Exhibit 10.1
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 1st day of February, 1998 by
and between Jefferson Smurfit Corporation (U.S.), f/k/a Container
Corporation of American (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 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
AllocationPolicies 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: /s/ Xxxxxxx X.Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President and CFO
SMURFIT PAPERBOARD, INC.
By: /s/ Xxxxxxx Xxxxxxx Jnr.
Name: Xxxxxxx Xxxxxxx Jnr.
Title: President and CEO
ATTACHMENT 1
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).
