Nestl Quality Requirements for Vendors of Raw and Packaging Materials

The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization.

Document issued by Nestec S.A., avenue Nestl 55, 1800 Vevey, Switzerland. Date issued: 09.07.2010 No/Version: 2 July 2010

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

I. GENERAL INFORMATION LIABILITY, CONFIDENTIALITY The Vendor shall provide Nestl with all elements (composition, origin, type of manufacturing process and others) required for meeting legal, labelling and customs obligations related to the materials and Nestl finished products. The Vendor shall inform Nestl spontaneously of all problems related to the materials sold to Nestl, and of all changes likely to affect the materials properties, especially changes of origin, composition or manufacturing process. Nestl will inform the Vendor of any change in the destination of the materials (intended use) that may have consequences on the expected qualities.

Each of the parties agrees to keep in absolute secrecy the information and/or documents (including this one) that they may have exchanged or may exchange (especially when drawing up the specification and during audits) relating to the other party and their activities. They must agree not to use them for a purpose other than to ensure a smooth procurement operation. They pledge to make all necessary arrangements with respect to their personnel and their subcontractors to ensure that this obligation is respected. The same obligations of confidentiality are also addressed to third parties.

Nestl AUDITS Nestl, or any person entrusted by Nestl, shall be authorized to perform audits at the Vendors, in the Vendor's premises. The person shall be granted unrestricted access to premises concerning the manufacture or handling of the materials under consideration and commit to confidentiality. The audit may include checking the required hygienic practices and the quality and food safety system efficiency, compliance with local regulations, vendor's or outsourced laboratory and the reliability of analytical results. Nestl shall be authorized to consult the HACCP study files, quality monitoring plans and all quality records relevant to the material sold to Nestl, including material, line and environment control records. The Vendor shall evaluate his own suppliers to ensure that they fulfil the relevant hygiene practices. However, Nestl reserves the right to audit the Vendors suppliers to check that the materials they provide meet requirements specified in the Purchasing contract. In certain

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

circumstances, the Vendor will cooperate with Nestl to facilitate a visit or audits of his own suppliers. Nestl reserves the right to share internally the outcome of the audits carried out at vendor facilities.

GENERAL REQUIREMENTS FOR MATERIALS The materials sold to Nestl must be fit for human consumption, authentic and produced without adulteration. The Vendor must meet the requirements for the technical characteristics of the material as described in the specification issued by Nestl. The specification is to be read in conjunction with the document "MRES", which gives further requirements that are largely specific to the country of destination or common to a whole group of materials. CHANGES IN MATERIAL CHARACTERISTICS The Vendor must contact Nestl and get a written agreement for delivery to Nestl in case the material characteristics deviate from the agreed specifications. The Vendor is expected to recommend improvements or a permanent material specification change in cases where change in design, composition, processing, location, reliability, specification or other conditions can impact the material quality and the food safety parameters. RELIGIOUS REQUIREMENTS Where required, the Vendor must comply with the defined dietary requirements (such as religious requirements for Halal or Kosher foods). For certification of Halal- or Koshersensitive products or ingredients, the Vendor must engage a credible Halal / Kosher body. The supplier must also ensure that the certification is done according to the requirements of Halal / Kosher. Packaging materials must be verified for the absence of hidden ingredients. CERTIFICATE REQUIREMENTS The Vendor must be able to provide certificates based on Nestl requirements. Typically, the following certificate types are requested by Nestl: - Certificate of Analysis: Analytical results of the testing that is carried out on the material batch/lot before delivery to Nestl. The tests are typically related to the quality and/or performance of the material. They confirm that a specific delivery has the agreed analytical values.

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

- Certificate of Compliance (packaging materials only): It typically states that the material complies with all relevant local regulatory requirements of the country(ies) where the Nestl finished product will be sold.

- Religious Certification: Issued by the relevant religious authorities/organization, it states that the raw material is manufactured under the given conditions defined by the religious authorities/organization. This is typically related to Kosher and Halal.

- Certificate of Origin/Source: This is generally issued by the government (in some cases, it can also be the vendor) and states the origin of the material.

- Certificate of Export: usually issued by the government. It allows goods to be exported (generally required by the importing country). It typically states that the manufacturing facility is regulated and inspected by a food authority (e.g. FDA).

- Other locally or regionally applicable certificates such as MSDS (Material Safety data Sheet), Declaration On Genetically Modified Organisms (GMO) can be requested.

The type, content and frequency of certificate issuance is specified in the MRES document. The Vendor is expected to comply with these requirements.

PACKAGING - STORAGE - SHELF LIFE Nestl has the following general requirements for the packaging of the delivered material(s): The material must be packed in suitable, clean and sound containers with no loose or detachable closures or other potential foreign matter hazards. The packaging must conform to the relevant legal requirements for materials in contact with food. All packaging materials used for the storage of foodstuffs must be free from taint or odour and must not taint the materials that they contain. Each packaging unit must be permanently and legibly identified in compliance with agreed Nestl requirements. The minimum requirements from a quality and food safety perspective include material description or trade name, batch or lot number, producer and / or distributor, shelf life and expiry date. In case specific storage or handling conditions apply, they should be included as well.

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

In addition, the Vendor must comply with any additional requirements for packaging and/or labelling as specified in the Nestl purchasing specifications and in MRES.

The Vendor must communicate the necessary information for storage conditions to Nestl.

All storage locations used by the Vendor must be clean, free from infestation, and maintained at a temperature and humidity appropriate for the material. The material must be adequately protected against water or other damages during the storage period.

The Vendor must communicate to Nestl the guaranteed shelf life of the delivered materials and, where required, comply with the Nestl minimum remaining shelf life requirements at the time of delivery to Nestl.

TRANSPORT - DELIVERY The Vendor must ensure that, during shipment: - The material will not suffer undue quality deterioration while being traded. - The physical logistics will not cause damages to the material.

The Vendor must follow the first expiry-first out (FEFO) principle. The Vendor shall ship the minimum number possible of batches of the same material per purchase order. The number of containers, including information on the individual shipping units, should accompany every delivery. The information should be sent in electronic format whenever possible, before the delivery with a reference to the specific purchase order.

A formal agreement (contract) is mandatory between Nestl and transport companies. Subcontracted transport companies cannot be used without prior Nestl authorization. The carrier selected for delivery of the materials shall be suitable for food use, be clean in order to prevent possible contamination, and shall protect against deterioration. Tankers used must be designated for food use only. Cleaning procedures and details of the type or nature of other foods carried by the tankers must be provided as requested. Tanker cleaning locations can be subject to assessment where required.

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

ALTERNATIVE SITES, SUB-CONTRACTING

The Vendor must inform Nestl of the eventuality of producing the materials in one or more alternative sites. These alternative sites must also be approved by Nestl before the materials can be sourced from them.

If the Vendor is not the manufacturer of the material (example: trade materials), then the Vendor shall ensure that the principles outlined in this document are applied and allow Nestl to check their application at the manufacturer's premises.

The Vendor cannot subcontract all or part of the material production to a third party without Nestl's prior agreement. In the case of a subcontracting or trade contract, the Vendor shall remain entirely responsible for the provision of the materials to Nestl. Therefore, the Vendor shall make sure that the subcontractor meets all the requirements as laid out in the present document and in the purchasing contract. The Vendor shall allow Nestl to audit/visit the subcontractor's plant.

II. REGULATORY COMPLIANCE The Vendor must have adequate tools and procedures must be in place for ensuring full compliance with regulations and consumer expectations of materials delivered to Nestl in the country of manufacture and, where required, in the country of sale of the Nestl finished products.

III. QUALITY AND FOOD SAFETY SYSTEM QUALITY AND FOOD SAFETY MANAGEMENT SYSTEM The Vendor is must: establish and maintain a documented quality and food safety management system that covers the manufacture and supply of the material(s) under consideration, have a clearly defined quality function within its organization, properly train all personnel who might affect material quality/food safety in their functions.

The Quality and food safety systems must comply with the provisions of the local legislation and/or with Nestl requirements. Compliance with quality system certification standards is accepted by Nestl in case it is for industry-recognised, Nestl-accepted standards and when issued by Nestl-accepted

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

Certification Bodies. For purposes of assessment and approval, Nestl reserves the right to request the complete report. Changes to the status of the systems impacting the material and related services delivered to Nestl, including extensions or reductions in the scope of approval, third party and/or regulatory approvals that are either gained or withdrawn must all be communicated to Nestl. In case materials other than for human consumption are manufactured, filled or packed on the vendor's site, the human / not human activities must be strictly separated (either by physical or by cleaning means).

The reference for the food safety system detailed requirements is the Nestl Food Safety Management System. HACCP (raw materials only) Nestl expects that, for the material(s) under consideration, the Vendor has a system in place for identification as described in the ISO22000 standard or an equivalent thereof. QUALITY ASSURANCE Vendors must apply consistent and appropriate quality checks on their materials to ensure their conformity with the requirements as described in the material Purchasing Specification and Material Requirements. As outlined in the Nestl specification, the material characteristics may be subject to inspections to allow the release of each batch. Where requested and agreed, a Certificate of analysis (COA) must be provided before or at each delivery for every batch included in the delivery. The Vendor must establish a control plan (including a sampling plan) in order to ensure conformity with the defined material characteristics. The records related to these controls must be kept and made available to Nestl upon request. The plan must be updated annually according to new issues/priorities that shall include regulatory developments (issued and pending), previous surveillance results, trend analysis and/or new conditions. The Vendor shall validate his control methods in relation to the official methods (international reference or equivalent), or other methods as defined by Nestl. RELEASE The Vendor must have a documented release system in place for the active release of incoming materials, rework, work in process (where applicable) and finished materials. It must include a procedure for the appropriate handling of potentially unsafe materials to ensure that they are not released until they have been evaluated. The release decision must be documented for each lot / batch of the respective material. 7

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

Responsibilities for the release decision must lie with dedicated and adequately trained personnel. HANDLING OF NON-CONFORMITY Vendor must: have a documented procedure in place for handling non-conforming materials. define a contact person that will be in charge of resolving non-conforming material issues and communication with Nestl. Nestl reserves the right to reject upon reception or during use any material that does not conform with the requirements in the relevant documents/specifications, and to return or destroy it at the risk and expense of the Vendor. In case of rejection of delivered materials or of unreleased production at the Vendor's site, the Vendor agrees to handle such materials in such a way that they will not be delivered a second time, either to the original Nestl site or to another one. In certain cases, Nestl will destroy the non-conforming or rejected goods.

In case a fault is found with the material, Nestl also expects the Vendor to conduct a root cause analysis in order to define a corrective action plan to prevent the problem from reoccurring or, where agreed, to accept Nestls proposed corrective action plan.

BUSINESS CONTINUITY PLAN, EMERGENCY PREPAREDNESS The Vendor must have a documented business continuity / disaster recovery plan addressing both recovery of production capacity, product recall / withdrawal, and continuity of service. Clearly defined responsibilities must be in place within the Vendor organization and contact person(s) for issues and emergencies communicated to Nestl. LABORATORIES Vendor laboratories carrying out analyses must comply with local regulatory requirements or requirements defined by local authorities for this purpose. Where requested by Nestl, the Vendor agrees that his own laboratory, or the external laboratory providing services to the Vendor, will participate in laboratory proficiency tests organised by Nestl. Furthermore, the Vendor agrees to initiate corrective action in case of unsatisfactory results.

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

IV. PREREQUISITE PROGRAMS, GOOD

MANUFACTURING

PRACTICES,

OPERATIONAL QUALITY GOOD MANUFACTURING PRACTICES, PREREQUISITES The Vendor's pre-requisite programs must cover the following elements, in compliance with applicable regulations, industry standards and Nestl-specific requirements for the material(s) under consideration: - construction and layout of buildings, premises - utilities (air, water, energy) - waste disposal - equipment suitability, cleaning and maintenance - calibration - management of purchased materials (vendor approval, material approval for use, control of incoming materials) - measures for the prevention of cross-contamination, zoning - cleaning and sanitation - pest control - personnel hygiene and employee facilities - rework - warehousing (handling, storage and delivery, transport) - food defense, bio-vigilance and bioterrorism - training and education - traceability and recall procedures ALLERGENS (raw materials only) The Vendor must have a procedure in place to evaluate the allergen cross-contact risks and implement control procedures throughout the process, storage and transport operations. The Vendor will be asked to complete the Nestl Major Allergen Declaration form, and must inform Nestl each time there is a change in his raw materials, processes or product portfolio which impacts the allergen information provided. In certain cases, the Vendor will be required to work with Nestl on appropriate control measures. NET CONTENT The Vendor must have a net content control system in place that is compliant with regulations of the country of manufacture and, where required, the country of sale of the material(s) under consideration.

No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

CALIBRATION

The Vendor must have a calibration and verification procedure for all equipment and instruments used in the production process that were identified as critical for elimination or reduction of key food safety hazards, release criteria and monitoring activities for the material(s) under consideration. TRACEABILITY AND RECALL PROCEDURES, The Vendor must have a system in place covering all steps involved in the production of the material(s) under consideration to be able to trace: the manufacturing and processing records, the results of quality controls performed, the origin of the ingredients used

In addition, the Vendor must be able to identify: the method and date of transport, the company that was responsible for the transport, all the locations where the material was stored, with the dates of storage.

The information must be made available for every batch of the material(s) delivered to Nestl within 4 hours of the request and must be kept on file for a minimum of 5 years. If the legislation of the country of destination requires a longer period, this will prevail.

The Vendor must conduct regular traceability exercises. MANAGEMENT OF PURCHASED MATERIALS The Vendor must have a process in place ensuring full approval of its vendors, including information about the origin and manufacturing location of the ingredients used for producing the materials supplied to Nestl, or of any other materials that could compromise the quality and food safety of the materials supplied to Nestl. An incoming materials control system must be defined and executed.

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No. / Version: 2 The intellectual property rights for this document belong to Nestl S. A., Vevey, Switzerland. It may not be copied or disclosed to others without authorization

Validation date: 13.07.2010 GI 31.104-3 Vendor Approval Process

NESTLE QUALITY REQUIREMENTS FOR VENDORS

Reason for revision : Vendor: Date and signature:

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