SUPPLY AND OFFTAKE AGREEMENT
This Supply and Offtake Agreement (Agreement), dated as of September 30, 2021 (the Effective Date) is made by and between INTERNATIONAL PAPER COMPANY, a New York corporation (IP), and SYLVAMO NORTH AMERICA, LLC, a Delaware limited liability company (Sylvamo and, together with IP, the Parties):
WHEREAS, IP and Sylvamo have entered into that certain Separation and Distribution Agreement, dated as of September 29, 2021 (as the same may be amended, modified or supplemented from time to time, the Separation and Distribution Agreement), pursuant to which the business of Sylvamo is being separated from IP into a new publicly traded company;
WHEREAS, pursuant to the Separation and Distribution Agreement, IP and Sylvamo agreed to enter into this Agreement to reflect the arrangements under which IP will continue to operate paper machines number 1 (GT 1) and 2 (GT 2, and together with GT 1, GT 1&2) at its mill in Georgetown, South Carolina (the Mill) to produce uncoated freesheet, uncoated bristols, wallboard tape and specialty papers (the Products) following the Distribution, and Sylvamo will purchase the Product produced by GT 1&2 upon the terms and conditions set forth herein; and
WHEREAS, all capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in the Separation and Distribution Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and upon the terms and subject to the conditions hereinafter set forth, the Parties hereby agree as set forth herein.
1. Operation and Intent. Following the Distribution, IP shall continue to own and retain title to the Mill, but agrees to operate GT 1&2 to produce the Products to be purchased by Sylvamo consistent in all material respects with the manner in which IP has operated GT 1&2 during the past three (3) years and pursuant to the terms set forth herein. The intent of this Agreement is to effectively transfer the economics associated with ownership and operation of GT 1&2 at the Mill to Sylvamo for the Term.
2. Production Process and Management.
(i) Subject to Section 2(c)(ii), Sylvamo shall use reasonable best efforts to maintain sufficient Product orders to keep GT 1&2 operating at their respective annual volume targets in the SAP System (as determined by IP during its annual budgeting process and adjusted for any calendar year on each Annual Adjustment Date (as defined below)), adjusted for grade mix and normal machine variability (Budgeted Capacity) during the Term.
(ii) Sylvamo shall manage all communications with its customers (including orders, inquiries and invoices) for the Product and shall be responsible for the sale of any Inventory or Saleable Job Lot (as defined below). All customer pricing decisions shall be Sylvamos sole responsibility.