EX-10.1







Exhibit 10.1




SECOND AMENDMENT TO SUPPLY AGREEMENT




     THIS SECOND AMENDMENT TO SUPPLY AGREEMENT is entered into this 18th day of December 2008, by
and between R. J. Reynolds Tobacco Company, a North Carolina corporation (“RJRT”), and Alcan
Packaging Food and Tobacco Inc., a Delaware corporation (“Supplier”).



WTNESSETH:




     WHEREAS, RJRT and Supplier are parties to a Supply Agreement, dated May 2, 2005 (as amended by
a First Amendment, dated September 16, 2005, the “Supply Agreement”);



     WHEREAS, RJRT and Supplier desire to amend the Supply Agreement in accordance with the terms
and provisions set forth below (except as otherwise provided herein, capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Supply Agreement); and



     WHEREAS, Supplier and Santa Fe Natural Tobacco Company, Inc. (“SFNTC”) are entering into a
letter agreement, dated the date hereof, relating to the potential of Supplier supplying SFNTC with
certain of SFNTC’s Cigarette packaging requirements, all subject to the terms and conditions
contained therein (the “Letter”).



     NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:



     1. Schedule 3.1(b) to the Supply Agreement is hereby deleted in its entirety. Section 3.1(b)
of the Supply Agreement is hereby deleted in its entirety and the following is substituted in its
place:



     [Intentionally Omitted]



     2. If SFNTC fails to purchase at least 90% of its Cigarette packaging requirements from
Supplier for any reason other than Cause, as defined below (with the foregoing determination to be
made based upon the total dollar value of the Cigarette cartons and crush-proof boxes purchased by
SFNTC during the applicable time period): (i) during the period commencing upon the Start Date, as
such term is defined in the Letter, and ending upon December 31, 2009, then RJRT shall pay to
Supplier the amount of $283,000.00 (Two Hundred and Eighty-Three Thousand Dollars) by February 15,
2010; or (ii) during the period commencing upon January 1, 2010 and ending upon
December 31, 2010, then RJRT shall pay to Supplier the amount of $141,300 (One Hundred Forty-One
Thousand and Three Hundred Dollars) by February 15, 2011,



 









 







except that RJRT shall not be required to
make the payment described in this clause (ii) if it has made the payment described in preceding
clause (i). The term “Cause” shall mean the occurrence of any of the following: Supplier’s failure
to comply with the terms of Section 2 of the Letter; Supplier’s failure to supply SFNTC with
Cigarette packaging products in accordance with specifications furnished by SFNTC or the failure
otherwise to meet SFNTC’s requirements relating to the quality of Cigarette packaging products;
Supplier’s failure to meet SFNTC’s requirements relating to delivery dates for Cigarette packaging
products; Supplier’s failure to provide SFNTC during 2009 with prices for Cigarette cartons and
crush-proof boxes that are equal to or less than the applicable prices set forth in Exhibit
A attached to the Letter; or Supplier’s breach of, or non-compliance with, any other obligation
owed to SFNTC relating to the supply of any of SFNTC’s Cigarette packaging requirements.



     3. RJRT hereby releases and discharges Supplier from any and all claims, actions, causes of
action and demands for money, damages, losses, liabilities, expenses, fees and costs (collectively,
“Claims”) relating to Supplier’s furnishing to RJRT, prior to the date hereof, of Cigarette
packaging for RJRT’s KOOL brand, which packaging was used by RJRT in 2008 for approximately 3,300
cases of Cigarettes shipped to Japan for sale, to the extent such Claims relate to or are based
upon faint or missing print on labels. In addition and without prejudice to any and all other
rights and remedies available to RJRT upon a breach by Supplier of Supplier’s obligations set forth
herein, the foregoing release shall be deemed null and void and of no force or effect if Supplier
breaches its obligations set forth in Section 2 of the Letter.



     4. Following (a) Supplier’s successful completion of RJRT’s supplier qualification process to
RJRT’s satisfaction, as determined in RJRT’s reasonable business judgment, for the supply of
Cigarette packaging sleeves (“Sleeves”), and (b) Supplier’s installation of the equipment necessary
to produce Sleeves, including, without limitation, an offset press and gluer, at its facility
located in Reidsville, North Carolina, Richmond, Virginia or Atlanta, Georgia, and Supplier’s
written confirmation to RJRT of such installation, then RJRT shall notify Supplier in writing (with
such notice to be provided no later than 30 days after the last to occur of the events described in
preceding clauses (a) and (b)) that Sleeves shall be deemed, upon RJRT’s delivery of such notice,
to be an Included Product for purposes of the Supply Agreement (with Annex B to the Supply
Agreement being deemed to be supplemented accordingly, and Annex D to the Supply Agreement being
deemed supplemented to reflect the Specifications for the Sleeves that were used in connection with
the above supplier qualification process), with Supplier’s Price for Sleeves, for purposes of the
Supply Agreement, being set forth in Exhibit A attached hereto, subject to adjustment as
otherwise provided in the Supply Agreement as amended by this Second Amendment
to Supply Agreement (with Annex F to the Supply Agreement being deemed to be supplemented
accordingly upon RJRT’s delivery of such notice).



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     5. RJRT agrees to provide Supplier with notice of, and an opportunity to bid on, RJRT’s
Cigarette packaging requirements involving offset printing (in addition to the parties’ agreement
in Section 4 hereof with respect to Sleeves) (it being acknowledged and agreed that such notice and
bidding opportunity shall be furnished using RJRT’s electronic procurement tool known as Bravo
Solutions, and it being further acknowledged and agreed that unless otherwise expressly agreed in a
writing signed by each of RJRT and Supplier after the date hereof, none of such other offset
business shall be deemed to be Included Products).



     6. If, during the Term, RJRT acquires all of the capital stock of any entity engaged in the
manufacture, in the United States, of Cigarettes, then RJRT shall use commercially reasonable
efforts to cause such entity to purchase from Supplier 80% of the acquired entity’s printed
Cigarette packaging requirements with respect to that entity’s U.S. Cigarette manufacturing
business (with the foregoing determination to be made based upon the total dollar value of the
printed Cigarette packaging purchased by that entity) during the period commencing upon the
180th day after the consummation of the acquisition of such entity through and until the
expiration of the Term, and Supplier shall supply the acquired entity such Cigarette packaging
requirements; provided, however, that neither RJRT nor such acquired entity shall have any
obligation pursuant to this Section 6: unless the quality, price, payment and delivery terms and
all other terms and provisions applicable to the supply of such requirements (collectively,
“Terms”) offered by Supplier to the acquired entity are at least as favorable to the acquired
entity as the most favorable Terms available to the acquired entity from any other supplier; or if
compliance with the provisions of this Section 6 would cause RJRT or the acquired entity to be in
breach of any of its respective contractual obligations owed to third parties, or would cause RJRT
or the acquired entity to incur any cost, expense or liability (over and above the acquired
entity’s cost of purchasing Cigarette packaging products from Supplier).



     7. If, during 2009, RJRT breaches its obligations set forth in Section 4, 5 or 6 hereof, then
(notwithstanding Section 1 hereof) the Price of each Product under the Supply Agreement, for the
period commencing January 1, 2010 through the expiration of the Term, shall be increased by 1.75%
over the Price applicable during 2009, with the foregoing price increase to be the sole and
exclusive remedy available to Supplier for any such breach.



     8. This Second Amendment to Supply Agreement may be executed in one or more counterparts, each
of which when executed and delivered shall be deemed an original, but all of which together shall
constitute one and the same instrument.



     9. Except as otherwise expressly set forth herein, the Supply Agreement remains unmodified and
in full force and effect.



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[The Remainder of this Page Intentionally Left Blank]




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     10. This Second Amendment to Supply Agreement shall become effective as of December 31, 2008,
provided RJRT has received on or before such date a copy of the Letter executed by each of
Supplier and SFNTC.



     IN WITNESS WHEREOF, the parties have executed this Second Amendment to Supply Agreement as of
the day and year first above written.



	 	 	 	 	 
	R. J. REYNOLDS TOBACCO COMPANY
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Andrew D. Gilchrist
 

Andrew D. Gilchrist
	 	 
	Title:

	 	Executive Vice President	 	 
	 
	 	 	 	 
	ALCAN PACKAGING FOOD AND TOBACCO INC.
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Dwight H. Kennedy
 

Dwight H. Kennedy
	 	 
	Title:

	 	President Global Tobacco	 	 







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