EXHIBIT 10.5
March 25, 2004
Commemorative Brands, Inc.
7211 Circle S Rd.
Austin, Texas 78745
Re: First Amended and Restated Letter Agreement (this "Agreement") for
Fee Consignment and Purchase of Gold
Dear Ladies and Gentlemen:
We are pleased to confirm that, subject to your acceptance of this
facility, THE BANK OF NOVA SCOTIA ("Scotiabank") will be prepared to deliver on
an uncommitted basis, from time to time, Gold (as such term is defined below)
upon consignment (the "Consignment(s)") to Commemorative Brands, Inc. (the
"Consignee") subject to availability and to the terms and conditions outlined
herein.
Definitions. For the purposes of this Agreement:
(a) "American Achievement Credit Agreement" means the Credit and Guaranty
Agreement dated as of March 25, 2004 among AAC Acquisition Corp., a
Delaware corporation (to be merged into American Achievement Corporation),
AAC Holding Corp., various affiliates of the Consignee, the lenders party
thereto and Goldman Sachs Credit Partners L.P., as administrative agent
for the lenders, as in effect on the date hereof.
(b) "Approved Inventory Location" shall mean any location set forth under the
appropriate heading on Exhibit A, and each other location previously
approved by Scotiabank from time to time.
(c) "Base Rate" shall mean the higher of (with any change in the Base Rate to
be effective as of the date of change of either of the following rates):
(i) the rate of interest then most recently established by
Scotiabank in New York from time to time to be its base rate for Dollars
loaned in the United States, as in effect from time to time, and
(ii) the Federal Funds Rate, as in effect from time to time, plus
one-half of one percent (0.50%) per annum.
Scotiabank's base rate is a reference rate and does not necessarily
represent the lowest or best rate charged to customers; Scotiabank may
make commercial loans or other loans at rates of interest at, above or
below Scotiabank's base rate.
(d) "Borrowing Base" shall mean at any date of determination the amount
determined by Scotiabank based on the most recent Borrowing Base
Certificate of the sum of (i) 90% of the Dollar Value of the aggregate
troy ounces of Gold located at the Consignee's Plants, plus (ii) 70% of
the Dollar Value of the aggregate troy ounces of Gold located at Approved
Inventory Locations, plus (iii) 40% of the Dollar Value of the aggregate
troy
ounces of Gold located with the Consignee's salesmen, college book stores
or jewelry stores as samples (but such contribution to the Borrowing Base
shall not exceed $1,000,000), plus (iv) 70% of the Dollar Value of the
aggregate troy ounces of Gold located with refiners approved by
Scotiabank, plus (v) subject to the last sentence of Section 23, 90% of
the Dollar Value of the aggregate troy ounces of Gold located in the
Consignee's pooled account with Stern Leach, provided that the Borrowing
Base shall not include the Dollar Value of Processed Gold returned to the
Consignee by the purchaser thereof for any reason (including pursuant to
customer warranty repairs).
(e) "Borrowing Base Certificate" shall mean a certificate executed by an
authorized officer of the Consignee substantially in the form of Exhibit
D.
(f) "Business Day" shall mean any day, other than a Saturday, a Sunday or a
day that banks are authorized or entitled to be closed for business in New
York, New York, or in the case of any location to which Gold is to be
delivered or received, a day that transactions cannot be carried out at
such location.
(g) "Change of Control" has the meaning assigned to such term in the American
Achievement Credit Agreement.
(h) "Consignment Documents" shall mean, collectively, this Agreement, the
Guaranty and other related documents.
(i) "Consignment Request" shall mean a request delivered by an authorized
officer of the Consignee to Scotiabank in the form of Exhibit B.
(j) "Dollar Value" with respect to Gold shall mean, on the day of
determination, the value in dollars of one troy ounce of Gold, determined
by the daily London Afternoon Fixing Price with respect to Gold on such
day times the number of ounces of Gold in respect of which the Dollar
Value is being determined. In the event that there is no London Afternoon
Fixing Price for Gold on a particular day, the last established London
Afternoon Fixing Price for Gold shall apply.
(k) "Dollars" and "$" shall mean lawful currency of the United States.
(l) "Event of Default" is defined in paragraph 17.
(m) "Federal Funds Rate" shall mean for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with member
banks of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by
Scotiabank from three Federal funds brokers of recognized standing
selected by Scotiabank.
(n) "Gold" shall mean, with respect to any gold consigned by Scotiabank or
required to be re-delivered to Scotiabank pursuant to the terms hereof,
gold in London Good Delivery
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bar form, loco London, England, and of a minimum fineness of .9995, unless
otherwise mutually agreed to by Scotiabank and Consignee in advance of
delivery to the Consignee. Gold shall exclude customer gold contained in
rings returned to the Consignee for repair, replacement or resizing.
(o) "Gold Rate" shall mean, with respect to any Consignment term, the average
London Inter Bank Offered Rate as shown on Reuters LIBO screen as at 10:00
a.m. London, England time three (3) Business Days prior to the first day
of the Consignment term, less the mean rate shown on such date on the
Reuters GOFO page as at 10:00 a.m. London, England time.
(p) "Governmental Authority" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
(q) "Guaranty" is defined in paragraph 12.
(r) "Guarantors" is defined in paragraph 12.
(s) "including" shall mean "including without limitation".
(t) "Intercreditor Agreement" shall mean the Intercreditor Agreement dated as
of March 25, 2004 between Scotiabank and Goldman Sachs Credit Partners,
L.P., as agent under the American Achievement Credit Agreement, confirming
the priority of the security interest of Scotiabank in the consigned Gold,
in all respects in form and substance satisfactory to Scotiabank, as in
effect on the date hereof and as the same may be amended or modified from
time to time.
(u) "Lien" shall mean any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property to secure payment of a
debt or performance of an obligation or other priority or preferential
arrangement of any kind or nature whatsoever.
(v) "Material Adverse Effect" means a material adverse effect on the business,
operations, assets, revenues, properties or prospects of the Parent, the
Parent and its subsidiaries (taken as a whole), the Consignee, or the
Consignee and its subsidiaries (taken as a whole).
(w) "Maximum Dollar Amount" is defined in paragraph 1.
(x) "Obligations" shall mean all obligations (monetary or otherwise) now or
hereafter arising of the Consignee or the Guarantors arising under or in
respect of this Agreement or other Consignment Document, including the
obligations of the Consignee to return or purchase Gold pursuant to the
terms hereof, but excluding the obligations of the Consignee and the
Guarantors under or in respect of the American Achievement Credit
Agreement.
(y) "Organic Document" shall mean, relative to the Consignee or any Guarantor,
its certificate of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to any of
its authorized shares of capital stock.
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(z) "Parent" means American Achievement Corp. and any successor thereto.
(aa) "Plant" shall mean, as the context may require, any of the Consignee's
facilities set forth under the appropriate heading on Exhibit A.
(bb) "Processed Gold" shall mean an undivided interest in each product of any
goods and inventory containing Gold located at a Plant or an Approved
Inventory Location or for which Gold located at a Plant or an Approved
Inventory Location comprises a part thereof, which undivided interest
shall be, with respect to any such product, equal to the ratio that the
Dollar Value of such Gold contained in such product or comprising a part
thereof bears to the cost of such product. Terms defined in the U.C.C. and
used in this definition have the meanings set forth in the U.C.C.
(cc) "U.C.C." shall mean the Uniform Commercial Code as in effect in the State
of New York from time to time.
(dd) "Value Date" shall mean the date two Business Days after the rate is set
for the purchase of Gold hereunder.
1. Availability. Gold delivered and held on consignment hereunder from time to
time by the Consignee shall not at any time have a Dollar Value which is in
excess of the least of (i) the Dollar Value of 27,000 troy ounces of Gold, (ii)
$14,175,000 and (iii) the Borrowing Base (the least of (i), (ii) and (iii) being
the "Maximum Dollar Amount").
2. Restoration of Maximum Dollar Amount. If at any time the Dollar Value of the
Gold held on consignment hereunder by the Consignee should exceed the Maximum
Dollar Amount (as such amount may have been reduced pursuant to the terms of
this Agreement), then Scotiabank may at its option, by telex or facsimile notice
to the Consignee, require that by the end of the Business Day immediately
following the day upon which such telex or facsimile notice is given, the
Consignee to either:
(a) re-deliver to Scotiabank a portion of the Gold held on consignment
hereunder sufficient to reduce the Dollar Value of the Gold
continued to be held on consignment hereunder to an amount no
greater than the Maximum Dollar Amount; or
(b) purchase from Scotiabank, at a purchase price agreed to between the
parties by the end of such Business Day, a quantity of the Gold held
on consignment hereunder sufficient to reduce the Dollar Value of
the Gold held on consignment hereunder to an amount no greater than
the Maximum Dollar Amount.
With respect to clause (b) above, if the parties are unable to agree to the
purchase of Gold at a mutually agreeable purchase price, then the Maximum Dollar
Amount shall be restored pursuant to the provisions of clause (a) above.
3. No Obligation to Deliver or Renew a Consignment. Execution of this Agreement
shall not obligate Scotiabank to deliver gold or to renew a Consignment term
pursuant to any request which it may receive from the Consignee; nor does it
obligate the Consignee to request the
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delivery of gold. The Consignee shall have no automatic right to obtain the
delivery of gold hereunder or to renew a Consignment term despite making the
appropriate request and notwithstanding the occurrence or non-occurrence of an
Event of Default hereunder. Scotiabank shall have complete discretion to refuse
any delivery or renewal request at any time until actual delivery or actual
renewal of a Consignment without giving any reason for any such refusal, and
Scotiabank shall incur no liability in respect of any such refusal. If
Scotiabank elects not to renew a Consignment term, the Consignee shall, within
ten (10) days after demand from Scotiabank, if it has not already done so, (a)
re-deliver to Scotiabank all Gold which is held for Scotiabank by the Consignee
under the relevant Consignment by physically delivering the Gold to Scotiabank
or (b) purchase such Gold in accordance with Section 10 or 11.
4. Orders. Requests for delivery of Gold will be made by an authorized
representative of the Consignee to an authorized officer of Scotiabank by
telephone, telex, electronic mail ("delivery" or "read" receipt requested) or
facsimile transmission. Each request will indicate the quantity and quality of
the Gold to be delivered, the date on which the delivery is requested to be made
and the required term of the Consignment, which term may be for up to six (6)
months or any other term which is acceptable to Scotiabank. All telephone
requests shall be confirmed in writing to Scotiabank within five (5) days of
such request.
5. Deliveries by Scotiabank.
(a) Scotiabank will arrange for the delivery of the Gold to a Plant or
an Approved Inventory Location and on the date agreed upon for
delivery. Scotiabank will assume all risk of loss or damage to the
Gold until it has been delivered to a Plant or, if applicable, an
Approved Inventory Location at which time such risk shall pass to
the Consignee. Such delivery shall be accompanied by a delivery
statement provided by Scotiabank setting out the quantity and
quality of Gold delivered.
(b) If on receipt of the Gold it is determined by the Consignee that the
Gold delivered by Scotiabank to the Consignee is of a different
quantity and/or quality than is set out in the delivery statement,
the Consignee shall forthwith give notice of such discrepancy to
Scotiabank. In that event, Scotiabank shall be entitled to conduct
such tests and make such examination of the Gold as it considers
necessary or desirable. If such tests or examinations determine that
the Gold delivered by Scotiabank to the Consignee is of a different
quantity and/or quality than was set out in the said delivery
statement, then Scotiabank or the Consignee, as the case may be,
shall make the appropriate adjustments.
(c) Unless Scotiabank receives from the Consignee the above described
notice of discrepancy within three (3) Business Days of receipt of
the Gold, then the Gold delivered will be deemed to be as set out in
the delivery statement that accompanied the delivery.
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6. Fees.
(a) The Consignee will pay to Scotiabank a consignment fee on the daily
Dollar Value of the Gold making up the applicable Consignment at a
per annum rate equal to the product of (i) the sum of (x) the Gold
Rate on the Dollar Value of each troy ounce of Gold held on
consignment hereunder as in effect three (3) Business Days prior to
the first day of the applicable Consignment then in effect for such
Gold plus (y) 3.75% multiplied by (ii) the number of troy ounces of
Gold consigned for each such Consignment, which rate shall remain in
effect for the term of the applicable Consignment. In the event that
a Consignment is made with no fixed Consignment term applicable
thereto, then the rate applicable to such Consignment shall be as
agreed upon by the parties and subject to change upon three (3)
Business Days' notice by Scotiabank to the Consignee, and the
Consignee agrees that such rate shall not be subject to approval by
the Consignee. In the event that the Consignee and Scotiabank should
fail at any time to agree upon the rate to apply to a Consignment or
the renewal of a Consignment term, then the Consignee shall
immediately deliver the subject Gold for which there is no agreement
to Scotiabank, as provided for in paragraph 16.
(b) The Consignee agrees to pay to Scotiabank on the date hereof an
upfront fee equal to $25,000.
(c) All rates in this Agreement shall be calculated on the basis of a
360 day year and for the actual number of days elapsed.
7. Title.
(a) Title to the Gold delivered by Scotiabank and held by the Consignee
on consignment for Scotiabank will remain with Scotiabank and will
not pass to the Consignee until such time as the Gold is purchased
by the Consignee as provided for in paragraphs 7(b), 10, and 11. In
the event that only a portion of a Consignment is purchased, then
title as pertains to that portion only will transfer to the
Consignee.
(b) Title to the Gold purchased by the Consignee as provided for in
paragraphs 10 and 11 will pass to the Consignee upon receipt by
Scotiabank of all Dollars due to it from the Consignee in payment
for the Gold purchased.
8. Commingling. The Consignee and Scotiabank agree that the Consignee shall be
permitted, in the ordinary course of its business as being conducted on the date
of this Agreement, to commingle the Gold held on consignment for Scotiabank with
any other Gold or Gold (in each case located at the Plants or Approved Inventory
Locations) containing alloys being held by the Consignee on consignment,
safekeeping, or trust, or with Gold or Gold containing alloys owned by the
Consignee. The Consignee shall also be permitted to accept returns from its
customers containing Gold for repair, replacement, restyling etc. without being
in violation of this Agreement.
9. Safekeeping. Until such time as the Gold being returned to Scotiabank has
been received by Scotiabank, or purchased by the Consignee, as hereinafter
provided, the Consignee will afford
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the Gold no less safekeeping protection than it affords Gold held for its own
account. The Consignee will arrange insurance coverage, acceptable to Scotiabank
and naming Goldman Sachs Credit Partners L.P., as agent, as loss payee and
additional insured, on the Gold held on consignment for Scotiabank by the
Consignee in such amounts and covering such risks as is usually carried by
companies engaged in a similar business and the Consignee shall, upon request,
deliver to Scotiabank a copy of all policies for such insurance. If Scotiabank
delivers written notice to the Consignee setting forth Scotiabank's reasonable
belief that an Approved Inventory Location offers inadequate safekeeping
protection for the Gold, the Consignee shall transfer all Gold contained at such
Approved Inventory Location to a Plant or another Approved Inventory Location
within 10 days following receipt of such notice.
10. Purchase Request. If the Consignee wishes to purchase part or all of the
Gold held hereunder on consignment for Scotiabank, an authorized representative
of the Consignee will make a request to an authorized officer of Scotiabank by
telephone, telex, electronic mail ("delivery" or "read" receipt requested) or
facsimile transmission stating the quantity and quality of Gold to be purchased
and the proposed Value Date of the purchase. All telephone requests shall be
confirmed in writing to Scotiabank within five (5) days of such request.
11. Purchase. Scotiabank shall at least two (2) Business Days prior to the
proposed Value Date for a purchase or such lesser period as Scotiabank may
accommodate (in its sole discretion), by its authorized officer, provide an
authorized representative of the Consignee with a quotation of the price (based
on the current market price for such Gold), as of the Value Date, of the Gold to
be purchased. If such price is agreed to by the authorized representative of the
Consignee, such Gold will thereupon be conclusively deemed to have been
contracted for purchase, with payment of the purchase price by the Consignee to
be on the relevant Value Date.
12. Security.
(a) As continuing collateral security for the present and future
Obligations of the Consignee to Scotiabank hereunder and under the
other Consignment Documents, the Parent, AAC Holding Corp., AAC
Acquisition Corp. Educational Communications, Inc., Taylor Senior
Holding Corp., TP Holding Corp., Taylor Publishing Company, Taylor
Publishing Manufacturing, LP., Taylor Manufacturing Holdings, LLC
and CBI North America, Inc. (the "Guarantors") shall deliver in
favor of Scotiabank (together with registrations, filings and other
supporting documentation deemed necessary by Scotiabank to perfect
same), in the form attached hereto as Exhibit C, its guaranty (the
"Guaranty") of the present and future Obligations of the Consignee
to Scotiabank.
(b) The intent of the parties hereto is to create a true consignment
from Scotiabank to the Consignee and not a consignment for security;
provided, however, that in order to protect the rights of Scotiabank
in the event that either this Agreement and under the other
Consignment Documents and the transactions contemplated hereby and
thereby are construed at any time with respect to any Gold as other
than a true consignment from Scotiabank to the Consignee (including
as a result of a Gold Sale), then as security for its Obligations
the Consignee hereby grants Scotiabank a Lien on and security
interest in and to the Collateral (whether now
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or hereafter existing). "Collateral" means all of the Consignee's
right, title and interest in and to (i) all Gold of any quality or
fineness (including the Gold consigned and purchased under this
Agreement), wherever located from time to time, including at the
Plants or the Approved Inventory Locations or in transit or with the
Consignee's salesmen, college book stores or jewelry stores as
samples, (ii) all Processed Gold, wherever located from time to
time, including at the Plants or the Approved Inventory Locations or
in transit or with the Consignee's salesmen, college book stores or
jewelry stores as samples, (iii) an undivided interest in all
proceeds of such Gold, including an undivided interest in the
accounts owing by any account debtor, and related general
intangibles (if any) arising from the sale of Gold (including the
Gold and the Processed Gold) in each case which undivided interest
shall be, with respect to any such proceeds (including insurance
proceeds), accounts or general intangibles, equal to the ratio that
the Dollar Value of such Gold contained in the goods delivered to
such account debtor or comprising a part thereof bears to the total
cost of such goods and (iv) all Metals Collateral (as defined in the
Intercreditor Agreement). Terms used in the definition of Collateral
for which meanings are provided in the U.C.C. are used in the
definition of Collateral with such meanings. "Gold Sale" means any
sale of Gold by Scotiabank to the Consignee, which sale shall occur
at any time the Consignee takes title to any Gold, whether pursuant
to paragraph 10 or 11 or at such earlier or other date as provided
by law or court order or decree. To the extent this Agreement and
any other Consignment Document and the transactions contemplated
hereby and thereby are not construed as a true consignment from
Scotiabank to the Consignee, or upon the occurrence of any Gold
Sale, the security interest granted pursuant to this paragraph
secures the complete and punctual payment of all Obligations of the
Consignee, whether now or hereafter existing. To the extent any Gold
of any quality or fineness located at a Plant or any Approved
Inventory Location becomes part of a product, Scotiabank shall only
have and shall continue to have rights or interests in and to such
product to the extent of an undivided interest in such product that
is equal to the ratio that the cost of such Gold contained in such
product or comprising a part thereof bears to the cost of such
product. In addition, Gold of any quality or fineness (including the
Gold) located at a Plant or any Approved Inventory Location that
becomes part of a product shall continue to be considered as being
consigned to the Consignee hereunder to the same extent as if such
Gold did not become part of a product and shall be subject to all
the terms hereof and any other Consignment Document (including the
continuation of title to such Gold in Scotiabank). Notwithstanding
the express intent of the parties hereto that this Agreement and any
other Consignment Document and the transactions contemplated hereby
be a true consignment from Scotiabank to the Consignee, the
Consignee shall file precautionary Uniform Commercial Code financing
statements to protect the rights of Scotiabank in and to the
Collateral. In furtherance of the intent of the parties hereto that
this Agreement and the transactions contemplated hereunder and
thereunder are a true consignment from Scotiabank to the Consignee,
and not a consignment for security, Scotiabank agrees that for so
long as no Event of Default has occurred and is continuing, it
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will not initiate any action, suit or proceeding claiming that this
Agreement or any of the transactions contemplated hereunder are
other than a true consignment from Scotiabank to the Consignee.
(c) The Consignee agrees that, from time to time at its own expense, the
Consignee will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
desirable, or that Scotiabank may request, in order to perfect,
preserve and protect any of its interest in the Gold.
(d) The Consignee hereby authorizes Scotiabank to file any financing
statement without its signature, to the extent permitted by
applicable law, and/or to file a copy of this Agreement as a
financing statement in any jurisdiction.
13. Invoices.
(a) Scotiabank will furnish the Consignee, as at the last day of each
month and as at the last day of a Consignment term, a statement of
the quantity and quality of Gold held on consignment for Scotiabank
and a calculation of the consignment fee in accordance with
paragraph 6 payable by the Consignee, together with an invoice for
such charges.
(b) In the case of purchases of Gold in accordance with paragraphs 10
and 11, Scotiabank will furnish the Consignee promptly after each
purchase is agreed to with a statement setting forth the quantity
and quality of the Gold sold, and a calculation of the purchase
price payable by the Consignee, together with an invoice for such
purchase price.
(c) Failure by Scotiabank to issue a statement and/or an invoice or
failure to issue such statement and/or invoice in a timely manner,
does not negate the Consignee's Obligations.
(d) If there is a discrepancy between the statement provided by
Scotiabank and the agreed to terms of the purchase by the Consignee,
as the Consignee understands them to be, the Consignee shall
forthwith notify Scotiabank of such discrepancy. If such
notification is not received by Scotiabank within three (3) Business
Days of receipt of the statement by the Consignee then such
statement shall be deemed to be correct.
14. Payments. Payment of the aggregate consignment fee will be made by the
Consignee (a) on or before the later of (i) ten (10) Business Days following the
last day of each month and (ii) five (5) Business Days after receipt by the
Consignee of an invoice therefor and (b) on or before the later of (i) the last
day of a Consignment term and (ii) five (5) Business Days after receipt by the
Consignee of an invoice therefor. Payment of the purchase price of the Gold will
be made on the Value Date. In either case, payment will be made in Dollars in
same day funds by any method mutually agreed upon from time to time. If an
amount payable hereunder is not paid when due, the Consignee will pay interest
on the unpaid amount, based on a 360 day year, calculated and payable upon
demand for the actual number of days elapsed and compounded monthly until paid
in full, at the Base Rate plus 2% per annum.
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15. Reports, etc.
(a) Within ten (10) days after the end of each month, the Consignee will
send a report in writing to Scotiabank setting out the quantity and
quality of the Gold held on consignment for Scotiabank as of the end
of such month and the location (whether at a Plant, an Approved
Inventory Location or otherwise) of all Gold (by ounces) consigned
hereunder.
(b) The Consignee will deliver a Borrowing Base Certificate (as of the
last Business Day of the previous week) to Scotiabank on the date
hereof and every two weeks thereafter on every other Monday (or if
such date of delivery is not a Business Day, the next succeeding
Business Day) during the term of this Agreement.
(c) The Consignee will deliver to Scotiabank the Parent's quarterly
financial statements within forty-five (45) days after the end of
each the Parent's first three fiscal quarters and the Parent's
annual audited financial statements within one hundred five (105)
days after the end of each fiscal year of the Parent and any other
information as Scotiabank may reasonably request from time to time.
(d) The Consignee will deliver to Scotiabank prompt written notice of
the occurrence of a Default or an Event of Default under and as
defined in the American Achievement Credit Agreement.
16. Period of Agreement. Scotiabank or the Consignee may, for any reason, and
upon not less than sixty (60) days' prior written notice to the other party (a
"Termination Notice"), terminate this Agreement, with such termination
effective, except as provided herein, as of the date specified in such
Termination Notice (the "Termination Date"). Each Consignment with a term
extending beyond the Termination Date shall terminate on the Termination Date.
On the relevant date for termination, the Consignee shall, if it has not already
done so, re-deliver to Scotiabank all Gold which is held for Scotiabank by the
Consignee under the relevant terminated Consignments by either physically
delivering the Gold to Scotiabank, or by purchasing the Gold from Scotiabank as
provided for in paragraphs 10 and 11 and shall pay to Scotiabank all applicable
amounts due and accruing to it hereunder. If an Event of Default should occur
prior to the Termination Date or prior to any other applicable date of
termination for a Consignment, Scotiabank's right to terminate this Agreement
and make demand hereunder shall take effect immediately.
17. Events of Default. Upon the occurrence of any one of the following events of
default (an "Event of Default"):
(a) failure by the Consignee to deliver any amount of Gold or pay any
purchase price, consignment fee, interest or other amount in respect
of any Gold held on consignment hereunder or purchased from
Scotiabank, within three (3) Business Days of the date on which it
is due hereunder; provided that such grace period shall have no
application if a Termination Notice has been given pursuant to
Section 16 and the Consignee has failed to re-deliver Gold or pay
amounts due and accruing as required by such Section
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(b) failure by the Consignee to restore the Maximum Dollar Amount as
required by paragraph 2;
(c) the Consignee or any Guarantor makes any representation or warranty
hereunder which is incorrect in any material respect; or breaches
any covenant hereunder or under any other Consignment Document or
fails to perform or observe, in any material respect, any other term
or provision contained in this Agreement or under any other
Consignment Document and any such breach of covenant or failure to
perform or observe shall remain unremedied for ten (10) days after
written notice thereof has been given by Scotiabank to the Consignee
in the manner provided for in paragraph 23;
(d) any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or any other proceedings for the relief of
debtors and/or creditors are instituted by or against the Consignee
or any Guarantor, and, in the case of any such proceeding instituted
against the Consignee or any Guarantor (but not instituted by such
party), any such proceeding shall remain undismissed, or unstayed
for a period of seventy-five (75) days or any of the actions sought
in such proceeding (including the entry of an order for relief
against it or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its
property) shall occur;
(e) an order is made or an effective resolution passed for the
winding-up or liquidation of the Consignee or any Guarantor; or a
secured party takes possession of all or any material part of the
undertaking, property or assets of the Consignee or any Guarantor;
or the Consignee or any Guarantor has a distress, execution,
attachment, sequestration or other legal process levied, enforced or
sued on or against all or substantially all of its undertaking,
property or assets and such secured party maintains possession, or
any such process is not dismissed, discharged, stayed or restrained,
in each case within seventy-five (75) days thereafter;
(f) subject to the provisions contained in Section 3 of the
Intercreditor Agreement, the Consignee or any Guarantor admits its
inability to pay its debts generally; or the Consignee or any
Guarantor fails to pay any of its indebtedness in an aggregate
amount of not less than $5,000,000 when due and such failure
continues after any applicable grace period specified in an
agreement or instrument relating to such indebtedness;
(g) subject to the provisions contained in Section 3 of the
Intercreditor Agreement, the Consignee or any Guarantor permits any
default under any agreement or instrument relating to its
indebtedness, or any other event, to occur and continue after any
applicable grace period specified in such agreement or instrument
and the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of indebtedness in an
aggregate amount of not less than $5,000,000;
11
(h) the Consignee or any Guarantor denies, to any extent, its respective
obligations under the Guaranty or any other Consignment Document or
claims the Guaranty or any other Consignment Document to be invalid
or withdrawn in whole or in part; or the Guaranty is determined to
be invalid in whole or in part by a court or other judicial entity,
or is invalidated in whole or in part by any Act, regulation or
governmental action; or the Consignee or any Guarantor breaches any
of its covenants as contained in the Guaranty or any other
Consignment Document and such breach is not remedied or waived
within 10 days of such breach, or makes any representation or
warranty as contained in the Guaranty or any other Consignment
Document which is incorrect in any material respect;
(i) a materially adverse change occurs in the financial condition of the
Parent and its subsidiaries on a consolidated basis which gives
reasonable grounds to conclude, in the sole opinion of Scotiabank,
reasonably exercised, that the Consignee or the Guarantors will be
unable to perform or observe, in the normal course, their respective
obligations under this Agreement or the Guaranty;
(j) the occurrence of a Change of Control; or
(k) subject to the provisions contained in Section 3 of the
Intercreditor Agreement, any Event of Default under and as defined
in the American Achievement Credit Agreement occurs and is
continuing;
then Scotiabank may terminate this Agreement and, upon making a demand in
writing upon the Consignee, will become entitled to have the Consignee deliver
to Scotiabank forthwith all Gold held by the Consignee on consignment for
Scotiabank hereunder and shall be entitled to receive payment forthwith from the
Consignee of all amounts due and accruing to Scotiabank hereunder and under the
other Consignment Documents. Delivery of such Gold shall be made by either
physically delivering the Gold to Scotiabank or by paying to Scotiabank the spot
value of the Gold then held by the Consignee, as determined by Scotiabank, as of
the date and time of termination, and by so paying such amount, the Consignee
shall be deemed to have purchased the Gold which it was required to re-deliver
to Scotiabank. If the Consignee fails to immediately deliver to Scotiabank all
such Gold held on consignment hereunder or fails to immediately pay to
Scotiabank all other amounts due to it hereunder, Scotiabank may proceed to take
such steps as it deems fit, including realizing upon any security it holds in
that respect.
18. Agreement Effectiveness. The agreement of Scotiabank to make the initial
consignment of Gold shall be subject to the prior or concurrent satisfaction of
each of the conditions precedent set forth below:
(a) the delivery of resolutions of the Board of Directors of the
Consignee and each Guarantor then in full force and effect
authorizing the execution, delivery and performance of this
Agreement and each other document to be executed by it hereunder;
(b) the delivery of true and complete copies of the Organic Documents of
the Consignee and each Guarantor;
12
(c) the delivery of the incumbency and signatures of the officers of the
Consignee and each Guarantor authorized to act with respect to this
Agreement and each other document executed by it;
(d) the delivery of copies of proper Uniform Commercial Code amendment
and/or termination statements, if any, necessary to assign or
terminate all Liens and other rights of any Person in any Collateral
previously granted by the Consignee to Scotiabank;
(e) the delivery of certified copies of Uniform Commercial Code search
reports, or a similar search report certified by a party acceptable
to Scotiabank, dated a date reasonably near to the date hereof,
listing all effective financing statements which name the Consignee
(under its trade names, present name and any previous names) as the
debtor and which are filed in the jurisdictions in which filings
were made pursuant to clause (d) above, together with copies of such
financing statements (none of which shall cover any Collateral);
(f) the delivery of the opinion of Ropes & Gray LLP, counsel for the
Consignee and the Guarantors, in form and substance acceptable to
Scotiabank;
(g) the delivery of insurance certificates in form and substance
reasonably acceptable to Scotiabank and showing Goldman Sachs Credit
Partners L.P. as loss payee and as an additional insured; and
(h) the delivery of the Intercreditor Agreement and the satisfaction or
waiver of the conditions set forth in Section 3.1 of the American
Achievement Credit Agreement and the concurrent funding of the
initial loans thereunder.
19. All Deliveries under Consignment. The delivery of any Gold agreed to be
consigned by Scotiabank hereunder is subject to satisfaction of each of the
conditions precedent set forth in this paragraph 19:
(a) Compliance with Warranties, No Default, etc. Both before and after
giving effect to the delivery of Gold requested to be held under
consignment hereunder, the following statements shall be true and
correct: (i) the representations and warranties set forth in this
Agreement and each other Consignment Document shall be true and
correct in all material respects with the same effect as if then
made (unless stated to relate solely to an earlier date, in which
case such representations and warranties shall be true and correct
as of such earlier date); (ii) except as disclosed by the Consignee
to Scotiabank on the date hereof, (A) no litigation, arbitration or
governmental investigation or proceeding shall be pending or, to the
knowledge of the Consignee, threatened against any Guarantor, the
Consignee or any of its subsidiaries which could have a Material
Adverse Effect; and (B) no development shall have occurred in any
litigation, arbitration or governmental investigation or proceeding
disclosed by the Consignee to Scotiabank on the date hereof which
could have a Material Adverse Effect;
13
(b) there shall not be any pending or, to the knowledge of the
Consignee, threatened, litigation, arbitration or governmental
investigation or proceeding which purports to affect the legality,
validity or enforceability of this Agreement or any other
Consignment Document;
(c) there is sufficient availability under paragraph 1 to make the
requested consignment of Gold;
(d) all documents executed or submitted pursuant hereto by or on behalf
of the Consignee in connection with such consignment (or
continuation, as the case may be) shall be satisfactory in form and
substance to Scotiabank and its counsel; Scotiabank and its counsel
shall have received all information, approvals, opinions, documents
or instruments as Scotiabank or its counsel may reasonably request;
(e) no Event of Default (nor any event which with the passage of time or
the giving of notice, or both, would become an Event of Default)
shall have then occurred and be continuing, and none of the
Guarantors, the Consignee nor any of their respective subsidiaries
shall be in material violation of any law or governmental regulation
or court order or decree the violation of which could have a
Material Adverse Effect; and
(f) Scotiabank shall have received a Consignment Request for such
Consignment.
Each of the delivery of a Consignment Request and the acceptance by the
Consignee of any Gold to be held by it under consignment shall constitute a
representation and warranty by the Consignee to Scotiabank that on the date of
such consignment or extension of term (both immediately before and after giving
effect thereto) the statements made in clauses (a), (b), (c), (d) and (e) of
this paragraph 19 are true and correct.
The Consignee agrees that if prior to the time of the making of a requested
Consignment, any matter certified to herein by it will not be true and correct
at such time as if then made, it will immediately so notify Scotiabank. Except
to the extent, if any, that prior to the time of the making of a requested
consignment Scotiabank shall receive written notice to the contrary from the
Consignee, each matter certified to herein shall be deemed once again to be
certified as true and correct at the date of the making of such Consignment as
if then made.
20. Authorized Representatives. The Consignee will, from time to time, notify
Scotiabank in writing of the names of two or more persons who are to be its
authorized representatives for the purposes hereof. Scotiabank will, from time
to time, notify the Consignee in writing of the names of two or more persons who
are to be its authorized officers for the purposes hereof. The Consignee and
Scotiabank shall provide to each other specimen signatures of such persons.
21. Representations of the Consignee. The Consignee hereby represents and
warrants to Scotiabank that: (a) it has full corporate power and authority to
purchase Gold from Scotiabank and to receive and hold Gold for Scotiabank on the
terms and conditions contained herein; (b) it has obtained all necessary
governmental and other approvals, if any, to receive and hold and
14
purchase Gold; (c) this Agreement has been duly authorized by all necessary
corporate action; (d) the execution, delivery and performance of this Agreement
by the Consignee will not result in the breach of its Organic Documents or a
violation of or default under any contract or agreement to which the Consignee
or its properties is bound; and (e) when executed and delivered by the
Consignee, this Agreement will constitute the legal, valid and binding
obligation of the Consignee, enforceable in accordance with the terms hereof,
except as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights and except to the extent that availability of the remedy of
specific performance or injunctive relief and other equitable remedies.
22. Representations of Scotiabank. Scotiabank hereby represents and warrants to
the Consignee that it shall have title free and clear of any encumbrance to all
Gold to be delivered to the Consignee under this Agreement, and that it has full
power and authority to deliver and sell Gold to the Consignee on the terms and
conditions contained herein.
23. Covenants of the Consignee.
(a) The Consignee shall maintain at its principal place of business
records reasonably satisfactory to Scotiabank with respect to the
Gold delivered by Scotiabank hereunder, and shall permit an
authorized officer of Scotiabank, or a representative not
necessarily in Scotiabank's employ, at the Consignee's expense (up
to $45,000 per year), to examine such records at any reasonable time
during normal business hours, at reasonable intervals and without
prior notice.
(b) The Consignee shall pay all taxes, customs duties, assessments and
charges lawfully levied, assessed or imposed in respect of the Gold
held by the Consignee for Scotiabank hereunder or upon the sale of
such Gold by Scotiabank to the Consignee, except any tax in respect
of the income of Scotiabank.
All payments by the Consignee shall be made without set-off or
counterclaim and free and clear of any taxes (including any value
added tax), levies, duties, charges, fees or deductions for
withholdings whatsoever.
If, as a result of any requirement, it should be necessary for the
Consignee to deduct or withhold any amount from any payment
hereunder, then the Consignee shall make an additional payment so
that the amount received by Scotiabank after such deduction or
withholding equals the amount that would have been received by
Scotiabank if there had been no such deduction or withholding
requirement.
Evidence satisfactory to Scotiabank of the payment of any tax, etc.
referred to in this paragraph will, upon the request of Scotiabank
made from time to time, be provided by the Consignee to Scotiabank.
(c) The Consignee shall duly observe and conform in all material
respects to all valid requirements of any Governmental Authority
relative to the holding of Gold by the Consignee for Scotiabank
hereunder.
15
(d) The Consignee shall at all times cause all Gold held on consignment
hereunder and not sold to a customer of the Consignee to be located
only (i) at the Plants or the Approved Inventory Locations, (ii) in
transit between the Plants or the Approved Inventory Locations,
(iii) with its salesmen, college book stores or jewelry stores as
samples, and/or (iv) in transit to Scotiabank; provided, however,
that no sale to any customer of the Consignee shall be made unless
the Consignee shall have first either purchased or returned a like
amount of Gold to Scotiabank pursuant to the terms of this
Agreement. The Consignee further agrees that except for Gold (under
and as defined in this Agreement), no other Gold that is not owned
by the Consignor will be kept in a Plant or an Approved Inventory
Location. In any event, if any Gold (other than Gold (under and as
defined in this Agreement), Processed Gold owned by the Consignee
and Processed Gold to be returned to the owner thereof) shall at any
time be located at a Plant or an Approved Inventory Location, the
Consignee agrees that such Gold shall be transferred (by book entry
or otherwise) as soon as practicable (and in any event no later than
the next Business Day) to another facility of the Consignee's. The
Consignee shall also be permitted to accept returns from its
customers containing Gold for repair, replacement, restyling etc.
without being in violation of this Agreement.
(e) The Consignee shall use the Gold held on consignment pursuant to the
terms of this Agreement only in connection with the completion of
customer orders in the ordinary course of business at the Plants or
the Approved Inventory Locations.
(f) The Consignee shall at all times cause, or deliver to Scotiabank all
information reasonably necessary to permit Scotiabank to file,
Uniform Commercial Code financing statements naming Commemorative
Brands, Inc., as the consignor and The Bank of Nova Scotia as the
assignee of the consignor and as consignees the various operators of
the Approved Inventory Locations (but limited to Richards and West,
AuraFin, and Traditional Heritage and those that are refiners) or
other similar instruments or documents, to be on file pursuant to
the Uniform Commercial Code of all jurisdictions as may be necessary
or, in the opinion of Scotiabank, desirable to perfect the interest
of Scotiabank pursuant to the terms of this Agreement. Scotiabank
will provide to the Consignee a list of financing statements filed
pursuant to this clause (f) upon written request by the Consignee,
(g) The Consignee shall not permit to be located at any of (i) the OK
Casting Approved Inventory Location, (ii) the Dunhams Approved
Inventory Location or (iii) any other Approved Inventory Location
with respect to which Uniform Commercial Code financing statements
of the type referred to in clause (f) above have not been filed with
respect to the Collateral, Gold with a Dollar Value in excess of
$100,000 at any one Approved Inventory Location or $500,000 at all
such Approved Inventory Locations.
Notwithstanding anything to the contrary contained in clause (f) or (g)
above, the Company will not permit Gold with a Dollar Value in excess of
$750,000 (which amount shall be in addition to any amount set forth in clause
(g) above) to be located at the address for Stern
16
Leach set forth on Exhibit A unless Scotiabank or the Consignee has filed a
Uniform Commercial Code financing statement of the type referred to in clause
(f) above.
24. Notices. Any notice in writing may be given by being delivered by hand or by
being sent by authenticated telex, facsimile transmission [or electronic mail
("delivery" or "read" receipt requested)] in the case of the Consignee to:
Commemorative Brands, Inc.
7211 Circle S Road
Austin, TX 78745
Attention: Sherice P. Bench, Chief Financial Officer
Facsimile No.: (512) 443-5213
[Email: Sherice.bench@cbi-rings.com]
with a copy to:
Ropes & Gray LLP
One International Place
Boston, Massachusetts 02110
Attention: C. Todd Boes
Facsimile No.: (617) 951-7050
[Email: tboes@ropesgray.com]
and in the case of Scotiabank to:
The Bank of Nova Scotia
Wholesale Banking Operations
44 King St. West
Toronto, Ontario, Canada M5H 1H1
Attention: Head of Metal Operations, Toronto
Facsimile: (416) 866-6843
Email:
with a copy to :
Mayer, Brown, Rowe & Maw LLP
190 South LaSalle Street
Chicago, Illinois 60603
Attention: J. Thomas Mullen, Esq.
Facsimile No.: (312) 701-7711
[Email: tmullen@mayerbrownrowe.com]
or to such other address, telex or facsimile number [or electronic mail address]
as may hereafter be notified in writing by the Consignee or Scotiabank,
respectively and any such notice, if given
17
by hand, authenticated telex or facsimile transmission [or electronic mail
(return receipt requested)] will be deemed to have been given when delivered or
sent.
If the Consignee or any of its agents or employees makes an oral request
or gives an oral notice hereunder to Scotiabank, whether to an agent or an
employee of Scotiabank then, until it has received notice in writing by the
Consignee, Scotiabank shall be entitled to rely on its dealings with the
Consignee upon those oral instructions whether by telephone or otherwise. In so
relying, neither Scotiabank nor any agent or employee shall incur any liability
to the Consignee in acting upon such oral instructions, contemplated hereby and
which Scotiabank believes in good faith to have been given by a person
authorized by the Consignee to effect any applicable transaction. In the event
there is a discrepancy between the oral instructions and any written
confirmation in respect thereof, or in the absence of receiving confirmation,
the oral instructions as understood by Scotiabank will be deemed to be the
controlling instructions.
25. Deliveries by Consignee. All deliveries of Gold to be made hereunder by the
Consignee to Scotiabank will be free of all Liens, and made in accordance with
the directions of Scotiabank or, in the absence of such directions, in a
commercially acceptable manner to Scotiabank at the address of Scotiabank
specified in paragraph 24. The Consignee shall bear the cost of such delivery
and shall bear the risk of loss of or damage to such Gold until delivery is made
by it to Scotiabank.
26. Indemnity Provisions. If the introduction of or any change in or in the
interpretation of, or any change in its application to the Consignee of, any law
or any regulation or guideline issued by any central bank or other Governmental
Authority (whether or not having the force of law), including any reserve or
special deposit requirement or any tax (other than tax on Scotiabank's general
income), or any capital requirement, has due to Scotiabank's compliance the
effect, directly or indirectly, of (i) increasing the cost to Scotiabank of
performing its obligations hereunder; (ii) reducing any amount received or
receivable by Scotiabank hereunder or its effective return hereunder or on its
capital; or (iii) causing Scotiabank to make any payment or to forgo any return
based on any amount received or receivable by Scotiabank hereunder, then upon
demand from time to time the Consignee shall pay such amount as shall compensate
Scotiabank for any such cost, reduction, payment or forgone return. The
Consignee shall further indemnify Scotiabank for all costs, losses and expenses
incurred by Scotiabank in connection with (i) the early termination of any
Consignment term, (ii) the failure of the Consignee for any reason to return the
required amount of Gold back to Scotiabank on the dates required pursuant to the
terms of this Agreement, except to the extent the Consignee has purchased such
Gold from Scotiabank in accordance with the terms hereof or (iii) the return of
any Gold to Scotiabank on other than the last day of the Consignment term
applicable to such Gold; and agrees that Scotiabank shall have no liability to
the Consignee for any reason in respect of this facility other than on account
of Scotiabank's gross negligence or willful misconduct. Any certificate of
Scotiabank in respect of the foregoing will be conclusive and binding upon the
Consignee, except for manifest error, provided that Scotiabank shall determine
the amounts owing to it in good faith using any reasonable averaging and
attribution methods.
27. Assignment. The Consignee may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Scotiabank.
Scotiabank may at any time assign or transfer all or any of its rights and/or
obligations hereunder, provided such assignment or transfer
18
is to its successors in title or to a wholly-owned subsidiary or a branch or
office of Scotiabank and each such assignee is entitled to rely on the
provisions contained in paragraph 25.
28. LAWS. THIS AGREEMENT WILL BE INTERPRETED AND GOVERNED IN ALL RESPECT BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
29. Amendments. This Agreement constitutes the entire Agreement between the
Consignee and Scotiabank in respect of the subject matter hereof and may only be
amended by a document signed by the Consignee and Scotiabank.
30. Judgment Currency. If any payment of a currency required hereunder is
required to be made in a currency of payment which is different from the
currency of exchange in the jurisdiction in which it is to be received, the
obligation of the payor to make payments in the currency of payment will not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed or converted into the applicable currency of exchange of the
jurisdiction of the payment except to the extent such tender or recovery shall
result in the effective receipt (upon legal conversion from the applicable
currency of exchange to the required currency of payment at the spot buying rate
of Scotiabank of the currency of payment in the applicable currency of exchange
quoted by Scotiabank at the time of conversion and receipt of the funds) by the
payee of the full amount of such currency of payment as at the date when such
payment was due with interest to the date of such payment or, if greater, on the
date when payment is made. The obligation of the payor shall be enforceable as
an additional or alternative cause of action for the purpose of recovery in the
currency of exchange of the jurisdiction of the payment of the amount (if any)
by which such effective receipt shall fall short of the full amount of such
currency of payment and such right shall not be affected or merged into any
judgment obtained in the applicable currency of exchange.
31. Force Majeure. If Scotiabank is prevented from or hindered in making
delivery of Gold or the making of delivery is delayed by reason of force majeure
(which shall be deemed for this purpose to include war, civil commotion, act of
terrorism, hijacking, strike, walkout, industrial dispute, fire, explosion,
storm, tempest, flood, act or omission of any Governmental Authority or of a
person or body for the time being exercising the power and authority of such
body (whether in Canada, New York, Texas or elsewhere) or any further cause not
within the direct control of Scotiabank) Scotiabank shall be under no liability
whatsoever in respect thereof and the time for delivery by Scotiabank shall be
extended for a period equal to that during which delivery is so prevented,
hindered or delayed; however, notwithstanding the foregoing, Scotiabank may, if
it so chooses, by notice in writing given to the Consignee, advise that it will
not make the delivery affected by the force majeure.
Scotiabank shall not be liable for any loss arising on or in connection
with any lack of delivery of Gold to the Consignee hereunder as a result of
moratorium, currency restrictions or changes thereof and the Consignee shall
indemnify Scotiabank against any loss suffered as a result thereof.
32. Determination. Scotiabank shall have the right to determine at any time, and
in its discretion (exercised in good faith as defined in Section 1-201 of the
UCC), as to whether any event,
19
circumstance, or thing envisaged in this Agreement is or would be "material" or
"adverse", as such terms are used herein.
33. Expenses. The Consignee agrees to pay on demand all out-of-pocket expenses
of Scotiabank (including reasonable attorneys' fees), in connection with (i) the
negotiation, preparation, execution and delivery of this Agreement and the other
Consignment Documents, including any amendments, waivers, consents, supplements
or other modifications to this Agreement and the other Consignment Documents as
may from time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated, (ii) the preparation and review of the form
of any document or instrument relevant to this Agreement and the other
Consignment Documents, (iii) the filing, recording, refiling or rerecording of
any Uniform Commercial Code financing statements relating thereto and all
amendments, supplements and modifications to any thereof and any and all other
documents or instruments of further assurance required to be filed or recorded
or refiled or rerecorded by the terms hereof, (iv) the exercise by Scotiabank of
its examination rights as set forth in and subject to paragraph 23(a) and (v)
the administration and monitoring of this Agreement and the other Consignment
Documents, and compliance of the parties hereto with respect to the terms
hereof.
34. Survival. The obligations of the Consignee under paragraphs 25, 26, 29 and
33 shall survive any termination of this Agreement, the payment in full of all
Obligations and the return to the Scotiabank of all Gold. The representations
and warranties made by the Consignee in this Agreement and in each other
Consignment Document shall survive the execution and delivery of this Agreement
and each such other Consignment Document.
35. Severability. Any provision of this Agreement or any other Consignment
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such other Consignment Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
36. Execution in Counterparts, Effectiveness, etc. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Consignee and Scotiabank (or notice thereof
satisfactory to Scotiabank) shall have been received by Scotiabank and notice
thereof shall have been given by Scotiabank to the Consignee.
37. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER
CONSIGNMENT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF SCOTIABANK OR THE CONSIGNEE SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE CITY AND STATE OF NEW
YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT SCOTIABANK'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
20
OTHER PROPERTY MAY BE FOUND. THE CONSIGNEE HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS, FOR ITSELF AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, ITS PROPERTY,
TO THE JURISDICTION OF THE COURTS OF THE CITY AND STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
CONSIGNEE FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. THE CONSIGNEE HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE CONSIGNEE HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
CONSIGNEE HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER CONSIGNMENT DOCUMENTS.
38. Waiver of Jury Trial. SCOTIABANK AND THE CONSIGNEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON OR BASED, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER CONSIGNMENT DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF SCOTIABANK OR THE CONSIGNEE. THE CONSIGNEE ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER CONSIGNMENT DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR SCOTIABANK ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER CONSIGNMENT DOCUMENT.
21
If the foregoing terms and conditions are satisfactory, please so indicate
by executing on the enclosed copy of this Agreement the form of acceptance and
returning it to us on or before March 25, 2004, failing which this offer will
expire.
Yours truly,
THE BANK OF NOVA SCOTIA
By: _______________________
Its: Authorized Officer
By: _______________________
Its: Authorized Officer
ACCEPTED:
Dated: March 25, 2004
COMMEMORATIVE BRANDS, INC.
By: ____________________________
Name:
Title:
Consignment Agreement
EXHIBIT A
Plants and Approved Inventory Locations
Plants
Owned Property:
1. 7211 Circle S Road, Austin, TX 78745
Leased Property:
2. 7101 Intermodal Drive, Louisville, KY
3. 6406 Burleson Road, Suite 120, Austin, TX
4. 4605 Osborne, El Paso, TX
Approved Inventory Locations
5. Richards and West, Inc.,1255 University Avenue, Rochester, NY 14607-1643;
Contract Manufacturer
6. Stern Leach, Inc., 49 Pearl Street, Attleboro, MA 02703; Refiner
7. Pease and Curren, Inc., 75 Pennsylvania Avenue, Worwick, RI 02888; Refiner
8. Heraeus, PMM, Inc. 65 Euclid Avenue, Newark, NJ 07105; Refiner
9. Metalor USA Refining Corporation, 225 John Dietsch Boulevard, North
Attleboro, MA 02761-0255; Refiner
10. OK Casting, 3520 Charleston Road, Norman, OK 73069; Contract Manufacturer
11. Aurafin Corporation, 770 International Parkway, Sunrise, FL 33325;
Contract Manufacturer
12. Dunhams Jewelry Mfg., 7365 Remeon, Suite 8204, El Paso, TX 79912; Contract
Manufacturer
13. MeTech International, Inc., 120 Mapleville Main Street, Mapleville, RI
02839; Refiner
14. AMC Company, 2412 Greenlawn Parkway, Austin, TX 78757; Refiner
15. Angelo, Inc., 8255 Firestone Blvd., Suite 500, Downey, CA 90241; Contract
Manufacturer
16. Empressa Plat-Mex, S.A., Rosas Morena #68, Col. San Rafael, C.P. 06470,
Mexico D.F. Mexico; Contract Manufacturer
17. Carriage Casting, 5935 Cromo Dr., El Paso, TX 79903; Contract Manufacturer
18. Henry Marnolejo Jewelry Shop, 4667 Montana Ave., El Paso, TX 79903;
Contract Manufacturer
19. CBC Jewelry Shop, 5024 Donipahn Drive, Suite 4, El Paso, TX 79932;
Contract Manufacturer
20. American Bullion Inc., 125 Selandia Lane, Carson, CA 90746; Fabricator
21. Technic Inc., 1 Spectacle Street, Cranston, RI 02940; Fabricator
EXHIBIT B
Form of Consignment Request
The Bank of Nova Scotia,
as Consignor
One Liberty Plaza
New York, New York 10006
Attention: Director of Operations
Re: Commemorative Brands, Inc.
Gentlemen and Ladies:
This Consignment Request is delivered to you pursuant to paragraph 19(f)
of the First Amended and Restated Letter Agreement for Fee Consignment and
Purchase of Gold dated as of March 25, 2004 (as amended, supplemented, amended
and restated or otherwise modified from time to time, the "Agreement"), between
Commemorative Brands, Inc., a Delaware corporation (the "Consignee") and The
Bank of Nova Scotia ("Scotiabank"). Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in (or
by reference in) the Agreement.
The Consignee hereby requests that Scotiabank make a consignment of
_________ troy ounces of Gold to the Consignee on __________ __, 200_ for a
Consignment term of ______ month(s) to be delivered to the [Plant][Approved
Inventory Location] located at ________________________________________________.
The proposed Value Date is __________, 200__.
The Consignee hereby certifies and warrants that both before and after
giving effect to the consignments requested hereby, all statements set forth in
clauses (a), (b), (c), (d) and (e) of paragraph 19 of the Agreement are true and
correct in all material respects, and all conditions to consignment in clauses
(a), (b), (c), (d) and (e) of such paragraph have been satisfied.
The Consignee agrees that if prior to the time of the making of the
consignment requested hereby any matter certified to herein by it will not be
true and correct at such time as if then made, it will immediately so notify
Scotiabank. Except to the extent, if any, that prior to the time of the making
of the consignment requested hereby Scotiabank shall receive written notice to
the contrary from the Consignee, each matter certified to herein shall be deemed
once again to be certified as true and correct at the date of the making of such
consignment as if then made.
The Consignee has caused this Consignment Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this _____ day of __________, 200___
COMMEMORATIVE BRANDS, INC.
By ______________________________
Title: __________________________
EXHIBIT C
GUARANTY
THIS GUARANTY dated as of March 25, 2004 is executed in favor of The Bank
of Nova Scotia ("Scotiabank").
W I T N E S S E T H:
WHEREAS, Commemorative Brands, Inc. (the "Company") has entered into the
First Amended and Restated Letter Agreement for Fee Consignment and Purchase of
Gold dated as of even date herewith (as amended or otherwise modified from time
to time, the "Consignment Agreement"; capitalized terms used herein but not
otherwise defined have the respective meanings set forth in the Consignment
Agreement) with Scotiabank pursuant to which Scotiabank has agreed on an
uncommitted basis to deliver Gold to the Company on consignment subject to the
terms and conditions set forth therein.
WHEREAS, the operations of the undersigned are integrated with those of
the Company to such an extent that the financial strength and flexibility of the
Company have a direct impact on the undersigned; and
WHEREAS, each of the undersigned will benefit from the consignment of Gold
to the Company pursuant to the Consignment Agreement and is willing to guaranty
the Liabilities (as defined below) as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the undersigned hereby
unconditionally, as primary obligor and not merely as surety, jointly and
severally guarantees the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, of all obligations
(monetary or otherwise) of the Company to Scotiabank, howsoever created, arising
or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, which arise out of or in connection
with the Consignment Agreement, any other Consignment Document or any document
or instrument executed in connection therewith, in each case as the same may be
amended, modified, extended or renewed from time to time, and all costs and
expenses paid or incurred by Scotiabank in enforcing this Guaranty against the
undersigned (all such obligations, costs and expenses being herein collectively
called the "Liabilities"); provided that the liability of any of the undersigned
hereunder shall be limited to the maximum amount of the Liabilities which such
undersigned may guaranty without violating any fraudulent conveyance or
fraudulent transfer law.
Each of the undersigned agrees that, in the event of the dissolution or
insolvency of the Company or such undersigned, or the inability or failure of
the Company or such undersigned to pay debts as they become due, or an
assignment by the Company or such undersigned for the benefit of creditors, or
the occurrence of any other Event of Default (as defined in the Consignment
Agreement) under paragraph 17(d) or 17(e) of the Consignment Agreement, and if
such event shall occur at a time when any of the Liabilities may not then be due
and payable,
such undersigned will pay to Scotiabank forthwith the full amount which would be
payable hereunder by such undersigned if all Liabilities were then due and
payable.
This Guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of any of the undersigned
or that at any time or from time to time no Liabilities are outstanding) until
the Consignment Agreement has terminated and all Liabilities have been paid in
full.
The undersigned further agrees that if at any time all or any part of any
payment theretofore applied by Scotiabank to any of the Liabilities is or must
be rescinded or returned by Scotiabank for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy or reorganization of the Company
or any of the undersigned), such Liabilities shall, for the purposes of this
Guaranty, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
Scotiabank, and this Guaranty shall continue to be effective or be reinstated,
as the case may be, as to such Liabilities, all as though such application by
Scotiabank had not been made.
Scotiabank may, from time to time, at its sole discretion and without
notice to the undersigned (or any of them), take any or all of the following
actions: (a) retain or obtain the primary or secondary obligation of any obligor
or obligors, in addition to the undersigned, with respect to any of the
Liabilities, (b) extend or renew any of the Liabilities for one or more periods
(whether or not longer than the original period), alter or exchange any of the
Liabilities, or release or compromise any obligation of any of the undersigned
hereunder or any obligation of any nature of any other obligor with respect to
any of the Liabilities, (c) release its security interest in, or surrender,
release or permit any substitution or exchange for, all or any part of any
property securing any of the Liabilities or any obligation hereunder, or extend
or renew for one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations of any nature
of any obligor with respect to any such property, and (d) resort to the
undersigned for payment of any of the Liabilities when due, whether or not
Scotiabank shall have resorted to any property securing any of the Liabilities
or any obligation hereunder or shall have proceeded against any other obligor
primarily or secondarily obligated with respect to any of the Liabilities.
Notwithstanding any payment made by or for the account of any of the
undersigned pursuant to this Guaranty, the undersigned shall not be subrogated
to any rights of Scotiabank until such time as this Guaranty shall have been
discontinued and Scotiabank shall have received payment of the full amount of
all liabilities of the undersigned hereunder.
Each of the undersigned hereby expressly waives, to the maximum extent
permitted by applicable law: (a) notice of the acceptance by Scotiabank of this
Guaranty, (b) notice of the existence or creation or non-payment of all or any
of the Liabilities, (c) presentment, demand, notice of dishonor, protest, and
all other notices whatsoever, and (d) all diligence in collection or protection
of or realization upon any Liabilities or any security for or guaranty of any
Liabilities.
The creation or existence from time to time of additional Liabilities to
Scotiabank is hereby authorized, without notice to the undersigned (or any of
them), and shall in no way affect
or impair the rights of Scotiabank or the obligations of any of the undersigned
under this Guaranty.
No delay on the part of Scotiabank in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by
Scotiabank of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy; nor shall any modification
or waiver of any provision of this Guaranty be binding upon Scotiabank except as
expressly set forth in a writing duly signed and delivered on behalf of
Scotiabank. No action of Scotiabank permitted hereunder shall in any way affect
or impair the rights of Scotiabank or the obligations of the undersigned under
this Guaranty. For purposes of this Guaranty, Liabilities shall include all
obligations of the Company to Scotiabank arising under or in connection with the
Consignment Agreement or any other Consignment Document, notwithstanding any
right or power of the Company or anyone else to assert any claim or defense as
to the invalidity or unenforceability of any obligation, and no such claim or
defense shall affect or impair the obligations of any of the undersigned
hereunder.
This Guaranty shall be binding upon the undersigned and the respective
successors and assigns of the undersigned; and to the extent that the Company or
any of the undersigned is either a partnership or a corporation, all references
herein to the Company and to such undersigned, respectively, shall be deemed to
include any successor or successors, whether immediate or remote, to such
partnership or corporation.
This Guaranty shall be construed in accordance with and governed by the
internal laws of the State of New York. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
This Guaranty may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original but all such counterparts shall
together constitute one and the same Guaranty.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY OR ANY OTHER CONSIGNMENT DOCUMENT SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT SCOTIABANK'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE UNDERSIGNED HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH OF THE
UNDERSIGNED FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, TO ITS ADDRESS SET FORTH ON SCHEDULE I (OR SUCH OTHER ADDRESS AS IT
SHALL HAVE SPECIFIED IN WRITING TO SCOTIABANK AS ITS ADDRESS FOR NOTICES
HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH
OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT ANY OF THE UNDERSIGNED HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH UNDERSIGNED
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
GUARANTY AND THE OTHER CONSIGNMENT DOCUMENTS.
EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF)
SCOTIABANK, HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY, ANY OTHER
CONSIGNMENT DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered as
of the day and year first above written.
AMERICAN ACHIEVEMENT CORPORATION
By:____________________________________
Name: _________________________________
Title:_________________________________
AAC HOLDING CORP.
By:____________________________________
Name: _________________________________
Title:_________________________________
AAC ACQUISITION CORP.
By:____________________________________
Name: _________________________________
Title:_________________________________
EDUCATIONAL COMMUNICATIONS, INC.
By:____________________________________
Name: _________________________________
Title:_________________________________
TAYLOR SENIOR HOLDING CORP.
By:____________________________________
Name: _________________________________
Title:_________________________________
Guaranty
TP HOLDING CORP.
By:____________________________________
Name: _________________________________
Title:_________________________________
TAYLOR PUBLISHING COMPANY
By:____________________________________
Name: _________________________________
Title:_________________________________
TAYLOR PUBLISHING MANUFACTURING, L.P.
By:____________________________________
Name: _________________________________
Title:_________________________________
TAYLOR MANUFACTURING HOLDINGS, LLC
By:____________________________________
Name: _________________________________
Title:_________________________________
CBI NORTH AMERICA, INC.
By:____________________________________
Name: _________________________________
Title:_________________________________
Guaranty
SCHEDULE I
ADDRESSES OF THE GUARANTORS
EXHIBIT D
Form of Borrowing Base Certificate
The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Re: First Amended and Restated Letter Agreement for Fee Consignment and
Purchase of Gold dated as of March 25, 2004 (as amended or otherwise
modified from time to time, the "Gold Consignment Agreement")
between Commemorative Brands, Inc. and The Bank of Nova Scotia
Ladies/Gentlemen:
Terms to which meanings are ascribed in the Gold Consignment Agreement are
used in this Borrowing Base Certificate with such meanings.
The Company hereby certifies that the Dollar Value of Gold held on
consignment under the Gold Consignment Agreement on _______________ did not
exceed the Borrowing Base. The related computations are set forth in Schedule 1
hereto.
IN WITNESS WHEREOF, the Company has caused this Borrowing Base Certificate
to be executed and delivered by its chief financial officer on the ____ day of
_______________, _______.
COMMEMORATIVE BRANDS, INC.
By:____________________________________
Name: _________________________________
Title:_________________________________
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SCHEDULE I
TO
BORROWING BASE CERTIFICATE
10. GOLD AT THE COMPANY'S PLANTS
1A. Dollar Value of Gold located at the Company's Plants $_______
1B. Percentage of the Dollar Value of Gold located at the Company's Plants
included in Borrowing Base 90%
1C. Margined Dollar Value of Gold located at the Company's Plants
(item 1A times item 1B) $_______
11. GOLD AT APPROVED INVENTORY LOCATIONS
2A. Dollar Value of Gold located at Approved Inventory Locations $_______
2B. Percentage of the Dollar Value of Gold located at Approved Inventory
Locations included in Borrowing Base 70%
2C. Margined Dollar Value of Gold located at Approved Inventory Locations
(item 2A times item 2B) $_______
12. GOLD WITH COMPANY'S SALESPERSONS
3A. Dollar Value of Gold located with the Company's salespersons, bookstores
and jewelry stores as samples $_______
3B. Percentage of the Dollar Value of Gold located with the Company's
salespersons, bookstores and jewelry stores as samples included in
Borrowing Base 40%
3C. Margined Dollar Value of Gold located with the Company's salespersons,
bookstores and jewelry stores as samples (the lesser of: (i) item 3A
times item 3B or (ii) $1,000,000) $_______
13. GOLD AT APPROVED REFINERS
4A. Dollar Value of Gold located at approved refiners $_______
4B. Percentage of the Dollar Value of Gold located at approved refiners
included in Borrowing Base 70%
4C. Margined Dollar Value of Gold located at approved refiners (item 4A times
item 4B) $_______
14. GOLD IN STERN LEACH POOLED ACCOUNT
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5A. Dollar Value of Gold located in pooled account with Stern Leach(1) $_______
5B. Percentage of the Dollar Value of Gold located in pooled account with
Stern Leach included in Borrowing Base 90%
5C. Margined Dollar Value of Gold located in pooled account with Stern Leach
(item 5A times item 5C) $_______
15. BORROWING BASE
(item 1C + item 2C + item 3C + item 4C + item 5C) $_______
16. DOLLAR VALUE OF GOLD ON CONSIGNMENT $_______
17. ACCOUNTS SUBJECT TO SECURITY INTEREST
8A. Aggregate amount owing by the Company to Scotiabank for Gold purchased
from Scotiabank $_______ $_______
8B. Accounts receivable of Account Debtors to the Company with respect to
Gold purchased from Scotiabank $_______
8C. Accounts receivable subject to lien of Scotiabank (lesser of item 8A and
item 8B) $_______
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(1) Not to exceed $750,000 at any time
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