Document:

bmomaterionmetalsconsign

                                                                    Exhibit 10.1                                                                  Execution Version                            METALS CONSIGNMENT AGREEMENT                                                                       Dated as of August 27, 2019                                    by and among                                BANK OF MONTREAL                                 as the Metal Lender                                                                                 and                              MATERION CORPORATION;         MATERION ADVANCED MATERIALS TECHNOLOGIES AND SERVICES INC.;                       MATERION TECHNICAL MATERIALS INC.;                               MATERION BRUSH INC.;                      MATERION LARGE AREA COATINGS LLC; and        MATERION ADVANCED MATERIALS TECHNOLOGIES AND SERVICES CORP.;                                                                           as the Customers                                               NAI-1507494005v7   

 

                                TABLE OF CONTENTS                                                                             Page   ARTICLE 1.   DEFINITIONS. ............................................................................................................ 1  ARTICLE 2.   CONSIGNMENT FACILITY. ................................................................................ 13        Section 2.1. Consigned Metal; Title. .......................................................................... 13        Section 2.2. Valuation. ............................................................................................... 14        Section 2.3. Consignment Fees; Payments by the Customers. ................................... 15        Section 2.4. Requests for Consignments under the Consignment Facility. ................ 17        Section 2.5. Conversion Options. ............................................................................... 17        Section 2.6. Inability to Determine Fixed Consignment Fee. .................................... 18        Section 2.7. Illegality. ................................................................................................. 18        Section 2.8. Indemnity. ............................................................................................... 18        Section 2.9. Maintenance of Consignment Limits. .................................................... 19        Section 2.10. Upfront Fee. ............................................................................................ 20        Section 2.11. Late Fee. ................................................................................................. 20        Section 2.12. Default Rate. ........................................................................................... 20        Section 2.13. Termination; Return of Consigned Metal. .............................................. 20        Section 2.14. Facility Fee. ............................................................................................ 21        Section 2.15. [Intentionally Omitted]. .......................................................................... 21        Section 2.16. Commingling. ......................................................................................... 21        Section 2.17. Customer Agent. ..................................................................................... 21  ARTICLE 3.   [RESERVED]. ............................................................................................................ 21  ARTICLE 4.   SEGREGATED STORAGE FACILITY. .............................................................. 21        Section 4.1. Segregated Storage Facility. ................................................................... 21        Section 4.2. Periodic Removal of Stored Precious Metal. ......................................... 22        Section 4.3. Removal of Stored Precious Metal at Request of the Metal                    Lender. .................................................................................................... 22        Section 4.4. Stored Precious Metal Not Subject to Fees. ........................................... 22        Section 4.5. Access to Segregated Storage Facility. .................................................. 23        Section 4.6. Security Interest. ..................................................................................... 23        Section 4.7. Risk of Loss. ........................................................................................... 23        Section 4.8. Waiver of Setoff. .................................................................................... 23                                        -i-   NAI-1507494005v7   

 

         Section 4.9. Termination of Segregated Storage Facility. .......................................... 23  ARTICLE 5.   [RESERVED.] ............................................................................................................ 24  ARTICLE 6.   CONDITIONS. .......................................................................................................... 24        Section 6.1. Conditions to the Metal Lender’s Obligations Hereunder. .................... 24        Section 6.2. Conditions to Subsequent Transactions.................................................. 25        Section 6.3. Customers’ Confirmation. ...................................................................... 25        Section 6.4. Authorized Representatives. ................................................................... 26  ARTICLE 7.   SECURITY; SUBORDINATION. .......................................................................... 26        Section 7.1. Collateral. ............................................................................................... 26        Section 7.2. Identification of Collateral. .................................................................... 26        Section 7.3. Supporting Letters of Credit. .................................................................. 27        Section 7.4. Intercreditor Agreements. ....................................................................... 27        Section 7.5. Security Documents................................................................................ 27  ARTICLE 8.   REPRESENTATIONS AND WARRANTIES. ..................................................... 27        Section 8.1. Existence and Standing........................................................................... 27        Section 8.2. Authorization and Validity. .................................................................... 27        Section 8.3. No Conflict; Government Consent. ........................................................ 28        Section 8.4. Security Interest in Collateral. ................................................................ 28        Section 8.5. Financial Statements. .............................................................................. 28        Section 8.6. Material Adverse Change. ...................................................................... 28        Section 8.7. Taxes....................................................................................................... 28        Section 8.8. Litigation and Environmental Matters.................................................... 29        Section 8.9. Compliance With Laws. ......................................................................... 29        Section 8.10. Investment Company Act. ...................................................................... 29        Section 8.11. Solvency. ................................................................................................ 29        Section 8.12. Shared Benefits of Agreement................................................................ 30        Section 8.13. Specifically Designated National and Blocked Persons. ........................ 30        Section 8.14. Anti-Money Laundering. ........................................................................ 30  ARTICLE 9.   AFFIRMATIVE AND NEGATIVE COVENANTS. ........................................... 31        Section 9.1. Financial and Collateral Reporting. ........................................................ 31        Section 9.2. Use of Consignments. ............................................................................. 32        Section 9.3. Notices. ................................................................................................... 32                                        -ii-   NAI-1507494005v7   

 

         Section 9.4. Conduct of Business. .............................................................................. 32        Section 9.5. Payment of Obligations. ......................................................................... 33        Section 9.6. Compliance with Laws and Material Contractual Obligations. ............. 33        Section 9.7. Inspections; Field Exams. ....................................................................... 33        Section 9.8. Communications with Accountants. ....................................................... 33        Section 9.9. [Reserved]............................................................................................... 33        Section 9.10. Additional Collateral; Further Assurances. ............................................ 34        Section 9.11. Restricted Payments. .............................................................................. 34        Section 9.12. Indebtedness. .......................................................................................... 34        Section 9.13. Fundamental Changes and Asset Sales. ................................................. 35        Section 9.14. Liens. ...................................................................................................... 36        Section 9.15. Change of Name or Location. ................................................................ 37        Section 9.16. Amendments to Agreements. ................................................................. 38        Section 9.17. Financial Covenants. .............................................................................. 38        Section 9.18. Subordination of Intercompany Notes.................................................... 38        Section 9.19. Accounting Methods. ............................................................................. 39        Section 9.20. Consigned Metal. .................................................................................... 39        Section 9.21. Metal Intercreditor Agreement. .............................................................. 39        Section 9.22. [Reserved]............................................................................................... 40        Section 9.23. Location of Metal. .................................................................................. 40        Section 9.24. Permitted Metals Agreements. ............................................................... 40        Section 9.25. Insurance and Safekeeping. .................................................................... 41  ARTICLE 10.  EVENTS OF DEFAULT AND ACCELERATION. ............................................ 42        Section 10.1. Events of Default. ................................................................................... 42        Section 10.2. Waiver. ................................................................................................... 44  ARTICLE 11.  AMENDMENTS/WAIVERS. ................................................................................. 45  ARTICLE 12.  INDEMNIFICATION. .............................................................................................. 45  ARTICLE 13.  SETOFF. ..................................................................................................................... 45  ARTICLE 14.  ASSIGNMENTS. ....................................................................................................... 46        Section 14.1. Assignment by Customers. ..................................................................... 46        Section 14.2. Participations. ......................................................................................... 46        Section 14.3. Pledges. ................................................................................................... 47                                        -iii-   NAI-1507494005v7   

 

   ARTICLE 15.  EXPENSES. ............................................................................................................... 47  ARTICLE 16.  GOVERNING LAW; JURY TRIAL WAIVER; CONSENT TO               JURISDICTION; MISCELLANEOUS. ....................................................................... 47        Section 16.1. Governing Law. ...................................................................................... 47        Section 16.2. Forum; Waiver of Jury Trial. .................................................................. 47        Section 16.3. Usury. ..................................................................................................... 48        Section 16.4. Additional Costs. .................................................................................... 48        Section 16.5. Capital Adequacy. .................................................................................. 49        Section 16.6. Certificate. .............................................................................................. 49        Section 16.7. Survival of Representations and Covenants. .......................................... 50        Section 16.8. Notices. ................................................................................................... 50        Section 16.9. Lost Documents. ..................................................................................... 51        Section 16.10. Waiver. ................................................................................................... 51        Section 16.11. Severability. ............................................................................................ 51        Section 16.12. Section Headings, Etc. ............................................................................ 51        Section 16.13. Counterparts. .......................................................................................... 52        Section 16.14. Disclaimer of Reliance. .......................................................................... 52        Section 16.15. Environmental Indemnification. ............................................................. 52        Section 16.16. Joint and Several Obligations; Suretyship Waivers and Consents. ........ 52                                           -iv-   NAI-1507494005v7   

 

                        METALS CONSIGNMENT AGREEMENT         THIS  METALS  CONSIGNMENT  AGREEMENT      (as  may  be  amended,  supplemented,  extended, restated or otherwise modified from time to time, this “Agreement”), dated as of August 27,  2019 (the “Effective Date”), is by and among: BANK OF MONTREAL (“BMO”), a Canadian chartered  bank (the “Metal Lender”); MATERION CORPORATION (f/k/a Brush Engineered Materials Inc.), an  Ohio  corporation  (“BEM”);  MATERION  ADVANCED  MATERIALS  TECHNOLOGIES  AND  SERVICES  INC.  (f/k/a  Williams  Advanced  Materials  Inc.),  a  New  York  corporation  (“WAM”);  MATERION  TECHNICAL  MATERIALS  INC.  (f/k/a  Technical  Materials,  Inc.),  an  Ohio  corporation  (“TMI”);  MATERION  BRUSH  INC.  (f/k/a  Brush  Wellman  Inc.),  an  Ohio  corporation  (“BWI”);  MATERION  LARGE  AREA  COATINGS  LLC  (f/k/a  Techni-Met,  LLC),  a  Delaware  limited  liability  company  (“TML”);  MATERION  ADVANCED  MATERIALS  TECHNOLOGIES  AND  SERVICES  CORP. (f/k/a Academy Corporation), a New Mexico corporation (“AC”); and such other Subsidiaries of  BEM who may from time to time become parties by means of their execution and delivery with the Metal  Lender  of  a  Joinder  Agreement  under  the  Metals  Consignment  Agreement  (as  defined  below).   BEM,  WAM, TMI, BWI, TML, AC, and such Subsidiaries are herein sometimes referred to collectively as the  “Customers” and each individually as a “Customer”.                                   BACKGROUND         Pursuant  to  this  Agreement,  the  Metal  Lender  will  extend  to  the  Customers  (i) a  metals  consignment facility, and  (ii) a metals storage facility, all on the terms and conditions, and in reliance upon  the covenants, representations and warranties of the Customers hereinafter set forth.                                   AGREEMENT         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:                                    ARTICLE 1.                                  DEFINITIONS.         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 aggregate value (as determined in  accordance with Section 2.2 hereof) of all Precious Metal and Copper outstanding on consignment, loan,  conditional sale or lease from the Metal Lender under this Agreement and from all Approved Consignors  under Permitted Metal Agreements plus any unpaid purchase price for such Precious Metal or Copper that  has been withdrawn and is required to be purchased and paid for in full under this Agreement or such  Permitted Metal Agreements.         “Aggregate Secured Metal Limit” means the maximum aggregate value of all Consigned 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 Preamble.                                        -1-  

 

         “AML Laws” has the meaning set forth in Section 8.14 hereof.         “Anti-Terrorism Laws” shall mean any applicable laws relating primarily to terrorism or money  laundering,  including  Executive  Order  No.  13224  (effective  September  24,  2001),  the  Uniting  and  Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act  of 2001, The Currency and Foreign Transactions Reporting Act, and the Trading with the Enemy Act (as  any of the foregoing applicable laws may from time to time be amended, renewed, extended, or replaced).         “Applicable Margin” has the meaning set forth in the Letter Agreement.         “Approved  Consignor”  means  a  Person  who supplies  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 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  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 Metal Lender (or the Collateral Agent) in writing  from time to time.         “Approved Storage Facility 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 Metal Lender in writing from time to time.           “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 Metal Lender (or the Collateral Agent) 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.         “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 Metal Lender (or the Collateral Agent) in writing from time to time.                                         -2-  

 

         “Authorized Representatives” means all person(s) who are authorized by and on behalf of the  Customer  Agent  or  the  Customers  under  this  Agreement,  including,  without  limitation,  to  transact  Consignment and purchase and sale transactions with the Metal Lender under the Consignment Facility.         “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.         “BASF Lease” has the meaning set forth in Section 9.21(c) hereof.          “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  Copper,  Gold,  Silver,  Platinum,  Palladium or Rhodium.         “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.         “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.                                         -3-  

 

         “Collateral” means all of the Customers’ respective right, title and interest (if any) in the following  property and assets, whether now owned or existing or hereafter acquired or arising, regardless of where  located:               (a)   all Metal of such Customer (whether such Metal is now or hereafter owned by, or  consigned or loaned to such Customer) or in which such Customer now or hereafter holds or acquires an  interest, in each case, whether located at the premises of a Customer, or in the possession of fabricators,  refiners or third parties;               (b)   all Inventory of such Customer, whether now existing or hereafter arising, which  contains or consists of Metal; and               (c)   all products and proceeds of any and all of the foregoing of any kind or nature,  including, but not limited to, (i)  the liquidation of Collateral described in clauses (a) and (b) above, (ii) any  other sale or disposition of the Collateral, to the extent such proceeds and products are attributable to the  Collateral described in clauses (a) and (b) above, and (iii) proceeds of any insurance policies and claims  against third parties.         “Collateral Agent” means Bank of Montreal, in its capacity as Collateral Agent for itself and for  the Approved Consignors pursuant to the Metal Intercreditor Agreement, or any successor Collateral Agent  thereto.         “Collateral Compliance Certificate” shall have the meaning set forth in Section 9.1(e).         “Consigned Copper” means  Copper which has been consigned to a  Customer pursuant to the  Consignment Facility.         “Consigned  Metal”  means  Metal  which  has  been  consigned  to  a  Customer  pursuant  to  the  Consignment Facility.         “Consignment” means a consignment or lease of Metal by the Metal Lender to a Customer under  the Consignment Facility.         “Consignment Facility” means the facility established pursuant to Article 2 hereof, whereby a  Customer may request Consignments of Metal from the Metal Lender.         “Consignment  Facility  Indebtedness”  means  the  value  (as  determined  in  accordance  with  Section 2.2 hereof) of all Consigned Metal plus any unpaid purchase price for Consigned Metal that has  been withdrawn from Consignment and is required to be purchased under the Consignment Facility.         “Consignment Limit” means, with respect to all  Metal, the lesser of: (i) $150,000,000 minus the  then  current  Copper  Consignment  Facility  Indebtedness  (if  any);  and  (ii)  the  value  (as  determined  in  accordance with Section 2.2 hereof) of the Customers’ Inventory of Metal (including any Metal 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  (A)  not  outstanding  on  consignment,  loan  or  lease  to the  Customers  from  Approved  Consignors  under  Permitted  Metals  Agreements, and (B) is free and clear of all Liens other than Permitted Metal Liens.          “Consolidated”  or  “consolidated”  means,  wherever  used  in  conjunction  with  a  financial  statement, covenant or definition, such financial statement, covenant or definition shall (unless otherwise                                         -4-  

 

   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 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 Second 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.         “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, and (c) Indebtedness under any sale and leaseback transaction.         “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. “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  Lender  (which  shall  not  be  unreasonably  withheld  or  delayed),  becomes  a  party  hereto  by  executing  and  delivering  a  Joinder  Agreement.         “Copper” means copper meeting the London Market Exchange Grade A Specifications, unless  otherwise agreed in writing between the Metal Lender and the Customer Agent.                                         -5-  

 

         “Copper Consignment Facility Indebtedness”  means  the  value  (as determined in accordance  with Section 2.2 hereof) of all Consigned Copper plus any unpaid purchase price for Consigned Copper  that has been withdrawn from Consignment and is required to be purchased under the Consignment Facility.         “Copper  Consignment  Limit”  means  the  lesser  of:  (i)  $50,000,000;   and  (ii)  the  value  (as  determined in accordance with Section 2.2 hereof) of the Customers’ Inventory of Copper (including any  Copper obtained or, at the time of determination, proposed to be obtained, by a Customer pursuant to this  Agreement)  at  Approved  Locations  or  in  transit  between  any  Approved  Locations  which  is  (A)  not  outstanding on consignment, loan or lease to the Customers from Approved Consignors under Permitted  Metals Agreements, and (B) is free and clear of all Liens other than Permitted Metal Liens.         “Customer” has the meaning set forth in the Preamble.         “Customer Agent” means BEM, in its capacity as agent of the Customers, or any other Customer  appointed by the Metal Lender in its sole discretion and approved in writing by BEM.         “Default” means (a) an Event of Default or (b) an event or condition that, but for the requirement  that time elapse or notice be given or both, would constitute an Event of Default.         “Dollars”, “U.S. Dollars” and “$” 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.         “Effective Date” has the meaning set forth in the Preamble.         “Environmental Laws” means all federal, state, provincial, foreign or local statutes, 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 protection of public  health as it relates to exposure to Hazardous Materials or the protection of the environment, preservation or  reclamation of natural resources or the management, or release or threatened release of any Hazardous  Material.         “Environmental Liability” means any liability, contingent or otherwise (including any liability  for damages, costs of investigation and environmental remediation, governmental response costs, natural  resource damages, fines, penalties or indemnities), of the Customers directly or indirectly resulting from,  based  upon  or  relating  to  (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 presence, 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 Metal” means Metal owned by the Customers (excluding therefrom, however, (i)  the  aggregate  amount  of  all  Metal  which  is  on  consignment,  loan  or  conditional  sale  from  an  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.         “Event of Default” means each and every event specified in Section 10.1 of this Agreement.                                         -6-  

 

         “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 Rate Consignment” means a Consignment bearing a Fixed Consignment Fee.         “Fixed  Rate  Period”  means,  with  respect  to  the  Consignment  of  Metal  based  upon  a  Fixed  Consignment Fee, 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, twenty-four (24) months, or thirty- six (36) months after such Drawdown Date, as the Customer may select in its relevant notice pursuant to  Section 2.4 or 2.5 (or such other period as the Metal Lender and the Customer shall agree upon from time  to time thereafter); 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  or as otherwise mutually agreed.         “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.         “GAAP” means generally accepted accounting principles in the United States of America.         “German Guarantee” has the meaning set forth in Section 10.1(k) hereof.         “German Precious Metals Agreement” means that certain Precious Metals Agreement, dated of  even date herewith, by and between the Metal Lender and Materion Advanced Materials Germany GmbH  (“MAMG”), as amended, supplemented or modified from time to time.         “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 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 Metal  Lender, or in such other degree of fineness or form as the parties may agree upon from time to time.         “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 or materials containing same, radon gas, infectious  or medical wastes, harmful biological agents, and all other substances or wastes of any nature regulated  pursuant to or that could give rise to liability under any Environmental Law.                                         -7-  

 

         “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 Marked-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 Party” shall have the meaning set forth in Article 12 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.         “ISDA Agreement” means any ISDA Master Agreement at any time in existence between one or  more Customers and the Metal Lender, together with the Schedule related thereto, and any Confirmation  thereunder, as amended, restated, supplemented or otherwise modified from time to time.         “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 Amended and Restated Intercreditor Agreement,  dated as of December 28, 2007, by and between the The Bank of Nova Scotia (as the predecessor-in-interest  to the “Metals Agent” thereunder, on behalf of itself and the Approved Consignors) and the Senior Credit  Agent (on behalf of the Lenders  under the  Senior Credit Agreement), as  may  be  amended, restated or  supplemented from time to time, including as amended as of the date hereof to substitute the Metal Lender  as the “Metal Agent” thereunder.         “Letter Agreement” means that certain Margin and Upfront Fee Letter Agreement by and among  Metal Lender, the Customers and MAMG dated of even date herewith, as may be amended or otherwise  modified from time to time.         “Letter of Credit” means an irrevocable stand-by letter of credit in favor of the Metal Lender (or  the Collateral Agent), on behalf of the Metal Lender, reasonably acceptable to the Metal Lender in form  and substance, issued and delivered to the Metal Lender by JPMorgan Chase Bank, N.A. or any other  domestic bank reasonably acceptable to the Metal Lender (or the Collateral Agent).         “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.                                        -8-  

 

         “LIBO Termination Date” has the  meaning set forth in Section 2.3(e) hereof.         “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.         “MAMG” has the meaning set forth in the definition of “German Precious Metals Agreement”.          “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 the Customers, taken as a whole, to perform their material obligations under this Agreement, or (c) a  material portion of the Collateral subject to this Agreement or the Metal Lender’s rights with respect to  such Collateral.         “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 $20,000,000 (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 August 27, 2022.  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 each of Copper, Gold, Silver, Platinum, Palladium and Rhodium.          “Metal  Documents”  means  this  Agreement,  the  Security  Documents,  the  Metal  Hedging  Transactions,  each  ISDA  Agreement  (if  any)  and  all  agreements,  instruments  and  documents  relating  thereto which have been executed or delivered by or on behalf of a Customer.         “Metal  Hedging  Transaction”  means  any  transaction  (including  any  agreement with  respect  thereto)  now existing  or  hereafter entered  into by  a  Customer  and  the  Metal  Lender  which  is  a  swap,  forward, option, cap, floor, collar, cross-currency transaction or other similar transaction (including any  option with respect to any of these transactions) or any combination thereof, whether linked to one or more  Consignments,  interest  rates,  price  indices  or  other  financial  measures,  which  is  designed  to  hedge  or  mitigate risks to which a Customer has exposure with respect to Metal.         “Metal Intercreditor Agreement” means the Amended and Restated Intercreditor and Collateral  Agency  Agreement,  dated as  of  December  28,  2017,  by  and  among  The  Bank  of  Nova  Scotia  (as the  predecessor-in-interest  to  the  Collateral  Agent  thereunder)  and  the  Approved  Consignors,  as  may  be  amended,  restated  or  supplemented  from  time  to  time,  including  as  amended  as  of  the  date  hereof  to  substitute the Metal Lender as the Collateral Agent thereunder.         “Metal Lender” has the meaning set forth in the Preamble.                                        -9-  

 

         “Metal Lender’s Address” means 3 Times Square, 27th Floor, New York, NY 10036, Attn: Bimal  Das, MD & Global Head, Metals Sales and Structuring, or such other person or address as the Metal Lender  shall designate from time to time in accordance with the provisions hereof.         “Metals Rate” means, with respect to any Fixed Rate Period, 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: (a) in the case of Gold, 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; (b) in the case of Silver, the  arithmetic mean rate for such Fixed Rate Period as shown on the Reuters Silver Forward page as at 10:00  a.m. London, England time two (2) Business Days prior to the first day of such Fixed Rate Period; (c) in  the  case  of  Platinum  or  Palladium,  as  applicable,  the  forward  rate  for  such  Platinum  or  Palladium,  as  applicable, for such Fixed Rate Period as quoted by the Metal Lender from time to time; and (d) in the case  of Copper or Rhodium, such rate as the Metal Lender shall specify for Rhodium from time to time.         “Net Marked-to-Market Exposure” means, as of any date of determination, the excess (if any)  of all unrealized losses over all unrealized profits of the Customers arising from Swap Agreements and  Metal Hedging Transactions.  As used in this definition, “unrealized losses” means the fair market value of  the costs to a Customer of replacing such Swap Agreement or Metal Hedging Transaction as of the date of  determination (assuming the Swap Agreement or Metal Hedging Transaction were to be terminated as of  that date), and “unrealized profits” means the fair market value of the gain to such Customer of replacing  such Swap Agreement or Metal Hedging Transaction as of the date of determination (assuming such Swap  Agreement or Metal Hedging Transaction were to be terminated as of that date) and, with respect to Metal  Hedging Transactions, as reasonably determined and communicated by the Metal Lender to the Customer  Agent  and,  to  the  extent  applicable  to  the  particular  Metal  Hedging  Transaction,  using  the  value  of  underlying Metal calculated in accordance with Section 2.2 hereof.         “Obligations” means any and all Indebtedness, obligations and liabilities of the Customers to the  Metal Lender 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 and obligations  of the Customer under the Consignment Facility, the Segregated Storage Facility and the Metal Hedging  Transactions, and all interest, taxes, fees, charges, expenses and attorneys’ fees chargeable to the Customers  hereunder or thereunder.         “OFAC” has the meaning set forth in Section 8.14 hereof.         “Palladium”  means,  except  as  provided  in,  and  for  the  purposes  of Section 2.1(b) hereof,  palladium having a minimum degree of fineness of ninety-nine and 95/100 percent (99.95%), in sponge,  plate or ingots, in form available to the Metal Lender, or in such other degree of fineness or form as the  parties may agree upon from time to time.         “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 copper, gold, silver, platinum, palladium, rhodium and  other  precious  or  base  metal  consignment,  loan,  conditional  sale  or  lease  agreements  or  arrangements  entered into from time to time by BEM or any of its Subsidiaries, to the extent permitted by Sections 9.21                                        -10-  

 

   and Section 9.12(h) hereof.  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(b) hereof.         “Platinum” means, except as provided in, and for the purposes of Section 2.1(b) hereof, platinum  having a minimum degree of fineness of ninety-nine and 95/100 percent (99.95%), in sponge or plate, in  form available to the Metal Lender, or in such other degree of fineness or form as the parties may agree  upon from time to time.         “Pledge and Security Agreement” means that certain Amended and Restated Pledge and Security  Agreement, dated as of June 20, 2013, among BEM, the Grantors as defined therein and the Senior Credit  Agent, as may be amended, restated or supplemented, or otherwise replaced from time to time.         “Precious Metal” means each of Gold, Silver, Platinum, Palladium and Rhodium.         “Premises”  means  any  real  estate  owned,  used  or  leased  by  a  Customer  or  an  Affiliate  of  a  Customer.         “Prime Rate” means the variable per annum rate of interest so designated from time to time by the  Metal Lender as its U.S. Dollar “base rate” for U.S. Dollar commercial loans made by the Metal Lender in  the United States.  The Prime Rate is a reference rate and does not necessarily represent the lowest or best  rate being charged to any customer.  Changes in the rate of interest resulting from changes in the Prime  Rate shall take place immediately without notice or demand of any kind.         “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.         “Rhodium”  means  rhodium  having  a  minimum  degree  of  fineness  of ninety-nine  and  90/100  percent (99.90%) in form available to the Metal Lender, or in such other degree of fineness or form as the  parties may agree upon from time to time.         “Sanctioned Country” means, at any time, any country or territory which is the subject or target  of any Sanctions broadly restricting or prohibiting dealings with such country, territory or government.         “Sanctioned Person” means, at any time: (i) any Person listed in any list of Specially Designated  Nationals  or  equivalent maintained  by  the  United  States  government  (including  by  OFAC,  the  U.S.  Department of State or the U.S. Department of Commerce), the Canadian government, the United Nations  Security Council or the European Union or any of its member states’ governments; (ii) any Person who to  any Customer’s actual knowledge is controlled by any Person described in clause (i) hereof; or (iii) any  Person who is 50% or more directly owned by one or more than one person described in clauses (i) and (ii)  hereof.         “Sanctions”  means  economic  or  financial  sanctions  or  trade  embargoes  enacted,  imposed,  administered or enforced from time to time via executive order, rule, regulation or other law relating to                                        -11-  

 

   anti-bribery, anti-corruption, terrorism or money laundering by (i) the U.S. government, including those  administered  by  OFAC,  the  U.S.  Department  of  State  or  the  U.S.  Department  of  Commerce,  (ii)  the  Canadian government; (iii) the United Nations Security Council; or (iv) the European Union or any of its  member states’ governments.         “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 Lender.         “Segregated  Storage  Facility”  means  a  safekeeping  vault  at  an  Approved  Storage  Facility  Location in which one or more Customers will hold Stored Precious Metal which shall be clearly marked  as belonging to the Metal Lender and shall be segregated from all other material and metal.          “Senior Credit Agent” means JPMorgan Chase, N.A., as administrative agent.         “Senior Credit Agreement” means that certain Second Amended and Restated Credit Agreement,  dated  as  of  June  20,  2013,  among  BEM,  Materion  Advanced  Materials  Technologies  and  Services  Netherlands B.V., the other foreign Subsidiary borrowers party thereto from time to time, certain lenders  party thereto from time to time, and the Senior Credit Agent, as may be amended, restated or supplemented,  or refinanced or otherwise replaced from time to time.         “Silver” means, except as provided in, and for the purposes, of Section 2.1(b) hereof, silver having  a minimum degree of fineness of ninety-nine and 90/100 percent (99.90%), in bars of approximately one  thousand (1,000) troy ounces each, in form available to the Metal Lender, or in such other degree of fineness  or form as the parties may agree upon from time to time.         “Stored Precious Metal” shall have the meaning set forth in Section 4.1 hereof.         “Stored Precious  Metal  Limit”  means  the  lesser  of  (a)  $125,000,000,  and  (b)  the  amount  of  insurance coverage obtained and in effect from time to time with respect to Stored Precious Metal pursuant  to Section 4.7 hereof.         “Subordinated  Indebtedness”  means  Indebtedness  of  the  Customer  which  is  subordinated  in  writing to all Obligations of the Customer to the Metal Lender on terms satisfactory to the Metal Lender.         “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                                        -12-  

 

   any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices,  equity prices or other financial measures.         “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 ARTICLE 1, unless the context otherwise requires, accounting  and financial terms used in this Agreement shall have the meanings attributed to them by GAAP (provided  that, if the Customer Agent notifies the Metal Lender that the Customer Agent requests an amendment to  any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in  the application thereof on the operation of such provision (or if the Metal Lender notifies the Customer  Agent that it requests an amendment to any provision hereof for such purpose), regardless of whether any  such notice is given before or after such change in GAAP or in the application thereof, then such provision  shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall  have  become  effective  until  such  notice  shall  have  been  withdrawn  or  such  provision  amended  in  accordance herewith), 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.                                    ARTICLE 2.                             CONSIGNMENT FACILITY.         Section 2.1. Consigned Metal; Title.               (a)   Subject to the terms and conditions herein set forth and provided that no Default  has  occurred  and  is  then  continuing,  the  Metal  Lender  hereby  agrees  that  it  will consign  Metal  to the  Customers from time to time in such amounts as are requested by 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  Consignment  Facility  Indebtedness  would  exceed  the  Consignment  Limit  and,  solely  with  respect  to  Copper, no Consignment of Copper shall be made if, after giving effect thereto, the Copper Consignment  Facility Indebtedness would exceed the Copper Consignment Limit.               (b)   The commodities to be consigned to the Customers by the Metal Lender under the  Consignment Facility will consist of Metal as defined herein; provided, however, that notwithstanding  anything in this Agreement to the contrary, unless the parties otherwise agree, and subject to Section 2.1(h)  below, the fineness of Metal consisting of gold and rhodium provided by the Metal Lender shall be ninety- nine and 90/100 percent (99.90%); the fineness of Metal consisting of platinum and palladium shall be  ninety-nine and 95/100 percent (99.95%); the fineness of Metal consisting of silver shall be ninety-nine and  90/100 percent (99.90%); and Metal consisting of copper shall satisfy the definition of “Copper.”  EXCEPT  FOR THE FINENESS OF THE CONSIGNED METAL AND THE QUANTITY THEREOF WITH  RESPECT   TO   EACH    CONSIGNMENT,     THE   METAL     LENDER    MAKES    NO  REPRESENTATION  OR  WARRANTY  OF  ANY  KIND,  EXPRESS  OR  IMPLIED,  WITH  RESPECT TO THE METAL CONSIGNED OR TO BE CONSIGNED OR SOLD HEREUNDER,  WHETHER AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY  OTHER  MATTER,  AND  THE  METAL  LENDER  HEREBY  DISCLAIMS  ALL  SUCH  WARRANTIES.               (c)   Metal shall be consigned to the Customers by the Metal Lender in amounts as  requested by 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                                        -13-  

 

   time shall the Consignment Facility Indebtedness exceed the Consignment Limit, and at no time shall the  Copper Consignment Facility Indebtedness exceed the Copper Consignment Limit.               (d)   All  deliveries  of  Metal  requested  by  the  Customer  Agent  on  behalf  of  the  Customers shall be made at the Customers’ expense and risk by a recognized reputable carrier of the Metal  Lender’s reasonable selection or, at the request of the Customer Agent on behalf of the Customers, by the  Metal Lender crediting the account of a Customer with a third party designated by the parties for such  purpose.  Following the delivery of Consigned Metal to a Customer in accordance with Customer Agent’s  instructions, the Customers shall insure the Consigned Metal, including all Consigned Metal which is in  transit between Approved Locations, until such time as the Consigned Metal being returned to the Metal  Lender has been received by the Metal Lender, or purchased by a Customer.               (e)   Title to Consigned Metal shall remain in the 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 the Metal Lender to file financing statements against  such Customer with respect to the Consigned Metal, and each Customer agrees, upon request of the 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 taxes imposed or measured by the income of the Metal Lender and franchise  taxes imposed on the Metal Lender).               (h)   The Metal Lender shall not be liable for any delay in delivery or for any inability  to deliver Metal hereunder directly or indirectly resulting from or relating to any unavailability or scarcity  of Metals, foreign or domestic embargoes, seizure, acts of God, insurrections, strikes, war, terrorism, 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, or events or contingencies beyond the reasonable control of the Metal Lender.         Section 2.2. Valuation.         For the purpose of this Agreement:  (a) the value of Copper on a particular valuation date shall be  the official price for a cash buyer of Copper on such valuation date as customarily set by the London Metal  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; (b) the value of Gold on a particular valuation date shall  be  the  gold  price  PM  on such  valuation  date  as  published  by  the London  Bullion  Market  Association  (“LBMA”), or if no such price is available for such date, then the gold price PM on the next previous day  for which such price was available; (c) the value of Silver on a particular valuation date shall be the silver  price on such valuation date published by the LBMA, or if no such price is available for such date, then the  silver price on the next previous day for which such price was available; (d) the value of Platinum on a                                        -14-  

 

   particular date shall be the LBMA platinum price PM on such valuation date, or if no such price is available  for  such  date,  then  the  LBMA  platinum  price  PM  on  the  next  previous  day  for  which  such  price  was  available; (e) the value of Palladium on a particular valuation date shall be the LBMA palladium price PM  on such valuation date, or if no such price is available for such date, then the LBMA palladium price PM  on the next previous day for which such price was available; and (f) the value of Rhodium shall be the fair  market value of such Rhodium as reasonably determined by the Metal Lender from time to time.  In the  event that the London Metal Exchange or the LBMA shall discontinue or alter in any material respect its  usual practice of quoting a price for Copper, Gold, Silver, Platinum or Palladium, as applicable, on any day  for which such a price is necessary for the purposes of this Agreement, the 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  Metal  Exchange or the LBMA, as applicable, shall resume its usual practices of quoting such prices.         Section 2.3. Consignment Fees; Payments by the Customers.               (a)   During such time as Metal is consigned to any Customer hereunder and until the  same is withdrawn from consignment and returned to the Metal Lender or paid for in full by the Customer  as hereinafter provided, the Customers will pay to the 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 (5th) 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 (5th) 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 Article 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 Metal Lender and specified by the  Metal Lender from time to time by written notice, 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 a specific quantity and form  of Metal consigned to a Customer for a specific Fixed Rate Period at a rate per annum equal to the Metals  Rate, plus the Applicable Margin, provided, however, that in the event that the Metal Lender determines  prior to the commencement of any Fixed Rate Period that the Metals Rate as computed in accordance with  the foregoing definition, plus the Applicable Margin does not reflect the rate at which the Metal Lender is  prepared to sell, consign or deliver a particular Category of Metal on a fixed rate basis for the relevant Fixed  Rate Period, then the Metals Rate for such Fixed Rate Period shall be the rate, if any, which the Metal  Lender notifies the Customers prior to the commencement of such Fixed Rate Period as the rate (when  added to the Applicable Margin) at which the Metal Lender is prepared to provide Consignments of a  similar nature.  The quantity and form of Metal, and the Fixed Rate Period shall be selected by the Customer  Agent on behalf of the Customer requesting the Consignment, and consented to by the 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 on behalf of the Customer, such  selections shall be irrevocable and binding on the Customers and shall obligate the Customers to accept the  Consignment requested from the Metal Lender in the amount, in the Category and at the Fixed Consignment  Fee for the Fixed Rate Period specified.                                        -15-  

 

               (e)   If  the  Metal  Lender  reasonably  determines  that  (i)(A)  the  Metals  Rate  is  not  ascertainable by reference to the Reuters LIBO screen referenced in the definition of “Metals Rate” and  that such circumstance is unlikely to be temporary, or (B) the circumstances set forth in the immediately  preceding  clause  (i)(A)  have  not  arisen  but  the  applicable  supervisor  or  administrator  (if  any)  of  the  underlying rate for such Reuters LIBO screen or a governmental body or authority having jurisdiction over  the Metal Lender has made a public statement identifying the specific date after which such rate will no  longer be used for determining interest rates for loans (either such date, a “LIBO Termination Date”), or  (ii) a rate other than the underlying rate of such Reuters LIBO screen has become a widely recognized  benchmark rate for newly originated loans in Dollars in the U.S. market, then the Metal Lender and the  Customer Agent may choose a replacement index for purposes of determining the Metals Rate and make  adjustments to applicable margins and related amendments to this Agreement.  The Metal Lender and the  Customers shall enter into an amendment to this Agreement to reflect the replacement index, the adjusted  Metals Rate and such other related amendments as may be appropriate, in the reasonable discretion of the  Metal Lender, for  the  implementation  and  administration  of  the  replacement index-based  Metals  Rate.   Until an amendment reflecting a new replacement index in accordance with this Section 2.3(e) is effective,  each advance, conversion and renewal of a Consignment with a Fixed Consignment Fee will continue to  bear  interest  with  reference  to  the  Reuters  LIBO  screen; provided, however,  that  if  the  Metal  Lender  reasonably determines that a LIBO Termination Date has occurred, then following the LIBO Termination  Date, all Consignments to which a Fixed Consignment Fee would otherwise apply shall automatically be  converted to Floating Rate Consignments until such time as an amendment reflecting a replacement index  and related matters as described above is implemented.                 (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 Metal Lender a market premium  per troy ounce 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 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 Metal Lender’s pool accounts, loco London, free and clear of all Liens  (other than Liens in favor of the 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 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 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.                                         -16-  

 

               (i)   All payments (other than payments in the form of Metal) shall be made by the  Customers at the Metal Lender’s Address herein set forth or such other place as the 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 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 Lender as the Metal Lender determines in its sole discretion.         Section 2.4. Requests for Consignments under the Consignment Facility.               (a)   The Customer Agent shall give to the Metal Lender notice by telephone of each  request for a Consignment of Metal.  Subject to agreement with respect to any Floating Consignment Fee  or Fixed Consignment Fee (to the extent applicable), each such notice shall be irrevocable and binding on  the Customers and shall obligate the Customers to accept the consignment requested.               (b)   Requests  for  any  Floating  Rate  Consignments  shall  be  furnished  to  the  Metal  Lender no later than 2:00 p.m. (New York time)one (1) Business Day prior to the proposed Drawdown  Date or as otherwise mutually agreed.  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 Metal Lender  by 3:00 p.m. (New York time)three (3) London Banking Days or as otherwise mutually agreed 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 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 amount of the Consignment Facility Indebtedness set forth in the Metal Lender’s books and  records shall be prima facie evidence of the Consignment Facility Indebtedness 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 pay and  perform their obligation under the Consignment Facility when due.         Section 2.5. Conversion Options.               (a)   Subject to the provisions hereof, the Customer Agent 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 Customer Agent shall give  the Metal Lender at least three (3) London Banking Days’ prior written notice (or as otherwise mutually  agreed) of the day on which such election is effective; and (iii) no Consignment may be converted into a                                        -17-  

 

   Fixed Rate Consignment when a Default has occurred and is continuing hereunder.  The Customer Agent  shall give to the Metal Lender notice of its decision to convert an outstanding consignment.  All or any part  of outstanding Consignments under the Consignment Facility may be converted as provided herein.  Subject  to  agreement  with  respect  to  any  Floating  Consignment  Fee  or  Fixed  Consignment  Fee  (to  the  extent  applicable), each such request shall be irrevocable.               (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 the Customer Agent giving to the  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 election 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 continuance of such Default.  In the event that the Customer Agent does  not notify the Metal Lender of its election hereunder with respect to any Consignment, such Consignment  shall be automatically converted to a Floating Rate Consignment at the end of the applicable Fixed Rate  Period.         Section 2.6. Inability to Determine Fixed Consignment Fee.         In the  event, prior to the  commencement of any Fixed Rate  Period relating to any Fixed Rate  Consignment, the Metal Lender shall determine in good faith that adequate and reasonable methods do not  exist  for  ascertaining  the  Fixed  Consignment  Fee  that  would  otherwise  determine  the  Fixed  Rate  Consignment  during  any  Fixed  Rate  Period,  the  Metal  Lender  shall  forthwith  give  notice  of  such  determination (which shall be conclusive and binding on the Customers) to the Customer Agent.  In such  event, (a) any request for a Fixed Rate Consignment shall be automatically withdrawn and shall be deemed  a request for a Floating Rate Consignment; (b) each Fixed Rate Consignment will automatically on the last  day  of  the  then  current  Fixed  Rate  Period  thereof,  become  a  Floating  Rate  Consignment;  and  (c)  the  obligations  of  the  Metal  Lender to  make  Fixed  Rate  Consignments  shall  be  suspended  until  the  circumstances giving rise to such suspension no longer exist, whereupon the Metal Lender shall so notify  the Customer Agent.         Section 2.7. Illegality.         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 the Metal  Lender to make or maintain Fixed Rate Consignments, the Metal Lender shall forthwith give notice of such  circumstances to the Customer Agent 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 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 2.7, 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.         Section 2.8. Indemnity.         In  addition  to  the  indemnities  provided  in Article  12 and Section  16.15 (but  without  any  duplication of remedy or recovery), each Customer shall indemnify the Metal Lender and hold the Metal  Lender harmless from and against any loss, cost or expense (including loss of anticipated profits) that the  Metal Lender has sustained or incurred as a consequence of (a) default by any Customer in payment of any                                        -18-  

 

   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 the 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  the  Customer  Agent  (or  any  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 the Metal Lender to lenders of funds  obtained by it in the ordinary course of business in order to maintain any such Consignments.         Section 2.9. Maintenance of Consignment Limits.               (a)   If  the  Consignment  Facility  Indebtedness  or  the  Copper  Consignment  Facility  Indebtedness at any time exceeds the Consignment Limit or the Copper Consignment Limit, as applicable,  the Customers will promptly, and in any event within five (5) Business Days of the date of the occurrence  of such excess, without further notice or demand by the Metal Lender:                     (i)   make payment to the Metal Lender, as provided in Section 2.3(g) hereof,                          for Consigned Metal or Copper, as applicable, having an aggregate value                          sufficient to result in the remaining Consignment Facility Indebtedness or                          Copper  Consignment  Facility  Indebtedness  being  not  more  than  the                          Consignment Limit or Copper Consignment Limit, as applicable,                     (ii)  deliver to the Metal Lender’s pool accounts, loco London, or in a form                          otherwise agreed by the Metal Lender, Metal free and clear of all Liens                          (other than Liens in favor of the Metal Lender) having an aggregate value                          (as determined in accordance with Section 2.2 hereof) sufficient to result                          in  the  remaining  Consignment  Facility  Indebtedness  or  Copper                          Consignment Facility Indebtedness being not more than the Consignment                          Limit or Copper Consignment Limit, as applicable, or                     (iii) engage in any combination of the actions in clauses (i) and (ii) above such                          that the remaining Consignment Facility Indebtedness does not exceed the                          Consignment  Limit  and  the  remaining  Copper  Consignment  Facility                          Indebtedness does not exceed the Copper Consignment Limit.               (b)   Any  physical  return  of  Metal  to  the  Metal  Lender  shall be  at  a  location  as  determined by the Metal Lender in its sole discretion, shall be at the Customers’ expense and risk, and shall  only be credited to the Customers’ account upon the 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)   All deliveries and returns of Metal made by the Customers to the Metal Lender  under this  Agreement will be  free of all Liens,  derived  in all cases from sources on the LBMA Good  Delivery List or as otherwise mutually agreed, and made in accordance with the directions of the Metal  Lender or, in the absence of such directions, in a commercially acceptable manner to the Metal Lender.   The Customer shall bear the cost of such delivery and shall bear the risk of loss of or damage to such  Consignment until delivery is made by it to the Metal Lender.                                         -19-  

 

               (d)   Each Customer hereby authorizes the 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.         Section 2.10. Upfront Fee.         The Customers and MAMG shall pay to the Metal Lender on or prior to the date of this Agreement  an upfront fee in an amount set forth in the Letter Agreement.           Section 2.11. Late Fee.         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)  Business  Days  after  the  same  is  due,  the  Customers shall pay to the Metal Lender, to the extent permitted by applicable law, by bank wire to a bank  of the Metal Lender’s choice, a late fee on the unpaid amount equal to (x) such amount, multiplied by (y)  the Prime Rate plus 2%.         Section 2.12. Default Rate.         Upon the occurrence and during the continuance of an Event of Default, the then applicable rates  at which Floating Consignment Fees and Fixed Consignment Fees are calculated and charged hereunder  shall, to the extent permitted by applicable law, at the Metal Lender’s option, increase by the Prime Rate  plus 2% per annum.         Section 2.13. Termination; Return of Consigned Metal.               (a)   The  Consignment  Facility  shall  terminate  on the  Maturity  Date.  ALL  SUMS  OUTSTANDING  AND  ALL  OBLIGATIONS  OUTSTANDING  UNDER  THE  CONSIGNMENT  FACILITY WILL BE DUE AND PAYABLE UPON THE EARLIER OF (I) THE OCCURRENCE  OF  AN  EVENT  OF  DEFAULT  AND  THE  METAL  LENDER’S  ACCELERATION  OF  THE  OBLIGATIONS AS A RESULT THEREOF, OR (II) THE MATURITY DATE; PROVIDED THAT,  IN  RESPECT  OF  ANY  CONSIGNMENT  WITH  A  TERM  THAT  MATURES  AFTER  THE  MATURITY  DATE,  ALL  OBLIGATIONS  IN  RESPECT  THEREOF  SHALL  BE  DUE  AND  PAYABLE ON THE LAST DAY OF ITS TERM OR THE MATURITY DATE, AS DETERMINED  BY  THE  METAL  LENDER  IN  ITS  DISCRETION  AND  COMMUNICATED  TO  THE  CUSTOMER AGENT IN WRITING AT LEAST 30 DAYS PRIOR TO THE MATURITY DATE.   Upon termination of the Consignment Facility, the Metal Lender may credit any amounts then held by it to  reduce  the  amount of  the  Consignment  Facility  Indebtedness  in  accordance  with  the  provisions  of  Article 13 hereof.  Termination of the Consignment Facility shall not affect the Customers’ duty to pay and  perform their Obligations to the Metal Lender under the Consignment Facility in full.  Notwithstanding  termination, until all Obligations have been fully satisfied, the Metal Lender shall retain the consignment  interests and security interests granted under this Agreement and under the Security Documents, and, except  for those specific covenants and conditions dealing with the consigning of Metal, all terms and conditions  of this Agreement shall remain in full force and effect.               (b)   Upon termination of the Consignment Facility for any reason, the Customer shall  immediately upon the effective date of termination (i) make payment for all Consigned Metal theretofore  consigned to but not purchased and paid for in full by the Customers under the Consignment Facility, the  purchase price thereof to be determined in accordance with Section 2.3(g) hereof; (ii) deliver to the Metal  Lender, to the Metal Lender’s pool accounts, or in loco London form, any Consigned Metal theretofore  consigned to but not purchased and paid for in full by the Customers under the Consignment Facility; or                                        -20-  

 

   (iii) any combination of the foregoing.  Any physical return of Consigned Metal to the Metal Lender shall  be at the Customers’ expense and risk and shall only be credited to the Customers’ account upon the 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.         Section 2.14. Facility Fee.         Customers shall pay to the Metal Lender monthly within five (5) Business Days after receipt of  invoice from the Metal Lender, a facility fee calculated at the rate of .25% per annum on the average daily  unused portion of the Consignment Limit during any month (or portion thereof) occurring on or after the  Effective Date.         Section 2.15. [Intentionally Omitted].         Section 2.16. Commingling.         Subject to Article 4 hereof with respect to the segregation of Stored Precious Metal, and subject to  the continuing security interests therein granted by Section 7.1 hereof, the Customers and the Metal Lender  agree  that  the  Customers,  in  the  ordinary  course  of  their  business,  shall  be  permitted  to  commingle  Consigned  Metals  with  any  other  Metals  or  Metal-containing  or  other  alloys owned  or  held  by  the  Customers.         Section 2.17. Customer Agent.         For purposes of this Agreement, the Customers (i) authorize the Customer Agent, to make such  requests, give such notices or furnish such certificates to the Metal Lender as may be required or permitted  by this Agreement or any Metal Document for the benefit of the Customers and (ii) authorize the Customer  Agent and the Metal Lender to treat such requests, notices, certificates or consents given or made by the  Customer Agent to have been made, given or furnished by the Customers for purposes of this Agreement.  The Metal Lender shall be entitled to rely on each such request, notice, certificate or consent made, given  or  furnished  by  the  Customer  Agent  pursuant  to  the  provisions  of  this  Agreement  or  any  other  Metal  Document  as  being  made  or  furnished  on  behalf  of,  and  with  the  effect  of  irrevocably  binding,  such  Customer. Each warranty, covenant, agreement and undertaking made on its behalf by the Customer Agent  shall be deemed for all purposes to have been made by each Customer and shall be binding upon and  enforceable  against  each  Customer  to  the  same  extent  as if  the  same  had  been  made  directly  by  each  Customer.                                    ARTICLE 3.                                   [RESERVED].                                    ARTICLE 4.                        SEGREGATED STORAGE FACILITY.         Section 4.1. Segregated Storage Facility.         The Metal Lender may elect in its sole discretion from time to time to deliver to one or more  Segregated  Storage  Facilities  identifiable  Precious  Metal  pursuant  to  this Article 4 (“Stored  Precious  Metal”); provided, however, that unless the Metal Lender shall otherwise agree, (a) the Stored Precious  Metal shall be delivered in such amounts as may be requested by the Customer Agent provided that the  aggregate  value  of  all  Stored  Precious  Metal  outstanding  and  subject  to  this Article 4 and  valued  in  accordance with the provisions of Section 2.2 hereof shall not exceed the Stored Precious Metal Limit at                                        -21-  

 

   any time, and (b) deliveries of Stored Precious Metal shall occur no more frequently than on a weekly basis.   Upon delivery of the  Precious  Metal to a Segregated Storage  Facility pursuant to this Section 4.1, the  Customer Agent will sign and return to the Metal Lender a receipt for the Precious Metal so delivered,  which receipt shall indicate that the Precious Metal constitutes Stored Precious Metal held for the Metal  Lender’s account pursuant to the terms of this Article 4.  The Customer Agent will hold the Stored Precious  Metal in a Segregated Storage Facility, and the Customer Agent will indicate in its books and records that  the Stored Precious Metal is owned by and belongs to the Metal Lender and is being held for the Metal  Lender’s account pursuant to the terms of this Article 4.  Except as hereinafter provided, title to the Stored  Precious Metal will at all times remain solely in the Metal Lender, and neither the Customer Agent nor, for  the avoidance of doubt, any Customer:  (a) will acquire any interest in the Stored Precious Metal except as  hereinafter permitted; (b) except as permitted in Section 4.2 or Section 4.3, will remove the Stored Precious  Metal from the Segregated Storage Facility; and (c) will create or incur, any Lien whatsoever on any of the  Stored Precious Metal, other than any Lien that is claimed by or granted by the Metal Lender.  Except as  provided in Section 4.2, the Stored Precious Metal will not become part of the Customer Agent’s (or, for  the avoidance of doubt, any Customer’s) Inventory for any purposes.           Section 4.2. Periodic Removal of Stored Precious Metal.         Upon  notifying  the  Metal  Lender  using  the  Metal  Lender’s  approved  notice  procedures,  the  Customer Agent may remove Stored Precious Metal from a Segregated Storage Facility in such quantities  as may be required by a Customer for its manufacturing operations; provided, however, all quantities of  Stored Precious Metal so removed from the Segregated Storage Facility:  (a) shall immediately and without  further action become and be deemed to constitute Consigned Metal under Article 2 of this Agreement and  shall be subject to all of the terms and conditions of this Agreement, including Article 2 hereof; or (b) shall  be paid for in full upon terms agreed to at such time by the Customer Agent and the Metal Lender.  If,  following removal of the Stored Precious Metal from the Segregated Storage Facility and its designation as  Consigned  Metal  pursuant  to Article 2 of  this  Agreement,  the Consignment  Limit  is  exceeded,  the  Customer Agent will promptly and without further notice from or demand by the Metal Lender, take such  action as is required by Section 2.9 hereof to reduce the amount of Consigned Metal outstanding pursuant  to the Consignment Facility to an amount at or below the Consignment Limit.         Section 4.3. Removal of Stored Precious Metal at Request of the Metal Lender.         From time to time, the Metal Lender may provide the Customer Agent with reasonable written  instructions specifying that a quantity of Stored Precious Metal must be delivered to the Metal Lender or  to a designated third party located in the continental United States and within a 100-mile radius of where  such Stored Precious Metal is then located.  Following receipt of such instructions, the Customer Agent  shall promptly arrange for the delivery of such quantity of Stored Precious Metal in accordance with such  instructions.   Except  as  provided  in Section 4.2 hereof,  the  Customer  Agent  may  only remove  Stored  Precious Metal from safekeeping in order to deliver such Stored Precious Metal to the Metal Lender or to  a third party in accordance with the Metal Lender’s written instructions.  The Customer Agent may only  transfer Stored Precious Metal to a third party for the Metal Lender’s account pursuant to the terms of this  Agreement notwithstanding the fact that the Customer Agent may hold other Metal for the Metal Lender’s  account.           Section 4.4. Stored Precious Metal Not Subject to Fees.         Neither Customer Agent, on the one hand, nor the Metal Lender, on the other hand, shall be required  to pay to the other any consignment fees, market premiums or any other fees with respect to the Stored  Precious Metal while it is in a Segregated Storage Facility, and no consignment fees shall be imposed until                                        -22-  

 

   such time  as the  Customer Agent removes Stored  Precious  Metal from its Segregated  Storage  Facility  pursuant to the provisions of Section 4.2 hereof.         Section 4.5. Access to Segregated Storage Facility.         Notwithstanding  anything  to  the  contrary  in  this  Agreement,  Customer  Agent  will  at  all times  provide to the Metal Lender access to each Segregated Storage Facility and to its related premises and  related books and records during regular business hours, with or without notice, in order to permit the Metal  Lender to verify compliance with the terms of this Article 4; provided, however, that in the event that the  Metal Lender has a reasonable belief that any removal of Stored Precious Metal from a Segregated Storage  Facility is not in compliance with Section 4.2 or Section 4.3, then the Metal Lender shall have immediate  access to the relevant Segregated Storage Facility and the related premises.  While on the Premises, the  Metal Lender shall follow all generally applicable safety, health and security policies.         Section 4.6. Security Interest.         The Customer Agent and the Metal Lender agree and intend that all Stored Precious Metal within  a Segregated Storage Facility shall be owned solely by the Metal Lender, and no Customer shall have or be  deemed to have any right, title or interest in under and to the Stored Precious Metal; provided, however,  that to the extent any Customer is so deemed by operation of law or otherwise to have any right title or  interest in, under or to the Stored Precious Metal, such Customer hereby grants to the Metal Lender a  security interest in all right, title and interest of such Customer, if any, in, under and to the Stored Precious  Metal to secure the payment and performance of all Obligations contained in this Agreement, including,  without limitation, the provisions of this Article 4.  Each Customer hereby agrees that the Metal Lender is  authorized  to  prepare  and  file  any  Uniform  Commercial  Code  financing  statements  and  continuations  thereof reasonably deemed necessary or appropriate by the Metal Lender to evidence its ownership interest  and security interest in the Stored Precious Metal.           Section 4.7. Risk of Loss.          The Customers will be liable to the Metal Lender for any theft, loss or conversion of any Stored  Precious Metal held pursuant to the terms of this ARTICLE 4 or for any casualty to any Stored Precious  Metal held pursuant to the terms of this ARTICLE 4 and will maintain in full force and effect insurance  conforming to that required pursuant to Section 9.25(d) hereof in an amount sufficient to cover the Stored  Precious Metal and naming the Metal Lender as a loss payee and as an additional insured as its interest may  appear, and will deliver to the Metal Lender proof that such insurance is in full force and effect prior to the  first shipment of Stored Precious Metal pursuant to the terms of this ARTICLE 4.         Section 4.8. Waiver of Setoff.         Customer Agent  (and, for the avoidance of doubt, each Customer) hereby waives any and all Liens,  rights of setoff or other claims against the Stored Precious Metal held for the Metal Lender pursuant to the  terms of this Article 4.         Section 4.9. Termination of Segregated Storage Facility.         All Segregated Storage Facilities shall terminate on the Maturity Date or on such earlier date as the  Metal Lender accelerates the Obligations by reason of the occurrence of an Event of Default hereunder.  In  addition, the Customer Agent, on the one hand, or the Metal Lender, on the other hand, may at any time on  thirty (30) days prior written notice to the other terminate any particular Segregated Storage Facility.  Upon  termination of a Segregated Storage Facility, Customer Agent shall return at its sole expense and risk to the                                        -23-  

 

   Metal Lender in accordance with the Metal Lender’s reasonable written instruction all Stored Precious  Metal that was delivered to the Customers.  Termination of any particular Segregated Storage Facility shall  not affect any Customer’s duty to perform its obligations to the Metal Lender under this Article 4.                                    ARTICLE 5.                                   [RESERVED.]                                    ARTICLE 6.                                  CONDITIONS.         Section 6.1. Conditions to the Metal Lender’s Obligations Hereunder.         The obligation of the Metal Lender to make the initial Consignments of Metals hereunder or to  enter into the Metal Hedging Transactions, is subject to the satisfaction (or the Metal Lender’s waiver) of  all of the following conditions precedent:               (a)   The Metal Lender shall have received a purchase agreement, payoff letter or other  instrument from (i) The Bank of Nova Scotia with respect to that certain Third Amended and Restated  Precious Metals Agreement, effective as of October 1, 2010 (as amended), and (ii) Scotiabank Europe plc  with respect to that certain Copper Consignment Agreement, dated as of April 2, 2012 (as amended), in  each case, to extinguish all Indebtedness of the Customers under such agreements, and transfer title to all  Metals  outstanding  thereunder  to  the  Metal  Lender  for  simultaneous  Consignment  hereunder  (with  no  physical transfer of possession thereof from the Approved Locations).               (b)   The Metal Lender shall have received all applicable fees and expenses required to  be paid by the Customers on or before the date hereof.               (c)   The representations and warranties set forth in Article 8 hereof shall be true and  correct in all material respects on and as of the date hereof.               (d)   There  shall  have  been  no  material  adverse  change  in  the  Customers’  financial  condition or their financial or business prospects, from those represented in the financial statements or other  information  (other  than  projections)  submitted  to  the  Metal  Lender  by  or  on  behalf  of  a  Customer  in  accordance with Section 8.5, which could reasonably be expected to have a Material Adverse Effect.               (e)   The Metal Lender shall have received an opinion of counsel to each Customer  (other than AC, for which no opinion of counsel will be required), in form and substance satisfactory to the  Metal Lender.               (f)   The  Metal  Lender  shall  have  received  a  certificate  from  the  secretary  of  each  Customer  certifying  as  to  the  incumbency  and  genuineness  of  the  signature  of  each  Authorized  Representative of such Customer and certifying that attached thereto is a true, correct and complete copy  of (i) the articles or certificate of incorporation or formation (or equivalent), as applicable, of such Customer  and all amendments thereto, certified as of a recent date by the appropriate governmental authority (to the  extent available) in its jurisdiction of incorporation, organization or formation (or equivalent), as applicable,  (ii) the bylaws, partnership agreement, limited liability company agreement or other governing document  of such Customer as in effect on the Effective Date (including all amendments thereto), (iii) resolutions  duly  adopted  by  the  board  of  directors  (or  other  governing  body)  of  such  Customer  authorizing  and  approving the transactions contemplated hereunder and the execution, delivery and performance of this  Agreement.                                         -24-  

 

               (g)   The Metal Lender shall have received certificates as of a recent date as to the good  standing of each Customer under the laws of its jurisdiction of incorporation, organization or formation (or  equivalent), as applicable.               (h)   The Metal Lender shall have received the fully executed German Precious Metals  Agreement together with all guarantees in favor of the Metal Lender to be delivered by the Customer Agent  or any of its Subsidiaries in connection therewith, each in form and substance satisfactory to Metal Lender.               (i)   The Metal Lender shall have received a fully executed amendment to the Lender  Intercreditor Agreement naming the Metal Lender as the “Metal Agent” thereunder, in form and substance  satisfactory to Metal Lender.               (j)   The Metal Lender shall have received a fully executed amendment to the Metal  Intercreditor Agreement naming the Metal Lender as the Collateral Agent thereunder, in form and substance  satisfactory to Metal Lender.               (k)   The Metal Lender shall have received the Letter of Credit, together with evidence  of the cancellation of the existing letter of credit issued by the Senior Credit Agent in favor of The Bank of  Nova Scotia, in the principal amount of $30,000,000.               (l)   The Metal Lender shall have received insurance certificates in form and substance  satisfactory to the Metal Lender and otherwise satisfying the requirements of Section 4.7 and Section 9.25.               (m)   No Default or Event of Default, shall have occurred and be continuing.         Section 6.2. Conditions to Subsequent Transactions.         The  obligation  of  the  Metal  Lender  to  make  any  subsequent  Consignments,  Metal  Hedging  Transactions  or  deliveries  under the  Segregated  Storage  Facility  is subject  to the  following  conditions  precedent:               (a)   All warranties and representations set forth in this Agreement (except those made  as of a specific date) shall be true and correct in all material respects as of the date such Consignment or  Metal Hedging Transaction is requested and is to occur or delivery is requested to be made.               (b)   After giving effect to such requested Consignment, Metal Hedging Transaction or  delivery (both as of the proposed date thereof and, on a pro forma basis as of the last day of the most recent  Fiscal Quarter for which financial statements have been delivered to the Metal Lender), no Event of Default  and no Default shall have occurred and be continuing, or shall result from the requested transaction.               (c)   No Customer is  the  subject of any voluntary or involuntary petition under any  chapter  of  the  Bankruptcy  Code,  or  any  proceeding  seeking  the  appointment  of  a  receiver,  trustee  or  custodian of any of its property or business.               (d)   No  event(s)  shall  have  occurred,  and  no  circumstance(s)  shall  exist, which  individually or in the aggregate with other such circumstances or events, has had, or could reasonably be  expected to have, a Material Adverse Effect.         Section 6.3. Customers’ Confirmation.                                         -25-  

 

         Each request by the Customer Agent on behalf of a Customer to the Metal Lender for the delivery  of Metal under the Consignment Facility and the Segregated Storage Facility, and for a Metal Hedging  Transaction, shall be deemed to be a representation and warranty to the Metal Lender that the respective  conditions  specified  in Section 6.2 for such  Consignment  and/or  Metal  Hedging  Transaction  has  been  satisfied.         Section 6.4. Authorized Representatives.         Each Customer confirms that the initial Authorized Representatives of the Customer Agent are  identified in Schedule 6.4 hereto, and that the Metal Lender may conclusively rely on such confirmation  until it has received further certification from the Customer Agent, in form acceptable to the Metal Lender,  canceling or amending  the list of Authorized Representatives.  Any person identifying himself or herself  as an Authorized Representative of the Customer Agent and who is identified on in Schedule 6.4 shall have  the right to effect transactions under the Consignment Facility, the Segregated Storage Facility and this  Agreement.  The Metal Lender shall have no responsibility or obligation to ascertain whether the person is  in fact the Authorized Representative of the Customer Agent which he or she claims to be or is, in fact,  authorized to effect the transaction.  At its option, the Metal Lender may verify any telephonic or telegraphic  request for a transaction by calling an Authorized Representative, and where more than one Authorized  Representative is so authorized, by calling an Authorized Representative or other individual other than the  caller or the individual initiating the transaction.  The Customers hereby authorize the Metal Lender at its  option to record electronically all telephonic requests for transactions that the Metal Lender may receive  from the Customer Agent or any other person purporting to act on behalf of the Customer Agent.                                    ARTICLE 7.                           SECURITY; SUBORDINATION.         Section 7.1. Collateral.         The  intent  of  the  parties  hereto  is  to  create  a  true  Consignment  from  the  Metal  Lender  to  the  Customers and for title to remain with the Metal Lender; provided, however, that in the event that this  Agreement, any other Metal Document or the transactions contemplated hereby or thereby are construed at  any time with respect to any Consigned Metal as other than a true Consignment from Metal Lender to the  Customers,  then  as  security  for  its  Obligations,  each  Customer  hereby  grants  the  Metal  Lender  a  first  priority perfected Lien (subject to Liens arising by operation of law) on the Collateral securing all present  and future Obligations of such Customer to the Metal Lender under this Agreement and any Consignment  hereunder.   Except  as  contemplated  by  the  Intercreditor  Agreements  and  any  Client-Customer  Arrangements, the Obligations of the Customers shall at all times be secured by such first priority perfected  Lien on the Collateral.           Section 7.2. Identification of Collateral.         For the purpose of identifying the Collateral, so long as Metal of a particular Category is subject to  any Consignment, all Metal of such Category in the possession or control of each Customer, or Metal of  such  Category  held  by  a  third  party  for  the  account  of  a  Customer,  shall  constitute  Collateral  notwithstanding that (i) such Metal is in alloyed form or is contained in raw materials, work-in-process, or  finished goods, (ii) such Metal was delivered to, or credited to the account of, a Customer by a third party  in exchange for or in consideration of Metal delivered by the Metal Lender to such third party, (iii) such  Metal was sold by a Customer to the Metal Lender and then consigned or loaned back to such Customer  pursuant to this Agreement, (iv) such Metal has been commingled with other Inventory of the Customers,  or (v) such Metal is otherwise demonstrably not the actual Metal physically delivered by the Metal Lender.                                         -26-  

 

         Section 7.3. Supporting Letters of Credit.         As continuing security for the prompt and punctual payment and performance of all Obligations  and/or as may be required by the Metal Intercreditor Agreement, the Customer Agent shall cause one or  more Letters of Credit to be issued for the benefit of the Metal Lender (or to the Collateral Agent for the  benefit of the Metal Lender and the other Approved Consignors) to the extent required by Section 9.24(b),  and maintain such Letters of Credit at all times until payment in full of the Obligations and termination of  the Metal Lender’s obligations hereunder.         Section 7.4. Intercreditor Agreements.         Notwithstanding any provision contained herein to the contrary, as among the Metal Lender, the  lenders under the Senior Credit Agreement and the Approved Consignors, the priority of security interests  and consignment interests of the Metal Lender under this Agreement shall at all times be subject to, and  evidenced and confirmed by, the Intercreditor Agreements.         Section 7.5. Security Documents.         Each  Customer  agrees  to  execute  and  deliver  any  and  all  Security  Documents,  in  form  and  substance  reasonably  satisfactory  to  the  Metal  Lender,  and  take  such  action  as  the  Metal  Lender  may  reasonably request from time  to time  in order to cause the  Metal Lender to be secured  at all times as  described in this Agreement.                                    ARTICLE 8.                      REPRESENTATIONS AND WARRANTIES.         As a material inducement to the Metal Lender to enter into this Agreement and to provide Metal  and financial accommodations contemplated hereby, each Customer hereby represents and warrants to the  Metal Lender (which representations and warranties shall survive the execution of this Agreement, the  Consignments of Metal, the creation of the Segregated Storage Facility, and the entering into of any Metal  Hedging Transaction) that:         Section 8.1. Existence and Standing.         Each Customer is a corporation or a limited liability company (as applicable) duly and properly  incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good  standing  or  full  force and  effect under  the  laws  of its  jurisdiction  of incorporation  or  organization (as  applicable) and has all requisite corporate or limited liability company (as applicable) authority to conduct  its business in each jurisdiction in which its business is conducted.         Section 8.2. Authorization and Validity.         Each  Customer  has  the  power  and  authority  and  legal  right  to  execute  and  deliver  the  Metal  Documents to which it is a party and to perform its obligations thereunder.  The execution and delivery by  each  Customer  of  the  Metal  Documents  to  which  it  is  a  party  and  the  performance  of  its  obligations  thereunder have been duly authorized by proper proceedings, and the Metal Documents to which such  Customer is a party constitute legal, valid and binding obligations of such Customer enforceable against  such Customer in accordance with their terms, except as enforceability may be limited by bankruptcy,  insolvency or similar laws affecting the enforcement of creditors’ rights generally and except as the same  may be subject to general principles of equity.                                         -27-  

 

         Section 8.3. No Conflict; Government Consent.         Neither the execution and delivery by any Customer of the Metal Documents to which it is a party,  nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof  will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on such  Customer or (ii) any Customer’s articles or certificate of incorporation or organization (as applicable) or  by-laws, code of regulations or operating agreement (as applicable), or (iii) the provisions of any indenture,  instrument or agreement to which any Customer is a party or is subject, or by which it, or its property, is  bound, or conflict with or constitute a default thereunder, or result in, or require, the creation or imposition  of any Lien (other than Permitted Liens) in, of or on the property of such Customer pursuant to the terms  of  any  such  indenture,  instrument  or  agreement.   No  order,  consent,  adjudication,  approval,  license,  authorization,  or  validation  of,  or  filing  (other  than  the  filing  of  the  appropriate  Security  Documents),  recording or registration with, or exemption by, or other action in respect of any governmental or public  body or authority, or any subdivision thereof, which has not been obtained by a Customer, is required to be  obtained by any Customer in connection with the execution and delivery of the Metal Documents, the  transactions under this Agreement, the payment and performance by the Customer of the Obligations or the  legality, validity, binding effect or enforceability of any of the Metal Documents.         Section 8.4. Security Interest in Collateral.         The provisions of this Agreement and the other Metal Documents (once delivered hereunder) will  create legal and valid Liens on all the Collateral in favor of the Metal Lender, and such Liens will constitute  perfected  and  continuing  Liens  on  the  Collateral,  securing  the  Obligations,  enforceable  against  the  applicable  Customer,  and  having  priority  over  all  other  Liens  on  the  Collateral  except  in  the  case  of  (a) Permitted Metal Liens, to the extent any such Permitted Metal Liens would have priority over the Liens  in favor of the Metal Lender pursuant to any applicable law or agreement, (b) Liens perfected only by  possession (including possession of any certificate of title) to the extent the Metal Lender has not obtained  or does not maintain possession of such Collateral, and (c) an alteration of such priorities pursuant to the  Intercreditor Agreements.         Section 8.5. Financial Statements.         The audited consolidated financial statements of BEM and its Subsidiaries for the period ending  on December 31, 2018 heretofore delivered to the Metal Lender and each of the other financial statements  now or hereafter delivered pursuant to Section 9.1 were prepared in accordance with GAAP (as in effect  on the date  such  statements  were  prepared) and fairly present the  consolidated financial condition and  operations of BEM and its Subsidiaries at such date and the consolidated results of their operations for the  period then ended.         Section 8.6. Material Adverse Change.         Since the date of the most recent financial statements delivered pursuant to Section 9.1 hereof,  there has been no change in the business, property, condition (financial or otherwise) or results of operations  of the Customers which could reasonably be expected to have a Material Adverse Effect.         Section 8.7. Taxes.         The Customers have filed all U.S. federal, state and local tax returns and all other tax returns which  are required to be filed and have paid all material taxes due pursuant to said returns or pursuant to any  assessment received by any Customer, except such taxes, if any, that are being contested in good faith by  appropriate proceedings and for which the applicable Customer has set aside on its books adequate reserves                                        -28-  

 

   except to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse  Effect.         Section 8.8. Litigation and Environmental Matters.               (a)   There  are  no  actions,  suits,  proceedings  or  investigations  by  or  before  any  arbitrator or governmental authority pending against or, to the knowledge of any Customer, threatened  against  or affecting  the  Customers  (i)  as  to  which  there  is  a  reasonable  possibility  of  an  adverse  determination  and  that,  if  adversely  determined,  could  reasonably  be  expected,  individually  or  in  the  aggregate, to result in a Material Adverse Effect or (ii) that question the validity of this Agreement or the  transactions contemplated hereby.  There are no labor controversies pending against or, to the knowledge  of any Customer, threatened against or affecting any Customer (i) which could reasonably be expected,  individually or in the aggregate, to result in a Material Adverse Effect, or (ii) that question the validity of  this Agreement or the transactions contemplated hereby.               (b)   Except with respect to any matters reflected in the Financial Statements or that,  individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect,  no Customer (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with  any permit, license or other approval required under any Environmental Law, (ii) has become subject to  any judgment, decree, order or other similar requirement of or agreement with any governmental authority  or other Person under any Environmental Laws (iii) has received written notice of any claim with respect  to any Environmental Liability, the subject of which is unresolved or for which ongoing obligations remain,  or  (iv)  knows  of  any  circumstances,  conditions,  events  or  incidents  including,  without  limitation,  the  release, emission, discharge, presence or disposal of or exposure to any Hazardous Materials that that could  reasonably be expected to form the basis of any claim of Environmental Liability against or affecting the  Customers.         Section 8.9. Compliance With Laws.         Each Customer is in compliance with all laws, regulations and orders of any governmental authority  applicable to it or its property and all indentures, agreements and other instruments binding upon it or its  property,  except  where  the  failure  to  do  so,  individually  or  in  the  aggregate,  could  not  reasonably  be  expected to result in a Material Adverse Effect.         Section 8.10. Investment Company Act.         No Customer is an “investment company” or a company “controlled” by an “investment company,”  within the meaning of the Investment Company Act of 1940, as amended.         Section 8.11. Solvency.               (a)   Immediately after the making of each Consignment, and after giving effect thereto,  (i) the fair value of the assets of each Customer, at a fair valuation, will exceed the debts and liabilities,  subordinated, contingent or otherwise, of each Customer; (ii) the present fair saleable value of the property  of each Customer will be greater than the amount that will be required to pay the probable liability of each  Customer on its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other  liabilities become absolute and matured; (iii) each Customer will be able to pay its debts and liabilities,  subordinated,  contingent  or  otherwise,  as  such  debts  and  liabilities  become  absolute  and  matured;  and  (iv) each Customer will not have unreasonably small capital with which to conduct the businesses in which  it is engaged as such businesses are now conducted and are proposed to be conducted after the date hereof.                                         -29-  

 

               (b)   The  Customers  do  not  intend  to  and  do  not  believe  that they  will, incur  debts  beyond their ability to pay such debts as they mature, taking into account the timing of and amounts of cash  to  be  received  by  them  and  the  timing  of  the  amounts  of  cash  to  be  payable  on  or  in  respect  of  its  Indebtedness.         Section 8.12. Shared Benefits of Agreement.         Each Customer expects to derive benefit (and its board of directors or other governing body has  determined that it may reasonably be expected to derive benefit), directly and indirectly, from the Metal  supplied, and financial accommodations extended, by the Metal Lender to any of the Customers pursuant  to  this  Agreement.   Each  Customer  has  determined  that  execution,  delivery,  and  performance  of  this  Agreement and any other Metal Documents to be executed by such Customer is within its purpose, will be  of direct and indirect benefit to such Customer, and is in its best interest.         Section 8.13. Specifically Designated National and Blocked Persons.         No Customer, or, to the knowledge of any Customer, any director, officer, employee or authorized  agent of any Customer or Affiliate of any Customer is a Sanctioned Person or is located in a Sanctioned  Country.  No  Customer  is  in  violation  of  any  Sanctions  applicable  to  such  Customer  and  none  of  the  transactions contemplated hereby or by any Metal Document will violate any such Sanctions applicable to  it.   Each  Customer  has  implemented  and  maintains  in  effect  adequate  internal  procedures  reasonably  designed  to  ensure  compliance.   No  Customer  will,  directly  or  indirectly,  use  the  proceeds  of  the  transactions  contemplated  by  this  Agreement,  or  lend,  contribute  or  otherwise  authorize  the  giving  or  offering of any financial or other advantage to any person, such that the activities, business or person to be  funded, at the time of such funding, are subject to Sanctions or in any manner that would result in a violation  of any Sanctions. No Customer nor any of its Affiliates is in violation of any Anti-Terrorism Law or engages  in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding,  or attempts to violate, any Anti-Terrorism Law.         Section 8.14. Anti-Money Laundering.                (a)   Each Customer is in compliance and will continue to comply with all applicable  laws, regulations, rules and government guidance primarily relating to the prevention of money laundering  and terrorist  financing  (collectively  “AML  Laws”)  in  any  jurisdiction  where  it  operates  and  provides  services;               (b)   Each  Customer  has  policies  and  controls  designed  to  ensure  compliance  with  economic and export sanctions programs and will continue to comply with the applicable economic and  export sanctions administered in the local jurisdictions where each such Customer operates and provides  services, including, where applicable, the U.S. Treasury Department’s Office of Foreign Asset Control  (“OFAC”);                (c)   The  Customers maintain  policies  and  procedures  designed  to  ensure  that  their  customers, employees and vendors comply with AML Laws and  Sanctions.  Upon the Metal Lender’s  request, each Customer will confirm in writing that such Customer has followed its policies and procedures  established to comply with AML Laws and economic sanctions programs; and               (d)   Each  Customer  agrees  to  notify  the  Metal  Lender  promptly  whenever  such  Customer  receives  any  written  notices  from  any  governing  or  regulatory  entity  pertaining  to  such  Customer’s alleged non-compliance with AML Laws or OFAC.                                         -30-  

 

                                    ARTICLE 9.                    AFFIRMATIVE AND NEGATIVE COVENANTS.         From the date hereof and until (a) the Obligations have been paid and performed in full, and (b) the  Metal Lender’s commitments and obligations, have been terminated, each Customer jointly and severally  agrees that from and after the date hereof and until the payment and performance in full of all Obligations:         Section 9.1. Financial and Collateral Reporting.         Each Customer will maintain a system of accounting established and administered in accordance  with GAAP, and will furnish to the Metal Lender:               (a)   within ninety (90) days after the close of each Fiscal Year of BEM, its audited  consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of  the end of and for such year, setting forth in each case in comparative form the figures for the previous  Fiscal Year, all reported on by Ernst & Young LLP or other independent public accountants of recognized  national standing (without a “going concern” or like qualification or exception and without any qualification  or exception as to the scope of such audit) to the effect that such consolidated financial statements present  fairly in all material respects the financial condition and results of operations of BEM and its consolidated  Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;               (b)   within forty-five (45) days after the end of each of the first three Fiscal Quarters  of  each  Fiscal  Year  of  BEM,  BEM’s  consolidated  balance  sheet and  related  statements  of  operations,  stockholders’ equity and cash flows as of the end of and for such Fiscal Quarter and the then elapsed portion  of the Fiscal Year, setting forth in each case in comparative form the figures for the corresponding period  or periods of (or, in the case of the balance sheet, as of the end of) the previous Fiscal Year, all certified by  one of its executive officers as presenting fairly in all material respects the financial condition and results  of operations of BEM and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP  consistently applied, subject to normal year-end audit adjustments and the absence of footnotes and any  matters;               (c)   concurrently  with  any  delivery  of  financial  statements  under Section 9.1(a) or  9.1(b) above,  a  certificate  of  an  executive  officer  of  BEM  (i)  showing  the  calculations  necessary  to  determine compliance with this Agreement, and (ii) certifying as to whether a Default has occurred and, if  a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with  respect thereto;               (d)   concurrently  with  any  delivery  of  financial  statements  under Section 9.1(a) or  9.1(b) above, a certificate of the accounting firm that reported on such financial statements stating whether  they obtained knowledge during the course of their examination of such financial statements of any Default  (which certificate may be limited to the extent required by accounting rules or guidelines);               (e)   as soon as available but in any event within twenty (20) days after the close of each  Fiscal  Month,  a  certificate  as  of the  last  day  of  such  Fiscal  Month  (each  a  “Collateral  Compliance  Certificate”) detailing on a consolidating basis, in form reasonably acceptable to the Metal Lender, the  quantity  and  location  of  all  Metal  owned  or  otherwise  held  by  the  Customers  (including  all  Metal  outstanding  under  Permitted  Metals  Agreements  and  all  Client  Metal  subject  to  any  Client-Customer  Arrangement) as well as Collateral supporting the Net Marked-to-Market Exposure of all Metal Hedging  Transactions, each of which Collateral Compliance Certificates shall serve as the basis for determining the  Customers’ eligibility for additional Consignments and Metal Hedging Transactions until such time as the  Metal Lender receives an updated Collateral Compliance Certificate;                                        -31-  

 

               (f)   as soon as available, but in any event not more than thirty (30) days prior to the  end of each Fiscal Year of BEM, a copy of the plan and forecast (including a projected consolidated and  consolidating balance sheet, income statement and funds flow statement) of BEM for the upcoming Fiscal  Year; and               (g)   promptly  following  any  request  therefor,  such  other  information  regarding  the  operations, business affairs and financial condition of the Customers, or compliance with the terms of this  Agreement, as the Metal Lender may reasonably request.         Section 9.2. Use of Consignments.         Each Customer will use the Consigned Metal for general corporate purposes of the Customers not  otherwise prohibited by this Agreement.         Section 9.3. Notices.         Each Customer through the Customer Agent, will give prompt notice in writing to the Metal Lender  of:  (a) the occurrence of any Event of Default; (b) the filing or commencement of any action, suit or  proceeding by or before any arbitrator or governmental authority against or affecting any Customer that, if  adversely determined, could reasonably be expected to result in a Material Adverse Effect; (c) any Lien  (other than Permitted Metal Liens) attaching or asserted against any material portion of the Collateral;  (d) any loss, damage, or destruction to the Collateral in the amount of $500,000 or more, whether or not  covered by insurance; (e) the occurrence of any “Default” under the Senior Credit Agreement or any “Event  of Default” under any Permitted Metals Agreement which is subject to the Metal Intercreditor Agreement;  (f) the occurrence of any “Default” or “Event of Default” under any other Permitted Metal Agreement not  described in the preceding clause (e) which has resulted in the exercise or commencement of any creditor  remedies thereunder against Metal in the possession, custody or control of any Customer; (g) corporate  reorganization involving any of the Customers; (h) any breaches, threats or incidents related to the physical  security or safekeeping of the Collateral of which it becomes aware, and (i) any other development that  results in, or could reasonably be expected to result in, a Material Adverse Effect.  Each notice delivered  under this Section 9.3 shall be accompanied by a statement of an executive officer of the Customer Agent  setting forth the details of the event or development requiring such notice and any action taken or proposed  to be taken with respect thereto.         Section 9.4. Conduct of Business.         Each Customer will:               (a)   carry  on  and  conduct  its  business  in  substantially  the  same  manner  and  in  substantially the same or related fields of enterprise as is conducted as of the date of this Agreement;               (b)   do all things necessary to remain duly incorporated or organized, validly existing  and (to the extent such concept applies to such entity) in good standing as a domestic corporation or limited  liability company, in its jurisdiction of incorporation or organization and maintain all requisite authority to  conduct its business in each jurisdiction in which its business is conducted;                (c)   keep adequate books and records with respect to its business activities in which  proper entries, reflecting all financial transactions, are made in accordance with GAAP and on a basis  consistent with the Financial Statements delivered to the Metal Lender pursuant to Section 8.5; and                                          -32-  

 

               (d)   implement  and  maintain  procedures  and  controls  at  least  as stringent  as  those  customarily implemented and maintained by similarly situated companies engaged in similar businesses as  such Customer, including, but not limited  to, procedures and  controls related to monitoring, detecting,  assessing, reporting and  responding to breaches, threats  or incidents  related to the  physical security or  safekeeping of the Collateral.         Section 9.5. Payment of Obligations.         Each Customer will pay its obligations, including tax liabilities, that, if not paid, could result in a  Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity  or amount thereof is being contested in good faith by appropriate proceedings, (b) such Customer has set  aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to  make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.         Section 9.6. Compliance with Laws and Material Contractual Obligations.         Each Customer will (a) comply with all laws, rules, regulations and orders of any governmental  authority applicable to it or its property (including without limitation Environmental Laws) and (b) perform  in all material respects its obligations under material agreements to which it is a party, in each case except  where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a  Material Adverse Effect.         Section 9.7. Inspections; Field Exams.         Each  Customer will permit the  Metal Lender, by its respective  employees,  representatives and  agents, from time to time during normal business hours and without disruption to the Customers’ normal  business operations to (a) inspect any of the Metal, the Collateral, and the books, financial records and  written policies, records and other documents related to the procedures and controls of such Customer,  (b) examine, audit and make  extracts or copies of the  books  of accounts, financial records and written  policies, records and other documents related to the procedures and controls of such Customer, (c) have  access to its properties, facilities, the Collateral and its advisors, officers, directors and employees to discuss  the affairs, finances and accounts of such Customer, and (d) review, evaluate and make test verifications  and counts of the Collateral of each Customer, and (e) on not less than forty-eight (48) hours’ notice conduct  field exams of each Customer at the sole cost and expense of each Customer.  If an Event of Default has  occurred and is continuing, each Customer shall provide such access to the Metal Lender at all times and  without notice and without regard to whether such access will disrupt the Customers’ normal business  operations.  During any inspection conducted at a Customer’s Premises, the Metal Lender will, and will  cause its employees, representatives and agents to, comply with all health, safety and security requirements  of general application in effect at any such property or location where Collateral or books and records are  located.   Without  limitation  of  the  foregoing,  each  Customer  acknowledges  and  agrees  that  the  Metal  Lender and its respective employees, representatives and agents shall conduct a field exam within one- hundred twenty (120) days of the Effective Date.          Section 9.8. Communications with Accountants.         Each Customer executing this Agreement authorizes the Metal Lender to communicate directly  with its independent certified public accountants and authorizes and shall instruct those accountants and  advisors to communicate to the Metal Lender information relating to any Customer with respect to the  business, results of operations and financial condition of any Customer.         Section 9.9. [Reserved].                                        -33-  

 

         Section 9.10. Additional Collateral; Further Assurances.               (a)   Subject to applicable law, each Customer shall, unless the Metal Lender otherwise  consents, (i) cause each operating Subsidiary of BEM which holds Consigned Metal to become or remain  a Customer and become a party to this Agreement by executing a Joinder Agreement.               (b)   Without  limiting  the  foregoing,  each  Customer  shall,  and  shall  cause  each  of  BEM’s Subsidiaries which is required to become a Customer pursuant to the terms of this Agreement to,  execute and deliver, or cause to be executed and delivered, to the Metal Lender such other documents and  agreements, and shall take or cause to be taken such actions as the Metal Lender may, from time to time,  reasonably request to carry out the terms and conditions of this Agreement and the other Metal Documents.         Section 9.11. Restricted Payments.         No Customer will declare or make, or agree to pay or make, directly or indirectly, any Restricted  Payment, except (a) BEM may declare and pay dividends with respect to its equity interests payable solely  in additional shares of its common stock, (b) Subsidiaries of BEM may declare and pay dividends ratably  with respect to their equity interests, (c) BEM may make Restricted Payments pursuant to and in accordance  with stock option plans or other benefit plans for management or employees of BEM or its Subsidiaries and  (d) BEM and its Subsidiaries may make any other Restricted Payment so long as no Default or Event of  Default has occurred and is continuing prior to making such Restricted Payment or would arise after giving  effect (including pro forma effect) thereto and the aggregate amount of such Restricted Payments does not  exceed 10% of Consolidated Net Worth as of the most recently ended Fiscal Quarter of BEM for which  financial statements have been delivered; provided, that the foregoing aggregate limitation for Restricted  Payments shall not apply as long as the Leverage Ratio does not exceed 2.50 to 1.00 immediately prior to  and immediately after giving effect to any such Restricted Payment.         Section 9.12. Indebtedness.         The Customers will not, nor will they permit any other Customer to, create, incur or suffer to exist  any Indebtedness, except:               (a)   the Obligations;               (b)   Indebtedness  existing  on  the  date  hereof  and  extensions,  renewals  and  replacements of any such Indebtedness;               (c)   Indebtedness of any Customer to any other Customer or to any Subsidiary of BEM;               (d)   Guarantees by BEM of Indebtedness of any of its Subsidiaries and by any such  Subsidiary of Indebtedness of BEM or any other such Subsidiary;               (e)   Indebtedness of any Customer incurred to finance the acquisition, construction or  improvement  of  any  assets,  including  Capitalized  Lease  Obligations  and  any  Indebtedness  assumed  in  connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the  acquisition  thereof,  and  extensions,  renewals  and  replacements  of  any  such  Indebtedness  that  do  not  increase  the  outstanding  principal  amount  thereof; provided that  the  aggregate  principal  amount  of  Indebtedness incurred in any Fiscal Year pursuant to this clause (e) shall not exceed $25,000,000;               (f)   contingent obligations (i) by endorsement of instruments for deposit or collection  in the ordinary course of business, (ii) consisting of the reimbursement obligations in respect of letter of                                        -34-  

 

   credit  obligations  permitted  by  the  Senior  Credit  Agreement,  (iii)  consisting  of  the  guarantees  of  Indebtedness incurred  for the  benefit of any Subsidiary of BEM if the  primary obligation is  expressly  permitted elsewhere in this Section 9.12, and (iv) under the Beryllium Contracts;               (g)   Indebtedness  arising  under  Swap  Agreements  and  Metal  Hedging  Transactions  having a  Net Marked-to-Market  Exposure  not  exceeding  $50,000,000,  which amount  shall include  the  Swap Agreements and Metal Hedging Transactions in existence on the Effective Date;               (h)   Indebtedness  arising  under  this  Agreement  and  all  other  Permitted  Metals  Agreements in an aggregate principal amount not to exceed the Aggregate Secured Metal Limit;               (i)   Indebtedness arising under or permitted by the Senior Credit Agreement;               (j)   unsecured  Indebtedness  of  a  Customer  (including  unsecured  Subordinated  Indebtedness to the extent subordinated to the Obligations on terms reasonably acceptable to the Metal  Lender) in the form of publicly issued notes, to the extent not otherwise permitted under this Section 9.12,  and  any  Indebtedness  of  a  Customer  constituting  refinancings,  renewals  or  replacements  of  any  such  Indebtedness; provided that (i) both immediately prior to and after giving effect (including giving effect on  a pro forma basis) thereto, no Default or Event of Default shall exist or would result therefrom, (ii) such  Indebtedness matures after, and does not require any scheduled amortization or other scheduled payments  of principal prior to, the date that is 181 days after the Maturity Date (it being understood that any provision  requiring an offer to purchase such Indebtedness as a result of change of control or asset sale shall not  violate the foregoing restriction), (iii) such Indebtedness is not guaranteed by any Subsidiary of BEM that  is not a Customer (which guarantees, if such Indebtedness is subordinated, shall be expressly subordinated  to the Obligations on terms not less favorable to the Metal Lender than the subordination terms of such  Subordinated Indebtedness), (iv) the covenants applicable to such Indebtedness are not more onerous or  more restrictive in any material respect (taken as a whole) than the applicable covenants set forth in this  Agreement and (v) both immediately prior to and after giving effect (including giving effect on a pro forma  basis) thereto, the Customers would be in compliance with Section 9.17; and               (k)   other unsecured Indebtedness in an amount not in excess of $100,000,000.         Section 9.13. Fundamental Changes and Asset Sales.               (a)   No Customer will merge into or consolidate with any other Person, or permit any  other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one  transaction or in a  series of transactions) any of its assets, (including pursuant to a sale  and leaseback  transaction), or any of the equity interests of any of its Subsidiaries (in each case, whether now owned or  hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving  effect thereto no Event of Default shall have occurred and be continuing:                     (i)   any Person may merge into BEM in a transaction in which BEM is the                          surviving corporation;                     (ii)  any Customer may merge into any other Customer (provided that any such                          merger involving BEM must result in BEM as the surviving entity);                     (iii) any Customer may sell, transfer, lease or otherwise dispose of its assets to                          any other Customer;                                         -35-  

 

                     (iv)  each Customer may (A) sell inventory in the ordinary course of business,                          (B) effect sales, trade-ins or dispositions of equipment that is obsolete or                          no  longer  useful  in  any  meaningful  way  in  its  business,  (C)  enter  into                          licenses of technology in the ordinary course of business, and (D) make                          any other sales, transfers, leases or dispositions that, together with all other                          property  of  the  Customers  previously  leased,  sold  or  disposed  of  as                          permitted  by this clause (D) during any Fiscal Year of BEM,  does not                          represent property with a book value that (1) is greater than 10% of the                          Consolidated Total Assets of BEM or (2) is responsible for more than 10%                          of the consolidated net sales or of the Consolidated Net Income of BEM,                          in each case, as would be shown in the consolidated financial statements                          of BEM as  at the beginning of the four-quarter period ending with the                          quarter in which such determination is made (or if financial statements                          have not been delivered hereunder for that quarter which begins the four                          quarter period, then the financial statements delivered hereunder for the                          quarter ending immediately prior to that quarter); and                     (v)   any Customer may liquidate or dissolve if BEM determines in good faith                          that such liquidation or dissolution is in the best interests of BEM and is                          not materially disadvantageous to the Metal Lender, and all Consigned                          Metal consigned to such Customer is either returned to the Metal Lender                          or purchased and paid for pursuant to this Agreement.               (b)   No  Customer  will  engage  to  any  material  extent  in  any  business  other  than  businesses of the type conducted by the Customers on the date of this Agreement and businesses reasonably  related thereto.               (c)   No Customer will change its Fiscal Year from the basis in effect on the date of this  Agreement.         Section 9.14. Liens.         No Customer will create, incur, or suffer to exist any Lien in, of, or on any of the Collateral of such  Customer, except the following (collectively, “Permitted Liens”):               (a)   Liens created pursuant to any Metal Document;               (b)   Liens arising in connection with Permitted Metals Agreements subject to the Metal  Intercreditor Agreement to the extent required by Section 9.21;                (c)   Liens arising in connection with the Senior Credit Agreement subject to the Lender  Intercreditor Agreement;               (d)   any Lien on any property or asset of any Customer existing on the date hereof;  provided that  such  Lien  shall  secure  only  those  obligations  which  it secures  on  the  date  hereof  and  extensions, renewals and replacements thereof;               (e)   any Lien existing on any property or asset prior to the acquisition thereof by any  Customer or existing on any property or asset of any Person that becomes a Customer after the date hereof  prior  to  the  time  such  Person  becomes  a  Customer; provided that  (i)  such  Lien  is  not  created  in  contemplation of or in connection with such acquisition or such Person becoming a Customer, as the case                                        -36-  

 

   may be, (ii) such Lien shall not apply to any other property or assets of a Customer and (iii) such Lien shall  secure  only those obligations  which it secures  on the date  of such  acquisition or the date  such Person  becomes a Customer, as the case may be, and extensions, renewals and replacements thereof that do not  increase the outstanding principal amount thereof;               (f)   Liens on assets acquired, constructed or improved by any Customer; provided that  (i) such security interests secure Indebtedness permitted by Section 9.12(e), (ii) the Indebtedness secured  thereby does not exceed the cost of acquiring, constructing or improving such assets and (iii) such security  interests shall not apply to any other property or assets of the Customer;               (g)   Liens for taxes, fees, assessments, or other governmental charges or levies on the  property of any Customer if such Liens (i) shall not at the time be delinquent or (ii) subject to the provisions  of Section 9.5, do not secure obligations in excess of $15,000,000 and a stay of enforcement of such Lien  is in effect;               (h)   Liens imposed by law, such as carrier’s, warehousemen’s, and mechanic’s Liens  and other similar Liens arising in the ordinary course of business which secure payment of obligations not  more than ten days past due or which are being contested in good faith by appropriate proceedings diligently  pursued and for which adequate reserves shall have been provided on the Customer’s books;               (i)   statutory  Liens  in  favor  of  landlords  of  real  property  leased  by  a  Customer;  provided that, the Customer is current with respect to payment of all rent and other material amounts due  to such landlord under any lease of such real property;               (j)   Liens  arising  out  of  pledges  or  deposits  under  worker’s  compensation  laws,  unemployment  insurance,  old  age  pensions, or  other  social  security  or  retirement  benefits,  or  similar  legislation or to secure the performance of bids, tenders, or contracts (other than for the repayment of  Indebtedness) or to secure indemnity, performance, or other similar bonds for the performance of bids,  tenders, or contracts (other than for the repayment of Indebtedness) or to secure statutory obligations (other  than liens arising under ERISA or Environmental Laws) or surety or appeal bonds, or to secure indemnity,  performance, or other similar bonds;               (k)   the equivalent of the types of Liens discussed in clauses (g) through (j) above,  inclusive, in any jurisdiction in which the Customer is engaged in business or owns property or assets;               (l)   Liens arising from judgments or orders under circumstances that do not constitute  an Event of Default under Section 10.1(m);               (m)   Liens in favor of or asserted by any Client in Client Metals under or in connection  with any Client-Customer Arrangement; and               (n)   other  Liens  not  otherwise  permitted  above  so  long  as  the  aggregate  principal  amount of the obligations subject to such Liens does not at any time exceed $20,000,000.   The Permitted Liens referred to in this Section 9.14, excluding those referred to in clauses (e), (g) and  (n) above, are referred to in this Agreement as “Permitted Metal Liens”.         Section 9.15. Change of Name or Location.         No Customer shall (a) change its name as it appears in official filings in the state of its incorporation  or organization, (b) change its chief executive office, principal place of business, mailing address, corporate                                        -37-  

 

   offices  or  warehouses  or  locations  at  which  Collateral  is  held  or  stored,  or  the  location  of  its  records  concerning the Collateral, (c) change the type of entity that it is, (d) change its organization identification  number,  if  any,  issued  by  its  state  of  incorporation  or  other  organization,  or  (e)  change  its  state  of  incorporation or organization, in each case, without at least fifteen (15) Business Days’ prior written notice  to the Metal Lender and the Metal Lender shall have either (i) determined that such event or occurrence  will not adversely affect the validity, perfection or priority of the Metal Lender’s security interest in the  Collateral, or (ii) after the Metal Lender’s written acknowledgement that any reasonable action requested  by the Metal Lender in connection therewith, including to continue the perfection of any Liens in favor of  the Metal Lender in any Collateral, has been completed or taken, and, provided that, with respect to any  Customer, any new location shall be in continental U.S.         Section 9.16. Amendments to Agreements.               (a)   No Customer will amend or terminate its articles of incorporation, charter, by- laws, code of regulations or other organizational document in any manner that could reasonably be expected  to materially and adversely affect the Metal Lender’s Liens on the Collateral.               (b)   The  Customers  shall  not amend,  amend  and  restate,  supplement  or  otherwise  modify, or permit to be amended, amended and restated, supplemented or otherwise modified, any of the  terms of the Senior Credit Agreement, the Pledge and Security Agreement or any agreements entered into  in connection therewith in a manner that could reasonably be expected to have a Material Adverse Effect.               (c)   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 Lender will not be required to make any such modifications to the extent they  would  affect  the  Applicable  Margin  or  cause  the  Metal  Lender  to  surrender,  modify,  alter,  release  or  otherwise compromise its security interest in the Collateral.         Section 9.17. Financial Covenants.               (a)   Maximum Leverage Ratio.  BEM will not permit the Leverage Ratio, determined  as of the end of each of its Fiscal Quarters for the then most-recently ended four Fiscal Quarters, to be  greater than 3.50 to 1.00.               (b)   Minimum Fixed Charge Coverage Ratio.  BEM will not permit the Fixed Charge  Coverage Ratio, determined as of the end of each of its Fiscal Quarters for the then most-recently ended  four Fiscal Quarters, to be less than 1.50 to 1.00.         Section 9.18. Subordination of Intercompany Notes.         All Indebtedness evidenced by an intercompany note, together with all accrued interest thereon,  and any other indebtedness for borrowed money now owing or which hereafter may become owing by or  from a Customer to any other Customer, howsoever such indebtedness may be hereafter created, extended,  renewed or evidenced, together with all accrued interest thereon and any and all other obligations and  liabilities of any kind owing by or from a Customer to any other Customer shall at all times and in all  respects be subordinate and junior in right of payment to any and all obligations, liabilities and indebtedness  of any kind of the Customers to the Metal Lender including, without limitation, the Obligations, and any  extensions, renewals, modifications, and amendments thereof and all accrued interest thereon and any fees                                        -38-  

 

   owing by the Customers to the Metal Lender; provided, however, that the Customers may make payments  in respect of intercompany notes as long as such payment will not result in an Event of Default.         Section 9.19. Accounting Methods.         No Customer shall modify or change its method of accounting (other than as may be required to  conform to GAAP) or enter into, modify, or terminate any agreement currently existing, or at any time  hereafter entered into with any third party accounting firm or service bureau for the preparation or storage  of the Customers’ accounting records without such accounting firm or service bureau agreeing to provide  to the Metal Lender information relating to (a) the Customers’ financial condition and (b) the Collateral.         Section 9.20. Consigned Metal.         No Customer shall grant any security interest or ownership rights to any of its customers with  respect to any of the Consigned Metal whether or not such customers have prepaid orders for the Consigned  Metal or any products or property which does or will include the Consigned Metal.  Notwithstanding the  foregoing, the parties agree that any Client may file financing statements or other public notices with respect  to any Client Metal subject to any Client-Customer Arrangement.         Section 9.21. Metal Intercreditor Agreement.               (a)   No  Customer  shall  obtain  Gold,  Silver,  Platinum,  Palladium  or  Rhodium  on  a  secured basis (whether styled as a consignment, loan, conditional sale or other secured financing) from any  supplier, lender, consignor or financial institution other than the Metal Lender unless (i) no Metal of the  same Category is outstanding on Consignment to any Customer under Article 2 hereof, or (ii) such other  supplier, lender, consignor or financial institution executes and delivers to the Metal Lender a counterpart  or joinder to the Metal Intercreditor Agreement in form and substance reasonably acceptable to Collateral  Agent.               (b)   Notwithstanding any provision contained in this Agreement to the contrary, if any  Customer holds any Metal of a particular Category on a secured basis  (whether styled as a consignment,  loan, conditional sale or other secured financing) pursuant to any Permitted Metals Agreement (other than  this Agreement), the Customers will not have the right to obtain Consignments of the same Category of  Metals  under  this  Agreement  unless  the  supplier,  lender,  consignor  or  financial  institution  under  such  Permitted Metals Agreement executes and delivers to the Metal Lender an intercreditor agreement (which  may  be  the  Metal  Intercreditor  Agreement)  in  form  and  substance  reasonably  acceptable  to  the  Metal  Lender.  In its capacity as Metal Lender (and not as the Collateral Agent) or in the event Metal Lender no  longer serves as the  Collateral Agent, Metal Lender agrees that, notwithstanding any provision of this  Agreement to the contrary, to the extent the Customers (or any of them) provide security, certificates of  insurance, Letters of Credit, access rights, appraisals, reports, notices or any other items directly to the  Collateral Agent for the benefit of the Approved Consignors, the Customers will not be required to provide  any such items to the Metal Lender hereunder, including, without limitation:  (i) supporting Letters of Credit  as contemplated by Section 7.3; (ii) financial reports and certifications as contemplated by Section 9.1; (iii)  any  notices  contemplated  by Section  9.3;  (iv)  the  right  to  conduct  inspections  or  field  exams  as  contemplated by Section 9.7; (v) notices with respect to Permitted Precious Metals Agreements and Client- Customer Arrangements as contemplated by Section 9.24; and (vi) insurance coverage and certificates of  insurance as contemplated by Section 9.25.               (c)   Notwithstanding anything to the contrary set forth in this Agreement, the foregoing  Sections 9.21(a) and 9.21(a) shall not apply to any Metal that a Customer obtains from any supplier, lender,  consignor or financial institution on an unsecured basis, and each Customer shall be entitled to obtain any                                        -39-  

 

   Category of Metals on an unsecured basis from any supplier, lender, consignor or financial institution.  For  purposes  of  this Section  9.21(c) only,  the  parties  to  this  Agreement  agree  that  the  Lease,  dated  as  of  December 20, 2006, between WAM and BASF Corporation (as the assigned of BASF Catalysts, LLC), as  amended, modified or restated from time to time (the “BASF Lease”), will be deemed unsecured; provided,  however, that the Customers shall ensure that at all times the aggregate value of the metals consigned or  leased under the BASF Lease does not exceed $35,000,000.               (d)   For the avoidance of doubt, each Customer shall be entitled to (i) purchase Metals  for cash from any Person, and (ii) enter into Client-Customer Arrangements in the ordinary course of such  Customer’s business.         Section 9.22. [Reserved].         Section 9.23. Location of Metal.               (a)   The  Customers  shall  at  all  times  maintain  one  hundred  percent  (100%)  of  the  Consigned Metal physically located at (i) one or more Approved Locations, (ii) in transit between any  Approved Locations, or (iii) in transit to Metal Lender.               (b)   The Customers shall not permit the value (as determined pursuant to Section 2.2  hereof) of all Metal of the Customers in the possession of, or in transit to, Approved Refiners/Fabricators  to exceed $50,000,000 at any time (or such other amount as may be approved by the Metal Lender or the  Collateral Agent from time to time).               (c)   The Customers shall not permit the value (as determined pursuant to Section 2.2  hereof) of all Metal of the Customers in the possession of, or in transit to, Approved Subconsignees to  exceed $20,000,000 at any time (or such other amount as may be approved by the Metal Lender or the  Collateral Agent from time to time).         Section 9.24. Permitted Metals Agreements.               (a)   The Customers shall provide the Metal Lender with (i) prompt written notice of  each Permitted Metals Agreement and Client-Customer Arrangement entered into by any Customer from  time to time, (ii) a copy of each Permitted Metals Agreement and each agreement entered into to evidence  any Client-Customer Arrangement, (iii) notice of any Lien filed in connection with a Permitted Metals  Agreement or a Client-Customer Arrangement, and (iv) such additional information as the Metal Lender  may reasonably request from time to time with respect to all Permitted Metals Agreements and all Client- Customer Arrangements.               (b)   (i)   The Customers shall ensure that (A) the sum of: (1) the aggregate value  (determined in accordance with Section 2.2 hereof) of all Metal held by the Customers (which may include  Metal obtained or held by any Customer pursuant to this Agreement, any Permitted Metal Agreement and  any Client-Customer Arrangement) at all Approved Locations, plus (2) the aggregate undrawn face amount  of any Letters of Credit in excess of the Net Marked-to-Market Exposure of all Metal Hedging Transactions,  at  all  times  equals  or  exceeds  (B) the  sum  of: (1) the  aggregate  value  (determined  in  accordance  with  Section 2.2 hereof) of Consigned Metal consigned or leased to the Customers under this Agreement, plus  (2) the aggregate value (determined in accordance with Section 2.2 hereof) of Metal outstanding to the  Customers under all Permitted Metals Agreements (other than this Agreement), plus (3) the aggregate value  (determined  in  accordance  with Section 2.2 hereof)  of  Metal  outstanding  to  the  Customers  under  any  Client-Customer Arrangement.                                         -40-  

 

                     (ii)  If it is determined that a Physical Metal Deficiency (as defined below)  exists, then within forty-five (45) of any Authorized Representative becoming aware of such Physical Metal  Deficiency, the Customers shall (A) purchase or otherwise acquire Equity Metal, or (B) amend one or more  Letters of Credit or cause additional Letters of Credit to be issued, or (C) provide a Collateral Compliance  Certificate evidencing a reduction in such Physical Metal Deficiency, or (D) engage in any combination of  the foregoing, to the extent necessary to cure such Physical Metal Deficiency.  During such 45-day period,  the Customer’s failure to comply with Section 9.24(b) shall not be deemed to be a Default under this  Agreement.  As used in this Agreement, the term “Physical Metal Deficiency” means the amount, if any,  by which (i) the amount determined pursuant to Section 9.24(b)(i)(B) exceeds (ii) the amount determined  pursuant to Section 9.24(b)(i)(A).  Notwithstanding anything to the contrary in this Section 9.24(b)(ii), if  the amount of the Physical Metal Deficiency equals or exceeds $20,000,000, the Customers shall have five  (5) Business Days to cure such Physical Metal Deficiency in accordance with this Section 9.24(b)(ii).                  (c)   The Customers shall ensure that at all times the Aggregate Secured Metal Facility  Indebtedness does not exceed the Aggregate Secured Metal Limit.         Section 9.25. Insurance and Safekeeping.               (a)   The Customers will bear all risk of loss, damage or disappearance from any cause  whatsoever (including, but not limited to, that resulting from fire, theft by any means  including fraud,  accidental damage and transit risks, confiscation, expropriation, nationalization, deprivation, war, riots,  strikes and civil commotion) with respect to the Consigned Metal or Stored Precious Metal from the time  delivered by the Metal Lender until returned to the Metal Lender or purchased by the Customer, as provided  in this Agreement.                 (b)   Until such time as the Consigned Metal or Stored Precious Metal being returned  to the Metal Lender has been received by Metal Lender, or purchased by the Customer, as provided in this  Agreement, the Customer will afford the Consigned Metal or Stored Precious Metal no less safekeeping  protection than it affords Metal held for its own account.               (c)   If the Metal Lender delivers written notice to the Customer Agent setting forth the  basis for its reasonable belief that an Approved Storage Facility Location offers inadequate safekeeping  protection for the Stored Precious Metal, the applicable Customer shall transfer all Stored Precious Metal,  contained at such Approved Storage Facility Location to another Approved Storage Facility Location (if  any) within ten (10) days following receipt of such notice.  If the Collateral Agent and Metal Lender jointly  deliver  written  notice  to  the  Customer  Agent  setting  forth the  basis  for their reasonable  belief  that  an  Approved  Location  offers  inadequate  safekeeping  protection  for  the  Consigned  Metal,  the  applicable  Customer shall:  (i) with respect to Approved Locations that are not Approved Refiner/Fabricator Locations  or Approved Subconsignee Locations, transfer all Consigned Metal contained at such Approved Location  to another Approved Location within ten (10) days following receipt of such notice, and (ii) with respect to  Approved  Refiner/Fabricator  Locations  or  Approved  Subconsigneee  Locations,  use  its  commercially  reasonable  efforts  to  transfer  all  Consigned  Metal  contained  as  such  Approved  Location  to  another  Approved Location as quickly as possible taking into account the reasonable completion of outstanding or  committed refining, fabrication or other third party activities undertaken in the ordinary course of business.               (d)   Each  Customer  will  arrange  and  maintain  insurance  coverage  reasonably  acceptable to the Metal Lender on the Consigned Metal and Stored Precious Metal in such amounts and  covering such risks as is usually carried by companies engaged in a similar business.  Without limiting the  foregoing, each Customer will maintain all risk property/cargo insurance sufficient to cover the Consigned  Metal and Stored Precious Metal on a replacement cost basis and insurance to cover theft of the Consigned  Metal  or  Stored  Precious  Metal  by  any  means,  including  via  computer,  and  the  Metal  Lender  will  be                                        -41-  

 

   included as a loss payee under this insurance.  The Customer Agent shall, upon request, deliver to the Metal  Lender  evidence  of  such  insurance,  including  but  not  limited  to  a  certificate  of  insurance,  and  such  certificate of insurance will provide that the insurer will provide thirty (30) days’ prior written notice of  cancellation, non-renewal or material modification to the Metal Lender and note the Metal Lender as a loss  payee.                                    ARTICLE 10.                     EVENTS OF DEFAULT AND ACCELERATION.         Section 10.1. Events of Default.         In each case of the occurrence of any one or more of the following events (each of which is herein  called an “Event of Default”):               (a)   any  representation  or  warranty  made  or  deemed  made  by  or  on  behalf  of  a  Customer herein or in any of the Metal Documents or in any certificate, statement or agreement furnished  in writing by the Customers in connection with this Agreement or any Metal Document shall prove to be  false or misleading in any material respect; or               (b)   default in the payment of any Obligation, when the same shall become due and  payable, whether at the due date thereof or at a date fixed for payment or by acceleration or otherwise and  continuation thereof for a period of two (2) Business Days; or               (c)   (i)   default  by  any  Customer  in  the  due  observance  or  performance  of,  or  compliance with, any covenant or agreement contained in any of Section 9.2, 9.3 or 9.4 (with respect to a  Customer’s existence), Section 9.7, Sections 9.10 through 9.21, inclusive, or Section 9.24(b); or (ii) default  by any Customer in the due observance or performance of, or compliance with, any covenant or agreement  contained in Section 9.23 and continuance of such default for five (5) Business Days after occurrence; or                (d)   default  by  the  Customer  Agent  or  any  Customer  in  the  due  observance  or  performance of, or compliance with, any covenant or agreement contained in any of Sections 4.2 or 4.3 and  continuance of such default for two (2) Business Days after occurrence; or                (e)   default by any Customer (other than a default which constitutes an Event of Default  under another subsection of this Section 10.1) in the due observance or performance of, or compliance  with, any other covenant, condition or agreement to be observed or performed pursuant to the terms of this  Agreement  or  pursuant  to  the  terms  of  any  other  Metal  Document  and  which  default  shall  continue  unremedied for thirty (30) days after Customer Agent’s receipt of written notice thereof from the Metal  Lender; or|               (f)   any Customer shall (i) make an assignment for the benefit of creditors; or (ii) file  or suffer the filing of any voluntary or involuntary petition under any chapter of the Bankruptcy Code by  or against any Customer; provided, however, that the involuntary filing of a petition in bankruptcy against  a Customer shall not constitute an Event of Default unless such Customer fails to object and the petition is  not stayed  or discharged within sixty (60) days  after the  filing thereof; or (iii) apply for or permit the  appointment of a receiver, trustee or custodian of any of the property or business of any Customer; or  (iv) become insolvent or suffer the entry of an order for relief under the Bankruptcy Code; or (v) make an  admission in writing of its inability to pay its debts as they become due; or               (g)   the occurrence of any loss, theft, destruction of or damage to any of the Consigned  Metal or Stored Precious Metal which is not either adequately covered by insurance payable to the Metal                                        -42-  

 

   Lender  or  paid  for  by  the  Customer  as  provided  in  this  Agreement  within  fifteen  (15)  days  of  such  occurrence; or               (h)   the occurrence of any attachment of any Lien (other than a Permitted Metal Lien)  on any of the Consigned Metal or Stored Precious Metal; or               (i)   the occurrence of any attachment of any Lien (other than a Permitted Metal Lien)  on any other Collateral and such attachment shall not be discharged within thirty (30) days of the date such  attachment was made; or               (j)   (i) an “Event of Default” shall occur under and as defined in the Senior Credit  Agreement; (ii) an “Event of Default” shall occur under and as defined in any Permitted Metals Agreement  that is subject to the Metal Intercreditor Agreement; or (iii) a default shall occur with respect to any evidence  of  Material  Indebtedness  of  any  Customer  (which  may  include  any  Metal  Hedging  Transaction  if  the  Indebtedness covered thereby qualifies as Material Indebtedness at the time of determination), if the effect  of such default is to accelerate the maturity of such Material Indebtedness or to permit the holder thereof to  cause such Material Indebtedness to become due prior to the stated maturity thereof; or if any Material  Indebtedness of any Customer is not paid, when due and payable, whether at the due date thereof or a date  fixed for prepayment or otherwise; or               (k)   (i) any guarantee issued in favor of Metal Lender in accordance with the German  Precious  Metals  Agreement  (a  “German  Guarantee”)  shall  fail  to  be  in  full  force  and  effect,  or  any  Customer or applicable guarantor thereunder otherwise ceases to guarantee the obligations of MAMG under  the German Precious Metals Agreement in accordance with the terms thereof; or (ii) Metal Lender exercises  any of its available rights or remedies under any German Guarantee due to a failure by MAMG to make a  payment to BMO in accordance with the terms  of the  German  Precious Metals Agreement, and Metal  Lender fails to receive payment or satisfaction in full under such German Guarantee pursuant to the terms  of and within the time period specified therein; or                (l)   any Change in Control shall occur; or               (m)   one or more judgments for the payment of money in an aggregate amount in excess  of $20,000,000 (or the equivalent thereof in currencies other than dollars) shall be rendered against any  Customer and the same shall remain undischarged for a period of thirty (30) consecutive days during which  execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to  attach or levy upon any assets of the Customer to enforce any such judgment; or               (n)   (i) any Security Document or this Agreement shall for any reason fail to create a  valid and perfected first priority security interest in any material portion of the Collateral purported to be  covered thereby, except as permitted by the terms of any Metal Document, or (ii) any Security Document  shall fail to remain in full force or effect or any action shall be taken by a Customer or other party thereto  (other than the Metal Lender) to discontinue or to assert the invalidity or unenforceability of any Security  Document; or               (o)   any material provision of any Metal Document for any reason ceases to be valid,  binding and enforceable in accordance with its terms, or any Customer shall challenge the enforceability of  any Metal Document (including, without limitation, any Intercreditor Agreement) or shall assert in writing,  or engage in any action or inaction based on any such assertion, that any provision of any of the Metal  Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms;  or                                         -43-  

 

               (p)   the  Customers  shall fail  to  renew  or replace  any  Letter  of  Credit  securing  this  Agreement, or any extension(s) or replacement(s) therefor, at least ten  (10) Business Days  prior to its  scheduled expiry date, if any, unless the Customers have demonstrated to the Metal Lender’s reasonable  satisfaction that the loss of such Letter of Credit is adequately offset by other existing Letters of Credit and  other Collateral; or the issuer of any Letter of Credit shall seek to modify, revoke or terminate its liability  under a Letter of Credit, or any governmental agency shall seek to limit, defer, postpone or terminate the  Metal Lender’s rights or the issuer’s liability under a Letter of Credit, unless the Customers have replaced  such Letter of Credit with a substitute Letter of Credit within ten (10) Business Days or have demonstrated  to the Metal Lender’s reasonable satisfaction that the loss of such Letter of Credit is adequately offset by  other Collateral;   then in any such event, immediately upon the occurrence of the Event of Default set forth in subparagraph  (e) above, and during the continuance of such Event of Default, at the option of the Metal Lender in all  other cases, (i) the  obligations  of the  Metal Lender hereunder shall terminate,  (ii) the  Customers  shall  promptly return to the Metal Lender all Consigned Metal theretofore consigned to but not purchased and  paid for by the Customers, (iii) the Customer Agent shall promptly return to the Metal Lender all Stored  Precious  Metal  not  purchased  and  paid  for  by  any  Customer  and  shall  otherwise  grant,  or  cause  any  applicable Customer to grant, the Metal Lender immediate access to any Stored Precious Metal in order to  allow for the Metal Lender’s recovery thereof, (iv) all the Customers’ obligations to the Metal Lender  (including, without limitation, those under the Consignment Facility, the Segregated Storage Facility and  any Metal Hedging Transactions) shall become immediately due and payable without presentment, demand  or notice, all of which are hereby expressly waived, notwithstanding any credit or time allowed to the  Customers or any instrument evidencing the Customers’ Obligations to the Metal Lender; (v) the Metal  Lender may draw against any and all Letters of Credit securing this Agreement; and (vi) the Customers  shall deliver cash collateral to the Metal Lender equal to the Net Marked-to-Market Exposure of all Metal  Hedging  Transactions  to  be  held  by  the  Metal  Lender  and  on  such  terms  and  conditions  as  shall  be  satisfactory to the Metal Lender in its sole discretion.  The Metal Lender shall in addition have all of the  rights and remedies of a secured party under the Uniform Commercial Code with respect to any Collateral  now  or  hereafter  securing  the  Customer’s  Obligations  hereunder.   The  Customers  shall,  at  the  Metal  Lender’s request, immediately assemble all such Collateral and Metal, and the Metal Lender may go upon  the Customer’s Premises to take immediate possession thereof.         Section 10.2. Waiver.         No failure or delay on the Metal Lender’s part to exercise or to enforce any of the Metal Lender’s  rights hereunder or under any other instruments or agreement evidencing the Customers’ Obligations to the  Metal Lender or to require strict compliance with the terms hereof or thereof in any one or more instances  and no course of conduct on the Metal Lender’s part shall constitute or be deemed to constitute a waiver or  relinquishment of any such rights hereunder unless it shall have signed a waiver thereof in writing and no  such waiver, unless expressly stated therein, shall be effective as to any transaction which occurs after the  date of such waiver or as to any continuance of a breach after such waiver.  The Metal Lender’s rights  hereunder  shall  continue  unimpaired  notwithstanding  any  extension  of  time,  compromise  or  other  indulgence granted by the Metal Lender to the Customers with respect to the Customers’ Obligations to the  Metal Lender or any instrument given the Metal Lender in connection therewith, and each Customer hereby                                         -44-  

 

   waives notice of any such extension, compromise or other indulgence and consent to be bound thereby as  if they had expressly agreed thereto in advance.                                    ARTICLE 11.                             AMENDMENTS/WAIVERS.         This Agreement (including the Schedules hereto) and the other Metal Documents constitute the  entire agreement of the parties herein and supersede any and all prior agreements, written or oral, as to the  matters contained herein, and no modification or waiver of any provision hereof or of any Metal Document,  nor consent to the departure by the Customers therefrom, shall be effective unless the same is in writing,  and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for  which given.                                    ARTICLE 12.                                INDEMNIFICATION.         Each Customer, jointly and severally, agrees to indemnify and hold harmless the Metal Lender and  each of its Affiliates and any of their respective officers, directors, employees, agents and advisors (each,  an “Indemnified Party”) from and against any Indemnified Liabilities that may be incurred by or asserted  or awarded against any Indemnified Party, in each case arising out of or related to  this Agreement, the  Security Documents or any other Metal Documents executed or delivered in connection herewith or any  early termination thereof, and any related documents or the transactions contemplated hereby or thereby,  including but not limited to: (i) any Indemnified Liabilities arising out of or relating to a breach, act, or  omission by or of the Customer Agent, any Customer, any Approved Refiner/Fabricator, any Approved  Subconsignee or any of their respective Affiliates, or any third party having custody over any Metal in any  location or in transit, including any Approved Location, Approved Storage Facility Location or Approved  Subconsignee Location; (ii) any violation of applicable law; or (iii) any incorrect, incomplete or untrue  information or documentation provided by or through any Customer in connection with the storage of the  Metals; except to the extent that such Indemnified Liability is found in a final, non-appealable judgment by  a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful  misconduct.  In any such litigation, or preparation therefor, the Metal Lender shall be entitled to select a  single firm for its own counsel and, in addition to the foregoing indemnity, each Customer agrees to pay  promptly the reasonable fees and expenses of such counsel, except to the extent that such expenses related  to  the  litigation  have  been  determined  in  a  final,  non-appealable  judgment  by  a  court  of  competent  jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.  This  indemnification shall survive and continue for the benefit of all Indemnified Parties.                                    ARTICLE 13.                                     SETOFF.         Each Customer hereby grants to the Metal Lender, a continuing Lien and right of setoff as security  for all liabilities and obligations to the Metal Lender, whether now existing or hereafter arising, upon and  against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping  or control of Metal Lender.  At any time upon the occurrence and during the continuance of an Event of  Default, without demand or notice (any such notice being expressly waived by each  Customer), but without  any duplication in recovery, the Metal Lender may setoff the same or any part thereof and apply the same  to any liability or obligation of any Customer even though unmatured and regardless of the adequacy of  any other Collateral (other than obligations and liabilities under any Metal Hedging Transaction which are  adequately cash-collateralized).  ANY AND ALL RIGHTS TO REQUIRE THE METAL LENDER  TO  EXERCISE  ITS  RIGHTS  OR  REMEDIES  WITH  RESPECT  TO  ANY  OTHER  COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT                                        -45-  

 

   OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF  THE  CUSTOMER,  ARE  HEREBY  KNOWINGLY,  VOLUNTARILY  AND  IRREVOCABLY  WAIVED BY EACH CUSTOMER.                                    ARTICLE 14.                                  ASSIGNMENTS.         Section 14.1. Assignment by Customers.         The rights of the Customers under this Agreement may not be assigned to any third party without  the prior written consent of the Metal Lender.  All covenants and agreements of the Customers contained  herein shall bind the Customers and their successors and assigns, and shall inure to the benefit of the Metal  Lender, its successors and assigns.  Subject to and without limitation of Section 14.2 and Section 14.3,  Metal  Lender  may  at  any  time  assign  or  transfer  all or  any  of  its  rights  and/or  obligations  hereunder,  provided  such  assignment  or  transfer  is  to  its  successors  in  title  or  to  a  wholly-owned  subsidiary,  an  Affiliate, or a branch or office of Metal Lender and each such assignee is entitled to rely on the provisions  contained in Article 14.         Section 14.2. Participations.               (a)   The Metal Lender shall have the unrestricted right at any time and from time to  time, and without the consent of or notice to the Customers, to grant to one or more banks or other financial  institutions  (each,  a  “Participant”)  participating  interests  in  the  Metal  Lender’s  obligations  under  this  Agreement (other than the Segregated Storage Facility) and/or any or all of the commitments held by the  Metal Lender under this Agreement (other than the Segregated Storage Facility).  In the event of any such  grant by the Metal Lender of a participating interest to a Participant, whether or not upon notice to the  Customers, Metal Lender shall remain responsible for the performance of its obligations hereunder and the  Customers shall continue to deal solely and directly with Metal Lender in connection with Metal Lender’s  rights and obligations hereunder.  Subject to the terms and provisions of any Metal Document, the Metal  Lender  may  furnish  any  information  concerning  the  Customers  in  its  possession  from  time  to  time  to  prospective Participants, provided that Metal Lender shall require any such prospective Participant to agree  in writing to maintain the confidentiality of such information;               (b)   The Metal Lender may sell participations to a Participant in all or a portion of such  Metal Lender’s rights and obligations under this Agreement (including all or a portion of its commitment  to consign Metal); provided that each of the Customers and the Metal Lender must give its prior written  consent to the  sale  of such participation (which consent shall not be  unreasonably withheld but which  consent must be obtained prior to the release of any information to such participant); and provided further  that any consent of the Customers otherwise required under this Section shall not be required if an Event  of Default has occurred and is continuing.  In addition, any sale of a participation shall provide that (i) such  Metal Lender’s obligations under this Agreement shall remain unchanged, (ii) such Metal Lender shall  remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the  Customers shall continue to deal solely and directly with the Metal Lender in connection with the rights  and obligations of the parties under this Agreement.  Any agreement or instrument pursuant to which the  Metal Lender sells such a participation shall provide that the Metal Lender shall retain the sole right to  enforce this Agreement and to approve any amendment, modification or waiver of any provision of this  Agreement.                                         -46-  

 

         Section 14.3. Pledges.         The Metal Lender may at any time pledge or assign a security interest in all or any portion of its  rights under this Agreement to a Federal Reserve Bank, and this Section shall not apply to any such pledge  or assignment of a security interest; provided that no such pledge or assignment of a security interest shall  release the Metal Lender from any of its obligations hereunder or substitute any such assignee for such  Metal Lender as a party hereto.                                    ARTICLE 15.                                    EXPENSES.         The Customers shall pay upon demand all reasonable out-of-pocket expenses of the Metal Lender  in connection with the preparation, administration, collection, waiver or amendment of credit terms, or in  connection with the Metal Lender’s exercise, preservation or enforcement of any of its rights or remedies  hereunder and under the Security Documents, including, without limitation, reasonable fees of outside legal  counsel or the allocated costs of in-house legal counsel, accounting, consulting, brokerage or other costs  relating to any appraisals or examinations conducted in connection with the loan and consignment or any  Collateral therefor, and the amount of all such expenses shall, until paid, bear interest at the rate applicable  to  principal  hereunder  (including  any  applicable  default  rate  specified  in  this  Agreement)  and  be  an  obligation secured by any Collateral.                                    ARTICLE 16.        GOVERNING LAW; JURY TRIAL WAIVER; CONSENT TO JURISDICTION;                                MISCELLANEOUS.         Section 16.1. Governing Law.         This  Agreement and the  rights  and  obligations of the parties  hereunder shall be construed and  interpreted in accordance with the laws of the State of New York (excluding the laws applicable to conflicts  or choice of law).  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without  invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in  any other jurisdiction.         Section 16.2. Forum; Waiver of Jury Trial.         EACH CUSTOMER HEREBY IRREVOCABLY AGREES THAT ANY SUIT FOR THE  ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER METAL DOCUMENTS  MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL  COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF  SUCH  COURT  AND  SERVICE  OF  PROCESS  IN  ANY  SUCH  SUIT  BEING  MADE  UPON  CUSTOMER BY MAIL AT THE CUSTOMER’S ADDRESS SET FORTH IN THIS AGREEMENT.   EACH  CUSTOMER  HEREBY  WAIVES  ANY  OBJECTION  THAT  IT  MAY  NOW  OR  HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT  SUCH SUIT IS BROUGHT IN AN INCONVENIENT FORUM.  EACH CUSTOMER AND THE  METAL    LENDER    MUTUALLY     HEREBY    KNOWINGLY,     VOLUNTARILY      AND  INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM  BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT  OR  ANY  OTHER  METAL  DOCUMENTS  AT  ANY  TIME  EXECUTED  IN  CONNECTION  HEREWITH  OR  ANY  COURSE  OF  CONDUCT,  COURSE  OF  DEALINGS,  STATEMENTS  (WHETHER  VERBAL  OR  WRITTEN)  OR  ACTIONS  OF  ANY  PARTY,  INCLUDING,                                        -47-  

 

   WITHOUT  LIMITATION,  ANY  COURSE  OF  CONDUCT,  COURSE  OF  DEALINGS,  STATEMENTS  OR  ACTIONS  OF  THE  METAL  LENDER  RELATING  TO  THE  ADMINISTRATION OF THE    CONSIGNMENTS, THE METAL HEDGING TRANSACTIONS,  AND  THE  SEGREGATED  STORAGE  FACILITY,   OR  ENFORCEMENT  OF  THE  METAL  DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY  SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR  HAS NOT BEEN WAIVED.  EXCEPT AS PROHIBITED BY LAW, EACH CUSTOMER HEREBY  WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY  SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES  OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH CUSTOMER CERTIFIES  THAT NO REPRESENTATIVE OF METAL LENDER OR ATTORNEY HAS REPRESENTED,  EXPRESSLY OR OTHERWISE, THAT THE METAL LENDER WOULD NOT, IN THE EVENT  OF  LITIGATION,  SEEK  TO  ENFORCE  THE  FOREGOING  WAIVER.   THIS  WAIVER  CONSTITUTES A MATERIAL INDUCEMENT FOR THE METAL LENDER TO ACCEPT THIS  AGREEMENT AND EXTENDS THE FACILITIES HEREUNDER.         Section 16.3. Usury.         All agreements between the Customers and the Metal Lender are hereby expressly limited so that  in no contingency or event whatsoever, whether by reason of acceleration of maturity of the Indebtedness  or Obligations evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Metal  Lender for the use or the forbearance of the  Indebtedness or Obligations  evidenced hereby exceed the  maximum permissible under applicable law.  As used herein, the term “applicable law” shall mean the law  in effect as of the date hereof provided, however that in the event there is a change in the law which results  in a higher permissible rate of interest, then this Agreement shall be governed by such new law as of its  effective date.  In this regard, it is expressly agreed that it is the intent of the Customers and the Metal  Lender in the execution, delivery and acceptance of this Agreement to contract in strict compliance with  the  laws  of  the  State  of  New  York  from  time  to  time  in  effect.   If,  under  or  from  any  circumstances  whatsoever, fulfillment of any provision hereof or of any of the other Metal Documents at the time of  performance of such provision shall be due, shall involve transcending the limit of such validity prescribed  by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such  validity, and if under or from circumstances whatsoever the Metal Lender should ever receive as interest  and amount which would exceed the highest lawful rate, such amount which would be excessive interest  shall be applied to the reduction of the non-interest portion of the Obligations evidenced hereby and not to  the payment of interest.  This provision shall control every other provision of all agreements between the  Customers and the Metal Lender.         Section 16.4. Additional Costs.         If any present or future applicable law, which expression, as used herein, includes statutes, rules  and regulations thereunder and interpretations thereof by any competent court or by any governmental or  other regulatory body or official charged with the administration or the interpretation thereof and requests,  directives, instructions and notices at any time or from time to time hereafter made upon or otherwise issued  to the Metal Lender by any central bank or other fiscal, monetary or other authority (whether or not having  the force of law), shall:               (a)   subject the Metal Lender to any tax (except for taxes on income or profits), levy,  impost, duty, charge, fee, deduction or withholding of any nature with respect to the making of Fixed Rate  Consignments, or                                         -48-  

 

               (b)   materially change the basis of taxation (except for changes in taxes on income or  profits) of payments to the Metal Lender of the principal of or the interest on Fixed Rate Consignments or  any other amounts payable to the Metal Lender under this Agreement for Fixed Rate Consignments, or               (c)   impose  or  increase  or  render  applicable  (other  than  to  the  extent  specifically  provided  for  elsewhere  in  this  Agreement)  any  special  deposit,  reserve,  assessment, liquidity,  capital  adequacy or other similar requirements (whether or not having the force of law) against assets held by, or  deposits in or for the account of, or loans by, or commitments of the Metal Lender as they relate to this  Agreement, or               (d)   impose on the Metal Lender any other conditions or requirements with respect to  Fixed Rate Consignments or any class of commitments of which any of Fixed Rate Consignments form a  part;               (e)   and the result of any of the foregoing is:                     (i)   to  increase  the  cost  to  the  Metal Lender  of  making,  funding,  issuing,                          renewing, extending or maintaining any of the Fixed Rate Consignments,                          or                     (ii)  to reduce the amount of principal, interest or other amount payable to the                          Metal  Lender  hereunder  on  account  of  any  of  the  Fixed  Rate                          Consignments, or                     (iii) to require the Metal Lender to make any payment or to forego any interest                          or other sum payable hereunder, the amount of which payment or foregone                          interest or other sum is calculated by reference to the gross amount of any                          sum receivable or deemed received by the Metal Lender for the Customers                          hereunder,   then, and in each such case, the Customers will, upon demand by the Metal Lender, at any time and from  time  to time  and  as often as the  occasion therefor may arise, pay to the Metal Lender such additional  amounts as will be sufficient to compensate the Metal Lender for such additional cost, reduction, payment  or foregone interest or other sum.         Section 16.5. Capital Adequacy.         If any present or future law, governmental rule, regulation, policy, guideline or directive (whether  or not having the force of law) or the interpretation thereof by a court or governmental authority with  appropriate jurisdiction affects the amount of capital required or expected to be maintained by the Metal  Lender or any corporation controlling the Metal Lender and the Metal Lender determines that the amount  of capital required to be maintained by them, or any of them, is increased by or based upon the existence  of Fixed Rate Consignments made or deemed to be made pursuant hereto or the commitments of the Metal  Lender hereunder, then the Metal Lender may notify the Customer of such fact, and the Customers shall  pay to the Metal Lender from time to time upon demand, as an additional fee payable hereunder, such  amount as the Metal Lender shall determine and certify in a notice to the Customers to be an amount that  will adequately compensate  the  Metal Lender in light of these circumstances  for its increased costs  of  maintaining such capital.  The Metal Lender shall allocate such cost increases among its customers in good  faith and on an equitable basis.         Section 16.6. Certificate.                                        -49-  

 

         A certificate setting forth any additional amounts payable pursuant to Sections 16.4 and 16.5 and  a brief explanation of such amounts which are due, submitted by the Metal Lender to the Customers, shall  be prima facie evidence that such amounts are due and owing.         Section 16.7. Survival of Representations and Covenants.         This Agreement and all covenants, agreements, representations and warranties made herein and in  the certificates delivered pursuant hereto, shall survive the consigning of Consigned Metal by the Metal  Lender to the Customers, the entering into of Metal Hedging Transactions and the execution and delivery  to the Metal Lender of this Agreement, and shall continue in full force and effect so long as any Obligation  is  outstanding  and  unpaid.   Whenever in this  Agreement  any  of  the  parties  hereto  is  referred  to, such  reference shall be deemed to include the successors and assigns of such party; and all covenants, promises  and agreements contained in this Agreement by or on behalf of the Customers shall inure to the benefit of  the successors and assigns of the Metal Lender.         Section 16.8. Notices.         All notices, requests, demands and other communications provided for hereunder shall be in writing  (including telecopied or electronic communication) and mailed or telecopied or delivered to the applicable  party at the addresses indicated below or, in the case of electronic communication, at the e-mail address  designated by each party.         If to the Metal Lender:              Lauren Hanley             Director             BMO Capital Markets             115 S. LaSalle St., 25W             Chicago, IL 60603             Email: lauren.hanley@bmo.com             Tel: 312.590.1490                          Bimal Das             MD & Global Head, Metals Sales and Structuring             Bank of Montreal             3 Times Square, 27th Floor             New York, NY 10036             Email: bimaldas@bmo.com             Tel: 646.740.6567                          and                          BMO CM Metals Mailbox             Email: MetalsCB@bmo.com                     in each case (except for routine communications) with a copy to:                      Willkie Farr & Gallagher LLP              1875 K St. N.W.              Washington, DC 20006              Attn: Vanessa Tanaka, Esq.                                        -50-  

 

               Email: vtanaka@willkie.com              Tel: (202) 303-1113                      If to the Customer:              c/o Materion Corporation              6070 Parkland Blvd.              Mayfield Heights, Ohio 44124              Attention:  Chris Eberhardt, Vice President, Tax and Treasury              Telecopy No.: (216) 481-2523                      in each case (except for routine communications) with a copy to:                      Jones Day              325 John H. McConnell Blvd., Suite 600              Columbus, Ohio 43215              Attention:  Jeffrey D. Litle, Esq.              Telecopy No.:  (614) 461-4198   or, as to each party, at such other address as shall be designated by such parties in a written notice to the  other party complying as to delivery with the terms of this Section.  All such notices, requests, demands  and other communication shall be deemed given upon receipt by the party to whom such notice is directed.         The address of the Metal Lender for payment by or on behalf of the Customers hereunder shall be  provided to the Customer Agent by the Metal Lender from time to time or upon request by the Customer  Agent.         Section 16.9. Lost Documents.         Upon receipt of an affidavit of an officer of the Metal Lender as to the loss, theft, destruction or  mutilation of this Agreement or any Security Document which is not of public record, and, in the case of  any such loss, theft, destruction or mutilation, the Customers will execute and deliver, in lieu thereof, a  replacement Agreement or Security Document.         Section 16.10. Waiver.         Neither any failure nor any delay on the part of the Metal Lender in exercising any right, power or  privilege  hereunder or under any other instrument given  as security therefor, shall operate as a waiver  thereof, nor shall a single or partial exercise thereof preclude any other or future exercise, or the exercise  of any right, power or privilege.         Section 16.11. Severability.         Any provision of this Agreement or any of the Security Documents or other Credit Documents  which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the  extent  of  such  prohibition  or  unenforceability  without  invalidating  the  remaining  provisions  hereof  or  affecting the validity or enforceability of such provision in any other jurisdiction.         Section 16.12. Section Headings, Etc.         Any  Article  and  Section  headings  in  this  Agreement  are  included  herein  for  convenience  of  reference only and shall not constitute a part of this Agreement for any other purpose.                                        -51-  

 

         Section 16.13. Counterparts.         This Agreement may be executed by the parties hereto in several counterparts hereof and by the  different parties hereto on separate counterparts hereof, each of which shall be an original and all of which  counterparts shall together constitute one and the same agreement.  Delivery of an executed signature page  of this Agreement by facsimile transmission or e-mail of a pdf copy shall be effective as an in-hand delivery  of an original executed counterpart hereof.         Section 16.14. Disclaimer of Reliance.         Neither the Metal Lender nor the Customers have relied on any oral representations concerning any  of the terms or conditions of this Agreement or any of the Security Documents in entering into the same.   Each  party  acknowledges  and  agrees  that  none  of  the  officers  of  any  other  party  has  made  any  representations  that are  inconsistent  with  the  terms  and  provisions  of this  Agreement  and  the  Security  Documents, and no party has relied on any oral promises or representations in connection therewith.         Section 16.15. Environmental Indemnification.         In  addition  to  the  other  indemnification  obligations  provided  under  this  Agreement  and  in  consideration of the execution and delivery of this Agreement by the Metal Lender and the making of  consignments and other extensions of credit, each Customer hereby indemnifies, exonerates and holds the  Indemnified Parties free and harmless from and against any and all claims, actions, causes of action, suits,  losses,  costs,  settlement  payments,  fees,  liabilities  and  damages,  and  expenses  incurred  in  connection  therewith  (irrespective  of  whether  any  such  Indemnified  Party  is  a  party  to  the  action  for  which  indemnification hereunder is sought), including reasonable attorneys’ fees and disbursements (collectively,  the “Indemnified Liabilities”), incurred by the Indemnified Parties or any of them as a result of, or arising  out of, or relating to:               (a)   any investigation, litigation or proceeding related to any environmental cleanup,  audit,  compliance  or  other  matter  relating  to  the  protection  of  the  environment  or  the  release  by  the  Customers of any Hazardous Material; or               (b)   the  presence  on  or  under,  or  the  escape,  seepage,  leakage,  spillage,  discharge,  emission,  discharging  or  releases  from,  any  real  property  owned  or  operated  by  any  Customer  of  any  Hazardous Material (including any losses, liabilities, damages, injuries, costs, expense or claims asserted  or arising under any Environmental Law), regardless of whether caused by, or within the control of, a  Customer;   except, in each case arising by reason of an Indemnified Party’s gross negligence or willful misconduct.  If  and to the extent that the foregoing undertaking may be unenforceable for any reason, the Customer agrees  to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities  which is permissible under applicable law.  Notwithstanding anything to the contrary herein contained, the  obligations and liabilities under this Section shall survive and continue in full force and effect and shall not  be terminated, discharged or released in whole or in part irrespective of whether all the Obligations have  been paid in full or the Metal Lender’s commitment to consign Metal has been terminated.         Section 16.16. Joint and Several Obligations; Suretyship Waivers and Consents.               (a)   Without limiting any other provision of this Agreement, each Customer shall be  jointly and severally liable for any and all covenants, agreements, Obligations (including, for purposes of                                         -52-  

 

   clarity, any indemnification obligations), and representations and warranties under this Agreement, any  Metal Hedging Transaction, the Security Documents and any other Metal Document.               (b)   Each Customer unconditionally guarantees to the Metal Lender, jointly with the  other Customers  and  severally, as a  primary obligor and  not merely as a  surety, the  due  and  punctual  payment and performance of the Obligations for the ratable benefit of the Metal Lender. Each Customer  consents and agrees that the Metal Lender may, at any time and from time to time, without notice or demand,  whether before or after any actual or purported termination, repudiation or revocation of this Agreement by  any  Customer,  and  without  affecting  the  enforceability  or  continuing  effectiveness  hereof  as  to  such  Customer:  (i)  with  the  written  consent  of  the  other  Customers,  supplement,  restate,  modify,  amend,  increase, decrease, extend, renew or otherwise change the time for payment or the terms of this Agreement  or any part thereof, including any increase or decrease of the rate(s) of interest thereon; (ii) supplement,  restate, modify, amend, increase, decrease or waive, or enter into or give any agreement, approval or consent  with respect to, this Agreement or any part thereof, or any of the Security Documents, or any condition,  covenant, default, remedy, right, representation or term thereof or thereunder; (iii) accept partial payments;  (iv) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer  or enforce any security or guarantees, and apply any security and direct the order or manner of sale thereof  as the Metal Lender in its sole and absolute discretion may determine; (v) release any Person from any  personal liability with respect to this Agreement or any part thereof; (vi) settle, release on terms satisfactory  to the Metal Lender or by operation of applicable law or otherwise liquidate or enforce any security or  guaranty  in  any  manner,  consent  to  the  transfer  of  any  security  and  bid  and  purchase  at  any  sale;  or  (vii) consent to the merger, change or any other restructuring or termination of the corporate or partnership  existence of any Customer or any other Person, and correspondingly restructure the Obligations evidenced  hereby,  and  any  such  merger,  change,  restructuring  or  termination  shall  not  affect  the  liability  of  any  Customer or the continuing effectiveness hereof, or the enforceability hereof with respect to all or any part  of the Obligations evidenced hereby.               (c)   The Metal Lender may enforce this Agreement independently as to each Customer  and independently of any other remedy or security the  Metal Lender at any time  may have  or hold in  connection with the Obligations evidenced hereby, and it shall not be necessary for the Metal Lender to  marshal assets in favor of any Customer or any other Person or to proceed upon or against or exhaust any  security or remedy before proceeding to enforce this Agreement.  Each Customer expressly waives any  right to require the Metal Lender to marshal assets in favor of any Customer or any other Person or to  proceed against any other Customer or any Collateral provided by any Person, and agrees that the Metal  Lender may proceed against Customers or any Collateral in such order as it shall determine in its sole and  absolute discretion.               (d)   Each Customer further agrees that its guaranty hereunder constitutes a guaranty of  payment when due and not of collection, and waives any right to require that any resort be had by the Metal  Lender to any security held for the payment of the Obligations or to any balance of any deposit account or  credit on the books of the Metal Lender in favor of the Customer or any other person.               (e)   The  Metal  Lender’s  rights  hereunder  shall  be  reinstated  and  revived,  and  the  enforceability of this Agreement shall continue, with respect to any amount at any time paid on account of  the Customers’ Obligations to the Metal Lender which thereafter shall be required to be restored or returned  by the Metal Lender, all as though such amount had not been paid.               (f)   To the  maximum extent permitted by applicable law, each  Customer expressly  waives any and all suretyship defenses now or hereafter arising or asserted by reason of (i) any disability  or  other  defense  of  the  other  Customers  with  respect  to  the  Obligations  evidenced  hereby,  (ii)  the  unenforceability or invalidity of any security or guaranty for the Obligations evidenced hereby or the lack                                        -53-  

 

   of perfection or continuing perfection or failure of priority of any security for the Obligations evidenced  hereby, (iii) the cessation for any cause whatsoever of the liability of the other Customers (other than by  reason of the full payment and performance of all Obligations), (iv) any failure of the Metal Lender to  comply with applicable law in connection with the sale or other disposition of any Collateral or other  security for any Obligation, (v) any act or omission of the Metal Lender or others that directly or indirectly  results in or aids the discharge or release of any Customer or the Obligations evidenced hereby or any  security or guaranty therefor by operation of law or otherwise, (vi) the avoidance of any Lien in favor of  the Metal Lender for any reason, (vii) any rescission, waiver, amendment or modification of, or any release  from any of the terms or provisions of, any Metal Document or any other agreement, including with respect  to any other Customer under this Agreement; (viii) any default, failure or delay, willful or otherwise, in the  performance of the Obligations; (ix) any change in the corporate existence, structure or ownership of any  Customer,  or  any  insolvency,  bankruptcy,  reorganization  or  other  similar  proceeding  affecting  any  Customer or its assets or any resulting release or discharge of any Obligation (other than the payment in  full in cash or immediately available funds of all the Obligations); (x) the existence of any claim, set-off or  other rights that any Customer may have at any time against any other Customer, the Metal Lender, or any  other corporation or person, whether in connection herewith or any unrelated transactions, provided that  nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim;  (xi) any other circumstance (including, without limitation, any statute of limitations) or any existence of or  reliance on any representation by the Metal Lender that might otherwise constitute a defense to, or a legal  or equitable discharge of, any Customer or any other guarantor or surety or (xii) any action taken by the  Metal Lender that is authorized by this Section or any other provision hereof or of any Security Document.   Until such time, if any, as all of the Obligations have been paid and performed in full and no portion of any  commitments of the Metal Lender to consign Metal to the Customers under any agreement remains in  effect, no Customer shall have any right of subrogation, contribution, reimbursement or indemnity from  any other Customer, and each Customer (only in its capacity as a guarantor or surety) expressly waives any  right to enforce any remedy that the Metal Lender now has or hereafter may have against any other Person  and waives the benefit of, or any right to participate in, any Collateral now or hereafter held by the Metal  Lender.  If any amount shall be paid to any Customer on account of any subrogation rights at any time prior  to payment in full of the Obligations, such amount shall be held by such Customer in trust for the Metal  Lender, segregated from other funds of such Customer, and shall, forthwith upon receipt by such Customer,  be  paid  to  the  Metal  Lender  to  be  credited  and  applied  against  the  Obligations,  whether  matured  or  unmatured, in accordance with the terms of the Agreement.               (g)   In furtherance of the foregoing and not in limitation of any other right that the  Metal  Lender  has  at  law  or  in  equity  against  any  Customer  by  virtue  hereof,  upon  the  failure  of  any  Customer  to  pay  any  Obligation  when  and  as  the  same  shall  become  due,  whether  at  maturity,  by  acceleration, after notice of prepayment or otherwise (but, in each case, subject to any grace period provided  in this Agreement), each Customer hereby promises to and will forthwith pay, or cause to be paid, to the  Metal Lender such unpaid Obligation. Upon payment by any Customer of any sums to the Metal Lender as  provided above, all rights of such Customer against the owing Customer arising as a result thereof by way  of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be fully  subordinated  to  the  indefeasible  payment  in  full  in  cash  of  the  Obligations  (except  for  contingent  indemnities and cost and expense reimbursement obligations to the extent no claim has been made).               (h)   In  the  event  that in  any  action  or  proceeding  involving  any  state  or  foreign  corporate law, or any state, Federal or foreign bankruptcy, insolvency, reorganization or other law affecting  the rights of creditors generally, the obligations of any Customer under this Agreement shall be held or  determined to be void, avoidable, invalid or unenforceable (including, without limitation, because of any  applicable state or Federal law relating to fraudulent conveyances or transfers), then, notwithstanding any  other provision of this Agreement to the contrary, the amount of such liability of a Customer shall, without  any further action by any Customer, Collateral Agent or the Metal Lender, be automatically limited and                                        -54-  

 

   reduced to the highest amount that is valid and enforceable (such highest amount determined hereunder  being the relevant Customer’s “Maximum Liability”).  This Section with respect to the Maximum Liability  of each Customer is intended solely to preserve the rights of Collateral Agent and the Metal Lender to the  maximum extent not subject to avoidance under applicable law, and no party to this Agreement nor any  other person or entity shall have  any right or claim under this  Section with respect to such Maximum  Liability, except to the extent necessary so that the obligations of any Customer hereunder shall not be  rendered void, voidable, invalid or unenforceable under applicable law.                                         -55-  

 

            IN WITNESS WHEREOF, the Metal Lender and the Customers have caused this Agreement to  be duly executed and delivered by their respective duly authorized representatives as of the day and year  first above written.   CUSTOMERS:                                   MATERION CORPORATION                     MATERION ADVANCED MATERIALS                                           TECHNOLOGIES AND SERVICES INC.                                             By: /s/ Christopher E. Eberhardt         By: /s/ Christopher E. Eberhardt      Name: Christopher E. Eberhardt           Name: Christopher E. Eberhardt        Title: Vice President, Tax and Treasury  Title: Vice President, Secretary and Treasurer                                                                                         MATERION TECHNICAL MATERIALS INC.        MATERION BRUSH INC.                                                                                        By: /s/ Christopher E. Eberhardt         By: /s/ Christopher E. Eberhardt      Name: Christopher E. Eberhardt           Name: Christopher E. Eberhardt        Title: Vice President, Secretary and Treasurer  Title: Vice President, Secretary and Treasurer                                                                                         MATERION LARGE AREA COATINGS LLC         MATERION ADVANCED MATERIALS                                           TECHNOLOGIES AND SERVICES CORP.                                             By: /s/ Shawn J. Lefort                                     By: /s/ Jeffrey A. Hirt                                      Name: Shawn J. Lefort                                     Name: Jeffrey A. Hirt                                      Title: Vice President, Treasurer and Secretary  Title: Vice President, Treasurer and Secretary                                                                                        METAL LENDER:                                BANK OF MONTREAL                                                                      By: /s/ Paul Rosica                                       Name: Paul Rosica                                      Title: Managing Director                                                                                                                                              -56-  

 

                      -57-EX-10.2

 Exhibit 10.2 

VIELA BIO 
 2018 EQUITY
INCENTIVE PLAN 
 1. Purposes of the Plan. The purposes of the Plan are to attract and retain the best available personnel, to
provide additional incentives to Employees, Directors and Consultants and to promote the success of the business of the Company. 
 2.
Definitions. The following definitions shall apply as used herein and, except as defined otherwise in an Award Agreement, in the Award Agreements. 

“Administrator” means the Board and any Committee or individual appointed to administer the Plan under
Section 4. 
 “Award” means an award described in Section 6. 

“Award Agreement” means the written agreement evidencing the grant of an Award, including any
amendments and attachments thereto. 
 “Board” means the Board of Directors of the Company. 

“Cause” means, with respect to the termination of employment or service, the term “Cause” (or
similar term) that is expressly defined in a then-effective written agreement between the Grantee and the Company or its Parent or any Subsidiary, or in the absence of such a definition, “Cause” shall be determined in the
discretion of the Administrator to mean the Grantee’s: (i) performance of any act or failure to perform any act in bad faith and to the material detriment of the Company or its Parent or any Subsidiary, as determined by the Administrator;
(ii) the failure to follow the lawful, written instruction of the Board or the Chief Executive Officer; (iii) dishonesty, intentional misconduct or material breach of any written agreement with the Company or its Parent or any Subsidiary;
(iv) a material violation of a written policy of the Company; or (v) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person. 

“Code” means the Internal Revenue Code of 1986, as amended. 

“Committee” means any committee that is composed of at least two members of the Board. 

“Common Stock” means the common stock, $0.001 par value of the Company. 

“Company” means Viela Bio, Inc., a Delaware corporation, or any successor entity. 

“Consultant” means any person other than an Employee or a Director (solely with respect to rendering
services in such person’s capacity as a Director) who is engaged by the Company or any Subsidiary to render consulting or advisory services to the Company or such Subsidiary. 

“Corporate Transaction” means any of the following transactions: 

	 	(i)	 a transaction or series of related transactions in which any person (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than any person who currently owns more than a majority of the Company’s Common Stock, becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of more than 50% of the combined voting power of the then outstanding voting securities of the Company, except that any change in the ownership of the stock of the
Company as a result of a private financing of the Company that is approved by the Board will not be considered a Corporate Transaction; 

  

	 	(ii)	 a consolidation or merger of the Company with or into another entity, unless the stockholders of the Company
immediately before such consolidation or merger own, directly or indirectly, a majority of the combined voting power of the outstanding voting securities of the corporation or other entity resulting from such consolidation or merger;

  

	 	(iii)	 the sale of all or substantially all of the assets of the Company; or 

 

	 	(iv)	 the liquidation, dissolution or winding up of the Company. 

For the avoidance of doubt, a transaction will not constitute a Corporate Transaction if: (1) its sole purpose is to change the
jurisdiction of the Company’s incorporation, or (2) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such
transaction. 
 “Director” means a member of the Board or the board of directors of any Subsidiary.

 “Employee” means an employee of the Company or any Subsidiary (including a Director who is also an
employee). 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

“Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 

 

	 	(i)	 if the Common Stock is listed on one or more established stock exchanges or national market systems, its Fair
Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of
determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; 

  

	 	(ii)	 if the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or
by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such stock as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market
Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as
reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 

  
 2 

	 	(iii)	 if neither (i) nor (ii) above applies, its Fair Market Value shall be the fair market value determined by
the Board using any measure of value that the Board determines to be appropriate (including, as it considers appropriate, relying on appraisals), and with respect to Options and SARs, in a manner consistent with the valuation principles under
Section 409A of the Code, except as the Board may expressly determine otherwise. 

 “Good
Reason” means, with respect to the termination of employment or service, the term “Good Reason” (or similar term) that is expressly defined in a then-effective written agreement between the Grantee and the Company or
its Parent or any Subsidiary, or in the absence of such a definition (i) a material diminution in the Grantee’s base salary except for across-the-board salary
reductions similarly affecting all or substantially all similarly situated employees of the Company or (ii) a change of more than 50 miles in the geographic location at which the Grantee primarily provides services to the Company, so long as
the Grantee provides at least 90 days’ notice to the Company following the initial occurrence of any such event and the Company fails to cure such event within 30 days thereafter, and the Grantee terminates employment for Good Reason within 30
days of the end of the Company’s cure period if the Company fails to cure such event. 

“Grantee” means an individual who holds an Award. 

“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code. 
 “Initial Public Offering” means the consummation of the
first firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, or under similar regulations in Hong Kong or other jurisdictions, covering the offer and sale by the Company of its equity
securities, as a result of or following which Shares shall be publicly held. 

“Non-Qualified Stock Option” means an Option not intended to
qualify as an Incentive Stock Option. 
 “Option” means an option to purchase Shares. 

“Parent” means a “parent corporation” of the Company, whether now or hereafter existing, as
defined in Section 424(e) of the Code. 
 “Plan” means this 2018 Equity Incentive Plan, as may
be amended or restated from time to time. 

  
 3 

 “Public Offering” means an underwritten public
offering of the Shares pursuant to an effective registration statement under the Securities Act or under similar regulations in Hong Kong or other jurisdictions. 

“Restricted Stock” means Shares issued under the Plan subject to restrictions determined by the
Administrator and set forth in the applicable Award Agreement. 
 “Restricted Stock Units” means an
Award based on the value of Common Stock that is an unfunded and unsecured promise to deliver Shares, cash, or other property upon the attainment of specified vesting or performance conditions, as determined by the Administrator and set forth in the
applicable Award Agreement. 
 “SAR” means a stock appreciation right entitling the Grantee to Shares
or cash compensation, as determined by the Administrator and set forth in the applicable Award Agreement, measured by appreciation in the value of Common Stock. 

“Securities Act” means the Securities Act of 1933, as amended. 

“Service Provider” means an Employee, Director, or Consultant. 

“Share” means a share of Common Stock. 

“Subsidiary” means a “subsidiary corporation” of the Company, whether now or hereafter
existing, as defined in Section 424(f) of the Code. 
 “Unrestricted Stock” means Shares issued
under the Plan that are not subject to vesting, forfeiture or similar restrictions pursuant to the applicable Award Agreement. For the sake of clarity, Shares that are only subject to restrictions on transfer, right of first refusal, market stand-off and other similar restrictions shall not, by virtue of such restrictions, be deemed to be “Restricted Stock.” 

3. Stock Subject to the Plan. 

(a) Reserved Shares. Subject to the provisions of Sections 11 and 12 of the Plan, (i) the maximum aggregate number of Shares which
may be issued pursuant to all Awards is 3,558,587 Shares, and (ii) the maximum aggregate number of Shares which may be issued pursuant to Incentive Stock Options is 3,558,587 Shares. The Shares may be authorized, but unissued, or reacquired
Common Stock. 
 (b) Shares Returned to Plan. Any Shares covered by an Award (or portion of an Award) which are forfeited, canceled,
reacquired by the Company prior to vesting, expired (whether voluntarily or involuntarily), satisfied without the issuance of Shares, or withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding, or
otherwise terminated (other than by exercise) shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually have been issued under the Plan
pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that if Shares are forfeited or repurchased by the Company, such Shares shall become available for future grant under
the Plan for all purposes other than the grant of Incentive Stock Options. 

  
 4 

 4. Administration of the Plan. 

(a) Administration by the Board. Subject to Sections 4(b) and 4(c), the Plan will be administered by the Board. The Board shall have
authority (i) to grant Awards and determine recipients and terms thereof, (ii) to determine Fair Market Value, (iii) to amend, modify or terminate any outstanding Award pursuant to Section 9(c), and (iv) to adopt, amend and
repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board shall have full discretionary authority to construe and interpret the terms of the Plan and any Award Agreements entered into under
the Plan and to determine all facts necessary to administer the Plan and any Award Agreements. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest
in the Plan or in any Award. No Director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan that is made in good faith. 

(b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan
to one or more Committees. All references in the Plan to the “Administrator” shall mean the Board or a Committee of the Board or the officers referred to in Section 4(c) to the extent that the Board’s powers or
authority under the Plan have been delegated to such Committee or officers. 
 (c) Delegation to Officers. To the extent permitted by
applicable law, the Board or a Committee may delegate to one or more officers of the Company or any Subsidiary the power to grant Awards, subject to any limitations under the Plan, to Employees, and to exercise such other powers under the Plan as
the Board or a Committee may determine, provided, that the Board or a Committee shall fix certain material terms of the Awards to be granted by such officers (including the exercise price of such Awards, if applicable, which may include a
formula by which the exercise price will be determined) and the maximum number of Shares (as defined below) subject to Awards that the officers may grant; provided further, however, that no officer shall be authorized to grant Awards to
himself or herself. 
 (d) Indemnification. The Administrator shall not be liable for any act, omission, interpretation, construction
or determination made in good faith in connection with the Plan. In addition to such other rights of indemnification as they may have, members of the Board and any Committee (and any individuals to whom authority to act for the Board is delegated in
accordance with the Plan) shall be defended and indemnified by the Company to the extent permitted by law against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any claim,
investigation, action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any Award granted hereunder,
and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct. Upon the institution of any such action, suit, or proceeding, any
such indemnified person against whom a claim is made shall notify the Company in writing and give the Company the opportunity, within thirty (30) days after such notice and at its own expense, to handle and defend the same before such
indemnified person undertakes to handle it on his or her own behalf. 

  
 5 

 (e) Foreign Award Recipients. Notwithstanding any provision of the Plan to the
contrary, in order to comply with the laws in other countries in which the Company and any Subsidiary operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority
to: (i) determine which Subsidiaries, if any, shall be covered by the Plan; (ii) determine which individuals, if any, outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any
Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be
necessary or advisable (and such subplans and/or modifications shall be attached to the Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitation contained in Section 3
hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. 

5. Eligibility for Awards. Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. Incentive
Stock Options may be granted only to Employees. 
 6. Types and Terms of Awards. 

(a) General. Awards may be made under the Plan in the form of (i) Options, (ii) SARs, (iii) Restricted Stock,
(iv) Restricted Stock Units, and (v) Unrestricted Stock. 
 (b) Conditions of Awards. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, restrictions and restriction periods, repurchase provisions, rights of first refusal, forfeiture provisions,
form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. Subject to the terms of the Plan, the Administrator may determine the effect on an Award of the
disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment of the Grantee. All of the terms and conditions of an Award shall be as set forth in the applicable Award Agreement or in
the Plan. 
 (c) Discretion of Administrator. Except as otherwise provided by the Plan, each Award may be made alone or in addition or
in relation to any other Award. The terms of each Award need not be identical, and the Administrator need not treat Grantees uniformly. 
 7. Options
and SARs. 
 (a) General. The Administrator may grant Options and SARs under the Plan and determine the number of
Shares to be covered by each Option and/or SAR, the exercise price and such other terms, conditions and limitations applicable to the exercise of each Option and/or SAR, as it deems necessary or advisable. Subject to Section 7(g), Options
granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option. 

  
 6 

 (b) Exercise Price. The exercise price per Share subject to an Option or SAR shall be
determined by the Administrator at the time of grant but shall not be less than 100% of the Fair Market Value on the date of grant. If an Employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more
than 10% of the combined voting power of all classes of stock of the Company or any Subsidiary or Parent of the Company, and an Incentive Stock Option is granted to such Employee, the exercise price of such Incentive Stock Option shall not be less
than 110% of the Fair Market Value on the date of grant. Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above as a substitution for a stock option or stock appreciation right in
accordance with and pursuant to Section 424 of the Code, in the case of an Incentive Stock Option, and pursuant to Section 409A of the Code, in the case of a Non-Qualified Stock Option. 

(c) Term of Options and SARs. The term of each Option and SAR shall be fixed by the Administrator and set forth in the Award Agreement;
provided, however, that no Option or SAR shall be exercisable more than ten (10) years after the date of grant. If an Employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more
than 10% of the combined voting power of all classes of stock of the Company or any Subsidiary or Parent of the Company, and an Incentive Stock Option is granted to such Employee, the term of such Option shall be no more than five (5) years
from the date of grant. Except as otherwise provided for in the applicable Award Agreement, unless the employment of an Employee is terminated for “Cause,” an Option or SAR granted to an Employee shall expire (i) no
earlier than 30 days and no later than three (3) months after the Employee ceases to be an Employee (or such longer period of time as determined by the Administrator and set forth in the applicable Award Agreement), or (ii) if the Employee
ceases to be an Employee because of a disability or the Employee dies while the Option is outstanding, no earlier than one year after the Employee becomes disabled or dies (or such longer period of time as determined by the Administrator and set
forth in the applicable Award Agreement). If the Employee’s employment is terminated for “Cause,” any Option or SAR held by the Employee shall immediately expire. 

(d) Exercisability; Rights of a Stockholder. Options and SARs shall become vested and/or exercisable at such time or times, whether or
not in installments, as shall be determined by the Administrator and set forth in the Award Agreement; provided, however, that the Administrator may at any time accelerate the vesting and/or exercisability of all or any portion of any
Option or SAR. A Grantee shall have the rights of a stockholder only as to Shares acquired upon the exercise of an Option or SAR in accordance with the Plan and applicable Award Agreement (and not as to Shares underlying an unexercised Option or
SAR) and the entry of such Grantee’s name as a stockholder in the books of the Company. 
 (e) Exercise of Options and SARs.
Options and SARs may be exercised in whole or in part by delivery to the Company of a written notice of exercise in such form of notice (including electronic notice) and manner of delivery as is specified by the Administrator, together with payment
in full as specified Section 7(f) for the number of Shares for which the Option or SAR is exercised. Shares subject to the Option will be delivered by the Company as soon as practicable following exercise. An Option may not be exercised for a
fraction of a Share. 

  
 7 

 (f) Payment Upon Exercise. No Shares shall be delivered pursuant to any exercise of
an Option or SAR until payment in full of all required tax withholding, and in the case of an Option, the aggregate exercise price. Payment of the purchase price may be made by one or more of the following methods (or any combination thereof), as
determined by the Administrator in its sole discretion, at or after grant, consistent with the Award Agreement: 
  

	 	(i)	 In cash, by either certified or bank check, by wire transfer of immediately available funds, or other
instrument acceptable to the Administrator; 

  

	 	(ii)	 In the form of previously acquired Shares based on the Fair Market Value on the date of exercise, subject to
clauses (iv) and (v) of this Section 7(f) if the Initial Public Offering as occurred; 

  

	 	(iii)	 If permitted by the Administrator, by the Grantee’s delivery of a promissory note, if the Board has
expressly authorized the loan of funds to the Grantee for the purpose of enabling or assisting the Grantee to effect such exercise; provided, that at least so much of the exercise price as represents the par value of the Shares exercised
shall be paid in cash if required by state law; 

  

	 	(iv)	 If permitted by the Administrator and the Initial Public Offering has occurred (or the Shares otherwise become
publicly-traded), through the delivery (or attestation to the ownership) of Shares that have been purchased by the Grantee on the open market or that are beneficially owned by the Grantee and are not then subject to restrictions under any Company
plan, provided that accepting such Shares will not result in adverse accounting consequences to the Company. Such surrendered Shares shall be valued at Fair Market Value on the exercise date; 

 

	 	(v)	 If permitted by the Administrator and the Initial Public Offering has occurred (or the Shares otherwise become
publicly-traded), through the delivery of irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the Grantee chooses to
pay the purchase price as so provided, the Grantee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure; and/or

  

	 	(vi)	 By such other means as the Administrator may accept. 

Options may be exercised pursuant to such cashless exercise procedures as may be approved and implemented by the Administrator from time to time, including
without limitation pursuant to broker-assisted exercise transactions and/or net exercise procedures; provided that, notwithstanding anything to the contrary herein, unless the Administrator gives prior written approval, a Grantee shall not be
entitled to satisfy the requirement of payment in full of any tax withholding, as set forth in the first sentence of this Section 7(f), through any “cashless” or “net exercise” arrangement. Payment instruments will be
received subject to collection. No certificates for Shares so purchased will be issued to the Grantee until the Company has completed all steps it 

  
 8 

 
has deemed necessary to satisfy legal requirements relating to the issuance and sale of the Shares, which steps may include, without limitation, (i) receipt of a representation from the
Grantee at the time of exercise of the Option that the Grantee is purchasing the Shares for the Grantee’s own account and not with a view to any sale or distribution of the Shares or other representations relating to compliance with applicable
law governing the issuance of securities, (ii) the legending of the certificate representing the Shares to evidence the foregoing restrictions, and (iii) obtaining from the Grantee payment or provision for all withholding taxes due as a
result of the exercise of the Option, consistent with Section 9(b). The delivery of certificates representing the Shares to be purchased pursuant to the exercise of an Option will be contingent upon (A) receipt from the Grantee (or a
purchaser acting in his or her stead in accordance with the provisions of the Option) by the Company of the full purchase price for such Shares and the fulfillment of any other requirements contained in the Award Agreement or applicable provisions
of laws and (B) if required by the Company, the Grantee shall have entered into any stockholders agreements or other agreements with the Company and/or certain other of the Company’s stockholders relating to the Shares. In the event a
Grantee chooses to pay the purchase price in previously owned Shares through the attestation method, the number of Shares transferred to the Grantee upon the exercise of the Option shall be net of the number of Shares attested to.  

(g) Annual Limit on Incentive Stock Options. Each Option shall be designated in the Award Agreement as either an Incentive Stock Option
or a Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for
the first time by the Grantee during any calendar year (under all plans of the Company and any Subsidiary or Parent) exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. For purposes
of this Section 7(g), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 

(h) Early Exercise. The Award Agreement for an Option or SAR may, but need not, include a provision whereby the Grantee may elect at any
time while an Employee, Director or Consultant to exercise any part or all of the Option prior to full vesting. Any unvested Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or any Subsidiary or
Parent or to any other restriction the Administrator determines to be appropriate. 
 8. Restricted Stock, Restricted Stock Units and Unrestricted
Stock. 
 (a) General. The Administrator shall determine the terms and conditions of each Award Agreement for
Restricted Stock, Restricted Stock Units and Unrestricted Stock. Subject to Section 9(a), Award Agreements for Restricted Stock and Restricted Stock Units shall include such restrictions as the Administrator may impose, which restrictions may
lapse separately or in combination at such time or times, in such installments or otherwise, as the Administrator may deem appropriate. 

  
 9 

 (b) Stock Certificates. Unless the Administrator shall otherwise determine,
certificates evidencing the Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in the applicable Award Agreement, and the Grantee shall be required, as a condition of the Award grant, to
deliver to the Company a stock power endorsed in blank and such other instruments of transfer as the Committee may prescribe. Following the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Grantee or if the Grantee has died, to the beneficiary designated, in a manner determined by the Administrator, by a Grantee. In the absence of an effective designation by a Grantee, the
designated beneficiary shall be the Grantee’s estate. 
 (c) Forfeiture and the Option to Purchase. Except as otherwise
determined by the Administrator, upon a Grantee’s termination of employment or service (as determined under criteria established by the Administrator) for any reason during the applicable restriction period, the Company (or its designee) shall
have the right, but shall not be obligated, (i) to repurchase from the Grantee all or part of Shares of Restricted Stock still subject to restriction at their issue price or other stated or formula price or (ii) to require forfeiture of
such Shares, if issued at no cost. 
 (d) Rights as a Stockholder. Upon (i) the grant of an Award for Restricted Stock or for
Unrestricted Stock or the settlement in Shares, pursuant to the applicable Award Agreement, of an Award for Restricted Stock Units and (ii) payment of any applicable purchase price, the Grantee of such Award shall be entered as a stockholder on
the books and the Company and considered the record owner of and shall be entitled to vote the Restricted Stock or Unrestricted Stock if, and to the extent, such Shares are entitled to voting rights, subject to such conditions contained in the Award
Agreement. The Grantee shall be entitled to receive all dividends and any other distributions declared on the Shares; provided, however, that the Company is under no duty to declare any such dividends or to make any such distribution.

 9. General Provisions Applicable to Awards. 

(a) Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom
they are granted, either voluntarily or by operation of law, and may be exercised, during the lifetime of the Grantee, only by the Grantee. Notwithstanding the foregoing, the Administrator may provide in an Award Agreement that the Award is
transferable by will, by the laws of descent and distribution, or as permitted by Rule 701 promulgated under the Securities Act. References to a Grantee, to the extent relevant in the context, shall include references to authorized transferees. 

(b) Withholding. The Grantee must satisfy all applicable federal, state, and local or other income and employment tax withholding
obligations before the Company will deliver stock certificates or otherwise recognize ownership of Shares under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company
elects not to or cannot withhold from other compensation, the Grantee must pay the Company the full amount, if any, required for withholding or, if permitted by the Administrator in its discretion, have a broker tender to the Company cash equal to
the withholding obligations. 
 (c) Amendment of Awards. The Administrator may amend, modify or terminate any outstanding
Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a
Non-Qualified Stock Option. The Grantee’s consent to such action shall be required unless (A) the Administrator determines that the action, taking into account any related action, would not
materially and adversely affect the Grantee’s rights under the Plan or (B) the change is permitted under Section 11 or 12 hereof. 

  
 10 

 (d) No Distribution; Compliance with Legal Requirements. The Administrator may
require each person acquiring Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to distribution thereof. No Shares shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar requirements have been satisfied. The Administrator may require the placing of such stop-orders and restrictive legends on certificates for Shares and Awards as it deems
appropriate. 
 (e) Delivery of Stock Certificates. Stock certificates to Grantees shall be deemed delivered for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the Grantee, at the Grantee’s last known address on file with the Company; provided that stock certificates to
be held in escrow pursuant to Section 8 of the Plan shall be deemed delivered when the Company shall have recorded the issuance in its records. 

(f) Uncertificated Shares. To the extent any Shares are uncertificated: (i) such Shares shall be deemed delivered by the Company
for all purposes when the Company or a stock transfer agent of the Company shall have given to the Grantee, by electronic mail or by United States mail, addressed to the Grantee at the Grantee’s last known address on file with the Company,
notice of the issuance and recorded the issuance in its records (which may include electronic “book entry” records); (ii) any reference in this Plan or any Award Agreement to the legending of certificates shall be interpreted to mean the
notation in the Company’s records (which may include electronic “book entry” records); (iii) any provision requiring deposit of stock certificates shall not be deemed breached solely by virtue of the fact that there is no stock
certificate representing such Shares; and (iv) the rights of an individual or entity that is entitled to retain possession of a stock certificate (e.g., as security for performance, as escrowed property, or for similar purposes) shall not be
prejudiced solely by virtue of the fact that such Shares are not represented by a stock certificate. 
 (g) No Employment Rights.
The adoption of the Plan and the grant of Awards do not confer upon any individual or entity any right to continued employment or other service relationship with the Company or any Subsidiary. 

(h) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading
policy-related restrictions, terms and conditions as may be established by the Administrator, or in accordance with policies set by the Administrator, from time to time. 

10. Conditions Upon Issuance of Shares. 

(a) General. If at any time the Administrator determines that the delivery of Shares pursuant to the exercise, vesting or any other
provision of an Award Agreement is or may be unlawful under applicable law, the vesting or right to exercise an Award or to otherwise receive Shares pursuant to the terms of an Award Agreement shall be suspended until the Administrator determines
that such delivery is lawful, and shall be further subject to the approval of counsel for the Company with respect to such compliance. The Company shall have no obligation to effect any registration or qualification of the Shares under federal or
state laws. 

  
 11 

 (b) Transferability of Shares. Shares received pursuant to the exercise, vesting or
any other provision of an Award shall not be sold, assigned, transferred, pledged or otherwise encumbered by the Grantee, except as specifically authorized by the Plan or the Award Agreement to which the Shares are subject. References to a Grantee,
to the extent relevant in the context, shall include references to authorized transferees. The transfer restrictions in this Section 10(b) shall apply in addition to the transfer restrictions, if any, that are generally applicable to Shares
under the Company’s bylaws, as may be amended from time to time and in effect at a given time, or under any notice of exercise or similar agreement under which a Grantee acquires Shares in connection with an Award. 

(c) Securities Law Compliance. As a condition to the exercise of an Award or the receipt of Shares pursuant to an Award, the Company may
require (i) the person exercising such Award (A) to make such representations and agreements as the Company may consider appropriate to avoid violation of the Securities Act or comparable state law, and (B) to agree to market standoff
obligations in connection with any Public Offering of Shares of the Company, and (ii) that the certificates evidencing such Shares bear appropriate legends restricting transfer. 

(d) Repurchase Rights; Right of First Refusal. The Award Agreement shall provide for a repurchase right and a right of first refusal
pursuant to which the Company shall have the right to repurchase Shares in connection with the termination of Grantee’s services and a right of first refusal pursuant to which the Company will have the right to purchase any Shares prior to any
proposed disposition by the Grantee (or any successor in interest) of any Shares issued under the Plan. 
 11. Adjustments. In
the event of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, combination or exchange of shares, reclassification of shares, spin-off or other similar change in
capitalization or event, or any dividend or distribution to holders of Shares other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the number and class of securities and exercise price
per Share of each outstanding Option and SAR, (iii) the number of Shares subject to and the repurchase price per Share subject to each outstanding Restricted Stock Award and Restricted Stock Unit Award, and (iv) the terms of each other
outstanding Award shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Administrator; provided, however, that each adjustment to
Non-Qualified Stock Options or SARs shall satisfy the requirements of Treas. Reg. § 1.409A-1(b)(5)(v)(D) (or any successor regulation) and each adjustment to
Incentive Stock Options shall satisfy the requirements of Treas. Reg. § 1.424-1 (or any successor regulation); provided, further, that the Administrator will make any adjustment to an
Award as is required by Section 25102(o) of the California Corporations Code to the extent that the Company is relying upon the exemption afforded thereby with respect to the Award. 

12. Corporate Transactions. The Administrator may provide, in its discretion, with respect to the treatment of each outstanding Award
(either separately for each Award or uniformly for all Awards), upon the date of a Corporate Transaction, for any combination of the following: 

  
 12 

 (a) any Option or SAR shall become vested and immediately exercisable, in whole or in part;

 (b) any Restricted Stock or Restricted Stock Unit shall become non-forfeitable, in whole or in
part; 
 (c) any Option or SAR shall be assumed by the successor corporation or cancelled in exchange for substitute stock options or SARs in
a manner consistent with the requirements of Treas. Reg. § 1.409A-1(b)(5)(v)(D) (or any successor regulation), in the case of a Non-Qualified Stock Option or
SAR, and Treas. Reg. § 1.424-1(a) (or any successor regulations), in the case of an Incentive Stock Option; 

(d) any Option or SAR that is not exercised as of the date of the Corporate Transaction shall be cancelled for no consideration; 

(e) any Option shall be cancelled in exchange for cash and/or other substitute consideration with a value equal to (A) the number of
Shares subject to that Option, multiplied by (B) the difference, if any, between the Fair Market Value per Share on the date of the Corporate Transaction or the per share consideration payable to the Company’s shareholders in the Corporate
Transaction (such per share consideration, the “Transaction Consideration”) and the exercise price of that Option; provided, that if the Fair Market Value per Share on the date of the Corporate Transaction or the Transaction
Consideration does not exceed the exercise price of any such Option, the Administrator may cancel that Option without any payment of consideration therefor; 

(f) any Restricted Stock or Restricted Stock Unit shall be cancelled in exchange for restricted stock of or restricted stock units in respect
of the capital stock of any successor corporation; 
 (g) any Restricted Stock shall be redeemed for cash and/or other substitute
consideration with a value equal to (i) the Fair Market Value of an unrestricted Share on the date of the Corporate Transaction or (ii) the Transaction Consideration; or 

(h) any Restricted Stock Unit shall, subject to Section 16 hereof, be cancelled in exchange for cash and/or other substitute consideration
with a value equal to (i) the Fair Market Value per Share on the date of the Corporate Transaction or (ii) the Transaction Consideration. 
 In
taking any of the actions permitted under this Section 12, the Administrator shall not be obligated to treat all Grantees, all Awards, all Awards held by a Grantee, or all Awards of the same type identically. Any substitute consideration issued
to a Grantee pursuant to this Section 12 may include, to the extent determined by the Administrator, the right to receive consideration payable in the Corporate Transaction after the closing (e.g., in respect of an earn-out or escrow release). 
 13. Effective Date and Term of Plan; Stockholder Approval. 

(a) Adoption of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten
(10) years from the date of adoption unless sooner terminated. 

  
 13 

 (b) Stockholder Approval. No Option or SAR granted under the Plan may be exercised,
no Shares shall be issued under the Plan, and no Restricted Stock Unit shall be settled, until the Plan is approved by stockholders of the Company holding a majority of the outstanding securities of the Company entitled to vote (determined on an as-converted basis). If such stockholder approval is not obtained within twelve (12) months after the date of the Board’s adoption of the Plan, then all Awards previously granted under the Plan shall
terminate and cease to be outstanding, and no further Awards shall be granted under the Plan. 
 14. Amendment, Suspension or Termination of the
Plan. 
 (a) General. Subject to the terms of the Plan, the Board may at any time and from time to time, alter, amend,
suspend or terminate the Plan, in whole or in part; provided that the Board shall obtain stockholder approval of any Plan amendment to the extent necessary to comply with applicable law, rule or regulation. In addition, in no event shall an
amendment increase the maximum number of shares of Common Stock with respect to which Awards may be granted under the Plan without stockholder approval. 

(b) Limitation on Grants of Awards. No Award may be granted during any suspension of the Plan or after termination of the Plan. 

(c) No Effect on Outstanding Awards. Except as set forth in Section 14(b) no suspension or termination of the Plan shall materially
and adversely affect any rights under Awards outstanding at the time of such suspension or termination. 
 15. No Employment or Services
Rights. The Plan shall not confer upon any Grantee any right to employment or service with the Company or any Subsidiary or Parent, nor shall it interfere in any way with the right of the Company or any Subsidiary or Parent to
terminate the Grantee’s employment or service at any time. 
 16. Compliance with Code
Section 409A. It is intended that the provisions of the Plan comply with Section 409A of the Code (“Section 409A”), and all provisions of
the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. If an Award that is subject to Section 409A is payable upon a Corporate Transaction which is not a
permissible payment event or time (as described in Treas. Reg. § 1.409A-3) then, for purposes of payment of such Award, no Corporate Transaction shall be deemed to have occurred with respect to that
Award unless and until there occurs a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company (within the meaning in accordance with Treas. Reg. § 1.409A-3(i)(5)). To the extent required or advisable to avoid a violation of Section 409A, no discretion to require payment of an Award that is subject to Section 409A upon a Corporate
Transaction shall be exercised if not set forth in writing by the time required under Section 409A. If an Award is subject to Section 409A, any payment made to a Grantee who is a “specified employee” of the Company or any
Subsidiary shall not be made before such date as is six months after the Grantee’s “separation from service” to the extent required to avoid the adverse consequences of Section 409A of the Code. For purposes of this
Section 16, the terms “separation from service” and “specified employee” shall have the meanings set forth in Section 409A and the applicable Treasury regulations. Nothing in the Plan or in an Award Agreement shall be
interpreted or 

  
 14 

 
construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Section 409A) to the Company, any Subsidiary or Parent, or to any
other individual or entity, and the Company shall have no liability to a Grantee, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant. 

17. Status of Plan. With respect to the portion of any Award that has not been exercised and any payments in cash, Shares or other
consideration not received by a Grantee, a Grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly so determine in connection with any Award. 

18. Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise. 
 19. Severability. If any provision of the Plan or any Award is, becomes, or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any Grantee, such provision shall be construed or deemed amended to conform with applicable law, or if the provision cannot be so construed or deemed amended without, in the sole discretion of the
Administrator, materially altering the intent of the Plan or the Award, such provision shall be severed as to the jurisdiction or Grantee and the remainder of the Plan and any such Award shall remain in full force and effect. 

20. Governing Law. The validity and construction of the Plan and any Award Agreements thereunder shall be governed by the laws of the
State of Delaware, excluding any conflicts or choice of law rules or principles that might otherwise refer construction or interpretation of any provision of the Plan or an Award Agreement to the substantive law of another jurisdiction. 

*         *         * 

ADOPTED BY THE BOARD ON JANUARY 30, 2018 
 APPROVED BY THE
STOCKHOLDERS ON JANUARY 30, 2018 

  
 15 

 VIELA BIO, INC. 

STOCK OPTION AGREEMENT 

This Stock Option Agreement (the “Agreement”) between Viela Bio, Inc. (the “Company”) and the
individual identified below as the “Optionee” evidences the grant of a stock option under the Viela Bio 2018 Equity Incentive Plan (as amended, the “Plan”). This Agreement is subject to the terms of
the Plan. To the extent that there is a conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern unless this Agreement states explicitly that the conflict provision of the Agreement shall govern.

  

			
	Name of Optionee (the “Optionee”)	  	
		
	No. of shares of Common Stock subject to this Option (“Option Shares”)	  	
		
	Exercise price per Share (“Exercise Price”)	  	$[     ]
		
	Grant Date	  	
		
	Vesting Commencement Date	  	Grant Date
		
	Vesting Schedule	  	 Subject to Section 4, the Option shall vest as follows:
  

Twenty-five percent of the Option Shares shall vest on the first anniversary of the Vesting Commencement Date, subject to the Optionee’s continuous
service. The remaining Option Shares shall vest in equal amounts quarterly until the fourth anniversary of the Vesting Commencement Date, subject to the Optionee’s continuous service.

		
	Type of Option	  	 _____ Incentive Stock Option
 _____ Non-Qualified Stock Option

  
 1 

 1. Definitions. Capitalized terms not defined in this Agreement have the meaning
provided in the Plan. In this Agreement, additional terms are defined as follows: 
 (a) “Agreement” means this Stock
Option Agreement. 
 (b) “Date of Exercise” means the date on which the Company receives notice of and payment for
the exercise, in whole or in part, of the Option pursuant to Section 6(a) of this Agreement. 
 (c) “Exercise
Notice” means the form of Exercise Notice and Agreement attached to this Agreement as Schedule 1 or such other form as the Administrator designates to be used to exercise the Option. 

(d) “Expiration Date” means the date that is ten (10) years after the Grant Date. 

2. Grant of Option. Pursuant to the Plan and subject to the terms of this Agreement, the Company grants to the Optionee, as of the Grant
Date, the Option to purchase from the Company Shares in an amount equal to the number of Option Shares, exercisable at the Exercise Price. 

3. Type of Option. If designated above as a “Non-Qualified Stock
Option,” the Option is not an incentive stock option under Section 422 of the Code (an “ISO”) and shall be treated as a non-statutory stock option. If designated above
as an “Incentive Stock Option,” the option is intended to be an ISO; however, to the extent that the Option does not satisfy the requirements applicable to ISOs, the Option shall be treated as a
non-statutory stock option. 
 4. Vesting; Exercise Period and Termination. 

(a) Requirement of Vesting. This Option may be exercised before termination to the extent that the Option has become vested. 

(b) Vesting Schedule. The Option Shares shall vest and become exercisable in one or more installments pursuant to the vesting schedule
specified on the cover page of this Option. The Option shall cease to vest immediately in the event that the Optionee ceases to be a Service Provider. 

(c) Termination of Option. The Option, if not previously exercised, shall terminate on the Expiration Date, except that, if the Optionee
ceases to be a Service Provider while the Option is outstanding, the Option shall terminate on the date the Optionee’s status as a Service Provider terminates or, if later, immediately after the last day on which the Option is exercisable as
set forth below: 
 i. If the Optionee’s status as a Service Provider terminates by reason of the Optionee’s death or disability
(as defined in Section 422(c) of the Code), the Option may be exercised, to the extent vested on the date of such termination, by the Optionee, the Optionee’s legal representative or legatee for a period of twelve (12) months from the
date of death or disability or until the Expiration Date, if earlier. 

  
 2 

 ii. If the Optionee’s status as a Service Provider terminates for any reason other
than death or disability, the Option may be exercised, to the extent vested on the date of termination, for a period of three (3) months from the date of termination or until the Expiration Date, if earlier; provided, however, if
the Optionee’s employment is terminated for Cause, (1) the Option shall terminate immediately upon the date of such termination and (2) any Shares purchased under the Option for which the Company has not yet delivered the share
certificates or which are otherwise unvested and/or unexercised as of such termination will be immediately and automatically forfeited and the Company will refund to the Optionee the exercise price paid for the Shares, if any. 

(d) Non-transferability. The Option is not transferable by the Optionee other than by will or by
the laws of descent and distribution, and is exercisable, during the Optionee’s lifetime, only by the Optionee, or, in the event of the Optionee’s disability, by the Optionee’s legal representative. 

5. Adjustments. The number of Option Shares as to which the Option has not been exercised, the Exercise Price, and the type of stock or
other consideration to be received on exercise of the Option shall be subject to such adjustment pursuant to the Plan in the manner determined to be appropriate by the Administrator, in its sole discretion. Any adjustment determined to be
appropriate by the Administrator shall be conclusive and shall be binding on the Optionee. 
 6. Exercise. 

(a) Notice. The Option shall be exercised, in whole or in part, by the delivery to the Company of written notice of such exercise, in
such form as the Administrator may from time to time prescribe, accompanied by full payment of the Exercise Price with respect to that portion of the Option being exercised and payment of any applicable withholding in accordance with
Section 6(c) below. Unless the Administrator notifies the Optionee to the contrary, the form of Exercise Notice attached to this Agreement as Schedule 1 shall be used to exercise the Option. The Optionee acknowledges that any Option Shares
delivered to Optionee upon exercise of the Option shall be subject to, among other things, a repurchase right and a right of first refusal in favor of the Company. 

(b) Payment. Payment of the Exercise Price and any applicable withholding shall be made by cash or check. If the Common Stock is
registered under Section 12 of the Exchange Act at the time the Option is exercised, then the Exercise Price may also be paid as follows: 

i. in shares of Common Stock held by the Optionee (or any other person or persons exercising the option) for the requisite period necessary to
avoid a charge to the Company’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or 

ii. to the extent the option is exercised for vested Option Shares, through a special sale and remittance procedure pursuant to which the
Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (1) to a Company-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of
the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the
Company by reason of such exercise and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. 

  
 3 

 (c) Withholding. The Optionee agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining the Optionee) for the satisfaction of all federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. The Optionee acknowledges
and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise. 

(d) Securities Laws Restrictions. Unless the Option Shares are covered by an effective registration statement under the Securities Act
at the time of exercise of the Option, the Option Shares shall constitute “restricted securities,” as such term is defined in Rule 144 of the Securities Act. The Optionee acknowledges that (i) the Option Shares have not been
registered under the Securities Act or the securities laws of any state, (ii) there may not exist a market for resale of the Option Shares, and (iii) such Option Shares may need to be held indefinitely unless the Option Shares are
subsequently registered under the Securities Act or an exemption from registration is available. The Company shall have no obligation to register the Option Shares under the Securities Act or otherwise. In connection with any transfer of Option
Shares, the Company may require the Optionee to provide to the Company at its expense an opinion of counsel, satisfactory to the Company, that such transfer is in compliance with all applicable federal and state securities laws (including, without
limitation, the Securities Act). Any attempted disposition of Option Shares not in accordance with the terms and conditions of this Section 6(d) shall be null and void, and the Company shall not reflect on its records any change in record
ownership of any Option Shares as a result of any such disposition, shall otherwise refuse to recognize any such disposition and shall not in any way give effect to any such disposition of any Option Shares. 

7. Lock-Up Agreement. Subject to the final sentence of this Section 7, the Optionee hereby
agrees that the Optionee will not, without the prior written consent of the managing underwriter of any Public Offering, during the period commencing on the date of the final prospectus relating to such Public Offering and ending on the date
specified by the Company and the managing underwriter (such period not to exceed (i) one hundred and eighty (180) days (or in the case of a Public Offering for which the rules of the NASD or any other regulatory authority or stock exchange
having jurisdiction over the securities of the Company are applicable, such longer period as the underwriters or the Company shall require in order to facilitate compliance with applicable rules and regulations, as the case may be) with respect to
the Company’s Initial Public Offering and (ii) ninety (90) days with respect to a Public Offering other than the Initial Public Offering): (A) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Option Shares or (B) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Option Shares, whether any such transaction described in clause (A) or (B) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise. The
underwriters in connection with any Public Offering are intended third party beneficiaries of this Section 7 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. The Optionee further
agrees to execute such agreements as may be reasonably requested by the underwriters in any Public Offering that are consistent with this Section 7 or that are necessary to give further effect thereto. In order to enforce the foregoing
covenant, the Company may impose stop transfer instructions with respect to the Option Shares until the end of such period. Notwithstanding anything to the contrary set forth in this Section 7, if the Optionee is party to any other written
agreement with the Company pursuant to which the Optionee is subject to a similar lock-up agreement, the provisions of such other written agreement shall govern with respect to such matters and shall supersede
this Section 7. 

  
 4 

 8. Rights as Stockholder. The Optionee shall have no rights as a stockholder with
respect to any shares of Common Stock subject to the Option until and unless a certificate or certificates representing such shares are issued to the Optionee pursuant to this Agreement and the Exercise Notice. 

9. No Guarantee of Continuing Service. Neither the grant of the Option evidenced by this Agreement nor any term or provision of this
Agreement shall constitute or be evidence of any understanding, express or implied, on the part of the Company or its affiliates to employ or retain the Optionee for any period. 

10. Notices. All notices, requests, consents and other communications shall be in writing and be deemed given when delivered personally,
by facsimile transmission or when received if mailed by first class registered or certified mail, postage prepaid. Notices to the Company or the Optionee shall be addressed as set forth underneath their signatures below, or to such other address or
addresses as may have been furnished by such party in writing to the other. 
 11. Electronic Delivery. The Company may, in its sole
discretion, decide to deliver any documents relating to the Company, the Plan or this Option, and any other documents that the Company is required to deliver to its security holders (including, without limitation, disclosures that may be required by
the Securities and Exchange Commission), by email or other electronic means. The Optionee hereby consents to (a) conduct business electronically, (b) receive such documents and notices by such electronic delivery, and (c) sign
documents electronically, and the Optionee hereby agrees to participate through an on-line or electronic capitalization administration platform established and maintained by the Company or a third party
designated by the Company. The Optionee acknowledges that he or she may incur costs in connection with electronic delivery, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere
with his or her ability to access the documents. 
 12. Amendments. This Agreement may not be orally amended, modified or terminated,
nor shall any oral waiver of any of its terms be effective. This Agreement may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. 

13. Representation and Acknowledgement of Optionee. The Optionee acknowledges that the Optionee has received, read and understood the
Plan and this Option Agreement and agrees that the Optionee is bound by and subject to their respective terms and conditions. [Optionee acknowledges that the grant of the Option hereunder is in full satisfaction of the Company’s obligation to
grant an option under the Optionee’s [Employment Agreement][offer letter], dated as of [date], 2018.]1 

[Remainder of the page intentionally left blank.] 

 

	1 	 Note to Draft: Include if applicable. 

  
 5 

 IN WITNESS WHEREOF, this Stock Option Agreement is deemed made as of the date first set
forth above. 
  

					
	Submitted by:	 		  	Accepted by:
	OPTIONEE	 		  	VIELA BIO, INC.
			
	  
	 		  	  

	Signature	 		  	By
			
	  
	 		  	  

	Print Name	 		  	Print Name
			
		 		  	  

		 		  	Title
			
	Address:	 		  	
	  
	 		  	

 [Signature Page to Stock Option Agreement] 

 SCHEDULE 1 

VIELA BIO 2018 EQUITY INCENTIVE PLAN 

EXERCISE NOTICE AND AGREEMENT 
 Viela Bio,
Inc. 
 [Address] 
 [Date] 

Attention: Chief Executive Officer 
 1.
Exercise of Option. Effective as of today, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option (the “Option”) to purchase
                         shares of the Common Stock (the “Shares”) of Viela Bio, Inc. (the
“Company”) under and pursuant to the Viela Bio 2018 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement dated
                        ,              (the “Option
Agreement”). 
 2. Delivery of Payment and Documents. Optionee herewith delivers to the Company (i) a check in the
amount of the full purchase price of the Shares, as set forth in the Option Agreement, plus any and all withholding taxes due in connection with the exercise of the Option and (ii) two (2) copies of a blank Stock Power and Assignment Separate
from Stock Certificate in the form of Exhibit 1 attached hereto (the “Stock Powers”), both executed by Optionee and Optionee’s spouse, if any. 

3. Repurchase Option. 
 (a)
Upon the termination of Optionee’s status as a Service Provider for any reason (including with or without Cause by the Company (or its affiliate, as applicable), a termination by Optionee with or without Good Reason, or upon death or
disability) (a “Service Termination”), the Company shall have the right and option to purchase from Optionee, or Optionee’s personal representative, as the case may be, any or all of the Optionee’s Option Shares (the
“Repurchase Option”). 
 (b) The repurchase price under the Repurchase Option (the “Repurchase Price”)
shall be if the Service Termination is for Cause, the lesser of the Exercise Price and the Fair Market Value, and if the Service Termination is for any reason other than for Cause, the Fair Market Value of each Option Share as of the date of the
Repurchase Notice (as defined below). 
 (c) The Company may exercise its Repurchase Option within the later of six (6) months following
the date of a Service Termination or sixty (60) days following the Exercise Date by delivering personally or by registered mail to Optionee (or his or her transferee or legal representative, as the case may be), with a copy to the Escrow Holder
(defined below), a notice in writing (the “Repurchase Notice”) indicating the Company’s intention to exercise the Repurchase Option and specifying the number of Shares and a date within such six (6) month or sixty
(60) day period in which the repurchase shall be effected (the “Repurchase Date”). The Repurchase Price shall be paid, at the Company’s option, (i) by delivering to Optionee (or Optionee’s transferee or legal
representative) on the Repurchase Date a check, money order or wire transfer in the amount of the Repurchase Price, or (ii) by canceling an amount of Optionee’s indebtedness to the Company or any of its affiliates equal to the Repurchase
Price, or (iii) by a combination of (i) and (ii) so that the combined payment and cancellation of indebtedness equals such aggregate Repurchase Price. 

  
 1 

 
If the aggregate Repurchase Price for all equity being repurchased from the Optionee exceeds $500,000, the Company may elect to pay the Repurchase Price in three equal installments, with the
first installment payable on the Repurchase Date and the second and third installments payable on the first and second anniversaries of the Repurchase Date. Notwithstanding the foregoing, the Company may defer payment of the Repurchase Price to the
extent necessary to avoid a violation of applicable law, a default under the Company’s credit agreement(s), or a liquidity problem, in each case as determined by the Board in good faith, provided that the Company shall pay the Repurchase Price
as otherwise provided above as soon as the violation, default or liquidity problem is abetted. 
 (d) Upon the Repurchase Date, the Company
shall become the legal and beneficial owner of the Option Shares being repurchased and the rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Option Shares
being repurchased by the Company. 
 (e) Whenever the Company shall have the right to repurchase Option Shares hereunder, the Company may
designate and assign one or more employees, officers, directors or stockholders of the Company or other persons or organizations to exercise all or a part of the Company’s Repurchase Option under this Agreement and purchase any or all of such
Option Shares. 
 (f) The Repurchase Option shall terminate upon an Initial Public Offering. 

4. Restrictions on Transfer. The Optionee shall not sell, assign, pledge or otherwise transfer (voluntarily or involuntarily) any Option
Shares without prior written consent of the Administrator, other than (i) transfers to the Company or its assignee in accordance with the Repurchase Option or the Right of First Refusal (as defined below), (ii) transfers to the Company, or its
assignee, or a shareholder of the Company, or its assignee, in accordance with an Other ROFR Agreement (as defined below), or (iii) transfers during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the
Optionee’s Immediate Family, provided, however, that the Administrator may prohibit such transfer to Immediate Family if the Administrator determines it would make Rule 701 of the Securities Act, or any similar applicable state blue sky
exemption, inapplicable to the Shares. “Immediate Family” shall mean (1) spouse, lineal descendant or antecedent, father, mother, brother or sister, or (2) a trust for the benefit Optionee or any of the individuals listed
in clause (1). The restrictions of this Section 4 shall terminate with on the earlier of an Initial Public Offering or a Corporate Transaction. 

5. Company’s Right of First Refusal. Subject to Section 5(g), before any Option Shares held by Optionee or any permitted
transferee under this Section 5 (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law) other than to Immediate Family, the
Company or its assignee(s) shall have a right of first refusal to purchase the Option Shares on the terms and conditions set forth in this Section 5 (the “Right of First Refusal”). If the Holder would like to transfer
any Option Shares, the Company may either (i) exercise its Right of First Refusal and purchase the Option Shares as set forth in this Section 5, (ii) waive its Right of First Refusal and permit the transfer of the Option Shares to the
Proposed Transferee (defined below), or (iii) prohibit any transfer of the Option Shares. For the avoidance of doubt, the Right of First Refusal shall not apply with respect to a repurchase under the Repurchase Option. 

  
 2 

 (a) Notice of Proposed Transfer. The Holder of the Option Shares shall deliver to the
Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Option Shares; (ii) the name of each proposed purchaser or other transferee
(“Proposed Transferee”); (iii) the number of Option Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Option
Shares (the “Offered Price”), and the Holder shall offer the Option Shares at the Offered Price to the Company or its assignee(s). 

(b) Exercise of Right of First Refusal. At any time within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, (i) elect to purchase all, but not less than all, of the Option Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in
accordance with Section 4(c) below, or (ii) instruct the Optionee that the Company will not exercise its Right of First Refusal and that the Option Shares may not be transferred to the Proposed Transferee. 

(c) Purchase Price. The purchase price (“Purchase Price”) for the Option Shares purchased by the Company or its
assignee(s) under this Section 5 shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the
Board of Directors of the Company in good faith. 
 (d) Payment. Payment of the Purchase Price shall be made, at the option of the
Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within
thirty (30) days after receipt of the Notice or in the manner and at the times set forth in the Notice. 
 (e) Holder’s Right to
Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) and the Company approves the transfer as provided in this Section 5, then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within one hundred and twenty (120) days after the date of
the Notice, that any such sale or other transfer is effected in accordance with any applicable securities laws and that the Proposed Transferee agrees in writing that the provisions of this Section 5 and the other terms and conditions of the
Option Agreement and this Exercise Notice and Agreement shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Option Shares described in the Notice are not transferred to the Proposed Transferee within such period, a
new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Option Shares held by the Holder may be sold or otherwise transferred. 

(f) Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any Shares upon the earlier of
(i) consummation of an initial Public Offering (as defined in the Option Agreement), or (ii) consummation of a Corporate Transaction (as defined in the Plan). 

(g) Other ROFR Agreement. Notwithstanding anything to the contrary set forth in this Section 5, if the Optionee is party to any
other written agreement with the Company pursuant to which the Optionee is subject to a right of first refusal agreement with respect to the Shares, the provisions of such other written agreement shall govern with respect to such matters and shall
supersede this Section 5. 

  
 3 

 6. Additional Restrictions Upon Share Ownership or Transfer. 

(a) Rights as a Stockholder. Subject to the terms and conditions of this Exercise Notice and Agreement, Optionee will have all of the
rights of a stockholder of the Company with respect to the Shares from and after the date that Shares are issued to Optionee until such time as Optionee disposes of the Shares or the Company and/or its assignee(s) exercise(s) the Right of First
Refusal. Upon an exercise of the Right of First Refusal, Optionee will have no further rights as a holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in accordance with the
provisions of this Exercise Notice and Agreement, and Optionee will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Company for transfer or cancellation. 

(b) Escrow. As security for Optionee’s faithful performance of this Exercise Notice and Agreement, Optionee agrees, immediately
upon receipt of the stock certificate(s) evidencing the Shares, to deliver such certificate(s), together with the Stock Powers executed by Optionee and by Optionee’s spouse, if any (with the date, name of transferee, stock certificate number
and number of Shares left blank), to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is hereby appointed to hold such certificate(s) and Stock Powers in escrow and to take all such
actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Exercise Notice and Agreement. Optionee and the Company agree that Escrow Holder will not be liable to any party to this Exercise
Notice and Agreement (or to any other person or entity) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Exercise Notice and Agreement. Escrow
Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Exercise Notice
and Agreement. The Shares will be released from escrow upon termination of both the Right of First Refusal (or similar right set forth in an agreement between the Company and Optionee) and the Repurchase Option. 

7. Superseding Transfer Restrictions. Notwithstanding anything to the contrary set forth in this Exercise Notice and Agreement, Optionee
hereby agrees (a) to be bound by any and all restrictions on transfer of the Shares as set forth in the Company’s Bylaws (as may be amended from time to time) and (b) that such transfer restrictions set forth in this Exercise Notice
and Agreement and the Company’s Bylaws (as may be amended from time to time) shall supersede all other agreements, whether written or oral, in place by and between the Company and Optionee regarding the transfer of the Shares. 

8. Tax Consultation. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection
with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. 
 9. Investment
Representations. In connection with the purchase of the above-listed Shares, the undersigned Optionee represents to the Company the following: 

(a) Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Shares. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution”
thereof within the meaning of the Securities Act. 

  
 4 

 (b) Optionee acknowledges and understands that the Shares constitute “restricted
securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment
intent as expressed herein. Optionee further understands that the Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges
and understands that the Company is under no obligation to register the Shares. Optionee understands that the certificate evidencing the Shares shall be imprinted with any legend required under applicable state securities laws. 

(c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. 

10. Spousal Consent. If the Optionee is legally married or promptly following the Optinee’s marriage if the Optionee becomes
legally married following the date of this exercise of the Option, the Optionee shall deliver to the Company, as a condition of the grant hereunder, the Spousal Consent attached hereto as Exhibit 2. 

11. Restrictive Legends and Stop-Transfer Orders. 

(a) Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws: 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH. 
 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A
RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE AND AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES. 
 THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER PRIOR TO THE EXPIRATION OF SUCH PERIOD WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER. 

  
 5 

 (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with
the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect
in its own records. 
 (c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that
have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice and Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to
whom such Shares shall have been so transferred. 
 12. Stockholder Consent to Electronic Transmissions. Subject to the limitations
set forth in Delaware General Corporation Law § 232(e), each Holder or other security holder hereby consents to the delivery of any notice to stockholders given by the Company under the Delaware General Corporation Law or the Company’s
certificate of incorporation or bylaws by (a) facsimile telecommunication to the facsimile number to any facsimile number for the Holder or other security holder in the Company’s records, (b) email to any email address for the Holder
or other security holder in the Company’s records, (c) posting on an electronic network together with separate notice to the Holder or other security holder of such specific posting or (d) any other form of electronic transmission (as
defined in the Delaware General Corporation Law) directed to the Holder or other security holder. This consent may be revoked by Holder or other security holder by written notice to the Company and may be deemed revoked in the circumstances
specified in Delaware General Corporation Law § 232. 
 13. Successors and Assigns. The Company may assign any of its rights
under this Exercise Notice and Agreement to single or multiple assignees, and this Exercise Notice and Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this
Exercise Notice and Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns. 
 14.
Interpretation. Any dispute regarding the interpretation of this Exercise Notice and Agreement shall be submitted by Optionee or by the Company forthwith to the Administrator, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on all parties. 
 15. Governing Law; Severability. This
Exercise Notice and Agreement is governed by the internal substantive laws, but not the choice of law rules, of the State of Delaware. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Exercise Notice and Agreement shall continue in full force and effect. 
 16. Entire Agreement. The Plan
and the Option Agreement are incorporated herein by reference. This Exercise Notice and Agreement, the Plan and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

  
 6 

 [Remainder of the page intentionally left blank.] 

  
 7 

 IN WITNESS WHEREOF, this Exercise Notice and Agreement is deemed made as of the date first
set forth above. 
  

					
	Submitted by:	 		  	Accepted by:
	OPTIONEE	 		  	VIELA BIO, INC.
			
	  
	 		  	  

	Signature	 		  	By
			
	  
	 		  	  

	Print Name	 		  	Print Name
			
		 		  	  

		 		  	Title
			
	Address:	 		  	Address:
	  
	 		  	  

	  
	 		  	  

	  
	 		  	  

 [Signature Page to Exercise Notice and Agreement] 

 EXHIBIT 1 

STOCK POWER AND ASSIGNMENT 

SEPARATE FROM STOCK CERTIFICATE 

FOR VALUE RECEIVED and pursuant to that certain Exercise Notice and Agreement dated as of
                            ,
                , (the “Agreement”), the undersigned hereby sells, assigns and transfers unto Viela Bio, Inc. a Delaware corporation (the
“Company”),                                  shares of the Common
Stock of the Company, standing in the undersigned’s name on the books of the Company represented by Certificate No(s).                  delivered herewith, and does
hereby irrevocably constitute and appoint the Secretary of the Company as the undersigned’s attorney-in-fact, with full power of substitution, to transfer said
stock on the books of the Company. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE OPTION AGREEMENT, THE EXERCISE NOTICE AND AGREEMENT AND ANY SCHEDULES AND EXHIBITS THERETO. 

 

			
	Dated:                                     ,
            	  	OPTIONEE
		
		  	  

		  	(Signature)
		
		  	  

		  	(Please Print Name)
		
		  	  

		  	(Spouse’s Signature, if any)
		
		  	  

		  	(Please Print Spouse’s Name)

 Instructions to Optionee: Please do not fill in any blanks other than the signature line. The purpose of
this Stock Power and Assignment is to enable the Company to acquire the shares to exercise its Repurchase Option or Right of First Refusal as set forth in the Exercise Notice and Agreement without requiring additional
signatures on the part of the Optionee or Optionee’s Spouse, if any. 

 EXHIBIT 2 

SPOUSAL CONSENT 
 I,
the undersigned spouse of                     , hereby acknowledge that I have read and understand the contents of the Viela Bio 2018 Equity
Incentive Plan, as amended from time to time (the “Plan”), the Stock Option Agreement between Viela Bio, Inc. (the “Company”) and my spouse for the purchase under the Plan of shares of Common Stock of the Company,
and the other written agreements between the Company and my spouse governing such shares (collectively, the “Agreements”). I am aware that the Agreements provide for the repurchase of my spouse’s shares of the Company under
certain circumstances and impose other restrictions on the transfer of such shares. I agree that my spouse’s interest in such shares is subject to the Agreements and any interest I may have in such shares shall be irrevocably bound by the
Agreements and further that my community property interest, if any, shall be similarly bound by the Agreements. 
 I am aware that the
legal, financial and other matters contained in the Agreements are complex and I am free to seek advice with respect thereto from independent counsel. I have either sought such advice or determined after carefully reviewing the Agreements that I
will waive such right. 
  

	
	Signature:
                                    
	
	Print Name:
                                        

	
	Date:
                                         
   

  
 3

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