Subject: RE: ISDA Agreement between Enron Canada Corp. and CASCO Inc.
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked]
Date: Fri, 18 May 2001 01:06:00 -0700 (PDT)

To All:
It seems as if CASCO has several major issues with our form of ISDA and 
obviously it is going to be difficult negotiating/executing this document.  I 
plan to notify Grant Oh, the Canadian Originator, to make him aware of these 
issues and advise him of the issues we face.  In addition, I will request 
that he speak to his contact at CASCO to let him know that the comments 
provided are very much outside our standard negotiating guidelines.

Thanks
Russell

 -----Original Message-----
From:  Panus, Stephanie  
Sent: Thursday, May 17, 2001 1:40 PM
To: St Clair, Carol
Cc: Diamond, Russell; Cook, Mary
Subject: ISDA Agreement between Enron Canada Corp. and CASCO Inc.

See below comments from Casco.

----- Forwarded by Stephanie Panus/NA/Enron on 05/17/2001 01:39 PM -----

	"Tonon, Lina" <[email-masked]> 05/17/2001 01:30 PM 	   To: 
"[email-masked]'" <[email-masked]>  cc: 
"[email-masked]'" <[email-masked]>, 
"[email-masked]'" <[email-masked]>, 
"[email-masked]'" <[email-masked]>, 
"[email-masked]'" <[email-masked]>  Subject: 
ISDA Agreement between Enron Canada Corp. and CASCO Inc.

MESSAGE FROM STEVEN W. SMITH

Stephanie:

Russell Diamond has raised a number of issues on the ISDA Schedule with
Terry Gabrielle of Canada Starch.  I have discussed these issues with Mr.
Gabrielle and thought it would be helpful if I set out Canada Starch's
position on those issues.  You will appreciate that it is important to
Canada Starch that its ISDA Master Agreement and Schedule be consistent with
those utilized in the Corn Products International family of companies.
Accordingly, Canada Starch has very limited flexibility in moving away from
the standard form of Schedule prescribed by Corn Products International for
use by its subsidiary companies.

1.   CASCO has not defined a cross default amount
      CASCO is suggesting a Threshold Amount of Cdn.$10 Million.
2.   CASCO is requesting Market Quotation, as opposed to Market Loss
      We have reviewed the arguments for and against the use of
Market Quotation versus the use of "Loss" and CASCO is of the view that the
obtaining of Market Quotations from Reference Market-Makers is the more fair
method to use.  Accordingly, CASCO proposes to use Market Quotation, which
incidentally is the Corn Products International Standard provision.
3.   CASCO is not including additional cure language for Credit Event
Upon Merger
      The suggested "cure" language of Enron is not consistent
with the Corn Products International standard provision.  CASCO's view is
that Enron is free to offer these proposed solutions to CASCO in the event
of a Credit Event Upon Merger and CASCO will determine whether or not to
accept either of these "remedies" at that time.  CASCO is not prepared to
accept these remedies in advance of such Credit Event Upon Merger occurring.
4.   CASCO is restricting the ability to net payments to only
transactions of the same type
      CASCO is required to restrict netting on this basis because
it does not have the systems in place to net across transactions of
different types.  
5.   Cross default - CASCO is requesting to aggregate defaults for
purposes of determining if the threshold has been exceeded
      CASCO's position is consistent with that provided in the
Corn Products International standard and we believe is a fair method by
which to deal with defaults which may individually be relatively minor in
nature but in the aggregate, exceed the Threshold Amount.
6.   CASCO is not accepting affiliate setoff
      Once again, affiliate setoff is not contemplated by the Corn
Products International standard agreement.  Moreover,  CASCO questions the
fairness of binding its affiliates to a setoff provision to which it might
not be aware.  Moreover, we have advised CASCO that the legal enforceability
of an affiliate setoff provision is questionable.  
7.   CASCO, potentially, want to confirm physical transactions under the
ISDA
      We assume that you are referring to the section of Part 7
Commodity Transactions which contemplates physical settlement.  If that is
the case, CASCO has put forward this provision because it is consistent with
the Corn Products International standard.
8.   CASCO has not included transfer, applicable rate and limitation of
liability language in the schedule
      Each of these items were excluded because they are not
consistent with the Corn Products International standard.  With respect to
the transfer provisions, CASCO is of the view that it is prepared to
consider a transfer request from Enron once it knows the particular
circumstances of the transfer.  CASCO is not prepared to approve transfers
in advance of knowing the details, not withstanding the continued existence
of a guarantee.
      With respect to the change to Applicable Rate, as mentioned
above, this change is not part of the Corn Products International standard
and it is not clear to CASCO why this change should be made.  
      With respect to the limitation of liability language, not
only is this section not consistent with the Corn Products International
standard, but it is also inconsistent with any other ISDA Master Agreement
entered into by CASCO.  
9.   CASCO is not accepting the Credit Support Annex
      It is CASCO's understanding that the ISDA Master Agreement
between CASCO and Enron was meant to be based on the creditworthiness of
CASCO, without any Credit Support Annex or other form of Credit Support
Provider being involved (other than the guaranty of Canada Starch Operating
Company Inc.)  Accordingly, CASCO is not prepared to enter into a Credit
Support Annex.
10.   There seems to be concerns with Enron's $15MM Guaranty cap
      It is CASCO's understanding that the ISDA Master Agreement
is meant to be a foundation document for all future Transactions (as defined
in the ISDA Master Agreement) which occur between CASCO and Enron Canada
Corp.  Accordingly, it seems inconsistent to CASCO to place a limit on the
guaranty which Enron Corp. is prepared to provide.  Any such limit would
necessarily require CASCO to re-visit the guaranty and the appropriateness
of the limit before any subsequent transaction is entered into.  It is
CASCO's experience in other ISDA Master Agreements that the guarantees
provided by the Credit Support Provider of its counterparty are
unconditional as to both time and amount.
Stephanie, I hope the foregoing helps explain CASCO's position on the
various outstanding issues in the ISDA Schedule.  Taking into the account
the foregoing comments, I look forward to receiving your comments on the
draft Schedule which I forwarded to you on March 26, 2001.

Lina Tonon
Legal Assistant to Steven W. Smith
Osler, Hoskin & Harcourt LLP
Direct:  416-862-6610
Fax:     416-862-6666

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