Exhibit 1.1
[ ]
iShares
iSHARES SILVER TRUST
DISTRIBUTION AGREEMENT
[ ],
2005
DISTRIBUTION AGREEMENT
[ ],
2005
Barclays Capital Inc.
200 Park Avenue
New York, NY 10166
Ladies and Gentlemen:
Barclays Global Investors
International Inc., a Delaware corporation (the
“Sponsor”), has sponsored the formation of a trust,
known as “iShares Silver Trust” (the
“Trust”) pursuant to the laws of the State of New York.
Subject to the terms hereof, the Trust has issued to Barclays
Capital Inc. (“Barclays Capital”) an aggregate of
[ ]
units of fractional undivided beneficial interest in and ownership
of the Trust (each such unit, an “iShare
®
”) upon the deposit by
Barclays Capital with JPMorgan Chase Bank N.A., a national banking
association organized under the laws of the United States of
America acting through its London branch as custodian of the Trust
(in such capacity, the “Custodian”), of an aggregate
amount of
[ ]
Ounces of silver bullion, (equal to
[ ]
baskets as described in the Prospectus, the “Initial
Deposit”). The iShares are described in the Prospectus which
is referred to below.
The Sponsor has filed, in accordance
with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations thereunder (collectively, the
“Act”), with the Securities and Exchange Commission
(the “Commission”) a registration statement on Form S-1
(Registration No.
333-[ ])
including a prospectus, relating to the iShares. The Sponsor has
furnished to you, for use by Barclays Capital, the form of what is
expected to be the final prospectus (constituting a part of the
registration statement, each such prospectus being herein called a
“Prospectus”) relating to the iShares. Except where the
context otherwise requires, the registration statement, as amended
when it becomes effective, including all documents filed as a part
thereof, and including any information contained in any prospectus
subsequently filed with the Commission pursuant to Rule 424(b)
under the Act and also including any registration statement filed
pursuant to Rule 462(b) under the Act, is herein called the
“Registration Statement”. As used herein,
“business day” shall mean a day on which the American
Stock Exchange is open for trading. Capitalized terms not otherwise
defined herein shall have the meaning ascribed to them in the
Depositary Trust Agreement (as defined below).
The Sponsor, on its own behalf and
in its capacity as sponsor of the Trust, and Barclays Capital agree
as follows:
1. Sale and Purchase . Upon
the basis of the representations and warranties and subject to the
terms and conditions herein set forth (including satisfaction of
the conditions set forth in section 6 hereof), Barclays Capital is
purchasing from the Trust
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iShares (such iShares, collectively, the “Purchased
Shares”) in exchange for silver bullion which, in the amount
of the Initial Deposit, has been delivered by Barclays Capital to
the Custodian on the date hereof. The Sponsor and the Trust are
advised by Barclays Capital that, upon satisfaction (or waiver by
Barclays Capital) of the conditions set forth in section 6 hereof,
Barclays Capital intends to make a public offering of its iShares
as soon after the effective date of the Registration Statement, and
on such terms, as in its judgment is advisable.
2. Deposit of Silver and Delivery
of the Purchased Shares . Pursuant to the Depositary Trust
Agreement of the iShares Silver Trust between the Sponsor and the
Trustee (the “Depositary Trust Agreement”), dated the
date hereof, Barclays Capital has on the date hereof made delivery
of the Initial
Deposit to the Custodian, with irrevocable
instructions to transfer such Initial Deposit to the account of the
Trust, and the Trust has caused the Purchased Shares to be
delivered to Barclays Capital through the facilities of The
Depository Trust Company (“DTC”) for the account of
Barclays Capital.
3. Representations and Warranties
of the Sponsor . The Sponsor, on its own behalf and in its
capacity as sponsor of the Trust, represents and warrants to and
agrees with Barclays Capital that:
(a) at the time the conditions set
forth in section 6 hereof have been waived or satisfied (such time,
the “time of closing”) (i) the Registration Statement
shall have become effective and no stop order of the Commission
with respect thereto shall have been issued and no proceedings for
such purpose shall have been instituted or, to the Sponsor’s
knowledge after due inquiry, will then be contemplated by the
Commission; (ii) each Prospectus, at the time of filing thereof,
shall have complied in all material respects with the requirements
of the Act and the last Prospectus distributed in connection with
the offering of the shares shall not contain an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; (iii) the Registration Statement shall comply, and
shall have complied at the time it became effective, in all
material respects with the requirements of the Act and the
Prospectus will comply, as of its date and at the time of closing,
in all material respects with the requirements of the Act and any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
have been so described or filed; (iv) the conditions to the use of
Form S-1 have been satisfied; (v) the Registration Statement shall
not contain, and shall have not contained at the time it became
effective, an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the
Sponsor makes no warranty or representation with respect to any
statement contained in the Registration Statement or the Prospectus
in reliance upon and in conformity with information concerning
Barclays Capital and furnished in writing by or on behalf of
Barclays Capital to the Sponsor expressly for use in the
Registration Statement or such Prospectus; and (vi) the Sponsor and
the Trust shall have not distributed and will not distribute any
offering material in connection with the offering or creation of
the shares other than the Registration Statement or the then most
recent Prospectus;
(b) on the date of the Initial
Deposit, the statement of financial position is as set forth in the
section of the Registration Statement and the Prospectus entitled
“Statement of Financial Condition”;
(c) as of the date hereof, the Trust
has been duly formed and is validly existing as an investment trust
under the laws of the State of New York, as described in the
Registration Statement and the Prospectus, and has all power and
authority to issue and deliver the iShares as contemplated
herein;
(d) the Sponsor is a Delaware
corporation, with full power and authority to conduct its business
as described in the Registration Statement and the
Prospectus;
(e) the Sponsor is duly qualified,
validly existing and in good standing under the laws of its
jurisdiction of organization; and the Trust is not required to so
qualify in any jurisdiction;
(f) complete and correct copies of
the Depositary Trust Agreement, and any and all amendments thereto,
have been delivered to Barclays Capital, and no changes thereto
have been made subsequent to the date hereof and prior to the time
of closing;
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(g) the iShares have been duly and
validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued, fully
paid and non-assessable and free of statutory and contractual
preemptive rights, rights of first refusal and similar
rights;
(h) the iShares conform in all
material respects to the description thereof contained in the
Registration Statement and the Prospectus and the holders of the
iShares will not be subject to personal liability by reason of
being such holders;
(i) this Agreement has been duly
authorized, executed and delivered by the Sponsor;
(j) neither the Sponsor nor the
Trust is in material breach or material violation of or in material
default under (nor has any event occurred which with notice, lapse
of time or both would result in any material breach or material
violation of, constitute a material default under or give the
holder of any indebtedness (or a person acting on such
holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a part of such indebtedness
under) its respective constitutive documents, or any indenture,
mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which the Sponsor or the Trust is a
party or by which either of them or any of their properties may be
bound or affected, and the execution, delivery and performance of
this Agreement, the issuance and sale of the iShares and the
consummation of the transactions contemplated hereby will not
conflict with, result in any breach or violation of or constitute a
default under (nor constitute any event which with notice, lapse of
time or both would result in any breach or violation of or
constitute a default under), respectively, the constitutive
documents of the Sponsor or the Depositary Trust Agreement, or any
indenture, mortgage, deed of trust, bank loan or credit agreement
or other evidence of indebtedness, or any license, lease, contract
or other agreement or instrument to which the Sponsor or the Trust
is a party or by which either of them or any of their respective
properties may be bound or affected, or any federal, state, local
or foreign law, regulation or rule or any decree, judgment or order
applicable to the Sponsor or the Trust;
(k) no approval, authorization,
consent or order of or filing with any federal, state, local or
foreign governmental or regulatory commission, board, body,
authority or agency is required in connection with the issuance and
sale of the iShares or the consummation by the Sponsor and the
Trust of the transactions contemplated hereby other than
registration of the iShares under the Act, which has been or will
be effected, and any necessary qualification under the securities
or blue sky laws of the various jurisdictions in which the shares
are being offered by Barclays Capital or under the rules and
regulations of the National Association of Securities Dealers (the
“NASD”);
(l) except as set forth in the
Registration Statement and the Prospectus, (i) no person has the
right, contractual or otherwise, to cause the Trust to issue or
sell to it any iShares or other equity interest of the Trust, and
(ii) no person has the right to act as an underwriter or as a
financial advisor to the Trust in connection with the offer and
sale of the iShares, in the case of each of the foregoing clauses
(i) and (ii), whether as a result of the filing or effectiveness of
the Registration Statement or the sale of the iShares as
contemplated thereby or otherwise; no person has the right,
contractual or otherwise, to cause the Sponsor on behalf of the
Trust to register under the Act any other equity interests of the
Trust, or to include any such shares or interests in the
Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the shares as contemplated
thereby or otherwise;
(m) each of the Sponsor and the
Trust has all necessary licenses, authorizations, consents and
approvals and has made all necessary filings required under any
federal, state, local or foreign law, regulation or rule, and has
obtained all necessary authorizations, consents and approvals from
other persons, in order to conduct its respective business; neither
the Sponsor nor the Trust is in violation
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of, or in default under, or has received notice
of any proceedings relating to revocation or modification of, any
such license, authorization, consent or approval or any federal,
state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Sponsor or the
Trust;
(n) all legal or governmental
proceedings, affiliate transactions, off-balance sheet
transactions, contracts, licenses, agreements, leases or documents
of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed as
required;
(o) except as set forth in the
Registration Statement and the Prospectus, there are no material
actions, suits, claims, investigations or proceedings pending or
threatened or, to the Sponsor’s knowledge after due inquiry,
contemplated to which the Sponsor or the Trust, or (to the extent
that is or could be material in the context of the offering and
sale of the iShares) any of their respective directors or officers,
is or would be a party or of which any of their respective
properties are or would be subject at law or in equity, before or
by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency;
(p) PricewaterhouseCoopers, whose
report on the audited statement of financial condition of the Trust
is filed with the Commission as part of the Registration Statement
and the Prospectus, are independent public accountants as required
by the Act;
(q) the audited statement of
financial condition included in the Prospectus, together with the
related notes and schedules, presents fairly the financial position
of the Trust as of the date indicated and has been prepared in
compliance with the requirements of the Act and in conformity with
generally accepted accounting principles; there are no financial
statements (historical or pro forma) that are required to be
included in the Registration Statement and the Prospectus that are
not included as required; and the Trust does not have any material
liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not disclosed in the Registration
Statement and the Prospectus;
(r) subsequent to the respective
dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any (i) material
adverse change, or any development involving a prospective material
adverse change affecting the Sponsor or the Trust, (ii) transaction
which is material to the Sponsor or the Trust taken as a whole,
(iii) obligation, direct or contingent (including any off-balance
sheet obligations), incurred by the Sponsor or the Trust, which is
material to the Trust, (iv) change in the iShares or outstanding
indebtedness of the Trust, or (v) dividend or distribution of any
kind declared, paid or made on the iShares;
(s) the Trust is not and, after
giving effect to the offering and sale of the iShares, will not be
an “investment company” or an entity
“controlled” by an “investment company,” as
such terms are defined in the investment Company Act of 1940, as
amended (the “Investment Company Act”);
(t) except as set forth in the
Registration Statement and the Prospectus, (i) the Sponsor and the
Trust own, or have obtained valid and enforceable licenses for, or
other rights to use, the inventions, patent applications, patents,
trademarks (both registered and unregistered), tradenames,
copyrights, trade secrets and other proprietary information
described in the Registration Statement and the Prospectus as being
owned or licensed by them or which are necessary for the conduct of
their respective businesses, (collectively, “Intellectual
Property”); (ii) there are no third parties who have or, to
the Sponsor’s knowledge after due inquiry, will be able to
establish rights to any Intellectual Property, except for the
ownership rights of the owners of the Intellectual Property which
is licensed to the Sponsor or the Trust; (iii) there is no
infringement by third parties of any Intellectual Property; (iv)
there is no pending or threatened action, suit, proceeding or claim
by others challenging the Sponsor’s or the Trust’s
rights in or
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to any Intellectual Property, and the Sponsor
and the Trust are unaware of any facts which could form a
reasonable basis for any such claim; (v) there is no pending or
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any Intellectual Property, and the Sponsor
and the Trust are unaware of any facts which could form a
reasonable basis for any such claim; and (vi) there is no pending
or threatened action, suit, proceeding or claim by others that the
Sponsor or the Trust infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of
others, and the Sponsor and the Trust are unaware of any facts
which could form a reasonable basis for any such claim.
(u) the Trust is not subject to any
tax filing or any payment obligation of any tax or other assessment
of a similar nature (whether imposed directly or through
withholding) including any interest, additions to tax or penalties
applicable thereto due or claimed to be due;
(v) neither the Sponsor nor the
Trust has sent or received any communication regarding termination
of, or intent not to renew, any of the contracts or agreements
referred to or described in, or filed as an exhibit to, the
Registration Statement, and no such termination or non-renewal has
been threatened by the Sponsor or the Trust or, to the
Sponsor’s or the Trust’s knowledge, any other party to
any such contract or agreement;
(w) on behalf of the Trust, the
Sponsor has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 and 15d-14 under
the Exchange Act of 1934 (the “Exchange Act”), giving
effect to the rules and regulations, and SEC staff interpretations
(whether or not public), thereunder)); such disclosure controls and
procedures are designed to ensure that material information
relating to the Trust, is made known to the Sponsor, and such
disclosure controls and procedures are effective to perform the
functions for which they were established; on behalf of the Trust,
the Sponsor has been advised of: (i) any significant deficiencies
in the design or operation of internal controls which could
adversely affect the Trust’s ability to record, process,
summarize, and report financial data; and (i) any fraud, whether or
not material, that involves management or other employees who have
a role in the Trust’s internal controls; any material
weaknesses in internal controls have been identified for the
Trust’s auditors;
(x) any statistical and
market-related data included in the Registration Statement and the
Prospectus are based on or derived from sources that the Sponsor
believes to be reliable and accurate, and the Sponsor has obtained
the written consent to the use of such data from such sources to
the extent required;
(y) neither the Sponsor, nor the
Trust, nor any of the Sponsor’s directors, members, officers,
affiliates or controlling persons has taken, directly or
indirectly, any action designed, or which has constituted or might
reasonably be expected to cause or result in, under the Exchange
Act or otherwise, the stabilization or manipulation of the price of
any security or asset of the Trust to facilitate the sale or resale
of the iShares; and
(z) to the Sponsor’s knowledge
after due inquiry, there are no affiliations or associations
between any member of the NASD and any of the Sponsor’s
officers, directors or 5% or greater securityholders, except for
Barclays Global Investor Services, a registered broker-dealer
wholly owned by an affiliate of the Sponsor (and which will take no
part in any distribution of the iShares) or as set forth in the
Registration Statement and the Prospectus.
In addition, any certificate signed
by any officer of the Sponsor and delivered to Barclays Capital or
counsel for Barclays Capital in connection with the offering of the
iShares shall be deemed to be a representation and warranty by the
Sponsor, as the case may be, as to matters covered thereby, to
Barclays Capital.
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4. Certain Covenants of the
Sponsor . The Sponsor, on its own behalf and in its capacity as
sponsor of the Trust, agrees:
(a) to furnish such information as
may be required and otherwise to cooperate in qualifying the
iShares for offering and sale under the securities or blue sky laws
of such states as Barclays Capital may reasonably designate and to
maintain such qualifications in effect so long as Barclays Capital
may request for the distribution of the iShares not to exceed a
period of nine months; provided that the Trust shall not be
required to qualify as a foreign corporation or to consent to the
service of process under the laws of any such jurisdiction (except
service of process with respect to the offering and sale of the
iShares); and to promptly advise Barclays Capital of the receipt by
the Sponsor of any notification with respect to the suspension of
the qualification of the iShares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose;
(b) to make available to Barclays
Capital, as soon as practicable after the Registration Statement
becomes effective, and thereafter from time to time to furnish to
Barclays Capital, as many copies of the Prospectus (or of the
Prospectus as amended or supplemented if the Sponsor or the Trust
shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) as Barclays Capital
may request for the purposes contemplated by the Act; in case
Barclays Capital is required to deliver a prospectus after the
nine-month period referred to in Section 10(a)(3) of the Act in
connection with the sale of the iShares, the Sponsor will prepare,
at its expense, promptly upon request such amendment or amendments
to the Registration Statement and the Prospectus as may be
necessary to permit compliance with the requirements of Section
10(a)(3) of the Act;
(c) to endeavor to cause the
Registration Statement to become effective on or before the time of
closing and the Sponsor will advise Barclays Capital promptly; and,
if requested by Barclays Capital, to confirm in writing when the
Registration Statement and any post-effective amendment thereto has
become effective; and (iii) upon receipt of request from Barclays
Capital therefor, to file a post-effective amendment removing any
reference to Barclays Capital thereunder;
(d) to advise Barclays Capital
promptly, confirming such advice in writing, of any request by the
Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information with
respect thereto, or of notice of institution of proceedings for, or
the entry of a stop order suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop
order suspending the effectiveness of the Registration Statement,
to use its best efforts to obtain the lifting or removal of such
order as soon as possible; to advise Barclays Capital promptly of
any proposal to amend or supplement the Registration Statement or
the Prospectus and to provide Barclays Capital and Barclays
Capital’s counsel copies of any such documents for review and
comment a reasonable amount of time prior to any proposed filing
and to file no such amendment or supplement to which Barclays
Capital shall object in writing;
(e) subject to section 4(d) hereof,
to file promptly all reports and any information statement required
to be filed by the Trust with the Commission in order to comply
with the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Purchased
Shares;
(f) to advise Barclays Capital
promptly of the happening of any event within the time during which
a prospectus relating to the Purchased Shares is required to be
delivered under the Act which could require the making of any
change in the Prospectus then being used so that the
Prospectus
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would not include an untrue statement of
material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under
which they are made, not misleading, and, during such time, subject
to section 4(d) hereof, to prepare and furnish, at the
Sponsor’s expense, to Barclays Capital promptly such
amendments or supplements to such Prospectus as may be necessary to
reflect any such change;
(g) to make generally available to
the shareholders of the Trust, and to deliver to Barclays Capital,
an earnings statement of the Trust (which will satisfy the
provisions of Section 11(a) of the Act) covering a period of twelve
months beginning after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Act) as soon as is
reasonably practicable after the termination of such twelve-month
period;
(h) to furnish to Barclays Capital
promptly for a period of one year from the date of this Agreement
such information as Barclays Capital may reasonably request
regarding the Trust;
(i) to pay all costs, expenses, fees
and taxes in connection with (i) the preparation and filing of the
Registration Statement, the Prospectus, and any amendments or
supplements thereto, and the printing and furnishing of copies of
each thereof to Barclays Capital (including costs of mailing and
shipment), (ii) the registration, issue, sale and delivery of the
iShares including any stock or transfer taxes and stamp or similar
duties payable upon the sale, issuance or delivery of the shares to
Barclays Capital, (iii) the producing, word processing and/or
printing of this Agreement, any Powers of Attorney and any closing
documents (including compilations thereof) and the reproduction
and/or printing and furnishing of copies of each thereof to
Barclays Capital and (except closing documents) to dealers
(including costs of mailing and shipment), (iv) the qualification
of the iShares for offering and sale under state or foreign laws
and the determination of their eligibility for investment under
state law as aforesaid (including the legal fees and filing fees
and other disbursements of counsel for Barclays Capital) and the
printing and furnishing of copies of any blue sky surveys or legal
investment surveys to Barclays Capital, (v) any listing of the
iShares on any securities exchange or qualification of the iShares
for quotation on the American Stock Exchange and any registration
thereof under the Exchange Act, (vi) any filing for review of the
public offering of the iShares by the NASD, including the legal
fees and filing fees and other disbursements of counsel to Barclays
Capital, (vi) the fees and disbursements of the Custodian (as
defined in the Depositary Trust Agreement), transfer agent or
registrar for the iShares, (vii) the costs and expenses of the
Trust relating to presentations or meetings undertaken in
connection with the marketing of the offering and sale of the
iShares to prospective investors and Barclays Capital’s sales
forces, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of
any consultants engaged in connection with the road show
presentations, travel, lodging and other expenses incurred by the
officers of the Sponsor or the Trust and any such consultants, and
the cost of any aircraft chartered in connection with the road
show, and (ix) the performance of the Sponsor’s other
obligations hereunder;
(j) to use its best efforts to cause
the iShares to be listed on the American Stock Exchange;
(k) to maintain a Custodian (as
defined in the Depositary Trust Agreement) and an orderly procedure
for the transfer and register of the iShares; and
(l) to waive until the time of
closing any fees due under Section 5.8(a) of the Depositary Trust
Agreement.
5. Reimbursement of Barclays
Capital’s Expenses . The Sponsor shall, at the earlier of
the time of closing and the first business day immediately
following the last day on which the conditions
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referred to in section 6 hereof may be
satisfied, reimburse Barclays Capital for all of its out-of-pocket
expenses, including the fees and disbursements of counsel, incurred
by Barclays Capital in connection with the preparation of this
Agreement and the transactions contemplated hereby.
6. Conditions of Barclays
Capital’s Obligations . The obligations of Barclays
Capital hereunder are subject to the accuracy of the
representations and warranties contained herein on the date hereof
(if applicable), at the time of closing, the performance by the
Sponsor of its obligations hereunder and compliance with the
following additional conditions precedent no later than on
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2005:
(a) The Sponsor shall furnish to
Barclays Capital at the time of closing an opinion of counsel for
the Sponsor, addressed to Barclays Capital, and dated the time of
closing and in form and substance satisfactory to Clifford Chance
US LLP, counsel for Barclays Capital, stating that:
(i) the iShares issuable hereunder,
when issued in accordance with the terms hereof will have been duly
authorized and validly issued and fully paid and
non-assessable;
(ii) the iShares conform to the
description thereof contained in the Registration Statement and the
Prospectus;
(iii) the Registration Statement and
the Prospectus (except as to the financial statements and schedules
and other financial and statistical information contained therein,
as to which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the
Act;
(iv) the Registration Statement has
become effective under the Act and, to such counsel’s
knowledge, no stop order proceedings with respect thereto are
pending or threatened under the Act and any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424 under
the Act has been made in the manner and within the time period
required by
