Item 1.01 Entry into a Material Definitive Agreement

On June 1, 2012, Cereplast, Inc. (the "Company") entered into an Exchange Agreement and a Forbearance Agreement with certain of the holders of the Company's 7% Senior Subordinated Convertible Notes due 2016 (the "Notes") issued pursuant to the Indenture dated as of May 24, 2011 (the "Indenture"), by and among the Company and Wells Fargo Bank, National Association, as Trustee.

Pursuant to the terms of the Exchange Agreement, certain of the holders agreed to convert the Notes into shares at an exchange rate of one share of the Company's common stock for each $1.00 amount of the Notes exchanged.

Pursuant to the terms of the Forbearance Agreement, certain of the holders agreed to forbear from exercising their rights to require the Company to pay accrued interest on June 1, 2012 until the earlier of December 1, 2012 or the Company's failure to meet certain milestones. In addition, pursuant to the terms of the Forbearance Agreement, the Company agreed to amend the conversion rate of the Notes as set forth in the Indenture to provide for an effective conversion rate of $1.00.

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