MASTER
PURCHASE AGREEMENT
THIS
AGREEMENT, dated as of February 23,2006 (the "Effective
Date"), entered into by and between Petrobras America Inc., a
Delaware corporation having its principal office at 10777
Westheimer Road, Suite 1200, in Houston, Harris County, Texas,
hereinafter referred to as "PURCHASER", and United Energy
Corporation, incorporated in the State of Nevada, hereinafter
referred to as "SELLER".
WITNESSED:
WHEREAS,
PURCHASER and SELLER desire to enter into this Master Purchase
Agreement in order to agree and establish the general terms
and conditions of SELLER'S potential future sales and
deliveries of any or all of the SELLER'S oil and gas well
production enhancement products as listed in Schedule I
(hereinafter collectively referred to as
"PRODUCTS"),
WHEREAS,
SELLER is willing and able to sell and deliver from time to
time to PURCHASER as the case may be, the PRODUCTS in
accordance with the general terms and conditions set forth
herein,
WHEREAS,
PURCHASER desires to enter into a cooperative Master Purchase
Agreement with SELLER aimed at reducing administrative costs,
improving order cycle times, and simplifying the process of
acquisition of PRODUCTS offered by SELLER as selected by
PURCHASER.
WHEREAS,
the parties wish to set forth their agreement with respect to
the foregoing and related matters,
NOW,
THEREFORE, in consideration of the premises and other good and
valuable consideration hereinafter set forth, PURCHASER and
SELLER agree as follows:
DEFINITIONS:
AGREEMENT/CONTRACT
- Shall mean this entire Master Purchase Agreement
acknowledged and signed by the Parties, which shall govern all
purchasing transactions initiated by the PURCHASER for the
length of time established herein and covering those PRODUCTS
contained in the PRODUCT LIST.
CLIENT
- Hereby refers to customers of the PURCHASER who are the end
users of the PRODUCTS sold by SELLER to PURCHASER. SELLER
acknowledges that PURCHASER is not anticipated to be the
ultimate end user of any PRODUCTS it sells and that PURCHASER
will re-sell those PRODUCTS to its clients.
DAYS
- Unless otherwise indicated herein "day[s]" shall mean a
normal business day defined as Monday through
Friday
EXHIBITS
- Shall mean the documents attached hereto and incorporated
herein for all purposes.
MADE-TO-ORDER
PRODUCTS - PRODUCTS not maintained as part of the stock
inventory and which require the SELLER to design, manufacture,
produce or purchase all or part of the end product as
requested by PURCHASER in order to meet the specifications or
technical aspects of the PRODUCTS sought by
PURCHASER.
PRODUCTS
- Shall mean SELLER'S formulations of oil and gas well
production enhancement products listed on Schedule I, as such
exhibit may be amended from time to time during the Term
hereof.
PRODUCT
LIST - Shall mean SELLER'S PRODUCTS and price list as
identified on Schedule I any and all documents and electronic
lists demonstrating the PRODUCTS that are available for sale,
including PRODUCTS in the SELLER's inventory as well as any
PRODUCTS classified as MADE-TO-ORDER.
PURCHASE
ORDER - Shall mean an official Purchase Order, whether
generated electronically or on paper, executed by
PURCHASER
and/or authorizing the supply of PRODUCTS by SELLER.
.
STOCK
PRODUCTS - Are those PRODUCTS generated or maintained as part
of the SELLER'S inventory at the time of the placement of the
Purchase Order.
ARTICLE
I. GENERAL PROVISIONS
1.1
Mutual Agreement .
The parties hereto agree that this Master Purchase Agreement sets
forth the general terms and conditions that shall govern all sale
and purchase transactions between PURCHASER and SELLER for
PRODUCTS, from time to time for the Term and under the scope of
this Master Purchase Agreement, pursuant to each individual
Purchase Order (hereinafter defined "PO"). The
terms and conditions of this Agreement are incorporated by
reference in each PO.
1.2
Term .
The term ("Term") of this Master Purchase Agreement shall commence
on the Effective Date and subject to early termination in
accordance with the terms and conditions herein, shall remain in
full force and effect for an initial period of three (3) years, and
thereafter shall be subject to renewal for successive three (3)
year periods upon the written agreement of both parties prior to
the expiration date of the then existing Term. Both parties may at
any time agree in writing to early termination of the
Term.
1.3
No Exclusivity .
Notwithstanding anything contained herein to the contrary, the
parties agree that this is not an exclusivity agreement and nothing
in this Master Purchase Agreement requires PURCHASER to purchase
any PRODUCTS solely from SELLER or requires SELLER to sell PRODUCTS
exclusively to PURCHASER; provided, however, that during the Term
of this Master Purchase Agreement, SELLER shall sell and deliver to
PURCHASER, PRODUCTS, in accordance with the terms and conditions
herein.
SELLER
acknowledges that PURCHASER is not anticipated to be the
ultimate end user of any PRODUCTS it purchases from SELLER,
and that PURCHASER will re-sell those PRODUCTS to its
CLIENT.
ARTICLE
II. PURCHASE ORDERS
2.1
Issuance of Purchase Orders .
SELLER shall sell and deliver to PURCHASER and PURCHASER shall
purchase from SELLER PRODUCTS, when the same are ordered by
PURCHASER, as set forth below:
2.1
(a) PURCHASER may issue to SELLER one or more POs for
PRODUCTS. The PO is the exclusive instrument to be used by
PURCHASER and shall be governed by the general terms and
conditions set forth herein, and this Master Purchase
Agreement is expressly referenced in the text of the PO, and
shall be considered incorporated therein by
reference.
2.1
(b) No sale or transaction of any kind related to this
Agreement shall be valid without the issuance and execution of
a Purchase Order.
2.I(c)
PURCHASER may send POs to SELLER in an electronic form (e.g.,
e-mail attachments in Microsoft Word or Excel, Adobe Acrobat,
XML, Browser-Web) compatible with SELLER'S systems
requirements, via facsimile, or regular mail.
2.2
Acceptance of Purchase Orders .
SELLER shall, within ten (10) days of the receipt of any PO from
PURCHASER, issue to PURCHASER a written acceptance thereof or if
rejected, a written explanation of the reasons for such rejection.
Provided, however, that SELLER may reject a PO only for legitimate
business reasons. If PURCHASER does not receive such written
explanation of the reasons for rejection of a PO within the ten
(10) days following SELLER'S receipt of such PO, then said PO shall
be deemed accepted by SELLER for purposes of this Master Purchase
Agreement. If unable to meet the delivery time requested in any PO,
SELLER may propose a revised delivery time, then PURCHASER, at its
discretion, may accept such revised delivery time or withdraw the
relevant PO without any liability whatsoever, as provided in
Article 2.3.
2.3.4
Prevalence .
Except for the provisions applicable to the delivery time, in the
event of any conflict or discrepancy that may appear between the
terms and conditions of this Master Purchase Agreement and any POs,
the terms and conditions of this Master Purchase Agreement and its
attached exhibits shall prevail.
2.4
Assurances .
SELLER agrees to give PURCHASER reasonable assurances of SELLER'S
ability to perform its obligations under this Master Purchase
Agreement upon PURCHASER'S request for such assurances and to
provide follow-up with SELLER'S own factory, its vendors or
subcontractors on each PO to ensure that the delivery date provided
therein and other stipulations provided herein are
met.
ARTICLE
III.
DELIVERY
TERMS
3.1
Delivery .
SELLER shall deliver the PRODUCTS to PURCHASER'S EXW ("EX Works"),
SELLER'S Plant on the agreed delivery time and at the agreed
delivery point in accordance with the applicable PO and the terms
and conditions set forth herein. In addition, SELLER AND PURCHASER
ACKNOWLEDGE AND AGREE THAT TIME IS OF THE ESSENCE WITH RESPECT TO
THE DELIVERY OF PRODUCTS HEREUNDER. SELLER agrees to provide
frequent follow-up to POs designated as "CRITICAL PRODUCTS" since
they represent first priority requirements as set forth in Exhibit
A, (Delivery Times). Notwithstanding the foregoing, the parties may
agree upon other delivery terms, in which event, the parties shall
also agree upon any adjustments to the general commercial terms
applicable hereunder, taking into account all relevant
circumstances.
3.2
Title and Risk of Loss .
Risk of loss or damage of PRODUCTS sold under any PO and title to
PRODCUTS shall pass to PURCHASER, as the case may be, upon SELLER's
delivery of PRODUCT EXW, SELLER'S Plant, in accordance with the
Incoterms 2000 published by the International Chamber of Commerce.
Notwithstanding the foregoing, the parties may agree, in
exceptional cases, to other delivery terms.
3.3
Containers .
SELLER shall deliver the PRODUCT in 55 gallon drums, separately
labeled, as per the warehouse number and final destination
indicated in the applicable POs or by other means of transport in
accordance with the terms of a Purchase Order.
3.4
Shipping Documents .
SELLER shall submit to PURCHASER a commercial invoice as well as
those documents required by the authorities of the exporting
country, for each shipment of PRODUCTS pursuant to a PO, which
shall meet the invoicing requirements indicated in Exhibit D,
(Requirements for Payment). For clearance of the customs
authorities of the country of importation, SELLER shall produce and
submit the certificate of country of origin and/or any other
documents needed for customs clearance. In the event that, by
changes in the applicable laws and regulations, further
documentation would be required for tile effective and timely
exportation from the country of origin and importation into the
designated country. SELLER agrees to use its best reasonable
efforts to produce any required documentation. If SELLER fails to
fully comply with the provisions of this Article 3.4, SELLER shall
be liable for any and all charges related to insurance,
transportation, storage, detention or demurrage charges, penalties
and fees related thereto. In such circumstance PURCHASER shall have
the right to charge SELLER for those charges and/or make deductions
from any outstanding invoice at PURCHASER'S election. In addition,
shipments shall not be deemed delivered when lack of required
documentation persists. SELLER shall provide to PURCHASER with the
information herein described accurately and in a timely manner.
Furnishing this information by SELLER shall be a pre-condition for
process of payment.
3.5
SELLER'S Delivery Performance .
SELLER shall meet a minimum of90% On-Time Delivery of the total
number of POs delivered within six (6) months period. If SELLER'S
On-Time Delivery falls under 90%, subject to exceptions for Force
Majeure SELLER shall have four weeks to present a detailed plan to
reach the minimum performance agreed in this Master Purchase
Agreement. Notwithstanding the foregoing, if SELLER fails to comply
with the minimum delivery performance after the four weeks period
(the "Grace Period"), Liquidated Damages for Delay will apply as
per Article 3.5.1.
3.5.1
Liquidated Damage for Delay .
In the event SELLER fails to make delivery within the time
established following the Grace Period as provided under Article
3.5, PURCHASER may at its option terminate the PO or part thereof
as to which there has been delay without incurring cancellation
charges or any other costs. Should PURCHASER elect to maintain such
PO active, SELLER shall be subject to Liquidated Damages of one
percent (1 %) of the total value of the delayed PRODUCT or PRODUCTS
per week of delay regarding PRODUCTS delivered after the Grace
Period. This Liquidated Damages Article shall start from the eighth
(8th) day of delay and up to the day the PRODUCTS are delivered in
accordance with the terms of this Agreement and meet all specific
requirements contained in the PO as previously agreed to, but in
any event shall not exceed ten percent (10%) of the total value of
the PRODUCTS on any individual PO. PURCHASER'S failure to exercise
this Liquidated Damages Article when applicable within any specific
time frame or any specific occasion shall not be deemed to be a
waiver of said Article at any time.
PURCHASER,
at its discretion, shall be entitled to forthwith deduct the
accrued applicable liquidated damages from any outstanding
invoice. In the event there are no outstanding invoices,
SELLER shall immediately issue a credit note for the benefit
of PURCHASER, establishing the applicable delay charge. The
provision in this Article 3.5.1 shall be SELLER'S sole
liability and PURCHASER'S sole remedy for delay in
delivery.
ARTICLE
IV. INSPECTION, REJECTION
4.1
Inspection .
PURCHASER, at its own expense, reserves the right to appoint a
competent inspection company approved by SELLER to perform services
on its behalf at SELLER'S plant, or at the plant of a third party
contracted by SELLER, through a qualified service representative
(hereinafter the "Inspector"). Inspector shall be responsible for
performing any inspection services required by PURCHASER in
accordance with an inspection protocol subject to be determined in
accordance with the further mutual agreement between PURCHASER and
SELLER (Inspection Services).
4.2
Rejection. Upon
inspection at the final destination, PURCHASER may reject any or
all PRODUCTS delivered by SELLER hereunder that are non-conforming
as reasonably determined by PURCHASER as per Exhibit C,
(Discrepancies).
ARTICLE
V. INVOICING; PRICE AND PAYMENT; TAXES
5.1
Invoicing .
SELLER shall, within three (3) business days after delivery, submit
to PURCHASER sales invoices in US Dollars, together with copies of
the bill of lading and/or relevant shipping documents evidencing
delivery. Such sales invoices shall contain all the information
requested in Exhibit D, (Requirements for Payment). No payment
shall be due if such sales invoices are submitted without the
proper shipping documents.
5.2
Price and Payment .
Within thirty (30) days after receipt of
