EXHIBIT 10.6(b)
AMENDMENT TO ALLOCATION POLICIES AND PROCEDURES
FOR FERNANDINA BEACH, FLORIDA MILL
UNDER THE
OPERATING AGREEMENT
BY AND AMONG
CONTAINER CORPORATION OF AMERICA
N/K/A JEFFERSON SMURFIT CORPORATION (U.S.)
AND
SMURFIT PAPERBOARD, INC.
THIS AMENDMENT is effective this lst day of February 1998 by and between
Jefferson Smurfit Corporation (U.S.), f/k/a Container Corporation of America
(hereinafter 'JSC'), and Smurfit Paperboard, Inc. ('SPI').
WITNESSETH
WHEREAS, JSC and SPI entered into that certain Operating Agreement dated as
of the 30th day of April 1992 (the 'Operating Agreement') in connection with the
ownership, operation and related transactions involving the production and sale
of linerboard from SPI's No. 2 linerboard machine located at JSC's Fernandina
Beach, Florida paper mill; and
WHEREAS, the division of operating costs and other matters, including
transfer pricing with respect to the sale of linerboard from the No. 2 machine
to JSC and its exchange customers, is set forth in Exhibit A to the Operating
Agreement titled 'Allocation Policies and Procedures for Fernandina Beach,
Florida Mill' (hereinafter, the 'Allocation Policies'); and
WHEREAS, the parties desire to amend the Transfer Price Method section of
the Allocation Policies to reflect an objective approximation of actual market
pricing.
NOW, THEREFORE, the parties hereby agree as follows:
1. References to JSC in this amendment shall be deemed to mean CCA, as
defined in the Operating Agreement.
2. The section titled 'Proposed Transfer Price Method' of the Allocation
Policies is hereby amended to read in its entirety as set forth in
Attachment 1 hereto.
3. This amendment shall be effective as of February 1, 1998.
4. Except as amended hereby, by Revision No. 1 (effective January 1992) to
pages 67/68 of the Allocation Policies, and by Agreement dated as of May
11, 1994 by and between CCA, SPI, SIBV, Bankers Trust and Chemical (each
as defined therein), the Operating Agreement and the Allocation Policies
have not been amended and remain in full force and effect as of the date
hereof.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
JEFFERSON SMURFIT CORPORATION (U.S.)
By: XXXXXXX X. XXXXX
..............................
Name: Xxxxxxx X. Xxxxx
Title: Vice President and CFO
SMURFIT PAPERBOARD, INC.
By: XXXXXXX XXXXXXX JNR
...........................
Name: Xxxxxxx Xxxxxxx Jnr
Title: President and CEO
ATTACHMENT I
PROPOSED TRANSFER PRICE METHOD
Net sales recorded by SPI will be determined as if it was independent of
JSC. All sales from SPI's paper machine will be processed by SPI, regardless of
the customer. Sales to trade customers or JSG affiliates other than JSC will be
recorded by SPI at the invoice price. Sales to JSC ('intercompany transfers')
and to JSC exchange customers ('exchanges') will be invoiced by SPI to JSC or
the exchange customer and recorded as sales by SPI at the intercompany transfer
and exchange list price per ton for each of the applicable grades, as determined
by JSC's Logistics Department, which prices are derived from the publication
Pulp and Paper Week. SPI will record the freight costs it incurs related to its
sales. An adjustment to the intercompany transfer and exchange prices invoiced
by SPI will be made at the end of each month, resulting in a payment by SPI or
JSC to the other, as the case may be. The invoiced prices will be adjusted such
that intercompany transfers and exchanges will be recorded as follows:
1. Each month, the intercompany transfer and exchange price per ton
for all SPI intercompany transfer and exchange sales of 42-pound Kraft
linerboard, except those sales representing distressed grades as described
above, shall be the midpoint of the unbleached East Kraft liner price range
published in the publication Pulp and Paper Week.
2. Each month, the intercompany transfer and exchange price per ton
for all SPI intercompany transfer and exchange sales of all grades other
than 42-pound Kraft linerboard shall be the sum of the price of 42-pound
Kraft linerboard as set forth in paragraph 1 above plus the respective
upcharge for each such other grade as determined by JSC's Logistics
Department each month.
3. Published prices shall be retroactive to the beginning of the month
in which such price is published.
4. Prices as determined in paragraphs 1 and 2 above shall be reduced
by $10 per ton when the Pulp and Paper Week published price indicates
discounting of list prices has been reported in the market (indicated in
the publication with an asterisk (*) on the selling price, by footnote or
otherwise).
