As
filed with the Securities and Exchange Commission on
November
8,
2004
Registration
No.
333-105202
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
AMENDMENT
NO.
4
TO
Form
S-1
REGISTRATION STATEMENT
UNDER
THE
SECURITIES ACT OF
1933
streetTRACKS
®
GOLD TRUST
SPONSORED BY WORLD GOLD
TRUST SERVICES,
LLC
(Exact name of
Registrant as specified in its
charter)
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New
York
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6189
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•
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(State or other
jurisdiction of
incorporation or
organization)
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(Primary Standard
Industrial
Classification Code
Number)
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(I.R.S. Employer
Identification
No.)
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c/o World Gold Trust
Services, LLC
444 Madison Avenue,
3
rd
Floor
New York, New York 10022
(212)
317-3800
(Address, including zip
code, and telephone number, including area code, of Registrant's
principal executive
offices)
Steven
J. Glusband, Esq.
Kathleen H. Moriarty,
Esq.
Carter Ledyard & Milburn LLP
2 Wall
Street
New York, New York 10005
(212)
732-3200
(Name, address, including
zip code, and telephone number, including area code, of agent for
service)
Copies
to:
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Mr.
J. Stuart Thomas
World Gold Trust Services, LLC
444 Madison
Avenue,
3
rd
Floor
New York, New York 10022
(212)
317-3800
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Kevin W. Kelley,
Esq.
Gibson, Dunn & Crutcher
LLP
200 Park
Avenue
New York, New York
10166
(212)
351-4000
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John
Altorelli, Esq.
Paul, Hastings, Janofsky
& Walker LLP
75 East 55
th
Street
New York, New York
10022
(212)
318-6000
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Approximate
date of commencement of proposed sale to the public:
As soon as
practicable after this
registration
statement becomes
effective.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box.
![[X]](https://content.edgar-online.com/edgar_conv_img/2004/11/08/0000950136-04-003776_XBOX.GIF)
If this Form is filed
to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act of 1933, check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
![[ ]](https://content.edgar-online.com/edgar_conv_img/2004/11/08/0000950136-04-003776_EBOX.GIF)
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act of 1933, check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act of
1933, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering.
If delivery of the
prospectus is expected to be made pursuant to Rule 434, please check
the following box.
Calculation
of Registration Fee
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Title
of
each
class
of securities
to be registered
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Amount to
be
registered
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Proposed
maximum
offering
price
per Share
(1)
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Proposed
maximum
aggregate
offering
price
(1)
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Amount of
registration
fee
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streetTRACKS
®
Gold
Shares
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120,000,000
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$
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42.35
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$
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4,525,716,000
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$
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481,732.37
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(2)
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(1)
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Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(d) under
the Securities Act of 1933. The initial amount of gold required for
deposit with the
streetTRACKS
®
Gold Trust to
create streetTRACKS
®
Gold Shares is 10,000 ounces per
Basket (a Basket is 100,000 Shares). The price of gold used to
calculate the proposed maximum offering price per Share is
$42.35,
which is based upon the
November
3,
2004 afternoon gold price fix in London.
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(2)
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Of this amount $161,933.97 was previously
paid with respect to 60,400,000 Shares.
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The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment
which specifically states that this registration statement shall
thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission,
acting pursuant to said section 8(a), may
determine.
The
information in this preliminary prospectus is not complete and may be
changed. These
securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary
prospectus is not an offer to sell these securities and
the Sponsor and the
Trust are not soliciting an offer to buy these securities in
any jurisdiction where the offer or sale is not
permitted.
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PRELIMINARY
PROSPECTUS
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Subject
to
Completion
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November 8, 2004
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120,000,000
Shares
street
TRACKS®
Gold
Shares
The
streetTRACKS® Gold
Trust (Trust) will issue
streetTRACKS® Gold
Shares
(Shares) which represent
units of fractional
undivided beneficial interest in and ownership
of the Trust. World Gold Trust Services, LLC is the
sponsor of the
Trust (Sponsor), The Bank of
New York is the trustee of the Trust
(Trustee),
HSBC Bank
USA,
N.A. is the custodian of the
Trust (Custodian) and State
Street Global Markets, LLC is the marketing agent of the Trust
(Marketing Agent).
The Trust intends
to issue additional Shares on a continuous basis
through its
Trustee.
The Shares may be purchased from
the Trust only in one
or more blocks of 100,000 Shares (a block of
100,000 Shares is called a Basket).
The Trust will issue
Shares in Baskets to certain authorized
participants (Authorized
Participants) on
an ongoing basis as described in "Plan of
Distribution."
Baskets will be offered
continuously at the
net
asset value (NAV) for 100,000 Shares on the
day that an order to create a Basket is
accepted by the
Trustee.
Prior to this
offering, there has been no public market for the Shares.
The Sponsor has applied for approval to list the Shares on the New York
Stock Exchange (NYSE) under the symbol
"GLD."
Investing in the Shares involves significant risks.
See "Risk Factors" starting on page
7.
Neither the Securities and Exchange Commission
(SEC) nor any
state securities commission has approved or
disapproved of the securities offered in this
prospectus, or determined if this prospectus is truthful or
complete. Any representation to the contrary
is a criminal
offense.
The Shares are neither interests in nor obligations of
the
Sponsor,
the Trustee
or
the Marketing
Agent.
streetTRACKS®
is a registered service mark of State Street Corporation, an affiliate
of the Marketing
Agent.
The
Trust will issue Shares from time to time in Baskets, as described in
"Creation and Redemption of Shares."
It is expected that
the Shares will be sold to the public at
varying prices to be determined by reference to, among other
considerations, the price of gold and the trading price of the Shares on the NYSE at the time of
each sale.
Shares
The
Trust is offering
Shares (Underwritten Shares) through UBS
Securities LLC, also called the Purchaser, as underwriter. The Purchaser has, subject to
conditions, agreed to purchase the Underwritten Shares at a per Share price equal to one-tenth (1/10) of an ounce
of gold, as described in "Plan of
Distribution." Total proceeds
to the Trust from the sale of the Underwritten Shares will be
ounces of gold. Delivery of the Underwritten Shares is expected to be made on
a date between
November
and
, 2004.
The
public offering price of the Underwritten Shares will be determined
as described
above and
such Shares could be sold at different prices if
sold by the Purchaser
at different times.
In connection with the
offering and sale of the Underwritten Shares, the Purchaser will be
paid an aggregate fee by the Sponsor of
$ .
The Purchaser may also receive an advisory fee payable by the
Sponsor within one month after the
initiation of trading in the Shares (to be paid in the sole discretion
of the Sponsor depending on the success of
the Trust at such time) in the amount of
$
million for advice provided by the Purchaser in the original
structuring of the Trust. In addition to such fees, the Purchaser
may receive commissions/fees from investors
through their commission/fee-based brokerage accounts, in amounts between
$
and
$
.
UBS
Investment
Bank
This
prospectus contains information you should consider when making an
investment decision about the Shares. You may rely on the information
contained in this prospectus. The Trust and the Sponsor have not
authorized any person to provide you with different information and, if
anyone provides you with different or inconsistent information, you
should not rely on it. This prospectus is not an offer to sell the
Shares in any jurisdiction where the offer or sale of the Shares is not
permitted.
The Shares are not registered for public sale in any
jurisdiction other than the United States.
TABLE OF CONTENTS
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Statement
Regarding Forward-Looking
Statements
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ii
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Glossary of Defined
Terms
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iii
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Prospectus
Summary
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1
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Risk
Factors
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7
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Use of
Proceeds
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16
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Overview of the Gold
Industry
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17
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Operation of the Gold Bullion
Market
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23
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Analysis of Movements in the Price of
Gold
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26
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Business of the
Trust
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28
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Description of
the
Trust
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33
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The
Sponsor
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35
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The
Trustee
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37
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The
Custodian
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38
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The
Marketing
Agent
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39
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Description of the
Shares
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42
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Custody of the Trust's
Gold
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44
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Description of the Custody
Agreements
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47
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Creation and Redemption of
Shares
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51
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Description of the Trust Indenture
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57
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United States Federal Tax
Consequences
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67
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ERISA and Related
Considerations
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71
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Plan of
Distribution
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72
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Legal
Proceedings
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75
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Legal
Matters
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75
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Experts
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75
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Where You Can Find More
Information
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75
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Statement of Financial
Condition
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F-2
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Until
,
2004 (25 days after the
date of this prospectus), all dealers effecting transactions in the
Shares, whether or not
participating in this distribution, may be required to deliver a
prospectus. This requirement is in addition to the obligations of
dealers to deliver a prospectus when acting as underwriters and with
respect to unsold allotments or
subscriptions.
The
information contained in
the sections captioned
"Overview of the Gold Industry,"
"Operation of the Gold Bullion
Market" and
"Analysis of Movements in the Price of
Gold"
is based on information
obtained from sources
that the Sponsor believes are reliable. This
prospectus
summarizes certain documents and other information in a manner
the
Sponsor
believes to be
accurate. In making an investment decision, you must rely on your own
examination of the Trust, the gold industry, the operation of the gold
bullion market and the terms of the offering and the
Shares,
including the merits and risks involved.
Although the Sponsor believes this information to be reliable, the
accuracy and completeness of this information is not guaranteed and has
not been independently
verified.
i
Statement Regarding Forward-Looking
Statements
This prospectus includes
"forward-looking statements" which generally
relate to future events or future performance. In some cases, you can
identify forward-looking statements by terminology such as
"may," "will,"
"should," "expect,"
"plan,"
"anticipate,"
"believe,"
"estimate,"
"predict,"
"potential" or the negative of these terms or
other comparable terminology. All statements (other than statements of
historical fact) included in this prospectus that address activities,
events or developments that will or may occur in the future, including
such matters as changes in commodity prices and market conditions (for
gold and the Shares), the Trust's operations, the Sponsor's
plans and references to the Trust's future success and other
similar matters are forward-looking statements. These statements are
only predictions. Actual events or results may differ materially. These
statements are based upon certain assumptions and analyses the Sponsor
made based on its perception of historical trends, current conditions
and expected future developments, as well as other factors appropriate
in the circumstances. Whether or not actual results and developments
will conform to the Sponsor's expectations and predictions,
however, is subject to a number of risks and uncertainties, including
the special considerations discussed in this prospectus, general
economic, market and business conditions, changes in laws or
regulations, including those concerning taxes, made by governmental
authorities or regulatory bodies, and other world economic and
political developments. See "Risk Factors."
Consequently, all the forward-looking statements made in this
prospectus are qualified by these cautionary statements, and there can
be no assurance that the actual results or developments the Sponsor
anticipates will be realized or, even if substantially realized, that
they will result in the expected consequences to, or have the expected
effects on, the Trust's operations or the value of the Shares.
Moreover, neither the Sponsor nor any other person assumes
responsibility for the accuracy or completeness of the forward-looking
statements. Neither the Trust nor the Sponsor is under a duty to update
any of the forward-looking statements to conform such statements to
actual results or to reflect a change in the
Sponsor's expectations or
predictions.
ii
Glossary
of
Defined
Terms
In this prospectus, each of the following quoted terms have the
meanings set forth after such term:
"Allocated
Bullion Account Agreement" —
The
agreement between the Trustee and the Custodian which establishes the
Trust Allocated Account. The Allocated Bullion Account Agreement and
the
Unallocated
Bullion Account Agreement are sometimes referred to together as the
"Custody
Agreements."
"ANAV"
— Adjusted NAV. See "Description of the Trust
Indenture — Valuation of Gold, Definition of Net Asset Value and
Adjusted Net Asset Value" for a description of how the
ANAV of the Trust is calculated. The ANAV of the Trust is used to
calculate the
fees
of the Trustee, the Sponsor and the Marketing
Agent.
"Authorized
Participant" — A person who (1) is a registered
broker-dealer or other securities market
participant such as a bank or other
financial institution which is not required to register as a
broker-dealer to engage in securities
transactions, (2) is a participant in DTC,
(3) has entered into a Participant Agreement with the Trustee and (4)
has established an Authorized Participant Unallocated Account with the
Custodian. Only Authorized Participants may place orders to create or
redeem one or more Baskets.
"Authorized Participant
Unallocated Account" — An unallocated gold account
established with the Custodian by an Authorized Participant. Each
Authorized Participant's Authorized Participant Unallocated
Account will be used to facilitate the transfer of gold deposits and
gold redemption distributions between the Authorized Participant and
the Trust in connection with the creation and redemption of
Baskets.
"Basket" — A block of
100,000 Shares. Multiple blocks of 100,000 Shares are called
"Baskets."
"BNY" — The Bank of New York,
a
banking
corporation organized under the laws of the
State of New York with trust powers. BNY is the trustee of the
Trust.
"Book Entry
System" — The Federal Reserve Treasury Book Entry
System for United States and federal agency
securities.
"CEA" — Commodity Exchange Act of
1936, as
amended.
"CFTC"
— Commodity Futures Trading Commission, an independent agency
with the mandate to regulate commodity futures and option markets in
the United States.
"Clearing Agency"
— Any clearing agency or similar system other than the Book Entry
System or DTC.
"Code" — The
United States Internal Revenue Code of 1986, as amended.
"Creation Basket Deposit" — The
total deposit required to create a
Basket.
The deposit
will be an amount of gold and cash, if any,
that is in the same proportion to the total assets of the Trust (net
of estimated
accrued but unpaid fees,
expenses and other liabilities) on the date
an
order to purchase one or more Baskets
is properly received as the number of Shares
comprising
the number of Baskets
to be created in respect of the deposit
bears to the total number of Shares outstanding on the date
such
order is properly
received.
"Custodian" — HSBC Bank
USA,
N.A., a national banking association and
a market maker, clearer
and approved weigher under the rules of the
LBMA.
"Custody Agreements" — The
Allocated Bullion Account Agreement together with the Unallocated
Bullion Account Agreement.
"Custody
Rules" — The rules, regulations, practices and
customs of the LBMA, the Bank of England or any applicable regulatory
body which apply to gold made available in physical form by the
Custodian.
"DTC" — The
Depository Trust Company. DTC is a limited purpose trust company
organized under New York law, a member of the US Federal Reserve System
and a
clearing
agency registered with the SEC. DTC will act as the securities
depository for the Shares.
"DTC
Participant" — Participants in DTC, such as banks,
brokers, dealers and trust
companies.
iii
Glossary of Defined Terms
"Evaluation
Time" — The time
at
which the Trustee will evaluate the gold
held by the Trust and determine both the NAV and the ANAV of the Trust,
which is currently the
time of the London PM Fix on each
day
when the NYSE is open for regular trading
or, if there is no London PM Fix on
such
day or the London PM Fix has not been
announced by 12:00 PM New York time on
such
day, 12:00 PM New York
time on such
day.
"FSA" — The Financial Services
Authority, an independent non-governmental body which exercises
statutory regulatory power under the FSM Act
and which regulates the major
participating
members of the LBMA in the United
Kingdom.
"FSM
Act" —
The Financial Services and Markets Act
2000.
"HSBC" — HSBC Bank
USA,
N.A., a national banking association and
a market maker, clearer
and approved weigher under the rules of the
LBMA. HSBC is the custodian of the
Trust's gold.
"Indirect Participants" — Those
banks, brokers, dealers, trust companies and others who maintain,
either directly or indirectly, a custodial relationship with a DTC
Participant.
"LBMA" — The London Bullion Market
Association. The LBMA is the trade association that acts as the
coordinator for activities conducted on behalf of its members and other
participants in the London bullion market. In addition to coordinating
market activities, the LBMA acts as the principal point of contact
between the market and its regulators. A primary function of the LBMA
is its involvement in the promotion of refining standards by
maintenance of the "London Good Delivery
Lists,"
which are the lists of LBMA accredited melters and assayers of gold.
Further, the LBMA coordinates market clearing and vaulting, promotes
good trading practices and develops standard documentation. The major
participating members of the LBMA are regulated by the FSA in the
United Kingdom under the
FSM
Act.
"London Good Delivery Bar"
— A bar of gold meeting the London Good Delivery Standards.
"London Good Delivery Standards" —
The specifications for weight, dimensions, fineness (or purity),
identifying marks and appearance of gold bars as set forth in
"The Good Delivery Rules for Gold and Silver
Bars" published by the LBMA. The London Good Delivery
Standards are described in "Operation of the Gold Bullion
Market — The London Bullion Market."
"London PM Fix" — The afternoon
session of the twice daily fix of the price of an 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. See
"Operation of the
Gold Bullion Market – The London
Bullion Market" for a description of the operation of the
London PM Fix.
"Marketing
Agent
Agreement" — The
agreement
between
the
Sponsor
and the Marketing Agent under
which, among other things,
the Marketing Agent will assist the Sponsor
with certain marketing activities.
"Marketing
Agent" — State Street Global Markets, LLC, a
Delaware limited liability company and a wholly-owned
subsidiary of State
Street
Corporation.
"NAV" — Net asset value. See
"Description of the Trust
Indenture
—
Valuation of
Gold, Definition of Net Asset Value and Adjusted Net Asset
Value" for a description of how the NAV of the Trust and
the NAV per Share are
calculated.
"OTC" — The global Over-the-Counter
market for the trading of gold which consists of transactions in spot,
forwards, and options and other derivatives.
"Participant Agreement" — An
agreement entered into by each Authorized
Participant, the Sponsor
and the Trustee which provides the
procedures for the creation and redemption of Baskets and for the
delivery of the gold and any cash required for such creations and
redemptions.
"Participant Unallocated Bullion
Account Agreement" — The agreement between an
Authorized Participant and the Custodian which establishes the
Authorized Participant Unallocated
Account.
"Purchaser" —
the
purchaser of the Underwritten Shares, as described on the
front page of this
prospectus.
"Seed Baskets" — The
three
Baskets issued to
the Specialist in exchange for the deposit
into the Trust of
30,000
ounces of gold in connection with the
formation of the Trust.
iv
Glossary of Defined Terms
"Shareholders"
— Owners of beneficial interests in the Shares.
"Shares" — Units of fractional
undivided beneficial interest in and ownership of the Trust which are
issued by the Trust and named
"streetTRACKS®
Gold Shares."
"Specialist" — Bear Hunter
Structured Products, LLC, the designated NYSE specialist firm for the
Shares and the purchaser of the Seed
Baskets.
"Sponsor" — World Gold Trust
Services, LLC, a Delaware limited liability company wholly-owned by the
WGC.
"tonne"
— One metric tonne which is equivalent to 1,000 kilograms or
32,150.7465 troy ounces.
"Trust"
— The
streetTRACKS®
Gold Trust, an investment trust, formed on
November
,
2004
under New York law pursuant to
the
Trust Indenture.
"Trust Allocated
Account" — The allocated gold account of the Trust
established with the Custodian by the Allocated Bullion Account
Agreement. The Trust Allocated Account will be used to hold the gold
deposited with the Trust in allocated form (i.e., as individually
identified bars of gold).
"Trustee"
— The Bank of New York,
a
banking
corporation organized under the laws of the
State of New York with trust powers.
"Trust Indenture" — The agreement
entered into by the Sponsor and the Trustee under which the Trust is
formed and which sets
forth the rights and
duties of the Sponsor, the Trustee and
Custodian.
"Trust Unallocated Account"
— The unallocated gold account of the Trust established with the
Custodian by the Unallocated Bullion Account Agreement. The Trust
Unallocated Account will be used to facilitate the transfer of gold
deposits and gold redemption distributions between Authorized
Participants and the Trust in connection with the creation and
redemption of Baskets and the sales of gold made by the Trustee for the
Trust.
"Unallocated Bullion Account
Agreement" — The agreement between the Trustee and
the Custodian which establishes the Trust Unallocated Account. The
Allocated Bullion Account Agreement and the Unallocated Bullion Account
Agreement are sometimes referred to together
as the "Custody
Agreements."
"Underwritten Shares" — The Shares
purchased by the
Purchaser as described on
the front page of this
prospectus.
"US
Shareholder" — A Shareholder that is (1) an
individual who is treated as a citizen or resident of the United States
for US federal income tax purposes; (2) a corporation or partnership
created or organized in or under the laws of the United States or any
political subdivision thereof; (3) an estate, the income of which is
includible in gross income for US federal income tax purposes
regardless of its source; or (4) a trust, if a court within the United
States is able to exercise primary supervision over the administration
of the trust and one or more US persons have the authority to control
all substantial decisions of the
trust.
"WGC"
— World Gold Council, a not-for-profit association registered
under Swiss law and the sole member of the
Sponsor.
"WGTS"
— World Gold Trust Services, LLC, a Delaware limited liability
company wholly-owned by the WGC. WGTS is the sponsor of the
Trust.
v
Prospectus
Summary
This is
only a summary of the prospectus and, while it contains material
information about the Trust and its Shares,
it does not contain or summarize all of the information about the Trust
and the Shares contained
in this prospectus which is material and/or which may be important to
you. You should read this entire prospectus, including
"Risk Factors" beginning on page
7, before making an
investment decision about the
Shares.
TRUST
STRUCTURE
The Trust
is an investment trust, formed on
November
,
2004 under New York law
pursuant to a trust
indenture
(Trust Indenture).
The
Trust holds gold and
is
expected from time to
time to
issue Baskets
in
exchange for deposits of gold
and
to distribute gold in connection with
redemptions of Baskets. The
investment
objective of the Trust
is for the Shares to reflect the performance
of the price of gold bullion, less the Trust's expenses.
The Sponsor believes
that, for many investors, the Shares will
represent a
cost- effective
investment in
gold. The material terms of the Trust
Indenture are discussed in greater detail
under the section "Description of the Trust
Indenture".
The Shares represent
units of fractional undivided beneficial interest in and ownership of
the Trust and are expected to be traded under the ticker symbol GLD on
the NYSE.
The Trust's Sponsor is World Gold Trust Services,
LLC (WGTS), which is
wholly-owned by the World Gold Council (WGC), a not-for-profit
association registered under Swiss law.
The Sponsor is a Delaware limited
liability company and was formed on July 17, 2002. Under the Delaware
Limited Liability Company
Act and the governing documents of the
Sponsor, the WGC, the sole member of the
Sponsor, is not responsible for the debts, obligations
and liabilities of the Sponsor solely by reason of
being the sole member of the
Sponsor.
The Sponsor is
responsible for establishing the Trust and for the registration of the
Shares. The Sponsor
will generally oversee the performance of the Trustee and the
Trust's principal service providers, but will not exercise
day-to-day oversight over the Trustee and such service
providers. The
Sponsor may remove the Trustee and appoint a successor (1) if the
Trustee commits certain willful bad acts in
performing its duties or
willfully
disregards its duties, (2) if the
Trustee acts in bad faith in performing its
duties,
(3)
if the Trustee's creditworthiness has materially deteriorated or
(4)
if the Trustee's
negligent acts or omissions have had a
material adverse effect
on the Trust or the interests of
Shareholders and the Trustee has not cured the
material adverse
effect within a certain period of time and established that
the
material adverse effect will not recur.
The Sponsor will remove the Trustee if the
Trustee does not meet the qualifications for a trustee under the Trust
Indenture. See "Description of
the Trust Indenture — The Trustee
— Resignation, discharge
or
removal of Trustee; successor trustees" for more
information. The Sponsor may
direct the Trustee to
employ one or more other custodians in addition to or in replacement of
the Custodian,
provided that the Sponsor may not appoint a successor custodian without
the consent of the Trustee
if the
appointment
has
a material adverse effect on the
Trustee's ability to perform its
duties.
To assist the Sponsor
in marketing the
Shares, the Sponsor will enter into a
marketing agent agreement with the Marketing Agent
(Marketing
Agent Agreement). The
Sponsor will maintain a public website on
behalf of the Trust,
containing information about the Trust and
the Shares. The internet address of the
Trust's website
will be
www.streettracksgoldshares.com.
This
internet address is only provided here as a
convenience to
you,
and the information contained on or
connected to the
Trust's website is not considered part
of this prospectus. The
general
role,
responsibilities of the Sponsor are further discussed in
"The
Sponsor."
The Trustee is The Bank of New York
(BNY).
The Trustee is generally responsible for the
day-to-day administration of the Trust. This includes
(1)
selling
the Trust's gold as needed to pay the Trust's
expenses (gold sales are expected to occur
approximately monthly in the ordinary course), (2)
calculating the NAV of the
Trust and the NAV per
Share,
(3) receiving and processing orders
from Authorized Participants to create and
redeem Baskets and coordinating the processing of such
orders with the Custodian and
The
Depository Trust Company
(DTC) and (4) monitoring the
Custodian. The general
role,
responsibilities and
regulation of the Trustee are further
described in "The
Trustee."
1
The
Custodian is HSBC Bank
USA,
N.A. (HSBC). The
Custodian is responsible for the
safekeeping
of the Trust's
gold deposited with it by Authorized
Participants in connection with the creation of Baskets. The Custodian
also facilitates the transfer of gold in and
out of the Trust through gold accounts it will maintain for Authorized
Participants and the Trust. The Custodian is
a market maker, clearer
and approved weigher under the rules of the
London Bullion Market Association (LBMA).
The general role,
responsibilities
and regulation of the Custodian are further
described in
"The
Custodian" and "Custody of the Trust's
Gold."
Detailed
descriptions of
certain specific rights
and duties of the Trustee and the Custodian
are set forth in "Description
of the Trust Indenture" and "Description of
the Custody
Agreements."
The
Marketing Agent will assist the Sponsor in (1) developing a marketing
plan for the Trust
on an ongoing
basis, (2) preparing marketing
materials regarding the Shares, including
the content of the Trust's website,
(3) executing the
marketing plan for the
Trust,
(4) incorporating gold
into
its strategic and tactical exchange-traded
fund research,
and
(5)
licensing the
"streetTRACKS®"
trademark.
The general role and
responsibilities of the Marketing Agent are further described
in "The Marketing
Agent."
TRUST OVERVIEW
The investment
objective of the Trust is for the Shares to
reflect the performance of the price of gold bullion, less the expenses
of the
Trust's operations. The Shares are
designed for investors who want a
cost-effective and
convenient way to invest in gold. Advantages of
investing in the Shares
include:
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Ease and
Flexibility of Investment.
The Sponsor has
applied to list the Shares on the NYSE. The Shares are
expected to be exchange-listed equity
instruments providing institutional and
retail investors with indirect access to the gold bullion market. The
Shares are expected upon listing on
the NYSE to be bought and sold on the NYSE like any other
exchange-listed
securities,
except that the Shares will regularly trade until 4:15 PM instead of
4:00 PM New York
time.
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Expenses.
The
Sponsor expects that, for many investors,
costs associated with buying and selling
the Shares in the secondary market and the
payment of the
Trust's ongoing expenses
will be lower than the
costs associated with buying and selling gold bullion
and storing and insuring gold bullion in a traditional
allocated gold bullion account.
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Investing in the Shares does not insulate
the investor from certain risks, including price volatility. See
"Risk Factors."
PRINCIPAL OFFICES
The Trust's office is located at 444 Madison Avenue,
3
rd
Floor, New York, New York 10022 and its telephone number is (212)
317-3800. The Sponsor's office is located at 444 Madison Avenue,
3
rd
Floor, New York, New York
10022. The Trustee
has a trust office at
2
Hanson Place, Brooklyn, New York 11217. The Custodian is
located at 8 Canada Square, London, E14 5HQ,
United Kingdom. The Marketing Agent's office is
located at State Street
Financial Center, One Lincoln Street, Boston, Massachusetts
02111.
2
The Offering
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Offering
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The Shares represent units of
fractional undivided beneficial interest in and ownership of the
Trust.
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Use of proceeds
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Proceeds received by the
Trust from the issuance and sale of Baskets, including
the
Seed Baskets
and the Underwritten Shares
(each
of which are described on the front page of this prospectus), will
consist of gold deposits and, possibly from time to time, cash.
Pursuant to the Trust Indenture, during the life of the Trust such
proceeds will only be (1) held by the Trust, (2) distributed to
Authorized Participants in connection with the redemption of Baskets or
(3) disbursed or sold as needed to pay the Trust's ongoing
expenses.
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New York Stock Exchange
symbol
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GLD
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Creation and redemption
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The
Trust expects to create and redeem the Shares from time to time, but
only in one or more Baskets (a Basket equals a block of 100,000
Shares). The creation and redemption of Baskets requires the delivery
to the Trust or the distribution by the Trust of the amount of gold and
any cash represented by the Baskets being created or redeemed, the
amount of which will be based on the combined NAV of the number of
Shares included in the Baskets being created or redeemed. The initial
amount of gold required for deposit with the Trust to create Shares is
10,000 ounces per Basket. The number of ounces of gold required to
create a Basket or to be delivered upon the redemption of a Basket will
gradually decrease over time, due to the accrual of the Trust's
expenses and the sale of the Trust's gold to pay the
Trust's expenses. See "Business of the Trust —
Trust Expenses — Pro Forma Impact of Trust
Expenses." Baskets may be created or redeemed only by
Authorized Participants, who will pay a transaction fee for each order
to create or redeem Baskets and may sell the Shares included in the
Baskets they create to other investors. See
"Creation and Redemption of Shares" for more
details.
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Net Asset Value
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The NAV of the Trust
is the aggregate value of the Trust's assets less its liabilities
(which include
estimated
accrued but unpaid fees and expenses). In determining the
NAV of the Trust, the Trustee will value the gold held by the Trust on
the basis of the price of an ounce of gold as set by the afternoon
session of the twice daily fix of the price of an ounce of gold which
starts at 3:00 PM London, England time and is performed by the five
members of the London gold fix (London PM Fix). See
"Operation of the Gold Bullion Market — The London
Bullion Market" for a description of the operation of the
London gold price fix. The Trustee will determine the NAV of the Trust
on each day
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3
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the NYSE is open for regular
trading, at the earlier of the London PM Fix for the day or 12:00 PM
New York time. If no London PM Fix is made on a particular evaluation
day or if the London PM Fix has not been announced by 12:00 PM New York
time on a particular evaluation
day, the next most recent London gold price fix (AM or PM) will be used
in the determination of the NAV of the Trust, unless the Trustee, in
consultation with the Sponsor, determines that such price is
inappropriate to use as basis for such determination. The Trustee will
also determine the NAV per Share, which equals the NAV of the Trust,
divided by the number of outstanding
Shares.
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Trust
expenses
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The
Trust's ordinary operating expenses are accrued daily and are
reflected in the NAV of the Trust. The
Trust's expenses include fees and expenses of the Trustee (which
include fees and expenses paid to the Custodian by the Trustee for the
custody of the Trust's gold), the fees and expenses of the
Sponsor, certain taxes, the fees of the Marketing Agent, printing and
mailing costs, legal and audit fees, registration fees and NYSE listing
fees. In order to pay the Trust's expenses, the Trustee will sell
gold held by the Trust on an as-needed basis. Each sale of gold by the
Trust will be a taxable event to Shareholders. See "United
States Federal Tax Consequences — Taxation of US
Shareholders."
For seven years from
the date of the Trust
Indenture or
until
the earlier termination
of the
Marketing Agent Agreement, if at the end of
any month during
this
period the estimated ordinary expenses of the Trust exceed an amount
equal to 0.40% per
year
of the daily adjusted NAV (ANAV) of the Trust for such
month,
the fees payable to the Sponsor and the Marketing Agent
for
such month will be reduced by the amount of
such excess in equal shares up to the amount of
their
fees provided that the gross assets of the
Trust exceed a certain minimum amount.
See
"Risk Factors — When the fee
reduction
terminates or expires
. . ." For details on the
calculation of the ANAV of the Trust, see "Description of
the Trust Indenture — Valuation of Gold, Definition of Net Asset
Value and Adjusted Net Asset Value." The Trust
will pay on an ongoing basis the expenses of its operation as described
in "Business of the Trust – Trust
Expenses" and "Description of the Trust
Indenture – Expenses of the
Trust."
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Sponsor's
and Marketing Agent's
fees
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The
Sponsor's fee is payable monthly in arrears and is accrued daily
at an annual rate equal to 0.15% of
the daily ANAV of the Trust. The Marketing
Agent's fee is payable monthly in arrears and is
accrued daily at an annual rate equal to
0.15% of the daily ANAV of the Trust. If at the end of any month
during the
period ending seven
years from the date of the Trust
Indenture or
upon the
earlier termination of
the Marketing Agent
Agreement the estimated ordinary expenses
of the Trust exceed an amount equal to
0.40% per
year
of the daily ANAV of the Trust for such month, the
Marketing Agent's fee and the
Sponsor's fee are subject to
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4
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reduction. See "Business of the
Trust —
Trust Expenses —
Fee
Reduction."
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Termination
events
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The Sponsor may, and it is anticipated that the
Sponsor will, direct the Trustee to terminate and liquidate the Trust
at any time after the first anniversary of the Trust's formation
when the NAV of the Trust is less than $350 million (as adjusted for
inflation). The Sponsor may also direct the Trustee to terminate the
Trust if the Commodity Futures Trading Commission (CFTC) determines
that the Trust is a commodities pool under the Commodity Exchange Act
of 1936, as amended (CEA). The Trustee may also terminate the Trust
upon the agreement of the owners of beneficial interests in the Shares
(Shareholders) owning at least 66 2/3% of the
outstanding Shares.
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The Trustee will terminate and
liquidate the Trust if one of the following events
occurs:
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DTC, the securities
depository for the Shares, is unwilling or unable to perform its
functions under the Trust Indenture and no suitable replacement is
available;
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The Shares are
de-listed from the NYSE and are not listed for trading on another US
national securities exchange or through the Nasdaq Stock Market within
five business days from the date the Shares are
de-listed;
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The NAV of the Trust
remains less than $50 million for a period of 50 consecutive business
days at any time after the first 90 days of the Shares being traded on
the NYSE;
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The Sponsor resigns or
is unable to perform its duties or becomes bankrupt or insolvent and
the Trustee has not appointed a successor and has not itself agreed to
act as sponsor;
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The Trustee
resigns or is removed and no successor trustee is appointed within 60
days;
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The Custodian resigns and
no successor custodian is appointed within 60
days;
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The sale of all of the
Trust's assets;
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The Trust
fails to qualify for treatment, or ceases to be treated, for US federal
income tax purposes, as a grantor trust;
or
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The maximum period for which
the Trust is allowed to exist under New York law ends.
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Upon
the termination of the Trust, the Trustee will, within a reasonable
time after the termination of the Trust, sell the Trust's gold
and, after paying or making provision for the Trust's
liabilities, distribute the proceeds to the Shareholders. See
"Description of the Trust Indenture — Termination of
the Trust."
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5
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Authorized
Participants
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Baskets may be created or redeemed only by
Authorized Participants. Each Authorized Participant must (1) be
a registered broker-dealer or other securities market participant such
as a bank or other financial institution which is not required to
register as a broker-dealer to engage in securities transactions,
(2) be a participant in DTC, (3) have entered into an
agreement with the Trustee and the Sponsor (Participant Agreement) and
(4) have established an unallocated gold account with the
Custodian (Authorized Participant Unallocated Account). The
Participant Agreement provides the
procedures for the creation and redemption of Baskets and for the
delivery of gold and any cash required for such creations or
redemptions. A list of the current Authorized Participants can be
obtained from the Trustee or the Sponsor. See "Creation
and Redemption of Shares" for more
details.
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Clearance and settlement
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The Shares
will be evidenced by one or
more global certificates that
the Trustee will issue to DTC. The Shares will be available only in
book-entry form. Shareholders may hold their Shares through DTC, if
they are participants in DTC, or indirectly through entities that are
participants in
DTC.
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Summary
of
Financial
Condition
As
of the date of the
formation of the Trust on
,
2004,
the NAV of the Trust, which represents the
value of the gold deposited into the Trust in exchange for the Seed
Baskets, was
$
and the NAV per Share was
$ .
See
"Statement
of
Financial
Condition"
elsewhere in this
prospectus.
6
Risk
Factors
You should consider carefully the risks described below
before making an investment decision. You should also refer to the
other information included in this prospectus, including the
Trust's financial statements and the related notes.
The value of the Shares relates directly to the value
of the gold held by the Trust and
fluctuations in the price of
gold could materially adversely affect an investment in the Shares.
The Shares are designed to mirror as closely as possible the
performance of the price of gold bullion,
and the value of the Shares relates directly to the value of the gold
held by the Trust, less the Trust's liabilities (including
estimated accrued but
unpaid expenses). The price of gold has fluctuated widely
over the past several years. Several factors may affect the price of
gold, including:
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Global gold
supply and demand, which is influenced by such factors as forward
selling by gold producers, purchases made by gold producers to unwind
gold hedge positions, central bank purchases and
sales, and production and cost levels in
major gold-producing countries such as South Africa, the United States
and Australia;
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Investors' expectations with respect to
the rate of inflation;
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Currency exchange
rates;
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Investment and trading
activities of hedge funds and commodity funds; and
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Global or
regional political, economic or financial events and
situations.
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In addition, investors
should be aware that
there is no
assurance that gold will maintain its
long-term
value in terms of purchasing
power in the
future. In the event that the price of gold declines,
the Sponsor expects the value of an
investment in the Shares to decline
proportionately.
The Shares may trade at a price which is at, above or
below the
NAV per Share and any discount
or premium in the trading price relative to
the NAV per Share may widen as a result of non-concurrent
trading hours between the COMEX and the
NYSE.
The Shares may trade at, above
or below the
NAV per Share. The NAV per Share will
fluctuate with changes in the market value
of the Trust's assets. The trading price of the Shares will
fluctuate in accordance with changes in the
NAV per Share as well as market supply and demand. The amount of the
discount or premium in the trading price
relative to the NAV per Share may be influenced by
non-concurrent trading hours between the
COMEX division of the New York Mercantile Exchange and the
NYSE. While the Shares will trade on the NYSE until
4:15 PM New York time, liquidity in the
global gold
market will be reduced after the close of
the COMEX division of the New York
Mercantile Exchange at 1:30 PM New York
time. As a result, during this time, trading spreads, and the
resulting premium or discount, on the
Shares may widen.
The
sale of gold by the Trust to pay expenses will reduce the amount of
gold represented by each Share on an ongoing basis irrespective of
whether the trading price of the Shares
rises or falls in response to changes in the price of
gold.
Each outstanding Share will
represent a fractional,
undivided interest in the gold held by the
Trust. As
the Trust will
not generate any income and
as the Trust will regularly sell gold over
time to pay for its ongoing expenses,
the amount of gold represented by
each Share will gradually decline over time. This is true even if
additional Shares are issued in exchange for
additional deposits of gold into the Trust, as the amount of
gold required to create Shares will proportionately
reflect the amount of gold represented by the Shares
outstanding at the time of creation.
Assuming
a constant gold price, the trading price of
the Shares is expected to gradually decline relative to
the price of gold as the amount of gold represented
by the Shares gradually declines.
The Shares
will only maintain their original price if the price of gold
increases.
Investors should be aware that the gradual decline in the amount of
gold represented by the Shares will occur
regardless of whether the trading price of the Shares rises or falls in
response to changes in the price
7
Risk Factors
of
gold. The estimated ordinary
operating expenses of the Trust, which accrue
daily commencing
after
the first day of trading of the Shares
on the NYSE,
are described in "Business of the Trust — Trust
Expenses" and "Description of the Trust
Indenture — Expenses of the
Trust."
When the fee
reduction
terminates
or expires, the estimated
ordinary expenses payable by the Trust may
increase, thus reducing the NAV of the Trust more
rapidly and adversely affecting an investment in the
Shares.
For seven years
from the date of the Trust
Indenture or
until
the earlier termination of the Marketing
Agent Agreement, if at the end of any month
during
this
period the estimated ordinary expenses of the Trust
exceed an amount equal to 0.40% per
year
of the daily ANAV of the Trust for such month,
the
fees payable to the Sponsor and the Marketing
Agent from the assets of the Trust for such month will
be reduced by the amount of such excess in
equal shares up to the amount of
their
fees.
Investors should be
aware that if the
gross value of
the
Trust's
assets is less than
approximately
$388
million, the ordinary expenses
of the Trust
will be accrued at a rate greater than
0.40% per year of the daily ANAV of the
Trust, even
after the Sponsor and the Marketing Agent have
completely
reduced their combined fees of 0.30% per year of the daily ANAV
of the Trust. This amount is based on the
estimated ordinary expenses of the Trust described in
"Business of the Trust — Trust Expenses" and may be
higher if the Trust's actual ordinary expenses exceed those
estimates. Additionally, if the Trust
incurs unforeseen expenses that cause the total ordinary expenses of
the Trust to exceed 0.70% per
year
of the daily ANAV of the Trust, the ordinary expenses will
accrue
at a rate greater than 0.40% per year of the daily ANAV of the
Trust, even after the Sponsor and the Marketing Agent have
completely
reduced
their combined fees of
0.30% per
year of the
daily ANAV of the
Trust.
Upon the end of the seven year
period or the earlier termination of the
Marketing Agent Agreement, the fee
reduction will expire and the estimated
ordinary expenses of the Trust which are payable from the assets of the
Trust each month may be more than
they would have been
during the period when the fee reduction is
in effect, thus reducing the NAV of the
Trust more rapidly than if the fee
reduction
was in
effect
and adversely affecting the value of the
Shares.
The
estimated
ordinary operating
expenses of the Trust, which accrue daily,
are described in "Business of the Trust — Trust
Expenses" and
"Description of the Trust Indenture — Expenses of
the Trust." For details on the calculation of
the ANAV of the
Trust, see "Description of the Trust Indenture —
Valuation of Gold, Definition of Net Asset
Value and Adjusted Net Asset
Value."
The sale of the
Trust's gold to pay expenses at a time of low gold prices could
adversely affect the value
of the Shares.
The Trustee will sell gold held by the Trust to
pay Trust expenses on an
as-needed basis
irrespective of
then-current gold prices.
The Trust is not actively managed
and no attempt will be made to buy or
sell gold to
protect against or to
take advantage of fluctuations in the price
of gold. Consequently, the
Trust's
gold may be sold at a time when the gold
price is low, resulting in a negative effect on the value of
the Shares.
Purchasing activity in the gold market
associated with the purchase of
Baskets
from the Trust may cause a temporary increase in the price of gold.
This increase may adversely affect an investment in the Shares.
Purchasing
activity associated with acquiring the gold required for deposit into
the Trust in connection
with the creation of Baskets may
temporarily increase the market price of gold, which will result in
higher prices for the Shares. Temporary increases
in the market price of gold may also occur as a result of the
purchasing activity of other market participants. Other market
participants may attempt to benefit from an increase in the market
price of gold that may result from increased purchasing activity of
gold connected with the issuance of
Baskets.
Consequently, the market price of gold may decline immediately after
Baskets are created. If
the price of gold declines, the trading price of the
Shares will also decline.
As the
Sponsor and its management have no history of operating an investment
vehicle like the Trust, their experience may be
inadequate or unsuitable to manage the Trust.
The
Sponsor was expressly formed to be
the sponsor of the Trust and has no history of past
performance. The past performances of the Sponsor's management in
other positions are no
indication of their ability
8
Risk Factors
to manage an investment vehicle such as the
Trust. If
the experience of the Sponsor and its management is not adequate or
suitable to manage an investment vehicle
such as the Trust, the operations of the Trust may be adversely
affected.
The Shares are a
new securities product and their value could
decrease if unanticipated operational or trading
problems arise.
The mechanisms and procedures governing the
creation, redemption and offering
of the Shares have been developed specifically for this
securities product. Consequently, there may
be unanticipated problems or issues with respect to the mechanics of
the Trust's operations and the trading of the Shares that could
have a material adverse effect on an investment in
the Shares. In addition, although the Trust is not actively
"managed" by traditional methods, to the
extent that unanticipated operational or trading problems or issues
arise, the Sponsor's past experience and qualifications may not
be suitable for solving these problems or issues.
Shareholders will not have the protections
associated
with ownership of shares in an investment
company registered under the Investment Company Act of
1940
or the protections afforded by the
Commodity Exchange Act of
1936.
The Trust is not registered as
an investment company under the Investment Company Act of 1940 and
is not required to register under such act.
Consequently, Shareholders will not have the regulatory
protections provided to investors in
investment companies. The Trust will not hold or trade in commodity
futures contracts regulated by the CEA, as
administered by the CFTC. Furthermore, the Trust is not a commodity
pool for purposes of the CEA, and
none
of the
Sponsor,
the Trustee
or the Marketing Agent
is
subject to regulation
by the CFTC as a commodity pool operator or
a commodity trading advisor in connection
with the Shares. Consequently, Shareholders
will not have the regulatory protections
provided to investors in CEA-regulated instruments or commodity
pools.
The Trust may be
required to terminate and liquidate at a time that is
disadvantageous to
Shareholders.
If the Trust
is required to terminate and liquidate, such termination and
liquidation could occur at a time which is
disadvantageous to Shareholders, such as when gold prices are lower
than
the gold prices at the time when
Shareholders purchased their Shares. In such a case, when the
Trust's gold is sold as part of the
Trust's liquidation, the resulting proceeds distributed to
Shareholders will be less than if gold prices
were higher at the time of sale. See
"Description of the Trust Indenture — Termination of
the Trust"
for
more information about the termination of the
Trust, including when the termination of the
Trust may be triggered by
events outside the direct
control of the Sponsor, the Trustee or the
Shareholders.
The lack of a market for the Shares may limit the
ability of Shareholders to sell the Shares.
Prior to the date of
this prospectus, there has been no market for the Shares, and there can
be no assurance that an active public market for the Shares will
develop. If an active public market for the Shares does not exist or
continue, the market prices and liquidity of the Shares may be
adversely affected.
The operations of the Trust
and the Sponsor depend on support from the WGC. This support may not be
available in the future and, if such support is not
available, the operations of the Trust may be adversely
affected.
The Sponsor is a
subsidiary of the WGC, a not-for-profit association that represents
members of the gold mining industry through international marketing
programs directed at stimulating demand for gold in all
forms.
The
ongoing operations of the Trust depend on the financial and management
support of the Sponsor.
The operations of the Sponsor, in turn,
depend on the financial and management support of the WGC.
See "The Sponsor" for more
information on the funding of the Sponsor. If the WGC
limits or ends its support of the Sponsor for any
reason, the operations of the Trust and an investment in the Shares may
be adversely affected.
As a
result, the Trust may be required to
terminate.
The
WGC's members determine the financial plan of the WGC.
The WGC's current and reasonably
foreseeable
operational costs and
expenses are underwritten by the WGC's members through
the end of
9
Risk Factors
2004.
The WGC's members have
funded the
estimated
ordinary operating
expenses of the
Sponsor through 2004,
including the costs associated with the initial registration of the
Shares
and the listing of the
Shares
on the NYSE. The WGC has
provided
$3 million in funding to cover the estimated ordinary expenses of the
Sponsor for 2005 and 2006. There
is no assurance that the WGC's members will fund the WGC
or the Sponsor
thereafter.
The lack of such funding
could adversely affect the ability of the Sponsor to support the
Trust.
Shareholders will not have the rights
enjoyed by investors in certain other vehicles.
As interests in
an investment trust, the
Shares have none of the statutory rights normally associated with
the ownership of shares of a corporation
(including, for example, the right to bring
"oppression" or
"derivative" actions). In
addition, the
Shares have limited voting and distribution
rights (for
example,
Shareholders do not have the right to elect
directors and will not receive
dividends).
See "Description of the Shares"
for a description of the limited rights of holders of
Shares.
An investment in the
Shares may be adversely affected by competition from other methods of
investing in gold.
The Trust is a new, and thus untested, type
of investment vehicle. It will compete with other financial vehicles,
including traditional debt and equity securities issued by
companies in the gold industry and
other securities backed by or linked to
gold, direct
investments in gold and investment vehicles similar to
the Trust. Market and financial conditions, and other
conditions beyond the Sponsor's control, may make it more
attractive to invest in other financial vehicles or to invest in gold
directly, which could limit the market for the Shares and reduce the
liquidity of the Shares.
Crises may motivate
large-scale sales of gold which could decrease the price of gold
and
adversely affect an investment in the Shares.
The
possibility of large-scale distress sales of gold in times of crisis
may have a short-term negative impact on the price of gold and
adversely affect an investment in the Shares. For example, the 1998
Asian financial crisis resulted in significant sales of gold by
individuals which depressed the price of gold.
Crises in the future
may impair gold's price performance
which would, in turn,
adversely affect an investment in the Shares.
Substantial sales of gold by the official sector could
adversely affect an investment in the Shares.
The official
sector consists of central
banks, other governmental agencies and multi-lateral
institutions that buy, sell and
hold gold as part of their reserve
assets. The official sector holds a significant amount of
gold, most of which is static, meaning that it is held in vaults and is
not bought, sold, leased or swapped or otherwise mobilized in the open
market. A number of central banks have sold portions of their gold over
the past 10 years, with the result that the official sector, taken as a
whole, has been a net supplier to the open market. Since 1999,
most sales have been made in a coordinated
manner under the terms of the Central Bank Gold Agreement, under which
15 of the world's major central banks (including the European
Central Bank) agreed to
limit the level of their gold sales and lending to the market for the
following five years. The
European Central Bank announced in March
2004 that the agreement would be extended for
a further five-year period starting on September 27,
2004. The new agreement is similar to the
existing agreement, although the ceiling for gold sales is
25% higher and the Bank of Greece replaces the
Bank of England as a signatory to the
agreement. UK Treasury indicated at the time of the announcement of
the new agreement that the UK government
had no plans to sell gold from its reserves
and therefore would not participate in the new
agreement. See "Overview of
the Gold Industry —
Sources of Gold Supply" and
"Analysis of Movements in the
Price of Gold" for more details. As before, the new
agreement will be reviewed after five
years. It is
possible that the new agreement may not
be renewed when it expires in September
2009. In the event that future economic, political or social
conditions or pressures require members of the official sector to
liquidate their gold assets all at once or in an uncoordinated manner,
the demand for gold might not be sufficient to accommodate the sudden
increase in the supply of gold to the market. Consequently, the price
of gold could decline significantly, which would adversely affect an
investment in the
Shares.
10
Risk Factors
A
widening of interest rate differentials between the
cost of money and the cost of gold could negatively affect
the price of gold which, in turn, could
negatively
affect the price of the Shares.
A combination of
rising money interest rates and a continuation of the current low cost
of borrowing gold could improve the economics of selling gold forward.
This could result in an increase in hedging by gold mining companies
and short selling by speculative interests, which would
negatively affect the
price of gold. Under such circumstances, the price of
the Shares would be similarly
affected.
The Trust's
gold may be subject to loss, damage, theft or restriction on
access.
There is a risk that part or all of the Trust's
gold could be lost, damaged or stolen. Access to the Trust's gold
could also be restricted by natural events (such as an earthquake) or
human actions (such as a terrorist attack). Any of these events may
adversely affect the operations of the Trust and, consequently, an
investment in the Shares.
The Trust may not have adequate sources of recovery if
its gold is lost, damaged, stolen or
destroyed and recovery
may
be limited,
even in the event of fraud, to the market value of the gold at the time
the fraud is
discovered.
Shareholders'
recourse against the Trust, the Trustee and
the Sponsor,
under New York law, the Custodian,
under English law, and
any
subcustodians
under the law
governing their custody operations is
limited. The Trust will not insure its
gold.
The
Custodian
will
maintain insurance with regard to its
business on such terms
and conditions as it considers
appropriate.
The Trust will not be a beneficiary of any
such insurance and does not have the ability
to dictate the existence,
nature or amount of coverage.
Therefore, Shareholders cannot be assured
that the Custodian will maintain adequate
insurance or any
insurance with respect
to the gold held by the Custodian on behalf of the Trust.
In addition, the
Custodian and the Trustee will not require
any
direct or indirect subcustodians
to
be insured or bonded with respect to their
custodial activities or in respect of the
gold held by them on behalf of the
Trust.
Consequently, a loss may be suffered
with respect to the
Trust's gold which is not covered by
insurance and for which no person is liable in damages.
The
liability of the Custodian
is
limited under the Custody
Agreements. Under the
agreements between the
Trustee and the
Custodian which establish the Trust's
unallocated gold account (Unallocated Bullion Account Agreement) and
the Trust's allocated gold account (Allocated Bullion Account
Agreement), the Custodian
is
only
liable for losses that are
the direct result of its
own negligence, fraud or
willful default in the performance of its
duties.
Any such liability is further limited, in
the case of the Allocated Bullion Account
Agreement, to
the market value of the
gold held in the Trust
Allocated Account at the time such
negligence, fraud or
willful default
is discovered by the
Custodian and, in
the case of the
Unallocated Bullion Account
Agreement,
to the
amount of gold
credited to the Trust Unallocated Account
at the time such negligence, fraud or
willful default
is discovered by the Custodian. Under each
Participant Unallocated Bullion Account
Agreement (between the Custodian and an
Authorized
Participant),
the Custodian is not contractually or otherwise liable for any losses
suffered by any Authorized Participant or Shareholder that are not the
direct result of its own gross negligence, fraud or
willful default
in the performance of its duties under
such
agreement,
and in no event will
its liability exceed the market value of
the balance in its Authorized Participant Unallocated Account at the
time such gross negligence, fraud or
willful default
is discovered by the Custodian. In
addition, the Custodian will not be liable for any delay in performance
or any non-performance of any of its obligations under the Allocated
Bullion Account Agreement, the Unallocated Bullion Account Agreement or
the Participant
Unallocated Bullion Account Agreement by reason of any cause beyond its
reasonable control,
including acts of God,
war or terrorism. As a result, the
recourse of the
Trustee or the investor, under English law, is limited.
Furthermore, under English common law, the
Custodian or any subcustodian
will
not be liable for any delay in the performance or any non-performance
of its custodial obligations by reason of any cause beyond its
reasonable
control.
Under the
Allocated Bullion
Account Agreement, except for
an obligation on the part
of the
Custodian
to use commercially reasonable efforts to obtain delivery of the
Trust's gold from
any subcustodians
appointed by
the
Custodian, the
Custodian is not liable
for
the acts or omissions of
its subcustodians unless
the selection of such
subcustodians
was made
negligently
or in bad faith.
There are expected to
be no written contractual arrangements between subcustodians
that
hold the Trust's gold and the Trustee or
11
Risk Factors
the
Custodian, because
traditionally such arrangements are based on the LBMA's rules and
on the customs and practices of the
London bullion
market. In the event of a legal dispute
with respect to or arising from such arrangements, it may be difficult
to define such customs and practices. The LBMA's rules may be
subject to change outside the control of the Trust. Under English
law,
neither the
Trustee,
nor the
Custodian
would
have a supportable breach of contract claim against a subcustodian for
losses relating to the safekeeping of gold.
If the Trust's gold is lost or
damaged while in
the custody of a subcustodian, the Trust may
not be able to
recover damages
from
the Custodian
or the
subcustodian.
Whether a subcustodian
will be liable
for the failure
of
subcustodians
appointed by it
to exercise due
care in the safekeeping
of the
Trust's gold
will depend on the facts
and circumstances of the particular
situation.
Shareholders cannot be assured that the Trustee will be able to recover
damages from subcustodians whether
appointed by
the Custodian or by
another subcustodian for any losses
relating to the safekeeping of gold by such
subcustodian.
The obligations of the Custodian under the Allocated Bullion Account
Agreement, the Unallocated Bullion Account Agreement and the
Participant
Unallocated Bullion Account Agreement are governed by English law. The
Custodian may enter into arrangements with English subcustodians, which
arrangements may
also be governed by English law. The Trust
is a New York investment trust. Any United States, New York or other
court situated in the United States may have difficulty interpreting
English law
(which, insofar as it relates to custody
arrangements, is largely derived from court
rulings rather
than statute),
LBMA rules or the customs and practices in the London custody market.
It may be difficult or impossible for the Trust to sue a subcustodian
in a United States, New York or other court situated in the United
States. In addition, it may be difficult, time consuming and/or
expensive for the Trust to enforce in a foreign court a judgment
rendered by a United States, New York or other court situated in the
United States.
If the Trust's
gold is lost, damaged, stolen or destroyed under circumstances
rendering a party liable to the Trust, the
responsible party may not have the financial resources sufficient to
satisfy the Trust's claim. For
example, as to a particular event of loss, the only source of recovery
for the Trust might be limited to the
Custodian or one or more subcustodians or, to the extent identifiable,
other responsible third parties (e.g., a
thief or terrorist), any of which may not have the financial resources
(including liability insurance coverage) to
satisfy a valid claim of the
Trust.
Neither
the Shareholders nor any Authorized Participant will have
a
right under the Custody
Agreements to
assert a claim
of the Trustee against the Custodian or any
subcustodian;
claims under the
Custody Agreements may only be asserted by
the Trustee on behalf of the
Trust.
Gold bullion allocated to the Trust in
connection with the creation of a Basket may not meet the
London Good Delivery
Standards
and, if a Basket is issued against such gold, the Trust may suffer a
loss.
Neither the
Trustee nor the Custodian independently confirms the fineness of the
gold allocated to the Trust in connection with the
creation of a Basket. The gold bullion allocated to the
Trust by theCustodian
may be
different from the reported
fineness
or weight
required by the
LBMA's standards
for gold bars delivered in settlement of a
gold trade (London Good Delivery Standards), the standards required by
the Trust. If the Trustee
nevertheless issues a
Basket
against
such
gold,
and
if the
Custodian
fails to satisfy its obligation to credit the Trust the amount of any
deficiency,
the Trust may suffer a loss. The London
Good Delivery Standards
are described in "Operation of the Gold
Bullion Market
— The London Bullion
Market." The
Custodian's
responsibility for the allocation to the Trust of
gold
meeting LBMA standards
is
described in "Description of the Custody
Agreements
— Transfers from the Trust
Unallocated
Account."
Because
neither the
Trustee
nor
the Custodian
oversees
or
monitors
the activities of subcustodians
who may hold the Trust's gold,
failure by
the subcustodians
to
exercise due care in the
safekeeping
of the Trust's gold could result in a loss
to the Trust.
Under the Allocated
Bullion Account Agreement described in "Description of the
Custody Agreements," the
Custodian may appoint from time to time one or more subcustodians to
hold the Trust's gold. The
subcustodians which the Custodian currently uses are
the Bank of England and LBMA market-making
members that provide bullion vaulting and clearing
services to third parties. The Custodian is required
12
Risk Factors
under the Allocated Bullion
Account Agreement to use reasonable care in appointing its
subcustodians but otherwise has no other
responsibility in relation to the subcustodians appointed by
it. These subcustodians may in turn appoint
further
subcustodians,
but the Custodian is not responsible for
the appointment of
these further subcustodians.
The
Custodian does not undertake to monitor the performance
by subcustodians of their custody functions or
their selection of further subcustodians. The Trustee
does not undertake to monitor the performance of
any subcustodian.
Furthermore, the Trustee may have no right
to visit the premises of any subcustodian for the purposes
of examining the Trust's gold or any
records maintained by the subcustodian, and
no
subcustodian
will
be obligated to
cooperate in any review the Trustee may wish to conduct of the
facilities, procedures, records or
creditworthiness of such subcustodian. In addition, the ability of the
Trustee to monitor the performance of the
Custodian may be limited because under the Allocated Bullion Account
Agreement and the Unallocated Bullion
Account Agreement (together, the Custody Agreements) the Trustee has
only limited rights to visit the premises of
the Custodian for the purpose of examining the Trust's gold
and certain related records maintained by
the Custodian. See "Custody of
the Trust's Gold" for more information about
subcustodians that may hold the
Trust's gold.
The ability of the
Trustee and the Custodian to take legal action against subcustodians
may be limited,
which increases the
possibility that the Trust may suffer a loss if a subcustodian does not
use due care in the safekeeping of the
Trust's
gold.
If
any subcustodian does not exercise due care in the safekeeping of
the Trust's
gold, the ability of the Trustee
or the Custodian to recover
damages against
such
subcustodian may be
limited
to
only such recourse, if
any, as may be available under
applicable
English
law
or, if the
subcustodian is not located in
England,
under other
applicable
law.
This is because there are expected to be no
written contractual arrangements between subcustodians who may hold the
Trust's gold and the Trustee or the
Custodian, as the case may
be.
If the Trustee's or the
Custodian's recourse against the subcustodian is so limited, the
Trust may not be
adequately compensated for
the loss. For
more information on the Trustee's and
the
Custodian's ability to seek recovery
against subcustodians and the
subcustodian's
duty to safekeep the Trust's gold, see "Custody of
the Trust's
Gold."
Gold
held in the Trust's unallocated gold account
and
any Authorized Participant's unallocated gold account
will not be
segregated from
the Custodian's assets.
If the Custodian becomes insolvent,
its assets may not be adequate to satisfy a claim by the
Trust or any Authorized
Participant. In addition, in the event of
the Custodian's insolvency, there may
be a delay and
costs incurred
in identifying the bullion held in the Trust's allocated gold
account.
Gold which is part of a deposit for a
purchase order or part of a redemption distribution will be held for a
time in the
Trust's unallocated gold
account (Trust Unallocated
Account) and,
previously or subsequently
in,
the
Authorized
Participant Unallocated
Account
of the purchasing or redeeming Authorized Participant.
During those times, the
Trust and the Authorized Participant, as the case may
be, will have no
proprietary
rights to any specific
bars of gold held by the Custodian and will
each be an unsecured creditor of
the Custodian with respect to the amount
of gold held in such unallocated
accounts. In addition, if the Custodian
fails to allocate the Trust's gold in a timely manner, in the
proper amounts or otherwise in accordance with the terms of the
Unallocated
Bullion Account Agreement, or if a
subcustodian fails to so segregate gold held by it on behalf of the
Trust, unallocated gold will not be
segregated from the Custodian's assets, and the Trust will be an
unsecured creditor of the Custodian with respect to the amount so held
in the event of the insolvency of the Custodian.
In the event the Custodian
becomes
insolvent, the Custodian's assets might not be adequate to
satisfy a claim by the Trust
or the Authorized
Participant for the amount of gold held in
their
respective unallocated gold
accounts.
In the case of the insolvency of the Custodian, a liquidator may seek to freeze
access to the
gold held in all of the accounts held by the Custodian, including the Trust's allocated
account (Trust
Allocated Account). Although the Trust would be able to claim ownership
of properly allocated gold, the Trust could
incur expenses in connection with asserting such claims, and the
assertion of such a claim by the liquidator
could delay creations and redemptions of
Baskets.
13
Risk Factors
In issuing
Baskets,
the Trustee will rely on certain information received from the
Custodian which is subject to confirmation after the Trustee has relied
on the information.
If such information turns out to be
incorrect,
Baskets
may be issued in exchange for an amount of gold
which is more or less than
the amount of gold which is required to be deposited with the
Trust.
The Custodian's
definitive records are prepared after the close
of
its business day.
However, when
issuing
Baskets,
the Trustee will rely on information reporting the
amount of gold
credited to the Trust's
accounts
which it receives from the Custodian during the business day and which
is subject to correction during the preparation of the
Custodian's definitive records after the close of business. If
the information relied upon by the Trustee is incorrect, the amount of
gold actually received by the Trust may be more or less than
the amount required to be deposited for the issuance of
Baskets.
The
Trust's obligation to reimburse the
Purchaser,
the Marketing Agent and the Authorized
Participants for certain liabilities in the
event the Sponsor fails to indemnify the
Purchaser,
the Marketing Agent or the Authorized
Participants could adversely affect an
investment in the
Shares.
The Sponsor has agreed to indemnify
the
Purchaser
and the Marketing
Agent,
their
partners, directors and officers, and any
person who controls the
Purchaser
or the Marketing Agent, and their
respective successors and assigns, against
any loss, damage,
expense, liability or claim that may be incurred by
the
Purchaser
and the Marketing Agent
in connection with (1) any untrue statement
or alleged untrue statement of a material
fact
contained
in the registration statement of which this
prospectus forms a part (including this prospectus, any preliminary
prospectus, any prospectus supplement and any exhibits thereto) or any
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading,
(2)
any untrue statement or alleged untrue statement of a material
fact made by the Sponsor
with respect to any
representations and
warranties
or any covenants under (A)
the distribution agreement
between the Sponsor and the
Purchaser, dated
November
,
2004
or (B) the Marketing Agent
Agreement,
or failure of the
Sponsor to perform any
agreement or
covenant
therein,
(3)
any untrue statement or
alleged untrue statement of a material fact
contained in any materials used in
connection with the marketing of the
Shares,
(4)
circumstances
surrounding the third party allegations relating to patent and contract
disputes as described in "Risk Factors—Competing
claims over ownership of intellectual property rights related to the
Trust could adversely affect the Trust and an Investment in the
Shares," "Business of the Trust—License
Agreement" and "Legal
Proceedings," or (5) the Marketing Agent's
performance of its
duties under the Marketing Agent
Agreement, and
to contribute to payments that the Purchaser or the Marketing Agent may
be required to make in respect thereof.
The
Trustee has
agreed to reimburse the
Marketing Agent, solely from and to the
extent of the Trust's assets, for indemnification
and contribution amounts due from the Sponsor
under the
preceding
sentence
and the
Purchaser
for indemnification
and contribution amounts due from the Sponsor in respect of the items
identified in
subsections
(1), (2), (3) and
(4) of the
preceding sentence
to the extent the
Sponsor has not paid such amounts directly when due.
Under the Participant Agreement, the
Sponsor
also
has agreed to indemnify the Authorized
Participants against
certain liabilities, including liabilities under the Securities Act of
1933, as amended (Securities Act) and to contribute to
payments that the Authorized
Participants
may be required to make in respect of such liabilities.
The
Trustee has
agreed to reimburse the Authorized
Participants, solely from and to the extent
of the Trust's assets, for indemnification
and contribution amounts due from the Sponsor in respect of such
liabilities to the extent the Sponsor has
not paid such amounts when due.
In the event the Trust is required to pay
any such
amounts,
the Trustee would be
required to sell assets of the Trust to cover the amount of any such
payment and the NAV of the Trust would be reduced
accordingly, thus
adversely affecting an investment in the
Shares.
Under
the Trust Indenture, the Sponsor may be able to seek indemnification
from the Trust for payments it makes in connection with the
Sponsor's activities under the Trust Indenture to the extent its
conduct does not disqualify it from receiving such indemnification
under the terms of the Trust Indenture. The
Sponsor shall also be indemnified from the Trust and held harmless
against any loss, liability or expense arising under the Distribution
Agreement, the Marketing Agent Agreement or any Participant Agreement
insofar as such loss, liability or expense arises from any untrue
statement or alleged untrue statement of a material fact contained in
any written statement provided to the Sponsor by the
Trustee. See
"Description of the Trust
Indenture—The
Sponsor—Liability of the Sponsor and
indemnification."
For information
14
Risk Factors
about when the Trust's assets may be
used to indemnify (1)
the Trustee, see
"Description of the Trust Indenture," and (2)
the Custodian, see "Description
of the Custody
Agreements."
Competing
claims over ownership of intellectual property rights related to the
Trust could adversely affect the Trust and
an investment in the Shares.
While the Sponsor believes that
all intellectual property rights needed to operate the Trust are owned
by or licensed to
the Sponsor or the WGC or have been obtained,
third parties may
allege or assert ownership of intellectual property rights which may be
related to the design, structure and
operations of the Trust. To the extent any claims of
such ownership are brought or any
proceedings are
instituted to assert such claims,
the negotiation,
litigation or settlement of such claims, or
the ultimate disposition of such claims in a court of
law if a suit is brought,
may
adversely affect the Trust and an
investment in the Shares,
for
example, resulting in expenses or damages
or the termination of the Trust.
See
"Legal
Proceedings."
If
the Marketing Agent and the WGC do not conclude an international
marketing agent agreement within
60
days of the effectiveness of the registration statement of which this
prospectus forms a part, the Sponsor may
terminate the Marketing Agent Agreement and
the services of the Marketing Agent. This
could affect the performance of the services provided by the Marketing
Agent and would terminate the obligation of the Sponsor to reduce its
fees under certain circumstances.
The
Marketing Agent, the WGC and the Sponsor have entered into an agreement
obligating the WGC and the Marketing Agent to conclude an international
marketing agent agreement providing for the distribution outside the US
of exchange-traded securities whose investment objective or investment
method is tied to gold bullion or derivatives of gold bullion. If the
WGC and the Marketing Agent do not conclude such an agreement within
60
days of the effectiveness of the registration statement of which this
prospectus forms a part, the Sponsor may exercise its option,
exercisable for
60
days commencing on the
61st
day after effectiveness of the registration statement of which this
prospectus forms a part, to terminate the Marketing Agent Agreement and
the services of the Marketing Agent. Upon any such termination, the
Marketing Agent License Agreement and the WGC/WGTS License Agreement
would terminate, the Sponsor and the Trust would be required to cease
using the
"streetTRACKS
®
"
mark and the Sponsor would be required to amend this prospectus and the
registration statement of which this prospectus forms a part to delete
any reference to the Marketing Agent, State Street Corporation or
"streetTRACKS
®
".
If the services of the Marketing Agent under the Marketing Agent
Agreement are terminated, the services provided by the Marketing Agent
would have to be performed by the Sponsor or a replacement marketing
agent. The Sponsor may not be able to perform such services at the same
performance level as the Marketing Agent or find a replacement
marketing agent able to perform such services at the same performance
level as the Marketing Agent. A replacement marketing agent might not
be willing to perform such services for the same fees as the Marketing
Agent.
Under the terms of the Trust Indenture, for seven years
from the date of the Trust Indenture or until the earlier termination
of the Marketing Agent Agreement, if at the end of any month during
this period the estimated ordinary expenses of the Trust exceed an
amount equal to 0.40% per year of the daily
ANAV of the Trust for such month, the fees
payable to the Sponsor and the Marketing Agent from the assets of the
Trust will be reduced by the amount of such excess in equal shares up
to the amount of their fees. If the Marketing Agent Agreement is
terminated pursuant to the termination right described in the preceding
paragraph, the Sponsor's obligation to reduce its fees in
accordance with the preceding sentence will
terminate.
15
Use
of Proceeds
Proceeds received by the Trust from the issuance
and sale of
Baskets,
including the
Seed
Baskets and the
Underwritten
Shares
(which
are described on the front page of this
prospectus), will consist of gold deposits
and, possibly from time to time, cash. Pursuant to the Trust Indenture,
during the life of the Trust such proceeds will only be
(1)
held by the Trust,
(2)
distributed to Authorized Participants in connection with the
redemption of Baskets or
(3)
disbursed or sold
as needed to pay the Trust's ongoing
expenses.
16
Overview
of the Gold Industry
HOW GOLD TRAVELS FROM THE MINE TO
THE CUSTOMER
The following is a general description of
the typical path gold takes from the mine to the customer. Individual
paths may vary at several stages in the process from the following
description.
Gold, a naturally occurring mineral
element, is found in ore deposits throughout the world. Ore
containing gold is first either dug from the surface or blasted from
the rock face underground.
Mined ore is hauled to a
processing plant, where it is crushed or milled.
Crushed or milled ore is
then concentrated in order to separate out the coarser gold and heavy
mineral particles from the remaining parts of the ore. Gold is
extracted from these ore concentrates by a number of processes and,
once extracted, is then smelted to a gold-rich doré (generally a
mixture of gold and silver) and cast into bars. Smelting, in its
simplest definition, is
the melting of ores or concentrates with a reagent which results in the
separation of gold from
impurities.
The doré goes through a
series of refining processes to upgrade it to a purity and format that
is acceptable in the market place. Refining can take a number of
different forms, according to the type of ore being treated. The
doré is refined to a purity of 99.5% or higher. The most
common international standard of purity is the standard
established by the London Good Delivery
Standards, described in
"Operation of the Gold Bullion Market — The London
Bullion Market."
The gold mining company pays the
refinery a fee, and then sells the bars to a bullion dealer. In some
cases, the refinery may buy the gold from the mining company, thus
effectively operating as a bullion dealer. Bullion dealers in turn sell
the gold to manufacturers of jewelry or industrial products containing
gold. Both the sale by the mine and the purchase by the manufacturer
will frequently be priced with reference to the London gold price fix,
which is widely used as the price benchmark for
international gold transactions.
Some
gold mining companies sell forward their gold to a bullion dealer in
order to lock in cash-flow for revenue management
purposes. The price they receive on delivery of the gold will be that
which was agreed to at the time of the initial transaction, equivalent
to the spot price plus the interest accrued up until the date of
delivery.
Once a manufacturer of jewelry or industrial products
has taken delivery of the purchased gold, the manufacturer fabricates
it and sells the fabricated product to the customer. This is the
typical pattern in many parts of the developing world. In some
countries, especially in the industrialized world, bullion dealers will
consign gold out to a
manufacturer. In these cases, the gold will be stored in a secured
vault on the premises of the manufacturer, who will use these
consignment stocks for fabrication into products as needed. The actual
sale of the gold from the bullion dealer to the manufacturer only takes
place at the time the manufacturer sells the product, either to a
distributor, a retailer or the customer.
In some cases, the
manufacturer may, often for cost reasons, ship the gold to another
country for fabrication into products. The fabricated products may then
be returned to the manufacturer's country of business for onward
sale, or shipped to a third country for sale to the customer.
GOLD SUPPLY AND DEMAND
Gold is a physical
asset that is accumulated, rather than consumed. As a result, virtually
all the gold that has ever been mined still exists today in one form or
another.
Gold
Survey
2004
,
a publication of Gold Fields Mineral Services Ltd. (GFMS), an
independent precious metals research organization based in London,
estimates that existing above-ground stocks of gold amounted
to 150,500
tonnes (approximately
4.7
billion ounces) at the end
of 2003. These stocks have
increased by approximately
2.0% per year on average
for the 10 years ending
December
2003. When
used in this prospectus,
"tonne"
refers to one metric tonne, which is
equivalent to 1,000 kilograms or 32,150.7465 troy
ounces.
Existing stocks may be
broadly divided into two categories based on the primary reason for the
purchase or holding of the gold:
17
Overview of the Gold Industry
|
|
•
|
Gold
purchased or held as a store of value or monetary asset; and
|
|
|
•
|
Gold purchased or held as a raw material or
commodity.
|
The first category, gold held as a
store of value or monetary asset, includes the
33,160
tonnes of gold
that is estimated to be owned by the official sector
(central banks, other governmental agencies and multi-lateral
institutions such as the International Monetary Fund).
An estimated
3,960
tonnes
of this gold has already been mobilized into the market and
fabricated into gold products. This reduces to
29,200
tonnes
(19.4%
of the estimated total) the total that could theoretically become
available in the unlikely event that all
official sector holdings were liquidated.
The 23,600
tonnes of gold
(15.7% of the
estimated total) in the hands of private investors also falls into
this first category. While much of the gold
in this category exists in bullion form and, in
theory, could be mobilized and made available to the market, there are
currently no indications that a significantly greater amount of gold
will be mobilized in the near future than has been mobilized in recent
years.
The second category, gold held
as a raw material or commodity, includes the
76,800
tonnes of gold
(51.0% of the
estimated total) that has been manufactured into jewelry. As all gold
jewelry exists as fabricated products, the jewelry would need to be
remelted and transformed into bullion bars before being mobilized into
the market in an acceptable form. While adornment is the primary
motivation behind purchases of gold jewelry in the industrialized
world, much of the jewelry in the developing world has an additional
store of value element, with this jewelry being held, at least in part,
as a means of savings. As
this jewelry in the
developing world tends to be of higher purity,
the price of an item of jewelry is more closely
correlated with the value of the gold contained in it than is the case
in the industrialized world. As a result, this jewelry is more
susceptible to recycling. Recycled jewelry, primarily from the
developing world, is the largest single component of annual gold scrap
supply, which has averaged
733
tonnes annually over
the last 10 years.
The second category also includes the
17,300
tonnes of gold
(11.5% of the
estimated total) that has been manufactured or incorporated into
industrial products. Similar to jewelry, this gold would need to be
recovered from the industrial
products and then remelted
and recast into bars before it could be mobilized into the market.
Small quantities of remelted gold from industrial products come onto
the market each year.
Approximately 3,600
tonnes of above-ground
stocks (2.4% of the estimated total)
is unaccounted
for.
World Gold Supply and Demand
(1994
–
2003)
The following table sets forth a summary of the world gold supply
and demand for the last 10
years and is based on
information reported in the
GFMS
Gold Survey
2004
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supply
|
|
1994
|
|
1995
|
|
1996
|
|
1997
|
|
1998
|
|
1999
|
|
2000
|
|
2001
|
|
2002
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
(tonnes)
|
|
|
Mine production
|
|
|
2,285
|
|
|
|
2,291
|
|
|
|
2,375
|
|
|
|
2,493
|
|
|
|
2,542
|
|
|
|
2,574
|
|
|
|
2,591
|
|
|
|
2,621
|
|
|
|
2,590
|
|
|
|
2,593
|
|
|
|
Old gold
scrap
|
|
|
621
|
|
|
|
631
|
|
|
|
644
|
|
|
|
626
|
|
|
|
1,099
|
|
|
|
608
|
|
|
|
610
|
|
|
|
708
|
|
|
|
836
|
|
|
|
943
|
|
|
|
Official sector
sales
|
|
|
130
|
|
|
|
167
|
|
|
|
279
|
|
|
|
326
|
|
|
|
363
|
|
|
|
477
|
|
|
|
479
|
|
|
|
527
|
|
|
|
545
|
|
|
|
606
|
|
|
|
Net producer
hedging
|
|
|
105
|
|
|
|
475
|
|
|
|
142
|
|
|
|
504
|
|
|
|
97
|
|
|
|
506
|
|
|
|
(15
|
)
|
|
|
(151
|
)
|
|
|
(437
|
)
|
|
|
(310
|
)
|
|
|
Total
Reported
Supply
|
|
|
3,141
|
|
|
|
3,565
|
|
|
|
3,440
|
|
|
|
3,949
|
|
|
|
4,102
|
|
|
|
4,165
|
|
|
|
3,665
|
|
|
|
3,705
|
|
|
|
3,534
|
|
|
|
3,832
|
|
|
|
Demand
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
fabrication in carat
jewelry
|
|
|
2,640
|
|
|
|
2,812
|
|
|
|
2,856
|
|
|
|
3,311
|
|
|
|
3,182
|
|
|
|
3,148
|
|
|
|
3,222
|
|
|
|
3,026
|
|
|
|
2,680
|
|
|
|
2,533
|
|
|
|
Gold
fabrication in
electronics
|
|
|
187
|
|
|
|
204
|
|
|
|
207
|
|
|
|
235
|
|
|
|
226
|
|
|
|
248
|
|
|
|
282
|
|
|
|
200
|
|
|
|
209
|
|
|
|
238
|
|
|
|
Gold fabrication
in
dentistry
|
|
|
64
|
|
|
|
67
|
|
|
|
68
|
|
|
|
70
|
|
|
|
64
|
|
|
|
66
|
|
|
|
69
|
|
|
|
69
|
|
|
|
69
|
|
|
|
67
|
|
|
|
Gold fabrication
in other industrial and decorative
applications
|
|
|
104
|
|
|
|
110
|
|
|
|
113
|
|
|
|
115
|
|
|
|
104
|
|
|
|
99
|
|
|
|
99
|
|
|
|
97
|
|
|
|
82
|
|
|
|
80
|
|
|
|
Retail
investment
|
|
|
349
|
|
|
|
465
|
|
|
|
298
|
|
|
|
492
|
|
|
|
336
|
|
|
|
446
|
|
|
|
335
|
|
|
|
359
|
|
|
|
373
|
|
|
|
314
|
|
|
|
Total
Reported
Demand
|
|
|
3,344
|
|
|
|
3,657
|
|
|
|
3,541
|
|
|
|
4,223
|
|
|
|
3,912
|
|
|
|
4,007
|
|
|
|
4,007
|
|
|
|
3,749
|
|
|
|
3,413
|
|
|
|
3,232
|
|
|
|
Supply Less
Demand
1
|
|
|
(203
|
)
|
|
|
(93
|
)
|
|
|
(102
|
)
|
|
|
(275
|
)
|
|
|
190
|
|
|
|
158
|
|
|
|
(342
|
)
|
|
|
(44
|
)
|
|
|
122
|
|
|
|
600
|
|
|
|
|
|
(1)
|
This
is the residual from combining all the other
data in the table.
This residual results
from the fact that there is no reliable methodology for measuring all
elements of gold supply and demand. It includes
net institutional
investment, movements in stocks
and other elements, together with
any residual
error.
|
18
Overview of the Gold Industry
SOURCES OF GOLD
SUPPLY
Sources of gold supply include both mine
production and the recycling or mobilizing
of existing above-ground stocks. The largest portion of gold supplied
into the market annually is from gold mine production. The second
largest source of annual
gold supply is from old scrap, which is gold that has been recovered
from jewelry and other fabricated products and converted back into
marketable gold. Official sector sales have outstripped purchases since
1989, creating additional net supply of gold into the marketplace. Net
producer hedging accelerates the sale of physical gold and can
therefore impact, positively or negatively, supply in a given year.
Mine production
Mine production includes gold produced from
primary deposits and from secondary deposits where
the gold is recovered as a by-product metal from other mining
activities.
Mine production is derived from
numerous separate
operations on all continents of the world, except Antarctica. Any
disruption to production in any one locality is unlikely to affect a
significant number of these operations simultaneously. Such potential
disruption is unlikely to have a material impact on the overall level
of global mine production, and therefore equally unlikely to have a
noticeable impact on the gold price.
In the unlikely event of
significant disruptions to production occurring simultaneously at a
large number of individual mines, any impact on the price of gold would
likely be short-lived. Historically, any sudden and significant rise in
the price of gold has been followed by a reduction in physical demand
which lasts until the period of unusual volatility is past. Gold price
increases also tend to lead to an increase in the levels of recycled
scrap used for gold supply. Both of these factors have tended to limit
the extent and duration of upward movements in the price of gold.
Since 1984, the amount of new gold that is mined each year has been
substantially lower than the level of physical demand. For example,
during the five years from 1999 to
2003, new mine production only satisfied
70% of the total
demand for fabrication and retail investment. The shortfall in total
supply has been met by additional supplies from existing above-ground
stocks, predominantly coming from the recycling of fabricated gold
products, official sector sales and net producer hedging.
Old
gold scrap
Gold scrap is gold that has been recovered from
fabricated products, melted, refined and cast into bullions bars for
subsequent resale into the gold market. The predominant source of gold
scrap is recycled jewelry.
This predominance is largely a
function of price and economic circumstances. The 1998 peak in gold
scrap supply can be attributed to the concurrent collapse of many of
the East Asian currencies, which began with the Thai Baht in July 1997,
leading to price-driven and distress related selling.
Official
sector sales
Historically, central banks have retained gold as
a strategic reserve asset. However, since 1989 the official sector has
been a net seller of gold to the private sector, supplying an average
of
379
tonnes per year from 1989 to
2003 inclusive. This has
resulted in net movements of gold from the official to the private
sector. Owing to the prominence given by market commentators to this
activity and the size of official sector gold holdings, this area has
been one of the more visible sources of
supply.
The Central Bank
Gold Agreement, also known as the Washington Agreement on Gold
or
"WAG,"
announced during the International
Monetary Fund meetings in Washington, DC on September 26,
1999, is a voluntary agreement among key central banks to clarify their
intentions with respect to their gold holdings. The signatories to the
agreement were the European Central Bank and 14 other central banks.
These institutions agreed not to enter the gold market as sellers
except for already decided sales, which were to be achieved through a
five year program that limited annual sales to approximately 400
tonnes and total sales
over the period to 2,000
tonnes. The signatories
further agreed not to expand their
19
Overview of the Gold Industry
use of gold
lending and derivatives
over the period. The European
Central Bank announced in March 2004 that the agreement would be
extended for a further five-year period
starting on September 27, 2004. The new agreement is similar to the
existing agreement, although the ceiling for
gold sales is 25% higher and the Bank of Greece replaces the
Bank of England as a signatory to the
agreement. UK Treasury indicated at the time of the announcement of the
new agreement that the UK government had no
plans to sell gold from its reserves and therefore would not
participate in the new agreement.
As before, the new agreement will be reviewed after five
years.
The following chart shows the reported gold
holdings in the official sector at
December
2003.
|
(1)
|
The
Euro Area comprises the following
countries: Austria, Belgium, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg,
The
Netherlands, Portugal,
and
Spain,
plus the European Central Bank from January
1999 when the European Economic and
Monetary Union was
implemented.
|
Net producer hedging
Net producer hedging creates
incremental supply in the market by accelerating the timing of the
sale of gold. A mining company wishing to protect
itself from the risk of a decline in the gold price may elect to sell
some or all of its anticipated production for delivery at a future
date. A bullion dealer accepting such a transaction will finance it by
borrowing an equivalent quantity of gold (typically
from a central bank), which is immediately sold into the market. The
bullion dealer then invests the cash proceeds from that sale of
gold and uses the yield on these investments to pay
the gold mining company the contango (i.e., the premium available on
gold for future delivery). When the mining company delivers the gold it
has contracted to sell to the bullion dealer, the dealer returns the
gold to the central bank that lent it, or rolls the loan forward in
order to finance similar transactions in the future. While over time
hedging transactions involve no net increase in the supply of gold to
the market, they do accelerate the timing of the sale of the
gold, which has an impact on the balance between
supply and demand at the time. Since 2000, there has been an annual net
reduction in the volume of outstanding producer hedges that has reduced
supply.
20
Overview of the Gold Industry
The following illustration details a
typical hedging transaction (numbering
indicates sequential
timing).
SOURCES
OF GOLD DEMAND
As reported by published statistics, the
demand for gold amounted
to less than 3.0% of total above ground stocks in
2003. Demand for gold is
driven primarily by demand for jewelry, which is used for adornment
and, in much of the developing world, also
as an investment. Retail investment and
industrial applications
represent increasingly important, though relatively small, components
of overall demand. Retail investment is measured as customer purchases
of bars and coins. Gold bonding wire and gold plated contacts and
connectors are the two most frequent uses of gold in industrial
applications.
Gold demand is widely dispersed throughout
the world. While there are seasonal fluctuations in
the levels of demand for gold (especially jewelry)
in many countries,
variations in the timing of such
fluctuations in different countries
mean that seasonal changes
in demand do not have a significant impact on
the global gold price.
Jewelry
The primary source of
gold demand is gold jewelry. The motivation for jewelry purchases
differs in various regions of the world. In the industrialized world,
gold jewelry tends to be purchased purely for adornment purposes, while
gold's attributes as a store of value and a means of saving
provide an additional motivation for jewelry purchases in much of the
developing world. Price and economic factors, such as available wealth
and disposable income, are the primary factors in jewelry demand.
Jewelry purchased purely for adornment purposes is generally of lower
caratage or purity, with design
input and improved finishes accounting for a
substantial
portion
of the purchase price. In those parts of the world where the
additional motivation of savings or investment applies to the purchase
of jewelry, which are mainly in Asia, the Indian subcontinent and the
Middle East, gold jewelry is generally of higher caratage, and the
purchase price more closely reflects the value of the gold contained in
each item.
Electronics, dentistry and other industrial
and decorative
applications
Gold bonding wire
and gold plated contacts and connectors are the two most frequent uses
of gold in electronics. Other uses include high-melting point gold
alloy solders and gold thick film pastes for hybrid circuits. In
conservative and restorative dentistry, gold is generally used alloyed
with other noble metals and with base metals, for inlay and onlay
fillings, crown and bridgework and porcelain veneered restorations.
Increasingly, pure gold electroforming is being used for dental
repairs. Other industrial applications of gold include the use of thin
gold coatings on table and enamel ware for decorative
21
Overview of the Gold Industry
purposes and on glasses used in the
construction and aerospace industries to reflect infra-red rays. Small
quantities are also used in various pharmaceutical applications,
including the treatment of arthritis, and in medical implants. Future
applications for gold catalysts are in pollution control, clean energy
generation and fuel cell technology. In addition, work is under way on
the use of gold in cancer treatment.
Retail investment
Retail investment demand covers coins and bars
meeting the standards for
investment gold adopted by the European Union, extended to include
medallions of no less than 99% purity, and bars or coins which
are likely to be worn as jewelry in certain countries. Retail
investment is measured as net purchases by the ultimate
customer.
22
Operation
of the Gold Bullion Market
The global trade in
gold consists of Over-the-Counter (OTC) transactions in spot, forwards,
and options and other derivatives, together
with exchange-traded futures and options.
GLOBAL
OVER-THE-COUNTER MARKET
The OTC market
trades on a 24-hour per day continuous basis and accounts for most
global gold trading.
Market makers,
as well as others in the OTC market, trade with
each other and with their clients on a principal-to-principal basis.
All risks and issues of
credit are between the parties directly involved in the transaction.
Market makers include the
eight
market-making members of the LBMA, the trade
association that acts as the coordinator for
activities conducted on behalf of its members and other participants in
the London bullion market.The
eight market-making
members of the LBMA are: Barclays Bank
plc, Deutsche Bank AG,
HSBC Bank USA,
N.A.
(through its London branch), J.
Aron and Company (UK) (a division of Goldman Sachs),
JPMorgan Chase Bank,
ScotiaMocatta (a
division of the Bank of
Nova Scotia), Société Générale, and UBS AG.
The OTC market provides a relatively flexible market in terms of
quotes, price, size, destinations for delivery and other factors.
Bullion dealers customize transactions to meet clients'
requirements. The OTC market has no formal structure and no open-outcry
meeting place.
The main centers of the OTC market are London,
New York and Zurich. Mining companies, central banks, manufacturers of
jewelry and industrial products, together with investors and
speculators, tend to transact their business through one of these
market centers. Centers such as Dubai and several cities in the Far
East also transact substantial OTC market business, typically involving
jewelry and small bars (1 kilogram or less). Bullion dealers have
offices around the world and most of the world's major bullion
dealers are either members or associate members of the LBMA. Of the
eight market-making
members of the LBMA, five
offer clearing services. There are a further
51 full members, plus a
number of associate members around the world.
The number of LBMA market-making, clearing
and full members reported in this prospectus are as of
July 23, 2004. These numbers may change from time to
time as new members are added and existing
members drop out.
In the OTC market,
the standard size of gold trades between market makers ranges between
5,000 and 10,000 ounces. Bid-offer spreads are typically
50
US cents per ounce.
Certain dealers are
willing to offer clients competitive prices for much larger volumes,
including trades over
100,000 ounces, although this will vary according to
the dealer, the client and market conditions, as transaction costs in
the OTC market are negotiable between the parties and therefore vary
widely. Cost indicators can be obtained from various information
service providers as well as dealers.
Liquidity
in the OTC market can vary from time to time during the course of the
24-hour trading day. Fluctuations in
liquidity are reflected in adjustments to dealing spreads – the
differential between a dealer's
"buy" and "sell"
prices. The period of greatest liquidity in the gold market
generally occurs at the
time of
day when trading in the
European time zones overlaps with trading in the United States, which
is when OTC market trading in London, New
York and other centers coincides with futures and options
trading on the
COMEX division of the New
York Mercantile Exchange. This period lasts for
approximately four hours each
New
York business day
morning.
THE LONDON BULLION MARKET
Although the
market for physical gold is distributed globally, most OTC market
trades are cleared through London. In
addition to coordinating market activities, the LBMA acts as
the principal point of contact between the market and its regulators. A
primary function of the LBMA is its involvement in the promotion of
refining standards by maintenance of the
"London Good Delivery
Lists,"
which are the lists of LBMA accredited melters and assayers of gold.
The LBMA also coordinates market clearing and vaulting, promotes good
trading practices and develops standard
documentation.
The term "loco
London" gold refers to gold physically held in London that
meets the specifications for weight, dimensions, fineness (or purity),
identifying marks (including the assay stamp of a LBMA
23
Operation of the Gold Bullion Market
acceptable refiner) and appearance set forth
in "The Good Delivery Rules for Gold and Silver
Bars" published by the
LBMA. Gold bars meeting
these requirements are described in this prospectus from time to time
as "London Good Delivery
Bars." The
unit of trade in London is the troy ounce, whose conversion between
grams is: 1,000 grams = 32.1507465 troy
ounces and 1 troy ounce = 31.1034768 grams. A London Good Delivery
Bar is acceptable for
delivery in settlement of a transaction on the OTC market. Typically
referred to as 400-ounce bars, a London Good Delivery
Bar must contain between
350 and 430 fine troy ounces of gold, with a minimum fineness (or
purity) of 995 parts per 1,000
(99.5%), be of good appearance and be easy to handle and stack.
The fine gold content of a gold bar is calculated by multiplying the
gross weight of the bar (expressed in units of 0.025 troy ounces)
by the fineness of the bar.
A London Good Delivery Bar
must also bear the stamp of one of the melters and assayers who are on
the LBMA approved list. Unless
otherwise specified, the gold spot price always refers to
that of a London Good Delivery
Bar. Business is generally
conducted over the phone and through electronic
dealing systems.
Twice daily during
London trading hours there is a
fix
which provides reference gold prices for that day's trading. Many
long-term contracts will be priced on the basis of either the morning
(AM) or afternoon (PM) London fix, and market participants will usually
refer to one or the other of these prices when looking for a basis for
valuations. The London fix is the most widely used benchmark for daily
gold prices and is quoted by various financial information
sources.
Formal
participation in the London fix is traditionally limited to five
members, each of which is a bullion dealer
and a member of the LBMA. N M Rothschild & Sons Limited withdrew
from participation in the London fix in
April 2004 after acting as chairman since the inception of the fix more
than 80 years ago. This prompted some
changes in the process
which
took effect from May 2004. The chairmanship
now
rotates annually
among the five member firms. Under this new arrangement, ScotiaMocatta
(a division of the Bank of Nova
Scotia), assumed
the chairmanship on May 5, 2004, for a period of twelve
months. With effect from the same date, the
fix has taken place by telephone and the five member firms no
longer meet face-to-face as was previously
the case. The morning session of the fix starts at 10:30 AM
London time and the afternoon session starts
at 3:00 PM London time. The other members of the gold fixing
are currently Deutsche Bank AG, HSBC Bank
USA,
N.A., Société
Générale and Barclays Bank plc. Barclays Bank
plc bought the N M Rothschild Limited's seat on
the London fix for an undisclosed sum. Any other
market participant wishing to participate in
the trading on the fix is required to do so through one of the
five gold fixing members.
Orders are placed
either with one of the five fixing members or with another bullion
dealer who will then be in contact with a fixing member during the
fixing. The fixing members net-off all orders when communicating their
net interest at the fixing. The fix begins with the fixing chairman
suggesting a "trying price," reflecting the
market price prevailing at the opening of the fix. This is relayed by
the fixing members to their dealing rooms which have direct
communication with all interested parties. Any market participant may
enter the fixing process at any time, or adjust or withdraw his order.
The gold price is adjusted up or down until all the buy and sell orders
are matched, at which time the price is declared fixed. All fixing
orders are transacted on the basis of this fixed price, which is
instantly relayed to the market through various media.
The London fix is widely viewed as a full
and fair representation of all market interest at the
time of the fix.
FUTURES EXCHANGES
The most significant gold
futures exchanges are the COMEX
division of the New York Mercantile Exchange
and the Tokyo Commodity Exchange
(TOCOM). The COMEX division of the New York Mercantile
Exchange is the largest exchange in the world for trading
precious metals futures
and options and has been trading gold since 1974. The TOCOM has been
trading gold since 1982. Trading on these exchanges is based on fixed
delivery dates and transaction sizes for the futures and options
contracts traded. Trading costs are negotiable. As a matter of
practice, only a small percentage of the futures market turnover ever
comes to physical delivery of the gold represented by the
contracts traded. Both exchanges permit
trading on margin. Margin trading can add to the speculative risk
involved given the potential for margin calls if the price moves
against the contract holder. The
COMEX division of the
24
Operation of the Gold Bullion Market
New York Mercantile Exchange
operates through a central clearance
system. On June 6, 2003, TOCOM
adopted a similar clearance system. In each case, the exchange acts as
a counterparty for each member for clearing
purposes.
OTHER
EXCHANGES
There are other gold exchange markets, such
as the Istanbul Gold Exchange (trading gold since 1995), the Shanghai
Gold Exchange (trading gold since October 2002) and the Hong Kong
Chinese Gold & Silver Exchange Society (trading gold since
1918).
MARKET REGULATION
The global gold markets are overseen and regulated by both
governmental and self-regulatory
organizations. In addition, certain trade associations
have established rules and protocols for market
practices and participants. In the United Kingdom,
responsibility for the regulation of the financial
market participants, including the major participating
members of the LBMA, falls under the authority of
the Financial Services Authority (FSA) as provided by
the Financial Services and Markets Act 2000 (FSM
Act). Under this act, all UK-based banks, together with
other investment firms, are subject to a range of
requirements, including fitness and properness, capital
adequacy, liquidity, and systems and
controls.
The FSA is responsible for
regulating investment products, including derivatives, and those who
deal in investment products. Regulation of
spot, commercial forwards, and deposits of gold and silver
not covered by the FSM Act is provided for by
The London Code of Conduct for Non-Investment Products,
which was established by market participants in
conjunction with the Bank of England.
Participants in the US OTC market for
gold are generally regulated by
the market regulators
which
regulate their activities in the other markets in which they operate.
For example, participating banks are
regulated by the banking authorities.
In the
United
States,
Congress created the
CFTC
in 1974 as an
independent agency with the mandate to regulate
commodity futures and option markets in the United
States. The CFTC regulates market participants and has
established rules designed to prevent market
manipulation, abusive trade practices and
fraud.
The CFTC requires that any trader holding an
open position of more
than 200 lots (i.e. 20,000 ounces) in any
one contract month on the
COMEX division of the New York Mercantile Exchange
must declare his
or her identity, the nature of
his or her
business (hedging, speculative, etc.) and
the existence and size of his or
her
positions.
The
TOCOM
has
authority to perform financial and operational surveillance on its
members' trading activities,
scrutinize positions held by members and large-scale customers, and
monitor the price movements of futures
markets by comparing them with cash and other derivative markets'
prices. To act as a Futures Commission
Merchant Broker, a broker must obtain a license from Japan's
Ministry of Economy, Trade and Industry
(METI), the regulatory
authority that oversees the operations of the
TOCOM.
25
Analysis
of Movements in the Price of Gold
As movements in the price of
gold are expected to directly affect the price of the Shares, investors
should understand what the recent movements in the price of gold have
been. Investors, however, should also be
aware that past movements in the gold price are not indicators of
future movements. This section of the prospectus identifies recent
trends in the movements of the gold price and discusses some of the
important events which have influenced these movements.
The
following chart provides historical background on the price of gold.
The chart illustrates movements in the price of gold in
US dollars per ounce over
the period from January 1971 to
September
30, 2004, and is
based on the London PM
Fix.
The following chart illustrates the
movements in the price of gold in
US dollars per ounce over
the period from January 1999 to
September
30, 2004, and is
based on the London
PM Fix. This
period
corresponds
to
the boxed portion of the above
chart.
26
Analysis of Movements in the Price of Gold
After
reaching a 20-year low of $252.80 per ounce
at the London PM Fix on July 20, 1999, the
gold price
gradually
increased.
The
average
gold price for
2002
was
$309.68 per
ounce, with a low of $277.75
and a high of $349.30. For 2003, the
average gold price was
$363.32
per ounce, with a
low of $319.90 and a high of $416.25. In the
first
nine
months of 2004, the
gold price ranged between
a high of $427.25
on
April 1, 2004 and a low of $375.00
on May 10,
2004.
The initial reason for the
market's turnaround during 1999
was the strong rise in physical demand, notably in
price sensitive markets such as China, Egypt, India and Japan. The
sharp gold price rise in September 1999 was largely a reflection of the
Central Bank Gold Agreement, which removed an important element of
uncertainty from the market and led not just to renewed professional
interest in the market but also to short-covering purchases. The
Central Bank Gold Agreement underpinned improved sentiment in the
longer term (fears over official sector sales had been a key element to
negative sentiment across the market in the latter part of the
1990s).
Despite the Central Bank Gold Agreement, a number of
factors led to the gold price resuming a downward trend in 2000. These
included renewed strength in the dollar (gold is
often perceived as a dollar hedge), strong
global economic growth, low inflation and, for much of the year,
buoyant stock markets in the United States and other key countries.
This downward price trend persisted into the early part of 2001. At
this time the gold price once again appeared to be approaching $250 per
ounce but, as before, strong physical demand from price sensitive
markets such as India again countered the downward trend.
Sentiment in the gold market started to change in early 2001, and
the gold price has shown an upward trend since March of that year. A
rapid economic slowdown occurred in the world economy, while stock
markets in the United States and other key countries were falling.
There was an end to the significant disinvestment in gold in Europe and
North America that had affected gold prices during 2000. In addition,
the rapid sequence of interest rate cuts in the United States reduced
the risk/reward ratio that had previously been enjoyed by speculators
who had been trading in the gold market from the short side (i.e.,
selling forward or futures with a view to buying back at a lower
price). Lower interest rates reduced the contango (i.e., the premium
available on gold for future delivery) available and this, combined
with steady prices, meant that such trades became increasingly
unattractive. After the first quarter of 2001, some mining companies
started to reduce their hedge books, reducing the amount of gold coming
onto the market. Political uncertainties and the continuing economic
downturn after the attacks of September 11, 2001 added to demand for
gold investments.
The continuation of the upward price trend
during the years 2002, 2003 and the first half of 2004 reflected
external issues such as the decline in the US dollar relative to other
currencies, volatility in equity markets, doubts over global economic
recovery other than in China and East Asia, concern over corporate
governance issues, and growing political tension, including the rise in
terrorism. Developments internal to the gold market such as rising
investment demand, the announcement of the renewed Central Bank Gold
Agreement, and the continued reduction in forward selling by mining
companies also played an important
role.
27
Business
of the
Trust
The investment
objective of the Trust is
for the Shares to
reflect the performance of the
price of gold
bullion, less
the Trust's
expenses.
The Sponsor believes
that, for many investors,
the Shares will
represent a
cost-effective
investment relative to traditional means of investing in
gold. As the value of the Shares is tied to the value of the
gold held by the Trust, it is important in understanding the investment
attributes of the Shares to first understand the investment attributes
of gold.
THE CASE FOR INVESTING IN GOLD
All forms of investment carry some degree of risk. In addition, the
Shares have certain unique risks, as described in "Risk
Factors"
starting on page
7.
Holding gold directly also has risks. However, including
gold in a well-balanced portfolio can help diversify risk.
Gold's ability to serve as a portfolio diversifier is due to
its historically low-to-negative correlation with stocks and bonds. The
economic forces that determine the price of gold are different from the
forces that determine the prices of most financial assets. For example,
the price of a stock often depends on the earnings or growth potential
of the issuing company or the confidence investors have
in its management. The price of a bond
depends primarily on its credit rating, its yield and the yields of
competing fixed income investments. The price of gold, however, depends
on different factors, including the supply and demand for gold, the
strength or weakness of the
US dollar, the rate of
inflation and interest rates and the current political environment.
Gold does not depend on a promise to pay on the part of any government
or corporation, as is the case with investments in money market
instruments as well as in the corporate and
government bond markets. Gold is not directly affected by the economic
policies of any individual country and cannot be repudiated, as is the
case with paper assets. Gold is not subject to the risk of default or
bankruptcy. Gold cannot be created at will as can paper-backed
assets.
Some of gold's investment attributes are shared
with traditional portfolio diversifiers, which include
non-US equities, emerging
markets securities, real estate investment trusts, and domestic and
foreign bonds. Gold historically
has had little
correlation with these traditional
diversifiers and
low-to-negative
correlation with
the Standard & Poor's
500 Index, which is widely regarded as the standard for measuring the
stock market performance of large
capitalized US
companies. In the search for effective
diversification, investors have begun to turn to a variety of
non-traditional diversifiers. These non-traditional diversifiers
include hedge and private equity funds, commodities, timber and
forestry, fine art and collectibles. Gold has one or more of the
following advantages over each of these non-traditional diversifiers:
greater liquidity, lower risk and lower management and holding
costs.
STRATEGY BEHIND THE
SHARES
The Shares are intended to offer investors a new
and different opportunity to participate in the gold market through
an investment in
securities.
Certain pension
funds
which
have not been able to participate in the gold market
are expected to be able to
purchase and hold the
Shares.
Historically, the
logistics of buying, storing and insuring gold have
constituted a barrier to entry for some
institutional and retail investors alike. The offering of the Shares is
intended to overcome these barriers to entry. The logistics of storing
and insuring gold are dealt with by the Custodian and the related
expenses are built into the price of the Shares. Therefore, the
investor does not have any additional tasks or costs over and above
those associated with dealing in any other publicly traded
security.
28
Business of the Trust
The Shares are intended to provide
institutional and retail investors with a simple and
cost-efficient means of
gaining investment benefits similar to those of holding gold bullion.
The Shares offer an investment that is:
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•
|
Easily
Accessible.
Investors can access the gold market through a
traditional brokerage
account. The
Sponsor believes that investors will be able to
more effectively implement strategic and tactical
asset allocation strategies that use gold by using the Shares instead
of using the traditional means of purchasing, trading and holding
gold.
|
|
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•
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Relatively Cost
Efficient.
The Sponsor
believes that, for many investors, transaction costs related
to the Shares will be lower than those associated with the purchase,
storage and insurance of physical gold.
|
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•
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Exchange
Traded.
The Shares are
expected to trade on the NYSE, providing investors with an
efficient means to implement various investment strategies.
Upon
effectiveness of the registration statement
of which this prospectus is a part,
the
Shares will be eligible for
margin accounts.
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Transparent.
The Shares will be
backed by the assets of the Trust and the Trust will not hold or employ
any derivative securities. Further, the value of the Trust's
holdings will be reported on the Trust's website
daily.
|
SECONDARY MARKET
TRADING
While the
Trust's investment objective is for the Shares to reflect the
performance of gold bullion, less the
expenses of the Trust, the Shares may trade in the
secondary market on the NYSE at prices that are lower
or higher relative to their NAV per Share. The amount
of the discount or premium in the trading price
relative to the NAV per Share may be influenced by
non-concurrent trading hours between
the COMEX division of
the New York Mercantile Exchange and
the NYSE. While the Shares will
trade on the NYSE until
4:15
PM New York time, liquidity in the
global gold
market will be reduced after the close of
the COMEX division of the New York
Mercantile Exchange at 1:30 PM New York
time. As a result, during this time, trading
spreads, and the resulting premium or discount, on the Shares
may widen.
LICENSE
AGREEMENT
In connection with
the settlement of a lawsuit between the WGC, WGTS and BNY concerning
the ownership of certain intellectual
property related to the Trust and BNY's contractual entitlement
to act as the trustee of the Trust, BNY has
agreed to serve as the trustee of the Trust. In addition, while the
WGC and WGTS do not agree that BNY owns any
of the intellectual property involved with the Trust, the
WGC and WGTS have entered into a license agreement with
BNY under which BNY grants to the WGC and
WGTS a perpetual, world-wide, non-exclusive, non-transferable license
under BNY's patents and patent
applications that cover securitized gold products solely for the
purpose of establishing, operating and
marketing any securitized gold financial product that is sold,
sponsored or issued by the WGC or WGTS. Also
under the license agreement, the WGC and WGTS grant to BNY a perpetual,
world-wide, non-exclusive, non-transferable
license under their patents, patent applications and other
intellectual property rights solely for the
purpose of establishing, operating and marketing financial
products involving the securitization of any
commodity, including
gold.
TRUST
EXPENSES
The Trustee will sell gold as needed to
pay the expenses of the Trust, as described below. The Trust's
estimated
ordinary operating expenses are accrued
daily commencing
after
the first day of the trading of the Shares on the
NYSE and are reflected in the NAV of the
Trust. The ordinary operating expenses of
the Trust include (1) fees paid to the Sponsor, (2) fees paid to
the Trustee, (3) fees paid to the
Custodian, (4) fees paid to the Marketing Agent and (5) various Trust
administration fees, including printing and
mailing costs, legal and audit fees, registration fees and NYSE
listing fees. The Sponsor will pay the
costs of the Trust's organization and the initial sale of the
Shares, including the applicable SEC
registration fees. The Trustee will
charge no fee and will assume the Trust's operating expenses
(other than extraordinary expenses)
for the period from
the Trust's formation through the day
the Shares commence
29
Business of the Trust
trading on the NYSE. The Trustee and the
Sponsor have entered into a separate agreement relating to payment by
the Sponsor to the
Trustee for
this
period.
These payments are not reimbursable to the
Sponsor by the Trust. If the Sponsor fails
to pay the Trustee under such
agreement, the Trustee
may recover the unpaid amounts from the assets of the Trust, and may
sell the Trust's gold as necessary to provide funds for such
unpaid amounts.
Fees are paid to the
Sponsor as compensation for services performed under the Trust
Indenture and for services performed in
connection with maintaining the Trust's website and marketing the
Shares. The Sponsor's fee is payable
monthly in arrears and is accrued daily at an annual rate equal to
0.15%
of the ANAV of the
Trust, subject to reduction as described
below.
The Sponsor will
receive reimbursement from the Trust for all of its
disbursements and expenses incurred in
connection with the Trust.
Fees are
paid to the Trustee as compensation for services performed under the
Trust Indenture. The Trustee's fee is
payable monthly in arrears and is accrued daily at an annual rate equal
to 0.02% of the ANAV of the Trust,
subject to a minimum fee of $500,000 and a maximum fee of $2 million
per year. The Trustee's fee is
subject to modification as determined by the Trustee and the Sponsor in
good faith to account for significant changes in the Trust's
administration or the Trustee's duties.
The Trustee will charge the Trust for its
expenses and disbursements incurred in connection with the
Trust (including the expenses of the Custodian paid by
the Trustee), exclusive of fees of agents for
services to be performed by the Trustee,
and for any extraordinary services performed by the Trustee for
the Trust.
Fees are paid to the Custodian under the Allocated Bullion Account
Agreement as compensation for its custody
services. Under the Allocated Bullion Account Agreement, the Custodian
is entitled to a fee that is accrued daily
at an annual rate equal to 0.10% of the
average daily
aggregate value of the gold held in the
Trust Allocated
Account and the
Trust
Unallocated
Account, payable in
quarterly
installments in arrears. The Custodian does not receive a
fee under the Unallocated Bullion Account
Agreement.
Fees
are
paid to the Marketing Agent by the Trustee from the assets of the Trust
as compensation for services performed
pursuant to the
Marketing
Agent Agreement.
The Marketing
Agent's fee is payable monthly in arrears and is accrued daily at
an annual rate equal to
0.15%
of the ANAV of the Trust, subject to
reduction as described
below.
The administration fees of the Trust are currently estimated to be
approximately
$663,000
per year. These estimated fees include the
following:
(1)
legal fees of approximately
$175,000
per year,
(2)
audit and
quarterly
review fees of approximately
$268,000
per year,
(3)
market data fees of approximately $15,000 per year,
(4) NYSE
fees of $5,000 in the first year and $2,000 per year afterwards, and
(5) printing fees of approximately $200,000
per year. In addition, administration fees will include the SEC and
National Association of Securities Dealers,
Inc. (NASD) registration fees applicable to any future registration of
additional
Shares. Investors should
be aware that administration fees are likely to increase over time due
to increases in the fees of service
providers
to the Trust.
The Trustee will sell
gold held by the Trust on an as-needed basis to pay the Trust's
expenses. As a result, the amount of gold
to be sold will vary from time to time depending on the level of the
Trust's expenses and the market price
of gold. Cash held by the Trustee will not bear any
interest.
Shareholders do not have
the option of choosing to pay their proportionate share of the
Trust's expenses in lieu of having
their share of expenses paid by the sale of the Trust's gold.
Each
sale of gold by the Trust will be a taxable
event to Shareholders. See "United States Federal Tax
Consequences — Taxation of US
Shareholders."
Fee
Reduction
For
seven years from the date of the Trust
Indenture or
until
the earlier termination of the Marketing Agent Agreement, if at the end
of any month during
this
period the estimated ordinary expenses of the Trust exceed an amount
equal to 0.40% per
year
of the daily ANAV of the Trust for such month, the fees payable to the
Sponsor and the Marketing Agent from the
assets of the Trust for such month will be reduced by the amount of
such excess in equal shares up to the
amount of their fees.
Investors should be aware that if the gross
value of the Trust assets is less than
approximately
$388
million, the ordinary expenses of the Trust
will be accrued at a rate greater than 0.40% per year of the
daily ANAV of the
30
Business of the Trust
Trust,
even after the Sponsor and the Marketing Agent have
completely
reduced
their combined fees of 0.30% per year of the daily ANAV of the
Trust. This amount is based on the estimated ordinary expenses of
the Trust described in "Business of the Trust
— Trust Expenses" and
may be higher if the Trust's actual ordinary expenses exceed
those estimates. Upon the end of the seven
year period or the earlier termination of the Marketing Agent
Agreement, the fee reduction will expire.
See "Risk Factors — When the fee reduction
terminates or expires . .
."
Pro Forma Impact of Trust
Expenses
Each time the Trust's gold is sold to pay the
Trust's expenses, the amount of gold represented by
each outstanding Share will be reduced.
This is true even if additional Shares are issued in exchange for
additional deposits of gold into the Trust,
as the amount of gold required to create Shares will
proportionately reflect the amount of gold
represented by the Shares outstanding at the time an order to
create Shares is
placed.
The following table
demonstrates the impact of the Trust's anticipated ordinary
operating expenses on the NAV of the Trust
over a five-year period, based on the following assumptions: (1) a
beginning NAV of $1,453 million, based on
40 million Shares issued in exchange for 4 million ounces of gold at a
price of $363.23 per ounce, the average
London PM Fix price in calendar year 2003;
(2) no creations
or redemptions of Baskets over the
five-year period;
(3)
constant
annual
administrative expenses of
$663,000
for the periods presented below; and (4) all expenses accrued during
the periods presented below have been paid as of the end of such
periods. The Trust may incur costs of
extraordinary services and other expenses not reflected in this table.
See "Description of the Trust Indenture — Expenses
of the Trust — Other expenses." These extraordinary
expenses include amounts required to be paid from the Trust for the
indemnification of the
Purchaser
and the Marketing Agent
to the extent such indemnification is not
made by the Sponsor as described under "Risk Factors
— The Trust's obligation to reimburse the
Purchaser,
the Marketing
Agent and the Authorized
Participants for certain
liabilities
. . ."
See also "Risk Factors — When the fee reduction
terminates or expires
. . ."
The Sponsor will not as a matter of course make public projections
as to future results of the Trust. However,
as the Trust currently has no operating history, the Sponsor has
prepared the pro forma information set
forth below to illustrate the impact of the Trust's anticipated
ordinary operating expenses on the NAV of
the Trust and the impact of increases and decreases in the gold price
on the NAV of the Trust, based on the
identified assumptions and qualifications. The below pro forma
information was not prepared with a view
toward complying with the guidelines established by the American
Institute of Certified Public Accountants
with respect to prospective financial information, but, in the
Sponsor's view, was prepared on a
reasonable basis. This pro forma information is not fact and should not
be relied upon as being necessarily
indicative of future results, and you are cautioned not to place undue
reliance on this
information.
Neither
the Trust's independent auditors, nor any other independent
accountants, have compiled, examined, or
performed any procedures with respect to the pro forma information
contained in this prospectus, nor have they
expressed any opinion or any other form of assurance on this
information or its achievability, and
assume no responsibility for, and disclaim any association with, this
information.
31
Business of the Trust
Calculation of NAV: Assuming a Constant
Gold
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|
|
|
(thousands,
except per share and per ounce)
|
|
Beginning
Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
price per
ounce
1
|
|
$
|
363.23
|
|
|
$
|
363.23
|
|
|
$
|
363.23
|
|
|
$
|
363.23
|
|
|
$
|
363.23
|
|
|
Shares
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
40,000
|
|
|
Ounces
|
|
|
4,000
|
|
|
|
3,984
|
|
|
|
3,968
|
|
|
|
3,952
|
|
|
|
3,936
|
|
|
Ounces
per Share
|
|
|
0.1000
|
|
|
|
0.0996
|
|
|
|
0.0992
|
|
|
|
0.0988
|
|
|
|
0.0984
|
|
|
NAV
2
|
|
$
|
1,452,920
|
|
|
$
|
1,447,111
|
|
|
$
|
1,441,325
|
|
|
$
|
1,435,563
|
|
|
$
|
1,429,823
|
|
|
NAV per
Share
2
|
|
$
|
36.32
|
|
|
$
|
36.18
|
|
|
$
|
36.03
|
|
|
$
|
35.89
|
|
|
$
|
35.75
|
|
|
Adjusted
NAV
3
|
|
$
|
1,452,257
|
|
|
$
|
1,446,448
|
|
|
$
|
1,440,662
|
|
|
$
|
1,434,900
|
|
|
$
|
1,429,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
operating
expenses
|
|
$
|
5,809
|
|
|
$
|
5,786
|
|
|
$
|
5,763
|
|
|
$
|
5,740
|
|
|
$
|
5,717
|
|
|
%
Daily
ANAV
|
|
|
0.40
|
%
|
|
|
0.40
|
%
|
|
|
0.40
|
%
|
|
|
0.40
|
%
|
|
|
0.40
|
%
|
|
Ounces
of gold
sold
|
|
|
15.99
|
|
|
|
15.93
|
|
|
|
15.87
|
|
|
|
15.80
|
|
|
|
15.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
price per
ounce
1
|
|
$
|
363.23
|
|
|
$
|
363.23
|
|
|
$
|
363.23
|
|
|
$
|
363.23
|
|
|
$
|
363.23
|
|
|
Shares
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
40,000
|
|
|
Ounces
|
|
|
3,984
|
|
|
|
3,968
|
|
|
|
3,952
|
|
|
|
3,936
|
|
|
|
3,921
|
|
|
Ounces
per Share
|
|
|
0.0996
|
|
|
|
0.0992
|
|
|
|
0.0988
|
|
|
|
0.0984
|
|
|
|
0.0980
|
|
|
NAV
2
|
|
$
|
1,447,111
|
|
|
$
|
1,441,325
|
|
|
$
|
1,435,563
|
|
|
$
|
1,429,823
|
|
|
$
|
1,424,106
|
|
|
NAV per
Share
2
|
|
$
|
36.18
|
|
|
$
|
36.03
|
|
|
$
|
35.89
|
|
|
$
|
35.75
|
|
|
$
|
35.60
|
|
|
|
|
(1)
|
Average
London PM Fix price in calendar-year
2003.
|
|
(2)
|
Assumes
no accrued but
unpaid
expenses.
|
|
(3)
|
Adjusted
NAV = NAV less
$663,000
of estimated annual administrative
expenses.
|
The
following table demonstrates the impact that increases and decreases in
the price of gold will have on the NAV of
the Trust. The table is based on the same assumptions and
qualifications as the preceding table and
on the additional assumption that the initial gold price of $363.23 per
ounce increases or
decreases by 5.0% per year over the identified
five-year period. The NAV per Share figures
in the below table include the impact of the sales of gold
identified in the preceding
table.
Calculation of NAV: Assuming
an Increasing and Decreasing Gold
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Ending
Statistics
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|
Increasing Price
Scenario:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
price per
ounce
|
|
$
|
381.39
|
|
|
$
|
400.46
|
|
|
$
|
420.48
|
|
|
$
|
441.51
|
|
|
$
|
463.58
|
|
|
Year-on-year
change
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
|
NAV per
share
|
|
$
|
37.99
|
|
|
$
|
39.73
|
|
|
$
|
41.56
|
|
|
$
|
43.47
|
|
|
$
|
45.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decreasing
Price
Scenario:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
price per
ounce
|
|
$
|
345.07
|
|
|
$
|
327.82
|
|
|
$
|
311.42
|
|
|
$
|
295.85
|
|
|
$
|
281.06
|
|
|
Year-on-year
change
|
|
|
(5.0
|
%)
|
|
|
(5.0
|
%)
|
|
|
(5.0
|
%)
|
|
|
(5.0
|
%)
|
|
|
(5.0
|
%)
|
|
NAV
per
share
|
|
$
|
34.37
|
|
|
$
|
32.51
|
|
|
$
|
30.76
|
|
|
$
|
29.10
|
|
|
$
|
27.53
|
|
|
|
32
Description
of the Trust
The Trust is an investment
trust, formed on
November
,
2004 under New York law
pursuant to the Trust Indenture.
The Trust
holds gold and
is
expected from time to
time to issue
Baskets in exchange for deposits of gold and
to
distribute gold in connection with
redemptions of Baskets. The
investment objective
of the Trust is
for the Shares to reflect the performance of the price of gold bullion,
less the Trust's expenses.
The Sponsor believes
that, for many investors, the Shares will
represent a
cost-effective
investment relative to traditional means of investing in
gold. The material terms
of the Trust Indenture are discussed under "Description of
the Trust
Indenture."
The Shares represent
units of fractional undivided beneficial interest in and ownership of
the Trust. The Trust is not managed like a corporation or
an active investment vehicle.
The gold held by
the Trust will only be
sold:
(1) on an as-needed basis to pay
Trust expenses; (2) in the
event the Trust terminates and liquidates its
assets;
or (3) as
otherwise required by law or regulation.
The sale of gold by the Trust is a taxable
event to Shareholders. See "United States Federal
Tax Consequences
—
Taxation of
US
Shareholders."
The Trust is not registered as an investment company
under the Investment Company Act of 1940 and is not required to
register under such act. The Trust will not hold or trade in commodity
futures contracts regulated by the CEA, as administered by the CFTC.
The Trust is not a commodity pool for purposes of the CEA, and
none
of the
Sponsor,
the Trustee or the
Marketing Agent
is subject to
regulation as a commodity pool operator or a commodity trading
adviser in connection with the
Shares.
The
Trust expects to create
and redeem Shares
from time to time but only
in Baskets (a Basket equals a block of 100,000
Shares).
The
number of outstanding Shares is expected to increase and
decrease from time to
time as a result of the creation and
redemption of Baskets. The
creation and redemption of
Baskets
requires the delivery to
the Trust or the
distribution by the Trust of the amount of gold and any cash
represented by the Baskets
being created or redeemed. The total amount of gold and any cash
required for the creation of
Baskets will be based on the combined NAV of the number of
Baskets
being created or redeemed. The initial amount of gold required for
deposit with the Trust to create Shares is
10,000 ounces per Basket. The number of ounces of gold required to
create a Basket or to be delivered upon a redemption of a Basket will
gradually decrease over time. This is because the Shares comprising a
Basket will represent a decreasing amount of gold due to the sale of
the Trust's gold to pay the
Trust's expenses. Baskets
may be created or redeemed
only by Authorized
Participants, who will pay a transaction fee
of $2,000 for each order to
create or redeem Baskets.
Authorized Participants may sell to other investors all or part of the
Shares included in the
Baskets they purchase from the
Trust. See "Plan of
Distribution."
The Trustee
will determine the NAV of the Trust on each
day
that the NYSE is open for regular
trading,
at the earlier of the London PM Fix for such
day or 12:00 PM
New York time. The NAV of
the Trust is the aggregate value of the
Trust's assets less its
estimated accrued but
unpaid
liabilities (which include accrued expenses). In determining
the Trust's NAV, the Trustee will
value the gold held by the Trust based on the London PM Fix price for
an ounce of gold. The Trustee will also determine the NAV per
Share. If on a day when
the Trust's NAV is being calculated
the London PM Fix is not available or
has not been announced by
12:00
PM New York
time, the gold
price from the next most recent London
fix (AM or PM) will be
used, unless the Trustee determines that such price is inappropriate to
use.
The Trust's assets will consist of
allocated gold bullion, gold credited to an unallocated gold account
and, from time to time, cash, which will be used to pay expenses.
Except for the transfer of gold in or out of the Trust
Unallocated Account in
connection
with the creation or redemption of
Baskets or upon a sale of
gold to pay the Trust's expenses,
it is anticipated that only a small amount
of unallocated gold will be held in
the Trust Unallocated
Account. Cash held by
the Trust will not generate any income. Each Share will
represent a proportional interest, based
on the total number of Shares outstanding, in the gold and any cash
held by the Trust, less the Trust's liabilities
(which include accrued but unpaid
fees and expenses).
The Sponsor expects
that the secondary market trading
price of the Shares
will fluctuate over time
in response to the price of gold. In addition, the
Sponsor expects that the trading price
of the Shares
will reflect
the estimated accrued
but unpaid expenses of the
Trust.
Investors may obtain on
a 24-hour basis gold pricing information based on the spot price for an
ounce of gold from various financial information service providers.
Current spot prices are also generally available with bid/ask spreads
from gold bullion dealers. In addition, the Trust's website will
provide ongoing pricing
information for gold spot prices and the
Shares. Market prices for the Shares will be available
33
The Description of the Trust
from a
variety of sources including brokerage firms,
information websites and other information
service providers.
The NAV of the
Trust will be published by the Sponsor on each
day that the NYSE is open
for regular trading and will be posted on the Trust's
website.
The Trust has no fixed
termination date and will terminate
upon the occurence of a
termination event listed in
the Trust Indenture. See
"Description of the Trust Indenture
—
Termination of the
Trust."
34
The
Sponsor
The Sponsor is a Delaware limited liability company and
was formed on July 17, 2002. The Sponsor's office is located at
444 Madison Avenue, 3
rd
Floor, New York, New York 10022.
Under the Delaware Limited
Liability Company Act and the governing
documents of the Sponsor, the WGC, the sole member of the Sponsor, is
not responsible for the debts, obligations and liabilities of the
Sponsor solely by reason of being the sole member of the
Sponsor.
The
WGC's members
have
funded the
estimated
ordinary
operating expenses of
the
Sponsor through 2004, including
the costs associated with the initial registration of the Shares and
the listing of the Shares on the NYSE. The WGC has
provided
$3 million
in funding to cover the estimated ordinary expenses of the Sponsor for
2005 and
2006.
THE SPONSOR'S
ROLE
The Sponsor is
responsible for establishing the Trust and for the registration of the
Shares.
The
Sponsor will generally oversee the performance of the Trustee and the
Trust's principal service providers, but will not exercise
day-to-day oversight over the Trustee or such service
providers. The Sponsor will regularly
communicate with the Trustee to monitor the overall performance of the
Trust.
The
Sponsor, with assistance and support from the Trustee, will be
responsible
for preparing and filing
periodic reports on behalf of the Trust with the
SEC and
will
provide any required certification for such
reports. The Sponsor will designate the independent
certified public accountants of the Trust and may from
time to time employ legal counsel for the Trust.
In
accordance with the Trust Indenture, to assist the Sponsor in marketing
the Shares the Sponsor will enter into the Marketing Agent Agreement
with the Marketing Agent and the
Trust. The Sponsor may also from time to
time employ other
additional or successor marketing agents
after
such time as when the Marketing Agent
Agreement is no longer in
effect. The fees and
expenses of the
Marketing Agent and any additional or successor marketing agent will be
paid by the Trustee
from the assets
of the Trust. See "The
Marketing Agent" for more information about the Marketing
Agent. The Sponsor will maintain a public
website on behalf of the Trust, which will contain information about
the Trust and the Shares, and will oversee certain
Shareholder services, such
as a call center and prospectus fulfillment.
The Sponsor may
direct the
Trustee, but only
as provided in the Trust Indenture. For example, the Sponsor may direct
the Trustee to sell the Trust's gold to pay expenses, to suspend
a redemption order or postpone a redemption settlement date or to
terminate the Trust if certain criteria
are
met. The Sponsor
anticipates that if the NAV of the Trust is less than $350 million (as
adjusted for inflation) at any time after
the first anniversary of the Trust's inception that the Sponsor
will, in accordance with the Trust
Indenture, direct the Trustee to terminate and liquidate the
Trust.
The Sponsor
may remove the Trustee and appoint a successor (1) if the Trustee
commits certain willful bad acts in
performing its duties or willfully
disregards its duties, (2) if the Trustee acts in bad faith in
performing its duties,
(3)
if the Trustee's creditworthiness has materially deteriorated or
(4)
if the Trustee's
negligent acts or omissions have had a
material adverse effect on
the Trust or the interests of Shareholders
and the Trustee has not cured the material
adverse effect within a certain period of
time and established that
the
material adverse
effect will not recur. The Sponsor will
remove the Trustee if the Trustee does not meet the qualifications for
a trustee under the Trust Indenture. See
"Description of the Trust
Indenture — The Trustee —
Resignation, discharge
or
removal of Trustee; successor trustees" for more
information.
The Sponsor may direct the Trustee to employ one or more other
custodians in addition to or in
replacement of the Custodian, provided that
the Sponsor may not direct the employment of an additional
or successor custodian without the
Trustee's consent if the employment would have a material
adverse effect on the Trustee's
ability to perform its duties. The Sponsor's approval is required
for the Trustee to employ one or more other
custodians selected by the Trustee for the safekeeping of gold
and for services
in connection with the deposit and delivery
of gold. The Sponsor may permit the Trustee to enter into the
custody agreements applicable to an
additional or successor custodian without satisfaction of
the
requirements for such custody agreements set forth in
the Trust Indenture.
Fees are paid to
the Sponsor as compensation for services
performed under the Trust Indenture and for services
performed in connection with maintaining the
Trust's website and marketing the Shares. The
Sponsor's fee is payable monthly in
arrears and is accrued daily at an annual rate equal
to
0.15%
of the
35
The Sponsor
ANAV of the Trust. The Sponsor will receive
reimbursement from the Trust for all of its
disbursements and expenses incurred in connection with
the Trust.
If at the end of any
month during the period
ending seven years
from
the date of the
Trust Indenture or upon the earlier
termination of the Marketing Agent Agreement
the estimated ordinary expenses of the Trust exceed an amount equal to
0.40% per
year of
the daily ANAV of the Trust for such month, the Sponsor's fee is
subject to reduction. See
"Business of the
Trust —
Trust Expenses —
Fee
Reduction."
36
The
Trustee
BNY,
a banking
corporation organized under the laws of the
State of New York with trust powers, will
serve as the Trustee. BNY has
a trust office at
2 Hanson Place,
Brooklyn, New York
11217.
BNY is subject to supervision by
the New York State
Banking Department and the
Board of Governors of the
Federal Reserve System. Information
regarding creation and redemption Basket composition, NAV of the Trust,
transaction fees and the names of the parties that have each executed a
Participant Agreement may be obtained from
BNY. A copy of the
Trust Indenture is available for inspection at BNY's
trust office
identified
above.
Under
the Trust Indenture, the Trustee is required to maintain capital,
surplus and undivided profits of $500
million.
THE
TRUSTEE'S
ROLE
The Trustee is generally responsible for the day-to-day
administration of the Trust, including
keeping
the Trust's operational records. The
Trustee's principal responsibilities include (1)
selling
the Trust's gold as needed to pay the Trust's expenses
(gold sales are expected to occur
approximately monthly in the ordinary course), (2) calculating the NAV
of the Trust and the
NAV per Share, (3) receiving and processing
orders from Authorized Participants to create and redeem
Baskets and coordinating the processing of such orders
with the Custodian and DTC, and
(4)
monitoring
the Custodian.
If the Trustee determines that maintaining
gold with the Custodian is not in the best interest of the Trust, the
Trustee must so advise the Sponsor, who may direct the Trustee to take
certain actions in respect of the Custodian. In the absence of such
instructions, the Trustee may initiate action to remove the gold from
the Custodian. The ability of the Trustee to
monitor the performance of the Custodian may
be limited because under the Custody Agreements the
Trustee
may,
only up to twice a
year,
visit the premises of the Custodian for the
purpose of examining the Trust's gold
and certain related records maintained by the Custodian. In
addition, the Trustee
has
no right to visit the premises of any subcustodian for
the purposes of examining the Trust's gold or any
records maintained by the subcustodian, and
no
subcustodian
is
obligated to cooperate in any review the
Trustee may wish to conduct of the facilities, procedures,
records or creditworthiness of such
subcustodian.
The
Trustee intends to
regularly communicate with the Sponsor to
monitor the overall performance of the
Trust. The Trustee, along with the Sponsor, will
liaise with the
Trust's legal, accounting and other professional
service providers as needed. The Trustee
will
assist and support the Sponsor with the
preparation of all
periodic reports required
to be filed with the SEC
on behalf of the
Trust.
Fees are paid to the Trustee as compensation for services performed
under the Trust Indenture. The
Trustee's fee is payable monthly in arrears and
is accrued daily at an annual rate equal to 0.02% of
the ANAV of the Trust, subject to a minimum
fee of $500,000 and a maximum fee of $2 million per
year. The Trustee's fee is subject to
modification by the Trustee and the Sponsor in good faith to account
for significant changes in the Trust's administration or the
Trustee's duties. The Trustee will
charge the Trust for its expenses and disbursements incurred in
connection with the Trust (including the
expenses of the Custodian paid by the Trustee), exclusive of fees of
agents for services to be performed by the
Trustee, and for any extraordinary services performed by the Trustee
for the
Trust.
Affiliates
of the Trustee may from time to time
act as
Authorized
Participants or
purchase or sell
gold or Shares
for their own account, as agent for their
customers and for accounts over which they exercise investment
discretion.
37
The Custodian
HSBC will serve as
the Custodian of the Trust's gold. HSBC is a
national banking
association organized under the laws
of
the
United States of America. HSBC is subject to
supervision by the Federal Reserve Bank of New
York and
the Federal Deposit
Insurance
Corporation.
HSBC's London custodian office is
located at 8 Canada Square, London, E14 5HQ, United
Kingdom. In addition to supervision and
examination by the
US
federal banking
authorities, HSBC's London custodian operations are
subject to supervision by the
FSA.
The global parent company of HSBC is HSBC Holdings
plc (HSBC Group),
a public limited company incorporated in
England. HSBC Group had over
$81 billion in capital as of June 30,
2004.
THE
CUSTODIAN'S
ROLE
The Custodian is responsible for safekeeping for the Trust gold
deposited with it by Authorized Participants
in connection with the creation of Baskets. The Custodian is also
responsible for selecting its direct
subcustodians, if any. The Custodian facilitates the
transfer of gold in and out of the Trust through the
unallocated gold accounts it will maintain for each
Authorized Participant
and the unallocated and allocated gold
accounts it will maintain for the Trust. The Custodian is responsible
for allocating specific bars of gold bullion
to the Trust's allocated gold account. The Custodian will provide
the Trustee with regular reports detailing
the gold transfers in and out of the Trust's unallocated and
allocated gold accounts and identifying the gold bars held in the
Trust's allocated gold
account.
Fees are paid to the Custodian under the Allocated Bullion Account
Agreement as compensation for its custody
services. Under the Allocated Bullion Account Agreement, the Custodian
is entitled to a fee that is accrued daily
at an annual rate equal to 0.10% of the average
daily aggregate
value of the gold held in the Trust
Allocated Account and the Trust Unallocated Account, payable in
quarterly
installments in arrears.
The Custodian does not receive a fee under the
Unallocated Bullion Account Agreement.
The Custodian and its
affiliates may from time to time act as
Authorized
Participants or
purchase or sell
gold or Shares for their own account, as
agent for their customers and for accounts over which they exercise
investment
discretion.
38
The
Marketing Agent
State Street Global
Markets, LLC, a wholly-owned subsidiary of State Street Corporation,
will act as the Marketing Agent.
The Marketing
Agent is a registered broker-dealer with the SEC, and is a member
of
NASD,
the Municipal Securities Rulemaking Board, the National Futures
Association and the Boston Stock
Exchange. The Marketing Agent's office
is located at State Street Financial Center, One Lincoln Street,
Boston, Massachusetts 02111.
THE MARKETING AGENT'S
ROLE
The Marketing Agent
will assist the Sponsor in (1) developing a marketing plan for the
Trust on an ongoing
basis, (2) preparing marketing materials
regarding the Shares,
including the content of
the Trust's website, (3) executing the
marketing plan for the Trust, (4)
incorporating gold
into
its strategic and tactical exchange-traded
fund
research,
and
(5)
licensing the
"streetTRACKS®"
trademark.
Under the Marketing Agent
Agreement, the
Marketing Agent will be paid a fee for its services from the assets of
the Trust in an amount equal to
0.15% per
year
of the daily ANAV of the Trust, payable monthly in arrears. If at
the end of any month during the
period ending seven
years
from
the date of the Trust
Indenture
or upon the earlier termination of the Marketing Agent
Agreement the
estimated ordinary expenses of the Trust exceed an amount equal to
0.40% per
year
of the daily ANAV of the Trust for such
month, the Marketing Agent's fee is subject to reduction. See
"Business of the
Trust
– Trust
Expenses — Fee
Reduction."
If the amount
expended or allocated by either the Sponsor or the Marketing Agent in
any one year period on promoting and
marketing the Trust in the US is 25% less than the yearly
average of such amount over the
preceding
two year period
and the
amount of
the shortfall of any
such party is not spent
during
the following 12 month
period,
the unspent
amount will be paid over to the other party
who will add such
unspent
amount to the amount the
other party
spends
during the next 12 month period.
The
Marketing Agent Agreement provides that the Marketing Agent and the
Sponsor will work together to develop
similar and related gold based
exchange-traded funds in the US.
In
addition, the Sponsor, the WGC and the Marketing Agent have entered
into an agreement obligating the WGC and the Marketing Agent to
conclude an international marketing agent agreement providing for the
distribution of exchange-traded securities whose investment objective
or investment method is tied to gold bullion or derivatives of gold
bullion outside the US. If the WGC and the Marketing Agent do not
conclude an international marketing agent agreement within
60
days of the effectiveness of the registration statement of which this
prospectus forms a part, the Sponsor may exercise its option,
exercisable for
60
days commencing on the
61st
day after effectiveness of the registration statement of which this
prospectus forms a part, to terminate the Marketing Agent Agreement and
the services of the Marketing Agent. Upon such termination, the
Marketing Agent License Agreement and the WGC/WGTS License Agreement
would terminate, the Sponsor and the Trust would be required to cease
using the "streetTRACKS
®
"
mark, and the Sponsor would be required to amend this prospectus and
the registration statement of which this prospectus forms a part to
delete any reference to the Marketing Agent, State Street Corporation
or "streetTRACKS
®
".
The Marketing Agent Agreement
also provides that the Marketing Agent and
the Sponsor will jointly negotiate and share equally in any
revenue from the development of unlisted
trading privileges and dual listing rights relating to the Trust
and any similar or related
gold based
exchange-traded fund, as well as licensing
rights to list option contracts and other
exchange-traded derivatives that are specific to the
Trust and any similar or related gold based
exchange-traded
fund.
The Marketing
Agent Agreement contains customary representations, warranties and
covenants. In addition, the Sponsor
has
agreed to indemnify the Marketing Agent from and against
certain liabilities, including liabilities
under the Securities
Act, and to contribute to
payments that the Marketing Agent may be required to make in respect
thereof. The
Trustee has
agreed to reimburse the Marketing Agent,
solely from and to the extent of the Trust's
assets, for indemnification and
contribution amounts due from the Sponsor
in respect of such liabilities to the extent the Sponsor has not paid
such amounts when
due.
39
The Marketing Agent
The Marketing Agent Agreement has a term
of seven years and is automatically
renewed
for successive three year periods, unless
terminated in accordance with the Marketing
Agent
Agreement by
either party prior to any such successive term. The
Marketing Agent Agreement may also be
terminated by either party if the Trust is terminated pursuant to the
Trust Indenture or either party becomes
insolvent or enters into bankruptcy proceedings. If the
Marketing Agent Agreement is terminated by
the Sponsor, the Sponsor is required to pay the Marketing Agent
an amount equal to the present market value
of the future payments the Marketing Agent would otherwise
receive under the Marketing Agent Agreement over the
subsequent 10 year period.
The
Sponsor can elect to
exercise its
buy-out option which will terminate the
Marketing Agent
Agreement
and remove the
Marketing Agent by paying an amount equal
to the present fair market value of the future payments the Marketing
Agent would otherwise receive from the
Trust under the Marketing Agent Agreement over the subsequent
10 year period,
plus:
|
|
|
|
•
|
10%
of such value, but such payment will be made only if the Trust's
average assets under management do not
exceed $1.25 billion for the 30 day period prior to the end of the
first year of the Trust's
operations;
|
|
|
|
|
•
|
20%
of such value, but such payment will be made only if the Trust's
average assets under management do not
exceed $2.25 billion for the 30 day period prior to the end of the
third year of the Trust's operations;
and
|
|
|
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•
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30%
of such value, but such payment will be made only if the Trust's
average assets under management do not
exceed $3.0 billion for the 30 day period prior to the end of the fifth
year of the Trust's
operations.
|
However, the Sponsor shall not have such right if, at the
time of such election, any competing exchange-traded fund has been
listed on an exchange in the US for more than a
year and the competing exchange-traded fund
is not controlled or sponsored by either of the
Sponsor
or the Marketing
Agent (or its
affiliates).
Notwithstanding the
foregoing, even
if the
Trust's average assets under
management do not meet
either the $1.25 billion, $2.25 billion or
$3.0 billion
benchmarks
described above in the time periods described
above, if
the percentage growth in the Trust's assets for
the relevant year is
equal to or greater than the percentage
growth in the
assets of any
competing
exchange-traded
fund described in the preceeding sentence
for the
comparable
12 month period of operations, the Sponsor
will not have the
right to terminate the Marketing Agent
Agreement and remove
the Marketing
Agent.
WGC/WGTS LICENSE AGREEMENT
In
connection with the Marketing Agent Agreement, the Sponsor and the WGC
will
enter into a license
agreement, dated as of
November
, 2004, with the Marketing
Agent. Under the license agreement, the Sponsor
and the
WGC
will
grant to the Marketing Agent, a
royalty-free, worldwide, non-exclusive, non-transferable (i)
sublicense under the license agreement
among the Sponsor, the WGC and BNY, which is described in
"Business of the
Trust
– License Agreement," to
BNY's patents and patent applications that cover securitized
gold products in connection with
the Marketing
Agent's performance of its services under the Marketing
Agent Agreement; and (ii) a license to the
Sponsor's and the WGC's patents, patent applications and
intellectual property and trade name and
trademark rights in connection with the
Marketing Agent's performance of
its services under the Marketing Agent
Agreement and for the purpose of establishing, operating and
marketing financial products involving the
securitization of gold.
The
license agreement will expire upon the expiration or termination of the
Marketing Agent Agreement (including the
termination of the Marketing Agent Agreement by the Sponsor in the
event the WGC and the Marketing Agent do not conclude an international
marketing agent agreement within
60
days of the effectiveness of the registration statement of which this
prospectus forms a part).
Either party may terminate the license agreement prior
to such term if the other party materially breaches
the license agreement and fails to cure such breach
within 30 days following written notice of such
breach from the non-breaching party. The license
agreement contains customary representations,
warranties and covenants. In addition, the
Sponsor, the WGC and the Marketing Agent have agreed to
indemnify each other for breaches of their
respective representations and warranties and the Sponsor and
the WGC have agreed to indemnify the
Marketing Agent for violations of the intellectual property rights
of others as a result of the Marketing
Agent's use of the licensed intellectual
property.
40
The Marketing Agent
The Marketing Agent and
its affiliates may from
time to time
become
Authorized
Participants
or purchase or
sell gold or
Shares for their own account, as agent for
their customers and for accounts over which they exercise investment
discretion.
MARKETING
AGENT LICENSE
AGREEMENT
The
Sponsor, the
WGC and the Marketing Agent
will also
enter into a marketing license agreement,
dated as of
November
, 2004, pursuant to which
the Marketing Agent
will
grant to the Sponsor and WGC a
royalty-free, worldwide, non-exclusive, non-transferable license to use
the
"streetTRACKS®"
trademark, for the
purpose of establishing and operating the
Trust, issuing and distributing the Shares and
listing
the Shares on the NYSE.
The marketing license agreement will expire upon the
expiration or termination of the Marketing Agent Agreement
(including the termination of the Marketing
Agent Agreement by the Sponsor in the event the WGC and
the Marketing Agent do not conclude an international
marketing agent agreement within
60
days of the effectiveness of the
registration statement of which this prospectus forms a
part). Either party may terminate the
marketing license agreement prior to such term if the other party materially breaches the license agreement and
fails to cure such breach within 30 days following written notice of such breach from the non-breaching
party. The license agreement contains customary representations, warranties and covenants. In
addition, the Sponsor, the WGC and the Marketing Agent have agreed to indemnify each other for breaches of
their respective representations and
warranties.
41
Description
of the Shares
GENERAL
The Trustee is authorized under
the Trust Indenture to create and issue an unlimited number of Shares.
The Trustee will create Shares only
in Baskets (a
Basket equals a
block of 100,000 Shares) and only upon the
order of an Authorized Participant. The Shares represent
units of fractional undivided beneficial interest in and ownership of
the Trust and have no par value. Any creation and
issuance of Shares above the amount registered on the
registration
statement of which this prospectus is a part will require the
registration of such additional Shares.
DESCRIPTION OF LIMITED RIGHTS
The Shares do not
represent a traditional investment and you should not view them as
similar to "shares" of a
corporation operating a business enterprise with
management and a board of directors. As a Shareholder, you
will not have the statutory rights normally associated with the
ownership of shares of a corporation, including, for example, the right
to bring "oppression" or
"derivative" actions.
All Shares are of
the same class with equal rights and privileges. Each Share is
transferable, is fully paid and non-assessable and entitles the holder
to vote on the limited matters upon which
Shareholders may vote under the Trust Indenture. The Shares do not
entitle their holders to any conversion or pre-emptive rights, or,
except as provided below, any redemption rights or rights to
distributions.
Distributions
The Trust Indenture provides for distributions to Shareholders in
only two circumstances. First, if the Trustee and the Sponsor determine
that the Trust's cash account balance exceeds the anticipated
expenses of the Trust for the next 12 months and the excess amount is
more than $0.01 per
Share outstanding, they
shall direct the excess amount to be distributed to the Shareholders.
Second, if the Trust is
terminated and liquidated, the Trustee will distribute to the
Shareholders any amounts remaining
after the satisfaction of all
outstanding liabilities of the Trust and the establishment of such
reserves for applicable taxes, other governmental charges and
contingent or future liabilities as the Trustee shall determine.
Shareholders of record on
the record date fixed by the Trustee for a distribution will be
entitled to receive their pro rata portion of
any distribution.
Voting and
Approvals
Under the Trust Indenture, Shareholders
have no voting rights, except in
limited circumstances. Shareholders holding
at least 66 2/3% of
the Shares outstanding may vote to remove the
Trustee. The Trustee may terminate
the Trust upon the agreement of Shareholders owning
at least
66 2/3% of the
outstanding Shares. In addition, certain amendments to the Trust
Indenture require
51%
or unanimous consent of the
Shareholders.
Redemption of the
Shares
The
Shares may only be redeemed by or through an Authorized
Participant and only in
Baskets.
See "Creation and Redemption of
Shares" for details on the redemption
of the Shares.
BOOK-ENTRY FORM
Individual certificates will not be issued for the Shares. Instead,
one or more global
certificates will be deposited by the
Trustee with DTC and registered in the name of Cede & Co., as
nominee for DTC. The global certificates
will evidence
all of the Shares
outstanding at any time.
Under the Trust Indenture, Shareholders are limited to
(1) participants in DTC such
as banks, brokers, dealers and trust
companies (DTC
Participants), (2)
those who
maintain, either directly or
indirectly, a custodial relationship with a DTC Participant
(Indirect Participants), and
(3) those
banks, brokers, dealers, trust companies and others
who hold interests in the Shares through DTC Participants or
Indirect Participants. The Shares are only
42
Description of the Shares
transferable through the book-entry system of
DTC. Shareholders who are not DTC Participants may
transfer their Shares through DTC by
instructing the DTC Participant holding their Shares
(or by instructing the Indirect Participant or other
entity through which their Shares are held) to transfer the
Shares. Transfers will be made in accordance with standard securities
industry practice.
43
Custody
of the Trust's Gold
Custody of the gold bullion deposited
with and held by the Trust will be provided by the Custodian at its
London, England vaults, by subcustodians selected by the Custodian and
by others acting on behalf of the subcustodians. The Custodian is
a market maker, clearer and
approved weigher under the rules of the LBMA.
The
Custodian, as instructed by the Trustee, is authorized to accept, on
behalf of the Trust, deposits of gold in unallocated form.
Acting on standing instructions
given by the Trustee, the Custodian
will allocate gold deposited
in unallocated form
with the Trust by
selecting bars of gold bullion
for
deposit to the Trust
Allocated Account. All gold bullion allocated
to the Trust must conform to the rules,
regulations, practices and customs of the LBMA.
The Trustee and
the Custodian will enter into the
Custody
Agreements which will
establish the Trust Unallocated
Account and the Trust
Allocated
Account. The Trust Unallocated Account will be used to
facilitate the transfer of gold deposits and gold
redemption distributions between Authorized Participants and the Trust
in connection with the creation and redemption of Baskets and
the sales of gold made by the Trustee for the
Trust. Except for when gold is
transferred in and out of
the Trust or for when a small amount of gold
remains credited
to the Trust Unallocated Account at the end
of a business day (which
is expected
to be no more than 430
ounces), the gold deposited with the Trust
will be held in the Trust Allocated
Account.
The Custodian is authorized to appoint from time to time one or more
subcustodians to hold the Trust's
gold. The subcustodians that the Custodian currently
uses are the Bank of England and LBMA
market-making members that provide bullion
vaulting and clearing services to third parties. The Custodian
does not have written custody agreements
with the subcustodians it selects. The Custodian's selected
subcustodians may appoint further
subcustodians.
These
further subcustodians are not expected to have written custody
agreements with the Custodian's
subcustodians that selected
them. The lack of such written contracts
could affect the recourse of the Trust
and
the Custodian
against
any subcustodian in the event
a subcustodian does
not use due care in the safekeeping of the Trust's gold. See
"Risk
Factors — The
ability of the
Trustee or
the Custodian
to take legal action against subcustodians may be
limited..."
The Custodian is required to use reasonable care in selecting
subcustodians, but otherwise
has no responsibility in
relation to the
subcustodians
appointed by it, and the
Custodian
is not responsible for their selection of
further subcustodians.
The
Custodian does not undertake to monitor the
performance by subcustodians of their custody functions or their
selection of additional
subcustodians. The Custodian is not
responsible for the actions or inactions of
subcustodians.
Under the Allocated
Bullion Account Agreement entered into
by the Trustee and
the Custodian,
the
Custodian
is
responsible for the safekeeping of the gold held on behalf of the Trust
in accordance with the terms and conditions of the Allocated Bullion
Account Agreement and is required
to
exercise reasonable care in
the
performance of its obligations under such agreement. The Custodian will
only be responsible for any loss or damage suffered by the Trust as a
direct result of any negligence, fraud or willful default in the
performance of its duties. The Custodian's liability under the
Allocated Bullion Account Agreement is
further limited
to the market value of the gold held in the Trust Allocated Account at
the time such
negligence, fraud or
willful
default is discovered by the Custodian,
provided that the Custodian promptly notifies the Trustee of its
discovery. The Custodian's liability under the Unallocated
Bullion Account Agreement is further
limited to the amount of the
gold
credited to the Trust Unallocated Account at the time
such negligence,
fraud or
willful
default is discovered by the Custodian,
provided that the Custodian promptly notifies the Trustee of its
discovery.
In
the event of a loss caused by the failure of
the Custodian or a subcustodian to exercise reasonable care, the
Trustee, on behalf of the Trust,
has the right to seek
recovery with respect to the loss against
the Custodian or
subcustodian in
breach.
The
Custodian is obliged under the Allocated
Bullion Account Agreement to use
commercially reasonable efforts to obtain delivery of gold from
those
subcustodians appointed by it. However, the
Custodian may not have the right to, and does not have the
obligation to, seek
recovery of the
gold from any
subcustodian appointed by a
subcustodian.
44
Custody of the Trust's Gold
Under the customs and practices of the
London bullion market, allocated gold is held by custodians
and, on their behalf, by
subcustodians under arrangements that permit
each entity for which gold is being held (1) to request
from the entity's custodian (and a custodian or
subcustodian to request from its subcustodian) a list identifying each
gold bar being held and
the
identity of
the particular custodian or subcustodian
holding the gold bar and (2) to request the entity's custodian to
release the entity's gold within two
business days following demand for release. Each
custodian or subcustodian is obligated under
the customs and practices of the London bullion market
to provide the
bar list and
the identification of
custodians and subcustodians referred to in
(1) above, and each custodian is obligated to release gold as
requested. The Custodian
will provide the Trustee
with statements on a monthly basis which
contain sufficient information to identify
each bar of gold held in the Trust Allocated Account and the
custodian or
subcustodian having possession of each
bar. Under
English
law, unless otherwise provided in
any
applicable custody agreement,
a custodian
generally is
liable to its customer for failing to take
reasonable
care of the gold and for failing to release
the customer's gold upon demand.
The Custodian and the
Trustee will not require any direct or
indirect subcustodians
to
be insured or bonded with respect to their
custodial activities.
The
Custodian will maintain
insurance with regard to its
business on such terms and
conditions as it considers appropriate.
The
Trust will not be a beneficiary of
any
such insurance
and does not have the ability to dictate the
existence, nature or amount
of the coverage. Therefore, Shareholders
cannot be assured that the Custodian will maintain adequate
insurance or any
insurance with respect to
the gold held by the Custodian on behalf of the
Trust.
ALLOCATED ACCOUNTS
An allocated account is an
account with a bullion dealer,
which may also be a bank, to
which individually identified gold bars owned by the account holder are
credited. The gold bars in an allocated gold account are specific to
that account and are identified by a list which shows, for each gold
bar, the refiner, assay or fineness, serial
number and gross and fine weight. The account holder
will have full ownership
of the gold bars and, except as instructed by the
account holder, the bullion dealer
may not trade, lease or lend the
bars.
UNALLOCATED
ACCOUNTS
An
unallocated account is an account with a bullion dealer, which may also
be a bank, to which a fine weight amount of
gold is credited. Transfers to or from an unallocated account are made
by crediting or debiting the number of
ounces of gold being
deposited or withdrawn.
Gold
held in
an
unallocated account
will
not be
segregated from
the
Custodian's
assets. The
account holder therefore
has no ownership
interest in any specific bars of gold that the bullion dealer
holds or owns. The account holder is an
unsecured creditor of the bullion
dealer, and
credits to an unallocated account are at risk of the bullion
dealer's
insolvency, in
which event it
may not be possible for a liquidator
to identify any
gold held in an unallocated account as belonging to the account holder
rather than to the bullion dealer. The
account holder is entitled to direct the bullion dealer to
deliver an amount of physical gold equal to
the amount of gold standing to the credit of the account holder. When
delivering gold, the bullion dealer
will allocate physical gold from its general stock to the account
holder with a corresponding debit being made
to the amount of gold credited to the unallocated
account.
TRANSFERS OF GOLD
For each creation
of a Basket, gold will be transferred by a
debit to an Authorized
Participant
Unallocated Account and a
credit to the
Trust
Unallocated
Account. After gold has
been
credited
to an Authorized Participant Unallocated
Account
in connection
with the creation of a Basket,
the Custodian will transfer the
credited amount from the
Authorized Participant Unallocated Account to the Trust Unallocated
Account. The Custodian will then allocate
specific
bars of gold from its
gold stocks,
and, if
subcustodians
are used, they are expected to allocate specific bars of gold from
their stocks, so that the allocated gold bars represent the
amount of gold credited to the Trust
Unallocated Account to the extent
such amount
is representable
by whole
bars.
The allocated gold bars
will be held in the Trust Allocated Account.
The bars of gold may be held directly by the Custodian
or by or for a subcustodian of the Custodian. The Custodian
will update
its
records at the end of each business day to identify the
specific bars of gold allocated to the Trust.
45
Custody of the Trust's Gold
The process of withdrawing gold from the
Trust for a redemption of a Basket will follow the same general
procedure as for depositing gold with the Trust for a creation of a
Basket, only in reverse. Each transfer of gold between the Trust
Allocated Account and the Trust Unallocated Account connected with a
creation or redemption of a Basket may result in a small amount of gold
being held in the Trust Unallocated Account after the completion of the
transfer. In making
deposits and withdrawals between the Trust Allocated Account and the
Trust Unallocated Account, the Custodian will use
commercially reasonable efforts to
minimize
the amount of gold held in the Trust Unallocated Account
as of the close of each business
day. See "Creation
and Redemption of Shares."
46
Description
of the Custody Agreements
The Allocated
Bullion Account
Agreement
between the Trustee and the
Custodian establishes the Trust Allocated Account. The Unallocated
Bullion Account Agreement
between
the Trustee and the Custodian establishes the Trust Unallocated
Account.
These
agreements are sometimes referred to together as the
"Custody Agreements" in this prospectus.
The following is a description of the material terms of
the
Custody Agreements. As the Custody Agreements are similar in form, they
are discussed together, with material distinctions between the
agreements noted.
REPORTS
The Custodian will provide the
Trustee with reports for each business day, no later than the following
business day, identifying the movements of gold in and out of the Trust
Allocated Account and the credits and debits of gold to the Trust
Unallocated Account. The Custodian will also provide the Trustee with
monthly statements of
account for the Trust
Allocated Account and the Trust
Unallocated Account as of the last business day of each
month. The monthly statements will contain
sufficient information to identify each bar of gold held in the Trust
Allocated Account and the
custodian or
subcustodian having possession of such
bar. Under the Custody Agreements, a
"business
day" means
any day other than a day (1) when the
NYSE is closed for regular trading or (2), if the
transaction
requires the receipt or delivery, or the
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 transaction requires the execution or
completion of procedures which cannot be executed
or completed by
the close of the business
day.
Except for
withdrawals
of physical gold made directly from the
Trust Allocated Account as to which transfer
of ownership is determined at the time the recipient
or its agent acknowledges in writing its receipt of
gold, the Custodian's records of all deposits to and
withdrawals from, and all debits and credits to, the
Trust Allocated Account and the Trust Unallocated
Account which are to occur on a business day, and all
end of business day account balances in the Trust
Allocated Account and Trust Unallocated Account, are
stated as of the close of the Custodian's business
(usually 4:00 PM London time) on such business
day.
SUBCUSTODIANS
Under
the Allocated Bullion Account Agreement, the Custodian may select
subcustodians to perform any of
its
duties, including holding gold for it.
These subcustodians may
in turn select other subcustodians to perform
their duties, including holding gold for them,
but the Custodian is not
responsible for (and therefore has no
liability in relation to) the selection of
those other
subcustodians.
The Allocated Bullion Account Agreement requires the Custodian to use
reasonable care in selecting any
subcustodian and provides
that, except for the Custodian's obligation to
use commercially reasonable efforts to obtain delivery of gold held by
subcustodians
when necessary, the Custodian will not be liable for the
acts or omissions, or for the solvency, of any
subcustodian
that it selects unless the selection of
that subcustodian was
made negligently or in bad faith. The
subcustodians
selected and used by the Custodian as of the date of this
prospectus are: the Bank of England, The Bank of Nova Scotia
(ScotiaMocatta), Deutsche Bank AG, JPMorgan
Chase Bank, and UBS AG.
The Allocated Bullion Account Agreement provides that the Custodian
will notify the Trustee if it selects any additional
subcustodians or stops
using any
subcustodian
it has previously selected.
LOCATION AND SEGREGATION OF
GOLD; ACCESS
Gold held for the Trust
Allocated Account by the Custodian will be
held at the Custodian's London
vault.
Gold held by the
Custodian's currently selected
subcustodians
and by
subcustodians of
subcustodians may be held
in vaults
located in
England
or in other locations.
The Custodian will segregate
by identification in its books and records the Trust's gold
in the Trust Allocated Account from any
other gold which it owns or holds for others and will
require
the
47
Description of the Custody Agreements
subcustodians
it selects to so segregate the Trust's
gold held by them. This requirement
reflects the
current custody
practice
in the London bullion
market, and under the Allocated
Bullion Account Agreement, the Custodian is
deemed to have
communicated
such requirement by
virtue of its
participation
in the London
bullion market. The
Custodian's books and records will identify every bar of gold
held in the Trust
Allocated Account in its own vault by
refiner, assay or fineness, serial number
and gross and fine weight. Subcustodians
selected by the Custodian
are expected to identify in their
books and records each bar of gold held for the Custodian by serial
number and such subcustodians may use other
identifying
information.
The Trustee may, upon reasonable notice, visit the Custodian's
premises up to twice a year and examine the
Trust's gold held there and the Custodian's records
concerning the Trust Allocated Account and the
Trust Unallocated Account. The Trust's
independent auditors may also visit the Custodian's premises
in connection with their audit of the
financial statements of the Trust. Visits will not be allowed when
no gold of the Trust is held in the
Custodian's vault.
TRANSFERS INTO THE TRUST UNALLOCATED
ACCOUNT
The Custodian will credit to the Trust Unallocated
Account the amount of gold it
receives from the Trust
Allocated
Account,
an Authorized Participant Unallocated Account or from other
third party unallocated accounts for credit to the Trust Unallocated
Account. Unless otherwise agreed
by the Custodian in
writing,
the only gold the Custodian will accept in physical form for
credit to the Trust Unallocated Account is gold the Trustee has
transferred from the Trust Allocated Account.
TRANSFERS FROM THE TRUST UNALLOCATED
ACCOUNT
The Custodian will transfer gold from the Trust
Unallocated Account only in
accordance with the Trustee's instructions to the
Custodian. A transfer of gold from the Trust Unallocated Account may
only be made: (1) by
transferring gold to a third party unallocated account; (2)
by transferring gold to the Trust Allocated
Account; or (3) by either
(A)
making gold available for collection at the
Custodian's vault premises or
at such other location as the Custodian may
specify
or
(B),
if separately agreed, delivering the gold to such location
as the Custodian and the Trustee agree
at the Trust's expense and
risk. Any gold
made available in physical
form will be in a form which complies with
the rules, regulations, practices and
customs of the LBMA, the
Bank of England or any applicable regulatory
body (Custody Rules) or in such other form as may be agreed between the
Trustee and the Custodian, and in all cases
will comprise one or more
whole gold
bars selected by
the Custodian.
The Custodian will
use commercially reasonable efforts to transfer
gold from the Trust
Unallocated Account
to the Trust
Allocated Account
by the close of business (London
time) on each business day, such that the amount of gold
that remains credited to the Trust Unallocated Account does not exceed
430 fine ounces.
TRANSFERS INTO THE TRUST
ALLOCATED ACCOUNT
The Custodian will receive transfers of gold
into the Trust Allocated Account only at the Trustee's
instructions given pursuant to the Unallocated Bullion Account
Agreement by debiting gold from the Trust Unallocated
Account and crediting such gold to the Trust Allocated
Account.
TRANSFERS FROM
THE TRUST ALLOCATED ACCOUNT
The Custodian will transfer gold
from the Trust Allocated Account only
in accordance with the
Trustee's instructions.
Generally, the Custodian will transfer gold from the Trust
Allocated Account only by debiting gold from the Trust Allocated
Account and crediting the gold to the Trust Unallocated Account. When
the Trustee instructs the Custodian to make gold physically available,
the Custodian will transfer gold from the Trust Allocated Account by
debiting gold from the Trust Allocated Account and making such gold
available for collection or delivery as described in the following
paragraph.
WITHDRAWALS OF
GOLD DIRECTLY FROM THE TRUST
ALLOCATED ACCOUNT
Upon the Trustee's
instruction, the Custodian will debit gold from the
Trust Allocated Account and make the gold available
for collection by the Trustee or, if separately agreed, for delivery by
the Custodian in
48
Description of the Custody Agreements
accordance with its usual
practices at the
Trust's expense and
risk. The Trustee and the Custodian expect that the Trustee will
withdraw gold physically from the Trust
Allocated Account (rather
than by crediting it to the Trust
Unallocated
Account
and instructing a further transfer from that account) only
in exceptional circumstances, such as
if, for some unforeseen
reason, it was not possible to transfer gold
in unallocated form. The Custodian will
not be obliged to effect any requested delivery if, in its reasonable
opinion, (1) this would cause the Custodian
or its agents to be in breach of the
Custody Rules or other
applicable law, court order or regulation, (2)
the costs incurred would be excessive or (3)
delivery is impracticable for any reason. When gold is
physically withdrawn from the Trust Allocated
Account pursuant to the Trustee's instruction, all right, title,
risk and interest in and to the gold withdrawn shall pass to the person
to whom or to or for whose account such gold is transferred, delivered
or collected at the time the recipient or its agent acknowledges in
writing its receipt of gold. Unless
the Trustee specifies the bars of gold to be debited from the Trust
Allocated Account, the Custodian is entitled to select the
gold
bars.
RIGHT TO REFUSE
TRANSFERS
OR AMEND TRANSFER PROCEDURES
The Custodian may
refuse to accept transfers of gold
to the Trust Unallocated
Account, amend the procedures for transferring gold
to or from the Trust
Unallocated Account or for the physical withdrawal of gold from the
Trust Unallocated Account or the Trust Allocated Account or impose such
additional procedures in relation to the transfer of gold
to or from the Trust
Unallocated Account as the Custodian may from time to time consider
appropriate. The Custodian will notify the Trustee
within a commercially reasonable time before the Custodian amends
these procedures or
imposes additional ones, and, in doing so, the
Custodian will consider the Trustee's need to communicate any
changes to Authorized
Participants and
others.
FEES AND
EXPENSES
For the
Custodian's services under the
Allocated
Bullion Account Agreement
and in connection with
the Custodian's processing of orders
to create and redeem Baskets, the Custodian shall receive from the
Trust
a fee payable
quarterly
in arrears that is accrued daily at an annual
rate equal to
0.10%
of the average
daily
aggregate value of the
gold held in the Trust Allocated Account and the Trust Unallocated
Account. This fee will
include any
UK
value added or similar tax should any such tax apply. If the Trust uses
an additional or successor custodian, the fee paid to such custodian
may not include any applicable
UK
value added or similar
tax.
The Custodian receives
no fee under the
Unallocated
Bullion Account
Agreement.
The
Trust will pay on demand
all costs, charges and
expenses incurred by
the Custodian in connection with the performance of its duties and
obligations under the Custody Agreements or otherwise in connection
with the gold held in the Trust Allocated Account or the Trust
Unallocated
Account.
TRUST
UNALLOCATED ACCOUNT CREDIT AND DEBIT BALANCES
No interest will
be paid by the Custodian on any credit balance to the Trust Unallocated
Account. Unless otherwise agreed to by the Trustee and the Custodian,
the Trustee may not
maintain a negative balance
in the Trust Unallocated
Account.
EXCLUSION OF LIABILITY
The Custodian
will use reasonable care in the performance of its duties under the
Custody Agreements and will only be responsible for any loss or damage
suffered by the
Trust
as a direct result of any
negligence,
fraud or willful default in the performance of its duties. The
Custodian's liability under the Allocated Bullion Account
Agreement is further limited to the market
value of the gold held in the Trust Allocated Account at the time
such
negligence, fraud or willful default is discovered by the
Custodian, provided that the Custodian promptly notifies the Trustee of
its discovery. The Custodian's liability under the Unallocated
Bullion Account Agreement is further
limited to the amount of the
gold credited to the
Trust Unallocated Account at the time
such
negligence, fraud or willful default is discovered by the
Custodian, provided that the Custodian promptly notifies the Trustee of
its discovery.
49
Description of the Custody Agreements
Furthermore, the Custodian has no duty to
make or take or to require any subcustodian selected by it to make or
take any special arrangements or precautions beyond those required by
the Custody Rules or as
specifically
set forth in the Custody
Agreements.
INDEMNITY
The Trust
will, solely out of the Trust's
assets, indemnify the
Custodian and each
of its
officers,
directors, employees and affiliates (on an after tax basis)
on demand against all costs and expenses, damages, liabilities and
losses which the Custodian or
any such
officer, director, employee or affiliate may suffer or incur
in connection with the Custody Agreements, except to the extent that
such sums are due directly to the Custodian's or
such
officer's,
director's,
employer's
or
affiliate's
negligence,
willful default or fraud.
INSURANCE
The Custodian will maintain
such insurance for its business, including
its bullion and custody business, as it deems appropriate. The
Trustee and the Sponsor
(so long as the Sponsor is WGTS)
may, subject to confidentiality restrictions, review this
insurance coverage from time to time upon
reasonable prior
notice.
FORCE MAJEURE
The Custodian will not be liable for any delay
in performance or any non-performance of any of its obligations under
the Custody Agreements by reason of any cause beyond its reasonable
control, including,
acts
of God, war or
terrorism.
TERMINATION
The Trustee and the Custodian may each terminate any Custody
Agreement upon 90
business days' prior
notice, provided that the Custody Agreements may not be
terminated for the first year following the date of the formation of
the Trust unless the Trust is terminated.
The Custody Agreements will also terminate
90
business days after the resignation or
removal of the Trustee unless (1)
a successor trustee of the Trust is
appointed prior to the end of the
90
business day
period or
(2)
the full
liquidation of
the Trust is started within the 90 business
day period and the Trustee requests that the Custodian continue the
Custody Agreements in effect until the liquidation of the Trust is
complete. If either the Allocated Bullion Account Agreement
or the Unallocated Bullion Account Agreement is
terminated, the other agreement automatically
terminates.
If redelivery
arrangements for the gold held in the Trust Allocated Account are not
made, the Custodian may continue to store the gold and charge storage
fees and expenses incurred by the
Custodian, and, after six months
from the termination date, the Custodian may sell the gold and account
to the Trustee for the proceeds, less any amounts due to the Custodian
under the Allocated Bullion Account
Agreement. If arrangements for transfer or repayment,
as the case may be, of the balance in the Trust Unallocated Account are
not made, the Custodian may continue to charge
expenses incurred by the
Custodian, and, after six months
from the termination date, the Custodian may close the Trust
Unallocated Account and account to the Trustee for the proceeds, less
any amounts due to the Custodian under the Unallocated Account Bullion
Agreement.
GOVERNING LAW
The
Custody Agreements are governed by English law. The Trustee and the
Custodian both consent to the non-exclusive
jurisdiction of the courts of the State of New York and the
federal courts located in the borough of Manhattan in New York
City. Such consent
is
not required for any person to assert a claim of New York jurisdiction
over the Trustee or the
Custodian.
50
Creation
and Redemption of Shares
The Trust will create and redeem
Shares from
time to time, but only in one or more Baskets
(a Basket equals
a block of 100,000
Shares). The creation
and redemption of Baskets will only be made in exchange for the
delivery to
the Trust or the
distribution by the Trust of the
amount of gold and any cash represented by the Baskets being created or
redeemed, the amount of
which will be based on the
combined NAV of the number of
Shares
included in the Baskets being created or
redeemed determined on the day the
order to create or redeem
Baskets is properly
received.
Authorized
Participants are the only persons that
may place orders to
create and redeem Baskets.
Authorized Participants must be
(1)
registered broker-dealers or other securities market
participants, such as banks and other
financial
institutions,
which are not required to register as broker-dealers to engage in
securities transactions,
and (2)
participants in DTC. To
become an Authorized Participant, a person must
enter into a Participant
Agreement with the Sponsor
and the Trustee. The Participant
Agreement provides the procedures for the creation and redemption of
Baskets and for the delivery of the gold and any cash required for such
creations and redemptions. The
Participant Agreement and the related
procedures attached thereto may be amended by the Trustee and the
Sponsor, without the consent of any
Shareholder or Authorized Participant. Authorized
Participants will pay a transaction fee of $2,000 to the Trustee for
each order they
place
to create or redeem one or more
Baskets. Authorized Participants who make
deposits with the Trust in exchange for Baskets will receive no
fees, commissions or other form of
compensation or inducement of any kind from either the Sponsor
or the Trust, and no such person has any
obligation or responsibility to the Sponsor or the Trust to effect
any sale or resale of
Shares.
Authorized Participants are
cautioned that some of
their activities will result in their being
deemed participants in a distribution in a manner which would render
them statutory underwriters and subject
them to the prospectus-delivery and liability provisions of the
Securities Act, as described in
"Plan of
Distribution."
Prior to initiating any creation or redemption order, an Authorized
Participant must have entered into an
agreement with the Custodian to establish an Authorized
Participant Unallocated Account in London (Participant Unallocated
Bullion Account Agreement). Authorized Participant Unallocated
Accounts may only be used for transactions
with the Trust. Gold held in
Authorized Participant
Unallocated Accounts
is
not segregated
from the Custodian's
assets, as a
consequence of which
an
Authorized
Participant will have
no proprietary interest in
any specific bars of
gold held by the Custodian.
Credits to
its
Authorized Participant
Unallocated Account are
therefore at
risk of the Custodian's insolvency. No
fees will be charged by the Custodian for
the use of
the Authorized Participant Unallocated
Account as long as the Authorized Participant Unallocated
Account is used solely for gold transfers to
and from the Trust Unallocated Account and the Custodian (or
one of its affiliates) receives compensation for
maintaining the Trust Allocated Account. Authorized
Participants should be aware that the
Custodian's liability threshold under the Participant Unallocated
Bullion Account Agreement is gross
negligence, not negligence, which is the Custodian's
liability threshold under the Trust's
Custody Agreements.
As the terms of
the Participant Unallocated Bullion Account Agreement differ in certain
respects from the terms of the Trust's
Unallocated Bullion Account Agreement, potential Authorized
Participants should review the terms
of the
Participant Unallocated Bullion Account Agreement carefully. The form
of Participant Unallocated Bullion Account
Agreement is attached as an attachment to the Participant
Agreement. A copy of the Participant
Agreement may be obtained by potential Authorized Participants from
the Trustee.
Certain Authorized Participants are expected to have the facility to
participate directly in the gold bullion market and the gold futures
market. In some cases, an Authorized
Participant may from time to time acquire gold from or sell gold to its
affiliated gold trading desk, which may profit in these instances.
The Sponsor believes that the size and
operation of the gold bullion market make it unlikely that an
Authorized Participant's direct
activities in the gold or securities markets will impact the price of
gold or the price of the Shares. Each
Authorized Participant
will be
registered
as a broker-dealer under the Securities
Exchange Act of 1934 (Exchange Act) and
regulated
by
the
NASD,
or will be exempt from
51
Creation and Redemption of Shares
being or otherwise will not be required to be
so regulated or registered, and
will
be qualified to act as a broker or dealer in
the states or other
jurisdictions where the nature of its business so
requires. Certain Authorized Participants
will be regulated under federal and state banking laws and regulations.
Each Authorized Participant will have its
own set of rules and procedures, internal controls and
information barriers as it determines is
appropriate in light of its own regulatory
regime.
Authorized Participants may act for their
own accounts or as agents for broker-dealers, custodians and other
securities market participants that wish to create or redeem Baskets.
An order for one or more Baskets may be
placed
by an Authorized Participant on behalf of multiple
clients.
As
of the date of this prospectus, Bear Hunter Structured Products,
LLC
and UBS Securities LLC
each intend
to sign a Participant Agreement with the
Trust and, upon the effectiveness of such
agreement, may create and redeem Baskets as
described above. Persons interested in
purchasing Baskets should contact the Sponsor or the Trustee to obtain
the contact information for
the
Authorized Participants. Shareholders who are not Authorized
Participants will only be able to redeem
their Shares through an Authorized
Participant.
All
gold will be delivered to the Trust and distributed by the Trust in
unallocated form through credits and debits
between Authorized Participant Unallocated Accounts and the Trust
Unallocated Account. Gold transferred from
an Authorized Participant Unallocated Account to the Trust in
unallocated form will first be credited to
the Trust Unallocated Account. Thereafter, the Custodian will allocate
specific bars of gold representing the
amount of gold credited to the Trust Unallocated Account (to the
extent such amount is representable by whole
gold bars) to the Trust Allocated Account. The movement of
gold is reversed for the distribution of
gold to an Authorized Participant in connection with the redemption
of Baskets.
All gold
bullion represented by a credit to
any Authorized
Participant Unallocated Account and to the Trust
Unallocated Account and all gold bullion held in the Trust
Allocated Account with the Custodian must be of at least
a minimum
fineness
(or purity) of
995 parts per
1,000
(99.5%) and otherwise conform to the rules,
regulations practices and customs of the LBMA, including the
specifications for a London Good Delivery
Bar.
Under the Participant
Agreement, the Sponsor
has agreed
to indemnify the Authorized
Participants against certain
liabilities, including liabilities under the Securities
Act, and to
contribute to
the payments the Authorized Participants
may be required to
make in respect of those liabilities. The
Trustee has
agreed to reimburse the Authorized
Participants, solely from and to the extent
of the Trust's assets, for indemnification
and contribution amounts due from the Sponsor
in respect of such liabilities to the
extent the Sponsor has not paid such amounts when
due.
The following description of the procedures for the creation and
redemption of Baskets is only a summary and an investor should refer to
the relevant provisions of the Trust Indenture and the form of
Participant Agreement for more detail, each of which is attached as an
exhibit to the registration statement of which this prospectus is a
part. The form of Participant Unallocated Bullion
Account Agreement is attached as an attachment to the form
of Participant Agreement. See
"Where You Can Find More Information" for
information about where you can obtain the registration statement.
CREATION PROCEDURES
On any business day, an Authorized
Participant may place an order with the Trustee to
create one or more Baskets. For purposes of processing both purchase
and redemption orders, a
"business
day" means any day other than a
day (1) when the NYSE is closed for regular
trading
or
(2),
if the order requires the receipt or delivery, or the 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 transaction requires the execution or
completion of
procedures which
cannot be executed or completed
by the close of the business
day. Purchase orders must be placed by
4:00 PM or the
close of regular trading on the NYSE,
whichever is
earlier.
The day on which the Trustee
receives a valid
purchase order is the
purchase order
date.
52
Creation and Redemption of Shares
By placing a
purchase order, an
Authorized Participant agrees to deposit
gold with
the
Trust, or a
combination of gold and cash, as
described below. Prior to the delivery of
Baskets for a purchase order, the Authorized Participant must also have
wired to the Trustee the non-refundable transaction fee due for the
purchase order.
Determination of required
deposits
The total deposit required to create each
Basket (Creation Basket Deposit) will
be an amount of gold and cash, if
any, that is in the same proportion to the total assets of the Trust
(net of estimated
accrued but unpaid
fees, expenses and other
liabilities) on the date the order to
purchase is properly received as the number of Shares to be
created under the
purchase order is in proportion to the total
number of Shares outstanding on the date the order is
received. The Sponsor
anticipates
that in the ordinary course of the Trust's operations a cash
deposit will not be required for the creation of
Baskets.
The amount of the required gold deposit is determined by dividing
the number of ounces of gold held by the Trust by the number of Baskets
outstanding, as adjusted for estimated
accrued but unpaid fees and expenses as
described in the next paragraph.
The amount of any
required cash deposit is determined as follows. The
estimated unpaid fees, expenses and
liabilities of the Trust accrued through the purchase
order date are subtracted from
any cash held or
receivable by the Trust as of the purchase
order date. The remaining amount is
divided by the number of
Shares
outstanding immediately before the purchase order
date and then multiplied by the number
of Shares being created
pursuant to the purchase
order. If the resulting amount is positive, this
amount is the required cash deposit. If the resulting amount
is negative, the amount of the required gold deposit will be
reduced by the number of fine ounces
of gold equal in value to
that resulting amount,
determined at the price of gold used in
calculating the
NAV of the Trust
on
the purchase order date. Fractions of
a fine ounce of gold
smaller than 0.001
of a
fine ounce
which are included in the gold deposit amount are
disregarded. All questions as to the composition of a
Creation Basket Deposit
will be finally determined by the
Trustee.
The Trustee's determination of the Creation Basket Deposit shall
be final and binding on all persons interested in the
Trust.
Delivery of
required deposits
An Authorized
Participant who places a purchase
order is responsible for crediting its Authorized
Participant Unallocated Account with the required gold deposit amount
by the end of the second business day in London
following the purchase order
date. Upon receipt of the gold deposit amount, the
Custodian, after receiving appropriate instructions from the Authorized
Participant and the Trustee, will
transfer on the third business day following
the purchase order date
the gold deposit amount from the Authorized Participant Unallocated
Account to the Trust Unallocated Account and the Trustee will direct
DTC to credit the number of Baskets
ordered to the Authorized Participant's DTC
account. The expense and risk of delivery, ownership
and safekeeping of gold until such gold has been received by the Trust
shall be borne solely by the Authorized
Participant. The
Trustee may accept delivery of gold by such other means as the Sponsor,
from time to time, may determine to be acceptable for the Trust,
provided that the same is disclosed in a prospectus relating to the
Trust filed with the SEC pursuant to Rule 424 under the
Securities Act.
If gold is to be delivered other than as
described above, the Sponsor is authorized to establish such procedures
and to appoint such custodians and establish such custody accounts in
addition to those described in this prospectus, as the Sponsor
determines to be desirable.
Acting on standing instructions
given by the Trustee, the Custodian will transfer the gold
deposit amount from the Trust Unallocated Account to the Trust
Allocated Account by transferring gold bars from its inventory to the
Trust Allocated Account. The
Custodian will use
commercially reasonable
efforts to complete the transfer of gold to
the Trust Allocated Account prior to the time by which the Trustee is
to credit the Basket to the Authorized Participant's
DTC
account; if, however, such transfers have not been completed by such
time, the number of
Baskets ordered will be delivered against
receipt of the gold deposit amount
in
the Trust Unallocated Account, and all
Shareholders
will be exposed to the risks of unallocated gold
to the extent of that gold deposit amount
until the Custodian completes the allocation
process.
See
"Risk
Factors — Gold held in the Trust's unallocated
gold account
and any Authorized Participant's unallocated gold account will
not be segregated from the Custodian's
assets..."
53
Creation and Redemption of Shares
Because
gold is allocated only in multiples of whole bars, the
amount of gold allocated from the Trust Unallocated Account to the
Trust Allocated Account may be less than the total fine
ounces of gold credited
to the Trust Unallocated Account. Any
balance will be held in
the Trust Unallocated Account. The Custodian will
use commercially reasonable
efforts to minimize the amount of gold held in the Trust
Unallocated Account; no more than 430 ounces of gold
is expected to be held
in the Trust Unallocated Account at the close of each business
day.
Rejection of
purchase orders
The Trustee may reject a
purchase order or a
Creation
Basket Deposit if:
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•
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It determines that the
purchase order or the
Creation
Basket Deposit is not in
proper form;
|
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•
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The Sponsor believes that the
purchase order or the
Creation
Basket Deposit would have
adverse tax consequences to the Trust or its Shareholders;
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|
•
|
The
acceptance or
receipt
of the
Creation
Basket Deposit would, in
the opinion of counsel to the Sponsor, be unlawful;
or
|
|
|
•
|
Circumstances outside the
control of the Trustee, the Sponsor or the Custodian make
it, for all practical
purposes, not feasible to process
creations of
Baskets.
|
None of the
Trustee, the
Sponsor
or
the Custodian will be liable for the rejection of any
purchase
order or Creation Basket Deposit.
REDEMPTION PROCEDURES
The procedures by which an Authorized
Participant can redeem one or more Baskets will mirror the procedures
for the creation of Baskets. On any business day, an Authorized
Participant may place an order with the Trustee to redeem one or more
Baskets.
Redemption
orders must be placed by 4:00 PM or
the close of regular trading on the
NYSE, whichever is
earlier.
A redemption order so received is effective
on the date it is received in satisfactory form by the
Trustee.
The redemption procedures allow Authorized
Participants to redeem Baskets and do not entitle an individual
Shareholder to redeem any Shares in an amount less than a Basket, or to
redeem Baskets other than through an Authorized Participant.
By
placing a redemption order, an Authorized Participant agrees to
deliver the
Baskets to be
redeemed through DTC's book-entry
system to the Trust not later than the third
business day following the effective date of the redemption
order. Prior to the delivery of the
redemption distribution for a redemption order, the Authorized
Participant must also have wired to the Trustee the non-refundable
transaction fee due for the redemption order.
Determination of redemption distribution
The redemption distribution from the Trust will consist of (1) a
credit to the redeeming Authorized Participant's Authorized
Participant Unallocated Account representing
the amount of the gold
held by the Trust evidenced by the Shares being redeemed
plus or minus (2) the cash redemption amount. The
cash redemption amount is equal to the
value of
all assets of the Trust other than gold
less
all
estimated accrued but
unpaid expenses and other liabilities,
divided by the number of Baskets outstanding
and multiplied by the
number of Baskets included in the Authorized Participant's
redemption order. The Trustee will distribute any positive
cash redemption amount through DTC to the account
of the Authorized Participant as recorded on DTC's book entry
system. If the cash redemption amount is negative, the
credit to the Authorized
Participant Unallocated
Account will be reduced by the number of
ounces of gold equal in
value to the
negative cash redemption amount, determined
at the price of gold used in calculating the
NAV of the Trust
on
the redemption order date. The Sponsor
anticipates that in the
ordinary course
of the Trust's operations
there will be no cash
distributions
made to Authorized Participants upon
redemptions.
Fractions of
a fine ounce of
gold included in the redemption distribution smaller than 0.001
of
a fine ounce are
disregarded. Redemption distributions will be subject to the
deduction of any applicable tax or other governmental charges which may
be due.
54
Creation and Redemption of Shares
Delivery of redemption
distribution
The redemption distribution due from the Trust
will be delivered to the Authorized Participant on the third business
day following the redemption order
date if,
by
9:00
AM
New York time on such third business day, the
Trustee's DTC account has been credited with the
Baskets to be
redeemed. If the
Trustee's DTC account has not been
credited with all of the Baskets to
be redeemed by such time,
the redemption distribution will
be delivered to the extent of whole Baskets
received. Any
remainder of the redemption distribution will be
delivered on the next business
day to the extent of remaining whole Baskets
received if the Trustee receives the fee
applicable to the extension of the redemption distribution date
which
the Trustee may, from time to time, determine and the
remaining
Baskets to be redeemed are credited to the
Trustee's DTC account by
9:00
AM New York time on such next business
day. Any further
outstanding amount of the the redemption
order shall be cancelled. The Trustee is also
authorized to deliver the redemption distribution
notwithstanding that the
Baskets
to be redeemed are not
credited to the Trustee's DTC account by
9:00
AM New York time on the third business day following
the redemption order date if the Authorized Participant
has collateralized its obligation to deliver the
Baskets
through
DTC's book entry
system on such terms as
the Sponsor and the Trustee may from time to
time agree
upon.
The Custodian
will transfer the
redemption gold amount from the Trust Allocated Account to the Trust
Unallocated Account and, thereafter,
to the redeeming Authorized
Participant's Authorized Participant Unallocated
Account. The Authorized Participant
and
the Trust are each at risk in respect of
gold credited to their
respective unallocated accounts in the
event of the
Custodian's
insolvency. See "Risk Factors
— Gold held in the Trust's unallocated gold account and any
Authorized Participant's unallocated gold account will not be
segregated from the Custodian's
assets..."
As with the
allocation of gold to the Trust Allocated Account which occurs upon a
purchase order, if in
transferring gold from the Trust Allocated Account to the Trust
Unallocated Account in connection with a redemption order there is an
excess amount of gold transferred to the Trust
Unallocated Account, the excess over the gold redemption amount will be
held in the Trust Unallocated Account. The Custodian will
use commercially reasonable
efforts to minimize the amount of
gold held in the Trust Unallocated Account; no
more than 430 ounces of gold is
expected to be held in the Trust Unallocated
Account at the close of each business
day.
Suspension or rejection of redemption
orders
The Trustee may, in its discretion, and will when
directed by the Sponsor, suspend the right of redemption, or postpone
the redemption settlement date, (1) for any
period during which the NYSE is closed other than customary weekend or
holiday closings, or trading on the NYSE is suspended or restricted,
(2) for any period during which an emergency
exists as a result of which delivery, disposal or evaluation of
gold is not reasonably practicable,
or (3) for such other period as the Sponsor
determines to be necessary for the protection of the Shareholders.
None of the
Sponsor, the
Trustee
or
the Custodian will be
liable to any person or in any way for any loss or damages
that may result from any such suspension or postponement.
The
Trustee will reject a
redemption order if the order is not in proper form as described in the
Participant Agreement or if the fulfillment of the order, in the
opinion of its counsel, might be unlawful.
CREATION AND REDEMPTION TRANSACTION FEE
To compensate the
Trustee for services
in processing the creation and redemption of
Baskets, an Authorized Participant will be required to pay a
transaction fee to the Trustee of
$2,000 per order to create
or redeem Baskets. An order may include multiple Baskets. The
transaction fee may be reduced, increased or otherwise
changed by the Trustee with the consent of
the Sponsor.
The Trustee shall notify DTC of any agreement to change
the transaction fee and will not implement
any
increase in the fee for the redemption of
Baskets until 30 days after the date of the notice. A
transaction fee may not exceed
0.10% of the value
of a Basket at the time the creation and redemption order is
accepted.
55
Creation and Redemption of Shares
TAX
RESPONSIBILITY
Authorized Participants are responsible for any transfer tax, sales
or use tax, recording tax, value added tax
or similar tax or governmental charge applicable to the creation or
redemption of Baskets, regardless of whether
or not such tax or charge is imposed directly on the Authorized
Participant, and agree
to indemnify the Sponsor, the Trustee and the Trust if
they are required by law to pay any such
tax, together with any applicable penalties,
additions to tax or interest
thereon.
56
Description
of the Trust Indenture
The Trust operates
under the terms of the Trust Indenture, dated as of
November
,
2004, between the
Sponsor and the Trustee.
A copy of the Trust
Indenture is
available for inspection at the Trustee's office. The
following is a description of the material terms of the Trust
Indenture.
THE
SPONSOR
This section summarizes some of the important provisions of the
Trust Indenture which apply to the Sponsor. For a general description
of the Sponsor's role concerning the
Trust, see "The
Sponsor
–
The Sponsor's
Role."
Liability of
the Sponsor
and indemnification
The Sponsor will not be liable to the
Trustee or any Shareholder for any action taken or for
refraining from taking any action in good
faith, or for errors in judgment or for depreciation or loss incurred
by reason of the sale of any gold or other
assets of the Trust. However,
the
preceding
liability exclusion will not protect the
Sponsor against any liability resulting from its own gross negligence,
bad faith, willful misconduct or willful
malfeasance in the performance of its duties or the reckless disregard
of its obligations and duties to the
Trust.
The Sponsor and its
shareholders, members,
directors, officers, employees, affiliates
and subsidiaries will be indemnified from
the Trust and held harmless against
certain losses,
liabilities or expenses incurred
in the performance of its duties under the
Trust Indenture without gross
negligence, bad faith, willful misconduct, willful
malfeasance or reckless disregard of the indemnified
party's obligations and duties under the Trust
Indenture. Such indemnity includes payment from the Trust
of the costs and expenses incurred in defending against
any claim or liability under the Trust Indenture.
Under
the Trust Indenture, the Sponsor may be able to seek indemnification
from the Trust for payments it makes in
connection with the Sponsor's activities under the Trust
Indenture to the extent its conduct does
not disqualify it from receiving such indemnification under the terms
of the Trust Indenture. The Sponsor shall
also be indemnified from the Trust and held harmless against any loss,
liability or expense arising under the Distribution Agreement, the
Marketing Agent Agreement or any Participant Agreement insofar as such
loss, liability or expense arises from any untrue statement or alleged
untrue statement of a material fact contained in any written statement
provided to the Sponsor by the Trustee. Any amounts payable to the Sponsor will be
secured by a lien on the Trust.
The Sponsor has agreed to
indemnify the
Purchaser,
the Marketing
Agent and the
Authorized Participants against certain
liabilities
described under
"Risk Factors – The
Trust's obligation to reimburse the
Purchaser,
the Marketing Agent
and the Authorized Participants for certain
liabilities
. . ." and to contribute to
payments that the
Purchaser,
the Marketing Agent and the Authorized
Participants may be required to make in
respect of
those
liabilities. The
Trustee has
agreed to reimburse the
Purchaser,
the Marketing Agent and the Authorized
Participants, solely from and to the extent
of the Trust's assets, for indemnification and contribution
amounts due from the Sponsor in respect of
such liabilities to the extent the Sponsor has not paid such amounts
when due.
The
Sponsor has agreed that, to the extent the Trustee pays any amount in
respect of the reimbursement obligations described in the preceding
sentence, the Trustee, for the benefit of the Trust, will be subrogated
to and will succeed to the rights of the party so reimbursed against
the
Sponsor.
Resignation
of the Sponsor;
successor sponsors
The Sponsor
may resign its position as sponsor at any time by delivering to the
Trustee an executed instrument of
resignation. The resignation will not become effective until the
earlier of the time when
(1) the
Trustee appoints a successor sponsor to assume, with appropriate
compensation from the Trust, the duties and
obligations of the Sponsor, (2) the Trustee agrees to act as sponsor
without appointing a successor sponsor, or
(3) if a successor sponsor has not been
found within 60 days following the date the instrument of resignation
was delivered, the date the Trustee
terminates and liquidates the Trust
and
distributes
all remaining assets to
DTC
for distribution to DTC Participants who are then
owners of
Shares
on the records of
DTC.
Any successor sponsor must be satisfactory
to the Trustee. Upon effective
57
Description of the Trust Indenture
resignation, the Sponsor will be discharged
and will no longer be liable in any manner
except as to acts or omissions occurring prior to such resignation, and
the new sponsor will then undertake and
perform all duties and be entitled to all rights and compensation
as sponsor under the Trust
Indenture.
If the Sponsor fails to
undertake or perform or becomes incapable of undertaking or performing
any of its duties required under the Trust
Indenture, and the failure is not cured within 15 business
days following receipt of notice from the
Trustee of the failure, or if the Sponsor is adjudged bankrupt
or insolvent, or a receiver of the Sponsor
or of its property is appointed, or a trustee or liquidator or
any public officer takes charge or control
of the Sponsor or of its property or affairs for the purpose
of rehabilitation, conservation or
liquidation, then, in any such case, the Trustee may do any one or more
of the following: (1) appoint a successor
sponsor to assume, with such compensation from the Trust as
the Trustee may deem reasonable under the
circumstances, the duties and obligations of the resigning
Sponsor, (2) agree to act as sponsor without appointing
a successor sponsor, or (3) terminate and
liquidate the Trust and
distribute its remaining assets. The Trustee
has no obligation to appoint a successor sponsor or to assume the
duties of the Sponsor and will have no
liability to any person because the Trust is terminated as described in
the preceding
sentence.
The Sponsor may transfer all
or substantially all of its assets to an entity which carries on the
business of the Sponsor, if at the time of
the transfer the successor assumes all of the obligations of the
Sponsor under the Trust
Indenture. In such an
event, the Sponsor will then be relieved of
all further liability under the Trust
Indenture.
THE TRUSTEE
This section
summarizes some of the important provisions of the Trust Indenture
which apply to the Trustee. For a general description of the
Trustee's role concerning the Trust, see "The
Trustee – The Trustee's
Role."
Qualifications of the
trustee
The Trustee and any successor trustee must
be (1) a bank, trust company, corporation or
national banking association organized and doing business under the
laws of the United States or any of its
states,
and authorized under such laws to exercise corporate trust
powers, (2) a participant in DTC or such
other securities depository as shall then be acting
and (3), unless counsel to the
Sponsor, the appointment of which is
acceptable to the Trustee, determines that such requirement
is not necessary for the exception under
section 408(m)(3)(B) of
the United States Internal Revenue Code
of 1986, as amended (Code), to apply, a
banking institution as defined in Code
section
408(n). The Trustee and any successor trustee must
have, at all times, an aggregate capital, surplus, and undivided
profits of not less than
$500
million.
General duty of care of
trustee
The Trustee will not be
under any duty to give the property held by it under the Trust
Indenture any greater degree of care than it
gives its own similar property.
Limitation
on trustee's liability
The Trustee will not be liable
for the disposition of gold or moneys, or in respect of any evaluation
which it makes under the Trust Indenture or
otherwise, or for any action taken or omitted or for any loss or injury
resulting from its actions or its performance or lack of performance of
its duties under the Trust Indenture in the absence of gross negligence
or willful misconduct on its part. In no event will the Trustee be
liable for acting in accordance with or conclusively relying upon any
instruction, notice, demand, certificate or document from the Sponsor,
an Authorized Participant or any entity acting on their behalf which
the Trustee believes is given as authorized by the Trust Indenture.
In addition, the Trustee will not be liable for any
delay in performance or for the non-performance
of
any of its obligations under the Trust Indenture by reason of
causes beyond
its reasonable control, including acts of
God, war or terrorism. The
Trustee will not be liable for any indirect, consequential, punitive or
special damages, regardless of the form of action and whether or not
any such damages were foreseeable or contemplated, or for an amount in
excess of the value of the Trust's
assets.
Trustee's liability for custodial services and
agents
The Trustee will not be
answerable for the default of the Custodian or any other custodian of
the Trust's gold employed at the
direction of the Sponsor or selected by the Trustee with reasonable
care. The
58
Description of the Trust Indenture
Trustee may also employ
custodians for Trust assets other than gold, agents, attorneys,
accountants, auditors and other
professionals and shall not be answerable for the default or misconduct
of any of them if they were selected with
reasonable care. The fees and expenses charged by custodians for
the custody of gold and related services,
agents, attorneys, accountants, auditors or other professionals,
and expenses reimbursable to any custodian
under a custody agreement authorized by the Trust Indenture,
exclusive of fees for services to be performed by the
Trustee, will be expenses of the Trust. Fees paid for
the custody of assets other than gold will be an
expense of the Trustee.
Taxes
The Trustee
will not be personally liable for any taxes or other governmental
charges imposed upon the gold or its
custody, moneys or other Trust assets, or on the income therefrom or
the sale or proceeds of the sale thereof, or
upon it as Trustee or upon or in respect of the Trust or the Shares.
For all such taxes and charges and for any
expenses, including counsel's fees, which the Trustee may sustain
or incur with respect to such taxes or
charges, the Trustee will be reimbursed and indemnified out of the
Trust's assets and the payment of such
amounts shall be secured by a lien on the
Trust.
Indemnification of
the trustee
The Trustee and its
directors, shareholders, officers, employees, agents and affiliates
will be indemnified from the Trust's
assets against any loss, liability or expense (1)
in connection with
the acceptance or administration of the Trust and any
actions taken in accordance with the Trust
Indenture or the administration of the Trust or in
connection with any offer or sale of Shares
incurred without (A) gross negligence,
bad faith, willful misconduct and willful
malfeasance on the part of the indemnified
party and
without (B) reckless disregard on the part
of the indemnified party of its obligations and duties under the
Trust Indenture or (2) related to any
filings or submissions, or the failure to make any filings or
submissions, with the SEC concerning the
Shares, except where the loss, liability or expense arises out of any
written information provided by the Trustee
to the Sponsor for any such filings or submissions. Such
indemnity shall include payment from the
Trust of the costs and expenses incurred by the indemnified party
in investigating or defending itself against
any claim or liability. Any amounts payable to an
indemnified party may be payable in advance
or will be secured by a lien on the
Trust.
Indemnity for
actions taken to protect the trust
The Trustee is under no obligation to appear in, prosecute or defend
any action that in its opinion may involve
it in expense or liability, unless it is furnished with reasonable
security and indemnity against the expense
or liability. The Trustee's costs resulting from the
Trustee's appearance in, prosecution of or
defense of any such action are deductible from and will
constitute a lien against the Trust's assets. Subject
to the preceding conditions, the Trustee shall, in its
discretion, undertake such action as it may deem
necessary to protect the Trust and the rights and
interests of all Shareholders pursuant to the terms of the
Trust Indenture.
Protection for amounts due to trustee
If any
fees or costs
owed to the Trustee under the
Trust Indenture are not paid when due, the Trustee
may sell or otherwise dispose
of any Trust assets (including gold)
and pay itself from the proceeds.
As security for all obligations owed to
the Trustee under the Trust Indenture, the Sponsor, each Authorized
Participant and each Shareholder grants
the Trustee a continuing security interest in, and
a lien on, the Trust's assets and all Trust
distributions.
Holding of trust property other than
gold
The Trustee will hold and
record the ownership of the Trust's assets in such a manner so
that they will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
Trustee or its creditors, except a claim for
payment of services, advances, indemnities and expenses by the Trustee
in providing services as trustee or, in the
case of cash deposits held by the Trustee, liens or rights in favor
of creditors of the Trustee arising under
bankruptcy, insolvency or similar laws.
The Trustee will hold any money the Trust receives, without
interest, as a deposit for the account of the
Trust in accordance with the provisions of the Trust
Indenture, until it is required to be disbursed. Any
59
Description of the Trust Indenture
Trust assets other than gold
or cash will be held by the Trustee either directly or through the
Federal Reserve Treasury Book Entry System
for United States and federal agency securities (Book Entry
System), DTC, or through any other clearing
agency or similar system (Clearing Agency), if available. The
Trustee will have no responsibility or
liability for the actions or omissions of the Book Entry System, DTC or
any Clearing
Agency. The
Trustee shall not be liable for ascertaining or acting upon any calls,
conversions, exchange offers, tenders,
interest rate changes, or similar matters relating to securities held
at DTC.
Resignation, discharge or removal of trustee; successor
trustees
The Trustee may resign by
executing an instrument of
resignation, filing
it with the Sponsor,
and mailing a copy of a notice
of its resignation to all
DTC Participants for
distribution to the Shareholders not less
than 60 days before the date when
the resignation is to take
effect.
The
Sponsor may remove the Trustee and appoint a successor Trustee if it
determines that (1) the Trustee is guilty of
willful misconduct or malfeasance or willful disregard of its duties
under the Trust Indenture, (2) the Trustee
has acted in bad faith in performing its duties under the Trust
Indenture, (3) there has occurred a material
deterioration in the creditworthiness of the Trustee or (4) there has
occurred one or more negligent acts or
omissions on the part of the Trustee which have a material adverse
effect, either singly or together, on the
Trust or the interests of the Shareholders and the Trustee has not,
within 15 days of receipt of the
Sponsor's notice of such material
adverse effect, (A) cured such
material adverse
effect or responded to the notice explaining
the steps it will take to cure such material
adverse effect and cures such
material adverse
effect within 30 days from the date of the
notice and (B) established, to the Sponsor's satisfaction, that
such act or omission (or acts or omissions)
will not recur. Shareholders representing at
least 66 2/3% of the Shares then
outstanding may at any time remove the
Trustee by delivery of a written
instrument to the Trustee and the Sponsor.
If the
Trustee does not meet the qualification for a trustee under the Trust
Indenture, fails to undertake or perform or becomes incapable of
undertaking or performing any of its duties required under the Trust
Indenture, and the failure
is not
cured within 15 business days following receipt of
notice from the Sponsor of the failure, or is adjudged
bankrupt or insolvent, or a receiver of the Trustee
or of its property is appointed, or a trustee or liquidator or any
public officer takes charge or control of the Trustee or of its
property or affairs for the purposes of rehabilitation, conservation or
liquidation, then, in any such case, the Sponsor
will remove the
Trustee.
Upon
receiving notice of resignation or upon the removal of the Trustee, the
Sponsor shall use its best efforts promptly to appoint a successor
trustee in the manner and meeting the qualifications provided in the
Trust Indenture, by written instrument or instruments delivered to the
resigning Trustee and the successor trustee.
Any resignation or removal
of a trustee and appointment of a successor trustee
will become effective
upon the acceptance of appointment by the successor trustee. Notice of
the appointment of a successor trustee shall be mailed promptly after
acceptance of the appointment by the successor trustee to all
DTC Participants for
distribution to the Shareholders.
Upon effective
resignation or removal, the
retiring
trustee will be discharged from
liability under the Trust Indenture
except as to acts or omissions occurring prior to such
resignation or
removal.
If the Trustee is
removed or resigns and no successor trustee is appointed within 60 days
after the date notice of removal is received by the Trustee or the
date the Trustee
issues its notice of
resignation, the Trustee will terminate and liquidate the
Trust and distribute its remaining
assets.
THE
CUSTODIAN AND CUSTODY OF THE TRUST'S
GOLD
This section summarizes some of
the important provisions of the Trust Indenture which apply to the
Custodian and the custody of the Trust's gold. For a general
description of the Custodian's role, see "The
Custodian
–
The Custodian's Role."
For more information on the custody of the Trust's gold, see
"Custody of the Trust's Gold" and
"Description of the Custody
Agreements."
The
Trustee, on behalf of the Trust,
will enter into
the Custody Agreements
with the Custodian under which the Custodian will maintain the Trust
Allocated Account and the Trust Unallocated
Account.
60
Description of the Trust Indenture
Before
entering into the Custody
Agreements, the
Trustee will determine
that, subject to the
limitations and shortcomings that are described under
"Risk Factors" and
"Custody of the Trust's
Gold," the Custody
Agreements
establishing the Trust Allocated Account and Trust Unallocated Account
protect the Trust and the interests of the
Shareholders. Prior to the initial deposit of
gold with a custodian which is in addition
to or in lieu of the Custodian, the Trustee
will determine that the relevant
custody agreement and related custody
arrangements include certain
provisions intended to assure the safe
custody of the gold held by the custodian
unless the Sponsor has permitted the Trustee in writing to
enter into the
relevant custody agreement without one or more of such
provisions.
The Trustee is responsible for monitoring the performance
of the Custodian and any successor
custodian or additional custodian and for enforcing the
obligations of each such custodian as
is necessary to protect
the Trust and the rights and interests of the Shareholders. In the
event that the Trustee determines that the
maintenance of gold with a particular
custodian is not in the best
interests of the Shareholders, the Trustee
will so advise the Sponsor and take such
reasonable action as the Sponsor will direct, or, if the
Sponsor has not given direction within one business day,
the
Trustee
will initiate action to remove
the gold from the custody of such
custodian or take such other action as the Trustee
determines appropriate to safeguard the interests of the
Shareholders. However, see "The
Trustee –
The Trustee's Role" for
a description of limitations on the ability of the
Trustee to monitor the performance of the Custodian.
The Trustee shall have no liability for any such action
taken at the direction of the Sponsor or, in the absence of such
direction, any action taken by it in good
faith.
Appointment and removal of
custodians
The Sponsor may
direct the Trustee to employ one or more other custodians in addition
to or in replacement of the Custodian,
provided that the Sponsor may not direct the employment of a
successor custodian or an additional
custodian without the Trustee's consent if the employment would
have a material adverse effect on the
Trustee's ability to perform its duties. The Trustee may, with
the prior approval of the Sponsor, also
employ one or more
successor or additional
custodians selected by the Trustee for
the safekeeping of gold and services in
connection with the deposit and delivery of
gold. Before
gold may be placed with any additional or successor custodian, the
Trustee will determine that the custody
agreements applicable to the additional or successor custodian
substantially satisfy certain specified
requirements set forth in the Trust Indenture, unless the Sponsor has
permitted the Trustee to enter into such
custody agreements without satisfaction of
these
requirements.
Investors should be aware that these
requirements are
different in certain respect than the
requirements set forth in the Custody
Agreements.
VALUATION OF
GOLD, DEFINITION OF NET
ASSET VALUE AND ADJUSTED NET ASSET VALUE
As of the London
PM
Fix on each day
that the NYSE is open for regular trading
or, if there is no
London PM
Fix on
such
day or the
London PM Fix has
not been announced by 12:00
PM
New York time on
such
day, as of 12:00
PM
New York time on such
day (Evaluation Time), the
Trustee will evaluate the gold held by the Trust and determine both the
ANAV
and the NAV of the
Trust.
At the Evaluation
Time, the Trustee will value the Trust's gold on the
basis of that day's London PM Fix
or, if no London PM Fix is made on
such day or has not
been announced by
the Evaluation
Time, the next most recent London gold
price fix (AM or PM) determined prior to
the Evaluation Time will
be used, unless the Trustee, in consultation with the
Sponsor, determines that such price is inappropriate as a
basis for evaluation.
In the event the
Trustee and the Sponsor determine that the London PM
Fix
or last prior London
fix
is not an appropriate basis for
evaluation of the Trust's
gold, they shall identify an alternative
basis for such
evaluation to be
employed by the Trustee. Neither the
Trustee nor the Sponsor shall be liable to any person for the
determination that the London PM
Fix or last prior London
gold price
fix is not appropriate as a basis for
evaluation of the
Trust's
gold or for any determination as to the
alternative basis for such
evaluation provided that such determination
is made in good faith. See
"Operation of the Gold Bullion Market – The London
Bullion Market" for a description of the London PM
Fix.
Once the value of the gold has been determined,
the Trustee will subtract all
estimated accrued but unpaid
fees (other than the fees to be
computed by reference to
the ANAV
of the Trust or
custody fees
61
Description of the Trust Indenture
based on the
value of the gold held by the
Trust), expenses and other liabilities of the Trust from the
total value of the gold and all other assets of the Trust (other than
any amounts credited to the Trust's reserve account, if
established). The resulting figure is the ANAV of the Trust. The ANAV
of the Trust is used to compute
the fees of
the Sponsor, the Trustee and the Marketing Agent.
To
determine the Trust's NAV, the Trustee will subtract the amount
of estimated accrued but unpaid
fees computed by
reference to the ANAV
of the Trust and to
the value of the gold held by the
Trust from the ANAV
of the
Trust.
The
resulting figure is the NAV of the Trust. The Trustee will
also determine the NAV per Share by dividing the NAV of
the Trust by the number of the Shares outstanding as of the
close of trading on the NYSE (which includes the net
number of any
Shares
created or redeemed on such evaluation
day).
The
Trustee's estimation of accrued but unpaid fees, expenses and
liabilities will be conclusive upon all persons interested in the Trust
and no revision or correction in any computation made under the Trust
Indenture will be required by reason of any difference in
amounts
estimated from those actually paid.
The Sponsor and
the Shareholders may rely on any evaluation furnished by the Trustee,
and the Sponsor will have no responsibility for the evaluation's
accuracy. The determinations the Trustee makes will be made in good
faith upon the basis of, and the Trustee will not be liable for any
errors contained in, information reasonably available to it. The
Trustee will not be liable to the Sponsor,
DTC, the Shareholders
or any other
person for errors in
judgment. However, the
preceding liability
exclusion will not protect the Trustee against any liability resulting
from willful misfeasance, willful misconduct, bad faith or
gross negligence in the performance of its duties or
the reckless disregard of
its obligations and duties.
EXPENSES OF THE
TRUST
All expenses of
the Trust will be paid by the Trust through the sale of the
Trust's gold by the Trustee. The Trustee will
charge no fee and will assume the Trust's operating expenses
(other than extraordinary expenses)
for the period from
the Trust's formation through the day
the Shares commence trading on the NYSE. The Trustee and the Sponsor
have entered into a separate agreement relating to payment by the
Sponsor to
the Trustee for
this
period.
These
payments are not reimbursable to the
Sponsor by the Trust. If the Sponsor fails
to pay the Trustee under such
agreement, the Trustee
may recover the unpaid amounts from the assets of the Trust, and may
sell the
Trust's
gold as necessary to provide funds for such unpaid
amounts.
Trustee's
fee and
expenses
Fees
are paid to the Trustee as compensation for services performed under
the Trust Indenture. The Trustee's
fee is payable monthly in arrears and is accrued daily at an annual
rate equal to 0.02% of the ANAV of
the Trust, subject to a minimum fee of $500,000 and a maximum fee of $2
million per year. The Trustee will charge
the Trust for its expenses and disbursements incurred in connection
with the Trust (including the expenses of
the Custodian paid by the Trustee), exclusive of fees of agents for
services to be performed by the Trustee,
and for any extraordinary services performed by the Trustee for
the Trust.
The Trustee's fee
may be changed by the Trustee and Sponsor in good
faith to account for significant changes in the Trust's
administration or the Trustee's
duties.
Sponsor's fee and
expenses
Fees are paid to the
Sponsor as compensation
for
services
performed under
the Trust Indenture and
services
in connection with maintaining a website for the Trust, including
licensing costs, and with the marketing of the Shares.
The Sponsor's fee is payable monthly
in arrears and is accrued daily at an annual rate equal to
0.15%
of the ANAV of the Trust. The Sponsor will
receive reimbursement from the Trust for all of its disbursements and
expenses incurred in connection with the Trust.
For
seven
years from the date of the Trust Indenture or
until
the earlier termination of the marketing Agent Agreement, if
at the end of any month during
this
period the estimated ordinary expenses of
the Trust exceed an amount equal to 0.40% per
year
of the daily ANAV of the Trust for such month, the Sponsor's fee
is subject to reduction. See
"Business of the
Trust –
Trust Expenses –
Fee
Reduction."
62
Description of the Trust Indenture
Other
expenses
In addition,
the following expenses are or may be charged to the
Trust:
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Expenses
of custody, deposit or delivery of gold
(other than expenses borne by Authorized
Participants)
and disbursements
charged by and indemnification due any
Custodian;
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Fees of the Trustee for extraordinary
services;
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Various taxes and governmental charges
and any taxes, fees and charges payable by the Trustee with respect to
the creation or redemption of
Baskets;
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Expenses
and costs of any action taken by the Trustee or the Sponsor to protect
the Trust and the rights and interests of
Shareholders;
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Amounts for indemnification of the Trustee or the Sponsor
as permitted under the Trust
Indenture;
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Amounts for
reimbursement
of the
Purchaser,
the Marketing Agent and the Authorized
Participants in respect
of certain claims described under
"Risk Factors – The
Trust's obligation to reimburse the
Purchaser,
the Marketing Agent
and the Authorized Participants for certain
liabilities
. . ."
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Expenses incurred in contacting
Shareholders;
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Legal and auditing
expenses, and the compensation paid to agents properly employed
by or on behalf of the
Trustee;
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Fees paid
to DTC for custody of the
Shares;
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Federal
and state annual fees in keeping the registration of the Shares on a
current basis for the issuance of
Baskets;
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Expenses
of the Sponsor relating to the printing and distribution of marketing
materials describing the Trust and the
Shares;
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Fees and expenses
of the Marketing
Agent;
and
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Stationery, postage
and all other out-of-pocket expenses of the Trust not otherwise stated
above incurred by the Trustee, the Sponsor
or the Custodian or any additional or successor custodian pursuant to
actions permitted or required under the Trust Indenture.
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SALES OF GOLD
The Trustee will at the direction of the
Sponsor or in its own discretion sell the Trust's gold as
necessary to pay the Trust's expenses. When selling gold to pay
expenses, the Trustee will endeavor to sell the smallest amounts of
gold needed to pay expenses in order to minimize the Trust's
holdings of assets other than gold. Unless otherwise directed by the
Sponsor, when selling gold the Trustee will endeavor
to sell at the price established by the London PM Fix.
The Trustee will place orders with dealers (which may
include the Custodian) through which the Trustee expects to
receive the most
favorable price and execution of orders.
The Custodian may be the purchaser of such gold only if the
sale transaction is made
at the next London
gold price fix (either AM or PM) following the sale
order. Neither
the Trustee nor the Sponsor
is
liable for depreciation or loss incurred by
reason of any sale. See "United States Federal
Tax Consequences – Taxation of
US
Shareholders" for information on the tax treatment of gold
sales.
The Trustee
will also sell the
Trust's gold if the Sponsor
notifies
the Trustee that sale is required
by applicable law or regulation or in connection
with the termination and liquidation of the Trust. The Trustee
will not be liable or
responsible in any way for depreciation or loss incurred by reason of
any sale of gold directed by the Sponsor.
Any property received
by the Trust other than gold, cash or an amount receivable in cash
(such as, for example, an insurance claim) will be promptly sold or
otherwise disposed of by the Trustee at the direction of the Sponsor
and the resulting proceeds will be credited to the Trust's cash
account.
Cash account and reserve
account
The Trustee will maintain a cash account for the
Trust in which proceeds of gold sales and other cash
received by the Trustee
on behalf
of the Trust will be held. On each business
day, the Trustee will report
63
Description of the Trust Indenture
the balance of the cash account to the
Sponsor. The Trustee may withdraw funds from
the cash account to establish a reserve account for any
taxes, other governmental charges and contingent
or future liabilities.
The
Trustee will deduct its fee from the cash
account monthly in
arrears. The Trustee will charge
the cash account its disbursements for
payment of expenses at such times as the Trustee determines
convenient in its administration of the
Trust.
THE SECURITIES DEPOSITORY; BOOK-ENTRY-ONLY
SYSTEM; GLOBAL SECURITY
DTC will act as securities depository
for the Shares. DTC is a limited-purpose
trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency"
registered pursuant to the provisions of
section 17A of the
Exchange
Act. DTC was created to hold securities
of DTC Participants and
to facilitate the clearance and settlement of transactions in such
securities among the DTC Participants through electronic book-entry
changes. This eliminates the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own DTC.
Access to the DTC system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or
indirectly. DTC is expected to
agree with and represent to
the DTC Participants
that it will administer its book-entry system in accordance with its
rules and by-laws and the requirements of
law.
Individual certificates will not be issued for the Shares.
Instead, one or more
global certificates will be
signed by the Trustee and the Sponsor on
behalf of the Trust, registered in the name of Cede & Co., as
nominee for DTC, and deposited with the Trustee on behalf of DTC. The
global certificates will
evidence
all of the Shares
outstanding at any time.
The representations, undertakings and agreements made on the part of
the Trust in the global
certificates are made
and intended for the purpose of binding only the Trust and not the
Trustee or the Sponsor
individually.
Upon the
settlement date of any creation, transfer or redemption of
Shares, DTC will credit or debit, on its book-entry
registration and transfer system, the amount of the Shares so created,
transferred or redeemed to the accounts of the appropriate DTC
Participants. The Trustee and the
Authorized
Participants will designate the accounts to
be credited and charged in the case of creation or
redemption of Shares.
Beneficial ownership of the Shares will be
limited to DTC Participants, Indirect Participants and persons holding
interests through DTC Participants and Indirect Participants. Owners of
beneficial interests in the Shares will be shown on, and the transfer
of ownership will be effected only through, records maintained by DTC
(with respect to DTC
Participants), the records
of DTC Participants (with respect to Indirect
Participants),
and the records of Indirect Participants (with respect to
Shareholders that are
not DTC Participants or Indirect Participants).
Shareholders are
expected to receive from or through the DTC Participant
maintaining the account through which the Shareholder
has purchased their Shares a written confirmation relating
to such purchase.
Shareholders that are not DTC Participants
may transfer the Shares through DTC by instructing the
DTC Participant
or Indirect Participant
through which the Shareholders hold their
Shares to transfer the Shares.
Shareholders that are DTC Participants may transfer
the
Shares
by instructing DTC in accordance with the
rules of DTC. Transfers will be
made in accordance with standard securities industry practice.
DTC may decide to discontinue providing its service with respect to
Baskets and/or the Shares by giving notice to the Trustee and the
Sponsor. Under such circumstances, the Trustee and the Sponsor will
either find a replacement for DTC to perform its functions at a
comparable cost or, if a replacement is unavailable, terminate the
Trust.
The rights of the Shareholders generally
must be exercised by DTC Participants acting on their behalf
in accordance with the rules and procedures
of DTC. Because the
Shares
can only be held in book-entry form through DTC and DTC Participants,
investors must rely on DTC, DTC
Participants and any other
64
Description of the Trust Indenture
financial intermediary through which they
hold the
Shares to receive the benefits and exercise
the rights described in this section. Investors should
consult with their broker or financial
institution to find out about procedures and requirements for
securities held in book-entry form through
DTC.
SHARE SPLITS
If the Sponsor believes that the per Share price in the secondary
market for Shares has fallen outside a desirable trading price range,
the Sponsor may direct the Trustee to declare a split or reverse split
in the number of Shares outstanding and to make a corresponding change
in the number of Shares constituting a Basket.
BOOKS AND
RECORDS
The Trustee will keep proper books of record and
account of the Trust at its office located in New York or such office
as it may subsequently designate upon
notice. These books and
records are open to inspection by any person who
establishes to the Trustee's satisfaction that such person is a
Shareholder upon reasonable advance notice at all reasonable
times during the usual business hours of the Trustee.
The
Trustee will keep a copy of the
Trust Indenture on file in its office
which will be available
for inspection on reasonable advance notice at all reasonable times
during its usual business hours by any Shareholder.
STATEMENTS,
FILINGS AND REPORTS
After
the end of each fiscal year, the Sponsor will cause to be prepared an
annual report for the Trust containing
audited financial statements. The annual report will be in such form
and contain such information as will be
required by applicable laws, rules and regulations and may contain such
additional information which the Sponsor
determines shall be included. The annual report shall be filed with the
SEC and the
NYSE
and shall be
distributed to such persons and in such manner, as shall be required by
applicable laws, rules and
regulations.
The Sponsor is responsible
for the registration and qualification of the Shares under the federal
securities laws and any other securities and
blue sky laws of the
US
or any other jurisdiction as the Sponsor may
select. The Sponsor will also prepare, or cause to be
prepared, and file any periodic reports or updates
required under the Exchange
Act.
The Trustee will assist and
support the Sponsor in
the preparation of such
reports.
The accounts of the Trust will be audited, as required by law and as
may be directed by the Sponsor, by independent certified public
accountants designated from time to time by the
Sponsor.
The accountants report will be
furnished by the Trustee to Shareholders upon request.
The
Trustee will make such elections, file such tax returns, and prepare,
disseminate and file such tax reports, as it is advised by its counsel
or accountants are from time to time required by any applicable
statute, rule or
regulation.
The
costs incurred in connection with such statements,
filings and
reports will be expenses of the Trust.
FISCAL YEAR
The fiscal year of the Trust will initially be
the
period ending September 30 of each year. The
Sponsor may select an alternate fiscal
year.
TERMINATION OF THE TRUST
The Sponsor
may, and
it is anticipated that the Sponsor will, direct the Trustee
to terminate and liquidate the Trust
at any time after the first
anniversary of the Trust's inception when the NAV of
the Trust is less than
$350 million (as adjusted for
inflation by reference to the National
Consumer Price Index as described in the Trust
Indenture).
The Sponsor may direct the Trustee to
terminate the Trust if the CFTC determines that the Trust is
a commodities pool under the
CEA.
The Trustee may also terminate the
Trust upon the agreement of Shareholders owning at
least 66 2/3% of the outstanding
Shares.
65
Description of the Trust Indenture
The Trustee will terminate and liquidate
the Trust if any of the
following events occurs:
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DTC is unwilling or unable to
perform its functions under the Trust Indenture and the Sponsor
determines that no suitable replacement is
available;
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The
Shares are de-listed from the NYSE and are not listed for trading on
another US national
securities exchange or through the Nasdaq Stock Market within five
business days from the date the Shares are
de-listed;
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The NAV
of the Trust remains less than $50
million for a period of
50
consecutive business days at any time after the first 90 days of the
Shares being traded on the
NYSE;
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The Sponsor
is unable to perform its duties or becomes bankrupt or insolvent and
the Trustee has not appointed a successor and has not itself agreed to
act as
sponsor
of the Trust;
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The Sponsor
resigns and the Trustee has not appointed a successor and has not
itself agreed to act as
sponsor of
the Trust within 60 days from the resignation notification
date;
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The Trustee
resigns or is removed and no successor
trustee is appointed by
the Sponsor within 60 days from the resignation or removal notification
date;
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The
Custodian resigns and
no
successor custodian is employed within 60
days from the resignation notification
date;
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The sale of all of the Trust's
assets;
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The
Trust fails to qualify for treatment, or ceases to be treated, for US
federal income tax purposes, as a grantor
trust;
or
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The maximum period for which the
Trust is allowed to exist under New York law
ends.
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The
Trustee will give
written notice of the
termination of the Trust, specifying the date of
termination, upon which DTC will no longer permit
transfers,
to DTC Participants for
distribution to the Shareholders
at least 20 days prior to the termination of the Trust. The Trustee
will, within a reasonable time after the termination of the Trust, sell
the Trust's gold and, after payment of outstanding
accrued fees, expenses and liabilities and
establishment of any reserves deemed appropriate by the Trustee for
applicable taxes, other governmental charges or contingent or future
liabilities, distribute the proceeds to Shareholders.
The Trustee is not required to invest any proceeds it
holds for distribution to the Shareholders, unless the
Sponsor directs that the proceeds will be invested
pending distribution.
AMENDMENTS
The Trust
Indenture can be amended by the Sponsor and the Trustee without the
Shareholders'
consent in order to (1) correct any ambiguities, defects or
inconsistencies in the Trust Indenture or to address other matters or
questions arising under the Trust Indenture in a manner that will
not materially adversely affect the
interests of Shareholders as determined in good faith
by the Sponsor, and (2) make any change required by the SEC.
The Trust Indenture may also be amended by the Sponsor and the Trustee
with the consent of Shareholders representing at
least 51% of the Shares outstanding. However, the
Trust Indenture may not be amended without the consent of all of the
Shareholders if the amendment would (1) permit the acquisition of any
asset other than gold and cash acquired in accordance with the Trust
Indenture, (2) reduce the interest of any Shareholder in the Trust, or
(3) reduce the percentage of Shareholders required to consent to the
amendment. The Trustee shall provide each DTC Participant with copies
of a notice of any amendment for the DTC Participant to distribute to
the Shareholders for whom the DTC Participant holds Shares.
GOVERNING LAW; CONSENT TO NEW YORK JURISDICTION
The Trust
Indenture, and the rights of the
Sponsor, the Trustee, DTC (as registered owner of the Trust's
global
certificates for
Shares)
and the Shareholders under the Trust Indenture, are governed
by the laws of the State of New York.
The
Sponsor,
the Trustee and DTC and, by accepting
Shares, each
DTC
Participant and each Shareholder, consents to the
jurisdiction of the courts of the State of New York and
any federal courts located in the borough of
Manhattan in New York City. Such consent in not
required for any person to assert a claim of New York jurisdiction over
the Sponsor or the
Trustee.
66
United
States Federal Tax Consequences
The following discussion of the
material United States federal income tax consequences that generally
will apply to the purchase, ownership and disposition of Shares by a
US Shareholder (as defined
below), and certain United States federal income, gift and estate tax
consequences that may apply to an investment in Shares by a
Non-US Shareholder (as
defined below), represents, insofar as it describes conclusions as to
US federal tax law and
subject to the limitations and qualifications described therein, the
opinion of Carter Ledyard & Milburn LLP, special
United States federal tax counsel to the Sponsor. The discussion below
is based on the Code, Treasury
Regulations promulgated under the Code and judicial and administrative
interpretations of the Code, all as in effect on the date
of this prospectus and
all of which are subject to change either prospectively or
retroactively. The tax treatment of Shareholders may vary depending
upon their own particular circumstances. Certain Shareholders
(including broker-dealers, traders or other investors with special
circumstances) may be subject to special rules not discussed below. In
addition, the following discussion applies only to investors who will
hold Shares as "capital assets" within the
meaning of Code section
1221. Moreover, the discussion below does not address
the effect of any state, local or foreign tax law on an owner of
Shares. Purchasers of Shares are urged to consult their own tax
advisors with respect to all federal, state, local and foreign tax law
considerations potentially applicable to their investment in
Shares.
For purposes of this discussion, a
"US
Shareholder" is a Shareholder that is:
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An individual who is treated as a
citizen or resident of the United States for
US federal income tax
purposes;
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A corporation created or organized
in or under the laws of the United States or any political subdivision
thereof;
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An estate, the income of which is includible in gross
income for US federal
income tax purposes regardless of its source; or
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A trust, if a
court within the United States is able to exercise primary supervision
over the administration of the trust and one or more
US persons have the
authority to control all substantial decisions of the
trust.
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A Shareholder
that is not a US Shareholder as defined above is generally considered a
"Non-US Shareholder" for purposes of this
discussion. For United States federal income tax purposes, the
treatment of any beneficial owner of an interest in a partnership,
including any entity treated as a partnership for United States federal
income tax purposes, will generally depend upon the status of the
partner and upon the activities of the partnership. Partnerships and
partners in partnerships should consult their tax advisors about the
United States federal income tax consequences of purchasing, owning and
disposing of Shares.
TAXATION OF THE
TRUST
The Trust will be classified as a
"grantor trust" for
US federal income tax
purposes. As a result, the Trust itself will not be subject to
US federal income tax.
Instead, the Trust's income and expenses will "flow
through" to the Shareholders, and the Trustee will report
the Trust's income, gains, losses and deductions to the Internal
Revenue Service
(IRS)
on that basis.
TAXATION OF
US
SHAREHOLDERS
Shareholders generally will be treated,
for US federal income tax
purposes, as if they directly owned a pro rata share of the underlying
assets held in the Trust. Shareholders also will be treated as if they
directly received their respective pro rata shares of the Trust's
income, if any, and as if they directly incurred their respective pro
rata shares of the Trust's expenses. In the case of a Shareholder
that purchases Shares for
cash, its initial tax basis in its pro rata share of the
assets held in the Trust at the time it acquires its Shares will be
equal to its cost of acquiring the Shares. In the case of a Shareholder
that acquires its Shares as part of a
creation, the delivery of
gold to the Trust in exchange for the underlying gold
67
United States Federal Tax Consequences
represented by the Shares will not be a
taxable event to the Shareholder, and the Shareholder's tax basis
and holding period for the Shareholder's pro rata share of the
gold held in the Trust will be the same as its tax basis and holding
period for the gold delivered in exchange therefor. For purposes of
this discussion, it is assumed that all of a Shareholder's Shares
are acquired on the same date, at the same price per Share and, except
where otherwise noted, that the sole asset of the Trust is gold.
When the Trust sells gold, for example to pay expenses, a
Shareholder generally will recognize gain or loss in an amount equal to
the difference between (1)
the Shareholder's pro rata share of the amount realized by the
Trust upon the sale and
(2) the
Shareholder's tax basis for its pro rata share of the gold that
was sold, which gain or loss will
generally be long-term or short-term capital gain or loss, depending
upon whether the Shareholder has held its
Shares for more than one year. A Shareholder's tax
basis for its share of any gold sold by the Trust generally will be
determined by multiplying the Shareholder's total basis for its
share of all of the gold held in the Trust immediately prior to the
sale, by a fraction the numerator of which is the amount of gold sold,
and the denominator of which is the total amount of the gold held in
the Trust immediately prior to the sale. After any such sale, a
Shareholder's tax basis for its pro rata share of the gold
remaining in the Trust will be equal to its tax basis for its share of
the total amount of the gold held in the Trust immediately prior to the
sale, less the portion of such basis allocable to its share of the gold
that was sold.
Upon a Shareholder's sale of some or all of
its Shares, the Shareholder will be treated as having sold the portion
of its pro rata share of the gold held in the Trust at the time of the
sale that is attributable to the Shares sold. Accordingly, the
Shareholder generally will recognize gain or loss on the sale in an
amount equal to the difference between
(1) the amount realized
pursuant to the sale of the Shares, and
(2) the
Shareholder's tax basis for the portion of its pro rata share of
the gold held in the Trust at the time of sale that is attributable to
the Shares sold, as determined in the manner described in the preceding
paragraph.
A redemption of some or all of a Shareholder's
Shares in exchange for the underlying gold represented by the Shares
redeemed generally will not be a taxable event to the Shareholder. The
Shareholder's tax basis for the gold received in the redemption
generally will be the same as the Shareholder's tax basis for the
portion of its pro rata share of the gold held in the Trust immediately
prior to the redemption that is attributable to the Shares redeemed.
The Shareholder's holding period with respect to the gold
received should include the period during which the Shareholder held
the Shares redeemed. A subsequent sale of the gold received by the
Shareholder will be a taxable event.
After any sale or
redemption of less than all of a Shareholder's Shares, the
Shareholder's tax basis for its pro rata share of the gold held
in the Trust immediately after such sale or redemption generally will
be equal to its tax basis for its share of the total amount of the gold
held in the Trust immediately prior to the sale or redemption, less the
portion of such basis which is taken into account in determining the
amount of gain or loss recognized by the Shareholder upon such sale or,
in the case of a redemption, which is treated as the basis of the gold
received by the Shareholder in the redemption.
As noted above,
the foregoing discussion assumes that all of a Shareholder's
Shares were acquired on
the same date and at the same price per Share. If a Shareholder owns
multiple lots of Shares (i.e., Shares acquired on different dates
and/or at different prices), it is uncertain whether the Shareholder
may use the "specific identification" rules
that apply under Treas. Reg. §1.1012-1(c) in the case of sales of
shares of stock, in determining the amount, and the long-term or
short-term character, of any gain or loss recognized by the Shareholder
upon the sale of gold by the Trust, upon the sale of any Shares by the
Shareholder, or upon the sale by the Shareholder of any gold received
by it upon the redemption of any of its Shares. The IRS could take the
position that a Shareholder has a blended tax basis and holding period
for its pro rata share of the underlying gold in the Trust.
Shareholders that hold multiple lots of Shares, or that are
contemplating acquiring multiple lots of Shares, should consult their
own tax advisers as to the determination of the tax basis and holding
period for the underlying gold related to such Shares.
MAXIMUM 28% LONG-TERM CAPITAL
GAINS TAX RATE FOR
US SHAREHOLDERS WHO ARE
INDIVIDUALS
Under current law, gains recognized by
individuals from the sale of "collectibles,"
including gold bullion, held for more than one year are taxed at a
maximum rate of 28%, rather than the
15% rate applicable
to
68
United States Federal Tax Consequences
most other long-term capital gains. For these
purposes, gain recognized by an individual upon the sale of an interest
in a trust that holds collectibles is treated as gain recognized on the
sale of collectibles, to the extent that the gain is attributable to
unrealized appreciation in value of the collectibles held by the trust.
Therefore, any gain recognized by an individual
US Shareholder
attributable to a sale of Shares held for more than one year, or
attributable to the Trust's sale of any gold bullion which the
Shareholder is treated (through its ownership of Shares) as having held
for more than one year, generally will be taxed at a maximum rate of
28%. The tax rates for capital gains recognized upon the sale of
assets held by an individual
US Shareholder for one
year or less or by a taxpayer other than an individual
US taxpayer are generally
the same as those at which ordinary income is taxed.
BROKERAGE FEES AND TRUST EXPENSES
Any
brokerage or other transaction fee incurred by a Shareholder in
purchasing Shares will be treated as part of the Shareholder's
tax basis in the underlying assets of the Trust. Similarly, any
brokerage fee incurred by a Shareholder in selling Shares will reduce
the amount realized by the Shareholder with respect to the sale.
Shareholders will be required to recognize gain or loss upon a sale
of gold by the Trust (as discussed above), even though some or all of
the proceeds of such sale are used by the Trustee to pay Trust
expenses. Shareholders may deduct their respective pro rata shares of
each expense incurred by the Trust to the same extent as if they
directly incurred the expense. Shareholders who are individuals,
estates or trusts, however, may be required to treat some or all of the
expenses of the Trust as miscellaneous itemized deductions. Individuals
may deduct certain miscellaneous itemized deductions only to the extent
they exceed 2% of adjusted gross income. In addition, such
deductions may be subject to phase-outs and other limitations under
applicable provisions of the Code.
INVESTMENT BY
REGULATED INVESTMENT COMPANIES
Mutual funds and other
investment vehicles which are "regulated investment
companies" within the meaning of Code section 851 should
consult with their tax advisors concerning
(1) the likelihood that an
investment in Shares, although they are a
"security" within the meaning of the
Investment Company Act of 1940, may be considered an investment in the
underlying gold for purposes of Code section 851(b), and
(2) the extent to which an
investment in Shares might nevertheless be consistent with preservation
of their qualification under Code section 851.
INVESTMENT BY CERTAIN RETIREMENT
PLANS
Code section
408(m) provides that the acquisition of a
"collectible" by an individual retirement
account (IRA) or a participant-directed
account maintained under any plan that is tax-qualified under Code
section 401(a) is treated as a taxable
distribution from the account to the owner of the IRA, or to the
participant for whom the plan account is
maintained, of an amount equal to the cost to the account of acquiring
the collectible. The Sponsor
has
received a private letter ruling from the
IRS to the effect that a purchase of Shares
by an IRA, or by a participant-directed account under a Code section
401(a) plan, will not be treated as
resulting in a taxable distribution to the IRA owner or plan
participant under Code section 408(m).
However, if any of the Shares so purchased are distributed from the IRA
or plan account to the IRA owner or plan
participant, or if any gold received by such IRA or plan account upon
the redemption of any of the Shares purchased by it
is
distributed to the IRA owner or plan participant, the
Shares or gold so distributed will be subject to
federal income tax in the year of distribution, to the
extent provided under the applicable
provisions of Code section 408(d) or Code section 402. See also
"ERISA and Related
Considerations."
UNITED STATES INFORMATION REPORTING AND BACKUP
WITHHOLDING FOR US AND NON-US
SHAREHOLDERS
The Trustee
will file certain information returns with the IRS, and provide certain
tax-related information to Shareholders, in
connection with the Trust. Proposed regulations, if finalized in their
current form, would require that each
Shareholder be provided with information regarding its allocable
portion of the
69
United States Federal Tax Consequences
Trust's annual
income (if any)
and expenses, and sales of Trust assets, including, in the case of a
sale of gold, the amount of proceeds
attributable to each Share. Each Shareholder, however, would be
required to determine for itself the amount
of gain or loss recognized with respect to such sales.
A
US Shareholder may be
subject to US backup
withholding tax in certain circumstances unless it provides its
taxpayer identification number and complies with certain certification
procedures. Non-US
Shareholders may have to comply with certification procedures to
establish that they are not a
US person in order to
avoid the information reporting and backup withholding tax
requirements.
The amount of any backup withholding will be
allowed as a credit against a Shareholder's
US federal income tax
liability and may entitle such a Shareholder to a refund, provided that
the required information is furnished to the IRS.
INCOME TAXATION OF NON-US
SHAREHOLDERS
The Trust does not expect to generate
taxable income except for gain (if any) upon the sale of gold.
A Non-US Shareholder generally will not be
subject to US federal income tax with respect to gain recognized upon the sale or other disposition of
Shares, or upon the sale of gold by the Trust, unless (1) the Non-US Shareholder is an individual and is present
in the United States for 183 days or more during
the taxable year of the sale or other
disposition, and the gain is treated as being from United
States sources; or (2) the gain is
effectively connected with the conduct by the Non-US Shareholder of a
trade or business in the United States and
certain other conditions are met.
ESTATE AND
GIFT TAX CONSIDERATIONS FOR
NON-US
SHAREHOLDERS
Under the
US federal tax law,
individuals who are neither citizens nor residents (as determined for
estate and gift tax purposes) of the United States are subject to
estate tax on all property that has a
US
"situs." Shares may well be considered to
have a US situs for these
purposes. If they are, then Shares would be includible in the
US gross estate of a
non-resident alien Shareholder. For the year
2004,
US estate tax is imposed
at rates of up to
48% of the fair
market value of the taxable estate. The
US estate tax rate is
subject to change in future years. In addition,
the
US federal
"generation-skipping transfer tax" may apply
in certain circumstances. The estate of a non-resident alien
Shareholder who was resident in a country which has an estate tax
treaty with the United States may be entitled to benefit from such
treaty.
For non-citizens and non-residents of the United States,
the US federal gift tax
generally applies only to gifts of tangible personal property or real
property having a US
situs. Tangible personal property (including gold) has a
US situs if it is
physically located in the United States. Although the matter is not
settled, it appears that ownership of Shares should not be considered
ownership of the underlying gold for this purpose, even to the extent
that gold were held in custody in the United States. Instead, Shares
should be considered intangible property, and therefore they should not
be subject to US gift tax
if transferred during the holder's lifetime.
Such Shareholders
are urged to consult their tax advisers regarding the possible
application of US estate,
gift and generation-skipping transfer taxes in their particular
circumstances.
TAXATION IN JURISDICTIONS OTHER THAN THE
UNITED STATES
Prospective purchasers of Shares that are
based in or acting out of a jurisdiction other than the United States
are advised to consult their own tax advisers as to the tax
consequences, under the laws of such jurisdiction (or any other
jurisdiction not being the United States to which they are subject), of
their purchase, holding, sale and redemption of or any other dealing in
Shares and, in particular, as to whether any value added tax, other
consumption tax or transfer tax is payable in relation to such
purchase, holding, sale, redemption or other
dealing.
70
ERISA
and Related Considerations
The Employee Retirement Income
Security Act of 1974, as amended
(ERISA),
and/or Code section 4975
impose certain requirements on employee benefit plans
and certain other plans and arrangements, including individual
retirement accounts and annuities, Keogh plans, and certain collective
investment funds or insurance company general or separate accounts in
which such plans or arrangements are invested, that are subject to
ERISA and/or the Code (collectively,
Plans),
and on persons who are fiduciaries with respect to the investment of
assets treated as "plan assets" of a Plan.
Government plans and some church plans are not subject to the fiduciary
responsibility provisions of ERISA or the provisions of section 4975 of
the Code, but may be subject to substantially similar rules under state
or other federal law.
In contemplating an investment of a
portion of Plan assets in Shares, the Plan fiduciary responsible for
making such investment should carefully consider, taking into account
the facts and circumstances of the Plan, the "Risk
Factors" discussed above and whether such investment is
consistent with its fiduciary responsibilities, including, but not
limited to: (1) whether
the fiduciary has the authority to make the investment under the
appropriate governing plan instrument;
(2) whether the investment
would constitute a direct or indirect non-exempt prohibited transaction
with a party in interest;
(3) the Plan's
funding objectives; and
(4) whether under the
general fiduciary standards of investment prudence and diversification
such investment is appropriate for the Plan, taking into account the
overall investment policy of the Plan, the composition of the
Plan's investment portfolio and the Plan's need for
sufficient liquidity to pay benefits when due.
It is anticipated
that the Shares will constitute "publicly-held offered
securities" as defined in Department of Labor Regulations
§ 2510.3-101(b)(2). Accordingly, Shares purchased by a
Plan, and not the Plan's interest in the underlying gold bullion
held in the Trust represented by the Shares, should be treated as
assets of the Plan, for purposes of applying the
"fiduciary responsibility" and
"prohibited transaction" rules of ERISA and
the Code. See also "United States Federal
Tax Consequences
—
Investment by Certain Retirement
Plans."
71
Plan
of
Distribution
In addition to, and independent of, the purchase of the Underwritten
Shares by the Purchaser (described below)
and the purchase of the Seed Baskets by the initial depositor of gold
into the Trust, the Trust expects to issue
Shares in Baskets to Authorized Participants from time to time in
exchange for deposits of the amount of gold
and any cash represented by the Baskets being created. Because new
Shares can be created and issued on an
ongoing basis, at any point during the life of the Trust, a
"distribution,"
as such term is used in the Securities Act,
will be occurring.
Authorized Participants, other
broker-dealers and other persons are
cautioned
that
some of their activities will result in their being deemed participants in a distribution in a
manner which would render them statutory
underwriters and subject them to the
prospectus-delivery and liability provisions of the Securities Act. For
example, an Authorized Participant, other
broker-dealer firm or its client will be deemed a statutory
underwriter if it purchases a Basket from
the Trust, breaks the Basket down into the constituent Shares
and sells the Shares to its customers; or
if it chooses to couple the creation of a supply of new Shares with
an active selling effort involving
solicitation of secondary market demand for the Shares. A determination
of whether one is an underwriter must take
into account all the facts and circumstances pertaining to
the activities of the broker-dealer or its
client in the particular case, and the examples mentioned
above should not be considered a complete
description of all the activities that would lead to categorization
as an
underwriter.
Investors who purchase
Shares through a
commission/fee-based
brokerage account
may
pay
commissions/fees
charged by the brokerage account.
Investors
are encouraged to
review the terms of their brokerage accounts
for details on applicable charges.
Dealers who are not
"underwriters" but are participating in a
distribution (as contrasted to ordinary secondary trading
transactions), and thus dealing with Shares that are part of an
"unsold allotment" within the meaning of
section 4(3)(C) of the
Securities Act, would be
unable to take advantage of the prospectus-delivery exemption provided
by section 4(3) of the
Securities Act.
The
Sponsor intends to qualify the Shares in states selected by the Sponsor
and through broker-dealers who are members of
the
NASD.
Investors intending to create or redeem Baskets
through Authorized
Participants in transactions not
involving a broker-dealer registered in such investor's state of
domicile or residence should consult their legal advisor regarding
applicable broker-dealer or securities regulatory requirements under
the state securities laws prior to such creation or
redemption.
In
connection with the formation of the Trust, the Custodian
will receive
30,000 ounces
of unallocated gold on behalf of the Trust
from the Specialist in exchange for the Seed Baskets. The Seed Baskets
will be purchased at a per Share price
equal to one-tenth (1/10) of an ounce of gold. No fee or commission is
payable in connection with the issuance of
Seed Baskets.
UBS Securities LLC,
also called the Purchaser, has, subject to conditions, agreed to
purchase the Underwritten Shares at the
price of one-tenth (1/10) of an ounce of gold per Share, pursuant to a
distribution agreement between the Sponsor
and the Purchaser.
Total proceeds to the Trust from the sale of the Underwritten Shares will be
ounces
of gold. The public offering price of the Underwritten
Shares will be determined
by reference to, among
other considerations, the price of gold and
the trading prices of the Shares on the NYSE at the time the
Underwritten Shares are sold to the public.
The Underwritten Shares could be sold at different prices if such
Underwritten Shares are sold by the
Purchaser at different
times. In connection
with the offering and sale of the Underwritten Shares, the Purchaser
will be paid an aggregate fee by the Sponsor of $
.
The Purchaser may also receive an advisory
fee payable by the Sponsor within one month after the commencement of
trading in Shares (to be paid in the sole
discretion of the Sponsor depending upon the success of the Trust at
such time) in the amount of
$
million for advice provided by the Purchaser in the original
structuring of the Trust. In addition to
such fees, the Purchaser may receive commissions/fees from
investors through their
commission/fee-based brokerage accounts, in
amounts between
$ and
$ .
The Sponsor estimates that the total expenses payable by the Sponsor
in connection with the offering and sale of
the Underwritten
Shares, excluding the fee paid to the
Purchaser,
will be approximately
$ .
The Trust will not bear any of such
expenses.
72
Plan of Distribution
The Marketing Agent will assist the
Sponsor in (1) developing a marketing plan for the Trust on an
ongoing basis, (2) prepare marketing
materials regarding the Shares, including the content on the
Trust's website, (3) executing the marketing plan for the Trust,
(4) incorporating gold
into its exchange-traded fund
research, and
(5) licensing
the
"streetTRACKS®"
trademark. Fees will
be paid to the Marketing Agent by the
Trustee from the assets of the Trust as
compensation for services preformed pursuant to the Marketing Agent
Agreement.
The Sponsor has agreed to
indemnify the
Purchaser,
the Marketing Agent and the Authorized
Participants against certain liabilities,
including liabilities under the Securities
Act,
and to contribute to
payments that the
Purchaser,
the Marketing Agent and the Authorized
Participants may be required to make in
respect of those
liabilities.
The
Trustee has
agreed to reimburse
the
Purchaser,
the Marketing Agent and the Authorized
Participants, solely from and to the extent
of the Trust's assets, for indemnification and contribution
amounts due from the Sponsor in respect of
such liabilities to the extent the Sponsor has not paid such amounts
when due.
See
"Risk
Factors
— The Trust's obligation to
reimburse the
Purchaser,
the Marketing Agent
and the Authorized Participants for certain
liabilities
. . ."
In addition, the WGC has agreed to indemnify
the
Purchaser
and the Marketing Agent
against certain
liabilities.
In connection with this offering, the
Purchaser
may engage in activities that stabilize, maintain or
otherwise affect the price of the Shares,
including:
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•
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stabilizing
transactions;
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•
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purchases to cover positions
created by short sales.
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Stabilizing transactions consist of bids or purchases for the
purpose of preventing or retarding a decline
in the market price of the Shares while this offering
is in progress. These transactions may also include
making short sales of Shares, which involves the sale
by the
Purchaser
of a greater number of Shares than they are
required to purchase in this offering, and purchasing Shares on the
open market to cover positions created by
short sales.
The
Purchaser
and its affiliates have provided, are providing and may provide certain
financial advisory and investment banking
services to the Sponsor, for which they have received and may
receive customary
fees.
The
Purchaser
will not act as an Authorized Participant with respect to the
Underwritten
Shares, and its activities with respect to
the Underwritten
Shares will be distinct from those of an
Authorized Participant. The
Purchaser
expects
to
become
an Authorized
Participant.
The
Purchaser
has represented, warranted and agreed
that:
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the offering of the Shares
will be made on a private placement basis in Canada
in the
provinces of
British Columbia,
Ontario,
Alberta, Manitoba, Saskatchewan, Prince
Edward Island and
Quebec
(1)
through the
Purchaser
or its affiliates who are permitted under
applicable securities laws or available exemptions to offer and sell
the Shares in Canada;
(2)
solely to purchasers who are entitled under applicable
provincial securities laws to purchase the Shares
without the benefit of a prospectus qualified under
those
securities laws; and
(3)
in the case of purchasers in provinces other
than Ontario, without the services of a dealer registered pursuant to
those securities
laws;
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the
offering and sale of Shares in France may not be
made
to the public and will be made only on a
private placement basis (i) through legal entities
authorized pursuant to Articles L. 531-1 and L.
531-2 of the French Monetary and Financial Code
(
Code monétaire et financier
) to (ii) qualified
investors (as defined in Article L. 411-2
of the French Monetary and Financial Code and in Decree no.
98-880 of October 1, 1998) participating in these
transactions only on their own behalf and for their
own account under the terms and conditions defined in
Decree
no.
98-880 dated October 1, 1998. Additionally
the Purchaser has
represented, warranted and agreed that during such placement
it will disclose to such qualified investors that (i)
this prospectus may not be considered or used as a
public offering in the meaning of, and for the purpose
of, Article L. 411-1 of the French Monetary
and Financial Code, (ii) no action has or will be
taken that would allow an
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73
Plan of Distribution
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offering of the shares to
the public in France and no prospectus has been
prepared nor filed, nor will a prospectus be prepared
or filed, in France, to be reviewed and approved by
the French
Autorité des Marchés
Financiers
(AMF) regarding the
transactions or the Shares described in this
prospectus, (iii)
they may participate in these transactions
only on their behalf and for their own account under the terms and
conditions defined in Decree No. 98-880 dated October 1, 1998 and (iv)
the Shares may
only be subsequently offered or sold or otherwise
disposed of, directly or indirectly, to the public in
France only if the terms and conditions provided for
in Articles L. 411-1, L. 411-2, L. 412-1 and L.
621-8 of the Monetary and Financial Code have been
complied
with.
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the
offering and sale of Shares in Switzerland will
be made on the
basis of a non-public offering. This
prospectus does not constitute
an
issuance prospectus according to articles
652a or 1156 of the Swiss Federal Code of
Obligations or a listing prospectus
according to article
32 of the Listing Rules of the Swiss
exchange.
The
Shares may not be offered or distributed on a professional basis in or
from Switzerland and neither this prospectus
nor any other offering material relating to the Shares may
be publicly issued in connection with any
such offer or distribution. The Shares have not been and will
not be approved by any Swiss regulatory
authority. In particular, neither the Shares nor the Trust are or
will be
registered with or
supervised by the Swiss Federal Banking
Commission, and investors may not claim protection under
the Swiss Investment Fund Act;
and
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the Trust is a collective
investment scheme as defined in the Financial Services and Markets Act
2000. The Trust has not been authorized, or
otherwise recognized or approved, by the Financial Services
Authority and, as an unregulated scheme, it accordingly
cannot be promoted in the United Kingdom to
the general public. The
Purchaser has
represented, warranted and agreed that it will promote
the Trust in the United Kingdom in accordance with
applicable law and regulation only to
(1)
persons who are investment professionals (as
defined in Article 14(5) of the Financial Services and Markets
Act 2000 (Promotion of Collective Investment
Schemes) (Exemptions) Order 2001
(CIS
Order));
(2)
persons who are within any of the categories of persons
described in Article 22 of the CIS Order; or
(3)
persons to whom
this
prospectus may otherwise lawfully be
communicated.
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The Shares are
expected to trade on the NYSE under the symbol
"GLD."
74
Legal
Proceedings
The Sponsor, the WGC, the Trust and BNY,
as Trustee of the Trust, have been named as
defendants in a civil lawsuit filed by
plaintiffs Gemini Diversified Holdings LLC and Dan Ascani in the
Supreme Court of the State of New York,
County of New York, on November 6, 2003 (Index
No. 119243/03). The complaint alleges breach of
contract and misappropriation of trade
secrets under the Trade Secrets Act of the State of Georgia, and
seeks compensatory damages in excess of
$450,000, preliminary and permanent injunctive
relief, costs and attorneys fees and other
relief.
The lawsuit is in its
discovery phase.
The Sponsor believes it has good defenses against these
claims.
The Sponsor
and the WGC
have
agreed to indemnify the
Purchaser
and the Marketing Agent
against liabilities arising out of the
complaint.
Legal Matters
The validity of the
Shares will be passed upon for the
Sponsor by Carter Ledyard & Milburn LLP, New
York, New York, who, as
special US tax counsel to
the Trust, will also
render an opinion regarding the material federal income tax
consequences relating to the Shares.
Gibson, Dunn
& Crutcher
LLP,
New York, New York, will opine on the validity of the
Underwritten Shares for
the
Purchaser.
Experts
will
audit the Statement of Financial
Condition of the Trust as of
November
,
2004. We
will
include the Statement of Financial
Condition of the Trust in this prospectus in
reliance on
's
report thereon, given on their authority as experts in accounting and
auditing.
Where You Can Find More
Information
The Sponsor has filed on behalf of the Trust a
registration statement on Form S-1 with the SEC under the
Securities Act. This prospectus does not contain
all of the information set forth in the registration statement
(including the exhibits to the registration statement), parts of which
have been omitted in accordance with the rules and regulations of the
SEC. For further information about the Trust or the Shares, please
refer to the registration statement, which you may inspect, without
charge, at the public reference facilities of the SEC at the below
address or online at www.sec.gov, or obtain at prescribed rates from
the public reference facilities of the SEC at the below address.
Information about the Trust and the Shares can also be obtained
from the Trust's
website.
The internet address of
the Trust's website
will
be
www.streettracksgoldshares.com.
This internet address is only
provided here as a convenience to you to allow you to
access the Trust's website, and the information
contained on or connected to the Trust's
website is not part of this prospectus or the registration
statement of which this prospectus is part.
The Trust is subject
to the informational requirements of the Exchange Act
and the Sponsor,
on behalf of the
Trust,
will file
quarterly and annual
reports and other information with the SEC. The Sponsor will file an
updated prospectus annually for the Trust pursuant to the Securities
Act. The reports and other information can be inspected at
the public reference facilities of the SEC
located at 450 Fifth Street, N.W., Washington, D.C. 20549 and online at
www.sec.gov. You may also obtain copies of such material from the
public reference facilities of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. You may obtain more
information concerning the operation of the public reference facilities
of the SEC by calling the SEC at 1-800-SEC-0330 or visiting
online at www.sec.gov.
75
Report
of Independent
Registered Public Accounting
Firm
[To be furnished by
amendment]
F-1
Statement
of Financial Condition
November
, 2004
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Assets
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Investment
in
gold
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$
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Total
assets
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Liabilities
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Total
liabilities
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—
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Commitments and
Contingencies
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—
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Temporary
Shareholders'
Equity:
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Shares
at redemption value to investors (issued and outstanding [Date of
Formation]; unlimited authorized: no par
value)
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$
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Total
Liabilities
and Temporary Shareholders'
Equity
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$
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See Notes to the Financial
Statement.
F-2
Notes
to the Financial Statement
At
November
, 2004
1 ORGANIZATION
The streetTRACKS
®
Gold
Trust (the "Trust") is an investment trust
formed on November
, 2004 under New York law pursuant to a trust
indenture. The Trust holds gold and is expected from time to time to
issue Shares (in minimum
denominations of 100,000, also referred to as
"Baskets") in exchange for deposits of gold
and to distribute gold in connection with redemption of Baskets. The
investment objective of the Trust is for the Shares to reflect the
performance of the price of gold bullion, less the Trust's
expenses.
The Trustee will at the direction of the Sponsor or in
its own discretion sell the Trust's gold as necessary to pay the
Trust's expenses. When selling gold to pay expenses, the Trustee
will endeavor to sell the smallest amounts of gold needed to pay
expenses in order to minimize the Trust's holdings of assets
other than gold. Unless otherwise directed by the Sponsor, when selling
gold the Trustee will endeavor to sell at the price established by the
London PM Fix. The Trustee will place orders with dealers (which may
include the Custodian) through which the Trustee expects to receive the
most favorable price and execution of orders. The Custodian may be the
purchaser of such gold only if the sale transaction is made at the next
London gold price fix (either AM or PM) following the sale order.
Neither the Trustee nor the Sponsor is liable for depreciation or loss
incurred by reason of any sale.
On the date of the formation of
the Trust, the Custodian received 30,000 ounces of unallocated gold on
behalf of the Trust in exchange for the issuance of three (3) Baskets
(each Basket is equivalent to 100,000 Shares). The per
Share price for each Basket was equal to one-tenth
( 1/10) of an ounce of
gold. The value of the gold
deposited with the Trust has been based on a price for an ounce of gold
of $ . This price is
the price for an ounce of gold as set by the London PM Fix on the date
of the formation of the
Trust.
The fiscal
year end of the Trust is September
30.
2 SIGNIFICANT
ACCOUNTING POLICIES
The preparation of financial statements in
accordance with accounting principles generally accepted in the United
States requires those responsible for preparing financial statements to
make estimates and assumptions that affect the reported amounts and
disclosures. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by
the Trust.
2.1 Valuation of Gold
Gold acquired, or disposed of, by the Trust will be recorded
at average cost. Gold will
be valued at
the lower of cost or
market.
2.2 Creations
& Redemptions of Shares
The Trust will create and redeem
Shares from time to time on a continuous basis, but only in one or more
Baskets (a Basket equals a block of 100,000 Shares). The creation and
redemption of Baskets will only be made in exchange for the delivery to
the Trust or the distribution by the Trust of the amount of gold and
any cash represented by the Baskets being created or redeemed, the
amount of which will be based on the combined net asset value of the
number of Shares included in the Baskets being created or redeemed
determined on the day the order to create or redeem Baskets is properly
received.
As
the Shares of the Trust are redeemable
by
Authorized Participants only in Baskets,
the Trust has classified the Shares as
Temporary Shareholders' Equity on the Statement of Financial
Condition. The Trust records the redemption value, which represents its
maximum obligation, as Temporary Shareholders' Equity with
the difference from historical cost as
an offsetting amount to Retained Earnings.
At
, 2004,
there are no Shares whose redemption value exceeds
their
historical value.
F-3
Changes in the
shares at
, 2004
are as
follows:
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|
Opening
balance
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|
|
—
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|
|
Creations
|
|
|
|
|
|
Redemptions
|
|
|
—
|
|
|
Balance at
,
2004
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|
|
|
|
|
|
The typical settlement period for Shares is
three
business days. In the event of a trade date
at period end, where a settlement is pending, a respective accounts
receivable and/or payable will be
recorded.
2.3 Organization
Costs
The costs of the Trust's
organization and the initial offering of the Shares, estimated at
$9.45 million to
$10.45 million, will be
borne directly by the Sponsor.
2.4 Income
Taxes
The Trust will be classified as a
"grantor trust" for US federal income tax
purposes. As a result, the Trust itself will not be subject to US
federal income tax. Instead, the Trust's income and expenses will
"flow through" to the Shareholders, and the
Trustee will report the Trust's income, gains, losses and
deductions to the Internal Revenue Service on that
basis. At
, 2004, no amounts had
"flowed through" to the
Shareholders.
3 Investment
in Gold
The
following represents the changes in ounces of gold
and the respective
value at
,
2004
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|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
in
ounces
|
|
Amount
in US$
|
|
Opening balance
|
|
|
—
|
|
|
|
—
|
|
|
Creations
|
|
|
|
|
|
|
|
|
|
Redemption
|
|
|
—
|
|
|
|
—
|
|
|
Sales of
Gold
|
|
|
—
|
|
|
|
—
|
|
|
Balance as of
,
2004
|
|
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|
|
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|
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|
4 RELATED
PARTIES - SPONSOR, TRUSTEE, CUSTODIAN AND MARKETING AGENT FEES
Fees will be paid to the Sponsor as compensation for services
performed under the Trust Indenture and for services performed in
connection with maintaining the Trust's website and marketing the
Shares. The Sponsor's fee is payable monthly in arrears and is
accrued daily at an annual rate equal to 0.15% of the ANAV of
the Trust, subject to reduction as described below. The Sponsor will
receive reimbursement from the Trust for all of its disbursements and
expenses incurred in connection with the Trust.
Fees will be
paid to the Trustee as compensation for services performed under the
Trust Indenture. The Trustee's fee is payable monthly in arrears
and is accrued daily at an annual rate equal to 0.02% of the
ANAV of the Trust, subject to a minimum fee of $500,000 and a maximum
fee of $2 million per year. The Trustee's fee is subject to
modification as determined by the Trustee and the Sponsor in good faith
to account for significant changes in the Trust's administration
or the Trustee's duties. The Trustee will charge the Trust for
its expenses and disbursements incurred in connection with the Trust
(including the expenses of the Custodian paid by the Trustee),
exclusive of fees of agents for services to be performed by the
Trustee, and for any extraordinary services performed by the Trustee
for the Trust.
Affiliates of the Trustee may from time to time
act as Authorized Participants or purchase or sell gold or Shares for
their own account, as agent for their customers and for accounts over
which they exercise investment discretion.
Fees are paid to the
Custodian under the Allocated Bullion Account Agreement as compensation
for its custody services. Under the Allocated Bullion Account
Agreement, the Custodian is entitled to a fee that is accrued daily at
an annual rate equal to 0.10% of the average daily aggregate
value of the gold held in the Trust's allocated gold account
(Trust Allocated Account) and the Trust's unallocated gold
account
F-4
(Trust Unallocated Account), payable in
quarterly installments in arrears. The Custodian does not receive a fee
under the Unallocated Bullion Account Agreement.
The Custodian
and its affiliates may from time to time act as Authorized Participants
or purchase or sell gold or Shares for their own account, as agent for
their customers and for accounts over which they exercise investment
discretion.
Fees will be paid to the Marketing Agent by the
Trustee from the assets of the Trust as compensation for services
performed pursuant to the agreement among the Sponsor, the Trustee on
behalf of the Trust and the Marketing Agent (Marketing Agent
Agreement). The Marketing Agent's fee is payable monthly in
arrears and is accrued daily at an annual rate equal to 0.15% of
the ANAV of the Trust, subject to reduction as described below.
The Marketing Agent and its affiliates may from time to time act as
Authorized Participants or purchase or sell gold or Shares for their
own account, as agent for their customers and for accounts over which
they exercise investment
discretion.
For seven years
from the date of the Trust Indenture or until the earlier termination
of the Marketing Agent Agreement, if at the end of any month during
this period the estimated ordinary expenses of the Trust exceed an
amount equal to 0.40% per year of the daily ANAV of the Trust
for such month, the fees payable to the Sponsor and the Marketing Agent
from the assets of the Trust for such month will be reduced by the
amount of such excess in equal shares up to the amount of their fees.
Investors should be aware that if the gross value of the Trust's
assets is less than approximately $388 million, the ordinary expenses
of the Trust will be accrued at a rate greater than 0.40% per
year of the daily ANAV of the Trust, even after the Sponsor and the
Marketing Agent have completely reduced their combined fees of
0.30% per year of the daily ANAV of the Trust. This amount is
based on the estimated ordinary expenses of the Trust described in
"Business of the Trust — Trust
Expenses" and may be higher if the Trust's actual
ordinary expenses exceed those estimates. Additionally, if the Trust
incurs unforeseen expenses that cause the total ordinary expenses of
the Trust to exceed 0.70% per year of the daily ANAV of the
Trust, the ordinary expenses will accrue at a rate greater than
0.40% per year of the daily ANAV of the Trust, even after the
Sponsor and the Marketing Agent have completely reduced their combined
fees of 0.30% per year of the daily ANAV of the
Trust.
Upon the end of the seven year period or the earlier
termination of the Marketing Agent Agreement, the fee reduction will
expire and the estimated ordinary expenses of the Trust which are
payable from the assets of the Trust each month may be more than they
would have been during the period when the fee reduction is in effect,
thus reducing the NAV of the Trust more rapidly than if the fee
reduction was in effect and adversely affecting the value of the
Shares.
At the date of formation of the Trust, there
were no amounts payable to related
parties.
F-5
PART
II—INFORMATION NOT REQUIRED IN PROSPECTUS
TABLE OF CONTENTS
Item 13. Other
Expenses of Issuance and Distribution.*
The expenses expected to be incurred in connection with the issuance
and distribution of the securities being registered, other than
underwriting compensation, are as set forth below. Except for the
registration fee payable to the Securities and Exchange
Commission, which is
included
in the "Registration fees" section
below, all such expenses are estimated:
|
|
|
|
|
|
|
|
|
Registration
fees
|
|
$
|
513,742
|
|
|
Printing and engraving expenses
|
|
$
|
425,000
|
|
|
Legal fees and expenses
|
|
$
|
4,000,000
|
|
|
Insurance
|
|
$
|
170,000
|
|
|
Accounting
|
|
$
|
72,000
|
|
|
Miscellaneous
|
|
$
|
550,000
|
|
|
Total
|
|
$
|
5,730,742
|
|
|
|
|
|
|
|
*
|
Subject
to revision upon
completion of the
offering.
|
Item
14. Indemnification of Directors and Officers.
Section
18-108 of the Delaware Limited Liability Company Act provides that a
limited liability company may indemnify and hold harmless any members,
managers or other persons against any and all claims and demands
whatsoever, subject to any standards and restrictions set forth in the
limited liability company agreement of the limited liability
company.
Section 18 of the Sponsor's
Amended and Restated Limited Liability
Company Agreement provides that, to the fullest extent permitted by
applicable law, a member or officer of the Sponsor shall be entitled to
indemnification from the Sponsor for any loss, damage or claim incurred
by the member or officer for any act or omission performed or omitted
by the member or officer in good faith on behalf of the Sponsor and in
a manner reasonably believed to be within the scope of the authority
conferred on the member or officer by the Sponsor's
Amended and Restated Limited Liability
Company Agreement, provided, however, that no member or officer shall
be entitled to be indemnified if the loss, damage or claim was due to
the member's or officer's fraud or willful
misconduct. A member's or officer's
reasonably incurred costs and expenses in defending pending or
threatened actions, suits or proceedings will be paid in advance by the
Sponsor
if
the member or officer provides an undertaking to repay the amounts
advanced
if it is ultimately determined that the member or officer is not
entitled to be indemnified by the
Sponsor.
The indemnity and the
advance
of expenses is limited to the
Sponsor's assets, and no member of the Sponsor shall have
personal liability for such indemnity.
Section 7.05 of the Trust
Indenture provides that the Sponsor and its directors,
shareholders, members, officers, employees,
affiliates and subsidiaries shall be indemnified from
the Trust and held harmless against any loss, liability or expense
incurred by an indemnified party without (1) gross negligence, bad
faith, willful misconduct or willful malfeasance on the part of the
indemnified party arising out of or in connection with the performance
of its obligations under the Trust Indenture or any actions taken in
accordance with the provisions of the Trust Indenture or (2) the
indemnified party's reckless disregard of its obligations and
duties under the Trust Indenture. The indemnity shall include payment
from the Trust of the indemnified party's costs and expenses of
defending itself against any claim or liability based on its capacity
as Sponsor under the Trust Indenture.
In addition,
the WGC has entered into separate
indemnification agreements with certain officers of the Sponsor which
require the WGC, among other things, to
indemnify the officers against certain liabilities which may arise by
reason of their status as officers of the Sponsor. The Sponsor or
the WGC also intends to maintain director
and officer liability insurance for the Sponsor, if available on
reasonable terms.
II-1
Item 15. Recent Sales of
Unregistered Securities.
Not applicable.
Item
16. Exhibits and Financial Statement
Schedules.
(a) Exhibits
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|
|
|
Exhibit
Number
|
|
|
|
Description
|
|
1.1
|
|
|
|
|
|
Form of Distribution
Agreement*
|
|
1.2
|
|
|
|
|
|
Form of
Purchaser Reimbursement
Agreement*
|
|
3.1
|
|
|
|
|
|
Certificate of
Formation of World Gold Trust
Services,
LLC*
|
|
3.2
|
|
|
|
|
|
Amended and
Restated Limited Liability Company
Agreement of World Gold Trust Services,
LLC*
|
|
4.1
|
|
|
|
|
|
Form of Trust Indenture
|
|
4.2
|
|
|
|
|
|
Form of Participant
Agreement
|
|
4.3
|
|
|
|
|
|
Form of Sponsor Payment and
Reimbursement Agreement
|
|
5.1
|
|
|
|
|
|
Form of Opinion of Carter
Ledyard & Milburn LLP as
to
legality
|
|
8.1
|
|
|
|
|
|
Form
of Opinion of Carter Ledyard & Milburn
LLP as
to tax
matters*
|
|
10.1
|
|
|
|
|
|
Form of Allocated Bullion Account
Agreement
|
|
10.2
|
|
|
|
|
|
Form of Unallocated Bullion Account
Agreement
|
|
10.3
|
|
|
|
|
|
Form of Participant Unallocated Bullion
Account Agreement (included as Attachment B to the Form
of Participant Agreement
filed
as Exhibit
4.2)
|
|
10.4
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|
|
|
|
|
Form of
Depository
Agreement
|
|
10.5
|
|
|
|
|
|
License
Agreement*
|
|
10.6
|
|
|
|
|
|
Form of
Marketing
Agent
Agreement
|
|
10.7
|
|
|
|
|
|
Form
of World Gold Trust
Services,
LLC Funding
Agreement
|
|
10.8
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|
|
|
|
|
Form of
World Gold Council/World Gold Trust
Services, LLC License
Agreement
|
|
10.9
|
|
|
|
|
|
Form of
Marketing Agent License
Agreement
|
|
10.10
|
|
|
|
|
|
Form of Marketing Agent Reimbursement
Agreement
|
|
23.1
|
|
|
|
|
|
Consent of
Auditors**
|
|
23.2
|
|
|
|
|
|
Consents of
Carter Ledyard & Milburn LLP
are included in
Exhibits
5.1 and
8.1
|
|
24.1
|
|
|
|
|
|
Powers of attorney are included on the
signature page to
the Trust's
registration
statement
filed with the Securities and Exchange Commission on May 13,
2003
|
|
99.1
|
|
|
|
|
|
Code of Ethics of World Gold Trust Services,
LLC
|
|
99.2
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|
|
|
|
|
Form of Opinion of Davenport
Lyons
|
|
|
* Previously
filed.
** To be furnished by
amendment.
(b) Financial
Statement Schedules
Not
applicable.
II-2
Item 17. Undertakings.
The
undersigned Registrant
hereby undertakes:
(1) To file, during any period in which
offers or sales are being made, a post-effective amendment to this
registration statement:
|
|
(i)
|
To include any
prospectus required by section 10(a)(3) of the Securities Act of
1933;
|
|
|
(ii)
|
To reflect in the prospectus any facts or
events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in
the effective registration statement; and
|
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|
(iii)
|
To
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration
statement.
|
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) If applicable,
to provide to the underwriter at the closing specified in
the underwriting agreements certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
(4) That insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to
the foregoing provisions, or otherwise, the
Registrant has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in
the Securities Act of
1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person
of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the
Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by
it is against public policy as expressed in the
Securities Act of 1933 and will be
governed by the final adjudication of such
issue.
II-3
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the
requirements for filing
on Form
S-1 and has duly caused this
amendment to the registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New York, New York, on
November 8,
2004.
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|
|
|
|
|
|
|
|
|
|
|
WORLD
GOLD TRUST SERVICES, LLC
Sponsor of the Equity Gold
Trust
|
|
|
|
By:
|
|
/s/ J. Stuart Thomas
|
|
|
|
|
|
J. Stuart
Thomas
Managing Director
|
|
|
Pursuant
to the requirements of the Securities Act of
1933, this amendment to the
registration statement has been signed by the following
persons in the
capacities*
and on the dates
indicated.
|
|
|
|
|
|
|
Signature
|
|
Capacity
|
|
Date
|
|
|
|
/s/
J. Stuart Thomas
|
|
Managing
Director
(principal
executive
officer)
|
|
November 8 ,
2004
|
|
|
|
J. Stuart
Thomas
|
|
|
|
**
|
|
Chief Financial Officer and
Treasurer
(principal
financial officer and
principal accounting
officer)**
|
|
November 8,
2004
|
|
|
|
James
Lowe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**By:
|
|
/s/ J. Stuart Thomas
|
|
|
|
|
|
J. Stuart Thomas
Attorney-in-fact
|
|
|
|
|
|
|
*
|
The
Registrant is a
trust and the persons are
signing in their capacities as officers of World Gold
Trust Services, LLC, the Sponsor of the
Registrant.
|
II-4
EXHIBIT
INDEX
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
|
|
Description
|
|
1.1
|
|
|
|
|
|
Form of Distribution
Agreement*
|
|
1.2
|
|
|
|
|
|
Form of Purchaser
Reimbursement
Agreement*
|
|
3.1
|
|
|
|
|
|
Certificate of Formation of World Gold
Trust Services, LLC*
|
|
3.2
|
|
|
|
|
|
Amended and Restated Limited Liability
Company Agreement of World Gold Trust Services,
LLC*
|
|
4.1
|
|
|
|
|
|
Form of Trust Indenture
|
|
4.2
|
|
|
|
|
|
Form of Participant
Agreement
|
|
4.3
|
|
|
|
|
|
Form of Sponsor Payment and
Reimbursement Agreement
|
|
5.1
|
|
|
|
|
|
Form of Opinion of Carter
Ledyard & Milburn LLP as
to
legality
|
|
8.1
|
|
|
|
|
|
Form of
Opinion of Carter Ledyard &
Milburn LLP as to tax
matters*
|
|
10.1
|
|
|
|
|
|
Form of Allocated Bullion Account
Agreement
|
|
10.2
|
|
|
|
|
|
Form of Unallocated Bullion Account
Agreement
|
|
10.3
|
|
|
|
|
|
Form of Participant Unallocated Bullion
Account Agreement (included as Attachment B to the Form
of Participant Agreement
filed
as Exhibit
4.2)
|
|
10.4
|
|
|
|
|
|
Form of
Depository
Agreement
|
|
10.5
|
|
|
|
|
|
License
Agreement*
|
|
10.6
|
|
|
|
|
|
Form of
Marketing
Agent
Agreement
|
|
10.7
|
|
|
|
|
|
Form
of World Gold Trust
Services,
LLC Funding
Agreement
|
|
10.8
|
|
|
|
|
|
Form of
World Gold Council/World Gold
Trust Services, LLC License
Agreement
|
|
10.9
|
|
|
|
|
|
Form of
Marketing Agent License
Agreement
|
|
10.10
|
|
|
|
|
|
Form of Marketing Agent
Reimbursement
Agreement
|
|
23.1
|
|
|
|
|
|
Consent of
Auditors**
|
|
23.2
|
|
|
|
|
|
Consents of
Carter Ledyard & Milburn LLP
are included in
Exhibits
5.1 and
8.1
|
|
24.1
|
|
|
|
|
|
Powers of attorney are included on the
signature page to the
Trust's
registration
statement
filed with the Securities and Exchange Commission on May 13,
2003
|
|
99.1
|
|
|
|
|
|
Code of Ethics of World Gold
Trust Services,
LLC
|
|
99.2
|
|
|
|
|
|
Form of Opinion of Davenport
Lyons
|
|
|
* Previously
filed.
** To be
furnished by
amendment.
EXHIBIT 4.1
[FORM OF]
TRUST INDENTURE
OF
streetTRACKS(R) GOLD TRUST
DATED AS OF __________, 2004
BETWEEN
WORLD GOLD TRUST SERVICES, LLC,
AS SPONSOR
AND
THE BANK OF NEW YORK,
AS TRUSTEE
EFFECTIVE ________, 2004
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ............................................................................................1
ARTICLE II SCOPE OF TRUSTEE'S DUTIES, INITIAL DEPOSIT AND DECLARATION OF TRUST, SUBSEQUENT CREATIONS AND
ISSUANCE ........................................................................................................11
Section 2.01. Scope of Trustee's Duties................................................................11
Section 2.02. Initial Deposit, Declaration of Trust and Issuance of Initial Creation Baskets...........14
Section 2.03. Subsequent Creations and Issuance of Creation Baskets....................................14
Section 2.04. Requirements for Deposits of Gold........................................................17
Section 2.05. Creation Basket Gold Deposit Amount......................................................18
ARTICLE III ADMINISTRATION OF THE TRUST..........................................................................18
Section 3.01. Initial Expense..........................................................................18
Section 3.02. Custody of Gold: Allocated and Unallocated Accounts, Additional Custodians and
Successor Custodians, Duty to Monitor Custodians, Certain Requirements for Custody
Agreements, Duty to Allocate Gold, Trust Assets to be Free of Liens, etc. ...............18
Section 3.03. Cash Account.............................................................................22
Section 3.04. Reserve Account..........................................................................22
Section 3.05. Certain Deductions and Distributions.....................................................23
Section 3.06. Statements and Reports...................................................................24
Section 3.07. Sale of Gold or other Property...........................................................26
Section 3.08. Counsel; Marketing Agent.................................................................26
Section 3.09. Notice to Sponsor........................................................................27
Section 3.10. Book-Entry-Only System, Global Security..................................................27
Section 3.11. Trust to be administered as Grantor Trust................................................30
ARTICLE IV EVALUATION OF GOLD....................................................................................30
Section 4.01. Evaluation of Gold.......................................................................30
Section 4.02. Responsibility of the Trustee for Evaluations............................................30
ARTICLE V TRUST EVALUATION AND REDEMPTION OF REDEMPTION BASKETS..................................................31
Section 5.01. Trust Evaluation.........................................................................31
Section 5.02. Redemption of Redemption Baskets.........................................................31
Section 5.03. Other Redemption Procedures..............................................................33
ARTICLE VI TRANSFER OF streetTRACKS(R) GOLD SHARES...............................................................33
Section 6.01. Transfer of streetTRACKS(R) Gold Shares..................................................33
ARTICLE VII SPONSOR .............................................................................................35
Section 7.01. Responsibility and Duties................................................................35
Section 7.02. Certain Matters Regarding Successor Sponsor..............................................35
Section 7.03. Resignation of Sponsor; Successors.......................................................35
i
Section 7.04. Compensation of the Sponsor..............................................................36
Section 7.05. Liability of Sponsor and Indemnification.................................................36
ARTICLE VIII TRUSTEE ............................................................................................37
Section 8.01. General Definition of Trustee's Rights, Duties and Responsibilities......................37
Section 8.02. Books, Records and Reports; Audit........................................................42
Section 8.03. Agreement on File........................................................................44
Section 8.04. Compensation of Trustee..................................................................44
Section 8.05. Indemnification of Trustee...............................................................44
Section 8.06. Resignation, Discharge or Removal of Trustee; Successors.................................45
Section 8.07. Qualifications of Trustee................................................................47
ARTICLE IX TERMINATION ..........................................................................................47
Section 9.01. Procedure Upon Termination...............................................................47
Section 9.02. Moneys to Be Held Without Interest to Beneficial Owners..................................49
Section 9.03. Dissolution of Sponsor Not to Terminate Trust............................................50
ARTICLE X MISCELLANEOUS PROVISIONS...............................................................................50
Section 10.01. Amendment and Waiver.....................................................................50
Section 10.02. Registration (Initial and Continuing) of streetTRACKS(R) Gold Shares;
Certain Securities Law Filings ..........................................................51
Section 10.03. License Agreement with the Licensor......................................................51
Section 10.04. Right of Sponsor to Direct Trustee to Declare a Split of street TRACKS(R) Gold Shares....51
Section 10.05. Indemnification of Underwriter and Initial Marketing Agent...............................51
Section 10.06. Reduction in Fees of Sponsor and Initial Marketing Agent.................................52
Section 10.07. Certain Matters Relating to Beneficial Owners............................................53
Section 10.08. Prospectus Delivery......................................................................54
Section 10.09. New York Law to Govern...................................................................54
Section 10.10. Consent to Jurisdiction..................................................................54
Section 10.11. Merger...................................................................................54
Section 10.12. Notices..................................................................................54
Section 10.13. Severability.............................................................................55
Section 10.14. Headings.................................................................................55
Section 10.15. Counterparts.............................................................................55
ii
TRUST INDENTURE
OF
streetTRACKS(R) GOLD TRUST
Effective _________, 2004
This Trust Indenture, dated as of _________, 2004, between World Gold
Trust Services, LLC, as Sponsor, and The Bank of New York, as Trustee,
WITNESSETH, THAT:
WHEREAS the Sponsor desires to establish a trust, to be known as "
streetTRACKS(R) GOLD TRUST" (the "Trust"), pursuant to the laws of the State of
New York; and
WHEREAS the Sponsor desires to establish the terms on which deposits of
gold may be held IN TRUST against which the Trustee, not in its individual
capacity but solely as Trustee on behalf of the Trust, will issue
streetTRACKS(R) Gold Shares (as hereinafter defined) evidencing fractional
undivided interests in the Trust; and
WHEREAS the Sponsor desires to provide for other terms and conditions
upon which the Trust shall be established and administered as hereinafter
provided;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Sponsor and the Trustee hereby agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Additional Custodian.
A custodian in addition to the Initial Custodian or a Successor
Custodian, appointed pursuant to Section 3.02, and serving from time to
time under one or more Custody Agreements other than the Allocated
Bullion Account Agreement and the Unallocated Bullion Account
Agreement.
Adjusted Net Asset Value.
The value of the assets of the Trust less certain liabilities as
specified in Section 5.01.
1
Agreement.
This Trust Indenture and all amendments and supplements hereto.
Allocated Bullion Account Agreement.
Shall mean that certain Allocated Bullion Account Agreement entered
into on or about the date of this Agreement between the Trustee and the
Initial Custodian, substantially in the form of Exhibit A annexed
hereto.
Authorized Officer.
With respect to the Sponsor, shall mean the President, any Managing
Director, any Vice President, any Secretary or any other person or category of
persons named in the resolution(s) authorizing the Sponsor to establish the
Trust or authorizing the Trustee to perform its duties under this Agreement; and
with respect to the Trustee, shall mean a person authorized to sign agreements
of this type in accordance with the By-Laws of the Trustee.
Basket.
A Creation Basket or a Redemption Basket, as the context may require.
Beneficial Owner.
Shall have the meaning assigned to such term in Section 3.10(d).
Book Entry System.
Shall have the meaning assigned to such term in Section 8.01(c).
Business Day.
Any day other than (i) a day on which the Exchange is closed for
regular trading or (ii) if the transaction involves the receipt or
delivery of Gold or confirmation thereof in the United Kingdom or in
some other jurisdiction, (y) a day on which banking institutions in the
United Kingdom or in such other jurisdiction, as the case may be, are
authorized by law to close or a day on which the London gold market is
closed or (z) a day on which banking institutions in the United Kingdom
or in such other jurisdiction, as the case may be, are authorized to be
open for less than a full business day or the London gold market is
open for trading for less than a full business day and transaction
procedures required to be executed or completed before the close of the
business day may not be so executed or completed.
2
Cash Account.
The account created pursuant to Section 3.03.
Cash Deposit.
Shall have the meaning assigned to such term in Section 2.03(c).
Cash Redemption Amount.
Shall have the meaning assigned to such term in Section 5.02(c).
Clearing Agency.
Shall have the meaning assigned to such term in Section 8.01(c).
COMEX.
The Comex Division of the NYMEX.
CPI-U.
The National Consumer Price Index for All Urban Consumers, as published
by the United States Department for Labor, or any successor index.
Creation Basket.
The minimum number of streetTRACKS(R) Gold Shares that may be created
at any one time, which is 100,000.
Creation Basket Deposit.
Shall have the meaning assigned to such term in Section 2.01(4).
Creation Basket Gold Deposit Amount.
10,000 Fine Ounces of Gold, as adjusted by the Trustee pursuant to
Section 2.03(d) and 2.05.
Custodian.
(a) The Initial Custodian, (b) any Additional Custodian, or (c) any
Successor Custodian, provided that the Sponsor and the Trustee are
satisfied that (1) while the Trust receives, holds or delivers Gold as
defined in clause (a) or (b) of the definition of Gold herein, at least
one Custodian shall be a clearing member of LBMA, and (2) while the
Trust receives, holds or delivers Gold as defined in clause (c) of the
definition of Gold herein,
3
at least one Custodian is qualified to serve as a custodian for such
Gold for the market and in the jurisdiction where such Gold is traded.
Custody Accounts.
(a) The Trust Allocated Account and the Trust Unallocated Account
maintained by the Initial Custodian for the Trust, and (b) such other
account maintained by a Custodian for the Trust pursuant to a Custody
Agreement.
Custody Agreements.
Shall mean (i) the Allocated Bullion Account Agreement and the
Unallocated Bullion Account Agreement entered into between the Trustee
and the Initial Custodian, substantially in the forms annexed hereto
as, respectively, Exhibit A (Allocated) and Exhibit B (Unallocated),
and (ii) such other agreements entered into by the Trustee with a
Custodian pursuant to Section 3.02(d) providing for the deposit,
safekeeping or delivery of Gold and related services.
Depositor.
Each Participant that may from time to time deposit a Creation Basket
Deposit with the Trustee.
Depository.
The Depository Trust Company, New York, New York, or such other
depository of streetTRACKS(R) Gold Shares as may be selected by the
Sponsor and Trustee as specified herein.
Depository Agreement.
The Letter of Representations from the Sponsor and the Trustee to the
Depository, dated as of _________________ , as the same may be from
time to time amended or supplemented.
Discretionary Termination Amount.
The amount specified in Section 9.01(a).
Distribution Agreement.
The agreement between the Sponsor and the Underwriter under which the
Underwriter will purchase the number of Creation Baskets specified in
the agreement.
4
Distribution Date.
The date(s) for distribution of amounts from the Cash Account,
established by the Sponsor and Trustee pursuant to Section 3.05(e).
DTC Participants.
Shall have the meaning assigned to such term in Section 3.10(c).
Evaluation Time.
The time on any Business Day when the London P.M. Fix is announced or,
if no London P.M. Fix is made on such Business Day or if the London
P.M. Fix has not been announced by 12:00 p.m. New York time on such
Business Day, 12:00 p.m. New York time.
Exchange.
The New York Stock Exchange or, if the streetTRACKS(R) Gold Shares
shall cease to be listed on The New York Stock Exchange and are listed
on one or more other exchanges, the exchange on which the
streetTRACKS(R) Gold Shares are principally traded, as specified by the
Sponsor.
Fine Ounce.
The measure of fine gold content, calculated by multiplying the gross
weight in Ounces by the fineness, expressed in terms of the fine metal
content in parts per 1000, in accordance with The Good Delivery Rules
for Gold and Silver Bars contained in the Rules promulgated by the
LBMA.
Fiscal Year.
The fiscal year of the Trust which shall initially be the period ending
September 30 of each year. The Sponsor shall have the continuing right
to select an alternate fiscal year.
Global Security.
The global certificate or certificates issued to the Depository as
provided in the Depository Agreement, each of which shall be
substantially in the form attached hereto as Exhibit D.
Gold.
(a) Gold bullion meeting the requirements of London Good Delivery, (b)
credit to an account maintained on an Unallocated Basis representing
the right to receive gold bullion meeting the requirements specified
for London Good Delivery and (c) such other gold
5
bullion as may hereafter be specified by the Sponsor and Trustee from
time to time and disclosed in the Prospectus, provided that any gold
bullion so specified shall have that minimum fineness required for
London Good Delivery of gold. All gold bullion in addition shall (i)
have that minimum fineness required for gold under the COMEX Rules and
(ii) not have numismatic or other value apart from its intrinsic
mineral value, provided that the Trustee shall not be liable to any
person for the consequences of any gold bullion not meeting the minimum
fineness required for gold under the COMEX Rules if those Rules require
a greater minimum fineness than the LBMA Rules and the Trustee shall be
indemnified against any loss, liability or expense in connection with
any claim of liability arising therefrom as provided in Section 8.05.
Good Delivery.
London Good Delivery, or the equivalent rules of such other gold market
where the Sponsor may direct the Trustee in accordance with Section
3.02(b) to arrange through a Custody Agreement for safekeeping of Gold
and services in connection with its deposit and delivery, provided that
any gold bullion permitted to be delivered to a Trust Allocated Account
in such market shall meet the definition of Gold under this Agreement.
HBUS London Branch.
HSBC Bank USA, National Association, acting by its London branch.
Indirect Participants.
Shall have the meaning assigned to such term in Section 3.10(c).
Initial Custodian.
HBUS London Branch.
Initial Date of Deposit.
The date hereof.
Initial Deposit.
The deposit of Gold and cash, if any, made by a Depositor with the
Custodian and Trustee, respectively, on the Initial Date of Deposit
specified in Schedule A hereto.
Initial Marketing Agent.
State Street Global Markets, LLC, a Delaware limited liability company.
6
Internal Revenue Code.
The Internal Revenue Code of 1986, as amended, or any successor
provisions.
LBMA.
The London Bullion Market Association.
London Good Delivery.
Shall have the meaning assigned thereto in The Good Delivery Rules for
Gold and Silver Bars contained in the Rules promulgated by the LBMA.
London P.M. Fix.
The price of an ounce of gold as fixed by the five members of the
London gold fix at or about 3:00 p.m. London, England time.
Marketing Agent
The Initial Marketing Agent and any other entity engaged by the Sponsor
from time to time to assist with the marketing of the streetTRACKS(R)
Gold Shares as provided in Section 3.08.
Marketing Agent Agreement
The agreement entered into by the Sponsor with the Initial Marketing
Agent pursuant to Section 3.08 in the form annexed as Exhibit E-2.
Net Asset Value.
The value of the Trust determined under Section 5.01.
Net Asset Value per streetTRACKS(R) Gold Share.
The value of an streetTRACKS(R) Gold Share determined under Section
5.01.
NYMEX.
The New York Mercantile Exchange.
Order Cut-Off Time.
Close of regular trading on the Exchange, usually 4:00 p.m. New York
time.
Ounce.
7
A troy ounce, equal to 1.0971428 ounces avoirdupois.
Participant.
An entity that (1) is a DTC Participant, (2) maintains a Participant
Unallocated Account and (3) has entered into a Participant Agreement
which, at the relevant time, is in full force and effect.
Participant Agreement.
An agreement among the Trustee, the Sponsor and a Participant,
substantially in the form set forth in Exhibit C hereto, as the same
may be from time to time amended in accordance with its terms.
Participant's Custodian.
Shall mean the custodian with which the Participant Unallocated Account
is maintained, and shall be the same entity that serves as Custodian of
a Custody Account maintained for the Trust on an Unallocated Basis.
Participant Unallocated Account.
Shall mean the account maintained on an Unallocated Basis by the
Participant's Custodian for a Participant.
Prospectus.
The prospectus relating to the Trust as most recently filed with the
SEC pursuant to Rule 424 under the Securities Act of 1933, as amended.
Purchase Order.
Shall have the meaning assigned thereto in Section 2.03(a)(i).
Purchase Order Date.
Shall have the meaning assigned thereto in Section 2.03(a)(i).
Record Date.
The date(s) established by the Sponsor and the Trustee pursuant to
Section 3.05(e) for distributions from the Cash Account.
Redemption Basket.
8
The minimum number of streetTRACKS(R) Gold Shares that may be redeemed
pursuant to Section 5.02, which shall be the number of shares
constituting a Creation Basket on the Redemption Order Date.
Redemption Distribution.
The property delivered in satisfaction of a redemption of a Redemption
Basket as specified in Section 5.02(c).
Redemption Order.
Shall have the meaning assigned thereto in Section 5.02(a).
Redemption Order Date.
Shall have the meaning assigned thereto in Section 5.02(b).
Redemption Settlement Date.
Shall have the meaning assigned thereto in Section 5.02(d).
Rules.
The rules, regulations, practices and customs of the LBMA or the COMEX
as the context shall indicate, or in the case of Gold as defined in
clause (c) of the definition of Gold herein, the rules, regulations,
practices and customs of the market and jurisdiction where such Gold is
traded.
SEC.
The Securities and Exchange Commission.
Sponsor.
World Gold Trust Services, LLC, or any entity into which it may be
merged or with which it may be consolidated, or any entity resulting
from any merger or consolidation to which it shall be a party, or any
entity succeeding to all or substantially all of its business as
sponsor of the Trust, or any successor Sponsor designated as such by
operation of law or any successor Sponsor appointed as herein provided.
Sponsor Indemnified Party.
Shall have the meaning assigned to such term in Section 7.05(b).
streetTRACKS(R) Gold Share.
9
Each unit, having no par value, of fractional undivided beneficial
interest in and ownership of the Trust, which interest initially shall
equal a fraction whose numerator is 1 and whose denominator is the
number of streetTRACKS(R) Gold Shares issued in the Initial Deposit and
specified in Schedule A hereto. The denominator of such fraction shall
be decreased by the number of any streetTRACKS(R) Gold Shares redeemed
as provided in Sections 5.02 and 5.03, and shall be increased by the
number of any streetTRACKS(R) Gold Shares created and issued pursuant
to Section 2.03, and increased or decreased pursuant to any split or
reverse split directed by the Sponsor pursuant to Section 10.04.
Successor Custodian.
A custodian appointed by the Trustee pursuant to Section 3.02 in lieu
of the Initial Custodian or any predecessor Successor Custodian.
Suspended Redemption Order.
Shall have the meaning assigned to such term in Section 5.02(d).
Transaction Fee.
Shall have the meaning assigned to such term in Section 2.03(f).
Trust.
Shall mean the trust created by this Agreement as constituted from
time to time.
Trust Allocated Account.
The Custody Account maintained by the Initial Custodian for the Trust
pursuant to the Allocated Bullion Account Agreement, or if applicable,
another account maintained by another Custodian recording the amount of
gold bullion held for the Trust on an allocated basis, as the case may
be.
Trustee.
The Bank of New York or any entity into which it may be merged or
converted, or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which it
shall be a party, or any entity succeeding to all or substantially all
of its corporate trust business, or any successor Trustee designated as
such by operation of law or appointed as herein provided.
Trustee Indemnified Party.
Shall have the meaning assigned to such term in Section 8.05.
Trust Unallocated Account.
10
The account maintained by the Initial Custodian for the Trust pursuant
to the Unallocated Bullion Account Agreement, or another account
maintained by an Additional Custodian or a Successor Custodian for the
Trust on an Unallocated Basis, as the case may be.
Unallocated Basis.
Shall mean, with respect to a Gold account maintained by a custodian,
that the person in whose name the account is held is entitled to
delivery in accordance with the Rules of an amount of Gold equal to the
amount of Gold standing to the credit of the person's account but has
no ownership interest in any Gold that the custodian owns or holds.
Underwriter.
UBS Securities LLC
Underwriter's Order Date.
Shall have the meaning assigned such term in Section 2.02(c).
Underwriter's Settlement Date.
Shall have the meaning assigned such term in Section 2.02(c).
Other Usages.
The following usages shall apply in interpreting this agreement.
(1) References to a governmental or quasigovernmental agency, authority
or instrumentality or an authorized self-regulatory organization
(including the SEC, COMEX, NYMEX and LBMA) shall also refer to a
regulatory or other body that succeeds to the functions of the agency,
authority or instrumentality.
(2) "A or B" means "A or B or both."
(3) Including" means "including, but not limited to."
ARTICLE II
SCOPE OF TRUSTEE'S DUTIES, INITIAL DEPOSIT AND DECLARATION OF TRUST, SUBSEQUENT
CREATIONS AND ISSUANCE
OF CREATION BASKETS, REQUIREMENTS FOR DELIVERY OF GOLD
SECTION 2.01. SCOPE OF TRUSTEE'S DUTIES.
Subject to the terms and conditions of this Agreement, the Trustee is
hereby authorized to and shall perform the services for the Trust as its Trustee
specified in this Agreement, which services shall include the following:
11
(1) enter into the Custody Agreements with the Initial Custodian and
discharge its duties thereunder;
(2) enter into a Participant Agreement with each Participant and
discharge its responsibilities thereunder;
(3) receive from Participants and process properly submitted Purchase
Orders, as described in Section 2.03(a);
(4) in connection with Purchase Orders, (i) receive Cash Deposits
defined in Section 2.03(c)) from Participants, (ii) notify the
Custodian to expect to receive a transfer into the Trust
Unallocated Account of the Gold that a Participant has instructed
the Custodian to deliver to the Trust Unallocated Account, (iii)
instruct the Custodian to allocate and transfer allocated gold
from the Trust Unallocated Account to the Trust Allocated Account,
and (iv) receive reports relating to the Custody Accounts from the
Custodian indicating, among other things, that the Custodian has
received Gold from Participants for the credit of the Trust and
has allocated such Gold to the Trust Allocated Account, as
described in Section 2.03(a)(iii), 3.02(d) and as provided in the
Custody Agreements under which such Gold is received;
(5) in connection with Purchase Orders, deliver Creation Baskets to
the Depository for the account of the Participant placing a
Purchase Order for which the Trustee has received the
Participant's Cash Deposit, if any, and (through the Custodian)
the Participant's Creation Basket Gold Deposit Amount (the Cash
Deposit and the Creation Basket Gold Deposit Amount together
constituting the "Creation Basket Deposit"), as described in
Section 2.03(b);
(6) receive from Participants and process properly submitted
Redemption Orders, as described in Section 5.02, or as may from
time to time be permitted by Section 5.03;
(7) in connection with Redemption Orders, instruct the Custodian to
transfer Gold (i) from the Trust Allocated Account to the Trust
Unallocated Account and (ii) from the Trust Unallocated Account to
the Participant Unallocated Account of the redeeming Participant,
as described in Section 5.02;
(8) in connection with Redemption Orders, receive from the redeeming
Participant through the Depository, and thereupon cancel,
streetTRACKS(R) Gold Shares corresponding to the Redemption
Baskets to be redeemed, or as may from time to time be permitted
by Section 5.03;
(9) on behalf of the Trust, enter into Custody Agreements as provided
in Section 3.02(a) and (d), monitor the performance of the
Custodian (as described in Section 3.02(c)) and enforce each
Custody Agreement, as described in Section 3.02(c), and give the
instructions to a Custodian provided in Sections 3.02(e) and (g);
12
(10) determine on each Business Day (i) the Creation Basket Gold
Deposit Amount, as described in Sections 2.03 and 2.05, (ii) the
valuation of Gold owned or to be received by the Trust, as
described in Article IV, (iii) the Adjusted Net Asset Value and
Net Asset Value of the Trust and the Net Asset Value per
streetTRACKS(R) Gold Share, as described in Section 5.01;
(11) establish and maintain (i) the Cash Account as described in
Sections 3.03 and 3.05 and (ii) a Reserve Account, as described in
Section 3.04; provide or arrange for custody of the Trust's assets
other than cash and Gold; and record the ownership of the Trust's
assets as provided in Section 3.02(f)
(12) accrue and pay charges of the Trust as described in Section 3.05,
and sell Gold to raise cash to pay such charges pursuant to
Section 3.05(d);
(13) distribute to the Beneficial Owners any excess cash in the Cash
Account, as described in Section 3.05(e);
(14) sell Gold as authorized or directed pursuant to Section 3.07;
(15) notify the Sponsor of notices received and take actions as
provided in Section 3.09;
(16) interact with the Depository as provided in Section 3.10 or as
otherwise required hereunder;
(17) keep proper books of record and account of all transactions of the
Trustee under this Agreement, as described in Section 8.02(a),
maintain a copy of this Agreement available for inspection as
provided in Section 8.03, and furnish to DTC Participants after
the end of each Fiscal Year, an annual report and other
information, as described in Section 3.06;
(18) take the actions authorized under Sections 7.03 and 8.01(s) in the
circumstances described therein affecting the Sponsor's continued
performance under this Agreement;
(19) arrange for the annual audit of the accounts of the Trust and
prepare or cause to be prepared tax and other regulatory filings
as provided in Section 8.02;
(20) communicate as described in Section 3.10 with Beneficial Owners as
may from time to time be required in connection with the
administration of the Trust;
(21) terminate the Trust in accordance with Article IX, as described
therein;
(22) enter into and discharge its duties under the Reimbursement
Agreements identified in Section 10.05; and
13
(23) undertake such actions, in the Trustee's discretion, as the
Trustee shall deem necessary or desirable to protect the Trust and
the rights and interest of the Beneficial Owners in accordance
with this Agreement.
SECTION 2.02. INITIAL DEPOSIT, DECLARATION OF TRUST AND ISSUANCE OF INITIAL
CREATION BASKETS.
(a) The Trustee acknowledges that the Trustee (i) has received from the
Initial Custodian confirmation that the Initial Custodian has credited the
Initial Deposit to the Trust Unallocated Account and has transferred Gold to the
Trust Allocated Account pursuant to Section 4.5 of the Trust Unallocated Account
Agreement, and (ii) has received the Transaction Fee(s) (defined under Section
2.03(f)) payable with respect to the Purchase Order(s) relating to issuance of
the initial Creation Baskets, if any. The Trustee hereby declares that subject
to the terms and conditions of this Agreement, (i) the Initial Deposit, (ii) all
Gold that the Custodian credits to the Trust Allocated Account, the Trust
Unallocated Account and any other Custody Account, in accordance with the
Custody Agreements, and (iii) all other assets owned by the Trust from time to
time, shall be owned by the Trust and the Trustee as trustee thereof, for the
use and benefit of all present and future Beneficial Owners in accordance with
their respective beneficial interests as the same may be constituted from time
to time.
(b) The Trustee hereby confirms that, in exchange for the Initial
Deposit, the Trustee has issued the Global Security to the Depository and that,
upon the registration statement for the sale of the streetTRACKS(R) Gold Shares
being declared effective, the Trustee will direct the Depository to credit to
the Depositor identified in Schedule A the streetTRACKS(R) Gold Shares
constituting the number of Creation Baskets identified in such Schedule A.
(c) The Sponsor shall enter into a Distribution Agreement with the
Underwriter in the form annexed as Exhibit E-1 hereto concurrently with the
execution of this Agreement. Pursuant to the Distribution Agreement, on the
third Business Day following the date on which the Distribution Agreement is
signed (the date on which the Distribution Agreement is signed, the
"Underwriter's Order Date" and the third following Business Day, the
"Underwriter's Settlement Date"), or such later Business Day which the Sponsor
shall specify by written instruction to the Trustee received by the Trustee not
later than the Business Day preceding the Underwriter's Settlement Date, the
Underwriter shall deliver to the Custodian the Creation Basket Deposit, computed
for the Underwriter's Order Date, for the number of Creation Baskets specified
in the Distribution Agreement and, upon notice from the Custodian that the
Custodian has received such Creation Basket Deposit, the Trustee shall issue and
deliver such number of Creation Baskets to the Depository for credit to the
account of the Underwriter.
SECTION 2.03. SUBSEQUENT CREATIONS AND ISSUANCE OF CREATION BASKETS.
(a) After the Initial Deposit, the following procedures, as
supplemented by the more detailed procedures specified in the attachment to the
Participant Agreement, which may be amended from time to time in accordance with
the provisions of the Participant Agreement (and any such amendment will not
constitute an amendment of this Agreement), will govern the Trustee in the
creation and issuance of additional Creation Baskets. Subject to the limitations
14
upon and requirements for issuance of Creation Baskets stated herein and in such
procedures, the number of Creation Baskets which may be issued by the Trust is
unlimited.
(i) On any Business Day, a Participant may submit a request to the
Trustee to create one or more Creation Baskets (such request by a
Participant, a "Purchase Order") in the manner provided in the
Participant Agreement. Purchase Orders must be received by the
Order Cut-Off Time on a Business Day (the "Purchase Order Date").
The Trustee will process Purchase Orders only from Participants
with respect to which the Participant Agreement is in full force
and effect. The Trustee and the Sponsor will each maintain and
make available at their respective offices specified in Section
10.12 during normal business hours a current list of the
Participants with respect to which the Participant Agreement is in
full force and effect. The Sponsor directs the Trustee to deliver
a copy of the Prospectus to each Participant prior to its
execution and delivery of the Participant Agreement.
(ii) Any Purchase Order is subject to rejection by any of the Sponsor
or the Trustee pursuant to Section 2.03(e).
(iii) After accepting a Participant's Purchase Order, the Trustee will
issue and deliver Creation Baskets to fill a Participant's
Purchase Order at or shortly after 9:00 a.m. New York time on the
third Business Day after the Purchase Order Date, but only if by
such time the Trustee has received (A) for its own account, the
Transaction Fee, (B) for the account of the Trust the Cash
Deposit, if any, and (C) notice from the Custodian (which need not
be the Custodian's official report of transactions for such day)
that the Custodian has received for the account of the Trust to
the credit of the Trust Unallocated Account (or other Custody
Account provided for in the relevant Custody Agreement), from the
Participant Unallocated Account (or other account of the
Participant from which Gold may be transferred to the Trust in
accordance with the relevant Custody Agreement) the Creation
Basket Gold Deposit Amount due from the Participant submitting the
Purchase Order.
(b) Upon issuing a Creation Basket pursuant to a Purchase Order of a
Participant, the Trustee will deposit the Creation Basket with the Depository in
accordance with the Depository's customary procedures, for credit to the account
of the Participant that placed the Purchase Order.
(c) The Cash Deposit ("Cash Deposit") shall be an amount of cash equal
to the cash held or receivable by the Trust as of the Purchase Order Date, if
any, less the fees, expenses and other liabilities of the Trust accrued through
the Purchase Order Date, as computed by the Trustee under Section 5.01, divided
by the number of streetTRACKS(R) Gold Shares outstanding immediately before the
Purchase Order Date, and then multiplied by the number of streetTRACKS(R) Gold
Shares to be created pursuant to the Participant's Purchase Order. A negative
Cash Deposit amount will reduce the Creation Basket Gold Deposit Amount pursuant
to Section 2.05. If, notwithstanding the provisions of Section 3.07, the Trust
holds assets other than Gold, cash or cash receivables, no Purchase Orders will
be accepted until such other assets have been sold or otherwise disposed of.
15
(d) The quantity of Gold included in the Creation Basket Gold Deposit
Amount will change as a result of expenses paid and expenses accrued in excess
of cash then held by the Trust, and shall be determined by the Trustee in the
manner specified in Section 2.05. The Trustee's determination of the Creation
Basket Gold Deposit Amount and the amount of the Cash Deposit, if any, required
for each Creation Basket Deposit shall be final and binding upon all persons
interested in the Trust.
(e) The Trustee shall have the absolute right, but shall have no
obligation, to reject any Purchase Order or Creation Basket Deposit (i)
determined by the Trustee not to be in proper form; (ii) that the Sponsor has
determined and advised the Trustee would have adverse tax consequences to the
Trust or to Beneficial Owners; (iii) the acceptance or receipt of which would,
in the opinion of counsel to the Sponsor acceptable to the Trustee, be unlawful;
or (iv) if circumstances outside the control of the Trustee, the Custodian or
the Sponsor make it for all practical purposes not feasible to process creations
of Creation Baskets. Neither the Trustee nor the Sponsor shall be liable to any
person by reason of the rejection of any Purchase Order or Creation Basket
Deposit.
(f) A non-refundable transaction fee will be payable to the Trustee for
its own account in connection with each Purchase Order pursuant to this Section
and in connection with each Redemption Order pursuant to Section 5.02
("Transaction Fee"). The Transaction Fee charged in connection with each such
creation and redemption shall be initially $2,000, but may be changed as
provided in Section 2.03(g). Even though a single Purchase Order or Redemption
Order may relate to multiple Creation Baskets, only a single Transaction Fee
will be due for each Purchase Order or Redemption Order.
(g) The Transaction Fee may subsequently be waived, modified, reduced,
increased or otherwise changed by the Trustee with the consent of the Sponsor,
but will not in any event exceed 0.10% of the value of a Creation Basket at the
time of creation or of a Redemption Basket at the time of redemption, as the
case may be (in each case determined at the Net Asset Value per Share for the
date of the Purchase Order or Redemption Order, respectively). Promptly after
agreeing to and prior to implementing such change, the Sponsor shall cause the
current Prospectus for the Trust to be amended to reflect any such changes in
the Transaction Fee. The Trustee shall notify the Depository of any agreement to
change the Transaction Fee and shall not implement any increase for redemptions
of outstanding streetTRACKS(R) Gold Shares until 30 days after the date of that
notice. The amount of the Transaction Fee in effect at any given time shall be
made available by the Trustee upon request.
(h) Certificates for Creation Baskets will not be issued, other than
the Global Security issued to the Depository. So long as the Depository
Agreement is in effect, Creation Baskets will be issued and redeemed and
streetTRACKS(R) Gold Shares will be transferable solely through the book-entry
systems of the Depository and the DTC Participants and their Indirect
Participants as more fully described in Section 3.10. The Depository may
determine to discontinue providing its service with respect to Creation Baskets
and streetTRACKS(R) Gold Shares by giving notice to the Trustee and the Sponsor
pursuant to and in conformity with the provisions of the Depository Agreement
and discharging its responsibilities with respect thereto under applicable law.
Under such circumstances, the Trustee and the Sponsor shall take action either
to find a replacement for the Depository to perform its functions at a
comparable cost and
16
on terms acceptable to the Trustee and the Sponsor or, if such a replacement is
unavailable, to terminate the Trust.
SECTION 2.04. REQUIREMENTS FOR DEPOSITS OF GOLD.
(a) Except as provided in paragraph (b) of this Section, Gold may be
delivered for deposit to the Trust only by transfer to the Trust Unallocated
Account maintained by the Custodian on behalf of the Trust from a Participant
Unallocated Account pursuant to the procedures specified in the Participant
Agreement. The expense and risk of delivery, ownership and safekeeping of Gold
until such Gold has been received by the Trust shall be borne solely by the
Depositor.
(b) The Trustee shall accept delivery of Gold by such other means as
the Sponsor, from time to time, may determine to be acceptable for the Trust,
provided that the same is disclosed in the Prospectus. If Gold is to be
delivered other than as described in Section 2.04(a), the Sponsor is authorized
to establish such procedures and to appoint such custodians and establish such
custody accounts in addition to those described herein, as the Sponsor
determines to be desirable.
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SECTION 2.05. CREATION BASKET GOLD DEPOSIT AMOUNT.
The Trustee will adjust the quantity of Gold included in the Creation
Basket Gold Deposit Amount as appropriate to reflect sales or other disposition
of Gold for payment of Trust expenses or otherwise and as may be required to
reflect accrued expenses in excess of the value of assets of the Trust other
than Gold, as computed under Section 5.01. In general, in order to effectuate
the foregoing, the Trustee shall first determine the excess (if any) of accrued
expenses and other liabilities over the value of all assets of the Trust other
than Gold, utilizing the Net Asset Value for the date of the adjustment. The
Trustee shall determine the quantity of Gold equal in value to such excess, at
the price of Gold determined under Section 4.01 hereof for such date. The
Trustee shall subtract that number of Fine Ounces of Gold from the total number
of Fine Ounces of Gold then held by the Trust, and divide the resulting Gold
amount by the number of Baskets then outstanding. Fractions of a Fine Ounce of
Gold included in the Creation Basket Gold Deposit Amount smaller than 0.001 of a
Fine Ounce shall be disregarded. The Sponsor intends to publish, or may
designate other persons to publish, on each Business Day, the quantity of Gold
included in the Creation Basket Gold Deposit Amount and the Cash Deposit, if
any. If the Sponsor elects to publish such information, the inability of the
Sponsor or its designee to provide such information for any period of time will
not in itself result in a halt in the trading of streetTRACKS(R) Gold Shares on
the Exchange.
ARTICLE III
ADMINISTRATION OF THE TRUST
SECTION 3.01. INITIAL EXPENSE.
The cost of (i) organizing the Trust and (ii) the initial sale of the
streetTRACKS(R) Gold Shares shall be borne by the Sponsor, provided, however,
that the liability of the Sponsor under this Section 3.01 shall not include any
fees or other expenses incurred in connection with the administration of the
Trust subsequent to the commencement of trading of streetTRACKS(R) Gold Shares
on the Exchange.
SECTION 3.02. CUSTODY OF GOLD: ALLOCATED AND UNALLOCATED ACCOUNTS,
ADDITIONAL CUSTODIANS AND SUCCESSOR CUSTODIANS, DUTY TO MONITOR CUSTODIANS,
CERTAIN REQUIREMENTS FOR CUSTODY AGREEMENTS, DUTY TO ALLOCATE GOLD, TRUST ASSETS
TO BE FREE OF LIENS, ETC.
(a) Concurrently with the execution of this Agreement, the Trustee,
acting on behalf of the Trust, shall enter into Custody Agreements with the
Initial Custodian in the form of the Allocated Bullion Account Agreement,
annexed hereto as Exhibit A, and the Unallocated Bullion Account Agreement,
annexed hereto as Exhibit B. Pursuant to these Custody Agreements, the Initial
Custodian shall maintain for the account of the Trust (i) the Trust Allocated
Account to which the Initial Custodian will credit Gold held for the Trust on an
allocated basis and (ii) the Trust Unallocated Account recording the amount of
Gold owned by the Trust on an Unallocated Basis. Unless the Sponsor otherwise
directs, the Trustee shall maintain only one Trust Unallocated Account for the
Trust at any time. Each other Custody Agreement entered into by the Trustee with
a Custodian on behalf of the Trust shall be in a form suitable for the type of
Gold and the market for which the Custodian shall be providing its
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services. The terms of such other Custody Agreement shall include provisions
substantially similar to those set forth in paragraph (d) of this Section,
unless the Sponsor permits the Trustee in writing to enter into a Custody
Agreement that omits any such provision.
(b) From time to time, the Sponsor may direct the Trustee to employ one
or more other custodians (each, an "Additional Custodian" or a "Successor
Custodian") in addition to or in replacement of the Initial Custodian or any
Successor Custodian or Additional Custodian for the safekeeping of Gold and
services in connection with its deposit and delivery, provided that the Sponsor
may not direct the employment of a Successor Custodian or an Additional
Custodian without the Trustee's consent, if such employment would have a
materially adverse effect on the Trustee's performance of its duties hereunder.
The Trustee may also, with the prior approval of the Sponsor, employ one or more
other Successor Custodians or Additional Custodians selected by the Trustee for
the safekeeping of Gold and services in connection with its deposit and
delivery.
(c) The Trustee shall be responsible for monitoring the performance of
each Custodian and for taking such actions to enforce the obligations of each
Custodian as are necessary to protect the Trust and the rights and interests of
the Beneficial Owners. In the event that the Trustee determines that maintenance
of Gold with a Custodian is not in the best interest of the Beneficial Owners,
the Trustee shall so advise the Sponsor and thereafter take such reasonable
action as the Sponsor shall direct, or if the Sponsor has not given direction
within one Business Day, shall initiate action to remove the Gold from the
custody of the Custodian or take such other action as the Trustee determines
appropriate to safeguard the interests of the Beneficial Owners. The Trustee
shall have no liability for any such action taken at the direction of the
Sponsor or, in the absence of such direction, any action taken by it in good
faith.
(d) Before entering into the Custody Agreements attached hereto as
Exhibits A and B with the Initial Custodian, the Trustee has determined that
these agreements protect the Trust and the rights and interests of the
Beneficial Owners. Before initially placing Gold with an Additional Custodian or
a Successor Custodian, the Trustee shall have determined that the relevant
Custody Agreement and any related custody arrangements satisfy substantially the
following requirements, unless the Sponsor has permitted the Trustee in writing
to enter into the relevant Custody Agreement without satisfaction of one or more
of these requirements:
(i) That Gold held by the Custodian will be held in a vault
maintained under the control of the Custodian, or held by or for
a sub-custodian employed as authorized by the relevant Custody
Agreement.
(ii) That the Custodian shall deliver Gold held on behalf of the Trust
by the Custodian, or by or for any sub-custodian employed by the
Custodian, only to such persons and at such times as specified in
instructions furnished to it by the Trustee in a writing signed
by an authorized person or by authenticated electronic
transmission, or any substantial equivalent, and each Custody
Agreement shall contain an explicit undertaking by the Custodian
to this effect.
(iii) That as of the close the business on any Business Day, the
balance of any Custody Account maintained by a Custodian for the
Trust on an Unallocated Basis shall
19
not exceed the maximum fine weight of the standard measure of
Gold used by the Custodian for Good Delivery in the market in
which it operates, for example, 430 Fine Ounces in the London
market.
(iv) That when the Trustee instructs the Custodian (1) to debit Gold
from a Trust Allocated Account maintained by the Custodian for
transfer to a Custody Account maintained by the Custodian for the
Trust on an Unallocated Basis and (2) to execute the instruction
on the same Business Day as and in connection with one or more
instructions the Trustee gives to the Custodian, the Custodian
will use commercially reasonable efforts to execute the
instructions in a manner that minimizes the time the Gold to be
debited from the Trust Allocated Account stands to the credit of
the Custody Account maintained for the Trust by the Custodian on
an Unallocated Basis.
(v) That Gold transferred from a Custody Account of the Trust
maintained on an Unallocated Basis (including any transfers for
deposit to a Trust Allocated Account) or upon transfer from a
Trust Allocated Account for credit to the Custody Account of the
Trust maintained on an Unallocated Basis will be in a form which
complies with the relevant requirements for Good Delivery and
that, if the weight and fineness of Gold delivered by the
Custodian upon transfer from the Custody Account of the Trust
maintained on an Unallocated Basis is determined to be different
from that reported to the Trustee by the Custodian, the Custodian
will make appropriate credits or debits to the Custody Accounts
maintained by the Custodian for the Trust such that the total
Fine Ounces credited by the Custodian to Custody Accounts of the
Trust equal the amount reported to the Trustee.
(vi) That, in the event Gold withdrawn from a Custody Account of the
Trust maintained on an Unallocated Basis does not comply with the
relevant requirements for Good Delivery or is not of the weight
and fineness represented in the Custodian's account records,
recovery in accordance with the Custody Agreements shall not be
barred by delay in asserting a claim because of the failure to
discover such loss or damage, regardless of whether the loss or
damage could or should have been discovered.
(vii) That (A) the Custodian will be obligated to use reasonable care
and will be responsible to the Trust for any loss resulting
directly from its negligence, fraud or willful misconduct, (B)
the Custodian will maintain, at no cost to the Trust, appropriate
insurance in regard to its Gold and custody business, and (C)
that the Custodian will periodically allow the Trustee to review
such insurance from time to time upon reasonable prior notice and
will provide the Sponsor information regarding such insurance
required by the Sponsor in connection with the maintenance of the
registration of the streetTRACKS(R) Gold Shares, in each case
subject to appropriate confidentiality agreements.
(viii) That the Trust's assets held by the Custodian or by or for any
sub-custodian employed by the Custodian will not be subject to
any right, charge, security
20
interest, lien or claim of any kind except (1) a claim of payment
by the Custodian or any sub-custodian for the safe custody or
administration of the Trust's assets or, (2) in the case of a
Custody Account maintained by a Custodian on an Unallocated
Basis, liens or rights in favor of creditors of such Custodian
arising under bankruptcy, insolvency or similar laws, and the
Custodian shall provide a representation to the foregoing effect.
(ix) That the beneficial ownership of the Gold will be freely
transferable without the payment of money or value other than for
safe custody or administration.
(x) That the Trust's independent public accountants will be given
access to records identifying assets of the Trust and access to
the Trust's assets as required for confirmation of the contents
of those records.
(xi) That the Trustee will receive (1) for each Business Day by no
later than the following Business Day, information showing the
movement of Gold into and out of the Custody Accounts maintained
by the Custodian for the Trust, in sufficient detail to identify
each transaction, the Business Day on which it occurred and
information to allow the Trustee to determine the Custodian's
compliance with the requirements set forth in clause (iii) of
this paragraph (d) relating to the intended maximum amount of
Gold to be held in a Custody Account maintained by the Custodian
for the Trust on an Unallocated Basis and (2) periodic reports
(not less than quarterly) with respect to the safekeeping of the
Trust's assets which shall identify separately the assets held by
the Custodian and the assets held by each sub-custodian used by
the Custodian and the assets held by each other party holding
assets of the Trust on behalf of the Custodian or a
sub-custodian.
(xii) That the Custodian 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 such State in connection
with any action, suit or other proceeding arising out of or
relating to the custody agreement or any action taken or omitted
thereunder, and waives any claim of forum non conveniens and any
objections as to laying of venue, and 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 the Custodian at its address for purposes of notices
specified in the relevant Custody Agreement.
(e) When directing transfers to and from the Custody Accounts of the
Trust, the Trustee will instruct the Custodian (which instruction may be
provided by the relevant Custody Agreement) to take the actions described in
clauses (iii) an (iv) of the preceding paragraph (d) of this Section 3.02.
(f) The Trustee shall hold and record the ownership of the Trust's
assets in such manner that they will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the Trustee or its
creditors, other than a claim for payment of services, advances, indemnities and
expenses by the Trustee in providing services as trustee or, in the case of cash
deposits, liens or rights in favor of creditors of the Trustee arising under
bankruptcy,
21
insolvency or similar laws and the Trustee, will, as requested by the Sponsor
and at the Trustee's expense, provide an opinion of counsel, satisfactory to the
Sponsor, to the foregoing effect with respect to assets held by the Trustee.
(g) The Trustee shall instruct each Custodian to transfer from the
Custody Accounts maintained by the Custodian amounts of Gold held as an asset of
the Trust only (i) to another Custody Account, (ii) to effect a sale of Gold in
accordance with the applicable provisions of this Agreement, (iii) to effect a
redemption of streetTRACKS(R) Gold Shares in accordance with the provisions of
Article V hereof, (iv) upon termination of the Trust as provided in Section 9.01
hereof or (v) otherwise as directed by a governmental or regulatory body having
authority to make such direction.
SECTION 3.03. CASH ACCOUNT.
The Trustee shall open and maintain a separate non-interest bearing
account with the Trustee or such other banking institution specified by the
Sponsor, or if the Sponsor fails so to specify, as selected by the Trustee, in
the name, and for the benefit, of the Trust, subject only to draft or order by
the Trustee acting pursuant to the terms of this Agreement, and shall hold in
such account all cash received by it from or for the account of the Trust. Such
account shall be known as the "Cash Account." On each Business Day, the Trustee
shall notify the Sponsor, in writing, of the balance of the Cash Account.
SECTION 3.04. RESERVE ACCOUNT.
The Trustee shall open and maintain a separate non-interest bearing
account with the Trustee or such other banking institution specified by the
Sponsor, or if the Sponsor fails so to specify, as selected by the Trustee, in
the name, and for the benefit, of the Trust, subject only to draft or order by
the Trustee acting pursuant to the terms of this Agreement, and shall hold in
such account all cash which it has credited to such account from the Cash
Account to reflect the reserves for taxes or other governmental charges and
other contingent liabilities payable out of the Trust that the Trustee has
established from time to time as required by generally accepted accounting
principles. Such account shall be known as the "Reserve Account." The Trustee
shall not be required to transmit to the Depository for distribution to
Beneficial Owners any of the amounts held in such reserves; provided, however,
that if the Trustee, in its sole discretion, determines that such amounts are no
longer necessary for payment of any applicable taxes or other governmental
charges, then it shall promptly deposit such amounts in the Cash Account or, if
the Trust shall have terminated or shall be in the process of termination, the
Trustee shall transfer such amounts to the Depository for distribution to
Beneficial Owners such Beneficial Owners' interest in the amounts previously
reserved in accordance with Section 9.01.
22
SECTION 3.05. CERTAIN DEDUCTIONS AND DISTRIBUTIONS.
(a) Subject to paragraph (c) of this Section, monthly, in arrears, the
Trustee shall deduct from moneys held in the Cash Account and pay to itself
individually the amounts that it is at the time entitled to receive pursuant to
Section 8.04 on account of its services performed. The Trustee shall charge the
Cash Account its disbursements for payment of other expenses at such times as
the Trustee determines convenient in its administration of the Trust.
(b) The following charges are or may be accrued and paid by the Trust:
(1) Trustee's fees as set forth in Section 8.04 and Sponsor's fees as
set forth in Section 7.04;
(2) expenses of custody, deposit or delivery of the Gold (exclusive of
any expenses borne by a Depositor or redeeming Participant as
provided herein or in the Participant Agreement), and
disbursements charged by and indemnification due any Custodian;
(3) fees of the Trustee for extraordinary services performed under
this Agreement;
(4) taxes, as provided herein, and various other governmental charges;
(5) any taxes, fees and charges payable by the Trustee with respect to
Creation Baskets or Redemption Baskets;
(6) expenses and costs of any action taken by a Trustee Indemnified
Party or a Sponsor Indemnified Party to protect the Trust and the
rights and interests of Beneficial Owners;
(7) indemnification of the Trustee or the Sponsor as provided in this
Agreement, including, without limitation, in Sections 7.05 and
8.05;
(8) expenses incurred in contacting Beneficial Owners in the manner
described in Section 3.10;
(9) legal and auditing expenses, and the compensation paid to agents
employed by the Trustee as permitted hereunder;
(10) fees paid to the Depository for custody of streetTRACKS(R) Gold
Shares;
(11) federal and state annual fees in keeping the registration of
streetTRACKS(R) Gold Shares on a current basis pursuant to Section
10.02 for the issuance of Creation Baskets;
(12) expenses of the Sponsor relating to the printing and distribution
of marketing materials describing the Trust and streetTRACKS(R)
Gold Shares (including
23
but not limited to, associated legal, consulting, advertising and
marketing costs and other out-of-pocket expenses);
(13) fees and expenses of the Marketing Agent;
(14) reimbursement of the Underwriter and the Marketing Agent in
respect of unpaid indemnification obligations of the Sponsor as
provided in Section 10.05; and
(15) stationery, postage and all other out-of-pocket expenses of the
Trust not otherwise stated above incurred by it, the Sponsor or
the Custodian or any Additional Custodian or Successor Custodian
pursuant to actions permitted or required under this Agreement.
(c) The Trustee shall, when directed by the Sponsor, and, in the
absence of such direction, may, in its discretion, sell Gold in such quantity
and at such times as may be necessary to permit payment of expenses hereunder
including any of the expenses enumerated in subsection (b) above. The Trustee is
conclusively authorized to sell Gold at such times and in the smallest amounts
required to permit payment of expenses as they come due, it being the intention
to minimize the Trust's holdings of assets other than Gold. Neither the Trustee
nor the Sponsor shall have any liability for loss or depreciation resulting from
sales of Gold so made. Further, the Trustee shall not be liable or responsible
in any way for depreciation or loss incurred by reason of any sale made pursuant
the Sponsor's direction.
(d) If at any time and from time to time the Trustee and Sponsor
determine that the balance on hand in the Cash Account exceeds the anticipated
expenses of the Trust during the following 12 months, they shall direct that
such excess be distributed and shall establish such Record and Distribution
Dates for such distribution as they deem appropriate. In calculating the amount
of a distribution, fractions of less than $0.01 will be ignored. Notwithstanding
the foregoing, no distribution shall be made if the amount distributable will be
less than $0.01 per streetTRACKS(R) Gold Share outstanding. The Trustee shall
make distributions under this paragraph solely to the Depository as the
registered holder of all streetTRACKS(R) Gold Shares in accordance with Section
3.10(g) and the Trustee shall have no liability to any person in respect of any
distribution so made.
(e) The Trustee will charge no fee and will assume the expense of
operation (other than extraordinary expenses) of the Trust accrued through the
day the streetTRACKS(R) Gold Shares commence trading on the Exchange. The
Trustee and the Sponsor have entered into a separate agreement relating to
payment by the Sponsor of compensation to the Trustee for the period described
in the preceding sentence. If the Sponsor fails to pay the Trustee pursuant to
such compensation agreement, the Trustee may recover the unpaid amounts from the
assets of the Trust, and may sell Gold as necessary to provide funds therefor,
provided, however, that, to the extent any such unpaid amounts are paid from the
Trust, the Trust shall succeed to the rights of the Trustee against the Sponsor
under the compensation agreement.
SECTION 3.06. STATEMENTS AND REPORTS.
24
After the end of each Fiscal Year, the Sponsor shall cause to be
prepared an annual report for the Trust containing financial statements prepared
by the Trustee and audited by independent accountants designated by the Sponsor.
The annual report shall be in such form and contain such information as shall be
required by applicable laws, rules and regulations and may contain such
additional information which the Sponsor determines shall be included. The
annual report shall be filed with the SEC and such other regulatory agencies,
and distributed to such persons and in such manner, as shall be required by
applicable laws, rules and regulations. The cost of the preparation and
distribution of the annual report shall be an expense of the Trust.
25
SECTION 3.07. SALE OF GOLD OR OTHER PROPERTY.
In addition to selling Gold in accordance with Section 3.05(c), the Trustee
shall sell Gold whenever any one or more of the following conditions exist:
(a) the Sponsor has notified the Trustee that such sale is required by
applicable law or regulation; or
(b) the Trust is to be terminated and its assets liquidated in
accordance with Section 9.01.
Any property received by the Trust other than Gold, cash or an amount
receivable in cash (such as, for example, an insurance claim) shall be promptly
sold or otherwise disposed of by the Trustee at the direction of the Sponsor and
the proceeds thereof shall be credited to the Cash Account.
Unless otherwise directed by the Sponsor, when selling Gold the Trustee
shall endeavor to sell at the value determined under Section 4.01 for the date
of sale. The Trustee shall place orders with dealers (which may include the
Custodian) through which it may reasonably expect to obtain the most favorable
price and execution of orders. Solely in sale transactions made at the next
London "fix" (A.M. or P.M.) following the sale order, the Custodian may also be
the purchaser.
The Trustee and the Sponsor shall not be liable or responsible in any
way for depreciation or loss incurred by reason of any sale made pursuant to
this Section 3.07.
SECTION 3.08. COUNSEL; MARKETING AGENT.
(a) The Sponsor may from time to time employ counsel to act on behalf
of the Trust and perform any legal services in connection with the Gold and the
Trust, including any legal matters relating to the possible disposition or
acquisition of any Gold. The fees and expenses of such counsel shall be paid by
the Trustee from the assets of the Trust.
(b) To assist the Sponsor in marketing streetTRACKS(R) Gold Shares,
which assistance shall include but shall not be limited to the developing and
executing a marketing plan and preparing marketing materials, the Sponsor shall
enter into a Marketing Agent Agreement with the Initial Marketing Agent in the
form annexed as Exhibit E-2 hereto concurrently with the execution of this
Agreement. The Sponsor may also from time to time employ such other additional
or successor Marketing Agent(s) on such terms and conditions as the Sponsor
determines. Subject to the provisions of Section 10.06 hereof, the fees and
expenses of the Initial Marketing Agent and any successor or additional
Marketing Agent(s) shall be paid by the Trustee from the assets of the Trust.
The Sponsor shall not be answerable for the default or misconduct of the Initial
Marketing Agent and shall not be answerable for the default or misconduct of any
successor or additional Marketing Agent(s) if the Sponsor shall have selected
such successor or additional Marketing Agent(s) with reasonable care. The
Trustee shall have no liability for the terms, value or validity of any
agreement entered into by the Sponsor with a Marketing Agent or for the default
or misconduct of any Marketing Agent. So long as the Marketing Agent Agreement
with the Initial Marketing Agent shall be in effect, the name of the
26
Trust shall be that identified in the preamble hereto, except to the extent the
Sponsor and the Initial Marketing Agent shall otherwise determine.
SECTION 3.09. NOTICE TO SPONSOR.
If the Trustee receives notice at any time that an action is to be
taken by reason of its holding of the assets of the Trust for which no direction
is provided herein, the Trustee shall promptly notify the Sponsor and shall
thereupon take or refrain from taking such action as the Sponsor shall in
writing direct; provided, however, that if the Sponsor shall not within five
Business Days of the giving of such notice to the Sponsor direct the Trustee to
take or refrain from taking any action, the Trustee shall take such action or
decline to take action as it, in its sole discretion, shall deem advisable.
Neither the Sponsor nor the Trustee shall be liable to any person for any action
or failure to take action with respect to this Section 3.09.
SECTION 3.10. BOOK-ENTRY-ONLY SYSTEM, GLOBAL SECURITY.
(a) The Sponsor and the Trustee will enter into the Depository
Agreement pursuant to which the Depository will act as securities depository for
streetTRACKS(R) Gold Shares. streetTRACKS(R) Gold Shares will be represented the
Global Security (which may consist of one or more certificates as required by
the Depository), which will be registered, as the Depository shall direct, in
the name of Cede & Co., as nominee for the Depository and deposited with, or on
behalf of, the Depository. No other certificates evidencing streetTRACKS(R) Gold
Shares will be issued. The Global Security shall be in the form attached hereto
as Exhibit D and shall represent such streetTRACKS(R) Gold Shares as shall be
specified therein, and may provide that it shall represent the aggregate amount
of outstanding streetTRACKS(R) Gold Shares from time to time endorsed thereon
and that the aggregate amount of outstanding streetTRACKS(R) Gold Shares
represented thereby may from time to time be increased or reduced to reflect
deposits or redemptions of Baskets. Any endorsement of a Global Security to
reflect the amount, or any increase or decrease in the amount, of outstanding
streetTRACKS(R) Gold Shares represented thereby shall be made in such manner and
upon instructions given by the Trustee as specified in the Depository Agreement.
(b) Any Global Security issued to The Depository Trust Company or its
nominee shall bear a legend substantially to the following effect: "Unless this
certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Trustee or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is required by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein."
(c) The Depository has advised the Sponsor and the Trustee as follows:
The Depository is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the
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provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
The Depository was created to hold securities of its participants (the "DTC
Participants") and to facilitate the clearance and settlement of securities
transactions among the DTC Participants in such securities through electronic
book-entry changes in accounts of the DTC Participants, thereby eliminating the
need for physical movement of securities certificates. DTC Participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations, some of whom (and/or their representatives) own
the Depository. Access to the Depository's system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly ("Indirect Participants").
(d) As provided in the Depository Agreement, upon the settlement date
of any creation, transfer or redemption of streetTRACKS(R) Gold Shares, the
Depository will credit or debit, on its book-entry registration and transfer
system, the amount of streetTRACKS(R) Gold Shares so created, transferred or
redeemed to the accounts of the appropriate DTC Participants. The accounts to be
credited and charged shall be designated by the Trustee and each Participant, in
the case of a creation or redemption of Baskets. Ownership of beneficial
interest in streetTRACKS(R) Gold Shares will be limited to DTC Participants,
Indirect Participants and persons holding interests through DTC Participants and
Indirect Participants. Owners of beneficial interests in streetTRACKS(R) Gold
Shares ("Beneficial Owners") will be shown on, and the transfer of beneficial
ownership by Beneficial Owners will be effected only through, in the case of DTC
Participants, records maintained by the Depository and, in the case of Indirect
Participants and Beneficial Owners holding through a DTC Participant or an
Indirect Participant, through those records or the records of the relevant DTC
Participants. Beneficial Owners are expected to receive from or through the
broker or bank that maintains the account through which the Beneficial Owner has
purchased streetTRACKS(R) Gold Shares a written confirmation relating to their
purchase of streetTRACKS(R) Gold Shares.
(e) So long as Cede & Co., as nominee of the Depository, is the
registered owner of streetTRACKS(R) Gold Shares, references herein to the
registered or record owners of streetTRACKS(R) Gold Shares shall mean Cede & Co.
and shall not mean the Beneficial Owners of streetTRACKS(R) Gold Shares.
Beneficial Owners of streetTRACKS(R) Gold Shares will not be entitled to have
streetTRACKS(R) Gold Shares registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and
will not be considered the record or registered holder of streetTRACKS(R) Gold
Shares under this Agreement. Accordingly, to exercise any rights of a holder of
streetTRACKS(R) Gold Shares under the Agreement, a Beneficial Owner must rely on
the procedures of the Depository and, if such Beneficial Owner is not a DTC
Participant, on the procedures of each DTC Participant or Indirect Participant
through which such Beneficial Owner holds its interests. The Trustee and the
Sponsor understand that under existing industry practice, if the Trustee
requests any action of a Beneficial Owner, or a Beneficial Owner desires to take
any action that the Depository, as the record owner of all outstanding
streetTRACKS(R) Gold Shares, is entitled to take, in the case of a Trustee
request, the Depository will notify the DTC Participants regarding such request,
such DTC Participants will in turn notify each Indirect Participant holding
streetTRACKS(R) Gold Shares through it, with each successive Indirect
Participant continuing to notify each person holding streetTRACKS(R) Gold Shares
through it until the request has reached the Beneficial Owner, and in the case
of a request or authorization to act being sought or given by a Beneficial
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Owner, such request or authorization is given by the Beneficial Owner and
relayed back to the Trustee through each Indirect Participant and DTC
Participant through which the Beneficial Owner's interest in the streetTRACKS(R)
Gold Shares is held.
(f) As described above, the Trustee will recognize the Depository or
its nominee as the owner of all streetTRACKS(R) Gold Shares for all purposes
except as expressly set forth in this Agreement. Conveyance of all notices,
statements and other communications to Beneficial Owners will be effected as
follows. Pursuant to the Depository Agreement, the Depository is required to
make available to the Trustee upon request and for a fee to be charged to the
Trust a listing of the streetTRACKS(R) Gold Share holdings of each DTC
Participant. The Trustee shall inquire of each such DTC Participant as to the
number of Beneficial Owners holding streetTRACKS(R) Gold Shares, directly or
indirectly, through such DTC Participant. The Trustee shall provide each such
DTC Participant with sufficient copies of such notice, statement or other
communication, in such form, number and at such place as such DTC Participant
may reasonably request, in order that such notice, statement or communication
may be transmitted by such DTC Participant, directly or indirectly, to such
Beneficial Owners. In addition, the Trust shall pay to each such DTC Participant
an amount as reimbursement for the expenses attendant to such transmittal, all
subject to applicable statutory and regulatory requirements.
(g) Distributions on streetTRACKS(R) Gold Shares pursuant to Section
3.05(d) shall be made to the Depository or its nominee, Cede & Co., as the
registered owner of all streetTRACKS(R) Gold Shares. The Trustee and the Sponsor
expect that the Depository or its nominee, upon receipt of any payment of
distributions in respect of streetTRACKS(R) Gold Shares, shall credit
immediately DTC Participants' accounts with payments in amounts proportionate to
their respective beneficial interests in streetTRACKS(R) Gold Shares as shown on
the records of the Depository or its nominee. The Trustee and the Sponsor also
expect that payments by DTC Participants to Indirect Participants and Beneficial
Owners held through such DTC Participants and Indirect Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in a "street name," and will be the responsibility of such DTC Participants and
Indirect Participants. Neither the Trustee nor the Sponsor will have any
responsibility or liability for any aspects of the records relating to or
notices to Beneficial Owners, or payments made on account of beneficial
ownership interests in streetTRACKS(R) Gold Shares, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests or for any other aspect of the relationship between the Depository and
the DTC Participants or the relationship between such DTC Participants and the
Indirect Participants and Beneficial Owners owning through such DTC Participants
or Indirect Participants or between or among the Depository, any Beneficial
Owner and any person by or through which such Beneficial Owner is considered to
own streetTRACKS(R) Gold Shares.
(h) Limitation of Liability. The Global Security to be issued hereunder
is executed and delivered solely on behalf of the Trust by World Gold Trust
Services, LLC, as Sponsor, and by The Bank of New York, as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in them by this
Agreement. The representations, undertakings and agreements made on the part of
the Trust in the Global Security are made and intended not as personal
representations, undertakings and agreements by World Gold Trust Services, LLC
or The Bank of New York, but are made and intended for the purpose of binding
only the Trust.
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Nothing in the Global Security shall be construed as creating any liability on
World Gold Trust Services, LLC or The Bank of New York, individually or
personally, to fulfill any representation, undertaking or agreement other than
as provided in this Agreement.
(i) Successor Depository. If a successor to The Depository Trust
Company shall be employed as Depository hereunder, the Trustee and Sponsor shall
establish procedures acceptable to such successor with respect to the matters
addressed in this Section 3.10.
SECTION 3.11. TRUST TO BE ADMINISTERED AS GRANTOR TRUST.
Nothing in this Agreement, any Custody Agreement with any Custodian, or
otherwise, shall be construed to give the Trustee the power to vary the
investment of the Beneficial Owners within the meaning of Treasury Regulation
Section 301.7701-4(c) or similar or successor provisions of United States
Treasury Regulations under the Internal Revenue Code, nor shall the Sponsor give
the Trustee any direction that would vary the investment of the Beneficial
Owners. The Trustee shall not be liable to any person for the failure of the
Trust to qualify as a grantor trust under the Internal Revenue Code or any
comparable provision of the laws of any State or other jurisdiction where such
treatment is sought, provided that this sentence shall not limit the Trustee's
responsibility for the administration of the Trust in accordance with this
Agreement.
ARTICLE IV
EVALUATION OF GOLD
SECTION 4.01. EVALUATION OF GOLD.
As of the Evaluation Time on each Business Day, the Trustee shall
determine the value of the Gold held or receivable by the Trust on the basis of
the London P.M. Fix for the day on which the evaluation is made, or if no London
P.M. Fix is made on such day or has not been announced by the Evaluation Time,
on the basis of the last London "fix" (A.M. or P.M.) determined prior to the
Evaluation Time, unless the Trustee in consultation with the Sponsor determines
such price inappropriate as a basis for evaluation. In the event the Trustee and
the Sponsor determine that the London P.M. Fix or last prior London "fix" is not
an appropriate basis for evaluation, they shall identify an alternative basis
for evaluation to be employed by the Trustee. Neither the Trustee nor the
Sponsor shall be liable to any person for the determination that the London P.M.
Fix or last prior London "fix" is not appropriate as a basis for evaluation of
the Gold held or receivable by the Trust or for any determination as to the
alternative basis for evaluation provided that such determination is made in
good faith.
SECTION 4.02. RESPONSIBILITY OF THE TRUSTEE FOR EVALUATIONS.
The Sponsor and the Beneficial Owners may rely on any evaluation
furnished by the Trustee, and the Sponsor shall have no responsibility for the
accuracy thereof. The determinations made by the Trustee hereunder shall be made
in good faith upon the basis of, and the Trustee shall not be liable for any
errors contained in, information reasonably available to it.
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The Trustee shall be under no liability to the Sponsor, the Depository,
Beneficial Owners or any other person, for errors in judgment, provided,
however, that this provision shall not protect the Trustee against any liability
to which it would otherwise be subject by reason of willful misfeasance, willful
misconduct, bad faith or gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties hereunder.
ARTICLE V
TRUST EVALUATION AND REDEMPTION OF REDEMPTION BASKETS
SECTION 5.01. TRUST EVALUATION.
As of the Evaluation Time on each Business Day, the Trustee shall
subtract all estimated accrued but unpaid fees (other than the fees computed by
reference to the Adjusted Net Asset Value of the Trust, as defined below, or
custody fees computed by reference to the value of Gold held by the Trust),
expenses and other liabilities of the Trust from the total value of the Gold
determined by the Trustee pursuant to Section 4.01 and all other assets of the
Trust (other than any amounts credited to the Reserve Account). The resulting
figure is the "Adjusted Net Asset Value" of the Trust. The Trustee shall
subtract from the Adjusted Net Asset Value the amount of accrued fees computed
by reference to the Adjusted Net Asset Value of the Trust and custody fees
computed by reference to the value of Gold held by the Trust and the resulting
figure is the "Net Asset Value" of the Trust. The Trustee shall also divide the
Net Asset Value of the Trust by the number of streetTRACKS(R) Gold Shares
outstanding as of the Evaluation Time on the date of the evaluation then being
made (which shall take into account the settlement of Creation Baskets and
Redemption Baskets occurring on such date), which figure is the "Net Asset Value
per streetTRACKS(R) Gold Share."
Adjusted Net Asset Value, Net Asset Value and Net Asset Value per
streetTRACKS(R) Share shall be computed in accordance with generally accepted
accounting principles in the United States. The Trustee's estimation of accrued
but unpaid fees, expenses and liabilities shall be conclusive upon all persons
interested in the Trust and no revision or correction in any computation made
pursuant to this Agreement shall be required by reason of any difference in
amounts estimated from those actually paid.
SECTION 5.02. REDEMPTION OF REDEMPTION BASKETS.
(a) On any Business Day, a Participant with respect to which a
Participant Agreement is in full force and effect (as reflected on the list
maintained by the Trustee pursuant to Section 2.03(a)(i)) may redeem one or more
Redemption Baskets standing to the credit of the Participant on the records of
the Depository in kind by delivering a request for redemption to the Trustee
(such request, a "Redemption Order") in the manner specified in the procedures
specified in the attachment to the Participant Agreement, as amended from time
to time in accordance with the provisions of the Participant Agreement (and any
such amendment will not constitute an amendment of this Agreement).
(b) To be effective, a Redemption Order must be submitted on a Business
Day by the Order Cut-Off Time in form satisfactory to the Trustee (the Business
Day on which the
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Redemption Order is so submitted, "Redemption Order Date"). The Trustee shall
reject any Redemption Order the fulfillment of which its counsel advises may be
illegal under applicable laws and regulations, and the Trustee shall have no
liability to any person for rejecting a Redemption Order in such circumstances.
(c) Subject to deduction of any tax or other governmental charges due
thereon, the redemption distribution ("Redemption Distribution") shall consist
of the portion of the Net Asset Value of the Trust, determined pursuant to
Section 5.01 for the Redemption Order Date, attributable to the Redemption
Basket(s). In general, such distribution shall consist of (A) credit to a
Participant Unallocated Account of the redeeming Participant maintained with the
Custodian of the amount of Gold representing the fractional undivided interest
in the Gold held by the Trust evidenced by the Redemption Baskets subject to the
redeeming Participant's Redemption Order plus or minus (B) a cash amount (the
"Cash Redemption Amount"). The Cash Redemption Amount shall be equal to all
assets of the Trust other than Gold less all accrued expenses and other
liabilities, divided by the number of Baskets outstanding and multiplied by the
number of Redemption Baskets subject to the redeeming Participant's Redemption
Order. If the Cash Redemption Amount is positive, then it shall be paid in cash.
If the Cash Redemption Amount is negative, then it shall reduce the credit to
the Participant's Participant Unallocated Account, by an amount of Gold equal in
value, at the price of Gold determined under Section 4.01 hereof for the
Redemption Order Date, to such negative Cash Redemption Amount. Fractions of a
Fine Ounce of Gold included in the Redemption Distribution smaller than 0.001 of
a Fine Ounce shall be disregarded.
The Trustee will distribute any positive Cash Redemption Amount through
the Depository to the account of the Participant as recorded on the book entry
system of the Depository.
(d) By 10:00 a.m. New York time (but not later than 3:30 London time)
on the third Business Day following the Redemption Order Date (such third
Business Day, the "Redemption Settlement Date"), if the Trustee's account at the
Depository has by 9:00 a.m. New York time on such day been credited with the
Redemption Baskets being tendered for redemption and the Trustee has by such
time received the Transaction Fee, the Trustee shall deliver the Cash Redemption
Amount (if any) and shall direct the Custodian to deliver Gold included in the
Redemption Distribution by effecting the necessary transfers of the Gold to the
redeeming Participant's Participant Unallocated Account. If by such time the
Trustee does not receive from a redeeming Participant all streetTRACKS(R) Gold
Shares comprising the Redemption Order, the Trustee will (i) settle the
Redemption Order to the extent of whole Redemption Baskets received from the
Participant and (ii) keep the redeeming Participant's Redemption Order open
until 9:00 a.m. New York time on the first Business Day following the Redemption
Settlement Date as to the balance of the Redemption Order (such balance, the
"Suspended Redemption Order"), provided, however, that the redeeming Participant
pays the Trustee such fee for the custody of the Gold included in the Suspended
Redemption Order for the period subsequent to the Redemption Settlement Date as
the Trustee may, from time to time, determine. If the Redemption Basket(s)
comprising the Suspended Redemption Order are credited to Trustee's account at
the Depository by 9:00 a.m. New York time on such following Business Day, the
Redemption Distribution with respect to the Suspended Redemption Order shall be
paid in the manner provided in the second preceding sentence. If by such time
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the Trustee does not receive from the redeeming Participant all streetTRACKS(R)
Gold Shares comprising the Suspended Redemption Order, the Trustee will settle
the Suspended Redemption Order to the extent of whole Redemption Baskets then
received and any balance of the Suspended Redemption will be cancelled.
Notwithstanding the foregoing, when and under such conditions as the Sponsor and
the Trustee may from time to time determine, the Trustee shall be authorized to
deliver the Redemption Distribution notwithstanding that a Redemption Basket has
not been credited to the Trustee's account at the Depository if the Participant
has collateralized its obligation to deliver the Redemption Basket on such terms
as the Sponsor and the Trustee may, in their sole discretion, from time to time
agree.
If Gold is to be delivered through a Custodian other than the Initial
Custodian or in a market other than the London market, the Sponsor and Trustee
are authorized to establish such other procedures, including requirements as to
the time of receipt by the Trustee of the tendered Redemption Baskets, for
payment of the Redemption Distribution as they shall determine appropriate.
(e) The Trustee may, in its discretion, and will when so directed by
the Sponsor, suspend the right of redemption, or postpone the Redemption
Settlement Date, (i) for any period during which the Exchange is closed other
than customary weekend or holiday closings, or trading is suspended or
restricted; (ii) for any period during which an emergency exists as a result of
which delivery, disposal or evaluation of the Gold is not reasonably
practicable; or (iii) for such other period as the Sponsor determines to be
necessary for the protection of Beneficial Owners. Neither the Sponsor nor the
Trustee is liable to any person or in any way for any loss or damages that may
result from any such suspension or postponement.
(f) Redemption Baskets effectively redeemed pursuant to the provisions
of this section or as may be otherwise provided pursuant to Section 5.03 shall
be cancelled by the Trustee in accordance with the Depository's procedures.
SECTION 5.03. OTHER REDEMPTION PROCEDURES.
The Sponsor and the Trustee from time to time may, but shall have no
obligation to, establish procedures with respect to redemption of
streetTRACKS(R) Gold Shares in lot sizes smaller than the Redemption Basket and
permitting the Redemption Distribution to be in a form, and delivered in a
manner, other than that specified in Section 5.02. If Gold is to be delivered
through a Custodian other than the Initial Custodian or in a market other than
the London market, the Sponsor and Trustee are authorized to establish such
procedures and to appoint such custodians and establish such custody accounts in
addition to those described herein, as the Sponsor and the Trustee shall agree
and determine to be desirable.
ARTICLE VI
TRANSFER OF STREETTRACKS(R) GOLD SHARES
SECTION 6.01. TRANSFER OF STREETTRACKS(R) GOLD SHARES.
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Beneficial Owners that are not DTC Participants may transfer
streetTRACKS(R) Gold Shares by instructing the DTC Participant or Indirect
Participant holding the streetTRACKS(R) Gold Shares for such Beneficial Owner in
accordance with standard securities industry practice. Beneficial Owners that
are DTC Participants may transfer streetTRACKS(R) Gold Shares by instructing the
Depository in accordance with the rules of the Depository and standard
securities industry practice.
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ARTICLE VII
SPONSOR
SECTION 7.01. RESPONSIBILITY AND DUTIES.
The Sponsor shall be liable in accordance herewith for the obligations
imposed upon and undertaken by the Sponsor hereunder.
SECTION 7.02. CERTAIN MATTERS REGARDING SUCCESSOR SPONSOR.
The covenants, provisions and agreements herein contained shall in
every case be binding upon any successor to the business of the Sponsor. The
Sponsor may transfer all or substantially all of its assets to an entity which
carries on the business of the Sponsor, if at the time of such transfer such
successor duly assumes all the obligations of the Sponsor under this Agreement,
and in such event, the Sponsor shall be relieved of all further liability under
this Agreement.
SECTION 7.03. RESIGNATION OF SPONSOR; SUCCESSORS.
If at any time the Sponsor desires to resign its position as Sponsor
hereunder, it may resign by delivering to the Trustee an instrument of
resignation executed by the Sponsor. Such resignation shall not become effective
until the earlier of (i) the effective date of the appointment by the Trustee of
a successor Sponsor to assume, with such compensation from the Trust as the
Trustee may deem reasonable under the circumstances, the duties and obligations
of the resigning Sponsor hereunder by an instrument of appointment and
assumption executed by the Trustee and the successor Sponsor; (ii) the date the
Trustee shall have agreed to act as Sponsor hereunder succeeding to all the
rights and duties of the resigning Sponsor without appointing a successor
Sponsor and without terminating this Agreement; or (iii) the date by when the
Trustee shall have terminated and liquidated the Trust and distributed all
remaining assets to the Depository for distribution to DTC Participants who are
then owners of streetTRACKS(R) Gold Shares on the records of the Depository,
which action the Trustee shall take if, within sixty (60) days following the
date on which a notice of resignation shall have been delivered by the Sponsor,
a successor Sponsor has not been appointed and the Trustee has not agreed to act
as Sponsor hereunder. The Trustee shall have no obligation to appoint a
successor Sponsor or to assume the duties of the Sponsor and shall have no
liability to any person because the Trust is terminated by reason of the
Sponsor's resignation. If the Sponsor shall fail to undertake or perform or
become incapable of undertaking or performing its duties hereunder or shall
become bankrupt or its affairs shall be taken over by public authorities, the
Trustee shall act in accordance with the provisions set forth in Section
8.01(s). Any successor Sponsor shall be satisfactory to the Trustee. Upon its
resignation becoming effective, the resigning Sponsor shall be discharged and
shall no longer be liable in any manner hereunder except as to acts or omissions
occurring before its resignation became effective, and the successor Sponsor
shall thereupon undertake and perform all duties and be entitled to all rights
and compensation as Sponsor under this Agreement. The successor Sponsor shall
not be under any liability hereunder for acts or omissions occurring prior to
the effective date stated in the instrument appointing it successor Sponsor.
Notice of appointment of successor Sponsor shall be mailed promptly after
acceptance of appointment by the Trustee to all DTC Participants who are then
owners of
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streetTRACKS(R) Gold Shares on the records of the Depository for distribution to
Beneficial Owners as provided in Section 3.10.
SECTION 7.04. COMPENSATION OF THE SPONSOR.
Subject to the provisions of Section 10.06 hereof, as compensation for
performing services under this Agreement and services provided in connection
with the maintenance of a web site for the Trust, including licensing costs, and
with the marketing of streetTRACKS(R) Gold Shares, the Sponsor shall receive a
fee, payable monthly in arrears, in an amount per annum equal to 0.15% of the
daily Adjusted Net Asset Value of the Trust. The Sponsor shall also receive
reimbursement for any and all disbursements and expenses incurred hereunder.
Within 30 Business Days following the end of each calendar year, the Sponsor
shall certify to the Trustee the amount of its actual expenses during the
preceding calendar year and shall reimburse the Trust any amounts received in
excess of the expenses so certified. The Trustee shall have no liability or
responsibility for amounts paid to the Sponsor pursuant to this Section.
SECTION 7.05. LIABILITY OF SPONSOR AND INDEMNIFICATION.
(a) The Sponsor shall not be under any liability to the Trustee or any
Beneficial Owner for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment or
for depreciation or loss incurred by reason of the sale of any Gold or other
assets held in trust hereunder; provided, however, that this provision shall not
protect the Sponsor against any liability to which it would otherwise be subject
by reason of its own gross negligence, bad faith, willful misconduct or willful
malfeasance in the performance of its duties hereunder or reckless disregard of
its obligations and duties hereunder. The Sponsor may rely in good faith on any
paper, order, notice, list, affidavit, receipt, evaluation, opinion,
endorsement, assignment, draft or any other document of any kind prima facie
properly executed and submitted to it by the Trustee, the Trustee's counsel or
by any other person for any matters arising hereunder. The Sponsor shall in no
event be deemed to have assumed or incurred any liability, duty, or obligation
to any Beneficial Owner or to the Trustee other than as expressly provided for
herein.
(b) The Sponsor and its shareholders, members, directors, officers,
employees, affiliates (as such term is defined in Regulation S-X) and
subsidiaries (each a "Sponsor Indemnified Party") shall be indemnified from the
Trust and held harmless against any loss, liability or expense incurred
hereunder without (1) gross negligence, bad faith, willful misconduct or willful
malfeasance on the part of such Sponsor Indemnified Party arising out of or in
connection with the performance of its obligations hereunder or any actions
taken in accordance with the provisions of this Agreement or (2) reckless
disregard on the part of such Sponsor Indemnified Party of its obligations and
duties under this Agreement. Each Sponsor Indemnified Party shall also be
indemnified from the Trust and held harmless against any loss, liability or
expense arising under the Distribution Agreement, the Marketing Agent
Agreement or any Participant Agreement insofar as such loss, liability or
expense arises from any untrue statement or alleged untrue statement of a
material fact contained in any written statement provided to the Sponsor by the
Trustee. Such indemnity shall include payment from the Trust of the costs and
expenses incurred by such Sponsor Indemnified Party in defending itself against
any such indemnified claim or liability.
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Any amounts payable to a Sponsor Indemnified Party under this Section 7.05 may
be payable in advance or shall be secured by a lien on the Trust. The Sponsor
shall not be under any obligation to appear in, prosecute or defend any legal
action which in its opinion may involve it in any expense or liability;
provided, however, that the Sponsor may, in its discretion, undertake any action
which it may deem necessary or desirable in respect of this Agreement and the
rights and duties of the parties hereto and the interests of the Beneficial
Owners and, in such event, the legal expenses and costs of any such action shall
be expenses and costs of the Trust and the Sponsor shall be entitled to be
reimbursed therefor by the Trust.
ARTICLE VIII
TRUSTEE
SECTION 8.01. GENERAL DEFINITION OF TRUSTEE'S RIGHTS, DUTIES AND
RESPONSIBILITIES.
All duties, rights, privileges and liabilities of the Trustee set forth
in this Agreement are subject to the following:
(a) Duties Limited to Those Specified. The duties, responsibilities and
obligations of the Trustee shall be limited to those expressly set forth in this
Agreement and no duties, responsibilities or obligations shall be inferred or
implied against the Trustee. The Trustee shall not be subject to, nor required
to comply with, any other agreement to which the Sponsor or a Participant is a
party and to which the Trustee is not a party, even though this Agreement may
refer to that agreement; nor shall it be required to comply with any direction
or instruction from the Sponsor, a Participant or an entity acting on behalf of
either other than directions or instructions contained in or delivered in
accordance with this Agreement. The Trustee shall not be required to expend or
risk any of its own funds or otherwise incur any liability, financial or
otherwise, in the performance of any of its duties under this Agreement, except
as specifically provided herein.
(b) Indemnity for Actions Taken to Protect the Trust. The Trustee shall
not be under any obligation to appear in, prosecute or defend any action that in
its opinion may involve it in expense or liability, unless it shall be furnished
with reasonable security and indemnity against such expense or liability. Any
pecuniary cost of the Trustee resulting from the Trustee's appearance in,
prosecution of or defense of any such action shall be deductible from and
constitute a lien against the assets of the Trust. Subject to the foregoing, the
Trustee shall, in its discretion, undertake such action as it may deem necessary
at any and all times to protect the
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Trust and the rights and interest of all Beneficial Owners pursuant to the terms
of this Agreement.
(c) Holding of Trust Property other than Gold. Assets of the Trust,
exclusive of Gold or cash, shall be held by the Trustee either directly or
through the Federal Reserve/ Treasury Book Entry System for United States and
federal agency securities (the "Book Entry System"), the Depository, or through
any other clearing agency or similar system (a "Clearing Agency"), if available.
The Trustee shall have no responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange offers, tenders,
interest rates changes, or similar matters relating to securities held at the
Depository or with any Clearing Agency unless the Trustee shall have received
actual and timely written notice of the same, nor shall the Trustee have any
responsibility or liability for the actions or omissions to act of the Book
Entry System, the Depository or any Clearing Agency. All moneys deposited with
or received by the Trustee hereunder shall be held by it, without interest
thereon or investment thereof, as a deposit for the account of the Trust in
accordance with the provisions of Section 3.03 and 3.04, until disbursed in
accordance with the provisions of this Agreement. Such monies held hereunder
shall be deemed segregated by maintaining such monies in an account or accounts
for the exclusive benefit of the Trust in accordance with the provisions of
Sections 3.03 and 3.04.
(d) Official Process Affecting the Property. If at any time the Trustee
is served with any judicial or administrative order, judgment, decree, writ or
other form of judicial or administrative process that in any way affects the
Trust or its property (including but not limited to orders of attachment or
garnishment or other forms of levies or injunctions or stays relating to the
transfer of any assets of the Trust), the Trustee is authorized to comply
therewith in any manner that it or legal counsel of its own choosing deems
appropriate; and if the Trustee complies with any such judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process, the Trustee shall not be liable to any of the parties
hereto or to any other person or entity even though such order, judgment,
decree, writ or process may be subsequently modified or vacated or otherwise
determined to have been without legal force or effect.
(e) Limitation on Trustee's Liability. The Trustee shall not be liable
for the disposition of Gold or moneys, or in respect of any evaluation which it
makes under this Agreement or otherwise, or for any action taken or omitted or
for any loss or injury resulting from its actions or its performance or lack of
performance of its duties hereunder in the absence of gross negligence or
willful misconduct on its part. In no event shall the Trustee be liable
(i) for acting in accordance with or conclusively relying upon any
instruction, notice, demand, certificate or document from the Sponsor,
a Participant or any entity acting on behalf of the Sponsor or a
Participant which the Trustee believes is given pursuant to or is
authorized by this Agreement;
(ii) for any indirect, consequential, punitive or special damages,
regardless of the form of action and whether or not any such damages
were foreseeable or contemplated; or
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(iii) for an amount in excess of the value of the assets of the Trust.
Whenever in this Agreement it is stated that the Trustee is not or
shall not be liable or shall have no liability (or words of like effect) for
some matter or thing, such statement shall mean that the Trustee is not and
shall not be liable to any person, including the Trust, the Depository, any
Beneficial Owner, the Sponsor, a Participant or prospective Participant or a
Custodian, with regard to that matter or thing, and in each such case, the
Trustee shall be indemnified by the Trust against any loss, liability or expense
in connection with the matter or thing for which it was stated the Trustee would
not be liable. Such indemnity shall include payment by the Trust of the costs
and expenses set forth in the second sentence of Section 8.05, and shall be
considered amounts payable under Section 8.05. Such indemnity shall survive the
resignation or removal of the Trustee and the termination of the Trust (but not
the final distribution of the Trust assets), and shall inure to the benefit of
any entity which is successor to any Trustee Indemnified Party, as defined in
Section 8.05.
(f) Protection for Amounts Due to Trustee. If any fees, expenses or
costs incurred by, or any obligations owed to, the Trustee under this Agreement
are not promptly paid when due, the Trustee may reimburse itself therefor from
the assets of the Trust and may sell, liquidate, convey or otherwise dispose of
any assets (including Gold) for such purpose. The Trustee may in its sole
discretion withhold from any distribution an amount (in kind or in cash, as the
case may be) that it believes would, upon sale or liquidation, produce proceeds
equal to any unpaid amounts to which the Trustee is entitled to hereunder.
(g) Security Interest in Property for Obligations To Trustee. As
security for the due and punctual performance of any and all obligations owed to
the Trustee under this Agreement, now or hereafter arising, the Sponsor, each
Participant, the Depository, and each Beneficial Owner hereby pledges, assigns
and grants to the Trustee a continuing security interest in, and a lien on, the
assets of the Trust and all distributions thereon or additions thereto. The
security interest of the Trustee shall at all times be valid, perfected and
enforceable by the Trustee against the Sponsor, the Depository, each DTC
Participant who is an owner of streetTRACKS(R) Gold Shares on the records of the
Depository, and each Beneficial Owner and all third parties in accordance with
the terms of this Agreement.
(h) Advice of Counsel. The Trustee may consult with legal counsel of
its own choosing, at the expense of the Trust, as to any matter relating to this
Agreement, and the Trustee shall not incur any liability in acting in good faith
in accordance with any advice from such counsel.
(i) Force Majeure. The Trustee shall not incur any liability for any
delay in performance, or for the non-performance, of any of its obligations
under this Agreement by reason of any cause beyond its reasonable control. This
includes any act of God or war or terrorism, any breakdown, malfunction or
failure of transmission in connection with or other unavailability of any wire,
communication or computer facilities, any transport, port, or airport
disruption, industrial action, acts and regulations and rules of any
governmental or supra national bodies or authorities or regulatory or
self-regulatory organization or failure of any such body, authority or
organization for any reason, to perform its obligations.
39
(j) Reliance on Writings. The Trustee shall be entitled to conclusively
rely upon any order, judgment, certification, demand, notice, instrument or
other writing delivered to it under this Agreement without being required to
determine the authenticity or the correctness of any fact stated therein or the
propriety or validity or the service thereof. The Trustee may act in conclusive
reliance upon any instrument or signature believed by it to be genuine and may
assume that any person purporting to give receipt or advice or to make any
statement or execute any document in connection with the provisions of this
Agreement has been duly authorized to do so, provided, however that where a list
of authorized officials of a person and their signatures are on file with the
Trustee, the Trustee shall compare such manual signatures to the signature on
any such documents. Such requirement shall not apply to "personal identification
numbers" or "PINS" or other forms of electronic security devices which function
as a proxy for a manual signature.
(k) Documents or Securities. The Trustee shall not be responsible in
any respect for the form, execution, validity, value, collectibility or
genuineness of documents, instruments or securities deposited with or delivered
to or held by it under this Agreement, or for any description therein, or for
the identity, authority or rights of persons executing or delivering or
purporting to execute or deliver any such document, instrument or security. The
Trustee shall not be called upon to advise any party as to the wisdom in selling
or retaining or taking or refraining from any action with respect to any asset
(including Gold), securities (including streetTRACKS(R) Gold Shares), or other
property deposited, issued or held under this Agreement.
(l) General Duty of Care of Trustee. The Trustee shall not be under any
duty to give the property held by it hereunder any greater degree of care than
it gives its own similar property.
(m) Requests for Instructions. At any time the Trustee may request an
instruction in writing in English from the Sponsor or a Participant with respect
to any action which the Sponsor or a Participant is authorized to direct the
Trustee hereunder, and may, at its own option, include in such request the
course of action it proposes to take and the date on which it proposes to act,
regarding any matter arising in connection with its duties and obligations under
this Agreement. The Trustee shall not be liable for acting in accordance with
such a proposal on or after the date specified therein, provided that the
specified date shall be at least three (3) Business Days after the Sponsor or
Participant receives the Trustee's request for instructions and its proposed
course of action, and provided further that, prior to so acting, the Trustee has
not received the written instructions requested.
(n) Reliance on Communications. When the Trustee acts on any
information, instructions, communications (including communications with respect
to the delivery of securities or the wire transfer of funds) sent by telex,
facsimile, email or other form of electronic or data transmission, the Trustee,
absent gross negligence, shall not be responsible or liable in the event such
communication is not an authorized or authentic communication of the party
sending it or is not in the form the party sent or intended to send (whether due
to fraud, distortion or otherwise), provided that this paragraph shall not limit
the Trustee's obligation to obtain such confirmations as may be specified in
this Agreement or any Participant Agreement. The Trustee shall be indemnified as
provided in Section 8.05 against any loss, liability, claim or expense
40
(including legal fees and expenses) it may incur in acting in accordance with
any such communication.
(o) Ambiguity. The Trustee may construe any provision of this Agreement
that it believes to be ambiguous or inconsistent with any other provisions
hereof, and any reasonable construction of any such provision hereof by the
Trustee in good faith shall be binding upon the parties hereto, each Participant
and all Beneficial Owners. In the event of any ambiguity or inconsistency or any
other uncertainty in any notice, instruction or other communication received by
the Trustee under this Agreement, the Trustee shall notify the Sponsor and the
giver thereof, and may, in its sole discretion, refrain from taking any action
other than to retain possession of the property of the Trust, unless the Trustee
receives such further written instructions, from the Sponsor or otherwise, that
eliminate such ambiguity, inconsistency or uncertainty.
(p) Reliance on Arbitral Decisions. The Trustee shall have no
responsibility for the contents of any writing of the arbitrators or any third
party that may be used as a means to resolve disputes among third parties with
respect to their interest in the Trust, Trust assets or any streetTRACKS(R) Gold
Shares and may conclusively rely without any liability upon the contents
thereof.
(q) Taxes. In no event shall the Trustee be personally liable for any
taxes or other governmental charges imposed upon or in respect of the Gold or
its custody, moneys or other assets from time to time held hereunder, or on the
income therefrom or the sale or proceeds of sale thereof, or upon it as Trustee
hereunder or upon or in respect of the Trust or the streetTRACKS(R) Gold Shares,
which it may be required to pay under any present or future law of the United
States of America or of any other taxing authority having jurisdiction in the
premises. For all such taxes and charges and for any expenses, including
counsel's fees, which the Trustee may sustain or incur with respect to such
taxes or charges, the Trustee shall be reimbursed and indemnified out of the
assets of the Trust and the payment of such amounts shall be secured by a lien
on the Trust. Any payments by the Trustee shall be subject to withholding
regulations then in force with respect to United States taxes. This paragraph
shall survive notwithstanding any termination of this Agreement and the Trust or
the resignation or removal of the Trustee.
(r) Trustee's Liability for Custodial Services and Agents. Subject to
Section 3.02 hereof, the Trustee shall not be answerable for the default of the
Initial Custodian or any Custodian employed at the direction of the Sponsor or
selected by the Trustee with reasonable care. The Trustee may also employ
custodians for Trust assets other than Gold, agents, attorneys, accountants,
auditors and other professionals and shall not be answerable for the default or
misconduct of any such custodians, agents, attorneys, accountants, auditors and
other professionals if such custodians, agents, attorneys, accountants, auditors
or other professionals shall have been selected with reasonable care. The fees
and expenses charged by Custodians for custody of Gold and services related to
the custody and safekeeping of Gold (including, for avoidance of doubt, any fees
paid to the Initial Custodian under the Allocated Bullion Account Agreement and
Unallocated Bullion Account Agreement), agents, attorneys, accountants, auditors
or other professionals, and expenses reimbursable to a Custodian pursuant to a
Custody Agreement, exclusive of fees for services to be performed by the
Trustee, shall constitute an
41
expense of the Trust. Fees paid for custody of assets other than Gold shall be
an expense of the Trustee.
(s) If the Sponsor shall fail to undertake or perform or shall become
incapable of undertaking or performing any of the duties which by the terms of
this Agreement are required to be undertaken or performed by it, and such
failure shall not be cured within fifteen (15) Business Days following receipt
of notice from the Trustee of such failure, or the Sponsor shall be adjudged
bankrupt or insolvent, or a receiver of the Sponsor or of its property shall be
appointed, or a trustee or liquidator or any public officer shall take charge or
control of the Sponsor or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then in any such case the Sponsor
shall be deemed conclusively to have resigned with such resignation being
effective immediately upon the occurrence of any of the specified events, and
the Trustee may do any one or more of the following: (1) appoint a successor
Sponsor to assume, with such compensation from the Trust as the Trustee may deem
reasonable under the circumstances, the duties and obligations of the Sponsor
hereunder by an instrument of appointment and assumption executed by the Trustee
and the successor Sponsor; or (2) agree to act as Sponsor hereunder without
appointing a successor Sponsor and without terminating this Agreement; or (3)
terminate and liquidate the Trust and distribute its remaining assets pursuant
to Section 9.01. The Trustee shall have no obligation to appoint a successor
Sponsor or to assume the duties of the Sponsor and shall have no liability to
any person because the Trust is or is not terminated pursuant to this paragraph.
(t) If the Net Asset Value of the Trust as shown by any evaluation made
pursuant to Section 5.01 shall be less than the Discretionary Termination Amount
(defined in Section 9.01(a)), the Trustee shall, only when so directed in
writing by the Sponsor, terminate and liquidate the Trust and distribute its
remaining assets, all in the manner provided in Section 9.01.
(u) The Trustee in its individual or any other capacity may own or hold
gold and streetTRACKS(R) Gold Shares, or be an underwriter or dealer in respect
of streetTRACKS(R) Gold Shares, and may deal in any manner with the same with
the same rights and powers as if it were not the Trustee hereunder.
(v) The Trustee shall discharge all of its obligations and perform all
of its duties under the Participant Agreement.
(w) The Trustee shall not be under any liability for information
provided by it to the Sponsor and subsequently distributed, on an intraday
basis, to Beneficial Owners or potential Beneficial Owners of streetTRACKS(R)
Gold Shares except by reason of its own gross negligence, bad faith, willful
misconduct or willful malfeasance, or reckless disregard of its duties and
obligations hereunder. Subject to the foregoing, the Trustee shall undertake to
provide to the Sponsor information necessary for the Sponsor to compute an
estimate of the Net Asset Value, on an intraday basis, and provide such estimate
to Beneficial Owners of streetTRACKS(R) Gold Shares.
SECTION 8.02. BOOKS, RECORDS AND REPORTS; AUDIT.
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(a) The Trustee shall keep proper books of record and account of all
the transactions under this Agreement at its office located in New York or such
office as it may subsequently designate upon notice to the other parties hereto.
The books and records of the Trust maintained by the Trustee shall be open to
inspection by any person establishing to the Trustee's reasonable satisfaction
that such person is a Beneficial Owner upon reasonable advance notice at all
reasonable times during the usual business hours of the Trustee. The Trustee
shall keep proper record of the creation of Creation Baskets and redemption of
Redemption Baskets at its New York office. Such records shall be open to
inspection upon reasonable advance notice at all reasonable times during the
usual business hours of the Trustee. Such records shall be preserved for such
time as the Sponsor may direct.
(b) The Trustee shall provide the Sponsor such financial and other
information regarding the operation of the Trust as may be required for the
Sponsor to prepare such reports and filings required under the federal
securities laws as provided in Section 10.02. Unless otherwise required by
applicable law or regulation, the Sponsor shall be responsible for any
certification of any such reports or the contents thereof and shall receive from
the Trustee such representations with respect to information within the
Trustee's control as shall be required for the Sponsor to make such
certification.
(c) The Trustee shall make such elections, file such tax returns, and
prepare, disseminate and file such tax reports, as it is advised by its counsel
or accountants are from time to time required by any statute, rule or regulation
of the United States, any State or political subdivision thereof, or other
jurisdiction having taxing authority in respect of the Trust or its
administration. The expense of accountants employed to prepare tax returns and
tax reports shall be an expense of the Trust.
(d) The accounts of the Trust shall be audited, as required by law and
as may be directed by the Sponsor, by independent certified public accountants
designated from time to time by the Sponsor and the cost of such audit shall be
an expense of the Trust. The report of such accountants shall be furnished by
the Trustee to Beneficial Owners upon request.
(e) When requested by the Sponsor, the Trustee will provide the Sponsor
a list of the agreements entered into by the Trustee on behalf of the Trust and
such other information as the Sponsor may reasonably request in order for the
Sponsor to make the representations and certifications, and for Sponsor's
counsel to provide the opinions, required by the Marketing Agent Agreement, the
Distribution Agreement and the Participant Agreement.
(f) The Trustee shall maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with this Agreement and the Trustee's duties hereunder; (ii)
transactions with respect to the Trust are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; and (iii)
assets are held for the Trust by the Custodian in accordance with the Trust
Indenture.
43
SECTION 8.03. AGREEMENT ON FILE.
The Trustee shall keep a certified copy or duplicate original of this
Agreement on file in its office and available for inspection on reasonable
advance notice at all reasonable times during its usual business hours by any
Beneficial Owner.
SECTION 8.04. COMPENSATION OF TRUSTEE.
(a) The Trustee shall receive at the times provided in Section 3.05 as
compensation for performing its services under this Agreement an amount per
annum computed on the daily Adjusted Net Asset Value of the Trust under the
following schedule, payable monthly in arrears:
0.02% on the first $10 billion of value
0.00% on any excess
provided, however, that the Trustee shall receive not less that $500,000 per
annum. The Trustee's annual compensation (including the minimum fee) shall be
pro rated on a daily basis for any year in which the Trustee acts less than the
entire year.
The Trustee's fee is subject to modification as determined by the
Trustee and Sponsor in good faith to reflect significant changes in the
administration of the Trust or the Trustee's duties from those contemplated
herein.
(b) The Trustee shall also charge the Trust for any and all expenses
and disbursements incurred hereunder, exclusive of fees of agents for services
to be performed by the Trustee, and for any extraordinary services performed by
the Trustee hereunder relating to the Trust.
(c) If the Trustee resigns or is removed, it shall be entitled to
compensation at a per diem rate through the effective date of its resignation or
removal, and its right to receive those fees and to reimbursement for expenses
and disbursements incurred hereunder prior to its resignation or removal shall
survive such resignation or removal.
SECTION 8.05. INDEMNIFICATION OF TRUSTEE.
The Trustee and its directors, shareholders, officers, employees,
agents, affiliates (as such term is defined in Regulation S-X) and subsidiaries
(each a "Trustee Indemnified Party") shall be indemnified from the assets of the
Trust and held harmless against any loss, liability or expense (a) arising out
of or in connection with the acceptance or administration of this Trust and any
actions taken in accordance with the provisions of this Agreement or the
administration of any Section of this Agreement or that arises out of or is
related to any offer or sale of streetTRACKS(R) Gold Shares incurred without (1)
gross negligence, bad faith, willful misconduct and willful malfeasance on the
part of such Trustee Indemnified Party and without (2) reckless disregard on the
part of such Trustee Indemnified Party of its obligations and duties under this
Agreement, or (b) that arises out of or is related to any filings with or
submissions to
44
the SEC in connection with or with respect to the streetTRACKS(R) Gold Shares
(which by way of illustration and not by way of limitation, include any
registration statement and any amendments to supplements thereto filed with the
SEC or any periodic reports or updates that may be filed under the Securities
Exchange Act of 1934, as amended) or any failure to make any filings with or
submissions to the SEC that are required to be made in connection with or with
respect to the streetTRACKS(R) Gold Shares, except for any loss, liability or
expense that arises out of any report that the Trustee files on behalf of the
Trust under the Securities Exchange Act of 1934, as amended, or out of any
information provided in writing by the Trustee to the Sponsor for use in any
registration statement or annual or other periodic report filed on behalf of the
Trust that is not materially altered by the Sponsor or omissions from that
information, if provided. Such indemnity shall include payment from the Trust of
the costs and expenses incurred by such Trustee Indemnified Party in
investigating or defending itself against any claim or liability relating to
this Agreement or the Trust, including any loss, liability or expense incurred
in acting pursuant to written directions or instructions given by the Sponsor or
counsel to the Trust to the Trustee from time to time in accordance with the
provisions of this Agreement or in undertaking actions from time to time which
the Trustee deems necessary in its discretion to protect the Trust and the
rights and interest of all Beneficial Owners pursuant to the terms of this
Agreement. Any amounts payable to a Trustee Indemnified Party under this Section
8.05 may be payable in advance or shall be secured by a lien on the Trust.
SECTION 8.06. RESIGNATION, DISCHARGE OR REMOVAL OF TRUSTEE;
SUCCESSORS.
(a) The Trustee may resign and be discharged of its duties hereunder by
executing an instrument in writing resigning as such Trustee, filing the same
with the Sponsor, if any, and mailing a copy of a notice of resignation to all
DTC Participants for distribution to Beneficial Owners as provided in Section
3.10 not less than sixty (60) days before the date specified in such instrument
when, subject to Section 8.06(c), such resignation is to take effect. The
Trustee shall be advised by the Depository as to the holdings of all DTC
Participants pursuant to the Depository Agreement. If the Sponsor shall
determine that (1) the Trustee is guilty of willful misconduct or malfeasance or
willful disregard of its duties hereunder, (2) the Trustee has acted in bad
faith in performing its duties hereunder, (3) there has occurred a material
deterioration in the creditworthiness of the Trustee or (4) there has occurred
one or more negligent acts or omissions on the part of the Trustee having a
materially adverse effect, either singly or in the aggregate, on the Trust or
the interests of the Beneficial Owners, and the Trustee has not, within fifteen
(15) days of receipt of the Sponsor's notice thereof that specifies in
reasonable detail the conduct, omissions or circumstances upon which the
Sponsor's determination is based, either (i) cured such adverse effect and
established, to the Sponsor's satisfaction, that such act or omission (or acts
or omissions) will not recur, or (ii) responded to that notice explaining the
steps it will take to cure such adverse effect and shall have cured such adverse
effect within 30 days from the date of the Sponsor's notice and shall have
established, to the Sponsor's satisfaction, that such act or omission (or acts
or omissions) will not recur, the Sponsor may remove the Trustee and appoint a
successor as herein provided. In case at any time the Trustee shall not meet the
requirements set forth in Section 8.07 hereof, shall fail to undertake or
perform or shall become incapable of undertaking or performing any of the duties
which by the terms of this Agreement are required to be undertaken or performed
by it, and such failure shall not be cured within fifteen (15) Business Days
following receipt of notice from the Sponsor of such failure, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee
45
or of its property shall be appointed, or a trustee or liquidator or any public
officer shall take charge or control of such Trustee or of its property or
affairs for the purposes of rehabilitation, conservation or liquidation, then in
any such case, the Sponsor shall, subject to the requirements of Section 8.06(b)
and (c), remove such Trustee and appoint a successor Trustee by written
instrument or instruments delivered to the Trustee so removed and to the
successor Trustee. Upon receiving notice of resignation or upon the removal of
the Trustee, the Sponsor shall use its best efforts promptly to appoint a
successor Trustee in the manner and meeting the qualifications hereinafter
provided, by written instrument or instruments delivered to such resigning
Trustee and the successor Trustee. Notice of such appointment of a successor
Trustee shall be mailed promptly after acceptance of such appointment by the
successor Trustee to DTC Participants for distribution to Beneficial Owners as
provided in Section 3.10. DTC Participants acting on the direction of Beneficial
Owners of at least sixty-six and two thirds percent (66 2/3 %) of the
streetTRACKS(R) Gold Shares then outstanding may at any time remove the Trustee
by written instrument or instruments delivered to the Trustee and Sponsor. The
Sponsor shall thereupon use its best efforts to appoint a successor Trustee in
the manner provided herein. Upon effective resignation or removal hereunder, the
resigning or removed Trustee shall be discharged and shall no longer be liable
in any manner hereunder except as to acts or omissions occurring prior to such
resignation or removal, and the new Trustee shall thereupon undertake and
perform all duties and be entitled to all rights and compensation as Trustee
under this Agreement. The successor Trustee shall not be under any liability
hereunder for acts or omissions occurring prior to execution of an instrument
accepting its appointment as Trustee.
(b) In case at any time the Trustee shall be removed or shall resign
and no successor Trustee shall have been appointed within sixty (60) days after
the date notice of removal has been received by the Trustee or the Trustee has
issued its notice of resignation, the Trustee shall terminate and liquidate the
Trust and distribute its remaining assets pursuant to Section 9.01.
(c) Any successor Trustee appointed hereunder shall execute and
acknowledge to the Sponsor and to the retiring Trustee an instrument accepting
such appointment hereunder, and such successor Trustee without any further act,
deed or conveyance shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee herein and shall be bound by all the terms and conditions of this
Agreement. Upon the request of such successor Trustee the retiring Trustee and
the Sponsor shall, upon payment of all amounts due the retiring Trustee, execute
and deliver an instrument acknowledged by them transferring to such successor
Trustee all the rights and powers of the retiring Trustee; and the retiring
Trustee shall transfer, deliver and pay over to the successor Trustee all monies
or other assets of the Trust at the time held by it, if any, together with all
necessary instruments of transfer and assignment or other documents properly
executed necessary to effect such transfer and the transfer of Gold held by each
Custodian, in such form as the Sponsor and the successor Trustee may reasonably
request, and such of the records or copies thereof maintained by the retiring
Trustee in the administration hereof as may be requested by the successor
Trustee, and the retiring Trustee shall thereupon be discharged from all duties
and responsibilities under this Agreement. Any resignation or removal of a
Trustee and appointment of a successor Trustee pursuant to this Section 8.06
shall become effective upon such acceptance of appointment by the successor
Trustee. The indemnification of the Trustee and any other Trustee Indemnified
Party provided for under Section 8.05 or any other Section of this
46
Agreement hereof and the lien securing payment of such indemnification shall
survive any resignation or removal of the Trustee hereunder and the termination
of the Trust (but not the distribution of Trust assets) and inure to the benefit
of any successor to the Trustee or a Trustee Indemnified Person.
(d) Any bank, trust company, corporation or national banking
association into which a Trustee hereunder may be merged or converted or with
which it may be consolidated, or any bank, trust company, corporation or
national banking association resulting from any merger, conversion or
consolidation to which such Trustee hereunder shall be a party, or any bank,
trust company, corporation or national banking association succeeding to all or
substantially all of the business of the Trustee, shall be the successor Trustee
under this Agreement without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto, notwithstanding
anything herein, or in any agreement relating to such merger, consolidation or
succession, by which any such Trustee may seek to retain certain powers, rights
and privileges theretofore obtaining for any period of time following such
merger or consolidation, to the contrary.
SECTION 8.07. QUALIFICATIONS OF TRUSTEE.
The Trustee and any successor Trustee shall be a bank, trust company,
corporation or national banking association organized and doing business under
the laws of the United States or any state thereof, authorized under such laws
to exercise corporate trust powers, a participant in The Depository Trust
Company or such other Depository as shall then be acting, and, unless counsel to
the Sponsor, acceptable to the Trustee, shall determine that such requirement is
not necessary for the exception under Section 408(m)(3)(B) of the Internal
Revenue Code to apply, a banking institution as defined in Section 408(n) of the
Internal Revenue Code. The Trustee and any successor Trustee shall have, at all
times, an aggregate capital, surplus, and undivided profits of not less than
$500,000,000.
ARTICLE IX
TERMINATION
SECTION 9.01. PROCEDURE UPON TERMINATION.
(a) Discretionary Termination. The Sponsor will have the discretionary
right to direct the Trustee to terminate the Trust (i) if, at any time after the
first anniversary of the Initial Date of Deposit, the Net Asset Value of the
Trust is less than $350,000,000, as such dollar amount shall be adjusted for
inflation in accordance with the CPI-U, such adjustment to take effect at the
end of the third year following the Initial Date of Deposit and at the end of
each year thereafter and to be made so as to reflect the percentage increase in
consumer prices as set forth in the CPI-U for the twelve (12) month period
ending in the last month of the preceding Fiscal Year (the "Discretionary
Termination Amount") or (ii) if the Commodities Futures Trading Commission
determines that the Trust is a commodity pool under the Commodity Exchange Act
of 1936, as amended. Any termination pursuant to the preceding sentence shall be
at the complete discretion of the Sponsor subject to the terms hereof, and the
Sponsor shall not be
47
liable in any way for depreciation or loss occurring as a result of any such
termination. The Trustee shall have no power to terminate the Agreement or the
Trust because the value of the Trust is below the Discretionary Termination
Amount and shall have no liability for the Sponsor's exercise or non-exercise of
its discretionary power to terminate the Trust. The Trust may also be terminated
by the Trustee (i) upon the agreement of the DTC Participants acting on the
direction of Beneficial Owners of at least 66-2/3% of the outstanding
streetTRACKS(R) Gold Shares and (ii) under the circumstances specified in
Section 8.01(s).
(b) Mandatory Termination Events. The Trust shall be terminated (i) if,
within 30 Business Days after the date of this Agreement, the registration
statement for the sale of the streetTRACKS(R) Gold Shares has not been declared
effective; (ii) in the event that streetTRACKS(R) Gold Shares are de-listed from
the Exchange and are not listed for trading on another United States national
securities exchange or through the NASDAQ Stock Market within five Business Days
from the date the shares are de-listed from the Exchange(1); (iii) if the
Depository is unable or unwilling to continue to perform its functions as set
forth herein and the Sponsor determines in its sole discretion that a comparable
replacement is unavailable; (iv) upon the disposition of all assets (including
Gold) held by the Trust; (v) in the event any sole Custodian then acting resigns
and no Successor Custodian has been employed pursuant to Section 3.02 within 60
days of such resignation; (vi) if at any time after the expiration of 90 days of
trading on the Exchange the Net Asset Value of the Trust remains less than $50
million for a period of 50 consecutive Business Days; (vii) the Trust fails to
qualify for treatment, or ceases to be treated, for United States federal income
tax purposes, as a grantor trust; (viii) upon the circumstances specified in
Section 8.06(b); or, (ix) if the law governing the Trust limits the maximum
period during which the Trust may continue, upon the expiration of 21 years
after the death of the last survivor of all of the descendants of Elizabeth II,
Queen of England, living on the date of this indenture. Notwithstanding the
foregoing, the Trustee shall have no obligation to appoint a successor Custodian
in the absence of direction by the Sponsor and shall have no liability to any
person in the event the Trust is terminated by reason of the resignation of any
Custodian.
(c) Written notice of termination, specifying the date of termination,
upon which the Depository shall no longer permit transfers, and the anticipated
period during which the assets of the Trust will be liquidated, shall be given
by the Trustee to DTC Participants for dissemination to Beneficial Owners as
described in Section 3.10 at least twenty (20) days prior to termination of the
Trust. Such notice shall further state that, as of the date thereof and
thereafter, neither requests to create additional Creation Baskets nor
additional Creation Basket Deposits will be accepted. Within a reasonable period
of time after such termination the Trustee shall, subject to any applicable
provisions of law, sell all of the Gold not already distributed to Participants
redeeming Redemption Baskets, as provided herein, if any, in such a manner so as
to
----------
1 It is intended that streetTRACKS(R) Gold Shares will be listed for trading on
the Exchange. Transactions involving streetTRACKS(R) Gold Shares in the public
trading market will be subject to customary brokerage charges and commissions.
There can be no assurance, however, that streetTRACKS(R) Gold Shares will always
be listed on the Exchange. Following the initial twelve-month period following
formation of the Trust and commencement of trading on the Exchange, the Exchange
will consider the suspension of trading in or removal from listing of
streetTRACKS(R) Gold Shares when, in its opinion, further dealings appear
unwarranted if: (a) the Trust has more than sixty (60) days remaining until
termination and there are fewer than 50 record Beneficial Owners for thirty (30)
or more consecutive trading days; or (b) such other event shall occur or
condition shall exist which, in the opinion of the Exchange, makes further
dealings on the Exchange inadvisable.
48
effectuate orderly sales and a minimal market impact. The Trustee shall not be
liable for or responsible in any way for depreciation or loss incurred by reason
of any sale or sales made in accordance with the provisions of this Section
9.01. The Trustee may suspend its sales of the Gold upon the occurrence of
unusual or unforeseen circumstances, including, but not limited to, a suspension
in trading of gold. Upon receipt of proceeds from the sale of the last Gold held
hereunder, the Trustee shall:
(i) pay to itself individually from the Trust an amount equal to the
sum of (1) its accrued compensation for its ordinary services, (2)
any compensation due it for extraordinary services, (3) any
advances made but not yet repaid and (4) reimbursement of any
other disbursements as provided herein;
(ii) deduct any and all other fees and expenses from the Trust in
accordance with the provisions of Section 3.05 hereof;
(iii) deduct from the Trust any amounts which it, in its sole
discretion, shall deem requisite to be added to the Reserve
Account for any applicable taxes or other governmental charges
that may be payable out of the Trust and any other contingent or
future liabilities;
(iv) distribute to the Depository for distribution each Beneficial
Owner's interest in the remaining assets of the Trust; and
(v) disseminate to each Beneficial Owner as provided in Section 3.10 a
final statement as of the date of the computation of the amount
distributable to the Beneficial Owners, setting forth the data and
information in substantially the form and manner provided for in
Section 3.06 hereof.
SECTION 9.02. MONEYS TO BE HELD WITHOUT INTEREST TO BENEFICIAL
OWNERS.
Unless the Sponsor shall direct that funds shall be invested pending
distribution (with any such direction to comply with Section 3.11 hereof), the
Trustee shall be under no liability with respect to moneys held upon
termination, except to hold the same as a deposit for the benefit of the
Beneficial Owners without interest thereon or investment thereof.
49
SECTION 9.03. DISSOLUTION OF SPONSOR NOT TO TERMINATE TRUST.
The dissolution of the Sponsor, or its ceasing to exist as a legal
entity from, or for, any cause, shall not operate to terminate this Agreement
insofar as the duties and obligations of the Trustee are concerned unless the
Trust is terminated pursuant to Section 9.01.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. AMENDMENT AND WAIVER.
(a) This Agreement may be amended from time to time by the Trustee and
the Sponsor without the consent of any Beneficial Owners (1) to cure any
ambiguity or to correct or supplement any provision hereof which may be
defective or inconsistent or to make such other provisions in regard to matters
or questions arising hereunder as will not materially adversely affect the
interests of Beneficial Owners as determined in good faith by the Sponsor; and
(2) to change any provision hereof as may be required by the SEC. This Agreement
may also be amended from time to time by the Sponsor and the Trustee with the
consent of the DTC Participants acting on the direction of Beneficial Owners of
at least 51% of the outstanding streetTRACKS(R) Gold Shares to add provisions to
or change or eliminate any of the provisions of this Agreement or to modify the
rights of Beneficial Owners; provided, however, that this Agreement may not be
amended without the consent of DTC Participants acting on the direction of
Beneficial Owners of all outstanding streetTRACKS(R) Gold Shares if such
amendment would (x) permit, except in accordance with the terms and conditions
of this Agreement, the acquisition of any asset other than Gold and cash
acquired in accordance with the terms and conditions of this Agreement; (y)
reduce the interest of any Beneficial Owner in the Trust; or (z) reduce the
percentage of outstanding streetTRACKS(R) Gold Shares required to consent to any
such amendment. The Trustee and Sponsor may from time to time alter the
administrative provisions of the Participant Agreement in accordance with its
terms and any such change shall not constitute an amendment of this Agreement.
(b) Promptly after the execution of any such amendment, the Trustee
shall receive from the Depository a list of all DTC Participants holding
streetTRACKS(R) Gold Shares. The Trustee shall inquire of each such DTC
Participant as to the number of Beneficial Owners for whom such DTC Participant
holds streetTRACKS(R) Gold Shares and provide each such DTC Participant with
sufficient copies of a written notice of the substance of such amendment for
transmittal by each such DTC Participant to such Beneficial Owners.
(c) It shall not be necessary for the consent of Beneficial Owners
under this Section 10.01 or under Section 9.01 to approve the particular form of
any proposed amendment or proposed termination procedure, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Beneficial Owners shall be subject to such reasonable regulations as
the Trustee may prescribe.
50
SECTION 10.02. REGISTRATION (INITIAL AND CONTINUING) OF
streetTRACKS(R) GOLD SHARES; CERTAIN SECURITIES LAW FILINGS.
The Sponsor agrees and undertakes on its own part or to appoint an
agent (i) to prepare and file a registration statement with the SEC under the
Securities Act of 1933, as amended, and take such action as is necessary from
time to time to qualify the streetTRACKS(R) Gold Shares for offering and sale
under the federal securities laws of the United States, including the
preparation and filing of amendments and supplements to such registration
statement, (ii) promptly to notify the Trustee of any such amendment or
supplement to the registration statement or Prospectus and of any order
preventing or suspending the use of the Prospectus; (iii) to provide the Trustee
from time to time with copies, including copies in electronic form, of the
Prospectus, in such quantities as the Trustee may reasonably request, (iv) to
prepare and file any periodic reports or updates that may be required under the
Securities Exchange Act of 1934, as amended, and (v) to take such action as is
necessary from time to time to register or qualify the streetTRACKS(R) Gold
Shares for offering and sale under the securities or blue sky laws of those
States of the United States or other jurisdictions as the Sponsor may select or
as may be necessary to continue that registration or qualification in effect for
so long as the Sponsor determines that the Trust shall continue to offer or sell
streetTRACKS(R) Gold Shares in that jurisdiction. Registration charges, blue sky
fees, printing costs, mailing costs, attorney's fees, and other miscellaneous
out-of-pocket expenses shall be borne by the Trust in the manner provided for by
Section 3.05.
SECTION 10.03. LICENSE AGREEMENT WITH THE LICENSOR.
(a) The Sponsor shall, prior to the Initial Date of Deposit, obtain
from The Bank of New York, the Sponsor and The World Gold Council licenses under
such patents and patent applications and other intellectual property rights as
may be necessary for the establishment and operation of the Trust and the sale
of the streetTRACKS(R) Gold Shares.
(b) The Trust shall reimburse the Sponsor for the cost of such licenses
in accordance with Section 3.05.
SECTION 10.04. RIGHT OF SPONSOR TO DIRECT TRUSTEE TO DECLARE A SPLIT
OF streetTRACKS(R) GOLD SHARES.
The Sponsor reserves the right to direct the Trustee to declare a split
or reverse split in the number of streetTRACKS(R) Gold Shares outstanding and a
corresponding change in the number of streetTRACKS(R) Gold Shares constituting a
Creation Basket whenever the Sponsor believes that the per streetTRACKS(R) Gold
Share price in the secondary market falls outside a desirable trading price.
SECTION 10.05. INDEMNIFICATION OF UNDERWRITER, INITIAL MARKETING
AGENT AND AUTHORIZED PARTICIPANTS.
The Trustee is hereby directed to enter into, on behalf of the Trust,
the following agreements:
51
(i) a Reimbursement Agreement with the Underwriter, in the
form attached as Exhibit F-1, pursuant to which the Trustee, on behalf
of the Trust, agrees to reimburse the each Indemnified Person specified
in such Reimbursement Agreement, solely from and to the extent of the
assets of the Trust, for any and all amounts payable by the Sponsor
pursuant to Section 9(a)(i), (ii), (iii) and (iv) of the Distribution
Agreement (including any amount in contribution thereof that may be
owed to any of the Indemnified Persons pursuant to Section 9(c)
thereof), to the extent the Sponsor has not directly paid such amounts
within 30 days after such amounts have become due and the Underwriter
has made demand to the Sponsor for payment of them under Section 9 of
the Distribution Agreement and to pay any and all expenses (including
reasonable and documented counsel fees and expenses) incurred by the
Underwriter in enforcing its rights under such Reimbursement
Agreement;
(ii) a Reimbursement Agreement with the Initial Marketing
Agent, in the form attached as Exhibit F-2, pursuant to which the
Trustee agrees to reimburse each Indemnified Person specified in the
Marketing Agent Agreement, solely from and to the extent of the assets
of the Trust, for any and all amounts payable by the Sponsor pursuant
to Section 7 of the Marketing Agent Agreement (including any amount in
contribution thereof that may be owed to any of the Indemnified Persons
pursuant to Section 7.4 thereof), to the extent the Sponsor has not
directly paid such amounts within 30 days after such amounts have
become due and the Initial Marketing Agent has made demand to the
Sponsor for payment of them, and to pay any and all expenses (including
reasonable and documented counsel fees and expenses) incurred by the
Initial Marketing Agent in enforcing its rights under such
Reimbursement Agreement; and
(iii) the Participant Agreements, pursuant to Section 10(g) of
which the Trustee agrees, solely from and to the extent of the assets
of the Trust, to reimburse the Authorized Participant and such other
persons as are specified in Section 10(b) of the Participant Agreement
to the extent the Sponsor does not pay amounts required to be paid by
the Sponsor under Section 10 of the Participant Agreement when due
(including any amount in contribution thereof that may be owed to any
Sponsor Indemnified Party pursuant to Section 10 thereof) and to pay
any and all expenses (including reasonable and documented counsel fees
and expenses) incurred by the Authorized Participant and such persons
as are specified in Section 10(b) in enforcing its rights under such
Section.
The Sponsor hereby agrees that, to the extent the Trustee pays any amount in
respect of the reimbursement obligations under the foregoing agreements, the
Trustee, for the benefit of the Trust, shall be subrogated to and shall succeed
to the rights of the party so reimbursed against the Sponsor.
SECTION 10.06. REDUCTION IN FEES OF SPONSOR AND INITIAL MARKETING
AGENT.
During the period from the inception of the Trust until the seventh
anniversary of the date of this Agreement or the earlier termination of the
Marketing Agent Agreement, the fees of the Sponsor shall be reduced, and the
disbursements from the Trust for the payment of the fees of the Initial
Marketing Agent shall be limited, as follows:
52
If at the end of any month the estimated ordinary expenses of the Trust
(including the Initial Marketing Agent's fees and the Sponsor's fees for such
month) exceed an amount equal to forty basis points (0.40%) per annum of the
daily Adjusted Net Asset Value of the Trust for such month, the fees payable to
the Sponsor and the Initial Marketing Agent for such month shall be reduced by
the amount of such excess in equal shares up to the amount of such fees. The
Sponsor agrees promptly to refund, and shall cause the Initial Marketing Agent
promptly to refund, any amount paid to the Sponsor or Initial Marketing Agent
which exceeds the reduced fee payable to the Sponsor or Initial Marketing Agent,
respectively, pursuant to this Section.
The provisions of this Section shall expire on the seventh anniversary
of the date of this Agreement or the earlier termination of the Marketing Agent
Agreement.
SECTION 10.07. CERTAIN MATTERS RELATING TO BENEFICIAL OWNERS.
(a) By the purchase and acceptance or other lawful delivery and
acceptance of streetTRACKS(R) Gold Shares, each Beneficial Owner thereof shall
be deemed to be a beneficiary of the Trust created by this Agreement and vested
with beneficial undivided interest in the Trust to the extent of the
streetTRACKS(R) Gold Shares owned beneficially by such Beneficial Owner, subject
to the terms and conditions of this Agreement. Upon issuance as provided herein,
streetTRACKS(R) Gold Shares shall be fully paid and non-assessable.
(b) Subject to and in accordance with Section 5.02 and 5.03,
streetTRACKS(R) Gold Shares may at any time prior to the date specified by the
Trustee in connection with the termination of the Trust be tendered to the
Trustee for redemption.
(c) The death or incapacity of any Beneficial Owner shall not operate
to terminate the Agreement or the Trust, nor entitle such Beneficial Owner's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them. Each Beneficial Owner expressly waives any right such Beneficial
Owner may have under any rule of law, or the provisions of any statute, or
otherwise, to require the Trustee at any time to account, in any manner other
than as expressly provided in the Agreement, in respect of the Gold or moneys
from time to time received, held and applied by the Trustee hereunder.
(d) No Beneficial Owner shall have any right to vote except as provided
in Sections 8.06, 9.01 and 10.01 or in any manner otherwise to control the
operation and management of the Trust, or the obligations of the parties hereto.
Nothing set forth in this Agreement shall be construed so as to constitute the
Beneficial Owners from time to time as partners or members of an association;
nor shall any Beneficial Owner ever be liable to any third person by reason of
any action taken by the parties to this Agreement, or for any other cause
whatsoever.
(e) The rights of Beneficial Owners must be exercised by DTC
Participants acting on their behalf in accordance with the rules and procedures
of the Depository as provided in Section 3.10.
53
SECTION 10.08. PROSPECTUS DELIVERY.
The Trustee shall, if required by the federal securities laws of the
United States, in any manner permitted by such laws, deliver at the time of
issuance of streetTRACKS(R) Gold Shares, a copy of the relevant Prospectus, as
most recently furnished to the Trustee by the Sponsor, to each person submitting
a Purchase Order.
SECTION 10.09. NEW YORK LAW TO GOVERN.
This Agreement is executed and delivered in the State of New York, and
all laws or rules of construction of such State shall govern the rights of the
parties hereto, the Depository as registered owner of the Global Security, and
the Beneficial Owners and the interpretation of the provisions hereof without
reference to the principles or rules of conflict of laws to the extent the laws
of a different jurisdiction would be required thereby. This Agreement shall be
deemed effective when it is executed by the Sponsor and the Trustee.
SECTION 10.10. CONSENT TO JURISDICTION.
Each party hereto, and the Depository, each DTC Participant and each
Beneficial Owner by the acceptance of an streetTRACKS(R) Gold Share, 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 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 hereunder, 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 for purposes of notices hereunder.
SECTION 10.11. MERGER.
This agreement embodies the entire agreement and understanding between
the parties relating to the subject matter hereof.
SECTION 10.12. NOTICES.
All notices and other communications under this agreement shall be in
writing in English, signed by the party giving it, and shall be deemed given, if
to the Trustee or the Sponsor, when delivered personally, on the next Business
Day after delivery to a recognized overnight courier or mailed first class
(postage prepaid) or when sent by facsimile to the parties (which facsimile copy
shall be followed, in the case of notices or other communications sent to the
Trustee, by delivery of the original) at the following addresses (or to such
other address as a party may have specified by notice given to the other parties
pursuant to this provision):
If to the Sponsor, to: World Gold Trust Services, LLC
444 Madison Avenue, 3rd Floor
New York, New York 10022
Attention: Mr. J. Stuart Thomas
Facsimile: (212) 688-0410
54
with a copy to: Carter Ledyard & Milburn LLP
2 Wall Street
New York, New York 10005
Attention: Steven J. Glusband, Esq.
Facsimile: (212) 732-3232
If to the Trustee, to: The Bank of New York
2 Hanson Place
Brooklyn, New York 11217
Attention: ADR Administration
Facsimile: (718) 315-4881
with a copy to: Emmet, Marvin & Martin, LLP
120 Broadway
New York, New York 10271
Attention: Peter B. Tisne, Esq.
Facsimile: (212) 238-3100
Any notice to be given to a Beneficial Owner shall be duly given if mailed or
delivered to DTC Participants designated by the Depository for delivery to
Beneficial Owners.
SECTION 10.13. SEVERABILITY.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or the rights of the Beneficial Owners.
SECTION 10.14. HEADINGS.
The headings used in this Agreement have been inserted for convenience
and shall not modify, define, limit or expand the express provisions of this
Agreement.
SECTION 10.15. COUNTERPARTS.
This Agreement may be simultaneously executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and
the same instrument.
55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by an Authorized Officer as of ________, 2004.
World Gold Trust Services, LLC
By
-----------------------------------------
Title:
Sponsor
The Bank of New York
By
-----------------------------------------
Title:
Trustee
56
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of ______________ in the year 2004 before me the
undersigned, a Notary Public in and for said State, personally appeared
______________________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
-------------------------
Notary Public
(Notarial Seal)
57
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On the ___ day of ______________ in the year 2004 before me the
undersigned, a Notary Public in and for said State, personally appeared
______________________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.
-------------------------
Notary Public
(Notarial Seal)
58
SCHEDULE A
Initial Deposit
Depositor Creation Basket Deposit Shares Issued
Bear Hunter Structured 30,000 Fine Ounces of Gold 300,000
Products, LLC
A-1
EXHIBIT A
FORM OF ALLOCATED BULLION ACCOUNT AGREEMENT
[ATTACHED TO AMENDMENT NO. 4 TO THE REGISTRATION STATEMENT AS EXHIBIT 10.1]
EXHIBIT B
FORM OF UNALLOCATED BULLION ACCOUNT AGREEMENT
[ATTACHED TO AMENDMENT NO. 4 TO THE REGISTRATION STATEMENT AS EXHIBIT 10.2]
EXHIBIT C
FORM OF PARTICIPANT AGREEMENT
[ATTACHED TO AMENDMENT NO. 4 TO THE REGISTRATION STATEMENT AS EXHIBIT 4.2]
EXHIBIT D
[FORM OF GLOBAL CERTIFICATE]
CERTIFICATE OF BENEFICIAL INTEREST
-Evidencing-
All Undivided Interests
-in-
streetTRACKS(R) GOLD TRUST
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
This is to certify that CEDE & CO. is the owner and registered holder of this
Certificate evidencing the ownership of all issued and outstanding
streetTRACKS(R) Gold Shares ("Shares"), each of which represents a fractional
undivided interest in the streetTRACKS(R) Gold Trust ("Trust"), created under
the laws of the State of New York by the Trust Indenture of streetTRACKS(R) Gold
Trust dated as of November___, 2004 between World Gold Trust Services, LLC, as
Sponsor, and The Bank of New York, as Trustee, (hereinafter called the
"Agreement "), copies of which are available at the offices of the Trustee.
At any given time this Certificate shall represent all undivided
interests in the Trust, which shall be the total number of Shares that are
outstanding at such time. The Agreement provides for the deposit of additional
Gold with the Trustee from time to time and the issuance by the Trustee of
additional Creation Baskets representing the Gold so deposited. At the request
of the registered holder this Certificate may be exchanged for one or more
Certificates issued to the registered holder in such denominations as the
registered holder may request, provided, however, that, in the aggregate, the
Certificates issued to the registered holder hereof shall represent all Shares
outstanding at any given time.
The Sponsor and Bear Hunter Structured Products, LLC as the initial
depositor of the Trust hereby grant and convey all of their rights, title and
interest in and to the Trust to the extent
D-1
of the undivided interest represented hereby to the registered holder of this
Certificate subject to and in pursuance of the Agreement, all the terms,
conditions and covenants of which are incorporated herein as if fully set forth
at length.
The registered holder of this Certificate is entitled at any time upon
tender of this Certificate to the Trustee, endorsed in blank or accompanied by
all necessary instruments of assignment and transfer in proper form, at its New
York office in the State of New York and, upon payment of any tax or other
governmental charges, to receive at the time and in the manner provided in the
Agreement, such holder's ratable portion of the assets of the Trust for each
Redemption Basket tendered and evidenced by this Certificate.
The holder of this Certificate, by virtue of the purchase and
acceptance hereof, assents to and shall be bound by the terms of the Agreement,
copies of which are on file and available for inspection at reasonable times
during business hours at the New York office of the Trustee, to which reference
is made for all the terms, conditions and covenants thereof.
The Trustee may deem and treat the person in whose name this
Certificate is registered upon the books of the Trustee as the owner hereof for
all purposes and the Trustee shall not be affected by any notice to the
contrary.
The Agreement permits, with certain exceptions as therein provided, the
amendment thereof, by the Sponsor and the Trustee with the consent of the
Beneficial Owners of 51% of the outstanding Equity Gold Shares to add provisions
to or change or eliminate any of the provisions of the Agreement or to modify
the rights of Beneficial Owners; provided, however, that the Agreement may not
be amended without the consent of the Beneficial Owners of all outstanding
Equity Gold Shares if such amendment would (x) permit, except in accordance with
the terms and conditions of the Agreement, the acquisition of any assets other
than Gold and cash acquired in accordance with the terms and conditions of the
Agreement; (y) reduce the interest of any Beneficial Owner in the Trust; or (z)
reduce the percentage of Beneficial Owners required to consent to any such
amendment. Any such consent or waiver by the holder of Shares shall be
conclusive and binding upon such holder of Shares and upon all future holders of
Shares, and shall be binding upon any Shares, whether evidenced by a Certificate
or held in uncertificated form, issued upon the registration or transfer hereof
whether or not notation of such consent or waiver is made upon this Certificate
and whether or not the Shares evidenced hereby are at such time in
uncertificated form. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of any holders of Shares.
The Agreement, and this Certificate, is executed and delivered by The
Bank of New York, not individually or personally but solely as the Trustee of
the Trust, and World Gold Trust Services, LLC, as Sponsor, in the exercise of
the powers and authority conferred and vested in them by the Agreement. The
representations, undertakings and agreements made on the part of the Trust in
the Agreement or this Certificate are made and intended not as personal
representations, undertakings and agreements by The Bank of New York or World
Gold Trust Services, LLC but are made and intended for the purpose of binding
only the Trust. Nothing in the Agreement or this Certificate shall be construed
as creating any liability on The Bank of New York or World Gold Trust Services,
LLC, individually or personally, to fulfill any
D-2
representation, undertaking or agreement other than as provided in the Agreement
or this Certificate.
This Certificate shall not become valid or binding for any purpose
until properly executed by the Trustee under the Agreement.
Terms not defined herein will have the same meaning as in the
Agreement.
IN WITNESS WHEREOF, The Bank of New York, as Trustee, has caused this
Certificate to be manually executed in its corporate name by an Authorized
Officer and World Gold Trust Services, LLC, as Sponsor, has caused this
Certificate to be executed in its name by the manual or facsimile signature of
one of its Authorized Officers.
The Bank of New York, World Gold Trust Services, LLC
As Trustee As Sponsor
By________________________________ By________________________________
Authorized Officer Authorized Officer
Date: November____, 2004
D-3
EXHIBIT E-1
FORM OF DISTRIBUTION AGREEMENT
[PREVIOUSLY FILED AS EXHIBIT 1.1]
EXHIBIT E-2
FORM OF MARKETING AGENT AGREEMENT
[ATTACHED AS AMENDMENT NO. 4 TO THE REGISTRATION STATEMENT AS EXHIBIT 10.6]
EXHIBIT F-1
FORM OF UNDERWRITER REIMBURSEMENT AGREEMENT
[PREVIOUSLY FILED AS EXHIBIT 1.2]
EXHIBIT F-2
FORM OF MARKETING AGENT REIMBURSEMENT AGREEMENT
[ATTACHED TO AMENDMENT NO. 4 TO THE REGISTRATION STATEMENT AS EXHIBIT 10.10]
EXHIBIT 4.2
FORM OF
streetTRACKS(R) GOLD TRUST
PARTICIPANT AGREEMENT
This streetTRACKS(R) Gold Trust Participant Agreement (the
"Agreement"), dated as of ________, is entered into by and between __________
(the "Authorized Participant"), The Bank of New York, not in its individual
capacity but solely as trustee (the "Trustee") of the streetTRACKS(R) Gold Trust
(the "Trust"), and World Gold Trust Services, LLC, as sponsor (the "Sponsor") of
the Trust.
SUMMARY
The Trustee serves as the trustee of the Trust pursuant to the Trust
Indenture dated as of __________ 2004 between the Sponsor and the Trustee (the
"Trust Indenture"). As provided in the Trust Indenture and described in the
Prospectus (defined below), units of fractional undivided beneficial interest in
and ownership of the Trust (the "Shares") may be created or redeemed by the
Trustee for an Authorized Participant in aggregations of one hundred thousand
(100,000) Shares (each aggregation, a "Basket"). Baskets are offered only
pursuant to the registration statement of the Trust on Form S-1, as amended
(Registration No.: 333-105202), as declared effective by the Securities and
Exchange Commission ("SEC") and as the same may be amended from time to time
thereafter (collectively, the "Registration Statement") together with the
prospectus of the Trust (the "Prospectus") included therein. Under the Trust
Indenture, the Trustee is authorized to issue Baskets to, and redeem Baskets
from, Authorized Participants, only through the facilities of the Depository
Trust Company ("DTC") or a successor depository, and only in exchange for an
amount of Gold that is transferred between the Authorized Participant and the
Trust through the Participant Unallocated Account (defined below) and the Trust
Unallocated Account. Under the Trust Indenture, when the Trustee issues Baskets
in exchange for Gold, the Gold transferred by an Authorized Participant to the
Participant Unallocated Account is transferred to the Trust Unallocated Account
and then transferred and allocated to the Trust Allocated Account by the
Custodian, and when the Trustee redeems Baskets tendered for redemption by an
Authorized Participant in exchange for Gold, the Gold held in the Trust
Allocated Account is to be deallocated and transferred to the Trust Unallocated
Account and then transferred from the Trust Unallocated Account to the
Participant Unallocated Account by the Custodian. The foregoing Gold transfers
are also governed by the Trust's Allocated Bullion Account Agreement and
Unallocated Bullion Account Agreement (together, the "Custody Agreements") and
the Participant Unallocated Bullion Account Agreement. This Agreement sets forth
the specific procedures by which an Authorized Participant may create or redeem
Baskets.
Because new Shares can be created and issued on an ongoing basis, at any
point during the life of the Trust, a "distribution," as such term is used in
the Securities Act of 1933, as amended ("1933 Act"), may be occurring. The
Authorized Participant is cautioned that some of its activities may result in
its being deemed a participant in a distribution in a manner which
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would render it a statutory underwriter and subject it to the
prospectus-delivery and liability provisions of the 1933 Act. The Authorized
Participant should review the "Plan of Distribution" portion of the Prospectus
and consult with its own counsel in connection with entering into this Agreement
and placing an Order (defined below).
Capitalized terms used but not defined in this Agreement shall have the
meanings assigned to such terms in the Trust Indenture. To the extent there is a
conflict between any provision of this Agreement and the provisions of the Trust
Indenture, the provisions of the Trust Indenture shall control.
To give effect to the foregoing premises and in consideration of the
mutual covenants and agreements set forth below, the parties hereto agree as
follows:
Section 1. Order Placement. To place orders for the Trustee to create or
redeem one or more Baskets, Authorized Participants must follow the procedures
for creation and redemption referred to in Section 3 of this Agreement and the
procedures described in Attachment A hereto (the "Procedures"), as each may be
amended, modified or supplemented from time to time.
Section 2. Status of Authorized Participant. The Authorized Participant
represents and warrants and covenants the following:
(a) The Authorized Participant is a participant of DTC (as such a
participant, a "DTC Participant"). If the Authorized Participant ceases to be a
DTC Participant, the Authorized Participant shall give immediate notice to the
Trustee of such event, and this Agreement shall terminate immediately as of the
date the Authorized Participant ceased to be a DTC Participant.
(b) Unless Section 2(c) applies, the Authorized Participant either (i)
is registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended ("1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"), or (ii) is exempt from
being, or otherwise is not required to be, licensed as a broker-dealer or a
member of the NASD, and in either case is qualified to act as a broker or dealer
in the states or other jurisdictions where the nature of its business so
requires. The Authorized Participant will maintain any such registrations,
qualifications and membership in good standing and in full force and effect
throughout the term of this Agreement. The Authorized Participant will comply
with all applicable federal laws, the laws of the states or other jurisdictions
concerned, and the rules and regulations promulgated thereunder, and with the
Constitution, By-Laws and Conduct Rules of the NASD (if it is a NASD member),
and will not offer or sell Shares in any state or jurisdiction where they may
not lawfully be offered and/or sold.
(c) If the Authorized Participant is offering or selling Shares in
jurisdictions outside the several states, territories and possessions of the
United States and is not otherwise required to be registered, qualified or a
member of the NASD as set forth in Section 2(b) above, the Authorized
Participant will (i) observe the applicable laws of the jurisdiction in which
such offer and/or sale is made, (ii) comply with the full disclosure
requirements of the 1933 Act, and the regulations promulgated thereunder, and
(iii) conduct its business in accordance with the spirit of the NASD Conduct
Rules.
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(d) The Authorized Participant is in compliance with the money laundering
and related provisions of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001, and the regulations promulgated thereunder, if the Authorized
Participant is subject to the requirements of the USA PATRIOT ACT.
(e) With respect to the transfers of Gold contemplated by this Agreement,
the Authorized Participant shall establish with the Participant's Custodian in
London or at such other location as the Sponsor and the Trustee agree an account
in relation to Gold which shall be maintained on an Unallocated Basis (the
"Participant Unallocated Account"), which shall be used only to effect
transactions between the Authorized Participant and the Trust and which shall be
in addition to any separate Gold account maintained for the Authorized
Participant on an Unallocated Basis by the Participant's Custodian. The
Participant Unallocated Account shall be established and maintained pursuant to
a Participant Unallocated Bullion Account Agreement with the Participant's
Custodian in the form attached to this Agreement as Attachment B, as the same
may be amended from time to time. In addition, if the Authorized Participant
does not already have a Gold account maintained for it on an Unallocated Basis
by the Participant's Custodian (separate from the Participant Unallocated
Account), the Authorized Participant must establish such an account, which shall
be established and maintained pursuant to such agreement as it and the
Participant's Custodian shall agree.
(f) The Authorized Participant has the capability to send and receive
communications via authenticated telecommunication facility to and from the
Trustee, the Custodian and the Participant's Custodian. The Authorized
Participant shall confirm such capability to the satisfaction of the Trustee and
the Custodian by the end of the Business Day before placing its first order with
the Trustee (whether such order is to create or to redeem Baskets). If required
by the Custodian with respect to authorized telecommunications by telephonic
facsimile, the Authorized Participant shall enter into a separate agreement with
the Custodian, as the case may be, indemnifying such party with respect to its
communications by telephonic facsimile, substantially in the form attached as
Attachment C, as the same may be amended from time to time.
Section 3. Orders. (a) All orders to create or redeem Baskets shall be made
in accordance with the terms of the Trust Indenture, the Custody Agreements,
this Agreement and the Procedures. Each party will comply with such foregoing
terms and procedures to the extent applicable to it. The Authorized Participant
hereby consents to the use of recorded telephone lines whether or not such use
is reflected in the Procedures. The Trustee and Sponsor may issue additional or
other procedures from time to time relating to the manner of creating or
redeeming Baskets which are not related to the Procedures, and the Authorized
Participant will comply with such procedures.
(b) The Authorized Participant acknowledges and agrees on behalf of itself
and any party for which it is acting (whether such party is a customer or
otherwise) that each order to create a Basket (a "Purchase Order") and each
order to redeem a Basket (a "Redemption Order", and each Purchase Order and
Redemption Order, an "Order") may not be revoked by the Authorized Participant
upon its delivery to the Trustee. A form of Purchase Order is attached hereto as
Exhibit B and a form of Redemption Order is attached hereto as Exhibit C.
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(c) The Trustee shall have the absolute right, but shall have no
obligation, to reject any Purchase Order or Creation Basket Deposit (i)
determined by the Trustee not to be in proper form; (ii) that the Sponsor has
determined and advised the Trustee would have adverse tax consequences to the
Trust or to the Beneficial Owners; (iii) the acceptance or receipt of which
would, in the opinion of counsel to the Sponsor acceptable to the Trustee, be
unlawful; or (iv) if circumstances outside the control of the Trustee, the
Custodian or the Sponsor make it for all practical purposes not feasible to
process creations of Creation Baskets. Neither the Trustee nor the Sponsor shall
be liable to any person by reason of the rejection of any Purchase Order or
Creation Basket Deposit.
(d) The Trustee shall reject any Redemption Order (i) determined by the
Trustee not to be in proper form or (ii) the fulfillment of which its counsel
advises may be illegal under applicable laws and regulations, and the Trustee
shall have no liability to any person for rejecting a Redemption Order in such
circumstances.
(e) The Trustee may, in its discretion, and will when so directed by the
Sponsor, suspend the right of redemption, or postpone the applicable redemption
settlement date, (i) for any period during which the New York Stock Exchange is
closed other than for customary weekend or holiday closings, or trading is
suspended or restricted; (ii) for any period during which an emergency exists as
a result of which delivery, disposal or evaluation of the Gold is not reasonably
practicable; or (iii) for such other period as the Sponsor determines to be
necessary for the protection of the Beneficial Owners. Neither the Sponsor nor
the Trustee shall be liable to any person or in any way for any loss or damages
that may result from any such suspension or postponement.
Section 4. Gold Transfers. (a) Any Gold to be transferred in connection
with any Order shall be transferred between the Participant Unallocated Account
and the Trust Unallocated Account and between the Trust Unallocated Account and
the Trust Allocated Account in accordance with the Procedures. The Authorized
Participant shall be responsible for all costs and expenses relating to or
connected with any transfer of Gold between its Participant Unallocated Account
and the Trust Unallocated Account.
(b) Each of the Trust, the Sponsor and the Trustee will have no liability
for loss or damages suffered by an Authorized Participant in respect of the
Authorized Participant's Participant Unallocated Account. The liability of the
Custodian with respect to any such loss or damage will be governed by the terms
of the Participant Unallocated Bullion Account Agreement attached hereto as
Attachment B. The Authorized Participant acknowledges that it is an unsecured
creditor of the Custodian with respect to the Gold held in the Authorized
Participant's Participant Unallocated Account and that such Gold is at risk in
the event of the Custodian's insolvency.
Section 5. Gold Standards. All Gold to be transferred between the Trust and
the Authorized Participant in connection with any Order shall meet the
applicable requirements of The Good Delivery Rules for Gold and Silver Bars (the
"Good Delivery Rules") promulgated by the London Bullion Market Association (the
"LBMA"), which include standards for fineness. As provided in the Authorized
Participant's Participant Unallocated Bullion Account Agreement and in the
Trust's Unallocated Bullion Account Agreement, amounts of Gold standing to the
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credit of an Authorized Participant's Participant Unallocated Account or the
Trust Unallocated Account, as the case may be, are held on an Unallocated Basis,
which, as provided by those agreements, means only that each of the Authorized
Participant or the Trust, as the case may be, is entitled to call on the
Participant's Custodian or the Custodian, as the case may be, to deliver in
accordance with the Good Delivery Rules an amount of Gold equal to the amount of
Gold standing to the credit of the Authorized Participant's or the Trust's
relevant unallocated bullion account, as the case may be, but neither the
Authorized Participant nor the Trust has any ownership interest in any Gold that
the Participant's Custodian or the Custodian, as the case may be, owns or holds.
The Sponsor and the Trustee may, from time to time, pursuant to the Trust
Indenture and as disclosed in the Prospectus, specify other gold bullion to be
held by the Trust and which therefore may be transferred between the Trust and
an Authorized Participant in connection with any Order, provided that such other
gold bullion meets the standard of fineness specified under the Good Delivery
Rules. A copy of the Good Delivery Rules may be obtained from the LBMA.
Section 6. Fees. In connection with each Order by an Authorized Participant
to create or redeem one or more Baskets, the Trustee shall charge, and the
Authorized Participant shall pay to the Trustee, the Transaction Fee prescribed
in the Trust Indenture applicable to such creation or redemption. The initial
Transaction Fee shall be two thousand dollars ($2,000). The Transaction Fee may
be adjusted from time to time as set forth in the Prospectus. As described in
the Procedures, in the case of a Redemption Order that is held open until the
fourth Business Day following the Redemption Order Date, for each day (whether
or not a Business Day) the Redemption Order is held open, the Authorized
Participant will be charged by the Trustee the greater of (i) $300 and (ii) $30
times the number of Baskets covered by the Redemption Order.
Section 7. Authorized Persons. Concurrently with the execution of this
Agreement and from time to time thereafter, the Authorized Participant shall
deliver to the Trustee notarized and duly certified as appropriate by its
secretary or other duly authorized official, a certificate in the form of
Exhibit A setting forth the names and signatures of all persons authorized to
give instructions relating to activity contemplated hereby or by any other
notice, request or instruction given on behalf of the Authorized Participant
(each, an "Authorized Person"). The Trustee may accept and rely upon such
certificate as conclusive evidence of the facts set forth therein and shall
consider such certificate to be in full force and effect until the Trustee
receives a superseding certificate bearing a subsequent date. Upon the
termination or revocation of authority of any Authorized Person by the
Authorized Participant, the Authorized Participant shall give immediate written
notice of such fact to the Trustee and such notice shall be effective upon
receipt by the Trustee. The Trustee shall issue to each Authorized Person a
unique personal identification number (the "PIN Number") by which such
Authorized Person shall be identified and by which instructions issued by the
Authorized Participant hereunder shall be authenticated. The PIN Number shall be
kept confidential by the Authorized Participant and shall only be provided to
the Authorized Person. If, after issuance, the Authorized Person's PIN Number is
changed, the new PIN Number shall become effective on a date mutually agreed
upon by the Authorized Participant and the Trustee.
Section 8. Redemption. The Authorized Participant represents and warrants
that it will not obtain an Order Number (as described in the Procedures) from
the Trustee for the purpose of redeeming a Basket unless it first ascertains
that (i) it or its customer, as the case may be, owns
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outright or has full legal authority and legal and beneficial right to tender
for redemption the Baskets to be redeemed and to receive the entire proceeds of
the redemption, and (ii) such Baskets have not been loaned or pledged to another
party and are not the subject of a repurchase agreement, securities lending
agreement or any other arrangement which would preclude the delivery of such
Baskets to the Trustee the third Business Day following the Redemption Order
Date.
Section 9. Role of Authorized Participant. (a) The Authorized Participant
acknowledges that, for all purposes of this Agreement and the Trust Indenture,
the Authorized Participant is and shall be deemed to be an independent
contractor and has and shall have no authority to act as agent for the Trust,
the Sponsor, the Trustee, the Custodian, or the Participant's Custodian in any
matter or in any respect.
(b) The Authorized Participant will make itself and its employees
available, upon request, during normal business hours to consult with the
Trustee, the Custodian, the Participant's Custodian or their designees
concerning the performance of the Authorized Participant's responsibilities
under this Agreement.
(c) With respect to any creation or redemption transaction made by the
Authorized Participant pursuant to this Agreement for the benefit of any
customer or any other DTC Participant or Indirect Participant, or any other
Beneficial Owner, the Authorized Participant shall extend to any such party all
of the rights, and 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 Trust Indenture.
(d) The Authorized Participant will maintain records of all sales of Shares
made by or through it and will furnish copies of such records to the Sponsor
upon the reasonable request of the Sponsor.
Section 10. Indemnification.
(a) The Authorized Participant hereby indemnifies and holds harmless the
Trustee, the Custodian, the Participant's Custodian, the Trust, the Sponsor,
their respective direct or indirect affiliates (as defined below) and their
respective directors, officers, employees and agents (each, an "AP Indemnified
Party") from and against any losses, liabilities, damages, costs and expenses
(including attorney's fees and the reasonable cost of investigation) incurred by
such AP Indemnified Party as a result of or in connection with: (i) any breach
by the Authorized Participant of any provisions of this Agreement, including its
representations, warranties and covenants; (ii) any failure on the part of the
Authorized Participant to perform any of its obligations set forth in this
Agreement; (iii) any failure by the Authorized Participant to comply with
applicable laws and the rules and regulations of self-regulatory organizations;
(iv) any actions of such AP Indemnified Party in reliance upon any instructions
issued in accordance with the Procedures believed by the AP Indemnified Party to
be genuine and to have been given by the Authorized Participant; or (v) (A) any
representation by the Authorized Participant, its employees or its agents or
other representatives about the Shares, any AP Indemnified Party or the Trust
that is not consistent with the Trust's then-current Prospectus made in
connection with the offer or the solicitation of an offer to buy or sell Shares
and (B) any untrue statement or
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alleged untrue statement of a material fact contained in any research reports,
marketing material and sales literature described in Section 14(b) or any
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading to the extent that
such statement or omission relates to the Shares, any AP Indemnified Party or
the Trust, unless, in either case, such representation, statement or omission
was made or included by the Authorized Participant at the written direction of
the Sponsor or is based upon any omission or alleged omission by the Sponsor to
state a material fact in connection with such representation, statement or
omission necessary to make such representation, statement or omission not
misleading.
(b) The Sponsor hereby agrees to indemnify and hold harmless the Authorized
Participant, its respective subsidiaries, affiliates, directors, officers,
employees and agents, and each person, if any, who controls such persons within
the meaning of Section 15 of the 1933 Act (each, a "Sponsor Indemnified Party")
from and against any losses, liabilities, damages, costs and expenses (including
attorneys' fees and the reasonable cost of investigation) incurred by such
Sponsor Indemnified Party as a result of (i) any breach by the Sponsor of any
provision of this Agreement that relates to the Sponsor; (ii) any failure on the
part of the Sponsor to perform any obligation of the Sponsor set forth in this
Agreement; (iii) any failure by the Sponsor to comply with applicable laws; or
(iv) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement of the Trust as originally filed with
the SEC or in any amendment thereof, or in any prospectus, or in any amendment
thereof or supplement thereto, or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except those
statements in the Registration Statement or the Prospectus based on information
furnished in writing by or on behalf of the Authorized Participant expressly for
use in the Registration Statement or the Prospectus.
(c) This Section 10 shall not apply to the extent any such losses,
liabilities, damages, costs and expenses are incurred as a result or in
connection with any gross negligence, bad faith or willful misconduct on the
part of the AP Indemnified Party or the Sponsor Indemnified Party, as the case
may be. The term "affiliate" in this Section 10 shall include, with respect to
any person, entity or organization, any other person, entity or organization
which directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such person, entity or
organization.
(d) If the indemnification provided for in this Section 10 is unavailable
to an indemnified party under Sections 10(a) or 10(b) or insufficient to hold an
indemnified party harmless in respect of any losses, liabilities, damages, costs
and expenses referred to therein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, liabilities, damages, costs and expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Sponsor and
the Trust, on the one hand, and by the Authorized Participant, on the other
hand, from the services provided hereunder or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Sponsor and the Trust, on the one hand,
and of the Authorized Participant, on the other hand, in connection with, to the
extent applicable, the statements or omissions which resulted in such losses,
liabilities, damages, costs
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and expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Sponsor and the Trust, on the one hand, and
the Authorized Participant, on the other hand, shall be deemed to be in the same
respective proportions as the amount of gold transferred to the Trust under this
Agreement on the one hand (expressed in dollars) bears to the amount of economic
benefit received by the Authorized Participant in connection with this Agreement
on the other hand. To the extent applicable, the relative fault of the Sponsor
on the one hand and of the Authorized Participant on the other shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Sponsor or by the Authorized Participant
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, liabilities, damages, costs and
expenses referred to in this Section 10(d) shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any action, suit or proceeding
(each a "Proceeding") related to such losses, liabilities, damages, costs and
expenses.
(e) The Sponsor and the Authorized Participant agree that it would not be
just and equitable if contribution pursuant to this Section 10 were determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 10(d) above. The
Authorized Participant shall not be required to contribute any amount in excess
of the amount by which the total price at which the Shares created by the
Authorized Participant and distributed to the public exceeds the amount of any
damage which the Authorized Participant has otherwise been required to pay by
reason of such untrue statement or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section 10
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Authorized Participant, its partners, stockholders, members,
directors, officers, employees and or any person (including each partner,
stockholder, member, director, officer or employee of such person) who controls
the Authorized Participant within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, or by or on behalf of the Sponsor, its partners,
stockholders, members, directors, officers, employees or any person who controls
the Sponsor within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act, 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, in the case of the Sponsor,
against any of the Sponsor's officers or directors, in connection with the
issuance and sale of the Shares or in connection with the Registration Statement
or the Prospectus.
(g) Pursuant to the Trust Indenture, the Trustee, solely from and to the
extent of the assets of the Trust, hereby agrees to reimburse any Sponsor
Indemnified Party to the extent the Sponsor does not pay such amounts when due
under this Section 10 (including any amount in contribution thereof that may be
owed to such Sponsor Indemnified Party pursuant to Section 10 hereof), and to
pay any and all expenses (including reasonable and documented counsel fees and
expenses) incurred by the Sponsor Indemnified Party in enforcing its rights
under this Section 10(g). In connection with enforcing its rights, each Sponsor
Indemnified Party shall use the same
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legal counsel which shall be selected by the Authorized Participant and be
reasonably acceptable to the Sponsor.
Section 11. (a) Limitation of Liability. None of the Sponsor, the Trustee,
the Authorized Participant, the Participant's Custodian and the Custodian shall
be liable to each other or to any other person, including any party claiming by,
through or on behalf of the Authorized Participant, for any losses, liabilities,
damages, costs or expenses arising out of any mistake or error in data or other
information provided to any of them by each other or any other person or out of
any interruption or delay in the electronic means of communications used by
them.
(b) Tax Liability. The Authorized Participant shall be responsible for the
payment of any transfer tax, sales or use tax, stamp tax, recording tax, value
added tax and any other similar tax or government charge applicable to the
creation or redemption of any Basket made pursuant to this Agreement, regardless
of whether or not such tax or charge is imposed directly on the Authorized
Participant. To the extent the Trustee, the Sponsor or the Trust is required by
law to pay any such tax or charge, the Authorized Participant agrees to promptly
indemnify such party for any such payment, together with any applicable
penalties, additions to tax or interest thereon.
Section 12. Acknowledgment. The Authorized Participant acknowledges receipt
of a (i) copy of the Trust Indenture and (ii) the current Prospectus of the
Trust and represents that it has reviewed and understands such documents.
Section 13. Effectiveness and Termination. Upon the execution of this
Agreement by the parties hereto, this Agreement shall become effective in this
form as of the date first set forth above, and may be terminated at any time by
any party upon thirty (30) days prior written notice to the other parties unless
earlier terminated: (i) in accordance with Section 2(a); (ii) upon notice to the
Authorized Participant by the Trustee in the event of a breach by the Authorized
Participant of this Agreement or the procedures described or incorporated
herein; (iii) immediately in the circumstances described in Section 20(j); or
(iv) at such time as the Trust is terminated pursuant to the Trust Agreement.
Section 14. Marketing Materials; Representations Regarding Shares;
Identification in Registration Statement.
(a) The Authorized Participant represents, warrants and covenants that (i),
without the written consent of the Sponsor, the Authorized Participant will not
make, or permit any of its representatives to make, any representations
concerning the Shares or any AP Indemnified Party other than representations
contained (A) in the then-current Prospectus of the Trust, (B) in printed
information approved by the Sponsor as information supplemental to such
Prospectus or (C) in any promotional materials or sales literature furnished to
the Authorized Participant by the Sponsor, and (ii) the Authorized Participant
will not furnish or cause to be furnished to any person or display or publish
any information or material relating to the Shares, any AP Indemnified Person or
the Trust that are not consistent with the Trust's then current Prospectus.
Copies of the then current Prospectus of the Trust and any such printed
supplemental information will be supplied by the Sponsor to the Authorized
Participant in reasonable quantities upon request.
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(b) Notwithstanding the foregoing, the Authorized Participant may without
the written approval of the Sponsor prepare and circulate in the regular course
of its business research reports, marketing material and sales literature that
includes information, opinions or recommendations relating to the Shares (i) for
public dissemination, provided that such research reports, marketing material or
sales literature compare the relative merits and benefits of Shares with other
products; and (ii) for internal use by the Authorized Participant. The
Authorized Participant will file all such research reports, marketing material
and sales literature related to the Shares with the NASD to the extent required
by the NASD Conduct Rules.
(c) The Authorized Participant and its affiliates may prepare and circulate
in the regular course of their businesses, without having to refer to the Shares
or the Trust's then-current Prospectus, data and information relating to the
price of gold.
(d) The Authorized Participant hereby agrees that for the term of this
Agreement the Sponsor may deliver the then-current Prospectus, and any
supplements or amendments thereto or recirculation thereof, to the Authorized
Participant in Portable Document Format ("PDF") via electronic mail in lieu of
delivering the Prospectus in paper form. The Authorized Participant may revoke
the foregoing agreement at any time by delivering written notice to the Sponsor
and, whether or not such agreement is in effect, the Authorized Participant may,
at any time, request reasonable quantities of the Prospectus, and any
supplements or amendments thereto or recirculation thereof, in paper form from
the Sponsor. The Authorized Participant acknowledges that it has the capability
to access, view, save and print material provided to it in PDF and that it will
incur no appreciable extra costs by receiving the Prospectus in PDF instead of
in paper form. The Sponsor will when requested by the Authorized Participant
make available at no cost the software and technical assistance necessary to
allow the Authorized Participant to access, view and print the PDF version of
the Prospectus.
(e) For as long as this Agreement is effective, the Authorized Participant
agrees to be identified as an authorized participant of the Trust (i) in the
section of the Prospectus included within the Registration Statement entitled
"Creation and Redemption of Shares" and in any other section as may be required
by the SEC and (ii) on the Trust's website. Upon the termination of this
Agreement, (i) during the period prior to when the Sponsor qualifies and elects
to file on Form S-3, the Sponsor will remove such identification from the
Prospectus in the amendment of the Registration Statement next occurring after
the date of the termination of this Agreement and, during the period after when
the Sponsor qualifies and elects to file on Form S-3, the Sponsor will promptly
file a current report on Form 8-K indicating the withdrawal of the Authorized
Participant as an authorized participant of the Trust and (ii) the Sponsor will
promptly update the Trust's website to remove any identification of the
Authorized Participant as an authorized participant of the Trust.
Section 15. Certain Covenants of the Sponsor. The Sponsor, on its own
behalf and as sponsor of the Trust, covenants and agrees:
(a) to advise the Authorized Participant promptly of the happening of any
event during the term of this Agreement which could require the making of any
change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of
-10-
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, to prepare and furnish, at the expense of the
Trust, to the Authorized Participant promptly such amendments or supplements to
such Prospectus as may be necessary to reflect any such change;
(b) to furnish to the Authorized Participant, at each time (i) the
Registration Statement or the Prospectus is amended or supplemented by the
filing of a post-effective amendment, (ii) a new Registration Statement is filed
to register additional Shares in reliance on Rule 429, and (iii) there is
financial information incorporated by reference into the Registration Statement
or the Prospectus, an opinion of Carter Ledyard & Milburn LLP, counsel for the
Sponsor, addressed to the Authorized Participant and dated such dates in form
and substance satisfactory to the Authorized Participant, stating that:
1. the Trust 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 Shares as contemplated therein and to execute and deliver this
Agreement;
2. the Sponsor has been duly organized and is validly existing as a
limited liability company in good standing under the laws of the State
of Delaware, with full corporate power and authority to conduct its
business as described in the Registration Statement and the Prospectus
and to execute and deliver this Agreement;
3. the Sponsor is duly qualified and is in good standing in each
jurisdiction where the conduct of its business requires such
qualification;
4. this Agreement has been duly authorized, executed and delivered by the
Sponsor;
5. the Shares issuable by the Trust as described in the Registration
Statement, when issued in accordance with the terms of the Trust
Indenture as described in the Registration Statement, will have been
duly authorized and validly issued and fully paid and non-assessable;
6. the Shares conform to the description thereof contained in the
Registration Statement and the Prospectus;
7. the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial 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 1933 Act;
8. the Registration Statement has become effective under the 1933 Act
and, to such counsel's knowledge, no stop order proceedings with
respect thereto are pending or threatened under the 1933 Act and any
required filing of the Prospectus and any supplement thereto pursuant
to Rule 424 under the 1933 Act has been made in the manner and within
the time period required by such Rule 424;
-11-
9. no approval, authorization, consent or order of or filing with any
federal, or New York State governmental or regulatory commission,
board, body, authority or agency is required in connection with the
issuance and sale of the Shares and consummation by the Sponsor of the
transactions contemplated in the Prospectus other than registration of
the Shares under the 1933 Act (except such counsel need express no
opinion as to any necessary qualification under the state securities
or blue sky laws of any state or the laws of any jurisdictions outside
the United States);
10. the execution, delivery and performance of this Agreement by the
Sponsor, the issuance and delivery of the Shares by the Trust and the
consummation by the Sponsor and the Trustee on behalf of the Trust of
the transactions contemplated hereby do not and 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) the amended and restated limited liability company
agreement of the Sponsor or the Trust Indenture, 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 known to such counsel after reasonable
investigation (based on a certificate of an officer of the Sponsor) to
which the Sponsor or the Trustee is a party or by which either of them
or any of their respective properties may be bound or affected, or any
federal, or New York State law, regulation or rule or any decree,
judgment or order applicable to the Sponsor or the Trust and known to
such counsel;
11. to such counsel's knowledge, neither the Sponsor nor the Trust is in
breach or violation of or in default under (nor has any event occurred
which with notice, lapse of time, or both would result in any breach
or violation of, or constitute a default under) their respective
constitutive documents, or any federal or New York State law,
regulation or rule applicable to the Sponsor or the Trust;
12. to such counsel's knowledge, there are no affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements,
leases or documents of a character which are required to be described
in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which have not been so described
or filed;
13. to such counsel's knowledge, there are no actions, suits, claims,
investigations or proceedings pending, or threatened to which the
Sponsor or the Trustee is or would be a party or to which any of their
respective properties is 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 which are
required to be described in the Registration Statement or the
Prospectus but are not so described;
14. the Trust is not and, after giving effect to the offering and sale of
the Shares, 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"); and
-12-
15. the information in the Registration Statement and the Prospectus under
the headings "Risk Factors--Competing claims over ownership of
intellectual property rights related to the Trust could adversely
affect the Trust and an investment in the Shares," "Business of the
Trust--License Agreement," "Description of the Shares," "United States
Federal Tax Consequences," "Description of the Trust Indenture,"
"Description of the Custody Agreements" and "Legal Proceedings"
insofar as such statements constitute a summary of documents or
matters of law are accurate in all material respects and present
fairly the information required to be shown.
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Sponsor,
representatives of the independent public accountants of the Trust and
representatives of the Authorized Participant at which the contents of the
Registration Statement and the Prospectus were discussed and, although such
counsel is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except as and to the extent stated in subparagraphs
(6) and (15) above), on the basis of the foregoing nothing has come to the
attention of such counsel that causes them to believe that the Registration
Statement or any amendment thereto at the time such Registration Statement or
amendment became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus or any
supplement thereto at the date of such Prospectus or such supplement, and at the
time of purchase of the Shares by the Authorized Participant hereunder,
contained an untrue statement of a material fact or omitted 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 (it
being understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial information included in
the Registration Statement or the Prospectus);
(c) to cause Deloitte & Touche LLP to deliver, at each time (i) the
Registration Statement or the Prospectus is amended or supplemented by the
filing of a post-effective amendment, (ii) a new Registration Statement is filed
to register additional Shares in reliance on Rule 429, and (iii) there is
financial information incorporated by reference into the Registration Statement
or the Prospectus, letters dated such dates and addressed to the Authorized
Participant, containing statements and information of the type ordinarily
included in accountants' letters to underwriters with respect to the financial
statements and other financial information contained in or incorporated by
reference into the Registration Statement and the Prospectus;
(d) to deliver to the Authorized Participant, at each time (i) the
Registration Statement or the Prospectus is amended or supplemented by the
filing of a post-effective amendment, (ii) a new Registration Statement is filed
to register additional Shares in reliance on Rule 429, and (iii) there is
financial information incorporated by reference into the Registration Statement
or the Prospectus, a certification by a duly authorized officer of the Sponsor
in the form attached hereto as Exhibit D.
In addition, any certificate signed by any officer of the Sponsor and
delivered to the Authorized Participant or counsel for the Authorized
Participant pursuant hereto shall be deemed
-13-
to be a representation and warranty by the Sponsor as to matters covered thereby
to the Authorized Participant;
(e) to furnish to the Authorized Participant, at each time (i) the
Registration Statement or the Prospectus is amended or supplemented by the
filing of a post-effective amendment, (ii) a new Registration Statement is filed
to register additional Shares in reliance on Rule 429, and (iii) there is
financial information incorporated by reference into the Registration Statement
or the Prospectus, such documents and certificates in the form as reasonably
requested by the Marketing Agent pursuant to Section 4.1(q) of the Marketing
Agent Agreement; and
(f) to cause the Trust to file a post-effective amendment to the
Registration Statement no less frequently than once per calendar quarter on or
about the same time that the Trust files a quarterly or annual report pursuant
to Section 13 or 15(d) of the 1934 Act (including the information contained in
such report), until such time as the Trust's reports filed pursuant to Section
13 or 15(d) of the 1934 Act are incorporated by reference in the Registration
Statement.
Section 16. Title To Gold. The Authorized Participant represents and
warrants on behalf of itself and any party for which it acts that upon delivery
of a Creation Basket Deposit to the Trustee in accordance with the terms of the
Trust Indenture and this Agreement, the Trust will acquire good and unencumbered
title to the Gold which is the subject of such Creation Basket Deposit, free and
clear of all pledges, security interests, liens, charges, taxes, assessments,
encumbrances, equities, claims, options or limitations of any kind or nature,
fixed or contingent, and not subject to any adverse claims, including any
restriction upon the sale or transfer of all or any part of such Gold which is
imposed by any agreement or arrangement entered into by the Authorized
Participant or any party for which it is acting in connection with a Purchase
Order.
Section 17. Third Party Beneficiaries. Each AP Indemnified Party, to the
extent it is not a party to this Agreement, is a third-party beneficiary of this
Agreement (each, a "Third Party Beneficiary") and may proceed directly against
the Authorized Participant (including by bringing proceedings against the
Authorized Participant in its own name) to enforce any obligation of the
Authorized Participant under this Agreement which directly or indirectly
benefits such Third Party Beneficiary.
Section 18. Force Majeure. No party to this Agreement shall incur any
liability for any delay in performance, or for the non-performance, of any of
its obligations under this Agreement by reason of any cause beyond its
reasonable control. This includes any act of God or war or terrorism, any
breakdown, malfunction or failure of transmission in connection with or other
unavailability of any wire, communication or computer facilities, any transport,
port, or airport disruption, industrial action, acts and regulations and rules
of any governmental or supra national bodies or authorities or regulatory or
self-regulatory organization or failure of any such body, authority or
organization for any reason, to perform its obligations.
Section 19. Ambiguous Instructions. If a Purchase Order Form or a
Redemption Order Form otherwise in good form contains order terms that differ
from the information provided in the telephone call at the time of issuance of
the applicable order number, the Trustee will attempt to contact one of the
Authorized Persons of the Authorized Participant to request confirmation of the
terms of the Order. If an Authorized Person confirms the terms as they appear in
the Order,
-14-
then the Order will be accepted and processed. If an Authorized Person
contradicts the Order terms, the Order will be deemed invalid, and a corrected
Order must be received by the Trustee, as the case may be, not later than the
earlier of: (i) within 15 minutes of such contact with the Authorized Person; or
(ii) 45 minutes after the Order Cut-Off Time (as described in the Procedures).
If the Trustee is not able to contact an Authorized Person, then the 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 an
Order contains terms that are illegible, the Order will be deemed invalid and
the Trustee will attempt to contact one of the Authorized Persons of the
Authorized Participant to request retransmission of the Order. A corrected Order
must be received by the Trustee not later than the earlier of (i) within 15
minutes of such contact with the Authorized Person or (ii) 45 minutes after the
Order Cut-Off Time, as the case may be.
Section 20. Miscellaneous.
(a) Amendment and Modification. This Agreement, the Procedures attached as
Attachment A and the Exhibits hereto may be amended, modified or supplemented by
the Trustee and the Sponsor, without consent of any Beneficial Owner or
Authorized Participant from time to time by the following procedure. After the
amendment, modification or supplement has been agreed to, the Trustee will mail
a copy of the proposed amendment, modification or supplement to the Authorized
Participant. For the purposes of this Agreement, mail will be deemed received by
the recipient thereof on the third (3rd) day following the deposit of such mail
into the United States postal system. Within ten (10) calendar days after its
deemed receipt, the amendment, modification or supplement will become part of
this Agreement, the Attachments or the Exhibits, as the case may be, in
accordance with its terms. If at any time there is any material amendment,
modification or supplement of any streetTRACKS(R) Gold Trust Participant
Agreement (other than this Agreement), the Trustee will promptly mail a copy of
such amendment, modification or supplement to the Authorized Participant.
Notwithstanding the foregoing, any amendment, modification or supplement to
any creation or redemption procedural item in the Procedures which is also set
forth in either of the Custody Agreements or in the Participant Unallocated
Bullion Account Agreement attached as Attachment B shall be made in accordance
with the terms of such agreements. After the amendment, modification or
supplement has been agreed to, the Trustee will mail a copy of the amendment,
modification or supplement to the Authorized Participant.
The form of agreements of the Custodian and the Trustee concerning their
respective indemnification by the Authorized Participant for communications by
telephone facsimile attached as Attachment C may be amended from time to time by
the Custodian and the Trustee, as the case may be.
(b) Waiver of Compliance. Any failure of any of the parties to comply with
any obligation, covenant, agreement or condition herein may be waived by the
party entitled to the benefits thereof only by a written instrument signed by
the party granting such waiver, but any such written waiver, or the failure to
insist upon strict compliance with any obligation, covenant, agreement or
condition herein, shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
-15-
(c) Notices. Except as otherwise specifically provided in this Agreement,
all notices required or permitted to be given pursuant to this Agreement shall
be given in writing and delivered by personal delivery, by postage prepaid
registered or certified United States first class mail, return receipt
requested, by nationally recognized overnight courier (delivery confirmation
received) or by telex, telegram or telephonic facsimile or similar means of same
day delivery (transmission confirmation received), with a confirming copy
regular mail, postage prepaid. For avoidance of doubt, notices may not be given
or transmitted by electronic mail. Unless otherwise notified in writing, all
notices to the Trust shall be given or sent to the Trustee. All notices shall be
directed to the address or telephone or facsimile numbers indicated below the
signature line of the parties on the signature page hereof.
(d) Successors and Assigns. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
(e) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party without the prior written
consent of the other parties, except 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, conversion, or consolidation to which such party
hereunder shall be a party, or any entity succeeding to all or substantially all
of the business of the party, shall be the successor of the party under this
Agreement. The party resulting from any such merger, conversion, consolidation
or succession shall notify the other parties hereto of the change. Any purported
assignment in violation of the provisions hereof shall be null and void.
Notwithstanding the foregoing, this Agreement shall be automatically assigned to
any successor Trustee or Sponsor at such time such successor qualifies as a
successor Trustee or Sponsor under the terms of the Trust Indenture.
(f) Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable New York
conflict of laws principles) as to all matters, including matters of validity,
construction, effect, performance and remedies. 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 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 hereunder, 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 party at such party's address for purposes of notices hereunder.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement, and it shall not be necessary in making proof of
this Agreement as to any party hereto to produce or account for more than one
such counterpart executed and delivered by such party.
-16-
(h) Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
(i) Entire Agreement. This Agreement and the Trust Indenture, along with
any other agreement or instrument delivered pursuant to this Agreement and the
Trust Indenture, supersede all prior agreements and understandings between the
parties with respect to the subject matter hereof, provided, however, that the
Authorized Participant shall not be deemed by this provision to be a party to
the Trust Indenture.
(j) Severance. If any provision of this Agreement is held by any court or
any act, regulation, rule or decision of any other governmental or supra
national body or authority or regulatory or self-regulatory organization to be
invalid, illegal or unenforceable for any reason, it shall be invalid, illegal
or unenforceable only to the extent so held and shall not affect the validity,
legality or enforceability of the other provisions of this Agreement and this
Agreement will be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein, unless the Sponsor determines in its
discretion, after consulting with the Trustee, that the provision of this
Agreement that was held invalid, illegal or unenforceable does affect the
validity, legality or enforceability of one or more other provisions of this
Agreement, and that this Agreement should not be continued without the provision
that was held invalid, illegal or unenforceable, and in that case, upon the
Sponsor's notification of the Trustee of such a determination, this Agreement
shall immediately terminate and the Trustee will so notify the Authorized
Participant immediately.
(k) 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.
(l) Survival. Sections 10 (Indemnification) and 17 (Third Party
Beneficiaries) hereof shall survive the termination of this Agreement.
(m) Other Usages. The following usages shall apply in interpreting this
Agreement: (i) references to a governmental or quasigovernmental agency,
authority or instrumentality shall also refer to a regulatory body that succeeds
to the functions of such agency, authority or instrumentality; and (ii)
"including" means "including, but not limited to."
[Signature Page Follows]
-17-
IN WITNESS WHEREOF, the Authorized Participant, the Sponsor and the
Trustee, on behalf of the Trust, have caused this Agreement to be executed by
their duly authorized representatives as of the date first set forth above.
The Bank of New York, not in its individual
capacity, but solely as Trustee of the
streetTRACKS(R) Gold Trust [Name of Authorized Participant]
By: By:
------------------- -------------------
Name: Name:
------------------- -------------------
Title: Title:
------------------- -------------------
Address: Address:
------------------- -------------------
Telephone: Telephone:
------------------- -------------------
Facsimile: Facsimile:
------------------- -------------------
Name of Authorized Participant's
Participant Unallocated Account:
--------------------------------
World Gold Trust Services, LLC
Sponsor of the streetTRACKS(R) Gold Trust
By:
-------------------
Name:
-------------------
Title:
-------------------
Address: 444 Madison Avenue, 3rd Floor
New York, New York 10022
Telephone: (212) 317-3800
Facsimile: (212) 688-0410
-18-
EXHIBIT A
streetTRACKS(R) GOLD TRUST
FORM OF CERTIFIED AUTHORIZED PERSONS OF AUTHORIZED PARTICIPANT
The following are the names, titles and signatures of all persons (each
an "Authorized Person") authorized to give instructions relating to any activity
contemplated by the Participant Agreement or any other notice, request or
instruction on behalf of the Authorized Participant pursuant to the
streetTRACKS(R) Gold Trust Participant Agreement.
Authorized Participant: _______________________
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ----------------------------
Signature: Signature:
----------------------- ------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ----------------------------
Signature: Signature:
----------------------- ------------------------
The undersigned, [name], [title] of [company], does hereby certify that
the persons listed above have been duly elected to the offices set forth beneath
their names, that they presently hold such offices, that they have been duly
authorized to act as Authorized Persons pursuant to the streetTRACKS(R) Gold
Trust Participant Agreement by and between [Authorized Participant] and the
Trustee and the Sponsor of the streetTRACKS(R) Gold Trust, dated [date], and
that their signatures set forth above are their own true and genuine signatures.
In Witness Whereof, the undersigned has hereby set his/her hand and the
seal of [company] on the date set forth below.
Subscribed and sworn to before me By:
this day of , 20 ----------------------
--- ------------ --- Name:
----------------------
Title:
----------------------
Date:
------------------------------------- ----------------------
Notary Public
A-1
EXHIBIT B
streetTRACKS(R) GOLD TRUST
FORM OF PURCHASE ORDER
Authorized Participant:
-------------------
Date:
-------------------
Submission
Number:
-------------------
PIN Number:
-------------------
Number of Fine Gold Ounces to be Delivered:
----------------------------
Number of Shares to be Issued:
-----------------------------------------
[Additional Information Required for Purchase Order]
All Purchase Orders are subject to the terms and conditions of the Trust
Indenture of the streetTRACKS(R) Gold Trust as currently in effect and the
streetTRACKS(R) Gold Trust Participant Agreement between the Authorized
Participant, and the Trustee and the Sponsor named therein. All representations
and warranties of the Authorized Participant set forth in such streetTRACKS(R)
Gold Trust Participant Agreement are incorporated herein by reference.
The undersigned does hereby certify as of the date set forth below that he/she
is an Authorized Person under the streetTRACKS(R) Gold Trust Participant
Agreement and that he/she is authorized to deliver this Purchase Order Form to
the Trustee on behalf of the Authorized Participant.
Date: By:
----------------- -----------------------------
Name:
Title:
B-1
EXHIBIT C
streetTRACKS(R) GOLD TRUST
FORM OF REDEMPTION ORDER
Authorized Participant:
-------------------
Date:
-------------------
Submission
Number:
-------------------
PIN Number:
-------------------
Number of Fine Gold Ounces to be Delivered:
----------------------------
Number of Shares to be Issued:
-----------------------------------------
[Additional Information Required for Redemption Order]
All Redemption Orders are subject to the terms and conditions of the Trust
Indenture of the streetTRACKS(R) Gold Trust as currently in effect and the
streetTRACKS(R) Gold Trust Participant Agreement between the Authorized
Participant and the Trustee and the Sponsor named therein. All representations
and warranties of the Authorized Participant set forth in such streetTRACKS(R)
Gold Trust Participant Agreement are incorporated herein by reference.
The undersigned does hereby certify as of the date set forth below that he/she
is an Authorized Person under the streetTRACKS(R) Gold Trust Participant
Agreement and that he/she is authorized to deliver this Redemption Order Form to
the Trustee on behalf of the Authorized Participant.
Date: By:
----------------- -----------------------------
Name:
Title:
C-1
EXHIBIT D
streetTRACKS(R) GOLD TRUST
WORLD GOLD TRUST SERVICES, LLC
OFFICER'S CERTIFICATE
The undersigned, a duly authorized officer of World Gold Trust Services,
LLC, a Delaware limited liability company (the "Sponsor"), and pursuant to
Section 15(d) of the streetTRACKS(R) Gold Trust Participant Agreement (the
"Agreement"), dated as of __________, by and between the Sponsor, The Bank of
New York, not in its individual capacity but solely as Trustee (the "Trustee")
of the streetTRACKS(R) Gold Trust (the "Trust"), and __________ (the "Authorized
Participant"), hereby certifies that:
1. Each of the following representations and warranties of the Sponsor is
true and correct in all material respects as of the date hereof:
(a) the Prospectus does 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; the
Registration Statement complies in all material respects with the
requirements of the 1933 Act and the Prospectus complies in all
material respects with the requirements of the 1933 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; the conditions to the
use of Form S-1 or S-3, if applicable, have been satisfied; the
Registration Statement does 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 not
misleading and the Prospectus does 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; provided, however, that the Sponsor makes
no warranty or representation with respect to any statement
contained in the Registration Statement or any Prospectus in
reliance upon and in conformity with information concerning the
Authorized Participant and furnished in writing by or on behalf
of the Authorized Participant to the Sponsor expressly for use in
the Registration Statement or such Prospectus; and neither the
Sponsor nor any person known to the Sponsor acting on behalf of
the Trust has distributed nor will distribute any offering
material other than the Preliminary Prospectus, the Registration
Statement or the Prospectus;
(b) 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
the Trust Indenture authorizes the Trustee to issue and deliver
the Shares to the Authorized Participant hereunder as
contemplated in the Registration Statement and the Prospectus;
(c) the Sponsor has been duly organized and is validly existing as a
limited liability company in good standing under the laws of the
State of Delaware, with full power and authority to conduct its
business as described in the Registration Statement and the
Prospectus, and has all requisite power and authority to execute
and deliver this Agreement;
(d) the Sponsor is duly qualified and is in good standing in each
jurisdiction where the conduct of its business requires such
qualification; and the Trust is not required to so qualify in any
jurisdiction;
(e) complete and correct copies of the Trust Indenture, and any and
all amendments thereto, have been delivered to the Authorized
Participant, and no changes thereto have been made;
(f) the outstanding Shares have been duly and validly issued and are
fully paid and non-assessable and free of statutory and
contractual preemptive rights, rights of first refusal and
similar rights;
(g) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and the
Prospectus and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(h) this Agreement has been duly authorized, executed and delivered
by the Sponsor and constitutes the valid and binding obligations
of the Sponsor, enforceable against the Sponsor in accordance
with its terms;
(i) neither the Sponsor nor the Trustee on behalf of the Trust is in
breach or violation of or in default under (nor has any event
occurred which with notice, lapse of time or both would result in
any breach or violation of, constitute a 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 Trustee on behalf of
the Trust is a party or by which any 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
Shares to the Authorized Participant hereunder and the
consummation of the transactions contemplated hereby does 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 amended and restated limited
liability company agreement of the Sponsor or the Trust
Indenture, 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 Trustee on behalf of the Trust is a
party or by which, respectively, the Sponsor or any of its
properties or the Trustee or the property of the Trust 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, the Trust or the Trustee;
(j) 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 Shares to the Authorized
Participant hereunder or the consummation by the Sponsor, the
Trust and the Trustee on behalf of the Trust of the transactions
contemplated hereunder other than registration of the Shares
under the 1933 Act, which has been effected, and any necessary
qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered or
under the rules and regulations of the National Association of
Securities Dealers (the "NASD");
(k) 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 Shares or other
equity interests 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 Shares, 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 Shares as contemplated thereby or
otherwise; no person has the right, contractual or otherwise, to
cause the Sponsor on behalf of the Trust or the Trust to register
under the 1933 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;
(l) 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 Trustee on behalf of the Trust is in violation 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
Trustee on behalf of the Trust;
(m) 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;
(n) except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits, claims, investigations
or proceedings pending or threatened or contemplated to which the
Sponsor, the Trust or the Trustee on behalf of the Trust, or any
of the Sponsor's 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;
(o) Deloitte & Touche LLP, whose report on the audited financial
statements of the Trust is filed with the SEC as part of the
Registration Statement and the Prospectus, are independent public
accountants as required by the 1933 Act;
(p) the audited financial statement(s) 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 1933
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;
(q) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has
not been (i) any material adverse change, or any development
involving a prospective material adverse change affecting the
Sponsor or the Trust, (ii) any transaction which is material to
the Sponsor or the Trust taken as a whole, (iii) any obligation,
direct or contingent (including any off-balance sheet
obligations), incurred by the Sponsor, the Trust or the Trustee
on behalf of the Trust, which is material to the Trust, (iv) any
change in the Shares purchased by the Authorized Participant or
outstanding indebtedness of the Sponsor or the Trust or (v) any
dividend or distribution of any kind declared, paid or made on
such Shares;
(r) the Trust is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act;
(s) except as set forth in the Registration Statement and the
Prospectus, 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");
(i) to the knowledge of the Sponsor or the Trust, there are no
third parties who have or 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; (ii) to the knowledge of the Sponsor or the
Trust, there is no infringement by third parties of any
Intellectual Property; (iii) there is no pending or, to the
knowledge of the Sponsor or the Trust, threatened action, suit,
proceeding or claim by others challenging the Sponsor's or the
Trust's rights in or 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; (iv) there is no pending or,
to the knowledge of the Sponsor or the Trust, threatened action,
suit, proceeding or claim by others challenging the validity or
scope of any Intellectual Property, other than the patents and
patent applications licensed to the Sponsor by the Bank of New
York, as to which the Sponsor and the Trust have no knowledge of
any such pending or threatened claims, 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, to the
knowledge of the Sponsor or the Trust, 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; (vi) to the knowledge of the
Sponsor or the Trust, there is no patent or patent application
that contains claims that interfere with the issued or pending
claims of any of the Intellectual Property; and (vii) to the
knowledge of the Sponsor or the Trust, there is no prior art that
may render any patent application licensed to the Sponsor by The
Bank of New York unpatentable;
(t) all tax returns required to be filed by the Sponsor have been
filed, and all taxes and other assessments 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 from such entities have been paid; and no tax
returns or tax payments are due with respect to the Trust as of
the date of this Agreement;
(u) neither the Sponsor nor the Trustee on behalf of 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, the Trustee on behalf of the Trust or
any other party to any such contract or agreement;
(v) with respect to its activities on behalf of the Trust, as
provided for in the Trust Indenture, the Trustee maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with the Trust Indenture and the Trustee's duties
thereunder; (ii) transactions with respect to the Trust are
recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; and (iii)
assets are held for the Trust by the Custodian in accordance with
the Trust Indenture;
(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 1934 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 (ii) 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; and
(y) neither the Sponsor, nor any of the Sponsor's directors, members,
officers, affiliates or controlling persons (but excluding the
members of the World Gold Council and their controlling persons)
nor the Trustee has taken, directly or indirectly, any action
designed, or which has constituted or might reasonably be
expected to cause or result in, under the 1934 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
Shares; and there are no affiliations or associations between any
member of the NASD and any of the Sponsor's officers, directors
or 5% or greater security holders, except as set forth in the
Registration Statement and the Prospectus.
For purposes hereof, the term "Registration Statement" shall mean
the Registration Statement as amended or supplemented from time
to time to the date hereof, the term "Preliminary Prospectus"
shall mean the preliminary prospectus dated [______], 2004
relating to the Shares and any other prospectus dated prior to
effectiveness of the Registration Statement relating to the
Shares, and the term "Prospectus" shall mean the Prospectus as
amended or supplemented from time to time to the date hereof.
2. Each of the obligations of the Sponsor to be performed by it on
or before the date hereof pursuant to the terms of the Agreement,
and each of the provisions thereof to be complied with by the
Sponsor on or before the date hereof, has been duly performed and
complied with in all material respects.
Capitalized terms used, but not defined herein shall have the meanings assigned
to such terms in the Agreement.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, I have hereunto, on behalf of the Sponsor, subscribed
my name this _____ day of ----------.
By: ________________________
Name:
Title:
I, _______________, in my capacity as [Vice President], hereby certify that
_______________ is the duly elected [President] of the Sponsor, and that the
signature set forth immediately above is [his/her] genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of the date first set forth
above.
By: ________________________
Name:
Title:
FORM OF
streetTRACKS(R) GOLD TRUST
PARTICIPANT AGREEMENT
ATTACHMENT A
streetTRACKS(R) GOLD TRUST PROCEDURES
CREATION AND REDEMPTION OF streetTRACKS(R) GOLD SHARES AND RELATED GOLD
TRANSACTIONS
Scope of Procedures and Overview
These procedures (the "Procedures") describe the processes by which one or more
Baskets of streetTRACKS(R) Gold Trust shares (the "Shares") issuable by The Bank
of New York, as trustee (the "Trustee") of the streetTRACKS(R) Gold Trust (the
"Trust"), may be purchased or, once Shares have been issued, redeemed by an
Authorized Participant (a "Participant"). Shares may be created or redeemed only
in blocks of 100,000 Shares (each such block, a "Basket"). Because the issuance
and redemption of Baskets also involve the transfer of Gold between the
Participant and the Trust, certain processes relating to the underlying Gold
transfers also are described.
Under these Procedures, Baskets may be issued only with respect to Gold
transferred to and held in the Trust's allocated and unallocated Gold accounts
maintained in London, England by HSBC Bank USA, National Association, London
Branch, as custodian (the "Custodian"). Capitalized terms used in these
Procedures without further definition have the meanings assigned to them in the
Trust Indenture (the "Indenture"), dated as of ____________ 2004, between the
Trustee and World Gold Trust Services, LLC (the "Sponsor") or the Participant
Agreement entered into by each Participant with the Sponsor and the Trustee.
For purposes of these Procedures, a "Business Day" is defined as any day other
than (i) a day on which the New York Stock Exchange ("NYSE") is closed for
regular trading or (ii), if the transaction involves the receipt or delivery of
Gold or confirmation thereof in the United Kingdom or in some other
jurisdiction, (a) a day on which banking institutions in the United Kingdom or
in such other jurisdiction, as the case may be, are authorized by law to close
or a day on which the London gold market is closed or (b) a day on which banking
institutions in the United Kingdom or in such other jurisdiction, as the case
may be, are authorized to be open for less than a full business day or the
London gold market is open for trading for less than a full business day and
transaction procedures required to be executed or completed before the close of
the business day may not be so executed or completed.
Baskets are issued pursuant to the Prospectus, which will be delivered by the
Sponsor to each Participant prior to its execution of the Participant Agreement,
and are issued and redeemed in accordance with the Indenture and the Participant
Agreement. Baskets may be issued and redeemed on any Business Day by the Trustee
in exchange for Gold, which the Trustee receives from Participants or transfers
to Participants, in each case on behalf of the Trust. Participants will
be required to pay a nonrefundable per order transaction fee of $2,000 to the
Trustee (the "Transaction Fee").
Participants and the Trust transfer Gold between each other using the
unallocated bullion account system of the London bullion market. Transfers of
Gold to and from the Trust are effected pursuant to (i) the streetTRACKS(R) Gold
Trust Allocated Bullion Account Agreement (the "Trust Allocated Agreement")
between the Trustee and the Custodian establishing the Trust's allocated account
(the "Trust Allocated Account") and the streetTRACKS(R) Gold Trust Unallocated
Bullion Account Agreement (the "Trust Unallocated Agreement") between the
Trustee and the Custodian establishing the Trust's unallocated account (the
"Trust Unallocated Account"; the Trust Allocated Agreement and the Trust
Unallocated Agreement are collectively referred to as the "Trust Custody
Agreements") and (ii) the streetTRACKS(R) Gold Trust Participant Unallocated
Bullion Account Agreement (the "Participant Unallocated Agreement") between the
Participant and HSBC Bank USA, National Association, London Branch, establishing
the Participant's unallocated account (the "Participant Unallocated Account").
Gold is transferred between the Trust and Participants through the Trust
Unallocated Account. When Gold is to be transferred to the Trust from a
Participant (in exchange for the issuance of Baskets), the Gold is transferred
from the Participant Unallocated Account to the Trust Unallocated Account and
then transferred from there to the Trust Allocated Account. When Gold is to be
transferred to a Participant (in connection with the redemption of Baskets), the
Gold is transferred from the Trust Allocated Account to the Trust Unallocated
Account and is transferred from there to the Participant Unallocated Account.
The Participant Unallocated Account is only to be used in connection with the
creation and redemption of Baskets. Use of the Participant Unallocated Account
for transferring Gold to the Trust does not require Participants to acquire Gold
from HSBC Bank USA, National Association, London Branch, or to maintain Gold in
the Participant Unallocated Account longer than the time required to create or
redeem Baskets as described in these Procedures. Each Participant is responsible
for ensuring that the Gold it intends to transfer to the Trust in exchange for
Baskets is available for transfer to the Trust in the manner and at the times
described in these Procedures. In meeting this responsibility, the Participant
may make such independent arrangements as it sees fit, including the borrowing
of Gold, to ensure that the relevant amount(s) of Gold is credited in time.
Upon acceptance of the Participant Agreement by the Sponsor and the Trustee, the
Trustee will assign a personal identification number (a "PIN number") to each
Authorized Person authorized to act for the Participant. This will allow the
Participant through its Authorized Person(s) to place Purchase Order(s) or
Redemption Order(s) for Baskets.
Important Notes:
o Any Order is subject to rejection by the Trustee for the reasons set
forth in the Indenture or the Participant Agreement.
o All Orders are subject to the provisions of the Indenture, the Trust
Custody Agreements and the Participant Agreement relating to unclear
or ambiguous instructions.
CREATION PROCESS
An order to purchase one or more Baskets placed by a Participant with the
Trustee by 4:00 p.m. N.Y. time on a Business Day (such day, "CREATION T")
results in the following taking place, in most instances, by 9:00 a.m. N.Y. time
(usually 2:00 p.m. London time) on CREATION T+3:
o Transfer to the Trust Allocated Account of Gold satisfying the Good
Delivery Rules in the amount corresponding to the Baskets to be
issued; and
o Transfer to the Participant's account at The Depository Trust Company
("DTC") of Baskets corresponding to the Gold the Participant has
transferred to the Trust.
CREATION PROCEDURES
CREATION T (PURCHASE ORDER TRADE DATE)
1. By the Order Cut-Off Time (close of regular trading on the NYSE,
usually 4:00 p.m. N.Y. time), an Authorized Person of the Participant
calls the Trustee at (212) 815-6250 to notify the Trustee that the
Participant wishes to place a Purchase Order with the Trustee to
create an identified number of Baskets and to request that the Trustee
provide an order number (an "Order Number"). The Authorized Person
provides a PIN number as identification to the Trustee. The Trustee
provides the Participant with an Order Number for the Participant's
Purchase Order Form. The Participant then completes and faxes to the
Trustee the Purchase Order Form included as Exhibit B to the
Participant Agreement. The Purchase Order Form must include the
Authorized Person's signature, the number of Baskets being purchased,
and the Order Number previously provided by the Trustee.
2. If the Trustee has not received the Purchase Order Form from the
Participant within 15 minutes after the Trustee receives the phone
call from the Participant referenced in item (1) above, the Trustee
places a phone call to the Participant to enquire about the status of
the Order. If the Participant does not fax the Purchase Order Form to
the Trustee within 15 minutes after the Trustee's phone call, the
Participant's Order is cancelled. The Trustee will then notify the
Participant that the Order has been cancelled via telephone call.
3. If the Trustee has received the Participant's Purchase Order Form on
time in accordance with the preceding timing rules, then by 5:00 p.m.
N.Y. time the Trustee returns to the Participant a copy of the
Purchase Order Form submitted, marking it "Affirmed." The Trustee also
indicates on the Purchase Order Form the amount of Gold and cash, if
any, necessary for the Creation Deposit, and provides details of the
method of payment required for the Transaction Fee and the cash
portion, if any, of the Creation Deposit.
4. Based on the Purchase Orders placed with it on CREATION T, the Trustee
sends an authenticated electronic message (Swift MT699) to the
Custodian indicating the total ounces of Gold for which the Trustee
will require an allocation into the Trust Allocated
Account on CREATION T+3. In addition, the authenticated electronic
message (Swift MT699) will separately identify all expected
unallocated Gold receipts from each Participant. If the Trustee
rejects a Purchase Order pursuant to the Indenture or the Participant
Agreement after the foregoing messages are given to the Custodian, the
Trustee will notify the Custodian of such rejection, identifying the
Participant whose Purchase Order was rejected and the number of ounces
of Gold contained in the rejected Purchase Order.
5. By the close of business (usually 5:00 p.m. N.Y. time), each
Participant acquiring Baskets on CREATION T+3 sends an authenticated
electronic message (Swift MT604) to HSBC Bank USA, National
Association, London Branch, with a copy to the Trustee, to transfer on
CREATION T+3 from the Participant's Participant Unallocated Account
Gold in the relevant amount(s) to the Trust Unallocated Account. If
the Participant's instruction does not conform to the Trustee's
instruction specified in the preceding item 4, the Trustee will either
(i) send a correcting authenticated electronic message (Swift MT699)
to the Custodian which specifies the delivery of an amount of Gold
which conforms to the Participant's Purchase Order and the
Participant's instruction or (ii) send the Participant an email
message notifying the Participant of the discrepancy.
6. By the close of business (usually 5:00 p.m. N.Y. time), each
Participant acquiring Baskets on CREATION T+3 sends an authenticated
electronic message (Swift MT605) to HSBC Bank USA, National
Association, London Branch, identifying that Participant's Participant
Unallocated Account into which Gold, in the relevant amount(s), is to
be received on CREATION T+2.
CREATION T+2
1. By the close of business in London (usually 4:00 p.m. London time),
each Participant submitting a Purchase Order must ensure that Gold in
the relevant amount(s) is credited to the Participant's Participant
Unallocated Account.
2. If by 4:00 p.m. (London time) either (i), unless otherwise resolved
beforehand by a correcting authenticated electronic message from the
Trustee (Swift MT699) or a correcting authenticated electronic message
from the Participant (Swift MT604) to the satisfaction of the
Custodian, the amount of Gold specified in the Participant's
instruction given under item (5) of CREATION T to transfer Gold from
the Participant's Participant Unallocated Account to the Trust
Unallocated Account is not the same as the amount of Gold specified in
the advice given by the Trustee under item (4) of CREATION T with
regard to the expected unallocated Gold receipts from each Participant
or (ii) sufficient Gold to permit the Custodian to effect such
Participant's instruction is not credited to the Participant's
Participant Unallocated Account, such Participant's instruction shall
be automatically revoked as of 4:00 p.m. London time and the Custodian
will notify the Participant of such revocation.
3. The Custodian will send the Trustee an email message by 5:00 p.m.
London time (usually 12:00 noon N.Y. time) identifying each
Participant's instruction that has been revoked pursuant to the
preceding item 2. The relevant Participant's Purchase Order shall be
automatically cancelled as of 4:00 p.m. London time upon such
revocation and the
Trustee will send an email message to each Participant with a
cancelled Purchase Order informing the Participant of such
cancellation.
CREATION T+3
1. The Custodian transfers the relevant amount(s) of Gold from the
Participant's Participant Unallocated Account to the Trust Unallocated
Account.
2. As of 2:00 p.m. London time (usually 9:00 a.m. N.Y. time), the
Custodian will notify the Trustee by email and fax of the status of
the allocation process, including (i) the amount of Gold transferred
to the Trust Unallocated Account from each Participant's Participant
Unallocated Account, separately stated; (ii) the amount of Gold that
has been transferred into the Trust Allocated Account from the Trust
Unallocated Account, and (iii) the amount of Gold, if any, remaining
in the Trust Unallocated Account. In the event there is any need for
clarification of the status of the allocation process, the Trustee
will telephone the Custodian to obtain such clarification. This notice
does not reflect the official transfer record of the Custodian, which
is completed as of the conclusion of the Custodian's Business Day.
3. At 9:00 a.m. N.Y. time (usually 2:00 p.m. London time), following
receipt of the notice from the Custodian of the status of the
allocation process described in item (2) above, the Trustee authorizes
the creation and issuance of the Baskets ordered by each Participant
on CREATION T for which the Trustee has received confirmation from the
Custodian of receipt of the relevant amount(s) of Gold. If the
Custodian, despite using commercially reasonable efforts, is unable to
complete the allocation process by such time, the Trustee will
nevertheless issue Baskets, in the relevant amount, against both the
Trust Allocated Account and the Trust Unallocated Account balances
representing the Gold transferred by each Participant in connection
with its Purchase Order. The creation and issuance of Baskets will
occur through the DTC system known as "Deposit and Withdrawal at
Custodian" or "DWAC".
[Redemption Process Follows on Next Page]
REDEMPTION PROCESS
An order to redeem one or more Baskets placed by a Participant with
the Trustee by 4:00 p.m. N.Y. time on a Business Day (such day,
"REDEMPTION T") results in the following taking place by 11:00 a.m.
N.Y. time (usually 4:00 p.m. London time) on REDEMPTION T+3:
o Transfer to the Trustee's account at DTC and the subsequent
cancellation of the relevant number of the Participant's Baskets; and
o Transfer to the Participant by credit to the Participant's Participant
Unallocated Account of Gold and cash, if any, in the relevant
amount(s) corresponding to the Baskets delivered for redemption (the
"Redemption Distribution").
REDEMPTION PROCEDURES
REDEMPTION T (REDEMPTION ORDER TRADE DATE)
1. By the Order Cut-off Time (close of regular trading on the NYSE,
usually 4:00 p.m. N.Y. time), an Authorized Person of the Participant
calls the Trustee at (212) 815-6250 to notify the Trustee that the
Participant wishes to place a Redemption Order with the Trustee to
redeem an identified number of Baskets and to request that the Trustee
provide an Order Number. The Authorized Person provides a PIN number
as identification to the Trustee. The Trustee provides the Participant
with an Order Number for the Participant's Redemption Order Form. The
Participant then completes and faxes to the Trustee the Redemption
Order Form included as Exhibit C to the Participant Agreement. The
Redemption Order Form must include the Authorized Person's signature,
the number of Baskets redeemed, and the Order Number previously
provided by the Trustee.
2. If the Trustee has not received the Redemption Order Form from the
Participant within 15 minutes after the Trustee receives the phone
call from the Participant referenced in item (1) above, the Trustee
places a phone call to the Participant to enquire about the status of
the Order. If the Participant does not fax the Redemption Order Form
to the Trustee within 15 minutes after the Trustee's phone call, the
Participant's Order is cancelled. The Trustee will then notify the
Participant that the Order has been cancelled via telephone call.
3. If the Trustee has received the Participant's Redemption Order Form on
time in accordance with the preceding timing rules, then by 5:00 p.m.
N.Y. time the Trustee returns to the Participant a copy of the
Redemption Order Form submitted, marking it "Affirmed." The Trustee
also indicates on the Redemption Order Form the amount of Gold and
cash, if any, to be delivered in the Redemption Distribution, and
provides details of the method of payment to be used for the
Transaction Fee and the method of delivery of the cash portion, if
any, of the Redemption Distribution.
4. By the close of business (usually 5:00 p.m. N.Y. time), each
Participant redeeming Baskets on REDEMPTION T+3 sends an authenticated
electronic message (Swift
MT605) to HSBC Bank USA, National Association, London Branch,
identifying that Participant's Participant Unallocated Account into
which Gold, in the relevant amount(s), is to be received on REDEMPTION
T+3.
5. By the close of business (usually 5:00 p.m. N.Y. time), the Trustee
sends an authenticated electronic message (SWIFT MT699) containing
instructions to the Custodian to transfer on REDEMPTION T+3 from the
Trust Allocated Account to the Trust Unallocated Account
("deallocate") the total amount of Gold required to settle the
Redemption Orders received by the Trustee on REDEMPTION T. If the
Trustee rejects a Redemption Order pursuant to the Indenture or the
Participant Agreement after the foregoing message is sent, the Trustee
will notify the Custodian of such rejection, identifying the
Participant whose Redemption Order was rejected and the number of
ounces of Gold contained in the rejected Redemption Order.
REDEMPTION T+3
1. Between 9:00 a.m. London time and 2:00 p.m. London time, the Custodian
deallocates Gold in the amount(s) specified in the Trustee's
instructions sent on REDEMPTION T.
2. By 9:00 a.m. N.Y. time, the Participant delivers free to the Trustee's
Participant account at DTC (#2209) the Baskets to be redeemed.
3. If the Trustee does not receive from a redeeming Participant all
Shares comprising the Baskets being redeemed by 9:00 a.m. N.Y. time,
the Trustee will (i) settle the Redemption Order to the extent of
whole Baskets received from the Participant and (ii) keep the
redeeming Participant's Redemption Order open until 9:00 a.m. N.Y.
time on the following Business Day (REDEMPTION T+4) as to the balance
of the Redemption Order (such balance, the "Suspended Redemption
Order"). For each day (whether or not a Business Day) the Redemption
Order is held open, the Participant will be charged by the Trustee the
greater of $300 or $30 times the number of Baskets included in the
Suspended Redemption Order.
4. By 10:00 a.m. New York time (usually 3:00 p.m. London time), the
Trustee sends an authenticated electronic message (Swift MT699) to the
Custodian directing the Custodian to transfer Gold in the relevant
amount from the Trust Unallocated Account to the Participant
Unallocated Account. When London is, and New York is not, on daylight
savings time, such message must be received by the Custodian no later
than 3:30 p.m. London time. The Custodian will make reasonable
commercial efforts to allocate Gold remaining in the Trust Unallocated
Account after this transfer to the Trust Allocated Account by the
close of business in London, in accordance with the standing
instruction in the Trust Custody Agreements.
5. By close of business in New York (usually 5:00 p.m. N.Y. time), the
Trustee sends an authenticated electronic message (Swift MT699)
containing instructions to the Custodian to transfer the total amount
of Gold involved in that day's Suspended Redemption Order(s) from the
Trust Allocated Account to the Trust Unallocated Account by 9:00 a.m.
N.Y. time (usually 2:00 p.m. London time) the following Business Day.
This amount will be in addition to any amount being transferred
pursuant to an existing
instruction to deallocate in respect of redemptions settling in the
normal schedule, for which the following day will be REDEMPTION T+3.
6. By the close of business in New York (usually 5:00 p.m. N.Y. time),
each Participant redeeming Baskets on REDEMPTION T+4 with respect to a
Suspended Redemption Order sends an authenticated electronic message
(Swift MT699) to HSBC Bank USA, National Association, London Branch,
identifying that Participant's Participant Unallocated Account into
which Gold, in the relevant amount(s), is to be received on REDEMPTION
T+4.
REDEMPTION T+4
1. By 9:00 a.m. N.Y. time (usually 2:00 p.m. London time), the redeeming
Participant must deliver free to the Trustee's Participant account at
DTC (#2209) the Basket(s) comprising the Suspended Redemption Order.
The Trustee will settle the Suspended Redemption Order to the extent
of whole Baskets received. Any balance of the Suspended Redemption
Order will be cancelled.
2. The sequence of instructions and events related to the settlement of
the Suspended Redemption Order on REDEMPTION T+4 will be made in the
manner provided for a Redemption Order under REDEMPTION T+3.
* * * *
FORM OF
streetTRACKS(R) GOLD TRUST
PARTICIPANT AGREEMENT
ATTACHMENT B
HSBC BANK USA, NATIONAL ASSOCIATION
and
[NAME OF PARTICIPANT]
----------------------------------------------
streetTRACKS(R) GOLD TRUST
PARTICIPANT UNALLOCATED BULLION ACCOUNT AGREEMENT
----------------------------------------------
THIS AGREEMENT ("Agreement") is made on [date]
BETWEEN
(1) HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association
organized under the laws of the United States of America, whose
principal place of business in England is at 8 Canada Square, London
E14 5HQ ("WE" or "US"); and
(2) [NAME OF PARTICIPANT] a company incorporated under the laws of [ ],
whose [registered office][principal place of business] is at [ ]
("YOU").
INTRODUCTION
We have agreed to open and maintain for you an Unallocated Account (defined
below) in connection with your being a Participant with respect to the
streetTRACKS(R) Gold Trust, and to provide other services to you in connection
with the Unallocated Account. This agreement sets out the terms under which we
will provide those services to you and the arrangements which will apply in
connection with those services.
IT IS AGREED AS FOLLOWS:
1. INTERPRETATION
1.1 DEFINITIONS: In this agreement:
"ACCOUNT BALANCE" means the balance from time to time standing to your
credit in your Unallocated Account.
"AVAILABILITY DATE" means the Business Day on which you wish to
transfer Precious Metal to us for deposit into the Unallocated Account.
"BULLION" means the Precious Metal standing to your credit in your
Unallocated Account.
"BUSINESS DAY" means a day other than (i) a day on which the New York
Stock Exchange, Inc. is closed for regular trading or (ii), if the
transaction involves the receipt or delivery of gold or confirmation
thereof in the United Kingdom or in some other jurisdiction, (a) a day
on which banking institutions in the United Kingdom or in such other
jurisdiction, as the case may be, are authorized by law to close or a
day on which the London gold market is closed or (b) a day on which
banking institutions in the United Kingdom or in such other
jurisdiction, as the case may be, are authorized to be open for less
than a full business day or the London gold market is open for trading
for less than a full business day and transaction
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
procedures required to be executed or completed before the close of
the business day may not be so executed or completed.
"STREETTRACKS(R) GOLD SHARE" means each unit of fractional undivided
beneficial interest in and ownership of the streetTRACKS(R) Trust, as
the same shall be created and issued pursuant to the Trust Indenture.
"STREETTRACKS(R) GOLD TRUST" means the Trust created under the Trust
Indenture.
"LONDON A.M. GOLD FIX" means the price of an ounce of gold as fixed by
the five members of the London gold fix on or about 10:30 a.m. London,
England, time.
"LONDON P.M. GOLD FIX" means the price of an ounce of gold as fixed by
the five members of the London gold fix on or about 3:00 p.m. London,
England, time.
"LBMA" means The London Bullion Market Association or its successors.
"PARTICIPANT" means a Participant as defined in the Trust Indenture.
"PARTICIPANT AGREEMENT" means that certain Participant Agreement in
effect from time to time between you and the Trustee on behalf of the
Trust, pursuant to the Trust Indenture.
"POINT OF DELIVERY" means such date and time that the recipient or its
agent acknowledges in written form its receipt of delivery of Precious
Metal.
"PRECIOUS METAL" means gold.
"RULES" means the rules, regulations, practices and customs of the LBMA
(including the rules of the LBMA as to good delivery), the Bank of
England and such other regulatory authority or body as shall affect the
activities contemplated by this agreement.
"SPONSOR" means World Gold Trust Services, LLC.
"TRUSTEE" means The Bank of New York.
"TRUST INDENTURE" means that certain Trust Indenture of streetTRACKS(R)
Gold Trust dated as of [ ], 2004, between the Sponsor and the Trustee,
effective [ ], 2004.
"TRUST UNALLOCATED ACCOUNT" means the account maintained by us for the
streetTRACKS(R) Gold Trust in relation to Gold (as defined in the Trust
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
Indenture) pursuant to the Trust Unallocated Bullion Account Agreement
(as defined in the Trust Indenture).
"UNALLOCATED ACCOUNT" means the account maintained by us in your name
on an Unallocated Basis pursuant to this agreement.
"UNALLOCATED BASIS" means, with respect to a Precious Metal account
maintained with us, that the person in whose name the account is held
is entitled to call on us to deliver in accordance with the Rules an
amount of Precious Metal equal to the amount of Precious Metal standing
to the credit of the person's account but has no ownership interest in
any Precious Metal that we own or hold.
"VAT" means value added tax as provided for in the Value Added Tax Act
1994 (as amended or re-enacted from time to time) and legislation
supplemental thereto and any other tax (whether imposed in the United
Kingdom in substitution thereof or in addition thereto or elsewhere) of
a similar fiscal nature.
"WITHDRAWAL DATE" means the Business Day on which you wish to withdraw
Precious Metal from your Unallocated Account.
1.2 HEADINGS: The headings in this agreement do not affect its
interpretation.
1.3 SINGULAR AND PLURAL; OTHER USAGES: References to the singular include
the plural and vice versa. A reference to "A or B" means "A or B or
both A and B". "Including" means "including but not limited to".
2. UNALLOCATED ACCOUNTS
2.1 OPENING UNALLOCATED ACCOUNT: We shall open and maintain an Unallocated
Account for you under this Agreement solely in respect of Bullion to be
transferred between you and the streetTRACKS(R) Gold Trust or withdrawn
in accordance with clause 4.
2.2 DENOMINATION OF UNALLOCATED ACCOUNT: The Unallocated Account shall
evidence and record the amount of Bullion standing to your credit
therein, and increases and decreases to that amount. The Unallocated
Account shall be denominated in fine ounces of gold to three decimal
places.
2.3 REPORTS: We will provide you with monthly statements of your Account
Balance and debit and credit advices will be sent to you following each
deposit into and withdrawal from the Unallocated Accounts.
2.4 REVERSAL OF ENTRIES: We at all times reserve the right to reverse
any provisional or erroneous entries to your Unallocated Account with
effect back-valued to the date upon which the final or correct entry
(or no entry) should have been made.
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
3. DEPOSITS
3.1 PROCEDURE: You may at any time notify us of your intention to deposit
Precious Metal in your Unallocated Account. A deposit may be made (in
the manner and accompanied by such documentation as we may require)
only by transfer from an account of yours relating to the same kind of
Precious Metal and having the same denomination as that to which this
Unallocated Account relates. We will not accept physical delivery of
Precious Metal into this account.
3.2 NOTICE REQUIREMENTS: Any notice relating to a deposit of Precious
Metal must be in writing and:
(a) be received by us no later than 2.00 p.m. (London time) on the
Availability Date unless otherwise agreed;
(b) specify the details of the account from which the Precious
Metal will be transferred; and
(c) specify the amount (in the appropriate denomination) of the
Precious Metal to be credited to the Unallocated Account, the
Availability Date and any other information which we may from
time to time require.
3.3 TIMING: A deposit of Precious Metal will not be credited to an
Unallocated Account until an account of ours with any bank, broker or
other firm has been credited with an amount of Precious Metal equal to
the amount of such deposit.
3.4 RIGHT TO REFUSE PRECIOUS METAL OR AMEND PROCEDURE: We may refuse to
accept Precious Metal, amend the procedure in relation to the deposit
of Precious Metal or impose such additional procedures in relation to
the deposit of Precious Metal as we may from time to time consider
appropriate. Any such refusal, amendment or additional procedures will
be promptly notified to you.
4. WITHDRAWALS
4.1 PROCEDURE: You may at any time notify us of your intention to withdraw
Precious Metal standing to the credit of your Unallocated Account. We
will transfer Bullion from your Unallocated Account only at such times
and on such terms as specified in your instructions to us. A withdrawal
may be made (in the manner and accompanied by such documentation as we
may require) by:
(a) transfer to an account of yours relating to the same kind of
Precious Metal and having the same denomination as that to
which the Unallocated Account relates; or
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
(b) the collection by you of Precious Metal from us at our vault
premises, or as we may direct, at your expense and risk; or
(c) by delivery of Precious Metal to you at such location as you
direct, at your expense and risk; or
(d) transfer to the Trust Unallocated Account.
Any Precious Metal made available to you pursuant to clause 4.1 (b) or
(c) will be in a form which complies with the Rules or in such other
form as may be agreed between us. We are entitled to select the
Precious Metal to be made available to you pursuant to clause 4.1(b) or
(c) which in all cases will comprise one or more whole bars selected by
us (or other form as agreed), the combined fine weight of which will
not exceed the number of fine ounces of Bullion you have instructed us
to withdraw. In connection with any withdrawal pursuant to clause
4.1(d) you must have sufficient Precious Metal in the Unallocated
Account by 4:00 p.m. (London time) on the day before the Withdrawal
Date to permit us to complete the withdrawal. Anything in this
agreement to the contrary notwithstanding, and without limiting your
right to withdraw Bullion, we shall not be obliged to effect any
requested delivery if, in our reasonable opinion, this would cause us
or our agents to be in breach of the Rules or other applicable law,
court order or regulation, the costs incurred would be excessive or
delivery is impracticable for any reason. When pursuant to your
instruction Bullion is physically withdrawn from your Unallocated
Account, all right, title, risk and interest in and to the Bullion
withdrawn shall pass to you at the Point of Delivery.
4.2 NOTICE AND INSTRUCTION REQUIREMENTS: Any notice or instruction relating
to a withdrawal of Precious Metal must be in writing and specify the
amount (in the appropriate denomination) of the Precious Metal to be
debited to the Unallocated Account, the Withdrawal Date and any other
information which we may from time to time require. The following rules
determine when we must receive your notice or instruction to withdraw
Precious Metal:
(a) if the notice or instruction relates to a withdrawal pursuant
to clause 4.1(d) to effect a transfer of Precious Metal to the
Trust Unallocated Account in accordance with the Participant
Agreement, it must received by us no later than 9.00 a.m.
(London time) not less than two Business Days prior to the
Withdrawal Date and specify the details of the Trust
Unallocated Account to which the Precious Metal is to be
transferred;
(b) if the notice or instruction relates to a withdrawal pursuant
to clause 4.1(a), it must be received by us no later than 2.00
p.m. (London time) on the Withdrawal Date unless otherwise
agreed and must specify the details of the account to which
the Precious Metal is to be transferred; and
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
(c) if the notice or instruction relates to a withdrawal pursuant
to clause 4.1(b) or (c), it must be received by us no later
than 11.30 a.m. (London time) not less than two Business Days
prior to the Withdrawal Date unless otherwise agreed and
specify the name of the person or carrier that will collect
the Precious Metal from us or the identity of the person to
whom delivery is to be made, as the case may be.
4.3 RIGHT TO AMEND PROCEDURE: We may amend the procedure for the withdrawal
of Precious Metal from an Unallocated Account or impose such additional
procedures as we may from time to time consider appropriate. Any such
amendments or additional procedures will be promptly notified to you.
4.4 DELIVERY OBLIGATIONS: Unless otherwise instructed, we shall make
transportation and insurance arrangements in accordance with our usual
practice. Where instructions are given, we shall use all reasonable
efforts to comply with the same. We shall not be obliged to effect any
requested delivery if, in our reasonable opinion, this would cause us
or our agents to be in breach of the Rules or other applicable law,
court order or regulation; the costs incurred would be excessive or
delivery is impracticable for any reason. All insurance and
transportation costs shall be for your account.
4.5 PHYSICAL WITHDRAWAL OF ENTIRE UNALLOCATED ACCOUNT BALANCE: If, when you
notify us in connection with a physical withdrawal of Bullion from your
Unallocated Account under clause 4.4 that you are withdrawing the
entire balance in your Unallocated Account (or when a physical
withdrawal under clause 4.4 would, in our determination, result in the
entire balance in your Unallocated Account being withdrawn), the
physical withdrawal instruction may not be effected by our selection of
one or more whole bars of Bullion the combined fine weight of which
does not exceed the balance of your Unallocated Account that you are
withdrawing, then we will make available to you in accordance with
clause 4.4 the number of whole bars that can be accommodated under your
instruction. If you have another Unallocated Account with us relating
to Precious Metal, we will transfer the remainder of the balance to
that account, and if you do not have another Unallocated Account with
us, we will purchase for cash the remainder of the Bullion in your
Unallocated Account based on the London A.M. Gold Fix on the date you
are withdrawing the Bullion physically, or if there is no London A.M.
Gold Fix for such date, then the London A.M. Gold Fix for the next
Business Day.
5. INSTRUCTIONS
5.1 YOUR REPRESENTATIVES: You shall notify us promptly in writing of the
names of the people who are authorised to give instructions on your
behalf. Until we receive written notice to the contrary, we are
entitled to assume that any of those people have full and unrestricted
power to give us instructions on your behalf. We are also entitled to
rely on any
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
instructions which are from, or which purport to emanate from, any
person who appears to have such authority.
5.2 AMENDMENTS: Once given, instructions continue in full force and effect
until they are cancelled, amended or superseded. We must receive an
instruction cancelling, amending or superseding a prior instruction
before the time the prior instruction is acted upon. Any such
instructions shall have effect only after actual receipt by us.
5.3 UNCLEAR OR AMBIGUOUS INSTRUCTIONS: If, in our opinion, any instructions
are unclear or ambiguous, we will use reasonable endeavours (taking
into account any relevant time constraints) to obtain clarification of
those instructions but, failing that, we may in our absolute discretion
and without any liability on our part, act upon what we believe in good
faith such instructions to be or refuse to take any action or execute
such instructions until any ambiguity or conflict has been resolved to
our satisfaction.
5.4 REFUSAL TO EXECUTE: We reserve the right to refuse to execute
instructions if in our opinion they are or may be contrary to the
Rules or any applicable law.
5.5 REVOCATION OF INSTRUCTIONS: If, in connection with an instruction to
effect a withdrawal pursuant to clause 4.1(d), by 4:00 p.m. (London
time) on the day before the Withdrawal Date either (i) the amount of
Precious Metal specified in your instruction does not agree with the
amount of Precious Metal specified in the advice provided by the
Trustee with regard to the receipt of Precious Metal in the Trust
Unallocated Account or (ii) sufficient Precious Metal to permit us to
complete the withdrawal is not credited to your Unallocated Account,
your instruction will be automatically revoked. We will notify you of
the revocation of your instruction.
6. CONFIDENTIALITY
6.1 DISCLOSURE TO OTHERS: Subject to clause 6.2, each party shall respect
the confidentiality of information acquired under this agreement and
neither will, without the consent of the other, disclose to any other
person any information acquired under this agreement.
6.2 PERMITTED DISCLOSURES: Each party accepts that from time to time the
other party may be required by law or the Rules, or requested by a
government department or agency, fiscal body or regulatory authority,
to disclose information acquired under this agreement. In addition, the
disclosure of such information may be required by a party's auditors,
by its legal or other advisors or by a company which is in the same
group of companies as a party (eg. a subsidiary or holding company of a
party). Each party irrevocably authorises the other to make such
disclosures without further reference to such party. In connection with
a notice or instruction you give
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
to us to effect to withdraw and transfer Precious Metal to the Trust
Unallocated Account in accordance with the Participant Agreement, you
hereby authorize us to disclose to the Trustee of the Trust or its
agents (i) such information about your Unallocated Account that the
Trustee or its agents may reasonably request, including information
about your Account Balance and instructions you have given for the
deposit or withdrawal of Precious Metal in relation to your
Unallocated Account, and (ii) information about any revocation of
instructions under clause 5.5 above.
7. REPRESENTATIONS
7.1 YOUR REPRESENTATIONS: Upon execution of this agreement and with each
notice or instruction that you give hereunder you represent and warrant
and covenant to us that:
(a) you have all necessary authority, powers, consents, licences
and authorisations and have taken all necessary action to
enable you lawfully to enter into and perform your duties and
obligations under this agreement;
(b) you are a Participant as defined in the Trust Indenture and
are not in breach of the Participant Agreement;
(c) you are in compliance with the money laundering and related
provisions of (i) the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT Act) Act of 2001 enacted by the United
States of America, and the regulations promulgated thereunder,
if you are subject to the requirements of the USA PATRIOT Act,
and (ii) such other laws to which you are subject;
(d) the persons entering into this agreement on your behalf have
been duly authorised to do so; and
(e) this agreement and the obligations created under it are
binding upon you and enforceable against you in accordance
with its terms (subject to applicable principles of equity)
and do not and will not violate the terms of the Rules or any
order, charge or agreement by which you are bound.
8. FEES AND EXPENSES
8.1 FEES: You will pay us such fees as we from time to time determine and
notify to you, but we will not charge you any fees in connection with
your Unallocated Account pursuant to this Agreement while (i) this
account is used solely to effect transfers of Bullion between you and
the Trust Unallocated Account and (ii) we (or another member of an
affiliated group of which we are a member) are receiving compensation
from the
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
streetTRACKS(R) Gold Trust for maintaining the Trust Unallocated
Account.
8.2 EXPENSES: You must pay us on demand all costs, charges and expenses
(including any relevant taxes, duties and legal fees) incurred by us in
connection with the performance of our duties and obligations under
this agreement or otherwise in connection with your Unallocated Account
(including delivery, collection and storage costs).
8.3 CREDIT BALANCES: No interest or other amount will be paid by us on any
credit balance on your Unallocated Account.
8.4 DEBIT BALANCES: You are not entitled to overdraw your Unallocated
Account except to the extent that we otherwise agree in writing. In the
absence of such agreement, we shall not be obliged to carry out any
instruction of yours which will cause your Unallocated Account to be
overdrawn. If for any reason your Unallocated Account is overdrawn, you
will be required to pay us interest on the debit balance at the rate
agreed between us or, if no such agreement exists, at such rate as we
determine to be appropriate. The amount of the overdraft and any
accrued interest will be repayable by you on our demand. Your
obligation to pay interest to us will continue until the overdraft is
repaid by you in full. Our books and records shall be conclusive as to
the balance at any time standing to your credit in your Unallocated
Account.
8.5 DEFAULT INTEREST: If you fail to pay us any amount when it is due, we
reserve the right to charge you interest (both before and after any
judgement) on any such unpaid amount calculated at a rate equal to 1%
above the overnight London Interbank Offered Rate (LIBOR) for the
currency in which the amount is due. Both overdraft and default
interest will accrue on a daily basis and will be due and payable by
you as a separate debt. In the event of any inconsistency between this
agreement and an overdraft facility agreement between you and us, the
terms of the overdraft facility shall govern.
9. SCOPE OF RESPONSIBILITY
9.1 EXCLUSION OF LIABILITY: We will use reasonable care in the performance
of our duties under this agreement but will not be responsible in
contract, tort or otherwise, for any direct or indirect or
consequential damage, loss or expense suffered or incurred by you
arising directly or indirectly as a result of, or in connection with,
this agreement (including, without limitation, economic loss, loss of
profit, loss of anticipated savings or loss of goodwill) even if
advised of the likelihood of such losses arising, save for any loss or
damage suffered by you as a direct result of any gross negligence,
fraud or wilful default on our part in the performance of our duties
under this agreement, and in which case, our liability will not exceed
the market value of the Account Balance at the time such gross
negligence, fraud or wilful default is discovered by us. The value of
the
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
Account Balance shall be determined on any day using the London P.M.
Gold Fix, and if there is no such fix on such day, by the last London
fix (A.M. or P.M.).
9.2 NO DUTY OR OBLIGATION: We are under no duty or obligation to make or
take any special arrangements or precautions beyond those required by
the Rules or as specifically set forth in this agreement.
9.3 FORCE MAJEURE: We shall not be liable to you for any delay in
performance, or for the non-performance of any of our obligations under
this agreement by reason of any cause beyond our reasonable control.
This includes any act of God or war or terrorism, any breakdown,
malfunction or failure of transmission in connection with or other
unavailability of any wire, communication or computer facilities, any
transport, port, or airport disruption, industrial action, acts and
regulations and rules of any governmental or supra national bodies or
authorities or regulatory or self-regulatory organisations or failure
of any such body, authority, or organisation for any reason, to perform
its obligations.
9.4 INDEMNITY: You shall indemnify and keep us and each of our directors,
shareholders, officers, employees, agents, affiliates (as such term is
defined in Regulation S-X adopted by the United States Securities and
Exchange Commission under the United States federal Securities Act of
1933, as amended) and subsidiaries (us and each such person a
"Custodian Indemnified Person" for purposes of this clause 9.4)
indemnified (on an after tax basis) on demand against all costs and
expenses, damages, liabilities and losses which any such Custodian
Indemnified Person may suffer or incur, directly or indirectly in
connection with this agreement except to the extent that such sums are
due directly to our gross negligence, wilful default or fraud or that
of the Custodian Indemnified Person. The indemnity provided by this
clause 9.4 shall survive termination of this agreement.
9.5 THIRD PARTIES: You are our sole customer under this agreement and we do
not owe any duty or obligation or have any liability towards any person
who is not a party to this agreement. This agreement does not confer a
benefit on any person who is not a party to it other than the persons
named as a Custodian Indemnified Person. The parties to this agreement
do not intend that any term of this agreement shall be enforceable by
any person who is not a party to it (except that each Custodian
Indemnified Person may directly enforce the indemnity provision under
clause 9.4) and do intend that except as so provided, the Contracts
(Rights of Third Parties) 1999 Act (Eng.) shall not apply to this
agreement.
10. TERMINATION
10.1 METHOD: This agreement shall terminate immediately upon the earlier of
(i) your termination as a Participant with respect to the
streetTRACKS(R) Gold Trust pursuant to the Participant Agreement or
otherwise, or (ii)
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
termination of the streetTRACKS(R) Gold Trust pursuant to the Trust
Indenture. In addition, either party may terminate this agreement by
giving not less than 10 Business Days' written notice to the other
party. Any such notice given by you must specify:
(a) the date on which the termination will take effect;
(b) the person to whom any Account Balance which is a credit
balance is to be transferred; and
(c) all other necessary arrangements for the transfer or
repayment, as the case may be, of the Account Balance.
10.2 REDELIVERY ARRANGEMENTS: If you do not make arrangements acceptable to
us for the transfer or repayment, as the case may be, of any Account
Balance we may continue to maintain this Unallocated Account, in which
case we will continue to charge the fees and expenses payable under
clause 8. If you have not made arrangements acceptable to us for the
transfer or repayment of any Account Balance within six (6) months of
the date specified in the termination notice as the date on which the
termination will take effect, we will be entitled to close the
Unallocated Account and account to you for the proceeds after deducting
any amounts due to us under this agreement.
10.3 EXISTING RIGHTS: Termination shall not affect rights and obligations
then outstanding under this agreement which shall continue to be
governed by this agreement until all obligations have been fully
performed.
11. VALUE ADDED TAX
11.1 VAT EXCLUSIVE: All sums payable under this agreement by you to us
shall be deemed to be exclusive of VAT.
11.2 SUPPLIES: Where pursuant to or in connection with this agreement, we
make a supply to you for VAT purposes and VAT is or becomes chargeable
on such supply, you shall on demand pay to us (in addition to any other
consideration for such supply) a sum equal to the amount of such VAT
and we shall on receipt of such payment provide you with an invoice or
receipt in such form and within such period as may be prescribed by
applicable law.
11.3 DEEMED SUPPLIES: Where, pursuant to or in connection with this
agreement, we are deemed or treated by applicable law or the practice
from time to time of the relevant fiscal authority to make a supply for
VAT purposes to any person by virtue of our or any custodian for us
relinquishing physical control of any Precious Metal, and VAT is or
becomes chargeable on such supply, you shall on demand pay to us a sum
equal to the amount of such VAT and we shall on receipt of such payment
provide an invoice or receipt in such form and within such period as
may
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
be prescribed by applicable law to the person to which we are deemed
or treated to make such supply.
12. NOTICES
12.1 FORM: Subject to clause 12.5, any notice, notification, instruction or
other communication under or in connection with this agreement shall be
given in writing. References to writing include electronic
transmissions that are of the kind specified in clause 12.2.
12.2 METHOD OF TRANSMISSION: With the exception of monthly statements in
respect of the Unallocated Account, any notice, notification,
instruction or other communication required to be in writing may be
delivered personally or sent by first class post, pre-paid recorded
delivery (or air mail if overseas), authenticated electronic
transmission (including tested telex and authenticated SWIFT) or such
other electronic transmission as the parties may from time to time
agree, to the party due to receive the notice, instruction or
communication, at its address, number or destination set out in this
agreement or another address, number or destination specified by that
party by written notice to the other.
12.3 DEEMED RECEIPT ON NOTICE: A notice, notification, instruction, or other
communication under or in connection with this agreement will be deemed
received only if actually received or delivered.
12.4 RECORDING OF CALLS: We may record telephone conversations without use
of a warning tone. Such recordings will be our sole property and, if
acted upon by us, will be accepted by you as evidence of the orders or
instructions given.
12.5 INSTRUCTIONS RELATING TO BULLION: All notices, notifications,
instructions and other communications relating to the movement of
Bullion in relation to your Unallocated Account shall be by way of
authenticated electronic transmission (including tested telex and
authenticated SWIFT), and shall be addressed to:
Precious Metals Operations
HSBC Bank USA, National Association
8 Canada Square
London E14 5HQ
Tested Telex: 889217 RNB
SWIFT: BLIC GB2L
13. GENERAL
13.1 NO INTEREST IN STREETTRACKS(R) GOLD TRUST CONFERRED HEREBY: You
acknowledge that you do not acquire any ownership of streetTRACKS(R)
Gold Shares or interest in the streetTRACKS(R) Gold Trust or its assets
by establishing an Unallocated Account pursuant to this Agreement, by
delivering to the Unallocated Account established hereby an amount of
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
Precious Metal, or by giving any instruction hereunder. You acknowledge
that you will acquire ownership of streetTRACKS(R) Gold Shares or an
interest in the streetTRACKS(R) Gold Trust or its assets only upon the
issuance to you of streetTRACKS(R) Gold Shares pursuant to the Trust
Indenture. Neither the Trustee nor the Sponsor of the streetTRACKS(R)
Gold Trust shall, individually or as such Trustee or Sponsor of the
streetTRACKS(R) Gold Trust, have any liability for loss or damages
suffered by you with respect to your Unallocated Account or any Bullion
held for you pursuant to this Agreement.
13.2 NO ADVICE: Our duties and obligations under this agreement do not
include providing you with investment advice. In asking us to open and
maintain the Unallocated Account, you do so in reliance upon your own
judgement and we do not and shall not owe to you any duty to exercise
any judgement on your behalf as to the merits or suitability of any
transaction you make in relation to the Unallocated Account or
otherwise, including (i) any deposits into, or withdrawals from, your
Unallocated Account, (ii) any transactions to be effected in accordance
with the Participant Agreement, or (iii) the acquisition or disposition
of Precious Metal.
13.3 RIGHTS AND REMEDIES: Our rights under this agreement are in addition
to, and independent of, any other rights which we may have at any time
in relation to your Unallocated Account and any lien or other rights we
may have to set-off, combine or consolidate any of your accounts.
13.4 ASSIGNMENT: This agreement is for the benefit of and binding upon us
both and our respective successors and assigns. You may not assign,
transfer or encumber, or purport to assign, transfer or encumber, your
right, title or interest in relation to your Unallocated Account or any
right or obligation under this agreement unless we otherwise agree in
writing.
13.5 AMENDMENTS: Any amendment to this agreement must be agreed in writing
and be signed by us both. Unless otherwise agreed, an amendment will
not affect any legal rights or obligations which may already have
arisen.
13.6 PARTIAL INVALIDITY: If any of the clauses (or part of a clause) of this
agreement becomes invalid or unenforceable in any way under the Rules
or any law, the validity of the remaining clauses (or part of a clause)
will not in any way be affected or impaired.
13.7 ENTIRE AGREEMENT: This document, with the exception of any
representations made fraudulently, represents the entire agreement, and
supersedes and replaces any previous agreement between us relating to
the establishment of a Gold account to be maintained on an Unallocated
Basis for you as a Participant in connection with the streetTRACKS(R)
Gold Trust.
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
13.8 JOINT AND SEVERAL LIABILITY: If there is more than one of you, your
responsibilities under this agreement apply to each of you individually
as well as jointly.
13.9 COUNTERPARTS: This agreement may be executed in any number of
counterparts each of which when executed and delivered is an original,
but all the counterparts together constitute the same agreement.
13.10 BUSINESS DAYS: If any obligation of either you or us falls due to be
performed on a day which is not a Business Day in respect of the
Unallocated Account in question, then the relevant obligations shall be
performed on the next succeeding Business Day applicable to such
account.
14. GOVERNING LAW AND JURISDICTION
14.1 GOVERNING LAW: This agreement is governed by, and will be construed in
accordance with, English law.
14.2 JURISDICTION: You agree the English courts are to have jurisdiction to
settle any disputes or claims which may arise out of or in connection
with this agreement, and for these purposes you irrevocably submit to
the non-exclusive jurisdiction of the English courts.
14.3 WAIVER OF IMMUNITY: To the extent that you may in any jurisdiction
claim for yourself or your assets any immunity from suit, judgement,
enforcement or otherwise howsoever, you agree not to claim and
irrevocably waive any such immunity to which you would otherwise be
entitled (whether on grounds of sovereignty or otherwise) to the full
extent permitted by the laws of such jurisdiction.
14.4 SERVICE OF PROCESS: If you are situated outside England and Wales,
process by which any proceedings in England are begun may be served on
you by being delivered to the address specified below. This does not
affect our right to serve process in another manner permitted by law.
Your address for service of process
[Participant]
[Address]
[City, State, Postal Code]
Attention: [ ]
EXECUTED by the parties as follows
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
EXECUTED by the parties
Signed on behalf of
HSBC BANK USA, NATIONAL ASSOCIATION
by
Signature
....................................
Name
....................................
Title
....................................
Signed on behalf of
[NAME OF PARTICIPANT]
by
Signature
....................................
Name
....................................
Title
....................................
streetTRACKS(R) Gold Trust
Participant Unallocated Bullion Account Agreement
Signature Page
FORM OF
streetTRACKS(R) Gold Trust
PARTICIPANT AGREEMENT
ATTACHMENT C
HSBC Bank USA, National Association
Resolution Form - Telefax Instructions
To: HSBC Bank USA, National Association
ACCOUNT NAME:
---------------------------------------------------
We hereby request and authorize, pursuant to the powers delegated to us by a
resolution of the Board of Directors of (the "Company") (a certified copy of
which has been supplied to you), HSBC Bank_______________________ USA, National
Association (the "Bank") to accept and to execute instructions and/or give
effect to requests to the Bank to enter into contracts with or on behalf of the
Company where such instructions and/or requests are given by facsimile machine
("Telefax") and purport to come from us acting on behalf of the Company and are
honestly believed by the Bank to come from the Company. We agree to mark clearly
on any confirmation of any communications by Telefax the words "Confirmation
only - Do not duplicate".
We on behalf of the Company agree, that
(a) the Bank will be under no duty to challenge or make any enquiries
concerning any communication by Telefax which it believes in good faith to
be a genuine instruction from an authorized representative of the Company;
(b) the Company shall assume all risks involved in connection with any
communications by Telefax, and in particular (but without prejudice to the
generality of the foregoing) risks due to errors in transmission
misunderstandings or errors on the part of the Bank regarding the identity
of the Company's authorized representatives or otherwise and that the Bank
be discharged from all responsibility in respect thereof;
(c) the Company shall indemnify the Bank and its directors, officers, employees
or agents on demand and shall keep the Bank and its directors, officers,
employees or agents on demand indemnified against any loss arising to the
Bank in consequence of acting in reliance on any such communication and any
actions, proceedings, costs, claims and demands in respect thereof;
(d) that we will have no claim against the Bank or its directors, officers,
employees or agents by reason or account of the Bank or its directors,
officers, employees or agents either acting or declining or omitting to act
in accordance with any communication by Telefax; and
(e) the Company shall agree to perform and ratify any contracts entered into by
the Bank and/or any action taken by the Bank as a result of such
communications made or purporting to be made on behalf of the Company and
honestly believed by the Bank to have been made on behalf of the Company.
Such assumption of risk, discharge, indemnity and agreement to perform and
ratify shall extend to communications made or purporting to be made by us and/or
any other persons now or hereafter nominated from time to time by the Company,
such nomination having been duly and properly advised to the Bank and honestly
believed by the Bank to have been made on behalf of the Company.
Notwithstanding the foregoing, the Bank may at any time and at its absolute
discretion decline to execute any instruction or request given or to accept any
offer made by Telefax notwithstanding that at the time of such instruction or
request or offer the employee of the Bank receiving such instruction or request
may have indicated assent to the same.
This request and authority shall continue in force unless and until expressly
revoked by fifteen days' (or such lesser period as the Bank may accept) written
notice delivered to the Bank and signed in a manner complying with the Company's
current mandate.
Signed
-----------------------------------------------
for and on behalf of
Signed
-----------------------------------------------
for and on behalf of
Date
-------------------------------------------------
EXHIBIT 4.3
PAYMENT AND REIMBURSEMENT AGREEMENT
This Payment and Reimbursement Agreement ("Agreement") is dated as of
_________, 2004 and is between World Gold Trust Services, LLC, a Delaware
limited liability company ("Sponsor"), and The Bank of New York, a New York
banking corporation, in its capacity as trustee ("Trustee") of the
streetTRACKS(R) Gold Trust ("Trust"), a trust established pursuant to the Trust
Indenture ("Trust Indenture"), dated as of ___________, 2004, between the
Sponsor and the Trustee.
WHEREAS, pursuant to Section 3.05(e) of the Trust Indenture, the
Trustee has agreed to charge no fee and to assume the expenses of the operation
of the Trust (other than extraordinary expenses) accrued through the day the
Trust's streetTRACKS(R) Gold Shares commence trading on the New York Stock
Exchange, Inc. ("Reimbursement Period").
NOW, THEREFORE, in consideration of the foregoing recitals and the
following agreements, the parties agree as follows:
1. Payment and Reimbursement. The Sponsor agrees (i) to pay to the
Trustee the amount of the fee which would otherwise be payable to the Trustee
under Section 8.04 of the Trust Indenture for the Reimbursement Period but for
the operation of Section 3.05(e) of the Trust Indenture and (ii) to reimburse
the Trustee for the expenses of the operation of the Trust which the Trustee
assumes during the Reimbursement Period under Section 3.05(e) of the Trust
Indenture.
2. Statements. The Trustee shall provide the Sponsor with a statement
for the Reimbursement Period detailing the amounts to be paid or reimbursed to
the Trustee under Section 1 above. Such statement shall set forth in reasonable
specificity the amounts to be paid or reimbursed to the Trustee and the manner
of calculation thereof. At the request of the Sponsor, the Trustee shall furnish
to the Sponsor such additional documentation and information as may be necessary
for the Sponsor to establish to its reasonable satisfaction that the Trustee is
entitled to payment or reimbursement hereunder. The Sponsor shall pay to the
Trustee the amounts identified for payment or reimbursement in the statement no
later than [THIRTY (30)] days after receipt of such statement, unless part or
all of such amounts is disputed by the Sponsor. Upon the Trustee's receipt of
the Sponsor's written notice of the existence of disputed items in the
statement, the parties shall in good faith attempt to resolve such disputed
items within [THIRTY (30)] days after the Trustee's receipt of such notice.
4. Miscellaneous.
(a) Entire Agreement; Amendments and Waiver. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and may not be modified or amended except in a writing executed by
each of the parties
-1-
hereto. No waiver of any of the provisions hereof shall be deemed or shall
constitute a waiver of any other provisions of this Agreement (whether or not
similar), nor shall such waiver constitute a continuing waiver.
(b) Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may not be assigned by any party without
the prior written consent of the other party and any purported assignment in
violation of this provision shall be null and void.
(c) Governing Law. This Agreement has been executed and delivered
in the State of New York, and shall be governed by and construed in accordance
with the laws of the State of New York.
(d) Consent to Jurisdiction. Each party hereto irrevocably consents
to the non-exclusive jurisdiction of the courts of the State of New York and of
any Federal Court located in the Borough of Manhattan 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 hereunder, and waives any claim
of forum non conveniens and any objections as to laying of venue. Each party
hereto 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 party at such party's address for purposes of notices
hereunder.
(e) Notices. All notices and other communications under this
Agreement shall be in writing, signed by the party giving it, shall be deemed
given, if delivered personally, when received, if sent by first class mail
(postage prepaid), on the second business day after being mailed, or if sent by
a recognized overnight courier (receipt confirmation received) or by facsimile
(transmission confirmation received), on the next business day after being sent,
and shall be sent to the parties at the following addresses (or to such other
address as a party may have specified by notice given to the other party
pursuant to this provision):
If to the Sponsor, to: World Gold Trust Services, LLC
444 Madison Avenue
3rd Floor
New York, New York 10022
Attention: J. Stuart Thomas
Facsimile: (212) 688-0410
If to the Trustee, to: The Bank of New York
2 Hanson Place
Brooklyn, New York 11217
Attention: ADR Administration
Facsimile: 718-315-4881
-2-
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same agreement.
[Signature Page Follows]
-3-
IN WITNESS WHEREOF, the Trustee and the Sponsor have each caused this
Agreement to be duly executed and delivered as of the date first above written.
WORLD GOLD TRUST SERVICES, LLC
By:
---------------------------------
Name:
Title
THE BANK OF NEW YORK,
as Trustee
By:
---------------------------------
Name:
Title
-4-
EXHIBIT 5.1
CARTER LEDYARD & MILBURN LLP
Counselors at Law
2 Wall Street
New York, NY 10005-2072
570 Lexington Avenue Tel (212) 732-3200 1401 Eye Street, N.W.
New York, NY 10022 Fax (212) 732-3232 Washington, DC 20005
(212) 371-2720 (202) 898-1515
________, 2004
World Gold Trust Services, LLC
444 Madison Avenue
3rd Floor
New York, New York 10022
Re: StreetTRACKS(R) Gold Trust
--------------------------
Dear Ladies and Gentlemen:
We have served as counsel to World Gold Trust Services, LLC ("Sponsor")
in its capacity as sponsor of the StreetTRACKS(R) Gold Trust ("Trust") in
connection with the formation of the Trust and the preparation and filing of a
Registration Statement on Form S-1 (Registration No. 333-105202), as amended
(the "Registration Statement"), including the prospectus included in Part I of
the Registration Statement (the "Prospectus"), with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and the rules and
regulations thereunder (collectively, the "1933 Act"). The Registration
Statement relates to the proposed registration under the 1933 Act of 120,000,000
shares of fractional undivided beneficial interest in and ownership of the Trust
("Shares").
We have examined originals and copies, certified or otherwise
identified to our satisfaction, of all such agreements, certificates and other
statements of corporate officers and other representatives of the Sponsor and
other documents as we have deemed necessary as a basis for this opinion. In such
examination, we have assumed the following: (i) the authenticity of original
documents and the genuineness of all signatures; (ii) the conformity to the
originals of all documents submitted to us as copies; and (iii) the truth,
accuracy and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed.
We have, when relevant facts material to our opinion were not
independently established by us, relied to the extent we deemed such reliance
proper upon written or oral statements of officers and other representatives of
the Sponsor. We have not made or undertaken to make any independent
investigation to establish or verify the accuracy or completeness of such
factual representations, certifications and other information. The opinions set
forth below are also based on the following assumptions: (i) the Trust has been
duly formed and is validly existing as a trust under the laws of the State of
New York; and (ii) the Registration Statement has been declared effective under
the 1933 Act.
World Gold Trust Services, LLC -2-
We express no opinion as to matters of law in jurisdictions other than
the State of New York and the United States.
Except as otherwise expressly set forth in this letter, our opinions
are based solely upon the law and the facts as they exist on the date hereof and
we undertake no, and disclaim any, obligation to advise you of any subsequent
change in law or facts or circumstances which might affect any matter or opinion
set forth herein.
Based on the foregoing and subject to the qualifications set forth in
this letter, we are of the opinion that the Shares, when issued in accordance
with the terms of the Trust Indenture, including the receipt by the Trustee of
the consideration required for the issuance of Shares, will be duly and legally
issued and will be fully paid and non-assessable.
This opinion letter is furnished by us, as counsel for the Sponsor,
solely for your benefit in connection with the formation of the Trust and the
issuance of the Shares and may not be used for any other purpose or relied upon
by any other person other than you, without our prior written consent.
We hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement and to the use of our name where it appears in the
Registration Statement and the Prospectus.
Very truly yours,
Carter Ledyard & Milburn LLP
EXHIBIT 10.1
HSBC BANK USA, NATIONAL ASSOCIATION
AND
THE BANK OF NEW YORK,
NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE OF THE STREETTRACKS(R) GOLD TRUST
-----------------------------------------------------
STREETTRACKS(R) GOLD TRUST
ALLOCATED BULLION ACCOUNT AGREEMENT
-----------------------------------------------------
THIS AGREEMENT is made on , 2004
--------------------------
BETWEEN
(1) HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association
organized under the laws of the United States of America, whose
principal place of business in England is at 8 Canada Square, London
E14 5HQ ("WE" or "US"); and
(2) The BANK OF NEW YORK, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE (THE "TRUSTEE") OF STREETTRACKS(R) GOLD TRUST (THE
"STREETTRACKS(R) GOLD TRUST") as established pursuant to the Trust
Indenture (defined below) ("YOU").
INTRODUCTION
We have agreed to hold Bullion for you and to provide other services to you in
connection with such Bullion. This agreement sets out the terms under which we
will provide those services to you and the arrangements which will apply in
connection with those services.
IT IS AGREED AS FOLLOWS
1. INTERPRETATION
1.1 DEFINITIONS: In this agreement:
"ALLOCATED ACCOUNT" means any account maintained by us in your name
pursuant to this agreement.
"AVAILABILITY DATE" means the Business Day on which you wish us to
credit to your Allocated Account an amount of Bullion debited from your
Unallocated Account.
"BULLION" means the Precious Metal held for you under this agreement or
standing to your credit in your Unallocated Account, as the case may
be.
"BUSINESS DAY" means a day other than (i) a day on which the New York
Stock Exchange, Inc. is closed for regular trading or (ii), if the
transaction involves the receipt or delivery of gold or confirmation
thereof in the United Kingdom or in some other jurisdiction, (a) a day
on which banking institutions in the United Kingdom or in such other
jurisdiction, as the case may be, are authorized by law to close or a
day on which the London gold market is closed or (b) a day on which
banking institutions in the United Kingdom or in such other
jurisdiction, as the case may be, are authorized to be open for less
than a full business day or the London gold market is open for trading
for less than a full business day and transaction procedures required
to be executed or completed before the close of the business day may
not be so executed or completed..
"LBMA" means The London Bullion Market Association or its successors.
"PARTICIPANT" means a Participant as defined in the Trust Indenture.
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 2 -
"PARTICIPANT AGREEMENT" means that certain Participant Agreement in
effect from time to time between the Trustee and a Participant, as
those terms are defined in the Trust Indenture.
"PARTICIPANT UNALLOCATED ACCOUNT" means the Precious Metal account a
Participant is required by the Participant Agreement to have maintained
by us for such Participant on an Unallocated Basis.
"POINT OF DELIVERY" means such date and time that the recipient or its
agent acknowledges in written form its receipt of delivery of Precious
Metal.
"PRECIOUS METAL" means gold.
"RULES" means the rules, regulations, practices and customs of the LBMA
(including without limitation the rules of the LBMA as to good
delivery), the Bank of England and such other regulatory authority or
other body as shall affect the activities contemplated by this
agreement.
"SPONSOR" means World Gold Trust Services, LLC.
"SUB-CUSTODIAN" means a sub-custodian, agent or depository (including
an entity within our corporate group) selected by us to perform any of
our duties under this agreement including the custody and safekeeping
of Bullion.
"THIRD PARTY UNALLOCATED ACCOUNT" means a Precious Metal account
maintained by us on an Unallocated Basis for a party other than you in
your capacity as Trustee of the streetTRACKS(R) Gold Trust.
"TRUST INDENTURE" means that certain Trust Indenture of streetTRACKS(R)
Gold Trust dated as of November [ ], 2004, between World Gold Trust
Services, LLC, as Sponsor, and The Bank of New York, as Trustee,
effective November [ ], 2004.
"UNALLOCATED ACCOUNT" means the account maintained by us in your name
on an Unallocated Basis pursuant to the Unallocated Bullion Account
Agreement.
"UNALLOCATED BASIS" means, with respect to a Precious Metal account
maintained with us, that the person in whose name the account is held
is entitled to delivery in accordance with the Rules of an amount of
Precious Metal equal to the amount of Precious Metal standing to the
credit of the person's account but has no ownership interest in any
Precious Metal that we own or hold.
"UNALLOCATED BULLION ACCOUNT AGREEMENT" means that certain Unallocated
Bullion Account Agreement between you and us dated on or about the date
of this agreement.
"VAT" means value added tax as provided for in the Value Added Tax Act
1994 (as amended or re-enacted from time to time) and legislation
supplemental thereto and any
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 3 -
other tax (whether imposed in the United Kingdom in substitution
thereof or in addition thereto or elsewhere) of a similar fiscal
nature.
"WITHDRAWAL DATE" means the Business Day on which you wish to withdraw
Bullion from your Allocated Account.
1.2 HEADINGS: The headings in this agreement do not affect its
interpretation.
1.3 SINGULAR AND PLURAL; OTHER USAGES:
(a) References to the singular include the plural and vice versa.
(b) "A or B" means "A or B or both."
(c) "Including" means "including but not limited to."
2. ALLOCATED ACCOUNT
2.1 OPENING THE ALLOCATED ACCOUNT: We shall open and maintain the
Allocated Account for you in respect of Bullion.
2.2 DEPOSITS AND WITHDRAWALS: The Allocated Account shall evidence and
record the holdings of Bullion in, and the movements of Bullion into
and out of the Allocated Account.
2.3 DENOMINATION OF THE ALLOCATED ACCOUNT: The Allocated Account shall be
denominated in fine ounces of gold to three decimal places.
2.4 REPORTS: For each Business Day, by no later than the following Business
Day, we will transmit to you by authenticated SWIFT message(s)
information showing the movement of Bullion into and out of your
Allocated Account, and identifying separately each transaction and the
Business Day on which it occurred. In addition, we will provide you
such information about the movement of Bullion into and out of your
Allocated Account on a same-day basis at such other times and in such
other form as you and we shall agree. In the case of any difference
between the information provided by authenticated SWIFT message and the
information we provide you pursuant to the immediately preceding
sentence, the SWIFT message will be controlling, and we shall not be
liable for your or any third party's reliance on the information we
provide to you by means other than SWIFT message. For each calendar
month, we will provide you within a reasonable time after the end of
the month a statement of account for your Allocated Account,
accompanied by one or more weight lists in respect of the Bullion in
your Allocated Account as of the last Business Day of the calendar
month, containing information sufficient to identify each bar of
Bullion held in your Allocated Account and the party having physical
possession thereof. We also will provide you additional weight lists in
respect of the Bullion in your Allocated Account from time to time upon
your request, but only on the condition that you may not request weight
lists as a way to obtain them routinely on a more frequent basis than
the monthly basis on which we are undertaking to provide them.
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 4 -
2.5 REVERSAL OF ENTRIES: In order to maintain the accuracy of our books and
records, but without limiting our responsibilities or liability under
this agreement, we shall reverse or amend any entries to your Allocated
Account to correct errors that we discover or of which we are notified
with, if we deem it necessary, effect back-valued to the date upon
which the correct entry (or no entry) should have been made. Without
limiting the foregoing, if Bullion delivered to your Allocated Account
upon withdrawal from your Unallocated Account is determined to be of a
fineness or weight different from the fineness or weight we have
reported to you, (i) we shall debit your Allocated Account and credit
your Unallocated Account with the requisite amount of Bullion if the
determination reduces the total fine ounces of Bullion that should have
been credited to your Allocated Account, and (ii) we shall credit your
Allocated Account and debit your Unallocated Account with the requisite
amount of Bullion if the determination increases the total fine ounces
of Bullion that should have been credited to your Allocated Account.
2.6 ACCESS: Upon reasonable prior written notice, we will, during our
normal business hours, allow your representatives, not more than twice
during any calendar year, and your independent public accountants, in
connection with their audit of the financial statements of the
streetTRACKS(R) Gold Trust, to visit our premises and examine the
Bullion and such recordS maintained by us in relation to your Allocated
Account as they may reasonably require. You shall bear all costs
relating to such visits and exams, including any out of pocket or other
costs we may incur in connection therewith. Our providing of any such
visits or exams is conditioned on the relevant parties complying with
all our security rules and procedures and undertaking to keep
confidential all information they obtain in accordance with a form of
confidentiality agreement we will provide. If at the time of any visit
none of the Bullion is at our premises, the relevant parties will not
be permitted to visit our vault. Any visits by your representatives
pursuant to clause 2.6 of the Unallocated Bullion Account Agreement
shall be deemed to be a visit for purposes of this clause 2.6.
3. TRANSFERS INTO THE ALLOCATED ACCOUNT
3.1 PROCEDURE: We shall receive transfers of Bullion into your Allocated
Account only at your instruction given pursuant to your Unallocated
Bullion Account Agreement, by debiting Bullion from your Unallocated
Account and crediting such Bullion to your Allocated Account, unless we
otherwise agree in writing.
4. TRANSFERS FROM THE ALLOCATED ACCOUNT
4.1 PROCEDURE AND INSTRUCTIONS: We will transfer Bullion from your
Allocated Account to such persons and at such times as specified in
your instructions to us and not otherwise. Unless you instruct us
otherwise, we will transfer Bullion from your Allocated Account only by
debiting Bullion from your Allocated Account and crediting the Bullion
to your Unallocated Account. When you instruct us in accordance with
clause 4.4, we will transfer Bullion from your Allocated Account by
debiting Bullion from your Allocated Account and making such Bullion
available for collection or delivery as provided in clause 4.4. All
instructions to transfer Bullion from your Allocated Account must:
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 5 -
(a) in the normal course, be received by us no later than 9:00
a.m. (London time) on (i) the day that is two Business Days
prior to the Withdrawal Date or (ii), in the case of a
transfer of Bullion to your Unallocated Account in
connection with a redemption of streetTRACKS(R) Gold Trust
shares that has been held open one Business Day, on thE
Withdrawal Date, unless we otherwise agree;
(b) specify (i) the minimum number of fine ounces of Bullion to be
debited from your Allocated Account and, if you are
identifying the Bullion to be debited, (ii) the serial numbers
of the Bullion to be debited; and
(c) provide any other information which we may from time to time
require, including, where applicable, the name of the person
that will collect the Bullion from us or, if applicable, to
whom we are to deliver it, and the Withdrawal Date.
4.2 POWER TO AMEND PROCEDURE: We may amend our procedure for the physical
withdrawal of Bullion or impose such additional procedures as we may
from time to time consider appropriate. We will notify you within a
commercially reasonable time before we amend our procedures or impose
additional ones in relation to the withdrawal of Bullion, and in doing
so we will consider your needs to communicate any such change to
Participants and others.
4.3 SPECIFICATION OF BULLION: Unless you instruct us as to the serial
numbers of the Bullion to be debited, we are entitled to select the
Bullion to be debited from your Allocated Account. When you instruct us
to debit a minimum amount of Bullion from your Allocated Account for
credit to your Unallocated Account without specifying the serial
numbers of the Bullion to be debited, we will select the Bullion to be
debited and will use commercially reasonable efforts to select for
deallocation the smallest amount of Bullion necessary to satisfy your
instruction. When you notify us of a debit of Bullion pursuant to
clause 4.1(b) in the case of a redemption that has been held open one
Business Day, you may not specify the serial numbers of the Bullion to
be debited to your Allocated Account.
4.4 PHYSICAL WITHDRAWALS OF BULLION: Upon your instruction, we will debit
Bullion from your Allocated Account and make the Bullion available for
collection by you or, if separately agreed, for delivery by us, at your
expense and risk. You and we agree nevertheless that you expect to
withdraw Bullion physically from your Allocated Account (rather than by
crediting it to your Unallocated Account) only in exceptional
circumstances, as for example when we are unable to transfer Precious
Metal on an Unallocated Basis. In the case of all physical withdrawals
of Bullion from your Allocated Account, unless we agree to undertake
delivery, you must collect, or arrange for the collection of, the
Bullion being withdrawn from us, the Sub-Custodian or other party
having physical possession thereof. We will advise you of the location
from which the Bullion may be collected no later than one Business Day
prior to the Withdrawal Date. When we have agreed separately to deliver
Bullion in connection with a physical withdrawal, we shall make
transportation and insurance arrangements on your behalf in accordance
with our usual practice unless we have agreed in writing to other
arrangements, with which we shall use commercially reasonable efforts
to comply.
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Allocated Bullion Account Agreement - 6 -
Anything in this agreement to the contrary notwithstanding, and
without limiting your right to withdraw Bullion physically, we shall
not be obliged to effect any requested delivery if, in our reasonable
opinion, this would cause us or our agents to be in breach of the
Rules or other applicable law, court order or regulation, the costs
incurred would be excessive or delivery is impracticable for any
reason. When pursuant to your instruction Bullion is physically
withdrawn from your Allocated Account, all risk in and to the Bullion
withdrawn shall pass at the Point of Delivery to the person to whom or
to or for whose account such Bullion is transferred, delivered or
collected. If you instruct us as to the serial number of one or more
whole bars of Bullion to be debited, the Bullion you specify will be
made available for collection or delivery as soon as reasonably
practicable.
5. INSTRUCTIONS
5.1 YOUR REPRESENTATIVES: We will act only on instructions given in
accordance with this clause 5.1 and clause 14 and will not otherwise
act on instructions given by any person claiming to have a beneficial
interest in the streetTRACKS(R) Gold Trust. You shall notify us
promptly iN writing of the names of the people who are authorised to
give instructions on your behalf. Until we receive written notice to
the contrary, we are entitled to assume that any of those people have
full and unrestricted power to give us instructions on your behalf. We
are also entitled to rely on any instructions which are from, or which
purport to emanate from, any person who appears to have such authority.
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Allocated Bullion Account Agreement - 7 -
5.2 AMENDMENTS: Once given, instructions continue in full force and effect
until we receive further instructions that they are cancelled, amended
or superseded. We must receive an instruction cancelling, amending or
superseding a prior instruction before the time the prior instruction
is acted upon. Instructions shall have effect only after actual
receipt by us.
5.3 UNCLEAR OR AMBIGUOUS INSTRUCTIONS: If, in our opinion, any instructions
are unclear or ambiguous, we shall use reasonable endeavours (taking
into account any relevant time constraints) to obtain clarification of
those instructions but, failing that, we may in our absolute discretion
and without any liability on our part, act upon what we believe in good
faith such instructions to be or refuse to take any action or execute
such instructions until any ambiguity or conflict has been resolved to
our satisfaction.
5.4 REFUSAL TO EXECUTE: We will, where practicable, refuse to execute
instructions if in our opinion they are or may be contrary to the Rules
or any applicable law.
6. CONFIDENTIALITY
6.1 DISCLOSURE TO OTHERS: Subject to clause 6.2, we shall treat as
confidential and will not, without your consent, disclose to any other
person any transaction or other information we acquire about you or
your business pursuant to this agreement. Subject to clause 6.2, you
shall treat as confidential and will not, without our consent, disclose
to any other person any information that we provide to you about us or
our business pursuant to this agreement and that we tell you, at or
before the time we provide it, we are providing to you on a
confidential basis.
6.2 PERMITTED DISCLOSURES: Each party accepts that from time to time the
other party may be required by law or the Rules, or requested by or
required in connection with filings made with a government department
or agency, fiscal body or regulatory or self-regulatory authority, to
disclose information acquired under this agreement. In addition, the
disclosure of such information may be required by a party's auditors,
by its legal or other advisors, by a company which is in the same group
of companies as a party (i.e. a subsidiary or holding company of a
party) or by a Sub-Custodian. Subject to the agreement of the party to
which information is disclosed to maintain it in confidence in
accordance with clause 6.1, each party irrevocably authorises the other
to make such disclosures without further reference to such party.
7. CUSTODY SERVICES
7.1 APPOINTMENT: You hereby appoint us to act as custodian of the Bullion
in accordance with this agreement and any Rules which apply to us.
7.2 SEGREGATION OF BULLION: We will be responsible for the safekeeping of
the Bullion on the terms and conditions of this Agreement. We will
segregate Bullion in your Allocated Account from any Precious Metal
which we own or hold for others by making entries in our books and
records to identify such Bullion as being held for your Allocated
Account, and we will require Sub-Custodians to segregate Bullion held
by them for us from any
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 8 -
Precious Metal which they own or hold for others by making entries in
their books and records to identify such Bullion as being held for us.
It is understood that our undertaking to require Sub-Custodians to
segregate Bullion from Precious Metal they own or hold for others
reflects the current custody practice in the London market, and that
accordingly we will be deemed to have communicated that requirement
prior to the execution of this Agreement by our participation in that
market. Entries on our books and records to identify Bullion will
refer to each bar by refiner, assay, serial number and gross and fine
weight. Under current LBMA market practices, the weight lists provided
to us by our Sub-Custodians are expected to identify Bullion held for
us by serial number and may include additional identifying
information.
7.3 OWNERSHIP OF BULLION: We will identify in our books and records that
the Bullion belongs solely to you.
7.4 LOCATION OF BULLION: Subject to clause 8.1, the Bullion held for you in
your Allocated Account must be held by us at our London vault premises
or by or for any Sub-Custodian, unless otherwise agreed between us.
8. SUB-CUSTODIANS
8.1 SUB-CUSTODIANS: We may select Sub-Custodians to perform any of our
duties under this agreement including the custody and safekeeping of
Bullion. The Sub-Custodians we select may themselves select
subcustodians to perform their duties, but such subcustodians shall not
by such selection or otherwise be, or be considered to be, a
Sub-Custodian as such term is used herein. We will use reasonable care
in selecting any Sub-Custodian. As of the execution of this Agreement,
the Sub-Custodians that we use are: the Bank of England, The Bank of
Nova Scotia (ScotiaMocatta), Deutsche Bank AG, JPMorganChase Bank, and
UBS AG. We will notify you if we select any additional Sub-Custodian,
or stop using any Sub-Custodian for such purpose. Your receipt of
notice that we have selected a Sub-Custodian (including those named in
this clause 8.1) shall not be deemed to limit our responsibility in
selecting such Sub-Custodian. Not more frequently than annually, upon
your request, we will confirm to you that from time to time we may hold
Precious Metal for our own account with one or more of each of the
Sub-Custodians, provided that this confirmation shall not constitute a
representation by us regarding the solvency or creditworthiness of any
Sub-Custodian.
8.2 LIABILITY: Except for our obligation to make commercially reasonable
efforts to obtain delivery of Bullion from Sub-Custodians, we shall not
be liable for any act or omission, or for the solvency, of any
Sub-Custodian unless the selection of that Sub-Custodian was made by us
negligently or in bad faith.
9. REPRESENTATIONS
9.1 YOUR REPRESENTATIONS: You represent and warrant to us that (such
representations and warranties being deemed to be repeated upon each
occasion Bullion is credited to or debited from your Allocated Account
under this agreement):
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Allocated Bullion Account Agreement - 9 -
(a) you have all necessary authority, powers, consents, licences
and authorisations (which have not been revoked) and have
taken all necessary action to enable you lawfully to enter
into and perform your duties and obligations under this
agreement;
(b) the persons entering into this agreement on your behalf have
been duly authorised to do so; and
(c) this agreement and the obligations created under it are
binding upon you and enforceable against you in accordance
with its terms (subject to applicable principles of equity)
and do not and will not violate the terms of the Rules or any
law, order, charge or agreement by which you are bound.
9.2 OUR REPRESENTATIONS: We represent and warrant to you that (such
representations and warranties being deemed to be repeated upon each
occasion Bullion is credited to or debited from your Allocated Account
under this agreement):
(a) we have all necessary authority, powers, consents, licences
and authorisations (which have not been revoked) and have
taken all necessary action to enable us lawfully to enter into
and perform our duties and obligations under this agreement;
(b) the persons entering into this agreement on our behalf have
been duly authorised to do so; and
(c) this agreement and the obligations created under it are
binding upon us and enforceable against us in accordance with
its terms (subject to applicable principles of equity) and do
not and will not violate the terms of the Rules or any law,
order, charge or agreement by which we are bound.
10. FEES AND EXPENSES
10.1 FEES: For our services under this agreement you shall pay us an annual
fee equal to 0.10% of the average daily aggregate value of the Gold
held in the Allocated Account and the Unallocated Account. The gold
held in the Allocated Account and the Unallocated Account shall be
determined based on our end of Business Day balances, and the value of
the Gold shall be computed on the basis of the price of an ounce of
gold as fixed by the five members of the London gold fix at or about
3:00 p.m. London time (the "London P.M. Fix"), or if no London P.M. Fix
is made on such day, on the basis of the last prior London "fix" (A.M.
or P.M.). Our fee shall be paid in monthly installments in arrears.
10.2 EXPENSES: You must pay us on demand all costs, charges and expenses
(including any relevant taxes, duties and reasonable legal fees but not
including fees of Sub-Custodians) incurred by us in connection with the
performance of our duties and obligations under this agreement or
otherwise in connection with the Bullion.
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 10 -
10.3 DEFAULT INTEREST: If you fail to pay us any amount when it is due, we
reserve the right to charge you interest (both before and after any
judgement) on any such unpaid amount calculated at a rate equal to 1%
above the overnight London Interbank Offered Rate (LIBOR) for the
currency in which the amount is due. Interest will accrue on a daily
basis and will be due and payable by you as a separate debt.
11. VALUE ADDED TAX
11.1 VAT INCLUSIVE: All sums payable under this agreement by you to us shall
be deemed to be inclusive of VAT.
12. SCOPE OF RESPONSIBILITY
12.1 EXCLUSION OF LIABILITY: We will use reasonable care in the performance
of our duties under this agreement and will only be responsible to you
for any loss or damage suffered by you as a direct result of any
negligence, fraud or wilful default on our part in the performance of
our duties, in which case our liability will not exceed the market
value of the Bullion at the time such negligence, fraud or wilful
default is discovered by us, provided that we notify you promptly after
we discover such negligence, fraud or wilful default. If we credit
Bullion to your Allocated Account that is not of the fine weight we
have represented to you, recovery by you, to the extent such recovery
is otherwise allowed, shall not be barred by your delay in asserting a
claim because of the failure to discover such loss or damage regardless
of whether such loss or damage could or should have been discovered.
12.2 NO DUTY OR OBLIGATION: We are under no duty or obligation to make or
take, or require any Sub-Custodian to make or take, any special
arrangements or precautions beyond those required by the Rules or as
specifically set forth herein.
12.3 INSURANCE: We shall maintain insurance in regard to our business,
including our bullion and custody business, on such terms and
conditions as we consider appropriate. Upon reasonable prior written
notice, in connection with the preparation of the initial registration
statement under the United States federal Securities Act of 1933, as
amended, covering shares of the streetTRACKS(R) Gold Trust, we will
allow our insurance to be reviewed by you, by the Sponsor anD by UBS
Securities LLC as underwriter in connection with such initial
registration statement. We also will allow you and the Sponsor to
review such insurance in connection with any amendment to that initial
registration statement and from time to time, in each case upon
reasonable prior written notice from you. Any permission to review our
insurance is limited to the term of this agreement and is conditioned
on the reviewing party executing a form of confidentiality agreement we
will provide, or if the confidentiality agreement is already in force,
acknowledging that the review is subject to it. The foregoing
permissions for the Sponsor and UBS Securities LLC to review our
insurance shall cease when the Sponsor or UBS Securities LLC, as the
case may be, ceases to serve the streetTRACKS(R) Gold Trust as such
Sponsor oR underwriter.
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 11 -
12.4 FORCE MAJEURE: We shall not be liable to you for any delay in
performance, or for the non-performance of any of our obligations under
this agreement by reason of any cause beyond our reasonable control.
This includes any act of God or war or terrorism, any breakdown,
malfunction or failure of transmission in connection with or other
unavailability of any wire, communication or computer facilities, any
transport, port, or airport disruption, industrial action, acts and
regulations and rules of any governmental or supra national bodies or
authorities or regulatory or self-regulatory organisations or failure
of any such body, authority, or organisation for any reason, to perform
its obligations.
12.5 INDEMNITY: You shall, solely out of the assets of the streetTRACKS(R)
Gold Trust, indemnify anD keep us, and each of our directors,
shareholders, officers, employees, agents, affiliates (as such term is
defined in Regulation S-X adopted by the United States Securities and
Exchange Commission under the United States federal Securities Act of
1933, as amended) and subsidiaries (us and each such person a
"Custodian Indemnified Person" for purposes of this clause 12.5)
indemnified (on an after tax basis) on demand against all costs and
expenses, damages, liabilities and losses which any such Custodian
Indemnified Person may suffer or incur, directly or indirectly in
connection with this agreement except to the extent that such sums are
due directly to our negligence, wilful default or fraud or that of such
Custodian Indemnified Person.
12.6 THIRD PARTIES: You are our sole customer under this agreement and we do
not owe any duty or obligation or have any liability towards any person
who is not a party to this agreement. This agreement does not confer a
benefit on any person who is not a party to it. The parties to this
agreement do not intend that any term of this agreement shall be
enforceable by any person who is not a party to it, except Custodian
Indemnified Persons, and do intend that the Contracts (Rights of Third
Parties) 1999 Act shall not apply to this Agreement. Nothing in this
paragraph is intended to limit the obligations hereunder of any
successor Trustee of the streetTRACKS(R) Gold Trust or to limit the
right of any successor Trustee of the streetTRACKS(R) Gold Trust to
enforce our obligations hereunder.
12.7 NO LIENS: We will not create any right, charge, security interest, lien
or claim against the Bullion, except those in our favor arising under
this agreement or the Unallocated Bullion Account Agreement, and we
will not loan, hypothecate, pledge or otherwise encumber any Bullion
except pursuant to your instructions.
12.8 OTHER ACTIVITIES: We and any of our affiliates may act as a Participant
or own or hold Precious Metal or shares issued by the streetTRACKS(R)
Gold Trust or both and may deal with theM in any manner, including
acting as underwriter for the shares, with the same rights and powers
as if we were not the custodian hereunder.
13. TERMINATION
13.1 NON-TERMINATION: This agreement may not be terminated for one year
following the "Initial Date of Deposit", as that term is defined in the
Trust Indenture, unless the streetTRACKS(R) GolD Trust is terminated
during that period.
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Allocated Bullion Account Agreement - 12 -
13.2 METHOD: Subject to the requirements of clause 13.1, either party may
terminate this agreement by giving not less than 90 Business Days'
written notice to the other party. Any such notice given by you must
specify:
(a) the date on which the termination will take effect;
(b) the person to whom the Bullion is to be made available; and
(c) all other necessary arrangements for the redelivery of the
Bullion to you.
13.3 RESIGNATION OF TRUSTEE: In the event you resign or are discharged or
removed as Trustee, this agreement will terminate 90 Business Days
following your resignation, discharge or removal unless a successor
trustee to the streetTRACKS(R) Gold Trust is appointed before the end
of thE 90 Business Day period or a full liquidation of the
streetTRACKS(R) Gold Trust is started durinG the 90 Business Day period
and you request us to continue the agreement in effect until the
liquidation is completed.
13.4 REDELIVERY ARRANGEMENTS: Following any termination of this agreement,
if you do not make arrangements acceptable to us for the redelivery of
the Bullion we may continue to store the Bullion, in which case we will
continue to charge the fees and expenses payable under clause 10. If
you have not made arrangements acceptable to us for the redelivery of
the Bullion within 6 months of the date specified in the termination
notice as the date on which the termination will take effect, we will
be entitled to sell the Bullion and account to you for the proceeds
after deducting any amounts due to us under this agreement.
13.5 EXISTING RIGHTS: Termination shall not affect rights and obligations
then outstanding under this agreement which shall continue to be
governed by this agreement until all obligations have been fully
performed.
14. NOTICES
14.1 FORM: Subject to clause 14.5, any notice, notification, instruction or
other communication under or in connection with this agreement shall be
given in writing. References to writing include electronic
transmissions that are of the kind specified in clause 14.2.
14.2 METHOD OF TRANSMISSION: Any notice, notification, instruction or other
communication required to be in writing may be delivered personally or
sent by first class post, pre-paid recorded delivery (or air mail if
overseas), authenticated electronic transmission (including tested
telex and authenticated SWIFT) or such other electronic transmission as
the parties may from time to time agree to the party due to receive the
notice or communication, at its address, number or destination set out
in this agreement or another address, number or destination specified
by that party by written notice to the other.
14.3 DEEMED RECEIPT ON NOTICE: A notice, notification, instruction or other
communication under or in connection with this agreement will be deemed
received only if actually received or delivered.
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Allocated Bullion Account Agreement - 13 -
14.4 RECORDING OF CALLS: We may record telephone conversations without use
of a warning tone. Such records will be our sole property and accepted
by you as evidence of the orders or instructions given that are
permitted to be given orally under this agreement.
14.5 INSTRUCTIONS RELATING TO BULLION: All notices, notifications,
instructions and other communications relating to the movement of
Bullion in relation to your Allocated Account shall be by way of
authenticated electronic transmission (including tested telex and
authenticated SWIFT), and shall be addressed to:
Precious Metals Operations
HSBC Bank USA, National Association
8 Canada Square
London E14 5HQ
Tested Telex: 889217 RNB
SWIFT: BLIC GB2L
15. GENERAL
15.1 NO ADVICE: Our duties and obligations under this agreement do not
include providing you with investment advice. In asking us to open and
maintain the Allocated Account, you do so in reliance of your own
judgment and we shall not owe to you any duty to exercise any judgment
on your behalf as to the merits or suitability of any deposits into, or
withdrawals from, your Allocated Account.
15.2 RIGHTS AND REMEDIES: Our rights under this agreement are in addition
to, and independent of, any other rights which we may have at any time
in relation to the Bullion, except that we will not have any right to
set off against any account we maintain or property that we hold for
you under this agreement any claim or amount that we may have against
you or that may be owing to us other than pursuant to this agreement,
no matter how that claim or amount arose.
15.3 ASSIGNMENT: This agreement is for the benefit of and binding upon us
both and our respective successors, including any successor trustees,
and assigns. This agreement may not be assigned by either party without
the written consent of the other party; except that this clause shall
not restrict our power to merge or consolidate with any party, or to
dispose of all or part of our custody business.
15.4 AMENDMENTS: Any amendment to this agreement must be agreed in writing
and be signed by us both. Unless otherwise agreed, an amendment will
not affect any legal rights or obligations which may already have
arisen.
15.5 PARTIAL INVALIDITY: If any of the clauses (or part of a clause) of this
agreement becomes invalid or unenforceable in any way under the Rules
or any law, the validity of the remaining clauses (or part of a clause)
will not in any way be affected or impaired.
15.6 ENTIRE AGREEMENT: This document represents the entire agreement, and
supersedes any previous agreements between us relating to the subject
matter of this agreement.
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Allocated Bullion Account Agreement - 14 -
15.7 JOINT AND SEVERAL LIABILITY: If there is more than one of you, your
responsibilities under this agreement apply to each of you individually
as well as jointly.
15.8 COUNTERPARTS: This agreement may be executed in any number of
counterparts each of which when executed and delivered is an original,
but all the counterparts together constitute the same agreement.
15.9 BUSINESS DAYS: If any obligation of either you or us falls due to be
performed on a day which is not a Business Day in respect of the
Allocated Account in question, then the relevant obligations shall be
performed on the next succeeding Business Day applicable to such
account.
15.10 PROCESSING OF ACCOUNT ENTRIES: Except for physical withdrawals as to
which transfer of ownership is determined at the Point of Delivery,
records of (i) all deposits to and withdrawals from the Allocated
Account and all debits and credits to the Unallocated Account which,
pursuant to instructions given in accordance with this agreement and
the Unallocated Bullion Account Agreement, occur on a Business Day and
(ii) all end of Business Day account balances in the Allocated Account
and the Unallocated Account are prepared overnight as at the close of
our business (usually 4:00 p.m. London time) on that Business Day. For
avoidance of doubt, the foregoing sentence is illustrated by the
following examples, which are not intended to create any separate
obligations on our part:
Reports of a transfer of Precious Metal from a Third Party
Unallocated Account for credit to your Unallocated Account
on a Business Day and a debit of Bullion from your
Unallocated Account for credit to your Allocated Account on
that Business Day pursuant to the standing instruction
contained in the Unallocated Bullion Account Agreement and
of the balances in your Allocated Account and your
Unallocated Account for that Business Day shall be prepared
overnight as at the close of our business on that Business
Day.
Reports of a transfer of Bullion which we debit from your
Allocated Account for credit to your Unallocated Account on
a Business Day and a transfer of Bullion which we debit from
your Unallocated Account for credit to a Third Party
Unallocated Account on that Business Day and of the balances
in your Allocated Account and Unallocated Account for that
Business Day shall be prepared overnight as at the close of
our business on that Business Day.
When you instruct us to debit Bullion from your Allocated Account for
credit to your Unallocated Account and direct us to execute such
instruction on the same Business Day as and in connection with one or
more instructions that you give to us to debit Bullion from your
Unallocated Account, we will use commercially reasonable efforts to
execute the instructions in a manner that minimizes the time the
Bullion to be debited from your Allocated Account stands to your credit
in your Unallocated Account, save that we shall not be responsible for
any delay caused by late, incorrect or garbled instructions or
information from you or any third party.
15.11 MAINTENANCE OF THIS AGREEMENT. Concurrently with this agreement, we and
you are entering into the Unallocated Bullion Account Agreement. That
agreement shall remain
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 15 -
in effect as long as this agreement remains in effect, and if that
agreement is terminated, this agreement terminates with immediate
effect.
15.12 PRIOR AGREEMENTS: The Agreement supersedes and replaces any prior
existing agreement between you and us relating to the same subject
matter.
15.13 COOPERATION. During the term of this agreement, we and you will
cooperate with each other and make available to each other upon
reasonable request any information or documents necessary to insure
that each of our respective books and records are accurate and current.
16. GOVERNING LAW AND JURISDICTION
16.1 GOVERNING LAW: This agreement is governed by, and will be construed in
accordance with, English law.
16.2 JURISDICTION: We both agree the courts of the State of New York, in the
United States of America, and the United States federal court located
in the Borough of Manhattan in such state are to have jurisdiction to
settle any disputes or claims which may arise out of or in connection
with this agreement and, for these purposes we both irrevocably submit
to the non-exclusive jurisdiction of such courts, waive any claim of
forum non conveniens and any objections to the laying of venue, and
further waive any personal service.
16.3 WAIVER OF IMMUNITY: To the extent that you may in any jurisdiction
claim for yourself or your assets any immunity from suit, judgment,
enforcement or otherwise howsoever, you agree not to claim and
irrevocably waive any such immunity which you would otherwise be
entitled to (whether on grounds of sovereignty or otherwise) to the
full extent permitted by the laws of such jurisdiction.
16.4 SERVICE OF PROCESS: Process by which any proceedings are begun may be
served by being delivered to the addresses specified below. This does
not affect the right of either of us to serve process in another manner
permitted by law.
Our address for service of process: Your address for service of process
HSBC Bank USA, National Association, London Branch The Bank of New York
8 Canada Square 2 Hanson Place
London, E14 5HQ, United Kingdom Brooklyn, New York 11217
Attention: Precious Metals Department Attention: ADR Administration
Legal Department
EXECUTED by the parties as follows
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
STREETTRACKS(R) Gold Trust
Allocated Bullion Account Agreement - 16 -
Signed on behalf of
HSBC BANK USA, NATIONAL ASSOCIATION
by
Signature
....................................................
Name
....................................................
Title
....................................................
Signature
....................................................
Name
....................................................
Title
....................................................
Signed on behalf of
THE BANK OF NEW YORK,
NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE OF THE STREETTRACKS(R) GOLD TRUST,
by
Signature
......................................
Name
......................................
Title
.....................................
Signature Page
streetTRACKS(R) Gold Trust
Allocated Bullion Account Agreement
EXHIBIT 10.2
HSBC BANK USA, NATIONAL ASSOCIATION
AND
THE BANK OF NEW YORK,
NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE OF THE STREETTRACKS(R) GOLD TRUST
-----------------------------------------------------
STREETTRACKS(R) GOLD TRUST
UNALLOCATED BULLION ACCOUNT AGREEMENT
-----------------------------------------------------
THIS AGREEMENT is made on November , 2004
BETWEEN
(1) HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association
organized under the laws of the United States of America, whose
principal place of business in England is at 8 Canada Square, London
E14 5HQ ("WE" or "US"); and
(2) THE BANK OF NEW YORK, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE (THE "TRUSTEE") OF STREETTRACKS(R) GOLD TRUST (THE
"STREETTRACKS(R) GOLD TRUST") as established pursuant to the Trust
Indenture (defined below) ("YOU").
INTRODUCTION
We have agreed to open and maintain for you an Unallocated Account and to
provide other services to you in connection with your Unallocated Account. This
agreement sets out the terms under which we will provide those services to you
and the arrangements which will apply in connection with those services and your
Unallocated Account.
IT IS AGREED AS FOLLOWS
1. INTERPRETATION
1.1 DEFINITIONS: In this agreement:
"ACCOUNT BALANCE" means the balance from time to time standing to your
credit in your Unallocated Account.
"ALLOCATED ACCOUNT" means the account maintained by us in your name
pursuant to the Allocated Bullion Account Agreement.
"ALLOCATED BULLION ACCOUNT AGREEMENT" means that certain Allocated
Bullion Account Agreement between you and us dated on or about the date
of this Agreement.
"AVAILABILITY DATE" means the Business Day on which you wish us to
credit to your Unallocated Account either Bullion from your Allocated
Account or Precious Metal from a Third Party Unallocated Account.
"BULLION" means the Precious Metal standing to your credit in your
Unallocated Account or held for you in your Allocated Account, as the
case may be.
"BUSINESS DAY" means a day other than (i) a day on which the New York
Stock Exchange, Inc. is closed for regular trading or (ii), if the
transaction involves the receipt or delivery of gold or confirmation
thereof in the United Kingdom or in some other jurisdiction, (a) a day
on which banking institutions in the United Kingdom or in such other
jurisdiction, as the case may be, are authorized by law to close or a
day on which the London gold market is closed or (b) a day on which
banking institutions in the United Kingdom or in such other
jurisdiction, as the case may be, are authorized to be open for
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 2 -
less than a full business day or the London gold market is open for
trading for less than a full business day and transaction procedures
required to be executed or completed before the close of the business
day may not be so executed or completed.
"LBMA" means The London Bullion Market Association or its successors.
"PARTICIPANT" means a Participant as defined in the Trust Indenture.
"PARTICIPANT AGREEMENT" means that certain Participant Agreement in
effect from time to time among the Trustee and each Participant, as
those terms are defined in the Trust Indenture.
"PARTICIPANT UNALLOCATED ACCOUNT" means the Precious Metal account a
Participant is required by the Participant Agreement to have maintained
by us for such Participant on an Unallocated Basis.
"PARTICIPANT UNALLOCATED BULLION ACCOUNT AGREEMENT" means that certain
Participant Unallocated Bullion Account Agreement in effect from time
to time between us and each Participant pursuant to which we maintain
the Participant's Participant Unallocated Account.
"POINT OF DELIVERY" means such date and time that the recipient or its
agent acknowledges in written form its receipt of delivery of Precious
Metal.
"PRECIOUS METAL" means gold.
"RULES" means the rules, regulations, practices and customs of the LBMA
(including without limitation the rules of the LBMA as to good
delivery), the Bank of England and such other regulatory authority or
body as shall affect the activities contemplated by this agreement.
"SPONSOR" means World Gold Trust Services, LLC.
"THIRD PARTY UNALLOCATED ACCOUNT" means a Precious Metal account
maintained by us on an Unallocated Basis in the name of a person other
than you in your capacity as Trustee of the streetTRACKS(R) Gold Trust.
"TRUST INDENTURE" means that certain Trust Indenture of streetTRACKS(R)
Gold Trust dated as of November , 2004, between World Gold Trust
Services, LLC, as Sponsor, and The Bank of New York, as Trustee,
effective November , 2004.
"UNALLOCATED ACCOUNT" means the account maintained by us in your name
on an Unallocated Basis pursuant to this agreement.
"UNALLOCATED BASIS" means, with respect to a Precious Metal account
maintained with us, that the person in whose name the account is held
is entitled to delivery in accordance with the Rules of an amount of
Precious Metal equal to the amount of Precious Metal
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 3 -
standing to the credit of the person's account but has no ownership
interest in any Precious Metal that we own or hold.
"VAT" means value added tax as provided for in the Value Added Tax Act
1994 (as amended or re-enacted from time to time) and legislation
supplemental thereto and any other tax (whether imposed in the United
Kingdom in substitution thereof or in addition thereto or elsewhere) of
a similar fiscal nature.
"WITHDRAWAL DATE" means the Business Day on which you wish to debit
Bullion from your Unallocated Account and credit such Bullion either to
your Allocated Account or to a Third Party Unallocated Account.
1.2 HEADINGS: The headings in this agreement do not affect its
interpretation.
1.3 SINGULAR AND PLURAL; OTHER USAGES:
(a) References to the singular include the plural and vice versa.
(b) "A or B" means "A or B or both."
(c) "Including" means "including but not limited to."
2. UNALLOCATED ACCOUNT
2.1 OPENING UNALLOCATED ACCOUNT: We shall open and maintain the Unallocated
Account for you in respect of Bullion.
2.2 TRANSFERS INTO AND OUT OF UNALLOCATED ACCOUNT: The Unallocated Account
shall evidence and record the amount of Bullion standing to your credit
therein and increases and decreases to that amount.
2.3 DENOMINATION OF UNALLOCATED ACCOUNT: The Unallocated Account shall be
denominated in fine ounces of gold to three decimal places.
2.4 REPORTS: For each Business Day, by no later than the following Business
Day, we will transmit to you by authenticated SWIFT message(s)
information showing the increases and decreases to the Bullion standing
to your credit in your Unallocated Account, and identifying separately
each transaction and the Business Day on which it occurred. On each
Business Day that is a Withdrawal Date, we will send you a notification
as of 2:00 p.m. (London time) (i) as to each Participant, of the amount
of Precious Metal transferred from the Participant's Participant
Unallocated Account to your Unallocated Account, (ii) of the amount of
Bullion transferred from your Unallocated Account to your Allocated
Account and (iii) of the amount of any remaining Bullion in your
Unallocated Account, and we will use commercially reasonable efforts to
send the notification by approximately 2:00 p.m. (London time). In
addition, we will provide you such information about the increases and
decreases to the Bullion standing to your credit in your Unallocated
Account on a same-day basis at such other times and in such other form
as you and we shall agree. In the case of any difference between the
information provided
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 4 -
by authenticated SWIFT message and the information we provide you
pursuant to either of the two immediately preceding sentences, the
SWIFT message will be controlling, and we shall not be liable for your
or any third party's reliance on the information we provide to you by
means other than SWIFT message. For each calendar month, we will
provide you within a reasonable time after the end of the month a
statement of account for your Unallocated Account.
2.5 REVERSAL OF ENTRIES: In order to maintain the accuracy of our books and
records, but without limiting our responsibilities or liability under
this agreement, we shall reverse or amend any entries to your
Unallocated Account to correct errors that we discover or of which we
are notified with, if we deem it necessary, effect back-valued to the
date upon which the correct entry (or no entry) should have been made.
Without limiting the foregoing, if Bullion delivered to your Allocated
Account upon withdrawal from your Unallocated Account is determined to
be of a fineness or weight different from the fineness or weight we
have reported to you, (i) we shall debit your Allocated Account and
credit your Unallocated Account with the requisite amount of Bullion if
the determination reduces the total fine ounces of Bullion that should
have been credited to your Allocated Account, and (ii) we shall credit
your Allocated Account and debit your Unallocated Account with the
requisite amount of Bullion if the determination increases the total
fine ounces of Bullion that should have been credited to your Allocated
Account.
2.6 ACCESS: Upon reasonable prior written notice, we will, during our
normal business hours, allow your representatives, not more than twice
during any calendar year, and your independent public accountants, in
connection with their audit of the financial statements of the
streetTRACKS(R) Gold Trust, to visit our premises and examine such
records maintained by us in relation to your Unallocated Account as
they may reasonably require. You shall bear all costs relating to such
visits and exams, including any out of pocket or other costs we may
incur in connection therewith. Our providing of any such visits or
exams is conditioned on the relevant parties complying with all our
security rules and procedures and undertaking to keep confidential all
information they obtain in accordance with a form of confidentiality
agreement we will provide. Any visits by your representatives pursuant
to clause 2.6 of the Allocated Bullion Account Agreement shall be
deemed to be a visit for purposes of this clause 2.6.
3. TRANSFERS INTO THE UNALLOCATED ACCOUNT
3.1 PROCEDURE: We will credit to your Unallocated Account only the amount
of Bullion we receive from your Allocated Account or the amount of
Precious Metal we receive from a Third Party Unallocated Account for
credit to your Unallocated Account. Unless we otherwise agree in
writing, the only Precious Metal we will accept in physical form for
credit to your Unallocated Account is Bullion you have transferred from
your Allocated Account. By 9:00 a.m. (London time) on the day that is
two Business Days prior to the Availability Date, you will notify us
regarding each amount of Bullion or Precious Metal that you are
expecting to be credited to your Unallocated Account from a Participant
Unallocated Account, and the identity of the Participant Unallocated
Account from which such credit will be made. If, on any Business Day, a
Participant's instruction to us to transfer Bullion to your Unallocated
Account is revoked pursuant to clause 5.5 of that
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 5 -
Participant's Participant Unallocated Bullion Account Agreement, we
shall send you a notification by email identifying such Participant by
the close of business in London on that day. We shall use commercially
reasonable efforts to send you such notification by 5:00 p.m. (London
time). When by reference to your notifications and instructions to us
we reasonably believe an amount of Bullion has been credited to your
Unallocated Account in error, we will notify you promptly and, pending
our joint resolution of the error, will treat such amount as not being
subject to the standing instruction in clause 4.5 below.
3.2 RIGHT TO REFUSE BULLION OR AMEND PROCEDURE: We may refuse to accept
transfers of Bullion into your Unallocated Account, amend the procedure
in relation to the transfer of Bullion into your Unallocated Account or
impose such additional procedures in relation to the transfer of
Bullion into your Unallocated Account as we may from time to time
consider appropriate. Any such refusal will be promptly notified to
you. We will notify you within a commercially reasonable time before we
amend our procedures or impose additional ones in relation to the
transfer of Bullion into your Unallocated Account, and in doing so we
will consider your needs to communicate any such change to Participants
and others.
4. TRANSFERS FROM THE UNALLOCATED ACCOUNT
4.1 PROCEDURE: We will transfer Bullion from your Unallocated Account to
such persons and at such times and on such terms as specified in your
instructions to us and not otherwise. A transfer of Bullion from your
Unallocated Account may only be made by:
(a) transfer of Bullion to a Third Party Unallocated Account; or
(b) transfer of Bullion to your Allocated Account, including
pursuant to the standing instruction provided in clause 4.5;
or
(c) subject to clause 4.4, by either (i) making the Bullion
available for collection at our vault premises, or as we may
direct or (ii), if separately agreed, delivering the Bullion
to such location as we agree at your expense and risk.
Any Bullion to be made available in physical form pursuant to clause
4.1(b) or (c) will be in a form which complies with the Rules or in
such other form as may be agreed between us, and in all cases will
comprise one or more whole bars selected by us (or other form as
agreed), the combined fine weight of which will not exceed the number
of fine ounces of Bullion you have instructed us to debit.
4.2 INSTRUCTION REQUIREMENTS: You may at any time instruct us to transfer
Bullion standing to the credit of your Unallocated Account. Any
instruction relating to a transfer of Bullion other than pursuant to a
standing instruction must:
(a) if it relates to a transfer pursuant to clause 4.1(a), be
received by us no later than 3:00 p.m. (London time) on the
Withdrawal Date or 3:30 p.m. (London time) on a Withdrawal
Date occurring when London is and New York is not on daylight
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 6 -
savings time unless otherwise agreed and specify the details
of the Third Party Unallocated Account(s) to which the Bullion
is to be transferred;
(b) if it relates to a transfer pursuant to clause 4.1(b), be
received by us no later than 9:00 a.m. (London time) on the
day that is two Business Days prior to the Withdrawal Date
unless otherwise agreed, and specify the details of your
Allocated Account to which the Bullion is to be transferred;
(c) if it relates to a withdrawal pursuant to clause 4.1(c), be
received by us no later than 9:00 a.m. (London time) on the
day that is two Business Days prior to the Withdrawal Date
unless otherwise agreed, and specify the name of the person or
carrier that will collect the Bullion from us or the identity
of the person to whom delivery is to be made, as the case may
be; and
(d) in all cases, specify the number of fine ounces of Bullion to
be debited to the Unallocated Account, the Withdrawal Date and
any other information which we may from time to time require.
4.3 POWER TO AMEND PROCEDURE AND NOTICE OF AMENDMENTS TO AGREEMENTS: We may
amend the procedure for the transfer of Bullion from your Unallocated
Account or impose such additional procedures as we may from time to
time consider appropriate. We will notify you within a commercially
reasonable time before we amend our procedures or impose additional
ones in relation to the transfer of Bullion from your Unallocated
Account, and in doing so we will consider your needs to communicate any
such change to Participants and others. We also will provide you a copy
of any proposed amendment to the form of the Participant Unallocated
Bullion Account Agreement no later than 15 Business Days before the
amendment's scheduled effectiveness.
4.4 PHYSICAL WITHDRAWALS OF BULLION: Upon your instruction, we will debit
Bullion from your Unallocated Account and make the Bullion available
for collection by you or, if separately agreed, for delivery by us at
your expense and risk. You and we agree nevertheless that you expect to
withdraw Bullion physically from your Unallocated Account (rather than
by crediting it to a Third Party Unallocated Account) only in
exceptional circumstances, as for example when we are unable to
transfer Precious Metal on an Unallocated Basis. In the case of all
physical withdrawals of Bullion from your Unallocated Account, unless
we agree to undertake delivery, you must collect, or arrange for the
collection of, the Bullion being withdrawn from us, the Sub-Custodian
or other party having physical possession thereof. We will advise you
of the location from which the Bullion may be collected no later than
one Business Day prior to the Withdrawal Date. When we have agreed
separately to deliver Bullion in connection with a physical withdrawal,
we shall make transportation and insurance arrangements on your behalf
in accordance with our usual practice unless we have agreed in writing
to other arrangements, with which we shall use commercially reasonable
efforts to comply. Anything in this agreement to the contrary
notwithstanding, and without limiting your right to withdraw Bullion,
we shall not be obliged to effect any requested delivery if, in our
reasonable opinion, this would cause us or our agents to be in breach
of the Rules or other applicable law, court order or regulation, the
costs incurred would be excessive or
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 7 -
delivery is impracticable for any reason. When pursuant to your
instruction Bullion is physically withdrawn from your Unallocated
Account, all right, title, risk and interest in and to the Bullion
withdrawn shall pass at the Point of Delivery to the person to whom or
to or for whose account such Bullion is transferred, delivered or
collected.
4.5 STANDING INSTRUCTION: We will use commercially reasonable efforts to
comply with the following instruction, which we acknowledge you are
giving to us for execution as a standing instruction:
As early as we can but in any event by the close of business
(London time) on each Business Day, we will transfer to your
Allocated Account from the Bullion standing to your credit in
your Unallocated Account an amount of Bullion such that the
amount of Bullion that remains standing to your credit in your
Unallocated Account after any transfers on that day pursuant
to clause 4.1 does not exceed 430 fine ounces.
4.6 PHYSICAL WITHDRAWAL OF ENTIRE UNALLOCATED ACCOUNT BALANCE. If, when you
notify us in connection with a physical withdrawal of Bullion from your
Unallocated Account under clause 4.4 that you are withdrawing the
entire balance in your Unallocated Account (or when a physical
withdrawal under clause 4.4 would, in our determination, result in the
entire balance in your Unallocated Account being withdrawn), the
physical withdrawal instruction may not be effected by our selection of
one or more whole bars of Bullion the combined fine weight of which
does not exceed the balance of your Unallocated Account that you are
withdrawing, then we will make available to you in accordance with
clause 4.4 the number of whole bars that can be accommodated under your
instruction, and will purchase for cash the remainder of the Bullion in
your Unallocated Account based on the price of an ounce of gold as
fixed by the five members of the London gold fix at or about 10:30 a.m.
London time (the "London A.M. Fix") on the date you are withdrawing the
Bullion physically, or if there is no London A.M. Fix for Gold for such
date, then the London A.M. Fix for Gold for the next Business Day.
5. INSTRUCTIONS
5.1 YOUR REPRESENTATIVES: We will act only on instructions given in
accordance with this clause 5.1 and clause 11 and will not otherwise
act on instructions given by any person claiming to have a beneficial
interest in the streetTRACKS(R) Gold Trust. You shall notify us
promptly in writing of the names of the people who are authorized to
give instructions on your behalf. Until we receive written notice to
the contrary, we are entitled to assume that any of those people have
full and unrestricted power to give us instructions on your behalf. We
are also entitled to rely on any instructions which are from, or which
purport to emanate from, any person who appears to have such authority.
5.2 AMENDMENTS: Once given, instructions continue in full force and effect
until they are cancelled, amended or superseded. We must receive an
instruction canceling, amending or superseding a prior instruction
before the time the prior instruction is acted upon. Any instructions
shall have effect only after actual receipt by us.
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 8 -
5.3 UNCLEAR OR AMBIGUOUS INSTRUCTIONS: If, in our opinion, any instructions
are unclear or ambiguous, we will use reasonable endeavours (taking
into account any relevant time constraints) to obtain clarification of
those instructions but, failing that, we may in our absolute discretion
and without any liability on our part, act upon what we believe in good
faith such instructions to be or refuse to take any action or execute
such instructions until any ambiguity or conflict has been resolved to
our satisfaction.
5.4 REFUSAL TO EXECUTE: We reserve the right to refuse to execute
instructions if in our opinion they are or may be contrary to the
Rules or any applicable law.
6. CONFIDENTIALITY
6.1 DISCLOSURE TO OTHERS: Subject to clause 6.2, we shall treat as
confidential and will not, without your consent, disclose to any other
person any transaction or other information we acquire about you or
your business pursuant to this agreement. Subject to clause 6.2, you
shall treat as confidential and will not, without our consent, disclose
to any other person any information that we provide to you about us or
our business pursuant to this agreement and that we tell you, at or
before the time we provide it, we are providing to you on a
confidential basis.
6.2 PERMITTED DISCLOSURES: Each party accepts that from time to time the
other party may be required by law or the Rules, or requested by or
required in connection with filings made with a government department
or agency, fiscal body or regulatory or self-regulatory authority, to
disclose information acquired under this agreement. In addition, the
disclosure of such information may be required by a party's auditors,
by its legal or other advisors or by a company which is in the same
group of companies as a party (eg. a subsidiary or holding company of a
party). Subject to the agreement of the party to which information is
disclosed to maintain it in confidence in accordance with clause 6.1,
each party irrevocably authorizes the other to make such disclosures
without further reference to such party.
7. REPRESENTATIONS
7.1 YOUR REPRESENTATIONS: You represent and warrant to us that:
(a) you have all necessary authority, powers, consents, licences
and authorisations and have taken all necessary action to
enable you lawfully to enter into and perform your duties and
obligations under this agreement;
(b) the persons entering into this agreement on your behalf have
been duly authorised to do so; and
(c) this agreement and the obligations created under it are
binding upon you and enforceable against you in accordance
with its terms (subject to applicable principles of equity)
and do not and will not violate the terms of the Rules or any
law, order, charge or agreement by which you are bound.
7.2 OUR REPRESENTATIONS: We represent and warrant to you that:
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 9 -
(a) We have all necessary authority, powers, consents, licences
and authorisations and have taken all necessary action to
enable us lawfully to enter into and perform our duties and
obligations under this agreement;
(b) the persons entering into this agreement on our behalf have
been duly authorised to do so; and
(c) this agreement and the obligations created under it are
binding upon us and enforceable against us in accordance with
its terms (subject to applicable principles of equity) and do
not and will not violate the terms of the Rules or any law,
order, charge or agreement by which we are bound.
8. EXPENSES
8.1 EXPENSES: You must pay us on demand all costs, charges and expenses
(including any relevant taxes charged to us, duties and reasonable
legal fees) incurred by us in connection with the performance of our
duties and obligations under this agreement or otherwise in connection
with any Unallocated Account (including, without limitation, delivery,
collection and storage costs).
8.2 CREDIT BALANCES: No interest or other amount will be paid by us on
any credit balance on an Unallocated Account unless otherwise agreed
between us.
8.3 DEBIT BALANCES: You are not entitled to overdraw an Unallocated Account
except to the extent that we otherwise agree in writing. In the absence
of such agreement, we shall not be obliged to carry out any instruction
of yours which will cause any Unallocated Account to be overdrawn. If
for any reason an Unallocated Account is overdrawn, you will be
required to pay us interest in on the debit balance at the rate agreed
between us or, if no such agreement exists, at such rate as we
determine to be appropriate. The amount of the overdraft and any
accrued interest will be repayable by you on our demand. Your
obligation to pay interest to us will continue until the overdraft is
repaid by you in full.
8.4 DEFAULT INTEREST: If you fail to pay us any amount when it is due, we
reserve the right to charge you interest (both before and after any
judgement) on any such unpaid amount calculated at a rate equal to 1%
above the overnight London Interbank Offered Rate (LIBOR) for the
currency in which the amount is due. Both overdraft and default
interest will accrue on a daily basis and will be due and payable by
you as a separate debt. In the event of any inconsistency between this
agreement and an overdraft facility agreement between you and us, the
terms of the overdraft facility shall govern.
9. SCOPE OF RESPONSIBILITY
9.1 EXCLUSION OF LIABILITY: We will use reasonable care in the performance
of our duties under this agreement and will only be responsible for any
loss or damage suffered by you as a direct result of any negligence,
fraud or wilful default on our part in the performance of our duties,
and in which case our liability will not exceed the aggregate of the
Account Balance at the time such negligence, fraud or wilful default is
discovered by us, provided that we notify you promptly after we
discover such negligence, fraud or wilful default. If
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 10 -
we deliver from your Unallocated Account Bullion that is not of the
fine weight we have represented to you, recovery by you, to the extent
such recovery is otherwise allowed, shall not be barred by your delay
in asserting a claim because of the failure to discover such loss or
damage regardless of whether such loss or damage could or should have
been discovered.
9.2 NO DUTY OR OBLIGATION: We are under no duty or obligation to make or
take any special arrangements or precautions beyond those required by
the Rules or as specifically set forth in this agreement.
9.3 FORCE MAJEURE: We shall not be liable to you for any delay in
performance, or for the non-performance of any of our obligations under
this agreement by reason of any cause beyond our reasonable control.
This includes any act of God or war or terrorism, any breakdown,
malfunction or failure of transmission in connection with or other
unavailability of any wire, communication or computer facilities, any
transport, port, or airport disruption, industrial action, acts and
regulations and rules of any governmental or supra national bodies or
authorities or regulatory or self-regulatory organisations or failure
of any such body, authority, or organisation for any reason, to perform
its obligations.
9.4 INDEMNITY: You shall solely out of the assets of the streetTRACKS(R)
Gold Trust indemnify and keep us and each of our directors,
shareholders, officers, employees, agents, affiliates (as such term is
defined in Regulation S-X adopted by the United States Securities and
Exchange Commission under the United States federal Securities Act of
1933, as amended) and subsidiaries (us and each such person a
"Custodian Indemnified Person" for purposes of this clause 9.4)
indemnified (on an after tax basis) on demand against all costs and
expenses, damages, liabilities and losses which any such Custodian
Indemnified Person may suffer or incur, directly or indirectly in
connection with this agreement except to the extent that such sums are
due directly to our negligence, willful default or fraud or that of
such Custodian Indemnified Person.
9.5 THIRD PARTIES: You are our sole customer under this agreement and we do
not owe any duty or obligation or have any liability towards any person
who is not a party to this agreement. This agreement does not confer a
benefit on any person who is not a party to it. The parties to this
agreement do not intend that any term of this agreement shall be
enforceable by any person who is not a party to it, except Custodian
Indemnified Persons, and do intend that the Contracts (Rights of Third
Parties) 1999 Act shall not apply to this Agreement. Nothing in this
paragraph is intended to limit the obligations hereunder of any
successor Trustee of the streetTRACKS(R) Gold Trust or to limit the
right of any successor Trustee of the streetTRACKS(R) Gold Trust to
enforce our obligations hereunder.
9.6 OTHER ACTIVITIES: We and any of our affiliates may act as a Participant
or own or hold Precious Metal or shares issued by the streetTRACKS(R)
Gold Trust or both and may deal with them in any manner, including
acting as underwriter for the shares, with the same rights and powers
as if we were not a party to this agreement.
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 11 -
10. TERMINATION
10.1 NON-TERMINATION: This agreement may not be terminated for one year
following the "Initial Date of Deposit," as that term is defined in the
Trust Indenture, unless the streetTRACKS(R) Gold Trust is terminated
during that period.
10.2 METHOD Subject to the requirement of clause 10.1, either party may
terminate this agreement by giving not less than 90 Business Days'
written notice to the other party. Any such notice given by you must
specify:
(a) the date on which the termination will take effect;
(b) the person to whom each Account Balance which is a credit
balance is to be transferred; and
(c) all other necessary arrangements for the transfer or
repayment, as the case may be, of each Account Balance.
10.3 RESIGNATION OF TRUSTEE: In the event you resign or are discharged or
removed as Trustee, this agreement will terminate 90 Business Days
following your resignation, discharge or removal unless a successor
trustee to the streetTRACKS(R) Gold Trust is appointed before the end
of the 90 Business Day period or a full liquidation of the
streetTRACKS(R) Gold Trust is started during the 90 Business Day period
and you request us to continue the agreement in effect until the
liquidation is completed.
10.4 REDELIVERY ARRANGEMENTS: Following any termination of this agreement,
if you do not make arrangements acceptable to us for the transfer or
repayment, as the case may be, of any Account Balance we may continue
to maintain that Unallocated Account, in which case we will continue to
charge any expenses payable under clause 8. If you have not made
arrangements acceptable to us for the transfer or repayment of any
Account Balance within 6 months of the date specified in the
termination notice as the date on which the termination will take
effect, we will be entitled to close each Unallocated Account and
account to you for the proceeds after deducting any amounts due to us
under this agreement.
10.5 EXISTING RIGHTS: Termination shall not affect rights and obligations
then outstanding under this agreement which shall continue to be
governed by this agreement until all obligations have been fully
performed.
11. NOTICES
11.1 FORM: Subject to clause 11.5, any notice, notification, instruction or
other communication under or in connection with this agreement shall be
given in writing. References to writing include electronic
transmissions that are of the kind specified in clause 11.2.
11.2 METHOD OF TRANSMISSION: Any notice, notification, instruction or other
communication required to be in writing may be delivered personally or
sent by first class post, pre-paid
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 12 -
recorded delivery (or air mail if overseas), authenticated electronic
transmission (including tested telex and authenticated SWIFT) or such
other electronic transmission as the parties may from time to time
agree to the party due to receive the notice or communication, at its
address, number or destination set out in this agreement or another
address, number or destination specified by that party by written
notice to the other.
11.3 DEEMED RECEIPT ON NOTICE: A notice, notification, instruction or other
communication under or in connection with this agreement will be deemed
received only if actually received or delivered.
11.4 RECORDING OF CALLS: We may record telephone conversations without use
of a warning tone. Such recordings will be our sole property and
accepted by you as evidence of the orders or instructions given that
are permitted to be given orally under this agreement.
11.5 INSTRUCTIONS RELATING TO BULLION: All notices, notifications,
instructions and other communications relating to the movement of
Bullion in relation to your Unallocated Account shall be by way of
authenticated electronic transmission (including tested telex and
authenticated SWIFT), and shall be addressed to:
Precious Metals Operations
HSBC Bank USA, National Association
8 Canada Square
London E14 5HQ
Tested Telex: 889217 RNB
SWIFT: BLIC GB2L
12. GENERAL
12.1 NO ADVICE: Our duties and obligations under this agreement do not
include providing you with investment advice. In asking us to open and
maintain the Unallocated Account, you do so in reliance upon your own
judgement and we shall not owe to you any duty to exercise any
judgement on your behalf as to the merits or suitability of any
transfer into, or withdrawals from, your Unallocated Account.
12.2 RIGHTS AND REMEDIES: Our rights under this agreement are in addition
to, and independent of, any other rights which we may have at any time
in relation to the Unallocated Accounts, except that we will not have
any right to set off against any account we maintain or property that
we hold for you under this agreement any claim or amount that we may
have against you or that may be owing to us other than pursuant to this
agreement, no matter how that claim or amount arose.
12.3 ASSIGNMENT: This agreement is for the benefit of and binding upon us
both and our respective successors, including any successor trustees,
and assigns. This Agreement may not be assigned by either party without
the written consent of the other party, except that this clause shall
not restrict our power to merge or consolidate with any party, or to
dispose of all or part of our custody business.
12.4 AMENDMENTS: Any amendment to this agreement must be agreed in writing
and be signed
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 13 -
by us both. Unless otherwise agreed, an amendment will not affect any
legal rights or obligations which may already have arisen.
12.5 PARTIAL INVALIDITY: If any of the clauses (or part of a clause) of this
agreement becomes invalid or unenforceable in any way under the Rules
or any law, the validity of the remaining clauses (or part of a clause)
will not in any way be affected or impaired.
12.6 ENTIRE AGREEMENT: This document represents the entire agreement, and
supersedes any previous agreements between us relating to the subject
matter of this agreement.
12.7 JOINT AND SEVERAL LIABILITY: If there is more than one of you, your
responsibilities under this agreement apply to each of you individually
as well as jointly.
12.8 COUNTERPARTS: This agreement may be executed in any number of
counterparts each of which when executed and delivered is an original,
but all the counterparts together constitute the same agreement.
12.9 BUSINESS DAYS: If any obligation of either you or us falls due to be
performed on a day which is not a Business Day in respect of the
Unallocated Account in question, then the relevant obligations shall be
performed on the next succeeding Business Day applicable to such
account.
12.10 PROCESSING OF ACCOUNT ENTRIES: Except for physical withdrawals as to
which transfer of ownership is determined at the Point of Delivery,
records of (i) all deposits to and withdrawals from the Allocated
Account and all debits and credits to the Unallocated Account which,
pursuant to instructions given in accordance with this agreement and
the Allocated Bullion Account Agreement, occur on a Business Day and
(ii) all end of Business Day account balances in the Allocated Account
and the Unallocated Account are prepared overnight as at the close of
our business (usually 4:00 p.m. London time) on that Business Day. For
avoidance of doubt, the foregoing sentence is illustrated by the
following examples, which are not intended to create any separate
obligations on our part:
Reports of a transfer of Precious Metal from a Third Party
Unallocated Account for credit to your Unallocated Account on a
Business Day and a debit of Bullion from your Unallocated
Account for credit to your Allocated Account on that Business
Day pursuant to the standing instruction contained in the
Unallocated Bullion Account Agreement and of the balances in
your Allocated Account and your Unallocated Account for that
Business Day shall be prepared overnight as at the close of our
business on that Business Day.
Reports of a transfer of Bullion which we debit from your
Allocated Account for credit to your Unallocated Account on a
Business Day and a transfer of Bullion which we debit from your
Unallocated Account for credit to a Third Party Unallocated
Account on that Business Day and of the balances in your
Allocated Account and Unallocated Account for that Business Day
shall be prepared overnight as at the close of our business on
that Business Day.
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 14 -
When you instruct us to debit Bullion from your Allocated Account for
credit to your Unallocated Account and direct us to execute such
instruction on the same Business Day as and in connection with one or
more instructions that you give to us to debit Bullion from your
Unallocated Account, we will use commercially reasonable efforts to
execute the instructions in a manner that minimizes the time the
Bullion to be debited from your Allocated Account stands to your credit
in your Unallocated Account, save that we shall not be responsible for
any delay caused by late, incorrect or garbled instructions or
information from you or any third party.
12.11 MAINTENANCE OF THIS AGREEMENT. Concurrently with this agreement, we and
you are entering into the Allocated Bullion Account Agreement. That
agreement shall remain in effect as long as this agreement remains in
effect, and if that agreement is terminated, this agreement terminates
with immediate effect.
12.12 PRIOR AGREEMENTS:The Agreement supersedes and replaces any prior
existing agreement between you and us relating to the same subject
matter.
12.13 COOPERATION: During the term of this agreement, we and you will
cooperate with each other and make available to each other upon
reasonable request any information or documents necessary to insure
that each of our respective books and records are accurate and current.
13. GOVERNING LAW AND JURISDICTION
13.1 GOVERNING LAW: This agreement is governed by, and will be construed in
accordance with, English law.
13.2 JURISDICTION: We both agree the courts of the State of New York, in the
United States of America, and the United States federal court located
in the Borough of Manhattan in such state are to have jurisdiction to
settle any disputes or claims which may arise out of or in connection
with this agreement and, for these purposes we both irrevocably submit
to the non-exclusive jurisdiction of such courts, waive any claim of
forum non conveniens and any objections to the laying of venue, and
further waive any personal service.
13.3 WAIVER OF IMMUNITY: To the extent that you may in any jurisdiction
claim for yourself or your assets any immunity from suit, judgement,
enforcement or otherwise howsoever, you agree not to claim and
irrevocably waive any such immunity to which you would otherwise be
entitled (whether on grounds of sovereignty or otherwise) to the full
extent permitted by the laws of such jurisdiction.
13.4 SERVICE OF PROCESS: Process by which any proceedings are begun may be
served by being delivered to the addresses specified below. This does
not affect the right of either of us to serve process in another manner
permitted by law.
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 15 -
Our address for service of process: Your address for service of process
HSBC Bank USA, National Association, London Branch The Bank of New York
8 Canada Square 2 Hanson Place
London, E14 5HQ, United Kingdom Brooklyn, New York 11217
Attention: Precious Metals Department Attention: ADR Administration
Legal Department
EXECUTED by the parties as follows
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
streetTRACKS(R) Gold Trust
Unallocated Bullion Account Agreement - 16 -
Signed on behalf of
HSBC BANK USA, NATIONAL ASSOCIATION
by
Signature
................................................
Name
................................................
Title
................................................
Signature
................................................
Name
................................................
Title
................................................
Signed on behalf of
THE BANK OF NEW YORK,
NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
TRUSTEE OF THE STREETTRACKS(R) GOLD TRUST,
by
Signature
................................................
Name
................................................
Title
................................................
Signature Page
streetTRACKS(R) Gold Trust
Unallocated Bullion Accounts Agreement
EXHIBIT 10.4
[GRAPHIC OMITTED]
BOOK-ENTRY-ONLY CORPORATE EQUITY SECURITIES
LETTER OF REPRESENTATIONS
[To be Completed by Issuer and Agent]
World Gold Trust Services, LLC
------------------------------
[Name of Issuer]
The Bank of New York
--------------------
[Name of Agent]
[Date]
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street 49th Floor
New York, NY 10041-0099
Re: StreetTracks Gold Trust-863307104
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
[Issue description, including CUSIP number (the "Securities")]
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the Securities. Issuance of the Securities has been authorized
pursuant to an offering document or other such agreement dated 11-5-04 (the
"Document"). Issuer is selling the Securities to Bear Hunter (the "Initial
Purchaser") pursuant to the Document. Initial Purchaser shall take delivery of
the Securities through The Depository Trust Company ("DTC"). Agent is acting as
transfer agent, paying agent, and registrar with respect to the Securities.
To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its Rules with respect to the Securities, Issuer
and Agent make the following representations to DTC:
1. Prior to closing on the Securities on 11-8-04 there shall be deposited
with DTC one or more Security certificates registered in the name of DTC's
nominee, Cede & Co., for each of the Securities with the offering value(s) set
forth on Schedule A hereto, the total of which represents 100% of the offering
value of such Securities. If, however, the aggregate offering value of the
Securities exceeds $400 million, one certificate shall be issued with respect to
each $400 million of offering value and an additional certificate shall be
issued with respect to any remaining offering value. Each Security certificate
shall bear the following legend:
Unless this certificate is presented by an
authorized representative of The Depository Trust
Company, a New York corporation ("DTC'), to Issuer
or its agent for registration of transfer,
exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such
other name as is requested by an authorized
representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested
by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co.,has an
interest herein.
Issuer represents: [NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND SHALL
CROSS OUT THE OTHER.]
[The Security certificate(s) shall remain in Agent's custody as a "Balance
Certificate" subject to the provisions of the Balance Certificate Agreement
between Agent and DTC currently in effect.
On each day on which Agent is open for business and on which it receives an
instruction originated by a DTC participant ("Participant") through DTC's
Deposit/Withdrawal at Custodian ("DWAC") system to increase the Participant's
account by a specified number of Securities (a "Deposit Instruction"), Agent
shall, no later than 6:30 p.m. (Eastern Time) that day, either approve or cancel
the Deposit Instruction through the DWAC system.
On each day on which Agent is open for business and on which it receives an
instruction originated by a Participant through the DWAC system to decrease the
Participant's account by a specified number of Securities (a "Withdrawal
Instruction"), Agent shall, no later than 6:30 p.m. (Eastern Time) that day,
either approve or cancel the Withdrawal Instruction through the DWAC system.
Agent agrees that its approval of a Deposit or Withdrawal Instruction
shall be deemed to be the receipt by DTC of a new reissued or reregistered
certificated Security on registration of transfer to the name of Cede & Co. for
the quantity of Securities evidenced by the Balance Certificate after the
Deposit or Withdrawal Instruction is effected.]
[The Security certificate(s) shall be custodied with DTC.]
2. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the
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Security certificate(s); and (b) acknowledges that neither DTC's Participants
nor any person having an interest in the Securities shall be deemed to have
notice of the provisions of the Security certificates(s) by virtue of submission
of such certificate(s) to DTC.
3. In the event of any solicitation of consents from or voting by holders
of the Securities, Issuer or Agent shall establish a record date for such
purposes (with no provision for revocation of consents or votes by subsequent
holders) and shall send notice of such record date to DTC no fewer than 15
calendar days in advance of such record date. Notices to DTC pursuant to this
Paragraph by telecopy shall be directed to DTC's Reorganization Department at
(212) 855-5181 or (212) 855-5182. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (212) 855-5202. Notices to DTC pursuant to
this Paragraph, by mail or by any other means, shall be sent to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
55 Water Street 50th floor
New York, NY 10041-0099
4. In the event of a stock split, recapitalization, conversion, or any
similar transaction resulting in the cancellation of all or any part of the
Securities represented thereby, Agent shall send DTC a notice of such event as
soon as practicable, but in no event less than five business days prior to the
effective date of such transaction. Notices pursuant to this Paragraph regarding
stock splits shall be directed to DTC's Dividend Department as indicated in
Paragraph 6. All other notices pursuant to this Paragraph shall be directed to
DTC's Reorganization Department as also indicated in Paragraph 6.
5. In the event of a full or partial redemption, Issuer or Agent shall send
a notice to DTC specifying: (a) the amount of the redemption or refunding; (b)
in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be distributed to Security holders
(the "Publication Date"). Such notice shall be sent to DTC by a secure means
(e.g., legible telecopy, registered or certified mail, overnight delivery) in a
timely manner designed to assure that such notice is in DTC's possession no
later than the close of business on the business day before or, if possible, two
business days before the Publication Date. Issuer or Agent shall forward such
notice either in a separate secure transmission for each CUSIP number or in a
secure transmission for multiple CUSIP numbers (if applicable) which includes a
manifest or list of each CUSIP number submitted in that transmission. (The party
sending such notice shall have a method to verify subsequently the use of such
means and the timeliness of such notice.) The Publication Date shall be no fewer
than 30 days nor more than 60 days prior to the redemption date or, in the case
of an advance refunding, the date that the proceeds are deposited in escrow.
Notices to DTC pursuant to this Paragraph by telecopy shall be directed to DTC's
Call Notification Department at (516) 227-4164 or (516) 227-4190. If the party
sending the notice does not receive a telecopy receipt from DTC confirming that
the notice has been received, such party shall telephone (516) 2274070. Notices
to DTC pursuant to this Paragraph, by mail or by any other means, shall be sent
to:
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Manager, Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
6. In the event of an offering or issuance of rights with respect to the
Securities outstanding, Agent shall send DTC's Dividend and Reorganization
Departments a notice specifying: (a) the amount of and conditions, if any,
applicable to such rights offering or issuance; (b) any applicable expiration or
deadline date, or any date by which any action on the part of holders of such
Securities is required; and (c) the Publication Date of such notice. The
Publication Date will be as soon as practicable after the announcement by the
Company of any such offering or issuance of rights with respect to the
Securities outstanding. DTC requires that the Publication Date be no fewer than
30 days nor more than 60 days prior to the related payment date, distribution
date, or issuance date, respectively. Notices to DTC pursuant to this Paragraph
by telecopy shall be sent to DTC's Dividend Department at (212) 855-4545, and
receipt of such notices shall be confirmed by telephoning (212) 855-4530.
Notices to DTC pursuant to this Paragraph, by mail or any other means, shall be
sent to:
Supervisor, Stock Dividends
Dividend Department
The Depository Trust Company
55 Water Street 25th Floor
New York, NY 10041-0099
Notices to DTC pursuant to the above Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 855-5259, and receipt of such telecopy
shall be confirmed by telephoning (212) 855-5260. Such notices to DTC pursuant
to the above Paragraph, by mail or any other means, shall be sent to:
Supervisor, Rights Offerings
Reorganization Department
The Depository Trust Company
55 Water Street 50th Floor
New York, NY 10041-0099
7. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or Agent to
Security holders specifying the terms of the tender and the Publication Date of
such notice shall be sent to DTC by a secure means (e.g., legible telecopy,
registered or certified mail, overnight delivery) in a timely manner designed to
assure that such notice is in DTC's possession no later than the close of
business on the business day before or, if possible, two business days before
the Publication Date. Issuer or Agent shall forward such notice either in a
separate secure transmission for each CUSIP number or in a secure transmission
for multiple CUSIP numbers (if applicable) which includes a manifest or list of
each CUSIP number submitted in that transmission. (The party sending such
notice shall have a method to verify subsequently the use and timeliness of such
notice). Notices to DTC pursuant to this Paragraph and notices of other
corporate actions by telecopy shall be sent to DTC's Reorganization Department
at (212) 855-5488, and receipt of such notices shall be confirmed by telephoning
(212) 855-5290. Notices to DTC pursuant to this Paragraph, by mail or by any
other means, shall
-4-
be sent to the address indicated in Paragraph 3.
8. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities and an accompanying description of such Securities.
9. Issuer or Agent shall provide written notice of dividend payment
information to DTC as soon as the information is available. Issuer or Agent
shall provide such notice directly to DTC electronically, as previously arranged
by Issuer or Agent and DTC. If electronic transmission has not been arranged,
absent any other arrangements between Issuer or Agent and DTC, such information
shall be sent by telecopy to DTC's Dividend Department at (212) 855-4555 or
(212) 855-4556. If the party sending the notice does not receive a telecopy
receipt from DTC confirming that the notice has been received, such party shall
telephone (212) 855-4550. Notices to DTC pursuant to this Paragraph, by mail or
by any other means, shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
55 Water Street 25th Floor
New York, NY 10041-0099
10. Issuer or Agent shall notify DTC's Dividend Department of any dividend
payment date with regard to the Securities no later than the close of business
preferably five, but no fewer than two, business days prior to such payment
date. Agent shall include any available payment information at that time.
Notices pursuant to this Paragraph shall be directed to DTC's Dividend
Department as indicated in Paragraph 9.
11. Dividend payments and cash distributions shall be received by Cede &
Co. as nominee of DTC, or its registered assigns, in same-day funds no later
than 2:30 p.m. (Eastern Time) on the payment date. Issuer shall remit by 1:00
p.m. (Eastern Time) on the payment date all such dividend and distribution
payments due Agent, or at such earlier time as may be required by Agent to
guarantee that DTC shall receive payment in same-day funds no later than 2:30
p.m. (Eastern Time) on the payment date. Absent any other arrangements between
Issuer or Agent and DTC, such funds shall be wired to the Dividend Deposit
Account number that will be stamped on the signature page hereof at the time DTC
executes this Letter of Representations.
12. Issuer or Agent shall provide DTC, no later than 12:00 noon (Eastern
Time) on the payment date, automated notification of CUSIP-level detail. If the
circumstances prevent the funds paid to DTC from equaling the dollar amount
associated with the detail payments by 12:00 noon (Eastern Time), Issuer or
Agent must provide CUSIP-level reconciliation to DTC no later than 2:30 pin.
(Eastern Time). Reconciliation must be provided by either automated means or
written format. Such reconciliation notice, if sent by telecopy to DTC's
Dividend Department, shall be directed to (212) 855-4633, and receipt of such
reconciliation notice shall be confirmed by telephoning (212) 855-4430.
13. Redemption payments shall be received by Cede & Co., as nominee of DTC,
or its registered assigns, in same-day funds no later than 2:30 p.m. (Eastern
Time) on the payment date. Issuer shall remit by 1:00 p.m. (Eastern Time) on the
payment date all such redemption payments due Agent, or at such earlier time as
required by Agent to guarantee that DTC shall receive payment
-5-
in same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date.
Absent any other arrangements between Agent and DTC, such funds shall be wired
to the Redemption Deposit Account number that will be stamped on the signature
page hereof at the time DTC executes this Letter of Representations.
14. Reorganization payments resulting from corporate actions (such as
tender offers or mergers) shall be received by Cede & Co., as nominee of DTC, or
its registered assigns, in same-day funds no later than 2:30 p.m. (Eastern Time)
on the payment date. Issuer shall remit by 1:00 p.m. (Eastern Time) on the
payment date all such reorganization payments due Agent, or at such earlier time
as required by Agent to guarantee that DTC shall receive payment in same-day
funds no later than 2.30 p.m. (Eastern Time) on the payment date. Absent any
other arrangements between Agent and DTC, such funds shall be wired to the
Reorganization Deposit Account number that will be stamped on the signature page
hereof at the time DTC executes this Letter of Representations.
15. DTC may direct Issuer or Agent to use any other number or address as
the number or address to which notices or payments may be sent.
16. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or Agent's
invitation) necessitating a reduction in the aggregate principal amount of
Securities outstanding or an advance refunding of part of the Securities
outstanding, DTC, in its discretion: (a) may request Issuer or Agent to issue
and authenticate a new Security certificate; or (b) may make an appropriate
notation on the Security certificate indicating the date and amount of such
reduction in the number of Securities outstanding, except in the case of final
redemption, in which case the certificate will be presented to Issuer or Agent
prior to payment, if required.
17. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Agent
shall notify DTC of the availability of certificates. In such event, Issuer or
Agent shall issue, transfer, and exchange certificates in appropriate amounts,
as required by DTC and others.
18. DTC may discontinue providing its services as securities depository
with respect to the Securities at any lime by giving reasonable notice to Issuer
or Agent (at which time DTC will confirm with issuer or Agent the aggregate
principal amount of Securities outstanding). Under such circumstances, at DTC's
request, Issuer and Agent shall cooperate fully with DTC by taking appropriate
action to make available one or more separate certificates evidencing Securities
to any Participant having Securities credited to its DTC accounts.
19. Nothing herein shall be deemed to require Agent to advance funds on
behalf of Issuer.
20. This Letter of Representations may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts together shall constitute but one and the same
instrument.
21. This Letter of Representations shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
principles of conflicts of law.
-6-
22. The sender of each notice delivered to DTC pursuant to this Letter of
Representations is responsible for confirming that such notice was properly
received by DTC.
23. Issuer recognizes that DTC does not in any way undertake to, and shall
not have any responsibility to, monitor or ascertain the compliance of any
transactions in the Securities with the following, as amended from time to time.
(a) any exemptions from registration under the Securities Act of 1933; (b) the
Investment Company Act of 1940; (c) the Employee Retirement Income Security Act
of 1974; (d) the Internal Revenue Code of 1986; (e) any rules of any
self-regulatory organizations (as defined under the Securities Exchange Act of
1934); or (f) any other local, state, or federal laws or regulations thereunder.
24. Issuer hereby authorizes DTC to provide to Agent listings of DTC
Participants' holdings, known as Security Position Listings ("SPLs"), with
respect to the Securities from time to time at the request of the Agent. DTC
charges a fee for such SPLs. This authorization, unless revoked by Issuer, shall
continue with respect to the Securities while any Securities are on deposit at
DTC, until and unless Agent shall no longer be acting. In such event, Issuer
shall provide DTC with similar evidence, satisfactory to DTC, of the
authorization of any successor thereto so to act. Requests for SPLs shall be
sent by telecopy to the Proxy Unit of DTC's Reorganization Department at (212)
855-5181 or (212) 855-5182. Receipt of such requests shall be confirmed by
telephoning (212) 855-5202. Requests for SPLs, sent by mail or by any other
means, shall be directed to:
Supervisor, Proxy Unit
Reorganization Department
The Depository Trust Company
55 Water Street 50th Floor
New York, NY 10041-0099
25. Issuer and Agent shall comply with the applicable requirements stated
in DTC's Operational Arrangements, as they may be amended from time to time.
DTC's Operational Arrangements are posted on DTC's website at "www.DTC_org. "
26. The following rider(s), attached hereto, are hereby incorporated into
this Letter of Representations:
--------------------------------------------------------------------------------
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NOTES:
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A. IF THERE IS AN AGENT (AS DEFINED IN THIS
LETTER OF REPRESENTATIONS), AGENT AS WELL AS
ISSUER MUST SIGN THIS LETTER. IF THERE IS NO
AGENT, IN SIGNING THIS LETTER ISSUER ITSELF
UNDERTAKES TO PERFORM ALL OF THE OBLIGATIONS
SET FORTH HEREIN.
B. SCHEDULE B CONTAINS STATEMENTS THAT DTC
BELIEVES ACCURATELY DESCRIBE DTC, THE METHOD
OF EFFECTING BOOK-ENTRY TRANSFERS OF
SECURITIES DISTRIBUTED THROUGH DTC, AND
CERTAIN RELATED MATTERS.
Very truly yours,
------------------------------------
[Issuer]
By:
---------------------------------
[Authorized Officer's Signature]
The Bank of New York
------------------------------------
[Agent]
By:
---------------------------------
[Authorized Officer's Signature]
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
cc: Underwriter
Underwriter's Counsel
-8-
SCHEDULE A
------------------------------------------------------------
------------------------------------------------------------
[Describe Issue]
CUSIP Number Share Total Offering ($) Value
------------ ----------- ------------------
863307104 300,000
-9-
SCHEDULE B
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
-----------------------------------
(Prepared by OTC--bracketed material may be applicable only to certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities will
be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered Security certificate will
be issued for [each issue of] the Securities, [each] in the aggregate principal
amount of such issue, and will be deposited with DTC. [If, however, the
aggregate principal amount of [any] issue exceeds $400 million, one certificate
will be issued with respect to each $400 million of principal amount and an
additional certificate will be issued with respect to any remaining principal
amount of such issue.]
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Direct
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The Rules
applicable to DTC and its Direct and Indirect Participants are on file with the
Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Securities, except in the event that use of the book-entry system
for the Securities is discontinued.
-10-
4. To facilitate subsequent transfers, all Securities deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. or such other name as may be requested by an authorized
representative of DTC. The deposit of Securities with DTC and their registration
in the name of Cede & Co. or such other nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Securities are credited, which may or may
not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. [Beneficial Owners of Securities may wish to
take certain steps to augment transmission to them of notices of significant
events with respect to the Securities, such as redemptions, tenders, defaults,
and proposed amendments to the security documents. Beneficial Owners of
Securities may wish to ascertain that the nominee holding the Securities for
their benefit has agreed to obtain and transmit notices to Beneficial Owners, or
in the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of the notices be provided
directly to them.]
[6. Redemption notices shall be sent to DTC. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.]
7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or
vote with respect to the Securities. Under its usual procedures, DTC mails an
Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the
Securities will be made to Cede & Co., or such other nominee as may be requested
by an authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts, upon DTC's receipt of funds and corresponding detail
information from Issuer or Agent on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant and not of DTC, Agent, or Issuer, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, distributions, and dividends to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the
responsibility of Issuer or Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
-11-
[9. A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to [Tender/Remarketing] Agent,
and shall effect delivery of such Securities by causing the Direct Participant
to transfer the Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical delivery of Securities
in connection with an optional tender or a mandatory purchase will be deemed
satisfied when the ownership rights in the Securities are transferred by Direct
Participants on DTC's records and followed by a book-entry credit of tendered
Securities to [Tender/Remarketing] Agent's DTC account.]
10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent. Under such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to be printed and
delivered.
11. Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.
-12-
EXHIBIT 10.6
MARKETING AGENT AGREEMENT
-------------------------
MARKETING AGENT AGREEMENT (the "Agreement") made as of November __,
2004, by and between World Gold Trust Services, LLC, a Delaware limited
liability company, as Sponsor of streetTracks(R) Gold Trust (the "Sponsor") and
State Street Global Markets, LLC, a Delaware limited liability company (the
"Marketing Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the streetTracks(R) Gold Trust is governed by the Trust
Indenture dated as of the date hereof (the "Trust Indenture") between the
Sponsor and The Bank of New York, a New York banking corporation, not in its
individual capacity, but solely as the trustee (the "Trustee"), pursuant to
which the Trust will issue streetTRACKS(R) Gold Shares (the "Shares"), which
represent units of fractional undivided beneficial interest in and ownership of
the Trust, upon the deposit of gold with HSBC Bank USA, N.A., as custodian of
the Trust.
WHEREAS, the Sponsor has filed with the U.S. Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (Registration
No. 333-105202) and amendments thereto, including as part thereof a prospectus,
under the Securities Act of 1933, as amended (the "1933 Act"), the forms of
which have heretofore been delivered to the Marketing Agent;
WHEREAS, pursuant to the Trust Indenture the Sponsor wishes to retain
the Marketing Agent to provide certain assistance with respect to the marketing
of the Shares and the development of other gold related exchange-traded funds;
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the Sponsor and the Marketing Agent hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions. In addition to the other terms which are defined in
this Agreement, the following terms shall have the following meanings assigned
to them. All other capitalized terms used herein, but not otherwise defined
herein, shall have the meanings assigned to such terms in the Trust Indenture.
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
"Business Day" means any day that is not a Saturday, Sunday or a day on
which banking institutions in New York, New York are not required to be open or
the New York Stock Exchange, Inc. is not open for trading.
"Control" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Distribution Agreement" means the Distribution Agreement dated the
date hereof, between the Sponsor and UBS.
"ETF" means (i) an open-ended trust, (ii) a unit investment trust,
(iii) a mutual fund, (iv) a collective investment scheme or (v) any other
investment company or pooled, collective or commingled investment vehicle that
has the following characteristics: (a) the shares, units or similar interests
therein are or will be listed and traded on an exchange or other secondary
market or crossing facility, and (b) for which creation and/or redemption of
shares is effected (1) in large aggregations (sometimes referred to as "baskets"
or "blocks") only, (2) by authorized participants, (3) through the transfer of
the requisite amount and composition of the underlying assets, including,
without limitation, assets such as gold or other commodities (also known as
in-kind creation and redemption).
"Governmental Entity" means any supranational, national, state, local,
foreign, political subdivision, court, administrative agency, commission or
department or other governmental authority or instrumentality.
"Law" means any law, statute, treaty, rule, directive, regulation or
guideline or Order of any Governmental Entity.
"Orders" means judgments, writs, decrees, compliance agreements,
injunctions or orders of any Governmental Entity or arbitrator.
"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or
another entity, including a Governmental Entity (or any department, agency or
political subdivision thereof).
"Preliminary Prospectus" means the preliminary prospectus dated ______,
2004 relating to the Shares and any other prospectus dated prior to
effectiveness of the Registration Statement relating to the Shares.
"Prospectus" means, except when otherwise specified, the prospectus, in
the form filed by the Sponsor on behalf of the Trust with the Commission on or
before the second business day after the date hereof (or such earlier time as
may be required
2
under the Act) or, if no such filing is required, the form of final prospectus
included in the Registration Statement at the time it became effective.
"Reimbursement Agreement" means the Reimbursement Agreement dated as of
the date hereof between the Marketing Agent and the Trustee
"Related Agreements" means the Marketing Agent License and the WGC/WGTS
License.
"Related ETF" means an ETF based significantly on the performance of
gold bullion, involving, but not limited to, leverage, inverse performance,
dividend and income products.
"Representative" means officers, directors, employees, agents,
attorneys, accountants and financial advisors of a Person, as the case may be.
"Registration Statement" means, except when otherwise specified, the
Trust's registration statement on Form S-1 (File No. 333-105202) filed by the
Sponsor with the Commission as amended when it becomes effective under the Act,
including all documents filed as a part thereof.
"Similar ETF" means (a) an ETF or other exchange-traded security whose
investment objective or investment method is tied to gold bullion or a
derivative thereof and (b) both of the following conditions are fulfilled at any
relevant date of calculation for such ETF: (i) eighty percent (80%) or more of
the assets comprising the ETF are from gold or gold-indexed securities (for the
avoidance of doubt, gold-indexed securities includes synthetic gold products and
gold futures) and (ii) the index or other benchmark on which the ETF is based
has a correlation (measured by an "r" squared coefficient) of 0.85 or greater
(based on daily changes) to the performance of gold bullion over the previous
three (3) year period.
"UBS" means UBS Securities LLC.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE SPONSOR
2.1 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, the Marketing Agent that:
(a) At the time of purchase of the Shares by UBS under the
Distribution Agreement, the Registration Statement shall have become
effective and no stop order of the SEC with respect thereto has been issued
and no proceedings for such purpose has been instituted or, to the
Sponsor's knowledge after due inquiry, is contemplated by the SEC; any
Preliminary Prospectus
3
provided to prospective investors, at the time of filing thereof, complied
in all material respects to the requirements of the Act and the last
Prospectus distributed in connection with the offering of the Shares
purchased by UBS did not, as of its date, and does 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; the
Registration Statement complies and will comply when it becomes effective
and at the time of purchase of the Shares by UBS under the Distribution
Agreement, in all material respects with the requirements of the Act and
the Prospectus will comply, as of its date and at the time of purchase of
the Shares by UBS under the Distribution Agreement, 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 and will be so described or filed; the
conditions to the use of Form S-1 have been satisfied; the Registration
Statement does not and will not when it becomes effective and at the time
of purchase of the Shares by UBS under the Distribution Agreement 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
not misleading and the Prospectus will not, as of its date and at the time
of purchase of the Shares by UBS under the Distribution Agreement, 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;
provided, however, that the Sponsor makes no warranty or representation
with respect to any statement contained in any Preliminary Prospectus, the
Registration Statement or any Prospectus in reliance upon and in conformity
with information concerning the Marketing Agent and furnished in writing by
or on behalf of the Marketing Agent to the Sponsor expressly for use in the
Registration Statement or such Prospectus; and neither the Sponsor nor the
Trustee has distributed nor will distribute any offering material in
connection with the offering or creation of the Shares purchased by UBS
under the Distribution Agreement other than any Preliminary Prospectus
provided to prospective investors, the Registration Statement or the
Prospectus;
(b) as of the date of this Agreement, and as of the time of
purchase of Shares by UBS under the Distribution Agreement, respectively,
the statement of financial position as set forth in the section of the
Registration Statement and the Prospectus entitled "Statement of Financial
Condition" accurately reflects the financial condition of the Trust as of
the date specified in such statement of financial position;
(c) at the time of purchase of Shares by UBS under the
Distribution Agreement, the Trust has been duly formed and is validly
existing as
4
an investment trust under the laws of the State of New York, as described
in the Registration Statement and the Prospectus, and the Trust Indenture
authorizes the Trustee to issue and deliver the Shares to UBS under the
Distribution Agreement as contemplated in the Registration Statement and
the Prospectus;
(d) the Sponsor has been duly organized and is validly existing
as a limited liability company in good standing under the laws of the State
of Delaware, with full power and authority to conduct its business as
described in the Registration Statement and the Prospectus, and has all
requisite power and authority to execute and deliver this Agreement;
(e) the Sponsor is duly qualified and is in good standing in each
jurisdiction where the conduct of its business requires such qualification;
and the Trust is not required to so qualify in any jurisdiction;
(f) complete and correct copies of the Trust Indenture, and any
and all amendments thereto, have been delivered to the Marketing Agent, and
no changes thereto will have been made prior to the time of purchase of
Shares by UBS under the Distribution Agreement;
(g) at the time of purchase of the Shares by UBS under the
Distribution Agreement, the Shares will have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided in the Distribution Agreement, 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) at the time of purchase of the Shares by UBS under the
Distribution Agreement, the Shares will conform in all material respects to
the description thereof contained in the Registration Statement and the
Prospectus and the holders of the Shares 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 and constitutes the valid and binding obligations
of the Sponsor, enforceable against the Sponsor in accordance with its
terms;
(j) neither the Sponsor nor the Trustee on behalf of the Trust is
in breach or violation of or in default under (nor has any event occurred
which with notice, lapse of time or both would result in any breach or
violation of, constitute a 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
5
other agreement or instrument to which the Sponsor or the Trustee on behalf
of the Trust is a party or by which any 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 Shares to UBS under the
Distribution Agreement 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 amended and restated
limited liability company agreement of the Sponsor or the Trust Indenture,
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 Trustee on behalf of
the Trust is a party or by which, respectively, the Sponsor or any of its
properties or the Trustee or the property of the Trust 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, the Trust or
the Trustee;
(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 Shares to UBS under the Distribution Agreement
or the consummation by the Sponsor, the Trust and the Trustee on behalf of
the Trust of the transactions contemplated by the Distribution Agreement
other than registration of the Shares 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
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 Shares or other equity interests 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 Shares, 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 Shares as contemplated thereby or otherwise;
no person has the right, contractual or otherwise, to cause the Sponsor on
behalf of the Trust or 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
6
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 Trustee on behalf of the Trust is in violation 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 Trustee on
behalf of 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 actions, suits, claims, investigations or
proceedings pending or threatened or, to the Sponsor's knowledge after due
inquiry, contemplated to which the Sponsor, the Trust or the Trustee on
behalf of the Trust, or (to the extent that is or could be material in the
context of the offering and sale of the Shares to UBS under the
Distribution Agreement) any of the Sponsor's 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) Deloitte & Touche LLP, whose report on the audited financial
statements 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 financial statement 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, and prior to the
purchase by UBS of Shares under the Distribution Agreement, there has not
been (i) any material adverse change, or any development involving a
prospective
7
material adverse change affecting the Sponsor or the Trust, (ii) any
transaction which is material to the Sponsor or the Trust taken as a whole,
(iii) any obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Sponsor, the Trust or the Trustee on behalf
of the Trust, which is material to the Trust, (iv) any change in the Shares
purchased by UBS or outstanding indebtedness of the Sponsor or the Trust or
(v) any dividend or distribution of any kind declared, paid or made on such
Shares;
(s) the Trust is not and, after giving effect to the offering and
sale of the Shares, 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, 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"); (i) to the
knowledge of the Sponsor or the Trust, there are no third parties who have
or 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; (ii) to the knowledge of the
Sponsor or the Trust, there is no infringement by third parties of any
Intellectual Property; (iii) there is no pending or, to the knowledge of
the Sponsor or the Trust, threatened action, suit, proceeding or claim by
others challenging the Sponsor's or the Trust's rights in or 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; (iv) there is
no pending or, to the knowledge of the Sponsor or the Trust, threatened
action, suit, proceeding or claim by others challenging the validity or
scope of any Intellectual Property, other than the patents and patent
applications licensed to the Sponsor by the Bank of New York, as to which
the Sponsor and the Trust have no knowledge of any such pending or
threatened claims, 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, to the knowledge of the Sponsor or the Trust, 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; (vi) to the knowledge of the Sponsor or the Trust, there is no
patent or patent application that contains claims that interfere with the
issued or pending claims of any of the Intellectual Property; and (vii) to
the knowledge of the
8
Sponsor or the Trust, there is no prior art that may render any patent
application licensed to the Sponsor by The Bank of New York unpatentable;
(u) all tax returns required to be filed by the Sponsor have been
filed, and all taxes and other assessments 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 from such
entities have been paid; and no tax returns or tax payments are due with
respect to the Trust as of the date of this Agreement;
(v) neither the Sponsor nor the Trustee on behalf of 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 the Trustee
on behalf of the Trust or any other party to any such contract or
agreement;
(w) with respect to its activities on behalf of the Trust, as
provided for in the Trust Indenture, the Trustee maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with the Trust Indenture
and the Trustee's duties thereunder; (ii) transactions with respect to the
Trust are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain accountability for assets; and (iii) assets are held for the
Trust by the Custodian in accordance with the Trust Indenture;
(x) 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 (ii) 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;
(y) 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
9
the written consent to the use of such data from such sources to the extent
required; and
(z) neither the Sponsor, nor any of the Sponsor's directors,
members, officers, affiliates or controlling persons (but excluding the
members of the World Gold Council and their controlling persons) nor the
Trustee 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 Shares; and (cc) 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 as set forth in the Registration Statement and the
Prospectus.
In addition, any certificate signed by any officer of the Sponsor and
delivered to the Marketing Agent or counsel for the Marketing Agent in
connection with the offering of the Shares shall be deemed to be a
representation and warranty by the Sponsor as to matters covered thereby, to the
Marketing Agent.
SECTION 3
EXCLUSIVE MARKETING AGENT AND STRUCTURE OF TRUST
3.1 Appointment. Pursuant to Section 3.08 of the Trust Indenture, the
Sponsor hereby appoints the Marketing Agent as the exclusive Marketing Agent for
Shares on the terms and for the periods set forth in this Agreement, and the
Marketing Agent hereby accepts such appointment and agrees to act in such
capacity hereunder.
3.2 Name of the Trust; License. For the term of this Agreement, the
Sponsor shall cause the name of the Trust to be "streetTRACKS(R) Gold Trust,"
provided that the Marketing Agent or one of its Affiliates has granted to the
Sponsor for the benefit of the Trust a non-exclusive license, dated as of the
date hereof and substantially in the form of Exhibit A attached hereto ("the
Marketing Agent License"), to use the "streetTRACKS(R)" name in connection with
the operation and marketing of the Trust.
3.3 Fee and Expenses.
(a) Marketing Agent Fee. The Marketing Agent shall be paid,
solely from and to the extent of the assets of the Trust, for the services
of the Marketing Agent and its Affiliates as marketing agent to the Trust
hereunder, a fee from the Trust in an annual amount equal to fifteen basis
points (0.15%) per annum of the daily Adjusted Net Asset Value of the Trust
(as calculated pursuant to the Trust Indenture as in effect on the date
hereof), subject to reduction as provided in Section 3.3(b) below. Such fee
shall be computed and payable monthly in arrears.
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(b) Expenses Cap. If, at the end of any month during the period
beginning from the inception of the Trust until the seventh anniversary of
the date of the Trust Indenture or upon the earlier termination of this
Agreement, the estimated ordinary expenses of the Trust for such month
(including the Marketing Agent's fees hereunder and the Sponsor's fees
under the Trust Indenture for such month) exceed an amount equal to forty
basis points (0.40%) per annum of the daily Adjusted Net Asset Value of the
Trust for such month (as calculated pursuant to the Trust Indenture as in
effect on the date hereof), the fees payable to the Sponsor and the
Marketing Agent for such month shall be reduced by the amount of such
excess in equal shares up to the amount of such fees.
3.4 WGC/WGTS License. The Sponsor and World Gold Council, a not-for-
profit association registered under Swiss laws and the parent of the Sponsor,
have provided to the Marketing Agent and its Affiliates a non-exclusive license,
dated as of the date hereof and substantially in the form of Exhibit B attached
hereto, ("WGC/WGTS License") to use certain intellectual property in connection
with the marketing of the Trust and the Marketing Agent's obligations hereunder.
3.5 Expenses. Except as otherwise expressly provided in this Agreement or
the Related Agreements or agreed to in writing by the parties, each party hereto
shall bear its own fees and expenses incurred in connection with this Agreement
or the Related Agreements and the transactions contemplated hereby and thereby
(including, without limitation, the legal, accounting and due diligence fees,
costs and expenses incurred by such party).
SECTION 4
COVENANTS OF THE SPONSOR
4.1 Certain Covenants of the Sponsor. The Sponsor, on its own behalf and in
its capacity as sponsor of the Trust, covenants and agrees:
(a) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states and foreign jurisdictions as the
Marketing Agent may reasonably designate and to maintain such
qualifications in effect so long as the Marketing Agent may request during
the term of this Agreement; 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 Shares); and to promptly advise the
Marketing Agent of the receipt by the Sponsor or the Trust of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
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(b) to take all necessary action to register an indefinite number
of Shares under the 1933 Act, as amended and take, from time to time, such
steps, including payment of the related filing fees, as may be necessary to
register Shares under the 1933 Act to the end that all Shares will be
properly registered under the 1933 Act and to keep the Registration
Statement effective and current during the term of this Agreement;
(c) to make available to the Marketing Agent, as soon as
practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Marketing Agent, as many
copies of the Prospectus (or of the Prospectus as amended or supplemented
if any amendments or supplements have been made thereto after the effective
date of the Registration Statement) as the Marketing Agent may request for
the purposes contemplated by the 1933 Act; and in case the Marketing Agent
is required to deliver a prospectus after the nine-month period referred to
in Section 10(a)(3) of the 1933 Act in connection with the sale of the
Shares, the Sponsor will prepare, at the expense of the Trust, 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 1933 Act;
(d) to advise the Marketing Agent promptly and, if requested by
the Marketing Agent, to confirm such advice in writing when the
Registration Statement and any post-effective amendment thereto has become
effective, and upon receipt of request from the Marketing Agent therefor,
to file a post-effective amendment removing any reference to the Marketing
Agent thereunder;
(e) to prepare, at the expense of the Trust, such amendments or
supplements to the Registration Statement or the Prospectus and to file
such amendments or supplements with the Commission, when and as required,
by the 1933 Act, the 1934 Act and the rules and regulations of the
Commission thereunder, including if requested by the Marketing Agent; to
advise the Marketing Agent promptly of any proposal to amend or supplement
the Registration Statement or the Prospectus and to provide the Marketing
Agent and the Marketing Agent's counsel copies of any such documents for
review and comment within a reasonable amount of time prior to any proposed
filing and to file no such amendment or supplement to which the Marketing
Agent or its counsel shall reasonably object in writing; and to advise the
Marketing Agent 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;
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(f) subject to Section 4.1(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 Securities Exchange Act of
1934 (the "1934 Act") subsequent to the date of the Prospectus and for so
long as the term of this Agreement; and to provide the Marketing Agent and
the Marketing Agent's counsel with a copy of such reports and statements
and other documents to be filed by the Trust pursuant to Section 13, 14 or
15(d) of the 1934 Act (excluding filings under Rule 12b-25) during such
period for review and comment within a reasonable amount of time prior to
any proposed filing and to file no such amendment or supplement to which
the Marketing Agent or its counsel shall reasonably object in writing;
(g) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the 1933 Act;
(h) to advise the Marketing Agent promptly of the happening of
any event during the term of this Agreement which could require the making
of any change in the Prospectus then being used so that such Prospectus
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 4.1(d) hereof, to prepare and furnish, at the
expense of the Trust, to the Marketing Agent promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such
change;
(i) to make generally available to the Trust's securityholders,
and to deliver to the Marketing Agent, an earnings statement of the Trust
(which will satisfy the provisions of Section 11(a) of the 1933 Act)
covering a period of twelve months beginning after the effective date of
the Registration Statement (as defined in Rule 158(c) under the 1933 Act)
as soon as is reasonably practicable after the termination of such
twelve-month period but not later than [ ], 2005;
(j) to furnish to the Trust's securityholders and beneficial
owners as soon as practicable after the end of each fiscal year an annual
report (including a balance sheet and statements of income, shareholders'
equity and cash flow of the Trust for such fiscal year, accompanied by a
copy of the certificate or report thereon of nationally recognized
independent certified public accountants);
(k) to furnish to the Marketing Agent a copy the Registration
Statement, as initially filed with the Commission, and of all amendments
thereto (including all exhibits thereto);
(l) to (1) furnish to the Marketing Agent promptly during the
term of this Agreement (i) copies of any reports, proxy statements, or
other
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communications which are sent to the Trust's securityholders and beneficial
owners or shall from time to time publish or publicly disseminate, (ii)
copies of all annual, quarterly and current reports filed with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may
be designated by the Commission, (iii) copies of documents or reports filed
with any national securities exchange on which any class of securities of
the Trust is listed, and (iv) such other information as the Marketing Agent
may reasonably request regarding the Trust and (2) make available for
inspection by the Marketing Agent, its attorneys, accountants and other
advisors or agents, all financial and other records, pertinent corporate or
trust documents and properties, and cause the officers, directors and
employees of the Trustee, the Custodian and the Sponsor and the Trust's
attorneys and independent accountants to supply all information reasonably
requested by the Marketing Agent, its attorneys, accounts and other
advisors and agents;
(m) to use its best efforts to cause the Shares to be listed on
the NYSE;
(n) to furnish to the Marketing Agent (i) at the time of the
effectiveness of the Distribution Agreement and the purchase of the Shares
by UBS, (ii) at each time the Registration Statement or the Prospectus is
amended or supplemented, (iii) at each time the Trust files any report,
statement or other document pursuant to Section 13, 14 or 15(d) (excluding
filings required by Rule 12b-25) of the 1934 Act, and (iv) at such other
times as the Marketing Agent reasonably requests, an opinion of Carter
Ledyard & Milburn LLP, counsel for the Sponsor, addressed to the Marketing
Agent and dated such dates in form and substance satisfactory to the
Marketing Agent, stating that:
1. the Trust 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 the Trustee has all power and authority to issue
and deliver the Shares as contemplated therein and to execute and
deliver the Reimbursement Agreement;
2. the Sponsor has been duly organized and is validly existing as a
limited liability company in good standing under the laws of the State
of Delaware, with full corporate power and authority to conduct its
business as described in the Registration Statement and the Prospectus
and to execute and deliver this Agreement;
3. the Sponsor is duly qualified and is in good standing in each
jurisdiction where the conduct of its business requires such
qualification;
4. this Agreement has been duly authorized, executed and delivered by the
Sponsor;
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5. the Shares issuable by the Trust as described in the Registration
Statement, when issued in accordance with the terms of the Trust
Indenture as described in the Registration Statement, will have been
duly authorized and validly issued and fully paid and non-assessable;
6. the Shares conform to the description thereof contained in the
Registration Statement and the Prospectus;
7. the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial 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
1933 Act;
8. the Registration Statement has become effective under the 1933 Act and,
to such counsel's knowledge, no stop order proceedings with respect
thereto are pending or threatened under the 1933 Act and any required
filing of the Prospectus and any supplement thereto pursuant to Rule
424 under the 1933 Act has been made in the manner and within the time
period required by such Rule 424;
9. no approval, authorization, consent or order of or filing with any
federal, or New York State governmental or regulatory commission,
board, body, authority or agency is required in connection with the
issuance and sale of the Shares and consummation by the Sponsor of the
transactions contemplated in the Prospectus other than registration of
the Shares under the 1933 Act (except such counsel need express no
opinion as to any necessary qualification under the state securities or
blue sky laws of any state or the laws of any jurisdictions outside the
United States);
10. the execution, delivery and performance of this Agreement by the
Sponsor, the issuance and delivery of the Shares by the Trust and the
consummation by the Sponsor and the Trustee on behalf of the Trust of
the transactions contemplated hereby do not and 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) the
amended and restated limited liability company agreement of the Sponsor
or the Trust Indenture, 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 known to such
counsel after
15
reasonable investigation (based on a certificate of an officer of the
Sponsor) to which the Sponsor or the Trustee is a party or by which
either of them or any of their respective properties may be bound or
affected, or any federal, or New York State law, regulation or rule or
any decree, judgment or order applicable to the Sponsor or the Trust
and known to such counsel;
11. to such counsel's knowledge, neither the Sponsor nor the Trust is in
breach or violation of or in default under (nor has any event occurred
which with notice, lapse of time, or both would result in any breach or
violation of, or constitute a default under) their respective
constitutive documents, or any federal or New York State law,
regulation or rule applicable to the Sponsor or the Trust;
12. to such counsel's knowledge, there are no affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases
or documents of a character which are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement which have not been so described or
filed;
13. to such counsel's knowledge, there are no actions, suits, claims,
investigations or proceedings pending, or threatened to which the
Sponsor or the Trustee is or would be a party or to which any of their
respective properties is 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 which are
required to be described in the Registration Statement or the
Prospectus but are not so described;
14. the Trust is not and, after giving effect to the offering and sale of
the Shares, 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; and
15. the information in the Registration Statement and the Prospectus under
the headings "Risk Factors--Competing claims over ownership of
intellectual property rights related to the Trust could adversely
affect the Trust and an investment in the Shares," "Business of the
Trust--License Agreement," "Description of the Shares," "United States
Federal Tax Consequences," "Description of the Trust Indenture,"
"Description of the Custody Agreements" and "Legal Proceedings" insofar
as such statements constitute a summary of documents or matters of law
are accurate in all
16
material respects and present fairly the information required to be
shown.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Sponsor, representatives of the independent public accountants of the Trust
and representatives of UBS and the Marketing Agent at which the contents of
the Registration Statement and the Prospectus were discussed and, although
such counsel is not passing upon and does not assume responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (except as and to the extent
stated in subparagraphs (6) and (15) above), on the basis of the foregoing
nothing has come to the attention of such counsel that causes them to
believe that the Registration Statement or any amendment thereto at the
time such Registration Statement or amendment became effective contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus or any supplement thereto at the
date of such Prospectus or such supplement, and at the time of purchase of
the Shares by UBS under the Distribution Agreement, contained an untrue
statement of a material fact or omitted 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 (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial information included
in the Registration Statement or the Prospectus);
(o) to cause Deloitte & Touche LLP to deliver to the Marketing
Agent (i) at the time of the effectiveness of the Distribution Agreement
and the purchase of the Shares by UBS, and (ii) at each time (A) the
Registration Statement or the Prospectus is amended or supplemented by the
filing of a post-effective amendment, (B) a new Registration Statement is
filed to register additional Shares in reliance on Rule 429, and there is
financial information incorporated by reference into the Registration
Statement or the Prospectus, letters dated such dates and addressed to the
Marketing Agent, containing statements and information of the type
ordinarily included in accountants' letters to underwriters with respect to
the financial statements and other financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus;
(p) to deliver to the Marketing Agent (i) at the time of the
effectiveness of the Distribution Agreement and the purchase of the Shares
by UBS, (ii) at each time the Registration Statement or the Prospectus is
amended or supplemented, (iii) at each time the Trust files any report,
statement or other document pursuant to Section 13, 14 or 15(d) of the 1934
Act (excluding filings required by Rule 12b-25), and (iv) at such other
times as the Marketing Agent
17
reasonably requests, an officer's certificate in the form attached as
Exhibit C hereto;
(q) to furnish to the Marketing Agent (i) at the time of the
effectiveness of the Distribution Agreement and the purchase of the Shares
by UBS under the Distribution Agreement, (ii) at each time the Registration
Statement or the Prospectus is amended or supplemented, (iii) at each time
the Trust files any report, statement or other document pursuant to Section
13, 14 or 15(d) of the 1934 Act (excluding filings required by Rule
12b-25), and (iv) at such other times as the Marketing Agent reasonably
requests, such other documents and certificates as of such dates as the
Marketing Agent may reasonably request;
(r) to cause the Trustee to maintain a Custodian (as defined in
the Trust Indenture) and an orderly procedure for the transfer and
registration of the Shares;
(s) to cause the Trust to file a post-effective amendment to the
Registration Statement no less frequently than once per calendar quarter on
or about the same time that the Trust files a quarterly or annual report
pursuant to Section 13 or 15(d) of the 1934 Act (including the information
contained in such report), until such time as the Trust's reports
filed pursuant to Section 13 or 15(d) of the 1934 are incorporated by
reference in the Registration Statement; and
(t) to deliver to the Marketing Agent at the time of the
effectiveness of the Distribution Agreement and the purchase of the Shares
by UBS a favorable opinion of Emmet Marvin & Martin LLP, counsel for the
Trustee, addressed to the Marketing Agent and dated such dates in form and
substance satisfactory to the Marketing Agent, stating that (i) each of the
Trust Indenture and the Reimbursement Agreement has been duly authorized,
executed and delivered by the Trustee and constitutes a valid and binding
agreement of the Trustee enforceable against the Trustee in accordance with
its terms, except as enforcement of it may be limited by (x) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or similar laws
of general application relating to or affecting creditors' rights, (y)
general principles of equity and (z) the effect of public policy
considerations or court decisions that may limit rights to obtain
indemnification or contribution, (ii) upon delivery by the Trustee of
Shares against the deposit of Gold in accordance with the provisions of the
Trust Indenture, those Shares will be validly issued and will entitle the
registered holders of those Shares to the rights specified in the Trust
Indenture, and (iii) the Trustee has full power and authority to enter into
and perform its obligations under the Trust Indenture and the Reimbursement
Agreement.
For the purposes of this Section 4.1, the term "Registration Statement"
shall mean the Registration Statement as amended or supplemented from time to
time to
18
and including the date as of which the relevant representation is made, and the
term "Prospectus" shall mean the Prospectus as amended or supplemented from time
to time to and including the date as of which the relevant representation is
made.
SECTION 5
RESOURCE COMMITMENTS
5.1 Pre-Launch Development.
(a) The Sponsor and the Marketing Agent or one of its Affiliates
will develop the Trust and its marketing plan prior to the effective date
of the Registration Statement in accordance with the provisions of this
Section 5.1.
(b) The Sponsor and the Marketing Agent will use their
commercially reasonable efforts to commit sufficient resources to:
(i) finalize the Registration Statement and the governing
documents of the Trust and the Trust's service providers,
communicate with the Commission to obtain approval of the
Registration Statement and the Trust's no-action relief request
letter and communicate with the NYSE to obtain approval of the
listing of the Shares on the NYSE;
(ii) develop the content and information to be used on the
Trust's website; and
(iii) develop the marketing strategy for the Trust and the
Shares in the United States.
5.2 Post-Launch Activities.
(a) The Sponsor and the Marketing Agent or one of its Affiliates
will market the Trust and the Shares on an ongoing basis after the
Registration Statement is declared effective and the Shares have been
listed on the NYSE in accordance with the provisions of this Section 5.2.
(b) Subject to necessary regulatory approvals and compliance with
all applicable legal and regulatory requirements, the Marketing Agent
and/or its Affiliates shall:
(i) include the Trust in the ETF family based marketing and
advertising of the Marketing Agent;
19
(ii) in good faith, and subject to existing market
conditions, use commercially-reasonable efforts to market the
Trust (with due regard to the Marketing Agent's efforts with
respect to other comparably sized and revenue generating ETFs
marketed by the Marketing Agent);
(iii) ensure that the ETF road shows or presentations of the
Marketing Agent include the Trust at least as prominently as
other comparably-sized and revenue generating ETFs or future
commodity-linked products marketed by them;
(iv) include gold in strategic and tactical ETF research of
the Marketing Agent; and
(v) incorporate the Trust into the "streetTRACKS" website
and into any ETF-related asset allocation model of the Marketing
Agent and its Affiliates.
(c) The Marketing Agent shall provide the Sponsor with copies of
all written marketing materials distributed by it and its Affiliates
connected with the Trust.
5.3 Joint Reviews.
(a) In order to oversee the pre-launch development and
post-launch performance of the Trust on a regular basis, the parties shall:
(i) conduct at least once each calendar quarter in which the
annual review described in clause (ii) below is not conducted, a
review of the performance of the Trust, with such review to
include the senior management of the Sponsor and the senior
management of the Marketing Agent and to cover such topics as
asset growth/decline, sales strategy, new business efforts, new
product initiatives and stock exchange trading activity; and
(ii) conduct at least once each calendar year, a review of
the overall performance of the Trust, which will include a review
of the most recent quarterly period, with such review to include
the chief executive officer of the Sponsor and senior management
of the Marketing Agent and to cover such topics as strategic
direction and new business initiatives.
(b) Prior to each of the quarterly and annual review which will
take place pursuant to this Section 5.3, the Sponsor and the Marketing
Agent will jointly prepare and circulate among the parties, a report
covering the quarterly or
20
annual period which is the subject of each review, with such report to
cover such topics described above.
5.4 Information Provided to Marketing Agent. In performing its duties
hereunder the Marketing Agent shall be entitled to rely on and shall not be
responsible in any way for information provided to it by the Trustee or the
Sponsor and their respective service providers and shall not be liable or
responsible for the errors and omissions of such service providers, provided
that the foregoing shall not be construed to protect the Marketing Agent against
any liability to the Trustee, the Sponsor, the Trust or the Trust's beneficial
owners to which the Marketing Agent would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
5.5 Conditions to Marketing Agent's Obligations. The obligations of the
Marketing Agent hereunder is subject in the Marketing Agent's discretion, to the
condition that (i) all representations and warranties and other statements of
the Sponsor herein or delivered pursuant hereto, and all representations and
warranties of the Trustee in the Reimbursement Agreement be true and correct (a)
at and as of the date made, (b) at the time of the effectiveness of the
Distribution Agreement and the purchase of the Shares by UBS, (c) at each time
the Registration Statement or the Prospectus is amended or supplemented, (d) at
each time the Trust files any report, statement or other document pursuant to
Section 13, 14 or 15(d) of the 1934 Act (excluding filings under Rule 12b-25),
(e) at each time the Trust issues any Shares and (f) at such other times the
Marketing Agent reasonably requests, in each case as though made at and as of
such dates, and the Sponsor agrees that all such representations, warranties and
other statements are expressly made on and as of such dates (except, in all
cases, that such representations, warranties and statements relating to the
Registration Statement and the Prospectus shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
date), (ii) the Sponsor shall have performed all of its covenants, agreements
and obligations hereunder theretofore to be performed in all respects and (iii)
the Trustee shall have performed all of its covenants, agreements and
obligations under the Reimbursement Agreement theretofore to be performed in all
respects. The respective indemnities, agreements, representations, warranties
and other statements by the Sponsor set forth in or made pursuant to this
Agreement shall remain in full force and effect regardless of any investigation
(or any statement as to the results thereof) made by or on behalf of the
Marketing Agent or any controlling person of the Marketing Agent, or the Sponsor
or the Trustee, or any officer or director or any controlling person thereof,
and shall survive the execution, delivery, performance and termination of this
Agreement.
SECTION 6
SIMILAR ETFS AND RELATED ETFS; OTHER AGREEMENTS
6.1 Sponsor's Related ETF and Similar ETF Obligations. At any time
during the Term (as defined below) when the Sponsor has an idea for a Similar
ETF or
21
Related ETF, the Sponsor shall present such idea in a reasonably detailed
writing to the Marketing Agent and, subject to the Marketing Agent's approval of
such Similar ETF or Related ETF, the parties will negotiate in good faith to
jointly develop such Similar ETF or Related ETF and will not launch such Similar
ETF or Related ETF with a third party. If the Marketing Agent does not approve
such Similar ETF or Related ETF within forty-five (45) calendar days after the
Sponsor has brought the idea for such Similar ETF or Related ETF to the
Marketing Agent, Sponsor will be free to work by itself or with third parties on
such Similar ETF or Related ETF on terms that are substantially similar as those
under which the parties had discussed. If, with respect to any Similar ETF or
Related ETF which the Sponsor has agreed to develop with the Marketing Agent, a
registration statement has not been filed for such Similar ETF or Related ETF
with the Commission or the Sponsor and Marketing Agent are not able to agree on
terms for such Similar ETF or Related ETF within one-hundred-eighty (180) days
after the Sponsor has brought the idea for such Similar ETF or Related ETF to
the Marketing Agent, the Sponsor will be free to work by itself or with third
parties on such Similar ETF or Related ETF on such terms as they think desirable
unless (i) the Sponsor has been the principal cause as to why no such
registration statement was filed within such one-hundred-eighty (180) day period
or (ii) the Marketing Agent elects by written notice to the Sponsor within ten
(10) days after the end of such one-hundred-eighty (180) day period to continue
the development of such Similar ETF or Related ETF with the Sponsor. If the
Marketing Agent makes the foregoing election and such Similar ETF or Related ETF
has not been launched or Sponsor and the Marketing Agent are not able to agree
on terms for such Similar ETF or Related ETF within one-hundred eighty (180)
additional days, both parties will be free to work by themselves or with third
parties on such Similar ETF or Related ETF on such terms as they think
desirable, provided that a party which has been the principal cause as to why
such Similar ETF or Related ETF has not been launched in such one-hundred-eighty
(180) day period may not so work with third parties. The foregoing agreements in
this Section 6.1 shall only apply to Similar ETFs and Related ETFs which will be
organized in the United States.
6.2 Marketing Agent's Related ETF and Similar ETF Obligations. At any
time during the Term when the Marketing Agent or its Affiliates has an idea for
a Similar ETF or Related ETF, the Marketing Agent shall present such idea in
reasonably detailed writing to the Sponsor and, subject to the Sponsor's
approval of such Similar ETF or Related ETF, the parties will negotiate in good
faith to jointly develop such Similar ETF or Related ETF and will not launch
such Similar ETF or Related ETF with a third party. If the Sponsor does not
approve such Similar ETF or Related ETF within forty-five (45) calendar days
after the Marketing Agent has brought the idea for such Similar ETF or Related
ETF to the Sponsor, the Marketing Agent will be free to work by itself or with
third parties on such Similar ETF or Related ETF on terms that are substantially
similar as those under which the parties had discussed. If, with respect to any
Similar ETF or Related ETF which the Marketing Agent has agreed to develop with
the Sponsor, a registration statement has not been filed for such Similar ETF or
Related ETF with the Commission or the Sponsor and Marketing Agent are not able
to agree on
22
terms for such Similar ETF or Related ETF within one-hundred-eighty (180) days
after the Marketing Agent has brought the idea for such Similar ETF or Related
ETF to the Sponsor, the Marketing Agent will be free to work by itself or with
third parties on such Similar ETF or Related ETF on such terms as it thinks
desirable unless (i) the Marketing Agent has been the principal cause as to why
no such registration statement was filed within such one-hundred-eighty (180)
day period or (ii) the Sponsor elects by written notice to the Marketing Agent
within ten (10) days after the end of such one-hundred-eighty (180) day period
to continue the development of such Similar ETF or Related ETF with the
Marketing Agent. If the Marketing Agent makes the foregoing election and such
Similar ETF or Related ETF has not been launched or the Sponsor and the
Marketing Agent are not able to agree on terms for such Similar ETF or Related
ETF within one-hundred eighty (180) additional days, both parties will be free
to work by themselves or with third parties on such Similar ETF or Related ETF
on such terms as they think desirable, provided that a party which has been the
principal cause as to why such Similar ETF or Related ETF has not been launched
in such one-hundred-eighty (180) day period may not so work with third parties.
The foregoing agreements in this Section 6.2 shall only apply to Similar ETFs
and Related ETFs which will be organized in the United States.
6.3 Development Efforts; Status After Termination.
(a) The Marketing Agent and Sponsor shall use their commercially
reasonable efforts to develop any Related ETFs or Similar ETFs which the parties
have agreed to develop pursuant to Section 6.1 or Section 6.2. For the avoidance
of doubt, unless otherwise agreed to in writing by the parties, the parties
shall bear their own costs and expenses connected with any such development.
(b) If at the time of the termination of this Agreement a
registration statement or similar document has been formally filed with the SEC
for any Similar ETF or Related ETF which the parties have agreed to develop
pursuant to Section 6.1 or Section 6.2, unless otherwise agreed to in writing
signed by the parties, the parties shall cease such development and each party
shall have the right to develop such Similar ETF or Related ETF on its own or
with any third party.
6.4 Dual Listing Rights. The Marketing Agent and the Sponsor shall
jointly negotiate any unlisted trading privileges ("UTP") and dual listing
rights relating to the Trust and any Similar ETF or Related ETF which they bring
to market and determine the specialist for such rights. Any revenue derived from
such listings will be shared equally between the Marketing Agent, on the one
hand, and Sponsor, on the other.
6.5 Options and Derivatives. The Marketing Agent, on the one hand, and
Sponsor, on the other hand, will share equally any and all fees earned from
licensing the right to list option contracts and other exchange-traded
derivatives that are specific to the Trust and to any Similar ETF or Related ETF
which they bring to market.
23
6.6 Press Release. As soon as, and to the extent, legally permissible
after the execution of this Agreement, the parties shall jointly issue a press
release which has been or is approved by all parties announcing the execution of
this Agreement and the commencement of negotiations on the international
marketing agent agreement referred to in Section 8.5.
SECTION 7
INDEMNIFICATION
7.1 Indemnification of Marketing Agent. The Sponsor agrees to
indemnify, defend and hold harmless the Marketing Agent, its partners,
stockholders, members, directors, officers and employees and any Affiliate of
the foregoing, and the successors and assigns of all of the foregoing persons,
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which the Marketing Agent or any such person
may incur under the 1933 Act, the 1934 Act, the common law or otherwise, insofar
as such loss, damage, expense, liability or claim arises out of or is based
upon:
(a) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or in the
Registration Statement as amended or supplement) or in a Prospectus (the
term Prospectus for the purpose of this Section 7 being deemed to include
any Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented), or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement or such Prospectus or necessary to make the
statements made therein not misleading, except insofar as any such loss,
damage, expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained
in and in conformity with information concerning the Marketing Agent
furnished in writing by or on behalf of the Marketing Agent to the Sponsor
expressly for use in such Registration Statement;
(b) any untrue statement or alleged untrue statement of a
material fact or breach by the Sponsor of any representation or warranty
contained in Section 2 hereof or in any certificate delivered by the
Sponsor pursuant to paragraph (p) or (q) of Section 4.1 hereof;
(c) the failure by the Sponsor to perform when and as required
any agreement or covenant contained herein;
(d) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials provided by the
Sponsor or based upon written information furnished by or on behalf of the
Sponsor or the Trustee including, without limitation, slides, videos, films
or tape recordings used in connection with the marketing of the Shares;
24
(e) circumstances surrounding the third party allegations
relating to patent and contract disputes as described in the sections of
the Prospectus and the Registration Statement entitled "Risk
Factors--Competing claims over ownership of intellectual property rights
related to the Trust could adversely affect the Trust and an Investment in
the Shares," "Business of the Trust--License Agreement" and "Legal
Proceedings";
(f) the Marketing Agent's performance of its duties under this
Agreement except in the case of this clause (f), for any loss, damage,
expense, liability or claim resulting from the gross negligence or willful
misconduct of the Marketing Agent; provided, however, that the indemnity
agreement contained in clause (a) above with respect to any Preliminary
Prospectus or amended Preliminary Prospectus shall not inure to the benefit
of the Marketing Agent (or to the benefit of any person controlling the
Marketing Agent) from whom the person asserting any such loss, damage,
expense, liability or claim purchased the Shares which is the subject
thereof if the Prospectus corrected any such alleged untrue statement or
omission in any case where the Marketing Agent was required to send or give
a copy of the Prospectus to such person by the 1933 Act, the Sponsor or the
Trustee had notified the Marketing Agent of the amendment or supplement
prior to the sending of the written confirmation of sale and the Marketing
Agent failed to send or give a copy of the Prospectus to such person,
unless the failure is the result of noncompliance by the Sponsor with
paragraph (c) of Section 4.1 hereof.
In no case is the indemnity of the Sponsor in favor of the Marketing
Agent and such other persons as are specified in this Section 7.1 to be deemed
to protect the Marketing Agent and such persons against any liability to the
Sponsor, the Trustee or the Trust to which the Marketing Agent would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
If any action, suit or proceeding (each, a "Proceeding") is brought
against the Marketing Agent or any such person in respect of which indemnity may
be sought against the Sponsor pursuant to the foregoing paragraph, the Marketing
Agent or such person shall promptly notify the Sponsor in writing of the
institution of such Proceeding and the Sponsor shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided, however, that
the omission to so notify the Sponsor shall not relieve them from any liability
which they may have to the Marketing Agent or any such person except to the
extent that they have been materially prejudiced by such failure and has not
otherwise learned of such Proceeding. The Marketing Agent or such person shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of the Marketing Agent or
of such person unless the employment of such counsel shall have been authorized
in writing by the Sponsor in
25
connection with the defense of such Proceeding or the Sponsor shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Sponsor (in which case the Sponsor shall not have
the right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Sponsor and paid as incurred (it being understood, however, that the
Sponsor shall not be liable for the expenses of more than one separate counsel
(in addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). The Sponsor shall not be liable for any
settlement of any Proceeding effected without the Sponsor's written consent but
if settled with the Sponsor's written consent, the Sponsor agrees to indemnify
and hold harmless the Marketing Agent and any such person from and against any
loss or liability by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 Business Days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have fully
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement and (iii) such indemnified party shall have given the
indemnifying party at least 30 Business Days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened Proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding and does
not include an admission of fault, culpability or a failure to act, by or on
behalf of such indemnified party.
7.2 The Marketing Agent agrees to indemnify, defend and hold harmless
each of the Sponsor and its partners, stockholders, members, directors,
officers, employees and any person who controls the Sponsor within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and the successors
and assigns of all of the foregoing persons, from and against any loss, damage,
expense, liability or claim (including the reasonable cost of investigation)
which the Sponsor any such person may incur under the 1933 Act, the 1934 Act,
the common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by or on behalf of the Marketing Agent to the Sponsor
expressly for use in the Registration Statement (or in the Registration
Statement as amended or supplemented by any post-effective amendment thereof) or
in a
26
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated in such Registration Statement or such Prospectus or necessary to make
such information not misleading.
If any Proceeding is brought against the Sponsor or any person referred
to in the preceding paragraph in respect of which indemnity may be sought
against the Marketing Agent pursuant to the foregoing paragraph, the Sponsor or
such person shall promptly notify the Marketing Agent in writing of the
institution of such Proceeding and the Marketing Agent shall assume the defense
of such Proceeding, including the employment of counsel reasonably satisfactory
to such indemnified party and payment of all fees and expenses; provided,
however, that the omission to so notify the Marketing Agent shall not relieve
the Marketing Agent from any liability which the Marketing Agent may have to the
Sponsor or any such person or otherwise. The Sponsor or such person shall have
the right to employ their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Sponsor or such person
unless the employment of such counsel shall have been authorized in writing by
the Marketing Agent in connection with the defense of such Proceeding or the
Marketing Agent shall not have, within a reasonable period of time in light of
the circumstances, employed counsel to defend such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to or in
conflict with those available to the Marketing Agent (in which case the
Marketing Agent shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties, but the Marketing
Agent may employ counsel and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of the Marketing Agent), in any
of which events such fees and expenses shall be borne by the Marketing Agent and
paid as incurred (it being understood, however, that the Marketing Agent shall
not be liable for the expenses of more than one separate counsel (in addition to
any local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). The Marketing Agent shall not be liable for any settlement of any
such Proceeding effected without the written consent of the Marketing Agent but
if settled with the written consent of the Marketing Agent, the Marketing Agent
agrees to indemnify and hold harmless the Sponsor and any such person from and
against any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 Business Days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 Business Days' prior notice of its intention to settle. No
27
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such Proceeding.
7.3 If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under Sections 7.1 or 7.2 or insufficient to
hold an indemnified party harmless in respect of any losses, damages, expenses,
liabilities or claims referred to therein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, damages, expenses, liabilities or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sponsor and the Trust, on the one hand, and the Marketing Agent, on the other
hand, from the services provided hereunder or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Sponsor and the Trust on the one hand
and of the Marketing Agent on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Sponsor and the Trust on the one hand and the Marketing
Agent on the other shall be deemed to be in the same respective proportions as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Trust, plus the fees
received by the Sponsor, on the one hand, and the total fees received by the
Marketing Agent, on the other hand, bear to the aggregate public offering price
of the Shares. The relative fault of the Sponsor and the Trust on the one hand
and of the Marketing Agent on the other shall be determined by reference to,
among other things, whether the untrue statement or alleged untrue statement of
a material fact or omission or alleged omission relates to information supplied
by the Sponsor, the Marketing Agent and the Trust or by the Marketing Agent and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, damages, expenses, liabilities and claims
referred to in this Section 7.3 shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any Proceeding.
7.4 The Sponsor and the Marketing Agent agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in Section 7.3 above.
Notwithstanding the provisions of this Section 7, the Marketing Agent shall not
be required to contribute any amount in excess of the amount of the fees
received by it hereunder. No person guilty of fraudulent
28
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
7.5 The indemnity and contribution agreements contained in this Section
7 and the covenants, warranties and representations of the Sponsor contained in
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the Marketing Agent, its partners,
stockholders, members, directors, officers, employees and or any person
(including each partner, stockholder, member, director, officer or employee of
such person) who controls the Marketing Agent within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, or by or on behalf of each of the
Sponsor, the Trust, their partners, stockholders, members, directors, officers,
employees or any person who controls the Sponsor or the Trust within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and shall survive
any termination of this Agreement or the initial issuance and delivery of the
Shares. The Sponsor and the Marketing Agent agree promptly to notify each other
of the commencement of any Proceeding against it and, in the case of the
Sponsor, against any of the Sponsor's officers or directors in connection with
the issuance and sale of the Shares, or in connection with the Registration
Statement or the Prospectus.
7.6 The statements set forth in the first paragraph under the caption
"The Marketing Agent" in the Prospectus constitute the only information
furnished by or on behalf of the Marketing Agent as such information is referred
to in Sections 2.1and 7.1 hereof.
SECTION 8
DURATION
8.1 Duration. This Agreement shall become effective on the date hereof
and continue for an initial term of seven (7) years from the date of this
Agreement and will include any renewal term of this Agreement and will last
until the expiration of this Agreement or the earlier termination of this
Agreement in accordance with its terms (the "Term"). This Agreement will
automatically be renewed for successive three (3) year periods unless, no later
than thirty (30) calendar days prior to the end of the then-current Term, either
the Marketing Agent, on the one hand, or the Sponsor, on the other hand, elects
to terminate this Agreement by delivering written notice thereof to the other
party; provided that if the Sponsor is the terminating party, the Sponsor shall
pay to the Marketing Agent an amount equal to the present fair market value of
the future payments the Marketing Agent would otherwise receive over the
subsequent ten (10) year period, determined by an independent third party in
accordance with Section 8.4 hereunder. Notwithstanding the foregoing, this
Agreement may be terminated by any party upon written notice to the other
parties if (a) the Trust is terminated pursuant to the Trust Indenture, (b) any
other party becomes insolvent or bankrupt or files a voluntary petition, or is
subject to an involuntary petition, in bankruptcy or attempts to or makes an
assignment for the benefit of its creditors or consents to the appointment of a
trustee or
29
receiver, provided that the Sponsor may not terminate this Agreement pursuant to
this provision if the event relates to the Sponsor, the Trust or the Trustee or
(c) any other party willfully and materially breaches its obligations under this
Agreement and such breach has not been cured to the reasonable satisfaction of
the non-breaching party prior to the expiration of ninety (90) days after notice
by the non-breaching party to the breaching party of such breach.
8.2 Sponsor Buy-Out Options.
(a) If the Trust's average assets under management do not exceed
(i) $1.25 billion for the thirty (30) day period prior to the end of the
first year of the Trust's operations ("First Benchmark"), (ii) $2.25
billion for the thirty (30) day period prior to the end of the third year
of Trust's operations ("Second Benchmark"), or (iii) $3.0 billion for the
thirty (30) day period prior to the end of the fifth year of the Trust's
operations ("Third Benchmark"), the Sponsor may within thirty (30) days
after the end of each such year period:
(i) elect by written notice to the Marketing Agent to
terminate this Agreement by paying to the Marketing Agent one of
the following payments:
(A) if the First Benchmark has not been exceeded, an
amount equal to the present fair market value of the future
payments the Marketing Agent and its Affiliates would
otherwise receive from the Trust hereunder over the
subsequent ten (10) year period, plus ten percent (10%) of
such value;
(B) if the Second Benchmark has not been exceeded, an
amount equal to the present fair market value of the future
payments the Marketing Agent and its Affiliates would
otherwise receive from the Trust hereunder over the
subsequent ten (10) year period, plus twenty percent (20%)
of such value; or
(C) if the Third Benchmark has not been exceeded, an
amount equal to the present fair market value of the future
payments the Marketing Agent and its Affiliates would
otherwise receive from the Trust hereunder over the
subsequent ten (10) year period, plus thirty percent (30%)
of such value;
provided, that, if at the time of such election any Similar ETF
or Related ETF has been listed on an exchange in the United
States for more than a year and such Similar ETF or Related ETF
is not
30
Controlled or sponsored by the Sponsor, on the one hand, or the
Marketing Agent or any of its Affiliates, on the other hand (a
"Competing ETF"), such election will not be available; or
(ii) elect by written notice to the Marketing Agent to
terminate this Agreement by paying to the Marketing Agent an
amount equal to the present fair market value of the future
payments the Marketing Agent and its Affiliates would otherwise
receive from the Trust hereunder over the subsequent ten (10)
year period, provided that such election may only be made if the
percentage growth in the Trust's assets under management for the
relevant year of the Trust's operations are less than the
percentage growth in the assets under management of any Competing
ETF for the same twelve-month period represented by such year of
the Trust's operations.
(b) The Sponsor shall not have the right to terminate this
Agreement even if the Trust's average assets under management do not meet
either the First Benchmark, the Second Benchmark or the Third Benchmark
within the time periods referred to in Section 8.2(a) above if the
percentage growth in the Trust's assets under management for the relevant
year of the Trust's operations are equal to or greater than the percentage
growth in the assets under management of any Competing ETF for the same
twelve-month period represented by such year of the Trust's operations.
(c) The calculation of any payments to be made under this Section
8.2 shall be made in accordance with Section 8.4, and, upon the final
determination of any such payment under Section 8.4, such payment shall be
paid to the Marketing Agent within thirty (30) days of such determination
date.
(d) In connection with the making any such payment to the
Marketing Agent under this Section 8.2, this Agreement shall automatically
terminate, and, for a period of one year following the date of such
termination, the Marketing Agent shall not, and shall cause its Affiliates
to not, directly or indirectly, develop or launch any Similar ETF in the
United States without the prior written consent of Sponsor.
8.3 Resource Reduction Control. If the amount expended or allocated by
either the Sponsor or the Marketing Agent in any one year period on promoting
and marketing the Trust in the US is 25% less than the yearly average of such
amount over the preceding two year period and the amount of the shortfall of any
such party is not spent during the following 12 month period, the unspent amount
will be paid over to the other party who will add such unspent amount to the
amount the other party spends during the next 12 month period.
31
8.4 Fair Market Value Determination.
(a) For payment amounts which are required to be calculated in
accordance with this Section 8.4 ("Payment Amount"), the party responsible
for the Payment Amount shall within 30 days of the creation of the
obligation to make such payment by written notice to the other party
designate a nationally recognized investment bank ("Investment Bank"). The
designating party may not designate any investment bank (i) which would
create a conflict of interest or (ii) which has provided to the designating
party or its Affiliates in the two years preceding the designation, any
services related to ETFs. Each party shall provide the Investment Bank,
during normal business hours, with access to such personnel and records as
the Investment Bank may reasonably request for the sole purpose of
calculating the Payment Amount. As soon as practical (but in any event no
later than 90 days after the date of its designation), the Investment Bank
will provide each party which a statement of the calculation of the Payment
Amount ("Payment Statement"), with such statement to reasonably detail the
method of calculation of the Payment Amount.
(b) Following receipt of the Payment Statement, each party shall
have a period of sixty (60) days to review the Payment Statement, during
which period the parties and their advisors shall have the right to inspect
the work papers generated by the Investment Bank in preparation of the
Payment Statement. At or before the end of such sixty (60) day period, each
party will each either (i) accept the Payment Statement in its entirety, or
(ii) deliver to the other parties written notice and a written explanation
of those items in the Payment Statement which are disputed, in which case
the items so identified shall be deemed to be in dispute. Within a further
period of thirty (30) days from the delivery of any such dispute notice or
notices, the parties will attempt to resolve in good faith any disputed
items. Failing such resolution, the unresolved disputed items will be
referred within ten (10) Business Days for final binding resolution to an
independent nationally-recognized firm of certified public accountants
mutually acceptable to the parties or, if no such agreement is reached,
such firm as shall be jointly designated within such ten (10) Business Day
period for such purpose by the independent accountants of both parties (the
"Dispute Accountants"). In such event, the Payment Amount will be deemed to
be as determined by the Dispute Accountants within thirty (30) Business
Days of such reference. The decision of the Dispute Accountants will be
nonappealable and incontestable by any party and will not be subject to
collateral attack for any reason.
(c) Sponsor, on the one hand, and the Marketing Agent, on the
other hand, shall equally share the costs and expenses of the Investment
Bank and any Dispute Accountants.
32
8.5 Option to Terminate Following the Failure to Conclude an
International Marketing Agent Agreement. The World Gold Council and the
Marketing Agent shall negotiate in good faith to conclude as soon as practical
after the execution and delivery of this Agreement, but in any event within
forty-five (45) days of the effectiveness of the Registration Statement, an
international marketing agent agreement between the Marketing Agent and the
World Gold Council (or its affiliate) relating to the distribution of Similar
ETFs and Related ETFs outside the United States. In the event the World Gold
Council and the Marketing Agent do not conclude such an international marketing
agent agreement within forty-five (45) days after the effectiveness of the
Registration Statement for any reason, then the Sponsor shall have the option,
exercisable by written notice thereof to the Marketing Agent and the Trustee at
any time during the period commencing on and including the forty-sixth (46th)
day after effectiveness of the Registration Statement and ending on and
including the ninetieth (90th) day after effectiveness of the Registration
Statement (such period, the "Exercise Period"), to terminate this Agreement;
provided that the World Gold Council and the Marketing Agent shall continue to
negotiate in good faith during the Exercise Period until such time (if at all)
that such option is exercised in order to conclude an international marketing
agent agreement. If the Sponsor exercises its right to terminate the Marketing
Agent Agreement pursuant to this Section, then (i) the Marketing Agent License
and the WGC/WGTS License shall forthwith terminate in accordance with the terms
and conditions of the Marketing Agent License and the WGC/WGTS License,
respectively (including the survival provisions thereof), without the
requirement of any notice or further action on the part of any of the Sponsor,
the Council or the Marketing Agent, and the Sponsor shall immediately cease and
desist (and shall cause the Trust to immediately cease and desist) from all use
of the "streetTracks(R)" mark and any other trade name or trademark then
licensed under the Marketing Agent License; and (B) the Sponsor shall promptly
(but in any event within five (5) business days or such shorter period as may be
required by or advisable under applicable laws, rules and regulations) amend the
then-current Registration Statement and Prospectus and effect such other filings
with or submissions or notices to the SEC, any state securities commission, the
New York Stock Exchange, the National Association of Securities Dealers and any
other governmental authority or regulatory agency as may be required or
advisable under applicable laws, rules or regulations in each case in a manner
reasonably satisfactory to the Marketing Agent to reflect the termination of the
Marketing Agent Agreement, the Marketing Agent License and the WGC/WGTS License,
and to remove all references to "streetTracks(R)", "streetTracks(R) Gold Trust",
"streetTracks(R) Shares", "State Street Global Markets, LLC", "State Street
Corporation" or any variation of the foregoing from the Registration Statement
and Prospectus.
8.6 Consequences of Termination.
(a) Upon any termination of this Agreement, the following will
occur:
33
(i) The Related Agreements shall each terminate in
accordance with their terms;
(ii) The parties shall, as soon as practical, take such
actions as may be necessary to change the name of the Trust from
"streetTRACKS(R) Gold Trust" and to cease using the "street
TRACKS(R)" name for any other purpose connected with the Trust;
(iii) The Marketing Agent will no longer use the service
marks Gold Trust and Gold Shares and may not use such service
marks without the express written approval of the Sponsor; and
(iv) The parties shall cooperate reasonably with each other
in connection with any notices or filings to be made with any
governmental or regulatory body required as a result of such
termination, including the filing of any supplement or amendment
to the Registration Statement or Prospectus as a result of such
termination.
(b) In the event of the expiration or termination of this
Agreement, this Agreement shall be of no further force or effect, provided
that such expiration or termination shall not affect any obligation or
liability of a party for breach of any provisions of this Agreement prior
to the date of such expiration or termination and that Sections 2, 3.3 (any
fee due under such Section to be pro rated to the date of termination),
3.5, 5.5, 7, 9 and 10 of this Agreement will each survive the expiration or
termination of this Agreement.
SECTION 9
CONFIDENTIALITY
9.1 Confidentiality.
(a) The Sponsor and the Marketing Agent shall during the Term and
for one (1) year thereafter maintain in confidence, use only for the
purposes provided for in this Agreement and the Related Agreements, and not
disclose to any third party, without first obtaining the other party's
consent in writing, any and all Confidential Information (as defined below)
such party receives from the other party; provided, however, that either
party may disclose Confidential Information received from the other party
to those of its Representatives as may be necessary for such party to carry
out its obligations under this Agreement and the Related Agreements.
"Confidential Information" shall mean all information or data of a party
that is disclosed to or received by the other party, whether orally,
visually or in writing, in any form, including, without limitation,
information or data which relates to such party's business or
34
operations, research and development, marketing plans or activities, or
actual or potential products.
(b) Notwithstanding the provisions of this Agreement to the
contrary, a party shall have no liability to the other party for the
disclosure or use of any Confidential Information of the other party if the
Confidential Information:
(i) is known to such party at the time of disclosure other
than as the result of a breach of this Section 9 by such party;
(ii) has been or becomes publicly known, other than as the
result of a breach of this Section 9 by such party, or has been
or is publicly disclosed by the other party;
(iii) is received by such party after the date of this
Agreement from a third party (unless such third party breaches an
obligation of confidentiality to the other party); or
(iv) is required to be disclosed by Law or similar
compulsion or in connection with any legal proceeding, provided
that such party shall promptly inform the other party in writing
of such requirement and that such disclosure shall be limited to
the extent so required and, except to the extent prohibited by
Law, such party shall reasonably cooperate with the other party
(at the expense of the other party) in seeking a protective order
or other suitable confidentiality protections.
(c) The parties recognize and acknowledge that a breach or
threatened breach by a party of the provisions of this Section 9 may cause
irreparable and material loss and damage to the other party which cannot be
adequately remedied at law and that, accordingly, in addition to, and not
in lieu of, any damages or other remedy to which the non-breaching party
may be entitled, the issuance of an injunction or other equitable remedy
(without the requirement that a bond or other security be posted) is an
appropriate remedy for the non-breaching party for any breach or threatened
breach of the obligations set forth in this Section 9.
(d) Each party agrees that it will use the same degree of care,
but no less than a reasonable degree of care, in safeguarding the
Confidential Information of the other party as it uses for its own
Confidential Information of a similar nature. Each party shall promptly
notify the other party in writing of any misuse, misappropriation or
unauthorized disclosure of the Confidential Information of the other party
which may come to such party's attention.
35
(e) Upon the termination of this Agreement, if requested in
writing by the other party, each party shall, at such party's option,
promptly destroy or return to the other party all Confidential Information
received from the other party, all copies and extracts of such Confidential
Information and all documents or other media containing any such
Confidential Information.
SECTION 10
MISCELLANEOUS
10.1 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto, the
indemnities referred to in this Agreement and their respective successors and
assigns.
10.2 Entire Agreement. This Agreement and the Related Agreements
(including any schedules and exhibits attached hereto and thereto) contain all
of the agreements among the parties hereto and thereto with respect to the
transactions contemplated hereby and thereby and supersede all prior agreements
or understandings, whether written or oral, among the parties with respect
thereto.
10.3 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by a written instrument executed by all the
parties.
10.4 Successors and Assigns; Assignment. All the terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns. This Agreement shall not
be assigned by any party without the prior written consent of the other parties
and any assignment without such consent shall be null and void.
10.5 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but any such waiver, or the failure to insist upon strict
compliance with any obligation, covenant, agreement or condition herein, shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure or breach.
10.6 Severability. The parties hereto desire that the provisions of
this Agreement be enforced to the fullest extent permissible under the Law and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as
36
to such jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
10.7 Notices. All notices, waivers, or other communications pursuant to
this Agreement shall be in writing and shall be deemed to be sufficient if
delivered personally, by facsimile (and, if sent by facsimile, followed by
delivery by nationally-recognized express courier), sent by
nationally-recognized express courier or mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Sponsor, to:
World Gold Trust Services, LLC
444 Madison Avenue
New York, New York 10022
Attention: J. Stuart Thomas
Telephone: (212) 317-3800
Facsimile: (212) 688-0410
(b) if to the Marketing Agent, to: (a)
State Street Global Markets, LLC
One Lincoln Street
Boston, Massachusetts 02111
Attention: Gus Fleites
Telephone: 617 664 4489
Facsimile: 617 664 2669
and
State Street Global Markets, LLC
One Lincoln Street
Boston, Massachusetts 02111
Attention: Bob Guerin
Telephone: 617 664 5028
Facsimile: 617 664 2669
All such notices and other communications shall be deemed to have been
delivered and received (i) in the case of personal delivery or delivery by
facsimile or e-mail, on the date of such delivery if delivered during business
hours on a Business Day
37
or, if not delivered during business hours on a Business Day, the first Business
Day thereafter, (ii) in the case of delivery by nationally-recognized express
courier, on the first Business Day following dispatch, and (iii) in the case of
mailing, on the third Business Day following such mailing.
10.8 Governing Law; Jurisdiction.
(a) All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced
in accordance with the domestic laws of the State of New York, without
giving effect to any choice or conflict of law provision or rule (whether
in the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York. In furtherance of the foregoing, the internal law of the State of New
York will control the interpretation and construction of this Agreement,
even if under such jurisdiction's choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would ordinarily
or necessarily apply.
(b) Each party irrevocably consents and agrees, for the benefit
of the other parties, that any legal action, suit or proceeding against it
with respect to its obligations, liabilities or any other matter arising
out of or in connection with this Agreement or any Related Agreement may be
brought in the courts of the State of New York or the courts of the United
States of America located in the Borough of Manhattan, The City of New York
and hereby irrevocably consents and submits to the non-exclusive
jurisdiction of each such court in personam, generally and unconditionally
with respect to any action, suit or proceeding for itself and in respect of
its properties, assets and revenues. Each party irrevocably waives any
immunity to jurisdiction to which it may otherwise be entitled or become
entitled (including sovereign immunity, immunity to pre-judgment attachment
and execution) in any legal suit, action or proceeding against it arising
out of or based on this Agreement or any Related Agreement or the
transactions contemplated hereby or thereby which is instituted in any
court of the State of New York or any court of the United States of America
located in the Borough of Manhattan, The City of New York.
The provisions of this Section 10.8 shall survive any termination of
this Agreement and the Related Agreements, in whole or in part.
10.9 No Partnership. Nothing in this Agreement is intended to, or will
be construed to constitute the Sponsor or the Trust, on the one hand, and the
Marketing Agent or any of its Affiliates, on the other hand, as partners or
joint venturers; it being intended that the relationship between them will at
all times be that of independent contractors
38
10.10 Force Majeure. Neither party will be liable to any other party
for any delay or failure to perform its obligations under this Agreement (except
for the payment of money) if such delay or failure arises from or is due to any
cause or causes beyond the reasonable control of the party affected which
impedes, delays or aggravates any obligation under this Agreement, including,
without limitation, acts of God, acts of any Governmental Entity, labor
disturbances, act of terrorism or act of public enemy due to war, the outbreak
or escalation of hostilities, riot, fire, flood, civil commotion, insurrection,
severe or adverse weather conditions, power failure or computer or
communications line failure.
10.11 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
10.12 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.
10.13 Counterparts; Facsimile Signatures. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.
Facsimile counterpart signatures to this Agreement shall be acceptable and
binding.
[Signature Page Follows]
39
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first written above.
WORLD GOLD TRUST SERVICES, LLC
By:
-------------------------------------------
Name:
Title:
STATE STREET GLOBAL MARKETS, LLC
By:
-------------------------------------------
Name:
Title:
40
EXHIBIT A
---------
MARKETING AGENT LICENSE
[Attached to Amendment No. 4 to the Registration Statement as Exhibit 10.9]
EXHIBIT B
---------
WGC/WGTS LICENSE
[Attached to Amendment No. 4 to the Registration Statement as Exhibit 10.8]
EXHIBIT C
---------
WORLD GOLD TRUST SERVICES, LLC
OFFICER'S CERTIFICATE
The undersigned, a duly authorized officer of World Gold Trust
Services, LLC, a Delaware limited liability company (the "Company"), and
pursuant to Section 4.1(p) of the Marketing Agent Agreement (the "Agreement"),
dated as of November ____, 2004, by and between the Company and State Street
Global Markets, LLC, a Delaware limited liability company (the "Marketing
Agent") hereby certifies that:
1. Each of the representations and warranties of the Company
contained in the Section 2.1 of the Agreement is true and correct
in all material respects as if such representations and
warranties were made as of the date hereof. For purposes of this
paragraph, the term "Registration Statement" as used in Section
2.1 of the Agreement shall mean the Registration Statement as
amended or supplemented from time to time to the date hereof, and
the term "Prospectus" as used in Section 2.1 of the Agreement
shall mean the Prospectus as amended or supplemented from time to
time to the date hereof."
2. Each of the obligations of the Company to be performed by it on
or before the date hereof pursuant to the terms of the Agreement,
and each of the provisions thereof to be complied with by the
Company on or before the date hereof, has been duly performed and
complied with in all material respects
Capitalized terms used, but not defined herein shall have the meaning assigned
to such term in the Agreement.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, I have hereunto, on behalf of the Company, subscribed my
name this _____ day of November, 2004.
By:
-------------------------------------------
Name:
Title:
I, , in my capacity as [Vice President], hereby certify that [ ] is the duly
elected [President] of the Company, and that the signature set forth immediately
above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of the date first set forth
above.
By:
-------------------------------------------
Name:
Title:
EXHIBIT 10.7
FUNDING AGREEMENT
This Funding Agreement ("Agreement") is dated as of 27 October 2004 and is
BETWEEN
World Gold Council, an Association established under Swiss Law, of 55 Old Broad
Street, London EC2M 1RX, England ("WGC"); and
World Gold Trust Services, LLC, a Delaware limited liability company, of 444
Madison Avenue, New York, NY 10022, USA (the "LLC").
TERM OF AGREEMENT
This Agreement will terminate on 31 December 2006, unless the parties agree, in
writing, to an extension of this Agreement as described below.
AMOUNT AND PURPOSE OF THE FUNDING
WGC has paid to the LLC US$3,000,000 ("Funding Amount"). The Funding Amount is
to be used by the LLC, exclusively, to cover its expenses of operation for the
period 1 January 2005 to 31 December 2006. The Funding Amount will be placed on
deposit by the LLC until required.
REPAYMENT TERMS
On 31 December 2006 the LLC will repay to WGC the amount, if any, by which its
income for the period 1 January 2005 to 31 December 2006 exceeds its expenses of
operation for such period, with such payment not to exceed the Funding Amount.
The Funding Amount will be deemed to be included in the LLC's income for such
period. Any difference (if positive) between the Funding Amount and the amount
so paid (such difference, the "Reduction Amount") will be added to WGC's equity
holding in the LLC, unless the parties agree, in writing, to an extension of
this Agreement for the purpose of allowing the LLC to repay the Reduction Amount
to the extent the income of the LLC exceeds the LLC's expenses of operation for
the duration of such extension of this Agreement.
NO RECOURSE
WGC shall have no recourse of any kind against the LLC for the Funding Amount or
the Reduction Amount.
INTEREST
No interest will be charged on the Funding Amount or the Reduction Amount.
GOVERNING LAW
The laws of England will govern this Agreement and the parties agree to submit
to the non-exclusive jurisdiction of the courts of England.
[Signature Page Follows]
-1-
IN WITNESS whereof, the authorised representatives of the parties have set their
hand to this Agreement on the date set out above.
SIGNED on behalf of WORLD GOLD COUNCIL
By:
................................
Name (Print)
................................
Title:
................................
SIGNED on behalf of WORLD GOLD TRUST SERVICES, LLC
By:
................................
Name (Print)
................................
Title:
................................
-2-
EXHIBIT 10.8
WGC/WGTS LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement") is entered into as of
November ___, 2004 (the "Effective Date"), by and among WORLD GOLD COUNCIL, a
not-for-profit association established under Swiss law, WORLD GOLD TRUST
SERVICES, LLC, a Delaware limited liability company and wholly owned subsidiary
of World Gold Council (together, "Licensor"), and STATE STREET GLOBAL MARKETS,
LLC, a Delaware limited liability company ("Licensee").
WHEREAS, Licensor and The Bank of New York ("BONY") entered into a
License Agreement, dated as of September 11, 2003 (the "BONY License
Agreement"), whereby BONY granted Licensor a perpetual, world-wide,
non-exclusive, non-transferable (except as provided in Section 7.2 of the BONY
License Agreement) license (the "BONY License") under the BONY Patent Rights (as
defined herein) solely for the purposes of establishing, operating and marketing
Licensed Products (as defined herein). The BONY License includes the limited
right of Licensor to grant sublicenses to its partners, joint venturers,
trustees, custodians and agents, but only in connection with their
establishment, operation and marketing of Licensed Products;
WHEREAS, the streetTRACKS(R) Gold Trust (the "Trust") was established
pursuant to the Trust Agreement entered into by and between Licensor and BONY,
dated as of the date hereof (the "Trust Agreement"), pursuant to which the Trust
will issue streetTRACKS(R) Gold Shares (the "Shares") which represent units of
fractional undivided beneficial interest in and ownership of the Trust upon the
deposit of gold bullion by Authorized Participants (as defined in the Trust
Agreement) with HSBC Bank USA, as custodian of the Trust;
WHEREAS, Licensor and Licensee entered into a Marketing Agent
Agreement, dated as of the date hereof (the "Marketing Agent Agreement"),
whereby Licensor designated Licensee as the exclusive marketing agent of the
Trust;
WHEREAS, pursuant to the terms and conditions of the BONY License
Agreement, Licensor desires to grant a sublicense to Licensee under the BONY
Patent Rights, with the right to grant sublicenses, solely for use in connection
with Licensee's role as the exclusive marketing agent of the Trust under the
Marketing Agent Agreement;
WHEREAS, Licensor also has rights in other patents, patent applications
and other intellectual property rights (the "Licensor IP Rights") that may be
used in connection with Licensee's role as the exclusive marketing agent of the
Trust under the Marketing Agent Agreement;
WHEREAS, Licensor uses in commerce and owns in the United States all
trade name and/or trademark rights and associated goodwill in the designations
specified on Schedule 1 attached hereto (the "Licensor Marks"); and
WHEREAS, Licensor desires to grant a license to Licensee to the
Licensor IP Rights and the Licensor Marks, with the right to grant sublicenses,
solely for use in connection with Licensee's role as the exclusive marketing
agent of the Trust under the Marketing Agent Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Licensor and Licensee (each a
"Party" and collectively, the "Parties") agree as follows:
1. DEFINITIONS.
For the purposes of this Agreement, the following terms have the following
meanings:
(a) "Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
(b) "Agreement" has the meaning set forth in the preamble.
(c) "BONY" has the meaning set forth in the recitals.
(d) "BONY License" has the meaning set forth in the recitals.
(e) "BONY Patent Rights" means any patents and patent applications (and all
related know-how and trade secrets) of BONY, anywhere in the world, that cover
securitized gold products and that exist as of the effective date of the BONY
License Agreement or are filed or issued thereafter, including but not limited
to U.S. Provisional Application Serial No. [redacted], filed on [redacted],
entitled "[redacted]."
(f) "BONY Sublicense" has the meaning set forth in Section 2(a).
(g) "Confidential Information" has the meaning set forth in Section 9(b).
(h) "Control" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
(i) "Effective Date" has the meaning set forth in the preamble.
(j) "Indemnified Party" has the meaning set forth in Section 7(c).
(k) "Indemnifying Party" has the meaning set forth in Section 7(c).
(l) "Licensed Products" means any securitized gold financial product that
is sold, sponsored or issued by Licensor or any Affiliate of Licensor. For the
purposes of clarity, the Licensed Products do not include any products involving
the securitization of any commodity other than gold.
(m) "Licensee" has the meaning set forth in the Preamble.
(n) "Licenses" has the meaning set forth in Section 2(c).
(o) "Licensor" has the meaning set forth in the Preamble.
Page 2
(p) "Licensor IP Rights" has the meaning set forth in Section 2(d).
(q) "Licensor License" has the meaning set forth in Section 2(b).
(r) "Licensor Marks" has the meaning set forth in the recitals.
(s) "Losses" has the meaning set forth in Section 7(a).
(t) "Marketing Agent Agreement" has the meaning set forth in the recitals.
(u) "Party(ies)" has the meaning set forth in the recitals.
(v) "Patent Rights" has the meaning set forth in Section 5(a).
(w) "Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or
another entity, including a Governmental Entity (or any department, agency or
political subdivision thereof.
(x) "Proceeding" has the meaning set forth in Section 7(c).
(y) "Shares" has the meaning set forth in the recitals.
(z) "Sublicensee" has the meaning set forth in Section 2(a).
(aa) "Territory" means worldwide.
(bb) "Trademark License" has the meaning set forth in Section 2(c).
(cc) "Trust" has the meaning set forth in the recitals.
(dd) "Trust Agreement" has the meaning set forth in the recitals.
2. LICENSE.
(a) BONY Patent Rights Sublicense. Pursuant to Section 2 of the BONY
License Agreement and subject to the terms and conditions of this Agreement,
Licensor hereby grants to Licensee a worldwide, non-exclusive, and
non-transferable (except as provided in Section 10(a)) sublicense for the term
of this Agreement to use the BONY Patent Rights solely in connection with
Licensee's performance of its services as exclusive marketing agent for the
Trust pursuant to the Marketing Agent Agreement which includes establishing,
operating, and marketing the Licensed Product in the Territory (the "BONY
Sublicense"). Licensee shall, at Licensor's expense, fully cooperate with and
assist Licensor in the prosecution or maintenance of any patent or other
applications and ensuing registrations for the BONY Patent Rights and shall
execute or obtain execution of any documents Licensor shall reasonably request
in connection therewith, including but not limited to assignment of invention
rights.
(b) License to Licensor IP Rights. Subject to the terms and conditions of
this Agreement, Licensor hereby grants Licensee a worldwide, non-exclusive,
non-transferable
Page 3
(except as provided in Section 10(a)), royalty-free license for the term of this
Agreement to use the Licensor IP Rights (i) in connection with Licensee's
performance of its services as exclusive marketing agent for the Trust pursuant
to the Marketing Agent Agreement and/or (ii) for the purpose of establishing,
operating and marketing financial products involving the securitization of gold
(the "Licensor License"). Licensee shall, at Licensor's expense, fully cooperate
with and assist Licensor in the prosecution or maintenance of any patent or
other applications and ensuing registrations for the Licensor IP Rights and
shall execute or obtain execution of any documents Licensor shall reasonably
request in connection therewith, including but not limited to assignment of
invention rights.
(c) License to Licensor Marks. Subject to the terms and conditions of this
Agreement, Licensor hereby grants Licensee a worldwide, non-exclusive,
non-transferable (except as provided in Section 10(a)), royalty-free license to
use, display and refer to Licensor's name and the Licensor Marks set forth in
Schedule 1 hereto, under the quality control of Licensor, (i) in connection with
Licensee's performance of its services as exclusive marketing agent for the
Trust pursuant to the Marketing Agent Agreement and/or (ii) for the purpose of
establishing, operating and marketing financial products involving the
securitization of gold (the "Trademark License" and collectively with the BONY
Sublicense and the Licensor License, the "Licenses"). All use of the Licensor
Marks under the Trademark License and all goodwill associated therewith shall
inure to the exclusive benefit of Licensor. Licensee shall, at Licensor's
expense, fully cooperate with and assist Licensor in the prosecution or
maintenance of any trademark, service mark, domain name or copyright application
and ensuing registration concerning the Licensor Marks and shall execute any
documents Licensor shall reasonably request in connection therewith.
(d) Licensee's Limited Right to Sublicense. Each of the Licenses granted
herein shall include the limited right of Licensee to grant sublicenses to its
Affiliates, partners, joint venturers, trustees, distributors, custodians and
agents (each a "Sublicensee"), subject to the restrictions of this Agreement,
and solely in connection with such Sublicensee's performance of its services for
Licensee related to the activities of Licensee permitted hereunder. In addition,
Licensee shall include provisions in all such sublicenses that: (i) are
identical in substance to Sections 3, 4 and 5 herein (with the references in
such sublicenses to "Licensor" in Section 4(c) to continue to signify the
Licensor defined herein); (ii) require Licensee to terminate such sublicenses,
without penalty, if this Agreement is terminated for any reason; (iii) obligate
Licensee to give the Sublicensee notice if this Agreement is terminated for any
reason; and (iv) entitle Licensor herein to give such notice in the event that
the Licensee fails to do so.
(e) ALL RIGHTS NOT SPECIFICALLY AND EXPRESSLY GRANTED TO LICENSEE IN THIS
ARTICLE 2 ARE HEREBY RESERVED TO LICENSOR.
3. ENFORCEMENT.
Licensee shall promptly (a) notify Licensor of any potential or actual
infringement by a third party of the BONY Patent Rights, the Licensor IP Rights
or the Licensor Marks of which Licensee becomes aware, and (b) provide to
Licensor all evidence of such infringement in Licensee's possession, custody or
control. Licensor shall have the sole right, but not the obligation, to initiate
any legal action at its own expense against such infringement and to
Page 4
recover damages and enforce any injunction granted as a result of any judgment
in Licensor's favor. Licensor shall have sole control over any such action,
including, without limitation, the sole right to settle and compromise such
action. In the event of a dispute between Licensor and any third party regarding
the infringement, validity or enforceability of the BONY Patent Rights, Licensor
IP Rights or the Licensor Marks, Licensee agrees, at Licensor's expense, to do
all things reasonably requested by Licensor to assist Licensor in connection
with such dispute.
4. TERM AND TERMINATION.
(a) The term of this Agreement shall commence as of the Effective Date and
shall remain in full force and effect until the expiration or termination of the
Marketing Agent Agreement, unless earlier terminated pursuant to the terms of
this Agreement (the "Term").
(b) Either Party may terminate this Agreement by written notice to the
other Party at any time if the other Party materially breaches this Agreement
and fails to cure such breach with thirty (30) days following written notice
thereof from the non-breaching Party. Upon any termination or expiration of this
Agreement, all rights and obligations under this Agreement (including Licensee's
rights under the Licenses granted pursuant to Article 2) will immediately
terminate; provided, however, that the provisions of Articles 1, 5 , 6, 7, 8, 9
and 10, and any other provision that survives by its express terms, shall
survive any termination or expiration of this Agreement.
(c) On expiration or termination of this Agreement, Licensee shall
immediately cease and desist from all use of the BONY Patent Rights, Licensor IP
Rights and the Licensor Marks, and any similar marks, and inventions or works
based on or derivative thereof; and shall immediately deliver all products
bearing or made in connection with the BONY Patent Rights, Licensor IP Rights,
or the Licensor Marks, including without limitation all inventions or works
based on or derivative thereof, to Licensor at the address set forth in the
notice section below, or destroy them, at the option of Licensor.
5. ACKNOWLEDGMENT OF RIGHTS.
(a) Licensee will not directly or indirectly: (i) challenge or contest the
validity or enforceability of the BONY Patent Rights, the Licensor IP Rights or
the Licensor Marks; (ii) dispute the validity, enforceability, or BONY's or
Licensor's ownership of any patent within the BONY Patent Rights or Licensor IP
Rights, any inventions or works based thereon or derivative thereof, or any of
the claims therein ("Patent Rights"), or initiate or participate in any
proceeding of any kind opposing the grant of any patent, or challenging any
patent application in connection with the Patent Rights; (iii) dispute the
validity, enforceability, or Licensor's exclusive ownership of, any trademark,
trade name or domain name application or registration owned by Licensor with
respect to the Licensor Marks or initiate or participate in any proceeding of
any kind opposing the grant to Licensor of any trademark, trade name, or domain
name registration in the Licensor Marks or similar marks; (iv) fail to meet
Licensor's quality control with respect to the Licensor IP Rights or Licensor
Marks or make any other use thereof other than as expressly permitted herein;
(v) apply to register or otherwise obtain registration of the BONY Patent
Rights, Licensor IP Rights, or any inventions or works based thereon or
derivative thereof, the Licensor Marks, or any marks similar thereto, in the
patent and trademark or
Page 5
copyright office of any country or state, or with any business or domain name
registrar; or (vi) assist any other Person to do any of the foregoing (except if
required by court order or subpoena); provided, however, the foregoing shall in
no way limit Licensee's ability to defend against or to mitigate any claim
brought by Licensor or BONY against Licensee.
(b) Any violation of this Article 5 will constitute a material breach of
this Agreement.
6. REPRESENTATIONS AND WARRANTIES.
(a) Each Party hereby represents and warrants that (i) it has the power and
authority to enter into this Agreement and perform its obligations hereunder;
(ii) the execution and delivery of this Agreement have been duly authorized and
all necessary actions have been taken to make this Agreement a legal, valid and
binding obligation of such Party enforceable in accordance with its terms; and
(iii) the execution and delivery of this Agreement and the performance by such
Party of its obligations hereunder will not contravene or result in any breach
of the Certificate of Incorporation, Bylaws or any other organizational document
of such Party or of any agreement, contract, indenture, license, instrument or
understanding or, to the best of its knowledge, result in any violation of law,
rule, regulation, statute, order or decree to which such Party is bound or by
which they or any of their property is subject.
(b) Licensor represents and warrants that it owns and/or has the right to
license to Licensee the BONY Patent Rights, Licensor IP Rights and the Licensor
Marks in the United States and that to its actual knowledge, the BONY Patent
Rights, Licensor IP Rights and the Licensor Marks and Licensee's use of the
foregoing in accordance with this Agreement shall not infringe any copyright,
trademark, trade secret or other intellectual property right of any third party.
(c) EXCEPT AS EXPRESSLY SET FORTH IN THE FOREGOING, LICENSOR DOES NOT MAKE
AND HEREBY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, REGARDING THE SUBJECT MATTER OF THIS AGREEMENT
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE. IN NO EVENT SHALL THE CUMULATIVE LIABILITY OF LICENSOR TO
LICENSEE AND ITS AFFILIATES UNDER OR RELATING TO THIS AGREEMENT AT ANY TIME
EXCEED THE AGGREGATE AMOUNT OF THE FEES RECEIVED BY LICENSOR PURSUANT TO THIS
AGREEMENT AND THE TRUST AGREEMENT PRIOR TO SUCH TIME EXCEPT THAT THIS LIMITATION
SHALL NOT BE APPLICABLE TO A CLAIM BY LICENSEE FOR INDEMNIFICATION PURSUANT TO
ARTICLE 7.
7. INDEMNITY.
(a) Each Party shall defend, indemnify and hold harmless the other Party
and such other Party's Affiliates, employees, officers, directors, and agents
from and against any liabilities, losses, damages, costs or expenses (including,
without limitation, reasonable attorneys' fees) (collectively, "Losses")
resulting from or arising in connection with the breach by the Indemnifying
Party of any of its representations, warranties, covenants or obligations
contained in this Agreement.
Page 6
(b) Licensor shall indemnify, defend and hold harmless Licensee and its
permitted Sublicensees and assigns, Affiliates, employees, officers, directors,
and agents from and against any Losses resulting or arising from any claim
(whether such claim arises under tort, breach of express or implied contract, or
otherwise) that (i) Licensee's establishing, operating or marketing Licensed
Products in accordance with the terms of this Agreement and the Marketing Agent
Agreement infringes or otherwise violates any intellectual property rights of
any Person, (ii) Licensee's use of the BONY Patent Rights, Licensor IP Rights or
the Licensor Marks infringes the copyright, trademark, trade secret or other
intellectual property right of any Person or (iii) Licensee allegedly has
unauthorized possession of, is making unauthorized use of, or is
obtaining/providing unauthorized access to, a Person's trade secrets,
confidential or proprietary information, or service, which acts are allegedly
committed in connection with Licensor establishing, operating or marketing a
Licensed Product in accordance with this Agreement and the Marketing Agent
Agreement.
(c) If any action, suit, proceeding (including, but not limited to, any
governmental investigation), claim or dispute (collectively, a "Proceeding") is
brought or asserted against a Party for which indemnification is sought under
this Agreement, the Party seeking indemnification (the "Indemnified Party")
shall promptly (and in no event more than seven (7) days after receipt of notice
of such Proceeding) notify the Party obligated to provide such indemnification
(the "Indemnifying Party") of such Proceeding. The failure of the Indemnified
Party to so notify the Indemnifying Party shall not impair the Indemnified
Party's ability to obtain indemnification from the Indemnifying Party unless
such failure adversely affects the Indemnifying Party's ability to adequately
oppose or defend such Proceeding. Upon receipt of such notice from the
Indemnified Party, the Indemnifying Party shall be entitled to participate in
such Proceeding at its own expense. Provided no conflict of interest exists as
specified in clause (ii) below and there are no other defenses available to the
Indemnified Party as specified in clause (iv) below, the Indemnifying Party, to
the extent that it shall so desire, shall be entitled to assume the defense of
the Proceeding with counsel reasonably satisfactory to the Indemnified Party, in
which case all attorney's fees and expenses shall be borne by the Indemnifying
Party (except as specified below) and the Indemnifying Party shall in good faith
defend the Indemnified Party. After receiving written notice from the
Indemnifying Party of its election to assume the defense of the Proceeding, the
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, provided that the fees and
expenses of such counsel shall be borne entirely by the Indemnified Party unless
(i) the Indemnifying Party expressly agrees in writing to pay such fees and
expenses, (ii) there is such a conflict of interest between the Indemnifying
Party and the Indemnified Party as would preclude, in compliance with the
ethical rules in effect in the jurisdiction in which the Proceeding was brought,
one lawyer from representing both Parties simultaneously, (iii) the Indemnifying
Party fails, within the earlier of (x) twenty (20) days following receipt of
notice of the Proceeding from the Indemnified Party or (y) seven (7) days prior
to the date the first response or appearance is required to be made in such
Proceeding, to assume the defense of such Proceeding with counsel reasonably
satisfactory to the Indemnified Party or (iv) there are legal defenses available
to the Indemnified Party that are different from or are in addition to those
available to the Indemnifying Party. In each of cases (i) through (iv), the fees
and expenses of counsel shall be borne by the Indemnifying Party. No compromise
or settlement of such Proceeding may be effected by either Party without the
other Party's consent unless (m) there is no finding or admission of any
violation of law and no effect on any other
Page 7
claims that may be made against such other Party and (n) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party.
Neither Party shall have any liability with respect to any compromise or
settlement effected without its consent, which shall not be unreasonably
withheld. The Indemnifying Party shall have no obligation to indemnify and hold
harmless the Indemnified Party from any loss, expense or liability incurred by
the Indemnified Party as a result of a default judgment entered against the
Indemnified Party unless such judgment was entered after the Indemnifying Party
agreed, in writing, to assume the defense of such Proceeding.
8. LIMITATION OF LIABILITY.
EXCEPT FOR EACH PARTY'S OBLIGATION TO INDEMNIFY THE OTHER PARTY FOR LOSSES
PURSUANT TO ARTICLE 7, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR OTHER INDIRECT
DAMAGES, HOWSOEVER CAUSED, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE, EVEN
IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9. CONFIDENTIALITY
(a) Public Statements. Except as consented to by the other Party (such
consent not to be unreasonably withheld or delayed) or as otherwise specifically
set forth herein, neither Party will issue any public statement relating to or
in any way disclosing any aspect of the matter contemplated by this Agreement,
including the scope and the specific terms hereof. The obligations of the
Parties under this Section 9(a) are in addition to their respective obligations
pursuant to Section 9(b) but shall not limit the exceptions to public disclosure
specifically referred to in Section 9(b) paragraphs (i) through (v). This
Section 9(a) will in no way limit either Party's ability to (i) respond to
customary press inquiries or otherwise make public or private statements not
otherwise disclosing the Confidential Information (as defined below) or the
specific terms of this Agreement in the normal course of its business and/or in
connection with the obligations hereunder, or (ii) provide necessary information
to prospective Sublicensees and Authorized Participants and such Party's
personnel, agents, representatives and consultants.
(b) Confidentiality. Except as provided below, all information concerning
the BONY Patent Rights, the Licensor IP Rights, and all other business,
financial, marketing and product information disclosed to the other Party orally
or in writing is deemed confidential, restricted and proprietary to the
disclosing Party (the "Confidential Information"). Each Party agrees to use the
Confidential Information received from the other Party only for the purpose of
this Agreement. The Confidential Information disclosed or supplied is not to be
reproduced in any form except as required to accomplish the intent of, and in
accordance with the terms of, this Agreement. The receiving Party must provide
the same degree of care to avoid disclosure or unauthorized use of the
Confidential Information as it accords to protect its own similar proprietary
information, but in no event less than reasonable care under the circumstances.
All Confidential Information must be retained by the receiving Party in a secure
place with access limited to only such of its employees, subcontractors,
suppliers or agents who need to know such information for purposes of this
Agreement and to such third parties as the disclosing Party has consented to by
prior written approval. All Confidential Information, unless otherwise specified
in writing (x) remains
Page 8
the property of the disclosing Party, (y) must be used by the receiving Party
only for the purpose for which it was intended, and (z) including all copies
thereof, must be returned to the disclosing Party or destroyed after the
receiving Party's need for it has expired or upon request of the disclosing
Party, and, in any event, upon expiration or termination of this Agreement. At
the request of the disclosing Party, the receiving Party will furnish a
certificate of an officer of the receiving Party certifying that the
Confidential Information not returned to the disclosing Party has been
destroyed. The obligation of confidentiality set forth in this Section 9(b)
shall survive expiration or termination of this Agreement for a period of three
(3) years. For the purpose hereof, the Confidential Information shall not
include information, to the extent evidenced by reasonable documentation, that:
(i) is published or is otherwise in the public domain through no
fault of the receiving Party at the time of any claimed
unauthorized disclosure or use by the receiving Party;
(ii) prior to disclosure pursuant to this Agreement, is properly
within the legitimate possession of the receiving Party;
(iii) subsequent to disclosure pursuant to this Agreement, is lawfully
received from a third party having rights in the information
without restriction of the third party's right to disseminate the
information and without notice of any restriction against its
further disclosure;
(iv) is obligated to be produced under order of a court or other
similar requirement, rule or regulation of any governmental
authorities, so long as the Party required to disclose the
information provides the disclosing Party with prior notice of
such order or requirement and its cooperation to the extent
reasonable in preserving its confidentiality; or
(v) the disclosing Party agrees in writing is free of such
restrictions.
The Parties agree that, without limiting any other rights and remedies
specified herein, an injunction may be sought against the Party who has breached
or threatened to breach this Section 9(b). Each Party represents and warrants
that it has the right to disclose all Confidential Information which it has
disclosed to the other Party pursuant to this Agreement, and each Party agrees
to indemnify and hold harmless the other from all claims by a third party
related to the wrongful disclosure of such third party's proprietary
information. Otherwise, neither Party makes any representation or warranty,
express or implied, in respect of any Confidential Information.
10. MISCELLANEOUS PROVISIONS.
(a) ASSIGNMENT. Licensee may not assign or otherwise transfer (whether by
operation of law or otherwise) any right or obligation under this Agreement
without the prior written consent of Licensor; provided, however, that Licensee
may grant sublicenses as provided herein. Such consent shall be deemed given
with respect to an assignment or transfer (whether by operation of law or
otherwise) of the entire Agreement, including all rights and obligations
hereunder, to a successor in interest or assignee of substantially all of the
assets of Licensee,
Page 9
provided that Licensee has given prompt written notice thereof to Licensor. This
Agreement is binding on and inures to the benefit of the Parties and their
permitted successors and assigns. Any attempted assignment or other transfer of
rights under this Agreement in violation of this Section 10(a) will be void.
(b) GOVERNING LAW. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of New York without reference
to or inclusion of the principles of choice of law or conflicts of law of that
jurisdiction (except that questions affecting the construction and effect of any
patent will be determined by the law of the country in which the patent was
granted). It is the intent of the Parties that the substantive law of the State
of New York govern this Agreement and not the law of any other jurisdiction
incorporated through choice of law or conflicts of law principles. Each Party
agrees that any legal action, proceeding, controversy or claim between the
Parties arising out of or relating to this Agreement may be brought and
prosecuted only in the United States District Court for the Southern District of
New York or, if that Court lacks or declines to exercise subject matter
jurisdiction, in the Supreme Court of the State of New York in and for New York
County, and by execution of this Agreement each Party hereto submits to the
exclusive jurisdiction of such court and waives any objection it might have
based upon improper venue or inconvenient forum. Each Party hereto waives any
right it may have to a jury trial in connection with any legal action,
proceeding, controversy or claim between the Parties arising out of or relating
to the Agreement.
(c) EXCLUSIVE JURISDICTION AND VENUE. Any action brought by either Party
that arises out of or relates to this Agreement will be filed only in the state
or federal courts located in New York County, New York. Each Party irrevocably
submits to the jurisdiction of those courts. Each Party waives any objections
that it may have now or in the future to the jurisdiction of those courts, and
also waives any claim that it may have now or in the future that litigation
brought in those courts has been brought in an inconvenient forum.
(d) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
Parties as to its subject matter and supercedes all prior agreements,
negotiations, representations, and promises between them with respect to its
subject matter.
(e) UNENFORCEABLE PROVISIONS. If any provision of this Agreement is held
unenforceable by a court of competent jurisdiction, the other provisions will
remain in full force and effect. If legally permitted, the unenforceable
provision will be replaced with an enforceable provision that as nearly as
possible gives effect to the Parties' intent.
(f) RELATIONSHIP OF THE PARTIES. Each Party is an independent contractor of
the other Party. Nothing in this Agreement creates a partnership, joint venture
or agency relationship between the Parties.
(g) NOTICES. A notice under this Agreement is not sufficient unless it is:
(i) in writing; (ii) addressed using the contact information listed below for
the Party to which the notice is being given (or using updated contact
information which that Party has specified by written notice in accordance with
this Article); and (iii) sent by hand delivery, facsimile transmission,
registered or certified mail (return receipt requested), or reputable express
delivery service with tracking capabilities (such as Federal Express).
Page 10
CONTACT INFORMATION FOR LICENSOR:
World Gold Council
45 Pall Mall
London, SW1Y 5JG
Attn: James Burton
Telephone: 011 44 207826 4700
Facsimile: 011 44 207826 4799
World Gold Trust Services, LLC:
444 Madison Avenue
New York, New York 10022
Telephone: (212) 317-3800
Facsimile: (212) 688-0410
CONTACT INFORMATION FOR LICENSEE:
State Street Global Markets, LLC
One Lincoln Street
Boston, Massachusetts 02111
Attn: GUS FLEITES
Telephone: (617) 664-4489
Facsimile: (617) 664-2669
State Street Global Markets, LLC
One Lincoln Street
Boston, Massachusetts 02111
Attn: BOB GUERIN
Telephone: (617) 664-5028
Facsimile: (617) 664-2669
(h) AMENDMENTS. This Agreement may not be amended unless the amendment is
in writing and signed by authorized representatives of both Parties.
(i) WAIVERS. A waiver of rights under this Agreement will not be effective
unless it is in writing and signed by an authorized representative of the Party
that is waiving the rights.
(j) COUNTERPARTS. The Parties may execute this Agreement by signing
separate copies of the signature page. A facsimile copy of the signature page
will have the same effect as the original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
Page 11
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives.
WORLD GOLD COUNCIL
By:________________________________
Name:______________________________
Title:_____________________________
WORLD GOLD TRUST SERVICES, LLC
By:________________________________
Name:______________________________
Title:_____________________________
STATE STREET GLOBAL MARKETS, LLC
By:________________________________
Name:______________________________
Title:_____________________________
[SIGNATURE PAGE TO LICENSE AGREEMENT]
Page 12
SCHEDULE 1
LICENSOR MARKS
TRADEMARKS/SERVICE MARKS
Mark Country U.S. Serial No. U.S. Registration No.
---- ------- -------------- ---------------------
GOLD United States 78086724 2369750
(with design)
GLD United States 76493581 Pending
GLD United States 76493582 Pending
TRADE NAMES
1. World Gold Trust Services, LLC
2. World Gold Council
EXHIBIT 10.9
MARKETING AGENT LICENSE AGREEMENT
This License Agreement (this "Agreement"), entered into as of November
__, 2004 (the "Effective Date"), is made by and among STATE STREET CORPORATION,
a Massachusetts domestic corporation, STATE STREET GLOBAL MARKETS, LLC, a
Delaware limited liability company and an affiliate of State Street Corporation
(together, "Licensor"), WORLD GOLD COUNCIL, a not-for-profit association
organized under Swiss law, and WORLD GOLD TRUST SERVICES, LLC, a Delaware
corporation and wholly owned subsidiary of World Gold Council (together,
"Licensee").
WHEREAS, the streetTRACKS(R) Gold Trust (the "Trust") was established
pursuant to the Trust Agreement entered into by and between Licensee and The
Bank of New York ("BONY") dated as of the date hereof (the "Trust Agreement"),
pursuant to which the Trust will issue streetTRACKS(R) Gold Shares (the
"Shares") which represent units of fractional undivided beneficial interest in
and ownership of the Trust upon the deposit of gold bullion by Authorized
Participants (as defined in the Trust Agreement) with HSBC Bank USA, as
custodian of the Trust;
WHEREAS, Licensor and Licensee entered into a Marketing Agent Agreement
dated as of the date hereof (the "Marketing Agent Agreement") whereby Licensee
designated Licensor as the exclusive marketing agent of the Trust;
WHEREAS, Licensor uses in commerce and owns in the United States all
trade name and/or trademark rights and associated goodwill in the designations
specified on Schedule 1 attached hereto (the "Licensor Marks");
WHEREAS, Licensor desires to grant Licensee certain rights to the
Licensor Marks solely for use in connection with the Trust.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Licensor and Licensee (each a
"Party" and collectively, the "Parties") agree as follows:
1. DEFINITIONS.
For the purposes of this Agreement, the following terms have the following
meanings:
(a) "Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
(b) "Agreement" has the meaning set forth in the preamble.
(c) "BONY" has the meaning set forth in the recitals.
(d) "Confidential Information" has the meaning set forth in Section
9(b).
(e) "Control" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
(f) "Effective Date" has the meaning set forth in the preamble.
(g) "Indemnified Party" has the meaning set forth in Section 7(b).
(h) "Indemnifying Party" has the meaning set forth in Section 7(b).
(i) "License" has the meaning set forth in Section 2(a).
(j) "Licensee" has the meaning set forth in the Preamble.
(k) "Licensor" has the meaning set forth in the Preamble.
(l) "Licensor Marks" has the meaning set forth in the recitals.
(m) "Losses" has the meaning set forth in Section 7(a).
(n) "Marketing Agent Agreement" has the meaning set forth in the
recitals.
(o) "Party(ies)" has the meaning set forth in the recitals.
(p) "Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or another entity, including a Governmental Entity (or any
department, agency or political subdivision thereof.
(q) "Proceeding" has the meaning set forth in Section 7(b).
(r) "Shares" has the meaning set forth in the recitals.
(s) "Sublicensee" has the meaning set forth in Section 2(d).
(t) "Trust" has the meaning set forth in the recitals.
(u) "Trust Agreement" has the meaning set forth in the recitals.
2. LICENSE.
(a) License to Licensor Marks. Subject to the terms and conditions of
this Agreement, Licensor hereby grants Licensee a worldwide, non-exclusive,
non-transferable (except as provided in Section 10(a)), royalty-free license to
use, display and refer to Licensor's name and the Licensor Marks set forth in
Schedule 1 hereto, under the quality control of Licensor, for the purpose of
establishing and operating the Trust, issuing and distributing the Shares and
listing the Shares on the New York Stock Exchange (the "License). All use of the
Licensor Marks under the Trademark License and all goodwill associated therewith
shall inure to the exclusive benefit of Licensor. Licensee shall, at Licensor's
expense, fully cooperate with and
Page 2
assist Licensor in the prosecution or maintenance of any trademark, service
mark, domain name or copyright application and ensuing registration concerning
the Licensor Marks and shall execute any documents Licensor shall reasonably
request in connection therewith.
(b) Licensee's Limited Right to Sublicense. The License granted herein
shall include the limited right of Licensee to grant sublicenses to its
Affiliates, partners, joint venturers, trustees, distributors, custodians and
agents (each a "Sublicensee"), subject to the restrictions of this Agreement,
and solely in connection with such Sublicensee's performance of its services for
Licensee related to the activities of Licensee permitted hereunder. In addition,
Licensee shall include provisions in all such sublicenses that: (i) are
identical in substance to Sections 3, 4 and 5 herein (with the references in
such sublicenses to "Licensor" in Section 4(c) to continue to signify the
Licensor defined herein); (ii) require Licensee to terminate such sublicenses,
without penalty, if this Agreement is terminated for any reason; (iii) obligate
Licensee to give the Sublicensee notice if this Agreement is terminated for any
reason; and (iv) entitle Licensor herein to give such notice in the event that
the Licensee fails to do so.
(c) ALL RIGHTS NOT SPECIFICALLY AND EXPRESSLY GRANTED TO LICENSEE IN
THIS ARTICLE 2 ARE HEREBY RESERVED TO LICENSOR.
3. ENFORCEMENT.
Licensee shall promptly (a) notify Licensor of any potential or actual
infringement by a third party of the Licensor Marks of which Licensee becomes
aware, and (b) provide to Licensor all evidence of such infringement in
Licensee's possession, custody or control. Licensor shall have the sole right,
but not the obligation, to initiate any legal action at its own expense against
such infringement and to recover damages and enforce any injunction granted as a
result of any judgment in Licensor's favor. Licensor shall have sole control
over any such action, including, without limitation, the sole right to settle
and compromise such action. In the event of a dispute between Licensor and any
third party regarding the infringement, validity or enforceability of the
Licensor Marks, Licensee agrees, at Licensor's expense, to do all things
reasonably requested by Licensor to assist Licensor in connection with such
dispute.
4. TERM AND TERMINATION.
(a) The term of this Agreement shall commence as of the Effective Date
and shall remain in full force and effect until the expiration or termination of
the Marketing Agent Agreement, unless earlier terminated pursuant to the terms
of this Agreement (the "Term").
(b) Either Party may terminate this Agreement by written notice to the
other Party at any time if the other Party materially breaches this Agreement
and fails to cure such breach with thirty (30) days following written notice
thereof from the non-breaching Party. Upon any termination or expiration of this
Agreement, all rights and obligations under this Agreement (including Licensee's
rights under the License granted pursuant to Article 2) will immediately
terminate; provided, however, that the provisions of Articles 1, 5 , 6, 7, 8, 9
and 10, and any other provision that survives by its express terms, shall
survive any termination or expiration of this Agreement.
Page 3
(c) On expiration or termination of this Agreement, Licensee shall
immediately cease and desist from all use of the Licensor Marks, and any similar
marks, and inventions or works based on or derivative thereof; and shall
immediately deliver all products bearing or made in connection with the Licensor
Marks, including without limitation all inventions or works based on or
derivative thereof, to Licensor at the address set forth in the notice section
below, or destroy them, at the option of Licensor.
5. ACKNOWLEDGMENT OF RIGHTS.
(a) Licensee will not directly or indirectly: (i) challenge or contest
the validity or enforceability of the Licensor Marks; (ii) dispute the validity,
enforceability, or Licensor's exclusive ownership of, any trademark, trade name
or domain name application or registration owned by Licensor with respect to the
Licensor Marks or initiate or participate in any proceeding of any kind opposing
the grant to Licensor of any trademark, trade name, or domain name registration
in the Licensor Marks or similar marks; (iii) fail to meet Licensor's quality
control with respect to the Licensor Marks or make any other use thereof other
than as expressly permitted herein; (iv) apply to register or otherwise obtain
registration of the Licensor Marks, or any marks similar thereto, in the patent
and trademark or copyright office of any country or state, or with any business
or domain name registrar; or (v) assist any other Person to do any of the
foregoing (except if required by court order or subpoena); provided, however,
the foregoing shall in no way limit Licensee's ability to defend against or to
mitigate any claim brought by Licensor against Licensee.
(b) Any violation of this Article 5 will constitute a material breach
of this Agreement.
6. REPRESENTATIONS AND WARRANTIES.
(a) Each Party hereby represents and warrants that (i) it has the power
and authority to enter into this Agreement and perform its obligations
hereunder; (ii) the execution and delivery of this Agreement have been duly
authorized and all necessary actions have been taken to make this Agreement a
legal, valid and binding obligation of such Party enforceable in accordance with
its terms; and (iii) the execution and delivery of this Agreement and the
performance by such Party of its obligations hereunder will not contravene or
result in any breach of the Certificate of Incorporation, Bylaws or any other
organizational document of such Party or of any agreement, contract, indenture,
license, instrument or understanding or, to the best of its knowledge, result in
any violation of law, rule, regulation, statute, order or decree to which such
Party is bound or by which they or any of their property is subject.
(b) Licensor represents and warrants that it owns and/or has the right
to license to Licensee the Licensor Marks in the United States and that to its
actual knowledge, the Licensor Marks and Licensee's use of the foregoing in
accordance with this Agreement shall not infringe any copyright, trademark,
trade secret or other intellectual property right of any third party.
(c) EXCEPT AS EXPRESSLY SET FORTH IN THE FOREGOING, LICENSOR DOES NOT
MAKE AND HEREBY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, REGARDING
Page 4
THE SUBJECT MATTER OF THIS AGREEMENT INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT
SHALL THE CUMULATIVE LIABILITY OF LICENSOR TO LICENSEE AND ITS AFFILIATES UNDER
OR RELATING TO THIS AGREEMENT AT ANY TIME EXCEED THE AGGREGATE AMOUNT OF THE
FEES RECEIVED BY LICENSOR PURSUANT TO THIS AGREEMENT AND THE TRUST AGREEMENT
PRIOR TO SUCH TIME EXCEPT THAT THIS LIMITATION SHALL NOT BE APPLICABLE TO A
CLAIM BY LICENSEE FOR INDEMNIFICATION PURSUANT TO ARTICLE 7.
7. INDEMNITY.
(a) Each Party shall defend, indemnify and hold harmless the other
Party and such other Party's Affiliates, employees, officers, directors, and
agents from and against any liabilities, losses, damages, costs or expenses
(including, without limitation, reasonable attorneys' fees) (collectively,
"Losses") resulting from or arising in connection with the breach by the
Indemnifying Party of any of its representations, warranties, covenants or
obligations contained in this Agreement.
(b) If any action, suit, proceeding (including, but not limited to, any
governmental investigation), claim or dispute (collectively, a "Proceeding") is
brought or asserted against a Party for which indemnification is sought under
this Agreement, the Party seeking indemnification (the "Indemnified Party")
shall promptly (and in no event more than seven (7) days after receipt of notice
of such Proceeding) notify the Party obligated to provide such indemnification
(the "Indemnifying Party") of such Proceeding. The failure of the Indemnified
Party to so notify the Indemnifying Party shall not impair the Indemnified
Party's ability to obtain indemnification from the Indemnifying Party unless
such failure adversely affects the Indemnifying Party's ability to adequately
oppose or defend such Proceeding. Upon receipt of such notice from the
Indemnified Party, the Indemnifying Party shall be entitled to participate in
such Proceeding at its own expense. Provided no conflict of interest exists as
specified in clause (ii) below and there are no other defenses available to the
Indemnified Party as specified in clause (iv) below, the Indemnifying Party, to
the extent that it shall so desire, shall be entitled to assume the defense of
the Proceeding with counsel reasonably satisfactory to the Indemnified Party, in
which case all attorney's fees and expenses shall be borne by the Indemnifying
Party (except as specified below) and the Indemnifying Party shall in good faith
defend the Indemnified Party. After receiving written notice from the
Indemnifying Party of its election to assume the defense of the Proceeding, the
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, provided that the fees and
expenses of such counsel shall be borne entirely by the Indemnified Party unless
(i) the Indemnifying Party expressly agrees in writing to pay such fees and
expenses, (ii) there is such a conflict of interest between the Indemnifying
Party and the Indemnified Party as would preclude, in compliance with the
ethical rules in effect in the jurisdiction in which the Proceeding was brought,
one lawyer from representing both Parties simultaneously, (iii) the Indemnifying
Party fails, within the earlier of (x) twenty (20) days following receipt of
notice of the Proceeding from the Indemnified Party or (y) seven (7) days prior
to the date the first response or appearance is required to be made in such
Proceeding, to assume the defense of such Proceeding with counsel reasonably
satisfactory to the Indemnified Party or (iv) there are legal defenses available
to the Indemnified Party that are different from or
Page 5
are in addition to those available to the Indemnifying Party. In each of cases
(i) through (iv), the fees and expenses of counsel shall be borne by the
Indemnifying Party. No compromise or settlement of such Proceeding may be
effected by either Party without the other Party's consent unless (m) there is
no finding or admission of any violation of law and no effect on any other
claims that may be made against such other Party and (n) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party.
Neither Party shall have any liability with respect to any compromise or
settlement effected without its consent, which shall not be unreasonably
withheld. The Indemnifying Party shall have no obligation to indemnify and hold
harmless the Indemnified Party from any loss, expense or liability incurred by
the Indemnified Party as a result of a default judgment entered against the
Indemnified Party unless such judgment was entered after the Indemnifying Party
agreed, in writing, to assume the defense of such Proceeding.
8. LIMITATION OF LIABILITY.
EXCEPT FOR EACH PARTY'S OBLIGATION TO INDEMNIFY THE OTHER PARTY FOR
LOSSES PURSUANT TO ARTICLE 7, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR OTHER INDIRECT
DAMAGES, HOWSOEVER CAUSED, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE, EVEN
IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9. CONFIDENTIALITY
(a) Public Statements. Except as consented to by the other Party (such
consent not to be unreasonably withheld or delayed) or as otherwise specifically
set forth herein, neither Party will issue any public statement relating to or
in any way disclosing any aspect of the matter contemplated by this Agreement,
including the scope and the specific terms hereof. The obligations of the
Parties under this Section 9(a) are in addition to their respective obligations
pursuant to Section 9(b) but shall not limit the exceptions to public disclosure
specifically referred to in Section 9(b) paragraphs (i) through (v). This
Section 9(a) will in no way limit either Party's ability to (i) respond to
customary press inquiries or otherwise make public or private statements not
otherwise disclosing the Confidential Information (as defined below) or the
specific terms of this Agreement in the normal course of its business and/or in
connection with the obligations hereunder, or (ii) provide necessary information
to prospective Sublicensees and Authorized Participants and such Party's
personnel, agents, representatives and consultants.
(b) Confidentiality. Except as provided below, all business, financial,
marketing and product information disclosed to the other Party orally or in
writing is deemed confidential, restricted and proprietary to the disclosing
Party (the "Confidential Information"). Each Party agrees to use the
Confidential Information received from the other Party only for the purpose of
this Agreement. The Confidential Information disclosed or supplied is not to be
reproduced in any form except as required to accomplish the intent of, and in
accordance with the terms of, this Agreement. The receiving Party must provide
the same degree of care to avoid disclosure or unauthorized use of the
Confidential Information as it accords to protect its own similar proprietary
information, but in no event less than reasonable care under the circumstances.
All Confidential Information must be retained by the receiving Party in a secure
place with access
Page 6
limited to only such of its employees, subcontractors, suppliers or agents who
need to know such information for purposes of this Agreement and to such third
parties as the disclosing Party has consented to by prior written approval. All
Confidential Information, unless otherwise specified in writing (x) remains the
property of the disclosing Party, (y) must be used by the receiving Party only
for the purpose for which it was intended, and (z) including all copies thereof,
must be returned to the disclosing Party or destroyed after the receiving
Party's need for it has expired or upon request of the disclosing Party, and, in
any event, upon expiration or termination of this Agreement. At the request of
the disclosing Party, the receiving Party will furnish a certificate of an
officer of the receiving Party certifying that the Confidential Information not
returned to the disclosing Party has been destroyed. The obligation of
confidentiality set forth in this Section 9(b) shall survive expiration or
termination of this Agreement for a period of three (3) years. For the purpose
hereof, the Confidential Information shall not include information, to the
extent evidenced by reasonable documentation, that:
(i) is published or is otherwise in the public domain through no
fault of the receiving Party at the time of any claimed unauthorized disclosure
or use by the receiving Party;
(ii) prior to disclosure pursuant to this Agreement, is properly
within the legitimate possession of the receiving Party;
(iii) subsequent to disclosure pursuant to this Agreement, is
lawfully received from a third party having rights in the information without
restriction of the third party's right to disseminate the information and
without notice of any restriction against its further disclosure;
(iv) is obligated to be produced under order of a court or other
similar requirement, rule or regulation of any governmental authorities, so long
as the Party required to disclose the information provides the disclosing Party
with prior notice of such order or requirement and its cooperation to the extent
reasonable in preserving its confidentiality; or
(v) the disclosing Party agrees in writing is free of such
restrictions.
The Parties agree that, without limiting any other rights and remedies
specified herein, an injunction may be sought against the Party who has breached
or threatened to breach this Section 9(b). Each Party represents and warrants
that it has the right to disclose all Confidential Information which it has
disclosed to the other Party pursuant to this Agreement, and each Party agrees
to indemnify and hold harmless the other from all claims by a third party
related to the wrongful disclosure of such third party's proprietary
information. Otherwise, neither Party makes any representation or warranty,
express or implied, in respect of any Confidential Information.
10. MISCELLANEOUS PROVISIONS.
(a) ASSIGNMENT. Licensee may not assign or otherwise transfer (whether
by operation of law or otherwise) any right or obligation under this Agreement
without the prior written consent of Licensor; provided, however, that Licensee
may grant sublicenses as provided herein. Such consent shall be deemed given
with respect to an assignment or transfer (whether by operation of law or
otherwise) of the entire Agreement, including all rights and obligations
hereunder, to a successor in interest or assignee of substantially all of the
assets of Licensee,
Page 7
provided that Licensee has given prompt written notice thereof to Licensor. This
Agreement is binding on and inures to the benefit of the Parties and their
permitted successors and assigns. Any attempted assignment or other transfer of
rights under this Agreement in violation of this Section 10(a) will be void.
(b) GOVERNING LAW. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of New York without reference
to or inclusion of the principles of choice of law or conflicts of law of that
jurisdiction (except that questions affecting the construction and effect of any
patent will be determined by the law of the country in which the patent was
granted). It is the intent of the Parties that the substantive law of the State
of New York govern this Agreement and not the law of any other jurisdiction
incorporated through choice of law or conflicts of law principles. Each Party
agrees that any legal action, proceeding, controversy or claim between the
Parties arising out of or relating to this Agreement may be brought and
prosecuted only in the United States District Court for the Southern District of
New York or, if that Court lacks or declines to exercise subject matter
jurisdiction, in the Supreme Court of the State of New York in and for New York
County, and by execution of this Agreement each Party hereto submits to the
exclusive jurisdiction of such court and waives any objection it might have
based upon improper venue or inconvenient forum. Each Party hereto waives any
right it may have to a jury trial in connection with any legal action,
proceeding, controversy or claim between the Parties arising out of or relating
to the Agreement.
(c) EXCLUSIVE JURISDICTION AND VENUE. Any action brought by either
Party that arises out of or relates to this Agreement will be filed only in the
state or federal courts located in New York County, New York. Each Party
irrevocably submits to the jurisdiction of those courts. Each Party waives any
objections that it may have now or in the future to the jurisdiction of those
courts, and also waives any claim that it may have now or in the future that
litigation brought in those courts has been brought in an inconvenient forum.
(d) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the Parties as to its subject matter and supercedes all prior agreements,
negotiations, representations, and promises between them with respect to its
subject matter.
(e) UNENFORCEABLE PROVISIONS. If any provision of this Agreement is
held unenforceable by a court of competent jurisdiction, the other provisions
will remain in full force and effect. If legally permitted, the unenforceable
provision will be replaced with an enforceable provision that as nearly as
possible gives effect to the Parties' intent.
(f) RELATIONSHIP OF THE PARTIES. Each Party is an independent
contractor of the other Party. Nothing in this Agreement creates a partnership,
joint venture or agency relationship between the Parties.
(g) NOTICES. A notice under this Agreement is not sufficient unless it
is: (i) in writing; (ii) addressed using the contact information listed below
for the Party to which the notice is being given (or using updated contact
information which that Party has specified by written notice in accordance with
this Article); and (iii) sent by hand delivery, facsimile transmission,
registered or certified mail (return receipt requested), or reputable express
delivery service with tracking capabilities (such as Federal Express).
Page 8
-----------------------------------------------------
CONTACT INFORMATION FOR LICENSOR:
-----------------------------------------------------
-----------------------------------------------------
State Street Corporation
-----------------------------------------------------
225 Franklin Street
-----------------------------------------------------
Boston, Massachusetts 02110
-----------------------------------------------------
Attn: General Counsel
-----------------------------------------------------
Telephone: (617) 786-3000
-----------------------------------------------------
-----------------------------------------------------
State Street Global Markets, LLC
-----------------------------------------------------
One Lincoln Street
-----------------------------------------------------
Boston, Massachusetts 02111
-----------------------------------------------------
Attn: Gus Fleites
-----------------------------------------------------
Telephone: (617) 664-4489
-----------------------------------------------------
Facsimile: (617) 664-2669
-----------------------------------------------------
and to:
-----------------------------------------------------
State Street Global Markets, LLC
-----------------------------------------------------
One Lincoln Street
-----------------------------------------------------
Boston, Massachusetts 02111
-----------------------------------------------------
Attn: Bob Guerin
-----------------------------------------------------
Telephone: (617) 664-5028
-----------------------------------------------------
Facsimile: (617) 664-2669
-----------------------------------------------------
-----------------------------------------------------
CONTACT INFORMATION FOR LICENSEE:
-----------------------------------------------------
-----------------------------------------------------
World Gold Council
-----------------------------------------------------
45 Pall Mall
-----------------------------------------------------
London, SW1Y 5JG
-----------------------------------------------------
Attn: James Burton
-----------------------------------------------------
Telephone: 011 44 207826 4700
-----------------------------------------------------
Facsimile: 011 44 207826 4799
-----------------------------------------------------
-----------------------------------------------------
World Gold Trust Services, LLC:
-----------------------------------------------------
444 Madison Avenue
-----------------------------------------------------
New York, New York 10022
-----------------------------------------------------
Telephone: (212) 317-3800
-----------------------------------------------------
Facsimile: (212) 688-0410
-----------------------------------------------------
-----------------------------------------------------
(h) AMENDMENTS. This Agreement may not be amended unless the amendment
is in writing and signed by authorized representatives of both Parties.
(i) WAIVERS. A waiver of rights under this Agreement will not be
effective unless it is in writing and signed by an authorized representative of
the Party that is waiving the rights.
Page 9
(j) COUNTERPARTS. The Parties may execute this Agreement by signing
separate copies of the signature page. A facsimile copy of the signature page
will have the same effect as the original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
Page 10
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives.
STATE STREET CORPORATION
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
STATE STREET GLOBAL MARKETS, LLC
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
WORLD GOLD COUNCIL
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
WORLD GOLD TRUST SERVICES, LLC
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
[SIGNATURE PAGE TO LICENSE AGREEMENT]
SCHEDULE 1
LICENSOR MARKS
streetTRACKS(R) is a registered service mark of State Street
Corporation, an affiliate of State Street Global Markets, LLC, the marketing
agent of the Trust.
The registration number for streetTRACKS(R) is #2,489,489 as
registered on September 11, 2001.
EXHIBIT 10.10
REIMBURSEMENT AGREEMENT
-----------------------
REIMBURSEMENT AGREEMENT (this "Agreement"), dated as of November ___, 2004,
between (i) The Bank of New York, not in its individual capacity, but solely as
trustee (the "Trustee") of the streetTRACKS(R) Gold Trust (thE "Trust"), a trust
established pursuant to that Trust Indenture dated as of the date hereof (the
"Indenture") between the Trustee and World Gold Trust Services, LLC (the
"Sponsor"), and (ii) State Streets Global Markets, LLC, a Delaware limited
liability company (the "Marketing Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Trustee is party to the Indenture pursuant to which the Trust
will issue streetTRACKS(R) Gold Shares (the "Shares"), which represent units of
fractional undivided beneficial interest in and ownership of the Trust, upon the
deposit of gold with HSBC Bank USA, N.A., as custodian of the Trust;
WHEREAS, the Sponsor has filed with the U.S. Securities and Exchange
Commission a registration statement on Form S-1 (Registration No. 333-105202)
and amendments thereto (the "Registration Statement"), including as part thereof
a Prospectus under the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Sponsor and the Marketing Agent have entered into a Marketing
Agent Agreement dated as of the date hereof (the "Marketing Agent Agreement"),
pursuant to which the Sponsor has retained the Marketing Agent to provide
certain assistance with respect to the marketing of the Shares and the
development of other gold related exchange-traded funds;
WHEREAS, pursuant to the Marketing Agent Agreement, the Sponsor has agreed
to indemnify, defend and hold harmless the Marketing Agent, its partners,
stockholders, members, directors, officers and employees and any Affiliates of
the foregoing (collectively, "Indemnified Persons") from any loss, damage,
expense, liability or claim (including the reasonable cost of investigation)
which the Marketing Agent or any such other Indemnified Person may incur under
the 1933 Act, the 1934 Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon the
circumstances set forth in Section 7.1 of the Marketing Agent Agreement, and to
contribute to the amount paid or payable by such Indemnified Person in the event
such indemnification is unavailable;
WHEREAS, the Indenture directs the Trustee to enter into this Agreement to
provide for the reimbursement of the Marketing Agent and the other Indemnified
Parties to the extent the Sponsor has not directly paid the indemnification or
contribution amounts required to be paid by the Sponsor pursuant to Section 7 of
the Marketing Agent Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the Marketing Agent and the Trustee hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions. In addition to the other terms which are defined in this
Agreement, the following term shall have the meaning assigned to it below. All
other capitalized terms used herein, but not otherwise defined herein, shall
have the meanings assigned to such terms in the Trust Indenture.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
"Prospectus" shall mean, as context may require, any preliminary
prospectus included as part of the Registration Statement, the prospectus
subsequently filed with the SEC pursuant to Rule 424(b) under the Act and the
prospectus, in the form filed by the Sponsor on behalf of the Trust with the
Commission on or before the second business day after the date hereof (or such
earlier time as may be required under the Act) or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the time it became effective, and any amendment or supplement thereto from time
to time.
SECTION 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties. The Trustee represents and warrants to the
Marketing Agent that:
(a) the Trustee has full power and authority to enter into the
Indenture and this Agreement and to perform its obligations hereunder and
thereunder;
(b) each of the Indenture and this Agreement has been duly authorized,
executed and delivered by the Trustee and constitutes the valid and binding
agreement of the Trustee, enforceable against the Trustee in accordance
with its terms except as enforcement of it may be limited by (i)
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
similar laws of general application relating to or affecting creditors'
rights, (ii) general principles of equity and (iii) the effect of public
policy considerations or court decisions that may limit rights to obtain
indemnification or contribution;
(c) upon delivery by the Trustee of Shares against the deposit of Gold
in accordance with the provisions of the Indenture, those Shares will be
validly issued and will entitle the registered holders of those Shares to
the rights specified in the Indenture; and
SECTION 3
REIMBURSEMENT
3.1 Trustee Reimbursement. As authorized by the Indenture, the Trustee on
behalf of the the Trust hereby agrees to reimburse each Indemnified Person,
solely from and to the extent of the assets of the Trust, for any and all
amounts payable by the Sponsor pursuant to Section 7 of the Marketing Agent
Agreement
2
(including any amount in contribution thereof that may be owed to any of the
Indemnified Persons pursuant to Section 7.4 thereof), to the extent the Sponsor
has not directly paid such amounts when due under Article 7 of the Marketing
Agent Agreement (the "Obligation") within thirty (30) days after such amounts
have become due and the Marketing Agent has made demand to the Sponsor for
payment of them, and to pay any and all expenses (including reasonable and
documented counsel fees and expenses) incurred by the Marketing Agent in
enforcing its rights under this Agreement.
3.2 Unconditional Obligations. The obligations of the Trust under this
Agreement are absolute and unconditional irrespective of the value, genuineness,
validity, regularity or enforceability of the Marketing Agent Agreement or any
other agreement or instrument referred to herein, or any substitution, release
or exchange of any guarantee of the Obligation, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this clause that the obligations of
the Trust hereunder shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing, it is agreed
that the occurrence of any one or more of the following shall not alter or
impair the liability of the Trust hereunder which shall remain absolute and
unconditional as described above:
(a) at any time or from time to time, without notice to Trust, the time
for any performance of or compliance with the Obligation shall be extended,
or such performance or compliance shall be waived;
(b) any act taken by any party to any other agreement or instrument
referred to herein pursuant to the provisions thereof;
(c) the Obligation shall be modified, supplemented or amended in any
respect, or any right under the Marketing Agent Agreement or any other
agreement or instrument referred to herein shall be waived or any guarantee
of the Obligation shall be released or exchanged in whole or in part or
otherwise dealt with; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against the Sponsor, the Trust or any other Person, including any discharge
of, or bar or stay against collecting, all or any part of the Obligation in
or as a result of any such proceeding.
Except as set forth above, the Trust hereby expressly waives promptness,
diligence, presentment, demand of payment, protest, notice of acceptance and any
other notices whatsoever, and any requirement that the Marketing Agent exhausts
any right, power or remedy or proceed or take any other action against (i) the
Sponsor under the Marketing Agent Agreement or in respect of any claim for
payment against the Sponsor or any of its assets or under any other agreement or
instrument referred to herein or (ii) any other Person under any other guarantee
of or claim for payment of the Obligation.
The obligations of the Trust under this Agreement shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of the Sponsor in respect of the
3
Obligation is rescinded or must be otherwise restored by the Marketing Agent,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise.
Until final payment and satisfaction in full of the Obligation, the Trust hereby
waives all rights of subrogation or contribution, whether arising by contract as
set forth in Section 10.05 of the Indenture or operation of law (including,
without limitation, any such right arising under any bankruptcy, insolvency or
similar law) or otherwise by reason of any payment by it pursuant to the
provisions of this Agreement and further agrees with the Marketing Agent that
the Marketing Agent shall have no obligation whatsoever in respect of any such
payment by the Trust under this Agreement (including any obligation to repay to
the Trust any portion of such payment), and the Trust hereby irrevocably
releases the Marketing Agent from any such obligation.
The undertaking in this Agreement is a continuing undertaking, and shall apply
to the Obligation whenever arising.
3.3 Marketing Agent Indemnification. The Marketing Agent agrees to indemnify,
defend and hold harmless the Trust from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which,
jointly or severally, the Trust may incur under the 1933 Act, the 1934 Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by or on behalf of the Marketing Agent to the Trust
expressly for use in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the Trust) or in
a Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated in such Registration Statement or such Prospectus or necessary to make
such information not misleading. As of the date hereof, the statements set forth
in the first paragraph under the caption "The Marketing Agent" in the Prospectus
constitute the only information furnished by or on behalf of the Marketing Agent
for use in the Registration Statement or the Prospectus.
SECTION 4
MISCELLANEOUS
4.1 Amendment and Modification. This Agreement may be amended, modified or
supplemented only by a written instrument executed by each of the parties
hereto.
4.2 Successors and Assigns; Assignment. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. This Agreement shall not be
assigned by any party without the prior written consent of the other parties,
and any assignment without such consent shall be null and void.
4.3 Waiver of Compliance. Except as otherwise provided in this Agreement, any
failure of either of the parties to comply with any obligation, covenant,
agreement or condition herein may be waived by the party entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but any such waiver, or the failure to insist upon strict compliance
with any obligation, covenant, agreement or condition herein, shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure or
breach.
4
4.4 Severability. The parties hereto desire that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
4.5 Notices. All notices, waivers, or other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if delivered
personally, by facsimile (and, if sent by facsimile, followed by delivery by
nationally-recognized express courier), sent by nationally-recognized express
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to the Trustee, to:
The Bank of New York
2 Hanson Place
Brooklyn, New York 11217
Attention: ADR Administration
Telephone: [Please provide]
Facsimile: (718) 315-4881
if to the Marketing Agent, to:
State Street Global Markets, LLC
One Lincoln Street
Boston, Massachusetts 02111
Attention: Gus Fleites
Telephone: 617 664 4489
Facsimile: 617 664 2669
and
State Street Global Markets, LLC
One Lincoln Street
Boston, Massachusetts 02111
Attention: Bob Guerin
Telephone: 617 664 5028
Facsimile: 617 664 2669
5
All such notices and other communications shall be deemed to have been delivered
and received (i) in the case of personal delivery or delivery by facsimile or
e-mail, on the date of such delivery if delivered during business hours on a
Business Day or, if not delivered during business hours on a Business Day, the
first Business Day thereafter, (ii) in the case of delivery by
nationally-recognized express courier, on the first Business Day following
dispatch, and (iii) in the case of mailing, on the third Business Day following
such mailing.
4.6 Governing Law; Jurisdiction.
(a) All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced
in accordance with the domestic laws of the State of New York, without
giving effect to any choice or conflict of law provision or rule (whether
in the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York. In furtherance of the foregoing, the internal law of the State of New
York will control the interpretation and construction of this Agreement,
even if under such jurisdiction's choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would ordinarily
or necessarily apply.
(b) Each party irrevocably consents and agrees, for the benefit of the
other parties, that any legal action, suit or proceeding against it with
respect to its obligations, liabilities or any other matter arising out of
or in connection with this Agreement or any Related Agreement may be
brought in the courts of the State of New York or the courts of the United
States of America located in the Borough of Manhattan, The City of New York
and hereby irrevocably consents and submits to the non-exclusive
jurisdiction of each such court in personam, generally and unconditionally
with respect to any action, suit or proceeding for itself and in respect of
its properties, assets and revenues. Each party irrevocably waives any
immunity to jurisdiction to which it may otherwise be entitled or become
entitled (including sovereign immunity, immunity to pre-judgment attachment
and execution) in any legal suit, action or proceeding against it arising
out of or based on this Agreement or any Related Agreement or the
transactions contemplated hereby or thereby which is instituted in any
court of the State of New York or any court of the United States of America
located in the Borough of Manhattan, The City of New York.
The provisions of this Section 4.6 shall survive any termination of this
Agreement and the Related Agreements, in whole or in part.
4.7 Interpretation. The article and section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
4.8 Counterparts; Facsimile Signatures. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Facsimile counterpart
signatures to this Agreement shall be acceptable and binding.
6
[Signature Page Follows]
7
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first written above.
THE BANK OF NEW YORK, not in its
individual capacity, but solely as trustee of the
streetTRACKS(R) GOLD TRUST
By:
----------------------------------------------
Name:
Title:
STATE STREET GLOBAL MARKETS, LLC
By:
----------------------------------------------
Name:
Title:
8
EXHIBIT 99.1
WORLD GOLD TRUST SERVICES, LLC
CODE OF BUSINESS CONDUCT AND ETHICS
PURPOSE
This Code of Business Conduct and Ethics of World Gold Trust Services, LLC,
which we refer to as the "Code," contains the specific policies adopted by
written consent of the World Gold Council, our sole member ("WGC") , that
relates to the legal and ethical standards of business conduct of officers,
employees and agents of our company. For this purpose, the term "Company" shall
also include any subsidiary of our company.
The purpose of this Code is to provide a general statement regarding our
Company's expectations as to the legal and ethical nature of business conduct of
its officers, employees and agents while acting on our behalf and to provide for
the administration of this Code.
Moreover, this Code has been designed to be generally effective in preventing
and detecting criminal conduct.
POLICY
A. STANDARDS OF BUSINESS CONDUCT AND ETHICS
This Code sets forth specific policies governing the manner in which business
should be conducted by our Company and by all of our officers, employees and
agents and of our affiliates. These policies were developed and are intended to
be applied in good faith with reasonable business judgment to enable our Company
to achieve its operating and financial goals within the framework of applicable
laws and ethical conduct.
It is the personal responsibility of each officer, employee and agent of our
Company to adhere to the standards and restrictions, whether imposed by law or
this Code, applicable to his or her assigned duties and responsibilities and to
conduct himself or herself accordingly. Such standards and restrictions require
each officer, employee and agent to avoid any activities which would involve us
in any practice which is not in compliance with applicable laws or this Code.
Any officer, employee or agent who does not adhere to such standards and
restrictions is acting outside the scope of his or her employment or agency.
It is our Company's policy to observe and comply with all laws applicable to it
or the conduct of its business wherever located. In some situations the
applicable laws of one jurisdiction may conflict with the applicable laws of
another jurisdiction. In such cases the Company will endeavor to resolve such
conflict following the guidance of its legal counsel.
Beyond legal compliance, all of our officers, employees and agents are expected
to observe high standards of business and personal ethics in the execution of
their assigned
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duties and responsibilities. This requires the practice of honesty and integrity
in every aspect of dealing with other employees, the public, the business
community, shareholders, customers, suppliers and governmental and regulatory
authorities.
Our policy prohibits unlawful discrimination against employees, shareholders,
officers, customers or suppliers on account of race, color, age, sex, religion
or national origin. All persons will be treated with dignity and respect and
they will not be unreasonably interfered with in the conduct of their duties and
responsibilities.
No employee should be misguided by any sense of loyalty to our Company or a
desire for profitability that might cause him or her to disobey any applicable
law or Company policy. Violation of Company policy will constitute grounds for
disciplinary action, including, when appropriate, termination of employment.
Company policy prohibits our officers, employees and agents from entering into
certain transactions described in this Code. If such a transaction occurs, the
Company and its officers and employees directly involved may be subject to
fines, imprisonment and civil litigation. The following ethical business
practices have been adopted by our Company:
1. COMMERCIAL BRIBERY
Company policy prohibits payment of any form of commercial bribes,
kickbacks and other similar payoffs and benefits to any suppliers or
customers.
2. ACCOUNTING CONTROLS, PROCEDURES & RECORDS
Applicable laws and Company policy require the Company to maintain books
and records that accurately and fairly reflect its transactions and the
dispositions of its assets. False and misleading entries in our books and
records are strictly prohibited.
3. USE AND DISCLOSURE OF INSIDE INFORMATION
Company policy prohibits disclosure of material inside information to
anyone other than persons within the Company whose positions require them
to know such information. For this purpose, "inside information" is
information that has not been made available to the public (for example,
information that was not subject of a Company press release or other
disclosure document). "Material" information is any information relating to
our Company's business and affairs or any subsidiary of our Company, or any
information about the streetTRACKS(R) Gold Trust ("Trust"), about which
there is a substantial likelihood that a reasonable investor would consider
it important in making a decision to buy or sell Shares of the Trust.
Examples of material inside information include, but are not limited to,
financial forecasts, possible award of significant contracts, possible
reorganizations of the Company or changes to the Trust's structure.
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4. CONFIDENTIAL OR PROPRIETARY INFORMATION
Our policy prohibits employees from disclosing confidential or proprietary
information outside the Company, either during or after employment, without
Company authorization to do so.
5. CONFLICTS OF INTEREST
Our policy prohibits conflicts between the interests of our employees and
the Company. A "conflict of interest" occurs when a person's personal
interests interfere or may interfere in any manner, or appear to interfere,
with the best interests of our Company.
6. FRAUD AND SIMILAR IRREGULARITIES
Company policy strictly prohibits fraud and similar irregularities. Section
B.9. below sets forth the procedures to be followed concerning the
investigation of suspected fraud.
IF YOU HAVE ANY QUESTIONS CONCERNING THESE PRINCIPLES OR ANY ETHICAL OR LEGAL
ISSUE, THE FIRST STEP IS TO CONSULT WITH YOUR SUPERVISOR OR A HIGHER LEVEL
MANAGER. IF YOU NEED ADDITIONAL ASSISTANCE, OR IF YOU ARE UNCOMFORTABLE TALKING
TO YOUR SUPERVISOR OR A MANAGER, YOU MAY WISH TO RAISE THE ISSUE WITH OUR
COMPANY'S CHIEF FINANCIAL OFFICER ("CHIEF FINANCIAL OFFICER") OR OUTSIDE
COUNSEL.
B. ADMINISTRATION OF CODE OF BUSINESS CONDUCT AND ETHICS
This Code will be administered as follows:
1. ALLOCATIONS OF RESPONSIBILITY
This Code will be administered by the Chief Financial Officer or by a
committee appointed by the Chief Financial Officer for such purpose. For
the purpose of Section B of this Code, this committee of the Company shall
be referred to the "Committee".
The Chief Financial Officer or the Committee will establish such procedures
as it will deem necessary or desirable in order to execute such
responsibilities. Such procedures will provide for obtaining advice of
legal counsel where appropriate. In executing such responsibilities, the
Chief Financial Officer or the Committee may delegate authority to the
Chief Financial Officer or other committees, officers and other employees
and may engage such agents and advisors as it will deem necessary or
desirable.
2. SCOPE OF THIS CODE
The Chief Financial Officer or the Committee will, periodically, in light
of the experience of the Company, review this Code, and when necessary or
desirable,
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make recommendations to the WGC to ensure: (i) the Company's continued
conformance to applicable law; (ii) that it meets or exceeds industry
standards; and (iii) that any weaknesses revealed through monitoring,
auditing and reporting systems are eliminated or corrected.
3. DELEGATION OF SUBSTANTIAL DISCRETIONARY AUTHORITY
No employee of our Company will delegate substantial discretionary
authority to any individual who such employee knows, or through the
exercise of due diligence should know, has a propensity to engage in
illegal activities.
a. For this purpose, persons with "substantial discretionary authority"
include: (i) individuals who have substantial control over the Company
or who have a substantial role in policy-making within the Company;
(ii) individuals who exercise substantial supervisory authority, such
as a sales manager; and (iii) any other individuals who, although not
a part of our Company's management, exercise substantial discretion
when acting within the scope of their authority (for example, an
individual with authority to negotiate or set price levels or an
individual authorized to negotiate or approve significant contracts).
b. The Chief Financial Officer or the Committee, in administering this
Code, will consider, adopt and promulgate guidelines regarding
procedures to ascertain a "propensity to engage in illegal
activities."
4. COMMUNICATION OF POLICIES
To ensure the continued dissemination and communication of this Code, the
Chief Financial Officer or the Committee will take, or cause to be taken,
reasonable steps to communicate effectively the standards and procedures
included in this Code to officers, employees and agents of the Company.
5. MONITORING AND AUDITING
The Chief Financial Officer or the Committee will take reasonable steps to
monitor and audit compliance with the Code of Business Conduct, including
the establishment of monitoring and auditing systems that are reasonably
designed to detect conduct in violation of this Code by officers, employees
and agents of the Company.
To the extent so directed by the Chief Financial Officer or the Committee,
the information developed by our independent accountants in performing
their engagement by the Company and by its internal auditors in the
performance of their assigned responsibilities will be made available to
the CHIEF Financial Officer or the Committee in its capacity as
administrator of this Code as a means of monitoring and auditing compliance
with this Code.
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6. REPORTS
If a Committee has been appointed, the Committee will report to the Chief
Financial Officer, at least once each year, regarding the general
effectiveness of this Code. In any case, the Chief Financial Officer will
report to the WCG, at least once each year, regarding the general
effectiveness of this Code.
7. REPORTING SYSTEM
The Chief Financial Officer or the Committee will establish a reporting
system that will allow violations of this Code to be reported and acted
upon by officers or other employees of the Company with sufficient
authority to deal objectively with the reported matters. The existence and
nature of the reporting system will be communicated to all officers,
employees and, to the extent appropriate, to agents of the Company.
It will be a violation of this Code to intimidate or impose any form of
retribution on any officer, employee or agent who utilizes such reporting
system in good faith to report suspected violations of applicable laws,
rules or regulations, of this Code or other Company policies (except that
appropriate action may be taken against such officer, employee or agent if
such individual is one of the wrongdoers). Every reported allegation of
illegal or unethical behavior will be thoroughly and promptly investigated.
8. WAIVERS OF THIS CODE
Any waiver of this Code for executive officers may only be made with the
approval of the WGC and must be promptly disclosed to the public.
Any waiver of this Code for non-executive officers and other employees may
only be made with the approval of our Company's Chief Financial Officer or
the Committee.
9. INVESTIGATION OF VIOLATIONS
If, through operation of the Company's compliance monitoring and auditing
systems or its violation reporting systems or otherwise, the Company
receives information regarding an alleged violation of this Code or
applicable laws, the person or persons authorized by the Chief Financial
Officer or the Committee to investigate alleged violations of this Code
will, as appropriate, in accordance with procedures established by the
Chief Financial Officer or the Committee:
a. evaluate such information as to gravity and credibility;
b. initiate an informal inquiry or a formal investigation with respect
thereto;
c. prepare a report of the results of such inquiry or investigation,
including recommendations as to the disposition of such matter;
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d. make the results of such inquiry or investigation available to our
Chief Financial Officer or the Committee for action (including
disciplinary action by the Chief Financial Officer or the Committee);
and
e. recommend changes in this Code to the extent necessary or desirable to
prevent further similar violations. We may disclose the results of
investigations to law enforcement agencies.
10. DISCIPLINARY MEASURES
We will consistently enforce our Code of Business Conduct and Ethics
through appropriate means of discipline. Pursuant to procedures adopted by
it, the Chief Financial Officer or the Committee will determine whether
violations of this Code have occurred and, if so, will determine the
disciplinary measures to be taken against any officer, employee or agent of
the Company who has so violated this Code.
The disciplinary measures, which may be invoked at the discretion of the
Chief Financial Officer or the Committee, include, but are not limited to,
counseling, oral or written reprimands, warnings, probation or suspension
without pay, demotions, reductions in salary, termination of employment and
restitution.
Persons subject to disciplinary measures will include, in addition to the
violator, others involved in the wrongdoing such as (i) persons who fail to
use reasonable care to detect a violation, (ii) persons who if requested to
divulge information withhold material information regarding a violation,
and (iii) supervisors who approve or condone the violations or attempt to
retaliate against officers, employees or agents for reporting violations or
violators.
10. DOCUMENTATION
Subject to the applicable document retention program, the Company will
document its compliance efforts and results to evidence its commitment to
comply with the standards and procedures set forth above in this Code.
Date approved by the WGC, as sole member of the Company
November , 2004
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EXHIBIT 99.2
FORM OF DAVENPORT LYONS OPINION
[TO BE TYPED ON DAVENPORT LYONS HEADED NOTEPAPER]
To: World Gold Trust Services, LLC
444 Madison Avenue
3rd Floor
New York, NY 10022
2004
Dear Sirs,
STREETTRACKS(R) GOLD TRUST - FORM S-1 REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
1. We act as English legal advisers to World Gold Trust Services, LLC, a
Delaware limited liability company (THE COMPANY), in connection with
the preparation and filing of a Registration Statement on Form S-1
(Registration No. 333-105202), as amended (THE REGISTRATION STATEMENT),
including the prospectus included in Part I of the Registration
Statement (THE PROSPECTUS), with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (THE 1933 ACT). The
Registration Statement relates to the proposed registration under the
1933 Act of 120,000,000 shares of fractional undivided beneficial
interest in and ownership of the Trust.
2. Unless otherwise defined herein, the words and expressions used in this
letter shall have the same meaning as those words and expressions
defined in the Registration Statement.
3. We are solicitors qualified in England and express no opinion as to any
law other than English law at the date hereof. This opinion is governed
by and construed in accordance with English law.
4. For the purpose of the opinion contained in this letter, we have
examined the following only:
4.1 Amendment no 4 to the Registration Statement and the Prospectus
contained therein; and
4.2 the streetTRACKS(R) Gold Trust Allocated Bullion Account Agreement and
made between HSBC Bank USA, National Association, as custodian (1) and
The Bank of New York, as trustee (2), as filed as an exhibit to the
Registration Statement; and
4.3 the streetTRACKS(R) Gold Trust Unallocated Bullion Account Agreement
and made between HSBC Bank USA, National Association, as custodian (1)
and The Bank of New York, as trustee (2), as filed as an exhibit to the
Registration Statement; and
4.4 the form of streetTRACKS(R) Gold Trust Participant Unallocated Bullion
Account Agreement made between HSBC Bank USA, National Association, as
custodian (1) and [Authorised Participants] (2), as filed as an exhibit
to the Registration Statement.
5. The opinion set out in this letter is based upon the following
assumptions:
1
5.1 that the Registration Statement and Prospectus and the agreements
referred to in paragraphs 4.2, 4.3 and 4.4 above (THE CUSTODY
AGREEMENTS) which we have examined and on which we have based the
opinion set out in this letter are in the form in which they will be
executed and delivered;
5.2 that all signatures, stamps or seals, if any, on all documents supplied
to us as originals or as copies of originals are genuine;
5.3 that all documents submitted to us are authentic and complete;
5.4 that all documents submitted to us as copies conform to the original
documents and such originals are authentic and complete;
5.5 that the Custody Agreements and the arrangements to which they give
rise are not illegal, non-binding or unenforceable under or by virtue
of any applicable laws outside England (as to which we express no
opinion);
5.6 that to the extent that any obligation under the Custody Agreements, is
to be performed in any jurisdiction other than England, its performance
will not be illegal, non-binding or unenforceable under the laws of
such jurisdiction (as to which we express no opinion);
5.7 that the Custodian, the Trustee and any other person referred to in the
Registration Statement, the Prospectus or the Custody Agreements have
been duly incorporated and are validly existing and will have due power
and authority (at the relevant time) to enter into and be bound by the
arrangements contemplated by the Registration Statement, the Prospectus
and the Custody Agreements; and
5.8 that the arrangements for the custody of the gold bullion deposited
with and held by the Trust are correctly described in those sections of
the Registration Statement which are identified as Exhibit A to this
letter (RELEVANT SECTIONS) and in the Custody Agreements and that no
information that might be relevant for the purposes of the opinion
contained herein has been withheld from us (whether deliberately,
accidentally or otherwise).
6. ON THE BASIS OF THE FOREGOING AND SUBJECT TO THE LIMITATIONS AND
QUALIFICATIONS DESCRIBED IN THE RELEVANT SECTIONS AND IN RELIANCE
THEREON AND SUBJECT TO THE QUALIFICATIONS SET OUT BELOW AND TO MATTERS
NOT DISCLOSED TO US, WE CAN CONFIRM, AS OF THE DATE HEREOF THAT, WE
HAVE REVIEWED THE RELEVANT SECTIONS AND WE ARE OF THE OPINION THAT TO
THE EXTENT ENGLISH LAW APPLIES TO THE RELEVANT SECTIONS, THE RELEVANT
SECTIONS DO NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT RELATING
TO ENGLISH LAW.
7. The opinion set out in paragraph 6 above (OPINION) is subject to the
following qualifications:
7.1 we have assumed that the Registration Statement and Prospectus will not
be used for the purpose of any offering of Shares or other securities
in or into the United Kingdom. We do not give any opinion that the
Registration Statement and Prospectus is in compliance with any
securities legislation pertaining in the United Kingdom for this
purpose;
7.2 we have reviewed the Relevant Sections in isolation from the rules,
regulations, practices and customs of the London Bullion Market
Association and/or the Bank of
2
England as well as from the rules, regulations, practices, customs and
laws of any other applicable government, regulatory body or government
authority applicable to gold or banking or custody arrangements and as
to which we consequently express no opinion;
7.3 we do not express any opinion in relation to the compliance of the
Registration Statement or the offering of Shares thereunder with the
laws, rules, requirements, customs or practices of the Securities and
Exchange Commission or any other regulatory authority;
7.4 we have reviewed the Relevant Sections in isolation from the rest of
the Registration Statement and give no opinion on any arrangement for
the custody of the gold bullion or any other matter which may relate to
English law which is described or referred to outside the Relevant
Sections;
7.5 our review of the Relevant Sections was limited to an examination of
the English law aspects of the statements made therein;
7.6 we do not give any opinion herein as regards the likely outcome of the
bringing of proceedings in relation to the Custody Agreements in New
York or any other jurisdiction;
7.7 in so far as the Opinion may express or be deemed to express any
opinion as to future events or matters, the Opinion is based solely
upon existing law in force as at today's date and upon existing
documents of which we have knowledge.
8. This opinion is furnished by Davenport Lyons to World Gold Trust
Services, LLC for use in connection with the filing of the Registration
Statement.
9. We consent to the filing of this Opinion as an exhibit to the
Registration Statement.
Yours faithfully
DAVENPORT LYONS
3
EXHIBIT A
RELEVANT SECTIONS
The page references below refer to the pages of the Registration Statement.
1. Pages 11/12 - "Risk Factors" - The risk factor entitled "The Trust may
not have adequate sources of recovery if its gold is lost, damaged,
stolen or destroyed and recovery may be limited, even in the event of
fraud, to the market value of the gold at the time the fraud is
discovered."
2. Page 12/13 - "Risk Factors" - The risk factor entitled "Because neither
the Trustee nor the Custodian oversees or monitors the activities of
subcustodians who may hold the Trust's gold, failure by the
subcustodians to exercise due care in the safekeeping of the Trust's
gold could result in a loss to the Trust."
3. Page 13 - "Risk Factors" - The risk factor entitled "The ability of the
Trustee and the Custodian to take legal action against subcustodians
may be limited, which increases the possibility that the Trust may
suffer a loss if a subcustodian does not use due care in the
safekeeping of the Trust's gold".
4. Page 13 - "Risk Factors" - The risk factor entitled "Gold held in the
Trust's unallocated gold account and any Authorized Participant's
unallocated gold account will not be segregated from the Custodian's
assets. If the Custodian becomes insolvent, its assets may not be
adequate to satisfy a claim by the Trust or any Authorized Participant.
In addition, in the event of the Custodian's insolvency, there may be a
delay and costs incurred in identifying the bullion held in the Trust's
allocated gold account".
5. Page 37 - "The Trustee - The Trustee's Role" - In the first paragraph
of this section, the following sentence only: "In addition, the Trustee
has no right to visit the premises of any subcustodian for the purposes
of examining the Trust's gold or any records maintained by the
subcustodian, and no subcustodian is obligated to cooperate in any
review the Trustee may wish to conduct of the facilities, procedures,
records or creditworthiness of such subcustodian".
6. Pages 44-46 - "Custody of the Trust's Gold".
7. Pages 47-50 - "Description of the Custody Agreements".
8. Page 51 - "Creation and Redemption of Shares" - In the fourth
paragraph, the following sentences only: "Gold held in Authorized
Participant Unallocated Accounts is not segregated from the Custodian's
assets, as a consequence of which an Authorized Participant will have
no proprietary interest in any specific bars of gold held by the
Custodian. Credits to its Authorised Participant Unallocated Account
are therefore at risk of the Custodian's insolvency."
9. Page 55 - "Creation and Redemption of Shares - Redemption Procedures -
Delivery of redemption distribution" - In the second paragraph, the
following sentence only: "The Authorised Participant and the Trust are
each at risk in respect of gold credited to their respective
unallocated accounts in the event of the Custodian's insolvency."
4
