AGREEMENT FOR THE PURCHASE AND
SALE OF
BIODEGRADABLE RESINS
This AGREEMENT
FOR THE PURCHASE AND SALE OF BIODEGRADABLE RESINS (this
“Agreement”) is made as of December 1, 2006 by and
between Alcoa Kama, Inc, a Delaware corporation
(“Buyer”), and Cereplast, Inc., a Nevada corporation
(“Seller”).
Buyer desires to
purchase from Seller, and Seller desires to sell to Buyer,
Biodegradable Resins (“Product”) meeting the
Specifications set forth in Exhibit A attached hereto
(the “Specifications”), pursuant to the following terms
and conditions.
In consideration
of the premises and the mutual covenants hereinafter contained and
intending to be legally bound hereby, the parties hereto agree as
follows:
1.
Term . This Agreement will have XXXXXXXX”term (the
“XXXXXXXX”) commencing December 1, 2006 (the
“Commencement Date”) and expiring December 31,
XXXXXX. Unless terminated upon written notice by Buyer on or before
the date which is sixty (60) days prior to the expiration of
the then-current term, this Agreement will thereafter automatically
renew for additional XXXXXX terms (each, an “Additional
Term” and, together with the XXXXXXXXXXX).
2.
Purchase and Sale Commitments .
(a) Each
calendar year during the Term of this Agreement, Seller will sell
and deliver to Buyer, and Buyer will purchase and accept from
Seller, in conformance with (i) the Specifications, and
(ii) the other provisions of this Agreement, a maximum of
XXXXXXXXXXXX(million) pounds of Product per calendar year (the
“Annual Quantity”). The parties acknowledge and agree
that, notwithstanding the foregoing, Buyer shall not be obligated
to purchase any minimum quantity of Product hereunder.
(b) XXXXXXXXXXXXXXXXXXXXXXXXXX
(a)
Price . The price, per pound, for Product, delivered in
accordance with Article 4(a) below, shall be as set forth in
Exhibit B attached hereto.
(b)
Payment Terms . Unless otherwise expressly set forth in this
Agreement, the terms of payment are
XXXXXXXXXXXXXXXXXXXXXXX
4.
Delivery; Title; Risk of Loss; Loading .
Strategic Materials —
Resins
(a) Unless
otherwise agreed between the parties for any individual shipment,
all Product shipped hereunder shall be delivered
XXXXXXXXXXXXXXXXXXXXX
(b) Buyer
will bear the cost of transportation of the Product to such
destination. Seller will utilize Buyer’s designated
Transportation Management System (TMS) to determine the
method, agency and routing of transportation will be designated by
Seller. Excess packing, shipping and transportation charges
resulting from compliance with respect to the use of any agency or
method of transportation or any routing other than that which would
be designated by Buyer’s TMS shall paid by the Seller, unless
Seller obtains Buyer’s advance written approval prior to
incurring any such additional costs. Title to the product, and risk
of loss or damage of the Product, will pass to Buyer upon unloading
of the Product at Buyer’s facility.
5.
Warranty . Seller warrants that all Product delivered
hereunder will conform to applicable Specifications, drawings,
instructions, data, samples, standards and regulations, and will be
merchantable, free from defects in design, material and
workmanship, will be as described and advertised, of good quality,
fit for the intended purposes, and will be free from all liens and
encumbrances. These warranties are in addition to all other
warranties, express, implied or statutory, which may be applicable.
Seller shall indemnify, defend and hold Buyer harmless from any
breach of these warranties without prejudice to any other rights or
remedies of Buyer. Limitations on Buyer’s remedies (or
disclaimers of warranties), whether contained in documents of
Seller, or otherwise, shall not be effective and are hereby
objected to and rejected. All warranties and other provisions of
this paragraph shall survive inspection or acceptance of, payment
for, and use of the Product and completion, termination, or
cancellation of this Agreement, and shall run to Buyer, its
customers, successors, and assigns, and to users of the
Product.
6.
Competitive Pricing . XXXXXXXXXXXXXXXXXXXXXXX
7.
Taxes . If Seller is required by law to collect sales
and use tax (including any gross receipts tax imposed similar to a
sales and use tax) from Buyer on behalf of any taxing jurisdiction,
Seller shall provide to Buyer invoices which separately state and
clearly indicate the amount of tax and Buyer shall remit any such
tax to Seller. Seller shall have the responsibility of complying
with all applicable foreign, national, state or local laws
regarding value added tax and sales and use tax or substitutes
therefore including registration, collection of taxes and the
filing of returns where applicable. Notwithstanding whether Seller
must collect sales and use tax from Buyer, Seller shall state on
every invoice the taxing jurisdiction (e.g. country, state and
local jurisdiction) in which Product was provided. If applicable,
in lieu of payment for any sales and use tax, Seller shall accept a
properly executed exemption or direct pay certificate from Buyer.
The determination of whether an exemption or direct pay certificate
will be submitted to Seller in lieu of payment for any sales and
use tax shall be made by Buyer on a location by location basis.
With the exception of sales and use tax as described above, all
other taxes, however denominated or measured, imposed upon the
Seller, or the price or compensation under this contract, or upon
the product provided hereunder, shall be the responsibility and
liability of Seller.
8.
Inspection; Rejection; Quality Assurance; Manufacturing
Method .
Strategic Materials —
Resins
(a) All
Product shall, before delivery, be subject to inspection, tests,
and audits by Buyer or its agent, at reasonable times and places.
Seller agrees to provide access for Buyer to its facilities at all
reasonable times for such inspection, tests, and audits, and, at no
additional cost, to provide all assistance and facilities
reasonably necessary to perform the same. Neither the inspection,
testing, or auditing of any Product, nor the failure to do so,
before delivery to Buyer shall constitute acceptance of any
Product, or relieve Seller from exclusive responsibility for
furnishing Product in strict conformance with the Specifications.
Buyer understands that Seller, at its discretion, may not give
access to sensitive documents covered by proprietary “Know
How”. Buyer also understands that all information divulged
during the audit will be covered by Section 20,
below.
(b) Seller
warrants that it has and will maintain an adequate quality
control/assurance program with respect to the production and
delivery of Product and that it creates and maintains adequate
quality control/assurance reports, certificates, affidavits, and
other such records relating to such Product. Seller agrees that,
upon request and at no additional charge, it will promptly furnish
authenticated copies thereof, as well as applicable certificates of
conformance and/or compliance acceptable to Buyer, at the time of,
or promptly after, delivery.
I Product shall be
received subject to inspection and approval by Buyer after
delivery. Upon inspection, Buyer may give Seller notice of
rejection or revocation of acceptance, notwithstanding any payment,
passage of title, approval, prior test or inspection. No
inspection, approval, test, delay or failure to inspect or test, or
failure to discover any defect or other nonconformance, shall
relieve Seller of any obligations under this Agreement or impair or
waive any right or remedy of Buyer with respect to Seller’s
performance hereunder. If, in Buyer’s judgment, any Product
delivered hereunder does not conform with the requirements of this
Agreement, Buyer shall have the right to reject such Product and,
in addition to any other rights and remedies it may have, Buyer
may, in its sole discretion: (1) return any or all
nonconforming Product to Seller for reimbursement, credit,
replacement, or repair as Buyer may direct; (2) correct,
rework, and/or repair the Product with all costs associated
therewith to be charged to and paid by Seller; or (3) hold any or
all nonconforming Product, at Seller’s risk and expense, for
disposal or correction according to Seller’s instructions.
Any Product rejected by Buyer and returned to Seller shall be
returned, at Seller’s risk and expense, with the cost of
packaging, handling, inspection, examination, transportation and
any other costs incidental thereto to be charged to and paid by
Seller. Such Product shall not thereafter be tendered to Buyer for
acceptance unless the previous rejection and requirement of
correction are disclosed to Buyer in writing. All such
nonconforming Product that is so remedied will have the same
warranty as stated in Article 5 from the date of re-delivery.
Inspection and rights to reject in any event will not be more than
60 days from receipt of material by Buyer.
(d) Seller
shall give Buyer at least sixty (60) days’ prior written
notice of any intention to change any aspect of the manufacturing
process for Products to be delivered hereunder, including, but not
limited to, changes in raw materials, product specifications or
product quality levels or any significant change in formulation or
methods of manufacturing. Seller agrees that it will provide Buyer
with all reasonable assurances requested by Buyer to demonstrate
that such intended changes will not have an effect upon
Buyer’s operations. If
Strategic Materials —
Resins
Buyer objects
to any such change, Buyer shall give Seller written notice thereof
prior to the effective date of such change, and, if Seller
nevertheless proceeds with such change, and without limiting any
other remedy Buyer may have pursuant to this Agreement or
otherwise, Buyer shall be entitled to discontinue the purchase of
any Products affected by such change hereunder without liability or
other obligation to Seller.
9.
Compliance with Laws . Seller warrants that it will
comply with all applicable foreign, federal, state and local laws
and regulations in producing and delivering Products hereunder.
Upon request, Seller will furnish Buyer with certificates of
compliance therewith. Unless this Agreement is otherwise exempted
by law, Seller will comply with Executive Order 11246, as amended
by Executive Order 11375 (Equal Employment Opportunity) the
Rehabilitation Action of 1973, the Vietnam Era Veteran’s
Readjustment Assistance Act of 1974, the Americans with
Disabilities Act, as they have been or may be amended from time to
time, and regulations implementing such statutes; and any similar
state and local laws and ordinances and the regulations
implementing such statutes. If requested by Buyer, Seller will
furnish to Buyer an executed Certificate of Nonsegregated
Facilities. Seller warrants that Product delivered hereunder will
be produced at Seller facilities complying with all applicable
provisions of the Occupational Safety and Health Act and applicable
regulations under that Act and agrees to, upon request, provide
Buyer with all explanatory and factual information needed to verify
such compliance and to enable Buyer to comply therewith, and with
any other laws and regulations applicable hereto. Seller further
warrants that it will comply, where applicable, and without
limitation, with all orders, standards, and regulations of the
National Highway & Transportation Safety Administration,
Federal Aviation Administration, Environmental Protection
Administration, Food and Drug Administration, Consumer Product
Commission, and Occupational Safety & Health Act
Administration.
10.
Hazardous and Dangerous Goods and Materials : Seller
warrants: (i) that any chemical substance or mixture delivered
to Buyer pursuant to this Agreement is on the Toxic Substance
Control Act inventory or that the premanufacture notice
requirements thereof have been satisfied and such chemical
substance or mixture is lawfully available for sale and use;
(ii) that chemical substances or mixtures delivered hereunder
will be properly packaged with all appropriate warning labels,
instructions for use, and notices, and that, if such chemical
substances or mixtures are supplied in bulk, Seller will provide
Buyer with an adequate supply of such warning labels, instructions,
and notices for use in Buyer’s facilities; (iii) that
Seller will supply with, or before, delivery, and at any other time
upon Buyer’s request, all information known to Seller with
respect to potential hazards, including possible toxic or harmful
effects, related to the handling, use, storage, disposal, or
transportation of any chemical substances or mixtures delivered
hereunder, and any precautions that should be taken to eliminate or
reduce to a minimum such hazards; and (4) that Seller will
ascertain and furnish all information about Product delivered
hereunder required by Buyer to comply with all safety-related laws
and regulations (including, without limitation, those relating to
applicable right-to-know laws and occupational safety and health
acts), and with laws and regulations regarding composition,
ingredients, or otherwise, including promptly furnishing to Buyer
upon written request a list of all ingredients therein and the
amounts thereof and information concerning any changes in such
ingredients thereafter. Seller agrees that it will, upon
Buyer’s request, accept the return of
Strategic Materials —
Resins
unused toxic or
hazardous chemical substances or mixtures delivered to Buyer
pursuant to this Agreement.
11.
Environment, Health, Safety & Security . If Seller,
either as principal or by agent or employee,
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