CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY *****, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. STANDARD SUPPLIERAGREEMENT BETWEEN R. J. REYNOLDS TOBACCO COMPANY AND VORIDIAN COMPANY A DIVISION EASTMAN CHEMICAL COMPANY PURCHASING DEPARTMENT AUGUST 1, 2003
Exhibit 10.3
CERTAIN CONFIDENTIAL MATERIAL APPEARING IN THIS DOCUMENT, MARKED BY
*****, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
STANDARD SUPPLIER AGREEMENT
BETWEEN
R. J. REYNOLDS TOBACCO COMPANY
AND
VORIDIAN COMPANY
A DIVISION EASTMAN CHEMICAL COMPANY
PURCHASING DEPARTMENT
AUGUST 1, 2003
VORIDIAN, A DIVISION OF EASTMAN CHEMICAL COMPANY
STAN 00010
TABLE OF CONTENTS
Page No. | ||||||
1. | Purpose | 1 | ||||
2. | Contract Documents | 1 | ||||
3. | Pricing Method | 1 | ||||
4. | Invoices | 1 | ||||
5. | Force Majeure | 1 | ||||
6. | Labor Disputes | 1 | ||||
7. | Title and Risk | 1 | ||||
8. | Indemnity and Insurance | 2 | ||||
9. | Compliance | 2 | ||||
10. | Warranty | 2 | ||||
11. | Governing Law | 2 | ||||
12. | Relationship of the Parties | 2 | ||||
13. | Employment Background Investigations | 2 | ||||
14. | Separate Contracts | 3 | ||||
15. | Assignment and Binding Effect | 3 | ||||
16. | Time of the Essence | 3 | ||||
17. | Proprietary Information | 3 | ||||
18. | Termination | 3 | ||||
SIGNATURE PAGE | 5 |
i
R. J. REYNOLDS TOBACCO COMPANY STANDARD SUPPLIER AGREEMENT
VORIDIAN COMPANY, A DIVISION OF EASTMAN CHEMICAL
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In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officer or representative, effective the date first written herein.
R. J. REYNOLDS TOBACCO COMPANY | ||
BY: | /s/ H. Freeman Jr. | |
NAME: Harvey W. Freeman, Jr. | ||
TITLE: VP, Supply Chain Management | ||
DATE: 8/21/03 |
WITNESS: /s/ Crieta Douthet
THE VORIDIAN COMPANY | ||
BY: | /s/ Richard L. Johnson | |
NAME: Richard L. Johnson | ||
TITLE: Group Vice President , Fibers | ||
DATE: 8/29/03 |
WITNESS: /s/ Larry Beth
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Voridian Company | 08/01/03 | |
A Division of Eastman Chemical Company |
APPENDIX A
as amended August 1, 2003
to the Supplier Agreement between Voridian Company, A Division Eastman Chemical and
R. J. Reynolds Tobacco Company
I. | SCOPE OF SERVICES |
The Production Materials to be provided and Services to be rendered under this Specification shall include, but not be limited to the following:
A. | Procurement and Inventory Management |
1. | Stock-Supplier agrees to provide or have the necessary arrangements in place to provide the items as specified per production schedule. The Supplier shall maintain a service level acceptable to RJRTs Contract Manager on all items. The service level shall be mutually agreed upon between the Suppliers Account Manager and RJRTs Contract Manager. |
2. | Substitutions - The Supplier is encouraged to offer cost effective substitution alternatives, of equal or better quality, as an ongoing feature of this Specification. However, Supplier is required to have prior written approval from RJRTs Contract Manager before any or all substitutions are implemented. RJRTs Contract Manager is responsible for the evaluation of any and all recommendations. |
3. | Standardization - The Supplier and RJRT will meet on a regular basis to review proposed standardizations and substitutions. RJRTs Contract Administrator is responsible for coordinating this meeting. ***** |
4. | Delivery - All delivery points will be mutually agreed upon between RJRT and Supplier and adjusted as necessary. The Supplier is responsible for ensuring all deliveries are clearly marked with RJRTs purchase order number and delivery point. All deliveries must include accurate and complete packing slip information, such as RJRTs purchase order number, item description, and RJRTs Item Identification number. |
5. | Material Returns - In the event items are delivered to RJRT in error or defective, shall not be required to pay Supplier any Compensation, including any freight and Suppliers handling costs. RJRT may return to the Supplier the items following a return procedure agreeable to all parties. |
6. | ***** The Supplier shall on ***** develop ***** parties. |
7. | Partial Shipments - Partial shipments are permitted; however, Supplier shall diligently seek ways to minimize the need for partial shipments. This will be accomplished through proper planning, mutual establishment of delivery cycles, and consolidation of order where possible. RJRTs Contract Administrator and Suppliers Account Manager will work toward identifying the root cause of partial shipments and track this process to insure continuous improvement. |
1
8. | Canceled Orders - In the event an order is canceled, RJRTs Contract Administrator and Supplier shall agree on a settlement. |
9. | Order Entry - All orders shall be placed through the EDI system. In the event it is deemed necessary, the order may be placed by telephone or fax and confirmed by EDI. |
10. | Quality - Materials must meet the quality and service requirements set forth in R. J. Reynolds Tobacco Company supplier cellulose acetate filter tow certification specifications and performance evaluation process. Failure to adhere to these requirements can result in loss of business or termination of contract agreement. |
B. | System Requirements |
EDI Capabilities - The Supplier agrees to the EDI capabilities necessary to meet all requirements set forth in this Specification. Those capabilities shall include as a minimum, but are not limited to:
a. | Purchase Orders |
b. | Purchase Order Acknowledgments |
c. | Change Orders |
d. | Change Order Acknowledgments |
e. | Advance Ship Notices |
f. | Invoices |
C. | Suppliers Report |
RJRTs Contract Manager and Suppliers Account Manager shall mutually agree in writing from time to time on the frequency and level of detail of the following report.
Minority/Women Owned - Supplier shall provide a quarterly report reporting on the names, locations, and classification dollar volumes of such transactions.
II. | AGREEMENT TERM |
January 1, 2003 through *****
III. | VOLUME |
During the agreement period, RJRT agrees to purchase ***** Cellulose Acetate Filter Tow ***** from Voridian Company to include *****.
IV. | ALTERNATE MATERIAL |
During the term of this agreement, RJRT may, at its sole discretion, decide to utilize a filter material medium other than cellulose acetate for its cigarette filters.
2
V. | PRICING METHOD |
The Supplier and RJRT agree that the pricing methodology shall include, but not be limited to the following:
1. | Pricing |
Suppliers pricing reflects ***** containing ESTRON Acetate Tow Prices for 2003. Prices are firm for contract period 1/1/2003 through 12/31/2003
Price List | FOB: Delivered Terms: ***** |
Material Group: Cellulose Acetate Filter Tow
Pricing Agreement For The Calendar Year 2003
Estimated 2003 RJRT Volume: *****
Supplier: Voridian Company
Tow Item | Item 1.D. | 2003 Price ***** | ||
***** | ***** | $***** | ||
***** | ***** | $***** | ||
***** | ***** | $***** | ||
***** | ***** | $***** | ||
***** | ***** | $***** | ||
***** | ***** | $***** | ||
***** | ***** | $***** |
2. | TAXES |
All sales taxes will be paid by RJRT under RJRTs sales Tax Exempt Certificate Number 20.
VI. | CONTACTS FOR NOTICES |
As to R. J. Reynolds Tobacco Company:
R.J. Reynolds Tobacco Company
Purchasing Department
Winston Salem, North Carolina 27102
Attention: Ms. Crista W. Douthit
As to Supplier:
Voridian Company
P. O. Box 431
Kingsport, TN ###-###-####
Attention: Mr. John D. Lunsford
3
In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officer or representative, effective the last date written hereafter.
R. J. REYNOLDS TOBACCO COMPANY | ||
BY: | /s/ H. Freeman Jr. | |
NAME: | Harvey W. Freeman, Jr. | |
TITLE: | VP, Supply Chain Management | |
DATE: | 8/21/03 |
WITNESS: /s/ Crieta Douthet
VORIDIAN COMPANY, INC. | ||
BY: | /s/ Richard L. Johnson | |
NAME: | Richard L. Johnson | |
TITLE: | Group Vice President , Fibers | |
DATE: | 8/29/03 |
WITNESS: /s/ Larry Beth
4
RJRT & Eastman Tow Contract Amendment
January 8, 2010
Amendment to APPENDIX A - CELLULOSE ACETATE FILTER TOW
As amended January 8 2010 to the Supplier Agreement (RJRT CLM Contract 4053) between Eastman Chemical Company and R.J. Reynolds Tobacco Company dated August 1, 2003.
This amendment incorporates adjustments to ***** effective January 1, 2010 *****. This amendment to Appendix A supersedes all previously executed Appendix A amendments.
I. | SCOPE OF SERVICES |
The Production Materials to be provided and Services to be rendered under this Specification shall include, but not be limited to the following:
A. | Procurement and Inventory Management |
1. | Stock-Supplier agrees to provide or have the necessary arrangements in place to provide the items as specified per production schedule. The Supplier shall maintain a service level acceptable to RJRTs Contract Manager on all items. The service level shall be mutually agreed upon between the Suppliers Account Manager and RJRTs Contract Manager. |
2. | Substitutions - The Supplier is encouraged to offer cost effective substitution alternatives, of equal or better quality, as an ongoing feature of this Specification. However, Supplier is required to have prior written approval from RJRTs Contract Manager before any or all substitutions are implemented. RJRTs Contract Manager is responsible for the evaluation of any and all recommendations. |
3. | Standardization - The Supplier and RJRT will meet on a regular basis to review proposed standardizations and substitutions. RJRTs Contract Administrator is responsible for coordinating this meeting. *****. |
4. | Delivery - All delivery points will be mutually agreed upon between RJRT and Supplier and adjusted as necessary. The Supplier is responsible for ensuring all deliveries are clearly marked with RJRTs purchase order number and delivery point. All deliveries must include accurate and complete packing slip information, such as RJRTs purchase order number, item description, and RJRTs Item Identification number. |
5. | Material Returns - In the event items are delivered to RJRT in error or defective, RJRT shall not be required to pay Supplier for the invoiced amounts attributable to the erroneous or defective tow, including any freight and Suppliers handling costs. RJRT shall return to the Supplier the defective or erroneous tow items following a return procedure agreeable to all parties. |
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6. | ***** The Supplier and RJRT shall ***** develop ***** parties. |
7. | Partial Shipments - Partial shipments are permitted in Suppliers sole discretion in managing inventory. Partial shipments are permitted as requested by RJRT, however, RJRT shall bear all transportation expenses. Supplier is permitted at its discretion to fill a partial container with tow items of differing denier specifications from different RJRT orders. Supplier and RJRT shall diligently seek ways to minimize the need for partial shipments. This will be accomplished through proper planning, mutual establishment of delivery cycles, and consolidation of order where possible. RJRTs Contract Administrator and Suppliers Account Manager will work toward identifying the root cause of partial shipments and track this process to insure continuous improvement. |
8. | Canceled Orders - In the event an order is canceled, RJRTs Contract Administrator and Supplier shall agree on a settlement. |
9. | Order Entry - All orders shall be placed through the EDI system. In the event it is deemed necessary, the order may be placed by telephone or fax and confirmed by EDI. |
10. | Quality - Materials shall meet the initial quality, specification, and service requirements as mutually agreed between the Supplier and RJRT. Either party may propose changes subsequent to the initial mutual agreement of quality, specification, and service requirements, but any change will require mutual written agreement. |
B. | System Requirements |
EDI Capabilities - The Supplier agrees to the EDI capabilities necessary to meet all requirements set forth in this Specification. Those capabilities shall include as a minimum, but are not limited to:
(a) | Purchase Orders |
(b) | Purchase Order Acknowledgments |
(c) | Change Orders |
(d) | Change Order Acknowledgments |
(e) | Advance Ship Notices |
(f) | Invoices |
C. | Suppliers Report |
RJRTs Contract Manager and Suppliers Account Manager shall mutually agree in writing from time to time on the frequency and level of detail of the following report.
Minority/Women Owned - Supplier shall provide a quarterly report reporting on the names, locations, and classification dollar volumes of such transactions.
II. | AGREEMENT TERM |
Original term of ***** through ***** is renewed for *****. The renewal is from ***** through *****.
2
III. | VOLUME |
During the renewal term period, RJRT agrees to purchase ***** from Supplier *****
*****
IV. | PRICING METHOD |
Eastman and RJRT agree that the pricing methodology shall include, but not be limited to the following:
1. | Pricing |
*****
2010 prices are set out in the 2010 Price List named table. The 2010 prices are effective January 1, 2010.
Summary *****
*****
2. | ***** |
*****
3. | Other |
Payment terms will be *****. If the ***** day falls on a weekend or holiday, Eastman will ***** when RJRT pays ***** business day.
*****
Below are the current cellulose acetate filter tow specifications and ***** price:
Price List Terms: *****
Material Group: Cellulose Acetate Filter Tow
Pricing Agreement For The Calendar Year 2010
Supplier: Eastman Chemical Company
3
Tow Item | Item ID | 2010 Price ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** | ||
***** | ***** | ***** |
RJRT reserves the right to request modification to existing tow items, or new items provided *****.
4. | TAXES |
All sales taxes will be paid by RJRT under RJRTs sales Tax Exempt Certificate Number 20. Any VAT or other ***** taxes for ***** manufacturing rods in ***** on behalf of RJRT shall be paid by RJRT or the third party manufacturing filter rods on behalf of RJRT.
5. | ***** |
*****
V. | CONTACTS FOR NOTICES |
As to R. J. Reynolds Tobacco Company:
R.J. Reynolds Tobacco Company
Purchasing Department
401 North Main Street
Winston Salem, North Carolina 27102
Attention: Mr. Yucel Yalvac
As to Supplier:
Eastman, a Division of Eastman Chemical Company
P.O. Box 431
Kingsport, TN ###-###-####
Attention: Mr. John Lunsford
4
In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officer or representative, effective the last date written hereafter.
R. J. REYNOLDS TOBACCO COMPANY | ||
BY: | /s/ Daan Delen | |
NAME: | Daan Delen | |
TITLE: | Chairman, President & CEO | |
DATE: |
|
WITNESS:
EASTMAN CHEMICAL CO. | ||
BY: | /s/ Richard L. Johnson | |
NAME: | Richard L. Johnson | |
TITLE: | SR. Vice President Fibers, & Global Supply Chain | |
DATE: | 3/29/10 |
WITNESS:
5
Amendment #
Date: June 1, 2010
Addendum for CLM Contract No. 4681 8.01
This Addendum update is made as of the 1st day of June, 2010 and is executed pursuant to and in accordance with the previously executed Contract Number 4681 between R. J. REYNOLDS TOBACCO COMPANY and EASTMAN CHEMICAL COMPANY dated July 10, 2007. The provisions thereof are incorporated herein for the purpose of ***** for the life of the contract that ends *****. The ***** is amended to *****.
In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officer or representative, effective the last date written hereafter.
R.J. REYNOLDS TOBACCO | ||
Name: Craig Demarest | ||
Title: Sr. Director Procurement | ||
By: | /s/ Craig Demarest | |
Date: 5/27/11 | ||
EASTMAN CHEMICAL COMPANY | ||
Name: Jennifer Stewart | ||
Title: Fibers Business Unit Director | ||
By: | /s/ Jennifer Stewart | |
Date: 5/16/11 |
Amendment # RAI000050-2012
Date: January 1, 2012
Addendum for Contract No. RAI000214-DEC2010
For sake of clarity, the contract for calendar year 2012 constitutes the following documents: 1) Standard Supplier Agreement between R. J. Reynolds Tobacco Company (RJRT) and Voridian Company A Division of Eastman Chemical Company dated August 1, 2003 (Document Number: RJRT Contract CLM 4053); and 2) Amendment to APPENDIX A CELLULOSE ACETATE FILTER TOW as amended January 8, 2010 (RJRT Contract ADM 7564); and this amendment dated January 1, 2012 (RAI000050-2012) partially amending APPENDIX A above (RJRT Contract ADM 7564). *****.
Section IV.3 Other of Appendix A dated January 8, 2010 (RJRT Contract AMD 7564) is hereby amended to replace entirely the price list for 2012 calendar year purchases *****.
Material | Description | 2012 Price | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
***** | ***** | $ ***** | ***** | ***** | ||||
TOTAL | ***** | ***** |
*****
This amendment (RAI000050-2012) amends the January 8, 2010 Appendix A by replacing entirely the price list of Section IV.3 *****.
In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officer or representative, effective the last date written hereafter.
R. J. REYNOLDS TOBACCO COMPANY | ||
Name: Andrew D. Gilchrist | ||
Title: President and Chief Commercial Officer | ||
By: | /s/ Andrew D Gilchrist | |
Date: 1-20-12 | ||
EASTMAN CHEMICAL COMPANY | ||
Name: Linda Hensley | ||
Title: Vice President and General Manager, Fibers | ||
By: | /s/ LH Hensley | |
Date: 30 Jan 2012 |
Amendment #RAI000189-FEB2012.
Date: January 1, 2012
Addendum for Contract No. RAI000214-DEC2010
For sake of clarity, the contract for calendar year 2012 constitutes the following documents: 1) Standard Supplier Agreement between R. J. Reynolds Tobacco Company and Voridian Company A Division of Eastman Chemical Company dated August 1, 2003 (Document Number: RJRT Contract CLM 4053); and 2) Amendment to APPENDIX A CELLULOSE ACETATE FILTER TOW as amended January 8, 2010 (RJRT Contract ADM 7564); amendment to APPENDIX A dated January 1, 2012 (RAI000050-2012); and this amendment dated March 1, 2012 (# RAI000189- FEB2012) partially amending APPENDIX A above (RJRT Contract ADM 7564). *****.
Section VI. OTHER is hereby added to Appendix A:
VII. In performing this agreement and in manufacturing and using the Cellulose Acetate Filter Tow (Product), both parties shall comply with applicable laws and regulations, which may include without limitations United States of America regulation of tobacco products by the US FDA pursuant to 111 P.L. 31; 123 Stat. 1776; 2009 Enacted H.R. 1256; 111 Enacted H.R. 1256 (the so-called Family Smoking Prevention and Tobacco Control Act) and regulations promulgated thereunder. Supplier shall cooperate to provide information about Product as may allow RJRT to comply with RJRTs regulatory obligations associated with the manufacture of Tobacco Products (as that term it defined in the Family Smoking Prevention and Tobacco Control Act).
VIII. Eastman agrees to continue the Eastman Know Your Customer (KYC) Initiative with the goal that Eastman intends to act lawfully to supply legitimate customers with their legitimate needs and to lawfully minimize the potential for Eastman products to be diverted into illegal or counterfeit tobacco products. Eastman shall provide an annual update regarding the Eastman KYC Initiative.
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In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officer or representative, effective the last date written hereafter.
R. J. REYNOLDS TOBACCO COMPANY | ||
Name: Susan Wynn | ||
Title: Sr. Buyer. | ||
By: | /s/ Susan B. Wynn | |
Date: May 17, 2012 | ||
EASTMAN CHEMICAL COMPANY | ||
Name: Jennifer L. Stewart | ||
Title: Business Unit Director | ||
By: | /s/ Jennifer L. Stewart | |
Date: May 1, 2012 |
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