EXHIBIT 10.5
EXECUTION COPY
110,000 TROY OUNCES (GOLD)
11,250,000 TROY OUNCES (SILVER)
FEE CONSIGNMENT AGREEMENT,
dated as of September 28, 1994,
between
HANDY & HARMAN,
as the Consignee
and
THE BANK OF NOVA SCOTIA,
as the Consignor.
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms . . . . . . . . . . . . . . . . . .
1.2. Use of Defined Terms . . . . . . . . . . . . . .
1.3. Cross-References . . . . . . . . . . . . . . . .
ARTICLE II
COMMITMENT; CONSIGNMENT PROCEDURES
2.1. Commitment and Consignment Procedures . . . . . .
2.1.1. Commitment . . . . . . . . . . . . . . . . . . .
2.1.2. Consignor Not Permitted or Required to Consign or
Continue Under Consignment Bullion . . . . . .
2.2. Reduction of Commitment Amount . . . . . . . . .
2.2.1. Optional Reduction of Commitment Amount . . . . .
2.2.2. Mandatory Reduction of Commitment Amount . . . .
2.3. Consignment Procedure; Delivery of Bullion . . .
2.3.1. Continuation and Return Elections . . . . . . . .
2.3.2. Quality . . . . . . . . . . . . . . . . . . . . .
2.3.3. Title and Purchase Price of Bullion. . . . . . .
2.4. Extension of Consignment Maturity Date . . . . .
2.4.1. Request for Extension of Consignment Maturity
Date . . . . . . . . . . . . . . . . . . . . .
2.4.2. Consent to Extension . . . . . . . . . . . . . .
ARTICLE III
RETURN OF BULLION; POST-MATURITY RATES; FEES
3.1. Return of Bullion . . . . . . . . . . . . . . . .
3.1.1. Consignment Maturity Date . . . . . . . . . . . .
3.1.2. Voluntary Return of Bullion . . . . . . . . . . .
3.1.3. Mandatory Return of Bullion . . . . . . . . . . .
3.1.4. Acceleration of Consignment Maturity Date . . . .
3.2. Post-Maturity Rates, etc . . . . . . . . . . . .
3.3. Fees . . . . . . . . . . . . . . . . . . . . . .
3.3.1. Consignment Fee . . . . . . . . . . . . . . . . .
3.3.2. Commitment Fee . . . . . . . . . . . . . . . . .
3.3.3. Other Fees . . . . . . . . . . . . . . . . . . .
ARTICLE IV
CERTAIN OTHER PROVISIONS; SECURITY INTEREST
4.1. Consignments, etc. Unlawful . . . . . . . . . . .
4.2. Security Interest . . . . . . . . . . . . . . . .
4.3. Losses . . . . . . . . . . . . . . . . . . . . .
4.4. Increased Costs . . . . . . . . . . . . . . . . .
4.5. Taxes . . . . . . . . . . . . . . . . . . . . . .
4.6. Payments, Computations, etc. . . . . . . . . . .
ARTICLE V
CONDITIONS TO CONSIGNMENTS
5.1. Initial Consignment . . . . . . . . . . . . . . .
5.1.1. Resolutions, etc. . . . . . . . . . . . . . . . .
5.1.2. Delivery of Financing Statements, etc. . . . .
5.1.3. Delivery of Waiver and Consent or Amendment . . .
5.1.4. Opinions of Counsel . . . . . . . . . . . . . . .
5.1.5. Closing Fees, Expenses, etc. . . . . . . . . . .
5.2. All Deliveries under Consignment . . . . . . . .
5.2.1. Compliance with Warranties, No Default, etc. . .
5.2.2. Consignment Request . . . . . . . . . . . . . . .
5.2.3. Continuation of Consignment Period . . . . . . .
5.2.4. Satisfactory Legal Form . . . . . . . . . . . . .
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties . . . . . . . . .
6.2. Further Representations . . . . . . . . . . . . .
ARTICLE VII
COVENANTS
7.1. Covenants . . . . . . . . . . . . . . . . . . . .
7.2. Additional Covenants . . . . . . . . . . . . . .
7.2.1. Safekeeping, etc . . . . . . . . . . . . . . . .
7.2.2. Bullion to be Located at Plants . . . . . . . . .
7.2.3. Use of Bullion . . . . . . . . . . . . . . . . .
7.2.4. Further Assurances, etc . . . . . . . . . . . . .
7.2.5. SEC Filings . . . . . . . . . . . . . . . . . . .
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Listing of Events of Default . . . . . . . . . .
8.1.1. Failure to Return Bullion, etc. . . . . . . . . .
8.1.2. Breach of Warranty . . . . . . . . . . . . . . .
8.1.3. Validity of Security Interest . . . . . . . . . .
8.1.4. Non-Performance of Other Covenants and
Obligations . . . . . . . . . . . . . . . . . .
8.1.5. Default on Material Contracts . . . . . . . . . .
8.1.6. Bankruptcy, Insolvency, etc. . . . . . . . . . .
8.1.7. Consignment Treatment . . . . . . . . . . . . . .
8.2. Action if Bankruptcy . . . . . . . . . . . . . .
8.3. Action if Other Event of Default . . . . . . . .
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1. Waivers, Amendments, etc. . . . . . . . . . . . .
9.2. Notices . . . . . . . . . . . . . . . . . . . . .
9.3. Payment of Costs and Expenses . . . . . . . . . .
9.4. Indemnification . . . . . . . . . . . . . . . . .
9.5. Survival . . . . . . . . . . . . . . . . . . . .
9.6. Severability . . . . . . . . . . . . . . . . . .
9.7. Headings . . . . . . . . . . . . . . . . . . . .
9.8. Execution in Counterparts, Effectiveness, etc. .
9.9. Governing Law; Entire Agreement . . . . . . . . .
9.10. Successors and Assigns . . . . . . . . . . . . .
9.11. Forum Selection and Consent to Jurisdiction . . .
9.12. Waiver of Jury Trial . . . . . . . . . . . . . .
9.13. Benefit of this Agreement . . . . . . . . . . . .
9.14. Settlement Amount . . . . . . . . . . . . . . . .
9.15. Waiver of Immunity . . . . . . . . . . . . . . .
EXHIBIT A. Form of Consignment Request
EXHIBIT B. Form of Continuation/Return Request
EXHIBIT C Form of Consignment Extension Request
EXHIBIT D. Form of Opinion of General Counsel to the Consignee
EXHIBIT E. Form of Opinion of New York Counsel to the Consignee
EXHIBIT F. Form of Opinion of Connecticut Counsel to the
Consignor
EXHIBIT G. Form of Opinion of Rhode Island Counsel to the
Consignee
EXHIBIT H. Form of Opinion of Auditors to the Consignee
FEE CONSIGNMENT AGREEMENT
THIS FEE CONSIGNMENT AGREEMENT, dated as of September 28,
1994, between HANDY & HARMAN, a New York corporation (the
"Consignee") and THE BANK OF NOVA SCOTIA (the "Consignor"),
W I T N E S S E T H:
WHEREAS, the Consignee is engaged directly and through its
various Subsidiaries (such capitalized term, and other terms used
in these recitals, to have the meanings set forth in Section 1.1,
below) in the businesses described in the Consignee's Annual
Report on Form 10-K for the 1993 Fiscal Year;
WHEREAS, the Consignee desires to obtain the Commitment from
the Consignor pursuant to which the Consignor will from time to
time prior to the Commitment Termination Date consign up to
110,000 troy ounces of gold and up to 11,250,000 troy ounces of
silver (such gold and silver collectively referred to as the
"Bullion"), with the Bullion at all times to be located, except
as otherwise set forth herein, only at the Plants;
WHEREAS, the Consignor is willing, on the terms and subject
to the conditions hereinafter set forth (including Article V), to
extend the Commitment to consign the Bullion to the Consignee;
and
WHEREAS, the Bullion consigned to the Consignee will be used
at either one of the Plants in the production and fabrication of
products for customers of the Consignee in the ordinary course of
business;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1. Defined Terms. The following terms (whether
or not underscored) when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise
requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):
"ABR Fee" is defined in Section 3.2.
"Agreement" means, on any date, this Fee Consignment
Agreement as originally in effect on the Effective Date and as
thereafter from time to time amended, supplemented, amended and
restated, or otherwise modified and in effect on such date.
"Authorized Officer" means those officers of the Consignee
whose signatures and incumbency shall have been certified to the
Consignor pursuant to Section 5.1.1.
"Bullion" is defined in the second recital.
"Bullion Sale" is defined in Section 4.2.
"Collateral" is defined in Section 4.2.
"Commitment" is defined in Section 2.1.1.
"Commitment Amount" means, on any day,
(a) with respect to gold, (i) 110,000 troy ounces of
gold or, if less, (ii) the maximum number of troy ounces of
gold obtained by dividing (A) $52,250,000 (or, if, on or
prior to such day, the Advance Commitment Amount is reduced
pursuant to the terms of the Dollar Supply Agreement, a
Dollar amount equal to the product of (x) the Advance
Commitment Amount (after giving effect to any reduction
thereto on or prior to such day) and (y) 41.6749751%), by
(B) $475 (rounded down to the next whole number); and
(b) with respect to silver, (i) 11,250,000 troy ounces
of silver or, if less, (ii) the maximum number of troy
ounces of silver obtained by dividing (A) $73,125,000 (or,
if, on or prior to such day, the Advance Commitment Amount
is reduced pursuant to the terms of the Dollar Supply
Agreement, a Dollar amount equal to the product of (x) the
Advance Commitment Amount (after giving effect to any
reduction thereto on or prior to such day) and (y)
58.3250249%), by (B) $6.50 (rounded down to the next whole
number);
as the amounts in clauses (a)(i) and (b)(i) above may be reduced
from time to time pursuant to Section 2.2 or as required in
accordance with the proviso contained in clause (b) of Section
2.4.2.
"Commitment Termination Date" means the earliest of
(a) the Consignment Maturity Date;
(b) the date on which the Commitment Amount is
terminated in full or reduced to zero pursuant to Section
2.2;
(c) the occurrence of any Default described in clauses
(a) through (d) of Section 8.1.6;
(d) the occurrence and continuance of any other Event
of Default and either
(i) the declaration by the Consignor that the Bullion
is to be returned to it from consignment pursuant to
Section 8.3, or
(ii) in the absence of such declaration, the giving of
notice by the Consignor to the Consignee that the
Commitment has been terminated; and
(e) the occurrence of any Consignor Bankruptcy Event.
Upon the occurrence of any event described in clause (b), (c) or
(e), the Commitment shall terminate automatically and without
further action.
"Consignee" is defined in the preamble.
"Consignment Extension Request" means an extension request
duly executed by an Authorized Officer, substantially in the form
of Exhibit C hereto.
"Consignment Fee" is defined in clause (a) of Section 3.3.1.
"Consignment Maturity Date" means September 28, 1997, as
such date may be extended pursuant to Section 2.4.
"Consignment Period" means the period beginning on (and
including) the date on which any amount of Bullion is consigned
(or, in the case of previously consigned Bullion, the date on
which the consignment of such Bullion (or any portion thereof) is
continued in accordance with a Continuation/Return Notice) by the
Consignor to the Consignee pursuant to the terms of this
Agreement and shall end on (but exclude) the day which
numerically corresponds to such date one, two or three months (or
such other period, if agreed to by the Consignor) thereafter
(or, if such month has no numerically corresponding day, on the
last Business Day of such month), as the Consignee may select in
its relevant notice pursuant to Section 2.3 or 2.3.1; provided,
however, that
(a) Consignment Periods commencing on the same date
for consignments of Bullion comprising part of the same
consignment shall be of the same duration,
(b) if such Consignment Period would otherwise end on
a day which is not a Business Day, such Consignment Period
shall end on the next following Business Day; provided,
however, that if such next following Business Day is the
first Business Day of a calendar month, such Consignment
Period shall end on the next preceding Business Day, and
(c) no Consignment Period may end later than the
Consignment Maturity Date.
No more than ten Consignment Periods shall be in effect at any
one time.
"Consignment Request" means a request executed and delivered
by the Consignee in connection with the making of a consignment
of Bullion in the form of Exhibit A hereto.
"Consignor" is defined in the preamble.
"Contango Fee" means, with respect to any day, the
difference between the LIBO Rate (Reserve Adjusted) for a one
month Funding Period commencing on such day minus the Gold Rate
(in the case of consignments of gold) or the Silver Rate (in the
case of consignments of silver), in each case for a one month
Consignment Period commencing on such day.
"Continuation/Return Notice" means a notice of continuation
of consignment or return of all of a portion of Bullion
previously consigned hereunder to the Consignee duly executed by
an Authorized Officer, substantially in the form of Exhibit B
attached hereto.
"Default" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or both,
would constitute an Event of Default.
"Dollar Supply Agreement" means the Dollar Supply Agreement,
dated as of the date hereof (as amended, supplemented, amended
and restated or otherwise modified from time to time pursuant to
the terms thereof), among the Consignor, certain financial
institutions (the "Suppliers") from time to time parties thereto,
Chemical, BONY and Scotiabank as the co-agents for the Suppliers
and Scotiabank as the administrative agent for the Suppliers.
"Dollar Value of gold" means, as of any day of
determination, the value in Dollars of one troy ounce of gold as
determined by reference to the daily London Afternoon Fixing
Price for gold on such day. In the event there is no London
Afternoon Fixing Price for gold on a particular day, the last
established London Afternoon Fixing Price for gold shall apply;
provided, however that in the event such last established London
Afternoon Fixing Price is less than the Consignor's cost of
acquiring gold in the precious metals markets as of such day,
then the "Dollar Value of gold" as of such day shall equal the
Consignor's cost of gold in such markets as of such day, as
notified to the Consignee by the Consignor.
"Dollar Value of silver" means, as of any day of
determination, the value in Dollars of one troy ounce of silver
as determined by reference to the Silver Fixing Price for silver
on such day. In the event there is no Silver Fixing Price for
silver on a particular day, the last established Silver Fixing
Price for silver shall apply; provided, however, that in the
event such last established Silver Fixing Price is less than the
Consignor's cost of acquiring silver in the precious metals
markets as of such day, then the "Dollar Value of silver" as of
such day shall equal the Consignor's cost of silver in such
markets as of such day, as notified to the Consignee by the
Consignor.
"Effective Date" means the date this Agreement becomes
effective pursuant to Section 9.8.
"Event of Default" is defined in Section 8.1.
"Fee Consignment Document" means this Agreement, each
Consignment Request, each Consignment Extension Request and each
Continuation/Return Request.
"Fee Letter" is defined in the Revolving Credit Agreement.
"gold" means gold in London Good Delivery bar form, loco
London, England, and of a minimum fineness of .995, unless
otherwise mutually agreed to by the Consignor and Consignee in
advance of delivery to the Consignee.
"Gold Rate" means, with respect to any Consignment Period,
the arithmetic mean rate for the relevant Consignment Period as
shown on Reuters LIBO screen as at 10:00 a.m. London, England
time three Business Days prior to the first day of the
Consignment Period, less the mean rate shown on such date on the
Reuters GOFO page as at 10:00 a.m. London, England time;
provided, however, that in the event the Consignor determines
prior to the commencement of such Consignment Period that the
rate (as computed from the LIBO and GOFO Reuters pages set forth
in the preceding sentence) does not reflect the rate at which it
is prepared to provide consignments of gold for the relevant
Consignment Period, then the "Gold Rate" for such Consignment
Period shall be the rate, if any, which the Consignor notifies
the Consignee prior to the commencement of such Consignment
Period as the rate at which the Consignor is prepared to provide
consignments of a similar nature.
"herein", "hereof", "hereto", "hereunder" and similar terms
contained in this Agreement or any other Fee Consignment Document
refer to this Agreement or such other Fee Consignment Document,
as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Fee
Consignment Document.
"including" means including without limiting the generality
of any description preceding such term, and, for purposes of this
Agreement and each other Fee Consignment Document, the parties
hereto agree that the rule of ejusdem generis shall not be
applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters or to matters
specifically mentioned.
"Indemnified Liabilities" is defined in Section 9.4.
"Indemnified Parties" is defined in Section 9.4.
"London Afternoon Fixing Price" shall mean the London
Afternoon Fixing Price, as determined by The London Bullion
Market Association.
"London Good Delivery" has the meaning ascribed thereto by
The London Bullion Market Association.
"Market Interruption Event" means the occurrence of an event
which (i) is not within the control of the Consignor or
attributable to any act of, or failure to act by, the Consignor,
and (ii) at any time causes the Consignor to be unable to conduct
transactions in any accessible international gold or silver
market sufficient to make, maintain or continue, in whole or in
part, any of the consignments of Bullion hereunder, including the
following:
(a) changes in national or international financial,
political or economic conditions;
(b) wars, strikes, or acts of God;
(c) acts of government or any governmental activity;
or
(d) a change in law or regulation (by governmental or
other regulatory authority, whether or not having the force
of law) or the interpretation thereof which has the effect
of making it illegal or impractical for the Consignor to
engage in the consignment of Bullion.
"Obligations" means all obligations (monetary or otherwise)
of the Consignee arising under or in respect of this Agreement
and each other Fee Consignment Document, including the obligation
of the Consignee to return or purchase Bullion pursuant to the
terms hereof.
"Organic Document" means, relative to the Consignee, 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.
"Plant" means, as the context may require, either the
Consignee's fabrication facility located at 1770 Kings Highway,
Fairfield, Connecticut or at 231 Ferris Avenue, East Providence,
Rhode Island.
"Processed Bullion" means an undivided interest in each
product of any goods and inventory containing gold and/or silver
located at either Plant or for which gold and/or silver located
at either Plant comprises a part thereof, which undivided
interest shall be, with respect to any such product, equal to the
ratio that the cost of such gold and/or silver (other than U.S.
Bullion) 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.
"Revolving Credit Agreement" means the Revolving Credit
Agreement, dated as of the date hereof (as amended, supplemented,
amended and restated or otherwise modified from time to time
pursuant to the terms thereof), among the Consignee, certain
financial institutions from time to time parties thereto,
Chemical, BONY and Scotiabank as co-agents and Scotiabank, as the
administrative agent; provided that if the Revolving Credit
Agreement shall be refinanced or otherwise terminated and is no
longer of force and effect at a time when this Agreement is still
in effect, then, for purposes of this Agreement, the "Revolving
Credit Agreement" shall mean the Revolving Credit Agreement, as
in effect immediately prior to the date of such refinancing or
termination.
"Settlement Amount" is defined in Section 9.14.
"Short-Term Dollar Supply Agreement" means the Short-Term
Dollar Supply Agreement, dated as of the date hereof (as amended,
supplemented, amended and restated or otherwise modified from
time to time pursuant to the terms thereof), among the Consignor,
the Suppliers from time to time parties thereto, Chemical, BONY
and Scotiabank as co-agents for the Suppliers and Scotiabank, as
the administrative agent for the Suppliers.
"Short-Term Fee Consignment Agreement" means the Short-Term
Fee Consignment Agreement, dated as of the date hereof, between
the Consignor and the Consignee, as amended, supplemented,
amended and restated or otherwise modified from time to time
pursuant to the terms thereof.
"silver" means silver in London Good Delivery bar form, loco
London, England, and of a minimum fineness of .999, unless
otherwise mutually agreed to by the Consignor and the Consignee
in advance of delivery to the Consignee.
"Silver Fixing Price" means the Silver Fixing Price, as
determined by The London Silver Market Association.
"Silver Rate" means, with respect to any Consignment Period,
the rate that the Consignor notifies the Consignee prior to the
commencement of such Consignment Period as the rate which the
Consignor is prepared to provide funding for consignments of
silver of a similar nature for the relevant Consignment Period.
"Taxes" is defined in Section 4.5.
"U.C.C." means the Uniform Commercial Code, as in effect in
the State of New York from time to time.
"U.S. Bullion" means gold or silver of any quality or
fineness owned by the U.S. federal government and located from
time to time at the Plants (or either one of them).
SECTION I.2. Use of Defined Terms. Unless otherwise
defined or the context otherwise requires,
(a) terms for which meanings are provided in (or by
reference in) this Agreement shall have such meanings when
used in any Fee Consignment Document, notice and other
communication delivered from time to time in connection with
this Agreement or any other Fee Consignment Document; and
(b) terms used in this Agreement or any Fee
Consignment Document that are not defined herein (or in such
Fee Consignment Document) are used herein (or in such Fee
Consignment Document) with the meanings set forth in the
Dollar Supply Agreement.
SECTION I.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Fee Consignment
Document to any Article or Section are references to such Article
or Section of this Agreement or such other Fee Consignment
Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause
are references to such clause of such Article, Section or
definition.
ARTICLE II
COMMITMENT; CONSIGNMENT PROCEDURES
SECTION II.1. Commitment and Consignment Procedures. The
terms pursuant to which the Consignor will from time to time
deliver Bullion to be held under consignment by the Consignee or
continue to consign Bullion under consignment at the end of a
Consignment Period are as set forth in Sections 2.1.1 and 2.1.2,
below.
SECTION II.1.1. Commitment. On the terms and subject to
the conditions of this Agreement (including Article V), the
Consignor agrees from time to time on any Business Day occurring
prior to the Commitment Termination Date to deliver Bullion that
will be held on consignment by the Consignee in an aggregate
amount (not in excess of the Commitment Amount) as requested by
the Consignee. The commitment of the Consignor described in this
Section 2.1.1 is herein referred to as its "Commitment". On the
terms and subject to the conditions hereof, the Consignee may
from time to time prior to the Commitment Termination Date have
Bullion consigned to it, continue to hold under consignment all
or a portion of such Bullion, return all or a portion of such
Bullion from consignment to the Consignor and/or purchase all or
a portion of such Bullion, and thereafter have Bullion consigned
to it again.
SECTION II.1.2. Consignor Not Permitted or Required to
Consign or Continue Under Consignment Bullion. The Consignor
shall not be permitted or required to deliver any Bullion to be
held under consignment pursuant to the terms of this Agreement,
nor will the Consignor be required to continue to consign to the
Consignee at the end of any Consignment Period pursuant to
Section 2.3.1 Bullion then subject to such maturing Consignment
Period, to the extent (and only to the extent) that
(a) in the case of gold, after giving effect to the
requested consignment or continuation, the number of troy
ounces of gold consigned under this Agreement would exceed
the Commitment Amount then in effect relating to gold, as
set forth in the definition of "Commitment Amount";
(b) in the case of silver, after giving effect to the
requested consignment or continuation, the number of troy
ounces of silver consigned under this Agreement would exceed
the Commitment Amount then in effect relating to silver, as
set forth in the definition of "Commitment Amount"; or
(c) the Dollar Value of gold and the Dollar Value of
silver (as applicable) three Business Days prior to the
first day of the then requested Consignment Period or the
continuation of such Consignment Period, multiplied by the
number of troy ounces of gold and silver that is and will be
consigned under this Agreement (after giving effect to all
consignments of gold and silver requested on such date, and
any previous days (to the extent the gold and silver
previously requested has not yet been delivered under
consignment to the Consignee)), would exceed the Advance
Commitment Amount then in effect under the Dollar Supply
Agreement.
SECTION II.2. Reduction of Commitment Amount. The
Commitment Amount is subject to reduction from time to time
pursuant to this Section 2.2.
SECTION II.2.1. Optional Reduction of Commitment Amount.
The Consignee may, from time to time on any Business Day
occurring after the Effective Date, voluntarily reduce the
Commitment Amount; provided, however, that
(a) all such reductions shall require at least five
Business Days' prior written irrevocable notice to the
Consignor and be permanent;
(b) any partial reduction of the Commitment Amount
shall be in a minimum number of ounces of Bullion that
equals at least $10,000,000, based on the value of a troy
ounce of gold equalling $475, and a troy ounce of silver
equalling $6.50;
(c) the Commitment Amount of gold or silver may not be
so reduced to an amount less than the then aggregate number
of troy ounces of gold or silver (as the case may be) then
held under consignment pursuant to the terms of this
Agreement by the Consignee; and
(d) the Commitment Amount may only be reduced to zero
if, prior to or at the time of and as a condition to such
reduction, the Consignee shall have repaid in full all then
accrued and outstanding monetary Obligations and shall have
returned to the Consignor or purchased from the Consignor
pursuant to the terms of this Agreement all Bullion
previously consigned pursuant to the terms of this
Agreement.
SECTION II.2.2. Mandatory Reduction of Commitment Amount.
The Commitment Amount shall be permanently reduced on the date of
any permanent reduction in the Advance Commitment Amount as a
result of the operation of Section 2.4.2 of the Dollar Supply
Agreement by a number of troy ounces of Bullion equal to
(a) in the case of gold, the quotient obtained by
dividing (i) the product of (x) the Advance Commitment
Amount (after giving effect to any such reduction) and (y)
41.6749751% by (ii) $475 (rounded down to the next whole
number); and
(b) in the case of silver, the quotient obtained by
dividing (i) the product of (x) the Advance Commitment
Amount (after giving effect to any such reduction) and (y)
58.3250249%, by (ii) $6.50 (rounded down to the next whole
number).
SECTION II.3. Consignment Procedure; Delivery of Bullion.
By delivering a Consignment Request to the Consignor at or before
5:00 p.m. (New York City time), on a Business Day, the Consignee
may from time to time irrevocably request, on not less than four
nor more than five Business Days' notice, that a consignment of
Bullion be made by the Consignor in a number of ounces of gold
and/or silver such that the sum of the aggregate Dollar Value of
gold as of the date of such Consignment Request for all gold
subject to such Consignment Request plus the aggregate Dollar
Value of silver (as applicable) as of the date of such
Consignment Request for all silver subject to such Consignment
Request equals or exceeds $10,000,000 or, if less, in the
unutilized amount of the Commitment Amount for gold and/or
silver, as applicable. The Consignor will arrange for the
delivery of the Bullion to the applicable Plant (but only to such
Plants) in the amounts and types of Bullion requested for such
Plant in the Consignment Request on the date for delivery set
forth in the Consignment Request. The Consignor will assume all
risk of loss or damage to the Bullion until it has been delivered
to the applicable Plant, at which time such risk shall pass to
the Consignee, and unless the Consignee notifies the Consignor
within one day following delivery of such Bullion that such
Bullion is damaged, or does not conform to the quality or
fineness of Bullion requested to be delivered under consignment,
then such Bullion delivered to the Consignee shall be deemed to
be not damaged and to conform with the quality and fineness so
requested by the Consignee. Any Bullion delivered to the
Consignee that is damaged or that does not conform to the quality
and fineness of the requested Bullion shall be immediately
delivered back to the Consignor by the Consignee. In the case of
the return of Bullion to the Consignor from the Consignee, all
deliveries of Bullion will be made in accordance with the
directions of the Consignor at such address as the Consignor may
direct in a written notice to the Consignee. The Consignee shall
bear the cost of such delivery. The Consignee will assume all
risk of loss or damage to the Bullion until it has been delivered
to the Consignor, at which time such risk shall pass to the
Consignor.
SECTION II.3.1. Continuation and Return Elections. By
delivering a Continuation/Return Notice to the Consignor at or
before 5:00 p.m. (New York City time) on a Business Day that is
at least four but no more than five Business Days prior to the
expiration of a Consignment Period, the Consignee may from time
to time irrevocably elect that either (a) all Bullion subject to
such Consignment Period either remain under consignment from the
Consignor hereunder for such Consignment Periods as are selected
by the Consignee in such Continuation/Return Request or be
returned to the Consignor, or (b) that only a portion of the
Bullion subject to such Consignment Period remain under
consignment from the Consignor hereunder for such Consignment
Periods as are selected by the Consignee in such
Continuation/Return Request and that the remainder of such
Bullion be returned to and/or purchased from the Consignor;
provided, that the amount of Bullion, if any, to be subject to
the Consignment Periods requested in such Continuation/Return
Request, and the amount of Bullion, if any, elected to be
returned and/or purchased pursuant to such Continuation/Return
Request, shall have, in each case (unless the Consignee has
elected that all of the Bullion subject to such maturing
Consignment Period be continued hereunder for new Consignment
Periods or that all such Bullion be returned), an aggregate
Dollar Value of gold or Dollar Value of silver (as applicable),
or combination thereof, in each case as of the date of such
Continuation/Return Notice, equal to or greater than $10,000,000.
In the absence of delivery of a Continuation/Return Notice with
respect to any then maturing Consignment Period at least four but
no more than five Business Days prior to the last day of the then
current Consignment Period with respect thereto, the Consignee
shall be deemed, subject to satisfaction of the conditions set
forth in Section 5.2.3, to have requested that the entire amount
(or such lesser amount as may be otherwise permitted pursuant to
the terms hereof) of Bullion that was consigned in connection
with the then maturing Consignment Period remain consigned
hereunder for a Consignment Period of one month.
SECTION II.3.2. Quality. Gold and silver delivered to the
Consignee and returned to the Consignor shall in each case be of
the quality set forth in the definition of "gold" and of
"silver", respectively.
SECTION II.3.3. Title and Purchase Price of Bullion. Title
to the Bullion delivered on consignment by the Consignor
hereunder will remain with the Consignor and will not pass to the
Consignee. To the extent that any Bullion (or a portion of
Bullion) is purchased by the Consignee pursuant to the terms of
this Agreement, then title only to such Bullion (or such portion
of Bullion) will transfer to the Consignee. If the Consignee
wishes to purchase part or all of the Bullion held on consignment
from the Consignor, an Authorized Officer of the Consignee will
make a request to the Consignor stating the number of ounces of
Bullion and the quality of Bullion to be purchased and the
proposed date of the purchase. At the Consignor's sole option
and only if it desires to enter into the requested sale, the
Consignor shall at least two Business Days prior to the proposed
date for such purchase (or such lesser number of days as the
Consignor and the Consignee may agree), provide an Authorized
Officer of the Consignee with a quotation of the price at which
the Consignor is willing to sell the Bullion to the Consignee
multiplied by the number of ounces of Bullion to be purchased.
If such price is agreed to in a written notice by the Consignee
to the Consignor, such Bullion will thereupon be conclusively
deemed to have been contracted for purchase, with payment of the
purchase price by the Consignee to be made in cash on the date
agreed to by the Consignor and the Consignee (and the Consignee
agrees that in any event payment in cash to the Consignor for any
purchase of Bullion in respect of a specific Consignment Period
shall be made to the Consignor on or before the last day of such
Consignment Period). Title to the Bullion purchased by the
Consignee as provided above will pass to the Consignee only upon
receipt by the Consignor in immediately available funds of the
total purchase price due from the Consignee as payment for the
Bullion purchased.
SECTION II.4. Extension of Consignment Maturity Date. The
Consignment Maturity Date shall be subject to extension as set
forth in this Section.
SECTION II.4.1. Request for Extension of Consignment
Maturity Date. Any term or provision of this Agreement to the
contrary notwithstanding, not earlier than 60 days nor later than
45 days prior to the first anniversary of the Effective Date,
and/or each and any successive anniversary thereafter (if the
Commitment then remains in effect), the Consignee may, by
delivery of a duly completed Consignment Extension Request to the
Consignor, irrevocably request that the Consignor extend for a
one year period the then existing Consignment Maturity Date.
SECTION II.4.2. Consent to Extension. (a) The Consignor
shall, within 35 days of receipt of the notice described in
Section 2.4.1, notify the Consignee whether or not it consents to
the Consignee's request set forth in such Consignment Extension
Request, such consent to be in the sole discretion of the
Consignor. If the Consignor does not so notify the Consignee of
its decision within such 35 day period, then the Consignor shall
be deemed not to have consented to such request of the Consignee.
(b) Notwithstanding anything to the contrary contained in
this Section, the Consignment Maturity Date shall not be extended
for an additional period unless, in addition to the receipt of an
approval by the Consignor to extend such date pursuant to clause
(a) above, Suppliers whose Percentages equal or exceed 75% of the
Advance Commitment Amount under the Dollar Supply Agreement
(after giving effect to the operation of clause (c) of Section
2.4.2 of the Dollar Supply Agreement) have also so consented to
an extension of the Stated Maturity Date in accordance with
Section 2.4.2 of the Dollar Supply Agreement; provided, if there
shall occur any reduction in the Advance Commitment Amount as a
result of the operation of Section 2.4.2 of the Dollar Supply
Agreement, then the Commitment Amount hereunder shall be
similarly reduced in accordance with Section 2.2.2.
ARTICLE III
RETURN OF BULLION; POST-MATURITY RATES; FEES
SECTION III.1. Return of Bullion. The Consignee shall
deliver to the Consignor all or a portion (as applicable) of the
Bullion then held under consignment by it in accordance with the
terms of this Section. No return of Bullion pursuant to this
Article III shall cause a reduction in the Commitment Amount.
Notwithstanding anything to the contrary contained herein or in
any other Fee Consignment Document, whenever the Consignee is
entitled or required to return to the Consignor any Bullion held
under consignment by the Consignee hereunder, instead of
returning such Bullion the Consignee may return and deliver all
of its right, title and interest in and to other gold and/or
silver, as applicable, to the Consignor which in all cases shall
be owned by the Consignee and shall be free and clear of all
Liens and adverse claims in an equivalent amount, and of an
equivalent quality and fineness, as such Bullion, and any such
return of other gold and/or silver, as applicable, shall
constitute a return of such Bullion for all purposes of this
Agreement and shall constitute a purchase of such Bullion for
purposes of the second sentence of each of Sections 2.3.3 and
4.2.
SECTION III.1.1. Consignment Maturity Date. The Consignee
shall, at its election, either return to the Consignor and/or
purchase for cash all Bullion then consigned to it hereunder upon
the Consignment Maturity Date provided, that if on any
Consignment Maturity Date (without giving effect to any extension
of such date), a partial reduction to the Commitment Amount is
required in accordance with Section 2.2.2, then the Consignee
shall either return to the Consignor and/or purchase for cash
from the Consignor an amount of Bullion that is equal to the
amount of such reduction. To the extent the Consignor agrees to
a sale of Bullion for cash, the purchase price for each troy
ounce of any such gold or silver that the Consignee purchases
shall be determined in accordance with Section 2.3.3.
SECTION III.1.2. Voluntary Return of Bullion. From time to
time on any Business Day prior to the Consignment Maturity Date,
the Consignee may voluntarily return to the Consignor all (or any
portion) of Bullion previously consigned to it hereunder in
respect of a Consignment Period as designated by the Consignee;
provided, however, that
(a) no such voluntary return to the Consignor may be
made on any day other than the last day of the applicable
Consignment Period with respect to the Bullion then being
returned to the Consignor, unless the Consignor shall have
agreed to such return and the Consignee shall have given the
Consignor at least two (but no more than five) Business
Days' notice, and has paid any costs required pursuant to
clause (a) of Section 9.4 and clause (iii) of Section 9.3;
and
(b) all such voluntary partial returns of Bullion from
consignment shall be in a minimum number of troy ounces of
Bullion such that the number of ounces of Bullion returned
multiplied by the Dollar Value of gold or the Dollar Value
of silver (or both, if applicable) as in effect three
Business Days prior to the scheduled date of such return is
equal to or greater than $10,000,000.
SECTION III.1.3. Mandatory Return of Bullion. The
Consignee shall return Bullion to the Consignor upon the
occurrence of any of the events set forth in this Section.
(a) If, on the last day of any Consignment Period:
(i) the number of troy ounces of gold then consigned
by the Consignor to the Consignee hereunder exceeds the
then effective Commitment Amount for gold on such date,
or
(ii) the number of troy ounces of silver then consigned
by the Consignor to the Consignee hereunder exceeds the
then effective Commitment Amount for silver on such
date,
in each case as the applicable Commitment Amount may have
been reduced pursuant to the terms of this Agreement, then
the Consignee shall, at its election, either mandatorily
return to the Consignor and/or purchase from the Consignor
that number of troy ounces of gold or silver (or both) in
the amount of such excess on the last day of such
Consignment Period; provided, that notwithstanding the
foregoing, the Consignee shall not be required to purchase
or return any Bullion pursuant to this clause except for
Bullion that was consigned in connection with such maturing
Consignment Period. To the extent the Consignor agrees to a
sale of Bullion pursuant to Section 2.3.3, the purchase
price for each troy ounce of any such gold or silver that
the Consignee purchases shall be determined in accordance
with Section 2.3.3.
(b) Upon the occurrence and continuance of any Market
Interruption Event and demand in writing by the Consignor to
the Consignee, the Consignee shall, at its election, either
return to the Consignor and/or purchase for cash from the
Consignor on the last day of each then maturing Consignment
Period (or earlier, if required in the reasonable
determination of the Consignor or if required by law), the
amount of Bullion so demanded by the Consignor. To the
extent the Consignor agrees to a sale of Bullion to the
Consignee pursuant to Section 2.3.3, the purchase price for
each troy ounce of any such gold or silver that the
Consignee purchases shall be determined in accordance with
Section 2.3.3.
(c) Pursuant to an appropriately completed
Continuation/Return Notice delivered at least four but not
more than five Business Days prior to the last day of a
Consignment Period in accordance with the terms of Section
2.3.1 pursuant to which the Consignee has indicated that it
will return all or a portion of Bullion previously consigned
to it at the end of a Consignment Period, the Consignee
shall, at its election, either return to the Consignor
and/or purchase from the Consignor on the last day of the
applicable Consignment Period that number of troy ounces of
Bullion indicated in such Continuation/Return Notice on the
last day of the then maturing Consignment Period. To the
extent the Consignor agrees to a sale of Bullion to the
Consignee pursuant to Section 2.3.3, the purchase price for
each troy ounce of any such gold or silver that the
Consignee purchases shall be determined in accordance with
Section 2.3.3.
(d) Upon the failure of any Supplier to fund any
Advance on the commencement date of a Consignment Period as
required pursuant to the terms of the Dollar Supply
Agreement the Consignee shall, within three Business Days
following demand by the Consignor, return or purchase
pursuant to the terms of this Agreement (unless such failure
is no longer continuing) the number of ounces of each type
of Bullion that was previously consigned in respect of such
non-funded Advance.
(e) Upon the last day of any then maturing Consignment
Period on which the Dollar Value of gold as in effect three
Business Days prior to the first day of the next occurring
Consignment Period multiplied by the number of ounces of
gold then consigned and the Dollar Value of silver as in
effect three Business Days prior to the first day of the
next occurring Consignment Period multiplied by the number
of ounces of silver then consigned exceeds the then
effective Advance Commitment Amount, the Consignee shall, at
its election, either return to the Consignor and/or purchase
for cash from the Consignor on the last day of such maturing
Consignment Period, the number of troy ounces of Bullion
such that the Dollar Value of gold and Dollar Value of
silver (in each case as in effect three Business Days prior
to the first day of the next occurring Consignment Period)
that will remain consigned shall not exceed the Advance
Commitment Amount; provided, that notwithstanding the
foregoing, the Consignee shall not be required to purchase
or return any Bullion other than Bullion that was consigned
in connection with such then maturing Consignment Period.
To the extent the Consignor agrees to a sale of Bullion
pursuant to Section 2.3.3, the purchase price for each troy
ounce of any such gold or silver that the Consignee
purchases shall be determined in accordance with
Section 2.3.3.
SECTION III.1.4. Acceleration of Consignment Maturity Date.
Immediately upon any acceleration of the Consignment Maturity
Date pursuant to Section 8.2 or Section 8.3, the Consignee shall,
at its election, either return to the Consignor and/or purchase
for cash pursuant to the terms of this Agreement from the
Consignor all Bullion then under consignment to the full extent
of such acceleration. To the extent the Consignor agrees to a
sale of Bullion, the purchase price for each troy ounce of any
such gold or silver that the Consignee purchases shall be
determined in accordance with Section 2.3.3.
SECTION III.2. Post-Maturity Rates, etc. After the date
any monetary Obligation of the Consignee hereunder shall have
become due and payable, the Consignee shall pay interest (after
as well as before judgment) on such amounts on demand at a rate
per annum equal to the Alternate Base Rate plus a margin of 2%
per annum. In addition, to the extent that the Consignee fails
to return (or purchase) any Bullion on the dates required
pursuant to the terms of this Agreement, the Consignee shall pay
to the Consignor (after as well as before judgment) on demand,
instead of the fees set forth in Section 3.3.1, for each day that
such Bullion is not returned or purchased, an amount (the "ABR
Fee") equal to the product of (a) the Alternate Base Rate in
effect on such day plus a margin of 2% per annum minus the
Contango Fee as in effect on such day and (b) the Dollar Value of
gold and the Dollar Value of silver (as applicable) in each case
as in effect three Business Days prior to the first day of each
applicable Consignment Period then in effect multiplied by the
number of ounces of gold and/or silver not so returned or
purchased on or prior to such day.
SECTION III.3. Fees. The Consignee agrees to pay the fees
set forth in this Section 3.3. All such fees shall be non-
refundable.
SECTION III.3.1. Consignment Fee. (a) The Consignee
agrees to pay to the Consignor in arrears with respect to each
troy ounce of gold and/or silver held on consignment hereunder a
consignment fee (the "Consignment Fee") based on the Gold Rate
(in the case of consignments of gold) and the Silver Rate (in the
case of consignments of silver) plus in each case a margin of 1/2
of 1% per annum, on the Dollar Value of such gold (in the case of
consignments of gold) or the Dollar Value of such silver (in the
case of consignments of silver) as in effect three Business Days
prior to the first day of the Consignment Period then in effect
for such Bullion multiplied by the number of troy ounces of gold
and silver, respectively, consigned for each such Consignment
Period.
(b) For each day on which any Advances bear interest at the
Alternate Base Rate pursuant to Section 4.1, 4.2 or 4.3 of the
Dollar Supply Agreement, the Consignee agrees to pay to the
Consignor in arrears an additional consignment fee on an amount
equal to the aggregate principal amount of all Advances then
bearing interest at the Alternate Base Rate, such fee with
respect to any such Advances to be (i) calculated based on a rate
equal to the positive difference, if any, between (x) the
Alternate Base Rate then in effect, and (y) the LIBO Rate
(Reserve Adjusted) (or, if applicable as a result of the
operation of Section 4.2 of the Dollar Supply Agreement, the
Substitute Rate) that was in effect as of the first day of the
Consignment Period applicable to such Advances plus (in each
case) 1/2 of 1% per annum, and (ii) payable on the last day of
the Consignment Period then applicable to such Advances (or on
each three-month anniversary of such Consignment Period if such
Consignment Period is in excess of three months).
The Consignment Fee will be paid in arrears (a) on the
Consignment Maturity Date, (b) on the last day of each
Consignment Period (or on each three-month anniversary of a
Consignment Period, for Consignment Periods that are longer than
three months) with respect to the Bullion subject to such
Consignment Period and (c) on the date of any reduction in the
Commitment Amount pursuant to Section 2.2.1 or 2.2.2, in an
amount equal to any accrued Consignment Fee on that portion of
the Commitment Amount being reduced.
SECTION III.3.2. Commitment Fee. The Consignee agrees to
pay to the Consignor a commitment fee equal to 1/5 of 1% per
annum multiplied by the product of (a) the difference between (i)
the average daily number of ounces of gold or silver, as the case
may be, committed to be consigned hereunder (based on the Dollar
Value of gold equalling $475 per ounce and the Dollar Value of
silver equalling $6.50 per ounce) during the relevant period, and
(ii) the average daily number of ounces of gold or silver, as the
case may be, actually consigned hereunder during the relevant
period, and (b) $475 (in the case of gold) and $6.50 (in the case
of silver). Such commitment fee shall be payable in arrears on
each Quarterly Payment Date and on the Commitment Termination
Date.
SECTION III.3.3. Other Fees. The Consignee agrees to pay
to the Consignor those fees, in the amounts and on the dates, set
forth in the Fee Letter.
ARTICLE IV
CERTAIN OTHER PROVISIONS; SECURITY INTEREST
SECTION IV.1. Consignments, etc. Unlawful. If the
Consignor shall determine (which determination shall, upon notice
thereof to the Consignee, absent manifest error, be prima facie
evidence of the facts stated therein) that the introduction of or
any change in or in the interpretation of any law makes it
unlawful, or any central bank or other governmental authority
having authority over the Consignor asserts that it is unlawful,
for the Consignor to consign (or maintain previously consigned)
Bullion with the Consignee, the obligations of the Consignor to
consign (or to maintain previously consigned) Bullion with the
Consignee shall, upon such determination, forthwith be suspended
until the Consignor shall notify the Consignee that the
circumstances causing such suspension no longer exist (which
notification the Consignor agrees to give promptly when such
circumstances no longer exist), and all Bullion theretofore
delivered under consignment to the Consignee hereunder shall be,
at the election of the Consignee, either returned to and/or
purchased pursuant to the terms hereof from the Consignor at the
end of the then current Consignment Periods with respect thereto
or sooner, if required by such law or assertion.
SECTION IV.2. Security Interest. Title to Bullion
delivered on consignment by the Consignor hereunder will remain
with the Consignor and will not pass to the Consignee. To the
extent that any Bullion (or a portion of Bullion) is purchased by
the Consignee pursuant to the terms of this Agreement, then title
only to such Bullion (or such portion of Bullion) will transfer
to the Consignee. The intent of the parties hereto is to create
a true consignment from the Consignor to the Consignee and not a
consignment for security, provided, however, that in order to
protect the rights of the Consignor in the event that this
Agreement and the transactions contemplated hereby are construed
at any time with respect to any Bullion as other than a true
consignment from the Consignor to the Consignee (including as a
result of a Bullion Sale), as security for its Obligations (as
defined in this Agreement and the Short-Term Fee Consignment
Agreement) the Consignee hereby grants the Consignor a Lien on
and security interest in and to the Collateral (whether now or
hereafter existing). "Collateral" means all of the Consignee's
right, title and interest in and to (i) all gold and silver of
any quality or fineness (including the Bullion), other than the
U.S. Bullion, located from time to time at the Plants, (ii) all
Processed Bullion located from time to time at the Plants and
(iii) all proceeds of such gold and silver, including, to the
extent that the Consignee has not returned to the Consignor
and/or purchased pursuant to the terms hereof any amount of
Bullion (or other gold and/or silver) that is delivered to any
account debtor of the Consignee, accounts owing by such account
debtor, and related general intangibles (if any) arising from the
sale of such gold and silver (including the Bullion and the gold
and silver (other than U.S. Bullion) comprising any Processed
Bullion). 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. "Bullion Sale" means any sale of
Bullion by the Consignor to the Consignee, which sale shall occur
(notwithstanding the provisions of Section 2.3.3) at any time the
Consignee takes title to any Bullion, whether pursuant to Section
2.3.3 or at such earlier or other date as provided by law or
court order or decree. To the extent this Agreement and the
transactions contemplated hereby are not construed as a true
consignment from the Consignor to the Consignee, or upon the
occurrence of any Bullion Sale, the security interest granted
pursuant to this Section secures the complete and punctual
payment of all "Obligations" of the Consignee, whether now or
hereafter existing, under and as defined in (a) this Agreement
and each other Fee Consignment Document and (b) the Short-Term
Fee Consignment Agreement and each other Fee Consignment Document
(as defined therein). To the extent any gold and/or silver
(other than the U.S. Bullion) of any quality or fineness
(including the Bullion) located at either Plant becomes part of a
product, the Consignor 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 and/or silver (other than the U.S.
Bullion) contained in such product or comprising a part thereof
bears to the cost of such product. In addition, gold and/or
silver (other than the U.S. Bullion) of any quality or fineness
(including the Bullion) located at either Plant 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
and/or silver did not become part of a product and shall be
subject to all the terms hereof (including the continuation of
title to such gold and/or silver in the Consignor).
Notwithstanding the express intent of the parties hereto that
this Agreement and the transactions contemplated hereby be a true
consignment from the Consignor to the Consignee, the Consignee
shall file precautionary Uniform Commercial Code financing
statements to protect the rights of the Consignor in and to the
Collateral. In furtherance of the intent of the parties hereto
that this Agreement and the transactions contemplated hereunder
are a true consignment from the Consignor to the Consignee, and
not a consignment for security, the Consignor agrees that for so
long as no Event of Default has occurred and is continuing, it
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 the Consignor to the
Consignee.
SECTION IV.3. Losses. In the event the Consignor shall
incur any loss or expense as a result of
(a) any return to or purchase from the Consignor of
Bullion on a date other than the scheduled last day of the
Consignment Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any consignment of Bullion not being made in the
quantity or on the date requested by the Consignee, except
to the extent the same results from the failure of the
Consignor to satisfy its obligations hereunder with respect
thereto; or
(c) any consigned Bullion failing to remain under
consignment in accordance with the Continuation/Return
Notice therefor,
then, upon the written notice of the Consignor to the Consignee,
the Consignee, without duplication of its other Obligations,
shall, within five days of its receipt thereof, pay directly to
the Consignor such amount as will (in the reasonable
determination of the Consignor) reimburse the Consignor for such
loss or expense. Such written notice (which shall include
calculations in reasonable detail) shall, in the absence of
manifest error, be prima facie evidence of the matters stated
therein.
SECTION IV.4. Increased Costs. If any change in, or
the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any law or regulation,
directive, guideline, decision or request (whether or not having
the force of law) of any court, central bank, regulator or other
governmental authority having authority over the Consignor
affects or would affect the amount of capital required or
expected to be maintained by the Consignor or any Person
controlling the Consignor, and the Consignor determines (in its
sole and absolute discretion) that the rate of return on its or
such controlling Person's capital as a consequence of its
Commitment or the consignment of Bullion hereunder is reduced to
a level below that which the Consignor or such controlling Person
could have achieved but for the occurrence of any such
circumstance, then, in any such case upon notice from time to
time by the Consignor to the Consignee, the Consignee shall
immediately pay directly to the Consignor additional amounts
sufficient to compensate the Consignor or such controlling Person
for such reduction in rate of return. A statement of the
Consignor as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence
of manifest error, be prima facie evidence of the matters stated
therein. In determining such amount, the Consignor may use any
method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable.
SECTION IV.5. Taxes. All payments by the Consignee
hereunder and by the Consignor to the Administrative Agent and
the Suppliers under the Dollar Supply Agreement (including in
each case in respect of fees) shall be made free and clear of and
without deduction for any present or future income, excise, stamp
or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or
measured by the Consignor's, the Administrative Agent's or such
Supplier's net income or receipts imposed by the jurisdiction of
incorporation or organization of the Consignor, the
Administrative Agent or such Supplier, as the case may be (such
non-excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the
Consignee hereunder or by the Consignor under the Dollar Supply
Agreement is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Consignee will
(a) in the case of withholding or deduction (i) in
respect of payments made for the account of the Consignor
hereunder, pay directly to the relevant authority the full
amount required to be so withheld or deducted, and (ii) in
respect of payments made by the Consignor to the
Administrative Agent or the Suppliers under the Dollar
Supply Agreement, pay to the Consignor (and the Consignor
hereby agrees to pay over to the relevant authority) the
full amount required to be so withheld or deducted;
(b) in the case of clause (a)(i), promptly forward to
the Consignor an official receipt or other documentation
satisfactory to the Consignor evidencing such payment to
such authority; and
(c) pay to the Consignor such additional amount or
amounts as is necessary to ensure that the net amount
actually received by the Consignor, the Administrative Agent
or such Supplier will equal the full amount such Person
would have received had no such withholding or deduction
been required.
Moreover, if the Consignor, the Administrative Agent or any
Supplier is obligated to pay any Taxes with respect to any
payment received by the Consignor hereunder or by the Consignor,
the Administrative Agent or such Supplier under the Dollar Supply
Agreement, it may pay such Taxes and the Consignee will promptly
pay such additional amounts directly to the Consignor (and, in
the case of Taxes payable by the Administrative Agent or a
Supplier under the Dollar Supply Agreement, the Consignor agrees
to pay over to the Administrative Agent or such Supplier, as
applicable) as is necessary in order that the net amount received
by such Person after the payment of such Taxes (including any
Taxes on such additional amount) shall equal the amount such
Person would have received had not such Taxes been asserted.
If the Consignee fails to pay any Taxes when due to the
appropriate taxing authority (in the case of clause (a)(i)) or
the Consignor (in the case of clause (a)(ii)) or fails to remit
to the Consignor, for the account of the Consignor or for the
account of the Administrative Agent or any Supplier, as set forth
above, the required receipts or other required documentary
evidence, the Consignee shall indemnify such Person for any
incremental Taxes, interest or penalties that may become payable
by such Person as a result of any such failure. Upon the request
of the Consignee, the Consignor shall, prior to the due date of
any payments hereunder, execute and deliver to the Consignee on
or about the first scheduled payment date in each Fiscal Year,
one or more (as the Consignee may reasonably request) United
States Internal Revenue Service Forms 4224 or Forms 1001 or such
other forms or documents (or successor forms or documents),
appropriately completed, as may be applicable to establish that
payments to the Consignor are exempt from withholding or
deduction of Taxes.
SECTION IV.6. Payments, Computations, etc. Unless
otherwise expressly provided, all payments of Dollars by the
Consignee pursuant to this Agreement or any other Fee Consignment
Document shall be made by the Consignee to the Consignor without
setoff, deduction or counterclaim, not later than 11:00 a.m.
(New York City time), on the date due, in immediately available
funds, to such account as the Consignor shall specify from time
to time by notice to the Consignee. Funds received after that
time shall be deemed to have been received by the Consignor on
the next succeeding Business Day. All fees shall be computed on
the basis of the actual number of days (including the first day
but excluding the last day) occurring during the period for which
such interest or fee is payable over a year comprised of
360 days. Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except
as otherwise required by clause (b) of the definition of the term
"Consignment Period") be made on the next succeeding Business Day
and such extension of time shall be included in computing
interest and fees, if any, in connection with such payment.
ARTICLE V
CONDITIONS TO CONSIGNMENTS
SECTION V.1. Initial Consignment. The obligations of the
Consignor to make the initial consignment of Bullion on and after
the Effective Date shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in
this Section 5.1.
SECTION V.1.1. Resolutions, etc. The Consignor shall have
received from the Consignee a certificate, dated the date of the
initial delivery of Bullion under consignment, of its Secretary
or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full
force and effect authorizing the execution, delivery and
performance of this Agreement and each other Fee Consignment
Document to be executed by it;
(b) true and complete copies of the Consignee's
Organic Documents; and
(c) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement
and each other Fee Consignment Document executed by it,
upon which certificate the Consignor may conclusively rely until
it shall have received a further certificate of the Secretary or
Assistant Secretary of the Consignee canceling or amending such
prior certificate.
SECTION V.1.2. Delivery of Financing Statements, etc. The
Consignor shall have received
(a) acknowledgment copies (or other evidence
satisfactory to it) of properly filed Uniform Commercial
Code financing statements (Form UCC-1), and (if available)
Uniform Commercial Code financing statements (Form UCC-3),
each dated a date reasonably near to the Effective Date,
naming (i) Handy & Harman as the consignee and The Bank of
Nova Scotia as the consignor (in the case of the Form UCC-1
Statements), and (ii) The Bank of Nova Scotia (as assignor)
and The Bank of Nova Scotia, in its capacity as
Administrative Agent (as assignee) (in the case of the Form
UCC-3 statements) or other similar instruments or documents,
filed under the Uniform Commercial Code of all jurisdictions
as may be necessary or, in the opinion of the Consignor,
desirable to perfect the interest of the Consignor pursuant
to the terms of this Agreement;
(b) executed copies of proper Uniform Commercial Code
Form UCC-3 termination statements, if any, necessary to
release all Liens and other rights of any Person in any
Collateral previously granted by the Consignee; and
(c) certified copies of Uniform Commercial Code
Requests for Information or Copies (Form UCC-11), or a
similar search report certified by a party acceptable to the
Consignor, dated a date reasonably near to the Effective
Date, 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
(a) above, together with copies of such financing statements
(none of which shall cover any Collateral).
SECTION V.1.3. Delivery of Waiver and Consent or Amendment.
The Consignor shall have received a copy of a waiver and consent,
amendment or such other written agreement in form and substance
satisfactory to it from the respective holders of the Consignee's
8.83% Senior Notes due August 25, 2002, 9.37% Senior Notes due
December 27, 1999 and 10.2% Series D Senior Notes due 1998, duly
executed and delivered by such holders except to the extent that
all Indebtedness owing in respect of such notes has been paid in
full.
SECTION V.1.4. Opinions of Counsel. The Consignor shall
have received opinions, dated the date of the initial consignment
and, except as set forth below, addressed to the Consignor
(together, in the case of other than clause (e), with reliance
letters to the Administrative Agent and the Suppliers), from
(a) Paul E. Dixon, Vice President and General Counsel
of the Consignee, substantially in the form of Exhibit D
hereto (and the Consignee hereby expressly instructs such
counsel to deliver such opinions to the Consignor, the
Administrative Agent and the Suppliers);
(b) Skadden, Arps, Slate, Meagher & Flom, New York
counsel to the Consignee, substantially in the form of
Exhibit E hereto (and the Consignee hereby expressly
instructs such counsel to deliver such opinions to the
Consignor, the Administrative Agent and the Suppliers);
(c) Bingham, Dana & Gould, Connecticut counsel to the
Consignor, substantially in the form of Exhibit F hereto
(and the Consignor hereby expressly instructs such counsel
to deliver such opinions to the Administrative Agent and the
Suppliers);
(d) Edwards & Angell, Rhode Island counsel to the
Consignee, substantially in the form of Exhibit G hereto
(and the Consignee hereby expressly instructs such counsel
to deliver such opinions to the Consignor, the
Administrative Agent and the Suppliers); and
(e) KPMG Peat Marwick, independent public accountants
to the Consignee, addressed to the Consignee and
substantially in the form of Exhibit H hereto.
SECTION V.1.5. Closing Fees, Expenses, etc. The Consignor
shall have received all fees, costs and expenses due and payable
pursuant to Sections 3.3 and 9.3, if then invoiced.
SECTION V.2. All Deliveries under Consignment. The
obligation of the Consignor to deliver any Bullion on the
occasion of any consignment (including the initial consignment)
to the Consignee shall be subject to the satisfaction of each of
the conditions precedent set forth in this Section 5.2.
SECTION V.2.1. Compliance with Warranties, No Default, etc.
Both before and after giving effect to the delivery of Bullion
requested to be held under consignment hereunder, the following
statements shall be true and correct:
(a) the representations and warranties set forth in
Article VI (including those incorporated by reference from
the Revolving Credit Agreement (other than those contained
in Section 6.7 of the Revolving Credit Agreement for any
consignment of Bullion that is to occur after the initial
consignment of Bullion hereunder)) 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);
(b) except as disclosed by the Consignee to the
Consignor pursuant to Section 6.7 of the Revolving Credit
Agreement,
(i) no litigation, arbitration or governmental
investigation or proceeding shall be pending or, to the
knowledge of the Consignee, threatened against the
Consignee or any of its Subsidiaries which may
reasonably be expected to materially adversely affect
the Consignee's, or the Consignee and its Subsidiaries'
taken as a whole, businesses, operations, assets,
revenues, properties or prospects; and
(ii) no development shall have occurred in any
litigation, arbitration or governmental investigation
or proceeding disclosed pursuant to Section 6.7 of the
Revolving Credit Agreement which may reasonably be
expected to materially adversely affect the businesses,
operations, assets, revenues, properties or prospects
of the Consignee or the Consignee and its Subsidiaries,
taken as a whole;
(c) 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 Fee
Consignment Document;
(d) the Consignor shall not be prohibited by the
provisions of Section 2.1.2 from making the requested
consignment of Bullion;
(e) no Market Interruption Event shall have occurred
and then be continuing;
(f) the Suppliers parties to the Dollar Supply
Agreement shall have funded the Advances to the
Administrative Agent required in connection with the
requested consignment (provided, that the failure of one or
more Suppliers to fund such Advances shall not relieve the
Consignor from consigning Bullion to the Consignee to the
extent the Administrative Agent has received Advances from
other Suppliers under the Dollar Supply Agreement); and
(g) no Default shall have then occurred and be
continuing, and neither the Consignee nor any of its
Subsidiaries are in material violation of any law or
governmental regulation or court order or decree the
violation of which would have a material adverse effect on
businesses, operations, assets, revenues, properties or
prospects of the Consignee or the Consignee and its
Subsidiaries, taken as a whole.
SECTION V.2.2. Consignment Request. The Consignor 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 Bullion to be held by it under consignment
shall constitute a representation and warranty by the Consignee
to the Consignor that on the date of such consignment (both
immediately before and after giving effect to such consignment)
the statements made in clauses (a), (b), (c), (d) and (g) of
Section 5.2.1 are true and correct.
SECTION V.2.3. Continuation of Consignment Period. The
requirement that the Consignor continue to consign to the
Consignee any previously consigned Bullion subject to a maturing
Consignment Period upon the occasion of the expiration of such
Consignment Period is subject to satisfaction of each of the
conditions precedent set forth below:
(a)the Consignee shall not be prohibited by the
provisions of Section 2.1.2 from continuing to hold under
consignment such Bullion;
(b)unless otherwise agreed by the Consignor, no Market
Interruption Event shall have occurred and then be
continuing;
(c)no Consignor Bankruptcy Event shall have occurred;
and
(d)if required pursuant to clause (a) of Section 2.3.1
of the Dollar Supply Agreement, the Suppliers parties to the
Dollar Supply Agreement shall have funded the Advances to
the Administrative Agent required in connection with the
requested continuation (provided, that the failure of one or
more Suppliers to fund such Advances shall not relieve the
Consignor from continuing under consignment Bullion to the
Consignee to the extent the Administrative Agent has
received Advances from other Suppliers under the Dollar
Supply Agreement).
SECTION V.2.4. Satisfactory Legal Form. 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 the Consignor and its counsel; the Consignor and its counsel
shall have received all information, approvals, opinions,
documents or instruments as the Consignor or its counsel may
reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Consignor to enter into this
Agreement and deliver Bullion under consignment to the Consignee
hereunder, the Consignee represents and warrants to the Consignor
as set forth in this Article VI.
SECTION VI.1. Representations and Warranties. The
Consignee hereby represents and warrants to the Consignor that
the representations and warranties contained in Article VI of the
Revolving Credit Agreement are true and correct, each such
representation and warranty set forth in such Article and all
other terms of the Revolving Credit Agreement to which reference
is made therein, together with all related definitions and
ancillary provisions, being hereby incorporated into this
Agreement by reference as though specifically set forth in this
Section; provided, that each reference in such Article to the
"Borrower", the "Administrative Agent", "Obligations", "this
Agreement" and "Loan Documents" and words of similar import shall
be deemed to be a reference to the "Consignee", the "Consignor",
the Obligations hereunder, this Fee Consignment Agreement and the
Fee Consignment Documents, respectively.
SECTION VI.2. Further Representations. In addition to the
representations and warranties set forth above, the Consignee
hereby represents and warrants to the Consignor that (a) the
Consignee has full power and authority to receive and hold
Bullion for the Consignor on the terms and conditions contained
herein and has obtained all necessary governmental consents,
licenses and approvals, if any, that are required to receive and
hold such Bullion, and (b) if this Agreement and the transactions
contemplated hereunder are construed as other than a true
consignment from the Consignor to the Consignee, then this
Agreement creates a valid, first priority security interest in
favor of the Consignor in the Collateral, securing the payment of
the Obligations, and all filings and other actions necessary to
perfect a first priority security interest in favor of the
Consignor in such Collateral have been duly taken in all
applicable jurisdictions.
ARTICLE VII
COVENANTS
In order to induce the Consignor to enter into this
Agreement and deliver Bullion under consignment to the Consignee
hereunder, the Consignee covenants and agrees that until the
Commitment shall have been terminated and all Obligations then
due and outstanding shall have been paid or performed in full and
all Bullion shall have been returned to and/or purchased from the
Consignor, the Consignee shall comply with the covenants as set
forth in this Article VII.
SECTION VII.1. Covenants. The Consignee will perform,
comply with and be bound by all of the agreements, covenants and
obligations contained in Article VII of the Revolving Credit
Agreement, each such agreement, covenant and obligation contained
in such Article and all other terms of the Revolving Credit
Agreement to which reference is made therein, together with all
related definitions and ancillary provisions, being hereby
incorporated into this Agreement by reference as though
specifically set forth in this Section; provided, that each
reference in such Article to the "Borrower", the "Administrative
Agent", "Obligations", "this Agreement" and "Loan Documents" and
words of similar import shall be deemed to be a reference to the
"Consignee", the "Consignor", the Obligations hereunder, this Fee
Consignment Agreement and the Fee Consignment Documents,
respectively.
SECTION VII.2. Additional Covenants. In addition to the
covenants set forth in Section 7.1, the Consignee further
covenants and agrees that it will perform, comply and be bound by
the covenants set forth in this Section.
SECTION VII.2.1. Safekeeping, etc. Until such time as the
Bullion received from the Consignor has been returned to the
Consignor, or purchased pursuant to the terms of this Agreement
by the Consignee, the Consignee will afford the Bullion no less
safekeeping protection than it affords gold and silver held for
its own account, and in any event the Consignor will at all times
be satisfied with the level of such protection. The Consignee
will provide insurance coverage on Bullion held on consignment in
such amounts and covering such risks as is required by the
Consignor and the Consignee shall, upon request, deliver to the
Consignor a copy of all policies for such insurance. Insurance
policies in respect of the Bullion located at the Plants shall
name the Consignor as loss payee and proceeds from such insurance
with respect to Bullion will be paid to the Consignor.
SECTION VII.2.2. Bullion to be Located at Plants. The
Consignee agrees that it will at all times cause all Bullion held
on consignment hereunder and not sold to a customer of the
Consignee to be located only (i) at the Plants, (ii) in transit
between the Plants and/or (iii) in transit to the Consignor;
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 or silver to the
Consignor pursuant to the terms of this Agreement. The Consignee
further agrees that except for U.S. Bullion and Bullion (under and
as defined in this Agreement and the Short-Term Fee Consignment
Agreement), no other gold or silver that is not owned by the
Consignor will be kept in either Plant. In any event, if any gold
or silver (other than U.S. Bullion and Bullion (under and as
defined in this Agreement and the Short-Term Fee Consignment
Agreement) shall at any time be located at either Plant, the
Consignee agrees that such gold and silver 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.
SECTION VII.2.3. Use of Bullion. The Consignee agrees that
it shall use the Bullion 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.
SECTION VII.2.4. Further Assurances, etc. 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 the Consignor may request, in order to perfect,
preserve and protect any of its interest in the Bullion and the
other Collateral and the assignment by the Consignor to the
Administrative Agent contemplated pursuant to clause (b)(i) of
Section 9.10.
SECTION 7.2.5. SEC Filings. On the date of the filing of the
Consignee's next Form 8-K with the Securities and Exchange
Commission, the Consignee shall include a note stating that all
gold and silver (other than the U.S. Bullion) located at each Plant
is owned by the Consignor and held under consignment by the
Consignee.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION VIII.1. Listing of Events of Default. Each of the
following events or occurrences described in this Section 8.1
shall constitute an "Event of Default".
SECTION VIII.1.1. Failure to Return Bullion, etc. Failure
by the Consignee (i) to return and/or purchase for cash pursuant
to the terms hereof any amount of Bullion on the date a return or
purchase thereof is required hereunder or (ii) pay any
Consignment Fees, interest or other monetary Obligations, in the
case of this clause (ii) within five days of the date on which it
is due hereunder.
SECTION VIII.1.2. Breach of Warranty. Any representation
or warranty of the Consignee made or deemed to be made hereunder
or in any other Fee Consignment Document or any other writing or
certificate furnished by or on behalf of the Consignee to the
Consignor for the purposes of or in connection with this
Agreement or any such other Fee Consignment Document (including
any certificates delivered pursuant to Article V) is or shall be
incorrect when made in any material respect.
SECTION VIII.1.3. Validity of Security Interest. Any Fee
Consignment Document, or, to the extent the consignments
hereunder are not true consignments from the Consignor to the
Consignee or a Bullion Sale occurs, any Lien granted thereunder,
shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of the Consignee; the
Consignee or any other party shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding
nature or enforceability; or, to the extent the consignments
hereunder are not true consignments from the Consignor to the
Consignee or a Bullion Sale occurs, any Lien securing any
Obligation shall, in whole or in part, cease to be a perfected
first priority Lien in favor of the Consignor and its assigns.
SECTION VIII.1.4. Non-Performance of Other Covenants and
Obligations. The Consignee shall default in the due performance
and observance of any agreement contained herein or in any other
Fee Consignment Document (other than as set forth in Section
8.1.1), and such default shall continue unremedied for a period
of 10 Business Days after notice thereof shall have been given to
the Consignee by the Consignor.
SECTION VIII.1.5. Default on Material Contracts. (a) An
Event of Default under (and as defined in) the Revolving Credit
Agreement or the Short Term Revolving Credit Agreement shall have
occurred and be continuing, (b) an Event of Default under (and as
defined in) the Dollar Supply Agreement or the Short-Term Dollar
Supply Agreement shall have occurred and be continuing or (c) a
default shall occur in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise,
of any Indebtedness (other than Indebtedness outstanding under
the Revolving Credit Agreement or the Short Term Revolving Credit
Agreement) of the Consignee or any of its Subsidiaries having a
principal amount, individually or in the aggregate, in excess of
$1,000,000, or a default shall occur in the performance or
observance of any obligation or condition with respect to such
Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or such default shall continue
unremedied for any applicable period of time sufficient to permit
the holder or holders of such Indebtedness, or any trustee or
agent for such holders, to cause such Indebtedness to become due
and payable prior to its expressed maturity.
SECTION VIII.1.6. Bankruptcy, Insolvency, etc. The
Consignee or any of its Subsidiaries (including joint ventures)
shall
(a) become insolvent or generally fail to pay, or
admit in writing its inability or unwillingness to pay,
debts as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for the Consignee or any of its Subsidiaries or
joint ventures (other than Non-Recourse Joint Ventures) or
any property of any thereof, or make a general assignment
for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a
trustee, receiver, sequestrator or other custodian for the
Consignee or any of its Subsidiaries or joint ventures
(other than Non-Recourse Joint Ventures) or for a
substantial part of the property of any thereof, and such
trustee, receiver, sequestrator or other custodian shall not
be discharged within 60 days, provided that the Consignee,
each Subsidiary and each joint venture hereby expressly
authorizes the Consignor to appear in any court conducting
any relevant proceeding during such 60-day period to
preserve, protect and defend their rights under the Fee
Consignment Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in
respect of the Consignee or any of its Subsidiaries or joint
ventures (other than Non-Recourse Joint Ventures), and, if
any such case or proceeding is not commenced by the
Consignee or such Subsidiary or such joint venture, such
case or proceeding shall be consented to or acquiesced in by
the Consignee or such Subsidiary or such joint venture or
shall result in the entry of an order for relief or shall
remain for 60 days undismissed, provided that the Consignee,
each Subsidiary and each such joint venture hereby expressly
authorizes the Consignor to appear in any court conducting
any such case or proceeding during such 60-day period to
preserve, protect and defend their rights under the Fee
Consignment Documents; or
(e) take any action authorizing, or in furtherance of,
any of the foregoing;
provided, that, the foregoing shall not apply to any Subsidiary
or joint venture of the Consignee, the value of whose assets in
the aggregate for the Fiscal Quarter most recently ended
accounted for an amount equal to or less than 5% of Adjusted
Consolidated Tangible Net Worth.
SECTION VIII.1.7. Consignment Treatment. The consignment
of Bullion pursuant to the terms of this Agreement shall be
characterized as other than a true consignment from the Consignor
to the Consignee (for accounting purposes or as determined by a
court of competent jurisdiction), and such characterization shall
continue for a period of thirty consecutive days.
SECTION VIII.2. Action if Bankruptcy. If any Event of
Default described in clauses (a) through (d) of Section 8.1.6
shall occur, the Commitment (if not theretofore terminated) shall
automatically terminate and the Consignment Maturity Date shall
automatically be accelerated, and all previously delivered
Bullion then held by the Consignee pursuant to the terms hereof
shall be immediately returned to the Consignor, and all monetary
Obligations shall automatically be and become immediately due and
payable, without the requirement of notice or demand by the
Consignor to the Consignee of any kind being necessary.
SECTION VIII.3. Action if Other Event of Default. If any
Event of Default (other than any Event of Default described in
clauses (a) through (d) of Section 8.1.6) shall occur for any
reason, whether voluntary or involuntary, and be continuing, the
Consignor may by notice to the Consignee demand that all or any
portion of the previously delivered Bullion then held by the
Consignee pursuant to the terms hereof be returned to the
Consignor and/or declare all monetary Obligations to be due and
payable and/or the Commitment (if not theretofore terminated) to
be terminated and the Consignment Maturity Date to be
accelerated, whereupon all or such portion of such Bullion shall
immediately be returned to the Consignor, and the full unpaid
amount of such Obligations which shall be so declared due and
payable shall be and become immediately due and payable, without
further notice, demand or presentment, and/or, as the case may
be, the Commitment shall terminate and the Consignment Maturity
Date shall be accelerated.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION IX.1. Waivers, Amendments, etc. The provisions of
this Agreement and of each other Fee Consignment Document may
from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and consented to
by the Consignee and the Consignor. No failure or delay on the
part of the Consignor in exercising any power or right under this
Agreement or any other Fee Consignment Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice
to or demand on the Consignee in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or
approval by the Consignor under this Agreement or any other Fee
Consignment Document shall, except as may be otherwise stated in
such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION IX.2. Notices. All notices and other
communications provided to any party hereto under this Agreement
or any other Fee Consignment Document shall be in writing or by
facsimile and addressed, delivered or transmitted to such party
at its address or facsimile number set forth below its signature
hereto. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice,
if transmitted by facsimile, shall be deemed given when
transmitted upon receipt of electronic confirmation of
transmission.
SECTION IX.3. Payment of Costs and Expenses. The Consignee
agrees to pay on demand all reasonable out-of-pocket expenses of
the Consignor and (without duplication) the Administrative Agent
(including the fees and out-of-pocket expenses of a single
counsel to the Consignor and of local counsel, if any, who may be
retained by counsel to the Consignor and (without duplication)
the Administrative Agent), in connection with
(a) the negotiation, preparation, execution and
delivery of this Agreement and of each other Fee Consignment
Document, the Dollar Supply Agreement and the Short-Term
Dollar Supply Agreement, including in each case schedules
and exhibits, and any amendments, waivers, consents,
supplements or other modifications to this Agreement or any
other Fee Consignment Document, the Dollar Supply Agreement
or the Short-Term Dollar Supply Agreement as may from time
to time hereafter be required, whether or not the
transactions contemplated hereby are consummated;
(b) the preparation and review of the form of any
document or instrument relevant to this Agreement or any
other Fee Consignment Document or the Dollar Supply
Agreement and the Short-Term Dollar Supply Agreement;
(c) 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; and
(d) the administration and monitoring of this
Agreement and the Fee Consignment Documents, the Dollar
Supply Agreement and the Short-Term Dollar Supply Agreement,
and compliance of the parties hereto with respect to the
terms hereof.
The Consignee further agrees to pay on demand (or, in the case of
clause (iii) below, within five days following demand) therefor,
and to save the Consignor harmless from all liability for,
(i) any stamp or other taxes which may be payable in connection
with the execution or delivery of this Agreement or any other Fee
Consignment Document, or the consignment of Bullion hereunder,
(ii) all amounts payable under Article IV hereof, and (iii) all
amounts the Consignor is required to pay or to pay over to the
Suppliers and the Administrative Agent (or would be required to
pay or pay over to the extent first paid by the Consignee
hereunder) under Sections 4.1 through 4.6 (inclusive) and 4.10 of
the Dollar Supply Agreement (but only, in the case of Sections
4.1 and 4.2 and the proviso in Section 4.3 thereof (and in any
event without duplication of the Consignee's Obligation under
clause (b) of Section 3.3.1 hereof), to the extent any such
amount is calculated by reference to a rate equal to the positive
difference, if any, between (x) the Alternate Base Rate from time
to time in effect and (y) a LIBO Rate (Reserve Adjusted) plus 1/2
of 1% per annum (or, if applicable, the Substitute Rate plus 1/2
of 1% per annum) (and the Consignee agrees that, for purposes of
any determination to be made for purposes of Sections 4.1, 4.2,
4.3 or 4.4 of the Dollar Supply Agreement, it shall be
conclusively assumed that each Supplier elected to fund LIBO Rate
Advances by purchasing Dollar deposits in its LIBOR Office's
interbank eurodollar market)), Section 8.3 of the Dollar Supply
Agreement and Section 8.4 of the Dollar Supply Agreement in
respect of all of the Indemnified Liabilities (as defined in
Section 8.4 of the Dollar Supply Agreement), to the extent (and
only to the extent) such Indemnified Liabilities do not result
from a breach by the Consignor of its obligations hereunder or
under the Dollar Supply Agreement, from a Consignor Bankruptcy
Event or from the gross negligence or wilful misconduct of the
Consignor. To the extent that the foregoing undertaking with
respect to the payment of any such Indemnified Liabilities under
Section 8.4 of the Dollar Supply Agreement may be unenforceable
for any reason, the Consignee hereby agrees to make the maximum
contribution to the payment and satisfaction of such Indemnified
Liabilities which is permissible under applicable law. The
Consignee also agrees to reimburse the Consignor upon demand for
all reasonable out-of-pocket expenses (including attorneys' fees
and legal expenses) incurred by the Consignor and (without
duplication) the Administrative Agent in connection with (x) the
negotiation of any restructuring or "work-out", whether or not
consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION IX.4. Indemnification. In consideration of the
execution and delivery of this Agreement by the Consignor and the
consignment of Bullion hereunder, the Consignee (without
duplication of any of its other monetary Obligations hereunder)
hereby indemnifies, exonerates and holds the Consignor and its
officers, directors, employees and agents (collectively, the
"Indemnified Parties") free and harmless from and against any and
all actions, causes of action, suits, losses, costs, liabilities
and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to
the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out
of, or relating to
(a) the failure of the Consignee for any reason to
return the required amount of Bullion back to the Consignor
on the dates required pursuant to the terms of this
Agreement (whether at the end of a Consignment Period,
following the occurrence of a Market Interruption Event or
otherwise), except to the extent the Consignee has purchased
such Bullion from the Consignor in accordance with the terms
hereof;
(b) the return of any Bullion to the Consignor on
other than the last day of the Consignment Period applicable
to such Bullion;
(c) the failure by the Consignee to pay to the
Consignor any monetary amounts under Sections 3.2, 3.3, 4.5,
8.2, 8.3 or clause (iii) of Section 9.3 hereof which, in
turn, the Consignor is required to pay over to the Suppliers
(notwithstanding that such amounts are only payable by the
Consignor if and to the extent first paid by the Consignee)
under Sections 3.2.3, 3.2.1, 3.2.2, 4.6, 6.2 and 6.3 of the
Dollar Supply Agreement;
(d) any investigation, litigation or proceeding
involving the Consignee or any of its Subsidiaries or
property now or previously owned or leased by the Consignee
or any of its Subsidiaries related to any environmental
cleanup, compliance or other similar matter relating to the
protection of the environment by the Consignee or any of its
Subsidiaries or the Release by the Consignee or any of its
Subsidiaries of any Hazardous Material; provided, that the
Indemnified Party shall have given the Consignee notice of
any such matter and an opportunity to participate in, but
not (except at the sole discretion of the Indemnified
Parties) to manage or control, the defense or settlement of
any such matters which may give rise to any Indemnified
Liabilities;
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or
releasing from, any real property owned or operated by the
Consignee or any Subsidiary thereof of any Hazardous
Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising
under any Environmental Law), regardless of whether caused
by, or within the control of, the Consignee or such
Subsidiary;
(f)any breach of warranty contained in Section 6.12 of
the Revolving Credit Agreement (as incorporated by reference
pursuant to Section 6.1 hereof), without giving effect to
the exceptions based upon the materially adverse effect and
any qualification based on materiality or knowledge; or
(g) the entering into and performance of this
Agreement and any other Fee Consignment Document by any of
the Indemnified Parties (including any action brought by or
on behalf of the Consignee as the result of any
determination by the Consignor pursuant to Article V not to
consign Bullion to the Consignee due to the failure of the
Consignee to meet the conditions for such consignment);
except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of a
Consignor Bankruptcy Event, or any Indemnified Party's gross
negligence or wilful misconduct or except to the extent (and only
to the extent) the same results from a breach by the Consignor of
its obligations hereunder or under the Dollar Supply Agreement.
If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Consignee hereby agrees to make
the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under
applicable law. The Consignor hereby acknowledges and agrees
that the Consignee shall not be liable for any Indemnified
Liabilities arising solely as a result of changes in value of
gold or silver or the method utilized by the Consignor of funding
or procuring the Bullion to be consigned under this Agreement,
except to the extent such Indemnified Liability results from a
Default by the Consignee of its Obligations.
SECTION IX.5. Survival. The obligations of the Consignee
under Sections 4.3, 4.4, 4.5, 4.6, 9.3 and 9.4 shall survive any
termination of this Agreement, the payment in full of all
Obligations, and return to the Consignor of all Bullion and the
termination of the Commitment. The representations and
warranties made by the Consignee in this Agreement and in each
other Fee Consignment Document shall survive the execution and
delivery of this Agreement and each such other Fee Consignment
Document.
SECTION IX.6. Severability. Any provision of this
Agreement or any other Fee 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 Fee Consignment
Document or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION IX.7. Headings. The various headings of this
Agreement and of each other Fee Consignment Document are inserted
for convenience only and shall not affect the meaning or
interpretation of this Agreement or such other Fee Consignment
Document or any provisions hereof or thereof.
SECTION IX.8. 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 the
Consignor (or notice thereof satisfactory to the Consignor) shall
have been received by the Consignor and notice thereof shall have
been given by the Consignor to the Consignee.
SECTION IX.9. Governing Law; Entire Agreement. THIS
AGREEMENT AND EACH OTHER FEE CONSIGNMENT DOCUMENT SHALL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK. This Agreement and the other Fee
Consignment Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and
supersede any prior agreements, written or oral, with respect
thereto.
SECTION IX.10. Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns;
provided, however, that:
(a) the Consignee may not assign or transfer its
rights, title, interests or obligations hereunder without
the prior written consent of the Consignor; and
(b) the Consignor may (i) pursuant to Section 4.11 of
the Dollar Supply Agreement and Section 4.11 of the Short-
Term Dollar Supply Agreement, assign its rights, title and
interests (but not its obligations) hereunder (including
with respect to the security interest in the Collateral
granted pursuant to Section 4.2) to the Administrative Agent
(under and as defined in the Dollar Supply Agreement and the
Short-Term Dollar Supply Agreement) for its benefit and the
benefit of the Suppliers (under and as defined in such
agreements), and (ii) at any time assign or transfer all or
any of its rights, title, interests and/or obligations
hereunder, provided (in the case of this clause (b)(ii)),
such assignment or transfer is to its successors or to a
wholly-owned Subsidiary or a branch or agency of the
Consignor.
The Consignee agrees that, subject to the provisions of clause
(e) of Section 8.11.2 of the Dollar Supply Agreement, each
Participant to the Dollar Supply Agreement, for purposes of
Sections 4.3, 4.4, 4.6, 4.8, 4.9, 8.3 and 8.4 thereof, shall be
considered a Supplier.
SECTION IX.11. Forum Selection and Consent to Jurisdiction.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER FEE CONSIGNMENT
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE CONSIGNOR, ANY AGENT,
ANY SUPPLIER 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 THE
CONSIGNOR'S OR THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS
OF ANY JURISDICTION WHERE SUCH COLLATERAL OR 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 FEE CONSIGNMENT DOCUMENTS.
SECTION IX.12. Waiver of Jury Trial. THE CONSIGNOR 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 FEE CONSIGNMENT
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE CONSIGNOR 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 FEE CONSIGNMENT DOCUMENT
TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE CONSIGNOR ENTERING INTO THIS AGREEMENT AND
EACH SUCH OTHER FEE CONSIGNMENT DOCUMENT AND THE SUPPLIERS AND
THE CONSIGNOR ENTERING INTO THE DOLLAR SUPPLY AGREEMENT AND
ADVANCE DOCUMENTS.
SECTION IX.13. Benefit of this Agreement. The Consignee
acknowledges and agrees that the Administrative Agent and the
Suppliers are third-party beneficiaries of clause (iii) of the
last paragraph of Section 9.3 of this Agreement.
SECTION IX.14. Settlement Amount. If a judgment in Dollars
(instead of specific performance) is entered against the
Consignee with respect to the Consignee's failure to return all
or a portion of Bullion (or other gold or silver) in the amounts
and on the dates required pursuant to this Agreement, and the
amount of Dollars so awarded is less than the sum of (i) the
Dollar Value of gold multiplied by the number of ounces of such
unreturned gold and/or (ii) the Dollar Value of silver multiplied
by the number of ounces of such unreturned silver, in each case
as in effect three Business Days prior to the first day of the
Consignment Periods then in effect for such unreturned Bullion
(the "Settlement Amount"), then the Consignee agrees that it
shall pay to the Consignor the difference between the Settlement
Amount and the amount of Dollars awarded pursuant to such
judgment.
SECTION IX.15. Waiver of Immunity. To the extent that the
Consignor may have any immunity on the grounds of sovereignty or
otherwise from jurisdiction of any court in the United States or
from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution or
otherwise) or from any legal proceeding with respect to itself or
its property, the Consignor hereby irrevocably waives such
immunity for itself and its property (including, without
limitation, property held by the Consignor for its own account)
with respect to its obligations under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
HANDY & HARMAN
By: /s/ Stephen B. Mudd
Title: Vice President and Treasurer
Address: 250 Park Avenue
New York, New York 10177
Facsimile No.: 212-309-0682
Attention: Mr. Stephen B. Mudd
Vice President and Treasurer
THE BANK OF NOVA SCOTIA
By: /s/ Stephen Lockhart
Title: Senior Manager
Address: One Liberty Plaza
New York, New York 10006
Facsimile No.: 212-225-5090
Attention: Mr. Brian Allen
With a copy to:
Address: The Bank of Nova Scotia
Scotia Plaza
44 King Street West
Toronto, Ontario
Canada M5H 1H1
Facsimile No.: 416-866-4053
Attention: Peter Payne