exv10w1





Exhibit 10.1



Second Amended and Restated CTO/BLS Supply Agreement



This Second Amended and Restated CTO/BLS Supply Agreement (this “Agreement”) is entered into
effective as of November 17, 2009 by and between INTERNATIONAL PAPER COMPANY, a New York
corporation having its global headquarters located at 6400 Poplar Avenue, Memphis, Tennessee 38197
(“IP”), and ARIZONA CHEMICAL COMPANY, LLC, a Delaware limited liability company having its
principal business office at 4600 Touchton Road East, Suite 1500, Jacksonville, Florida 32246
(“ACC”).




RECITALS



Whereas, IP produces black liquor soap (“BLS”) as a by-product of its pulp mill operations, and
crude tall oil (“CTO”) which is produced by acidulating BLS (CTO and BLS may also be referred to as
the “Products”);



Whereas, ACC uses the Products as raw materials to be refined into a variety of other products;



Whereas, IP wishes to sell, and ACC wishes to purchase, all of IP’s output of CTO and BLS, as
further provided in this Agreement;



Whereas, the parties entered into a Supply Agreement (the “Original CTO/BLS Agreement”) on November
1, 2001 with respect to the supply of the Products by IP to ACC;



Whereas, the parties entered into an Amended and Restated CTO/BLS Agreement (the “Amended CTO/BLS
Agreement”) on February 28, 2007 to amend, restate and supersede in its entirety the Original
CTO/BLS Agreement; and



Whereas, the parties are entering into this Agreement to amend, restate and supersede in its
entirety the Amended CTO/BLS Agreement.




AGREEMENT





	1.	 	Scope of Agreement.






	 	1.1.	 	Sale and Purchase Requirements; Recovery Efforts






	 	(a)	 	IP hereby agrees to sell, and ACC agrees to purchase, 100% of the output of CTO
and BLS produced by IP at the mills owned by IP and identified on Schedule 1.1(a) that
is attached hereto and made a part hereof. Such sales and purchases shall be made in
accordance with the pricing and related volume provisions of this Agreement and its
related Schedules, as adjusted from time to time. For the sake of clarity and
notwithstanding anything in this Agreement that may be deemed to the contrary, in no
event shall any provision in this Agreement require IP to produce any minimum
quantities of CTO or BLS at any such mills (whether individually or in the aggregate),
and the parties agree that the volume of output of the Products will be subject to




1









 






	 	 	 	change, including, but not limited to, any such change that may arise as a result of
any closure of or modification to any such mill(s) or the volumes and types of pulp
and paper products produced therein, which shall in each case be at IP’s sole
discretion. As of the date of this Agreement, the parties acknowledge that current
equipment and mill operations allow BLS produced by various IP mills to be sent to
IP’s other IP mills for acidulation in accordance with standards for economical,
efficient and maximized product recovery as set forth in subsections (b) and (c) below
and ACC shall purchase from IP the resulting CTO pursuant to the terms of this
Agreement applicable to ACC’s purchase of CTO.
	 
	 	(b)	 	IP shall use commercially reasonable efforts to maintain and improve the
recovery of the Products at the mills, which efforts shall include (i) employing
accepted industry practices and using accepted industry benchmarks to measure recovery
of BLS and (ii) appointing a management-level employee to be responsible for BLS
production in accordance with this Agreement.
	 
	 	(c)	 	ACC shall use commercially reasonable efforts to assist IP to maintain and
improve the recovery and quality of the Products produced at the mills in order to
assist IP in its efforts to maximize the production of CTO and BLS. The duties of
ACC’s engineers shall include, but are not limited to, those duties set forth on
Schedule 1.1(c).
	 
	 	(d)	 	IP will provide ACC with confidential data on a monthly basis sufficient for
ACC to prepare its monthly “By-Products Recovery Report,” or successor report
containing information regarding the recovery of the Products at the IP mills
identified on Schedule 1.1(a), including the information identified on Schedule 1.1(d).
In addition, on an annual basis, each IP mill identified on Schedule 1.1(a) shall
provide ACC with such mill’s budgeted wood use for the immediately following year no
later than the later of (i) December 1 of the current year and (ii) such time as such
data is developed as part of such mill’s budgeting cycle. In the event that such
budgeted wood use changes for a particular mill, such mill shall provide written notice
of such change to ACC.






	 	1.2.	 	New Mill Option






	 	(a)	 	In the event IP (or a wholly owned or, subject to Section 1.2(e), a majority
owned subsidiary or other affiliate of IP (collectively with IP, “IP Entity”)) acquires
(whether directly or indirectly by means of acquiring an interest in an entity or
otherwise) control of a majority interest in, or constructs, a U.S. or foreign mill
that produces CTO and/or BLS, but which is not identified on Schedule 1.1(a) hereto
(each, a “New Mill”), ACC shall have an option exercisable in accordance with this
Section 1.2 to (a) amend Schedule 1.1(a) hereto to include such New Mill, and (b)
purchase 100% of the output of CTO and/or BLS produced by the New Mill in accordance
with the pricing and related volume provisions of this Agreement (a “New Mill Option”).
For purposes of this Agreement, “affiliate” means, with any person, any other person
directly controlling, controlled or under common control with such




2









 






	 	 	 	person. For the purposes of this Agreement, “Control” as applied to any person, means
the possession, directly or indirectly, of the power to direct or cause the direction
of the management of that person, whether through ownership of voting securities or
otherwise.
	 
	 	(b)	 	Subject to compliance with the requirements of any confidentiality obligations
or applicable law (including, without limitation, securities and exchange laws,
regulations and rules), IP shall use reasonable commercial efforts to provide ACC with
prompt written notice (a “New Mill Notice”) of the execution by IP (or a wholly owned
subsidiary or, subject to Section 1.2(e), a majority owned subsidiary or other
affiliate of IP) of a definitive agreement to acquire (whether directly or indirectly
by means of acquiring an interest in an entity or otherwise) a New Mill, which New Mill
Notice shall include the following information: (i) the identity of the New Mill, and
(ii) to the extent known by IP (a) the annual output and quality of CTO and/or BLS by
such New Mill and (b) the existence and, to the extent not subject to confidentiality
provisions, terms of any Conflicting Agreements (as defined herein); if IP does not
know the quality of the Product produced by the New Mill, it can satisfy this
information requirement by either providing samples to ACC or permitting ACC to send
people to the New Mill for a brief due diligence visit, at IP’s option. In the event
IP does not provide a New Mill Notice to ACC prior to the consummation of the
acquisition of a New Mill, IP shall provide a New Mill Notice to ACC within 30 calendar
days after the consummation of such an acquisition. In the event IP constructs a new
mill, IP shall provide a New Mill Notice to ACC within 30 calendar days after the
commencement of operations of the New Mill. To exercise a New Mill Option, ACC must
provide written notice of such exercise to IP no later than 30 calendar days after the
date of receipt of the New Mill Notice by ACC. ACC’s exercise notice with respect to
a New Mill Option shall include an amended Schedule 1.1(a) that identifies the
applicable New Mill. In the event the New Mill Notice did not contain all of the
information required by Section 1.2(b)(ii) above, the 30-day exercise period shall not
commence until IP provides the information in 1.2(b)(ii) above whether by information,
sample or visit by ACC personnel. If ACC fails to provide written notice to IP of the
exercise of a New Mill Option prior to the expiration of the aforementioned 30-day
exercise period, the applicable New Mill Option with respect to the New Mill in
question shall be deemed to have been irrevocably waived and terminated by ACC and such
New Mill shall not be added to Schedule 1.1(a).
	 
	 	(c)	 	Notwithstanding the foregoing, if a New Mill is subject to an agreement for the
sale of CTO and/or BLS to a third party at the time the New Mill is acquired by IP (a
“Conflicting Agreement”), then any New Mill Option exercised by ACC in accordance with
this Section 1.2 shall not become effective as to the portion of output by such New
Mill committed under the Conflicting Agreement until the Conflicting Agreement has
expired or has been terminated in accordance with its terms. To the extent ACC
properly exercises a New Mill Option in accordance with this Section 1.2, then IP shall
exercise any right it may have with respect to the early termination of any Conflicting
Agreement applicable to such New Mill and shall not exercise any




3









 






	 	 	 	right that it may have to extend the term of any such agreement, provided that in the
event the exercise of any such termination right would require IP or any affiliate to
make any additional payments or incur any penalties under such Conflicting Agreement,
(i) IP shall promptly notify ACC that IP has such right and, to the extent not subject
to confidentiality provisions, the terms thereof and (ii) IP shall not be obligated to
exercise such termination right unless ACC, at its sole option, agrees that it will
bear the cost and indemnify IP for any and all additional costs, payments, losses or
penalties that arise out of such termination.






	 	(d)	 	Upon the proper execution of a New Mill Option by ACC, authorized
representatives of ACC and IP shall execute an amended Schedule 1.1(a) that identifies
the New Mill that was the subject of such New Mill Option, including its pricing and
volume designation.
	 
	 	(e)	 	Notwithstanding Section 1.2(a), the provisions of Sections 1.2(a)-(d) shall not
apply to any New Mill acquired or constructed by a majority owned subsidiary or other
affiliate of IP if IP does not have the unilateral right and authority to cause such
New Mill to sell CTO and/or BLS to ACC in accordance with this Agreement because such
right and authority is subject to a veto, approval or other right or requirement
applicable to the other owner(s) of such subsidiary, entity or affiliate. In addition,
IP agrees that it will inform the controlling entity of any company or mill of which IP
(or a wholly or majority owned subsidiary or other affiliate of IP) owns a
non-controlling interest and the other owner(s) of a New Mill with such veto, approval
or other right or requirement contemplated by the first sentence of this Section
1.2(e), as the case may be, that ACC buys CTO and BLS from IP and that ACC may be
interested in buying CTO and BLS from such controlling entity or other owner(s). IP
agrees to provide to ACC contact information needed for ACC to contact the controlling
entity and the other owner(s) of a New Mill with such veto, approval or other right or
requirement contemplated by the first sentence of this Section 1.2(e), as the case may
be.






	 	1.3.	 	In the event an IP Entity or its successor in interest sells or transfers its ownership
interest in any mill identified on Schedule 1.1(a) during the term of this Agreement, IP or
its successor in interest, as the case may be, will assign to the entity acquiring such
mill, and IP or such successor in interest will cause such entity to enter into a written
agreement pursuant to which that entity will assume, in each case on and as of the
consummation of that sale or transfer, all of IP’s or such successor’s rights and
obligations under this Agreement with respect to such mill except that such entity
acquiring such mill shall not be subject to Section 1.2 hereof. Upon such assignment and
assumption, IP or its successor in interest, as applicable, shall have no further
obligations under this Agreement with respect to such mill.




4









 












	2.	 	Term of Agreement.






	 	2.1.	 	This Agreement shall commence as of 7:00 a.m. EST on November 17, 2009 (the “Effective
Date”) and shall continue in effect until terminated as provided herein.
	 
	 	2.2.	 	Either party may initiate the termination of this Agreement by providing written notice
(the “Termination Notice”) to the other party at least five (5) years prior to (i) February
28, 2027 (the “Initial Termination Date”) or (ii) any subsequent 12-month anniversary of
the Initial Termination Date. Such termination shall be effective on the Initial
Termination Date or any such subsequent anniversary of the Initial Termination Date, as the
case may be (the “Termination Effective Date”). Supplies of CTO and BLS shall be gradually
reduced during a five (5) year period ending on the Termination Effective Date (the
“Transition Period”). Following either party’s receipt of a Termination Notice, the
parties shall negotiate in good faith to agree upon an appropriate schedule for such
gradual reduction during the Transition Period. If the parties are unable to agree on an
appropriate schedule within sixty (60) days following a party’s receipt of a Termination
Notice, the following reduction schedule shall apply: (a) during the first year of the
Transition Period, IP shall be obligated to supply, and ACC shall be obligated to purchase,
100% of its output of CTO and BLS at the mills supplying CTO and BLS to ACC on the
Termination Notice Effective Date; (b) during the second year of the Transition Period, IP
shall be obligated to supply, and ACC shall be obligated to purchase, 90% of such amounts
of CTO and BLS; (c) during the third year of the Transition Period, IP shall be obligated
to supply, and ACC shall be obligated to purchase, 80% of such amounts of CTO and BLS; (d)
during the fourth year of the Transition Period, IP shall be obligated to supply, and ACC
shall be obligated to purchase, 60% of such amounts of CTO and BLS and (e) during the fifth
and final year of the Transition Period, IP shall be obligated to supply, and ACC shall be
obligated to purchase, 40% of such amounts of CTO and BLS.
	 
	 	2.3.	 	If ACC defaults in making any payment due hereunder, and if such default continues for
sixty (60) days after written notification thereof, IP may immediately terminate this
Agreement by written notice to that effect. Any such termination shall be without prejudice
to the accrued rights of IP and to other rights and remedies for default. If ACC becomes
bankrupt or insolvent or makes an assignment for the benefit of creditors, or a receiver is
appointed to take charge of its property, IP may, upon written notice to ACC, require that
all subsequent payments hereunder be made COD (cash on delivery) (i.e., this Agreement will
not terminate upon ACC’s bankruptcy).
	 
	 	2.4.	 	In the event of a material breach by ACC of any provisions of this Agreement other than
a payment default that is subject to Section 2.3 hereof that has not been cured within
forty-five (45) days of delivery of written notice thereof, IP may, at its option, (a)
regard each shipment as a separate and independent sale on the terms and conditions
applicable hereunder and enforce its rights under such separate and independent contract,
or (b) immediately terminate this Agreement as regards further shipments and declare the
obligations of ACC due forthwith for all previous shipments and ACC shall remain liable to
IP for all loss and damage sustained by reason of any such breach or breaches. If the




5









 






	 	 	 	credit of ACC shall at any time in the reasonable judgment of IP become impaired, IP shall
have the right to require adequate security, including payment in advance or upon delivery,
before making further shipments.
	 
	 	2.5.	 	In the event of a material breach by IP of any provisions of this Agreement that has
not been cured within forty-five (45) days of delivery of written notice thereof, ACC may,
at its option, (a) regard each shipment as a separate and independent sale on the terms and
conditions applicable hereunder and enforce its rights under such separate and independent
contract, or (b) immediately terminate this Agreement as regards further shipments and
declare the obligations of IP due forthwith for all previous shipments and IP shall remain
liable to ACC for all loss and damage sustained by reason of any such breach or breaches.
	 
	 	2.6.	 	ACC agrees to indemnify IP against any cost, liability or damage incurred by IP as a
result of any third party claim of infringement to the extent such claim arises out of any
goods produced by ACC or the operation of any process by ACC incorporating the Products.
IP agrees to indemnify ACC against any cost, liability or damage incurred by ACC as a
result of any third party claim of infringement to the extent such claim arises out of the
Products as supplied by IP to ACC, except to the extent that ACC owes IP a duty to
indemnify pursuant to the first sentence of this paragraph.






	3.	 	Purchase Price — CTO and BLS






	 	3.1.	 	The purchase price of CTO and BLS shall be as more fully described on the attached
Schedule 3.0. In the event that, in any calendar year, ACC sells more than 5,000 short
tons of the Products it acquires from IP to an unaffiliated third party, and the value of
green energy credits or subsidies from a US federal or state government is part of its
compensation (“Green Credits”), then for every short ton sold (including tons 1 through
5,000 once the 5,000 short ton minimum is satisfied) ACC will pay IP an amount (the “Green
Payment”) equal to 40% of the amount by which the total compensation ACC receives for such
Products acquired from IP, and if such sale is on a delivered basis, net of the freight
paid by ACC, exceeds the price of such Products paid by ACC to IP (including freight costs
paid by ACC). ACC shall pay the Green Payment associated with the first 5,000 short tons
of Products for which it is obligated to compensate IP under this section by adding such
amount to the first payment hereunder which shall be included in the next invoice ACC pays
to IP after an obligation under this section arises for ACC to make a Green Payment.
Thereafter, each subsequent invoice shall include the Green Payment for sales in the prior
quarter, if applicable. IP will have audit rights with regard to the calculation of Green
Credits per Section 3.4 below.
	 
	 	3.2.	 	IP and ACC recognize that pricing for Products and various services hereunder are
dependent upon the continued publication of various Price Indexes referenced herein, and IP
and ACC desire to contract for the contingencies where such Price Indexes are: (a)
temporarily unavailable or (b) permanently discontinued (all of the foregoing, “Index
Problems”). In the event of Index Problems, the parties shall use commercially reasonable
efforts to agree as soon as practical upon a substitute index. If after thirty (30) days
of




6









 






	 	 	 	discussions the parties are unable to agree upon a substitute mechanism or disagree with
respect to an Index, such dispute shall be resolved by arbitration pursuant to the
procedures set forth in Section 3.3. Index values which are corrected and republished by
the index’s original publisher shall be given full force and effect in this Agreement and
shall be used to correct transactions between IP and ACC; provided that the corrected index
is first republished within one year of the original index’s publication date. Any
adjustments required because of republished or corrected indexes shall be limited to
activity in the prior six months from such republication or correction.
	 
	 	3.3.	 	Arbitration Procedures. Any dispute under this Section 3 required or permitted to be
arbitrated under this Agreement shall be arbitrated before a single arbitrator The
arbitrator shall be selected and the arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association with such arbitration
to take place in Atlanta, Georgia or such other mutually agreed upon location. The
parties need not file, but are not prohibited from filing, with the American Arbitration
Association to invoke arbitration. Such arbitration shall commence no later than thirty
(30) days from the date of a party’s demand for arbitration and the arbitrator shall issue
an opinion no later than thirty (30) days from conclusion of final oral statements or date
of submission of final written arguments. Notwithstanding the above, in the event the
arbitration is a result of the parties’ inability to agree on whether an index is
inaccurate, the following procedures will apply: (1) within 20 days after the appointment
of the arbitrator, each party will submit to the arbitrator materials supporting their
position whether on not there has been a material inaccuracy in the index prices; (2)
within 20 days following the submission of written material to the arbitrator, he shall
choose one of the parties’ positions which shall be binding on the parties. The costs of
the arbitrator, and the arbitration itself, shall be allocated equally between IP and ACC.
	 
	 	3.4.	 	ACC shall, within thirty (30) days following the end of each quarter during the term or
any renewal hereof, provide IP with ACC’s calculation of the Green Credits for the previous
quarter. Upon IP’s request no more than twice per year during the term of this Agreement,
the parties will engage a mutually acceptable independent auditor to review the calculation
of Green Credits based upon detailed documentation provided by ACC to that auditor to
include, but not limited to, (1) the actual prices and volumes of Products that are
purchased by ACC from U.S. third party suppliers delivering Product to ACC facilities
located in the U.S. during the four calendar quarters immediately preceding the auditor’s
retention (or such shorter period as may be requested by IP) and (2) actual prices and
volumes of Product sold by ACC to third parties in the U.S. over the same period; provided
that in no event will the same quarterly period be audited more than once. The auditor’s
determination shall be binding upon both parties. The cost of the first audit in any given
year shall be shared equally between IP and ACC, and the cost of the second audit in such
year shall be borne solely by IP. ACC agrees to make available to such independent auditor
all documentation reasonably required in connection with this Section 3.4. In the event
that any such audit reveals an overpayment by ACC, IP shall credit the amount of such
overpayment to ACC on the next invoice sent to ACC. In the event that any such audit
reveals an underpayment by ACC, IP shall add the amount of such underpayment to the next
invoice sent to ACC.




7









 












	4.	 	Alkaline Brine






	 	4.1.	 	When BLS is shipped to ACC and acidulated by ACC or by third parties on behalf of ACC,
a by-Product of the process is brine or spent acid, with the specifications and typical
properties set forth on Schedule 4.1, (“Alkaline Brine”). Notwithstanding anything to the
contrary herein, the provisions of this Section 4 shall not apply to IP’s Savannah, Georgia
mill; the agreement of the parties with respect to acceptance of Alkaline Brine by IP’s
Savannah, Georgia mill are set forth in that certain Savannah Services Agreement between IP
and ACC dated as of February 28, 2007.
	 
	 	4.2.	 	IP shall accept from ACC 1.15 gallons of Alkaline Brine for each gallon of BLS received
by ACC from all IP mills, which Alkaline Brine shall be treated in accordance with this
Section 4.2. IP will provide ACC ten (10) days’ prior written notice in the event that it
is unable to accept delivery of Alkaline Brine, which notice shall specify the period
during which it is unable to accept delivery, provided that in no event shall such period
exceed ten (10) consecutive days.
	 
	 	 	 	(a) For Alkaline Brine used by IP in its recovery processes or any other manner where
purchased chemicals would otherwise be used, ACC shall receive a credit against future
purchases of CTO and BLS for the value of the chemical content of Alkaline Brine used by
IP. The amount of the credit shall be determined by reference to IP’s actual cost for
alternative chemicals, and IP shall provide ACC with documentation supporting such chemical
costs. ACC shall pay all costs of transporting such Alkaline Brine to IP up to the amount
of the credit received by ACC in connection with such Alkaline Brine, after which such
transportation costs shall be borne by IP.
	 
	 	 	 	(b)  For Alkaline Brine accepted for delivery by IP but not used in IP’s recovery processes
or in any other manner where purchased chemicals would otherwise be used, then ACC shall
not receive a credit in connection with such Alkaline Brine and shall not be liable for the
transportation costs in connection therewith.
	 
	 	4.3.	 	IP may, in its sole discretion, accept from ACC Alkaline Brine in excess of the volumes
set forth in Section 4.2, which Alkaline Brine IP shall process at the lowest reasonably
viable alternative cost. The incremental cost of such processing shall be borne by ACC.
	 
	 	4.4.	 	For Alkaline Brine which IP is obligated to accept as provided herein, but does not
accept, ACC shall dispose of such Alkaline Brine as efficiently as practicable. The cost
of such disposal shall be borne by IP.






	5.	 	Acidulation






	 	 	 	ACC may send BLS to mills owned by IP and having acidulation facilities that have
capacity in excess of the requirements by IP at that mill to process BLS on a toll basis.
Such mills shall process such BLS in exchange for a processing fee of $20.00 per ton of CTO
produced from such BLS. The $20.00 per ton fee is based on 2006 actual average




8









 






	 	 	 	steam costs; in subsequent years the processing fee will be adjusted to account for changes
in steam cost using the following formula:




(B/A x C) + 20 = D



Where:



A is the actual 2006 full mill site average cost of steam in $/M Lbs.



B is the current year’s full mill site average cost of steam in $/M Lbs.



C is the actual lbs of steam required to make 1 ton of CTO (prior year actual) expressed in M Lbs.



D is the new processing fee expressed in $/ton



As an example:



2006 cost for steam is $10/M Lbs.

Example year steam cost is $11/M Lbs.

Steam use per ton of CTO is .640M Lbs



(11/10 x .640) + 20 = $20.70





	 	 	 	Conversion of such BLS will be assumed to be the same as each such mill’s actual annual
yield for CTO conversion from BLS.






	6.	 	Title to, and Risk of Loss of, the Products.






Title and risk of loss of the Products hereunder shall pass to ACC upon delivery of the Products
to the carrier at the originating IP plant. Products shall be loaded onto tank cars provided by
ACC. Tank truck shipments shall be made only with the approval of ACC, and shall be made using
a carrier designated by ACC.




	7.	 	Warranties






	 	7.1.	 	ACC acknowledges that it alone has determined that the Products sold hereunder are
suitable for their intended use. ACC assumes all risk and liability for results obtained
in using the Products in ACC’s manufacturing or production process, whether used singly or
in combination with other substances, including any hazardous substances.
	 
	 	7.2.	 	IP will confer regularly with ACC in an effort to supply Products of a quality
satisfactory for ACC’s operations. IP will use reasonable efforts to supply Products in
accordance with the Specifications in Schedules 3.0 (A) and (B). IP MAKES NO WARRANTY OF
ANY KIND, EXPRESS OR IMPLIED, BY CONTRACT, STATUTE OR OTHERWISE, AND IP EXPRESSLY EXCLUDES
AND DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.




9









 












	8.	 	Claims






	 	8.1.	 	Any claim made by ACC with respect to Products delivered hereunder or non-delivery of
Products delivered hereunder may not exceed the amount of the purchase price thereof,
exclusive of delivery costs, and such claim must be in writing and received by IP within
ninety (90) days after delivery of such Products to ACC, or the date fixed for delivery (in
the case of non-delivery), and unless a claim is so made, ACC shall have waived all claims
in respect of such Products. Products that conform to the applicable specifications shall
not be returned to IP without IP’s prior permission, and then only in accordance with IP’s
instructions. The remedies herein shall be the sole and exclusive remedies available to
ACC under law or equity. ACC’S EXCLUSIVE REMEDY AND IP’S EXCLUSIVE LIABILITY FOR ANY AND
ALL CLAIMS (INCLUDING ANY CLAIMS FOR INDEMNIFICATION) ARISING OUT OF IP’S PERFORMANCE
HEREUNDER, OR FOR DELAYED DELIVERY OR NON-DELIVERY OF PRODUCTS, WHETHER OR NOT SUCH
LIABILITY IS BASED ON NEGLIGENCE, BREACH OF WARRANTY OR BREACH OF CONTRACT, SHALL BE
LIMITED TO (A) THE PURCHASE PRICE OF THE PRODUCTS WITH RESPECT TO WHICH SUCH CLAIM IS MADE
(PLUS TRANSPORTATION COSTS, IF ANY, PAID BY ACC FOR SUCH PRODUCTS), (B) AT IP’S OPTION IN
THE CASE OF PRODUCTS DELIVERED HEREUNDER, THE REPLACEMENT OF SUCH PRODUCTS AT ACC’S
DESTINATION OR (C) AT ACC’S OPTION IN THE CASE OF PRODUCTS NOT DELIVERED HEREUNDER,
SPECIFIC PERFORMANCE. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR SPECIAL, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT CAUSED BY OR RESULTING FROM THE
NEGLIGENCE OF SUCH PARTY. No provision of this Agreement is intended or shall be construed
to confer a benefit on any third party. No waiver of a breach of any provision of this
Agreement shall constitute a waiver of any other breach or of such provision.
	 
	 	8.2.	 	No charge or expense incident to any claim will be allowed unless approved by IP.






	9.	 	Taxes






	 	 	 	ACC shall be responsible for all sales, use, excise or other taxes or charges imposed upon
the sale, production, or transportation of the Products sold hereunder (other than income
taxes of IP or any successor owner of any mill set forth in Schedule 1.1(a)), and IP may
add such taxes or charges to the price of the Products sold hereunder.






	10.	 	Force Majeure






If IP shall be unable or shall fail at any time to supply, or ACC shall be unable or shall fail
to take, any or all of the Products as a consequence of fire, explosion, accident, labor
trouble, strike, lockout, combination of workers, breakdown of plant or machinery (including
transport), flood, drought, embargo, war, act of terrorism, riot, act of God or any public
enemy, priorities, allocations or restrictions made by or adopted pursuant to request of
governmental authority or any other action of governmental authority, inability to obtain
supplies; or any other delay or failure or cause beyond the reasonable control of either party,
whether or not of



10









 






the kind stated above, during the period of and to the extent of such disability IP shall not be
liable to ACC for failure to supply the Products ordered, nor shall ACC be liable to IP for
failure to take such Products. Any reduction or suspension of deliveries or receipts of
Products under this Agreement for any cause set forth above shall not constitute a breach of
this Agreement, and on the removal or termination of the causes therefore during the term of
this Agreement, deliveries shall be made and received except as above provided, at the specified
rate, but deliveries or receipts omitted during the period of suspension shall be disregarded
without liability to either party.




	11.	 	Safety






ACC acknowledges that it has received documents, including IP’s Material Safety Data Sheets and
product information bulletins, containing IP’s safety and health information concerning Products
deliverable hereunder, that it has read and it understands such information, and that it agrees
to comply with all applicable recommendations and warnings and use the Products delivered
hereunder only in a manner consistent with all information included in such documents and to
incorporate such information into its personnel safety programs. ACC shall inform its
employees, contractors, agents and customers who may become exposed to such Products after
delivery to ACC’s destination hereunder, of any hazards associated with Products, and of the
proper storage, handling and use procedures for Products, disclosed in such documents or in
additional documents which are transmitted to ACC during the term of this Agreement. ACC shall
indemnify IP from and against any claims, damages, liabilities and expenses (including
attorney’s fees) arising from ACC’s breach of the foregoing obligations.




	12.	 	General






	 	12.1	 	All notices, requests, demands, waivers and other communications required or
permitted to be given under this Agreement shall be in writing and may be given by any
of the following methods: (a) personal delivery; (b) registered or certified U.S. mail,
postage prepaid, return receipt requested; (c) internationally recognized overnight
delivery service; or (d) by facsimile transmission (with confirmation) to the
appropriate facsimile number set forth below (or at such other facsimile number for the
party as shall have been previously specified in writing to the other party) with
follow-up copy by internationally recognized overnight courier service the next
business day. Notices shall be sent to the appropriate party at its address given
below (or at such other address or facsimile number for such party as shall be
specified by notice given hereunder):
	 
	 	(a)	 	If to IP:




International Paper Company

6400 Poplar Avenue

Memphis, Tennessee 38197

Fax No.: (901) 214-0826

Attention: Vice President — Global Sourcing






11









 







with a copy to:



International Paper Company

6400 Poplar Avenue

Memphis, Tennessee 38197

Fax No.: (901) 419-4958

Attention: General Counsel





	 	  (b)	 	  If to ACC to:




Arizona Chemical Company, LLC

4600 Touchton Road East

Suite 1500

Jacksonville, FL 32246

Fax No.: +1 904 928 8687

Attention: Director Global Procurement



with a copy to:



Arizona Chemical Company, LLC

4600 Touchton Road East

Suite 1500

Jacksonville, FL 32246

Fax No.: +1 904 928 8672

Attention: General Counsel





	 	 	 	All such notices, requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. (New York City time) and such
day is a business day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next succeeding business
day in the place of receipt.
	 
	 	12.2	 	The validity, interpretation and performance of this agreement shall be governed by the laws
of the State of New York, without reference to its principles of conflicts of laws, and the
parties hereby submit to the exclusive jurisdiction of the Federal Courts sitting in New York
for the adjudication of any lawsuit arising out of or relating to this Agreement other than
disputes governed by Section 3.2. In the event no Federal Court sitting in New York has
jurisdiction over a lawsuit arising out of or relating to this Agreement, the parties hereby
submit to the exclusive jurisdiction of the State Courts of New York for the adjudication of
any such lawsuit, other than disputes governed by Section 3.2. Prior to bringing any lawsuit
arising out of or relating to this Agreement, the parties shall endeavor to resolve such
dispute (other than disputed governed by Section 3.2) by non-binding mediation in New York.
Unless otherwise agreed, the parties will select a mediator who is a former State or Federal
judge, and the fees and expenses of the mediator will be borne one-half by each of the parties
hereto.




12









 






	 	12.3	 	The failure of any party to insist in any one or more instances upon strict performance of
any of the provisions of this Agreement or to take advantage of any of its rights hereunder
shall not be construed as a waiver of any such provisions or the relinquishment of any such
rights, but the same shall continue and remain in full force and effect.
	 
	 	12.4	 	None of the parties shall assign its rights, delegate or sublet its performance in whole or
in part under this Agreement without the prior written consent of the other parties. Any
attempted assignment or delegation without prior written consent of the other party shall be
void and shall constitute a breach of this Agreement, provided, however, that IP shall assign
to any entity acquiring any of the mills identified on Schedule 1.1(a) all rights, or
obligations under this Agreement with respect to such mill in compliance with Section 1.3
hereof.
	 
	 	12.5	 	Effective on its Effective Date, this Agreement supersedes and cancels any agreement, written
or oral, among the parties heretofore made with respect to the Products described herein. If
any provision hereof is found by a mediator, court, public authority or any other person or
body of competent jurisdiction to be in violation of any law or rule, order or regulation
issued, adopted or promulgated by any governmental body, such finding of violation shall not
affect the validity and enforceability of the other provisions of this Agreement, and each
party shall be excused from performance of such provision to the extent necessary to bring an
end to such violation. IP and ACC shall use commercially reasonable efforts promptly to reach
agreement on the amendments to this Agreement necessary to bring the provision so found to be
in violation into compliance with such law, rule, order or regulation and, insofar as
possible, reflect the commercial intent of such provision.
	 
	 	12.6	 	This Agreement contains the entire understanding among ACC and IP for the purchase and sale
of the Products described herein and the same shall not be modified by acceptance by IP of any
purchase order or other document issued by ACC. Neither this Agreement nor any subsequent
agreement amending or supplementing this Agreement shall be binding on the parties hereto
unless and until it has been signed on each party behalf by their respective duly authorized
representatives, and commencement of performance hereunder or under any such subsequent
agreement shall not constitute a waiver of this requirement.




13









 










IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date set forth below.




	 	 	 	 	 
	INTERNATIONAL PAPER COMPANY	 	 
	 
	 	 	 	 
	By: 


 

Title:

	 	/s/ C. Cato Ealy
 


Senior Vice President
	 	 
	 
	 	 	 	 
	Date:

	 	November 17, 2009	 	 
	 
	 	 	 	 
	ARIZONA CHEMICAL COMPANY, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Cornelis Verhaar	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:

	 	President & Chief Executive Officer	 	 
	 
	 	 	 	 
	Date:

	 	17 November 2009	 	 






14









 






Schedule 1.1(a)




International Paper Company Pulp Mills



International Paper Mills Located in the following US Cities



-     Augusta, GA

-     Cantonment (Pensacola), FL

-     Courtland, AL

-     Campti, LA (Red River Mill) (a)

-     Eastover, SC

-     Georgetown, SC

-     Mansfield, LA

-     Pine Hill, AL (a)

-     Pineville, LA (b)

-     Prattville, AL

-     Riegelwood, NC

-     Riverdale, AL

-     Savannah, GA

-     Texarkana, TX

-     Valliant, OK (a)

-     Vicksburg, MS




Non-US Mills



-     Kwidzyen, Poland

-     Svetogorsk, Russia






 




			
	(a)	 	New and not IP Legacy Mills
	 
	All other mills are IP Legacy Mills
	 
	(b)	 	Per IP’s October 22, 2009 announcement, this mill is closing late 2009.








15









 








Schedule 1.1(c)




RECOVERY ENGINEER DUTIES





	•	 	Compile recovery statistics to be provided to Supply Mill Managers and operational
personnel.
	 
	•	 	Provide onsite evaluation of recovery and acidulation practices on a periodic basis or
where performance data indicates suboptimal or below target production performance. In
connection with such onsite evaluations, it will be the responsibility of the mill being
evaluated to provide ACC’s recovery engineers with appropriate support and access so as to
insure that the evaluation will be as productive as practical.




16









 











Schedule 1.1(d)




SUPPLIER’S MONTHLY REPORTING REQUIREMENTS



Wood use reporting — Type of wood (pine or hardwood) used and tonnage (Oven Dried basis)
Oven Dried (OD) tons of pine pulp produced



Gallons of crude sulfate turpentine produced



Tons of BLS produced



Tons of CTO produced (for CTO producing sites) and yield (or tons of BLS feed)



Forward operating plan scheduled outages greater than one week; type and scheduled duration)










17









 








Schedule 3.0(A)

CTO QUALITY SPECIFICATIONS




	 	 	 
	Acid Number

	 	Minimum 160
	Moisture

	 	Maximum 1.5%
	Phosphorous

	 	Maximum 100PPM
	Soap Number

	 	Maximum 1
	Volatiles (Sartorius)

	 	Maximum 4%
	Anthraquinone (AQ) Content (see note)

	 	Maximum 750 PPM
	Tank Truck and Tank Car Weights(1)

	 	Minimum 97% of Maximum Gross Wt.





Note: Arizona Test Method is CDM 0235-TP.




CTO QUALITY ADJUSTMENT MECHANISM



(1) The following adjustments will apply for AQ levels; however, ACC agrees that it will not seek
adjustments for AQ in CTO solely on the basis of analysis for AQ content. IP and ACC agree that
the AQ adjustment will be applied if ACC experiences operational problems due to AQ content of IP
CTO that cannot be mitigated by the blending of AQ and non-AQ CTO. ACC will share with IP the
evidence of such problems, if and when they occur.




	 	 	 	 	 
	AQ Level (PPM)	 	Price Deduction ($ per Ton of CTO)
	181 – 250
	 	$	5.00	 
	251 – 500
	 	$	10.00	 
	501 – 750
	 	$	20.00	 
	751 >
	 	$	30.00	 (if accepted) 





Buyer reserves the right to reject material with levels of AQ greater than 750 PPM in CTO.



(2) An additional quality adjustment shall be made using the following steps:



The quality of CTO from each IP mill shall be determined from monthly composites receipts. The CTO
price as calculated in Schedule 3.0 shall be adjusted 0.5% for every AN unit above and below the AN
specification of 163 for the succeeding calendar quarter. ACC will provide each IP mill with a net
price including any quality adjustment.




OTHER



(1) Excess freight charges resulting from underweight loads will be charged back to the shipping
mill.







18









 








Schedule 3.0(B)




BLS QUALITY SPECIFICATIONS



	 	 	 
	Acid Number (CTO)

	 	Minimum 166
	Tall Oil Content(1)

	 	Minimum 55%
	Total Black Liquor (drained + entrained)(2)

	 	Maximum 10%
	Fiber Content

	 	Maximum 500 PPM
	Anthraquinone (AQ) Content (see note)

	 	Maximum 750 PPM
	Tank Truck and Tank Car Weights(3)

	 	Minimum 97% of Maximum Gross Wt.





Note: Arizona Test Method is CDM 0235-TP.




BLS QUALITY ADJUSTMENT MECHANISM



(1) The following adjustments will apply for AQ levels; however, ACC agrees that it will not seek
adjustments for AQ in CTO solely on the basis of analysis for AQ content. IP and ACC agree that
the AQ adjustment will be applied if ACC experiences operational problems due to AQ content of IP
CTO that cannot be mitigated by the blending of AQ and non-AQ CTO. ACC will share with IP the
evidence of such problems, if and when they occur.




	 	 	 	 	 
	AQ Level in CTO (PPM)	 	Price Deduction ($ per Ton of CTO)
	181 – 250
	 	$	5.00	 
	251 – 500
	 	$	10.00	 
	501 – 750
	 	$	20.00	 
	751 >
	 	$	30.00	 (if accepted) 





Buyer reserves the right to reject material with levels of AQ greater than 750 PPM in CTO.



(2) A quality adjustment for AN shall be made using the following steps:



The quality of BLS from each IP mill shall be determined from monthly composites receipts on a
converted CTO basis. The BLS price as calculated in Schedule 3.0 shall be adjusted by 0.5% for
every AN unit above or below 166 for the succeeding calendar quarter.



ACC will provide each IP mill with a net price including any quality adjustment.




OTHER



(1) BLS volume will be adjusted to 55% for BLS with less than 55% tall oil content.



(2) Freight costs on any drained black liquor and any entrained black liquor over 10.0% will be
charged back to the shipping mill.






 









 







(3) Excess freight charges resulting from underweight loads will be charged back to the shipping
mill.1






 




			
	1	 	The standard acid number for CTO derived
from BLS is higher than the standard for CTO receipts because CTO produced from
BLS is tested in the laboratory as soon as produced before any quality
degradation that occurs in storage under normal operating conditions.




2









 










Schedule 4.1




SPECIFICATION AND TYPICAL PROPERTIES



ALKALINE BRINE



	 	 	 	 	 	 	 
	SPECIFICATIONS
	 	10.0 – 12.5pH	 	 	 	 
	 

	TYPICAL PROPERTIES
	 	Total Solids	 	 	20	%
	 

	 
	 	Fiber	 	 	<1.0	%
	 

	 
	 	NASO4	 	 	13	%