Long Term Supply Agreement and Conditions

Buyer agrees to purchase and Supplier agrees to sell to Buyer the Products on the terms and conditions stated below. No terms and conditions, other than those stated herein, whether contained in Buyer’s Purchase Order or elsewhere will be binding on Supplier unless agreed to in writing by Supplier. Buyer’s receipt of this acknowledgement without prompt written objection thereto will constitute an acceptance by Buyer of all terms and conditions set forth herein. Terms not defined in these terms and conditions have the meanings given to them in Seller’s sales confirmation referencing these terms.

1. Purchase Orders. Buyer will place written orders for Products, and designate in each order the weight, material, package size, description and Specifications for the Products so ordered, delivery date(s), time(s), and, Delivery Point(s) (each a “Purchase Order”). Supplier does not guarantee, but will use commercially reasonable efforts to meet, any delivery date on a Purchase Order.
2. Invoicing and Payment. ½% 10, net 30 calendar days, calculated from the delivery date for the Products described in such Purchase Order (the “Payment Terms”).

Supplier will have the right to withhold any shipments and may otherwise suspend its performance in the event Buyer fails to make any payment when due, whether under this or another contract between Buyer and Supplier.  Buyer’s failure to make timely payment will not release Buyer from its obligation to accept and pay for all remaining Product if and when delivered by Supplier.

3. Delivery. All deliveries of Products will be at the Delivery Point. In the event the Parties agree on alternative Delivery Point(s) or delivery terms the Parties also will agree on any price adjustment necessary to compensate for any change in transportation costs or the allocation of transportation costs.

The dates of delivery for Product will be determined by the date(s) for loading stating on the relevant bill(s) of lading for any Product, or for sales on EXW terms, the date Seller states that the Product is available at the EXW location.

4. Title and Risk of Loss. Risk of loss in and title to the Product will pass to Buyer upon delivery at the Delivery Point.
5. Shortage, Damage, Inspection, and Rejection. Shortage or damaged Product claims must be supported by exceptions taken on the delivery receipt (however denominated) furnished by Buyer to the delivering carrier. Failure to take such exceptions will bar any claim. Shortage and/or damage claims must be received by Supplier within five (5) business days of Buyer’s receipt of the Product.

Subject to Section 6, in the event of defects in material or workmanship or nonconformance with the Specifications set forth in or any Purchase Order,  Buyer may in its discretion (i) reject in whole or in part the delivery that includes the non-conforming Products, (ii) return the non-conforming Products to Supplier at the expense of Supplier, and/or (iii) require Supplier to replace the non-conforming Products (each and collectively, “Warranty Remedies”), provided that before exercising any of these remedies Buyer must promptly notify the Supplier of the breach or defect or nonconformance (an in any event, within 30 calendar days of receipt by Buyer) (“Defect Notice”) and provide Supplier with an opportunity to inspect the rejected goods and remedy the breach or defect. No allowances will be made to the Buyer for Products or labor involved in the movement of rejected Products from its plant.  These remedies are in addition to those remedies available at law.

6. Representations and Warranties. Each Party represents and warrants to the other Party that: (i) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and it has all required qualifications to conduct its business in each jurisdiction in which a transaction will be performed by it, (ii) it has all regulatory authorizations necessary for it to legally perform its obligations under each transaction, (iii) the execution, delivery and performance of each transaction is within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule or regulation applicable to it, (iv) each transaction when entered into in accordance with this Sales Confirmation constitutes its legally valid and binding obligation enforceable against it in accordance with its terms, (v) there are no Bankruptcy (as defined in 10(b)) or insolvency proceedings pending or being contemplated by it or, to its knowledge, threatened against it, and that it is financially solvent, (vi) there are no suits, proceedings, judgments, rulings or orders by or before any court of any governmental authority or arbitral tribunal that could materially adversely affect its ability to perform its obligations under this Sales Confirmation and each transaction, and (vii) it has knowledge and experience in the Product industry that enable it to evaluate the merits and risks of entering into each transaction.

Supplier warrants that the Products, at the time and place of delivery, (i) are free and clear from all liens, encumbrances and claims, and (ii) conform to the Specifications. SUPPLIER HAS NOT MADE ANY RECOMMENDATIONS TO BUYER REGARDING THE APPROPRIATE USE OF OR SUBSEQUENT SALE OF THE PRODUCT. EXCEPT FOR THE WARRANTIES SPECIFICALLY STATED IN THIS SECTION, SUPPLIER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED WITH RESPECT TO THE PRODUCT, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, PERFORMANCE OR OTHERWISE.

7. Termination. Either Party may immediately terminate this agreement upon (a) the insolvency, filing of a voluntary or involuntary petition under any law relating to bankruptcy, appointment by a court of a temporary or permanent receiver, trustee or custodian for the other Party’s business, an assignment for the benefit of creditors, of the other Party, or either Party failing to pay its debts as they become due; or (b) a Party’s breach of a material term or condition of this agreement.

Supplier may immediately terminate this agreement if Buyer fails to pay amounts past due within thirty (30) calendar days after receipt of notice thereof.

Upon termination, Buyer will immediately pay to Supplier the applicable Purchase Price for all Products in Buyer’s possession or control notwithstanding the payment terms of this Sales Confirmation or any Supplier invoice. All Purchase Orders placed by Buyer prior to the effective date of early termination may, in Supplier’s sole discretion despite the early termination, be performed in whole or in part by Supplier and, to the extent so performed, paid for by Buyer in accordance with the terms of this Sales Confirmation.

8. Remedies, Indemnification, and Limitation of Liability. In the event that either party fails to perform any of its material obligations under the Sales Confirmation, the non-defaulting party, at its option, may cancel this Sales Confirmation, including any outstanding purchase orders under this Sales Confirmation, and recover from the defaulting party its losses, costs, damages, and expenses resulting from or arising out of the breach, including reasonable attorneys’ fees (“Losses”).

NOTWITHSTANDING ANYTHING IN THESE TERMS AND CONDITIONS TO THE CONTRARY, BUYER UNDERSTANDS THAT SUPPLIER, IN ORDER TO MANAGE ITS PRICE RISK ASISING FROM THE SALE OF THE PRODUCTS AT A FIXED PRICE OVER A PERIOD OF TIME, MAY ENTER INTO DERIVATIVE TRANSACTIONS INCLUDING, WITHOUT LIMITATION, ENTERING INTO COMMODITY SWAPS, AND/OR THE BUYING AND SELLING OF FUTURES AND/OR OPTIONS ON FUTURES FOR ITS OWN ACCOUNT. IN THE EVENT OF ANY DEFAULT BY BUYER, SUPPLIER MAY SUSTAIN LOSSES AS A RESULT OF THE UNWINDING OR LIQUIDATING OF THESE DERIVATIVE TRANSACTIONS. THESE LOSSES ARE COMPENSABLE LOSSES UNDER THIS SALES CONFIRMATION AND WILL NOT BE DEEMED TO BE INDIRECT, CONSEQUENTIAL, SPECIAL OR UNFORESEEABLE.

Each party agrees to defend, indemnify, and hold the other harmless from all losses, liabilities, actions or claims, including claims for personal injury, property damage and related reasonable attorneys’ fees (collectively the “Third Party Claims”), brought by third parties, including any person or entity claiming by or through the other party, and which arise out of or relate to the indemnifying party’s production, handling, use or sale of the Products.

EXCEPT FOR SELLER’S LOSSES RELATED TO DERIVATIVE TRANSACTIONS AS STATED ABOVE, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE OR EXEMPLARY OF WHATSOEVER NATURE WHETHER ARISING OUT OF BREACH OF  WARRANTY, TORT (INCLUDING NEGLIGENCE, FAILURE TO WARN OR STRICT LIABILITY, CONTRIBUTION, INDEMNITY, SUBROGATION OR OTHERWISE.

SUPPLIER’S LIABILITY IN NO EVENT WILL EXCEED THE PURCHASE PRICE OF THE PRODUCTS.

9. Performance Assurance. If a Party has reasonable grounds for insecurity regarding the payment, performance or enforceability of any obligation under any transaction contemplated by this Sales Confirmation, that Party may demand Performance Assurance, whether or not an Event of Default has occurred or is threatened. The Performance Assurance will be provided by the other Party by (i) the end of the next Business Day after the demand is received if the demand is received by 12:00 noon on a Business Day, or (ii) the end of the second Business Day after the demand is received if the demand is received after 12:00 noon on a Business Day. “Performance Assurance” means cash in U.S. dollars, or a Letter of Credit on such terms and issued by a bank acceptable to the Party demanding Performance Assurance in its reasonable discretion. The amount of the Performance Assurance will be calculated in good faith by the demanding Party as of the date of the demand. If a Party fails to deliver the Performance Assurance within the period specified above, that failure will be deemed to be an Event of Default under Section 10. “Letter of Credit” means an irrevocable, transferable, standby letter of credit, issued by a major U.S. commercial bank or the U.S. branch office of a foreign bank with, in either case, a Credit Rating of at least (a) “A-” by the Standard & Poor’s Rating Group (a division of McGraw-Hill, Inc.) or its successor (the “S&P”) and “A3” by Moody’s Investor Services, Inc. or its successor (“Moody’s”), if such entity is rated by both S&P and Moody’s or (b) “A-” by S&P or “A3” by Moody’s, if such entity is rated by either S&P or Moody’s but not both.
10. Events of Default. Each of the following will constitute an “Event of Default” under this Sales Confirmation:

(a) The failure of such Party to make payments as required under this Sales Confirmation.

(b) A Party becomes Bankrupt or insolvent, however evidenced. “Bankrupt” means, as to either party, when it  (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is not dismissed, discharged, stayed or restrained in each case within five business days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official  management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within five business days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

(c) The dissolution or liquidation of such Party or the passage of a resolution requiring the dissolution or liquidation of such Party.

(d) A Merger Event has occurred and is continuing. “Merger Event” means a party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to another Entity, and, at the time of such consolidation, amalgamation, merger, or transfer, (1) the resulting, surviving or transferee entity fails to assume all the obligations of such party in regard to transactions contemplated under this Sales Confirmation; or (2) the creditworthiness of such Party or the resulting, surviving, transferee or successor entity is materially weaker than that of the other party immediately prior to such action.

(e) A Letter of Credit Default has occurred and is continuing. “Letter of Credit Default” means with respect to a Letter of Credit, the occurrence of any of the following events: (a) the issuer of a Letter of Credit fails to maintain a Credit Rating of at least (i) “A-” by S&P and “A3” by Moody’s, if such issuer is rated by both S&P and Moody’s, (ii) “A-” by S&P, if such issuer is rated only by S&P, or (iii) “A3” by Moody’s, if such issuer is rated only by Moody’s; (b) the issuer of the Letter of Credit fails to comply with or perform its obligations under such Letter of Credit; (c) the issuer of the Letter of Credit disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, the Letter of Credit; (d) the Letter of Credit fails to be renewed or replaced at least twenty (20) Business Days prior to its expiration or otherwise fails or ceases to be in full force and effect at any time during the term of the Sales Confirmation; or (e) the issuer of the Letter of Credit becomes Bankrupt; provided,  however, that no Letter of Credit Default will occur or be continuing in any event after the time the Letter of Credit is required to be canceled or returned to a Party.

(f) A Downgrade Event has occurred and is continuing. “Downgrade Event” means, with respect to a party that it has been assigned a credit rating of less than BBB- by Standard & Poor’s Rating Group or Baa3 by Moody’s Investors Service, Inc. or the party ceases to be rated by S&P or Moody’s.

(g) A Cross Default has occurred and is continuing. “Cross Default” means the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of such party under one or more Sales Confirmations or instruments relating to any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money (“Specified Indebtedness”) of the party in an aggregate amount of not less than the threshold amount as reasonably determined by Supplier, which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such Sales Confirmations or instruments, before it would otherwise have been due and payable or; (2) a default by such party in making one or more payments on the due date thereof in an aggregate amount of not less than the threshold amount, as agreed, under such Sales Confirmations or instruments (after giving effect to any applicable notice requirement or grace period).

(h) Fails to provide Performance Assurance as and when required under Section 9.

(i) The making of a materially incorrect or misleading representation or warranty hereunder or the breach of a material provision hereof that is not cured within ten (10) business days of written notice from the non-defaulting party.

11. Remedies Upon Event of Default. Upon the occurrence of an Event of Default, in addition to its other rights and remedies available in law or equity, the non-defaulting Party, will have the right to take any one or more of the following actions:

(i) Withhold or suspend all payments and/or withhold or suspend all deliveries of Products otherwise due to the defaulting party.

(ii) Upon at least one (1) business days’ written notice to the defaulting party, designate a date (not to be more than ten (10) days following the date of the notice) for liquidation and termination of all transactions under this Sales Confirmation (a “Settlement Date”), other than the settlement and setoff provisions of this Section 10; provided, however, that in the case of an Event of Default under Section 10(b), a Settlement Date will be deemed to have occurred immediately prior to the Event of Default and no prior written notice is required.

Enforcement of Remedies.  Except as specifically provided in this Sales Confirmation, no delay or failure on the part of a non-defaulting Party to exercise any right or remedy to which it may become entitled on account of an Event of Default will constitute an abandonment of any such right and the nondefaulting Party will be entitled to exercise such right or remedy at any time during the continuance of an Event of Default. No waiver of any Event of Default will constitute a waiver of any later Event of Default and all such waivers will be in writing. All of the remedies and other provisions of this Section 10 are without prejudice and in addition to any right of setoff, recoupment, combination of accounts, lien or other right to which any Party is at any time otherwise entitled (whether by operation of law or in equity, under contract or otherwise).

Settlement Amount.  A Settlement Amount will be calculated in a commercially reasonable manner for each such liquidated and terminated transaction and be payable by one Party to the other.  “Settlement Amount” means, with respect to a transaction and the non-defaulting Party, determined as of the Settlement Date, the losses and costs (or gains) expressed in U.S. dollars, which such Party incurs as a result of the liquidation and termination of the transaction, including losses and costs (or gains) based upon the then current replacement value of such transaction. The Settlement Amount will be due to or from the nondefaulting Party as appropriate. The nondefaulting Party will determine the Settlement Amount of each transaction as of the Settlement Date by reference to such future and forward quotations from leading dealers in the relevant commodity contract market and other bona fide third party offers, all adjusted for the length of the remaining term, as it selects in its reasonable judgment. In calculating a Settlement Amount, the non-defaulting Party will discount to present value (in any commercially reasonable manner based on interest rates for the applicable period and currency) any amount which would be due at a later date and will add interest (at a rate determined in the same manner) to any amount due prior to the date of the calculation.

Setoff.  The non-defaulting Party will setoff (i) all such Settlement Amounts that are due to the defaulting party, plus any Performance Assurance or collateral then held by the nondefaulting Party, plus (at the non-defaulting Party’s election) any or all other amounts due to the defaulting party, against (ii) all such Settlement Amounts that are due to the nondefaulting Party, plus any Performance Assurance or collateral then held by the defaulting party, plus (at the non-defaulting Party’s election) any or all other amounts due to the non-defaulting Party including any amounts calculated as owing to it under Section 8 above, so that all such amounts will be netted to a single liquidated amount payable by one Party to the other. The defaulting party will pay such amount to the non-defaulting Party within one Business Day of notification by the nondefaulting Party of the amount thereof, and if the nondefaulting Party has the payment obligation, it will pay the defaulting party within one Business Day of the determination of the amount to be paid.

12. Relationship. The relationship is that of buyer and seller. Neither Party, nor any of its agents or employees will be deemed to be the representative, employee or agent of the other Party for any purpose whatsoever, and the relationship of each Party to the other is that of an independent contractor, and neither Party will have any right or authority to assume or create any obligation of any kind, expressed or implied, on behalf of the other Party.
13. Compliance with Law. The Parties will comply with all applicable laws and regulations in performing their respective duties hereunder.
14. Severability. In the event that any provision hereof is found invalid or unenforceable pursuant to judicial decree or decision, the remainder of this Sales Confirmation will remain valid and enforceable according to its terms.
15. Waiver. Performance of any obligation required of a Party hereunder may be waived only by a written waiver signed by a duly authorized officer of the other Party, which waiver will be effective only with respect to the specific obligation described therein. The waiver by either Party of a breach of any obligation of the other will not operate or be construed as a waiver of any subsequent breach of the same provision or any other provision of this Sales Confirmation, nor a waiver by that Party of its right at any time thereafter to require strict compliance with all terms and conditions of this Sales Confirmation.
16. Force Majeure. If and to the extent that a Party’s performance of any of its obligations is prevented, hindered or delayed directly or indirectly by an event or circumstance beyond the reasonable control of such Party, including but not limited to, (i) fire, (ii) elements of nature such as flood or earthquake, (iii) physical damage to or destruction of all or part of a Party’s facilities or operating environment caused by acts of war, terrorism, riots, civil disorders, rebellions or revolutions (iv) labor strikes, lockouts or disturbances, (v) the adoption or interpretation of, or change in, any law, rule, or regulation, (vi) inability to obtain fuel, energy, material, equipment or transportation; or (vii) an act or event that constitutes a force majeure event under the contract between a Party and its subcontractor or third party contractor that is essential to the Party’s performance hereunder (each, a “Force Majeure Event”), and the non-performance, hindrance or delay which could not have been prevented or ameliorated by reasonable precautions, then the non-performing, hindered or delayed Party will be excused from the nonperformance, hindrance or delay, as applicable, of those obligations affected by the Force Majeure Event provided that (a) the affected Party continues to use commercially reasonable efforts to re-commence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, workaround plans or other. The Parties agree that Force Majeure Events do not include escalating labor costs, changes in tax laws, or changing economic conditions (including inflation and deflation, foreign exchange rates, unemployment rates, credit availability, or general economic malaise). The Party whose performance is prevented, hindered or delayed by a Force Majeure Event will immediately notify the other Party of the occurrence of the Force Majeure Event and describe in reasonable detail the nature of the Force Majeure Event. No accrued liability of either Party for an event that arose before the occurrence of a Force Majeure Event shall be excused or waived as a result of the occurrence.
17. Governing Law. This Sales Confirmation will be governed by and construed in accordance with the laws (notwithstanding conflicts of law rules) of the State of New York. The Parties expressly and irrevocably submit to the non-exclusive jurisdiction of any state or federal court in New York City,, State of New York over any claim, suit, action or proceeding arising out of or related to this Sales Confirmation.

Notwithstanding anything to the contrary contained herein, the following international conventions will not apply to this Sales Confirmation: (i) the Uniform Law on the Sale of Goods and the Uniform Law on the Formation of Contracts for the International Sale of Goods, (ii) the United Nations Convention on Contracts for the International Sale of Goods of 1980 (iii) the United Nations Convention on the Limitations Period in the International Sale of Goods, concluded in New York on 14 June, 1974, and the Protocol Amending the Convention on the Limitations Period in the International Sale of Goods, concluded in Vienna on 11 April, 1980.

18. Destination Control. Buyer acknowledges that Supplier is subject to U.S. laws that prohibit the sale or shipment of goods to certain destinations, persons or entities. Accordingly, Buyer agrees as a condition of this Sales Confirmation that the Product sold by Supplier hereunder will not be directly or indirectly resold or otherwise disposed of to any countries, entities, or persons with whom a transaction is prohibited under U.S. law at the time of execution or performance of this Sales Confirmation. Buyer further agrees that the Product will not be shipped by or on any carrier that is flagged, owned, controlled by or related to any such person, entity, country or its representatives or subjects.
19. Equal Opportunity Employer. Supplier is an equal opportunity employer, and to the extent Supplier is a federal contractor: (a) this Sales Confirmation is subject to the rules and regulations imposed upon contractors and subcontractors pursuant to 41 C.F.R. Chapter 60 and 61; and (b) unless this contract is exempt, there is incorporated herein by reference 41 C.F.R. Section 60-1.4, 41 C.F.R. Section 60-250.4, 41 C.F.R. Section 60-741.4 and 41 C.F.R. Section 61-250.10.
20. Financial Information. If requested by Supplier, Buyer will deliver (i) within 120 calendar days following the end of each fiscal year, a copy of Buyer’s annual report containing audited consolidated financial statements for such fiscal year and (ii) within 60 calendar days after the end of each of its first three fiscal quarters of each fiscal year, a copy of Buyer’s quarterly report containing unaudited consolidated financial statements for such fiscal quarter. In all cases the statements will be for the most recent accounting period and prepared in accordance with generally accepted accounting principles.

In the event of a material adverse change in the financial condition of Buyer, Supplier will have the right to change credit terms, cancel one or more Product deliveries, and/or withhold any Product deliveries, but such action will not release Buyer from its obligation to accept and pay for such remaining portions of Product if and when delivered by Buyer.