EXHIBIT 4.4.1
(Multicurrency--Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of November 24, 2006
CLAYMORE MACROSHARES CLAYMORE MACROSHARES
OIL UP HOLDING TRUST and OIL DOWN HOLDING TRUST
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming
those Transactions.
Accordingly, the parties agree as follows:
Section 1. Interpretation
(i) Definitions. The terms defined in Section 14 and in the Schedule
will have the meanings therein specified for the purpose of this Master
Agreement.
(ii) Inconsistency. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master
Agreement, the Schedule will prevail. In the event of any inconsistency
between the provisions of any Confirmation and this Master Agreement
(including the Schedule), such Confirmation will prevail for the purposes
of the relevant Transaction.
(iii) Single Agreement. All Transactions are entered into in
reliance on the fact that this Master Agreement and all Confirmations
form a single agreement between the parties (collectively referred to as
this "Agreement"), and the parties would not otherwise enter into any
Transactions.
Section 2. Obligations
(i) General Conditions.
(1) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other provisions
of this Agreement.
(2) Payments under this Agreement will be made on the due date
for value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments
in the required currency. Where settlement is by delivery (that is,
other than by payment), such delivery will be made for receipt on
the due date in the manner customary for the relevant obligation
unless otherwise specified in the relevant Confirmation or elsewhere
in this Agreement.
(3) Each obligation of each party under Section 2(a)(i) is
subject to (1) the condition precedent that no Event of Default or
Potential Event of Default with respect to the other party has
occurred and is continuing, (2) the condition precedent that no
Early Termination Date in respect of the relevant Transaction has
occurred or been effectively designated and (3) each other
applicable condition precedent specified in this Agreement.
(ii) Change of Account. Either party may change its account for
receiving a payment or delivery by giving notice to the other party at
least five Local Business Days prior to the scheduled date for the
payment or delivery to which such change applies unless such other party
gives timely notice of a reasonable objection to such change.
(iii) Netting. If on any date amounts would otherwise be payable:--
(1) in the same currency; and
(2) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and discharged
and, if the aggregate amount that would otherwise have been payable by one
party exceeds the aggregate amount that would otherwise have been payable by
the other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties
make and receive payments or deliveries.
(iv) Deduction or Withholding for Tax.
(1) Gross-Up. All payments under this Agreement will be made
without any deduction or withholding for or on account of any Tax
unless such deduction or withholding is required by any applicable
law, as modified by the practice of any relevant governmental
revenue authority, then in effect. If a party is so required to
deduct or withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the earlier of determining that
such deduction or withholding is required or receiving notice that
such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes,
whether assessed against X or Y) will equal the full amount Y would
have received had no such deduction or withholding been required.
However, X will not be required to pay any additional amount to Y to
the extent that it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure would
not have occurred but for (I) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on
or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (II) a Change in Tax
Law.
(2) Liability. If:--
(1) X is required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, to make any deduction or
withholding in respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such liability
(including any related liability for interest, but including any related
liability for penalties only if Y has failed to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(v) Default Interest; Other Amounts. Prior to the occurrence or
effective designation of an Early Termination Date in respect of the
relevant Transaction, a party that defaults in the performance of any
payment obligation will, to the extent permitted by law and subject to
Section 6(c), be required to pay interest (before as well as after
judgment) on the overdue amount to the other party on demand in the same
currency as such overdue amount, for the period from (and including) the
original due date for payment to (but excluding) the date of actual
payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If,
prior to the occurrence or effective designation of an Early Termination
Date in respect of the relevant Transaction, a party defaults in the
performance of any obligation required to be settled by delivery, it will
compensate the other party on demand if and to the extent provided for in
the relevant Confirmation or elsewhere in this Agreement.
Section 3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:--
(i) Basic Representations.
(1) Status. It is duly organized and validly existing under the
laws of the jurisdiction of its organization or incorporation and,
if relevant under such laws, in good standing;
(2) Powers. It has the power to execute this Agreement and any
other documentation relating to this Agreement to which it is a
party, to deliver this Agreement and any other documentation
relating to this Agreement that it is required by this Agreement to
deliver and to perform its obligations under this Agreement and any
obligations it has under any Credit Support Document to which it is
a party and has taken all necessary action to authorise such
execution, delivery and performance;
(3) No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law applicable to
it, any provision of its constitutional documents, any order or
judgment of any court or other agency of government applicable to it
or any of its assets or any contractual restriction binding on or
affecting it or any of its assets;
(4) Consents. All governmental and other consents that are
required to have been obtained by it with respect to this Agreement
or any Credit Support Document to which it is a party have been
obtained and are in full force and effect and all conditions of any
such consents have been complied with; and
(5) Obligations Binding. Its obligations under this Agreement
and any Credit Support Document to which it is a party constitute
its legal, valid and binding obligations, enforceable in accordance
with their respective terms (subject to applicable bankruptcy,
reorganisation, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).
(ii) Absence of Certain Events. No Event of Default or Potential
Event of Default or, to its knowledge, Termination Event with respect to
it has occurred and is continuing and
no such event or circumstance would occur as a result of its entering
into or performing its obligations under this Agreement or any Credit
Support Document to which it is a party.
(iii) Absence of Litigation. There is not pending or, to its
knowledge, threatened against it or any of its Affiliates any action,
suit or proceeding at law or inequity or before any court, tribunal,
governmental body, agency or official or any arbitrator that is likely to
affect the legality, validity or enforceability against it of this
Agreement or any Credit Support Document to which it is a party or its
ability to perform its obligations under this Agreement or such Credit
Support Document.
(iv) Accuracy of Specified Information. All applicable information
that is furnished in writing by or on behalf of it to the other party and
is identified for the purpose of this Section 3(d) in the Schedule is, as
of the date of the information, true, accurate and complete in every
material respect.
(v) Payer Tax Representation. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is
accurate and true.
(vi) Payee Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is
accurate and true.
Section 4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(i) Furnish Specified Information. It will deliver to the other
party or, in certain cases under subparagraph (iii) below, to such
government or taxing authority as the other party reasonably directs:--
(1) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(2) any other documents specified in the Schedule or any
Confirmation; and
(3) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to
make a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of
any Tax or with such deduction or withholding at a reduced rate (so
long as the completion, execution or submission of such form or
document would not materially prejudice the legal or commercial
position of the party in receipt of such demand), with any such form
or document to be accurate and completed in a manner reasonably
satisfactory to such other party and to be executed and to be
delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(ii) Maintain Authorisations. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or
other authority that are required to be obtained by it with respect to
this Agreement or any Credit Support Document to which it is a party and
will use all reasonable efforts to obtain any that may become necessary
in the future.
(iii) Comply with Laws. It will comply in all material respects with
all applicable laws and orders to which it may be subject if failure so
to comply would materially impair its ability to perform its obligations
under this Agreement or any Credit Support Document to which it is a
party.
(iv) Tax Agreement. It will give notice of any failure of a
representation made by it under Section 3(f) to be accurate and true
promptly upon learning of such failure.
(v) Payment of Stamp Tax. Subject to Section 11, it will pay any
Stamp Tax levied or imposed upon' it or in ---------- respect of its
execution or performance of this Agreement by a jurisdiction in which it
is incorporated, organised, managed and controlled, or considered to have
its seat, or in which a branch or office through which it is acting for
the purpose of this Agreement is located ("Stamp Tax Jurisdiction") and
will indemnify the other party against any Stamp Tax levied or
------------------------ imposed upon the other party or in respect of
the other party's execution or performance of this Agreement by any such
Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
respect to the other party.
Section 5. Events of Default and Termination Events
(i) Events of Default. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any of the following events constitutes
an event of default (an "Event of Default") with respect to such party:
(1) Failure to Pay or Deliver. Failure by the party to make,
when due, any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(2) Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to
make any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) or to give notice of a Termination Event or any
agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to
be complied with or performed by the party in accordance with this
Agreement if such failure is not remedied on or before the thirtieth
day after notice of such failure is given to the party;
(3) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party to
comply with or perform any agreement or obligation to be complied with or
performed by it in accordance with any Credit Support Document if such
failure is continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or the
failing or ceasing of such Credit Support Document to be in full force
and effect for the purpose of this Agreement (in either case other than
in accordance with its terms) prior to the satisfaction of all
obligations of such party under each Transaction to which such Credit
Support Document relates without the written consent of the other party;
or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the validity
of, such Credit Support Document;
(4) Misrepresentation. A representation (other than a
representation under Section 3(e) or (f)) made or repeated or deemed
to have been made or repeated by the party or any Credit Support
Provider of such party in this Agreement or any Credit Support
Document proves to have been incorrect or misleading in any material
respect when made or repeated or deemed to have been made or
repeated;
(5) Default under Specified Transaction. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (l) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period,
there occurs a liquidation of, an acceleration of obligations under,
or an early termination of, that Specified Transaction, (2)
defaults, after giving effect to any applicable notice requirement
or grace period, in making any payment or delivery due on the last
payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues
for at least three Local Business Days if there is no applicable
notice requirement or grace period) or (3) disaffirms, disclaims,
repudiates or rejects, in whole or in part, a Specified Transaction
(or such action is taken by any person or entity appointed or
empowered to operate it or act on its behalf);
(6) Cross Default. If "Cross Default" is specified in the
Schedule as applying to the party, the occurrence or existence of
(l) a default, event of default or other similar condition or event
(however described) in respect of such party, any Credit Support
Provider of such party or any applicable Specified Entity of such
party under one or more agreements or instruments relating to
Specified Indebtedness of any of them (individually or collectively)
in an aggregate amount of not less than the applicable Threshold
Amount (as specified in the Schedule) which has resulted in such
Specified Indebtedness becoming, or becoming capable at such time of
being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or
(2) a default by such party, such Credit Support Provider or such
Specified Entity (individually or collectively) in making one or
more payments on the due date thereof in an aggregate amount of not
less than the applicable Threshold Amount under such agreements or
instruments (after giving effect to any applicable notice
requirement or grace period);
(7) Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation, amalgamation or
merger);
(2) becomes insolvent or is unable to pay its debts or fails or admits in
writing its inability generally to pay its debts as they become due; (3)
makes a general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or any other
relief under any bankruptcy or insolvency law or other similar law
affecting creditors', rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding or
petition instituted or presented against it, such proceeding or petition
(A) results in a judgment of insolvency or bankruptcy or the entry of an
order for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or restrained in
each case within 30 days of the institution or presentation thereof; (5)
has a resolution passed for its winding-up, official management or
liquidation (other than pursuant to a consolidation, amalgamation or
merger); (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official for it or for all or substantially
all its assets; (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution, attachment,
sequestration or other legal process levied, enforced or sued on or
against all or substantially all its assets and such secured party
maintains possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8) causes
or is subject to any event with respect to it which, under the applicable
laws of any jurisdiction, has an analogous effect to any of the events
specified in clauses (1) to (7) (inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or
(8) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets to,
another entity and, at the time of such consolidation, amalgamation,
merger or transfer:--
(1) the resulting, surviving or transferee entity fails to assume all the
obligations of such party or such Credit Support Provider under this
Agreement or any Credit Support Document to which it or its predecessor
was a party by operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend (without
the consent of the other party) to the performance by such resulting,
surviving or transferee entity of its obligations under this Agreement.
(ii) Termination Events. The occurrence at any time with respect to
a party or, if applicable, any Credit Support Provider of such party or
any Specified Entity of such party of any event specified below
constitutes an Illegality if the event is specified in (i) below, a Tax
Event if the event is specified in (ii) below, or a Tax Event Upon Merger
if the event is specified in (iii) below, and, if specified to be
applicable, a Credit Event Upon Merger if the event is specified pursuant
to (iv) below, or an Additional Termination Event if the event is
specified pursuant to (v) below:--
(1) Illegality. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered
into, or due to the promulgation of, or any change in, the
interpretation by any court, tribunal or regulatory authority with
competent jurisdiction of any applicable law after such date, it
becomes unlawful (other than as a result of a breach by the party of
Section 4(b)) for such party (which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make a payment or
delivery or to receive a payment or delivery in respect of such
Transaction or to comply with any other material provision of this
Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document relating
to such Transaction;
(2) Tax Event. Due to (x) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on or
after the date on which a Transaction is entered into (regardless of
whether such action is taken or brought with respect to a party to
this Agreement) or (y) a Change in Tax Law, the party (which will be
the Affected Party) will, or there is a substantial likelihood that
it will, on the next succeeding Scheduled Payment Date (1) be
required to pay to the other party an additional amount in respect
of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect
of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a
payment from which an amount is required to be deducted or withheld
for or on account of a Tax (except in respect of Interest under
Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required
to be paid in respect of such Tax under Section 2(d)(i)(4) (other
than by reason of Section 2(d)(i)(4)(A) or (B));
(3) Tax Event Upon Merger. The party (the "Burdened Party") on
the next succeeding Scheduled Payment Date will either (1) be required
to pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account - of an Indemnifiable Tax
in respect of which the other party is not required to pay an
additional amount (other than by reason of Section 2(d)(i)(4)(A) or
(B)), in either case as a result of a party consolidating or
amalgamating with, or merging with or into, or transferring all or
substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(4) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(5) Additional Termination Event. If any "Additional
Termination Event" is specified in the Schedule or any Confirmation
as applying, the occurrence of such event (and, in such event, the
Affected Party or Affected Parties shall be as specified for such
Additional Termination Event in the Schedule or such Confirmation).
(iii) Event of Default and Illegality. If an event or circumstance
which would otherwise constitute or give rise to an Event of Default also
constitutes an Illegality, it will be treated as an Illegality and will
not constitute an Event of Default.
Section 6. Early Termination
(i) Right to Terminate Following Event of Default. If at any time an
Event of Default with respect to a party (the "Defaulting Party") has
occurred and is then continuing, the
other party (the "Non-defaulting Party") may, by not more than 20 days
notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all outstanding
Transactions. If, however, "Automatic Early Termination" is specified
in the Schedule as applying to a party, then an Early Termination Date
in respect of all outstanding Transactions will occur immediately upon
the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent
analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the
relevant petition upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(4) or, to the extent
analogous thereto, (8).
(ii) Right to Terminate Following Termination Event.
(1) Notice. If a Termination Event occurs, an Affected Party
will, promptly upon becoming aware of it, notify the other party,
specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that
Termination Event as the other party may reasonably require.
(2) Transfer to Avoid Termination Event. If either an Illegality
under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition
to its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such
party to incur a loss, excluding immaterial, incidental expenses) to
transfer within 20 days after it gives notice under Section 6(b)(i)
all its rights and obligations under this Agreement in respect of the
Affected Transactions to another of its Offices or Affiliates so that
such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give notice
to the other party to that effect within such 20 day period, whereupon the
other party may effect such a transfer within 30 days after the notice is
given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to
and conditional upon the prior written consent of the other party, which
consent will not be withheld if such other party's policies in effect at such
time would permit it to enter into transactions with the transferee on the
terms proposed.
(3) Two Affected Parties. If an Illegality under Section
5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
each party will use all reasonable efforts to reach agreement within
30 days after notice thereof is given under Section 6(b)(i) on
action to avoid that Termination Event.
(4) Right to Terminate. If:
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to all
Affected Transactions within 30 days after an Affected Party gives notice
under Section 6(b)(i); or,
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or
an Additional Termination Event occurs, or a Tax Event Upon Merger occurs
and the Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the case of a
Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an
Additional Termination Event if there is more than one Affected Party, or the
party which is not the Affected Party in the case of a Credit Event Upon
Merger or an Additional Termination Event if there is only one Affected Party
may, by not more than 20 days notice to the other party and provided that the
relevant Termination Event is then continuing, designate a day not earlier
than the day such notice is effective as an Early Termination Date in respect
of all Affected Transactions.
(iii) Effect of Designation.
(1) If notice designating an Early Termination Date is given
under Section 6(a) or (b), the Early Termination Date will occur on
the date so designated, whether or not the relevant Event of
Default, or Termination Event is then continuing.
(2) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions
of this Agreement. The amount, if any, payable in respect of an
Early Termination Date shall be determined pursuant to Section 6(e).
(iv) Calculations.
(1) Statement. On or as soon as reasonably practicable
following the occurrence of an Early Termination Date, each party
will make the calculations on its part, if any, contemplated by
Section 6(e) and will provide to the other party a statement (1)
showing, in reasonable detail, such calculations (including all
relevant quotations and specifying any amount payable under Section
6(e)) and (2) giving details of the relevant account to which any
amount payable to it is to be paid. In the absence of written
confirmation from the source of a quotation obtained in determining
a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy
of such quotation.
(2) Payment Date. An amount calculated as being due in respect of
any Early Termination Date under Section 6(e) will be payable on the
day that notice of the amount payable is effective (in the case of an
Early Termination Date which is designated or occurs as a result of an
Event of Default) and on the day which is two Local Business Days
after the day on which notice of the amount payable is effective (in
the case of an Early Termination Date which is designated as a result
of a Termination Event). Such amount will be paid together with (to
the extent permitted under applicable law) interest thereon (before as
well as after judgment) in the Termination Currency, from (and
including) the relevant Early Termination Date to (but excluding) the
date such amount, is paid, at the Applicable Rate. Such interest will
be calculated on the basis of daily compounding and the actual number
of days elapsed.
(v) Payments on Early Termination. If an Early Termination Date
occurs, the following provisions shall apply based on the parties'
election in the Schedule of a payment measure, either "Market Quotation"
or "Loss", and a payment method, either the "First Method" or
the "Second Method". If the parties fail to designate a payment measure
or payment method in the Schedule, it will be deemed that "Market
Quotation" or the "Second Method", as the case may be, shall apply. The
amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(1) Events of Default. If the Early Termination Date results
from an Event of Default:
(1) First Method and Market Quotation. If the First Method and Market
Quotation apply, the Defaulting Party will pay to the Non-defaulting
Party the excess, if a positive number, of (A) the sum of the Settlement
Amount (determined by the Non-defaulting Party) in respect of the
Terminated Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-defaulting Party's Loss in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second Method and Market
Quotation apply, an amount will be payable equal to (A) the sum of the
Settlement Amount (determined by the Non-defaulting Party) in respect of
the Terminated Transactions and the Termination Currency Equivalent of
the Unpaid Amounts owing to the Non-defaulting Party less (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party. If that amount is a positive number, the Defaulting
Party will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(2) Termination Events. If the Early Termination Date results
from a Termination Event:
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except
that, in either case, references to the Defaulting Party and to the
Non-defaulting Party will be deemed to be references to the Affected
Party and the party which is not the Affected Party, respectively, and,
if Loss applies and fewer than all the Transactions are being terminated,
Loss shall be calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions, and an
amount will be payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the party with the
higher Settlement Amount ("X") and the Settlement Amount of the
party with the lower Settlement Amount ("Y") and (b) the Termination
Currency Equivalent of the Unpaid Amounts owing to X less (II) the
Termination Currency Equivalent of the Unpaid Amounts owing to Y;
and
(B) if Loss applies, each party will determine its Loss in respect
of this Agreement (or, if fewer than all the Transactions are being
terminated, in respect of all Terminated Transactions) and an amount
will be payable equal to one-half of the difference between the Loss
of the party with the higher Loss ("X") and the Loss of the party
with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if it is
a negative number, X will pay the absolute value of that amount to Y.
(3) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination"
applies in respect of a party, the amount determined under this
Section 6(e) will be subject to such adjustments as are appropriate
and permitted by law to reflect any payments or deliveries made by
one party to the other under this Agreement (and retained by such
other party) during the period from the relevant Early Termination
Date to the date for payment determined under Section 6(d)(ii).
(4) Pre-Estimate. The parties agree that if Market Quotation
applies an amount recoverable under this Section 6(e) is a
reasonable pre-estimate of loss and not a penalty. Such amount is
payable for the loss of bargain and the loss of protection against
future risks and except as otherwise provided in this Agreement
neither party will be entitled to recover any additional damages as
a consequence of such losses.
Section 7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of
the other party, except that:
(i) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer
of all or substantially all its assets to, another entity (but without
prejudice to any other right or remedy under this Agreement); and
(ii) a party may make such a transfer of all or any part of its
interest in any amount payable to it from a Defaulting Party under
Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
Section 8. Contractual Currency
(i) Payment in the Contractual Currency. Each payment under this
Agreement will he made in the relevant currency specified in this Agreement
for that payment (the "Contractual Currency"). To the extent permitted by
applicable law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in
any currency other than the Contractual Currency, except to the extent such
tender results in the actual receipt by the party to which payment is owed,
acting in a reasonable manner and in good faith in converting the currency
so tendered into the Contractual Currency, of the full amount in the
Contractual Currency of all amounts payable in respect of this Agreement.
If for any reason the amount in the Contractual Currency so received
falls short of the amount in the Contractual Currency payable in respect
of this Agreement, the party required to make the payment will, to the
extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for
the shortfall. If for any reason the amount in the Contractual Currency
so received exceeds the amount in the Contractual Currency payable in
respect of this Agreement, the party receiving the payment will refund
promptly the amount of such excess.
(ii) Judgments. To the extent permitted by applicable law, if any
judgment or order expressed in a currency other than the Contractual
Currency is rendered (i) for the payment of any amount owing in respect
of this Agreement, (ii) for the payment of any amount relating to any
early termination in respect of this Agreement or (iii) in respect of a
judgment or order of another court for the payment of any amount
described in (i) or (ii) above, the party seeking recovery, after
recovery in full of the aggregate amount to which such party is entitled
pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the
Contractual Currency received by such party as a consequence of sums paid
in such other currency and will refund promptly to the other party any
excess of the Contractual Currency received by such party as a
consequence of sums paid in such other currency if such shortfall or such
excess arises or results from any variation between the rate of exchange
at which the Contractual Currency is converted into the currency of the
judgment or order for the purposes of such judgment or order and the rate
of exchange at which such party is able, acting in a reasonable manner
and in good faith in converting the currency received into the
Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such
party. The term "rate of exchange" includes, without limitation, any
premiums and costs of exchange payable in connection with the purchase of
or conversion into the Contractual Currency.
(iii) Separate Indemnities. To the extent permitted by applicable
law, these indemnities constitute separate and independent obligations
from the other obligations in this Agreement, will be enforceable as
separate and independent causes of action, will apply notwithstanding any
indulgence granted by the party to which any payment is owed and will not
be affected by judgment being obtained or claim or proof being made for
any other sums payable in respect of this Agreement.
(iv) Evidence of Loss. For the purpose of this Section 8, it will he
sufficient for a party to demonstrate that it would have suffered a loss
had an actual exchange or purchase been made.
Section 9. Miscellaneous
(i) Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties with respect to its subject
matter and supersedes all oral communication and prior writings with
respect thereto.
(ii) Amendments. No amendment, modification or waiver in respect of
this Agreement will be effective unless in writing (including a writing
evidenced by a facsimile transmission) and executed by each of the
parties or confirmed by an exchange of telexes or electronic messages on
an electronic messaging system.
(iii) Survival of Obligations. Without prejudice to Sections
2(a)(iii) and 6(c)(ii), the obligations of the parties under this
Agreement will survive the termination of any Transaction.
(iv) Remedies Cumulative. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement are
cumulative and not exclusive of any rights, powers, remedies and
privileges provided by law.
(v) Counterparts and Confirmations.
(1) This Agreement (and each amendment, modification and waiver
in respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will he deemed
an original.
(2) The parties intend that they are legally bound by the terms
of each Transaction from the moment they agree to those terms
(whether orally or otherwise). A Confirmation shall be entered into
as soon as practicable and may be executed and delivered in
counterparts (including by facsimile transmission) or be created by
an exchange of telexes or by an exchange of electronic messages on
an electronic messaging system, which in each case will be
sufficient for all purposes to evidence a binding supplement to this
Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic
message constitutes a Confirmation.
(vi) No Waiver of Rights. A failure or delay in exercising any
right, power or privilege in respect of this Agreement will not be
presumed to operate as a waiver, and a single or partial exercise of any
right, power or privilege will not be presumed to preclude any subsequent
or further exercise, of that right, power or privilege or the exercise of
any other right, power or privilege.
(vii) Headings. The headings used in this Agreement are for
convenience of reference only and are not to affect the construction of
or to be taken inio consideration in interpreting this Agreement.
Section 10. Offices; Multibranch Parties
(i) If Section 10(a) is specified in the Schedule as applying, each
party that enters into a Transaction through an Office other than its
head or home office represents to the other party that, notwithstanding
the place of booking office or jurisdiction of incorporation or
organisation of such party, the obligations of such party are the same as
if it had entered into the Transaction through its head or home office.
This representation will be deemed to be repeated by such party on each
date on which a Transaction is entered into.
(ii) Neither party may change the Office through which it makes and
receives payments or deliveries for the purpose of a Transaction without
the prior written consent of the other party.
(iii) If a party is specified as a Multibranch Party in the
Schedule, such Multibranch Party may make and receive payments or
deliveries under any Transaction through any Office listed in the
Schedule, and the Office through which it makes and receives payments or
deliveries with respect to a Transaction will be specified in the
relevant Confirmation.
Section 11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees and Stamp Tax, incurred by such other party by reason of the enforcement
and protection of its rights under this Agreement or any Credit Support
Document to which the Defaulting Party is a party or by reason of the early
termination of any Transaction, including, but not limited to, costs of
collection.
Section 12. Notices
(i) Effectiveness. Any notice or other communication in respect of
this Agreement may be given in any manner set forth below (except that a
notice or other communication under Section 5 or 6 may not be given by
facsimile transmission or electronic messaging system) to the address or
number or in accordance with the electronic messaging system details
provided (see the Schedule) and will be deemed effective as indicated:
(1) if in writing and delivered in person or by courier, on the
date it is delivered;
(2) if sent by telex, on the date the recipient's answerback is
received;
(3) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient
in legible form (it being agreed that the burden of proving receipt
will be on the sender and will not be met by a transmission report
generated by the sender's facsimile machine);
(4) if sent by certified or registered mail (airmail, if
overseas) or the equivalent (return receipt requested), on the date
that mail is delivered or its delivery is attempted; or
(5) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(ii) Change of Addresses. Either party may by notice to the other
change the address, telex or facsimile number or electronic messaging
system details at which notices or other communications are to be given
to it.
Section 13. Governing Law and Jurisdiction
(i) Governing Law. This Agreement will be governed by and construed
in accordance with the law specified in the Schedule.
(ii) Jurisdiction. With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party irrevocably:
(1) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York
and the United States District Court located in the Borough of
Manhattan in New York City, if this Agreement is expressed to be
governed by the laws of the State of New York; and
(2) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over
such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the
Civil Jurisdiction and Judgments Xxx 0000 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(iii) Service of Process. Each party irrevocably appoints the
Process Agent (if any) specified opposite its name in the Schedule to
receive, for it and on its behalf, service of process in any Proceedings.
If for any reason any party's Process Agent is unable to act as such,
such party will promptly notify the other party and within 30 days
appoint a substitute process agent acceptable to the other party. The
parties irrevocably consent to service of process given in the manner
provided for notices in Section 12. Nothing in this Agreement will affect
the right of either party to serve process in any other manner permitted
by law.
(iv) Waiver of Immunities. Each party irrevocably waives, to the
fullest extent permitted by applicable law, with respect to itself and
its revenues and assets (irrespective of their use or intended use), all
immunity on the grounds of sovereignty or other similar grounds from (i)
suit, (ii) jurisdiction of any court, (iii) relief by way of injunction,
order for specific performance or for recovery of property, (iv)
attachment of its assets (whether before or after judgment) and (v)
execution or enforcement of any judgment to which it or its revenues or
assets might otherwise be entitled in any Proceedings in the courts of
any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any
Proceedings.
Section 14. Definitions
As used in this Agreement:
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified the Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power of
the entity or person.
"Applicable Rate" means:
(i) in respect of obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Defaulting Party,
the Default Rate;
(ii) in respect of an obligation to pay an amount under Section
6(e) of either party from and after the Rate (determined in
accordance with Section 6(d)(ii)) on which that amount is payable,
the Default Rate;
(iii) in respect of all other obligations payable or
deliverable (or which would have been but for Section 2(a)(iii)) by
a Non-defaulting Party, the Non-default Rate; and
(iv) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law)'that occurs on or after the
date on which the relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified
as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed
in respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to
such recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organised, present or engaged in a trade
or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient, or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case
of tax matters, by the practice of any relevant governmental revenue
authority) and "lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and
foreign currency deposits) (a) in relation to any obligation under Section
2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so
specified, as otherwise agreed by the parties in writing or determined
pursuant to provisions contained, or incorporated by reference, in this
Agreement, (b) in relation to any other payment, in the place where the
relevant account is located and, if different, in the principal financial
centre, if any, of the currency of such payment, (c) in relation to any notice
or other communication, including notice contemplated under Section 5(a)(i),
in the city specified in the address for notice provided by the recipient and,
in the case of a notice contemplated by Section 2(b), in the place where the
relevant new account is to be located and (d) in relation to Section
5(a)(v)(2), in the relevant locations for performance with respect to such
Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding, or at the election of such party but without
duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position
(or any gain resulting from any of them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been made
(assuming satisfaction of each applicable condition precedent) on or before
the relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out- of-pocket expenses referred to under
Section 11. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the
earliest date thereafter as is reasonably practicable. A party may (but need
not) determine its Loss by reference to quotations of relevant rates or prices
from one or more leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or
by such party (expressed as a positive number) in consideration of an
agreement between such party (taking into account any existing Credit Support
Document with respect to the obligations of such party) and the quoting
Reference Market-maker to enter into a transaction (the "Replacement
Transaction") that would have the effect of preserving for such party the
economic equivalent of any payment or delivery (whether the underlying
obligation was absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section 2(a)(i) in
respect of such Terminated Transaction or group of Terminated Transactions
that would, but for the occurrence of the relevant Early Termination Date,
have been required after that date. For this purpose, Unpaid Amounts in
respect of the Terminated Transaction or group of Terminated Transactions are
to be excluded but, without limitation, any payment or delivery that would,
but for the relevant Early Termination Date, have been required (assuming
satisfaction of each applicable condition precedent) after that Early
Termination Date is to be included. The Replacement Transaction would be
subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the
extent reasonably practicable as of the same day and time (without regard to
different time zones) on or as soon as reasonably practicable after the
relevant Early Termination Date. The day and time as of which those quotations
are to be obtained will be selected in good faith by the party obliged to make
a determination under Section 6(e), and, if each party is obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if
more than one quotation has the same highest value or lowest value, then
one of such quotations shall he disregarded. If fewer than three quotations
are provided, it will be deemed that the Market Quotation in respect of such
Terminated Transaction or group of Terminated Transactions cannot be
determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head
or home office.
"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organized, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or
imposed on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:
(v) the Termination Currency Equivalent of the Market
Quotations (whether positive or negative) for each Terminated
Transaction or group of Terminated Transactions for which a Market
Quotation is determined; and
(vi) such party's Loss (whether positive or negative and
without reference to any Unpaid Amounts) for each Terminated
Transaction or group of Terminated Transactions for which a Market
Quotation cannot be determined or would not (in the reasonable
belief of the party making the determination) produce a commercially
reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money. "Specified Transaction" means,
subject to the Schedule, (a) any transaction (including an agreement with
respect thereto) now existing or hereafter entered into between one party to
this Agreement (or any Credit Support Provider of such party or any applicable
Specified Entity of such party) and the other party to this Agreement (or any
Credit Support Provider of such other party or any applicable Specified Entity
of such other party) which is a rate swap transaction, basic swap, forward
rate transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option or any
other similar transaction (including any option with respect to any of these
transactions), (b) any combination of these transactions and (c) any other
transaction identified as a Specified Transaction in this Agreement or the
relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto)
that is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation
or similar tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in
effect immediately before the effectiveness of the notice designating that
Early Termination Date (or, if "Automatic Early Termination" applies,
immediately before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by'
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or,
if the relevant Market Quotation or Loss (as the case may be), is determined
as of a later date, that later date, with the Termination Currency at the rate
equal to the spot exchange rate of the foreign exchange agent (selected as
provided below) for the purchase of such Other Currency with the Termination
Currency at or about 11:00 am. (in the city in which such foreign exchange
agent is located) on such date as would be customary for the determination of
such a rate for the purchase of such Other Currency for value on the relevant
Early Termination Date or that later date. The foreign exchange agent will, if
only one party is obliged to make a determination under Section 6(e), be
selected in good faith by that party and otherwise will be agreed by the
parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon
Merger or, if specified to be applicable, a Credit Event Upon Merger or an
Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or
prior to such Early Termination Date and which remain unpaid as at such Early
Termination Date and (b) in respect of each Terminated Transaction, for each
obligation under Section 2(a)(i) which was (or would have been but for Section
2(a)(iii) required to be settled by delivery to such party on or prior to such
Early Termination Date and which has not been so settled as at such Early
Termination Date, an amount equal to the fair market value of that which was
(or would have been) required to be delivered as of the originally scheduled
date for delivery, in each case together with (to the extent permitted under
applicable law) interest, in the currency of such amounts, from (and
including) the date such amounts or obligations were or would have been
required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b)
above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency. Equivalents of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
CLAYMORE MACROSHARES CLAYMORE MACROSHARES
OIL UP HOLDING TRUST OIL DOWN HOLDING TRUST
By: Investors Bank & Trust Company, By: Investors Bank & Trust Company,
not in its individual capacity but not in its individual capacity but
solely as trustee of the Claymore solely as trustee of the Claymore
MACROshares Oil Up Holding Trust MACROshares Oil Down Holding Trust
By: /S/ Xxxxxxx X. Xxxxxx By:/S/ Xxxxxxx X. Xxxxxx
--------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: President Title: President
Date: November 24, 2006 Date: November 24, 2006
