SUPPLY AGREEMENT
Exhibit
10
THIS SUPPLY AGREEMENT (“Agreement”), dated as of the
21st day of November, 2008, is by and between Peninsula Packaging, LLC, a
California limited liability company d/b/a Peninsula Packaging Company (“PPC”), and ECO2 Plastics,
Inc., a Delaware
corporation (the “Seller”).
BACKGROUND
PPC desires to purchase from Seller,
and Seller desires to sell to PPC, recycled polyethylene-terephthalate (PET)
flakes having the specifications and the qualities described on Exhibit A attached
hereto (the “Products”). The
parties now desire to enter into this Agreement for the purpose of setting forth
their relative rights and obligations with respect to the purchase and sale of
the Products.
NOW, THEREFORE, in
consideration of the foregoing and the mutual promises, covenants, and
agreements herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Purchase of
Products.
(a) During
the Term (as defined below), Seller agrees to sell to PPC the Products ordered
pursuant to PPC’s duly issued purchase orders (each, a “Purchase Order”) on the terms
and conditions provided herein.
(b) If
PPC is in need of at least one million five hundred thousand (1,500,000) pounds
of Products for any given calendar month occurring during the Term, and provided
that Seller is in compliance with the terms and conditions of this Agreement,
PPC shall order its requirements for one million five hundred thousand
(1,500,000) pounds of Products for such month from Seller, pursuant to a
Purchase Order delivered to Seller at least fourteen (14) days prior to the
commencement of such month. Seller shall accept each Purchase Order
and deliver the Products on the delivery date(s) therein specified to the
destination(s) therein. Notwithstanding the foregoing, in the event
that Seller reasonably anticipates that it will be incapable of meeting the
volume requirements of any such Purchase Order despite using commercially
reasonable efforts to do so, then Seller may, within three (3) business days of
receipt of such Purchase Order, provide written notice thereof to PPC,
indicating the portion of the order that Seller is able to accept, and Seller
shall thereafter deliver such reduced, accepted volume of Products on the
delivery date(s) specified in the Purchase Order to the destination(s) therein.
PPC shall be permitted to buy any rejected volume of Products from a third
party. Seller agrees that it shall not sell to any third party any rejected
volume of Products.
(c) Each
Purchase Order shall be deemed to incorporate all of the terms and conditions
contained in this Agreement, and may be accepted only upon the exact terms and
conditions set forth therein. Any terms or conditions proposed by
Seller that are inconsistent with or in addition to the terms and conditions set
forth therein are expressly rejected and shall be void and of no effect, unless
agreed to in writing and signed by PPC
(d) Subject
to the provisions of Section 1(b) hereof, nothing in this Agreement shall
require PPC to use Seller as an exclusive supplier of the Products.
2. Pricing.
This
section is intentionally left blank due to confidentiality and competitive
reasons.
3. Term and
Termination.
(a) The
term of this Agreement (the “Term”) shall commence as of
the date first written above and shall end on the date three (3) years
thereafter, unless earlier terminated as set forth below. The parties
may extend the Term upon their mutual written agreement.
(b) The
Term may be terminated by PPC prior to its natural expiration in the event that
any of the following events occur, upon written notice to Seller:
(i) Seller
fails to perform or fulfill any term, covenant, or condition contained in this
Agreement and Seller fails to cure such default thereof within three (3)
business days after Seller has been served with written notice
thereof;
(ii) Any
representation or warranty made by Seller herein is false or inaccurate in any
material respect when made, or becomes false or inaccurate in any material
respect thereafter; or
(iii) (A)
the application for the appointment of a receiver or custodian for Seller or the
property of Seller, (B) the entry of an order for relief or the filing of a
petition by or against Seller under the provisions of any bankruptcy or
insolvency law, (C) any assignment for the benefit of creditors by or against
Seller, or (D) Seller’s insolvency (which term is defined for purposes of this
paragraph as the failure or inability of Seller to meet its obligations as the
same fall due).
(c) The
Term may be terminated by Seller prior to its natural expiration in the event
that any of the following events occur, upon written notice to PPC:
(i) PPC
fails to perform or fulfill any term, covenant, or condition contained in this
Agreement and PPC fails to cure such default thereof within three (3) business
days after PPC has been served with written notice thereof; or
(ii) (A)
the application for the appointment of a receiver or custodian for PPC or the
property of PPC, (B) the entry of an order for relief or the filing of a
petition by or against PPC under the provisions of any bankruptcy or insolvency
law, (C) any assignment for the benefit of creditors by or against PPC, or (D)
PPC’s insolvency (which term is defined for purposes of this paragraph as the
failure or inability of PPC to meet its obligations as the same fall
due)
(d) At
the termination of the Term, PPC shall have no further obligation or liability
to Seller under this Agreement or any Purchase Orders other than to remit
payment of the Purchase Prices due hereunder for any Products accepted by PPC
hereunder prior to the effective date of termination.
4. Delivery. Time
is of the essence in this Agreement. Seller shall cause all Products
to be delivered to the delivery destination specified in each accepted Purchase
Order by the delivery date specified therein (or as rescheduled by PPC as set
forth below), in the quantities set forth therein (subject to the provisions of
Section 1(b) hereof), in new condition and free from defect. PPC may,
free of charge, reschedule the delivery date for any Product prior to Seller’s
shipment thereof by providing Seller with notice thereof (electronically, by
facsimile, or by mail). In the event that Seller breaches the terms
of this Section, PPC reserves the right, without liability, in addition to its
other rights and remedies, to terminate such Purchase Order, and to purchase
substitute Products elsewhere and charge Seller with any damages
incurred. Seller assumes all risks of loss of damage to Products
delivered pursuant to this Agreement until their delivery to, and acceptance by,
PPC.
5. Inspection. The
Products purchased by PPC are subject to inspection and approval by PPC at the
place of delivery set forth on the applicable Purchase Order. PPC
reserves the right to reject and refuse acceptance of any or all portions of the
Products which are not in accordance with: (i) the description of
such Products set forth in this Agreement and in the Purchase Order; (ii)
Seller’s samples (if any); and/or (iii) Seller’s express or implied
warranties. Any or all portions of the Products not accepted will be
returned to Seller at Seller’s expense for a full credit or refund, or at the
option of PPC, Seller shall be required, at its sole risk and expense, to
correct or replace such Products with conforming Products within such time as
PPC may require. If Seller fails to correct or replace any
nonconforming Products promptly after notification and authorization from PPC,
PPC may correct or replace such Products and charge Seller for the cost incurred
by PPC and/or set-off the cost hereunder at the sole discretion of
PPC. Payment for any Products ordered hereunder prior to inspection
and approval shall not constitute acceptance thereof and is without prejudice to
any and all claims that PPC may have against Seller.
6. Warranties. Seller
warrants that the Products will strictly conform to the specifications and the
qualities set forth on Exhibit A, are fit
for the use intended by PPC, are merchantable, are of good material and
workmanship, and are free from defect. All warranties will survive
the acceptance of each of the Products by PPC for a period of six (6) months
after such acceptance. These warranties are in addition to any
warranties of additional scope given to PPC by Seller.
7. Patents. Seller
shall defend, at its own expense, all suits, actions, or proceedings in which
PPC or PPC’s officers, directors, employees, agents, successors, assigns,
customers, or users of Seller’s Products (collectively, together with PPC, the
“PPC Parties”) are made
defendants for actual or alleged infringement of any U.S. or foreign letters
patent resulting from the use or sale of the Products purchased under this
Agreement, and Seller further shall pay and discharge any and all judgments or
decrees which may be rendered in any such suit, action, or proceeding against
the PPC Parties, and shall otherwise indemnify, defend, and hold the PPC Parties
harmless of, from, and against any and all damages or expenses resulting to, or
incurred by, them in any manner arising from any and all such claims, suits,
actions, or proceedings, including, but not limited to, reasonable attorneys’
fees.
8. Review and Audit
Privileges. Seller shall keep and preserve, for at least three
(3) years following the sale of each and every Product hereunder, full and
accurate accounting records relating to such Product. Seller shall
give PPC and its designated representatives (which representatives may include,
without limitation, independent auditors) access to such records during such
period of time to review and/or audit the records, from time to time, upon
request. Seller shall also provide, at Seller’s own expense, copies
of all or a portion of the records when so requested by PPC. In the
event any audit conducted by an independent auditor demonstrates a variance of
more than five percent (5%) on an annual basis in the amount determined by such
auditor to represent the fair purchase cost of any Product purchased hereunder
and the amount actually paid to Seller for such Product, Seller shall pay to PPC
the reasonable cost of such audit. In any event, Seller shall
promptly pay to PPC the amount of any such variance which results in an
overpayment by PPC to Seller.
9. Indemnification.
(a) Seller
shall indemnify, defend, and hold harmless the PPC Parties from and against any
and all losses, liabilities, claims, damages, and expenses (including reasonable
costs of investigation and attorneys’ fees) (collectively, the “Losses”) arising from (i)
personal or bodily injury to or death of persons or damage to the property of
PPC to the extent caused by the negligent acts, errors, and/or omissions or the
willful misconduct of Seller or its officers, directors, agents, employees, or
subcontractors, (ii) personal or bodily injury to or death of persons or damage
to the property of PPC, the other PPC Parties, or any third party as a result of
any use or sale of the Products, and (iii) the breach or default by Seller of
any provisions of this Agreement.
(b) The
provision set forth in subparagraph shall survive the delivery and acceptance of
the Products purchased hereunder and the expiration or termination of the
Term.
10. Taxes;
Set-Off. Seller shall pay all sales and other taxes, however
designated or levied, on the sale or use of the Products, other than taxes based
on PPC’s capital or net income. PPC shall have the right at all times
to set off any amount owing at any time from Seller to PPC against any amount
payable at any time by PPC in connection with this Agreement.
11. Representations and
Warranties. Seller hereby represents and warrants to PPC, and
agrees as follows:
(a) Seller
is in compliance with all federal and state laws and regulations applicable to
Seller’s performance hereunder;
(b) Seller
has the full power and authority to enter into this Agreement and perform each
of its obligations hereunder;
(c) Seller
has good and marketable title to the Products;
(d) There
is no party which has a lien on, security interest in, or claim to the Products;
and
(e) No
litigation or pending or threatened claims of litigation exist which do or could
be reasonably expected to adversely affect Seller’s ability to fully perform its
obligations hereunder or the rights granted by Seller to PPC under this
Agreement.
12. Compliance with
Laws. Seller shall comply with any and all federal,
state, foreign, local, and municipal regulations, ordinances, statutes, rules,
laws, and constitutional provisions applicable to Seller’s performance of this
Agreement.
13. Independent Contractor;
Insurance. Seller shall be considered an independent contractor of PPC
and shall effect and maintain liability, property damage and worker’s
compensation insurance policies. All such insurance policies shall
designate PPC and its officers, directors, employees and agents as an additional
insured and shall be primary and required to respond and pay prior to any other
available insurance coverage.
14. Force
Majeure. If any casualty or unforeseeable cause beyond the
control of a party, including, without limitation, acts of God, fires, floods,
epidemics, quarantine restrictions, terrorist acts, strikes, failure of public
utilities, or unusually severe weather, prevents the performance of a party’s
obligations under this Agreement, then such obligations shall be suspended
during the period of such event.
15. Notices. Any
notice, consent, or other communication given pursuant to this Agreement shall
be in writing and shall be effective either (i) when delivered personally to the
party for whom intended, (ii) upon delivery by an overnight courier service that
is generally recognized as reliable, and the written records maintained by the
courier shall be prima facie evidence of delivery, or (iii) on delivery (or
attempted delivery) by certified or registered mail, return receipt requested,
postage prepaid, as of the date shown by the return receipt; in any case
addressed to such party as set forth below or as a party may designate by
written notice given to the other party in accordance herewith.
If to
PPC: Peninsula
Packaging, LLC
0000 Xxxxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx
Attn: Managing
Director
Fax: (000)
000-0000
with a copy
to: Xxxxxxxx
Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx,
Esquire
Fax: (000)
000-0000
If to
Seller: ECO2
Plastics, Inc.
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief
Executive Officer
Fax:
(000) 000-0000
16. Entire Agreement;
Assignment. This Agreement, together with any Purchase Orders
issued in connection herewith, constitutes the complete and entire agreement
between PPC and Seller relating to the subject matter hereof, and supersedes any
and all other communications or agreements, whether written or oral, between the
parties hereto relating to the subject matter hereof. Neither this
Agreement nor any of the rights or obligations hereunder may be assigned or
transferred in any manner whatsoever by Seller without the prior written consent
of PPC.
17. Governing Law;
Forum. This Agreement shall be deemed to be made, governed by,
and construed in accordance with the laws of the State of California, without
reference to the conflicts of law principles thereof. Each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
state and federal courts of the State of California in all matters arising out
of or relating to this Agreement.
18. Severability. If
any provision or a portion of any provision of this Agreement is held to be
unenforceable or invalid by a court of competent jurisdiction, the validity and
enforceability of the enforceable portion of any such provision and/or the
remaining provisions shall not be affected thereby.
19. Waiver. The failure
of any party to enforce any of the provisions of this Agreement, or any rights
with respect hereto, or the failure to exercise any election provided for
herein, will in no way be considered a waiver of such provisions, rights, or
elections, or in any way affect the validity of this Agreement.
20. Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall
constitute an original, and all of which together shall constitute one and the
same document.
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as
of the day and year first written above.
PENINSULA
PACKAGING, LLC
By:
Name
Title:
ECO2
PLASTICS, INC.
By:
Name:
Title:________________________________
Exhibit
A
Specifications
and Qualities
See
attached
