Document:

Exhibit 10.2

 

MANAGEMENT
AGREEMENT

 

THIS AGREEMENT made and entered into as of the · day of ·, 2010

 

B E T W E E N:

 

SPROTT PHYSICAL SILVER
TRUST,

a closed-end mutual fund
trust established under the laws of the Province of Ontario, by its trustee, RBC DEXIA INVESTOR SERVICES TRUST,  a
trust company incorporated under the federal laws of Canada

 

(hereinafter referred to as
the “Trust”)

 

OF THE FIRST PART

 

-
and -

 

SPROTT ASSET MANAGEMENT LP,

a limited partnership
formed under the laws of the Province of Ontario

 

(hereinafter
referred to as the “Manager”)

 

OF
THE SECOND PART

 

WHEREAS the Trust was established under the laws of the
Province of Ontario pursuant to a trust agreement dated as of June 30,
2010 (the “Trust Agreement”);

 

AND WHEREAS the Trust was created to invest and hold substantially all of its assets
in physical silver bullion, which will provide holders of units of the Trust
with a secure, convenient and exchange-traded investment alternative for
investors interested in holding physical silver bullion without the
inconvenience that is typical of a direct investment in physical silver
bullion;

 

AND WHEREAS pursuant to the Trust Agreement, RBC Dexia Investor
Services Trust and the Manager were appointed as the trustee and the manager of
the Trust, respectively;

 

AND WHEREAS pursuant to the Trust Agreement, the Manager has the
full authority and exclusive power to manage and direct the business and
affairs of the Trust including, without limitation, to provide the Trust with
all necessary investment management services and all management and
administrative services, and to provide such other services and facilities as
described in the Trust Agreement;

 

AND WHEREAS pursuant to the Trust Agreement, the Trustee has no
responsibility for the investment management of the Trust Property (as
hereinafter defined) or for monitoring the Investment Policy (as hereinafter
defined);

 

AND WHEREAS the Trust and the Manager wish to evidence by this
Agreement the manner in which the Manager will provide investment management
services to the Trust and such other 

 

 

management and
administrative services to the Trust as hereinafter described, subject to the
terms and conditions set out herein.

 

NOW THEREFORE in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged) the parties hereto
agree as follows:

 

1.             Definitions and Interpretations

 

The terms defined in this Section whenever used
in this Agreement shall, unless the context otherwise requires, have the
respective meanings hereinafter specified:

 

(a)           “Agreement” means this management agreement
dated as of the day and year first above written as the same may be amended,
restated or supplemented from time to time and “herein”, “hereof”, “hereby”, “hereunder” and similar expressions refer to
this Agreement and include every instrument supplemental or ancillary to this
Agreement and, except where the context otherwise requires, not to any
particular article, section or subsection thereof;

 

(b)           “Applicable Laws”  means, unless the context otherwise dictates, any
applicable statute of Canada or of a province or territory of Canada or any
applicable statute of the United States of America or of a state or territory
of the United States of America or any applicable regulations, orders,
instruments, policies or other laws made under statutory authority by any
governmental or regulatory body or agency having jurisdiction over the Trust
including, but not limited to, Securities Legislation and the Tax Act;

 

(c)           “Business Day”
means any day on which the New York Stock Exchange Arca or the Toronto Stock
Exchange is open for trading;

 

(d)           “Custodian”  means the Trustee, acting as the custodian of the
Trust Property other than the Silver Bullion, and any sub-custodians appointed
by the Trustee, in accordance with the Trust Agreement, or any successor
custodian of the Trust Property other than the Silver Bullion appointed in
accordance with the Trust Agreement or pursuant to a separate written custodial
agreement;

 

(e)           “Disclosure Documents”
means any  (final) prospectus of the Trust filed
in all provinces and territories of Canada and any registration statement of
the Trust filed with the United States Securities and Exchange Commission or
similar offering documents, and any continuous disclosure documents of the
Trust filed with applicable Securities Authorities as may be used by the
Manager or required by applicable Securities Legislation in connection with
qualifying the distribution of the Units to the public, including any
amendments to such offering documents or continuous disclosure documents;

 

(f)            “Investment Policy”
shall have the meaning set forth in Section 3 hereof;

 

(g)           “LBMA” means the
London Bullion Market Association which is the London-based trade association
that represents the wholesale gold and silver bullion market in London and
maintains a list of accredited melters and assayers whose gold and silver bars
are accepted by members of the London bullion market in 

 

2

 

settlement against
transactions between each other and other acceptable counterparts, which is
referred to as the LBMA Good Delivery List;

 

(h)           “Management Fee”
shall have the meaning set forth in Section 8 hereof;

 

(i)            “Manager” means
Sprott Asset Management LP, acting as the manager of the Trust, and appointed
in accordance with the Trust Agreement;

 

(j)            “Net Asset Value of the
Trust” shall have the meaning and shall be calculated in accordance
with the Trust Agreement;

 

(k)           “Securities Authorities”  means the Ontario Securities Commission and equivalent
securities regulatory authorities in each other province and territory of
Canada, and the United States Securities and Exchange Commission;

 

(l)            “Securities Legislation”
means the laws, regulations, rules, requirements and policies of the Securities
Authorities which are in effect from time to time and applicable to the Trust
including, but not limited to, National Instrument 81-102 Mutual Funds,
National Instrument 81-106 Investment Fund Continuous
Disclosure, National Instrument 81-107 Independent
Review Committee for Investment Funds and the United States Securities Act of 1933, as amended;

 

(m)          “Silver Bullion”  means physical silver bullion in London Good Delivery
bar form that is unencumbered, fully allocated and stored at the Silver
Custodian by or on behalf of the Trust;

 

(n)           “Silver Custodian”  means the Royal Canadian Mint, acting as the custodian
of the Silver Bullion in accordance with the Storage Agreement, or any
successor custodian of the Silver Bullion appointed in accordance with the
Trust Agreement or pursuant to a separate written custodial agreement, and any
sub-custodians appointed by such custodian, including the Sub-Custodian;

 

(o)           “Storage Agreement”
means the silver storage agreement
between the Manager, on behalf of the Trust, and the Silver Custodian dated as
of ·, as the same may be
amended, restated or supplemented from time to time;

 

(p)           “Sub-Custodian”
means The Brink’s Company, acting through its Canadian subsidiary, Brink’s
Canada Limited, as the sub-custodian of the Silver Bullion, appointed by the
Silver Custodian pursuant to a written custodial agreement between the Silver
Custodian and the Sub-Custodian;

 

(q)           “Tax Act”  means the Income
Tax Act (Canada) and the regulations,
rules, requirements and policies promulgated thereunder, as amended from time
to time;

 

(r)            “Trust” means
Sprott Physical Silver Trust, a closed-end mutual fund trust established
pursuant to the Trust Agreement;

 

(s)           “Trust Agreement”
means the trust agreement of the Trust dated as of June 30, 2010, as the
same may be amended, restated, supplemented or replaced from time to time;

 

3

 

(t)                                    “Trust Property”  at any time, means any and all securities, cash
(including free credit balances), property and assets, real and personal,
tangible and intangible, transferred, conveyed or paid to the Trust including,
without limitation:

 

(i)                                      all funds realized from the sale of Units;

 

(ii)           Silver Bullion from time to time delivered to and
received by the Trust or held for its account as directed by the Manager and
accepted by the Silver Custodian on behalf of the Trust in accordance with the
Storage Agreement;

 

(iii)          all investments, sums or property of any type or
description (other than the Silver Bullion) from time to time delivered to and
received by the Trust or held for its account as directed by the Manager and
accepted by the Trustee on behalf of the Trust in accordance with the Trust
Agreement;

 

(iv)                               any proceeds of disposition of any of the foregoing
property and assets; and

 

(v)                                  all income, interest, profit, gains and accretions and
additional rights arising from or accruing to such foregoing property or such
proceeds of disposition;

 

(u)           “Trustee” means
RBC Dexia Investor Services Trust, acting as the trustee of the Trust, or any
successor trustee appointed in accordance with the Trust Agreement;

 

(v)           “Unit”  means
a unit of beneficial interest, in any class or series of a class of the Trust,
as presently constituted pursuant to the Trust Agreement or as the same may
from time to time hereinafter be constituted, and collectively referred to as
the “Units”; and

 

(w)          “Valuation Date”  means each Business Day, unless the Manager determines
that the assets of the Trust should be valued less frequently, either generally
or in respect of one or more specific instances, in which event “Valuation Date” shall mean such Business Day or Business
Days as the Manager determines.

 

In this Agreement, where the context so
indicates, the singular shall include the plural and the masculine shall
include the feminine and neuter.

 

2.             Appointment of the Manager

 

The Manager hereby directs
the Trustee to execute this Agreement on behalf of, and in order for, the Trust
to appoint the Manager to provide or engage others to provide all necessary or
advisable investment management and administrative services and facilities as
hereinafter set forth and the Manager hereby accepts such appointment and
agrees to act in such capacity and to provide or cause to be provided such
investment management and administrative services and facilities upon the terms
set forth in this Agreement.

 

4

 

The Trust hereby retains the Manager to manage the
Trust Property in the name of the Trust with full discretionary authority as to
all trades on a continuing basis until terminated and subject to and in
accordance with the provisions of this Agreement.

 

The Manager may from time to
time employ or retain any other person or entity to manage on behalf of the
Manager or to assist the Manager in managing or providing investment management
and administrative services to all or any portion of the Trust
Property, and in performing other
duties of the Manager set out in this Agreement.  In the event that the Manager engages such
other person or entity with respect to providing investment management services
to the Trust Property, and such other person or entity is not registered as an
adviser (or exempt from such registration requirement) under the Securities Act (Ontario), the Manager
shall be responsible under the terms of this Agreement and the Trust Agreement
to the Trust for advice received from such other person or entity with respect
to the Trust Property as if such advice were given by the Manager.

 

In accordance with its
authority and exclusive powers to manage and direct the investment management
and administrative services for the Trust, the Manager, on behalf of the Trust,
shall select brokers or dealers to transact trades in respect of the Trust
Property.  The Manager may execute a
portion of such portfolio transactions through an affiliate (as such term is
defined in the Securities Act (Ontario)) which
is a registered investment dealer. The Manager or its affiliates will offer
competitive rates and will only execute trades as an investment dealer for the
Trust when the executions obtained would be on terms and conditions no less
favourable to the Trust than would otherwise be obtainable if the orders were
placed through independent brokers or dealers and at commission rates equal or
comparable to rates that would have been charged by independent brokers or
dealers.

 

Funds of the Manager shall not be commingled with
those of the Trust under any circumstances.

 

3.             Investment Policy

 

The Trust’s investment
objective, strategy and operating restrictions with respect to the Trust
Property are set out in Article 22 of the Trust Agreement and Schedule “A”
attached hereto (the “Investment Policy”).  Subject to applicable Securities Legislation
and the terms of the Trust Agreement and this Agreement, the Manager shall
advise the Trust in writing promptly of any material change to the Investment
Policy, and any such writing shall be annexed hereto as a supplementary
schedule.

 

4.             Investment Management Services

 

The Manager shall manage the Trust Property by
taking such action from time to time in connection therewith as the Manager, in
its sole discretion, shall deem necessary or desirable for the proper
investment management of the Trust Property at all times in compliance with the
Investment Policy.  It is expressly
understood that the Manager’s investment discretion shall, subject to the
Investment Policy, be absolute.  Without
limiting the generality of the preceding sentence, the Manager shall not be
limited to investing the Trust Property in securities of a class authorized for
investment by trustees.

 

The Trust hereby grants to the Manager, subject to
the Trust Agreement, all power and authority necessary to give effect to the
foregoing including, without limitation, the power to:

 

5

 

(a)           provide or arrange to be provided research,
information, data, advice, opportunities and recommendations with respect to
the making, acquiring (by purchase, investment, re-investment, exchange or
otherwise), holding and disposing (through sale, exchange or otherwise) of
Trust Property in the name of, on behalf of, and at the risk of, the Trust;

 

(b)           obtain for the Trust such services as may be required
in acquiring, disposing of and owning Trust Property including, but not limited
to, the placing of orders with brokers and investment dealers to purchase, sell
and otherwise trade in or deal with any Trust Property in the name of, on
behalf of, and at the risk of, the Trust;

 

(c)           direct the delivery of the Trust Property sold,
exchanged or otherwise disposed of from the Trust’s account and to direct the
payment for Trust Property acquired for the Trust’s account upon delivery to
the Custodian or the Silver Custodian, as the case may be;

 

(d)           direct the holding of all or any part of the Trust
Property in cash or cash equivalents from time to time available for investment
in Silver Bullion, securities and other assets, which cash or cash equivalents
shall be invested or held on deposit with a Canadian chartered bank, trust
company, custodian or prime broker appointed by the Trust from time to time,
and investing all or any part of said cash or cash equivalents from time to
time available for investment in short-term debt obligations of or guaranteed
by the Government of Canada or a province thereof, or the Government of the
United States of America or a state thereof, or such other short-term
investment grade corporate debt obligations as the Manager, in its discretion,
deems advisable;

 

(e)           arrange for, and complete, for and on behalf of the
Trust, the purchase and sale of Silver Bullion, at the best available prices
available over a prudent period of time;

 

(f)            provide to the Trust and the Silver Custodian delivery
and payment particulars in respect of each purchase and sale of Silver Bullion;

 

(g)           arrange or cause to be arranged with the Silver
Custodian, or other custodians possessing industry expertise, for the storage
of Silver Bullion which is owned by the Trust, including arrangements regarding
indemnities or insurance in favour of the Trust for the loss of such Silver
Bullion in accordance with industry practices;

 

(h)           monitor relationships with silver bullion brokers to
ensure trades in Silver Bullion to be held as London Good Delivery bars are
effected and executed in accordance with LBMA compliance standards;

 

(i)            monitor relationships with the Silver Custodian and
any other custodian that has been appointed by the Trust to hold and store the
Silver Bullion which is owned by the Trust;

 

(j)            exercise, or direct the exercise of, any and all
rights, powers and discretion in connection with the Trust Property, including
the power to vote the securities at 

 

6

 

meetings of securityholders or executing
proxies or other instruments on behalf of the Trust for that purpose, and to
consent to any reorganization or similar transaction;

 

(k)           make any election to be made in connection with any
mergers, acquisitions, tender offers, take-over bids, arrangements, bankruptcy
proceedings or other similar occurrences which may affect the Trust Property;

 

(l)            execute any prospectus, registration statement or
similar offering document relating to the offering of securities of the Trust
filed with the Securities Authorities on behalf of the Trust; and

 

(m)          generally perform any other act necessary to enable it
to carry out its obligations under this Agreement and the Trust Agreement.

 

The
Manager agrees to give notice to the Trust:

 

(a)           of any legal or contractual restrictions on the
ability of the Trust to trade in any specific security or securities generally,
including securities deposited in its account by the Manager, on behalf of the
Trust, as Trust Property; or

 

(b)           of any issuer of which the Trust is an insider, unless
the Investment Policy precludes transactions in securities of such an issuer.

 

5.             Records

 

The Manager shall keep at all times proper books of account and records
relating to the services performed hereunder, which books of account and
records shall be accessible for inspection by the Trust at any time during
normal business hours.

 

6.             Information, Statements and
Reports

 

The Manager shall provide
the Trust with periodic statements describing the Trust Property, and
transactions involving the Trust Property, as follows:

 

(a)            at the end of each month in which a transaction has
been effected in respect of the Trust Property; or

 

(b)            at the end of each calendar quarter if no transaction
has been effected with respect to the Trust Property.

 

The Manager shall provide
the Trust with notice of any change in the primary portfolio manager(s) who
are responsible for the day-to-day investment management decisions made on
behalf of the Trust Property as set out in Schedule “A” attached hereto.  The Manager shall also provide the Trust with
notice of any action, inquiry or proceeding involving the Manager which is
initiated by a Securities Authority having jurisdiction over the Manager’s
investment management operations, unless such action, inquiry or proceeding is
initiated in conjunction with correspondence and applications made in the
ordinary course of maintaining such registrations in good standing and such
action, inquiry or proceeding does not have an adverse material effect on the
Trust, including the Manager’s ability to act as discretionary investment
manager to the Trust Property.

 

7

 

7.             Custody of Trust Property

 

It
is agreed that the Manager, on behalf of the Trust, shall be entitled to make
arrangements for the Trust Property, or any part thereof, to be held by such
custodian(s) as the Manager may designate; in such event, the Manager
agrees to provide the Trust with a copy of any authorization to such custodian(s) regarding
acceptance of instructions from the Manager or the Trust and the Trust agrees
not to withdraw any of the Trust Property so held without notice to the
Manager.

 

Subject to the foregoing
paragraph, the Trust and the Manager agree that the Silver Bullion will be held
by the Silver Custodian appointed by the Manager, on behalf of the Trust, and
the Trust Property other than the Silver Bullion will be held by the Custodian
appointed by the Manager, on behalf of the Trust.

 

8.             Fees and Expenses

 

In consideration for the
management, administrative and investment management services rendered by the
Manager pursuant to this Agreement and the Trust Agreement, the Manager shall
receive from the Trust a monthly management fee (the “Management
Fee”) set out in Schedule “B” attached hereto, as such may be
amended from time to time.

 

In addition to the
Management Fee paid to the Manager pursuant to the foregoing paragraph, the
Trust shall reimburse the Manager for all expenses incurred by the Manager in
connection with the duties set out in Section 4 hereof (including payments
to third parties in that regard) to the extent such expenses were incurred for
and on behalf of the Trust and do not represent administrative costs of the
Manager necessary for it to carry out its functions hereunder.  Such expenses shall be reimbursed on each
Valuation Date when incurred.

 

The expenses of the Trust’s
initial public offering of Units and the on-going operating expenses of the Trust,
and the responsibility for the payment thereof, are as set out in the Trust
Agreement.

 

9.             Compensation for Additional
Services

 

If
and to the extent that the Manager shall render services to the Trust other
than those required to be rendered pursuant to the provisions of this
Agreement, such additional services and activities will be compensated for
separately and shall be on such terms that are generally no less favourable to
the Trust than those available from arm’s length parties (within the meaning of
the Tax Act) for comparable services.

 

10.           Other
Activities of the Manager

 

The Trust acknowledges that
the Manager has investment management responsibilities and contracts with other
persons, companies, limited partnerships, investment funds and other
entities.  The Trust therefore agrees
that the Manager may provide investment management and other services to such
other persons and entities which are similar or different from the services
provided to the Trust by the Manager even though such other persons or entities
may be the same or similar to the Trust. 
The Trust hereby accedes to such advisory arrangement consequences on
the understanding that the Manager will act in good faith and follow a policy
of allocating over a period of time investment opportunities to the Trust on a
basis which is, in the Manager’s reasonable opinion, fair and equitable to the
Trust relative to investment opportunities allocated to 

 

8

 

other persons or entities
for which the Manager is responsible, and of which the Manager has knowledge,
in which case the Manager shall not be liable to account to the Trust for any
profit, commission or remuneration made or received from or by reason of such
investment decisions or advice.

 

The Manager, on behalf of
the Trust, may from time to time invest the Trust Property in securities of an
issuer in which the Manager or any affiliate, or any director, partner,
officer, shareholder and/or employee of either has an interest or is an officer,
a partner or a director, as set out under the sub-heading “Conflicts of
Interest” in Schedule “C” attached hereto.

 

11.           Authority to Enter into Agreement

 

Each
of the parties to this Agreement hereby represents and warrants to the other
that it is duly authorized and empowered to execute, deliver and perform this
Agreement and that such action does not conflict with or violate any provision
of law, regulation, policy, contract, deed of trust or other instrument to
which it is a party or by which it is bound and that this Agreement constitutes
a valid and binding obligation of it enforceable in accordance with its terms.

 

The
Trust shall provide to the Manager concurrently with the execution and delivery
by the Trust of this Agreement all such evidence of authority to act including,
without limitation, designations of authorized persons and certified copies of
the Trust Agreement and other documents, as the Manager may require.  The Manager may continue to rely on all such
evidence until notice to the contrary given hereunder has been received by it.

 

12.           Representations and Warranties of
the Manager

 

The Manager hereby represents and warrants to the
Trust that:

 

(a)           the Manager is registered under the securities
legislation in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New
Brunswick, Nova Scotia, and Newfoundland and Labrador as an adviser in the
category of portfolio manager and in Ontario as a dealer in the category of
exempt market dealer; and

 

(b)           the Manager has obtained, completed, executed, filed,
received and passed, as the case may be, all registrations, filings, approvals,
authorizations, consents and/or examinations required under applicable
Securities Legislation or by any Securities Authority by reason of its
activities as Manager hereunder and it shall maintain such registrations,
filings, authorizations and consents throughout the term of this Agreement.

 

13.           Standard of Care

 

The Manager shall exercise the powers granted and
discharge its duties hereunder honestly, in good faith and in the best
interests of the Trust and, in connection therewith, shall exercise the degree
of care, diligence and skill that a reasonably prudent professional manager
would exercise in comparable circumstances. 
However, it is agreed that the Manager does not in any way guarantee the
performance of the Trust Property and shall not be responsible for any loss in
respect of the Trust Property, except where such loss arises out of acts or
omissions of the Manager done or suffered in breach of its standard of care or
through the Manager’s own negligence, wilful misconduct, wilful neglect, default, bad faith or dishonesty or a
material failure in complying with Applicable Laws or the provisions set forth
in this Agreement or the Trust 

 

9

 

Agreement.

 

14.           Liability of the Manager

 

The Manager shall not be
liable to the Trust or any unitholder thereof for any loss suffered by the
Trust or any unitholder thereof, as the case may be, which arises out of any
action or inaction of the Manager if such course of conduct did not constitute
a breach of its standard of care or negligence, wilful misconduct, wilful
neglect, default, bad faith or dishonesty or a material failure in complying
with Applicable Laws or the provisions set forth in this Agreement or the Trust
Agreement, and if the Manager, in good faith, determined that such course of
conduct was in the best interests of the Trust.

 

The Trust acknowledges and
agrees that the Manager shall not be responsible for any loss of opportunity
whereby the value of any of the Trust Property could have been increased nor
shall it be responsible for any decline in value of any of the Trust Property
unless such decline is the result of the Manager’s breach of its standard of care
or negligence, wilful misconduct, wilful neglect, default, bad faith or
dishonesty or a material failure in complying with Applicable Laws or the
provisions set forth in this Agreement or the Trust Agreement.

 

The Trust acknowledges and
agrees that the Manager shall not be responsible for any losses or damages to
the Trust arising out of any action or inaction by the Silver Custodian, the
Custodian or any sub-custodian, including the Sub-Custodian, holding the Trust
Property, unless such action or inaction arises out of or is the result of the
Manager’s breach of its standard of care or negligence, wilful misconduct,
wilful neglect, default, bad faith or dishonesty or a material failure in
complying with Applicable Laws or the provisions set forth in this Agreement or
the Trust Agreement.

 

The Manager may rely and act
upon any statement, report or opinion prepared by or any advice received from
auditors, solicitors, notaries or other professional advisors of the Manager
and shall not be responsible or held liable for any loss or damage resulting
from relying or acting thereon if the advice was within the area of
professional competence of the person from whom it was received and the Manager
acted reasonably and in good faith in relying thereon.

 

The Manager hereby
acknowledges and agrees that the obligations of the Trust hereunder are not
personally binding upon the unitholders of the Trust, any annuitant under a
plan of which a unitholder of the Trust acts as a trustee or carrier, or the
agents of the Trust and that the Manager shall not resort to or seek redress,
recourse or satisfaction from the private property of any of the foregoing,
whether the liability be based on contract, tort or otherwise.  The Manager agrees that only the Trust and
the Trust Property shall be bound by and subject to the obligations and
liabilities arising out of this Agreement.

 

15.           Indemnity

 

The
Trust shall indemnify and hold harmless the Manager and its partners, officers,
agents and employees from and against any and all expenses, losses, damages,
liabilities, demands, charges, costs and claims of any kind or nature
whatsoever (including legal fees, judgments and amounts paid in settlement,
provided that the Trust has approved such settlement in accordance with the
Trust Agreement) in respect of the acts, omissions, transactions, duties,
obligations or responsibilities of the Manager as manager to the Trust, save
and except where such expenses, losses, damages, liabilities, demands, charges,
costs or claims are caused by acts or omissions of the Manager done or suffered
in breach of its standard of care or through the

 

10

 

Manager’s
own negligence, wilful misconduct, wilful neglect, default, bad faith or
dishonesty or a material failure in complying with Applicable Laws or the
provisions set forth in this Agreement or the Trust Agreement.

 

16.           Not
Partners or Joint Venturers

 

The Trust and the
Manager are not partners or joint venturers with each other and nothing herein
shall be construed so as to make them partners or joint venturers or impose any
liability as such on either of them; provided, however, that nothing herein shall
be construed so as to prohibit the Trust and the Manager or its affiliates from
embarking upon an investment together as partners, joint venturers or in any
other manner whatsoever, subject to Applicable Law.

 

17.           Term

 

This
Agreement shall become effective on the date hereof and shall be in force until
·, 2015  and shall be automatically renewed from time to time
thereafter for additional terms of one year unless otherwise terminated
pursuant to Section 18 hereof.

 

18.           Termination

 

This Agreement shall
continue in full force and effect until this Agreement is terminated by either
party giving at least 90 days’ prior written notice (or such shorter period
upon which the parties may mutually agree in writing) to the other party of
such termination.

 

The Trust may
terminate immediately this Agreement if the Manager is, in the opinion of the
Trustee, in material default of its obligations under this Agreement or the
Trust Agreement and such default continues for 120 days from the date that the
Manager receives notice of such default from the Trustee and no successor
manager has been appointed by the unitholders of the Trust pursuant to the
Trust Agreement.

 

In addition, the
Trust may terminate immediately this Agreement where (i) the Manager has
been declared bankrupt or insolvent or has entered into liquidation or
winding-up, whether compulsory or voluntary (and not merely a voluntary
liquidation for the purposes of amalgamation or reconstruction); (ii) the
Manager makes a general assignment for the benefit of its creditors or
otherwise acknowledges its insolvency; or (iii) the assets of the Manager
have become subject to seizure or confiscation by any public or governmental
authority.

 

Such termination of
the Agreement will be without prejudice to the rights and liabilities created
under this Agreement prior to the effective date of the termination.  Termination of this Agreement in accordance
with the terms hereof shall not result in any penalty or other fee.

 

The parties
acknowledge and agree that any change of the Manager (other than to its
affiliate) requires the approval of the unitholders of the Trust and the
approval of Securities Authorities in accordance with applicable Securities
Legislation.

 

Upon termination or
assignment of this Agreement, the Manager shall forthwith deliver to the Trust,
in the case of termination, or to the assignee, in the case of an assignment:

 

(a)           all records, documents and books of account of the
Trust; and

 

(b)           all materials and supplies of the Trust,

 

11

 

which are in the possession or control of the
Manager and relate directly or indirectly to the performance by the Manager of
its obligations under this Agreement; provided, however, that the Manager may
retain notarial or other copies of such records, documents and books of account
and the Trust or the assignee shall produce at its head office the originals of
such records, documents and books of account whenever reasonably required to do
so by the Manager for the purpose of legal proceedings or dealings with any
governmental authorities.

 

Notwithstanding the
foregoing paragraphs, the Trust reserves the right to make a partial withdrawal
from the Trust Property by providing prior written notice to the Manager.

 

With respect to any
transactions entered into by the Manager on behalf of the Trust prior to giving
or receiving notice of termination or partial withdrawal, such transactions
shall not be affected by such termination or partial withdrawal and adequate
provisions will be made for proper settlement of outstanding commitments and
the orderly transfer of the Trust Property.

 

19.           Conflict
of Interest Policy

 

Attached as Schedule “C”
hereto is a copy of the Manager’s Statement of Policies, which policy may be
amended or restated from time to time.

 

20.           Confidentiality
and Anti-Money Laundering Legislation

 

The Manager shall
treat as confidential all information pertaining to the Trust including,
without limitation, the financial affairs of the Trust, and the Manager shall
not disclose such confidential information to persons who are not involved in
the management and operation of the Trust, except with the Trust’s consent or
as may be necessary to comply with Applicable Laws or rules, regulations and
policies of Securities Authorities.  The
Trust will treat all investment advice and information which it receives from
the Manager as confidential and for the exclusive use of the Trust.

 

With respect to any prospective investor or
unitholder in the Trust, the Manager shall comply with Applicable Laws aimed at
the prevention of money laundering and terrorist financing.  If, as a result of any information or other
matter coming to the attention of the Manager, or any of its directors,
partners, officers, employees, or its
professional advisors, the Manager knows or suspects
that a prospective investor or unitholder of the Trust is engaged in money
laundering or terrorist financing, the Manager shall be required to report such
information or other matter to the Financial Transactions and Reports Analysis
Centre of Canada and such report or any other report required by Applicable
Laws shall not be treated as a breach of any restriction upon the disclosure of
information imposed by Canadian law or otherwise.

 

21.           Notices

 

Any notice or other communication required or
permitted to be given hereunder shall be in writing and if delivered, shall be
delivered to a responsible officer of the Trust or to the Manager, as the case
may be, and if mailed shall be mailed by prepaid registered mail:

 

12

 

(a)                 in the case of the Trust:

 

c/o RBC Dexia Investor Services Trust

155 Wellington Street West,
5th Floor

RBC Centre

Toronto, Ontario

M5V 3L3

 

Attention:        Head of Funds

 

Telephone:       (416) 974-5273

Facsimile:         (416) 955-1240

 

(b)                 in the case of the Manager:

 

Sprott Asset Management LP

Royal Bank Plaza, South Tower

200 Bay Street

Suite 2700, P.O. Box 27

Toronto, Ontario

M5J 2J1

 

Attention:        Kirstin McTaggart, Chief Compliance Officer

 

Telephone:       (416) 943-4065

Facsimile:         (416) 943-6497

 

or
at such other address and number as the party to whom such communication is to
be given shall have last notified the party giving the same in the manner
provided in this section.

 

Any
notice so mailed shall be deemed to have been given and received at the time of
delivery.  Any notice so mailed shall be
deemed to have been given and received if given by the Trust, when received by
the Manager, and if given by the Manager, on the third Business Day following
such mailing, except in the event of interruption of normal postal service, in
which event it shall be deemed given when received by the Trust.  Either party may from time to time upon
written notice to the other party change their or its address.

 

22.           Headings

 

The
inclusion of section headings in this Agreement is for convenience of reference
only and shall not affect the construction or interpretation hereof.

 

23.           Governing
Law

 

This
Agreement shall be governed by, and construed in accordance with, the laws of
the Province of Ontario and the federal laws of Canada applicable therein and
shall be treated in all respects as an Ontario contract.  The parties hereto hereby attorn to the
jurisdiction of the courts of Ontario for arbitration of any disputes between
them with respect to the subject matter hereof.

 

13

 

24.           Entire Agreement

 

This
Agreement, including the Schedules attached hereto, and the Trust Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes and replaces all prior understandings, agreements,
negotiations or discussions, whether written or oral, between the parties with
respect thereto.  There are no
representations, warranties, terms, conditions, undertakings or collateral
agreements or understanding, express or implied, between the parties other than
those expressly set forth in this Agreement and the Trust Agreement.

 

25.           Further Acts

 

Each
of the Trust and the Manager shall promptly do, make, execute or deliver, or
cause to be done, made, executed or delivered, all such further acts, documents
and things as the other party hereto may reasonably require from time to time
for the purpose of giving effect to this Agreement.

 

26.           Invalidity of Provisions

 

Each
of the provisions contained in this Agreement is distinct and severable and a
declaration of invalidity or unenforceability of any such provision or part
thereof by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof. 
To the extent permitted by Applicable Law, the parties waive any
provision of law which renders any provision of this Agreement invalid or
unenforceable in any respect.

 

27.           Amendment

 

This
Agreement may not be amended, changed, supplemented or otherwise modified in
any respect except by written instrument executed by the parties hereto or
their respective successors or permitted assigns.

 

28.           Assignment

 

This Agreement shall not be assigned by the Trust
without the prior written consent of the Manager.  Upon notice to the Trust, the Manager may
transfer or assign any and all rights granted hereunder to any of its
successors or affiliates.

 

29.           Successors

 

This
Agreement shall enure to the benefit of, and be binding upon, the parties
hereto and their respective successors and permitted assigns.

 

30.           Counterparts

 

This
Agreement may be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument.

 

[The
remainder of this page has been intentionally left blank.]

 

14

 

IN
WITNESS WHEREOF the Trust and the Manager, by proper officers duly
authorized on their behalf, have executed this Agreement as of the date first
above written.

 

 

	
   

  	
  SPROTT
  PHYSICAL SILVER TRUST, by its

  Trustee,
  RBC DEXIA INVESTOR SERVICES

  TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  We
  have the authority to bind the Trust.

  
	
   

  	
   

  	
   

  
	
   

  	
  SPROTT
  ASSET MANAGEMENT LP, by its

  general
  partner, SPROTT ASSET MANAGEMENT

  GP
  INC., in its capacity as the Manager of the Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  We
  have the authority to bind the Manager.

  

 

15

 

SCHEDULE “A”

 

INVESTMENT
POLICY

 

Investment Objective

 

The Trust was created to invest and hold
substantially all of its assets in Silver Bullion. The Trust seeks to provide a
secure, convenient and exchange-traded investment alternative for investors
interested in holding Silver Bullion without the inconvenience that is typical
of a direct investment in Silver Bullion. 
The Trust does not anticipate making regular cash distributions to
unitholders.

 

Investment
Strategy

 

The Trust intends to achieve its objective by
investing primarily in long-term holdings of unencumbered, fully allocated,
Silver Bullion and will not speculate with regard to short-term changes in
silver prices.

 

Investment
and Operating Restrictions

 

The investment activities of the Trust are
intended to be conducted in accordance with, among other things, the following
investment and operating restrictions, and they provide that the Trust:

 

(a)        will invest in and hold a
minimum of 90% of the total net assets of the Trust in physical silver bullion
in London Good Delivery bar form and hold no more than 10% of the total net
assets of the Trust, at the discretion of the Manager, in physical silver
bullion (in London Good Delivery bar form or otherwise), debt obligations of or
guaranteed by the Government of Canada or a province thereof, or by the
Government of the United States of America or a state thereof, short-term
commercial paper obligations of a corporation or other person whose short-term
commercial paper is rated R-1 (or its equivalent, or higher) by DBRS Limited or
its successors or assigns or F1 (or its equivalent, or higher) by Fitch Ratings
or its successors or assigns or A-1 (or its equivalent, or higher) by Standard &
Poor’s or its successors or assigns or P-1 (or its equivalent, or higher) by
Moody’s Investor Service or its successors or assigns, interest-bearing
accounts and short-term certificates of deposit issued or guaranteed by a
Canadian chartered bank or trust company, money market mutual funds, short-term
government debt or short-term investment grade corporate debt, or other
short-term debt obligations approved by the Manager from time to time (for the
purpose of this paragraph, the term “short-term” means having a date of maturity
or call for payment not more than 182 days from the date on which the
investment is made), except during the 60-day period following the closing of
the Trust’s initial public offering or additional offerings or prior to the
distribution of the assets of the Trust;

 

(b)       will store all Silver
Bullion owned by the Trust at the Silver Custodian (including at a facility
located in Canada leased by the Silver Custodian for this purpose) or in the
treasury vaults of a Schedule I Canadian chartered bank or an affiliate or
division thereof in Canada on a fully allocated basis, provided that the Silver
Bullion held in London Good Delivery bar form may be stored with a custodian
only if the Silver Bullion will remain London Good Delivery while with that
custodian;

 

(c)        will not hold any “taxable
Canadian Property” within the meaning of the Tax Act;

 

(d)       will not purchase, sell or
hold derivatives;

 

(e)        will not issue Units
following the completion of the Trust’s initial public offering except (i) if
the net proceeds per Unit to be received by the Trust are not less than 100% of
the most recently 

 

 

calculated Net Asset Value per Unit prior to, or upon, the
determination of the pricing of such issuance, or (ii) by way of Unit
distribution in connection with an income distribution;

 

(f)        will ensure that no part of
the stored Silver Bullion may be delivered out of safekeeping by the Silver
Custodian (except to an authorized sub-custodian) or, if the Silver Bullion is
held by another custodian, that custodian, without receipt of an instruction
from the Manager in the form specified by the Silver Custodian or such other
custodian indicating the purpose of the delivery and giving direction with
respect to the specific amount;

 

(g)       will ensure that no director
or officer of the Manager or the Manager’s general partner, or representative
of the Trust or the Manager will be authorized to enter into the Silver Bullion
storage vaults without being accompanied by at least one representative of the
Silver Custodian or, if the Silver Bullion is held by another custodian, that
custodian, as the case may be;

 

(h)       will ensure that the Silver
Bullion remains unencumbered;

 

(i)         will inspect or cause to be
inspected on an annual basis, the stored Silver Bullion together with a
representative of the Trust’s external auditor, and periodically on a spot
inspection basis;

 

(j)         will not guarantee the
securities or obligations of any person other than the Manager, and then only
in respect of the activities of the Trust;

 

(k)        in connection with requirements
of the Tax Act, will not make or hold any investment that would result in the
Trust failing to qualify as a “mutual fund trust” within the meaning of the Tax
Act;

 

(l)         in connection with
requirements of the Tax Act, will not invest in any security that would be a
tax shelter investment within the meaning of section 143.2 of the Tax Act;

 

(m)       in connection with
requirements of the Tax Act, will not invest in the securities of any
non-resident corporation, trust or other non-resident entity (or of any
partnership that holds such securities) if the Trust (or the partnership) would
be required to include any significant amount in income under sections 94 or
94.1 of the Tax Act;

 

(n)       in connection with
requirements of the Tax Act, will not invest in any security of an issuer that
would be a foreign affiliate of the Trust for purposes of the Tax Act; and

 

(o)       in connection with
requirements of the Tax Act, will not carry on any business and make or hold
any investments that would result in the Trust itself being subject to the tax
for specified investment flow-through trusts (SIFT) as provided for in section
122 of the Tax Act.

 

Primary Portfolio Manager

 

Eric
Sprott is the primary portfolio manager authorized to trade and carry out the
foregoing investment objective and strategy in respect of the Trust Property.

 

A2

 

SCHEDULE “B”

 

FEES

 

Management Fee

 

As compensation for providing management,
administrative and investment management services to the Trust pursuant to this
Agreement and the Trust Agreement, the Trust shall pay the Manager a monthly
Management Fee equal to 1/12 of 0.45% of the Net Asset Value of the Trust
(determined in accordance with the Trust Agreement), plus any applicable
federal and provincial taxes.  The
Management Fee shall be calculated and accrued daily and payable monthly in
arrears on the last day of each month.

 

 

SCHEDULE “C”

 

 

SPROTT
ASSET MANAGEMENT LP

STATEMENT
OF POLICIES

 

IMPORTANT - The securities laws of certain
jurisdictions of Canada require securities dealers and advisers, when they
trade in or advise with respect to their own securities or securities of
certain other issuers to which they, or certain other parties related to them,
are related or connected, to do so only in accordance with particular
disclosure and other rules.  These rules require
dealers and advisers, prior to trading with or advising their customers or
clients, to inform them of the relevant relationships and connections with the
issuer of the securities. Clients and customers should refer to the applicable
provisions of these securities laws for the particulars of these rules and
their rights or consult with a legal advisor.

 

General

 

Sprott Asset Management LP (herein referred to
as “SAM” or “we”)
is registered under the securities laws of British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, and Newfoundland
and Labrador as an adviser in the registration category of portfolio manager
and in Ontario as a dealer in the registration category of exempt market
dealer.

 

Under certain circumstances, SAM may advise
you, deal with or for you in securities transactions where the issuer of the
securities or the other party involved in the transaction is this firm or a
party having an ownership or business relationship with us, including
affiliates of SAM that are registered under securities laws (a “Sprott Registrant”).

 

Since these transactions may create a conflict
between our interests and yours, we are required by securities laws to disclose
to you certain relevant matters relating to these transactions.  This statement contains a general description
of our policies and the required disclosures.

 

Compliance with Law and Regulatory Requirements

 

SAM, its officers and employees are required to
fully observe, in letter and spirit, all laws governing their business and
securities activities.  SAM, its officers
and employees must deal fairly, honestly and in good faith with its clients.

 

SAM will only engage in activities where it is
confident that such activities are in compliance with all requirements imposed
by applicable law.  In particular, it is
SAM’s policy to ensure that the engagement of other Sprott Registrants on
behalf of SAM’s clients would only be done when it has been determined that
such other Sprott Registrant is an appropriate selection in the circumstances.

 

 

In addition to applicable securities regulatory
provisions and contractual provisions respecting any business arrangements that
may exist between SAM and other dealers and advisers, the directors, officers
and employees of each are subject to guidelines or codes of conduct governing
their actions.  Our internal compliance
process supplements these policies and procedures.

 

Related and Connected Issuers

 

National Instrument 31-103 Registration
Requirements and Exemptions requires SAM to disclose to investors
whether any securities it recommends to investors to buy, sell or hold are
securities issued by SAM, a related issuer or, during the distribution of the
securities, a connected issuer of SAM. 
An issuer is related to SAM if, through the ownership of, or control
over, voting securities or otherwise, the issuer is an influential
securityholder of SAM, SAM is an influential securityholder of the issuer or if
each of them is a related issuer of the same third party.  An issuer is connected to SAM if it has a
business relationship with SAM that, in connection with a distribution of
securities of that issuer, may lead a reasonable prospective purchaser to
question if the issuer and SAM are independent of each other.

 

In addition, SAM must disclose the name of any
related issuer that is a reporting issuer in Ontario or that has distributed
securities outside Ontario on a basis that, if it had done so in Ontario, would
have made such issuer a reporting issuer. 
Set out below are the names of such related issuers:

 

·                               Sprott Inc. (“SI”), a
reporting issuer that is a related issuer of SAM because SI is an indirect 100%
shareholder of Sprott Asset Management GP Inc., the general partner of SAM, and
is the sole limited partner of SAM.

 

·                               Sprott Resource Corp. (“SRC”), a reporting
issuer that is a related issuer of SAM because the professional group (as such
term is defined under National Instrument 33-105 Underwriting
Conflicts) of SAM exercises control or direction over, or
beneficially owns, directly or indirectly, 10% or more of the voting securities
of SRC, and SAM has officers, directors or employees who constitute at least
20% of the directors of SRC.  In
addition, an affiliate of SAM has entered into an agreement to provide management
services to SRC.

 

We may, from time to time, be deemed to be
related or connected to one or more other issuers for purposes of the
disclosure and other rules of the securities laws referred to above.  We are prepared to act as an adviser and
dealer in the ordinary course of our business to, and in respect of securities
of, any such related or connected issuer and, in connection therewith to
provide the full range of services customarily provided by us to, and in
respect of securities of, other issuers. 
In any such case, such adviser or dealer and other services shall be
carried on by us in the ordinary course of our business as an adviser or dealer
in accordance with our usual practices and procedures and in accordance with
all applicable disclosure and other regulatory requirements.

 

SAM, or its directors, officers, partners,
salespeople or other employees may, from time to time, recommend that you trade
in, or provide to you advice about, a security issued by these listed persons
or companies.  If you wish further
information concerning the relationship between SAM and these listed persons or
companies, or if you have any questions, please contact us.

 

Related Registrants

 

Where SAM has a principal shareholder, director
or officer that is a principal shareholder, director or officer of another
registrant, SAM shall adopt policies and procedures to minimize the potential
for conflict of interest resulting from such relationship(s).  SAM is also required to disclose to clients
in writing, initially before making a trade for or providing advice to the
client, and in a timely manner 

 

C2

 

thereafter and, if possible, before making the
next trade for or providing advice to the client, if there are any significant
changes to this disclosure, the details of the relationship(s) and the
policies and procedures adopted to minimize the potential for conflicts of
interest resulting from such relationships. 
Sprott Private  Wealth LP
(“SPW”), a registrant, is related to SAM,
by virtue of each of SAM and SPW having SI as a direct or indirect holder of
100% of the voting securities of each general partner of SAM and SPW.

 

Conflicts of Interest

 

SAM as Adviser and Dealer

 

The principal business activity of SAM is to
act as a portfolio manager for separately managed investment accounts of its
clients (a “SAM Managed Account”) and
investment funds it manages (a “SAM Investment Fund”).  SAM’s activities as a dealer are primarily
the  marketing of SAM Investment Funds to
clients of SAM or to investment dealers or mutual fund dealers.  In providing trading and advisory services to
our clients it is important that our clients understand our interests in the
service or transaction.

 

We must make certain disclosures where we (a) act
as your dealer/broker; (b) advise you; or (c) exercise discretion on
your behalf, with respect to securities issued by us, by a related issuer or,
in the course of a distribution, by a connected issuer (collectively, “Related Securities”).

 

In these situations, we must disclose our
relationship with the issuer of the securities. 
We must also make disclosure to you where we know or should know that,
as a result of our acting as your dealer/broker or adviser, or of our
exercising discretion on your behalf, Related Securities will be purchased or
sold by you through us.

 

The following is a list of the time and manner
in which these disclosures must be made:

 

·                               Where we purchase or sell securities for your account,
the required disclosure will be contained in the confirmation of trade and
monthly statement, which we prepare and send to you.

 

·                               Where we advise you with respect to the purchase, sale
or holding of securities, the disclosure must be made prior to our giving the
advice.

 

·                               If there is a significant change to the information
previously disclosed to you, SAM will notify you of the change in a timely
manner and, if possible, before making the next purchase or sale of the
securities for you or providing advice to you to purchase, sell or hold the
securities.

 

·                               Where we use our discretion as an adviser to trade
securities in a SAM Managed Account neither we nor another Sprott Registrant
will charge a trade commission without your consent, or otherwise in compliance
with applicable law.

 

·                               Where we exercise discretion over a SAM Managed
Account, SAM will refrain from causing you to purchase Related Securities
unless, to the extent required by law, prior to exercising discretionary
authority and at least once within each twelve-month period thereafter, SAM
provides you with a copy of this Statement of Policies and secures your
specific and informed written consent to allow SAM to exercise its discretion
to acquire the Related Securities on your behalf.

 

Potential for Conflict

 

To the extent that one Sprott Registrant
determines it to be in the interests of its clients to engage the services of,
or invest in financial products offered by, another Sprott Registrant, it could
be subject to a 

 

C3

 

potential conflict of interest, given its
indirect relationship with the other Sprott Registrants.  SAM and its officers and employees must
ensure that if they select another Sprott Registrant to assist a SAM client it
is based on the determination that such other Sprott Registrant is an
appropriate selection having regard to the client’s circumstances.

 

Representatives of SAM and other Sprott
Registrants may from time to time act as officers of SAM and may also be
officers of other Sprott Registrants. All Sprott Registrants have adopted
policies and procedures that minimize the potential for conflicts of interest
resulting from the relationships of the officers and the Sprott Registrants,
and all officers are required to observe such policies in carrying out their
duties.

 

There will be three individuals who will be
dually licensed with both SPW and SAM, namely:

 

	
  Name

  	
   

  	
  Position at SPW

  	
   

  	
  Position at SAM

  
	
  Eric
  S. Sprott

  	
   

  	
  Chief
  Executive Officer and Ultimate Designated Person

  	
   

  	
  Chief
  Executive Officer, Senior Portfolio Manager and Ultimate Designated Person

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  James
  R. Fox

  	
   

  	
  Vice-President,
  Sales and Marketing

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kirstin
  H. McTaggart

  	
   

  	
  Chief
  Compliance Officer

  	
   

  	
  Chief
  Compliance Officer and Operations

  

 

SAM and SPW propose to manage potential
conflicts associated with the dual registration of the individuals in the
following manner:

 

·                               Each dually registered individual will have sufficient
time in their work week to fully and properly discharge their responsibilities
at SPW and SAM.

 

·                               In order to protect client confidentiality, each
dually registered individual shall be prohibited from disclosing any
confidential client information to any person other than the staff of the
relevant entity or for the purpose of performing the relevant services for the
client.

 

Fair Allocation of Investment Opportunities and
Fair Treatment of SAM Investment Funds and SAM Managed Accounts

 

We must ensure the fair treatment of our
clients through the highest standards of integrity and ethical business
conduct.  The principle of fair treatment
must be recognized by all employees, officers and directors of SAM in order to
provide a true benefit to our clients. 
Our clients have the right to be assured that their interests will
always take precedence over the personal trading activities of SAM portfolio
managers and other SAM access persons.

 

Fairness Policy

 

In order to ensure fairness in the allocation
of investment opportunities among the SAM Managed Accounts and the SAM
Investment Funds (each a “SAM Client”),
SAM will allocate investment opportunities with consideration to the
suitability of such investments to each SAM Client’s investment objectives and
strategies, portfolio composition, restrictions and cash availability (even
though the 

 

C4

 

investment objectives and strategies are
substantially the same for some of the SAM Clients and cash flows of each SAM
Client can be substantially different given daily/monthly subscriptions and
redemptions/withdrawals).  As well, cash
flows (subscription inflows and redemptions/withdrawals) and investment
strategies can influence the allocation process in order to maintain property
weightings in each SAM Client account. 
If an investment opportunity is suitable for more than one SAM Client,
SAM will allocate such investment opportunities equitably in order to ensure
that each SAM Client has equal access to the same quality and quantity of
investment opportunities.

 

To ensure fairness in the allocation of
investment opportunities as between each SAM Client, SAM will ensure:

 

(a)                       where orders are entered simultaneously for execution
at the same price, fills are allocated on a pro rata basis;

 

(b)                      when transactions are executed at different prices for
a group of SAM Clients, fills are allocated on an average price basis;

 

(c)                       in the case of a block trade or a new or secondary securities
issue, if all SAM Client orders can be accommodated (demand is smaller than
supply), allocation is made on a pro rata basis
based on the order size of each SAM Client. 
Where the allotment received is insufficient to meet the full
requirements of all SAM Clients on whose behalf orders have been placed (demand
exceeds supply), allocation is made on a pro rata basis
based on the size of the SAM Client account or the existing position size in a
SAM Client account.  However, if such
prorating should result in an inappropriately small position for a SAM Client,
the allotment would be reallocated to another SAM Client.  Depending on the number of block trades or
new or secondary issues, over a period of time, every effort will be made to
ensure that these prorating and reallocation policies result in fair and equal
treatment to all SAM Clients, and

 

(d)                      when orders for more than one SAM Client are bunched
or blocked and the transactions are executed at varying prices, an average
price will be determined and allocated to each SAM Client on a pro rata basis.  As
well, all commissions will be totalled and allocated to all SAM Clients on a pro rata basis.  If
different prices and commissions are executed, then an average price as well as
total average commission will be calculated and allocated on a pro rata basis.  For a
normal secondary purchase order executed through a broker, the average price
and commission will be calculated and allocated evenly among our SAM
Clients.  There will be no
differentiation on price towards our SAM Clients.

 

In addition, SAM will always seek to obtain the
best order execution for each SAM Client and to minimize transaction
costs.  SAM employee trading accounts
(i.e. “PRO” accounts), retail and inventory trades are never commingled with
trades involving SAM Investment Funds.

 

Proxy Voting Guidelines

 

SAM, in its capacity as portfolio adviser to
the SAM Clients, is sometimes responsible for establishing, monitoring and
amending (if necessary) the policies and procedures relating to the voting of
proxies received in connection with each SAM Client’s investment portfolio.

 

C5

 

Generally speaking, SAM will vote in favour of
the following proxy proposals:

 

	
  ·

  	
  electing and
  fixing number of directors

  	
  ·

  	
  authorizing
  directors to fix remuneration of auditors

  
	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  appointing
  auditors

  	
  ·

  	
  approving private
  placements exceeding 25% threshold

  
	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  ratifying director
  actions

  	
  ·

  	
  approving private
  placements to insiders exceeding 10% threshold

  
	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  changing
  registered address

  	
  ·

  	
  approving special
  resolutions to change the authorized capital of the company to an unlimited
  number of common shares without par value

  

 

SAM will vote against any proposal relating to
stock option plans that: (i) exceed 5% of the common shares issued and
outstanding at the time of grant over a three year period (on a non-diluted
basis); (ii) provide that the maximum number of common shares issuable
pursuant to such plan be a “rolling” maximum equal to 5% of the outstanding
common shares at the date of the grant of applicable options; and
(iii) reprices the stock option.

 

In certain cases, proxy votes may not be cast
when the portfolio adviser determines that it is not in the best interests of the
SAM Client to vote such proxies.  In the
event a proxy raises a potential material conflict of interest between the
interests of a SAM Client and SAM, the conflict will be resolved by SAM in
favour of that SAM Client.

 

SAM retains the discretion to depart from these
polices on any particular proxy vote depending upon the facts and
circumstances.

 

The proxy voting guidelines of SAM are
available on request, free of charge, by contacting SAM at 1-866-299-9906.  SAM will maintain and prepare an annual proxy
voting record for each SAM Investment Fund. 
The proxy voting record for the annual period beginning July 1 for
each SAM Investment Fund will be available free of charge to any investor upon
request at any time after June 30 of the following year.

 

Misuse of Confidential and Insider Information

 

The misuse of confidential information or
misuse of any insider information not generally disclosed, for personal gain or
for the benefit of anyone else, is prohibited and grounds for serious sanction.

 

Confidentiality and Privacy

 

In addition, SAM has adopted a privacy policy
in accordance with the Personal Information
Protection and Electronic Documents Act (Canada) with respect to
personal information of SAM Clients. 
This policy states that SAM will only disclose this information to third
parties or its affiliates in limited specific circumstances on a strictly
confidential basis.

 

C6

 

Money Laundering and Terrorist Financing

 

As outlined by the Proceeds of
Crime (Money Laundering) and Terrorist Financing Act, SAM is
obligated to implement specific measures to detect and deter money laundering
and the financing of terrorist activity. 
As such, all investments into our SAM Managed Accounts and SAM
Investment Funds require completed documentation to be submitted by investors.  It is our duty to report to the Financial
Transactions and Reports Analysis Centre of Canada confirmation of any
investors engaged in money laundering. 
This reporting requirement will not be deemed to be a breach of any
information disclosure restrictions imposed by applicable law or otherwise.

 

Please do not hesitate to contact us should you
have any questions with regards to SAM’s Statement of Policies or should you
require further details on any SAM policies and practices.

 

Revised October 2009.

 

C7Exhibit 10.3

 

VALUATION SERVICES AGREEMENT

 

THIS AGREEMENT made and entered
into as of the · day of ·, 2010

 

	
  BETWEEN:

  	
   

  
	
   

  	
   

  
	
   

  	
  SPROTT ASSET MANAGEMENT LP,

  
	
   

  	
  a limited partnership formed under the laws of the Province of
  Ontario

  
	
   

  	
   

  
	
   

  	
  (hereinafter referred to as
  the “Manager”)

  
	
   

  	
   

  
	
   

  	
  OF
  THE FIRST PART

  
	
   

  	
   

  
	
   

  	
  - and -

  
	
   

  	
   

  
	
   

  	
  RBC DEXIA
  INVESTOR SERVICES TRUST,

  
	
   

  	
  a trust company
  incorporated under the federal laws of Canada

  
	
   

  	
   

  
	
   

  	
  (hereinafter referred to
  as the “Valuation Agent”)

  
	
   

  	
   

  
	
   

  	
  OF
  THE SECOND PART

  

 

WHEREAS Sprott
Physical Silver Trust (the “Trust”)
is a closed-end mutual fund trust established under the laws of the
Province of Ontario pursuant to a trust agreement dated as of June 30,
2010 (the “Trust Agreement”);

 

AND
WHEREAS pursuant to the Trust Agreement, RBC Dexia Investor
Services Trust and the Manager were appointed as the trustee and the manager of
the Trust, respectively;

 

AND WHEREAS pursuant to the Trust
Agreement, the Manager has the full authority and exclusive power to manage and
direct the business and affairs of the Trust including, without limitation, to
provide the Trust with all necessary investment management services and all
management and administrative services, and to provide such other services and
facilities as described in the Trust Agreement;

 

AND WHEREAS pursuant
to the Trust Agreement, the Manager has the ultimate responsibility to
calculate the Net Asset Value of the Trust, the Net Asset Value per Unit, the Class Net
Asset Value and the Class Net Asset Value per Unit, and to determine the Net
Income and the Net Realized Capital Gains for the Trust (as all such terms are
hereinafter defined) and, in conjunction therewith, may appoint a service
provider to perform some or all of such calculations and determinations on
behalf of the Trust;

 

AND WHEREAS the Manager wishes to
retain the Valuation Agent, in its capacity as a service provider to the Trust,
to provide certain valuation services (collectively, the “Services”)
for the Trust, subject to, and in accordance with, the terms and conditions
hereinafter set forth with effect from the date first written above;

 

 

AND WHEREAS the Valuation Agent, in its
capacity as a service provider, has agreed to provide such Services for the
Trust, subject to, and in accordance with, the terms and conditions of this
Agreement.

 

NOW THEREFORE in consideration of the
mutual covenants and agreements contained herein and for other good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged) the parties hereto agree as follows:

 

1.                                      Definitions

 

Unless
otherwise defined in this Agreement, the following terms shall have the meaning
as set out in the Trust Agreement:

 

(a)                                  “Affiliate”  has the meaning ascribed
thereto in the Securities Act (Ontario),
as amended from time to time;

 

(b)                                 “Agreement” means this valuation services agreement dated as
of the day and year first above written as the same may be amended, restated or
supplemented from time to time and “herein”, “hereof”, “hereby”, “hereunder” and similar expressions refer to
this Agreement and include every instrument supplemental or ancillary to this
Agreement and, except where the context otherwise requires, not to any
particular article, section or subsection thereof;

 

(c)                                  “Applicable Laws” means, unless the context otherwise dictates,
any applicable statute of Canada or of a province or territory of Canada or any
applicable statute of the United States of America or of a state or territory
of the United States of America or any applicable regulations, orders,
instruments, policies or other laws made under statutory authority by any
governmental or regulatory body or agency having jurisdiction over the Trust
including, but not limited to, Securities Legislation and the Tax Act;

 

(d)                                 “Business Day” means any day on which the New York Stock
Exchange Arca or the Toronto Stock Exchange is open for trading;

 

(e)                                  “Class Expenses” in respect of any particular class or
series of a class of Units means the expenses of the Trust (including
Management Fees) that are allocated only to that class or series of a class;

 

(f)                                    “Class Net Asset Value” in respect of any particular
class or series of a class of Units is the portion of the Net Asset Value of
the Trust attributed to such class or series of a class determined in
accordance with  Section 3.1 and Section 3.2
hereof;

 

(g)                                 “Class Net Asset Value per Unit” in respect of any
particular class or series of a class of Units is the portion of the Class Net
Asset Value of the Trust attributed to each Unit of such class or series of a
class determined in accordance with  Section 3.1
and Section 3.2 hereof;

 

(h)                                 “Common Expenses” means those expenses of the Trust other
than Class Expenses;

 

2

 

(i)                                     “Directions” means all directions, authorizations, notices,
requests and instructions given in accordance with Section 5 by any
director, officer, employee or other representative authorized to act on behalf
of the Manager or any Third Party Valuation Agent, as the case may be;

 

(j)                                     “Distribution Date” has the meaning ascribed thereto in Section 4.1
hereof;

 

(k)                                  “Fiscal Year” means the
fiscal year of the Trust ending on the last day of December in each year
or such other date as may be determined from time to time by the Manager;

 

(l)                                     “IFRS” means International Financial Reporting Standards as
issued by the International Accounting Standards Board;

 

(m)                               “Indemnified Party” has the meaning ascribed thereto in Section 7.4
hereof;

 

(n)                                 “Management Agreement” means the management agreement between the Manager and the Trust dated as
of ·, as the same may be amended, restated or supplemented from time to time;

 

(o)                                 “Management Fee” means the monthly management fee payable to
the Manager pursuant to the Management Agreement;

 

(p)                                 “Manager” means Sprott Asset
Management LP, acting as the manager of the Trust, or any successor manager
appointed in accordance with the Trust Agreement and subject to the Management
Agreement;

 

(q)                                 “Net Asset Value of the Trust” is the amount determined from
time to time in accordance with Section 3.1 hereof;

 

(r)                                    “Net Asset Value per Unit” is the amount determined from time
to time in accordance with Section 3.1 hereof;

 

(s)                                  “Net Change in Non-Portfolio Assets” on a Valuation Date
means:

 

(i)                          the aggregate
of all income accrued by the Trust as of that Valuation Date, including cash
dividends and distributions, interest and compensation since the last
calculation of Class Net Asset Value or Class Net Asset Value per
Unit, as the case may be; minus

 

(ii)                       the Common
Expenses to be accrued by the Trust as of that Valuation Date which have been
accrued since the last calculation of Class Net Asset Value or Class Net
Asset Value per Unit, as the case may be; plus or minus

 

(iii)                    any change in the value of
any non-portfolio assets or liabilities stated in any foreign currency accrued
on that Valuation Date since the last calculation of Class Net Asset Value
or Class Net Asset Value per Unit, as the case may be, including, without
limitation, cash, accrued dividends or interest and any receivables or payables;
plus or minus

 

3

 

(iv)                   any other item accrued on that Valuation Date
determined by the Manager to be relevant in determining the Net Change in
Non-Portfolio Assets;

 

(t)                                    “Net Income”  has the
meaning ascribed thereto in Subsection 4.2(a) hereof;

 

(u)                                 “Net Realized Capital Gains”  has
the meaning ascribed thereto in Subsection 4.2(b) hereof;

 

(v)                                 “Person” means any individual, partnership, limited
partnership, joint venture, syndicate, sole proprietorship, company or
corporation with or without share capital, unincorporated association, trust,
trustee, executor, administrator or other legal personal representative,
regulatory body or agency, government or governmental agency, authority or
entity however designated or constituted;

 

(w)                               “Proportionate Share”, when used to describe (i) an
amount to be allocated to any one class or series of a class of Units, means
the total amount to be allocated to all classes or series of classes of Units
multiplied by a fraction, the numerator of which is the Class Net Asset
Value of such class or series of a class and the denominator of which is the
Net Asset Value of the Trust at such time, and (ii) a Unitholder’s
interest in or share of any amount, means, after an allocation has been made to
each class or series of a class of Units as provided in clause (i), that
allocated amount multiplied by a fraction, the numerator of which is the number
of Units of that class or series of a class registered in the name of that
Unitholder and the denominator of which is the total number of Units of that
class or series of a class then outstanding (if such Unitholder holds Units of
more than one class or series of a class, then such calculation is made in
respect of each class or series of a class of Units and aggregated);

 

(x)                                   “QEF” has the meaning ascribed thereto in Section 4.6
hereof;

 

(y)                                 “Registrar and Transfer Agent”  means Equity Transfer &
Trust Company,  acting as the registrar and
transfer agent of the Units, and appointed by the Manager in accordance with
the Trust Agreement and pursuant to a transfer agent, registrar and disbursing
agent agreement dated as of ·, as the same may be
amended, restated or supplemented from time to time;

 

(z)                                   “Securities Authorities”  means the Ontario Securities
Commission and equivalent securities regulatory authorities in each other
province and territory of Canada, and the United States Securities and Exchange
Commission;

 

(aa)                           “Securities Legislation” means the laws, regulations, rules,
requirements and policies of the Securities Authorities which are in effect
from time to time and applicable to the Trust including, but not limited to
National Instrument 81-102 Mutual Funds,
National Instrument 81-106 Investment Fund Continuous
Disclosure, National Instrument 81-107 Independent
Review Committee for Investment Funds and the United States Securities Act of 1933, as amended;

 

(bb)                          “Services” means certain valuation services provided for the
Trust by the Valuation Agent, in its capacity as a service provider to the
Trust, subject to, and in accordance with, the terms and conditions set forth
in this Agreement;

 

4

 

(cc)                            “Silver Bullion” means physical silver bullion in London Good
Delivery bar form that is unencumbered, fully allocated and stored at the
Silver Custodian by or on behalf of the Trust;

 

(dd)                          “Silver Custodian” means the
Royal Canadian Mint, acting as the custodian of the Silver Bullion in
accordance with the Storage Agreement, or any successor custodian of the Silver
Bullion appointed in accordance with the Trust Agreement or pursuant to a
separate written custodial agreement, and any sub-custodians appointed by such
custodian, including the Sub-Custodian;

 

(ee)                            “Storage Agreement” means the silver storage agreement between the Manager, on behalf of the Trust, and the
Silver Custodian dated as of ·, as the same may be
amended, restated or supplemented from time to time;

 

(ff)                                “Sub-Custodian” means The Brink’s Company, acting through its
Canadian subsidiary, Brink’s Canada Limited, as the sub-custodian of the Silver
Bullion, appointed by the Silver Custodian pursuant to a written custodial
agreement between the Silver Custodian and the Sub-Custodian;

 

(gg)                          “Tax Act”  means the  Income Tax Act
(Canada) and the regulations, rules, and policies promulgated thereunder, as
amended from time to time;

 

(hh)                          “Third Party Data” has the meaning ascribed thereto in Section 3.4
hereof;

 

(ii)                                  “Third Party Valuation Agent” means any investment dealers,
investment managers or advisors, consultants, custodians, registrar and
transfer agents or other agents appointed by the Manager from time to time in
connection with its responsibilities hereunder. 
The Manager shall, or may, by a Direction specify that such Third Party
Valuation Agent shall direct the Valuation Agent as to any matters in Sections
3 or 4 or any matter related thereto, requiring the Manager’s Direction;

 

(jj)                                  “Trust”  means Sprott Physical Silver Trust, a closed-end mutual fund
trust established under the laws of the Province of Ontario and governed by the
Trust Agreement;

 

(kk)                            “Trust Agreement” means the trust agreement of the Trust
dated as of June 30, 2010, as the same may be amended, restated,
supplemented or replaced from time to time;

 

(ll)                                  “Trust Property” at any time, means any and all securities,
cash (including free credit balances), property and assets, real and personal,
tangible and intangible, transferred, conveyed or paid to the Trust including,
without limitation:

 

(i)                                      all funds
realized from the sale of Units;

 

(ii)                                  Silver Bullion
from time to time delivered to and received by the Trust or held for its
account as directed by the Manager and accepted by the Silver Custodian on
behalf of the Trust in accordance with the Storage Agreement;

 

5

 

(iii)                               all
investments, sums or property of any type or description (other than the Silver
Bullion) from time to time delivered to and received by the Trust or held for
its account as directed by the Manager and accepted by the Trustee on behalf of
the Trust in accordance with the Trust Agreement;

 

(iv)                               any proceeds of
disposition of any of the foregoing property and assets; and

 

(v)                                all income, interest,
profit, gains and accretions and additional rights arising from or accruing to
such foregoing property or such proceeds of disposition;

 

(mm)                     “Trustee”  means RBC Dexia
Investor Services Trust, acting as the trustee of the Trust, or any successor
trustee appointed in accordance with the Trust Agreement;

 

(nn)                          “Unit” means a unit of beneficial interest, in any class or
series of a class of the Trust, as presently constituted pursuant to the Trust
Agreement as the same may from time to time hereinafter be constituted, and
collectively referred to as the “Units”;

 

(oo)                          “Unitholders” means Persons whose name appears as a
registered holder of one or more Units or fractions thereof in the register
established and maintained by the Registrar and Transfer Agent appointed by the
Manager and “Unitholder” means any one of them;

 

(pp)                          “Valuation Agent” means RBC Dexia Investor Services Trust,
acting as a service provider to the Trust, and appointed by the Manager in
accordance with this Agreement and the Trust Agreement;

 

(qq)                          “Valuation Date” means each Business Day, unless the Manager
determines that the assets of the Trust should be valued less frequently,
either generally or in respect of one or more specific instances, in which
event “Valuation Date” shall mean such
Business Day or Business Days as the Manager determines; and

 

(rr)                                “Valuation Time” means 4:00 p.m. (Toronto time) on a Valuation Date or
such other time on a Valuation Date as the Valuation Agent in consultation with
the Manager deems appropriate.

 

2.                                      Appointment
of the Valuation Agent

 

2.1                                 Appointment

 

The Manager hereby retains the Valuation Agent, in
its capacity as a service provider to the Trust, and the Valuation Agent hereby
accepts such retainer, for the purpose of providing the Services for the Trust,
subject to, and in accordance with, the terms and conditions set forth in this
Agreement.

 

2.2                                 Authority of the Manager

 

The
Manager hereby represents, warrants and confirms to the Valuation Agent that it
has the power and authority to enter into this Agreement, to retain the
Valuation Agent to provide the Services to the Trust, and to otherwise perform
its obligations hereunder, and the Manager has obtained all authorizations and
approvals required of the Manager for the due execution, delivery and
performance by the Manager of this Agreement and the engagement of the
Valuation Agent to provide the Services 

 

6

 

hereunder.

 

2.3                                 Authority of the Valuation Agent

 

The
Valuation Agent hereby represents, warrants and confirms to the Manager that it
has the power and authority to enter into this Agreement and to perform its
obligations hereunder, and the Valuation Agent has obtained all authorizations
and approvals required of the Valuation Agent for the due execution, delivery
and performance by the Valuation Agent of this Agreement.

 

3.                                       Determination
of Net Asset Value

 

3.1                                 Calculation
of Net Asset Value of the Trust and Net Asset Value per Unit

 

Pursuant
to the Trust Agreement, the Net Asset Value of the Trust shall be determined
for the purposes of subscriptions and redemptions as at the Valuation Time on
each Valuation Date in United States dollars. 
The Net Asset Value of the Trust determined on the last Valuation Date
of each year shall include all income, Common Expenses, Class Expenses or
any other items to be accrued to December 31st of each year
and since the last calculation of the Net Asset Value per Unit or the Class Net
Asset Value per Unit for the purpose of the distribution of Net Income and Net
Realized Capital Gains of the Trust to Unitholders.  The “Net Asset Value of the
Trust” as at the Valuation Time on each Valuation Date shall be the
amount obtained by deducting from the aggregate fair market value of the assets
of the Trust as of such Valuation Date an amount equal to the fair value of the
liabilities of the Trust (excluding all liabilities represented by outstanding
Units) as of such Valuation Date.  The “Net Asset
Value per Unit” shall be determined by dividing the Net Asset
Value of the Trust on a Valuation Date by the total number of Units then outstanding
on such Valuation Date.  Subject to
Directions from the Manager as required, the Net Asset Value of the Trust as at
the Valuation Time on a Valuation Date shall be determined by the Valuation
Agent in accordance with the following:

 

(a)                        The assets of the Trust shall be deemed to include the following
property:

 

(i)                           all Silver Bullion owned by or contracted for the Trust;

 

(ii)                        all cash on hand or on deposit, including any interest accrued
thereon adjusted for accruals deriving from trades executed but not yet
settled;

 

(iii)                     all bills, notes and accounts receivable;

 

(iv)                    all interest accrued on any interest-bearing securities owned by
the Trust other than interest, the payment of which is in default; and

 

(v)                       prepaid expenses.

 

(b)                       The market value of the assets of the Trust shall be determined as
follows:

 

(i)                           the value of Silver Bullion shall be its market value based on the price
provided by a widely recognized pricing service as directed by the Manager and,
if such service is not available, such Silver Bullion shall be valued at a
price provided by another pricing service as determined by the Manager in
consultation with the Valuation Agent;

 

7

 

(ii)                        the
value of any cash on hand or on deposit, bills, demand notes, accounts
receivable, prepaid expenses, and interest accrued and not yet received, shall
be deemed to be the full amount thereof unless the Valuation Agent shall have
determined that any such deposit, bill, demand note, account receivable,
prepaid expense or interest is not worth the full amount thereof, in which
event the value thereof shall be deemed to be such value as the Valuation Agent
in consultation with the Manager shall determine to be the fair value thereof;

 

(iii)                     short-term
investments including notes and money market instruments shall be valued at
cost plus accrued interest;

 

(iv)                    the
value of any security or other property for which no price quotations are
available or, in the opinion of the Manager, to which the above valuation
principles cannot or should not be applied, shall be the fair value thereof
determined from time to time in such manner as the Valuation Agent in
consultation with the Manager shall from time to time provide; and

 

(v)                       the
value of all assets and liabilities of the Trust valued in terms of a currency
other than the currency used to calculate the Net Asset Value of the Trust
shall be converted to the currency used to calculate the Net Asset Value of the
Trust by applying the rate of exchange obtained from the best available sources
to the Valuation Agent as agreed upon by the Manager including, but not limited
to, the Trustee or any of its Affiliates.

 

(c)                        The liabilities of the Trust shall be calculated on a fair value
basis and shall be deemed to include the following:

 

(i)                           all bills, notes and accounts payable;

 

(ii)                        all fees (including Management Fees) and administrative and
operating expenses payable and/or accrued by the Trust;

 

(iii)                     all contractual obligations for the payment of money or property,
including distributions of Net Income and Net Realized Capital Gains, if any,
declared, accrued or credited to the Unitholders but not yet paid on the day
before the Valuation Date as of which the Net Asset Value of the Trust is being
determined;

 

(iv)                    all allowances authorized or approved by the Manager or the
Trustee for taxes or contingencies; and

 

(v)                       all other liabilities of the Trust of whatsoever kind and nature,
except liabilities represented by outstanding Units.

 

(d)                       For the purposes of determining the market value of
any security or property pursuant to Subsection 3.1(b) to which, in the
opinion of the Valuation Agent in consultation with the Manager, the above
valuation principles cannot be applied (because no price or yield equivalent
quotations are available as provided above, or the current pricing option is
not appropriate, or for any other reason), shall be the fair value as
determined in such manner by the Valuation Agent in consultation with the
Manager and generally adopted by the 

 

8

 

marketplace from time to time, provided that
any change to the standard pricing principles as set out above shall require
prior consultation and written agreement with the Manager.  For greater certainty, fair valuing an
investment comprising the Trust Property may be appropriate if: (i) market
quotations do not accurately reflect the fair value of an investment; (ii) an
investment’s value has been materially affected by events occurring after the
close of the exchange or market on which the investment is principally traded; (iii) a
trading halt closes an exchange or market early; or (iv) other events
result in an exchange or market delaying its normal close.

 

(e)                        For the purposes of determining the value of Silver
Bullion, the Manager relies solely on weights provided to the Manager by third
parties.  The Manager, the Trustee or the
Valuation Agent shall not be required to make any investigation or inquiry as
to the accuracy or validity of such weights.

 

(f)                          Portfolio transactions (investment purchases and
sales) will be reflected in the first computation of the Net Asset Value of the
Trust made after the date on which the transaction becomes binding.

 

(g)                       The Net Asset Value of the Trust and Net Asset Value
per Unit on the first Business Day following a Valuation Date shall be deemed
to be equal to the Net Asset Value of the Trust (or per Unit, as the case may
be) on such Valuation Date after payment of all fees, including Management
Fees, and after processing of all subscriptions and redemptions of Units in
respect of such Valuation Date.

 

(h)                       The Net Asset Value of the Trust and the Net Asset
Value per Unit determined by the Valuation Agent in accordance with the
provisions of this section shall be conclusive and binding on all Unitholders.

 

(i)                           The Manager and any investment manager retained by the
Manager as a Third Party Valuation Agent may determine such other rules regarding
the calculation of the Net Asset Value of the Trust and the Net Asset Value per
Unit which they deem necessary from time to time, which rules may deviate
from IFRS, and the Manager or such investment manager shall direct the
Valuation Agent on a timely basis.

 

3.2                                 Calculation of Class Net
Asset Value and Class Net Asset Value per Unit

 

(a)                        The Net Asset Value for a
particular class or series of a class of Units (the “Class Net
Asset Value”) as at the Valuation Time on a Valuation Date shall be
determined for the purposes of subscriptions and redemptions in accordance with
the following calculation:

 

(i)                           the Class Net Asset
Value last calculated for that class or series of a class; plus

 

(ii)                        the increase in the assets
attributable to that class or series of a class as a result of the issue of
Units of that class or series of a class or the redesignation of Units into
that class or series of a class since the last calculation; minus

 

(iii)                     the decrease in the assets
attributable to that class or series of a class as a result of the redemption
of Units of that class or series of a class or the redesignation of Units out
of that class or series of a class since the last calculation; plus or minus

 

9

 

 

(iv)                    the Proportionate Share of
the Net Change in Non-Portfolio Assets attributable to that class or series of
a class since the last calculation; plus or minus

 

(v)                     the
Proportionate Share of market appreciation or depreciation of the portfolio
assets attributable to that class or series of a class since the last
calculation; minus

 

(vi)                    the Proportionate Share of
the Common Expenses allocated to that class or series of a class since the last
calculation; minus

 

(vii)                 any Class Expenses allocated to that class or
series of a class since the last calculation.

 

(b)                       A Unit of a class or series
of a class of the Trust being issued or a Unit that has been redesignated as a
part of that class or series of a class shall be deemed to become outstanding
as of the next calculation of the applicable Class Net Asset Value immediately
following the Valuation Date at which the applicable Class Net Asset Value per
Unit that is the issue price or redesignation basis of such Unit is determined
and the issue price received or receivable for the issuance of the Unit shall
then be deemed to be an asset of the Trust attributable to the applicable class
or series of a class.

 

(c)                        A Unit of a class or series
of a class of the Trust being redeemed or a Unit that has been redesignated as
no longer being a part of that class or series of a class shall be deemed to
remain outstanding as part of that class or series of a class until immediately
following the Valuation Date as of which the applicable Class Net Asset Value
per Unit that is the redemption price or redesignation basis of such Unit is
determined; thereafter, the redemption price of the Unit being redeemed, until
paid, shall be deemed to be a liability of the Trust attributable to the
applicable class or series of a class and the Unit which has been redesignated
will be deemed to be outstanding as a part of the class or series of a class
into which it has been redesignated.

 

(d)                       On any Valuation Date that a
distribution is paid to Unitholders of a class or series of a class of Units, a
second Class Net Asset Value shall be calculated for that class or series of a
class, which shall be equal to the first Class Net Asset Value calculated on
that Valuation Date minus the amount of the distribution.  For greater certainty, the second Class Net
Asset Value shall be used for determining the Class Net Asset Value per Unit on
such Valuation Date for purposes of determining the issue price and redemption
price for Units on such Valuation Date, as well as the redesignation basis for
Units being redesignated into or out of such class or series of a class, and
Units redeemed or redesignated out of that class or series of a class as at
such Valuation Date shall participate in such distribution while Units
subscribed for or redesignated into such class or series of a class as at such
Valuation Date shall not.

 

(e)                        The Class Net Asset Value
per Unit of a particular class or series of a class of Units as at any
Valuation Date is the quotient obtained by dividing the applicable Class Net
Asset Value as at such Valuation Date by the total number of Units of that
class or series of a class outstanding at such Valuation Date. This calculation
shall be made without taking into account any issuance, redesignation or
redemption of Units of that class or series of a class to be processed by the
Trust immediately after the Valuation Time of such calculation on that
Valuation Date.  The Class Net Asset
Value per Unit for each class or series of a class of Units for the purpose of
the issue of Units or the redemption of Units 

 

10

 

shall
be calculated on each Valuation Date by or under the authority of the Manager
as at the Valuation Time on every Valuation Date as shall be fixed from time to
time by the Manager and the Class Net Asset Value per Unit so determined for
each class or series of a class shall remain in effect until the Valuation Time
as of which the Class Net Asset Value per Unit for that class or series of a
class is next determined.

 

3.3                                Suspension of Right of Redemption
and Calculation of Net Asset Value

 

(a)                        The Manager, on behalf of
the Trust, may suspend the right of Unitholders to request a redemption of
their Units or postpone the date of delivery or payment of the redemption
proceeds (whether Silver Bullion and/or cash, as the case may be) with the
prior approval of Canadian Securities Authorities having jurisdiction, where
required, for any period during which the Manager determines that conditions
exist which render impractical the sale of assets of the Trust or which impair
the ability of the Manager to determine the Net Asset Value of the Trust and
the Net Asset Value per Unit or the redemption amount for the Units.

 

 (b)                    In the event of any such
suspension, the Manager shall issue a press release announcing the suspension
and shall advise the Trustee, the Valuation Agent and any other agents
appointed by the Manager, as applicable. 
The suspension shall terminate in any event on the first Business Day on
which the condition giving rise to the suspension has ceased to exist or when
the Manager has determined that such condition no longer exists, provided that
no other condition under which a suspension is authorized then exists, at which
time the Manager shall issue a press release announcing the termination of the
suspension and shall advise the Trustee, the Valuation Agent and any other
agents appointed by the Manager, as applicable. 
Subject to applicable Securities Legislation, any declaration of suspension
made by the Manager, on behalf of the Trust, shall be conclusive.

 

 (c)                     During any period in which
the right of Unitholders to request a redemption of their Units for Silver
Bullion and/or cash is suspended pursuant to the Trust Agreement, the Manager,
on behalf of the Trust, shall direct the Valuation Agent to suspend the
calculation of the Net Asset Value of the Trust, the Net Asset Value per Unit,
the Class Net Asset Value and the Class Net Asset Value per Unit for each class
or series of a class of Units.  During
any such period of suspension, the Trust shall not issue or redeem any
Units.  The calculation of the Net Asset
Value of the Trust, the Net Asset Value per Unit, the Class Net Asset Value and
the Class Net Asset Value per Unit for each class or series of a class of Units
shall resume in compliance with applicable Securities Legislation or any
approval granted by Canadian Securities Authorities having jurisdiction. As
noted above, in the event of any such suspension or termination thereof, the
Manager shall issue a press release announcing the suspension or the
termination of such suspension, as the case may be.  Further, the Manager shall advise the
Valuation Agent on a timely basis as to the date of the first calculation of
the Net Asset Value of the Trust, the Net Asset Value per Unit, the Class Net
Asset Value and the Class Net Asset Value per Unit for each class or series of
a class of Units following such termination of the suspension.

 

3.4                                Third Party Data

 

Where,
for the purposes of the foregoing calculation of the Net Asset Value of the
Trust, the Net Asset Value per Unit, the Class Net Asset Value and the Class
Net Asset Value per Unit, and the calculation of any amounts for distribution
purposes hereunder, the Valuation Agent is provided with a 

 

11

 

value,
quotation, or other information related thereto by a third party (collectively,
the “Third Party Data”) including, without
limitation, the Manager or any Third Party Valuation Agent, the Valuation Agent
may rely on such Third Party Data and shall not be required to make any
investigation or inquiry as to the accuracy, completeness or validity of such
Third Party Data unless such data on its face is manifestly incomplete or
incorrect.  If such Third Party Data is not available to the Valuation Agent as of a
time reasonably proximate to the Valuation Date, such valuation of the Trust
Property shall be based on an estimate or estimates provided by the Manager or
a Third Party Valuation Agent.  Such
estimate or estimates shall be final and binding and shall be considered to be
the actual value of such Trust Property for the purposes of any distribution,
the Net Asset Value of the Trust, the Net Asset Value per Unit, the Class Net
Asset Value and the Class Net Asset Value per Unit calculations.  The Valuation Agent shall have no
responsibility or liability, whatsoever, for any loss or damage arising out of,
or in connection with, the Valuation Agent’s reliance on, or any failure to
provide, such Third Party Data or any such estimates except as provided in this
section.

 

4.                                       Determination of Net Income and
Net Realized Capital Gains

 

4.1                                 Valuation on Distribution Date

 

As
at the Valuation Time on the last Valuation Date in each Fiscal Year or such
other date as the Manager may, in its sole discretion, determine (a “Distribution Date”), the Valuation Agent,
subject to Directions from the Manager as required, shall, in the manner
hereinafter provided, determine the amount of the Net Income and the Net
Realized Capital Gains of the Trust for the period since the immediately
preceding Distribution Date (or in the case of the first Distribution Date,
from the inception date of the Trust).

 

4.2                                 Computation of Net Income and Net
Realized Capital Gains

 

The Net Income and the Net
Realized Capital Gains of the Trust shall be computed as of the Valuation Time
on each Distribution Date in accordance with the following:

 

(a)                        “Net  Income” for
any taxation year of the Trust shall be the net income for the year determined
pursuant to the provisions of the Tax Act having regard to the provisions
thereof that relate to the calculation of income of a trust, other than
subsection 104(6), and taking into account such adjustments thereto as are
determined by the Valuation Agent; provided, however, that capital gains and
capital losses shall be excluded from the computation of net income.

 

(b)                       “Net Realized Capital Gains” of the Trust
for any taxation year of the Trust shall be determined as the amount, if any,
by which the aggregate of the capital gains of the Trust in the year exceeds:

 

(i)                           the aggregate
of the capital losses of the Trust in the taxation year; and

 

(ii)                        the amount
determined by the Valuation Agent in respect of any unapplied net capital
losses for prior taxation years which the Trust is permitted by the Tax Act to
deduct in computing the taxable income of the Trust for the applicable taxation
year and provided that, in consultation with the Manager, the Net Realized
Capital Gains of the Trust for a taxation year may be calculated without subtracting
the full amount of the net capital losses of the Trust carried forward from
previous taxation years.

 

12

 

4.3                                 Distribution of Net Income and Net Realized Capital Gains to Unitholders

 

(a)                        Commencing with
the Fiscal Year ending December 31, 2010, the Manager intends to cause the
Trust to make annual distributions to Unitholders of Net Income, if any, for
each year calculated in accordance with Section 4.2.  Commencing with the Fiscal Year ending December
31, 2010, the Manager also intends to cause the Trust to make annual
distributions to Unitholders of such portion of Net Realized Capital Gains, if
any, for each year as determined in accordance with Section 4.2 hereof.

 

(b)                       Having regard
to the present intention of the Manager to allocate, distribute and make
payable to Unitholders all Net Income or Net Realized Capital Gains so that the
Trust will not have any liability for tax under Part I of the Tax Act in any
taxation year, it is the intention of the Manager that the total amount due and
payable pursuant to this Section 4.3 on the last Distribution Date in any year
shall not be less than the amount necessary to ensure that the Trust will not
be liable for income tax under Part I of the Tax Act for such year after taking
into account the Trust’s entitlement to a capital gains refund, if any.

 

(c)                        Distributions,
if any, of Net Income or Net Realized Capital Gains will generally be made to
Unitholders who were Unitholders of record as of 5:00 p.m. (Toronto time) on
the last Business Day prior to any relevant Distribution Date.  The amounts to be paid to a Unitholder shall
be the amount of Net Income or Net Realized Capital Gains determined as
described in Section 4.2 and Section 4.3 divided by the total number of Units
outstanding on the Distribution Date multiplied by the number of Units held by
such Unitholder on the applicable Distribution Date.  Notwithstanding the foregoing, the Manager
may adopt a method of allocating an appropriate proportion of Net Income and
Net Realized Capital Gains to  Unitholders
that redeemed Units during the year and, in any such event, shall advise the
Valuation Agent on a timely basis.

 

(d)                       All
distributions, if declared and paid, shall be calculated and, if a cash
distribution, paid in United States currency.

 

4.4                                 Additional Distributions,
Designations, Determinations and Allocations

 

In
addition to any distributions calculated by the Valuation Agent and distributed
by the Trust to Unitholders as described under Section 4.3 hereof, on the
Direction of the Manager, the Valuation Agent shall at such times and in such
manner as directed by the Manager determine such additional distributions of
monies or properties of the Trust including, without restriction, returns of
capital, in such amounts per Unit, payable at such time or times and to
Unitholders of record on such Distribution Date, as from time to time may be
determined by the Manager, and the Valuation Agent shall also make such
designations, determinations, allocations and elections for Canadian tax
purposes of amounts or portions of amounts which it has received, paid,
declared payable or allocated to Unitholders and of expenses incurred by the
Trust and of tax deductions of which the Trust may be entitled, as the Manager
may, in its sole discretion, determine.

 

4.5                                 Income
Tax Statements to Unitholders

 

(a)                       On or before March 31 in each year, or in the case of
a leap year on or before March 30 in such year, if applicable, or as otherwise
required by the Tax Act, the Manager shall prepare and deliver or make
available electronically, or cause to be prepared and delivered or made
available electronically, to Unitholders information pertaining to the Trust,
including all distributions, designations, determinations, allocations and
elections, which is 

 

13

 

required or permitted
by the Tax Act or which is necessary to permit Unitholders to complete their
individual income tax returns for the preceding year.

 

(b)                      It is the
Manager’s intention to claim the maximum amount of deduction available to the
Trust under paragraph 104(6)(b) of the Tax Act for each relevant Fiscal Year of
the Trust.  In the event that amounts
that were allocated, distributed or paid to Unitholders as capital gains
or as non-taxable payments are, for any reason, subsequently determined 
(including as a result of an assessment or reassessment by any
taxation authorities) to have been fully includible in the taxable
income of the Trust for the relevant Fiscal Year, then the Manager shall have
the discretion to increase its claim under paragraph 104(6)(b) of the Tax
Act for that Fiscal Year, which shall include the discretion to
issue new or amended  tax reporting slips to the relevant Unitholders
or former Unitholders and to declare that all or part of such amounts shall be
retroactively deemed to have been allocated, distributed and paid to
Unitholders out of the income of the Trust.

 

(c)                       In conjunction
with the foregoing, the Valuation Agent shall provide the Manager with any
income and capital gain or loss factors or other information determined in
accordance with the Services hereunder and required by the Manager for such
purpose.

 

4.6                                 Qualified
Electing Trust Election and Reporting

 

Within 45 days from the end of each taxable
year of the Trust, the Manager shall provide or cause to be provided to
Unitholders all information necessary to enable Unitholders or beneficial
owners of Units, as applicable, to elect to treat the Trust as a “qualified
electing fund” (a “QEF”) within
the meaning of Section 1295 of the U.S. Internal Revenue Code of
1986, as amended from time to time, for U.S. federal income tax
purposes and to comply with any reporting or other requirements incident to
such election including, but not limited to, providing or causing to be
provided to Unitholders or beneficial owners of Units, as applicable, a
completed “PFIC Annual Information Statement” as required by U.S. Treasury
Regulations Section 1.1295-1(g).  The
Manager shall comply and cause the Trust to comply with all applicable
requirements of the U.S. Treasury Regulations necessary to enable Unitholders
or beneficial owners of Units, as applicable, to elect to treat the Trust as a
QEF.

 

4.7                                 Unaudited
Fund Accounting Statements

 

On the Direction of the
Manager, the Valuation Agent shall, based on information in its records,
prepare annual and semi-annual draft unaudited fund accounting statements for
the Trust in respect of which the Manager shall review and provide ongoing
Directions, as required, to the Valuation Agent as to any revisions or
amendments thereto and shall approve the final version of all such fund
accounting statements for the Trust.

 

4.8                                 Tax
Reporting for the Trust

 

On the Direction of the
Manager, the Valuation Agent shall, in accordance with the prescribed Canadian
tax filing deadlines and requirements as set out in Applicable Laws, prepare
and file on behalf of the Manager, applicable Canadian tax and/or information
returns for the Trust and provide a copy of such tax reporting to the Manager
upon its request.  For greater certainty
hereunder, the Manager shall be responsible for all United States tax reporting
and elections to be filed on behalf of the Trust pursuant to Applicable Laws;
provided that, for greater certainty, the Valuation Agent shall provide such
agreed upon accounting reports prepared in accordance with the Services
hereunder and required by the Manager for such purpose.

 

14

 

4.9                                 Tax
Definitions

 

Unless the context otherwise requires, any term
in this Section 4 which is defined for the purposes of the Tax Act shall have
for the purposes of this Section 4 the meaning that it has for the purposes of
the Tax Act.

 

5.                                       Directions
and Communications

 

5.1                                 Directions

 

(a)                        Unless
otherwise specified herein, all communications (including, for greater
certainty, Directions) given under this Agreement shall be given in one of the
methods authorized by Section 5.2 and shall be given by an authorized officer,
Person or other representative of the Manager or any Third Party Valuation
Agent, as the case may be.  The Manager
and any Third Party Valuation Agent shall from time to time furnish the
Valuation Agent with a Certificate of Authorized Signing Authorities
substantially in the form set out in Schedule A attached hereto signed by the
Chief Executive Officer, the Chief Financial Officer or the Corporate Secretary
of the general partner of the Manager stating the name(s) and title(s) of the
authorized officer(s), Person(s) or representative(s) of the Manager and any
Third Party Valuation Agent, as the case may be, authorized to act on its
behalf together with specimen signatures of all such officers, Persons or
representatives.  The Manager and any
Third Party Valuation Agent shall keep the Valuation Agent informed as to any
changes in its authorized signatories, and the Valuation Agent shall be
entitled to rely upon the identification of such Persons as specified in such
certificates as the Persons entitled to act on behalf of the Manager and any
Third Party Valuation Agent for the purposes of this Agreement until a later
certificate respecting the same is delivered to the Valuation Agent.

 

(b)                       The Valuation
Agent shall:

 

(i)                           be fully protected in acting
upon any Direction reasonably believed by it to be genuine and presented by the
proper Person(s);

 

(ii)                        be under no duty to monitor
or verify whether any Direction by the Manager is in compliance with the terms
of the Trust’s governing  documentation
or with Securities Legislation; and

 

(iii)                     be under no duty to make any
investigation or inquiry as to any statement contained in any such Direction,
but may accept such statement as conclusive evidence of the truth and accuracy
of such statement.

 

(c)                        Any Direction
or telephone instruction, including a Direction or telephone instruction from
any Third Party Valuation Agent, is deemed for all purposes of this Agreement
to be a Direction from the Manager to the Valuation Agent.

 

15

 

5.2                                 Methods
of Communication

 

(a)                        Any notice to be given or
any document or instrument in writing to the Valuation Agent, the Manager or
any Third Party Valuation Agent (including for greater certainty, all
Directions) must be given through one of the following methods of
communication:

 

(i)                           personal or courier
delivery;

 

(ii)                        facsimile (in accordance
with the Manager’s guidelines);

 

(iii)                     S.W.I.F.T.;

 

(iv)                    one of the Valuation Agent’s
secured client access channels;

 

(v)                       directly between
electromechanical or electronic terminals (other than the internet or unsecured
lines of communication);

 

(vi)                    telephone (subject to
Sections 5.4 and 5.5); or

 

(vii)                 internet (subject to Section 5.6).

 

(b)                       Communications should be
addressed, as applicable, as follows:

 

(i)                            in the case of the Valuation
Agent:

 

RBC
Dexia Investor Services Trust

155
Wellington Street West, 5th Floor

RBC
Centre

Toronto,
Ontario M5V 3L3

 

Attention:  Head
of Funds

 

Telephone:  (416)
974-5273

Facsimile:  (416)
955-1240

 

(ii)                         in the case of the Manager:

 

Sprott
Asset Management LP

Royal
Bank Plaza, South Tower

200
Bay Street

Suite
2700, P.O.Box 27

Toronto,
Ontario M5J 2J1

 

Attention:  Kirstin McTaggart, Chief
Compliance Officer

 

Telephone:  (416)
943-4065

Facsimile:  (416)
943-6497

 

16

 

or
at such other address and number as the party to whom such communication is to
be given shall have last notified the party giving the same in the manner
provided in this section.

 

5.3                                 Deemed
Delivery

 

Pursuant
to Section 5.2:

 

(a)                        any communication delivered personally shall be deemed to have
been given and received on the day it is so delivered (or if that day is not a
Business Day, on the next succeeding Business Day); and

 

(b)                       any communication given by facsimile, S.W.I.F.T., secured client
access channels, directly between electromechanical or electronic terminals
(other than the internet or unsecured lines of communication) or the internet
(subject to Section 5.6) shall be deemed to have been given and received on the
Business Day it is transmitted provided that it was received before 3:00 p.m.
(Toronto time) and, if received after 3:00 p.m. (Toronto time), it shall be
deemed to have been given and received on the Business Day following the day of
transmission provided in each case that confirmation of transmission is
available from the party giving the communication.

 

5.4                                 Telephone
Directions

 

                                                With respect to
telephone Directions, the Manager shall endeavor to forward Directions (other
than by telephone) confirming such telephone Directions on the same day that
such verbal Directions are given to the Valuation Agent.  The fact that such confirming Directions are
not received or that contrary Directions are received by the Valuation Agent shall
in no way affect the validity of transactions effected by the Valuation Agent
on the basis of the telephone Directions.

 

5.5                                 Telephone
Communications

 

The
Manager agrees that some or all telephone conversations between the parties,
including Directions or communication given by telephone, may be recorded by
the Valuation Agent and that, in the event of any disagreement as to the
content of any Directions or communication given by telephone, such recording
shall be conclusive and determinative of the contents of the Directions or
communication.

 

5.6                                 Internet

 

The Manager agrees and confirms, in connection
with the Services provided by the Valuation Agent to the Trust, that the
Valuation Agent may forward reports and information to the Manager and/or to
the Manager’s authorized agents, and may receive and act upon communications
and instructions (including, without limitation, Directions) received from the
Manager and/or the Manager’s authorized agents through the use of such form of
electronic means of communications (including the internet which is not a
secure means of communication) as may be agreed to from time to time in
writing.  Without limiting the terms of
this Agreement, the Manager agrees and acknowledges that the Valuation Agent
shall bear no responsibility or liability whatsoever for any errors and
omissions, or direct, indirect or consequential losses or damages that are
attributable to the use of the internet for the purposes set out herein and
resulting or arising from viruses or worms, or the interception, tampering or
breach of confidentiality of data or information transmitted which is not
encrypted and authenticated in accordance with the Valuation Agent’s encryption
standards.

 

17

 

 

6.                                       Fees
and Statements

 

6.1                                 Fees
and Charges

 

In consideration of the Services provided by the Valuation Agent hereunder, the
Valuation Agent shall be paid such compensation as may from time to time be
agreed upon in writing between the Manager and the Valuation Agent. In
addition, the Valuation Agent shall be reimbursed for any disbursements and
expenses incurred in the performance of its duties hereunder.

 

6.2                                 Statements

 

The Valuation Agent shall send to the Manager itemized statements
setting out the amount of all compensation, disbursements and expenses provided
for in Section 6.1, and such amounts shall be due and payable within 30 days
after the respective dates on which such statements were issued by the
Valuation Agent  hereunder.

 

7.                                       Standard
of Care, Limitation of Liability and Indemnification

 

7.1                                 Standard
of Care

 

In providing the Services hereunder, the Valuation
Agent shall exercise the powers and discharge the duties of its office honestly
and in good faith and in connection therewith shall exercise the degree of
care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.

 

7.2                                 Liability
of the Valuation Agent

 

The Valuation Agent shall not be liable for any
act or omission in the course of, or connected with, rendering the Services
hereunder, except to the extent that such liability arises directly out of the
negligence, wilful misconduct or lack of good faith of the Valuation
Agent.  In no event shall the Valuation
Agent be liable for any consequential or special damages including, but not
limited to, loss of reputation, goodwill or business.  Notwithstanding the foregoing or any other
provision of this Agreement, the Valuation Agent’s liability hereunder shall in
no event exceed the aggregate amount of fees received by the Valuation Agent
from the Manager with respect to the Services provided during the immediately
preceding 12 months.

 

7.3                                 Limitation
of Responsibility

 

Without limiting the foregoing and except to
the extent that the Valuation Agent has not complied with its standard of care
set out in Section 7.1, the Valuation Agent shall not be responsible for:

 

(a)                        any loss to, or diminution of, the Trust Property;

 

(b)                       any act or omission required
or demanded by any governmental,
taxing, regulatory or other competent authority which has jurisdiction over the
Valuation Agent or the Trust;

 

(c)                        any loss resulting from official action (including
nationalisation and expropriation), currency restrictions or devaluations, acts
or threat of war or terrorism, insurrection, revolution or civil disturbance,
acts of God, strikes or work stoppages, inability of any 

 

18

 

settlement system to settle transactions,
interruptions in postal, telephone, facsimile and/or other communication
systems or in power supply, or any other event or factor beyond the reasonable  control of the Valuation Agent;

 

(d)                       any failure to act on Directions, if the Valuation
Agent reasonably believed that to do so might result in a breach of any
Applicable Laws or the terms of this Agreement;

 

(e)                        any action taken in accordance with a Direction from the Manager, or for
failure to act in the absence of a Direction from the Manager where a Direction
is required under this Agreement;

 

(f)                          any registrar, transfer agency or record-keeping services on behalf of
the Trust or any Unitholders;

 

(g)                       any preparation or filing of any audited financial statements or any
compliance, reporting or filings in accordance with applicable Securities
Legislation or any United States tax laws, regulations, rules or policies that
apply to the Trust pursuant to Applicable Laws; or

 

(h)                       any ongoing monitoring of investments of the Trust or any risk factors
whatsoever related thereto.

 

7.4                                 Indemnification
of the Valuation Agent

 

(a)                        The Manager shall indemnify
and hold harmless the Valuation Agent, its Affiliates and agents, and their
respective directors, officers, and employees (each an “Indemnified
Party”) from and against all taxes, duties, charges, costs, expenses,
damages, claims, actions, demands and any other liability whatsoever to which
the Indemnified Party, or any of them, may become subject, including legal
fees, judgments and amounts paid in settlement in respect of anything done or
omitted to be done in connection with the Services provided hereunder, except
to the extent incurred as a result of the negligence, wilful misconduct or lack
of good faith of any Indemnified Party. 
For greater certainty, the foregoing does not make the commencement of
formal legal proceedings a precondition for indemnification hereunder.

 

(b)                       Further, none of the
provisions of this Agreement shall require the Valuation Agent to expend or
risk its own funds, appear in, prosecute or defend proceedings, or otherwise
incur financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers hereunder, unless first indemnified to
its satisfaction.

 

8.                                       Amendments
and Termination of the Agreement

 

8.1                                 Amendments

 

This
Agreement may not be amended, changed, supplemented or otherwise modified in
any respect except by written instrument executed by the parties hereto or
their respective successors or permitted assigns.

 

19

 

8.2                                 Termination

 

(a)                        Either party
may at any time terminate this Agreement without any penalty by giving at least
60 days’ prior written notice to the other party of such termination unless the
parties mutually agree in writing to a different period.  Such prior notice is not required
and termination will be immediate upon the giving of notice in accordance with
Section 5 hereof in the event that:

 

(i)                           either party is declared
bankrupt or shall be insolvent;

 

(ii)                        the assets or
the business of either party shall become liable to seizure or confiscation by
any public or governmental authority; or

 

(iii)                     the Manager’s power and
authority to act on behalf of, or to represent, the Trust has been revoked,
terminated or is otherwise no longer in full force and effect.

 

(b)                       Upon the termination of this
Agreement, the Valuation Agent shall forthwith deliver to the Manager, on
behalf of the Trust, all books of account and other records in the format
existing at the effective date of termination of this Agreement.  A receipt signed by the Manager, on behalf of
the Trust, shall be a valid discharge to the Valuation Agent in respect of its
obligations hereunder.

 

9.                                       Miscellaneous

 

9.1                                 Access
to Records

 

On reasonable notice and during normal business hours, the Valuation
Agent shall make available to and permit the authorized officers, employees and
agents of the Manager, and such Securities Authorities or other regulatory
authorities as may have lawful jurisdiction over the Trust and the Manager, to
inspect and make copies of all accounts, books and records maintained by the
Valuation Agent in connection with its duties under this Agreement, provided
such Persons comply with the Valuation Agent’s reasonable requirements as to
confidentiality and privacy.

 

9.2                                 Review of Statements

 

The Manager shall, within 30 days following the issuance of any statement by the Valuation Agent related to the
provision of the Services hereunder, provide the Valuation Agent with written notice of any alleged
omissions from, or additions wrongly made to, or inaccurate entries in, such
statement.  If such notification by the
Manager is not received by the Valuation Agent within such 30-day period, the
Valuation Agent shall be released and discharged from liability and
accountability to anyone with respect to its acts and all transactions during
the period covered by such statement, except as provided in this Agreement.

 

9.3                                 Self-Dealing

 

(a)                        The Valuation Agent’s Services to the Manager and to
the Trust are not exclusive and, subject to the limitations otherwise provided
in this Agreement on the power and authorities of the Valuation Agent, the
Valuation Agent may for any purpose, and is hereby expressly authorized from
time to time in its discretion to, appoint, employ, invest 

 

20

 

in,
contract or deal with any individual, firm, partnership, association, trust or
body corporate including, without limitation, itself and any partnership, trust
or body corporate with which it may directly or indirectly be affiliated or in
which it may be directly or indirectly interested, whether on its own account
or for the account of another (in a fiduciary capacity or otherwise), without
being liable to account therefor and without being in breach of this Agreement.

 

(b)                       Without
limiting the generality of the foregoing, the Manager hereby authorizes the
Valuation Agent to act hereunder notwithstanding that the Valuation Agent or
any of its divisions, branches or Affiliates may:

 

(i)                           have a material interest in the transaction or that
circumstances are such that the Valuation Agent may have a potential conflict
of duty or interest including the fact that the Valuation Agent or any of its
Affiliates may:

 

(A)                    purchase, hold, sell, invest in or otherwise
deal with securities or other property or assets of the same class and nature
as may be held in the Trust, whether on its own account or for the account of
another (in a fiduciary capacity or otherwise);

 

(B)                      act as a market maker in the securities that form part
of the Trust Property to which any Directions relate;

 

(C)                      provide brokerage services to other clients;

 

(D)                     act as financial adviser to the issuer of such
securities;

 

(E)                       act in the same transaction as agent for more than one
client;

 

(F)                       have a material interest in the issue of securities that
form part of the Trust Property;

 

(G)                      use in other capacities knowledge gained in its
capacity as a provider of Services hereunder; or

 

(H)                     earn profits from any of the activities listed herein,

 

without being liable to account therefor and without
being in breach of this Agreement provided that the Valuation Agent complies
with Section 9.6 hereof.

 

9.4                                 Assignment

 

Subject to Section 9.5, neither this Agreement nor any of the rights or
obligations of either party hereunder may be assigned to any other Person
without the prior written consent of the other party, such consent not to be
unreasonably withheld or delayed.

 

21

 

9.5                                 Successors

 

This
Agreement shall enure to the benefit of, and be binding upon, the parties
hereto and their respective successors and permitted assigns.  For greater certainty, any trust company
resulting from the merger or amalgamation of the Valuation Agent with one or
more trust companies, or any trust company which succeeds to substantially all
of the business of the Valuation Agent shall thereupon become the successor to
the Valuation Agent hereunder without further act or formality.

 

9.6                                 Confidentiality

 

Except as otherwise provided in this Agreement, each party shall hold
in confidence all information relating to the Trust and this Agreement and may
only release such information to others where required by Applicable Law or
pursuant to any Directions, if applicable, or as otherwise agreed between the
parties.

 

9.7                                 Capacity

 

For greater certainty, the parties
acknowledge that the Valuation Agent is not entering into this Agreement in a
fiduciary capacity and the terms of this Agreement and the performance by the
Valuation Agent of its obligations under this Agreement shall not result,
directly or indirectly or in any manner whatsoever, in any fiduciary duties
being imposed or inferred upon the Valuation Agent.

 

9.8                                 Headings

 

The
inclusion of section headings in this Agreement is for convenience of reference
only and shall not affect the construction or interpretation hereof.

 

9.9                                 Governing
Law

 

This
Agreement shall be governed by, and construed in accordance with, the laws of
the Province of Ontario and the federal laws of Canada applicable therein and
shall be treated in all respects as an Ontario contract.  The parties hereto hereby attorn to the
jurisdiction of the courts of Ontario for arbitration of any disputes between
them with respect to the subject matter hereof.

 

9.10                           Entire
Agreement

 

This
Agreement, including Schedule A attached hereto, and the Trust Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes and replaces all prior understandings, agreements,
negotiations or discussions, whether written or oral, between the parties with
respect thereto.  There are no
representations, warranties, terms, conditions, undertakings or collateral
agreements or understanding, express or implied, between the parties other than
those expressly set forth in this Agreement and the Trust Agreement.

 

9.11                           Further
Acts

 

Each
of the Valuation Agent and the Manager shall promptly do, make, execute or
deliver, or cause to be done, made, executed or delivered, all such further
acts, documents and things as the other party hereto may reasonably require
from time to time for the purpose of giving effect to this Agreement.

 

22

 

9.12                           Invalidity
of Provisions

 

Each
of the provisions contained in this Agreement is distinct and severable and a
declaration of invalidity or unenforceability of any such provision or part
thereof by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof. 
To the extent permitted by Applicable Law, the parties waive any
provision of law which renders any provision of this Agreement invalid or
unenforceable in any respect.

 

9.13                           Counterparts

 

This
Agreement may be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument.

 

[The
remainder of this page is intentionally left blank.]

 

23

 

IN
WITNESS WHEREOF the parties have caused this Agreement to be
executed by their respective duly authorized officers effective as of the day
and year first above written.

 

	
   

  	
  SPROTT ASSET MANAGEMENT LP, by its general partner, SPROTT
  ASSET MANAGEMENT GP INC., in its capacity as the Manager of the
  Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  We have the authority to bind the Manager.

  
	
   

  	
   

  	
   

  
	
   

  	
  RBC DEXIA INVESTOR SERVICES
  TRUST, in its capacity as the
  Valuation Agent of the Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  We have the authority to bind the Valuation
  Agent.

  

 

24

 

SCHEDULE A

 

CERTIFICATE OF AUTHORIZED SIGNING
AUTHORITIES

 

[To be attached hereto.]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}]]