Document:

ex4-2.htm

AUTHORIZED PARTICIPANT AGREEMENT

 

AUTHORIZED PARTICIPANT AGREEMENT (this “Agreement”) dated as of [DATE] among (i) [AUTHORIZED PARTICIPANT], a [company] organized under the laws of [JURISDICTION OF AP] (the “Authorized Participant”), (ii) The Bank of New York Mellon, a New York Banking corporation acting in its capacity as trustee (in such capacity, the “Trustee”) of the Merk Gold Trust (the “Trust”), created under New York law pursuant to a Depositary Trust Agreement between the Trustee and the Sponsor, as defined herein, dated [      ], 2014, as it may be amended from time to time (the “Trust Agreement”), and (iii) Merk Investments LLC, in its capacity as sponsor of the Trust (in such capacity, the “Sponsor”).

 

R E C I T A L S

 

A. Pursuant to the provisions of the Trust Agreement, the Trust may from time to time issue or redeem equity securities representing an interest in the assets of the Trust (“Shares”), in each case only in aggregate amounts of 50,000 Shares (such aggregate amount, a “Basket”), and integral multiples thereof, and only in transactions with a party who, at the time of the transaction, shall have signed and entered into an effective Authorized Participant Agreement with the Trust.

 

B. [AUTHORIZED PARTICIPANT] has requested to become an “Authorized Participant” with respect to the Trust (as such term is defined in the Trust Agreement), and the Sponsor and the Trustee have agreed to such request.

 

NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties, hereto, intending to be legally bound, agree as follows:

 

Section 1. Procedures. The Authorized Participant will purchase or redeem Baskets of Shares of the Trust in compliance with procedures provided in the Trust Agreement as supplemented by the Creation and Redemption Procedures attached to this Agreement as Schedule 1 (such procedures, as the same may be amended or modified from time to time in compliance with the provisions hereof and thereof, the “Procedures”), using either (i) the form attached thereto as Annex I (a “Purchase Order”, in the case of an order to purchase one or more Baskets of Shares issued by the Trust and a “Redemption Order”, in case of an order to redeem one or more Baskets of Shares issued by the Trust) or (ii) through the Trustee’s electronic order entry system, as such may be made available and constituted from time to time, the use of which shall be subject to the terms and conditions attached thereto as Annex II. All Purchase Orders and Redemption Orders (collectively, “Orders”) shall be placed and executed in accordance with the Trust Agreement as supplemented by the Procedures. Capitalized terms used in this Agreement and not otherwise defined herein have the meaning ascribed to them in the Procedures.

 

  

  

  

Section 2. Incorporation of Standard Terms. The Standard Terms for Authorized Participant Agreements (the “Standard Terms”) attached hereto as Schedule 2 are hereby incorporated by reference into, and made a part of, this Agreement.

 

Section 3. Conflicts Rules. In case of any inconsistency between the provisions of this Agreement and the Trust Agreement, the provisions of the Trust Agreement shall control. In case of inconsistency between the provisions incorporated by reference into this Agreement pursuant to Section 2 above and any other provision of this Agreement, the latter will control.

 

Section 4. Authorized Representatives. Pursuant to Section 2.01 of the Standard Terms, attached hereto as Schedule 3-A is a certificate listing the Authorized Representatives of the Authorized Participant.

 

Section 5. Additional Covenants. The Authorized Participant covenants and agrees:

 

(a)          To ensure that any Delivery of Gold to the Custodian, or any withdrawal of Gold from the Trust, in connection with a Purchase Order or Redemption Order placed by the Authorized Participant will take place only through one or more custodian members of the London Bullion Market Association as appropriate under the terms of the Trust Agreement.

 

(b)          Promptly upon written demand therefore (accompanied by such reasonable evidence as the Authorized Participant may request), to reimburse the Trust, the Sponsor, the Trustee or the Custodian the amount of any taxes (including, without limitation, value added taxes) or governmental charges, and any applicable penalties, assessments to tax or interest thereon, that may be imposed on the Trust, the Sponsor, the Trustee or the Custodian in connection with (i) any Delivery of Gold by or on behalf of the Authorized Participant to the Custodian (in the case of a Purchase Order placed by the Authorized Participant), or (ii) any Delivery of Gold to or for the account of the Authorized Participant (in the case of a Redemption Order placed by the Authorized Participant).

 

Section 6. Notices. Except as otherwise specifically provided in the Procedures, all notices required or permitted to be given pursuant hereto shall be given in writing and delivered by personal delivery or by postage prepaid registered or certified United States first class mail, return receipt requested, or by telex or facsimile (with a confirming copy by mail) addressed as follows:

 

	  	
(i) If to the Trustee:

 

The Bank of New York Mellon

2 Hanson Place – Floor 9th

Brooklyn, NY 11217

Attn: ETF Services, Brooklyn

Telephone: (718) 315-5013

Facsimile: (718) 315-4850

E-Mail: etf_api_group@bnymellon.com

 

  

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(ii) If to the Sponsor:

 

Merk Investments LLC  

960 San Antonio Road, Suite 201

Palo Alto, California 94303

Attn: Axel Merk

Telephone: (650) 323-4341

E-Mail: agm@merkinvestments.com

 

(iii) If to the Authorized Participant:

 

[AUTHORIZED PARTICIPANT]

Attn:

[AP’S ADDRESS]

Telephone:

Facsimile:

Telex:

 

or such other address as any of the parties hereto shall have communicated in writing to the remaining parties in compliance with the provisions hereof.

 

Section 7. Effectiveness, Termination and Amendment. This Agreement shall become effective upon execution and delivery by each of the parties hereto. This Agreement may be terminated at any time by any party upon sixty (60) days prior written notice to the other parties and may be terminated earlier by the Trustee or the Sponsor at any time on the event of a breach by the Authorized Participant of any provision of this Agreement (including, without limitation, the Standard Terms incorporated by Section 2 hereof) or the Procedures. This Agreement, along with any other agreement or instrument delivered pursuant to this Agreement, supersedes any prior agreement between or among the parties concerning the matters governed hereby. This Agreement may be amended by the Trustee and the Sponsor from time to time without the consent of the Authorized Participant or any Registered Owner or Beneficial Owner by the following procedure: the Trustee or the Sponsor will mail a copy of the amendment to the Authorized Participant in compliance with the notice provisions of this Agreement; if the Authorized Participant does not object in writing to the amendment within fifteen (15) Business Days after receipt of the proposed amendment, the amendment will become part of this Agreement in accordance with its terms. Titles and section headings in this Agreement (and in the Standard Terms incorporated by Section 2 hereof and the Procedures) are included solely for convenient reference and are not a part of this Agreement.

 

Section 8. Governing Law. This Agreement and all the transactions hereunder shall be governed by and interpreted in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable New York conflict law principles) as to all matters including, without limitation, matters of validity, construction, effect, performance

 

  

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and remedies. The parties irrevocably submit to the non-exclusive jurisdiction of any New York State or United States Federal court sitting in New York City over any suit, action or proceeding arising out of, or relating to, this Agreement.

 

Section 9. Assignment. No party to this Agreement shall assign any rights, or delegate the performance of any obligations, arising hereunder without the prior written consent of the other parties hereto, which shall not be unreasonably withheld; provided that any entity into which a party hereto may be merged or converted, or with which it may be consolidated, or any entity resulting from any merger, consolidation or conversion to which a party hereunder shall be a party, shall be the successor of such party hereunder without further action. The party resulting from any such merger, conversion, consolidation or succession shall promptly notify the other parties hereto of the change. Any purported assignment or delegation in violation of these provisions shall be null and void. Notwithstanding the foregoing, any successor Trustee appointed in compliance with the Trust Agreement shall automatically become a party hereto and shall assume all the obligations of, and be entitled to all the rights and remedies of, the Trustee hereunder with respect to the Trust.

 

Section 10. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.

 

Section 11. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

 

 

[Signatures Follow on Next Page]

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Authorized Participant Agreement as of the date set forth above.

 

 

 

THE BANK OF NEW YORK MELLON, in its capacity as

Trustee of the Merk Gold Trust

 

 

By:                                                                     

Name:

Title:

Date:

 

 

MERK INVESTMENTS LLC, in its capacity as

Sponsor of the Merk Gold Trust

 

By:                                                                     

Name:

Title:

Date:

 

 

[AUTHORIZED PARTICIPANT]

 

By:                                                                     

Name:

Title:

Date:

 

  

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SCHEDULE 1- CREATION AND REDEMPTION PROCEDURES

 

 

 

 

 

TABLE OF CONTENTS - SCHEDULE 1

 

 

 

 

	  	
Page

	
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

	  
	  	
Section 1.01

	
Definitions

	  
	  	
Section 1.02

	
Interpretation

	  
	  	  	  	  
	
ARTICLE II CREATION PROCEDURES

	  
	  	
Section 2.01

	
Initial Creation of Shares

	  
	  	
Section 2.02

	
Subsequent Creation of Shares

	  
	  	  	  	  
	
ARTICLE III REDEMPTION PROCEDURES

	  
	  	
Section 3.01

	
Redemption of Shares

	  
	  	  	  	  
	
ANNEX I TO CREATION AND REDEMPTION PROCEDURES

	  
	  	
Creation/Redemption Order Form

	  
	  	  	  	  
	
ANNEX II TO CREATION AND REDEMPTION PROCEDURES

	  
	  	
Order Entry System Terms and Conditions

	  
	  	  	  	  

 

 

  

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CREATION AND REDEMPTION PROCEDURES

 

Adopted by the Sponsor and Trustee (each as defined below) as of _____, 2014

 

 

ARTICLE I

 

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 1.01.Definitions. For purposes of these Procedures, and the Standard Terms incorporated by reference into the Authorized Participant Agreement to which these Procedures are attached, unless the context otherwise requires, the following terms will have the following meanings:

 

“Affiliate” shall have the meaning given to it by Rule 501(b) under the Securities Act.

 

“APIndemnified Party” shall have the meaning ascribed to such term in Sections 6.01.a of the Standard Terms.

 

“Authorized Participant” shall have the meaning ascribed to the term in the introductory paragraph of the Authorized Participant Agreement.

 

“Authorized Participant Agreement” shall mean each Authorized Participant Agreement among the Authorized Participant, the Trustee and the Sponsor authorizing the Authorized Participant to submit Purchase Orders and Redemption Orders and into which these Creation and Redemption Procedures are attached as Schedule 1 thereto, and the Standard Terms for Authorized Participant Agreements, attached as Schedule 2 thereto, shall have been incorporated by reference.

 

“Authorized Participant Client” means any party on whose behalf the Authorized Participant acts in connection with an Order (whether a customer or otherwise).

 

“Authorized Representative” shall mean, with respect to an Authorized Participant, each individual who, pursuant to the provisions of the Authorized Participant Agreement between such Authorized Participant, the Sponsor and the Trustee, has the power and authority to act on behalf of the Authorized Participant in connection with the placement of Purchase Orders or Redemption Orders and is in possession of the personal identification number (PIN) assigned by the Trustee for use in any communications regarding Purchase or Redemption Orders on behalf of such Authorized Participant.

 

“Basket” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“Basket Gold Amount” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

  

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“Benchmark Price” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“Beneficial Owner” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“Business Day” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“Creation” means the process that begins when an Authorized Participant first indicates to the Trustee its intention to purchase one or more Baskets pursuant to these Procedures and concludes with the issuance by the Trustee and Delivery to such Authorized Participant of the corresponding number of Shares.

 

“Creation and Redemption Line” shall mean a telephone number designated as such by the Trustee and specified in Annex I of the Procedures or otherwise communicated to each Authorized Participant in compliance with the notice provisions of the respective Authorized Participant Agreement.

 

“Custodian” shall have the meaning ascribed to it in Section 1.1 of the Trust Agreement.

 

“Custody Agreement” or “Custody Agreements” shall have the meaning ascribed to it in Section 1.1 of the Trust Agreement.

 

“Delivery” shall mean a delivery of Gold or Shares, as applicable, in each case effected according to the definition of “Delivery” in Section 1.1 of the Trust Agreement.

 

“Depositor” shall mean any Authorized Participant that deposits Gold into the Trust, either for its own account or on behalf of another Person that is the owner or beneficial owner of that Gold.

  

“Deposit Property” means property which, in compliance with the provisions of the Trust Agreement, must be transferred by the Authorized Participant to the Trust in exchange for the Trust’s Shares.

 

“DTC” shall mean The Depository Trust Company, its nominees and their respective successors.

“DTC Participant” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“FINRA” means the Financial Industry Regulatory Authority.

“Fine Ounce” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“Gold” or “gold” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

  

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“Initial Creation” shall mean the initial creation of Shares pursuant to the provisions of Section 2.01 hereof.

 

“LBMA” shall mean the London Bullion Market Association or its successor.

 

“London Business Day” shall mean a day (other than a Saturday, Sunday or a public holiday in England) on which commercial banks generally and the over-the-counter markets in gold, as coordinated by the LBMA, are open for the transaction of business in London.

“London Good Delivery Standards” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“Order” shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement.

 

“Order Cutoff Time” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“Order Date” shall have, (i) with respect to a Purchase Order, the meaning ascribed to the term in Section 2.3(a) of the Trust Agreement; and (ii) with respect to a Redemption Order, the meaning ascribed to the term in Section 2.6(a) of the Trust Agreement.

 

“Person” shall mean any natural person or any limited liability company, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity or government or any agency or political subdivision thereof.

  

“Procedures” shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement.

 

“Prospectus” or “Prospectuses” means the current prospectus of the Trust included in its effective registration statement, as supplemented or amended from time to time.

 

“Purchase Order” shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement.

 

“Redemption Order” shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement.

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

 

“Shares” means Shares issued by the Trust pursuant to the provisions of the Trust Agreement.

 

“Sponsor” shall mean Merk Investments LLC, a Delaware limited liability company, in its capacity as the sponsor of the Trust under the Trust Agreement, and any successor thereto in compliance with the provisions thereof.

 

  

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“Sponsor Indemnified Party” shall have the meaning ascribed to such term in Sections 6.01.b of the Standard Terms.

“Standard Terms” shall have the meaning ascribed to such term in Section 2 of the Authorized Participant Agreement.

“Transaction Fee” means a fee of $500 to be paid by the Authorized Participant to the Trustee for each Purchase Order or Redemption Order.  The fee may be changed by the Trustee with the prior written consent of the Sponsor.

 

“Trustee” shall mean The Bank of New York Mellon, a New York banking corporation, in its capacity as Trustee under the Trust Agreement, and any successor thereto in compliance with the provisions thereof.

 

“Trust” shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement.

 

“Trust Agreement” shall have the meanings ascribed to it in the introductory paragraph of the Authorized Participant Agreement.

 

“Trust Allocated Account” shall have the meaning ascribed to it in Section 1.1 of the Trust Agreement.

“Trust Unallocated Account” shall have the meaning ascribed to it in Section 1.1 of the Trust Agreement.

“Unallocated Basis” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.

 

“VAT” shall mean (a) any tax imposed pursuant to or in compliance with the Sixth Directive of the Council of the European Economic Communities (77/388/EEC) including, without limitation, in relation to the United Kingdom, value added tax imposed by the Value Added Tax Act 1994 and legislation and regulations supplemental thereto; and (b) any other tax of a similar nature, whether imposed in a member state of the European Union or elsewhere, in substitution for, or levied in addition to, such tax referred to in “(a)”.

 

Section 1.02.Interpretation. In these Procedures:

 

Unless otherwise indicated, all references to Sections, clauses, paragraphs, schedules or exhibits, are to Sections, clauses, paragraphs, schedules or exhibits in or to these Procedures.

 

To the extent that term(s) defined in Section 1.01 apply before the Trust has commenced operations, such term(s) shall not be operative and any provisions relating to the Trust and its Shares contained in the Authorized Participant Agreement shall have no effect until the Trust commences operations and its Trust Agreement and Custody Agreements have been executed

 

  

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and delivered whereupon such terms and provisions shall become automatically operative and effective without any further action by the parties to the Authorized Participant Agreement.

 

The words “hereof”, “herein”, “hereunder” and words of similar import shall refer to these Procedures as a whole, and not to any individual provision in which such words may appear.

 

A reference to any statute, law, decree, rule, regulation or other applicable norm shall be construed as a reference to such statute, law, decree, rule, regulation or other applicable norm as re-enacted, re-designated or amended from time to time.

 

A reference to any agreement, instrument or document shall be construed as a reference to such agreement, instrument or document as the same may have been amended from time to time in compliance with the provisions thereof.

 

ARTICLE II

 

CREATION PROCEDURES

 

Section 2.01.Initial Creation of Shares. The initial creation of Shares will take place in compliance with such procedures as the Trustee, the Sponsor and the initial Depositor may agree.

 

Section 2.02.Subsequent Creation of Shares. After the Initial Creation, the issuance and Delivery of Shares shall take place only in integral numbers of Baskets in compliance with the following rules:

 

a.            Authorized Participants wishing to acquire from the Trustee one or more Baskets shall place a Purchase Order with the Trustee no later than 3:59:59 p.m. (New York time) on any Business Day. Purchase Orders received by the Trustee on or after the Order Cutoff Time on a Business Day shall be considered received at the opening of business on the next Business Day and shall have as their Order Date such next Business Day.

 

b.            For purposes of Section 2.02a. above, a Purchase Order shall be deemed “received” by the Trustee only when either of the following has occurred no later than 3:59:59 p.m. (New York time):

 

(i) Telephone/fax Order – An Authorized Representative shall have placed a telephone call to the Trustee’s Creation and Redemption Line and has received an Order Number from the Trustee for insertion in the Purchase Order, or

 

(ii) Web-based Order – An Authorized Representative shall have accessed the Trustee’s online services (https://inform.bnymellon.com)

 

in either case informing the Trustee that the Authorized Participant wishes to place a Purchase Order for a specified number of Baskets and, in the case of a telephone order, within 15 minutes following such telephone call, the Trustee shall have received a properly completed, irrevocable

 

  

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Purchase Order in the form set out in Annex I to these Procedures executed by an Authorized Representative of such Authorized Participant, via facsimile at the number specified in such Annex I.

 

c.            The Trustee shall provide a written summary to the Sponsor and the Custodian of all accepted Purchase Orders for such Order Date no later than 5:30 p.m. (New York time).

 

d.            As soon as reasonably practicable following receipt of a properly completed Purchase Order but not later than 5:30 p.m. (New York time) on the Order Date for such Purchase Order, the Trustee shall send to the Authorized Participant (with copy to the Custodian), via facsimile or electronic mail message, a copy of the corresponding Purchase Order endorsed “Accepted” by the Trustee and indicating the Basket Gold Amount that the Authorized Participant shall Deliver to the Custodian in respect of each Basket. Prior to the transmission of the Trustee’s acceptance as specified above, a Purchase Order will only represent the Authorized Participant’s unilateral offer to deposit Gold in exchange for Baskets and will have no binding effect upon the Trust or any other party. Following the transmission of the Trustee’s acceptance as specified above, a Purchase Order will be a binding agreement among the Trust and the Authorized Participant for the creation and purchase of Baskets and the deposit of Gold pursuant to the terms of the Purchase Order and these Procedures. If a Purchase Order is rejected, the Trustee shall send to the Authorized Participant (with copy to the Custodian), via facsimile or electronic mail message, as soon as reasonably practicable, but not later than 5:30 p.m. (New York time) on the Order Date for such Purchase Order, a copy of the corresponding Purchase Order endorsed “Declined” by the Trustee and indicating the reason. The preceding sentence notwithstanding, Purchase Orders not accepted by 5:30 p.m. (New York time) on the Order Date shall be deemed cancelled. A Purchase Order which is not properly completed will be deemed invalid and rejected by the Trustee; the Authorized Participant may submit a corrected Purchase Order within the time period specified in Section 1.09 of the Standard Terms, currently not later than the earlier of (i) within fifteen (15) minutes of such contact with the Authorized Participant or (ii) thirty (30) minutes after the Order Cutoff Time.

 

e.            Each Purchase Order shall settle on the third Business Day following the Order Date. The Basket Gold Amount corresponding to each Basket must be deposited in the Trust Unallocated Account in unallocated Gold loco London no later than 11:00 a.m. (London time) on the third Business Day following the Order Date. The Authorized Participant shall bear all risk of any loss until the Gold is credited to the Trust Unallocated Account.

 

f.             The Custodian shall advise the Trustee in writing of the deposits made to the Trust Allocated Account in connection with each Purchase Order. Upon receipt of such advice, the Trustee shall determine whether a deposit of Gold required to be made pursuant to Section 2.02e. has not been noted as deposited in the Trust Unallocated Account. In such event, the Trustee shall, by the Trustee’s close of business on the third Business Day following the Order Date, (i) send to the Custodian, via electronic mail message, a request that the Custodian confirm that the Custodian did not receive the anticipated deposit of Gold, and (ii) send to the Authorized Participant whose deposit was not received, via facsimile at the facsimile number specified by the Authorized Participant in the Purchase Order, a concurrent copy of such request.

 

  

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g.            On the third Business Day following the Order Date corresponding to a Purchase Order, or on such earlier date and time as the Trustee in its absolute discretion may agree with the Authorized Participant, the Trustee shall issue the aggregate number of Shares corresponding to the Baskets ordered by the Authorized Participant and Deliver them, by credit to the account at DTC which the Authorized Participant shall have identified for such purpose in its Purchase Order, provided that, by 10:00 a.m. (New York time) on the date such issuance and Delivery is to take place:

 

(i) the Custodian shall have reported in writing to the Trustee that the corresponding required amount of Gold has been deposited in the Trust Unallocated Account in compliance with the provisions of Section 2.02e. above,

(ii) the Custodian shall have reported in writing to the Trustee that the corresponding required amount of Gold has been allocated to the Trust Allocated Account (other than up to 430 Fine Ounces of Gold held on an Unallocated Basis) and the Custodian is holding that Gold for the account of the Trust, and

 

(iii) the Authorized Participant shall have paid or agreed to pay the Trustee the Transaction Fee, if applicable, and all taxes, governmental charges and fees payable in connection with such deposit, the transfer of Gold and the issuance and Delivery of Shares.

 

h.            In all other cases, the Trustee shall issue the aggregate number of Shares corresponding to the Baskets ordered by the Authorized Participant and Deliver them by credit to the account at DTC which the Authorized Participant shall have identified for such purpose in its Purchase Order on the Business Day following the date on which all of the conditions set forth in clauses (i), (ii) and (iii) of Section 2.02g. above shall have been met. In the event that, by 11:00 a.m. (New York time) on the third Business Day following the Order Date of a Purchase Order, the Trust Unallocated Account shall not have been credited with the required amount of Gold in compliance with the provisions of section 2.02e. above, the Trustee shall send to the Authorized Participant and the Custodian via fax or electronic mail message notice of such fact and the Authorized Participant shall have two (2) Business Days following receipt of such notice to correct such failure. If such failure is not cured within such two (2) Business Day period, the Trustee shall, unless the Sponsor shall otherwise direct, cancel such Purchase Order and will send via fax or electronic mail message notice of such cancellation to the Authorized Participant and the Custodian, and the Authorized Participant will be solely responsible for all damages, losses, costs and expenses incurred by the Trust, the Sponsor, the Trustee or the Custodian related to the cancelled Order.

 

i.             The foregoing provisions notwithstanding, neither the Trustee nor the Custodian shall be liable for any failure or delay in making Delivery of Shares in respect of a Purchase Order arising from nuclear fission or fusion, radioactivity, war, terrorist event, invasion, insurrection, civil commotion, riot, strike, act of government, public authority, public service or utility problems, power outages resulting in telephone, telecopy and computer failures, act of God such as fires, floods or extreme weather conditions, market conditions or activities causing trading halts, systems failures involving computer or other information systems affecting the

 

  

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Trust, the Trustee, the Custodian or sub-custodian and similar extraordinary events beyond the Custodian’s or the Trustee’s reasonable control. In the event of any such delay, the time to complete Delivery in respect of a Purchase Order will be extended for a period equal to that during which the inability to perform continues.

 

j.             Except as provided in Sections 2.02d., 2.02f., 2.02h. and the Standard Terms, none of the Trustee, the Sponsor or the Custodian are under any duty to give notification of any defects or irregularities in any Purchase Order or the delivery of the Basket Gold Amount, and shall not incur any liability for the failure to give any such notification.

k.        The Creation of Shares may be suspended or rejected under the circumstances specified in the Trust Agreement, these Procedures or the Standard Terms.

 

ARTICLE III

 

REDEMPTION PROCEDURES

Section 3.01.Redemption of Shares. Redemption of Shares shall take place only in integral numbers of Baskets in compliance with the following rules:

 

a.            Authorized Participants wishing to redeem one or more Baskets shall place a Redemption Order with the Trustee no later than 3:59:59 p.m. (New York time) on any Business Day. Redemption Orders received by the Trustee on or after the Order Cutoff Time on any Business Day shall be considered received at the opening of business on the next Business Day and shall have as their Order Date such next Business Day.

 

b.            For purposes of Section 3.01a. above, a Redemption Order shall be deemed “received” by the Trustee only when either of the following has occurred no later than 3:59:59 p.m. (New York time):

 

(i) Telephone/fax Order – An Authorized Representative shall have placed a telephone call to the Trustee’s Creation and Redemption Line and has received an Order Number from the Trustee for insertion in the Redemption Order, or

 

(ii) Web-based Order – An Authorized Representative shall have accessed the Trustee’s online services (http://inform.bnymellon.com)

 

in either case informing the Trustee that the Authorized Participant wishes to place a Redemption Order for a specified number of Baskets and, in the case of a telephone order, within 15 minutes following such telephone call, the Trustee shall have received a duly completed, irrevocable Redemption Order in the form set out in Annex I to these Procedures executed by an Authorized Representative of such Authorized Participant, via facsimile at the number specified in such Annex I.

The Trustee shall provide a written summary to the Sponsor and the Custodian of all accepted Redemption Orders for such Order Date no later than 5:30 p.m. (New York time).

  

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c.            Upon receipt of a properly completed Redemption Order, the Trustee shall send to the Authorized Participant (with copy to the Custodian), via facsimile or electronic mail message, as soon as reasonably practicable, but not later than 5:30 p.m. (New York time) on the Order Date for such Redemption Order a copy of the corresponding Redemption Order endorsed “Accepted” by the Trustee and indicating the Basket Gold Amount that the Custodian shall Deliver to the Authorized Participant in respect of each Basket being redeemed.  Prior to the transmission of the Trustee’s acceptance as specified above, a Redemption Order will only represent the Authorized Participant’s unilateral offer to deposit Baskets in exchange for a Delivery of Gold and will have no binding effect upon the Trust or any other party. Following the transmission of the Trustee’s acceptance as specified above, a Redemption Order will be a binding agreement among the Trust and the Authorized Participant for the redemption of Baskets and the Delivery of Gold pursuant to the terms of the Redemption Order and these Procedures. If a Redemption Order is rejected, the Trustee shall send to the Authorized Participant (with copy to the Custodian), via facsimile or electronic mail message, as soon as reasonably practicable, but not later than 5:30 p.m. (New York time) on the Order Date for such Redemption Order, a copy of the corresponding Redemption Order endorsed “Declined” by the Trustee and indicating the reason. The preceding sentence notwithstanding, Redemption Orders not accepted by 5:30 p.m. (New York time) on the Order Date shall be deemed cancelled. A Redemption Order which is not properly completed will be deemed invalid and rejected by the Trustee; the Authorized Participant may submit a corrected Redemption Order within the time period specified in Section 1.09 of the Standard Terms, currently not later than the earlier of (i) within fifteen (15) minutes of such contact with the Authorized Participant or (ii) thirty (30) minutes after the Order Cutoff Time.

 

d.            The Trustee shall, by 9:30 a.m. on the third Business Day following the Order Date of a Redemption Order, confirm in writing to the Custodian whether each of the following has occurred:

 

(i) the Authorized Participant has Delivered by 9:00 a.m. on the third Business Day following the Order Date to the Trustee’s account at DTC the total number of Shares to be redeemed by such Authorized Participant pursuant to such Redemption Order; and

 

(ii) the Authorized Participant has paid or agreed to pay the Trustee the Transaction Fee, if applicable, and all taxes, governmental charges and fees payable in connection with such deposit, the transfer of Gold and the issuance and Delivery of Shares, as well as any expense associated with the Delivery of Gold other than by credit to an account of the Authorized Participant maintained by the Custodian on an Unallocated Basis.

 

Provided that the Custodian has received written confirmation from the Trustee that the conditions set forth in clauses (i) and (ii) of Section 3.01d. above have been satisfied, the Custodian shall, on the next following London Business Day, Deliver, as applicable to the specific Redemption Order, unallocated Gold in the amounts specified in the communication sent in compliance with Section 3.01c. above, to the account indicated by the redeeming Authorized Participant in its Redemption Order (which shall be an appropriate gold account in

  

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London with the Custodian or another LBMA member custodian). Having made such Delivery, the Custodian shall send written confirmation thereof to the Trustee who shall then cancel the Shares so redeemed.  The Authorized Participant shall bear all risk of any loss from the time the Gold is transferred from the Trust Unallocated Account to the unallocated account of the Authorized Participant.

e.            In all other cases, Delivery must be completed by the Custodian as soon as, in the reasonable judgment of the Custodian, it is practicable following receipt of written confirmation from the Trustee that the conditions set forth in clauses (i) and (ii) of Section 3.01d. above have been satisfied.

 

f.             The foregoing provisions notwithstanding, neither the Trustee nor the Custodian shall be liable for any failure or delay in making Delivery of Gold in respect of a Redemption Order arising from nuclear fission or fusion, radioactivity, war, terrorist event, invasion, insurrection, civil commotion, riot, strike, act of government, public authority, public service or utility problems, power outages resulting in telephone, telecopy and computer failures, act of God such as fires, floods or extreme weather conditions, market conditions or activities causing trading halts, systems failures involving computer or other information systems affecting the Trust, the Trustee, the Custodian or sub-custodian and similar extraordinary events beyond the Custodian’s and the Trustee’s reasonable control. In the event of any such delay, the time to complete Delivery in respect of a Redemption Order will be extended for a period equal to that during which the inability to perform continues.

 

g.            In the event that, by 9:00 a.m. (New York time) on the third Business Day following the Order Date of a Redemption Order, the Trustee’s account at DTC shall not have been credited with the total number of Shares corresponding to the total number of Baskets to be redeemed pursuant to such Redemption Order, the Trustee shall send to the Authorized Participant and the Custodian via fax or electronic mail message notice of such fact and the Authorized Participant shall have two (2) Business Days following receipt of such notice to correct such failure. If such failure is not cured within such two (2) Business Day period, the Trustee (in consultation with the Sponsor) will cancel such Redemption Order and will send via fax or electronic mail message notice of such cancellation to the Authorized Participant and the Custodian, and the Authorized Participant will be solely responsible for all damages, losses, costs and expenses incurred by the Trust, the Sponsor, the Trustee or the Custodian related to the cancelled Order.

 

h.             The redemption of Shares may be suspended or rejected under the circumstances specified in the Trust Agreement, these Procedures or the Standard Terms.

i.             Except as provided in Section 3.02c., 3.02g. and the Standard Terms, none of the Trustee, the Sponsor or the Custodian are under any duty to give notification of any defects or irregularities in any Redemption Order or the Delivery of the Shares, and shall not incur any liability for the failure to give any such notification.

 

 

[Signatures Follow on Next Page]

  

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IN WITNESS WHEREOF, the Sponsor and the Trustee have executed these Creation and Redemption Procedures as of the date set forth above.

 

 

 

THE BANK OF NEW YORK MELLON, in its capacity as

 

Trustee

 

 

 

By:                                                                     

Name:

Title:

 

 

 

MERK INVESTMENTS LLC, in its capacity as

Sponsor

 

 

 

By:                                                                     

Name:

Title:

  

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ANNEX I TO CREATION AND REDEMPTION PROCEDURES

 

THE BANK OF NEW YORK MELLON, TRUSTEE

CREATION/REDEMPTION ORDER FORM

UNALLOCATED ORDERS ONLY

 

 

	
CONTACT INFORMATION FOR ORDER EXECUTION:

	
Telephone order number:

	
(___) ___-____

	
Fax order number:

	
(___) ___-____

 

Participant must complete all items in Part 1. The Trustee shall reject any order not submitted in proper form.

 

I. TO BE COMPLETED BY PARTICIPANT:

 

	
Name of Trust:

	
 

	 	 

 

	Date: 	 	 	Time:	
                                                                                              

	Broker Name: 	  	 	Authorized Participant Firm Name:	
                                   

	
 

	
 

	 	
 

	
 

	Telephone Number: 	
                          

	 	
Symbol:

	  	 	  
	
Type of order (Check Creation or Redemption please)

	 	  
	  	 	  
	Creation: 	
                                                      

	 	Redemption: 	
                                                          

	  	 	  
	# of Baskets: 	
      

	 	
 

	
 

	  	 	  
	
 

	
 

	 	  
	  	 	  
	
 Please indicate Gold clearing agent:

	 	  
	  	 	  

 

	
For Gold

	  

 

	
____

	
o

	
JP Morgan

	
o

	
Other (please specify clearing agent): ____________________

 

 

Account number for Gold delivery: ________________________________________

 

This Purchase or Redemption Order is subject to the terms and conditions of the Trust Agreement of the Shares of the Trust as currently in effect and the Authorized Participant Agreement between the Authorized Participant, the Trustee and the Sponsor named therein. All representations and warranties of the Authorized Participant set forth in the Trust Agreement (including, if this is a Purchase Order, the representations in Section 3.2 of the Trust Agreement) and in the Authorized Participant Agreement are incorporated herein by reference and are true and accurate as of the date hereof.

  

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The undersigned does hereby certify as of the date set forth below that he/she is an Authorized Representative under the Authorized Participant Agreement and that he/she is authorized to deliver this Purchase or Redemption Order to the Trustee on behalf of the Authorized Participant. The Authorized Participant acknowledges and agrees that (1) once accepted by the Trustee, this Purchase or Redemption Order will become a legally binding contract for the delivery of the Basket Gold Amount per Basket, or the number of Baskets, indicated above, and that the final Basket Gold Amount will be announced at the conclusion of the trading day and, (2) any taxes (including Value Added Taxes) incurred in connection with this transaction will be the responsibility of, and will be reimbursed upon demand from the Custodian or the Trust by, the Authorized Participant.

 

 

	
                              

	
__________________         

 

	
________________________________________

 

	
________________________________________

 

	  	
Authorized Representative’s Signature

	
Date

 

 

 

 

II. TO BE COMPLETED BY TRUSTEE:

 

This certifies that the above order has been:

 

                                             Accepted by the Trustee

 

                                             Declined-Reason:                                                                                                                      

 

 

	Final # of Fine Ounces: 	
                                          

	 	Final # of Shares: 	
                                

 

 

Final Cash Due to BNYM                                             

 

 

	
                              

	
                                      

	 	
                                      

	 	
                                                                            

	
Date

	 	
Time

	 	
Authorized Signature of Trustee

 

  

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ANNEX II TO CREATION AND REDEMPTION PROCEDURES

 

ORDER ENTRY SYSTEM TERMS AND CONDITIONS

 

This Annex II shall govern use by Authorized Participant of the electronic order entry system for placing Purchase Orders and Redemption Orders for Shares (the “System”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in Schedule I of the Authorized Participant Agreement. In the event of any conflict between the terms of this Annex II and Section J of the Authorized Participant Agreement with respect to the placing of Purchase Orders and Redemption Orders, the terms of this Annex II shall control.

 

1.            (a) Authorized Participant shall provide to The Bank of New York Mellon a duly executed authorization letter, in a form satisfactory to The Bank of New York Mellon, identifying those authorized persons who will access the System (the “Authorized Persons”). Authorized Participant shall notify The Bank of New York Mellon in writing in the event that any person’s status as an Authorized Person is revoked or terminated as soon as possible, in order to give The Bank of New York Mellon a reasonable opportunity to terminate such Authorized Person’s access to the System.

 

(b) It is understood and agreed that each Authorized Person shall be designated as an authorized user of Authorized Participant for the purpose of the Authorized Participant Agreement. Upon termination of the Authorized Participant Agreement, the Authorized Participant’s and each Authorized Person’s access rights with respect to System shall be immediately revoked.

 

2.            The Bank of New York Mellon grants to Authorized Participant a personal, nontransferable and nonexclusive license to use the System solely for the purpose of transmitting Purchase Orders and Redemption Orders and otherwise communicating with The Bank of New York Mellon in connection with the same. Authorized Participant shall use the System solely for its own internal and proper business purposes. Except as set forth herein, no license or right of any kind is granted to Authorized Participant with respect to the System. Authorized Participant acknowledges that The Bank of New York Mellon and its suppliers retain and have title and exclusive proprietary rights to the System. Authorized Participant further acknowledges that all or a part of the System may be copyrighted or trademarked (or a registration or claim made therefor) by The Bank of New York Mellon or its suppliers. Authorized Participant shall not take any action with respect to the System inconsistent with the foregoing acknowledgments. Authorized Participant may not copy, distribute, sell, lease or provide, directly or indirectly, the System or any portion thereof to any other person or entity without The Bank of New York Mellon’s prior written consent. Authorized Participant may not remove any statutory copyright notice or other notice included in the System. Authorized Participant shall reproduce any such notice on any reproduction of any portion of the System and shall add any statutory copyright notice or other notice upon The Bank of New York Mellon’s request.

 

2.            (a) Authorized Participant acknowledges that any user manuals or other documentation (whether in hard copy or electronic form) (collectively, the “Material”), which is delivered or

  

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made available to Authorized Participant regarding the System is the exclusive and confidential property of The Bank of New York Mellon. Authorized Participant shall keep the Material confidential by using the same care and discretion that Authorized Participant uses with respect to its own confidential property and trade secrets, but in no event less than reasonable care. Authorized Participant may make such copies of the Material as is reasonably necessary for Authorized Participant to use the System and shall reproduce The Bank of New York Mellon’s proprietary markings on any such copy. The foregoing shall not in any way be deemed to affect the copyright status of any of the Material which may be copyrighted and shall apply to all Material whether or not copyrighted. THE BANK OF NEW YORK MELLON AND ITS SUPPLIERS MAKE NO WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE MATERIAL OR ANY PRODUCT OR SERVICE, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

  

(b) Upon termination of the Authorized Participant Agreement for any reason, Authorized Participant shall return to The Bank of New York Mellon all copies of the Material which is in Authorized Participant’s possession or under its control.

 

3.            Authorized Participant agrees that it shall have sole responsibility for maintaining adequate security and control of the user IDs, passwords and codes for access to the System, which shall not be disclosed to any third party without the prior written consent of The Bank of New York Mellon. The Bank of New York Mellon shall be entitled to rely on the information received by it from the Authorized Participant and The Bank of New York Mellon may assume that all such information was transmitted by or on behalf of an Authorized Person regardless of by whom it was actually transmitted.

 

4.            The Bank of New York Mellon shall have no liability in connection with the use of the System, the access granted to the Authorized Participant and its Authorized Persons hereunder, or any transaction effected or attempted to be effected by the Authorized Participant hereunder, except for damages incurred by the Authorized Participant as a direct result of The Bank of New York Mellon’s gross negligence or willful misconduct. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IT IS HEREBY AGREED THAT IN NO EVENT SHALL THE BANK OF NEW YORK MELLON OR ANY MANUFACTURER OR SUPPLIER OF EQUIPMENT, SOFTWARE OR SERVICES BE RESPONSIBLE OR LIABLE FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES WHICH THE AUTHORIZED PARTICIPANT MAY INCUR OR EXPERIENCE BY REASON OF ITS HAVING ENTERED INTO OR RELIED ON THIS AGREEMENT, OR IN CONNECTION WITH THE ACCESS GRANTED TO AUTHORIZED PARTICIPANT HEREUNDER, OR ANY TRANSACTION EFFECTED OR ATTEMPTED TO BE EFFECTED BY AUTHORIZED PARTICIPANT HEREUNDER, EVEN IF THE BANK OF NEW YORK MELLON OR SUCH MANUFACTURER OR SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, NOR SHALL THE BANK OF NEW YORK MELLON OR ANY SUCH MANUFACTURER OR SUPPLIER BE LIABLE FOR ACTS OF GOD, MACHINE OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF COMMUNICATION FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR CAUSE BEYOND SUCH PERSON'S REASONABLE CONTROL.

 

  

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5.            The Bank of New York Mellon reserves the right to revoke Authorized Participant’s access to the System immediately and without notice upon any breach by the Authorized Participant of the terms and conditions of this Annex II.

 

6.            The Bank of New York Mellon shall acknowledge through the System its receipt of each Purchase Order or Redemption Order communicated through the System, and in the absence of such acknowledgment The Bank of New York Mellon shall not be liable for any failure to act in accordance with such orders and Authorized Participant may not claim that such Purchase Order or Redemption Order was received by The Bank of New York Mellon. The Bank of New York Mellon may in its discretion decline to act upon any instructions or communications that are insufficient or incomplete or are not received by The Bank of New York Mellon in sufficient time for The Bank of New York Mellon to act upon, or in accordance with, such instructions or communications.

 

7.          Authorized Participant agrees to use reasonable efforts to prevent the transmission through the System of any software or file which contains any viruses, worms, harmful component or corrupted data and agrees not to use any device, software, or routine to interfere or attempt to interfere with the proper working of the Systems.

 

8.          Authorized Participant acknowledges and agrees that encryption may not be available for every communication through the System, or for all data. Authorized Participant agrees that The Bank of New York Mellon may deactivate any encryption features at any time, without notice or liability to Authorized Participant, for the purpose of maintaining, repairing or troubleshooting its systems.

  

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SCHEDULE 2

STANDARD TERMS FOR AUTHORIZED PARTICIPANT AGREEMENTS

 

	  	  	  	
Page

	
ARTICLE I ORDERS FOR PURCHASE AND REDEMPTION

	  	
Section 1.01.

	
Authorization to Purchase and Redeem Baskets

	  
	  	
Section 1.02.

	
Procedures for Orders

	  
	  	
Section 1.03.

	
Consent to Recording

	  
	  	
Section 1.04.

	
Irrevocability

	  
	  	
Section 1.05.

	
Costs and Expenses

	  
	  	
Section 1.06.

	
Delivery of Property to the Trust

	  
	  	
Section 1.07.

	
Title to Deposit Property and Shares Surrendered for Redemption

	  
	  	
Section 1.08.

	
Certain Payments or Distributions

	  
	  	
Section 1.09.

	
Ambiguous Instructions

	  
	  	  	  	  
	
ARTICLE II AUTHORIZED REPRESENTATIVES

	  
	  	
Section 2.01.

	
Certification

	  
	  	
Section 2.02.

	
PIN Numbers

	  
	  	
Section 2.03.

	
Termination of Authority

	  
	  	
Section 2.04.

	
Verification

	  
	  	  	  	  
	
ARTICLE III STATUS OF THE AUTHORIZED PARTICIPANT

	  
	  	
Section 3.01.

	
Clearing Status

	  
	  	
Section 3.02.

	
Broker-Dealer Status

	  
	  	
Section 3.03.

	
Foreign Status

	  
	  	
Section 3.04.

	
Compliance with Certain Laws

	  
	  	
Section 3.05.

	
Authorized Participant Status

	  
	  	  	  	  
	
ARTICLE IV ROLE OF AUTHORIZED PARTICIPANT

	  
	  	
Section 4.01.

	
No Agency

	  
	  	
Section 4.02.

	
Rights and Obligations of DTC Participant

	  
	  	
Section 4.03.

	
Beneficial Owner Communications

	  

 

  

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Section 4.04.

	
Authorized Participant Customer Information

	  
	  	  
	
ARTICLE V MARKETING MATERIALS AND REPRESENTATIONS AND WARRANTIES

	  
	  	
Section 5.01.

	
Authorized Participant’s Representation

	  
	  	
Section 5.02.

	
Prospectus

	  
	  	  	  	  
	
ARTICLE VI INDEMNIFICATION; LIMITATION OF LIABILITY

	  
	  	
Section 6.01.

	
Indemnification

	  
	  	  	  	  
	
ARTICLE VII MISCELLANEOUS

	  
	  	
Section 7.01.

	
Commencement of Trading

	  

 

 

                                  STANDARD TERMS FOR AUTHORIZED PARTICIPANT AGREEMENTS (the “Standard Terms”) agreed to as of [           ], 2014 by and between The Bank of New York Mellon, a New York banking corporation, as trustee for the Merk Gold Trust (the “Trustee”), and Merk Investments LLC, a Delaware limited liability company, as sponsor for the Merk Gold Trust (the “Sponsor”).

 

ARTICLE I

 

ORDERS FOR PURCHASE AND REDEMPTION

 

Section 1.01. Authorization to Purchase and Redeem Baskets. Subject to the provisions of the Authorized Participant Agreement, during the term of the Authorized Participant Agreement the Authorized Participant will be authorized to purchase and redeem Baskets in compliance with the provisions of the Trust Agreement, the Procedures and these Standard Terms.

 

Section 1.02. Procedures for Orders. Each party hereto agrees to comply with the provisions of the Trust Agreement, the Procedures and these Standard Terms to the extent applicable to it.

 

Section 1.03. Consent to Recording. The phone lines used by the Trustee, the Custodian, the Sponsor and/or their affiliated persons may be recorded, and the Authorized Participant hereby consents to the recording of all calls with any of those parties. In the event that the Trustee, the Custodian, the Sponsor or any of their affiliated persons becomes legally compelled to disclose to any third party any recording involving communications with the Authorized Participant, the Sponsor agrees to provide the Authorized Participant with reasonable advance written notice identifying the recordings to be so disclosed unless prohibited by applicable rule, law or order, together with copies of such recordings, so that the Authorized Participant may seek a protective order or other appropriate remedy with respect to the recordings or waive its

  

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right to do so. In the event that such protective order or other remedy is not obtained or the Authorized Participant waives its right to seek such protective order or remedy, the Sponsor will use commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the recorded conversation. The Trustee, the Sponsor or any of their affiliated persons shall not otherwise disclose to any third party any recording involving communications with the Authorized Participant without the Authorized Participant’s express written consent, except that the Trustee and the Sponsor may disclose to any regulatory or self-regulatory organization, to the extent required by applicable rule or law, any recording involving communications with the Authorized Participant.

 

Section 1.04. Irrevocability. The Authorized Participant agrees that delivery to the Trustee of an Order shall be irrevocable; provided that the Trustee will reject any Order that is not properly completed. In the event that the purchase or redemption of Baskets is suspended by the Trustee or the Sponsor and such suspension affects any Order submitted by the Authorized Participant, the Trustee or Sponsor, as applicable, will promptly notify the Authorized Participant of such suspension. In such case, the Sponsor agrees to undertake commercially reasonable efforts to accommodate any request by the Authorized Participant to cancel a previously placed Order, but the Sponsor shall have no liability for the Trust’s inability to accommodate such a request.

 

Section 1.05. Costs and Expenses. The Authorized Participant shall be responsible for the expenses and costs incurred by the Trust that can be directly attributable to Orders submitted by the Authorized Participant other than ordinary course expenses and costs which are reimbursed through payment of the fee contemplated in Section 2.02(g) of the Procedures. The Trustee or the Sponsor shall provide the Authorized Participant with reasonably detailed information relating to such expenses and costs upon request by the Authorized Participant.

 

Section 1.06. Delivery of Property to the Trust and Shares Surrendered for Redemption. The Authorized Participant understands and agrees that in the event Deposit Property is not transferred to the Trust by the time specified for the Purchase Order, or Shares are not delivered to the Trustee by the time specified for the Redemption Order and, in each such case, in compliance with the Trust Agreement, the Procedures and these Standard Terms, the Purchase Order or Redemption Order may be cancelled by the Trustee and the Authorized Participant will be solely responsible for all damages, losses, costs and expenses incurred by the Trust, the Sponsor, the Trustee or the Custodian related to the cancelled Order. The Authorized Participant will not, however, be responsible for damages, losses, costs and expenses incurred by the Trust, the Sponsor, the Trustee or the Custodian related to cancelled Orders to the extent the failure to transfer Deposit Property to the Trust is due to the gross negligence, bad faith or reckless or willful misconduct of the Trustee, the Sponsor or the Custodian. The foregoing provisions notwithstanding, the Authorized Participant shall not be liable for any failure or delay in making Delivery of Gold in respect of a Purchase Order or for any failure or delay in surrendering Shares for redemption arising from nuclear fission or fusion, radioactivity, war, terrorist event, invasion, insurrection, civil commotion, riot, strike, act of government, public authority, public service or utility problems, power outages resulting in telephone, telecopy and computer failures, acts of God, such as fires, floods or extreme weather conditions, market conditions or activities causing trading halts, systems failures involving computer or other information systems affecting the 

  

- 25 -

  

Authorized Participant, or similar extraordinary events beyond the Authorized Participant’s control. In the event of any such delay, the time to complete Delivery in respect of a Purchase Order or Redemption Order will be extended for a period equal to that during which the inability to perform continues. Upon the deposit of any Gold, the Authorized Participant as Depositor represents and warrants that (i) the Gold represents the right to receive Gold that meets the London Good Delivery Standards and otherwise meets the relevant requirements to be Gold and contains the required number of Fine Ounces for the applicable Purchase Order, (ii) the Authorized Participant is duly authorized to make such deposit of Gold and (iii) at the time of Delivery, the Gold is free and clear of any lien, pledge, encumbrance, right, charge or claim.

 

Section 1.07. Title to Deposit Property and Shares Surrendered for Redemption. The Authorized Participant represents and warrants to the Trustee and the Sponsor that

 

a.            in connection with each Purchase Order, the Authorized Participant will have the right and authority to transfer to the Trust the corresponding Deposit Property, and that upon delivery of such Deposit Property to the Custodian and/or the relevant sub-custodian in accordance with the Procedures, the Trust will acquire good and unencumbered title to such property, free and clear of all liens, charges, duties imposed on the transfer of assets and encumbrances and not subject to any adverse claims or transferability restrictions, whether arising by operation of law or otherwise; and

 

b. in connection with a Redemption Order, the Authorized Participant will have the right and authority to surrender to the Trustee for redemption the corresponding Shares, and upon such surrender the Trust will acquire good and unencumbered title to such Shares, free and clear of all liens, charges, duties imposed on the transfer of assets and encumbrances and not subject to any adverse claims, transferability restrictions (whether arising by operation of law or otherwise), loan, pledge, repurchase or securities lending agreements or other arrangements which, under such circumstances, would preclude the delivery of such Shares to the Trustee on the third Business Day following the date of the Redemption Order.

 

Section 1.08. Certain Payments or Distributions.

 

a.            With respect to any Purchase Order, the Trustee acknowledges and agrees to return to the Authorized Participant, for its own benefit or for the benefit of any Authorized Participant Client for which it is acting, any payment, distribution or other amount paid to the Trust in respect of any Deposit Property transferred to the Trust that, based on the valuation of such Deposit Property at the time of transfer, should have been paid to the Authorized Participant or any Authorized Participant Client. Likewise, the Authorized Participant acknowledges and agrees to return to the Trust any payment, distribution or other amount paid to the Authorized Participant or any Authorized Participant Client in respect of any Deposit Property transferred to the Trust that, based on the valuation of such Deposit Property at the time of transfer, should have been paid to the Trust.

  

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b.            With respect to any Redemption Order, the Authorized Participant on behalf of itself and any Authorized Participant Client acknowledges and agrees to return to the Trust any payment, distribution or other amount paid to it or an Authorized Participant Client in respect of any property transferred to the Authorized Participant or any Authorized Participant Client that, based on the valuation of such property at the time of transfer, should have been paid to the Trust. The Trustee is entitled to reduce the amount of any property due to the Authorized Participant or any Authorized Participant Client by an amount equal to any payment, distribution or other sum to be paid to the Authorized Participant or to the Authorized Participant Client in respect of any property transferred to the Authorized Participant or any Authorized Participant Client that, based on the valuation of such property at the time of transfer, should be paid to the Trust. If, however, the Trustee so reduces an amount of any property appropriately due to the Authorized Participant, the Authorized Participant shall not be required to return to the Trust payments, distributions or other amounts equal to such reduction that has been paid to the Authorized Participant or the Authorized Participant Client as is contemplated in the first sentence of this Section 1.08(b). Likewise, the Trustee acknowledges and agrees to return to the Authorized Participant, for its benefit or for the benefit of any Authorized Participant Client for which it is acting, any payment, distribution or other amount paid to it in respect of any Shares transferred to the Trust that, based on the valuation of such Shares at the time of transfer, should have been paid to the Authorized Participant or such Authorized Participant Client.

 

Section 1.09. Ambiguous Instructions. In the event that a Purchase Order or Redemption Order contains terms that differ from the information provided in the related telephone call or email transmission, the Trustee will attempt to contact the Authorized Participant to request confirmation of the terms of the order at the telephone number indicated in the Purchase Order or Redemption Order. If an Authorized Representative (as defined below) confirms the terms as they appear in the Purchase Order or Redemption Order, then the order will be accepted and processed. If an Authorized Representative contradicts the terms of the Purchase Order or Redemption Order, the order will be deemed invalid, and a corrected Purchase Order or Redemption Order must be received by the Trustee not later than the earlier of (i) within fifteen (15) minutes of such contact with the Authorized Representative or (ii) thirty (30) minutes after the Order Cutoff Time. For the avoidance of doubt, notwithstanding the invalidation of the initial Purchase Order or Redemption Order pursuant to this paragraph, a Purchase Order or Redemption Order that is otherwise in proper form shall be deemed submitted at the time of its initial submission for purposes of determining when orders are deemed “received.” If the Trustee is not able to contact an Authorized Representative, then the Purchase Order or Redemption Order shall be accepted and processed in accordance with its terms notwithstanding any inconsistency from the terms of the telephone information. In the event that a Purchase Order or Redemption Order contains terms that are illegible, the submission will be deemed invalid and the Trustee will attempt to contact the Authorized Participant to request retransmission. A corrected Purchase Order or Redemption Order must be received by the Trustee, as applicable, not later than the earlier of (i) within fifteen (15) minutes of such contact with the Authorized Participant or (ii) thirty (30) minutes after the Order Cutoff Time.

  

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AUTHORIZED REPRESENTATIVES

Section 2.01. Certification. Concurrently with the execution of the Authorized Participant Agreement, the Authorized Participant shall deliver to the Trustee a certificate in a form as attached at Schedule 2-A to the Authorized Participant Agreement (an “Authorized Representative Certificate”) signed by the Authorized Participant’s Secretary or other duly authorized person setting forth the names, signatures, e-mail addresses and telephone and facsimile numbers of all persons authorized to give instructions relating to any activity contemplated hereby or any other notice, request or instruction on behalf of the Authorized Participant (each an “Authorized Representative”). Such certificate may be accepted and relied upon by the Trustee as conclusive evidence of the facts set forth therein and shall be considered to be in full force and effect until (i) receipt by the Trustee of a superseding Authorized Representative Certificate, or (ii) termination of the Authorized Participant Agreement. After such Authorized Representative Certificate is accepted by the Trustee, the Authorized Participant may authorize additional Authorized Representatives to give instructions relating to any activity contemplated hereby or any other notice, request or instruction on behalf of the Authorized Participant by delivering to the Trustee an addendum to the certificate described above in a form as attached at Schedule 2-B to the Authorized Participant Agreement.

 

Section 2.02. PIN Numbers. The Trustee shall issue to each Authorized Participant a unique personal identification number (“PIN Number”) by which such Authorized Participant shall be identified and instructions issued by the Authorized Participant shall be authenticated. The PIN Number shall be kept confidential and only provided to Authorized Representatives. The Authorized Participant may revoke the PIN Number at any time upon written notice to the Trustee pursuant to Section 2.03 hereof, and the Authorized Participant shall be responsible for doing so in the event that it becomes aware that an unauthorized person has received access to its PIN Number or has or intends to use the PIN Number in an unauthorized manner. Except as otherwise provided in these Standard Terms, the Authorized Participant agrees that neither the Trust or the Trustee shall be liable for losses incurred by the Authorized Participant as a result of unauthorized use of the Authorized Participant’s PIN Number prior to the time when the Authorized Participant provides notice to the Trustee of the termination or revocation of authority pursuant to Section 2.03 and the Trustee has de-activated the PIN Number as provided for in Section 2.03 hereof.

 

Section 2.03. Termination of Authority. Upon the termination or revocation of authority of an Authorized Representative by the Authorized Participant or the revocation of a PIN Number by the Authorized Participant, the Authorized Participant shall (i) give, as promptly as practicable under the circumstances, written notice of such fact to the Trustee and such notice shall be effective upon receipt by the Trustee; and (ii) request a new PIN Number. The Trustee shall, as promptly as practicable, de-activate the PIN Number upon receipt of such written notice.  If an Authorized Participant’s PIN Number is changed, the new PIN Number will become effective on a date mutually agreed upon by the Authorized Participant and the Trustee.

 

Section 2.04. Verification. The Trustee may assume that all instructions issued to it using the Authorized Participant’s PIN Number have been properly placed by Authorized Representatives, unless the Trustee has actual knowledge to the contrary or the Authorized Participant has properly revoked such PIN Number prior to the placement of such instructions. The Trustee shall have no duty to verify that an Order is being placed by an Authorized

  

- 28 -

  

Representative that uses a valid PIN Number. The Authorized Participant agrees that the Trustee shall not be responsible for any losses incurred by the Authorized Participant as a result of an Authorized Representative identifying himself or herself as a different Authorized Representative or an unauthorized person identifying himself or herself as an Authorized Representative, unless such person uses a PIN Number which the Authorized Participant had previously revoked in accordance with Section 2.03 hereof.

 

ARTICLE III

 

STATUS OF THE AUTHORIZED PARTICIPANT

 

Section 3.01. Clearing Status. The Authorized Participant represents, covenants and warrants that, as of the date of execution of the Authorized Participant Agreement, and at all times during the term of the Authorized Participant Agreement, the Authorized Participant is and will be entitled to use the clearing and settlement services of each of the national or international clearing and settlement organizations through which, in compliance with the Procedures, the transactions contemplated hereby will clear and settle. Any change in the foregoing status of the Authorized Participant shall terminate the Authorized Participant Agreement and the Authorized Participant shall give prompt written notice thereof to the Trustee.

 

Section 3.02. Broker-Dealer Status. The Authorized Participant represents and warrants that it is (i) registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, or other securities market participant, such as a bank or other financial institution, which, but for an exclusion from registration, would be required to register as a broker-dealer to engage in securities transactions (ii) qualified to act as a broker or dealer in the states or other jurisdictions where it transacts business to the extent so required by applicable law, and (iii) a member in good standing with FINRA. The Authorized Participant agrees that it will maintain such registrations, qualifications, and membership in good standing and in full force and effect throughout the term of the Authorized Participant Agreement. The Authorized Participant further agrees to comply with all applicable U.S. federal laws, the laws of the states or other jurisdictions concerned, and the rules and regulations promulgated thereunder, to the extent such laws and regulations are applicable to the Authorized Participant’s transactions in, and activities with respect to, Shares, and with the FINRA By-Laws and the FINRA Conduct Rules to the extent the foregoing relates to the Authorized Participant’s transactions in, and activities with respect to, Shares, and that it will not offer or sell Shares in any state or jurisdiction where they may not lawfully be offered and/or sold.  The Authorized Participant shall be solely responsible for determining the application of any such laws or regulations in all cases at its own expense.

 

Section 3.03. Foreign Status. If the Authorized Participant is offering and selling Shares in jurisdictions outside the several states, territories and possessions of the United States, the Authorized Participant agrees to observe the applicable laws of the jurisdiction in which such offer and/or sale is made and to conduct its business in accordance with the FINRA Conduct 

 

  

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Rules, to the extent the foregoing relates to the Authorized Participant’s transactions in, and activities with respect to, Shares.

 

Section 3.04. Compliance with Certain Laws. If the Authorized Participant is subject to the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended (the “U.S.A. PATRIOT Act”), the Authorized Participant has policies and procedures reasonably designed to comply with the anti-money laundering and related provisions of the U.S.A. PATRIOT Act, and the operations of the Authorized Participant are and have been conducted in compliance with the U.S.A. PATRIOT Act.

 

Section 3.05. Authorized Participant Status. The Authorized Participant understands and acknowledges that the method by which Baskets will be created and traded may raise certain issues under applicable securities laws. For example, because new Baskets of Shares may be issued and sold by the Trust on an ongoing basis, at any point a “distribution”, as such term is used in the Securities Act, may occur.  The Authorized Participant understands and acknowledges that some activities on its part, depending on the facts, may result in its being deemed a participant in a distribution in a manner which could render it a statutory underwriter and subject it to the prospectus delivery and liability provisions of the Securities Act.

 

ARTICLE IV

 

ROLE OF AUTHORIZED PARTICIPANT

 

Section 4.01. No Agency. The Authorized Participant acknowledges and agrees that for all purposes of the Authorized Participant Agreement, the Authorized Participant will have no authority to act as agent for the Trust or the Trustee in any matter or in any respect. The Authorized Participant agrees to make itself and its employees available, upon reasonable request, during normal business hours to consult with the Trustee, the Sponsor or their designees concerning the performance of the Authorized Participant’s responsibilities under the Authorized Participant Agreement; provided, however, that the Authorized Participant shall be under no obligation to divulge or otherwise disclose any information that the Authorized Participant reasonably believes (i) the disclosure of which to third parties is in violation of any applicable law or regulation or is otherwise prohibited, or (ii) is confidential or proprietary in nature.

 

Section 4.02. Rights and Obligations of DTC Participant. The Authorized Participant, as a DTC Participant, agrees that it shall be bound by all of the obligations of a DTC Participant in addition to any obligations that it undertakes hereunder or in accordance with the Procedures.

 

Section 4.03. Beneficial Owner Communications. The Authorized Participant agrees (i) subject to any limitations arising under federal or state securities laws relating to privacy, or other obligations it may have to its customers, to assist the Trustee or the Sponsor in determining certain information regarding sales of Shares made by or through the Authorized Participant (including, without limitation, the ownership level of each beneficial owner relating to positions in Shares that the Authorized Participant may hold as record holder) upon the request of the Trustee or the Sponsor that is necessary for the Trustee or Sponsor to comply with their 

  

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obligations to distribute information to beneficial owners of Shares under applicable state or federal securities laws and (ii) to forward to such beneficial owners written materials and communications received, directly or indirectly, from the Sponsor or the Trustee in sufficient quantities to allow mailing thereof to such beneficial owners, including, without limitation, notices, annual reports, disclosure or other informational materials and any amendments or supplements thereto that may be required to be sent by the Sponsor or the Trustee to such beneficial owners pursuant to applicable law or regulation or otherwise, or that the Sponsor or the Trustee reasonably wishes to distribute to such beneficial owners, in each case at the expense of the Sponsor and/or the Trust.

 

Section 4.04. Authorized Participant Customer Information. The Sponsor and the Trustee agree that the names and addresses and other information concerning the Authorized Participant’s customers are and shall remain the sole property of the Authorized Participant, and none of the Sponsor, the Trust, or the Trustee, or any of their respective affiliates, shall use such names, addresses or other information for any purpose except in connection with the performance of their duties and responsibilities under the Authorized Participant Agreement, the Procedures, the Standard Terms, the Trust Agreement and the applicable Prospectus and except for servicing and informational mailings related to the Trust referred to in Section 4.03 above.

 

ARTICLE V

 

MARKETING MATERIALS AND REPRESENTATIONS AND WARRANTIES

 

Section 5.01. Authorized Participant’s Representation. The Authorized Participant represents, warrants and agrees that, in connection with any sale or solicitation of a sale of Shares, it will not make, or permit any of its representatives to make on its behalf, any representations concerning Shares, the Trust or the Sponsor other than those not inconsistent with the Trust’s then current Prospectus or any promotional materials or sales literature furnished to the Authorized Participant by the Sponsor. The Authorized Participant agrees not to furnish or cause to be furnished to any person or display or publish any information or materials relating to Shares, the Trust or the Sponsor (excluding, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar materials not inconsistent with the Trust’s then-current Prospectus and in accordance with applicable laws and regulations, and any materials prepared and used for the Authorized Participant’s internal use only or brokerage communications prepared by the Authorized Participant in the normal course of its business), except such information and materials as may be furnished to the Authorized Participant by the Sponsor and such other information and materials as may be approved in writing by the Sponsor. The Authorized Participant understands that the Trust will not be advertised as offering redeemable securities, and that any advertising materials will prominently disclose that the Shares are not redeemable units of beneficial interest in the Trust. Notwithstanding the foregoing, the Authorized Participant and its Affiliates and representatives may, without the approval of the Sponsor, prepare and circulate in the regular course of their respective businesses, research, reports, marketing materials, sales literature or similar materials that include information, opinions or recommendations relating to Shares (i) for public dissemination, provided that such reports, research, marketing materials, sales literature or 

  

  

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other similar materials comply with applicable FINRA rules and (ii) for internal use by the Authorized Participant and its Affiliates and representatives.

 

Section 5.02. Prospectus. The Sponsor will provide, or cause to be provided, to the Authorized Participant copies of the then-current Prospectus and any printed supplemental information in reasonable quantities upon request. The Sponsor will, as promptly as practicable under the circumstances, notify the Authorized Participant when a revised, supplemented or amended Prospectus for the Shares is available, and deliver or otherwise make available to the Authorized Participant copies of such revised, supplemented or amended Prospectus at such time and in such quantities as may be reasonable to permit the Authorized Participant to comply with any obligation the Authorized Participant may have to deliver such Prospectus to its customers. The Sponsor will make such revised, supplemented or amended Prospectus available to the Authorized Participant no later than its effective date. The Sponsor shall be deemed to have complied with this Section 5.02 when the Authorized Participant has received such revised, supplemented or amended Prospectus by e-mail, in printable form, with such number of hard copies as may be agreed from time to time by the parties promptly thereafter.

 

ARTICLE VI

 

INDEMNIFICATION; LIMITATION OF LIABILITY

 

Section 6.01. Indemnification. The provisions of this Section 6.01 shall survive termination of the Authorized Participant Agreement.

 

a.            The Authorized Participant shall indemnify and hold harmless the Sponsor, in its capacity as sponsor of the Trust, the Trustee, the Trust and their respective Affiliates, subsidiaries, directors, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the Securities Act (each an “APIndemnified Party”) from and against any loss, liability, cost and expense (including, without limitation, reasonable attorneys’ fees) incurred by such AP Indemnified Party as a result of (i) any breach by the Authorized Participant of any provision of the Trust Agreement, the Authorized Participant Agreement, the Procedures, these Standard Terms and the relevant Prospectus (together, the “Trust Documents”) that relates to the Authorized Participant; (ii) any failure on the part of the Authorized Participant to perform any of its obligations set forth in the Trust Documents applicable to it; (iii) any failure by the Authorized Participant to comply in all material respects with applicable laws, including rules and regulations of self-regulatory organizations to the extent such laws, rules and regulations are applicable to the transactions being undertaken pursuant to the Trust Documents; or (iv) actions of such AP Indemnified Party pursuant to any instructions issued in accordance with the Trust Documents reasonably believed by the AP Indemnified Party to be genuine and to have been given by the Authorized Participant except to the extent that the Authorized Participant had previously revoked a PIN Number used in giving such instructions or representations (where applicable) and such revocation was given by the Authorized Participant and received by the Trustee in accordance with the terms of Section 2.03 hereto. The Authorized Participant shall not be liable under its indemnity agreement contained in this paragraph with respect to any 

  

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claim made against any AP Indemnified Party unless the AP Indemnified Party shall have notified the Authorized Participant in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim was served upon the AP Indemnified Party (or after the AP Indemnified Party shall have received notice of service on any designated agent). However, failure to notify the Authorized Participant of any claim shall not relieve the Authorized Participant from any liability which it may have to any AP Indemnified Party against whom such action is brought otherwise than on account of its indemnity agreement contained in this paragraph and shall only release it from such liability under this paragraph to the extent it has been materially prejudiced by such failure to give notice. The Authorized Participant shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any claims, but if the Authorized Participant elects to assume the defense, the defense shall be conducted by counsel chosen by it and satisfactory to the AP Indemnified Parties in the suit and who shall not, except with consent of the AP Indemnified Parties, be counsel to the Authorized Participant. If the Authorized Participant does not elect to assume the defense of any suit, it will reimburse the AP Indemnified Parties in the suit for the reasonable fees and expenses of any counsel retained by them.

 

b.            The Sponsor hereby agrees to indemnify and hold harmless the Authorized Participant, its Affiliates, subsidiaries, directors, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the Securities Act (each a “Sponsor Indemnified Party”) from and against any loss, liability, cost and expense (including, without limitation, reasonable attorneys' fees) incurred by such Sponsor Indemnified Party as a result of (i) any breach by the Sponsor of any provision of the Authorized Participant Agreement that relates to the Sponsor; (ii) any failure on the part of the Sponsor to perform any of its obligations set forth in the Authorized Participant Agreement applicable to it; (iii) any failure on the part of the Sponsor to comply in all material respects with applicable laws, including, without limitation, rules and regulations of self-regulatory organizations to the extent such laws, rules and regulations are applicable to the transactions being undertaken pursuant to the Authorized Participant Agreement; (iv) actions of such Sponsor Indemnified Party pursuant to any instructions issued or representations made in accordance with the relevant Prospectus, Authorized Participant Agreement, the Procedures, the Trust Agreement or these Standard Terms reasonably believed by the Sponsor Indemnified Party to be genuine and to have been given by the Sponsor; or (v) any untrue statements or omissions made in any promotional material or sales literature furnished to the Authorized Participant by the Sponsor or otherwise approved in writing by the Sponsor.  The Sponsor shall not be liable under its indemnity agreement contained in this paragraph with respect to any claim made against any Sponsor Indemnified Party unless the Sponsor Indemnified Party shall have notified the Sponsor in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the Sponsor Indemnified Party (or after the Sponsor Indemnified Party shall have received notice of service on any designated agent). However, failure to notify the Sponsor of any claim shall not relieve the Sponsor from any liability which it may have to any Sponsor Indemnified Party 

  

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against whom such action is brought otherwise than on account of its indemnity agreement contained in this paragraph and shall only release it from such liability under this paragraph to the extent it has been materially prejudiced by such failure to give notice. The Sponsor shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any claims, but if the Sponsor elects to assume the defense, the defense shall be conducted by counsel chosen by it and satisfactory to the Sponsor Indemnified Parties in the suit and who shall not, except with the consent of the Sponsor Indemnified Parties, be counsel to the Sponsor. If the Sponsor does not elect to assume the defense of any suit, it will reimburse the Sponsor Indemnified Parties in the suit for the reasonable fees and expenses of any counsel retained by them.

 

d.            No indemnifying party, as described in paragraphs (a) and (b) above, shall, without the written consent of the AP Indemnified Party or the Sponsor Indemnified Party, as the case may be, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the AP Indemnified Party or Sponsor Indemnified Party, as the case may be, from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any AP Indemnified Party or Sponsor Indemnified Party, as the case may be.

 

e.            The Authorized Participant shall not be liable to any AP Indemnified Party for any damages arising out of (i) mistakes or errors in data provided in connection with purchase or redemption transactions except for data provided by the Authorized Participant, or (ii) mistakes or errors by, or arising out of interruptions or delays of communications with, the Trustee or any AP Indemnified Party.

 

f.             The indemnification provided for in Section 6.01(a) shall not apply to the extent any such losses, liabilities, damages, costs and expenses are incurred as a result of any fraud, gross negligence, bad faith or reckless or willful misconduct on the part of an AP Indemnified Party. The indemnification provided for in Section 6.01(b) shall not apply to the extent any such losses, liabilities, damages, costs and expenses are incurred as a result of any fraud, gross negligence, bad faith or reckless or willful misconduct on the part of a Sponsor Indemnified Party.

 

g.             The indemnity agreements contained in this Section 6.01 shall remain in full force and effect and shall survive any termination of this Agreement. The Sponsor and the Authorized Participant agree promptly to notify each other of the commencement of any proceeding against it and against any of their officers or directors in connection with the issuance and sale of the Shares or in connection with the registration statement or the relevant Prospectus.

 

  

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ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01. Commencement of Trading. The Authorized Participant may not submit an Order prior to the effectiveness of the registration statement, or amendment to the registration statement, filed with the Securities and Exchange Commission.

Section 7.02. Defined Terms.  All capitalized terms used in these Standard Terms and not otherwise defined herein shall have the meanings ascribed to such terms in the Authorized Participant Agreement and the Procedures.

Section 7.03.  Third Party Beneficiaries.  The parties acknowledge and agree that the Trust shall be a third party beneficiary of the Authorized Participant Agreement, including, without limitation, as to Section 6.01(c) of these Standard Terms.

 

[Signatures Follow on Next Page]

  

IN WITNESS WHEREOF, the Sponsor and the Trustee have executed these Standard Terms as of the date set forth above.

 

THE BANK OF NEW YORK MELLON, in its capacity as Trustee

 

 

By:                                                                                

Name:

Title:

 

 

MERK INVESTMENTS LLC, in its capacity as Sponsor

 

 

By:                                                                                

Name:

Title:

  

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SCHEDULE 2-A

 

AUTHORIZED REPRESENTATIVES OF THE AUTHORIZED PARTICIPANT

 

Certificate of Authorized Representatives of the Authorized Participant

 

The following are the names, titles, signatures, phone numbers, and email addresses of all persons (each, an “Authorized Representative”) authorized to give instructions relating to any activity contemplated by the Authorized Participant Agreement between [AUTHORIZED PARTICIPANT], The Bank of New York Mellon and Merk Investments LLC, dated [DATE] (the “Agreement”) or any other notice, request or instruction on behalf of the Authorized Participant pursuant to the Agreement.

 

 

	
Name:

	
__________________

	  	
Name:

	
__________________

	
Title:

	
__________________

	  	
Title:

	
__________________

	
Signature:

	
__________________

	  	
Signature:

	
__________________

	
Phone:

	
__________________

	  	
Phone:

	
__________________

	
Email:

	
__________________

	  	
Email:

	
__________________

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	
Name:

	
__________________

	  	
Name:

	
__________________

	
Title:

	
__________________

	  	
Title:

	
__________________

	
Signature:

	
__________________

	  	
Signature:

	
__________________

	
Phone:

	
__________________

	  	
Phone:

	
__________________

	
Email:

	
__________________

	  	
Email:

	
__________________

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	
Name:

	
__________________

	  	
Name:

	
__________________

	
Title:

	
__________________

	  	
Title:

	
__________________

	
Signature:

	
__________________

	  	
Signature:

	
__________________

	
Phone:

	
__________________

	  	
Phone:

	
__________________

	
Email:

	
__________________

	  	
Email:

	
__________________

 

 

The undersigned, [AP’S AUTHORIZED SIGNATORY], does hereby certify that the persons listed above have been duly authorized to act as Authorized Representatives pursuant to the Authorized Participant Agreement.

 

 

By:                                                                                                      

Name:

Title:

Date:

  

 

  

 

SCHEDULE D

ADDENDUM TO CERTIFICATE OF AUTHORIZED REPRESENTATIVES OF THE MERK GOLD TRUST

[On AP’s Firm Letterhead]

[DATE]

Attn: ________________

The Bank of New York Mellon

2 Hanson Place — Floor 9th

Brooklyn, NY 11217

New York

 

	
Re:

	
Addendum to the Certificate of Authorized Representatives for [AUTHORIZED PARTICIPANT] under the Authorized Participant Agreement for the Merk Gold Trust, sponsored by Merk Investments LLC, dated [DATE] (the “Agreement”)

 

Ladies and Gentlemen:

 

Pursuant to the Agreement, the following are the names, titles, signatures, phone numbers, and email addresses of additional Authorized Representatives of [AUTHORIZED PARTICIPANT] (the “AP”) authorized to give instructions relating to any activity contemplated by the Agreement or any other notice, request or instruction on behalf of the AP pursuant to the Agreement. This list of Authorized Representatives is an addendum and adds further Authorized Representatives to the AP’s most recently executed certificate (entitled “Certificate of Authorized Representatives of the Authorized Participant”).

 

 

	
Name:

	
__________________

	  	
Name:

	
__________________

	
Title:

	
__________________

	  	
Title:

	
__________________

	
Signature:

	
__________________

	  	
Signature:

	
__________________

	
Phone:

	
__________________

	  	
Phone:

	
__________________

	
Email:

	
__________________

	  	
Email:

	
__________________

	  	  	  	  	  
	  	  	  	  	  
	
Name:

	
__________________

	  	
Name:

	
__________________

	
Title:

	
__________________

	  	
Title:

	
__________________

	
Signature:

	
__________________

	  	
Signature:

	
__________________

	
Phone:

	
__________________

	  	
Phone:

	
__________________

	
Email:

	
__________________

	  	
Email:

	
__________________

 

 

Please provide PIN numbers for those listed above.

 

The undersigned, [AP’S AUTHORIZED SIGNATORY], does hereby certify that the persons listed above have been duly authorized to act as Authorized Representatives pursuant to the Authorized Participant Agreement.

 

 

By:                                                                                                      

Name:

Title:

Date:ex10-4.htm

 

TRANSACTION AND SHIPPING AGREEMENT

 

 

By and between

 

 

MERK INVESTMENTS LLC,

 

as Sponsor of the Merk Gold Trust

 

and

 

COINS ‘N THINGS INC.

 

as a Precious Metals Dealer

 

 

________________________________________

 

 

 

Dated as of [ _______, 2014]

 

  

  

  

TRANSACTION AND SHIPPING AGREEMENT

 

THIS TRANSACTION AND SHIPPING AGREEMENT, dated as of [_______, 2014], is by and between MERK INVESTMENTS LLC, a Delaware limited liability company, as sponsor of the Merk Gold Trust, and COINS ‘N THINGS Inc., a Massachusetts corporation, as Precious Metals Dealer.

 

	
INTRODUCTION

	  
	
(1)

	
The Trustee has agreed to act as trustee for the holders of Shares pursuant to the Trust Agreement.

	 	 
	
(2)

 

	
The Trust holds London Bars and, in connection with a Delivery Applicant’s exchange of Shares for physical gold other than London Bars, also may obtain other gold bars and coins without numismatic value with a minimum fineness (or purity) of 995 parts per 1,000 (99.5%), and American Gold Eagle gold coins (with a minimum fineness of 91.67%).

	  	  
	
(3)

	
The Sponsor may engage in over-the-counter transactions with the Precious Metals Dealer to acquire, on behalf of the Trust, from the Precious Metals Dealer, the gold requested by a Delivery Applicant in a Delivery Application.

	 	 
	
(4)

	
The Custodian has agreed to hold, receive, transfer and convert the Trust’s gold on behalf of the Trust pursuant to the Trust Allocated Account Agreement and Trust Unallocated Account Agreement.

	 	 
	
(5)

 

	
In order to effect the delivery of Gold to Delivery Applicants who elect to take delivery of physical gold other than London Bars in exchange for Shares, the Fine Ounces that represent the physical gold to be acquired by the Trust from the Precious Metals Dealer pursuant to a Transaction Contract must be transferred from the Trust Unallocated Account to the PMD Unallocated Account.

	  	  
	
(6)

	
The Precious Metals Dealer has agreed to deliver physical gold other than London Bars to the Delivery Applicant in accordance with delivery instructions contained in a Delivery Application pursuant to this Agreement.

1.           INTERPRETATIONS

 

1.1           Definitions.  Except as otherwise specified in this Agreement or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Agreement.

 

“Agreement” means this Transaction and Shipping Agreement, as amended or supplemented in accordance with its terms.

 

“Business Day” means any day other than a day: (1) when the Exchange is closed for regular trading; or (2), if the order or other transaction requires the receipt or delivery, or the 

 

  

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confirmation of receipt or delivery, of gold in the United Kingdom or in some other jurisdiction on a particular day, (A) when banks are authorized to close in the United Kingdom or in such other jurisdiction or when the London gold market is closed or (B) when banks in the United Kingdom or in such other jurisdiction are, or the London gold market is, not open for a full business day and the order or other transaction requires the execution or completion of procedures which cannot be executed or completed by the close of the business day.

 

“Confidential Information” has the meaning ascribed to such term in Section 3.1.

 

“Custodian” means the JPMorgan Chase Bank, N.A., and any substitute or additional custodian of the Trust’s assets appointed by the Trustee at the direction of or as approved by the Sponsor as provided in the Trust Agreement and, where the context permits, any sub-custodians employed by the initial Custodian or any such substitute or additional custodian.

 

“Delivery Applicant” means a beneficial owner who is not an authorized participant and wishes to Surrender part or all of the Shares he or she holds for the purpose of taking Delivery of Physical Gold in the amount of Trust property represented by those Shares.

 

“Delivery Applicant Procedures” means the procedures for a Delivery Applicant to take Delivery of Physical Gold as provided in the Trust Agreement and as set forth in the Trust’s registration statement, as modified by the Sponsor and the Trustee from time to time.

 

“Delivery Application” means a document in form satisfactory to the Sponsor that expresses a Delivery Applicant’s intention to Surrender Shares on a Share submission day in exchange for an amount of Physical Gold up to the amount of gold represented by such Shares on such Share submission day.

 

“Delivery Day” means any Business Day the Exchange is open for trading.

 

“Disclosing Party” has the meaning ascribed to such term in Section 3.3.

 

“Effecting Delivery Applicant Instructions” has the meaning ascribed to such term in Section 7.1.

 

“Exchange” means the exchange or other securities market on which the Shares are principally traded, as specified from time to time by the Sponsor.

 

“Fine Ounce” means an Ounce of 100% pure gold, Fine Ounces being determined, as to physical gold, by multiplying the gross weight in Ounces by the fineness, expressed as a fraction of the fine metal content in parts per 1000 and, as to gold held in the Trust Unallocated Account, by the number of Fine Ounces credited to the account from time to time (such account being denominated in Fine Ounces).

 

 “Gold” or “gold” means physical gold and gold on an Unallocated Basis.

 

“Gold Coins” means gold coins without numismatic value and having a minimum fineness of 99.5% or, with respect to American Gold Eagle gold coins, having a minimum fineness of 91.67%.

 

  

2

  

“LBMA” means the London Bullion Market Association or its successor.

 

“London Bar” means a gold bar meeting the London Good Delivery Standards.

 

“London Good Delivery Standards” means the specifications for weight, dimensions, fineness (or purity), identifying marks and appearance of gold bars set forth in “The Good Delivery Rules for Gold and Silver Bars” published by the LBMA.

 

“London PM Fix” means the afternoon session of the twice daily fix of the price of a Fine Ounce of gold, which starts at 3:00 PM London, England, time and is performed in London by the five members of the London gold fix.

 

“Non-Disclosing Party” has the meaning ascribed to such term in Section 3.3.

 

“Ounce” means one troy ounce, equal to 31.103 grams (1.0971428 ounces avoirdupois).

 

“Physical Gold” or “physical gold” means (i) gold bullion that meets the London Good Delivery Standards and (ii), with respect to a Delivery Applicant’s taking Delivery of Physical Gold, gold bullion in bars of any size with a minimum fineness of 99.5% and Gold Coins.

 

“PMD Unallocated Account” means a loco London account maintained by the Custodian on an Unallocated Basis for the Precious Metals Dealer which may be used for facilitating a Delivery Applicant’s taking Delivery of Physical Gold as provided in the Trust Agreement and the Delivery Applicant Procedures.

 

“Precious Metals Dealer” means Coins ‘N Things, Inc., the dealer in gold selected by the Sponsor to facilitate the Delivery Applicant’s taking Delivery of Physical Gold as provided in the Trust Agreement and the Delivery Applicant Procedures.

 

“Precious Metals Dealer Indemnified Party” has the meaning ascribed to such term in Section 7.2.

 

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

 

“Share” means a unit of beneficial interest in the Trust created under the Trust Agreement, having no par value and representing a fractional undivided beneficial interest in the net assets of the Trust which undivided interest shall equal a fraction, the numerator of which is one and the denominator of which is the total number of Shares outstanding.

 

“Sponsor” means Merk Investments LLC, a Delaware limited liability company, or its successor.

 

“Surrender” means a book-entry transfer of Shares to the Trustee’s account with the Depository.

 

“Transaction Contract” means an over-the-counter transaction and shipping contract between the Precious Metals Dealer and the Sponsor pursuant to which (i) the Sponsor, on behalf of the Trust, will acquire the physical gold requested by a Delivery Applicant in the Delivery 

 

  

3

  

Application from the Precious Metals Dealer in exchange for the transfer of Unallocated Gold from the Trust Unallocated Account to the PMD Unallocated Account in an amount of Fine Ounces equal to the Fine Ounce content of the physical gold to be acquired and (ii) the Precious Metals Dealer will arrange for the delivery of the requested physical gold to the Delivery Applicant in accordance with the delivery instructions contained in the Delivery Application.

“Trust” means the Merk Gold Trust.

 

“Trust Agreement” means the Depositary Trust Agreement of the Merk Gold Trust dated on or about [________, 2014], as amended from time to time, between Merk Investments LLC, as Sponsor, and The Bank of New York Mellon, as Trustee.

 

“Trust Allocated Account” means the loco London account maintained for the Trust by the initial Custodian pursuant to the Trust Allocated Account Agreement, or another account maintained for the Trust by a successor Custodian on an allocated basis, as the case may be.

 

“Trust Allocated Account Agreement” means the Allocated Account Agreement dated [__________] between the Custodian and the Trustee pursuant to which the Allocated Account is established and operated.

 

“Trust Indemnified Party” has the meaning ascribed to such term in Section 7.1.

 

“Trust Unallocated Account” means the loco London account maintained for the Trust by the Initial Custodian pursuant to the Trust Unallocated Account Agreement, or another account maintained for the Trust by a successor Custodian on an Unallocated Basis, as the case may be.

 

“Trust Unallocated Account Agreement” means the Unallocated Account Agreement dated [__________] between the Custodian and the Trustee pursuant to which the Unallocated Account is established and operated.

 

“Trustee” means The Bank of New York Mellon, a New York banking corporation, in its capacity as trustee under the Trust Agreement, or any successor trustee thereunder.

 

“Unallocated Basis” means, with respect to the holding of gold, that the holder is entitled to receive delivery of physical gold in the amount standing to the credit of the holder’s account, but the holder has no ownership interest in any particular gold that the custodian maintaining that account owns or holds.

 

“Unallocated Gold” means gold held on an Unallocated Basis.

 

“USA Patriot Act” means the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act.

 

1.2           Rules of Construction.  Unless the context otherwise requires:

 

	
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a term has the meaning assigned to it;

	
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“or” is not exclusive;

 

  

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the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section, paragraph or other subdivision thereof;

	

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“including” means including without limitation;

	

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words in the singular include the plural and words in the plural include the singular; and

	

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a term defined in any part of speech shall have the corresponding meaning when capitalized and used herein in another part of speech.

 

2.           DESCRIPTION OF SERVICES

 

2.1           Exchange and Delivery of Physical Gold.  The Sponsor shall, on behalf of the Trust, acquire from the Precious Metals Dealer the physical gold requested by a Delivery Applicant in the Delivery Application pursuant to a Transaction Contract in exchange for the transfer of Unallocated Gold from the Trust Unallocated Account to the PMD Unallocated Account in an amount of Fine Ounces equal to the Fine Ounce content of the physical gold to be acquired, and, in accordance with Section 2.2, such transfer of Unallocated Gold shall represent the full consideration due from the Trust for the physical gold to be acquired.  The Precious Metals Dealer agrees to arrange promptly for the delivery of physical gold other than London Bars as set forth in the Delivery Application, a copy of which shall be provided to the Precious Metals Dealer by the Sponsor, to a Delivery Applicant as instructed in the Delivery Application pursuant to the terms of this Agreement.

a.           Consultation. On any Business Day, the Sponsor may request information concerning the availability of and suitable delivery methods for physical gold on behalf of Delivery Applicants and the Precious Metals Dealer shall be available to respond.

 

b.           Pre-Approval; Preparation for Delivery. When a Delivery Applicant submits a Delivery Application for pre-approval to the Sponsor that requests physical gold other than London Bars to be delivered in exchange for the Delivery Applicant’s Shares to be Surrendered, the Sponsor will provide a copy of the submitted Delivery Application to the Precious Metals Dealer. The Precious Metals Dealer will confirm to the Sponsor within 24 hours of receiving a Delivery Application with pending pre-approval that it can deliver the physical gold requested in the Delivery Application should the Sponsor engage in an order to have physical gold delivered in accordance with the instructions of the Delivery Application. Conversely, the Precious Metals Dealer shall notify the Sponsor within 24 hours of receiving a Delivery Application with pending pre-approval if it is unable to provide the Trust with the specified physical gold and the specified delivery timeframe set forth in the Delivery Application. If the Precious Metals Dealer confirms to the Sponsor that it can deliver the physical gold requested in the Delivery Application, the Precious Metals Dealer shall hold or set aside such requested physical gold to ensure such physical gold’s continued availability for delivery to a Delivery Applicant.  If, after the expiration of five (5) Business Days after the Precious Metals Dealer confirms to the Sponsor its ability to deliver such physical gold, the Precious Metals Dealer has not received further instruction pursuant to Section 2(c) of this Agreement concerning the requested physical gold, it is no longer required to hold or set aside such physical gold and shall have no further obligations hereunder with respect to such physical gold.

 

  

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c.           Instructions for Delivery. When a Delivery Applicant transfers Shares to the Trustee in a binding and irrevocable request to take delivery of physical gold other than London Bars in exchange for Shares based on instructions in the Delivery Application, the Sponsor shall (a) forward a copy of the Delivery Application to the Precious Metals Dealer and b) engage in an over-the-counter transaction with the Precious Metals Dealer to (i) acquire, for the Trust, the physical gold other than London Bars requested by the Delivery Applicant in exchange for the transfer of Unallocated Gold pursuant to a Transaction Contract, and (ii) promptly deliver the requested physical gold to the Delivery Applicant in accordance with the delivery instructions contained in the Delivery Application.

 

d.           Specifications of Physical Gold.  The Precious Metals Dealer represents and warrants to the Sponsor, the Trust and the Delivery Applicant that the physical gold acquired by the Trust from the Precious Metals Dealer for the Delivery Applicant (i) will be in the amount of Fine Ounces of gold specified in the Delivery Application and (ii) will meet the minimum requirements for physical gold provided for in this Agreement and the Trust Agreement.

 

2.2           PMD Unallocated Account.  The Precious Metals Dealer shall maintain a PMD Unallocated Account with the Custodian to facilitate the conversion of Unallocated Gold into the physical gold other than London Bars to be acquired by the Trust from the Precious Metals Dealer pursuant to this Agreement.  Upon the Trustee’s confirmation of the Delivery Applicant’s Surrender of Shares pursuant to the Delivery Application and the Trustee’s receipt of an executed Transaction Contract, the Trustee shall instruct the Custodian to transfer Unallocated Gold from the Trust Unallocated Account to the PMD Unallocated Account in an amount of Fine Ounces equal to the Fine Ounce content of the physical gold to be acquired by the Trust from the Precious Metals Dealer pursuant to a Transaction Contract.  Unallocated Gold held in the PMD Unallocated Account shall be held by the Precious Metals Dealer for the account of the Trust until the physical gold relating to the Unallocated Gold has been delivered by the Precious Metals Dealer to the courier for further delivery to the Delivery Applicant, at which time the Unallocated Gold shall be held for the account of the Precious Metals Dealer.

 

2.3           Accounting.  At the close of any Business Day on which the Precious Metals Dealer has acquired for the Trust, acting through the Sponsor, the physical gold requested in the Delivery Application but has not yet tendered the physical gold to the courier specified by the Delivery Applicant in the Delivery Application, the Precious Metals Dealer shall report to the Sponsor and the Trustee the Fine Ounces of gold held by the Precious Metals Dealer on behalf of the Trust.

 

2.4           Shipping Physical Gold.  The Precious Metals Dealer shall arrange for the physical gold to be shipped promptly to the Delivery Applicant in accordance with the delivery instructions contained in the Delivery Application.

 

a.           Specification of Delivery.  If the Precious Metals Dealer is unable to transport the physical gold in accordance with the instructions of the Delivery Application, it may, upon approval from the Sponsor, choose an alternate means of delivery of the physical gold to the Delivery Applicant, provided that the Precious Metals Dealer shall only use reputable, nationally recognized delivery or armored carrier services to deliver the physical gold.

 

  

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b.           Packaging.  The Precious Metals Dealer shall cause the physical gold received by the Delivery Applicant to be packaged in accordance with the custom of the trade so that the physical gold is not reasonably susceptible to loss or damage during the performance of this Agreement.

 

c.           Insurance for Shipment.  The Precious Metals Dealer shall obtain appropriate and customary insurance to cover the value of the shipment of physical gold to the Delivery Applicant as specified in the Delivery Application.

 

d.           Confirmation.  The Precious Metals Dealer agrees to send to the Sponsor and the Trustee confirmation of the shipment of the physical gold to the Delivery Applicant by the close of business on the day of the delivery of physical gold by the Precious Metals Dealer to the courier.  The information contained in the confirmation shall be agreed upon by the parties to this Agreement from time to time.

 

2.5           Transfer at Delivery.  The Delivery Applicant shall bear all risk of any loss from the time the physical gold is delivered by the Precious Metals Dealer to the courier specified by the Delivery Applicant in the Delivery Application, and neither the Precious Metals Dealer, the Trustee, the Trust nor the Sponsor shall have any liability for any such loss.

 

2.6           Material Disclosure.  The Precious Metals Dealer agrees that it shall not conceal or misrepresent any material fact or circumstance concerning the physical gold delivered to a Delivery Applicant.

 

2.7           Confirmation of Delivery to Delivery Applicant.  Upon delivering the physical gold to the Delivery Applicant, the Precious Metals Dealer will confirm to the Sponsor and the Trustee that the physical gold has been delivered in accordance with this Agreement.

 

2.8           Discrepancies.  In the event the Precious Metals Dealer discovers a discrepancy between the information stated in the Delivery Application and the physical gold delivered to the Delivery Applicant, the Precious Metals Dealer promptly shall notify the Sponsor of such a discrepancy.  In such a case, the Precious Metals Dealer promptly will correct said discrepancy and deliver to the Delivery Applicant such physical gold as instructed by the Delivery Application.

 

2.9           Due Diligence.  The Precious Metals Dealer agrees to furnish to the Sponsor such information or documentation as it may reasonably be requested from time to time including: (i) periodic verifications confirming compliance with this Agreement and other laws such as those relating to anti-money laundering; (ii) most recent financial statements, including balance sheets and income statements, of the Precious Metals Dealer; (iii) copies of compliance policies or procedures or similar documents relating to the obligations of the Precious Metals Dealer under this Agreement; (iv) such other information or documentation as the Sponsor may reasonably request.  The Precious Metals Dealer agrees to cooperate with reasonable requests from the Sponsor or its designees (including any auditors or legal counsel designated by any of them or their agents), in connection with any audit, regulatory or internal investigation or examination of the Sponsor or the Trust.

 

2.10           Records.  The Precious Metals Dealer agrees to maintain all records relating to the services provided under this Agreement.  Upon reasonable written request, the Precious Metals 

 

  

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Dealer agrees to make these records available to Sponsor or the Trust and to make one or more of the Precious Metals Dealer’s employees reasonably available to respond to inquiries from the Sponsor or the Trust.

 

2.11           Investment Advice.  It is understood and agreed that, as part of its services under this Agreement, the Precious Metals Dealer has not undertaken a duty to supervise the Trust’s investment in, or to make any recommendation to the Sponsor or the Trust with respect to, the purchase, sale or other disposition of physical gold obtained or delivered under this Agreement.

 

2.12           No Relationship.  Nothing contained in this Agreement shall create between the parties the relationship of principal and agent, partnership or joint venture.

 

2.13           Segregation.  Physical gold acquired by the Trust, acting through the Sponsor, and held for a Delivery Applicant by the Precious Metals Dealer (i) shall be recorded on the books and records of the Precious Metals Dealer as being held for the account of the Trust for delivery to the Delivery Applicant and (ii) shall be segregated from any other gold held by the Precious Metals Dealer for its own account or for the account of any other persons or entity.

 

3.           CONFIDENTIALITY

 

3.1           What is Confidential Information.  Each party to this Agreement shall safeguard and hold confidential from disclosure to unauthorized parties all “Confidential Information” of the other party.  For purposes of this Section, the term “Confidential Information” shall mean any and all information which is in any way connected with, derived from or related to the business of a party, including without limitation, any business and financial records, any retail or institutional customer information, computer programs, technical data, investment information, lists, compilations, compositions, programs, plans, devices, descriptions, drawings, methods, techniques, processes, designs, theories concepts or ideas, and any information relating to the pricing or marketing policies, suppliers or customers of a party.

 

3.2           What is not Confidential Information.  Confidential Information shall not include information to the extent such information is (i) already known to the receiving party free of any restriction at the time obtained, including information in the public domain; (ii) subsequently learned from an independent third party free of restriction; (iii) known through no wrongful act of either party; or (iv) independently developed by one party without reference to information which is confidential.

 

3.3           Permitted Disclosures of Confidential Information.  For purposes of this Section, only the officers, trustees, directors, and employees of Sponsor, its affiliates and the Trust and those of Precious Metals Dealer, including their respective accountants, auditors, attorneys, agents or service providers, shall be authorized parties, provided those individuals have a “need to know” the Confidential Information that is consistent with their respective positions and legal obligations and responsibilities.  In the event that Confidential Information may be required to be disclosed under applicable securities laws or rules, such Confidential Information may be disclosed upon notice to the other party, which notice may be a copy of the document containing such disclosure.  In the event that one party (the “Disclosing Party”) is requested or required by a court of competent jurisdiction or by any regulatory body which regulates the conduct of the 

 

  

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Disclosing Party to disclose any Confidential Information of the other party (the “Non-Disclosing Party”), to the extent permitted by law, regulation or individual process the Disclosing Party shall provide the Non-Disclosing Party with prompt written notice of any such request or requirement so that the Non-Disclosing Party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement.  If, in the absence of a protective order or other remedy or the receipt of a waiver by the Non-Disclosing Party, the Disclosing Party is nonetheless, in the opinion of its independent outside counsel, required to disclose Confidential Information, the Disclosing Party may, without liability hereunder, disclose only that portion of the Confidential Information which such counsel advises the Disclosing Party is required to be disclosed, provided that the Disclosing Party shall take all reasonably practicable measures to preserve the confidentiality of the Confidential Information, including, without limitation, protection under the Freedom of Information Act of the federal government or any state government or by reasonably  cooperating with the Non-Disclosing Party, at the Non-Disclosing Party’s expense, to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Information.

4.           REPRESENTATIONS

 

4.1           Precious Metals Dealer’s Representations.  The Precious Metals Dealer represents and warrants to the Sponsor, the Trust and the Delivery Applicant that (such representations and warranties being deemed to be repeated upon the Precious Metals Dealer’s receipt of a copy of each Delivery Application under this Agreement):

 

a.           The Precious Metals Dealer has all necessary authority, powers, licenses and authorizations (which have not been revoked) and has taken all necessary action to enable it lawfully enter into and perform its duties and obligations under this Agreement.

 

b.           The person entering into this Agreement on behalf of the Precious Metals Dealer has been duly authorized to do so.

 

c.           This Agreement and the obligations created under it are binding upon and enforceable against the Precious Metals Dealer, in accordance with its terms and do not and will not violate the terms of the any laws, rules or regulations or any order, charge or agreement by which the Precious Metals Dealer is bound.

 

d.           Any physical gold delivered to a Delivery Applicant by the Precious Metals Dealer under this Agreement: (i) will be in the number of Fine Ounces specified in the Delivery Application; (ii) meets the minimum requirements for physical gold provided for in this Agreement and the Trust Agreement; and (iii) at the time of delivery, the physical gold will be free and clear of any lien, pledge, encumbrance, right, charge or claim (other than the rights created by the Trust Agreement).

 

e.           The Precious Metals Dealer maintains sufficient insurance coverage (including sufficient capital to satisfy any deductibles under said insurance coverage) necessary to insure the full replacement value of any physical gold moved, transported or stored by the Precious Metals Dealer during the performance of this Agreement.

 

  

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f.           All physical gold acquired by the Trust, acting through the Sponsor, from the Precious Metals Dealer under this Agreement shall be in compliance with all United States export laws.  No physical gold sold by the Precious Metals Dealer shall be exported or re-exported into, or to a national resident of: (i) any country to which the United States has embargoed goods; and (ii) anyone of the United States Treasury Department’s list of Specially Designated Nationals or the United States Commerce Department’s Table of Denial Orders.

 

4.2           Sponsor’s Representations.  The Sponsor represents and warrants to the Precious Metals Dealer that (such representations and warranties being deemed to be repeated upon the provision of a copy of each Delivery Application to the Precious Metals Dealer under this Agreement):

 

a.           The Sponsor has all necessary authority, powers, licenses and authorizations (which have not been revoked) and has taken all necessary action to enable it lawfully enter into and perform its duties and obligations under this Agreement.

 

b.           The person entering into this Agreement on behalf of the Sponsor has been duly authorized to do so.

 

c.           This Agreement and the obligations created under it are binding upon and enforceable against the Sponsor, in accordance with its terms and do not and will not violate the terms of the laws, rules or regulations or any order, charge or agreement by which the Sponsor is bound.

 

4.3           USA Patriot Act.  The Precious Metals Dealer and the Sponsor agree to use all reasonable efforts to comply with all applicable laws and regulations, including the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the “USA Patriot Act”).  In particular, the Precious Metals Dealer and the Sponsor hereby represent and warrant that: (i) they are in compliance with the USA Patriot Act; (ii) none of the funds being used to consummate transactions subject to this Agreement were derived from or related or connected to money-laundering, terrorism or any other illegal or illicit activity; and (iii) none of the transactions subject to this Agreement are schemes, or part of a scheme, involving or in support of terrorism, money-laundering or any other illegal or illicit activity.  The Precious Metals Dealer and the Sponsor each reserve the right to require the respective counterparty to provide supporting information and documentation in support of the preceding representations and warranties, or to ensure compliance with the USA Patriot Act.

 

5.           FEES AND EXPENSES

 

5.1           Transaction-Based Fees. The cost of acquiring gold other than London Bars as specified in the Delivery Application in exchange for the transfer of Unallocated Gold from the Trust Unallocated Account is borne by the Sponsor. The Precious Metals Dealer shall charge market-based rates for such conversion, which shall be agreed upon by the Sponsor prior to the conversion, and be paid by the Sponsor in US Dollars to an account identified by the Precious Metals Dealer to the Sponsor in writing.

 

5.2           Responsibility of Sponsor.  Except when otherwise specified in the Delivery Application, the Sponsor shall be responsible for all expenses relating to shipping physical gold from the Precious Metals Dealer to the Delivery Applicant as specified in the Delivery Application. Such 

 

  

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expenses will typically be billed separately to the Sponsor, but may be included in the transaction-based fee referenced in Section 5.1., as may be agreed upon between the Sponsor and the Precious Metals Dealer.

 

6.           RISK AND LIABILITY

 

6.1           Standard of Care and Risk.  The Precious Metals Dealer shall take good care, custody and control of the gold in its possession pursuant to the terms of this Agreement and shall exercise the same degree of care and diligence in safeguarding the Trust’s gold as any reasonably prudent person acting as custodian would exercise in the same circumstances.  The Precious Metals Dealer shall bear all risk of physical loss or damage thereto from the time the Delivery Application has been received by the Precious Metals Dealer in accordance with the terms and conditions set forth in the Agreement until the time the physical gold has been tendered to the courier specified by the Delivery Applicant in the Delivery Application.

 

6.2           Default or Misconduct.  Neither the Sponsor nor the Trust nor the Trustee shall be responsible for the default or misconduct of the Precious Metals Dealer.  Subject to the preceding sentence, the Precious Metals Dealer accepts sole liability for: (i) any loss or damage to gold while in the possession of, or in transit to or from, the Precious Metals Dealer; (ii) any loss or damage to gold resulting from the actions or omissions of, or the insolvency of, the Precious Metals Dealer; (iii) the amount, validity or adequacy of insurance maintained by the Precious Metals Dealer; and (iv) any defect in gold acquired by the Precious Metals Dealer or failure of such gold to conform to the requirements of the London Good Delivery Standards or the requirements for physical gold set forth in this Agreement and the Trust Agreement.

 

6.3           Failure to Deliver.  Neither the Trust nor the Trustee nor the Sponsor nor the Precious Metals Dealer shall be liable for a failure to deliver the maximum number of Fine Ounces represented by the Shares surrendered to the Trust by the Delivery Applicant.

 

6.4           Recourse.  Nothing in this Section 6 shall limit the right of the Sponsor to seek recourse against the Precious Metals Dealer if the physical gold delivered to the Delivery Applicant does not meet: (i) the amount of Fine Ounces specified in the Delivery Application; or (ii) the minimum requirements for physical gold provided for in this Agreement and the Trust Agreement.

 

6.5           Communications with Delivery Applicant.  The Sponsor shall be responsible for all communications with a Delivery Applicant concerning the Delivery Application, including the amount and quantity of physical gold to be delivered to the Delivery Applicant.

 

6.6           Cooperation.  The parties shall promptly and diligently assist each other to establish the identity of any physical gold lost or destroyed and shall take all such other reasonable steps as may be necessary to assure the maximum amount of salvage at a minimum cost.

 

6.7           Lost or Destroyed Physical Gold.  In the event of physical loss or destruction (whether through fraud, theft, negligence or otherwise and regardless of culpability by the Precious Metals Dealer) while physical gold is in the possession and control of the Precious Metals Dealer during the term of this Agreement or any renewal(s) thereof, the Precious Metals Dealer will replace the lost or destroyed physical gold within twenty (20) Business Days from the date the Precious 

 

  

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Metals Dealer becomes aware of said loss or destruction, based on the advised weight and advised assay characteristics provided in the Delivery Application.

 

6.8           Damage to Physical Gold.  Conditional upon the Sponsor giving written notice to the Precious Metals Dealer via a Delivery Application, in the event of physical damage to physical gold while the physical gold is in the possession and control of the Precious Metals Dealer during the term of this Agreement or any renewal(s) thereof, the Precious Metals Dealer will restore the portion of damaged physical gold to at least as good as state as it was prior to being so damaged or, if the damaged physical gold cannot be restored, replace the damaged physical gold on the basis of the advised weight and advised assay character provided in the Delivery Application within twenty (20) Business Days from the date the Precious Metals Dealer becomes aware of said damage.

 

6.9           Replacement.  Upon replacement of lost and/or destroyed physical gold as provided for above, the Sponsor, on behalf of the Trust, hereby agrees to and does hereby assign to the Precious Metals Dealer all of the Trust’s right, title and interest in said lost and/or destroyed physical gold.  Upon replacement of lost and/or destroyed physical gold and/or upon restoration of damaged physical gold, the Sponsor, on behalf of the Trust, hereby agrees to and does hereby assign to the Precious Metals Dealer all of its rights of recovery against third parties that are the subject of a claim and/or against whom a claim can be instituted, and to execute any documents as may be reasonably necessary to perfect such assignment upon request by the Precious Metals Dealer or the Precious Metals Dealer’s insurers.

 

 

6.10           Consequential Damages.  The Precious Metals Dealer shall not be liable under any circumstances whatsoever for special, incidental, consequential, indirect or punitive losses or damages (including lost profits or lost savings), except to the extent such losses or damages arise as a result of gross negligence or willful misconduct by the Precious Metals Dealer and whether or not the Precious Metals Dealer has knowledge that such losses or damages might be incurred.

 

6.11           Force Majeure.  The Precious Metals Dealer shall not be responsible for any failure in performance under this Agreement to the extent such failure arises, directly or indirectly, out of causes reasonably beyond its control, including default by suppliers of goods or services essential to the performance of services hereunder, acts of God, war, terrorism, governmental acts in sovereign capacity, labor disturbances and strikes, power failures or other outages, fire, flood or epidemic.

 

7.           INDEMNITY

 

7.1           To Trust, Trustee and Sponsor.  The: (i) Trust; (ii) Trustee and its directors, officers, employees, shareholders, agents and affiliates (as such term is defined under the Securities Act); and (iii) Sponsor and its directors, officers, employees, members, agents and affiliates (as such term is defined under the Securities Act) (each, a “Trust Indemnified Party”) shall be indemnified from, and held harmless by, the Precious Metals Dealer against any loss, liability or expense (including the reasonable fees and expenses of counsel) arising out of or in connection with any breach by the Precious Metals Dealer of any representation, warranty, covenant or agreement of this Agreement or the performance of its obligations under this Agreement in effecting instructions pursuant to a Delivery Application (collectively, “Effecting Delivery Applicant

 

  

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Instructions”) to the extent such loss, liability or expense was incurred without: (i) negligence, bad faith, willful misconduct or willful malfeasance on the part of such Trust Indemnified Party in connection with the performance of its obligations under this Agreement, Effecting Delivery Applicant Instructions, or any actions taken in accordance with the provisions of this Agreement; or (ii) reckless disregard on the part of such Trust Indemnified Party of its obligations and duties under this Agreement, or in Effecting Delivery Applicant Instructions.  Such indemnity also shall include payment from the Precious Metals Dealer of the reasonable costs and expenses incurred by such Trust Indemnified Party in investigating or defending itself against any such loss, liability or expense or any claim therefor.  Any amounts payable to a Trust Indemnified Party under this section may be payable in advance or shall be secured by a lien on the assets of the Precious Metals Dealer.

 

7.2           To Precious Metals Dealer.  The Precious Metals Dealer and its directors, officers, employees, shareholders, agents and affiliates (as such term is defined under the Securities Act) (each, a “Precious Metals Dealer Indemnified Party”) shall be indemnified from the Sponsor and held harmless against any loss, liability or expense (including the reasonable fees and expenses of counsel) arising out of or in connection with Effecting Delivery Applicant Instructions to the extent such loss, liability or expense was incurred without: (i)  negligence, bad faith, willful misconduct or willful malfeasance on the part of such Precious Metals Dealer Indemnified Party in connection with the performance of its obligations under this Agreement, Effecting Delivery Applicant Instructions, or any actions taken in accordance with the provisions of this Agreement; or (ii) reckless disregard on the part of such Precious Metals Dealer Indemnified Party of its obligations and duties under this Agreement, or in Effecting Delivery Applicant Instructions.  Such indemnity also shall include payment from the Sponsor of the reasonable costs and expenses incurred by such Precious Metals Dealer Indemnified Party in investigating or defending itself against any such loss, liability or expense or any claim therefor.  Any amounts payable to a Precious Metals Dealer Indemnified Party under this section may be payable in advance or shall be secured by a lien on the assets of the Sponsor.

 

7.3           Limitation.  The Precious Metals Dealer agrees that obligations assumed by the Sponsor pursuant to this Agreement shall be limited in all cases to the assets of the Sponsor.  The Precious Metals Dealer further agrees that they shall not seek satisfaction of any such obligations from the Trust or any individual shareholder of the Trust, nor from the Trustee or any of the Trustee’s officers, employees or agents, whether past, present or future, none of whom shall be personally liable therefor.

 

8.           DURATION, AMENDMENT AND TERMINATION

 

8.1           Effectiveness and Duration.  The term of this Agreement shall begin on the date first written above and shall continue in effect subject to the termination provisions and all other terms and conditions hereof.

 

8.2           Amendments.  This Agreement may only be amended or modified by mutual written agreement of the parties in writing.

 

8.3           Termination.  This Agreement may be terminated at any time by the Sponsor on 180 days’ written notice delivered or mailed by registered mail, postage prepaid, to the Precious 

 

  

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Metals Dealer.  The Precious Metals Dealer may at any time terminate this Agreement on 180 days’ written notice delivered or mailed by registered mail, postage prepaid, to the Sponsor.  This Agreement automatically and immediately will terminate in the event of its assignment.  Termination of this Agreement pursuant to Section 8 shall be without the payment of any penalty.

 

8.4           Non-performance.  If the Precious Metals Dealer fails to undertake or perform, or becomes incapable of undertaking or performing, any of the duties that by the terms of this Agreement are required to be undertaken or performed by it, and such failure or incapacity is not cured within 30 days following receipt of notice from the Sponsor of such failure or incapacity, or if the Precious Metals Dealer is adjudged bankrupt or insolvent, or a receiver of the Precious Metals Dealer or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Precious Metals Dealer or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then in any such case the Precious Metals Dealer shall be deemed conclusively to have resigned effective immediately upon written notice from the Sponsor requesting such resignation following the occurrence of any of the specified events.

 

8.5           Transition to new Precious Metals Dealer.  Prior to the termination of this Agreement as set forth in this Section 8, the Sponsor shall provide the Precious Metals Dealer with written instructions for the return of the Trust’s gold.  The Precious Metals Dealer shall promptly comply with such instructions.  The Sponsor and/or the Trust shall bear the reasonable costs of transfer or return of the Trust’s gold.

 

9.           MISCELLANEOUS

 

9.1           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts shall constitute one and the same instrument.

 

9.2           Third Party Beneficiary.  The Precious Metals Dealer and the Sponsor acknowledge and agree that this Agreement is entered into for, among other things, the benefit of the Trust and intend that the Trust shall be a third-party beneficiary of this Agreement and be entitled to enforce all of the terms hereof, including the rights granted in its favor and in favor of the Sponsor under this Agreement.  The Trust Indemnified Parties and the Precious Metals Dealer Indemnified Parties shall by third-party beneficiaries  of Section 7, as applicable.

 

9.3           Legality of Agreement.  In case any one or more of the provisions contained in this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall in no way be affected, prejudiced or disturbed thereby.

 

9.4           Notice.  All notices given under this Agreement must be in writing.  Any notice to be given to a party shall be deemed to have been duly given (i) when it is actually delivered by a messenger or recognized courier service, (ii) five days after it is mailed by registered or certified mail, postage paid, or (iii) when receipt of a facsimile transmission is acknowledged via a return receipt or receipt confirmation as requested by the original transmission, in each case to or at the address set forth below:

 

  

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To the Sponsor:

 

MERK INVESTMENTS LLC

960 San Antonio Road, #201

Palo Alto, California 94303

Attention: Axel Merk

 

Telephone: (650) 323-4341

Facsimile: (650) 745-7045

 

or to any other place to which the Sponsor may have transferred its principal office with notice to the Precious Metals Dealer.

 

To the Precious Metals Dealer:

 

COINS ‘N THINGS, INC.

350 Bedford Street

Bridgewater, Massachusetts 02324

Attention: Mark Oliari

 

Telephone: (508) 697-9600

Facsimile: (508) 697-5815

 

or to any other place to which the Precious Metals Dealer may have transferred its principal office with notice to the Sponsor.

 

9.5           Jurisdiction, Waiver of Service, Authorized Agent of Service.  Each party hereto irrevocably consents to the jurisdiction of the courts of the State of New York, and of any federal court located in the Borough of Manhattan in the City of New York in such State, in connection with any action, suit or other proceeding arising out of or relating to this Agreement or any action taken or omitted under this Agreement and waives any claim of forum non conveniens and any objections as to laying of venue.  Each party further waives personal service of any summons, complaint or other process and agrees that service thereof may be made by certified or registered mail directed to such person at such person’s address last specified for purposes of notices hereunder.  Precious Metals Dealer agrees that the requirements of service will be satisfied by delivery of process to its place of business described in Section 9.4 by delivery of process by a deputy sheriff for Plymouth County, Massachusetts.

 

9.6           Governing Law.  This Agreement shall be interpreted under, and all rights and duties under this Agreement shall be governed by, the internal substantive laws (but not the choice of law rules) of the State of New York.

 

9.7           Survival.  The provisions of Sections 1.2, 2.1(d), 9.2, 9.3, 9.5, 9.6 and 9.7 and of Sections 3, 4, 6, 7 and 8 hereof shall survive the Delivery of physical gold to the Delivery Applicant and any expiration, termination or rescission of this Agreement, or the resignation or removal of the Trustee, Sponsor or Precious Metals Dealer.

 

  

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[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, MERK INVESTMENTS LLC and COINS ‘N THINGS have duly executed this Transaction and Shipping Agreement as of the day and year first set forth above.

 

	 	MERK INVESTMENTS LLC, as Sponsor	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	 	 
	 	Name:	 	 
	 	 	 	 
	 	Title:	 	 

 

 

 

 

	 	COINS ‘N THINGS, as Precious Metals Dealer	 
	 	 	 	 
	 	 	 	 
	
  

	
By: 

	 	 
	 	 	 	 
	 	Name:	 	 
	 	 	 	 
	 	Title:	 	 

 

 

[Signature Page to Transaction and Shipping Agreement]

 

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