Phys/Finc netting

Mark and Jeff,

The Paper & Pulp desk has a customer that they would like to put into a three
year financial deal; however, the credit profile of the customer would
require hefty upfront security. At the same time, they would like to enter
into a contract wherein ENA purchases all of their production (newsprint) at
index prices. ENA's payable to this company could run to 10MM/ month. Can
we draft a netting arrangement that would allow us to net the physical and
financial exposures in the event of a default so that the customer would not
be required to post security for the financial deal? I think we may have
done something along these lines for a couple of Fred Lagrasta's customers.
I am comfortable that the purchase payable will more than offset the
potential financial exposure, but want to ensure that you are comfortable
that the ability to net these two exposures can be assured through a
contract. Let me know your thoughts.

Thanks,
Tanya