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 in equity 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 otherwise5 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 not in its individual capacity
but solely as trustee of the but solely as trustee of the
Claymore MACROshares Oil Up Claymore MACROshares Oil Down
Holding Trust 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
