SUPPLY/PURCHASE/AGENCY AGREEMENT
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
EXHIBIT
10.2
This
Supply/Purchase/Agency Agreement (the “Agreement”),
entered into as of July 11, 2008, is by and between SMG Indium Resources
Ltd., a
Delaware corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (“SMGI”),
and
Unionmet Singapore Limited, a Singapore corporation with offices located
at ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇-▇▇ ▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (“Unionmet”).
RECITALS
WHEREAS,
Unionmet is in the business of the production and sale of indium ingots and
its
by-products; and
WHEREAS,
SMGI is
in the business of purchasing and stockpiling indium ingots; and
WHEREAS,
SMGI
has filed a Registration
Statement, No. 333-149413 on Form S-1, as amended (the “Registration
Statement”),
with
the Securities and Exchange Commission for the registration, under the
Securities Act of 1933, as amended, for the initial public offering (the
“IPO”)
of
securities of SMGI; and
WHEREAS,
the
parties desire that Unionmet sell to SMGI, and SMGI purchase from Unionmet,
indium ingots; and
WHEREAS,
the
parties by this Agreement desire to set forth their various rights and
responsibilities regarding the sale and purchase of the indium ingots and
other
matters;
NOW,
THEREFORE,
in
consideration of the premises and mutual covenants contained herein, the
parties, intending to be legally bound, hereto agree as follows:
| 1. |
Purchase
and Sale.
Upon the completion of the IPO, and pursuant to the terms and conditions
of this Agreement, Unionmet agrees to sell the amount of indium ingots
in
the purity specifications set forth on Schedule
1
to
SMGI or its designated agent, and SMGI agrees to purchase the amounts
of
indium ingots and purity specifications as set forth on Schedule
1
from Unionmet within the time frame as set forth on Schedule
1.
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| 2. |
Purchase,
Delivery and Shipment.
All purchases and sales of indium ingots by SMGI from Unionmet shall
be in
the manner set forth on Schedule
2,
including the amount of ingots to be purchased and sold, delivery
particulars, designated addresses and shipping requirements. In the
event
of a conflict between the terms and conditions of any contracts and
the
terms and conditions of this Agreement, the terms and conditions
of this
Agreement shall control as to such conflict, unless the parties agree
in
writing that the terms and conditions of a particular contract shall
supersede a particular term or condition of this Agreement.
|
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
| 3. |
Insurance
and Risk of Loss.
Details regarding insurance and risk of loss of the indium ingots
are set
forth on Schedule
3.
|
| 4. |
Inspection.
SMGI reserves the right to perform inspections on any and all shipments
of
indium ingots delivered by Unionmet to SMGI as set forth on Schedule
4.
|
| 5. |
SMGI’s
Obligations.
SMGI agrees to perform the obligations set forth on Schedule
5.
|
| 6. |
Unionmet’s
Obligations.
Unionmet agrees to perform the obligations set forth on Schedule
6,
including but not limited Unionmet’s agreement to act as a non-exclusive
agent to procure the purchase of additional metric tons of indium
ingots
on SMGI’s behalf in the country of China.
|
| 7. |
Price
and Payment.
The price and payment method and terms regarding each contract is
set
forth on Schedule
7.
|
| 8. |
Term.
Unless earlier terminated pursuant to Schedule
8,
this Agreement shall commence upon the completion of the IPO and
remain in
effect for a term of one (1) year from the completion of the IPO
(the
“Term”). This Agreement may be renewed on terms mutually acceptable to
each party upon 30 days written notice prior to the expiration of
such
term.
|
| 9. |
Indemnity
and Warranties.
SMGI and Unionmet’s respective indemnity and warranties are as set forth
on Schedule
9.
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| 10. |
Confidential
Information.
During the term of this Agreement, and except as required by any
court,
supervisory authority or administrative agency or as may, in the
opinion
of Unionmet’s counsel, be otherwise required by applicable law, Unionmet
shall not, without the consent of SMGI or a designated agent authorized
by
SMGI, disclose to any person, other than a then-current employee
of
Unionmet or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Unionmet of the
obligations hereunder, any confidential or proprietary information
of
SMGI, including any vendor from which SMGI purchases, or potentially
purchases, indium from, obtained by Unionmet during the term of this
Agreement, unless such information has become a matter of public
knowledge
at the time of such disclosure other than through the action of Unionmet.
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2
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
| 11. |
Notices.
Notices delivered pursuant to this Agreement shall be in writing,
and
shall be deemed to have been duly given when (a) delivered by hand;
(b)
sent by facsimile (with receipt confirmed), provided that a copy
is
promptly thereafter mailed by first-class prepaid certified mail,
return
receipt requested; (c) received by the addressee, if sent with delivery
receipt requested by Express Mail, Federal Express, other express
delivery
service or first-class prepaid certified mail, in each case to the
appropriate addresses and facsimile numbers set forth below, or to
such
other address(es) or facsimile number(s) as a party may designate
as to
itself by notice to the other party.
|
If
to
SMGI:
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to
Unionmet:
Unionmet
Singapore Limited
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇-▇▇
▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
Attention:
▇▇. ▇▇▇▇ ▇▇▇▇
Facsimile:
(▇▇) ▇▇▇▇-▇▇▇▇
In
each
case, with a copy to:
Ellenoff
▇▇▇▇▇▇▇▇ & Schole LLP
▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
and
Shooklin
& Bok LLP
▇▇.
▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
#▇▇-▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇
Attention:
▇▇. ▇▇▇▇ Gang
Fax:
(▇▇)
▇▇▇▇▇▇▇▇
3
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
| 12. |
Governing
Law.
This Agreement shall be governed by the laws of the State of New
York.
|
| 13. |
Waiver
of Jury Trial.
EACH PARTY TO THIS AGREEMENT UNCONDITIONALLY WAIVES ITS RIGHTS TO
A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF,
DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY RELATED DOCUMENTS, ANY
DEALINGS BETWEEN OR AMONG THEM RELAING TO THE SUBJECT MATTER OF THIS
AGREEMENT.
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| 14. |
Assignability.
The parties may not assign this Agreement without the prior written
consent of the respective parties.
|
| 15. |
Enforcement,
Separability.
It is the desire and intent of the parties hereto that the provisions
of
this Agreement shall be enforced to the fullest extent permissible
under
the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in case any provision of this
Agreement shall be declared invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall
not in any way be affected or impaired thereby. To the extent that
a
restriction contained in this Agreement is more restrictive than
permitted
by the laws of any jurisdiction where this Agreement may be subject
to
review and interpretation, the terms of such restriction, for the
purpose
only of the operation of such restriction in such jurisdiction, shall
be
the maximum restriction allowed by the laws of such jurisdiction
and such
restriction shall be deemed to have been revised accordingly herein.
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| 16. |
Titles
and Subtitles.
The titles of the paragraphs and subparagraphs of this Agreement
are for
convenience of reference only and are not to be considered in construing
this Agreement.
|
| 17. |
Counterparts.
This Agreement may be executed in any number of counterparts, each
of
which shall be an original, but all of which together shall constitute
one
instrument. This Agreement and each other agreement or instrument
entered
into in connection herewith or therewith or contemplated hereby or
thereby, and any amendments hereto or thereto, to the extent signed
and
delivered by means of a electronically confirmed facsimile transmission,
shall be treated in all manners and respects as an original agreement
or
instrument and shall be considered to have the same binding legal
effect
as if it were the original signed version thereof delivered in person.
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| 18. |
No
Strict Construction.
The parties hereto have participated jointly in the negotiating and
drafting of this Agreement. In the event an ambiguity or question
of
intent or interpretation arises, this Agreement shall be construed
as if
drafted jointly by the parties hereto, and no presumption or burden
of
proof shall arise favoring or disfavoring any party by virtue of
the
authorship of any of the provisions of this Agreement.
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4
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
| 19. |
Miscellaneous.
This Agreement contains the entire agreement of the parties relating
to
the subject matter hereof and supersedes any other agreements entered
into
between the Manager and the Company prior to the date of this Agreement
relating thereto. This Agreement may not be altered, modified, amended
or
terminated except by a written instrument signed by each of the parties
hereto. No term or provision hereof shall be deemed waived and no
breach
consented to or excused, unless such waiver, consent of excuse shall
be in
writing and signed by the party claimed to have waived, consented
or
excused. A consent, waiver or excuse of any breach shall not constitute
a
consent to, waiver of, or excuse of any other or subsequent breach
whether
or not of the same kind of the original breach.
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[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
5
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the day and year first
above
written.
By:/s/
Ailon Z. Grushkin_____________________
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
President
UNIONMET
SINGAPORE LTD.
By:/s/
Meng Limin__________________________
Name:
▇▇▇▇ ▇▇▇▇▇
Title:
Chief Operating Officer
6
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
1
Purchase
and Sale
Unionmet
agrees to sell to SMGI and SMGI agrees to purchase from Unionmet, one (1)
metric
ton of indium ingots 99.995% purity per month, for a minimum aggregate amount
of
10 metric tons for ten (10) consecutive months. The initial purchase month
shall
be set by mutual agreement following the completion of SMGI’s IPO.
7
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
2
Purchase,
Delivery and Shipment
All contracts
shall be negotiated by and between SMGI (or SMGI’s designated agent) and
Unionmet. The terms of such contracts shall be evidenced by written contracts
prepared by Unionmet. Each party will execute the contract to evidence
acceptance of the negotiated terms.
All
contracts shall contain standard industry terms, including but not limited
to,
the following:
| · |
Name
of commodity and specification, quantity and
price,
|
| · |
Ingot
size and count,
|
| · |
Packing
details,
|
| · |
Shipping
marks,
|
| · |
Time
of shipment,
|
| · |
Port
of loading,
|
| · |
Port
of destination,
|
| · |
Insurance,
|
| · |
Terms
of payment,
|
| · |
Documentations,
including but not limited to:
|
| o |
Certificate
of Quality and
|
| o |
Certificate
of Analysis,
|
| · |
Terms
of shipment, and
|
| · |
Other
conditions (if applicable).
|
All
contracts shall allow for at least 20 days for delivery.
Unionmet
shall ship all indium purchased by SMGI by air to the designated international
airport set forth in the contract suitably packaged for shipment.
Unionmet
shall provide any other documentation reasonably required or requested by
SMGI.
Unionmet
shall be responsible for all customs, duties and user fees required for the
export of the indium. SMGI shall be responsible for all customs, duties and
user
fees incurred in the receiving country.
8
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
3
Insurance
and Risk of Loss
Unionmet
shall pay the freight for the carriage of indium ingots to the named destination
which is provided in the contract, as well as the cargo insurance which insures
against the customer's risk of loss and damage to the goods during the
carriage. Unionmet shall, subject to the exclusions and limitations
herein, only be liable for partial and/or total loss and damage to the goods
from the carrier to the destination. If subsequent carriers are used for
the carriage to other locations different from the agreed destination, Unionmet
will not take up any risks when the goods have been delivered to the subsequent
carrier. Once the goods reach the destination port, the appointed
subsequent carriers or their agents/subcontractors, Unionmet will take no
responsibility for any risk of loss and damage to the goods, as well as any
additional costs.
9
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
4
Inspections
SMGI
shall reserve the right to inspect the indium ingots for damage incurred
during
shipping and for conformity to the specifications in the contracts (as described
in Schedule
2).
In the
event SMGI elects to inspect the indium ingots, SMGI will retain an
industry-recognized independent third party inspector to conduct such
inspection.
If
it is
determined that the indium SMGI has received does not conform to the
specifications of the contract, SMGI shall notify Unionmet in writing prior
to
the expiration of the warranty period set forth in Schedule 9 (or thirty
(30)
days after discovery of the non-conformity if not discernable after reasonably
inspection during the warranty period) and Unionmet shall at its own expense,
to
include but not limited to shipping, insurance and taxes, cure and conform
such
shipment with the contract.
In
the
event Unionmet or SMGI has a discrepancy regarding the inspection result,
such
party may request that the matter be presented to an arbitrator, whereby
such
arbitrator will select a new industry-recognized independent third-party
inspector to conduct an additional inspection of the indium ingots. The
prevailing party in the arbitration proceeding shall be reimbursed for all
expenses incurred in such process.
10
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
5
SMGI’s
Obligations
Upon
the
effectiveness of this Agreement, SMGI agrees to perform the
following:
| 1. |
SMGI
(including all orders for designated agents of SMGI) has provided
a good
faith, binding obligation to purchase from Unionmet a minimum of
one (1)
metric ton of indium ingots 99.995% purity per month, for a minimum
aggregate amount of ten (10) metric tons, for ten (10) consecutive
months.
The initial purchase month shall be set by mutual agreement following
the
completion of SMGI’s IPO.
|
11
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
6
Unionmet’s
Obligations
Upon
the
effectiveness of this Agreement, Unionmet agrees to perform the
following:
| 1. |
Unionmet
has provided a good faith, binding obligation to sell to SMGI a minimum
of
one (1) metric ton of
indium ingots 99.995% purity per month, for a minimum aggregate amount
of
ten (10) metric tons, for ten (10) consecutive months. The initial
purchase month shall be set by mutual agreement following the completion
of SMGI’s IPO.
|
| 2. |
Unionmet
agrees to act as a non-exclusive agent, during the Term of this Agreement,
to procure the purchase of additional metric tons of indium ingots
on
SMGI’s behalf in the country of China. Unionmet and SMGI agree to
negotiate the commissions on each specific transaction where Unionmet
acts
as the non-exclusive agent of SMGI.
|
12
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
7
Price
and Payment
Price. The
purchase price (the “Purchase Price”) of such indium purchased and sold shall be
determined by:
| A. |
The
quotational period for each monthly shipment shall be the month prior
to
each shipment month.
|
| B. |
The
ten (10) monthly shipments shall commence by mutual agreement promptly
following the completion of SMGI’s IPO.
|
| C. |
The
pricing basis for each shipment shall be
***.
|
| D. |
The
final price for each shipment shall be the basis price multiplied
by the
number of kilograms of indium shipped.
|
| E. |
The
delivery terms shall be “CIP - designation airport.” CIP shall mean the
Carriage and Insurance Paid to, named airport, as defined under
Incoterms.
|
Payment.
| 1. |
SMGI
shall pay Unionmet for all indium ordered by SMGI by T/T (Telegraphic
Transfer) within two (2) working days after the delivery of each
shipment.
Unionmet will only ship the second shipment of indium specified in
the
contracts after receiving the payment for the previously delivered
shipment.
|
13
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
8
Termination
This
Agreement may be terminated prior to the expiration of the Term only in
accordance with the following:
| 1. |
Either
party may immediately terminate this Agreement for cause if the other
party hereto becomes the subject of a voluntary or involuntary petition
in
bankruptcy or any proceeding relating to insolvency, receivership,
liquidation, or composition for the benefit of creditors.
|
| 2. |
Either
party hereto may terminate this Agreement for cause if the other
party
breaches any express material term or condition of this Agreement
and
fails to cure that breach within seven (7) business days after receiving
written notice of the breach. If the nature of the cure for any
non-monetary breach is such that it is reasonably expected to take
longer
than seven (7) business days, the breaching party shall be given
an
additional thirty (30) calendar days to cure such breach, provided
that
the cure is commenced during the original seven (7) business day
period
and is diligently carried out thereafter. In the event the material
breach
is not cured within the period specified above after delivery of
the
notice, the non-breaching party may terminate this Agreement in writing
as
of a date specified in the termination notice. The terminating party
shall
have all rights and remedies available at law or equity as well as
any
other rights and remedies as set forth in this
Agreement.
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14
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
Schedule
9
Indemnity
and Warranties
| 1. |
Unionmet
represents and warrants:
|
| a. |
That
it owns all right, title and interest to the indium sold to SMGI
(or its
designated agent) hereunder and that it has full legal right to sell
the
indium and that it has satisfied any and all applicable conditions
precedent to such sale and that the sale by it of the indium hereunder
does not violate any obligations to third parties to which it is
bound.
|
| b. |
That
it has full power to enter into this Agreement, to carry out its
obligations pursuant to this Agreement, and to grant the rights granted
pursuant to this Agreement. Further, Unionmet represents and warrants
that
it has obtained all corporate, third party, and governmental approvals
necessary to enter into this Agreement and carry out the transaction
contemplated thereby.
|
| c. |
That
it warrants that (a) the shipments of the indium shall be free from
all
liens charges or encumbrances, except any lien of Unionmet in respect
of
any unpaid portion of the Purchase Price; (b) the indium shall be
free
from defects in material and shall conform the specifications as
set forth
in Schedules
1 and 2
hereto, including but not limited to 99.995% indium purity
level.
|
| 2. |
Indemnity
by Unionmet.
Unionmet agrees to defend, indemnify and hold SMGI and its designated
agents, and their respective managers, directors, officers, employees
and
members harmless from any and all loss, cost, liability or expense
(including court costs and reasonable fees of attorneys and other
professionals) arising out of or resulting from the breach or claimed
breach of this Agreement or the above warranties and
representations.
|
| 3. |
Applicability
of representations, warranties and indemnification by
Unionmet.
The representations, warranties and indemnification provided in Sections
1
and 2 of this Schedule 9 shall only apply to Unionmet only when Unionmet
and SMGI have executed contracts. Such representations, warranties
and
indemnification shall not apply to Unionmet in its capacity as a
non-exclusive agent for SMGI.
|
| 4. |
SMGI
represents and warrants.
That it has full power to enter into this Agreement and to carry
out its
obligations pursuant to this Agreement. SMGI also represents and
warrants
that it has obtained all corporate and governmental approvals necessary
to
enter into this Agreement and carry out the transaction contemplated
thereby.
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15
CONFIDENTIAL
TREATMENT REQUESTED
WITH
RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED
WITH “***”
| 5. |
Indemnity
by SMGI.
SMGI agrees to defend, indemnify and hold Unionmet, and its managers,
directors, officers, employees and members harmless from any and
all loss,
cost, liability or expense (including court costs and reasonable
fees of
attorneys and other professionals) arising out of or resulting from
the
breach or claimed breach of this Agreement or the above warranties
and
representations.
|
| 6. |
Applicability
of representations, warranties and indemnification of SMGI.
The representations, warranties and indemnification provided in Sections
4
and 5 of this Schedule 9 shall only apply to SMGI only when Unionmet
and
SMGI have executed contracts. Such representations, warranties and
indemnification shall not apply to Unionmet in its capacity as a
non-exclusive agent for SMGI.
|
16