Unassociated Document


 



Exhibit 10.10




 



SUPPLY AGREEMENT







BY AND BETWEEN







EMPIRE RESOURCES, INC., having a principle place of business at 1 Parker Plaza, Fort Lee, New Jersey, 07024, USA, on the one hand,







AND












SOUTHERN ALUMINUM INDUSTRY (CHINA) CO., LTD, established in the People’s Republic of China with limited liability







AND












PT. ALUMINDO LIGHT METAL INDUSTRY, TBK, an Indonesia Limited Liability Company







AND


 

 







FUNG LAM TRADING COMPANY LTD, a Hong Kong Limited Liability Company,


on the other hand












This Agreement is entered this 27th day of May, 2011, (the “Effective Date”) by and among Empire Resources, Inc., a USA corporation (hereinafter “Empire”), on the one hand, and Southern Aluminum Industry (China) Co., Ltd, established in the People’s Republic of China with limited liability (hereinafter “SAIC”), PT. Alumindo Light Metal Industry TBK, an Indonesian Limited Liability Company, (hereinafter “Alumindo”), and Fung Lam Trading Company Ltd, a Hong Kong Limited Liability Company (hereinafter, “FLH” and collectively with SAIC and Alumindo, the “Manufacturers”), on the other hand.


 


WHEREAS, the Manufacturers are in the business of manufacturing aluminum products for sale;


 


WHEREAS, Empire is in the business of importing and distributing aluminum products;


 


WHEREAS, Empire and the Manufacturers have a pre-existing supply and purchase relationship, and desire to continue and expand their existing business collaboration;


 


WHEREAS, contemporaneously with the execution of this Agreement, Empire shall enter into that certain Pre-Payment Advance Agreement, by and among Empire, Alumindo, SAIC and  FLH, dated even date herewith (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Pre-Payment Advance Agreement”), pursuant to which Empire agrees to provide to the Manufacturers a pre-payment advance of US$ 10,000,000, (the “Pre-Payment Advance”) payable in two (2) installments, as set forth therein;


 




  





  











  






 


NOW, THEREFORE, in consideration of the promises, agreements and covenants herein contained, the parties mutually agree as follows:


 


1.           Acknowledgment.


 


1.1           Minimum Commitment.  It is agreed and understood that, on and after July 1, 2011, the Manufacturers shall produce in Indonesia and deliver to Empire from Indonesia an amount equal to 3500 Metric Tons (“MT”) (plus or minus fifteen (15) percent upon Empire’s written consent) of prime aluminum hot/cold rolled coil (the “Product”) (i.e., not “continuous cast”) per month (the “Existing Minimum Commitment”), produced from hot rolled coiled aluminum which is  wholly the product of Indonesia.  Notwithstanding the foregoing, the Manufacturers hereby agree to use commercially reasonable efforts to produce and deliver to Empire an amount of Product equal to 4000 MT per month (plus or minus fifteen (15) percent upon Empire’s written consent).


 


1.2           Use of the Pre-Payment Advance.  The Pre-Payment Advance by Empire to the Manufacturers shall be used by Manufacturers in order to augment its manufacturing capabilities as set forth herein, so that the Manufacturers may provide Empire with additional Product (as defined below).  It is agreed and understood that the obligations hereunder shall be undertaken in accordance with the terms of the Pre-Payment Advance Agreement.


 


1.3           Increased Supply; Minimum.  It is agreed and understood that in addition to the Existing Minimum Commitment set forth in Section 1.1, above, on or prior to January 1, 2013, the Manufacturers shall produce and deliver to Empire an additional 1500 MT amount of Product per month (plus or minus fifteen (15) percent upon Empire’s written consent) (the “Increased Supply”) (the Existing Minimum Commitment plus the Increased Supply, the “New Minimum Commitment”).  Upon mutual agreement of the parties, Empire may order, and the Manufacturers shall, if so ordered, supply to Empire an amount greater than the New Minimum Commitment in any given month.  For the avoidance of doubt, beginning on January 1, 2013, Manufacturers agree to produce and deliver to Empire an amount of Product equal to or greater 5000 MT per month (plus or minus fifteen (15) percent upon Empire’s written consent).


 


2.           Pre-Payment Advance; Equipment.


 


2.1           Pre-Payment Advance.  Empire shall provide to the Manufacturers the Pre-Payment Advance as described in the Pre-Payment Advance Agreement as set forth on Exhibit A.  The Manufacturers agree to use the Pre-Payment Advance to purchase the equipment as set forth on Exhibit B (the “New Equipment”) for use by SAIC in the People’s Republic of China.


 


2.2           Product.  As a material inducement of Empire entering into this Agreement, the Manufacturers agree to increase the supply of Product meeting the Specifications (as defined below) from Alumindo to Empire.  It is agreed and understood that the Manufacturers’ obligation to supply similar Products to third parties shall at all times be subject to the condition that the Manufacturers are able to produce a sufficient supply of Products for Empire.


 




  





2











  






 


2.3           Launch Date.


 


2.3.1           The Manufacturers shall use their best efforts to procure, install and launch the New Equipment as soon as reasonably practicable.  During the period between the Effective Date and such time as the New Equipment is put into production, the Manufacturers shall provide quarterly written updates (including photographs) of the progress of the installation and implementation, in form and substance as requested by Empire.


 


2.3.2           The Manufacturers shall deliver Product to Empire no later than January 1, 2013, or as mutually agreed upon by the parties (or, if the parties are unable to agree, then the provisions of Section 3.1, below, shall apply).


 


2.4           Title.  SAIC agrees to maintain title to, possession and operation of the New Equipment throughout the Term (as defined below) of this Agreement and will not voluntarily or involuntarily transfer, sell, assign, encumber or otherwise dispose of the New Equipment, or any part thereof, without the prior written signed consent of Empire.  As additional consideration for the Pre-Payment Advance, SAIC further agrees and warrants that it will reserve priority manufacturing time at SAIC’s premises located at Rong Qiao Economic and Technological Development Zone, Hong Lu Town, Fuqing, Fujian 350301, The People’s Republic of China, for all Empire Purchase Orders (as defined below) after the addition of the New Equipment.   The parties shall agree on terms and conditions for Purchase Orders for Products from SAIC’s premises, once such premise and New Equipment is operational.


 


3.           Order; Delivery.


 


3.1           Purchase Order.  Empire shall have the right to order Product during the Term by issuing to the Manufacturers Empire’s form of written purchase order (each, a “Purchase Order”).   In the event of a conflict between the terms of a Purchase Order and the terms of this Agreement, the terms of this Agreement shall control.  The parties agree that the Increased Supply shall be delivered from the Manufacturer’s plant located at Surabaya, Indonesia.


 


3.2           Delivery.  Empire shall be obligated to deliver to Manufacturers a Letter of Credit promptly after providing Manufacturers with required Product dimensions in accordance with Section 3.4, below.  The Manufacturers shall, jointly and severally, use their best efforts to manufacture, supply and deliver to Empire all Products ordered by Empire within forty-five (45) days after the contractual month of production, unless otherwise agreed upon in writing and mutually executed by the parties.  Prior to delivery of any Product to Empire, each Product shall be finished and inspected by Manufacturer at Manufacturer’s Indonesia plant located at Surabaya, Indonesia, unless the parties otherwise agree in writing.


 


3.3           Risk of Loss.   Unless otherwise agreed in writing, the Products shall be delivered F.O.B.  Surabaya, Indonesia.  The Manufacturers shall arrange for insurance (through the carrier or otherwise) to protect against loss during shipment up to and including delivery to Empire’s nominated shipping carrier at the port of Surabaya, with such insurance to be Manufacturers’ sole cost and expense.  Empire shall have no liability in respect of any damage to the Products during transit.  The Manufacturers shall deliver the Products in due time, as set forth in the Specifications or in the applicable Purchase Order.


 




  





3











  






 


3.4           Compliance with Specifications.  The Products shall be manufactured by the Manufacturers with all of the necessary skill and expertise using properly qualified and experienced personnel, so that the Products shall comply with the industry standards of The Aluminum Association based in Arlington, Virginia (the “Specifications”) as well as other specifications as may be required by Empire and as may be agreed between the parties from time to time.  Notwithstanding the foregoing, Empire shall provide the required dimensions of such Product to Manufacturers no later than thirty (30) days prior to the first day of the scheduled month of the commencement of the manufacture of such Product.


 


3.5           Non-Conformity.  In the event Empire conducts inspections of Product delivered and discovers any non-conformity with the relevant Purchase Order of Empire or the Specifications (a “Non-Conformity”), whether with respect to the quantity or quality of the Products delivered, or otherwise, Empire shall notify the Manufacturers of such Non-Conformity, and the Manufacturers shall, at its own expense and without delay, at Empire’s option, promptly replace such non-conforming Products, or provide Empire with reimbursement or a credit equal to the costs incurred by Empire by recalling, replacing, reworking and disposing of non-conforming Products or the finished goods or work-in-process in accordance with applicable laws (including without limitation, environmental laws, rules and regulations) if the Products are a component of such finished goods or work-in-process.


 


4.           Pricing and Payment.


 


4.1           Pre-Payment Advance Repayment.  Beginning on January 1, 2013, the Manufacturers shall pay to Empire the sum of $277,777.78 per month (by no later than the first day of each month), as repayment for the Pre-Payment Advance (the “Monthly Repayment”).  Such Monthly Repayment shall be made by the Manufacturers until such time as the Pre-Payment Advance has been repaid in full.


 


4.2           Price of Product.  At least sixty (60) days prior to the commencement of the quarter in which such Product is being manufactured, the price per MT of Product as ordered in a Purchase Order shall be agreed upon by the parties on the basis of the then prevailing international market conditions for similar quality and quantity.  Pricing shall be based upon the sum of (i) the price per MT of aluminum on the London Metal Exchange (“LME”), in United States Dollars, for a period agreed between the parties plus (ii) a premium for the Manufacturers’ services (the “Product Price”).


 


4.2.1           Empire and the Manufacturers agree to use best efforts to arrive upon a mutually agreeable Product Price for each Product being ordered.  In determining the Product Price, each party must take into consideration concurrent sales prices received by Manufacturers from other customers resulting from similar bona fide sales in North America of similar qualities and quantities, and concurrent offers and purchase prices received and/or paid by Empire to other suppliers.  Each party shall also take into account the prices quoted by CRU and/or Metal Bulletin for material imported into North America for similar grades and from suppliers of similar standing as the Manufacturers.  Notwithstanding the foregoing, the Manufacturers shall at all times during the Term provide the Products to Empire at the lowest price that such Products are offered to any third party in North America in equal or smaller quantities.  In the event the Manufacturers offers a lower price for any Products (or other products substantially the same as the Products) to any third party in North America, then Manufacturers agree to immediately lower the price to Empire, to such lowest price offered to any third party.


 




  





4











  






 


4.2.2           In the unlikely event that following such efforts Empire and the Manufacturers are unable to mutually agree upon a Product Price for a Product being ordered, the Manufacturers hereby agree to pay Empire $555,555.56 per month (the Monthly Repayment plus an additional payment of $277,777.78), for each month during which the parties fail to agree upon such Product Price.  In addition, until Empire and Manufacturers achieve a resolution on the Product Price of such Product, interest shall accrue on the remaining balance of the Pre-Payment Advance at the rate of one month Libor USD (the rate per annum at which Eurodollar deposits are offered in the interbank Eurodollar market for such interest period, as quoted on Reuters Screen LIBOR01 Page (or any successor page or service)) +3.5% per annum per month.


 


4.3           Final Acceleration. Notwithstanding anything to the contrary in this Agreement or in the Pre-Payment Advance Agreement, if any portion of the Pre-Payment Advance remains unpaid on January 1, 2016, the entire remaining Pre-Payment Advance shall become immediately due and owing to Empire.


 


5.           Term and Termination.


 


5.1           Term.  Unless terminated as set forth below pursuant to Section 5.2, this Agreement shall continue in full force and effect for an initial term commencing on the Effective Date and terminating at such time as the Pre-Payment Advance has been fully repaid in accordance with the terms of the Pre-Payment Advance Agreement (the “Initial Term”).  Thereafter, this Agreement shall automatically renew for one year terms (each, a “Successive Term”) unless terminated by (i) mutual written consent of the parties, which consent may be withheld by either party at its sole discretion or (ii) either party upon at least sixty (60) days’ written notice prior to the expiration of any Successive Term, in which case termination shall be effective as of the end of such then-current term.  The Initial Term and all Successive Terms shall be collectively referred to as the “Term”.


 


5.2           Termination.  Empire may terminate this Agreement, in whole or in part, effective immediately upon delivery to the Manufacturers of written notice to such effect on or prior to June 30, 2011, and thereafter, upon the occurrence of the following (any of the events meeting the criteria of Sections 5.2.1 – 5.2.6 is an “Event of Default”):


 


5.2.1           If Manufacturers default in the performance of, or materially breach any agreement, condition or covenant of this Agreement and such default, breach or non-compliance shall not have been remedied within thirty (30) days after receipt by Manufacturers of written notice thereof from Empire of such default, Empire may terminate this Agreement.


 


5.2.2           If the Manufacturers fail to timely deliver the full amount of Products ordered by Empire as required pursuant to any Purchase Order for any reason in accordance with Section 3.2, above.


 


5.2.3           If the Manufacturers are the subject of any governmental demand, inquiry, investigation or determination with respect to any illegal and/or trade related acts (including, but not limited to, import/export laws, dumping or failure to pay duties or other taxes).


 




  





5











  






 


5.2.4           If none of the Manufacturers are able to fulfill any Purchase Order by the date set forth therein which failure is directly attributable to a force majeure event (i.e., acts of God, war, strikes, embargoes and severe weather), the Manufacturers shall notify Empire of the occurrence of such force majeure event as promptly as possible and diligently work to cure such force majeure event and, provided, further that if the Manufacturers’ performance is delayed as the result of a force majeure event for a period of 90 days or more, Empire shall have the right to terminate this Agreement pursuant to Section 5.2.  For the avoidance of doubt, in no event shall a force majeure event excuse payment of the minimum Monthly Repayment as set for in Section 4.1, above.


 


5.2.5           If the Manufacturers shall become insolvent, or shall cease to carry on business in the normal course, or shall make or seek to make or arrange an assignment for the benefit of creditors, or if proceedings in voluntary or involuntary bankruptcy shall be initiated by, on behalf of the Manufacturers, or if a receiver or similar officer is appointed to take charge of all or part of Manufacturers’ assets.


 


5.2.6           If the Manufacturers (i) commit an event of default under any loan or indebtedness commitment, or (ii) experience a material adverse change in its financial or other condition, or ability to perform under this Agreement.


 


5.3           Rights and Obligations upon Expiration or Termination.


 


5.3.1           Upon the occurrence of an Event of Default, the full amount of the outstanding Pre-Payment Advance shall immediately become due and payable upon demand, and Empire shall be under no obligation to fund any remaining advances. Repayment of the Pre-Payment Advance in the event of an acceleration due to an Event of Default is set forth in the Pre-Payment Advance Agreement.


 


5.3.2           Termination of this Agreement will not affect any pre-termination obligations of either party under this Agreement, and any termination is without prejudice to the enforcement of any undischarged obligations existing at the time of termination.  Upon the termination or expiration of this Agreement, the Manufacturers shall promptly tender to Empire all finished and semi-finished Products.  The provisions of Sections 5.3 and 6 through 8 shall survive termination of this Agreement.


 


6.           Representations and Warranties; Indemnity.


 


6.1           Manufacturers’ Representations and Warranties.  Each of the Manufacturers, jointly and severally, represent, warrant and covenant that:


 


6.1.1           It has the corporate power and authority, and has received all required corporate and other approvals, to permit it to enter into this Agreement and to carry out the provisions hereof.


 


6.1.2           The Products shall conform in all respects to the Specifications, and U.S. Customs regulations (including, but not limited to, a certificate of origin), all as then in effect.


 


6.1.3           The Products are and will be of the highest quality and free from all manufacturing defects (including defects arising out of materials and workmanship and latent defects) and encumbrances.


 


6.1.4           It will comply with all applicable laws in connection with the manufacture and sale of the Products.


 




  





6











  






 


6.1.5           It has fully complied with, and shall continue to fully comply with the highest quality standards promulgated by the Aluminum Association and other standards as may be reasonably required by Empire from time to time, and it shall provide to Empire the appropriate registration and/or certification.


 


6.1.6           The services performed under this Agreement shall be performed in a timely and professional manner in accordance with the highest professional standards applicable to the Manufacturers’ industry.


 


6.2           Manufacturers’ Covenants.  Each of the Manufacturers acknowledge that Empire will rely on the Manufacturers in fulfilling its obligations under this Agreement to the fullest extent, which will be necessary for Empire to remain competitive.  In furtherance of the foregoing, each of the Manufacturers covenant that it shall use its best efforts to maintain “state of the art” product and process technology and will use such advances to reduce costs sufficiently to offset inflation, create economies of scale and to accommodate competitive pricing.


 


6.3            By Empire.  Empire represents, warrants and covenants that it has the corporate power and authority, and has received all required corporate and other approvals, to permit it to enter into this Agreement and to carry out the provisions hereof.


 


6.4           Manufacturers’ Indemnity.  The Manufacturers, jointly and severally, agree to defend, indemnify, and hold harmless Empire and its directors, officers, employees, agents, and customers from and against all claims, costs (including reasonable attorneys’ fees), judgments and other expenses arising out of or in connection with (i) the Manufacturers’ performance of its obligations under this Agreement; (ii) breaches of the Manufacturers’ representations and warranties set forth herein; or (iii) the production, sale or commercial utilization of the Products and infringement or misappropriation of third party intellectual property rights which infringement or misappropriation is not caused by the Manufacturers’ compliance with the Specifications. Empire shall notify the Manufacturers of such claim; and (i) give the Manufacturers sole control over the defense and settlement thereof, including all negotiations related thereto; and (ii) provide the Manufacturers with full authority, information and assistance necessary to defend such claim.


 


7.           Confidentiality.


 


7.1           Confidential Information. Empire and the Manufacturers agree that all information provided by one party to the other party in connection with this Agreement shall be maintained by such other party in the strictest confidence and shall not be used, or disclosed to any third party (nor to employees, agents, or representatives of such other party), except as necessary to carry out such other party’s obligations under this Agreement and except to the extent disclosure is required by law or order of a court of law having the power and jurisdiction to order such disclosure. In the event such disclosure is requested or demanded of a party, that party shall notify the other party in writing and provide all related details, and allow the other party a reasonable opportunity to intervene or contest such disclosure.  The foregoing obligations of confidentiality and nondisclosure shall not apply to information which a party can demonstrate: (i) was generally known to the public, or publicly available, at the time of disclosure; (ii) was already in the party’s possession at the time of disclosure; (iii) was received by the party from another person having no obligation of confidentiality to the other party; (iv) was approved for release in writing by the other party without any restriction; or (v) was independently discovered or developed by the party as evidenced by written record.


 




  





7











  






 


7.2           Permitted Disclosures.   Notwithstanding anything in this Section 7 to the contrary:


 


7.2.1           Either party to this Agreement may disclose to such persons and entities as may be reasonably required for the purpose of compliance with legal and regulatory responsibilities.  Such disclosures, however, shall be in such manner as to have the relevant confidential information maintained in confidence by such authorities to the extent possible under applicable laws and regulations.


 


7.2.2           Upon execution of this Agreement, the parties shall issue the mutually agreeable press release attached hereto as Schedule 7.2.2.  Thereafter, neither party shall issue a press release, third party communication or other public disclosure disclosing the relationship of the parties hereunder or related information without the prior written approval of the other party.


 


7.3           Return of Confidential Information. Upon either party’s written request, the other party shall promptly return to the requesting party any and all documents and materials and copies thereof (in all formats, including without limitation, hard copy, electronic, and otherwise) containing information received from the requesting party that is deemed by the requesting party to be confidential.


 


8.           General.


 


8.1           Governing Law; Dispute Resolution.  This Agreement shall be governed by the laws of the State of New York, United States, without regard to conflicts of laws principles.  All disputes arising out of, relating to, or in connection with this Agreement, including any question regarding its existence, validity, or termination, and any question as to whether a particular dispute is arbitrable hereunder, shall be referred to and finally resolved by binding arbitration administered by the International Chamber of Commerce and conducted pursuant to its Rules of Arbitration by three arbitrators appointed in accordance with said Rules, with the two co-arbitrators having 30 days from the appointment of the second arbitrator to nominate the chair.  The arbitration shall be conducted in the English language in Singapore, and shall be governed by and interpreted according to the laws of Singapore.  Judgment upon the award may be entered by any court having jurisdiction thereof.  The parties herein agree that the prevailing party of any arbitration proceeding will be entitled to an award of its attorney’s fees and costs.


 


8.2           Entire Agreement; Modification.  This Agreement and the Pre-Payment Advance Agreement constitute the only agreements between the parties relating to the subject matter hereof.  Any modifications or amendments must be in writing and mutually executed by the parties herein.  The waiver of any term, breach, default, or right under this Agreement by any party shall not be deemed to be a waiver or release of such term, breach, default or right or any subsequent breach of the same or any other term contained herein.


 


8.3           Liability.  The Manufacturers shall be jointly and severally liable for all obligations hereunder.  For the avoidance of doubt, if any of the Manufacturers is unable to perform any of its obligations hereunder for any reason whatsoever, including, without limitation, a force majeure event, the other shall automatically be responsible for the performance of such obligation; provided, however, that upon the occurrence of a force majeure event, Empire shall have the right, in its sole discretion, to waive performance of any obligation hereunder by the party subject to such force majeure event.  For the avoidance of doubt, in no event shall a force majeure event excuse payment of the minimum Monthly Repayment as set for in Section 4.1, above.


 




  





8











  






 


8.4           Notices.  All notices to each party to this Agreement shall be in writing and delivered via overnight carrier or by fax to the following addresses and/or fax numbers.  Notice shall be deemed received on the third (3rd) day from delivery by the noticing party to the overnight carrier and on the next day if notice is sent by fax.  The parties may change the address, fax number or person to whom notice must be made to the attention of by providing the other party written notice of any such change pursuant to this section.


 




	
If to Empire Resources, Inc.:

	
If to Southern Aluminum Industry (China) Co. Ltd








	
One Parker Plaza

	
Rong Qiao Economic and Technological Development Zone








	
Fort Lee, NJ 07024

	
Hong Lu Town, Fuqing,







Fujian 350301, The People of Republic of China








	
Attn:

	
Mr. Nathan Kahn

	
Attn:

	
Mr. Alim Satria











	
  

	
President

	
President Director







 




	
+ 1 (201) 944-2226 fax

	
+86 (591) 8538 7530 fax








	
+ 1 (201) 944-2200 phone

	
+86 (591) 8538 8010 phone









 


 



If to PT. Alumindo Aluminum Industry TBK:


38-40, Kembang Jepun,


Surabaya 60162


Indonesia



	
  

	
Attn:

	
Mr. Alim Satria







Executive Managing Director


+ 62 (31) 353-3055 fax


+ 62 (31) 353-1445 phone












If to Fung Lam Trading Company Ltd:


Rm 1501, Wing On House,


71 Des Voeux Rd, Central,


Hong Kong



	
  

	
Attn:

	
Mr. Alim Satria







Director


+852-2868 0204 fax


+852-2521 6551 phone




 


 




8.5           Counterparts.  This Agreement may be executed by the parties in counterparts, all of which, taken together, constitutes the original Agreement.  The parties further agree that the signatures hereto may be evidenced by facsimile telecopy, or by scanned copy delivered via e-mail transmission.


 




  





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8.6           Waiver.  Each Manufacturer waives (a) any defense arising by reason of any disability or other defense of any other Manufacturer, or the cessation from any cause whatsoever (including any act or omission of Empire) of the liability of any other Manufacturer, (b) any defense based on any claim that any Manufacturer’s obligations exceed or are more burdensome than those of any other Manufacturer’s obligations; (c) the benefit of any statute of limitations affecting the Manufacturers’ liability hereunder; (d) any right to require Empire to proceed against any Manufacturer or pursue any other remedy in Empire’s power whatsoever; and (e) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties.  Each Manufacturer expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the obligations hereunder, and all notices of acceptance of this Agreement or of the existence, creation or incurrence of new or additional obligations of the Manufacturers hereunder or under the Pre-Payment Advance Agreement.


 


8.7           Invalidity.  Any provision of this Agreement which shall prove to be invalid, void or illegal shall in  no way affect, impair or invalidate any other provision hereof and such other provisions shall remain in full force and effect.


 


8.8           Remedies.  No remedy or election hereunder shall be deemed exclusive but shall, whenever possible, be cumulative with all other remedies at law or equity.


 


8.9           Assignment.  This Agreement is not assignable by either party without the prior written and executed mutual consent of both parties, which consent shall be at each party’s sole discretion.


 


8.10           Language.  This Agreement shall initially be executed in English. Where required by any governmental authority having jurisdiction over this Agreement, the parties hereof or the Pre-Payment Advance and/or security interest therein, the parties may arrange to translate this Agreement into certain other language(s) or execute this Agreement in such other language(s) as required by such governmental authority. In that case, to the extent permitted by the governmental authority so requiring, the parties agree that in case of any discrepancy between the English version and other language version of this Agreement, the English version shall prevail.


 







Southern Aluminum Industry (China) Co., Ltd.                   Empire Resources, Inc.


 


 


 


/s/Alim Satria                                                                             /s/Nathan Kahn


Alim Satria                                                                                  Nathan Kahn


President Director                                                                     President


 




  





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PT. Alumindo Aluminum Industry TBK






















/s/Alim Satria


Alim Satria


Executive Managing  Director












Fung Lam Trading Company Ltd

















/s/Alim Satria


Alim Satria


Director


 




  





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EXHIBIT A


PRE-PAYMENT ADVANCE AGREEMENT


 


 



PRE-PAYMENT


ADVANCE AGREEMENT







BY AND BETWEEN







EMPIRE RESOURCES, INC., having a principle place of business at 1 Parker Plaza, Fort Lee, New Jersey, 07024, USA, on the one hand,







AND







SOUTHERN ALUMINUM INDUSTRY (CHINA) CO., LTD, established in the People’s Republic of China with limited liability,







PT. ALUMINDO LIGHT METAL INDUSTRY, TBK, an Indonesia


Limited Liability Company,







AND







FUNG LAM TRADING COMPANY LTD, a Hong Kong Limited Liability Company,


on the other hand







 







 


This Agreement is entered this 27th day of May, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, this “Pre-Payment Advance Agreement”), by and among (a) Empire Resources, Inc., a USA corporation (hereinafter “EMPIRE”), on the one hand, and (b) Southern Aluminum Industry (China) Co., Ltd, established in the People’s Republic of China with limited liability (hereinafter “SAIC”), PT. Alumindo Light Metal Industry, Tbk, an Indonesian corporation, (hereinafter “Alumindo”, together with SAIC, the “Manufacturers”), and Fung Lam Holdings, a Hong Kong Limited Liability Company (hereinafter, “FLH” and, collectively with the Manufacturers, the “Companies”), on the other hand.


 


WHEREAS, contemporaneously with the execution of this Pre-Payment Advance Agreement, the parties hereto will enter into a Supply Agreement (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Supply Agreement”).  Capitalized terms used herein for which no meanings are provided in this Pre-Payment Advance Agreement shall have the meanings provided in the Supply Agreement.


 


1.           Pre-Payment Advances.  Subject to the conditions set forth in Section 2 below, Empire (or one or more of its affiliates) shall provide to FLH a Pre-Payment Advance of US$ 10,000,000 (the “Pre-Payment Advance”) payable in 2 (two) installments (each an “Installment”).  Each installment shall be made on the following dates, in the following amounts and to the following account by wire transfer:


 




  





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First Payment


Due Date: Within 10 (ten) business days of the signing of this agreement


US$ 5,000,000


 


Second Payment


 


Due Date: 3 January 2012


US$ 5,000,000


 


Account Information:


Beneficiary : Fung Lam Trading Co., Ltd.


Beneficiary's Bank : Bank of China (HK) Ltd.


Beneficiary's A/C No.: 01291692006001


Advising Bank : Bank of China, New York Branch


                              410 Madison Avenue, New York NY 10017, U.S.A.


                              UID No. 101779


 


2.           Conditions Precedent.  EMPIRE shall not be required to make any Installment unless each of the following conditions has been satisfied at the time such Installment is required to be made: (a) no Event of Default has occurred and is continuing,  no material breach under this Pre-Payment Advance Agreement has occurred and is continuing and no breach under any other supply agreement that EMPIRE and Alumindo or EMPIRE and SAIC is party to has occurred and is continuing and (b) each of the representations and warranties set forth in Section 3 below are true and correct as of the date of each Pre-Payment Advance.


 


3.           Representations and Warranties.  Each Company hereby represents and warrants as of the date first written above and on the date of each Pre-Payment Advance as follows:


 


(a)           it is duly organized and in good standing under the laws of the jurisdiction of its organization and has full capacity and right to enter into and perform this Pre-Payment Advance Agreement and the Supply Agreement, and all necessary authority has been obtained;


 


(b)           each of this Pre-Payment Advance Agreement and the Supply Agreement constitutes its legal, valid and binding obligation enforceable against the Companies in accordance with its terms;


 


(c)           the entering into and performance of this Pre-Payment Advance Agreement and the Supply Agreement does not and will not violate any applicable law, regulation or order, and does not and will not result in the breach of, or constitute a default or require any consent under, any material agreement, instrument, or document to which it is a party or by which it or any of its property may be bound or affected;


 




  





13











  






 


(d)           all consents, approvals, licenses and authorizations of, and filings and registrations with, any governmental authority required under applicable law and regulations for the entering into and performance of this Pre-Payment Advance Agreement and the Supply Agreement have been obtained or made and are in full force and effect (including, without limitation, any applicable foreign exchange related authorization necessary for receiving each installment of the Pre-Payment Advance);


 


(e)           it is in the best interests of each Company to execute this Pre-Payment Advance Agreement inasmuch as such Company will derive substantial direct and indirect benefits from the Pre-Payment Advances made from time to time hereunder, and each Company acknowledges and agrees that EMPIRE is relying on this representation in agreeing to make Pre-Payment Advances hereunder;


 


(f)           no other sources of financing have been obtained, directly or indirectly, by the Companies to fund the Production Capacity Expansion, other than cash on hand of the Companies and the Pre-Payment Advance; and


 


(g)           since December 31, 2009, there has been no event or circumstance that, individually or in the aggregate, could reasonably be expected to have a material adverse effect on (x) the business, assets, liabilities (actual or contingent), condition (financial or otherwise), operations, performance, properties or prospects of any of the Companies, (y) the ability of any of the Companies to perform its obligations under this Pre-Payment Advance Agreement or under the Supply Agreement or (z) the legality, validity, binding effect or enforceability against any Company of this Pre-Payment Advance Agreement or the Supply Agreement.


 


4.           Use of Proceeds.  The proceeds of the Pre-Payment Advance will only be used to finance the expansion of SAIC’s production capacity (the “Production Capacity Expansion”) at its premises located at Rong Qiao Economic and Technological Development Zone, Hong Lu Town, Fuqing City, Fujian, The People’s of Republic of China, including the purchase of New Equipment.


 


5.           Receipts.  Promptly following receipt of each Installment FLH shall deliver to Empire a receipt executed by FLH in form and substance as set forth in the form Receipt attached hereto as Exhibit “A”; provided that any failure of Empire to produce such receipt shall not limit or otherwise affect the obligations owed by the Companies to Empire hereunder.


 


6.           Repayment.  The Pre-Payment Advance shall be repaid by the Manufacturers on the first day of each month starting from January 1, 2013 in the amount of (a) in the case that the parties to the Supply Agreement have agreed to a Purchase Price for such month as contemplated by Section 4 of the Supply Agreement, $277,777.78 and (b) in the case that the parties to the Supply Agreement have not agreed to a Purchase Price for such month as contemplated by Section 4 of the Supply Agreement, $555,555.56.  In addition, interest shall accrue on the remaining balance of the Pre-Payment Advance at the rate of One Month Libor USD (the rate per annum at which Eurodollar deposits are offered in the interbank Eurodollar market for such interest period, as quoted on Reuters Screen LIBOR01 Page (or any successor page or service)) +3.5% per annum during each month for which the parties to the Supply Agreement do not agree to a Purchase Price prior to such month as contemplated by Section 4 of the Supply Agreement.  It being understood that the minimum required amount to be delivered under the Supply Agreement on or after January 1, 2013 is the New Minimum Commitment.


 




  





14











  






 


To the extent that the Pre-Payment Advance is not repaid as set forth in the foregoing paragraph, EMPIRE shall have the right to require that the Pre-Payment Advance be repaid by any or all of the Companies in immediately available funds in U.S. dollars upon demand therefor.   The Companies and Empire shall each maintain a record of the amounts deducted from the Pre-Payment Advance and a running balance of the outstanding Pre-Payment Advance amounts.  The Companies and Empire shall mutually reconcile their record of outstanding Pre-Payment Advance amounts each calendar quarter as set forth in detail within Section 3 of the Supply Agreement.


 


7.           Acceleration; Termination.


 


(a)           Notwithstanding anything contained to the contrary in this Pre-Payment Advance Agreement or the Supply Agreement, upon or after the occurrence of any Event of Default, upon or after the occurrence of any material breach of this Pre-Payment Advance Agreement or upon or after any  representation or warranty hereunder not being true and correct in all material respects when made the full amount of the outstanding Pre-Payment Advances shall become due and payable by the Companies in immediately available funds in U.S. dollars on demand and EMPIRE shall be under no obligation to fund any remaining Installments.


 


(b)           Notwithstanding anything to the contrary in this Pre-Payment Advance Agreement or in the Supply Agreement, if any portion of the Pre-Payment Advance or any interest accrued thereon remains unpaid on January 01, 2016, the entire remaining Pre-Payment Advance shall become immediately due and owing to Empire and shall be immediately paid by Companies.


 


(c)           EMPIRE may in its sole and absolute discretion terminate its obligations hereunder at any time prior to June 30, 2011 by providing written notice thereof to any Company.  Upon such termination, the EMPIRE shall have no further obligations hereunder and Companies shall not be obligated to repay the first Installment of the Pre-Payment Advance.


 


8.           Taxes.  The obligations owed to EMPIRE under this Pre-Payment Advance Agreement shall be paid and otherwise satisfied without set-off or counterclaim, and with any and all gross-ups with respect to taxes, duties or other similar amounts required to cause the amounts received by EMPIRE to be equal to the outstanding Pre-Payment Advances made by EMPIRE.


 


9.           Information.  Each Company agrees to provide EMPIRE with information about the financial condition of such Company and each of the other Companies and SAIC’s progress in the Production Capacity Expansion, in each case at such times and with such detail as reasonably requested by EMPIRE.


 




  





15











  






 


10.           Governing Law; Dispute Resolution.  This Pre-Payment Advance Agreement shall be governed by the laws of the State of New York, United States, without regard to conflicts of laws principles.  All disputes arising out of, relating to, or in connection with this Pre-Payment Advance Agreement, including any question regarding its existence, validity, or termination, and any question as to whether a particular dispute is arbitrable hereunder, shall be referred to and finally resolved by binding arbitration administered by the International Chamber of Commerce and conducted pursuant to its Rules of Arbitration by three arbitrators appointed in accordance with said Rules, with the two co-arbitrators having 30 days from the appointment of the second arbitrator to nominate the chair.  The arbitration shall be conducted in the English language in Singapore, and shall be governed by and interpreted according to the laws of Singapore.  Judgment upon the award may be entered by any court having jurisdiction thereof.  The parties herein agree that the prevailing party of any arbitration proceeding will be entitled to an award of its attorney’s fees and costs.


 


11.           Entire Agreement; Modification.  This Pre-Payment Advance Agreement and the Supply Agreement constitute the only agreements between the parties relating to the subject matter hereof.  The parties hereto agree to amend, supplement, amend and restate or otherwise modify this Pre-Payment Advance Agreement and the Supply Agreement to the extent necessary to facilitate the actions described in Section 14; provided that, if any such amendment, supplement, amendment and restatement or other modification shall adversely affect the rights or obligations of any party hereto, such amendment, supplement, amendment and restatement or other modification shall be in form and substance reasonably satisfactory to such party.  All other amendments, supplements, amendment and restatements and other modifications must be in writing and mutually executed by the parties hereto.  The waiver of any term, breach, default, or right under this Pre-Payment Advance Agreement by any party shall not be deemed to be a waiver or release of such term, breach, default or right or any subsequent breach of the same or any other term contained herein.


 


12.           Notices.  All notices to each party to this Pre-Payment Advance Agreement shall be in writing and delivered via overnight carrier or by fax to the addresses and/or fax numbers set forth on Schedule I.  Notice shall be deemed received on the third (3rd) day from delivery by the noticing party to the overnight carrier and on the next day if notice is sent by fax.  The parties may change the address, fax number or person to whom notice must be made to the attention of by providing the other party written notice of any such change pursuant to this section.


 


13.           Cooperation.  Upon the request of EMPIRE and at the sole expense of the Companies, each Company shall take all necessary action (including, without limitation, obtaining all consents, approvals, licenses and authorizations of, and filings and registrations with, governmental authorities) to cause this Pre-Payment Advance Agreement, the Supply Agreement, the transactions contemplated hereby and thereby to be the legal, valid, binding and enforceable obligations and actions of the parties hereto under the applicable laws of the jurisdictions indicated by EMPIRE.


 


14.           Applicable Law.  When used in this Pre-Payment Advance Agreement and in the Supply Agreement the terms “applicable law”, “regulation”, “order” and “governmental authorities” shall include, without limitation, the laws, regulations, orders and governmental authorities applicable to the transactions contemplated by the Pre-Payment Advance Agreement and Supply Agreement, including, without limitation, those of each national and local jurisdiction where each party hereto is located and/or organized and/or conducts business related to such transactions.


 




  





16











  






 


15.           Counterparts.  This Pre-Payment Advance Agreement may be executed by the parties in counterparts, all of which, taken together, constitutes the original Pre-Payment Advance Agreement.  The parties further agree that the signatures hereto may be evidenced by facsimile telecopy, or by scanned copy delivered via e-mail transmission.


 


16.           Waiver.  Each Company waives (a) any defense arising by reason of any disability or other defense of any other Company, or the cessation from any cause whatsoever (including any act or omission of EMPIRE) of the liability of any other Company, (b) any defense based on any claim that any Company’s obligations exceed or are more burdensome than those of any other Company’s obligations; (c) the benefit of any statute of limitations affecting the Companies’ liability hereunder; (d) any right to require EMPIRE  to proceed against any Company or pursue any other remedy in EMPIRE’s power whatsoever; and (e) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties.  Each Company expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the obligations hereunder, and all notices of acceptance of this Pre-Payment Agreement or of the existence, creation or incurrence of new or additional obligations of the Companies hereunder or under the Supply Agreement.


 


17.           Invalidity.  Any provision of this Pre-Payment Advance Agreement which shall prove to be invalid, void or illegal shall in  no way affect, impair or invalidate any other provision hereof and such other provisions shall remain in full force and effect.


 


18.           Remedies.  No remedy or election hereunder shall be deemed exclusive but shall, whenever possible, be cumulative with all other remedies at law or equity.


 


19.           Assignment.  This Pre-Payment Advance Agreement is not assignable by either party without the prior written and executed mutual consent of both parties, which consent shall be at each party’s sole discretion.


 


20.           Joint and Several.  The obligations of the Companies hereunder shall be joint and several.  For the avoidance of doubt, if either Manufacturer is unable to perform any of its obligations to provide Product or any Company is unable to perform any other of its obligation hereunder for any reason whatsoever, including, without limitation, a force majeure event, each of the other Manufacturers or Companies, as the case may be, shall automatically be responsible for the performance of such obligation; provided, however, that upon the occurrence of a force majeure event, Empire shall have the right, in its sole discretion, to waive performance of any obligation hereunder by the party subject to such force majeure event.


 




  





17











  






 


21.           Language.  This Pre-Payment Advance Agreement shall initially be executed in English. To the extent requested by any governmental authority having jurisdiction over this Pre-Payment Advance Agreement, the parties hereto, the Pre-Payment Advance or the Collateral, the parties may arrange to translate this Prepayment Pre-Payment Advance Agreement into certain other language(s) or execute this Pre-Payment Advance Agreement in such other language(s) as requested by such governmental authority. In that case, to the extent permitted by the relevant governmental authority, the parties should procure that in case of any discrepancy between the English version and other language version of this Pre-Payment Advance Agreement, the English version shall prevail.


 




  





18











  






 




	 
Southern Aluminum Industry (China) Co., Ltd 

	 	 
Empire Resources, Inc.

	 
	 	 	 	 
	 	 	 	 
	
 
______________ 



	
 

	 
______________

	 
	 
Alim Satria 

	 	 
Nathan Kahn

	 
	 
President Director 

	 	 
President

	 






















 







 







 


PT. Alumindo Light Metal Industry, Tbk


 


.


 







 


______________


Alim Satria


Executive Managing Director


 







 


Fung Lam Trading Company Ltd.


 


.


 







 


______________


Alim Satria


Director


 




  





19











  






 


SCHEDULE I


 


Notice Information


 


If to Empire Resources, Inc.:



One Parker Plaza




Fort Lee, NJ 07024


United States of America


Attn: Mr. Nathan Kahn


President


+ 1 (201) 944-2226 fax


+ 1 (201) 944-2200 phone 












If to Southern Aluminium Industry (China) Co. Ltd:


Rong Qiao Economic and Technological Development Zone ,


Hong Lu Town, Fuqing,


Fujian 350301, The People’s of Republic of China


Attn:           Mr. Alim Satria


President Director


+86 (591) 8538 7530 fax


+86 (591) 8538 8010 phone












If to PT. Alumindo Aluminum Industry, [Tbk]:


38-40, Kembang Jepun


Surabaya 60162


Indonesia







Attn:           Mr. Alim Satria


Executive Managing Director


+ 62 (31) 353-3055 fax


+ 62 (31) 353-1445 phone







If to Fung Lam Trading Company Ltd.:


Rm 1501, Wing On House


71 Des Voeux Rd, Central


Hong Kong


Attn:           Mr. Alim Satria


Director


+852-2868 0204 fax


+852-2521 6551phone


 




  





20











  






 


EXHIBIT “A”







 


Fung Lam Trading Company Ltd. (“Fung Lam”) , herein acknowledge receipt of __________________, from Empire International, Inc, on this ___, day of _______, 2011, pursuant to the Pre-Payment Advance Agreement executed by and between Fung Lam, Southern Aluminum Industry (China) Co., Ltd., PT. Alumindo Light Metal Industry, Tbk, and Empire International, Inc., dated ______________________, 2011


 







 


Fung Lam Trading Company Ltd.


 


.


 







 


___________________________


Alim Satria


Director


 

















Acknowledged by:


Southern Aluminum Industry (China) Co., Ltd. (SAIC)



























___________________________


Alim Satria


President Director







PT. Alumindo Light Metal Industry Tbk



























Alim Satria


Executive Managing Director


 






  





21











  






 


EXHIBIT B


NEW EQUIPMENT


 



LIST OF EQUIPMENTS:








	
  

	
1.

	
2-Stand 4 Hi Tendem Mill  - 1 Set












Alloy 1xxx   3xxx   5xxx (5052)



	
  

	
Entry Thickness  max

	
:16 m/m








	
  

	
          Width max

	
:1500 m/m








	
  

	
           Weight max

	
: 8000 kg








	
  

	
Exit Thickness min

	
: 5.5 m/m








	
  

	
ID diameter

	
: 510








	
  

	
OD diameter

	
: 1500








	
  

	
Thickness tolerance

	
: ± 0.6%








	
  

	
Profile

	
: 0.3 – 0.8%








	
  

	
Main motor

	
: 2 x 1500 kw








	
  

	
Max speed

	
: 150 mpm













	
  

	
2.

	
CRANE 50Ton / 10Ton – 1 Unit













	
  

	
Lifting speed

	
: 0.66/2.5 m/min








	
  

	
Transfer Speed

	
: 5/20 m/min













	
  

	
3.

	
16 TON DOUBLE GERDER OVERHEAD CRANE – 4 Units













	
  

	
Lifting Speed

	
: 0.35/3.5 m/min








	
  

	
Transfer Speed

	
: 10/45m/min













	
  

	
4.

	
COMPRESSOR – 1 Unit












G 160-7.5



	
  

	
Power

	
:167kw








	
  

	
Capacity

	
: 30.4 m3/min








	
  

	
Bar Pressure

	
: 7.5













	
  

	
5.

	
Thickness Gauge – 3 Sets












Non Contact X-Ray Gauge



	
  

	
Thickness range

	
: 2-8mm








	
  

	
Accuracy

	
: ± 0.25%













	
  

	
6.

	
Transfer Car – 3 Units













	
  

	
7.

	
Forklift 10 Tons – 2 Units









 




  





22











  






 


SCHEDULE 7.2.2


 


PRESS RELEASE


 



Empire Resources, Inc. Announces Issuance of $12 Million of Convertible Debt and Completes Long-Term Supply and Finance Agreement with PT Alumindo Light Metal Industry Tbk


 


FT. LEE, NJ, June 6, 2011 -- Empire Resources (OTCQX:ERSO)


 


Empire Resources today announced the issuance of $12 million of 10% Convertible Senior Subordinated Notes due in 2016.  Each $1,000 note entitles the purchaser to receive 215.05 shares of common stock, subject to standard adjustments, at any time before June 1, 2016.


 


Leon Cooperman participated in the private placement as lead investor, along with several of Empire's board members. Mr. Cooperman commented, "I am pleased to partner with the management and directors of Empire and look forward to the Company's continued growth and prospects."


 


Empire Resources also announced the signing of agreements with Surabaya, Indonesia-based PT Alumindo Light Metal Industry Tbk, a leading producer of high quality semi finished aluminum products.  These agreements call for Empire to provide $10 million in financing to PT Alumindo to enable the expansion of capacity within that Company's production network.  The agreements also provide for a long term, multi-year substantial and preferential supply position for Empire from PT Alumindo's premier aluminum rolling mill located in Surabaya.  


 


Empire's CEO Nathan Kahn said, "We are pleased indeed to have been able to conclude these agreements with our long term partner PT Alumindo and its management team.  We have worked together with Alumindo for many years and we look forward to expanding this business partnership.  These agreements guarantee us a long term supply of high quality material, which will enable us to better serve our customers and marks a further milestone in the growth and strengthening of our relationship with Alumindo."


 


The notes have not been and will not be registered under the Securities Act of 1933, as amended, or applicable state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. Empire Resources intends to register the common stock issuable upon conversion of the notes under the Securities Act or applicable state securities laws.


 


Empire Resources, Inc., is a distributor of a wide range of semi-finished metal products to customers in the distribution, transportation, automotive, housing, appliance and packaging industries in the United States, Canada, Australia, New Zealand, Europe and Brazil.  It maintains supply contracts with mills around the world.


 


This press release contains forward-looking statements.  Such statements involve various risks that may cause actual results to differ materially.  These risks include, but are not limited to, the ability of the company to grow internally or by acquisition and to integrate acquired businesses, not being able to improve operating margins and efficiencies, changing industry and competitive conditions, and other risks referred to in the Company's publicly available statements and periodic reports.


 







 


CONTACT: David Kronfeld, +1-917-408-1940, dkronfeld@empireresources.com