EXHIBIT 10.1
CONSIGNMENT
AGREEMENT
THIS CONSIGNMENT
AGREEMENT is entered into as of October 2, 2009 by and
among CANADIAN IMPERIAL
BANK OF COMMERCE , a Canadian chartered bank (the “
Gold Lender ”), CIBC WORLD MARKETS INC.
,
an Ontario corporation and subsidiary of the Gold Lender (the
“ Copper Lender ”); and BRUSH
ENGINEERED MATERIALS INC. , an Ohio corporation (“
BEM ”), WILLIAMS ADVANCED MATERIALS INC.
, a
New York corporation (“ WAM ”),
TECHNICAL MATERIALS, INC. , an Ohio corporation
(“ TMI ”), BRUSH WELLMAN INC. , an
Ohio corporation (“ BWI ”), ZENTRIX
TECHNOLOGIES
INC. , an Arizona corporation (“ ZTI
”), WILLIAMS ACQUISITION, LLC , a New York limited
liability company d/b/a Pure Tech (“ Pure Tech
”), THIN FILM TECHNOLOGY, INC. , a California
corporation (“ TFT ”), TECHNI-MET,
LLC , a Delaware limited liability company (“
TML ”)
and such
other Subsidiaries (as hereinafter
defined) of BEM who may from time to time become parties hereto by
means of their execution and delivery with the Metal Lenders (as
hereinafter defined) of a Joinder Agreement (as hereinafter
defined) (BEM, WAM, TMI, BWI, ZTI, Pure Tech, TFT, TML and such
Subsidiaries are herein sometimes referred to collectively as the
“ Customers ” and individually as a
“ Customer ”).
W
I T N E
S S E T
H :
WHEREAS , the Customers and
the Metal Lenders desire to enter into this Consignment Agreement
(as the same may be amended, supplemented, extended, restated or
otherwise modified from time to time, this “
Agreement ”) pursuant to which the Gold Lender
will extend to the Customers a gold consignment facility and the
Copper Lender will extend to the Customers a copper consignment
facility, in either case, on the terms and conditions, and in
reliance upon the covenants, representations and warranties of the
Customers hereinafter set forth;
NOW, THEREFORE , in
consideration of the premises and of the mutual promises
hereinafter contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
When used herein, the terms set forth
below shall be defined as follows:
“ Affiliate
” means, with respect to a specified Person, another
Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.
“ Aggregate Secured Metal
Facility Indebtedness ” means the value (as
determined in accordance with Section 2.2 hereof
as it relates to Gold and Copper) of all precious and base metals
outstanding on consignment, loan, conditional sale or lease from
all Approved Consignors to the Customers under Permitted Metal
Agreements with Approved Consignors plus any unpaid
purchase price for such precious and base metals that have been
withdrawn and are required to be purchased and paid for in full
under such Permitted Metal Agreements.
“ Aggregate Secured
Metals Limit ” means the maximum aggregate value of
all Consigned Precious Metal (as defined in the Metal Intercreditor
Agreement) permitted to be outstanding at any particular time
pursuant to Section 4.8 of the Metal Intercreditor
Agreement.
“ Agreement
” has the meaning set forth in the Whereas Clause.
“ Approved
Consignor ” means a Person who supplies gold, silver,
platinum, palladium, rhodium, copper and/or other precious or base
metals to any of the Customers on a secured basis (whether styled
as a consignment, loan, conditional sale, lease or other secured
financing) and who is a party to the Metal Intercreditor
Agreement.
“ Approved Domestic
Location(s) ” means the Premises of any of the
Customers located in the continental United States and listed under
the appropriate heading on Schedule 1 attached
hereto, as it may be amended by the parties from time to time, and
each other location located in the continental United States
approved by the applicable Metal Lender (or the Collateral Agent)
in writing from time to time.
“ Approved Foreign
Location(s) ” means locations located outside of the
continental United States and listed under the appropriate heading
on Schedule 1 attached hereto, as it may be
amended by the parties from time to time, and each other location
located outside of the continental United States approved by the
applicable Metal Lender (or the Collateral Agent) in writing from
time to time.
“ Approved
Locations ” means, collectively (a) the Approved
Domestic Locations, (b) the Approved Foreign Locations,
(c) the locations of the Approved Refiners/Fabricators, and
(d) the Approved Subconsignee Locations.
“ Approved
Refiners/Fabricators ” means the refiners and
fabricators listed under the appropriate heading on
Schedule 1 attached hereto, as it may be amended
by the parties from time to time, and such other fabricators and
refiners as may be approved by the applicable Metal Lender (or the
Collateral Agent) in writing from time to time; provided ,
however , such Metal Lender together with the Collateral
Agent shall have the right, in their reasonable discretion, to give
written notice that a fabricator or refiner, whether now, or
hereafter approved, is no longer an Approved
Refiner/Fabricator.
“ Approved Subconsignee
Locations ” means, collectively, the locations
described in Schedule 1 attached hereto, as it
may be amended by the parties from time to time, and each other
location approved by the applicable Metal Lender in writing from
time to time, where Consigned Metal may be located while in the
possession of Approved Subconsignees.
“ Approved Subconsignee
Metal ” means all Consigned Metal outstanding on
sub-consignment from the Customers to Approved Subconsignees;
provided , however , that the value of all Approved
Subconsignee Metal shall not at any time exceed Five Million
Dollars ($5,000,000).
“ Approved
Subconsignees ” means the subconsignees listed under
the appropriate heading on Schedule 1 attached
hereto, as it may be amended by the parties from time to time, and
each other subconsignee approved by the applicable Metal Lender (or
the Collateral Agent) in writing from time to time.
“ Authorized
Representatives ” means all person(s) who are
authorized in writing by and on behalf of the Customer Agent or the
Customers under this Agreement, including, without limitation,
(a) to transact Consignment and purchase and sale transactions
with the applicable Metal Lender under the Consignment Facility,
and (b) to request that a Consignment under the Consignment
Facility be continued as such or converted to a Consignment of
another Type.
“ Bankruptcy Code
” means Title 11 of the United States Code (11 U.S.C. §
101 et seq .) as amended from time to time, and any
rule or regulation promulgated thereunder.
“ Beryllium
Contracts ” means any and all agreements or other
arrangements (however styled) for the purchase, procurement or
other acquisition of beryllium, in whatever form, entered into from
time to time by any Customer (including, without limitation, Beryl
Ore, Copper Beryllium Master Alloy, Vacuum Cast Beryllium Ingot and
Vacuum Hot Pressed Beryllium Billet), but only to the extent that
the US Dollar equivalent of any Indebtedness related thereto does
not exceed $20,000,000 during any consecutive twelve-month
period.
“ Business Day
” means a day on which commercial banks settle payments in
(a) London, if the payment obligation is calculated by
reference to any pricing period or pricing mechanism relating to
London, or (b) New York, New York, for all other payment
obligations; an adjustment will be made if a date would otherwise
fall on a day that is not a Business Day so that the date will be
the first following day that is a Business Day except as otherwise
set forth herein.
“ Capital
Expenditures ” means, without duplication, any
expenditure by any Customer for any purchase or other acquisition
or development of any asset which would be classified as a fixed or
capital asset on a consolidated balance sheet of BEM and its
Subsidiaries prepared in accordance with GAAP.
“ Capitalized
Lease ” means, for any Person, any lease of property
by such Person as lessee which would be capitalized on such
Person’s balance sheet in accordance with GAAP.
“ Category
” means, with respect to any Metal, its nature as either Gold
or Copper.
“ Changed Tax
Base ” means any tax imposed by the United States of
America payable by the applicable Metal Lender, the imposition of
which results directly from a change in law after the Closing that
changes the basis of federal income taxation in such a way that
results in the applicable Metal Lender becoming subject thereto
after the Closing to the extent attributable to the transactions
contemplated by the Metal Documents; provided that a Changed
Tax Base shall not include any (a) change in the rate of taxes
already imposed by the United States of America as of the Closing
or (b) imposition of taxes by the United States of America on
the applicable Metal Lender resulting from any (i) change in
lending office by any applicable Metal Lender or (ii) change
in the actions or business practices of any applicable Metal
Lender.
“ Change in
Control ” means (a) the acquisition of
ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission
thereunder as in effect on the date hereof), of equity interests
representing more than 20% of the aggregate ordinary voting power
represented by the issued and outstanding equity interests of BEM;
(b) occupation of a majority of the seats (other than vacant
seats) on the board of directors of BEM by Persons who were neither
(i) nominated by the board of directors of BEM nor
(ii) appointed by directors so nominated; or (c) the
occurrence of a change in control, or other similar provision, as
defined in any agreement or instrument evidencing any Material
Indebtedness (triggering a default or mandatory prepayment, which
default or mandatory prepayment has not been waived in
writing).
“ Client ”
means any third-party customer or client of a Customer that
delivers (whether by physical delivery or by means of entries in
any “pool account”, “toll account”, or
similar arrangement) Client Metal to such Customer pursuant to an
arrangement (each, a “ Client-Customer
Arrangement ”) whereby, in the ordinary course of
such Customer’s business, it (a) refines such Client
Metal for such third-party customer or client, or (b) uses
such Client Metal to manufacture or fabricate one or more products
or provide other services for such third-party customer or
client.
“ Client-Customer
Arrangement ” has the meaning set forth in the
definition of “Client”.
“ Client Metal
” means any Metal or other property owned or held by any
Client, and any Metal or other property consigned, loaned or
provisionally sold to any Client by any Person other than a
Customer.
“ Closing Date
” means the date of this Agreement.
“ Code ”
means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, and any rule or regulation
issued thereunder.
“ Collateral
” means any collateral securing payment of all or any portion
of the Obligations, including, without limitation, Consigned
Metal.
“ Collateral Access
Agreement ” means any landlord waiver or other
similar agreement in favor of the Metal Lenders from any third
party (including any bailee or consignee) in possession of any
Collateral or any landlord of any Customer for any leased Premises
where any Collateral is located, as any such waiver or similar
agreement may be amended, restated or otherwise modified from time
to time.
“ Collateral
Agent ” means The Bank of Nova Scotia, in its
capacity as Collateral Agent for itself and for the Approved
Consignors pursuant to the Metal Intercreditor Agreement.
“ Collateral Compliance
Certificate ” shall have the meaning set forth in
Section 9.1(e) hereof.
“ Consigned Metal
” means Metal that has been consigned to a Customer pursuant
to the Consignment Facility.
“ Consignment
” means a either consignment of Gold by the Gold Lender or a
consignment of Copper by the Copper Lender under the Consignment
Facility, as the context requires.
“ Consignment
Facility ” means the facility established pursuant to
Section 2 hereof, whereby a Customer may request
Consignments of Gold from the Gold Lender and Consignments of
Copper from the Copper Lender.
“ Consolidated
” or “ consolidated ” means,
wherever used in conjunction with a financial statement, covenant
or definition, such financial statement, covenant or definition
shall (unless otherwise specifically stated) refer to BEM and its
Subsidiaries on a consolidated basis determined, calculated or
applied in accordance with GAAP.
“ Consolidated
EBITDA ” means, with reference to any period,
Consolidated Net Income plus , to the extent deducted
from revenues in determining Consolidated Net Income,
(a) Consolidated Interest Expense, (b) Consolidated Tax
Expense, (c) depreciation, (d) amortization,
(e) depletion expense, and (f) nonrecurring losses
incurred other than in the ordinary course of business,
minus , to the extent included in Consolidated Net Income,
nonrecurring gains realized other than in the ordinary course of
business, all calculated for BEM and its Subsidiaries on a
consolidated basis.
“ Consolidated Fixed
Charges ” means, with reference to any period,
without duplication, Consolidated Interest Expense to the extent
paid in cash during such period, plus scheduled
principal payments on Indebtedness made during such period,
plus Capitalized Lease payments made during such
period, all calculated for BEM and its Subsidiaries on a
Consolidated basis.
“ Consolidated Funded
Debt ” means all Indebtedness for borrowed money and
Capitalized Leases, including, without limitation, current,
long-term and Subordinated Indebtedness, for BEM and its
Subsidiaries on a Consolidated basis, provided that for purposes of
this definition, obligations under the following will not be
considered in calculating Consolidated Funded Debt:
(a) obligations under Swap Agreements, (b) obligations
under this Agreement and obligations under other Permitted Metals
Agreements, (c) obligations under the Beryllium Contracts, and
(d) Indebtedness under any sale and leaseback transaction.
“ Consolidated Interest
Expense ” means, with reference to any period, the
interest expense of BEM and its Subsidiaries calculated on a
Consolidated basis for such period (but not including any up-front
fees paid in connection with this Agreement, any Permitted Metals
Agreement subject to the Metal Intercreditor Agreement or the
Senior Credit Agreement).
“ Consolidated Net
Income ” means, with reference to any period, the net
income (or loss) of BEM and its Subsidiaries calculated on a
Consolidated basis for such period.
“ Consolidated Net
Worth ” means, on any date, all amounts that would be
included under stockholders’ equity on a consolidated balance
sheet of BEM and its consolidated Subsidiaries, as determined on a
consolidated basis in accordance with GAAP.
“ Consolidated Tax
Expense ” means, with reference to any period, the
tax expense of BEM and its Subsidiaries calculated on a
Consolidated basis for such period.
“ Consolidated Total
Assets ” means, as of the date of any determination
thereof, total assets of BEM and its Subsidiaries calculated in
accordance with GAAP on a consolidated basis as of such date.
“ Constituent
Documents ” means, for any entity, its constituent or
organizational documents, including: (a) in the case of any
partnership, joint venture, trust or other form of business entity,
the partnership, joint venture or other applicable agreement of
formation and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation with the
secretary of state or other department in the state of its
formation, in each case as amended from time to time; (b) in
the case of any limited liability company, the articles or
certificate of formation and its operating agreement or limited
liability company agreement; and (c) in the case of a
corporation, the certificate or articles of incorporation and its
bylaws.
“ Control ”
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by
contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.
“ Copper ”
means, except as provided in, and for the purposes of,
Section 2.1(b) hereof, copper meeting the London
Market Exchange Grade A Specifications. The Copper initially
Consigned hereunder shall consist of the Copper purchased by the
Copper Lender from BWI on the Closing Date pursuant to the Copper
Purchase and Sale Agreement.
“ Copper Consignment
Limit ” means the lesser of (a) Twenty-Five
Million Dollars ($25,000,000), and (b) the value (as
determined in accordance with Section 2.2
hereof) of the Customers’ Inventory of Copper (including any
Copper obtained or, at the time of determination, proposed to be
obtained, by a Customer pursuant to this Agreement) at Approved
Locations or in transit between any Approved Locations which is
(i) not outstanding on consignment, loan or lease to the
Customers from other Approved Consignors under Permitted Metals
Agreements, and (ii) is free and clear of all Liens other than
Permitted Metal Liens; provided , however , that, to
the extent such Inventory of Copper is comprised of Equity Copper,
only the Copper Lender’s Pro-Rata Share of such Equity Copper
shall be included for the purpose of this clause (b).
“ Copper
Indebtedness ” means the value (as determined in
accordance with Section 2.2 hereof) of Copper
consigned hereunder plus any unpaid purchase price
for such consigned Copper that has been withdrawn from Consignment
and is required to be purchased under the Consignment Facility.
“ Copper
Lender” has the meaning set forth in the
Preamble.
“ Copper Purchase and
Sale Agreement ” means that certain LME Copper
Purchase and Sale Agreement, dated as of the Closing Date, pursuant
to which the Copper Lender purchased Copper from the BWI on the
Closing Date and may from time to time thereafter purchase
additional Copper from BWI.
“ Customer(s)
” shall have the meaning set forth in the Preamble, including
any other direct or indirect wholly-owned Subsidiary of BEM which,
upon BEM’s request and with the consent of the Metal Lenders
(which shall not be unreasonably withheld or delayed), becomes a
party hereto by executing and delivering a Joinder Agreement.
“ Customer Agent
” means BEM, in its capacity as agent of the Customers and
each of them.
“ Customer’s
Account ” means any demand deposit accounts of a
Customer with a Metal Lender which may be charged for payments to
be made by the Customers in accordance with the provisions of this
Agreement.
“ Default ”
means (a) an Event of Default or (b) an event or
condition that, but for the requirement that time elapse or notice
be given or both, would constitute an Event of Default.
“ Dollars” and
“$ ” means lawful currency of the United
States.
“ Drawdown Date
” means the date on which any Consignment under the
Consignment Facility is made or is to be made and the date on which
any Consignment under the Consignment Facility is converted or
continued in accordance with Section 2.5
hereof.
“ Environmental
Laws ” means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions or binding
agreements issued, promulgated or entered into by any governmental
authority, relating in any way to the environment, preservation or
reclamation of natural resources or the management, release or
threatened release of any Hazardous Material.
“ Environmental
Liability ” means any liability, contingent or
otherwise (including any liability for damages, costs of
environmental remediation, fines, penalties or indemnities), of the
Customers directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the
foregoing.
“ Equity Copper
” means Copper owned by the Customers (excluding therefrom,
however, (i) the aggregate amount of all Copper which is on
consignment, loan or conditional sale from any other Approved
Consignor, and (ii) all Approved Subconsignee Metal), which is
free and clear of all Liens (other than Permitted Metal Liens) and
which is located at one or more of the Customers’ Premises
which are also Approved Domestic Locations (or in transit between
Approved Domestic Locations) and which Premises are either
(a) owned by a Customer or (b) are the subject of a valid
and effective Collateral Access Agreement.
“ Equity Gold
” means Gold owned by the Customers (excluding therefrom,
however, (i) the aggregate amount of all Gold which is on
consignment, loan or conditional sale from any other Approved
Consignor, and (ii) all Approved Subconsignee Metal), which is
free and clear of all Liens (other than Permitted Metal Liens) and
which is located at one or more of the Customers’ Premises
which are also Approved Domestic Locations (or in transit between
Approved Domestic Locations) and which Premises are either
(a) owned by a Customer or (b) are the subject of a valid
and effective Collateral Access Agreement.
“ Event of
Default ” means each and every event specified in
Section 10.1 of this Agreement.
“ Excluded Taxes
” means, with respect to a Metal Lender, or any other
recipient of any payment to be made by or on account of any
Obligation of any Customer hereunder, (a) taxes imposed on or
measured by, in whole or in part, its revenue, net income (however
denominated), net assets, capital or net worth and franchise taxes
imposed on it in lieu thereof, by the jurisdiction (or any
political subdivision thereof) (i) under the laws of which
such recipient is organized, (ii) in which its principal
office is located, (iii) in which it is doing business (other
than solely as a result of entering into any of the Metal Documents
or taking any action thereunder), (iv) in which it has a
present or former connection (other than solely as a result of
entering into any of the Metal Documents or taking any action
thereunder) or (iv) in which its applicable lending office is
located, (b) any branch profits taxes or branch interest taxes
imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which Borrower is located,
(c) any withholding tax that (i) is imposed on amounts
payable to a Metal Lender at the time such Metal Lender becomes a
party hereto (other than the initial Metal Lenders party hereto) or
(ii) arises because any Metal Lender designates a new or
different lending office and (d) any withholding that is
attributable to a Metal Lender’s failure or inability (other
than as a result of a change in law) to comply with
Section 2.15(f) .
“ Financial
Statements ” means (a) the audited consolidated
balance sheet of BEM as at December 31, 2008 and the
statements of income and retained earnings of BEM for the year
ended on such date prepared and certified by independent certified
public accountants; and (b) a balance sheet of BEM as at
July 3, 2009, and combined profit and loss and surplus
statements of BEM for the period then ended, together with
supporting schedules, prepared on a review basis by independent
certified public accountants.
“ Fiscal Month
” means any of the monthly accounting periods of BEM.
“ Fiscal Quarter
” means any of the quarterly accounting periods of BEM.
“ Fiscal Year
” means any of the annual accounting periods of BEM ending on
December 31 of each year.
“ Fixed Charge Coverage
Ratio ” means the ratio, determined as of the end of
each Fiscal Quarter of BEM for the then most-recently ended four
(4) Fiscal Quarters of (a) Consolidated EBITDA,
minus cash taxes paid, minus the
unfinanced portion of Consolidated Capital Expenditures,
minus cash dividends, plus cash tax
refunds, to (b) Consolidated Fixed Charges, all calculated for
BEM and its Subsidiaries on a Consolidated basis.
“ Fixed Consignment
Fee ” means a consignment fee calculated in
accordance with the provisions of Section 2.3(d)
hereof.
“ Fixed Copper
Rate ” means, with respect to any Fixed Rate Period,
the nominal copper rate per year as reasonably determined by the
Copper Lender.
“ Fixed Gold Rate
” means, with respect to any Fixed Rate Period, (a) the
arithmetic mean rate for such Fixed Rate Period as shown on Reuters
LIBO screen at 10:00 a.m. London, England time two
(2) Business Days prior to the first day of such Fixed Rate
Period, less (b) the arithmetic mean rate for
such Fixed Rate Period as shown on the Reuters Gold Forward page as
at 12:00 a.m. London, England time two (2) Business Days
prior to the first day of such Fixed Rate Period.
“ Fixed Rate
Consignment ” means a Consignment bearing a Fixed
Consignment Fee.
“ Fixed Rate
Period ” means the period beginning on the Drawdown
Date and ending one (1) month, two (2) months, three
(3) months, six (6) months, nine (9) months, twelve
(12) months or (if approved by the applicable Metal Lender)
twenty-four (24) months, after such Drawdown Date (or such
other period as the applicable Metal Lender and the Customer shall
agree upon from time to time thereafter), as the Customer may
select in its relevant notice pursuant to
Sections 2.4 or 2.5 ;
provided , however , that, if such Fixed Rate Period
would otherwise end on a day which is not a London Banking Day,
such Fixed Rate Period shall end on the next following London
Banking Day; provided , however , that if such next
following London Banking Day is the first London Banking Day of a
calendar month, such Fixed Rate Period shall end on the next
preceding London Banking Day; and no Fixed Rate Period may end on a
date later than ten (10) Business Days prior to the Maturity
Date.
“ Floating Consignment
Fee ” means a consignment fee calculated in
accordance with the provisions of Section 2.3(c)
hereof.
“ Floating Rate
Consignment(s) ” means a Consignment bearing a
Floating Consignment Fee.
“ Fraudulent Transfer
Laws ” shall have the meaning set forth in
Section 16.17 hereof.
“ GAAP ”
means generally accepted accounting principles in the United States
of America, including any successor to such principles.
“ Gold ”
means, except as provided in, and for the purposes of,
Section 2.1(b) hereof, gold having a minimum
degree of fineness of ninety-nine and 50/100 percent (99.50%),
in bars of approximately four hundred (400) troy ounces, one
hundred (100) troy ounces or in bottles of one (1) kilo
(32.150 troy ounces) each, or in bags of gold grain of
approximately one hundred (100) troy ounces each, in form
available to the Gold Lender, or in such other degree of fineness
or form as the parties may agree upon from time to time.
“ Gold Consignment
Limit ” means the least of: (a) Twenty-Five
Million Dollars ($25,000,000); (b) the value (as determined in
accordance with Section 2.2 hereof) of
Thirty-Six Thousand troy ounces (36,000 oz.) of Gold; and
(c) the value (as determined in accordance with
Section 2.2 hereof) of the Customers’
Inventory of Gold (including any Gold obtained or, at the time of
determination, proposed to be obtained, by a Customer pursuant to
this Agreement) at Approved Locations or in transit between any
Approved Locations which is (i) not outstanding on
consignment, loan or lease to the Customers from other Approved
Consignors under Permitted Metals Agreements, and (ii) is free
and clear of all Liens other than Permitted Metal Liens;
provided , however , that, to the extent such
Inventory of Gold is comprised of Equity Gold, only the Gold
Lender’s Pro-Rata Share of such Equity Gold shall be included
for the purpose of this clause (c).
“ Gold
Indebtedness ” means the value (as determined in
accordance with Section 2.2 hereof) of Gold consigned
hereunder plus any unpaid purchase price for such
consigned Gold that has been withdrawn from Consignment and is
required to be purchased under the Consignment Facility.
“ Gold
Lender” has the meaning set forth in the
Preamble.
“ Hazardous
Materials ” means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes
or other pollutants, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated
biphenyls, beryllium, radon gas, infectious or medical wastes and
all other substances or wastes of any nature regulated pursuant to
any Environmental Law.
“ Indebtedness
” of a Person means, without duplication, such Person’s
(a) obligations for borrowed money, (b) obligations
representing the deferred purchase price of property or services
(other than accounts payable arising in the ordinary course of such
Person’s business payable on terms customary in the trade),
(c) obligations, whether or not assumed, secured by Liens or
payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, (d) obligations
which are evidenced by notes, acceptances, or other similar
instruments, (e) obligations of such Person to purchase
securities or other property arising out of or in connection with
the sale of the same or substantially similar securities or
property or any other off-balance sheet liabilities,
(f) obligations under Capitalized Leases, (g) contingent
obligations for which the underlying transaction constitutes
Indebtedness under this definition, (h) the stated face amount
of all letters of credit or bankers’ acceptances issued for
the account of such Person and, without duplication, all
reimbursement obligations with respect to such issued letters of
credit, (i) any and all obligations, contingent or otherwise,
whether now existing or hereafter arising, under or in connection
with Swap Agreements, including, without limitation, Net
Mark-to-Market Exposure, and (j) obligations of such Person
under any sale and leaseback transaction.
“ Indemnified
Liabilities ” shall have the meaning set forth in
Section 16.15 hereof.
“ Indemnified
Parties ” shall have the meaning set forth in
Section 16.15 hereof.
“ Intercreditor
Agreements ” means (a) the Lender Intercreditor
Agreement, and (b) the Metal Intercreditor Agreement, as each
may be amended from time to time.
“ Inventory
” shall have the meaning set forth in Article 9 of the
Uniform Commercial Code.
“ Joinder
Agreement ” means a Joinder Agreement in a form
reasonably acceptable to the parties hereto pursuant to which each
operating Subsidiary of BEM which holds Consigned Metal may become
a Customer and a party to this Agreement.
“ Lender Intercreditor
Agreement ” means the Intercreditor Agreement between
the Collateral Agent on behalf of the Metal Lenders and the other
Approved Consignors and the Agent on behalf of the Lenders under
the Senior Credit Agreement, as amended, restated or supplemented
from time to time.
“ Letter of
Credit ” means an irrevocable stand-by letter of
credit in favor of the Collateral Agent for the benefit of the
Approved Consignors, reasonably acceptable to the Collateral Agent
in form and substance, issued and delivered to the Collateral Agent
by JPMorgan Chase Bank, N.A. or any other domestic bank reasonably
acceptable to the Collateral Agent.
“ Letter of Credit
Locations ” means, collectively, the Approved Foreign
Locations, the Approved Subconsignee Locations, and from and after
the date that is ninety (90) days after the Closing, any
leased Approved Domestic Locations that are not then or thereafter
the subject of a valid and effective Collateral Access
Agreement.
“ Leverage Ratio
” means the ratio, determined as of the last day of each
Fiscal Quarter of BEM for the then most-recently ended four
(4) Fiscal Quarters of (a) Consolidated Funded Debt to
(b) Consolidated EBITDA.
“ Lien ”
means any lien (statutory or other), mortgage, security interest,
consignment interest, pledge, hypothecation, assignment, deposit
arrangement, encumbrance or preference, priority or other security
agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor
or lessor under any conditional sale, Capitalized Lease or other
title retention agreement).
“ London Banking
Day ” means any day on which commercial banks are
open for international business (including dealings in dollar
deposits) in London.
“ Material Adverse
Effect ” means a material adverse effect on
(a) the business, property, condition (financial or
otherwise), or results of operations of BEM and its Subsidiaries
taken as a whole, (b) the ability of any Customer to perform
its material obligations under this Agreement or the other Metal
Documents to which it is a party, (c) a material portion of
the Collateral subject to this Agreement, or the Metal
Lenders’ Liens on the Collateral, or the priority of any such
Liens, or (d) the validity or enforceability of any of the
Metal Documents or the rights or remedies of the Metal Lenders
thereunder.
“ Material
Indebtedness ” means any Indebtedness (other than the
Obligations), or obligations in respect of one or more Swap
Agreements, of any one or more of the Customers in an aggregate
principal amount exceeding $10,000,000 (or the equivalent thereof
in currencies other than dollars). For purposes of determining
Material Indebtedness, the “principal amount” of the
obligations of the Customers in respect of any Swap Agreement at
any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Customer would be required to pay
if such Swap Agreement were terminated at such time.
“ Maturity Date
” means September 30, 2010. Any obligations of the
Customers under this Agreement which are not paid when due on or
before the Maturity Date shall remain subject to the provisions of
this Agreement until all Obligations are paid and performed in
full.
“ Metal ”
means Gold and/or Copper as the context requires.
“ Metal Documents
” means this Agreement, the Copper Purchase and Sale
Agreement, the Security Documents and all agreements, instruments
and documents relating thereto which have been executed or
delivered by or on behalf of a Customer.
“ Metal Intercreditor
Agreement ” has the meaning set forth in
Section 9.21 hereof.
“ Metal Lenders
” means both the Gold Lender and the Copper Lender, and
“ Metal Lender ” means (a) with
respect to Consignments comprised of Gold, the Gold Lender,
(b) with respect to Consignments comprised of Copper, the
Copper Lender, and (c) with respect to all other matters,
either the Gold Lender or the Copper Lender, in each case, as the
context requires.
“ Metal Lender’s
Address ” means with respect to either Metal Lender,
c/o Canadian Imperial Bank of Commerce, 161 Bay Street, 5
th Floor, Toronto, Ontario, Canada M5J 2S8, or such
other address as the applicable Metal Lender shall designate from
time to time in accordance with the provisions hereof.
“ More Restrictive
Provision ” shall have the meaning set forth in
Section 9.26 hereof
“ Net Mark-to-Market
Exposure ” of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over
all unrealized profits of such Person arising from Swap Agreements.
As used in this definition, “unrealized losses” means
the fair market value of the cost to such Person of replacing such
Swap Agreement as of the date of determination (assuming the Swap
Agreement were to be terminated as of that date), and
“unrealized profits” means the fair market value of the
gain to such Person of replacing such Swap Agreement as of the date
of determination (assuming such Swap Agreement were to be
terminated as of that date).
“ Obligations
” means any and all Indebtedness, obligations and liabilities
of the Customers to the Metal Lenders of every kind and
description, direct or indirect, joint or several, absolute or
contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising under this Agreement
or any other Metal Document, including, without limitation, all
Indebtedness (including any Indebtedness arising from payments by
the Metal Lenders to any Customer required under the Bankruptcy
Code) and obligations of the Customer under the Consignment
Facility, and all interest, taxes, fees, charges, expenses and
attorneys’ fees chargeable to the Customers hereunder or
thereunder.
“ Other Taxes
” means all present or future stamp or documentary taxes or
any other license, use, excise, sales, or property taxes, similar
charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement.
“ Participant
” shall have the meaning set forth in
Section 14.2(a) hereof.
“ Permitted Liens
” shall have the meaning set forth in
Section 9.14 hereof.
“ Permitted Metal
Liens ” shall have the meaning set forth in
Section 9.14 hereof.
“ Permitted Metals
Agreements ” means gold, silver, platinum, palladium,
rhodium or other precious metal and/or copper or other base metal
consignment, loan, conditional sale or lease agreements or
arrangements entered into from time to time by BEM or any of its
Subsidiaries. The term “Permitted Metals Agreements”
shall not include Client-Customer Arrangements.
“ Person ”
means an individual, corporation, partnership, limited liability
company, joint venture, trust, or unincorporated organization.
“ Physical Metal
Deficiency ” shall have the meaning set forth in
Section 9.24(c) hereof.
“ Premises
” means any real estate owned, used or leased by a Customer
or an Affiliate of a Customer.
“ Pro-Rata Share
” has the meaning set forth in the Metal Intercreditor
Agreement.
“ Refining
Reserve ” means one hundred five percent (105%) of
the value (as determined in accordance with
Section 2.2 hereof) of (without duplication)
(i) all Consigned Metal, in each case, located at any Letter
of Credit Location, and (ii) all Approved Subconsignee Metal;
provided , however , that the foregoing percentage
may be adjusted by the Metal Lenders from time to time in its
reasonable discretion.
“ Restricted
Payment ” means any dividend or other distribution
(whether in cash, securities or other property) with respect to any
equity interests in any Customer, or any payment (whether in cash,
securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such
equity interests in any Customer or any option, warrant or other
right to acquire any such equity interests in a Customer.
“ Security
Documents ” means the Intercreditor Agreements and
all agreements delivered in connection with the foregoing, and any
other agreements now or hereafter securing the Obligations of the
Customers to the Metal Lenders.
“ Senior Credit
Agreement ” means that certain Credit Agreement,
dated as of November 7, 2007, among BEM, Williams Advanced
Materials (Netherlands), B.V., the other foreign Subsidiary
borrowers party thereto from time to time, certain lenders party
thereto from time to time, and JPMorgan Chase, National
Association, as administrative agent, as amended, refinanced or
otherwise replaced from time to time. If the Senior Credit
Agreement is hereafter amended, refinanced or otherwise replaced
(including, without limitation, with an unsecured credit facility),
the parties hereto shall negotiate in good faith to make
appropriate modifications to this Agreement acceptable to the
parties hereto, such that the applicable representations,
warranties, agreements, covenants and Events of Default herein
conform to their corresponding provisions of such amended,
refinanced or replaced credit facility; provided ,
however , that the Metal Lenders will not be required to
make any such modifications to the extent they would cause the
Collateral Agent or the Metal Lenders to surrender, release or
otherwise compromise their security interest in the Collateral.
“ Subordinated
Indebtedness ” means Indebtedness of the Customer
which is subordinated in writing to all Obligations of the Customer
to the Metal Lenders on terms satisfactory to the Metal
Lenders.
“ Subsidiary
” means, with respect to any Person (the
“parent”) at any date, any corporation, limited
liability company, partnership, association or other entity the
accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of
such date, as well as any other corporation, limited liability
company, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in
the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or
(b) that is, as of such date, otherwise Controlled, by the
parent or one or more Subsidiaries of the parent or by the parent
and one or more Subsidiaries of the parent.
“ Swap Agreement
” means any transaction (including an agreement with respect
thereto) now existing or hereafter entered into by any Customer
which is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction,
collar transaction, forward transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to
one or more interest rates, foreign currencies, commodity prices,
equity prices or other financial measures.
“ Taxes ”
means all present and future taxes (including income taxes),
levies, imposts, duties, deductions, withholdings, assessments,
similar fees or similar charges imposed by any governmental
authority in the United States of America, any State therein, and
any subdivision of any of the foregoing other than any Excluded
Tax; provided , that Taxes shall not include any income
taxes or franchise taxes imposed by any governmental authority in
Canada, any Province therein, or any subdivision of any of the
foregoing.
“ Type ”
means as to any Consignment under the Consignment Facility, its
nature as a Fixed Rate Consignment or a Floating Rate
Consignment.
“ Uniform Commercial
Code ” or “ UCC ” means the
Uniform Commercial Code in effect or the date hereof in the State
of New York, or such other jurisdiction if otherwise required by
applicable law.
To the extent not defined in this
Section l , unless the context otherwise requires,
accounting and financial terms used in this Agreement shall have
the meanings attributed to them by GAAP, and all other terms
contained in this Agreement shall have the meanings attributed to
them by Article 9 of the Uniform Commercial Code in force in
the State of New York, as of the date hereof to the extent the same
are used or defined therein.
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2.
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CONSIGNMENT FACILITY .
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Section 2.1 Consigned Metal;
Insurance; Title .
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(a) Subject to the terms and
conditions herein set forth and provided that no Default has
occurred and is then continuing, the Metal Lenders hereby agree
that they will consign Metal to the Customers from time to time in
such amounts as are requested by the Customers or the Customer
Agent on behalf of the Customers in the manner set forth herein on
any Business Day during the period from the date hereof until the
Maturity Date; provided , however , that no
Consignment shall be made if, after giving effect thereto, the Gold
Indebtedness would exceed the Gold Consignment Limit or the Copper
Indebtedness would exceed the Copper Consignment Limit.
(b) The commodities to be
consigned to the Customers by the Metal Lenders under the
Consignment Facility will consist of Gold and Copper;
provided , however , that notwithstanding anything in
this Agreement to the contrary, unless the parties otherwise agree,
the fineness of Gold shall, subject to
Section 2.1(h) below, be ninety-nine and
99/100 percent (99.99%). EXCEPT FOR THE FINENESS OF THE
CONSIGNED METAL AND THE QUANTITY THEREOF WITH RESPECT TO EACH
CONSIGNMENT, THE METAL LENDERS MAKE NO REPRESENTATION OR WARRANTY
OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE GOLD OR COPPER
CONSIGNED OR TO BE CONSIGNED OR SOLD HEREUNDER, WHETHER AS TO
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
MATTER, AND THE METAL LENDERS HEREBY DISCLAIM ALL SUCH
WARRANTIES.
(c) Metal shall be consigned to
the Customers by the Metal Lenders in amounts as requested by a
Customer or the Customer Agent on behalf of the Customers from time
to time in accordance, and in compliance, with the terms and
provisions hereof. Subject to Section 2.9 below,
it is understood that at no time shall the Gold Indebtedness exceed
the Gold Consignment Limit or the Copper Indebtedness exceed the
Copper Consignment Limit.
(d) All deliveries of Metal
requested by the Customers or the Customer Agent on behalf of the
Customers shall be made at the Customers’ expense and risk by
a recognized reputable carrier of the applicable Metal
Lender’s reasonable selection or, at the request of the
applicable Customer or the Customer Agent, by the applicable Metal
Lender crediting the account of a Customer with a third party
designated by the parties for such purpose. Following such request
for Consigned Metal to be delivered to a Customer in accordance
with Customer’s instructions, the Customers shall insure the
Consigned Metal, including all Consigned Metal which is in transit
between Approved Locations, in an amount not less than the value
thereof (as determined in accordance with
Section 2.2 ), at all locations on an all risk
form, including flood and earthquake and such other insurance
(including but not limited to, fraud insurance and / or fidelity
insurance for all employees, including officers) as may from time
to time be reasonably required by the applicable Metal Lender. The
Customers shall, as between the Metal Lenders and the Customers,
accept all risk of loss to the Consigned Metal upon delivery of
such Consigned Metal to or for the account of any Customer in
accordance with the provisions hereof until its return to the
applicable Metal Lender as hereinafter provided. All insurance
provided for in this Subsection (d) shall be effected under
valid and enforceable policies, issued by financially sound and
responsible insurance companies which are admitted in the
jurisdiction in which the Consigned Metal is located, or are
approved under the applicable states’ surplus lines insurance
laws. At least fifteen (15) days prior to the expiration dates
of all insurance policies required under this Subsection
(d) or if otherwise reasonably requested by the applicable
Metal Lender, the Customers or the Customer Agent shall deliver to
such Metal Lender an Acord Form 27 Certificate of Personal
Property Insurance or other similar forms satisfactory to such
Metal Lender evidencing the insurance coverage required hereby and
indicating that such Metal Lender is an additional insured and a
loss payee as its interests may appear under such policy. All such
insurance policies shall provide at least thirty
(30) days’ prior written notice to the applicable Metal
Lender of any cancellation or alteration thereof and shall insure
all Consigned Metal wherever it is located. At the applicable Metal
Lender’s request, the Customers will furnish the Metal Lender
with a true and complete copy of all insurance policies evidencing
the satisfaction of the Customers’ insurance obligations
hereunder. Notwithstanding the foregoing, neither Metal Lender
shall be under any duty either to ascertain the existence of or to
examine any such policy or certificate or to advise the Customers
in the event such policy shall not comply with the requirements
hereof.
(e) Title to Consigned Metal
shall remain in the applicable Metal Lender until such Consigned
Metal is purchased and withdrawn from consignment by a Customer,
and Consigned Metal shall for the purposes of this Agreement be
deemed to be outstanding on Consignment until paid for in full,
whereupon title to such purchased Consigned Metal shall pass to the
Customer to whom such Metal was consigned, or until such Consigned
Metal is returned or redelivered by the Customer as provided in
Section 2.3(g) or 2.9(a)(ii)
hereof. Each Customer hereby authorizes each Metal Lender to file
financing statements against such Customer with respect to the
Consigned Metal, and each Customer agrees, upon request of a Metal
Lender, to execute and deliver such other documents as may be
reasonably requested by the Metal Lender to further evidence or
perfect the Metal Lender’s interests as consignor and a
secured party under the Uniform Commercial Code.
(f) Until Consigned Metal is
purchased and withdrawn from Consignment and paid for in full, such
Consigned Metal and Inventory containing such Consigned Metal shall
at all times be physically located (i) at one or more Approved
Locations, or (ii) in transit between any Approved
Locations.
(g) The Customers shall pay all
license fees, assessments and sales, use, excise, property and
other taxes now or hereafter imposed by any governmental body or
authority with respect to the possession, use, sale, transfer,
consignment, delivery or ownership of all Metal consisting of
Consigned Metal (exclusive, however, of any Excluded Taxes imposed
on a Metal Lender).
(h) Neither Metal Lender shall
be liable for any delay in delivery or for any inability to deliver
Metal hereunder directly or indirectly resulting from any
unavailability or scarcity of Metal, foreign or domestic embargoes,
seizure, acts of God, insurrections, acts of terrorism, strikes,
war, the adoption or enactment of any law, ordinance, regulation,
ruling or order directly or indirectly interfering with the
production, sale, consignment or delivery of Metal generally, lack
of transportation, fire, flood, explosions or other accidents,
events or contingencies beyond the reasonable control of a Metal
Lender.
For the purpose of this Agreement,
(a) the value of Gold shall be determined on the basis of the
second fixing price for Gold on the valuation date as customarily
set by certain members of the London Bullion Market Association, or
if no such price is available for such date, then on the basis of
said second fixing price on the next previous day for which such
price was available, and (b) the value of Copper shall be
determined on the basis of the Official Price for a Cash Buyer of
Copper on the valuation date as customarily set by the London
Market Exchange, or if no such price is available for such date,
then on the basis of said Official Price on the next previous day
for which such price was available. In the event that the London
Bullion Market Association or the London Market Exchange shall
discontinue or alter in any material respect its usual practice of
quoting a price for Gold or Copper, as applicable, on any day for
which such a price is necessary for the purposes of this Agreement,
the applicable Metal Lender shall so notify the Customers, and the
Metal Lender, using its reasonable discretion, shall announce a
substituted index or mechanism which shall thereupon become the
method of valuation hereunder until the London Bullion Market
Association or London Market Exchange shall resume its usual
practices of quoting such prices.
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Section 2.3 Consignment Fees;
Payments by the Customers .
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(a) During such time as Metal
is consigned to any Customer hereunder and until the same is
withdrawn from consignment and returned to the applicable Metal
Lender or paid for in full by the Customer as hereinafter provided,
the Customers will pay to the applicable Metal Lender, a fee
computed daily on the value of such Consigned Metal as hereinafter
set forth. Such fee shall be accrued on a daily basis and, in the
case of Floating Rate Consignments, shall be paid monthly in
arrears, not later than the fifth (5 th ) Business Day
following the receipt of invoice, and in the case of Fixed Rate
Consignments, shall be paid monthly in arrears, not later than the
fifth (5 th ) Business Day following the receipt of
invoice, and on the last day of the Fixed Rate Period with respect
thereto. All fees payable under this Section 2
shall be computed on the basis of a 360-day year, counting the
actual number of days elapsed.
(b) The Customer may elect to
pay either a Floating Consignment Fee or, provided that no Default
has occurred and is then continuing, a Fixed Consignment Fee with
respect to each Consignment of Metal under the Consignment
Facility, subject to the terms and conditions hereinafter set
forth.
(c) Each Floating Consignment
Fee will be calculated for the period commencing with the Drawdown
Date and shall be at the rate per annum calculated by the
applicable Metal Lender and specified by the Metal Lender from time
to time in writing delivered to the Customer Agent at least seven
(7) days prior to the effective date of such rate.
(d) Each Fixed Consignment Fee
shall be calculated for the applicable Fixed Rate Period at a rate
per annum equal to (i) the Fixed Gold Rate for Consignments
consisting of Gold, plus a margin above such Fixed
Gold Rate (if any) agreed upon by the applicable Customer, or
(ii) the Fixed Copper Rate for Consignments consisting of
Copper, in each case, as set forth in the confirmation evidencing
such Fixed Rate Consignment. The quantity and form of Metal, and
the Fixed Rate Period shall be selected by the Customer Agent or
the Customer requesting the Consignment, and consented to by the
applicable Metal Lender. Once the specific quantity and Category of
Metal and the specific Fixed Rate Period have been selected and the
Fixed Consignment Fee determined and agreed to by the Customer
Agent or applicable Customer and the applicable Metal Lender, such
selections shall be irrevocable and binding on the Customers and
the Metal Lender and shall obligate the Customers to accept the
Consignment requested from the Metal Lender, and the Metal Lender
to make such Consignment, in the amount, in the Category and at the
Fixed Consignment Fee for the Fixed Rate Period specified.
(e) [ Reserved ].
(f) At such time as the
Customer shall request the Consignment and delivery of Metal under
the Consignment Facility, it shall become obligated to pay to the
applicable Metal Lender a market premium announced by the Metal
Lender at the time of such Consignment (which amount shall include
a premium for providing Metal of the higher percentage of fineness
required by Section 2.1(b) hereof). Such payment
is to be made within five (5) Business Days of the
Customers’ receipt of an invoice therefor.
(g) At such time as a Customer
shall purchase and withdraw Consigned Metal from Consignment under
the Consignment Facility, it shall become obligated to (i) pay
to the applicable Metal Lender (x) a purchase price computed
in accordance with Section 2.2 hereof if such
purchase is effected by the Customer (and the Customer has notified
the Metal Lender) prior to 2:30 p.m., London Time, on any
London Banking Day, plus any applicable premium
(provided that the Customer shall not be required to pay any
premium to the extent such premium was paid with respect to such
Metal pursuant to Section 2.3(f) above), or
(y) such other purchase price as shall be mutually agreed upon
by the Metal Lender and the Customer, or (ii) deliver Metal to
the applicable Metal Lender’s pool accounts, loco London,
free and clear of all Liens (other than Liens in favor of a Metal
Lender) a quantity of Metal equal to the Metal purchased. All
payments of purchase price for Consigned Metal or deliveries of
Metal are to be made within two (2) London Banking Days,
provided , however , title to such Consigned Metal
shall not pass to the Customer until the payment in full of such
purchase price. Consigned Metal shall be deemed to have been
purchased and withdrawn from Consignment, and payment of the
purchase price shall become due, at the earlier of (A) such
time as a Customer shall notify the applicable Metal Lender that it
elects to purchase such Consigned Metal, or (B) such time as a
Customer shall sell and deliver such Consigned Metal to its
customers in the ordinary course of its business.
(h) Each Customer hereby
authorizes the applicable Metal Lender to charge such
Customer’s account at any time and from time to time for the
purpose of paying any amounts which are at any time payable by the
Customers under this Section 2.3 . Accordingly,
all payments to be made by the Customers under this
Section 2.3 may be automatically debited to any
Customer’s account.
(i) All payments (other than
payments in the form of Metal) shall be made by the Customers at
the applicable Metal Lender’s Address herein set forth or
such other place as the applicable Metal Lender may from time to
time specify in writing, or by bank wire sent in accordance with
the Metal Lender’s instructions, in lawful currency of the
United States of America in immediately available funds, without
counterclaim or setoff and free and clear of, and without any
deduction or withholding for, any taxes or other payments.
(j) All payments shall be
applied first to the payment of all reasonable, out-of-pocket fees,
expenses and other amounts then due and payable to the applicable
Metal Lender under this Section 2 (excluding
purchase price for Consigned Metal and consignment fees), then to
accrued consignment fees and the balance on account of outstanding
purchase price for Consigned Metal; provided ,
however , that after the occurrence and during the
continuance of an Event of Default, payments will be applied to the
Obligations of the Customers to the Metal Lenders as the Metal
Lenders determine in their sole discretion.
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Section 2.4 Requests for
Consignments under the Consignment Facility .
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(a) The Customers may request
Consignments from the Metal Lenders from time to time by telephone
(if confirmed in writing), e-mail, facsimile or any other means
approved by the Metal Lenders. Upon receipt of any such request for
Consignment, the applicable Metal Lender and the applicable
Customer(s) shall agree upon the terms of such Consignment
(including the Drawdown Date, the Category, amount and fineness of
Metal to be consigned, the market premium (if any), the Type of
Consignment, the fees and margins to be charged with respect
thereto and, if a Fixed Rate Consignment, the Fixed Rate Period
with respect thereto), and upon reaching such agreement, if any,
the applicable Metal Lender shall provide such Customer(s) with
written confirmation thereof.
(b) Requests for any Floating
Rate Consignments shall be furnished to the applicable Metal Lender
no later than 2:00 p.m. (New York time) one (1) Business
Day prior to the proposed Drawdown Date. Each such notice shall
specify (i) the amount and form of Metal requested, and
(ii) the proposed Drawdown Date of such Consignment.
(c) Requests for any Fixed Rate
Consignments shall be furnished to the applicable Metal Lender by
3:00 p.m. (New York time) three (3) London Banking Days
prior to the proposed Drawdown Date. Each such notice shall specify
(i) the amount and form of Metal requested, (ii) the
proposed Drawdown Date of such Consignment, and (iii) the
Fixed Rate Period for such Consignment.
(d) The Customers irrevocably
authorize the applicable Metal Lender to make or cause to be made,
at or about the time of the Drawdown Date of any Consignment of
Metal or at the time of receipt of any payment of purchase price
for Consigned Metal or any redelivery of Consigned Metal, an
appropriate notation on the Metal Lender’s books and records
reflecting the making of such Consignment of Metal or (as the case
may be) the receipt of such purchase price for Consigned Metal, or
any redelivery of Consigned Metal. The amounts of Gold Indebtedness
and Copper Indebtedness set forth in the applicable Metal
Lender’s books and records shall be prima facie
evidence of the amounts owing and unpaid to the Metal Lender, but
the failure to record, or any error in so recording, any such
amount on the Metal Lender’s books and records shall not
limit or otherwise affect the obligations of the Customers
hereunder to make payments and perform their obligations under the
Consignment Facility.
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Section 2.5 Conversion
Options .
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(a) Subject to the provisions
hereof, the Customers may elect from time to time to convert an
outstanding Floating Rate Consignment to a Fixed Rate Consignment
and to convert an outstanding Fixed Rate Consignment to a Floating
Rate Consignment, provided that (i) with respect to any
such conversion of a Fixed Rate Consignment into a Floating Rate
Consignment, such conversion shall only be made on the last day of
the Fixed Rate Period with respect thereto; (ii) with respect
to any such conversion of a Floating Rate Consignment to a Fixed
Rate Consignment, the Customers shall give the applicable Metal
Lender at least three (3) London Banking Days’ prior
written notice of the day on which such election is effective; and
(iii) no Consignment may be converted into a Fixed Rate
Consignment when a Default has occurred and is continuing
hereunder. All or any part of outstanding Consignments under the
Consignment Facility may be converted as provided herein.
(b) Subject to the provisions
hereof, Fixed Rate Consignments may be continued as such upon the
expiration of a Fixed Rate Period with respect thereto by giving to
the applicable Metal Lender notice of the Customers’ decision
to continue an outstanding Consignment as such at least three (3)
London Banking Days’ prior to the day on which such
expiration is effective; provided that no Fixed Rate
Consignment may be continued as such while a Default has occurred
and is continuing, but shall be automatically converted to a
Floating Rate Consignment on the last day of the first Fixed Rate
Period relating thereto ending during the first occurrence of such
Default.
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[Reserved] .
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Illegality .
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Notwithstanding any other provisions
herein, if any present or future law, governmental regulation,
treaty or directive or reasonable interpretation or application
thereof shall make it unlawful for a Metal Lender to make or
maintain Fixed Rate Consignments, such Metal Lender shall forthwith
give notice of any such circumstances to the Customers and
thereupon (a) the agreement of the Metal Lender to make Fixed
Rate Consignments shall forthwith be suspended, and (b) the
Fixed Rate Consignments then outstanding shall be converted
automatically to Floating Rate Consignments on the last day of each
Fixed Rate Period applicable to such Fixed Rate Consignments or
within such earlier period as may be required by law. The Customers
shall promptly pay the applicable Metal Lender any additional
amounts necessary to compensate the Metal Lender for any reasonable
out-of-pocket costs incurred by the Metal Lender in making any
conversion in accordance with this Section, including any interest
or fees payable by the Metal Lender to lenders of funds obtained by
them in order to make or maintain its Fixed Rate Consignments
hereunder.
The Customers shall indemnify the
Metal Lenders and hold the Metal Lenders harmless from and against
any loss, cost or expense (including loss of anticipated profits)
that the Metal Lenders have sustained or incurred as a consequence
of (a) default by any Customer in payment of any Fixed Rate
Consignments as and when due and payable (including, without
limitation, as a result of prepayment or late payment of the
purchase price for the Consigned Metal or the acceleration of the
Consignment Facility Indebtedness pursuant to the terms of this
Agreement), which expenses shall include any such loss or expense
arising from interest or fees payable by a Metal Lender to lenders
of funds obtained by it in the ordinary course of business in order
to maintain its Fixed Rate Consignments; (b) default by any
Customer in taking a Consignment or conversion after a Customer had
given (or pursuant to Section 2.5 is deemed to
have given) its request therefor; and (c) the purchase of
Consigned Metal bearing a Fixed Consignment Fee or the making of
any conversion of any such Consignment to a Floating Rate
Consignment on a day that is not the last day of the applicable
Fixed Rate Period with respect thereto, including interest or fees
payable by a Metal Lender to lenders of funds obtained by it in the
ordinary course of business in order to maintain any such
Consignments.
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Section 2.9 Maintenance of
Consignment Limits .
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(a) If the Gold Indebtedness at
any time exceeds the Gold Consignment Limit or if the Copper
Indebtedness at any time exceeds the Copper Consignment Limit, then
the Customers will promptly, without further notice or demand by
either Metal Lender:
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(i)
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make payment to the applicable Metal Lender,
as provided in Section 2.3(g) hereof, for
Consigned Metal having an aggregate value sufficient to result in
(A) the remaining Gold Indebtedness being not more than the
Gold Consignment Limit or (B) the remaining Copper
Indebtedness being not more than the Copper Consignment Limit, as
applicable;
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(ii)
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deliver to the applicable Metal Lender, either
physically (only in such form as agreed to by the Metal Lender) to
a mutually-agreed upon location or to the Metal Lender’s pool
accounts, loco London or through a recognized third party, Gold or
Copper, as applicable, free and clear of all Liens (other than
Liens in favor of a Metal Lender) having an aggregate value (as
determined in accordance with Section 2.2
hereof) sufficient to result in (A) the remaining Gold
Indebtedness being not more than the Gold Consignment Limit or
(B) the remaining Copper Indebtedness being not more than the
Copper Consignment Limit, as applicable; or
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(iii)
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engage in any combination of the actions in
clauses (i) and (ii) above such that (A) the
remaining Gold Indebtedness does not exceed the Gold Consignment
Limit or (B) the remaining Copper Indebtedness does not exceed
the Copper Consignment Limit, as applicable.
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(b) Any physical delivery of
Metal by a Customer to a mutually-agreed upon location shall be at
the Customers’ expense and risk and shall only be credited to
the Customers’ account upon the applicable Metal
Lender’s assaying the value thereof, which assay shall be
undertaken by the Metal Lender as soon as practicable following
physical receipt of such Metal.
(c) Each Customer hereby
authorizes the applicable Metal Lender to charge such
Customer’s account at any time and from time to time for the
purpose of paying any amounts which are at any time payable by the
Customer under this Section 2.9 .
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Section 2.10 True Consignment;
Grant of Security Interest .
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(a) The parties hereto
acknowledge their intention that Section 2 of
this Agreement shall provide for a true consignment and that all
transactions under this Section 2 shall
constitute true consignments of the Consigned Metal.
(b) To secure the prompt and
punctual payment and performance of all Obligations, whether now
existing or hereafter incurred, each Customer hereby grants to the
each Metal Lender a continuing security interest in all of such
Customer’s right, title and interest, if any, in (i) the
Consigned Metal, whether now or hereafter existing, (ii) all
Inventory of such Customer that contains Consigned Metal, whether
now or hereafter existing, and (iii) all proceeds and products
of the foregoing. Nothing contained in the foregoing grant is
intended to conflict with the true consignment nature of this
Agreement with respect to the Consigned Metal.
(c) All Obligations under this
Section 2 are also entitled to the benefits of,
and are subject to, the Security Documents.
If the entire amount of a required
purchase price payment and/or consignment fee payment under the
Consignment Facility is not paid in full within ten (10) B
