not be converted before the first anniversary of the Exchange Date. In no case, however, will your SEUs remain outstanding (not
converted) after the third anniversary of the Exchange Date. The value of your converted SEUs, represented by a dollar credit under the DCP, will be paid in accordance with your DCP payment
election(s). You may not elect a conversion of your SEUs if you do not elect to defer the payment of your SEUs. 

        Interest.    Deferred cash amounts generally will earn interest at the 120% 10-Year Rate
described in the Circular. The value underlying deferred SEUs will be subject to changes in the value of EIX common stock until the SEUs are converted to a dollar amount under the DCP (at which time
they will begin to earn interest at the 120% 10-Year Rate). 

        Vesting.    The unvested portion of your Exchange Price, if deferred, will be subject to the same
vesting schedule applicable to the Exchange Price, as described in the Circular, and will not be paid before the applicable vesting date. 

1

 

        Payment.    Deferred amounts generally will be paid as soon as administratively practicable following
the termination of your employment with the Company. Payment will be made in a lump-sum or, if you elect on your Deferral Election Form, installments. You also may elect an
in-service distribution on your Deferral Election Form (see the response to Question 23 below). Later, you will be able to request an Unscheduled Withdrawal (see the response to Question
26 below) or a distribution on account of a Severe Financial Hardship (see the response to Question 27 below). Note, however, that your distribution will not be made before January 2, 2002,
even if your employment with the Company terminates prior to that date. 

        Risk Factors.    In deciding whether you want to make a deferral election, be sure to bear in mind the
deferral risk factors described below under "Risk Factors," in addition to the risk factors described in the Circular. 

2

  

 
 

RISK FACTORS    
  

        A deferral of compensation in accordance with the DCP involves a number of risks that you should carefully
consider. Also read the "Risk Factors" section of the Circular.

        Solvency of EME and EIX.    Your rights to any portion of the Exchange Price that you may elect to defer
under the DCP are only those of a general unsecured creditor of EME and EIX (EIX has guaranteed EME's obligations under the DCP). The payment of any portion of the Exchange Price that you may elect to
defer under the DCP is subject to those entities' continued solvency. 

        Opportunity Cost.    In electing to defer receipt of all or a portion of the Exchange Price, you should
consider the "opportunity cost" of the deferral afforded by the DCP. That is, you should consider whether the anticipated benefits of the deferral will be greater than the benefits that you could
achieve by accepting the Exchange Offer but not electing any deferred payments, paying income taxes as payments are made to you, and investing the consideration you receive in the Exchange in
alternative investments. 

        For
example, there is a significant differential between ordinary and capital gain tax rates. If you accept the Exchange Offer and are eligible to make a DCP deferral election, you must
weigh the opportunity costs and benefits, in your own specific case, between the following two alternatives: (1) making a deferral election and deferring payment of all or a portion of your
Exchange Price (and deferring payment of taxes) beyond the date(s) such amounts otherwise would have been paid; or (2) electing no deferrals, paying income tax when payment of the Exchange
Price is made, foregoing interest on deferrals under the DCP, and investing after-tax amounts not deferred in capital investments (any gain on which may be eligible for capital gain tax
rates when the assets are eventually sold or otherwise disposed of). Intervening legislation could reduce or remove the capital gain tax rate advantage. 

        Earnings-Related Risk.    Your deferrals that are credited in cash to your account under the DCP (your
"Deferral Account") will earn interest as described in this DCP Summary. The interest rates for each year under the DCP are fixed as of October 15 of the preceding year. You must therefore
weigh the opportunity costs and benefits, in your own specific case, between the following two alternatives: (1) deferring income (and deferring payment of taxes) under the DCP and having
earnings credited on your Deferral Account at an annually fixed rate; or (2) accepting the Exchange Offer but not electing
any deferrals and investing the net after-tax proceeds in alternative investments, which could produce a rate of return that is greater than or lesser than the interest rate applicable to
your Deferral Account. 

        The
interest rates under the DCP are calculated based on a 10-year average rate. Thus, market interest rates will fluctuate to a greater degree than the interest rates under
the DCP. 

        Stock-Related Risks.    The economic effect of SEUs is similar to an investment in EIX common stock.
However, unlike a shareholder, you cannot sell or pledge your SEUs and your SEUs do not carry any voting or other shareholder rights. SEUs are non-transferable and illiquid and thus their
"value" is at full market risk until they are converted to a dollar credit to your Deferral Account. You may lose value to the extent of any decline in the fair market value of the EIX common stock or
its failure to increase at a rate commensurate with lost opportunities. Neither appreciation nor return on your SEUs can be assured. 

        Tax Risk.    Based on the advice of its tax counsel, EME believes that your deferrals will have the
income tax consequences described in the responses to Questions 39 through 44 below. If you are subject to U.S. tax law and the Internal Revenue Service (the "IRS") successfully challenged your
deferrals, your vested deferrals would likely be taxed to you in 2001 (the year that they would have otherwise been paid without a deferral), and your unvested deferrals (and earnings thereon) would
likely be taxed to you in the year that they become vested, at ordinary income tax rates. You would 

3

 

have to pay interest on the unpaid taxes. However, management is not aware of any successful challenges by the IRS in circumstances similar to the Exchange Offer. 

        You
should also read the responses to Questions 45 and 46 below for information with respect to foreign and local tax matters and risks related to changes in applicable law. The Company
cannot assure you of any particular domestic or foreign tax consequences, and does not make any such assurances. 

4

  

 
 

QUESTIONS AND ANSWERS    
    
    ABOUT THE DCP    
  

Participation—General Provisions  

	1.
	Who is eligible for the DCP?

You
are eligible to participate in the DCP if you accept the Exchange Offer and if you satisfy each of the other eligibility requirements described in this section. 

ERISA Test.    The Company must limit participation in the DCP because of applicable requirements under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Your Individualized Statement will indicate if EME and EIX have determined that you are not eligible to participate in the DCP because of the ERISA
limitation. 

If
your Individualized Statement does not indicate that your DCP participation is limited, and if you were given a copy of this DCP Summary with your
copy of the Circular, EME and EIX have determined that your participation in the DCP will not be precluded because of ERISA. However, you also must satisfy certain securities law and employment
requirements, described below, if you want to participate in the DCP. 

Securities Law Test.    If you want to make a deferral election, you must: 

	(1)
	have
individual income in excess of $200,000 in each of the two most recent years, or joint income with your spouse in excess of $300,000 in each of the two most recent years, and
reasonably expect to reach the same level this year, or

	(2)
	have
an individual net worth or a joint net worth with your spouse in excess of $1,000,000. 

This
eligibility requirement is imposed because of applicable securities laws. EME's and EIX's determination of whether you are eligible to participate in the DCP is based solely on the ERISA test
described above. Even if EME and EIX determine that you are eligible under the ERISA test and give you a copy of this DCP Summary, the Company has not made any determination of whether you satisfy the
securities law requirement for eligibility described above. Thus, even if EME and EIX determine that you are eligible, you must attest when you elect a deferral to the fact that you satisfy one of the
above income or net worth requirements; otherwise, your deferral election will not be effective. 

The
term "income" for this purpose means the sum of: (1) your (or, with respect to the joint income test, your and your spouse's) total gross wages and bonuses actually paid by the Company or
another employer, (2) interest (whether taxable or non-taxable) and dividends that you receive, (3) gains or other income realized from your investments (unrealized
appreciation in the value of your assets does not count as income for this purpose), and (4) similar amounts of income actually paid to you or realized by you. "Income" is determined before
taking into account taxes, deductions that may reduce your income for tax purposes, and other expenses. Your contributions to a 401(k) retirement plan or compensation deferrals to a nonqualified
deferred compensation do not reduce your gross "income" for this purpose. The term "net worth" for this purpose means the total current value of your assets (such as your house, cars, and investments)
less the amount of your debt (such as your mortgage and other loans). For purposes of determining your "net worth" in this case, you may include the value of your Affiliate Options. 

Employment Requirement.    Any deferral election that you may make will not be effective if you are not employed by the Company on the
Exchange Date (unless the termination is due to your Retirement or following your Total Disability). If you are not employed by the Company 

5

 

on the Exchange Date, but the termination of your employment was or is due to your Retirement or following your Total Disability, you may elect a deferral. 

For
purposes of the DCP, "Retirement" generally means that you terminate employment with the Company at age 55 or later with at least five years of service to the Company. For purposes of the DCP,
EIX's Benefits Committee will determine whether you are "Totally Disabled" in its discretion. These definitions are the same as those set forth in the Circular. 

	2.
	Must I participate in the DCP?

No.
You are not required to elect a deferral and participation is completely voluntary. The EME, EIX and EC Boards of Directors, and the Company, do not make any recommendation as to whether you
should elect a deferral. 

	3.
	What is the benefit of a deferral?

The
benefits of a deferral are that (1) you are guaranteed that your Deferral Account balance will earn interest at the 120% 10-Year Rate, and (2) your deferred amounts
(including interest credited thereon) will not be subject to income tax until they are paid to you. (The tax consequences of the Exchange and of electing a deferral are described in more detail in the
"Federal Income Tax and Social Security Considerations" section of the Circular and below in this DCP Summary.) 

The
potential benefit of deferring your taxes is illustrated by the following chart, which shows that an assumed 8% pre-tax annual return under the DCP for a 10-year deferral
period is better than a 10% annual return taxed at the end of the same 10-year period at capital gain tax rates. Specifically, the chart compares your after-tax benefits of
(1) deferring $100,000 under the DCP, which will earn interest, compounded annually, at the 120% 10-Year Rate (currently 8%), and (2) receiving a payment of that amount, plus
interest, on March 13, 2001 and investing the net after-tax amount in a capital investment the annual rate of appreciation of which is assumed to be 10% compounded annually. The
following tax assumptions are also made: (1) the combined federal and state ordinary income tax rate is 48%, (2) the combined federal and state capital gain tax rate is 29%,
(3) the Social Security wage base has been 

6

 

reached each year (see the response to Question 40 below), and (4) the Medicare tax rate is 1.45%. 

	 
	 	With a Deferral
	 	Without a Deferral

	Original Amount	 	$	100,000	 	$	100,000
	 	 	
	 	

	Original Amount Plus Approximate Interest Through March 13, 2001 (120% 10-Year Rate for Deferred Amounts, 6.3% for Amounts Not Deferred)	 	$	104,829	 	$	103,794
	Less: Employment Taxes on December 31, 2000 (including the gross-up distribution described in the response to Question 40 below)	 	$	2,267	 	$	0
	Less: Employment Taxes on March 13, 2001	 	$	0	 	$	1,505
	Less: Income Taxes	 	$	0	 	$	49,821
	 	 	
	 	

	Net Amount on March 13, 2001	 	$	102,562	 	$	52,468
	Interest/Appreciation For Ten Years (Interest at 8% Per Year, Appreciation at 10% Per Year)	 	$	118,862	 	$	83,620
	 	 	
	 	

	Amount After Ten Years	 	$	221,424	 	$	136,088
	Less: Employment Taxes	 	$	0	 	$	0
	Less: Income Taxes	 	$	106,284	 	$	0
	Less: Capital Gain Taxes	 	$	0	 	$	24,250
	 	 	
	 	

	Net Amount After Ten Years	 	$	115,140	 	$	111,838
	 	 	
	 	

In
determining whether you want to elect a deferral, you also must take into consideration the tax rates that will apply in your situation, whether tax and interest rates will change in the future,
the actual rate of return that you expect to achieve by not electing a deferral and investing in a capital investment (relative to your desired level of risk), whether you would hold a capital
investment for the entire ten-year period (you would trigger tax earlier if you did not hold the asset for the entire ten-year period), whether the capital investment would pay
dividends or other taxable annual returns, how long you expect your period of deferral to be, and the other factors described above under "Risk Factors." 

	4.
	How and when do I elect a deferral?

If
you are eligible (see the response to Question 1 above) and want to elect a deferral, you must: (1) sign and date the Deferral Election Form included with this DCP Summary;
(2) indicate your deferral elections on your Deferral Election Form; and (3) return your Deferral Election Form to EME with and at the same time that you return your Election Form to
accept the Exchange Offer. 

If
the Deferral Election Form is signed by trustees, executors, administrators, guardians, attorneys-in-fact or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by EME, submit evidence satisfactory to EME of their authority to act in this capacity. Your elections on your
Deferral Election Form are irrevocable by you once your Deferral Election Form is filed.

You
cannot elect a deferral under the DCP if you do not accept the Exchange Offer. If you elect a deferral but the Exchange is not completed, your Deferral Election Form will be void. 

If
you are employed in a non-U.S. jurisdiction, your Exchange Offer Election Form (or a supplement thereto) may contain other terms and conditions, not described in the Circular or this
DCP Summary, that will apply if you accept the Exchange Offer and elect a deferral. Be sure to read your Election Form. 

7

 

	5.
	What deferral elections can I make?

If
you are eligible, you may make two deferral elections; one for the cash component of the Exchange Price otherwise payable to you, and one for the portion of the Exchange Price payable to you in the
form of SEUs. 

Cash Portion of the Exchange Price.    With respect to the cash portion of the Exchange Price, you may elect: 

	(1)
	no
deferrals (in which case the cash portion of the Exchange Price will be paid to you as described in the Circular),

	(2)
	that
the entire cash portion of the Exchange Price be credited under and paid in accordance with the DCP (a 100% deferral), or

	(3)
	that
the cash portion of the Exchange Price that exceeds a specified dollar amount be credited under and paid in accordance with the DCP. 

If
you elect alternative (3) above, the dollar amount that you specify (and interest thereon) will be paid to you on March 13, 2001. However, if the cash portion of the Exchange Price
otherwise payable to you on March 13, 2001 does not equal or exceed the dollar amount that you specify, you will receive only the amount available at that time. The balance will be paid to you
from any cash portion of the Exchange Price that becomes payable in January of 2002 or 2003 to the extent necessary to equal the dollar amount that you specify. Amounts in excess of what you specify
will be credited under and paid in accordance with the DCP. If you are granted SEUs, any portion of your SEUs that vest, are converted, or are paid will be disregarded for this purpose. That is, the
dollar amount that you specify will be paid only from the cash portion of the Exchange Price. 

If
you will be paid the Exchange Price all in cash (that is, you will not receive any SEUs) because you are not employed by the Company on the Exchange Date, any deferral election that you make with
respect to the cash portion of the Exchange Price will apply to the cash that is payable to you in lieu of the SEU portion of the Exchange Price. See the response to Question 16 below. 

SEUs.    With respect to the portion of the Exchange Price payable to you in SEUs, you may elect: 

	(1)
	no
deferrals (in which case your SEUs generally will be paid on the first or third anniversary of the Exchange Date, whichever you elect and as described in the Circular),

	(2)
	that
payment of all of your SEUs be deferred under the DCP, in which case your SEUs will be paid as described in this DCP Summary. 

You
may not elect to defer the payment of some, but not all, of your SEUs. If you elect alternative (2) above, your SEUs will remain outstanding (and their underlying value will continue to be
subject to changes in the value of EIX common stock, and they will continue to accrue dividend equivalent SEUs as EIX declares dividends on its common stock) until they are converted to a dollar
credit to your Deferral Account (see the response to Question 7 below). 

8

 

	6.
	Can you give me some examples of my deferral alternatives with respect to the cash portion of the Exchange Price?

Yes.
The following examples illustrate the differences between your deferral alternatives and how they affect the payment of the cash portion of the Exchange Price. These examples relate to the
deferral options available on your Deferral Election Form. However, these examples are based on the facts that are assumed for the hypothetical Affiliate Optionee in the response to Question 11 in the
Circular. You should refer to the chart when reading the following examples. For ease of illustration, these examples ignore the effects of tax withholding. (See the response to Question 40 below for
information on the effects of tax withholding.) Note that "scheduled" payments would not be made if the Affiliate Optionee's employment terminated and such amounts were not vested or did not vest in
connection with the termination. 

Cash Deferral Alternative (1)—No Deferral.    Cash deferral alternative (1) is no deferral. If the Affiliate Optionee
elected cash deferral alternative (1), the Affiliate Optionee would be paid the Exchange Price in the same manner described in the example in the response to Question 11 in the Circular. 

Cash Deferral Alternative (2)—100% Deferral.    Cash deferral alternative (2) is a 100% deferral
(i.e., the entire cash portion of the Exchange Price is deferred under the DCP). 

	•
	The
Affiliate Optionee's Deferral Account will be credited with $694,975.63 as of the Exchange Date. This amount represents the entire cash portion of the
Exchange Price ($656,821.07 + $38,154.56 = $694,975.63). Of this amount, $656,821.07 will be vested as of the Exchange Date, $16,542.23 (plus interest thereon) is scheduled to
vest on January 2, 2001, $16,542.23 (plus interest thereon) is scheduled to vest on January 2, 2002, and $5,070.10 (plus interest thereon) is scheduled to vest on January 2, 2003.
Interest will be credited and these amounts will be paid in accordance with the terms of the DCP. 

Cash Deferral Alternative (3)—Deferral in Excess of a Specified Dollar Amount.

Example One.    Cash deferral alternative (3) is a deferral in excess of a stated dollar amount. This example assumes that the
Affiliate Optionee elected cash deferral alternative (3) and stated a dollar amount of $500,000. 

	•
	The
Affiliate Optionee's Deferral Account will be credited with $194,975.63 as of the Exchange Date. This amount represents the cash portion of the Exchange
Price that the Affiliate Optionee elected to defer (the total cash portion of the Exchange Price, $694,975.63, less the stated dollar amount of
$500,000). Of this amount, $156,821.07 will be vested as of the Exchange Date, $16,542.23 (plus interest thereon) is scheduled to vest on January 2, 2001, $16,542.23 (plus interest thereon) is
scheduled to vest on January 2, 2002, and $5,070.10 (plus interest thereon) is scheduled to vest on January 2, 2003. Interest will be credited and these amounts will be paid in
accordance with the terms of the DCP.

	•
	The
Affiliate Optionee will be paid $500,000 (plus interest at 6.3% from the Exchange Date through the date of payment) on March 13, 2001. This is the
stated dollar amount that the Affiliate Optionee elected in his or her DCP deferral election, plus interest. 

Example Two.    As indicated above, cash deferral alternative (3) is a deferral in excess of a stated dollar amount. In this example,
the Affiliate Optionee is assumed to elect a stated dollar amount of $675,000. This example illustrates the effects of electing cash deferral alternative (3) and a stated dollar amount greater
than the cash portion of the Exchange Price that is vested or vests on March 13, 2001. 

	•
	The
Affiliate Optionee's Deferral Account will be credited with $19,975.63 as of the Exchange Date. This amount represents the cash portion of the Exchange
Price that the 

9

 

Affiliate
Optionee elected to defer (the total cash portion of the Exchange Price, $694,975.63, less the stated dollar amount of $675,000). Of this amount, no portion will be vested as of the
Exchange Date, $14,905.53 (plus interest thereon) is scheduled to vest on January 2, 2002, and $5,070.10 (plus interest thereon) is scheduled to vest on January 2, 2003. Interest will be
credited and these amounts will be paid in accordance with the terms of the DCP. 

	•
	The
Affiliate Optionee will be paid $656,821.07 (plus interest at 6.3% from the Exchange Date through the date of payment) on March 13, 2001. The
entire vested cash portion of the Exchange Price will be paid because it does not exceed the stated dollar amount elected by the Affiliate Optionee. The Affiliate Optionee will receive current
payments from the unvested cash portion of the Exchange Price, as vesting occurs, until the stated dollar amount is reached.

	•
	$16,542.23
(plus interest at 6.3% from the Exchange Date through the date of payment) is scheduled to vest on January 2, 2001 and also be paid on
March 13, 2001. This amount represents the cash portion of the Exchange Price attributable to the January 2001 vesting installments of the Affiliate Optionee's 1998 and 1999 Affiliate
Options.

	•
	$1,636.70
(plus interest at the 120% 10-Year Rate from the Exchange Date through the date of payment) is scheduled to vest and be paid on
January 2, 2002. This amount represents the cash portion of the Exchange Price attributable to the January 2002 vesting installments of the Affiliate Optionee's
1998 and 1999 Affiliate Options. Note, however, that this amount is only the portion of those installments that is necessary to pay the Affiliate Optionee the stated amount that he or she elected
($656,821.07 + $16,542.23 + $1,636.70 = $675,000). The excess was credited under the DCP as of the Exchange Date. Further note that interest on the amounts not
deferred (equal to the stated amount of $675,000) is also paid to the Affiliate Optionee. Therefore, the actual amount paid without deferral will equal $675,000, plus interest as indicated above in
this example. 

	7.
	Can you further explain my SEU deferral alternatives?

With
respect to the portion of the Exchange Price that is granted to you in the form of SEUs, you may elect no deferrals (in which case your SEUs generally will be paid on the first or third
anniversary of the Exchange Date, whichever you elect and as described in the Circular), or 100% deferrals. Your cash and SEU deferral elections are independent of each other. That is, you may defer
all or a portion of the cash portion of the Exchange Price, and elect no SEU payment deferrals. Similarly, you may elect no deferral of the cash portion of the Exchange Price, but elect that payment
of your SEUs be deferred. 

If
you elect to defer payment of your SEUs, the value of your SEUs will not be paid as described in the Circular. Instead, your SEUs will remain outstanding until you elect to convert them to a dollar
credit to your Deferral Account (see the response to Question 17 below). If you do not elect to convert your SEUs, they will automatically convert to a dollar credit to your Deferral Account upon the  earlier of (1) the third anniversary of the Exchange Date, or (2) the later of the first
anniversary of the Exchange Date or the day after the termination of your employment with the Company (see the response to Question 18 below). 

To
the extent that your SEUs remain outstanding, the value underlying the SEUs is subject to changes in the value of EIX common stock, and the SEUs will accrue dividend equivalent SEUs as EIX declares
dividends on its common stock (see the response to Question 18 in the Circular). 

The
amount that is credited to your Deferral Account in respect of your SEUs will be paid in accordance with your Deferral Account payment elections (see "Distributions" below). Note, 

10

 

however, that the conversion and payment of your SEUs may occur earlier than the termination of your employment with the Company if you elect an in-service distribution on your Deferral
Election Form (see the response to Question 23 below). 

	8.
	Do I have to make any other elections?

If
you elect a deferral of the cash portion of the Exchange Price, or if you elect a deferred payment of your SEUs, you must also complete the "Deferral Account Payment Elections" section of the
Deferral Election Form so that you can make your payment elections (see the response to Question 19 below). 

	9.
	Can I change my deferral election?

No.
Your deferral and, with one exception noted below, payment election(s) must be irrevocable pursuant to IRS rules and regulations. Therefore, you may not cancel or change your deferral election(s)
or payment election(s) (except that you may subsequently change your Retirement payment election as described in more detail in the response to Question 25 below). However, you may request an
Unscheduled Withdrawal or a Severe Financial Hardship withdrawal as described in the responses to Questions 26 and 27 below. 

	10.
	Can I transfer my rights to payment?

Generally,
no. The amount credited to your Deferral Account and the value underlying your SEUs will be paid only to you. The only exceptions are (1) in the event of your divorce, your account
balance (or SEUs) may become payable to your former spouse pursuant to a domestic relations order, and (2) if you die, your account balance (including any amount credited in respect of your
SEUs) will be payable to your beneficiary. 

	11.
	Can I name a beneficiary?

Yes.
You may name a beneficiary to receive amounts payable to you under the DCP in the event of your death. You can name any individual or entity you wish as your beneficiary, subject to your spouse's
consent if you are married and do not name your spouse as your sole primary beneficiary. Your beneficiary designation must be on a form approved by the Committee (as defined in the response to
Question 34 below). If you do not name a beneficiary, your beneficiary will be your surviving spouse, if your spouse survives you; otherwise, your beneficiary will be your estate. 

You
may change your beneficiary designation by filing a new beneficiary designation form with the Committee, subject to the spousal consent requirement described above. The Committee will rely on the
last valid beneficiary designation that you file and it receives before the date of your death. 

A
beneficiary designation form is included with the Circular. The beneficiary that you designate will be your beneficiary for purposes of the DCP and for purposes of paying any portion of the Exchange
Price that you do not defer. Additional beneficiary designation forms are available from EIX Executive Compensation at (626) 302-1025 or (626) 302-7568. 

Your
beneficiary designation will automatically be revoked if you marry or divorce after the date of the designation (unless, in the case of marriage, your new spouse was already named as your sole
primary beneficiary or, in the case of divorce, your prior spouse was not named as a beneficiary). Therefore, you should file a new beneficiary designation following either of such events. 

	12.
	Am I vested in my deferrals?

You
are vested in the cash portion of the Exchange Price that you defer that is attributable to vested Affiliate Options. The portion of the Exchange Price that is attributable to unvested 

11

 

Affiliate Options will be subject to the vesting schedule described in the responses to Questions 4 and 12 in the Circular. Any portion of the Exchange Price that you defer will be subject to the
same vesting and forfeiture provisions as it would have been if not deferred. That is, the deferred portion of the Exchange Price (and interest credited thereon under the DCP) that is attributable to
the unvested portion of your 1998 or 1999 Affiliate Options will not vest until January 2, 2001, 2002, or 2003, as applicable. If your employment by the Company terminates prior to your
becoming 100% vested, you will forfeit the unvested portion (and interest credited thereon). 

You
will become vested in a pro rata portion of the unvested Exchange Price (whether or not deferred) if your employment by the Company terminates due to your Retirement, death, or following your
Total Disability. (See the response to Question 12 in the Circular.) You will become fully vested in your Deferral Account balance if a merger, consolidation or other corporate event occurs that
triggers a "Distribution Date" under the Rights Agreements approved by the EIX Board of Directors on November 20, 1996, as amended from time to time. 

If
you elect a deferred payment of your SEUs, your SEUs will remain subject to the vesting schedule described in the response to Question 19 in the Circular. However, any amount credited under the DCP
in respect of your SEUs will be fully vested since your SEUs can be converted to a dollar credit to your Deferral Account only after your SEUs vest. 

	13.
	How are my deferrals credited?

EME
will credit the cash portion of the Exchange Price that you elect to defer to your Deferral Account as of the Exchange Date. EME will credit your Deferral Account with interest as described in the
response to Question 14 below, and with the dollar amount of the conversion of your SEUs as described in the responses to Questions 17 and 18 below. 

Your
Deferral Account will be reduced by the amount of (1) your distributions or withdrawals from that account, (2) any forfeitures of your unvested deferrals and/or interest on your
unvested deferrals (see the response to Question 15 below), and (3) by the amount that is used to satisfy any applicable tax withholding requirements (see the responses to Questions 40, 41 and
43 below). 

EME
may establish subaccounts under your Deferral Account if advisable for administrative purposes, such as to separately track your unvested deferrals or deferrals related to your SEUs. 

	14.
	How will my Deferral Account be credited with earnings?

EME
will credit your Deferral Account with interest. The annual interest rate for your Deferral Account will be the 120% 10-Year Rate described in the Circular. Interest will be credited
daily and compounded annually. 

	15.
	What happens to my unvested deferrals if my employment terminates?

You
will forfeit your deferrals (and the interest credited on those deferrals) and your SEUs to the extent that they are not vested on the date your employment terminates. 

	16.
	What special rules apply if I am not employed by the Company on the Exchange Date?

As
indicated in the response to Question 14 in the Circular, if you accept the Exchange Offer and you are not employed by the Company on the Exchange Date, you will be paid the Exchange Price all in
cash. You will be eligible to elect a deferral only if the termination of your employment was due to your Retirement or following your Total Disability. If you are eligible and elect a deferral, any
cash deferral election that you make will apply to the entire 

12

 

Exchange Price, including the portion that would have otherwise been granted in the form of SEUs. 

Converting Your SEUs  

	17.
	When can I elect to convert my SEUs?

If
you elect to defer payment of your SEUs, you have a right to convert all (but not less than all) of your vested outstanding SEUs to a dollar credit to your Deferral Account. Your vested SEUs will
convert automatically in certain circumstances, including the termination of your employment with the Company, as described in the response to Question 18 below. Any vested outstanding SEUs will be
converted to your Deferral Account in connection with the termination of your employment with the Company and therefore will be subject to the payment elections that you make for your Deferral Account
(see the response to Question 19 below). 

The
amount credited to your Deferral Account in respect of an SEU conversion will earn interest beginning on the date that it is credited. Thus, the effect of your election to convert an SEU is that,
after the conversion, the value related to your SEUs (now credited under the DCP) will earn interest at a stated rate and will no longer be subject to fluctuations in the market value of EIX common
stock. 

You
may elect a conversion of your vested SEUs at any time (1) after the first anniversary of the Exchange Date, and (2) before the earlier of the third anniversary of the Exchange Date
or the date your employment by the Company terminates. If additional SEUs vest after your conversion election, you may make another conversion election at any time before the earlier of the third
anniversary of the Exchange Date or the date your employment by the Company terminates. Your election must be on a form and in the manner required by the Committee. 

Contact
EIX Executive Compensation, at (626) 302-1025 or (626) 302-7568, for information on how to convert your vested SEUs into deferred compensation credits and
to request a copy of a SEU conversion election form. Conversion election forms will be available beginning in July 2001 but, as noted above, you cannot convert your SEUs before the first
anniversary of the Exchange Date. 

If
you elect a conversion of your vested outstanding SEUs, your Deferral Account will be credited as of the day following the date that EME receives your election with a dollar amount equal to:
(1) the closing price of a share of EIX common stock on the New York Stock Exchange on the date that EME receives your election (or, if that day is not a trading day, the closing price of a
share of EIX common stock on the New York Stock Exchange on the last trading day before the date that EME receives your election), multiplied by (2) the number of your vested outstanding SEUs
on the date that EME receives your election. 

For Example:    Assume that you elect to defer payment of your SEUs and that, at some time after a portion of the SEUs vest and after the
first anniversary of the Exchange Date, you have 1,050 SEUs (1,000 of which are then vested). You could elect, as long as the election was made during the period described above, to convert your 1,000
vested SEUs to a dollar credit to your Deferral Account. Assume that you make that election. If the closing price of a share of EIX common stock on the New York Stock Exchange is $24.50 on the day
that EME receives your election, your Deferral Account will
be credited with $24,500 (1,000 multiplied by $24.50) as of the next day. Your 50 unvested SEUs will remain outstanding. If those 50 SEUs vest, you may elect a conversion of those 50 SEUs after their
vesting date but before the earlier of the third anniversary of the Exchange Date or the termination of your employment with the Company. 

13

  

If
you are paid the Exchange Price all in cash, you will not be granted, and you will not need to elect a conversion of, SEUs. You will not be able to elect a conversion of your SEUs if you do not
elect to defer payment of your SEUs, even if you elect to defer payment of all or a portion of the cash component of the Exchange Price. 

	18.
	Will my SEUs automatically convert to deferred compensation credits?

If
you elect to defer payment of your SEUs and your employment by the Company terminates before the third anniversary of the Exchange Date, any of your vested SEUs that have not been paid or converted
will automatically be converted to a dollar credit to your Deferral Account on the later of (1) the first anniversary of the Exchange Date or
(2) the day after your employment by the Company terminates. Any of your SEUs that have not been paid or converted prior to the third anniversary of the Exchange Date will automatically be
converted to a dollar credit to your Deferral Account immediately following that date (whether or not you remain employed by the Company). 

If
your outstanding SEUs are automatically converted as described above, your Deferral Account will be credited as of the day of the conversion with a dollar amount equal to: (1) the "Per SEU
Conversion Amount" determined as described below, multiplied by (2) the number of your outstanding SEUs to be converted. 

First or Third Anniversary of the Exchange Date.    If the conversion of your SEUs is triggered by the first anniversary of the Exchange Date
(because your employment terminated before that date) or by the third anniversary of the Exchange Date, the Per SEU Conversion Amount equals: (1) the sum of the daily average of the high and
low trading prices of a share of EIX common stock on the New York Stock Exchange for each of the 20 trading days preceding the first or third, as applicable, anniversary of the Exchange Date;
(2) divided by 20. 

For Example:    Assume that you have 1,000 outstanding vested SEUs on the third anniversary of the Exchange Date, and that the Per SEU
Conversion Amount is $40 on that date. EME will credit your Deferral Account as of the close of business on that day with $40,000 (1,000 multiplied by $40). 

Termination of Employment on or After the First Anniversary of the Exchange Date.    If conversion of your SEUs is triggered by the
termination of your employment with the Company on or after the first anniversary of the Exchange Date, the Per SEU Conversion Amount will equal the closing price of a share of EIX common stock on the
New York Stock Exchange on the date your employment terminates (or, if that day is not a trading day, determined as of the immediately preceding trading day). 

Crediting.    The amount credited to your Deferral Account will earn interest beginning on the date that it is credited (the day after the
conversion). 

Other Automatic Conversions.    Your outstanding vested SEUs also may automatically be converted if you elect an in-service
distribution that is greater than the vested amount of cash then credited to your Deferral Account. (See the response to Question 23 below.) 

Distributions  

	19.
	What distribution alternatives are available to me?

Generally,
the distribution alternatives available for the amount credited to your Deferral Account (including the amount that is credited upon the conversion of your SEUs) are the same alternatives
that are available under the Edison International Executive Deferred Compensation Plan. 

14

 

At
the time you make your deferral election, you must also indicate on your Election Form: 

	•
	how
the amount credited to your Deferral Account will be paid upon the termination of your employment; and

	•
	whether
you want any in-service distributions from your vested Deferral Account balance. 

Your
alternatives are described in more detail in the responses to Questions 20 through 25 below. Note, however, that your distribution will not be made before January 2, 2002. In addition,
there is a minimum two-year deferral period for in-service distributions. That is, no in-service distribution will be made earlier than the second anniversary of
the Exchange Date. 

You
also may request an Unscheduled Withdrawal (see the response to Question 26 below) or a distribution on account of a Severe Financial Hardship (see the response to Question 27 below) from your
Deferral Account balance. You may request an Unscheduled Withdrawal or hardship distribution even though you have made a distribution election as described above. The minimum two-year
deferral period does not apply to a distribution on account of Severe Financial Hardship. That is, you may elect a Severe Financial Hardship distribution before the second anniversary of the Exchange
Date. The minimum two-year deferral period does apply to Unscheduled Withdrawals. 

You
may not elect more than one in-service distribution. However, you may make more than one Unscheduled Withdrawal and/or Severe Financial Hardship withdrawal, regardless of whether you
elect an in-service distribution. 

	20.
	How will my Deferral Account be distributed if I Retire?

You
may elect on your Election Form at the time of making your deferral election to have your Deferral Account paid to you following your Retirement in one of the following forms: 

	•
	A
lump-sum, or

	•
	Monthly
installment payments over 60, 120, or 180 months, or

	•
	An
initial lump-sum of a specified percentage or dollar amount of your Deferral Account with the remainder paid in monthly installment payments
over 60, 120, or 180 months. 

EME
will pay you in installments over 180 months if you do not make an election. In addition, EME may pay you in a single lump-sum if your Deferral Account is less than $3,500 after
your Retirement. If you elect installments, EME may shorten your payout period if necessary to produce a monthly amount of at least $300. If you elect installments, the balance remaining credited to
your Deferral Account will continue to be credited with interest at an annual rate equal to the 120% 10-Year Rate until your entire balance is paid. 

EME
generally will pay you (or installments will commence) on a date no later than 60 days following your Retirement date, except that payment will not be made (or installments will not
commence) earlier than January 2, 2002. The amount of your Deferral Account payable to you will be reduced by the amount of any taxes that the Company is required to withhold. 

	21.
	How will my Deferral Account be distributed if my employment terminates before I Retire?

Voluntary Terminations.    EME will pay to you an amount equal to your vested Deferral Account balance (less required tax withholding) in a
lump-sum or in three annual installments if you terminate employment before becoming eligible to Retire (other than a termination by the Company for Cause, described in more detail below,
or a termination due to your death or following your Total Disability, described in more detail in the responses to Questions 22 and 24 below). You should elect a lump-sum or three annual
installments on your Election Form at the time of making your deferral election. You will be paid in a lump-sum if you do not make an election. EME will pay you (or installments will
commence) on a date no later 

15

 

than 60 days following your termination of employment, except that payment will not be made (or installments will not commence) earlier than January 2, 2002. 

Your
post-termination Deferral Account balance will be credited with interest at an annual rate of 100% of the 120-month average annual rate of 10-year Treasury
Notes (the "100% 10-Year Rate") as of October 15th of the previous year (rather than the 120% 10-Year Rate) if you elect to be paid in three annual installments. 

Termination by the Company With Cause.    EME will pay you the amount of your vested Deferral Account balance (less required tax withholding)
in a single lump-sum if the Company terminates your employment with Cause. EME will pay you on a date no later than 60 days following the termination, except that payment will not
be made earlier than January 2, 2002. However, EME has the right to pay you earlier if it decides to do so. 

Your
post-termination Deferral Account balance will continue to be credited with interest at an annual rate equal to the 120% 10-Year Rate. 

For
purposes of the DCP, termination for "Cause" generally means that the Company terminates your employment because of your willful failure to substantially perform your duties, or you willfully
engage in conduct that is injurious to the Company (monetarily or otherwise). 

Adjustments.    EME may pay you in a single lump-sum if your Deferral Account is less than $3,500 after your employment
terminates. EME may shorten the payout period if you elect installments and your account produces a monthly installment payment of less than $300. 

	22.
	How will my Deferral Account be distributed if I become Totally Disabled?

If
you are declared to be Totally Disabled for purposes of the DCP, EME will pay you the amount of your Deferral Account balance (less required tax withholding) in the form that you elect
(lump-sum or installments) for Retirement. EME generally will pay you (or installments will commence) on a date no later than 60 days following the termination of your employment,
except that payment will not be made (or installments will not commence) earlier than January 2, 2002. 

Your
post-termination Deferral Account balance will continue to be credited with interest at an annual rate equal to the 120% 10-Year Rate. 

	23.
	Can I elect an in-service distribution from my Deferral Account?

Yes.
You may elect on your Election Form at the time of your initial deferral election to receive an in-service distribution from your Deferral Account. Your election must specify the
dollar amount of your vested Deferral Account to be distributed and the year in which distribution is to be made. The earliest year that you may elect for payment of an in-service
distribution is 2002. If you elect an in-service distribution for 2002, that distribution will be made in a lump-sum payment (less required tax withholding) as soon as
administratively practicable after the second anniversary of the Exchange Date. If you elect an in-service distribution for any year after 2002, that distribution will be made in a
lump-sum payment (less required tax withholding) on or about January 2nd of the year you specify. 

Your
in-service distribution election (as well as the dollar amount and year of payment) is irrevocable once made. Your in-service distribution will be made only from the
vested portion of your Deferral Account. 

For example:    If you elect a $50,000 in-service distribution, payable in 2005, you will be paid $50,000 from your vested
Deferral Account balance (if your vested Deferral Account balance then equals or exceeds that amount) on or about January 2, 2005. 

16

 

You
may elect only one in-service distribution. Thus, the amount of your Deferral Account that you specify for an in-service distribution will be distributed on one date. Your
in-service distribution election will be void if your employment by the Company terminates before the date that you elect for your in-service distribution. 

If
the dollar amount that you specify for an in-service distribution is greater than the vested amount credited to your Deferral Account as of the distribution date, any of your vested
SEUs that are then outstanding will be converted, based on the closing price of a share of EIX common stock on the New York Stock Exchange on the last trading day preceding the date of the conversion,
to a dollar credit to your Deferral Account to the extent necessary to raise your vested Deferral Account balance to the amount that you specify for the in-service distribution. If you
have no vested SEUs outstanding, or if the conversion of your vested SEUs is not sufficient to pay the full amount that you specified for your in-service distribution, your
in-service distribution will equal only the vested amount credited to your Deferral Account on the distribution date (after conversion of your then-outstanding vested SEUs).
You will not receive additional distributions if or when additional amounts vest. 

	24.
	What happens if I die before receiving my entire Deferral Account balance?

If
you die before receiving your entire Deferral Account balance, your remaining vested account balance will be paid to your beneficiary. 

If
you are still employed by the Company when you die, EME will pay your vested account balance to your beneficiary in accordance with your Retirement payment election. Your beneficiary will be paid
(or installments will commence) following your death, except that payment will not be made (or installments will not commence) earlier than January 2, 2002. 

If
you die after your Retirement or after your employment by the Company terminated following your Total Disability, EME will pay your remaining account balance to your beneficiary at the time or
times that it would have otherwise been paid to you. 

If
you die after your employment by the Company terminates (other than due to Retirement or a termination following your Total Disability), your beneficiary will receive a lump-sum payment
of any amount remaining credited to your account. Payment will be made following your death, except that payment will not be made earlier than January 2, 2002. 

Your
post-termination Deferral Account balance will continue to be credited with interest at an annual rate equal to the 100% 10-Year Rate or 120% 10-Year Rate,
whichever was in effect with respect to your Deferral Account immediately prior to your death. 

In
all cases, EME may pay your beneficiary in a single lump-sum if your remaining account balance is less than $3,500. Also, EME may shorten the payout period if your account produces a
monthly installment payment of less than $300. 

Your
beneficiary may petition the Committee once after your death for a change in the form of payment. The Committee may, in its sole and absolute discretion, choose to grant or deny your
beneficiary's petition. 

	25.
	Can I change my distribution elections?

You
may change the form of payout that you elect for Retirement by filing a new election form with the Committee. However, your new election will only be valid if the Committee receives it at least
13 months before your Retirement. If you Retire and fewer than 13 months have elapsed since the Committee received your new election, your distribution will be based on the last valid
election that you made. Election forms are available from EIX Executive Compensation at (626) 302-1025 or (626) 302-7568. 

You
may not change any other distribution elections. 

17

 

	26.
	Can I elect an Unscheduled Withdrawal from my Deferral Account?

Yes.
You may withdraw up to 100% of your vested Deferral Account balance at any time after the second anniversary of the Exchange Date (an "Unscheduled Withdrawal"). However, if you elect an
Unscheduled Withdrawal, you must pay a penalty. The penalty is generally 10% of the amount that you elect to withdraw. However, the penalty percentage is reduced to 5% for the two years following a
change of control (as that term is defined in the DCP document). The amount that you elect to withdraw, less the penalty amount and applicable tax withholding, will be paid to you. Your Deferral
Account will be reduced by the total amount that you elect to withdraw. 

For example:    If you elect an Unscheduled Withdrawal of $15,000 from your vested Deferral Account balance, EME will pay you $13,500 (less
applicable tax withholding) and you will forfeit $1,500 (10% of $15,000). If you elect an Unscheduled Withdrawal of that amount in the two-year period following a change of control, EME
will pay you $14,250 (less applicable tax withholding) and you will forfeit $750 (5% of $15,000). Your vested Deferral Account balance will be reduced by $15,000 in either case. 

The
minimum Unscheduled Withdrawal is 25% of your vested Deferral Account balance. An election to withdraw more than 75% of your vested Deferral Account balance will be treated as an election to
withdraw your entire vested Deferral Account balance. In addition, if you request an Unscheduled Withdrawal and the vested amount remaining in your Deferral Account is $3,500 or less, your election
will be treated as an election to withdraw your entire vested Deferral Account balance. 

You
can elect an Unscheduled Withdrawal on forms that are available from EIX Executive Compensation at (626) 302-1025 or (626) 302-7568. Payment will be made
within 30 days after the date your request for a withdrawal is received. If you want to make an Unscheduled Withdrawal of an amount greater than the vested amount then credited to your Deferral
Account, you should consider converting any of your then vested outstanding SEUs before you request your Unscheduled Withdrawal. 

	27.
	Can I make a withdrawal from my Deferral Account in the event of a Severe Financial Hardship?

Yes.
You can request a distribution from your vested Deferral Account balance for a Severe Financial Hardship at any time, and without penalty. The amount that you request as a distribution cannot
exceed the amount that you need to satisfy the hardship plus the amount of taxes that will be withheld in connection with the hardship distribution. 

Your
request must be filed with the Committee. You will receive a Severe Financial Hardship distribution only if the Committee approves your request. 

A
"Severe Financial Hardship" generally includes a financial hardship to you that results from: 

	•
	a
sudden and unexpected illness or accident that you (or one of your dependents) incur,

	•
	loss
to your property due to casualty, or

	•
	similar
extraordinary and unforeseeable circumstances that arise as a result of events beyond your control. 

The
Committee's determination of whether a Severe Financial Hardship exists will depend on the facts of each case. Examples of what will not be considered a Severe Financial Hardship include the need
to send a child to college or the desire to purchase a home. 

Contact
EIX Executive Compensation at (626) 302-1025 or (626) 302-7568, for information on how you may request a Severe Financial Hardship distribution. If you
want to request a 

18

 

Severe Financial Hardship distribution of an amount greater than the vested amount then credited to your Deferral Account, you should consider converting any of your then vested outstanding SEUs, if
you are then able to elect a conversion, before you request your distribution. 

	28.
	Can I take a loan from my Deferral Account, or assign or pledge my Deferral Account as collateral for a loan?

No,
loans from your Deferral Account are not available. Your account balance, and your SEUs, may not be assigned or pledged as collateral for a loan. 

	29.
	What valuation date is used for calculating payment/withdrawal amounts?

The
valuation date for determining the amount of your distribution from your Deferral Account will generally be the last day of the month in which your Retirement, termination of employment, or death
occurs. For scheduled in-service distributions and unscheduled or hardship withdrawals, it will be the day prior to the date the distribution or withdrawal occurs. 

	30.
	May the Company further defer the time of payment?

Notwithstanding
anything else in this DCP Summary to the contrary, the Company may delay the date of your payment if you are an officer described in the next paragraph and the Company's ability to
deduct its payment to you would otherwise be lost. 

The
Company's ability to deduct compensation in excess of $1 million per year to certain of its officers is limited by Section 162(m) of the Internal Revenue Code. Section 162(m)
is, however, very limited in its application. It generally only applies to an officer in a year in which the officer constitutes one of the five EIX executive officers whose compensation is listed in
the Proxy Statement prepared for the following year. These five persons may be officers of an EIX affiliate in some circumstances. 

If
the Committee determines that the Company's ability to deduct the amount otherwise payable to one of these five officers in a year is or reasonably could be limited by Section 162(m) because
the officer is or reasonably could be a Section 162(m) officer (as described above) in that year, the Company may delay the payment to that officer until a year in which the Committee
determines that the Company's tax deduction for the payment is not or is not reasonably expected to be limited by Section 162(m). If the payment is deferred, the deferred portion will continue
to be credited to the officer's Deferral Account and will continue to earn interest at the rate applicable to that account. 

Payment Security—Rights of Participants  

	31.
	Is the payment of the amount credited to my Deferral Account guaranteed under all circumstances?

No.
You have a right to receive the vested portion of your Deferral Account in accordance with the terms of the DCP. Your vested Deferral Account balance will be paid by the Company entity that
employed you at the time your Affiliate Options were granted. However, that entity's obligation under the DCP is an unsecured promise to pay money in the future in an amount equal to the vested
balance credited to your Deferral Account. 

EIX
has guaranteed the payment of the vested amount credited to your Deferral Account should EME become insolvent. EIX's guarantee of amounts otherwise payable by EME is also an unsecured promise to
pay money in the future. 

No
Company entity has set aside any money in a "rabbi trust" or otherwise, or created any special reserve, with respect to the DCP. Amounts payable to you or your beneficiary will be paid from the
general assets of EME (or, in the event that EME becomes insolvent, from the general assets of EIX) exclusively. You will have no special rights against any specific property 

19

 

or assets of EIX or EME, nor will you be the beneficiary of, or have any rights, claims or interests in, any annuity contract or other investment, or the proceeds therefrom, owned or which may be
acquired by EIX or EME, in the event of that entity's receivership, bankruptcy or insolvency. 

Your
rights against the assets of the Company in each case will be no greater than the rights of other unsecured general creditors. You will be entitled to receive amounts payable under the DCP, if
any, only if EME (or EIX should EME become insolvent) has enough funds available to pay DCP obligations after paying all of its secured or other priority creditors. 

	32.
	What about the DCP's investments?

There
are none. The DCP is an unfunded plan, has no assets, and makes no investments. 

	33.
	Does the DCP give me any employment rights?

No.
Neither the DCP nor your participation in the DCP has any effect on your employment status or gives you any rights to continued employment with the Company or any of its affiliates. 

Plan Administration  

	34.
	How will the DCP be administered?

The
Compensation and Executive Personnel Committee of the Board of Directors of EIX (the "Committee") will administer the DCP. The EIX Board of Directors appoints the members of the Committee and has
the right to change the membership of the Committee at any time. The Committee has the authority to make and enforce all rules and regulations for the administration of the DCP and to decide or
resolve any and all questions, including interpretations of the DCP, as may arise in connection with the DCP. 

Decisions
of the Committee with respect to the DCP and/or amounts payable under the DCP are final, conclusive and binding on all parties. 

You
will receive a statement of your DCP account balances following the end of each calendar quarter. If you have any questions regarding your statement, contact EIX Executive Compensation at
(626) 302-1025 or (626) 302-7568. Discrepancies in your statement should promptly be reported to EIX Executive Compensation. 

	35.
	How do I make a claim for amounts payable under the DCP?

You
should file a written request with the Committee if you believe that you are being denied a benefit to which you are entitled under the DCP. The request should set forth the reasons for
your claim. Any communication to the Committee should be sent to the Committee, care of EIX's Secretary to the following address: 

Corporate
Secretary, Edison International

2244 Walnut Grove Avenue, P.O. Box 800

Rosemead, California 91170 

The
Committee will reply to the claim within 90 days (or 180 days under special circumstances). If the claim is denied in whole or in part, you may submit the claim, within
60 days after such denial, to the Committee for review. The Committee will review the prior claim decision and any additional information that you may submit, and will inform you in writing of
its final decision, not more than 60 days after its receipt of your request for review (or 120 days under special circumstances). 

20

 

The
DCP's specific claims procedures are set forth in Section 14.1 of the DCP document. Claims also may be submitted to arbitration as described in Section 14.2 of the DCP document. 

	36.
	Is the DCP a "qualified" plan?

No.
As an unfunded plan maintained by the Company for the purpose of providing deferred compensation for a select group of management or highly compensated employees, the DCP is not subject to the
participation, vesting, funding, fiduciary responsibility or plan termination insurance provisions of ERISA. The DCP is not qualified under Section 401(a) of the Internal Revenue Code of 1986,
as amended. 

	37.
	Who pays the costs of administering the DCP?

The
Company pays the expenses of administering the DCP. 

	38.
	Can the DCP be amended or terminated?

EIX
generally may amend the DCP at any time. Your consent will be required as to any amendment that is materially adverse to your rights or benefits under the DCP. 

Federal Income Tax and Social Security Consequences  

        Questions 39 - 45 below discuss the United States federal income tax and Social Security considerations of a
material nature that relate to amounts credited and paid under the DCP, and that relate to SEUs if you elect a deferral of your SEU payment. Question 46 comments on state, local and foreign tax
matters. The information in this section has been prepared based on the advice of the Company's tax advisors. However, the Company cannot and does not guarantee any particular tax consequences. You
should consult your own tax advisors.

        The Company will withhold any amounts required by law (including U.S. federal, state or local, or foreign, income, employment or other taxes) to be withheld from
amounts credited or payments due under the DCP, and from amounts credited or due in respect of the SEUs. The amount of tax withheld by the Company may not be sufficient to pay the actual tax liability
due, and you will be responsible for any shortfall.

	39.
	What is the income tax effect of electing to defer compensation?

Based
on the advice of their tax counsel, EIX and EME believe that amounts credited to your Deferral Account will only be taxed for income tax purposes in the year when they are actually paid to you.
In addition, interest credited in accordance with the DCP will not be taxed in the year it is credited to your account but will only be taxed in the year it is actually paid to you. 

Similarly,
if you elect to defer the payment of your SEUs, your SEUs will not be taxed when they vest or are converted to a dollar credit to your Deferral Account, and you will not be taxed if and
when you are granted additional SEUs as dividend equivalents. You will only be taxed for income tax purposes in the year that the amount credited to your Deferral Account in respect of your SEUs is
actually paid to you. 

You
will recognize taxable income upon the receipt of payments from the DCP. The amount of income that you recognize will equal the amount of cash that you receive from the DCP and will constitute
ordinary income, not capital gain. 

You
will pay federal income tax based on the tax rates in effect for the year in which you receive a payment from the DCP, rather than based on the tax rates in effect for the year in which the
compensation is deferred. 

Under
current law, you will not be entitled to postpone income tax on payments from the DCP by rolling those payments over into an individual retirement account, nor will you be 

21

 

entitled to the benefits of income averaging that may be available for distributions from tax-qualified plans. 

	40.
	If my DCP credits are considered pretax deferrals, why is FICA currently withheld?

The
Federal Insurance Contributions Act ("FICA") imposes two types of taxes—Social Security tax (at 6.2%) and Medicare tax (at 1.45%)—on both employers and employees for wages
paid to employees. The Social Security tax is a percentage of wages up to the Social Security wage base limitation, which is $76,200 for the year 2000. The Social Security wage base is adjusted
annually. Once you have paid Social Security tax for a given year on an amount of wages from a particular employer equal to the wage base limitation, no further Social Security tax is payable on that
year's wages from that employer. Currently, there is no wage base limitation for Medicare tax purposes. Thus, all wages paid to you are subject to Medicare tax. 

Amounts
credited to your Deferral Account are treated as wages received for FICA tax purposes in the year such amounts are vested, rather than in the year that they are actually paid. Thus, although
the DCP defers the recognition of income for regular federal income tax purposes, it does not do so for FICA tax purposes. 

For Example:    Your Deferral Account is credited with $50,000 on the Exchange Date, $45,000 of which is vested. The vested $45,000 that is
credited to your Deferral Account, as well as interest credited with respect thereto in the year 2000, will be subject to FICA tax in 2000. Any interest credited after 2000 in respect of that vested
amount will not be subject to FICA tax. The unvested $5,000 credited to your Deferral Account will be subject to FICA tax in the year that it becomes vested. Any interest that is credited in respect
of the unvested $5,000, through the year of vesting, also will be subject to FICA tax in the year that the $5,000 vests, but interest credited after the year of vesting will not be subject to FICA
tax. 

Amounts
credited to your Deferral Account (including interest) will not be subject to FICA tax at the time they are paid to you. A limited exception to this rule is that your vested Deferral Account
balance (to the extent that it becomes vested in the year of payment) will be subject to FICA tax at the time of payment rather that on December 31 of that year. 

As
permitted by law, the Company will elect to defer the date that FICA taxes are triggered from the actual vesting date of deferred amounts to the last day of the calendar year in which the amounts
vest. The Company will elect to defer the FICA tax date to the last day of the calendar year in which deferred amounts vest to facilitate the withholding of your portion of the FICA taxes due. The
Company expects that it will satisfy its FICA tax withholding obligation with respect to your deferrals by deducting the amount it is required to withhold from your Deferral Account. 

For Example:    Your Deferral Account is credited with $50,000 on the Exchange Date, $45,000 of which is vested. The vested $45,000 that is
credited to your Deferral Account earns $1,500 in interest through December 31, 2000. The vested portion of your Deferral Account on December 31, 2000 equals $46,500 (the amount deferred
plus interest credited with respect thereto). The $46,500 will be subject to FICA tax on December 31, 2000. The required FICA withholding will equal $674.25 (this amount is calculated at a rate
of 1.45% and assumes that you had reached the $76,200 Social Security wage base limitation for 2000). The Company will satisfy its withholding obligation by deducting the $674.25 from your Deferral
Account balance. 

22

  

The
deduction to your Deferral Account will, however, be treated as a taxable distribution to you that will also be subject to income tax withholding. The Company will withhold federal income taxes at
the supplemental wage withholding rate (currently 28%) and any state and local income taxes. (For this example, state income tax withholding is assumed to be at a 6% rate—the current
supplemental withholding rate for California employees. No local income tax withholding is assumed. The actual state and, if applicable, local withholding rate(s) will depend on the state in which you
are employed.) 

Thus,
the actual amount required to be withheld will be greater than $674.25 and will equal (1) the original $674.25, plus (2) the amount of income tax withholding due with respect to
the total reduction of your Deferral Account. The actual withholding amount will be approximately $1,021.59 and will be ordinary taxable income to you. The actual withholding amount is calculated as
follows: (1) federal income tax withholding on the deemed distribution equals $286.04 (28% of $1,021.59), (2) state income tax withholding on the deemed distribution equals $61.30 (6% of
$1,021.59), and (3) the original FICA tax due equals $674.25; these amounts total $1,021.59. 

Your
vested Deferral Account balance will be $45,478.41 ($46,500 minus $1,021.59). (Note that if you had not reached the Social Security wage base limitation, the Company would also withhold Social
Security tax (at 6.2%) until the limitation had been reached, which would increase the amount deducted from your Deferral Account.) As noted above, the $1,021.59 will be taxable ordinary income to you
in the year that your Deferral Account is reduced. The income taxes that are withheld may not be sufficient to pay the actual tax liability due, and you will be responsible for any shortfall. 

The
unvested $5,000 credited to your Deferral Account will be subject to FICA tax in the year(s) that it vests. Assume that $2,500 vests in January 2001 and that interest credited on the $2,500
through December 31, 2001 is $283. The $2,783 will be subject to FICA tax on December 31, 2001. Your Deferral Account will be reduced by the required withholding amount, which will
constitute a taxable distribution to you and also will be subject to income tax withholding, as described above. Similar treatment will apply to the portions of your Deferral Account that vest in 2002
and 2003. 

The
Company fully expects to satisfy its tax withholding obligations in the manner described above. Thus, the Company's tax withholding obligations (1) should not affect other compensation
payable by the Company to you, and (2) should not require you to make a payment to the Company. 

	41.
	If my SEUs are not subject to income tax until they are paid, why is FICA withheld when the SEUs vest?

If
you elect to defer payment of your SEUs, your SEUs are treated as wages received for FICA tax purposes in the year that they become vested, rather than in the year that they are converted to a
dollar credit to your Deferral Account. Thus, although the SEUs defer the recognition of income for regular federal income tax purposes, they do not do so for FICA tax purposes. 

For Example:    You elect to defer payment of your SEUs and you are vested in 1,000 SEUs on the Exchange Date. You are subject to FICA tax on
the value of 1,000 SEUs in the year 2000. If the Per SEU Payment Amount is $25, you will recognize $25,000 of taxable income in 2000 for FICA purposes. 

For
purposes of FICA withholding, the Per SEU Payment Amount will equal the average of the high and low prices of a share of EIX common stock on the last trading day preceding the date that
withholding occurs. 

23

 

Your
SEUs will not be subject to FICA tax at the time that they are converted to a dollar credit to your Deferral Account. A limited exception to this rule is that if your SEUs vest, and are converted
and paid in the same year, FICA withholding will occur at the time of payment rather than December 31 of that year. In this case, your payment will be reduced by the amount of required FICA
withholding. If your SEUs vest and are converted (but not paid) in the same year, your Deferral Account will be reduced on December 31 of that year by the amount of required FICA withholding.
In this case, any interest that was credited to your Deferral Account with respect to the conversion and before December 31 of that year also will be subject to FICA withholding on
December 31. 

Interest
credited to your Deferral Account in respect of your converted SEUs, if any, will not be subject to FICA tax (with the limited exception noted in the last paragraph). 

As
noted in the response to Question 40, a tax rule allows the Company to elect to defer the date that FICA taxes are triggered from the actual vesting date to the last day of the calendar year in
which the amounts vest. The Company intends to defer the FICA tax date to the last day of the calendar year in which SEUs vest to facilitate the withholding of your portion of the FICA taxes due. The
Company expects that it will satisfy its FICA tax withholding obligation with respect to your SEUs by reducing the number of your outstanding vested SEUs by a number equal in value to the amount of
the withholding obligation. 

For Example:    Using the facts of the last example, you are subject to FICA tax on the value of 1,000 SEUs on December 31, 2000. If
the Per SEU Payment Amount is $25 on December 31, 2000, you will recognize $25,000 of taxable income at that time for FICA purposes. The required FICA withholding
will equal $362.50 (this amount is calculated at a rate of 1.45% and assumes that you had reached the Social Security wage base limitation for 2000). The Company will satisfy its withholding
obligation by reducing the number of your outstanding vested SEUs by the required withholding amount. The reduction to the number of your vested SEUs will, however, be treated as a taxable
distribution to you that will also be subject to income tax withholding. Therefore, the actual amount required to be withheld will be greater than $362.50 and will equal (1) the original
$362.50, plus (2) the income tax withholding due with respect to the reduction of your SEUs. The actual withholding amount will be approximately $549.24 (assuming a federal withholding rate of
28% and a state withholding rate of 6%) and will be ordinary taxable income to you. If the Per Unit Payment Amount is $25, the Company will reduce your outstanding vested SEUs by 21.9696 units
($549.24 divided by $25) and you will continue to hold 978.0304 vested SEUs. (Note that if you had not reached the Social Security wage base limitation, the Company would also withhold Social Security
tax (at 6.2%) until the limitation had been reached, which would increase the amount required to be withheld.) 

Similar
treatment will apply to your SEUs that vest in 2001, 2002 and 2003. 

The
Company fully expects to satisfy its tax withholding obligations in the manner described above. Thus, the Company's tax withholding obligations (1) should not affect other compensation
payable by the Company to you, and (2) should not require you to make a payment to the Company. 

	42.
	Will DCP distributions affect my Social Security benefits after I Retire?

Yes
and no. DCP distributions will not affect the amount of your Social Security benefits. For purposes of Social Security, these amounts are considered "earned" when they are vested; therefore, they
do not constitute earned income when they are distributed to you and will not cause any loss of Social Security benefits. However, because the distributions will be 

24

 

considered gross income for federal income tax purposes, they may have the effect of subjecting a portion of your Social Security benefits to federal income taxation. You should discuss these issues
in greater detail with your tax advisor. 

	43.
	What are the income tax withholding consequences of electing to defer compensation under the DCP?

Under
current law, no income tax withholding is required when you defer compensation, but the Company is required to withhold income tax from DCP distributions. The Company will withhold federal
income taxes from distributions at the supplemental wage withholding rate (currently 28%). State and local income tax withholding also may be required, depending on your state of employment. (For
example, the California supplemental wage withholding rate is 6%.) 

For example:    Using the facts in the second example in the response to Question 40, assume that your vested Deferral Account balance of
$45,478.41 increases to $65,000 because of interest and the conversion of your SEUs, then becomes payable to you. You will be paid approximately $42,900 (assuming a state tax withholding rate of 6%
and no local tax withholding). This amount equals your total vested Deferral Account balance of $65,000, minus (1) federal income tax withholding of $18,200 (28% of $65,000) and
(2) state tax withholding of $3,900 (6% of $65,000). The income taxes that are withheld may not be sufficient to pay the actual tax liability due, and you will be responsible for any shortfall.
FICA had already been withheld on the vested amounts. Thus, your distribution, including the interest that was credited after your vested amounts were subject to FICA tax, would not be subject to FICA
withholding. 

	44.
	Are amounts paid to my beneficiary taxable income to my beneficiary?

Any
amounts payable to your beneficiary upon or following your death are taxable to your beneficiary as income and, under certain circumstances, may be subject to estate taxes as part of your estate.
Your tax advisor can provide you with more information on this topic. 

	45.
	Could a change in tax law affect my benefits?

Yes.
The foregoing discussion is based on current law. Congress may change the relevant tax and Social Security law at any time, and such changes may be retroactive to before the date of enactment.
Such changes may have a material effect on the benefit you expect to achieve by deferring income. 

For
example, Congress may change the rates of federal income tax in the future. If federal income tax rates increase, you may pay more income tax when amounts credited under the DCP are paid than you
would have paid if those amounts had been taxed currently. You should therefore carefully evaluate the after-tax benefits and risks of electing a deferral. 

	46.
	What are (1) the local income tax and (2) the foreign income tax consequences of deferrals?

EIX
and EME are unaware of any state and local income tax consequences in the United States of participation in the DCP that differ from the United States federal income tax consequences described
above. 

EIX
and EME are unaware of any foreign jurisdiction (other than Singapore, as noted below) in which you may now be employed by EME in which the income tax consequences to you in that country would be
different than those United States federal income tax consequences described above. Taxation is,
however, different in Singapore. EIX and EME are distributing a supplement to this DCP Summary to participants who are employed in Singapore. 

25

 

Effect on Other Retirement Plan Benefits  

	47.
	How will amounts credited or paid under the DCP affect my benefits under other Company-sponsored retirement plans?

They
will not. Income that you would have recognized if you had exercised your Affiliate Options in the ordinary course would have been excluded from your compensation for purposes of determining your
benefits under other Company-sponsored retirement plans. Similarly, income recognized in connection with the DCP will be excluded from your compensation for purposes of determining your benefits under
other Company-sponsored retirement plans. 

Section 16 Consequences  

	48.
	What are the Section 16 reporting and matching liability consequences of the SEUs?

Under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), an insider is required to report the acquisition of SEUs (on Form 4 or 5), the granting of
additional SEUs as dividend equivalents (on Form 4 or Form 5), any forfeiture of SEUs (on Form 4 or 5), and the payment or conversion of SEUs (on Form 4). Executive
officers of EIX and members of the EIX Board of Directors are considered "insiders." An executive officer of an EIX affiliate may be deemed an EIX executive officer, and therefore considered an
insider, for this purpose. 

Under
Section 16(b) of the Exchange Act, an insider may have to pay to EIX the amount of any profit realized from a sale and purchase, or purchase and sale, of EIX equity securities (including
derivative securities) that occurs within a six-month period and is not otherwise exempt from Section 16(b). The grant, forfeiture and/or payment (including any automatic conversion
to your Deferral Account) of SEUs (including dividend equivalent SEUs) should be exempt from Section 16(b) "matching" liability.
SEU deferral and payment elections contemplated by the Exchange Offer should also be exempt from Section 16(b) matching liability. If you are an insider and make an election to convert your
SEUs to your Deferral Account, your election and the attendant conversion could be deemed to be a matchable "discretionary transaction" under Section 16(b) in certain circumstances and subject
you to Section 16(b) matching liability. These rules are complex—your election to convert your SEUs will subject you to Section 16(b) matching liability only if (1) it
is made within six months after you elect an opposite-way discretionary transaction (such as a transfer of your 401(k) plan account into the EIX stock fund), and (2) it occurs
within six months of a prior non-exempt acquisition of EIX equity securities by you (such as a purchase of EIX common stock on the open market). 

EIX
has implemented a compliance program to assist insiders with their reporting obligations and avoidance of Section 16 liability. If you are an insider, you should contact the EIX Corporate
Secretary before engaging in any transaction involving your SEUs (including any election to convert your SEUs). You also may contact the EIX Corporate Secretary if you are uncertain whether EIX
considers you to be an insider. However, compliance with Section 16 is the sole responsibility of the individual insider, and you should contact your personal attorney as appropriate. 

26

 

 
 

ADDITIONAL INFORMATION    
  

        If you have any questions with respect to the Exchange Offer, the DCP, the SEUs, or any other matters discussed in this DCP Summary, please contact EIX Executive
Compensation, at the special Exchange Offer telephone line (626/302-5675) or e-mail address (exchange@Edison.com), or at the following address: 

Executive
Compensation

Edison International

2244 Walnut Grove Avenue, P.O. Box 800

Rosemead, California 91770 

        After
the Exchange Date, you may also contact EIX Executive Compensation at (626) 302-1025 or (626) 302-7568. 

        The
Circular, and the documents filed with the Securities and Exchange Commission that are incorporated by reference in the Circular, are incorporated by reference into this DCP Summary.
If you need another copy of the Circular, contact EIX Executive Compensation at the above address or telephone number. For information with respect to the documents filed with the Securities and
Exchange Commission that are incorporated by reference, see "Additional Information; Incorporation of Documents by Reference" in the Circular. 

27

 
 

ATTACHMENT A    
    
    DEFERRED COMPENSATION PLAN DOCUMENT    
  

 
 

EDISON INTERNATIONAL    
    
    AFFILIATE OPTION    
    
    DEFERRED COMPENSATION PLAN    
  

Effective
as of August 7, 2000. 

  

 
 

TABLE OF CONTENTS    
  

	 
	 	Page

	ARTICLE 1	 	 
	 	DEFINITIONS	 	 
	ARTICLE 2	 	 
	 	PARTICIPATION	 	 
	 	2.1 Commencement	 	4
	 	2.2 Continuation of Participation	 	4
	ARTICLE 3	 	 
	 	EMPLOYEE DEFERRALS	 	 
	 	3.1 Participation Election	 	4
	 	3.2 Vesting	 	4
	ARTICLE 4	 	 
	 	DEFERRAL ACCOUNTS AND INTEREST	 	 
	 	4.1 Deferral Accounts	 	5
	 	4.2 Crediting Deferral Accounts	 	5
	 	4.3 Debiting Deferral Accounts	 	5
	 	4.4 Statement of Deferral Accounts	 	6
	 	4.5 Interest	 	6
	ARTICLE 5	 	 
	 	RETIREMENT BENEFITS	 	 
	 	5.1 Amount of Benefits	 	6
	 	5.2 Form of Benefits	 	6
	 	5.3 Commencement of Benefits	 	7
	 	5.4 Small Benefit Exception	 	7
	ARTICLE 6	 	 
	 	TERMINATION OF EMPLOYMENT BENEFITS	 	 
	 	6.1 Termination of Employment	 	7
	 	6.2 Termination of Employment With Cause	 	7
	ARTICLE 7	 	 
	 	DEATH BENEFITS	 	 
	 	7.1 Pre-Retirement Death Benefits	 	8
	 	7.2 Post-Retirement or Total Disability Death Benefits	 	8
	 	7.3 Post-Termination Death Benefits	 	8
	 	7.4 Change in the Form of Benefits	 	8
	 	7.5 Small Benefit Exception	 	8
	ARTICLE 8	 	 
	 	TOTAL DISABILITY BENEFITS	 	 
	 	8.1 Amount of Benefits	 	9
	 	8.2 Form of Benefits and Small Benefit Exception	 	9
	 	8.3 Commencement of Benefits	 	9
	ARTICLE 9	 	 
	 	IN-SERVICE WITHDRAWALS	 	 
	 	9.1 Scheduled Withdrawals	 	9
	 	9.2 Unscheduled Withdrawals	 	10
	 	9.3 Severe Financial Hardship Withdrawals	 	10

i

 

	ARTICLE 10	 	 
	 	CONDITIONS RELATED TO BENEFITS	 	 
	 	10.1 Nonassignability	 	11
	 	10.2 No Right to Assets	 	11
	 	10.3 Protective Provisions	 	11
	 	10.4 Taxes, Tax Withholding	 	11
	 	10.5 Employer's Right to Defer Payment	 	11
	 	10.6 Termination of Employment	 	12
	 	10.7 Payments on Behalf of Persons Under Incapacity	 	12
	ARTICLE 11	 	 
	 	PLAN ADMINISTRATION	 	 
	 	11.1 General	 	12
	 	11.2 Administrator Action	 	12
	 	11.3 Powers and Duties of the Administrator	 	12
	 	11.4 Construction and Interpretation	 	13
	 	11.5 Information	 	13
	 	11.6 Compensation, Expenses and Indemnity	 	13
	ARTICLE 12	 	 
	 	BENEFICIARY DESIGNATION	 	 
	 	12.1 Beneficiary Designations—General	 	13
	 	12.2 Payments to Minors	 	14
	ARTICLE 13	 	 
	 	AMENDMENT OR TERMINATION OF PLAN	 	 
	 	13.1 Amendment of Plan	 	14
	 	13.2 Termination of Plan	 	14
	 	13.3 Amendment or Termination After Change in Control	 	14
	 	13.4 Exercise of Power to Amend or Terminate	 	14
	 	13.5 Constructive Receipt Termination	 	14
	ARTICLE 14	 	 
	 	CLAIMS AND ARBITRATION PROCEDURES	 	 
	 	14.1 Claims and Review Procedures	 	15
	 	14.2 Dispute Arbitration	 	15
	ARTICLE 15	 	 
	 	MISCELLANEOUS	 	 
	 	15.1 Successors	 	15
	 	15.2 ERISA Plan	 	16
	 	15.3 Trust	 	16
	 	15.4 Employment Not Guaranteed	 	16
	 	15.5 Continued Service	 	16
	 	15.6 Gender, Singular and Plural	 	16
	 	15.7 Captions	 	16
	 	15.8 Validity	 	16
	 	15.9 Waiver of Breach	 	16
	 	15.10 Expenses	 	17
	 	15.11 Applicable Law	 	17
	 	15.12 Notice	 	17

ii

 
 

EDISON INTERNATIONAL    
    
    AFFILIATE OPTION DEFERRED COMPENSATION PLAN    
    
    Effective as of August 7, 2000    
    
    PREAMBLE    

        WHEREAS, the outstanding Edison Mission Energy and Edison Capital Affiliate Options granted under the Edison International Equity Compensation Plan, the Edison
International Officer Long-Term Incentive Compensation Plan and the Edison International Management Long-Term Incentive Compensation Plan may be exchanged pursuant to the
Affiliate Option Exchange Offer; and 

        WHEREAS,
it has been proposed to establish a deferred compensation plan that would permit the deferral of any amounts realized by Participants who elect to accept the Affiliate Option
Exchange Offer for their outstanding Affiliate Options. 

        NOW
THEREFORE, the Edison International Affiliate Option Deferred Compensation Plan is established subject to the terms and conditions set forth herein. 

 
 

ARTICLE 1
  DEFINITIONS    
  

        Whenever the following words or phrases are used in the Plan with the first letter capitalized, they shall have the meanings specified below. 

        Administrator means the Compensation and Executive Personnel Committee of the Board of Directors of EIX. 

        Affiliate means EIX or any corporation or entity which, along with EIX, is a component member of a "controlled group of corporations"
within the meaning of Section 414(b) of the Code. 

        Affiliate Option means an Edison Mission Energy or Edison Capital affiliate option performance award awarded to an Eligible Person
pursuant to the terms of the EIX Officer Long-Term Incentive Compensation Plan, the EIX Management Long-Term Incentive Compensation Plan, or the EIX Equity Compensation Plan. 

        Affiliate Option Exchange Offer or Exchange Offer means the offers by the Participating
Affiliates which expire on August 7, 2000 to exchange all outstanding Affiliate Options for Cash Exchange Amounts and SEUs under the terms and conditions set forth in the Exchange Offer
Circulars. 

        Beneficiary means the person or persons, or entity, entitled in accordance with Article 12 to receive all or a portion of a
Participant's Plan benefits upon the Participant's death. 

        Cash Exchange Amounts means the amounts, determined in accordance with the Exchange Offer Circular, that would become payable to a
Participant in cash in 2001, 2002 and 2003 as a result of the Participant's acceptance of the Affiliate Option Exchange Offer, including any cash that would become payable in lieu of SEUs to an
Eligible Person who is no longer employed by the Affiliates on the Exchange Date. 

        Cause means the willful failure by a Participant to substantially perform his or her duties for an Affiliate or the willful engaging by a
Participant in conduct which is injurious to an Affiliate, monetarily or otherwise. 

        Change in Control means any event that triggers a "Distribution Date" under the Rights Agreement approved by the EIX Board of Directors on
November 20, 1996, as amended on September 16, 1999. 

        Code means the United States Internal Revenue Code of 1986, as amended from time to time. 

        Conversion Election means a Participant's written election, filed on a form and in a manner prescribed by the Administrator for this
purpose, to convert all of the Participant's vested SEUs into a 

 

dollar credit to the Participant's Deferral Account in accordance with such Participant's Participation Election and Section 3.1. 

        Deferral Account means the notional account for each Participant established for recordkeeping purposes to which amounts deferred under
the Plan, denominated in cash, and interest thereon, is allocated under Article 4 of the Plan. 

        EIX means Edison International or any successor corporation. 

        Eligible Person means an individual who (a) is designated by a Participating Affiliate as eligible to participate in the Plan, and
(b) is employed by an Affiliate on the Exchange Date (unless such individual's employment with an Affiliate terminated due to his or her Retirement or following his or her Total Disability),
and (c) satisfies one of the requirements set forth in the following paragraph: 

        An
individual must satisfy at least one of the following three criteria to qualify as an Eligible Person: (a) he or she had individual Income (as defined below) in excess of
$200,000 in each of 1998 and 1999 and reasonably expects to reach the same level in 2000, (b) he or she had joint Income with his or her spouse in excess of $300,000 in each of 1998 and 1999
and reasonably expects to reach the same level in 2000, or (c) he or she has an individual Net Worth (as defined below) or a joint Net Worth with his or her spouse in excess of $1,000,000. When
making a Participation Election, an otherwise Eligible Person must attest, in writing in the Participation Election, to the fact that he or she satisfies one of these three criteria or the
Participation Election shall be ineffective. The Administrator may rely on such representation in determining whether the individual is an Eligible Person. For purposes of this paragraph, the
following definitions shall apply: 

        "Income"
means the sum of the individual's (or, with respect to the joint Income test, the individual's and his or her spouse's): (i) total gross wages and bonuses actually paid
by an Affiliate or another employer, (ii) interest (whether taxable or non-taxable) and dividends received, (iii) gains or other income realized from investments (unrealized
appreciation in the value of assets does not count as income for this purpose), and (iv) similar amounts of income actually paid or realized. "Income" is determined before taking into account
taxes, deductions that may reduce income for tax purposes, deductions on account of contributions to a 401(k) retirement plan or nonqualified deferred compensation plan, and other expenses. 

        "Net
Worth" means the total current value of the individual's (or, with respect to the joint Net Worth test, the individual's and his or her spouse's) assets (including houses, other
real estate, automobiles, investments and the value of vested Affiliate Options) minus his or her debts (including mortgages and other loans). 

        Employer means the Participating Affiliate that employed the Participant at the time the Participant's Affiliate Option was awarded. 

        ERISA means the United States Employee Retirement Income Security Act of 1974, as amended from time to time. 

        Exchange Date means the date, determined in accordance with the Exchange Offer Circular, that the Affiliate Option Exchange Offer becomes
effective and Affiliate Options are exchanged for Cash Exchange Amounts and SEUs. 

        Exchange Offer Circular means either the document describing the offer to exchange Edison Mission Energy Affiliate Options, dated
July 3, 2000, or the document describing the offer to exchange Edison Capital Affiliate Options, dated July 3, 2000. 

2

 

        100% 10-Year Rate means an annual interest rate effective for a calendar year that is equivalent to 100% of the
120-month average annual rate of 10-year U.S. Treasury Notes determined as of October 15 of the preceding year. 

        120% 10-Year Rate means an annual interest rate effective for a calendar year that is equivalent to 120% of the
120-month average annual rate of 10-year U.S. Treasury Notes determined as of October 15 of the preceding year. 

        Participant means an Eligible Person who has filed a valid and effective Participation Election in accordance with Section 3.1. 

        Participating Affiliate means EIX, Edison Mission Energy, or Edison Capital. 

        Participation Election means a Participant's written election, on a form and filed in a manner prescribed by the Administrator for this
purpose, to defer Cash Exchange Amounts and/or SEU Exchange Amounts under the Plan in accordance with Section 3.1. 

        Plan means this Edison International Affiliate Option Deferred Compensation Plan, as amended from time to time. 

        Retirement means a Participant's termination of employment with the Affiliates after attainment of age 55 and after completion of at least
five years of service with an Affiliate, as determined by the Administrator. 

        Scheduled Withdrawal means a distribution of all or a portion of a Participant's vested Deferral Account as elected by the Participant in
accordance with Section 9.1 of the Plan. 

        Severe Financial Hardship means a financial hardship to a Participant that results from: (a) a sudden and unexpected illness or
accident suffered by a Participant or his or her dependent(s), (b) loss of the Participant's property due to casualty, or (c) other similar extraordinary and unforeseeable circumstances
that arise as a result of events beyond a Participant's control. Examples of what will not be considered a Severe Financial Hardship include the Participant's need to pay college expenses for a
dependent or the Participant's desire to purchase a home. 

        Severe Financial Hardship Withdrawal means a distribution of all or a portion of a Participant's vested Deferral Account in accordance
with Section 9.3 of the Plan. 

        SEU means a stock equivalent unit granted to a Participant as a result of the Participant's acceptance of the Affiliate Option Exchange
Offer. 

        SEU Exchange Amounts means the amounts that would otherwise be paid to a Participant in cash in respect of the Participant's SEUs, had the
Participant not elected to defer such payment in accordance with the Plan. 

        Total Disability means the permanent and total disability of a Participant as determined by the Benefits Committee of EIX, in its
discretion. 

        Unscheduled Withdrawal means a distribution of all or a portion of a Participant's vested Deferral Account in accordance with
Section 9.2 of the Plan. 

        Valuation Date means the last day of the month in which a Participant's termination of employment occurs, or for the purposes of
calculating Scheduled, Unscheduled and Severe Financial Hardship Withdrawals under Article 9, the day before such a withdrawal is made. 

3

 

 
 

ARTICLE 2
  PARTICIPATION    
  

        2.1    Commencement.    

        An
Eligible Person will become a Participant in the Plan as of the Exchange Date if he or she files a valid and effective Participation Election. 

        2.2    Continuation of Participation.    

        Once
a Deferral Account balance has been established, a Participant or Beneficiary will continue as a Participant or Beneficiary under the Plan as long as a balance remains in his or her
Deferral Account. 

 
 

ARTICLE 3
  EMPLOYEE DEFERRALS    
  

        3.1    Participation Election.    

        (a)    Cash Exchange Amounts Deferral.    An Eligible Person may make a one-time election to defer his or
her Cash Exchange Amounts under the Plan by completing and submitting a Participation Election, which sets forth the Eligible Person's Cash Exchange Amounts deferral election, to the Administrator by
August 7, 2000. All of the Eligible Person's Cash Exchange Amounts, or the Eligible Person's Cash Exchange Amounts in excess of a specified dollar amount, may be deferred under the Plan. 

        (b)    SEU Exchange Amounts Deferral.    An Eligible Person may make a one-time election to defer 100%,
but not less than 100%, of his or her SEU Exchange Amounts under the Plan by completing and submitting a Participation Election, which sets forth the Eligible Person's SEU Exchange Amounts deferral
election, to the Administrator by August 7, 2000. 

        (c)    Irrevocable Election.    A Participant's Participation Election is irrevocable once filed. 

        3.2    Vesting.    

        (a)    Vesting in Deferral Accounts Upon Termination of Employment.    A Participant's right to receive Cash Exchange
Amounts deferred under Section 3.1(a) and any interest thereon will be subject to the vesting terms and conditions of the original Affiliate Option awards. To that end, the portion of a
Participant's Cash Exchange Amounts attributable to vested Affiliate Options (and interest thereon) shall be vested as of the Exchange Date. The portion of the Participant's Cash Exchange Amounts
attributable to unvested Affiliate Options (and interest thereon) will vest on January 2, 2001, 2002, or 2003, as applicable. Cash Exchange Amounts deferred under Section 3.1(a) (and
interest thereon) that are not vested on the Exchange Date will be conditionally credited to a Participant's Deferral Account and will be forfeited to the extent such amounts are not vested upon the
termination of the Participant's employment with the Affiliates. Amounts credited to a Participant's Deferral Account that relate to SEU Exchange Amounts shall be fully vested since only a
Participant's vested SEUs can be converted to a dollar credit to his or her Deferral Account. 

        (b)    Vesting in Deferral Accounts Upon Retirement, Total Disability or Death.    A Participant whose employment with
the Affiliates terminates on account of the Participant's Retirement, death, or following his or her Total Disability, will become vested in a pro rata portion of any Cash Exchange Amounts credited to
his or her Deferral Account that are attributable to Affiliate Options granted in 1998 and/or 1999. In such event, X% of the aggregate amount credited to the Participant's Deferral Account
attributable to 1998 Affiliate Options shall be vested, and X% of the aggregate amount credited to the Participant's Deferral Account attributable to 1999 Affiliate 

4

 

Options shall be vested. For this purpose, X shall be determined by dividing (i) the completed months that have elapsed between the date the Participant's 1998 Affiliate Options or 1999
Affiliate Options, as the case may be, were granted and the date of the Participant's termination of employment with the Affiliates, by (ii) 48. 

        (c)    Vesting Upon a Change in Control.    A Participant shall automatically be 100% vested in the balance credited
to his or her Deferral Account upon a Change in Control. 

 
 

ARTICLE 4
  DEFERRAL ACCOUNTS AND INTEREST    
  

        4.1    Deferral Accounts.    

        Solely
for record keeping purposes, the Administrator will maintain a Deferral Account for each Participant to which Cash Exchange Amounts and/or SEU Exchange Amounts deferred under
Section 3.1 and the interest thereon shall be credited. The Administrator may subdivide a Participant's Deferral Account into separate sub-accounts to keep track of the portions of
the Participant's Deferral Account balance that are subject to different vesting schedules. 

        4.2    Crediting Deferral Accounts.    

        (a)    Cash Exchange Amounts.    The portion of each Participant's Cash Exchange Amount that the Participant elects to
defer in accordance with his or her Participation Election shall be credited to his or her Deferral Account as of the Exchange Date. 

        (b)    SEU Exchange Amounts.    If an Eligible Person elects to defer his or her SEU Exchange Amounts in accordance
with Section 3.1(b), all of the Eligible Person's vested SEUs shall be converted to a dollar credit to his or her Deferral Account as of the day after his or her Conversion Election is received
by the Administrator. A Participant may file a Conversion Election with respect to his or her vested SEUs at any time (i) after the first anniversary of the Exchange Date and
(ii) before the earlier of the third anniversary of the Exchange Date or the date the Participant's employment with the Affiliates terminates. A Participant's Conversion Election is irrevocable
once filed. To the extent a Participant's employment with the Affiliates terminates before the third anniversary of the Exchange Date and the Participant elected a deferral of his or her SEU Exchange
Amounts, all vested SEUs that have not previously been converted pursuant to a Conversion Election shall automatically be converted to a dollar credit to his or her Deferral Account as of the later of
the first anniversary of the Exchange Date or the day following the termination of the Participant's employment with the Affiliates. If an Eligible Person elects a deferral of his or her SEU Exchange
Amounts, all of the Participant's outstanding vested SEUs that have not been converted to a dollar credit to his or her Deferral Account prior to the third anniversary of the Exchange Date shall
automatically be converted to a dollar credit to the Participant's Deferral Account as of the third anniversary of the Exchange Date. The dollar amount to be credited to a Participant's Deferral
Account upon conversion of his or her SEUs shall be
calculated in accordance with Section 9(c), 9(d), or 9(e), as applicable, of the Statement of Terms and Conditions applicable to the Participant's SEU Award Certificate. 

        4.3    Debiting Deferral Accounts.    

        Each
Participant's Deferral Account shall be reduced by the amount of his or her distributions, withdrawals, amounts used to satisfy applicable tax withholding obligations, and any
forfeited unvested Cash Exchange Amounts and the interest thereon. A Participant shall have no further rights with respect to an SEU if such SEU is converted to a dollar credit to his or her Deferral
Account in accordance with Section 4.2(b). 

5

 

        4.4    Statement of Deferral Accounts.    

        In
accordance with procedures established by the Administrator, each Participant shall receive a statement indicating the balance credited to his or her Deferral Account at the end of
each calendar quarter, or more or less frequently as determined by the Administrator. 

        4.5    Interest.    

        All
interest shall be compounded annually and credited to Participants' Deferral Accounts on a daily basis at the following rates: 

        (a)    120% 10-Year Rate.    Each Participant's Deferral Account balance shall earn interest at the 120%
10-Year Rate, as in effect from time to time, from the date a balance is first credited to that Deferral Account until the date that such Deferral Account balance is zero. 

        (b)    100% 10-Year Rate.    Notwithstanding Section 4.5(a), any Participant who terminates
employment with the Affiliates (other than by reason of the Participant's Retirement, death, of following the Participant's Total Disability), and whose Deferral Account balance is to be distributed
in installments rather than a single lump sum payment, shall earn interest on his or her Deferral Account balance beginning on the date his or her employment with the Affiliates terminates until the
date that such account balance is zero at the 100% 10-Year Rate, as in effect from time to time (rather than the 120% 10-Year Rate applicable until the date the Participant's
employment terminates). 

 
 

ARTICLE 5
  RETIREMENT BENEFITS    
  

        5.1    Amount of Benefits.    

        Following
a Participant's Retirement, the Participant's Employer will pay the Participant a retirement benefit in the form elected by the Participant in accordance with
Section 5.2, based on the vested balance of the Participant's Deferral Account as of the Valuation Date. If paid as a lump sum, the retirement benefit will be equal to the vested balance of the
Participant's Deferral Account. If paid in installments, the installments will be paid in amounts that will amortize the Participant's vested Deferral Account balance with interest credited at the
120% 10-Year Rate, as in effect from time to time, over the period of time benefits are to be paid. For purposes of calculating installments, the Participant's Deferral Account will be
valued as of December 31 each year, and subsequent installments will be adjusted for the next calendar year according to procedures established by the Administrator. 

        5.2    Form of Benefits.    

        A
Participant may elect on his or her Participation Election to have his or her Retirement benefits paid in cash: 

        (a)  in
a lump sum, 

        (b)  in
monthly installments paid over the Participant's choice of 60, 120, or 180 months, or 

        (c)  in
an initial lump sum of a specified percentage or dollar amount of the Participant's Deferral Account, with the remainder paid in monthly installments over the
Participant's choice of 60, 120, or 180 months. 

        If
no valid election is made, the Participant will be deemed to have elected monthly installments over 180 months. A Participant may change the form of benefits elected by filing
a new written election, on a form and in a manner prescribed by the Administrator, with the Administrator; provided, however, that if such new written election is received by the Administrator less
than 13 months prior to the date of the Participant's Retirement, such new written election shall be ineffective and the 

6

 

Participant's benefits will be distributed in accordance with the payout election (or deemed election) in effect 13 months prior to the date of the Participant's Retirement. 

        5.3    Commencement of Benefits.    

        Retirement
benefits will be paid or installments will commence within 60 days after the date of the Participant's Retirement, but in no event earlier than January 2, 2002
or as soon as administratively practicable thereafter. 

        5.4    Small Benefit Exception.    

        Notwithstanding
the provisions of Section 5.2, the Administrator may, in its sole discretion: 

        (a)  pay
benefits in a single lump sum if the sum of all benefits payable to the Participant is less than or equal to $3,500, or 

        (b)  reduce
the number of monthly installments elected by the Participant if necessary to produce a monthly benefit of at least $300. 

 
 

ARTICLE 6
  TERMINATION OF EMPLOYMENT BENEFITS    
  

        6.1    Termination of Employment.    

        (a)    Amount of Benefits.    Upon termination of a Participant's employment with the Affiliates (other than due to
the Participant's Retirement, death, or following the Participant's Total Disability), the Participant's Employer will pay the Participant a benefit in the form elected by the Participant in
accordance with Section 6.1(b), based on the vested balance of the Participant's Deferral Account as of the Valuation Date. If paid as a lump sum, the benefit will be equal to the vested
balance of the Participant's Deferral Account. If paid in installments, the installments will be paid in amounts that will
amortize the Participant's vested Deferral Account balance with interest credited at the 100% 10-Year Rate, as in effect from time to time, over the period of time benefits are to be paid.
For purposes of calculating installments, the Participant's Deferral Account will be valued as of December 31 each year, and subsequent installments will be adjusted for the next calendar year
according to procedures established by the Administrator. 

        (b)    Form of Benefits and Small Benefit Exception.    A Participant may elect on his or her Participation Election
to have his or her benefit paid in cash: 

          (i)  in
a lump sum, or 

        (ii)  in
three annual installments. 

        If
no valid election is made on the Participation Election, the Participant will be deemed to have elected a lump sum. The small benefit provisions of Section 5.4 shall apply to
benefits payable in accordance with this Section 6.1. The election of the form of benefit under this Section 6.1(b) is irrevocable once the Participant files his or her Participation
Election. 

        (c)  Commencement of Benefits. Benefits will be paid or installments will commence within 60 days after the date of the
Participant's termination of employment, but in no event earlier than January 2, 2002 or as soon as administratively practicable thereafter. 

        6.2    Termination of Employment With Cause.    

        Notwithstanding
anything in Section 6.1 to the contrary, upon an Affiliate's termination of a Participant's employment with Cause, the Participant's Employer will pay the vested
balance of the Participant's Deferral Account as of the Valuation Date. Such payment shall be made in a single lump sum within 60 days after the Participant's employment is terminated with
Cause, but in no 

7

 

event earlier than January 2, 2002 or as soon as administratively practicable thereafter. The Employer may pay such benefits to the Participant earlier if the Employer so elects. 

 
 

ARTICLE 7
  DEATH BENEFITS    
  

        7.1    Pre-Retirement Death Benefits.    

        If
a Participant dies while actively employed by an Affiliate, the Participant's Employer will pay such Participant's Beneficiary the vested balance of the Participant's Deferral Account
as of the Valuation Date. Such death benefits shall be paid to the Beneficiary in the form elected by the Participant in accordance with Section 5.2. If paid as a lump sum, the benefit will be
equal to the vested balance of the Participant's Deferral Account. If paid in installments, the installments will be paid in amounts that will amortize the Participant's vested Deferral Account
balance with interest credited at the 120% 10-Year Rate, as in effect from time to time, over the period of time benefits are to be paid. For purposes of calculating installments, the
Participant's Deferral Account will be valued as of December 31 each year, and subsequent installments will be adjusted for the next calendar year according to procedures established by the
Administrator. Benefits will be paid or installments will commence as soon as administratively practicable following the Participant's death, but in no event earlier than January 2, 2002 or as
soon as administratively practicable thereafter. 

        7.2    Post-Retirement or Total Disability Death Benefits.    

        If
a Participant dies (a) after Retirement or (b) after the Participant's employment by an Affiliate terminates following the Participant's Total Disability, the
Participant's Employer will pay the remaining balance of the Participant's Deferral Account to the Participant's Beneficiary at the same time and in the same form as such benefits would have otherwise
been paid to the Participant. 

        7.3    Post-Termination Death Benefits.    

        If
a Participant dies following termination of employment with an Affiliate for reasons other than (a) Retirement or (b) following the Participant's Total Disability, but
prior to the payment of all benefits under the Plan, the Participant's Employer will pay the remaining vested balance of the Participant's Deferral Account to the Beneficiary in a lump sum as soon as
administratively practicable following the Participant's death, but in no event earlier than January 2, 2002 or as soon as administratively practicable thereafter. 

        7.4    Change in the Form of Benefits.    

        Beneficiaries
may petition the Administrator once, and only after the death of the Participant, for a change in the form of death benefits. The Administrator may, in its sole and
absolute discretion, choose to grant or deny such a petition. 

        7.5    Small Benefit Exception.    

        Notwithstanding
the foregoing provisions of Section 7.1 and 7.2 set forth above, the Administrator may, in its sole discretion: 

        (a)  pay
death benefits in a single lump sum if the sum of all benefits payable to the Beneficiary is less than or equal to $3,500, or 

        (b)  reduce
the number of monthly installments elected by the Participant if necessary to produce a monthly death benefit of at least $300. 

8

 

 
 

ARTICLE 8
  TOTAL DISABILITY BENEFITS    
  

        8.1    Amount of Benefits.    

        Upon
termination of a Participant's employment by an Affiliate following his or her Total Disability, the Participant's Employer will pay the Participant a benefit in the form elected by
the Participant in accordance with Section 5.2, based on the vested balance of the Participant's Deferral Account as of the Valuation Date. If paid as a lump sum, the benefit will be equal to
the vested balance of the Participant's Deferral Account. If paid in installments, the installments will be paid in amounts that will amortize the Participant's vested Deferral Account balance with
interest credited at the 120% 10-Year Rate, as in effect from time to time, over the period of time benefits are to be paid. For purposes of calculating installments, the Participant's
Deferral Account will be valued as of December 31 each year, and subsequent installments will be adjusted for the next calendar year according to procedures established by the Administrator. 

        8.2    Form of Benefits and Small Benefit Exception.    

        Benefits
shall be paid in the form elected by the Participant in accordance with Section 5.2 and all the provisions of Section 5.2 (Form of Benefits) and Section 5.4
(Small Benefit Exception) shall apply to all benefit payments made upon the Participant's termination of employment following his or her Total Disability. 

        8.3    Commencement of Benefits.    

        Benefits
will be paid or installments will commence within 60 days following termination of the Participant's employment, but in no event earlier than January 2, 2002 or as
soon as administratively practicable thereafter. 

 
 

ARTICLE 9
  IN-SERVICE WITHDRAWALS    
  

        9.1    Scheduled Withdrawals.    

        (a)    Election.    A Participant may elect on his or her Participation Election to receive distribution of a
specified dollar amount of his or her vested Deferral Account at a specified year in the future. Such election, if made, must be on the Participant's Participation Election at the time it is initially
submitted to the Administrator and shall be irrevocable once filed. A Participant may elect only one Scheduled Withdrawal and only one distribution year. Any Scheduled Withdrawal election will be
ineffective if the Participant ceases to be employed by an Affiliate prior to the date the Scheduled Withdrawal is to be distributed. 

        (b)    Timing and Form.    The year specified for the Scheduled Withdrawal may not be earlier than 2002. Scheduled
Withdrawals for 2002 shall be paid in a lump sum as soon as administratively practicable following the second anniversary of the Exchange Date. Scheduled Withdrawals for years after 2002 shall be paid
in a lump sum on or as soon as administratively practicable following January 1st of the year specified in the Participation Election. 

        (c)    Inadequate Deferral Account Balance.    If a Participant has elected a Scheduled Withdrawal in an amount
greater than the Participant's vested Deferral Account balance on the Scheduled Withdrawal payment date and the Participant elected to defer his or her SEU Exchange Amounts, a portion of such
Participant's vested SEUs shall be converted to a dollar credit to the Participant's Deferral Account in accordance with Section 9(f) of the Statement of Terms and Conditions applicable to the
Participant's SEU Award Certificate. Such conversion shall be in an amount sufficient to satisfy the
Participant's Scheduled Withdrawal payment election. If the conversion of vested SEUs described in the preceding sentences is insufficient to fulfill such 

9

 

Participant's Scheduled Withdrawal payment election, then such Participant shall receive only a Scheduled Withdrawal of his or her entire vested Deferral Account balance (after conversion of any
vested SEUs) and will not receive any additional Scheduled Withdrawal distributions if and when any additional Deferral Account balances vest or SEUs are converted. 

        (d)    Remaining Deferral Account.    The remainder, if any, of the Participant's Deferral Account following payment
of a Scheduled Withdrawal (and any amount credited upon a subsequent conversion of SEUs) will remain credited to that Deferral Account and will be distributed according to the other terms of the Plan
and the Participant's Participation Election. 

        9.2    Unscheduled Withdrawals.    

        A
Participant may elect, on a form provided and in a manner prescribed by the Administrator, to withdraw between 25% and 100% (in whole percentages) of his or her vested Deferral Account
balance at any time following the second anniversary of the Exchange Date. A Participant who makes an Unscheduled Withdrawal shall pay a penalty of 10% of the amount elected to be withdrawn which
shall be deducted from the amount of the Unscheduled Withdrawal otherwise payable and forfeited to the Employer. The 10% penalty percentage shall be reduced to 5% of the amount elected to be withdrawn
in the case of Unscheduled Withdrawals received within two years following a Change in Control. The following Unscheduled Withdrawal elections shall be treated as an election to make an Unscheduled
Withdrawal of 100% of the Participant's vested Deferral Account balance: (a) an Unscheduled Withdrawal of over 75% of the Participant's vested Deferral Account balance, or (b) an
Unscheduled Withdrawal which leaves a vested Deferral Account balance of $3,500 or less. The Unscheduled Withdrawal shall be paid within 30 days after the date the Administrator receives an
Unscheduled Withdrawal election from the Participant. 

        9.3    Severe Financial Hardship Withdrawals.    

        A
Participant may elect, on a form and in a manner prescribed by the Administrator, to withdraw all or a portion of his or her vested Deferral Account balance at any time without penalty
on account of his or her Severe Financial Hardship, provided that the Administrator approves the Participant's Severe Financial Hardship Withdrawal. However, a Severe Financial Hardship Withdrawal
shall not exceed the amount needed by the Participant to alleviate the Severe Financial Hardship, plus the amount of taxes that will be withheld from such withdrawal. The Administrator is the final
arbiter of whether a particular set of factual circumstances constitutes a Severe Financial Hardship to a Participant and the Administrator's decision shall be final and binding. The amount of a
Severe Financial Hardship Withdrawal that is approved by the Administrator shall be paid in a lump sum as soon as administratively practicable following the Administrator's approval. 

10

  

 
 

ARTICLE 10
  CONDITIONS RELATED TO BENEFITS    
  

        10.1    Nonassignability.    

        The
benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or in any manner whatsoever. These
benefits will be exempt from the claims of creditors of any Participant or other claimants and from all orders, decrees, levies, garnishments or executions against any Participant to the fullest
extent allowed by law. Notwithstanding the foregoing, the benefit payable to a Participant may be assigned in full or in part, pursuant to a domestic relations order of a court of competent
jurisdiction or, following the Participant's death, may be paid to the Participant's Beneficiary. 

        10.2    No Right to Assets.    

        The
benefits paid under the Plan will be paid from the general assets of the respective Employer (or, in the event that Employer becomes insolvent, from the general assets of EIX), and
Participants and Beneficiaries will be no more than unsecured general creditors of the Employer or EIX with no special or prior rights, claims or interests in any assets of the Employer and/or EIX for
payment of any obligations hereunder. To that end, EIX guarantees the Plan obligations of each other Employer should that Employer become insolvent. The Participant will have no claim to benefits from
any other Affiliate. 

        10.3    Protective Provisions.    

        Participants
and Beneficiaries will cooperate with the Administrator by furnishing any and all information requested by the Administrator to facilitate the payment of benefits hereunder,
taking such physical examinations as the Administrator may deem necessary, and taking such other actions as may
be requested by the Administrator. If any Participant or Beneficiary refuses to cooperate, the Administrator and the Employer will have no further obligation to such Participant or Beneficiary under
the Plan. 

        10.4    Taxes, Tax Withholding.    

        Each
Participant, former Participant and Beneficiary shall be solely responsible for all income and employment taxes arising in connection with participation in the Plan or becoming
entitled to benefits under the Plan. The Administrator may reduce the amount of any benefit otherwise payable under the Plan by the amount of any federal, state or local income tax withholding
requirements and Social Security, Medicare or other employee tax requirements applicable to the payment of benefits under the Plan. To the extent the Administrator can not or does not satisfy such
withholding obligations in that manner, Participants and Beneficiaries will make appropriate arrangements, as a condition to the payment of any benefit, with the Administrator for satisfaction of any
such withholding obligation. 

        10.5    Employer's Right to Defer Payment.    

        If
the Administrator determines that an Employer's ability to take a tax deduction for one or more payments to be made under the Plan is, or reasonably could be, limited by Code
Section 162(m), the Employer may elect to defer such payment(s) until a year in which the Administrator determines that the Employer's tax deduction for such payment(s) is not, or is reasonably
not expected to be, limited by Code Section 162(m). Any payments deferred under this Section 10.5 shall remain in the Deferral Account of an affected Participant and shall continue to
earn interest at the rate applicable to that Deferral Account. 

11

 

        10.6    Termination of Employment.    

        For
all purposes of the Plan, a termination of a Participant's employment shall not be deemed to occur if the Participant's employment by one Affiliate terminates and, within
30 days of that termination, the Participant is reemployed by the same or another Affiliate. 

        10.7    Payments on Behalf of Persons Under Incapacity.    

        In
the event that any amount becomes payable under the Plan to a person who, in the sole judgement of the Administrator, is considered by reason of physical or mental condition to be
unable to give a valid receipt therefor, the Administrator may direct that such payment be made to any person found by the Administrator, in its sole judgement, to have assumed the care of such
person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Administrator, the Employer and all other Affiliates. 

 
 

ARTICLE 11
  PLAN ADMINISTRATION    
  

        11.1    General.    

        The
Administrator will administer the Plan and interpret, construe and apply its provisions in accordance with its terms and will provide direction and oversight as necessary to EIX
management to whom day-to-day Plan operations are delegated. 

        11.2    Administrator Action.    

        The
Administrator shall act at meetings by affirmative vote of a majority of the members of the Administrator. Any action permitted to be taken at a meeting may be taken without a
meeting if, prior to such action, a written consent to the action is signed by all members of the Administrator and such written consent is filed with the minutes of the proceedings of the
Administrator. A member of the Administrator shall not vote or act upon any matter which relates solely to himself or herself as a Participant. The Chairman or any other member or members of the
Administrator designated by the Chairman may execute any certificate or other written direction on behalf of the Administrator. 

        11.3    Powers and Duties of the Administrator.    

        The
Administrator shall have all powers necessary to accomplish its purposes under Section 11.1, including, but not by way of limitation, the power: 

        (a)  To
construe and interpret the terms and provisions of the Plan; 

        (b)  To
compute and certify the amount and kind of benefits payable to Participants and their Beneficiaries, to determine the time and manner in which such benefits are paid,
and to determine the amount of withholding taxes to be deducted pursuant to Section 10.4; 

        (c)  To
maintain all records that may be necessary for the administration of the Plan; 

        (d)  To
provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as
shall be required by law; 

        (e)  To
make and publish such rules for the regulation of the Plan and procedures for the administration of the Plan as are not inconsistent with the terms hereof; and 

        (f)    To
appoint a plan administrator or any other agent, and to delegate to them such powers and duties in connection with the administration of the Plan as the Administrator
may from time to time prescribe. 

12

 

        11.4    Construction and Interpretation.    

        The
Administrator shall have full discretion to construe and interpret the terms and provisions of the Plan, which interpretation or construction shall be final and binding on all
parties, including but not limited to each Participating Affiliate and any Participant or Beneficiary. The Administrator shall administer such terms and provisions in a uniform and nondiscriminatory
manner and in full accordance with any and all laws applicable to the Plan. 

        11.5    Information.    

        To
enable the Administrator to perform its functions, each Participating Affiliate shall supply full and timely information to the Administrator on all matters relating to the
compensation of all Participants, their Cash Exchange Amounts and SEU Exchange Amounts, their death or other cause of termination, and such other pertinent facts as the Administrator may require. 

        11.6    Compensation, Expenses and Indemnity.    

        The
members of the Administrator shall serve without compensation for their services hereunder. The Administrator is authorized at the expense of the Participating Affiliates to employ
such legal counsel as it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in connection with the administration of this Plan shall be paid by the
Participating Affiliates. To the extent permitted by applicable state law, the Participating Affiliates shall indemnify and save harmless the Administrator and each member thereof, and delegates of
the Administrator who are employees of a Participating Affiliate, against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims arising out
of their discharge in good faith of responsibilities under or incident to the Plan, other than expenses and liabilities arising out of willful misconduct. This indemnity shall not preclude such
further indemnities as may be available under insurance purchased by the Participating Affiliates or provided by the Participating Affiliates under any bylaw, agreement or otherwise, as such
indemnities are permitted under state law. 

 
 

ARTICLE 12
  BENEFICIARY DESIGNATION    
  

        12.1    Beneficiary Designations—General.    

        Each
Participant will have the right, at any time, to designate any person or persons as Beneficiaries (both primary and contingent) to whom payment under the Plan will be made in the
event of the Participant's death. The Beneficiary designation will be effective when it is received in writing by the Administrator during the Participant's lifetime on a form prescribed by the
Administrator. 

        The
receipt of a new valid Beneficiary designation by the Administrator will cancel all prior Beneficiary designations. Any finalized divorce or marriage of a Participant subsequent to
the date of a Beneficiary designation will revoke such designation, unless in the case of divorce the previous spouse was not designated as Beneficiary, and unless in the case of marriage the
Participant's new spouse previously was designated as Beneficiary. The spouse of a married Participant must consent in writing to any designation of a Beneficiary other than the spouse. 

        If
a Participant fails to validly designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage, divorce, or otherwise without execution of a new
designation, or if every person designated as Beneficiary predeceases the Participant or dies prior to the complete distribution of the Participant's benefits, then the Administrator will direct the
payment of the Participant's remaining benefits to the Participant's surviving spouse, or if there is no surviving spouse, to the Participant's estate. If a Beneficiary dies after commencement of
payment of the Participant's 

13

 

benefits to such Beneficiary, a lump sum of any remaining payments will be paid to such Beneficiary's beneficiary, if one has been designated, or to such Beneficiary's estate. 

        12.2    Payments to Minors.    

        Notwithstanding
anything else herein to the contrary, in the event any amount is payable under the Plan to a minor, payment shall not be made to the minor, but instead be paid:
(a) to that person's living parent(s) to act as custodian; (b) if that person's parents are then divorced, and one parent is the sole custodial parent, to such custodial parent; or
(c) if no parent of that person is then living, to a custodian selected by the Administrator to hold the funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect in the
jurisdiction in which the minor resides. If no parent is living and the Administrator decides not to select another custodian to hold the funds for the minor, then payment shall be made to the duly
appointed and currently acting guardian of the estate for the minor or, if no guardian of the estate for the minor is duly appointed and currently acting within 60 days after the date the
amount becomes payable, payment shall be deposited with the court having jurisdiction over the estate of the minor. 

 
 

ARTICLE 13
  AMENDMENT OR TERMINATION OF PLAN    
  

        13.1    Amendment of Plan.    

        Subject
to the terms of Section 13.3, EIX may amend the Plan at any time in whole or in part, provided, however, that the amendment: (a) will not decrease the balance of
any Participant's Deferral Account at the time of the amendment, and (b) will not result in a change to the interest formula that effectively decreases the interest rates under the Plan. EIX
may, however, amend the interest crediting dates of the Plan prospectively, in which case the Administrator will notify Participants of the amendment in writing within 30 days after the
amendment. 

        13.2    Termination of Plan.    

        Subject
to the terms of Section 13.3, EIX may terminate the Plan at any time. If EIX terminates the Plan, all Plan benefits will become fully vested, and the benefits Participants
are entitled to receive under the Plan will be paid to Participants in a lump sum within 60 days of the Plan's termination. 

        13.3    Amendment or Termination After Change in Control.    

        Notwithstanding
the foregoing, EIX will not amend or terminate the Plan without the prior written consent of affected Participants for a period of two calendar years following a Change
in Control, and will not thereafter amend or terminate the Plan in any manner which affects any Participant or Beneficiary who commences receiving benefits under the Plan prior to the end of the two
year period following the Change in Control. 

        13.4    Exercise of Power to Amend or Terminate.    

        Except
as provided in Section 13.3, EIX's power to amend or terminate the Plan will be exercisable by the Administrator. 

        13.5    Constructive Receipt Termination.    

        Notwithstanding
anything to the contrary in the Plan, in the event the Administrator determines that amounts deferred under the Plan have been constructively received by a Participant
and must be recognized as income for income tax purposes under applicable law, the Administrator may, in its sole discretion, commence distribution of that Participant's Deferral Account on such terms
as it may prescribe. The determination of the Administrator will be binding and conclusive. 

14

 

 
 

ARTICLE 14
  CLAIMS AND ARBITRATION PROCEDURES    
  

        14.1    Claims and Review Procedures.    

        (a)    Initial Claim.    The Administrator will notify a Participant in writing, within 90 days after his or
her written application for benefits, of his or her eligibility or ineligibility for benefits under the Plan. If the Administrator determines that a Participant is ineligible for benefits or full
benefits, the notice will set forth: (i) the specific reasons for the denial, (ii) a specific reference to the provisions of the Plan on which the denial is based, (iii) a
description of any additional information or material necessary for the claimant to perfect his or her claim and a description of why it is needed, and (iv) an explanation of the Plan's claims
review procedures and other appropriate information as to the steps to be taken if the Participant wishes to have the claim denial reviewed. If the Administrator determines that there are special
circumstances requiring additional time to make a decision, the Administrator will notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional 90-day period. 

        (b)    Review of Claim Denial.    If a Participant is determined by the Administrator to be ineligible for benefits,
or if the Participant believes that he or she is entitled to greater or different benefits, the Participant will have the opportunity to have the claim denial reviewed by the Administrator by filing a
petition for review with the Administrator within 60 days after receipt of the claim denial notice issued by the Administrator. Said petition will state the specific reasons which the
Participant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Administrator of the petition, the Administrator will afford the
Participant (and counsel, if any) an opportunity to present his or her position to the Administrator orally or in writing, and the Participant (or counsel) will have the right to review any pertinent
documents. The Administrator will notify the Participant of its decision in writing within the 60-day period, stating specifically the basis for its decision, written in a manner
calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If, because of special circumstances, the 60-day period is
insufficient, the decision may be deferred for up to another 60-day period at the election of the Administrator and notice of this deferral will be given to the Participant. In the event
of the death of the Participant, the same procedures will apply to the Participant's Beneficiaries. 

        14.2    Dispute Arbitration.    

        If
a Participant or Beneficiary is dissatisfied with the Administrator's decision on review, the matter shall be resolved through final and binding arbitration in Los Angeles,
California, pursuant to California Civil Procedure Code Sections 1282-1284.2 (excluding Sections 1283 and 1283.05). The arbitration shall be before a single neutral arbitrator mutually
agreed upon by the parties. In the event that the parties are unable to agree upon an arbitrator, the arbitrator shall be selected pursuant to California Civil Procedure Code Section 1281.6. If
a Participant or Beneficiary does not submit a request for arbitration within 30 days of receipt of the Administrator's written decision on review, the Participant or Beneficiary will be bound
by the Administrator's determination on review and may not thereafter be entitled to a review of the Administrator's determination by an arbitrator or a court. 

 
 

ARTICLE 15
  MISCELLANEOUS    
  

        15.1    Successors.    

        The
rights and obligations of each Employer under the Plan will inure to the benefit of, and will be binding upon, the successors and assigns of the Employer. 

15

 

        15.2    ERISA Plan.    

        The
Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a "select group of management or highly compensated employees" within the
meaning of Sections 201, 301 and 401 of ERISA, and therefore, the Plan is intended to be exempt from Parts 2, 3 and 4 of Title I of ERISA. EIX is the named fiduciary. 

        15.3    Trust.    

        The
Employers will be responsible for the payment of all benefits under the Plan. At their discretion, Employers may establish one or more grantor trusts for the purpose of providing for
payment of benefits under the Plan. The trust or trusts may be irrevocable, but an Employer's share of the assets thereof will be subject to the claims of the Employer's creditors. Benefits paid to
the Participant from any such trust will be considered paid by the Employer for purposes of meeting the obligations of the Employer under the Plan. 

        15.4    Employment Not Guaranteed.    

        Nothing
in the Plan, nor any amounts credited to a Participant's Deferral Account, shall confer upon any Participant any right to continue in the employ of any Affiliate, constitute any
contract or agreement of employment or affect any Participant's status as an employee at will, nor shall interfere in any way with the right of any Affiliate to change any Participant's compensation
or other benefits, or to terminate any Participant's employment with or without Cause. Nothing in this Section 15.4, however, is intended to adversely affect any express independent right of
such person under a separate employment contract. 

        15.5    Continued Service.    

        The
vesting schedule applicable to benefits under the Plan requires continued service through each applicable vesting date as a condition to the vesting of the applicable installment of
Plan benefits and the rights and benefits under the Plan. Partial service, even if substantial, during any vesting period will not entitle a Participant to any proportionate vesting or avoid or
mitigate a termination of rights and benefits upon or following a termination of employment as provided in Section 3.2(a), except as otherwise expressly provided in Section 3.2(b) or
3.2(c). 

        15.6    Gender, Singular and Plural.    

        All
pronouns and variations thereof will be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the
singular may be read as the plural and the plural as the singular. 

        15.7    Captions.    

        The
captions of the articles and sections of the Plan are for convenience only and will not control or affect the meaning or construction of any of its provisions. 

        15.8    Validity.    

        If
any provision of the Plan is held invalid, void or unenforceable, the same will not affect, in any respect whatsoever, the validity of any other provisions of the Plan. 

        15.9    Waiver of Breach.    

        The
waiver by the Employer or an Affiliate of any breach of any provision of the Plan by the Participant will not operate or be construed as a waiver of any subsequent breach by the
Participant. 

16

 

        15.10    Expenses.    

        Expenses
and fees incurred in connection with the administration of the Plan shall be paid by EIX. The Administrator is authorized to employ such legal counsel and consultants as it may
deem advisable to assist in the performance of its administrative duties. 

        15.11    Applicable Law.    

        The
Plan will be governed and construed in accordance with the laws of California except where the laws of California are preempted by ERISA. 

        15.12    Notice.     

        Any
notice or filing required or permitted to be given to an Employer or an Affiliate under the Plan will be sufficient if made in writing and hand-delivered, or sent by
first class mail to the principal office of EIX, directed to the attention of the Administrator. The notice will be deemed given as of the date of delivery, or, if delivery is made by mail, as of the
date shown on the postmark. 

        IN WITNESS WHEREOF, the Plan is adopted effective August 7, 2000. 

	 	 	EDISON INTERNATIONAL
	

 	
 	

By:	
 	

[John H. Kelly]

	

 	
 	

Its:	
 	

[Senior Vice President]

17

QuickLinks

TABLE OF CONTENTS

INTRODUCTION

RISK FACTORS

QUESTIONS AND ANSWERS ABOUT THE DCP

ADDITIONAL INFORMATION

ATTACHMENT A DEFERRED COMPENSATION PLAN DOCUMENT

EDISON INTERNATIONAL AFFILIATE OPTION DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

EDISON INTERNATIONAL AFFILIATE OPTION DEFERRED COMPENSATION PLAN Effective as of August 7, 2000 PREAMBLE

ARTICLE 1 DEFINITIONS

ARTICLE 2 PARTICIPATION

ARTICLE 3 EMPLOYEE DEFERRALS

ARTICLE 4 DEFERRAL ACCOUNTS AND INTEREST

ARTICLE 5 RETIREMENT BENEFITS

ARTICLE 6 TERMINATION OF EMPLOYMENT BENEFITS

ARTICLE 7 DEATH BENEFITS

ARTICLE 8 TOTAL DISABILITY BENEFITS

ARTICLE 9 IN-SERVICE WITHDRAWALS

ARTICLE 10 CONDITIONS RELATED TO BENEFITS

ARTICLE 11 PLAN ADMINISTRATION

ARTICLE 12 BENEFICIARY DESIGNATION

ARTICLE 13 AMENDMENT OR TERMINATION OF PLAN

ARTICLE 14 CLAIMS AND ARBITRATION PROCEDURES

ARTICLE 15 MISCELLANEOUS

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