SALES/BUY-BACK AGREEMENT
Exhibit 10.1
SALES/BUY-BACK AGREEMENT
AGREEMENT, made and entered into this 15 day of May, 2009 (“Effective Date”), by and between Traxys
North America LLC, a Delaware limited liability company corporation with offices at 000 Xxxxx
Xxxxxx Xxx Xxxx, XX 00000 (“Traxys”), and Molycorp Minerals, LLC, a Delaware limited liability
company with offices at 5619 Denver Tech Center Parkway, Suite 1000, Xxxxxxxxx Xxxxxxx, XX 00000
(“Molycorp”).
WHEREAS, Molycorp is the owner and operator of Rare Earth production and processing facilities
located at Mountain Pass, California; and
WHEREAS, Traxys is a marketer of mineral commodities; and
WHEREAS, The Parties wish to establish a relationship pursuant to the terms and conditions of this
Agreement.
NOW THEREFORE, in consideration of the mutual covenants of the Parties as hereinafter set forth,
and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
ARTICLE 1 – DEFINITIONS
For the purposes of this Agreement, unless clearly indicated otherwise by the context, the
following terms used with a capital letter have the following meanings:
1.1. “Product”:
| (a) | “Product or Products” means, Product 1 or product 2 individually or all Products 1 and 2 collectively, as appropriate. | ||
| (b) | “Product 1” means Didymium Oxide produced by Molycorp at the Facility. | ||
| (c) | “Product 2” means Bastnasite suitable for polishing applications or further refinement into other Rare Earth products stored by Molycorp at the Facility. |
1.2. “Party” means each of Traxys and Molycorp and “Parties” means both of them collectively.
1.3. “Settlement Date” means the first anniversary of the Effective Date of this Agreement for
Product 1 and the second anniversary of the Effective Date of this Agreement for Product 2, unless
extended by mutual written agreement of the Parties, or unless accelerated by Molycorp in
accordance with Article 8 below.
1.4. “Purchase Price” means the price for the Products payable by Traxys to Molycorp pursuant to
clause 2.2.
1.5. “Net Revenue” means the price at which a Product is sold by Traxys to a third party (net of
any taxes or other government charges) less the costs incurred by Traxys or its agents in making
the sale including transportation and related costs in getting the Product from the storage
facility
referred to in Clause 2.2 to the customer, further analysis/assay costs, royalties, the cost of
credit insurance in relation to the customer, insurance against loss, damage, etc., duties and
other similar direct costs (“Traxys Direct Costs”).
1.6. “Recommended Price” means the price proposed and confirmed by Traxys for a Product sale but
not approved by Molycorp.
1.7. “Facility” means Molycorp’s mine and processing facility at Mountain Pass, California.
1.8. “Settlement” means the transaction wherein Traxys pays to Molycorp the balance, if any, of
the Purchase Price in respect of Products sold and Traxys receives from the proceeds of such sale
or from Molycorp any Traxys Direct Costs, Finance Charges, and Handling Fees to which it is
entitled.
ARTICLE 2 – SALE AND PURCHASE
2.1. Molycorp agrees to sell and Traxys agrees to purchase approximately 1,000,000 pounds of
Didymium Oxide contained (Product 1) and up to 18,000,000 pounds of Bastnasite (Product 2), on the
terms and conditions set forth herein. Anything herein contained to the contrary notwithstanding,
the Parties may add other Rare Earth products to this Agreement by mutual agreement at any time.
Delivery of quantities of such Products shall be made as provided in Article 6.
2.2. The price of the Products is USD$6.95 per pound for Product 1 and USD$0.60 per pound for
Product 2 (subject to adjustment in accordance with clauses 3, 4 and 5) (“Purchase Price”) free
delivered in Molycorp storage facility, Mountain Pass, California (“Molycorp Storage Facility”).
Traxys shall file a UCC-1 financing statement to give notice that it is the owner of the Products
held in the Molycorp Storage Facility.
2.3. Traxys shall advance to Molycorp USD$6.00 per pound for Product 1 and USD$0.50 per pound for
Product 2 towards payment of the Purchase Price of those Products, within three working days
following the day of receipt by Traxys of the irrevocable warehouse release (in the form attached
as Schedule I), packing list and producer’s weight and analysis certificate (each an “Advance” and
together, “the Advances”).
2.4. Title to the Products will pass from Molycorp to Traxys (and a sale will be deemed completed)
upon receipt by Molycorp of the Advance relating to the Products covered by a warehouse release.
2.5. Financing: To allow Traxys to recover its cost of capital, Traxys will be entitled to a
finance charge (“Finance Charge”) on the amount of its outstanding Advances (commencing on the date
of each Advance), plus the amount of any unrecovered Traxys Direct Costs at US Libor three month
plus a percentage which will be adjustable to reflect Traxys’s actual cost of capital, on the basis
of a 360 days year and of the actual days elapsed as follows:
| (a) | Financing Charges to be paid as part of final settlement. | ||
| (b) | The financing rate will be set for periods of 3 months, revolving. |
- 2 -
| (c) | The new rate of interest will be advised by Traxys to Molycorp during the week preceding the start of the new period. | ||
| (d) | The applicable rate for the first 3-month period, ending on August 31, 2009, is 6% per annum and shall be reset on each of September 1, December 1, March 1 and June 1. |
2.6. Financing Charges to be recovered by Traxys shall reflect amounts received by Traxys in
accordance with clause 4.2, thereby reducing outstanding Advances. Amounts received by Traxys will
be applied by Traxys against the Advances made in the order of the oldest Advance first.
ARTICLE 3 – MARKETING TO THIRD PARTIES
3.1. Marketing: Until the Settlement Date, the Parties will consult regarding sales strategy.
Molycorp will make the final decision on sales.
3.2. Third Party analysis: If a third party analysis is required by a customer, it must be by an
independent laboratory internationally recognized in the analysis of Rare Earth products to be
nominated and agreed between the parties and the customer within 30 days after the event requiring
such analysis and the result of any such analysis will serve as the basis of settlement between
Traxys and Molycorp as an adjustment to the Purchase Price.
3.3. Credit Risk: To be agreed upon in advance between the Parties with the goal to credit insure
all outstanding account receivables exposure which are not secured by an irrevocable letter of
credit. Traxys shall not be required to accept any credit risk with respect to a proposed customer
as to whom credit insurance is not available.
3.4. Sharing of Net Revenue:
3.4.1. Net Revenue at or below US$6.00 per pound for Product 1 and US$.050 per pound for Product 2
shall be retained by Traxys and credited against Advances on a dollar-for-dollar basis.
3.4.2. Net Revenue between US$6.00 and US$8.50 per pound for Product 1 and between US$0.50 and
US$0.75 per pound for Product 2, shall be shared on a 70%/30% (Molycorp/Traxys) basis.
3.4.3. Net Revenue above US$8.50 per pound for Product 1 and above US$0.75 per pound for Product
2, shall be shared on a 60%/40% (Molycorp/Traxys) basis.
3.4.4. Anything herein contained to the contrary notwithstanding, Molycorp shall be entitled at
any time to repurchase any quantity of Product 2 previously purchased by Traxys for conversion to
Cracked REE Product and its direct sale of same. The repurchase price (which shall be US$0.50 per
pound), all Financing Charges, any Traxys Direct Costs, and Handling Fees attributable to such
repurchased Product 2 shall be paid by Molycorp within 180 days of the repurchase date.
- 3 -
3.4.5. The Net Revenue sharing will be calculated after deduction for any Financing Charges or
Handling Fees Molycorp owes Traxys.
3.5. Special Condition: In the event that Molycorp does not approve a sale by Traxys which has
been recommended by Traxys with a proposed price greater than US$6.00 per pound for Product 1 or
US$0.50 per pound for Product 2, and such tonnage remains unsold at the Settlement Date, Traxys
will be entitled to the greater of (i) a Handling Fee (as defined below) equal to 5% of the amount
of the Advance made with respect to such tonnage; or (ii) the amount Traxys would have received
pursuant to Sections 3.4.2 and 3.4.3 had the sale been completed at the Recommended Price. In the
event of a subsequent sale of this tonnage above the Recommended Price by Traxys, Molycorp will be
entitled to all Net Revenue less Traxys’ share of Net Revenue calculated at the Recommended Price.
ARTICLE 4 – SETTLEMENT
4.1. At the Settlement Date, all unsold material shall be re-purchased by Molycorp at US$6.00 per
pound for Product 1 and US$0.50 per pound for Product 2 and any unpaid Finance Charges, Handling
Fees and Traxys Direct Costs as to which Traxys is entitled to reimbursement shall become
immediately due and payable.
4.2. With respect to each Product, any payment received by either Party of US$6.00 (or less) per
pound for Product 1 and US$0.50 (or less) per pound for Product 2, shall be retained by Traxys with
respect to that Product, and the amount of the outstanding Advances shall be reduced on a
dollar-for-dollar basis until the amounts of outstanding Advances shall have been reduced to zero,
after which amounts received will be shared by Traxys and Molycorp as contemplated by this
agreement. With respect to each Product, any payment received by either Party in excess of US$6.00
per pound for Product 1 and US$0.50 per pound for Product 2, shall shared in accordance with the
Net Revenue sharing provisions of Section 3.4 above.
4.3. Anything herein contained to the contrary notwithstanding, it is contemplated and agreed by
the Parties that during the term of this Agreement, Molycorp shall process quantities of Product 2
into other Rare Earth products (herein the “Cracked REE Products”). The removal of quantities of
Product 2 from storage for the purposes of processing same into Cracked REE Products shall not be
subject to the approval provisions of Section 6.5 hereof.
ARTICLE 5 – HANDLING FEE
Traxys shall be entitled to 2% per annum handling fee (herein the “Handling Fee”) for any tonnage
unsold at Settlement Date (but excluding any tonnage referred to in clause 3.5, which amount shall
be paid to or credited to Traxys on the Settlement Date).
ARTICLE 6 – SHIPPING AND STORAGE
6.1. Packing: Product 1 in Supersacks, suitable for export/container shipment, and Product 2 in
bulk.
6.2. Delivery Schedule: For Product 1, initial delivery of approximately 600,000 pounds
contained, followed by monthly deliveries of approximately 100,000 pounds contained each
- 4 -
from May through December 2009 (final quantity and schedule to be agreed in writing). For Product
2, in multiple lots with final quantity and delivery schedule to be agreed in writing.
6.3. Delivery Location: Molycorp shall deliver the Products to a designated storage area at
Molycorp’s Mountain Pass, California facility. Molycorp shall keep the Traxys owned Products in a
segregated area of the Molycorp Storage Facility with a prominent sign indicating that it is the
property of Traxys. Molycorp shall safeguard such Products with the same degree of care it uses
with respect to its own property. Molycorp shall not permit or suffer to exist any lien or
encumbrance on Traxys-owned Products by any person claiming by or through Molycorp.
6.4. Traxys shall pay US$1.00 per month for storage of the Products. All Traxys Delivery Costs
associated with the on-sale of the Products shall be paid by Traxys and reimbursed to Traxys
following the receipt by Traxys of the sale proceeds from a customer.
6.5. The Parties will keep each other informed of all intended Product movements in and out of
storage. Except for withdrawals by Molycorp of Products for further processing and by Traxys for
an approved sale, all withdrawals of Products from storage will require the consent of both parties
evidenced in writing unless a party is in default of this agreement in which case the consent of
the defaulting party is not required for the withdrawal of Product from storage.
ARTICLE 7 – EQUITY CONVERSION OPTION
Conversion: Traxys shall have the right but not the obligation to convert (the “Conversion Right”)
any or all of the amount of its outstanding Advances to equity in Molycorp Minerals, LLC. Such
Conversion Right may be exercised by giving not less than ten (10) days advance written notice to
Molycorp and may be exercised on the six (6) month, twelve (12) month or eighteen (18) month
anniversary of the Effective Date of this Agreement or at any time during the period described
below following exercise by Molycorp of the option provided for in Article 8, at a price of
US$115.17 per share, subject to adjustment for stock splits, stock dividends or other
recapitalization events occurring after the date hereof. Said conversion will be to the same class
of shares owned by the now existing shareholders in Molycorp Minerals LLC. In the event Molycorp
exercises its acceleration option, Traxys shall have the option for 180 days from the date of
exercise, if such acceleration occurs during the first year after the Effective Date, or 90 days
from such date, if such acceleration occurs during the second year following the Effective Date, to
increase its equity position in Molycorp through the purchase of additional shares of Molycorp in
an amount equal to the amount which would have been paid to Traxys pursuant to Section 4.1 with
respect to the amount of Product for which Molycorp exercised its option provided in Article 8
hereof, at a price of US$115.17 per share, subject to adjustment for stock splits, stock dividends
or other recapitalization events occurring after the date hereof.
The Conversion Right granted to Traxys hereunder shall not be subject to the Preemptive Rights
provisions of Section 6.4 of the Amended and Restated Operating Agreement of Rare Earth
Acquisitions LLC dated as of August 12, 2008 (the “Operating Agreement”).
ARTICLE 8 – ACCELERATION OPTION
Acceleration: Anything herein contained to the contrary notwithstanding, Molycorp shall have the
unrestricted right, for any reason or no reason, and in its sole discretion, to accelerate the
- 5 -
Settlement Date with respect to all or any portion of either or both Products at any time, without
penalty. Notwithstanding any such acceleration, the conversion right granted to Traxys under
Article 7 shall survive for the periods stated therein.
ARTICLE 9 – INSURANCE
From the date of delivery of the Products into the warehouse the Products owned by Traxys shall be
insured by Traxys (including for loss by fire, natural disaster or other casualty) for at least the
greater of 110% of the Purchase Price or the Fair Market Value of the Products as established from
time to time by mutual agreement of the parties and with reference to then prevailing market
prices, with the cost included in Traxys Direct Costs and recoverable by Traxys from the proceeds
of sales to customers. Molycorp shall not be liable for any loss, destruction, damage or other
casualty to the Products that are covered by such insurance, or which should have been covered by
such insurance but for Traxys’ failure to maintain such insurance, except where the loss,
destruction, or damage is a result of Molycorp’s gross negligence or the misappropriation of its
employee.
ARTICLE 10 – TERMINATION
This Agreement shall be terminated before its normal term if:
Voluntary Petition. The Party shall (i) commence a voluntary case under the Federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to take advantage of
any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up
or composition or adjustment of debts, (iii) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws
or other laws, (iv) apply for, or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of a substantial part of its assets, domestic or foreign, (v) admit in
writing its inability to pay its debts as they become due, (vi) make a general assignment for the
benefit of creditors, or (vii) take any corporate action for the purpose of effecting any of the
foregoing; or
Involuntary Proceeding. A case or other proceeding shall be commenced against the
Party in any court of competent jurisdiction seeking (i) relief under the Federal bankruptcy laws
(as now or hereafter in effect) or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or (ii) the appointment
of a trustee, receiver, custodian, liquidator or the like of the Party, or of all or any
substantial part of the assets, domestic or foreign, of the Party and such case or proceeding shall
continue undismissed or unstayed for a period of sixty (60) calendar days, or an order granting the
relief requested in such case or proceeding against the Party (including, but not limited to, an
order for relief under such Federal bankruptcy laws) shall be entered;
At the non-defaulting Party’s discretion, in the event of a material breach by one of the Parties
of any or all of its obligations under the Agreement, and the defaulting Party fails to cure the
breach within 30 (thirty) days after receipt of written notice requesting the defaulting Party to
cure such breach.
- 6 -
ARTICLE 11 – FORCE MAJEURE
Force majeure means any event beyond a Party’s control, which could not be reasonably foreseen at
the time this Agreement was executed, given its unforeseeable and unavoidable nature, including,
but without limitation, any order, regulation, decision or directive, judgment or determination
issued by any authority in statute or other form; any uprising, disturbance, civil war or war with
a foreign power, strike or other labour disturbance; any fire, flood or other act of God; or, in
general, any other condition beyond the control of a Party.
If an event of force majeure should occur and prevents one of the Parties from performing its
obligations under this Agreement, the Party invoking an event of force majeure shall provide the
other Party with:
| (a) | full evidence of the said event as promptly as possible and in any event within 7 (seven) days of its occurrence, | ||
| (b) | any additional information that the other Party may reasonably require to ascertain the force majeure nature of the concerned event, and | ||
| (c) | an appropriate reporting on the evolution of the situation. |
If the event of force majeure still continues for a 3 (three) month period after its occurrence,
then the Party which has not claimed force majeure may terminate this Agreement, simply by
informing the other Party in writing of its decision to terminate this Agreement with immediate
effect.
ARTICLE 12 – DISPUTES
This Agreement shall be governed by, interpreted, construed, and enforced in accordance with the
laws of the State of New York without regard to the principles of conflicts of law thereof.
Any dispute or claim arising out of this Agreement or the transactions contemplated hereby, which
the Parties are unable to resolve themselves, shall be settled through binding arbitration. Any
such arbitration shall be administered by the American Arbitration Association under its
then-applicable Commercial Arbitration Rules. The arbitration shall be heard and decided by three
(3) arbitrators (one selected by Molycorp, one selected by Traxys and the third selected by the
first two arbitrators), and any judgment on the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. The arbitration shall take place in the city and state of
New York.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date set forth
next to their respective signatures below.
- 7 -
| Traxys North America LLC: | Molycorp Minerals, LLC: | |||||||||||
By:
|
/s/ | Xxxx Xxxxxxxx | By: | /s/ | Xxxx X. Xxxxx | |||||||
| Xxxx Xxxxxxxx, CEO | Xxxx X. Xxxxx, CEO | |||||||||||
Date:
|
May 18, 2009 | Date: | May 18, 2009 |
- 8 -
SCHEDULE I
(Date material arrives in warehouse)
Traxys North America LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sir
RE: WAREHOUSE RECEIPT/WARRANT
This is to confirm that we received:
| A) | [ ] Supersacks with a total of [ ] pounds of Product 1 contained, marked Lot [ ] on [ ]; or | ||
| B) | [ ] pounds of Product 2, identified as Lot [ ], which has been added to bulk storage on [ ]. |
This material is stored at our warehouse located at Mountain Pass, California. We confirm that our
storage costs are USD$1.00 per month or part thereof and we will invoice you monthly for the
storage costs.
Please address all communications to:
Please don’t hesitate to contact our , Mr at ( )
- or email
with any further queries or comments regarding the foregoing.
Yours faithfully,
- 9 -
