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Enron Mail |
Snady:
Here is what our internal counsel in Canada is recommending. Carol St. Clair EB 3892 713-853-3989 (Phone) 713-646-3393 (Fax) ----- Forwarded by Carol St Clair/HOU/ECT on 05/25/2000 04:39 PM ----- =09Mark Powell\CAL\ECT =09Sent by: Mark Powell =0905/25/2000 02:25 PM =09=09=20 =09=09 To: Carol St Clair/HOU/ECT@ECT =09=09 cc: Peter Keohane/CAL/ECT@ECT, Greg Johnston/CAL/ECT@ECT =09=09 Subject: Weyerhaeuser Company Limited ISDA Hi Carol, Peter has asked me to respond to your inquiry as to whether or not we can= =20 agree to the request of Weyerhaeuser Company Limited ("WCL") in order to=20 replace the existing securities representations (as found near the bottom o= f=20 this e-mail) in the ISDA to: "It is a Qualified Party within the meaning of the Ontario Securities=20 Commission, Rule 91-505 Over-the-Counter Derivatives." From my perspective, there are four main reasons why this amendment would n= ot=20 be appropriate. They are as follows: 1. Proposed Rule 91-504 - Over-The-Counter Derivatives ("91-504") and the= =20 corresponding companion policy have yet to be formally adopted. At this=20 time, 91-504 is merely a proposal. In addition to checking the Ontario=20 Securities Commission ("OSC") website, I have contacted the lawyer who firs= t=20 brought the "securities representation" issue to our attention and he has= =20 confirmed that 91-504 is not yet in place and there have been no recent=20 announcements by the OSC with respect to an anticipated timeline for such= =20 adoption. 2. Even though the WCL may trade through an office in Toronto, any trade= =20 with Enron Canada Corp. ("Enron Canada") is likely to be considered a "trad= e=20 within Alberta" under Alberta securities law (due to the fact that the head= =20 office and the mind and management of Enron Canada are in Alberta). As a= =20 result, it is important that we get representations which address Alberta= =20 securities law. 3. In a similar vein to point number 2 above, a "trade" can take place in = a=20 number of jurisdictions depending upon the particular facts of the trade. = =20 Although it may seem unlikely, it is possible that trades could possibly be= =20 made in jurisdictions other than Alberta and Ontario. With the exception o= f=20 British Columbia, I am not aware of other provinces of Canada adopting=20 similar "blanket orders", "policies" or "rules" with respect to this issue.= =20 However, it is usually Ontario, Alberta and British Columbia which are at t= he=20 forefront of Canadian securities law development (with the remaining=20 jurisdictions eventually following the leaders). I expect that, once 91-5= 04=20 is in place, we will see some movement from the remaining jurisdictions. = =20 Regardless, it would seem prudent to leave the reference to British Columbi= a=20 in place at this time. 4. I think it is worthwhile to have the parties to the ISDA acknowledge th= e=20 fact that a transaction under the ISDA will constitute an "OTC Derivative"= =20 (and thus, have the applicable prospectus and registration exemptions=20 potentially available to them). I can think of no reason why it would be= =20 beneficial to either party to remove this representation. With respect to our physical agreements, we have addressed points 1, 2 and = 3=20 above (as well as the fact that the exemptions we are relying upon are=20 provided by blanket orders and policies {as opposed to the Securities Act= =20 (Alberta), Securities Act (British Columbia) or Securities Act (Ontario)} a= nd=20 are, thus, more likely to be {and more easily} amended) with the following= =20 clause: "(i) each Transaction shall constitute a =01&commodity contract=018 or an = =01&OTC=20 derivative=018 or such other similar term as defined pursuant to the securi= ties=20 legislation in force in Alberta or British Columbia or pursuant to the=20 securities legislation of any other jurisdictions having application to the= =20 Transaction, and (ii) it is a =01&Qualified Party=018 within the meaning of= =20 paragraph 9.1 of Alberta Securities Commission Order Doc.#394043 and=20 paragraph 1.1 of the British Columbia Securities Commission Blanket Order= =20 BOR#91-501, in either case, as amended, restated, replaced or re-enacted fr= om=20 time to time, and pursuant to any equivalent order or other enactment made= =20 pursuant to the securities laws of Alberta, British Columbia or any other= =20 jurisdictions having application to the Transaction;" I understand that similar language has not been adopted in the ISDA due to= =20 the "open-ended" nature of the above-mentioned clause. If we want to refer= =20 to 91-504 and only to the blanket orders and policies currently in place, I= =20 would suggest that we amend the existing clause, which states: Canadian Securities Acts. (i) Each Transaction shall constitute an =01&OTC= =20 Derivative=018 as defined in the Securities Act (Alberta) and the Securitie= s Act=20 (British Columbia) which have application to such Transaction and (ii) it i= s=20 a =01&Qualified Party=018 within the meaning of paragraph 9.1 of Alberta Se= curities=20 Commission Order Doc#394043 and/or paragraph 1.1 of the British Columbia=20 Securities Commission Blanket Order BOR#91-501(BC), as in effect on the dat= e=20 hereof. to: Canadian Securities Legislation. (i) Each Transaction shall constitute an= =20 "OTC derivative" within the meaning of paragraph 4 of Alberta Securities=20 Commission Order Doc#394043 ("ASC 394043"), paragraph 1.1 of British Columb= ia=20 Securities Commission Blanket Order BOR#91-501(BC) ("BCSC 91-501") and/or= =20 paragraph 1.1 of [proposed] Ontario Securities Commission Rule 91-504 =01)= =20 Over-The-Counter Derivatives [as published by the Ontario Securities=20 Commission on January 7, 2000] ("[Proposed] OSC 91-504"), as applicable to= =20 such Transaction, (ii) it is a "Qualified Party" within the meaning of=20 paragraph 9.1 of ASC 394043 and/or paragraph 1.1 of BCSC 91-501, as in effe= ct=20 on the date hereof, and (iii) it is a "qualified party" within the meaning = of=20 paragraph 1.1 of [Proposed] OSC 91-504. Once 91-504 is formally adopted by the OSC, the bold and square bracketed= =20 language above should be deleted and you may want to amend the ISDAs which= =20 were drafted using such language. Similarly, if there are amendments to t= he=20 Alberta or British Columbia orders or a province (other than Ontario, Alber= ta=20 or British Columbia) which could possibly have/claim some jurisdiction with= =20 respect to a transaction under the ISDA issues a similar order or policy, y= ou=20 may want to amend the clause (and possibly, the pre-existing ISDAs). I hope this discussion is useful for you. If you have any questions, pleas= e=20 do not hesitate to give me a call. I can be reached directly at (403)=20 974-6708. Mark.
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