EXHIBIT 4.1
FORM OF
CLAYMORE MACROSHARES OIL DOWN
HOLDING TRUST AGREEMENT
================================================================================
MACRO SECURITIES DEPOSITOR, LLC,
as Depositor,
INVESTORS BANK & TRUST COMPANY,
as Trustee
and
CLAYMORE SECURITIES, INC.,
as Administrative Agent and Marketing Agent
CLAYMORE MACROSHARES OIL DOWN HOLDING TRUST
TRUST AGREEMENT
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.....................................................2
Section 1.2 Other Definitional Provisions..................................19
ARTICLE II
CREATION AND DECLARATION OF THE TRUST;
FORM OF THE CERTIFICATES; THE INITIAL DEPOSIT;
DELIVERY, REGISTRATION OF TRANSFER AND
SURRENDER OF DOWN-MACRO HOLDING SHARES
Section 2.1 Initial Deposit................................................20
Section 2.2 Acceptance by Trustee..........................................20
Section 2.3 Limited Purpose of the Down-MACRO Holding Trust................20
Section 2.4 Representations and Warranties of the Depositor................20
Section 2.5 Form of Certificates; Book-Entry System; Transferability
of Down-MACRO Holding Shares...................................22
Section 2.6 Paired Subsequent Issuances....................................26
ARTICLE III
APPOINTMENT OF THE TRUSTEE, ADMINISTRATIVE AND MARKETING AGENT;
THE ADMINISTRATION AND REINVESTMENT OF THE TREASURIES;
ESTABLISHMENT OF ACCOUNTS
Section 3.1 Acceptance of Appointment and Matters Relating to the Trustee..28
Section 3.2 Representations, Warranties and Covenants of the Trustee.......29
Section 3.3 Acceptance of Appointment and Matters Relating to the
Administrative and Marketing Agent.............................31
Section 3.4 Representations, Warranties and Covenants of the
Administrative Agent and Marketing Agent.......................32
Section 3.5 Establishment of the Securities Account........................34
Section 3.6 Establishment of the Distribution Account......................35
Section 3.7 Administration of Treasuries...................................35
Section 3.8 Establishment of the Fee Payment Account.......................37
ARTICLE IV
CALCULATIONS
Section 4.1 Calculations on Price Determination Days.......................38
Section 4.2 Calculation of Intraday Indicative Values......................39
i
Section 4.3 Calculation of Income Distribution Payments and
Settlement Payments............................................39
Section 4.4 Calculations Relating to Paired Subsequent Issuances and
Paired Optional Redemptions....................................39
ARTICLE V
RIGHTS OF HOLDERS OF THE DOWN-MACRO HOLDING SHARES
Section 5.1 Rights of Holders of the Down-MACRO Holding Shares.............40
Section 5.2 Priority of Payments...........................................40
Section 5.3 Payment of Expenses............................................41
Section 5.4 Payment of Fees................................................42
Section 5.5 Payments under the Income Distribution Agreement...............43
Section 5.6 Payments under the Settlement Contracts........................43
ARTICLE VI
REDEMPTIONS OF THE DOWN-MACRO HOLDING SHARES
Section 6.1 Paired Optional Redemptions....................................43
Section 6.2 Cancellation of a Redemption Order.............................45
Section 6.3 Redemptions on Early Termination Date and Final Scheduled
Termination Date...............................................45
Section 6.4 Settlement of the Settlement Contracts and Adjustment to the
Aggregate Amount of the Income Distribution Agreement..........45
Section 6.5 Settlement.....................................................46
ARTICLE VII
CAPITAL ACCOUNTS OF HOLDERS
AND OPERATION THEREOF; TAX ALLOCATIONS
Section 7.1 Capital Contributions..........................................47
Section 7.2 Capital Accounts; Allocations..................................47
Section 7.3 Regulatory and Related Allocations.............................49
Section 7.4 Transfer of or Change in Down-MACRO Holding Shares.............50
Section 7.5 Tax Allocations................................................50
Section 7.6 Determination of Certain Matters...............................52
Section 7.7 No Deficit Makeup..............................................52
Section 7.8 U.S. Partnership Tax Treatment.................................53
Section 7.9 Definitions....................................................53
ARTICLE VIII
REPORTS TO HOLDERS OF THE DOWN-MACRO HOLDING SHARES
Section 8.1 Reports to Holders of the Down-MACRO Holding Shares............54
Section 8.2 Form 8-K Disclosure............................................56
Section 8.3 Listing and De-Listing of the Up-MACRO Holding Shares..........57
ii
ARTICLE IX
OTHER MATTERS RELATING TO THE DEPOSITOR
Section 9.1 Liability of the Depositor.....................................57
Section 9.2 Limitations on Liability of the Depositor and Claymore
Securities, Inc................................................57
Section 9.3 Liabilities; Indemnification...................................58
ARTICLE X
MATTERS RELATING TO THE ADMINISTRATIVE AGENT
Section 10.1 Role of the Administrative Agent...............................59
Section 10.2 Liability of the Administrative Agent..........................59
Section 10.3 Limitation on Liability of the Administrative Agent and Others.59
Section 10.4 Administrative Agent Indemnification of the Down-MACRO Holding
Trust and the Trustee..........................................59
Section 10.5 Delegation of Duties...........................................60
ARTICLE XI
EARLY TERMINATION
Section 11.1 Termination Triggers..........................................60
ARTICLE XII
TRUSTEE TERMINATION EVENTS
Section 12.1 Trustee Termination Events.....................................62
Section 12.2 Force Majeure..................................................63
Section 12.3 Notification to Holders of the Down-MACRO Holding Shares.......63
ARTICLE XIII
THE TRUSTEE
Section 13.1 Duties of Trustee..............................................63
Section 13.2 Rights of the Trustee..........................................65
Section 13.3 Trustee Not Liable for Recitals in Down-MACRO Holding Shares...66
Section 13.4 Individual Rights of the Trustee...............................66
Section 13.5 Compensation...................................................66
Section 13.6 Indemnification................................................66
Section 13.7 Eligibility Requirements.......................................67
Section 13.8 Resignation or Removal of Trustee..............................67
Section 13.9 Successor Trustee..............................................68
Section 13.10 Merger or Consolidation........................................68
Section 13.11 Appointment of Co-Trustee or Separate Trustee..................68
Section 13.12 Books, Records; Taxes; Audit...................................70
Section 13.13 Trustee May Enforce Claims Without Possession of
Down-MACRO Holding Shares......................................71
iii
Section 13.14 Suits for Enforcement..........................................71
Section 13.15 Maintenance of Office or Agency................................71
ARTICLE XIV
TERMINATION
Section 14.1 Termination of Trust...........................................71
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1 Amendment; Waiver of Past Defaults and Termination.............72
Section 15.2 Registration (Initial and Continuing) of Down-MACRO
Holding Shares; Certain Securities Law Filings.................73
Section 15.3 Prospectus Delivery............................................73
Section 15.4 Protection of Right, Title and Interest to Trust Assets........74
Section 15.5 Limitation on Rights of Holders of the Down-MACRO
Holding Shares.................................................74
Section 15.6 Certain Rights of Holders of Down-MACRO Holding Shares;
Voting.........................................................75
Section 15.7 MACRO Licensing Agreement with MacroMarkets....................75
Section 15.8 Governing Law; Jurisdiction....................................76
Section 15.9 Notices........................................................76
Section 15.10 Severability of Provisions.....................................77
Section 15.11 Down-MACRO Holding Shares Nonassessable and Fully Paid.........77
Section 15.12 Further Assurances.............................................77
Section 15.13 Non-Petition Covenant; No Proceedings..........................78
Section 15.14 No Waiver; Cumulative Remedies.................................78
Section 15.15 Counterparts...................................................78
Section 15.16 Third-Party Beneficiaries......................................78
Section 15.17 Actions or Notices by Holders of the Down-MACRO Holding Shares.79
Section 15.18 Merger and Integration.........................................79
Section 15.19 Headings.......................................................79
iv
EXHIBITS
EXHIBIT A FORM OF DOWN-MACRO HOLDING SHARE
EXHIBIT B FORM OF INCOME DISTRIBUTION AGREEMENT
EXHIBIT C FORM OF SETTLEMENT CONTRACT
EXHIBIT D FORM OF PARTICIPANTS AGREEMENT
EXHIBIT E FORM OF MACRO LICENSING AGREEMENT
EXHIBIT F FORM OF NYMEX SUBLICENSING AGREEMENT
EXHIBIT G FORM OF QUARTERLY SHAREHOLDER STATEMENT
v
This TRUST AGREEMENT, dated as of August [ ], 2006 (this "Trust
Agreement"), is hereby entered into among MACRO SECURITIES DEPOSITOR, LLC, a
Delaware limited liability company, as Depositor (the "Depositor"), INVESTORS
BANK & TRUST COMPANY, not in its individual capacity but solely as Trustee (the
"Trustee"), and CLAYMORE SECURITIES, INC., not in its individual capacity but
solely as Administrative Agent (in such capacity, the "Administrative Agent")
and as Marketing Agent (in such capacity, the "Marketing Agent").
WHEREAS, the parties hereto have entered into this Trust Agreement
to form a trust under the laws of the State of New York to be known as the
"Claymore MACROshares Oil Down Holding Trust" and referred to herein as the
"Down-MACRO Holding Trust;"
WHEREAS, concurrently with the formation of the Down-MACRO Holding
Trust, the Depositor, the Trustee, the Administrative Agent and the Marketing
Agent have also entered into a trust agreement, dated as of the date hereof, to
form a trust under the laws of the State of New York that shall be known as the
" Claymore MACROshares Oil Up Holding Trust" and is referred to herein as the
"Up-MACRO Holding Trust;"
WHEREAS, (i) the Down-MACRO Holding Trust shall issue shares to be
known as the "Claymore MACROshares Oil Down Holding Shares" (referred to herein
as the "Down-MACRO Holding Shares") and (ii) the Up-MACRO Holding Trust shall
issue shares to be known as the "Claymore MACROshares Oil Up Holding Shares"
(referred to herein as the "Up-MACRO Holding Shares" and, together with the
Down-MACRO Holding Shares, the "Paired Holding Shares");
WHEREAS, the Depositor has assigned, transferred, conveyed and
otherwise set over to the Trustee the Initial Deposit (as defined herein) in
consideration for the issuance of founder's shares which shall constitute
permanent capital of the Down-MACRO Holding Trust, and the Trustee hereby
acknowledges receipt of such Initial Deposit in the Down-MACRO Holding Trust;
and
WHEREAS, the parties hereto wish to set forth the terms of the
Down-MACRO Holding Trust and the Down-MACRO Holding Shares and the respective
powers and duties of the Trustee, the Administrative Agent, the Marketing Agent
and the Depositor.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, representations and warranties hereinafter set forth and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties intending to be legally bound hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Definitions. Whenever used in this Trust Agreement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.
"Account" or "Accounts" shall mean any or all of the Securities
Account, the Distribution Account and/or the Fee Payment Account, as applicable.
"Acquisition Guidelines" shall have the meaning set forth in Section
3.7(a).
"Administrative Agent" shall mean Claymore Securities, Inc., in its
capacity as administrative agent hereunder, and its successors and assigns.
"Administrative Agent Indemnified Party" shall have the meaning set
forth in Section 10.4.
"Affiliate" shall mean with respect to any specified Person, another
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with the Person specified. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and "controlled" and "controlling"
have meanings correlative to the foregoing. A company is assumed to be an
Affiliate if the parent corporation owns 20 percent or more of the outstanding
shares.
"Aggregate Par Amount" shall mean, with respect to any Up-MACRO Holding
Shares, any Down-MACRO Holding Shares or any Paired Holding Shares, an amount
equal to the number of such shares multiplied by the Up-MACRO Stated Par Amount
or the Down-MACRO Stated Par Amount, as applicable.
"AMEX" shall mean the American Stock Exchange, LLC.
"Applicable Reference Price of Crude Oil" shall mean, with respect to
any Price Determination Day, the settlement price of the Light Sweet Crude Oil
Futures Contract, as established and reported by NYMEX on a per barrel basis in
U.S. dollars at the end of each such day based upon the trading that has
occurred in that contract by open outcry and published to the consolidated tape,
provided, that if NYMEX abandons its open outcry format for the Light Sweet
Crude Oil Futures Contract, the Applicable Reference Price of Crude Oil shall be
based on trading of the Light Sweet Crude Oil Futures Contract on the substitute
electronic trading platform established by NYMEX, and, in the event that the
NYMEX License has been terminated by NYMEX and MacroMarkets LLC and the
Depositor have successfully negotiated a license with a Substitute Oil Price
Provider, the settlement price for the Substitute Reference Oil Price that is
established for each such Price Determination Day.
2
"Authorized Participant" shall mean any entity that (1) is a registered
broker-dealer and a member in good standing with the National Association of
Securities Dealers, Inc., or a participant in the securities markets such as a
bank or other financial institution that is not required to register as a
broker-dealer or be a member of the National Association of Securities Dealers,
Inc. in order to engage in securities transactions, (2) is a participant in DTC
or has indirect access to the clearing facilities of DTC by virtue of a
custodial relationship with a DTC Participant, (3) is not a Benefit Plan
Investor and (4) has entered into a Participants Agreement.
"Available Income" shall mean the Up-MACRO Available Income or the
Down-MACRO Available Income, as applicable.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as
amended from time to time, and as codified as 11 U.S.C. Section 101 et seq.
"Beneficial Owners" shall have the meaning set forth in Section 2.5(b).
"Benefit Plan Investor" shall mean any (i) "employee benefit plan" (as
defined in Section 3(3) of ERISA), whether or not subject to Title I of ERISA,
including without limitation governmental plans, foreign pension plans and
church plans, (ii) "plan" (as defined in Section 4975(e)(1) of the Code),
whether or not subject to Section 4975 of the Code, including without limitation
individual retirement accounts and ▇▇▇▇▇ plans, or (iii) entity whose underlying
assets include plan assets by reason of such an employee benefit plan's or
plan's investment in such entity, including without limitation, as applicable,
an insurance company general account.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions and stock exchanges in New York, New York are
authorized or required by law, regulation or executive order to close.
"Calculation Agency Agreement" shall mean the Calculation Agency
Agreement, dated as of the date hereof, by and among the Trustee, the Down-MACRO
Holding Trustee, the Up-MACRO Tradeable Trustee, the Down-MACRO Tradeable
Trustee, the NYMEX and the AMEX, pursuant to which the AMEX shall render the
calculations set forth therein and in Article IV hereof.
"Calculation Agent" shall mean the AMEX in its role as calculation
agent under the Calculation Agency Agreement.
"Calculation Period" shall mean with respect to any Distribution Date,
the period from and including the last Distribution Date (or, in the case of the
first Distribution Date, from and including the Closing Date) to but excluding
the current Distribution Date. The Calculation Period that precedes a particular
Distribution Date is referred to herein as being "related" to such Distribution
Date.
"Certificate" shall mean a global certificate registered in the name of
Cede & Co. or another designee of the Depository that is executed and delivered
by the Trustee under this Trust Agreement evidencing the Up-MACRO Holding
Shares.
"Closing Date" shall mean September [ ], 2006.
"Code" shall mean U.S. Internal Revenue Code of 1986, as amended.
"Corporate Trust Office" shall have the meaning set forth under Section
13.15.
3
"Creation Order" shall have the meaning set forth in Section 3(b) of
the Participants Agreement.
"Daily Fee Accrual Rate" shall mean, with respect to any date of
determination until the second anniversary of the Closing Date, a rate equal to
1.60% per annum, and with respect to any date of determination during any
succeeding year, 1.50% per annum, divided by, in each case, the actual number of
days in the current calendar year (as calculated to the tenth decimal place).
"Daily Yield Rate" shall mean, with respect to any date of
determination and each Treasury on deposit in the Up-MACRO Holding Trust or the
Down-MACRO Holding Trust, as applicable, the applicable per annum Yield Rate for
that Treasury divided by the actual number of days in the current calendar year
(as calculated to the tenth decimal place).
"Depositor" shall mean MACRO Securities Depositor, LLC and its
successors and assigns.
"Depositor Indemnified Party" shall have the meaning set forth in
Section 9.3(c).
"Depository" shall mean The Depository Trust Company and its successors
and assigns.
"Depository Agreement" shall mean the Letter of Representations, dated
as of [ ], 2006, delivered by the Trustee and the Depositor to the Depository,
as it may be amended and restated from time to time.
"Designated Maturity" shall mean, with respect to any date of
determination, (i) the next succeeding calendar month if such date of
determination occurs during the period from the first day of the current
calendar month through and including the tenth Business Day of the current
calendar month and (ii) the second calendar month succeeding the calendar month
in which such date of determination occurs if such date of determination occurs
during the period from the eleventh Business Day through the last day of the
current calendar month.
"Distribution Account" shall have the meaning set forth in Section
3.6(a).
"Distribution Date" shall mean the 25th day of March, June, September
and December of each year or, if any such day is not a Business Day, the
following Business Day, commencing in September of 2006.
"Distribution Payment Date" means the first Business Day of the month
immediately following the month in which the related Distribution Date occurred.
"Down-MACRO Aggregate Par Amount" shall mean, with respect to any
date of determination, the product of (a) the aggregate number of Down-MACRO
Holding Shares that are Outstanding on such date and (b) the Down-MACRO Stated
Par Amount.
"Down-MACRO Asset Amount" shall mean, (i) with respect any
Distribution Date, the aggregate amount of funds on deposit in the Down-MACRO
Distribution Account on such Distribution Date, and (ii) with respect to any
other date of determination occurring during a Calculation Period that is not
a Distribution Date, an amount equal to: (A) the Down-MACRO Investment Amount
plus (B) the Down-MACRO Available Income Accrual for each day that has
elapsed during such Calculation Period (not including the date of
determination) minus (C) any portion of that Down-Macro Available Income
Accrual which was distributed in connection with
4
all Paired Optional Redemptions that have occurred during such Calculation
Period prior to the date of determination plus (D) funds deposited into the
Down-MACRO Holding Trust in connection with all Paired Subsequent Issuances that
have occurred during such Calculation Period prior to the date of determination
that represent the aggregate available income that would have accrued on the
Aggregate Par Amount of the Down-MACRO Holding Shares if cash equal to that
amount had been invested on the preceding Distribution Date.
"Down-MACRO Available Income" shall mean with respect to any
Distribution Date and the related Calculation Period, the funds remaining on
deposit in the Down-MACRO Distribution Account after payment priorities first
through fourth of Section 5.2(a) of the Down-MACRO Holding Trust Agreement
have been satisfied in full.
"Down-MACRO Available Income Accrual" shall mean, on any day of a
Calculation Period, (i) the sum of, for each Treasury on deposit in the
Down-MACRO Holding Trust on such day, the product of (x) the purchase price at
which the Down-MACRO Holding Trust acquired that Treasury multiplied by (y)
the Daily Yield Rate applicable to that Treasury minus (ii) the Down-MACRO
Daily Fee Accrual. If the result of the foregoing calculation is a negative
number, then the Down-MACRO Available Income Accrual shall be equal to zero.
"Down-MACRO Daily Fee Accrual" shall mean for any Calculation Period
and any date of determination occurring during such Calculation Period, the
product of the Daily Fee Accrual Rate and the Down-MACRO Asset Amount on such
day.
"Down-MACRO Distribution Account" shall mean the distribution account
for the Down-MACRO Holding Trust established pursuant to the Down-MACRO Holding
Trust Agreement.
"Down-MACRO Earned Income Accrual" shall mean, with respect to any
Price Determination Day:
o if on such day the Ending Level is below the Starting Level,
the Down-MACRO Available Income Accrual plus the Up-MACRO
Available Income Accrual on that Price Determination Day
multiplied by the Price Level Percentage Change on that day;
o if on such day the Ending Level is above the Starting Level,
the Down-MACRO Available Income Accrual minus the Down-MACRO
Available Income Accrual multiplied by the Price Level
Percentage Change on that day; and
o if on such day the Ending Level is equal to the Starting
Level, the Down-MACRO Available Income Accrual.
The Down-MACRO Earned Income Accrual for each day that is not a Price
Determination Day shall be determined by reference to the Price Level Percentage
Change on the last preceding Price Determination Day.
The Down-MACRO Earned Income Accrual for each Calculation Period shall be equal
to the sum of the Down-MACRO Earned Income Accruals for each day of that
Calculation Period up to but not including the related Distribution Date, as
reduced by any portion of that accrual which was distributed in connection with
one or more Paired Optional Redemptions effected during that Calculation Period
and increased in connection with Paired Subsequent Issuances by the portion
5
of the Underlying Value at which shares were created that represents
Down-MACRO Earned Income Accruals.
"Down-MACRO Fee Deduction Amount" shall mean, with respect to any
Calculation Period, an amount equal to the sum of, for each day during that
Calculation Period, the Down-MACRO Asset Amount as of that day multiplied by a
rate equal to 1.60% per annum for the first two years following the Closing Date
and a rate of 1.50% per annum thereafter, divided by, in each case, the actual
number of days in the current calendar year.
"Down-MACRO Fees" shall have the meaning specified in Section 5.4 of
the Down-MACRO Holding Trust Agreement.
"Down-MACRO Holding Shares" shall have the meaning set forth in the
Recitals to this Trust Agreement.
"Down-MACRO Holding Trust" shall have the meaning set forth in the
Recitals to this Trust Agreement.
"Down-MACRO Holding Trust Agreement" shall mean the Down-MACRO Holding
Trust Agreement, dated as of the date hereof, among the Depositor, the
Administrative Agent, the Marketing Agent and the Down-MACRO Holding Trustee, as
such agreement may be amended from time to time.
"Down-MACRO Holding Trustee" shall mean Investors Bank & Trust Company,
not in its individual capacity but solely as trustee of the Down-MACRO Holding
Trust.
"Down-MACRO Income Distribution Payment" shall mean with respect to any
Distribution Date an amount equal to:
(a) if the Down-MACRO Underlying Value on the last Price
Determination Day preceding such Distribution Date is greater than or equal to
the Down-MACRO Asset Amount on such date, zero; and
(b) if the Down-MACRO Asset Amount on the last Price Determination
Day preceding such Distribution Date is greater than the Down-MACRO Underlying
Value on such date, an amount equal to (i) the Down-MACRO Available Income for
such Distribution Date multiplied by (ii) a fraction the numerator of which is
the difference between the Down-MACRO Asset Amount and the Down-MACRO Underlying
Value and the denominator of which is the Down-MACRO Asset Amount.
"Down-MACRO Increase Amount" shall mean, with respect to any Subsequent
Issuance Date, an amount equal to (a) the number of Down-MACRO Holding Shares
requested by an Authorized Participant and created on that Subsequent Issuance
Date multiplied by (b) the Down-MACRO Stated Par Amount.
"Down-MACRO Investment Amount" shall mean, (i) with respect to any
Distribution Date, an amount equal to the amount reinvested in Treasuries
pursuant to Section 5.2(a)(iv) of the Down-MACRO Holding Trust Agreement and
(ii) with respect to any day other than a Distribution Date, an amount equal to
the amount in clause (i) divided by the number of Down-MACRO Holding Shares
Outstanding on that Distribution Date multiplied by the number of Down-MACRO
Holding Shares Outstanding on the date of determination.
6
"Down-MACRO Per Share Underlying Value" means, with respect to each
Price Determination Day and each Down-MACRO Holding Share or Down-MACRO
Tradeable Share, an amount calculated by dividing the Down-MACRO Underlying
Value by the number of Down-MACRO Holding Shares Outstanding on that day.
"Down-MACRO Redemption Percentage" shall mean (i) with respect to any
Redemption Date, a fraction, expressed as a percentage, the numerator of which
is the aggregate number of Down-MACRO Holding Shares that are being redeemed on
such date and the denominator of which is the aggregate number of Down-MACRO
Holding Shares that are Outstanding on such date prior to giving effect to the
Redemption Order placed on such Redemption Date and prior to giving effect to
any Purchase Orders that may also have been placed on such date and (ii) with
respect to an Early Termination Date or the Final Scheduled Termination Date,
100%.
"Down-MACRO Settlement Payment" shall mean, with respect to any
Redemption Date, an Early Termination Date or the Final Scheduled Termination
Date, an amount equal to:
(a if the Down-MACRO Underlying Value on such Redemption Date,
the last Price Determination Day preceding such Early Termination Date, or the
last Price Determination Day preceding the Final Scheduled Termination Date is
greater than or equal to the Down-MACRO Investment Amount on such date, zero;
and
(b) if the Down-MACRO Underlying Value on such Redemption Date,
the last Price Determination Day preceding such Early Termination Date or the
last Price Determination Day preceding the Final Scheduled Termination Date is
less than the Down-MACRO Investment Amount on such date, an amount equal to (i)
the excess of such Down-MACRO Investment Amount over such Down-MACRO Underlying
Value multiplied by (ii) the Down-MACRO Redemption Percentage for such
Redemption Date, Early Termination Date or Final Scheduled Termination Date.
"Down-MACRO Stated Par Amount" shall mean the stated par amount of
$[ ] per Down-MACRO Holding Share.
"Down-MACRO Tradeable Shares" shall mean the pass-through securities
issued by the Down-MACRO Tradeable Trust pursuant to the Down-MACRO Tradeable
Trust Agreement.
"Down-MACRO Tradeable Trust" shall mean the Claymore MACROshares Oil
Down Tradeable Trust formed under the Down-MACRO Tradeable Trust Agreement.
"Down-MACRO Tradeable Trust Agreement" shall mean the Down-MACRO
Tradeable Trust Agreement, dated as of the date hereof, among the Depositor, the
Administrative Agent, the Marketing Agent and the Down-MACRO Tradeable Trustee.
"Down-MACRO Tradeable Trustee" shall mean Investors Bank & Trust
Company, not in its individual capacity but solely as trustee of the Down-MACRO
Tradeable Trust.
"Down-MACRO Underlying Value" shall mean, with respect to any Price
Determination Day:
(a) if the Ending Level is below the Starting Level, an amount
equal to (i) the sum of the Down-MACRO Earned Income Accruals for each day that
has elapsed during the current Calculation Period, up to and including the
current Price Determination Day plus (ii) the Down-MACRO
7
Investment Amount for that Calculation Period plus (iii) (x) the Up-MACRO
Investment Amount for that Calculation Period multiplied by (y) the Price Level
Percentage Change for the Down-MACRO Holding Trust on such Price Determination
Day;
(b) if the Ending Level is above the Starting Level, an amount
equal to (i) the sum of the Down-MACRO Earned Income Accruals for each day that
has elapsed during the current Calculation Period, up to and including the
current Price Determination Day plus (ii) the Down-MACRO Investment Amount for
that Calculation Period minus (iii) (x) the Down-MACRO Investment Amount for
that Calculation Period multiplied by (y) the Price Level Percentage Change for
the Up-MACRO Holding Trust on such Price Determination Day; and
(c) if the Ending Level is equal to the Starting Level, an amount
equal to the sum of the Down-MACRO Earned Income Accruals for each day that has
elapsed during the current Calculation Period, up to and including the current
Price Determination Day plus the Down-MACRO Investment Amount.
"DTC" shall mean The Depository Trust Company.
"DTC Participant" shall mean a participant of the Depository.
"Early Termination Date" shall mean with respect to any date of
determination, the next Distribution Date that follows the occurrence of a
Termination Trigger.
"Eligible Deposit Account" shall mean either (a) a segregated
non-interest bearing trust account with an Eligible Institution or (b) a
segregated non-interest bearing trust account with the corporate trust
department of a depository institution organized under the laws of the United
States or any one of the states thereof, including the District of Columbia (or
any domestic branch of a foreign bank), and acting as a trustee for funds
deposited in such account, so long as any of the securities of such depository
institution shall have a credit rating from a nationally recognized rating
agency in one of its generic credit rating categories which signifies investment
grade.
"Eligible Institution" shall mean a depository institution (which may
be the Trustee or an Affiliate thereof) organized under the laws of the United
States or any one of the states thereof which at all times (i) has either (x) a
long-term unsecured debt rating of "A2" or better by ▇▇▇▇▇'▇ Investors Service,
Inc. or (y) a certificate of deposit rating of "P-1" by ▇▇▇▇▇'▇ Investors
Service, Inc., (ii) has either (x) a long-term unsecured debt rating of "AAA" by
Standard & Poor's Rating Service or (y) a certificate of deposit rating of
"A-l+" by Standard & Poor's Rating Service and (iii) is a member of the Federal
Deposit Insurance Corporation.
"Eligible Treasury" shall mean (i) any United States Treasury ▇▇▇▇,
note or bond, issued and guaranteed by the United States Department of the
Treasury, and (ii) any repurchase agreement collateralized by United States
Treasury bills, notes or bonds held by the Trustee, in each case in the coin and
currency of the United States of America, that matures prior the next scheduled
Distribution Date; provided, however, that "Eligible Treasury" shall not include
any treasury inflation-protected securities, I bonds, EE/E bonds, HH/H bonds or
any other financial product of the United States Department of the Treasury that
is issued as a physical certificate.
"Ending Level" shall mean, with respect to any Price Determination Day,
the Applicable Reference Price of Crude Oil on such Price Determination Day.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
8
"Event of Bankruptcy" shall occur with respect to any specified Person,
if:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or all
or any substantial part of its assets, or any similar action with respect to
such Person under any law relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts, and such case or proceeding
shall continue undismissed, or unstayed and in effect, for a period of sixty
(60) consecutive days; or an order for relief in respect of such Person shall be
entered in an involuntary case under the federal bankruptcy laws or other
similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect, or
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or for any substantial part of its property, or shall
make any general assignment for the benefit of creditors; or
(c) the board of directors (or similar body) of such Person or the
trustee for such Person (in the case of a business or statutory trust) shall
vote to implement any of the actions set forth in clause (b) above.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Order" shall have the meaning set forth in Section 5(b) of
the Participants Agreement.
"Fee Payment Account" shall have the meaning specified in Section
3.8(a) of this Trust Agreement.
"Final Distribution" shall mean any distribution made in redemption of
all or a portion of the Up-MACRO Holding Shares pursuant to Section 5.2(a) or
5.2(b) on the Final Scheduled Termination Date, an Early Termination Date or a
Redemption Date.
"Final Scheduled Termination Date" shall mean the Distribution Date
scheduled to occur in September of 2026.
"Form 8-K" shall mean a report on Form 8-K filed pursuant to Section 13
or Section 15(d) of the Exchange Act.
"Form 10-Q" shall mean the current quarterly report on Form 10-Q filed
pursuant to Section 13 or Section 15(d) of the Exchange Act.
"Form 10-K" shall mean the current annual report on Form 10-K filed
pursuant to Section 13 or Section 15(d) of the Exchange Act.
"Founders' Equity Account" shall mean an Eligible Deposit Account
established and maintained by the Trustee, into which the Initial Deposit shall
be deposited.
9
"Founders' Shares" shall mean 1,000 shares with a par value of $1 per
share, issued to MacroMarkets LLC and Claymore Securities, Inc., which
constitute the permanent capital of the Up-MACRO Holding Trust.
"Governmental Authority" shall mean any federal, state, local or
foreign court or arbitrator or governmental department, commission, board,
bureau, agency, authority, instrumentality or regulatory body.
"Holder" shall mean a registered holder of an Up-MACRO Holding Share or
a Down-MACRO Holding Share, as applicable.
"Holding Share" shall mean either an Up-MACRO Holding Share or a
Down-MACRO Holding Share.
"Income Distribution Agreement" shall mean the confirmation to the
Master Agreement, substantially in the form attached hereto as Exhibit B, to be
dated as of the date hereof, pursuant to which the Paired Holding Trusts will be
obligated to make payments to each other on each Distribution Date based on the
Up-MACRO Underlying Value and the Down-MACRO Underlying Value, respectively.
"Income Distribution Payment" shall mean, with respect to any
Distribution Date, (i) if a payment is required to be made by the Up-MACRO
Holding Trust to the Down-MACRO Holding Trust under the Income Distribution
Agreement, an Up-MACRO Income Distribution Payment or (ii) if a payment is
required to be made by the Down-MACRO Holding Trust to the Up-MACRO Holding
Trust under the Income Distribution Agreement, a Down-MACRO Income Distribution
Payment.
"Indirect Participant" shall mean a Person who is not a participant of
the Depository but who is a Beneficial Owner through a DTC Participant, either
directly or indirectly.
"Initial Deposit" shall have the meaning set forth in Section 2.1
hereof.
"Light Sweet Crude Oil Futures Contract" shall mean the NYMEX Division
Light Sweet Crude Oil Futures Contract of the Designated Maturity.
"Loss" shall have the meaning set forth in Section 9.3(b).
"MACRO Licensing Agreement" shall mean the licensing agreement, dated
as of the date hereof, substantially in the form attached hereto as Exhibit E,
among MacroMarkets, the Up-MACRO Holding Trust, the Down-MACRO Holding Trust,
the Up-MACRO Tradeable Trust and the Down-MACRO Tradeable Trust pursuant to
which MacroMarkets shall license its patented MACROs technology to each of the
MACRO Trusts.
"MACRO Shares" shall mean any or all of the Up-MACRO Holding Shares,
the Down-MACRO Holding Shares, the Up-MACRO Tradeable Shares or the Down-MACRO
Tradeable Shares, as applicable.
"MACRO Trust" shall mean any or all of the Up-MACRO Holding Trust, the
Down-MACRO Holding Trust, the Up-MACRO Tradeable Trust or the Down-MACRO
Tradeable Trust, as applicable.
10
"MACRO Trustee" shall mean any or all of the Up-MACRO Holding Trustee,
the Down-MACRO Holding Trustee, the Up-MACRO Tradeable Trustee or the Down-MACRO
Tradeable Trustee, as applicable.
"MACRO Unit" shall mean 50,000 Up-MACRO Holding Shares and 50,000
Down-MACRO Holding Shares.
"MacroMarkets" shall mean MacroMarkets LLC, and its successors and
assigns.
"Marketing Agent" shall mean Claymore Securities, Inc., in its capacity
as marketing agent hereunder, and its successors and assigns.
"Master Agreement" shall mean the ISDA Master Agreement, dated as of
the Closing Date, between the Trustee, on behalf of the Up-MACRO Holding Trust
and the Down-MACRO Holding Trustee, acting on behalf of the Down-MACRO Holding
Trust, as amended and supplemented by the schedule relating thereto.
"Net Par Amount Decrease" shall mean, with respect to any Business Day,
the net decrease in the Up-MACRO Aggregate Par Amount, after giving effect to
any Paired Subsequent Issuances or Paired Optional Redemptions occurring on that
Business Day.
"Net Par Amount Increase" shall mean, with respect to any Business Day,
the net increase in the Up-MACRO Aggregate Par Amount, after giving effect to
any Paired Subsequent Issuances or Paired Optional Redemptions occurring on that
Business Day.
"New York City Time" shall mean the current local time in New York, New
York.
"Notices" shall have the meaning set forth in Section 15.9(a) hereof.
"NYMEX" shall mean New York Mercantile Exchange, Inc. and its
successors and assigns.
"NYMEX License" shall mean the licensing agreement, dated as of
September [ ], 2006, between MacroMarkets and NYMEX, pursuant to which NYMEX
will license to MacroMarkets the right to use and sublicense the settlement
price of the Light Sweet Crude Oil Futures Contract.
"NYMEX Sublicensing Agreement" shall mean the sublicensing agreement,
dated as of September [ ], 2006, in substantially the form attached hereto as
Exhibit F, between MacroMarkets and the Depositor and acknowledged by the NYMEX,
pursuant to which MacroMarkets will sublicense to the MACRO Trusts the right to
use the settlement price of the Light Sweet Crude Oil Futures Contract in
connection with calculating and making distributions on the MACRO Shares.
"NYMEX Sublicensing Fee" shall mean the fee payable to MacroMarkets
under the NYMEX Sublicensing Agreement.
"Officer's Certificate" shall mean a certificate signed by an officer
of the Depositor that is authorized to make such certification.
11
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be counsel for, or an employee of, the Person providing the opinion and which
opinion shall be reasonably acceptable to the Trustee.
"Outstanding" shall mean, with respect to the Up-MACRO Holding Shares
or the Down-MACRO Holding Shares, as applicable, and any date of determination,
an amount equal to the aggregate number of Up-MACRO Holding Shares or Down-MACRO
Holding Shares, as applicable, issued by the Up-MACRO Holding Trust or the
Down-MACRO Holding Trust, as applicable, either on the Closing Date or in Paired
Subsequent Issuances occurring prior to such date of determination minus any
shares redeemed prior to such date of determination.
"Paired Holding Shares" shall have the meaning set forth in the
Recitals to this Trust Agreement.
"Paired Holding Trusts" shall mean the Up-MACRO Holding Trust together
with the Down-MACRO Holding Trust.
"Paired Optional Redemption" shall have the meaning set forth in
Section 6.1(a) hereof.
"Paired Subsequent Issuance" shall have the meaning set forth in
Section 2.6(a) hereof.
"Participant Custodian Account" shall have the meaning set forth in the
Participants Agreement.
"Participants Agreement" shall mean the participants agreement, dated
as of the date hereof, substantially in the form attached hereto as Exhibit D,
entered into among the Depositor, the Trustee, the Down-MACRO Holding Trustee,
each of the trustees of the Tradeable Trusts, the Administrative Agent and the
Authorized Participants who may be party thereto from time to time, which
specifies certain procedures for the subsequent issuance and redemption of
Paired Holding Shares and procedures for the creation and exchange of Tradeable
Shares for Holding Shares and Holding Shares for Tradeable Shares.
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability company,
limited liability partnership, joint stock company, trust, unincorporated
organization or Governmental Authority or other entity.
"Price Determination Day" shall mean each day on which the Applicable
Reference Price of Crude Oil is established.
"Price Level Percentage Change" shall mean, with respect to each Price
Determination Day, the absolute value of (x) the Ending Level on such Price
Determination Day minus the Starting Level divided by (y) the Starting Level.
"Prospectus" shall mean the prospectus, in the form filed by the
Depositor on behalf of the Up-MACRO Holding Trust and the Up-MACRO Tradeable
Trust with the SEC on or before the second Business Day after the date hereof
(or such earlier time as may be required under the Securities Act) or, if no
such filing is required, the form of final prospectus included in the
Registration Statement on and after the date on which such Registration
Statement becomes effective.
12
"Quarterly Distribution" shall mean with respect to each Distribution
Date, the distribution to be made to the Holders of the Up-MACRO Holding Shares
that are Outstanding on the Distribution Date pursuant to priority sixth of
Section 5.2(a), which shall consist of the cash on deposit in the Up-MACRO
Holding Trust after it makes or receives a payment under the Income Distribution
Agreement and makes all other payments or investments in Treasuries that it is
required to make pursuant to such Section 5.2(a).
"Record Date" shall mean the second Business Day following each
Distribution Date.
"Redemption Cash Component" shall have the meaning set forth in Section
6.1(d)(iii) hereof.
"Redemption Date" shall mean any Business Day on which a Redemption
Order for a Paired Optional Redemption is submitted.
"Redemption Order" shall have the meaning set forth in Section 4(b) of
the Participants Agreement.
"Redemption Percentage Value" shall have the meaning set forth in
Section 6.1(d)(ii) hereof.
"Registration Statement" means the registration statement, file no.
333-116566, dated as of [ ], 2006, relating to the Up-MACRO Holding Shares and
Up-MACRO Tradeable Shares, as filed with the SEC and effective as of [ ], 2006,
as may be amended, supplemented or otherwise modified from time to time.
"Registered Owner" shall mean the Person in whose name the Up-MACRO
Holding Shares are registered on the books of the Trustee maintained for that
purpose.
"Requirements of Law" shall mean with respect to any Person, the
certificate of incorporation, articles of incorporation or articles of
association and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or other Governmental Authority, in each case applicable to or
binding upon such Person or to which such Person is subject, whether federal,
state or local.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Account" shall have the meaning set forth in Section 3.5(a)
hereof.
"Securities Act" shall mean the United States Securities Act of 1933,
as amended.
"Settlement Contract" shall mean each confirmation, substantially in
the form attached hereto as Exhibit C, designated as a "Settlement Contract,"
referencing the Master Agreement, relating to one MACRO Unit of Paired Holding
Shares, dated as of the date on which such MACRO Unit was issued by the Paired
Holding Trusts and providing for payments between the Paired Holding Trusts on
the Final Scheduled Termination Date, an Early Termination Date or a Redemption
Date, which payments are calculated by reference to the Up-MACRO Underlying
Value and the Down-MACRO Underlying Value on the last Price Determination Day
preceding the Final Scheduled Termination Date, on the last Price Determination
Day preceding an Early Termination Date or on the relevant Redemption Date, as
applicable.
13
"Settlement Payment" shall mean an Up-MACRO Settlement Payment or a
Down-MACRO Settlement Payment, as applicable.
"Share Register" shall have the meaning set forth in Section 2.5(e)
hereof.
"Starting Level" shall mean $[ ], which represents the Applicable
Reference Price of Crude Oil, rounded to the nearest dollar, on August [ ],
2006, the last Price Determination Day prior to the Closing Day.
"Subsequent Issuance Date" shall have the meaning set forth in Section
2.6(a) hereof.
"Substitute Index Licensing Agreement" shall mean any licensing
arrangement pursuant to which the Up-MACRO Holding Trust acquires the right to
use a Substitute Reference Oil Price for the purposes of calculating the
Up-MACRO Underlying Value under this Trust Agreement in accordance with Article
IV of this Trust Agreement.
"Substitute Oil Price Provider" means the Dow ▇▇▇▇▇ Energy Service or
any other price provider selected by the Holders.
"Substitute Reference Oil Price" shall mean, with respect to any Price
Determination Day, the spot price for West Texas Intermediate Oil generated by
the Dow ▇▇▇▇▇ Energy Service, or if the Depositor is unable to obtain a license
from the Dow ▇▇▇▇▇ Energy Service, the crude oil price generated or determined
by another Substitute Oil Price Provider.
"Successor Trustee" shall have the meaning set forth in Section 13.8(a)
hereof.
"Termination Trigger" shall have the meaning set forth in Section
11.1(a) hereof.
"Tradeable Shares" shall mean the Up-MACRO Tradeable Shares and the
Down-MACRO Tradeable Shares.
"Tradeable Trusts" shall mean the Up-MACRO Tradeable Trust and the
Down-MACRO Tradeable Trust.
"Transaction Documents" shall mean this Trust Agreement, the Down-MACRO
Holding Trust Agreement, the Master Agreement, the Income Distribution
Agreement, the Settlement Contracts, the Participants Agreement, the MACRO
Licensing Agreement, the NYMEX Sublicensing Agreement and the Calculation Agency
Agreement.
"Transfer Agent and Registrar" shall have the meaning set forth in
Section 2.5(e) hereof.
"Treasury" shall mean with respect to any Distribution Date, an
Eligible Treasury that matures prior to the next Distribution Date.
"Treasury Stock Account" shall mean an Eligible Deposit Account
established and maintained by the Trustee, in which previously issued and
redeemed authorized shares of the Up-MACRO Holding Trust shall be held.
"Trust Assets" shall have the meaning set forth in Section 2.1 hereof.
"Trust Officer" shall mean any officer within the corporate trust
department of the Trustee, including any Vice President, Assistant Vice
President or Assistant Treasurer of the
14
Corporate Trust Office, or any trust officer, or any officer customarily
performing functions similar to those performed by the person who at the time
shall be such officers, in each case having responsibility for the
administration of this Trust Agreement.
"Trustee" shall mean Investors Bank & Trust Company, not in its
individual capacity but solely as Trustee under this Trust Agreement, or its
successor in interest in such capacity, or any successor trustee appointed as
herein provided.
"Trustee Indemnified Party" shall have the meaning set forth in Section
13.6 hereof.
"Trustee Termination Event" shall have the meaning set forth in Section
12.1 hereof.
"Trustees" shall mean, collectively, the Trustee and the Down-MACRO
Holding Trustee.
"UCC" shall mean the Uniform Commercial Code as amended and in effect
from time to time in the State of New York.
"Up-MACRO Administration and Marketing Fee" shall mean, with respect to
any Distribution Date, the sum of, for each day during the related Calculation
Period, an amount equal to a per annum rate of 0.35% multiplied by the Up-MACRO
Asset Amount on such day, which shall be the combined fee payable to the
Administrative Agent and Marketing Agent for services rendered to the Up-MACRO
Holding Trust.
"Up-MACRO Aggregate Par Amount" shall mean, with respect to any date of
determination, the product of (a) the aggregate number of Up-MACRO Holding
Shares that are Outstanding on such date and (b) the Up-MACRO Stated Par Amount.
"Up-MACRO Asset Amount" shall mean, (i) with respect any Distribution
Date, the aggregate amount of funds on deposit in the Distribution Account on
such Distribution Date, and (ii) with respect to any other date of determination
occurring during a Calculation Period that is not a Distribution Date, an amount
equal to: (A) the Up-MACRO Investment Amount plus (B) the Up-MACRO Available
Income Accrual for each day that has elapsed during such Calculation Period (not
including the date of determination) minus (C) any portion of that Up-Macro
Available Income Accrual which was distributed in connection with all Paired
Optional Redemptions that have occurred during such Calculation Period prior to
the date of determination, plus (D) the funds deposited into the Up-MACRO
Holding Trust in connection with all Paired Subsequent Issuances that have
occurred during such Calculation Period prior to the date of determination that
represent the aggregate available income that would have accrued on the
Aggregate Par Amount of the Up-MACRO Holding Shares if cash equal to that amount
had been invested on the preceding Distribution Date.
"Up-MACRO Available Income" shall mean with respect to any Distribution
Date and the related Calculation Period, the funds remaining on deposit in the
Distribution Account after payment priorities first through fourth of Section
5.2(a) hereof have been satisfied in full.
"Up-MACRO Available Income Accrual" shall mean, on any day of a
Calculation Period, (i) the sum of, for each Treasury on deposit in the Up-MACRO
Holding Trust on such day, the product of (x) the purchase price at which the
Up-MACRO Holding Trust acquired that Treasury multiplied by (y) the Daily Yield
Rate applicable to that Treasury minus (ii) the Up-MACRO Daily Fee Accrual. If
the result of the foregoing calculation is a negative number, then the Up-MACRO
Available Income Accrual shall be equal to zero.
15
"Up-MACRO Calculation Agent Fee" shall mean, with respect to any
Distribution Date, the fee specified in the Calculation Agency Agreement, which
shall be payable to the Calculation Agent for services rendered under the
Calculation Agency Agreement to the Up-MACRO Holding Trust and the Up-MACRO
Tradeable Trust.
"Up-MACRO Daily Fee Accrual" shall mean for any Calculation Period and
any date of determination occurring during such Calculation Period, the product
of the Daily Fee Accrual Rate and the Up-MACRO Asset Amount on such day.
"Up-MACRO Earned Income Accrual" shall mean, with respect to any Price
Determination Day:
o if on such day the Ending Level is above the Starting Level, the
Up-MACRO Available Income Accrual plus the Down-MACRO Available
Income Accrual on that Price Determination Day multiplied by the
Price Level Percentage Change on that day;
o if on such day the Ending Level is below the Starting Level, the
Up-MACRO Available Income Accrual minus the Up-MACRO Available
Income Accrual multiplied by the Price Level Percentage Change on
that day; and
o if on such day the Ending Level is equal to the Starting Level,
the Up-MACRO Available Income Accrual.
The Up-MACRO Earned Income Accrual for each day that is not a Price
Determination Day shall be determined by reference to the Price Level Percentage
Change on the last preceding Price Determination Day.
The Up-MACRO Earned Income Accrual for each Calculation Period shall be equal to
the sum of the Up-MACRO Earned Income Accruals for each day of that Calculation
Period up to but not including the related Distribution Date, as reduced by any
portion of that accrual which was distributed in connection with one or more
Paired Optional Redemptions effected during that Calculation Period and
increased in connection with Paired Subsequent Issuances by the portion of the
Underlying Value at which shares were created that represents Up-MACRO Earned
Income Accruals.
"Up-MACRO Expenses" shall have the meaning specified in Section 5.3 of
this Trust Agreement.
"Up-MACRO Fee Deduction Amount" shall mean, with respect to any
Calculation Period, an amount equal to the sum of, for each day during that
Calculation Period, the Up-MACRO Asset Amount as of that day multiplied by a
rate equal to 1.60% per annum for the first two years following the Closing Date
and a rate of 1.50% per annum thereafter, divided by, in each case, the actual
number of days in the current calendar year.
"Up-MACRO Fees" shall have the meaning specified in Section 5.4 of this
Trust Agreement.
"Up-MACRO Holding Shares" shall have the meaning specified in the
Recitals to this Trust Agreement.
16
"Up-MACRO Holding Trust" shall have the meaning specified in the
Recitals to this Trust Agreement.
"Up-MACRO Income Distribution Payment" shall mean, with respect to any
Distribution Date, an amount equal to:
(a) if the Up-MACRO Underlying Value on the last Price
Determination Day preceding such Distribution Date is greater than or equal to
the Up-MACRO Asset Amount on such date, zero; and
(b) if the Up-MACRO Asset Amount on the last Price Determination
Day preceding such Distribution Date is greater than the Up-MACRO Underlying
Value on such date, an amount equal to (i) the Up-MACRO Available Income for
such Distribution Date multiplied by (ii) a fraction the numerator of which is
the difference between the Up-MACRO Asset Amount and the Up-MACRO Underlying
Value and the denominator of which is the Up-MACRO Asset Amount.
"Up-MACRO Investment Amount" shall mean, (i) with respect to any
Distribution Date, an amount equal to the amount reinvested in Treasuries
pursuant to Section 5.2(a)(iv) and (ii) with respect to any day other than a
Distribution Date, an amount equal to the amount in clause (i) divided by the
number of Up-MACRO Holding Shares Outstanding on that Distribution Date
multiplied by the number of Up-MACRO Holding Shares Outstanding on the date of
determination.
"Up-MACRO Licensing Fee" shall mean, with respect to any Distribution
Date, the sum of, for each day during the related Calculation Period, an amount
equal to a per annum rate of 0.04% multiplied by the Up-MACRO Asset Amount on
such day, which shall be payable to MacroMarkets pursuant to the MACRO Licensing
Agreement.
"Up-MACRO Per Share Underlying Value" means, with respect to each Price
Determination Day and each Up-MACRO Holding Share or Up-MACRO Tradeable Share,
an amount calculated by dividing the Up-MACRO Underlying Value by the number of
Up-MACRO Holding Shares Outstanding on that day.
"Up-MACRO Redemption Percentage" shall mean (i) with respect to any
Redemption Date, a fraction, expressed as a percentage, the numerator of which
is the aggregate number of Up-MACRO Holding Shares that are being redeemed on
such date and the denominator of which is the aggregate number of Up-MACRO
Holding Shares that are Outstanding on such date prior to giving effect to the
Redemption Order placed on such Redemption Date and prior to giving effect to
any Purchase Orders that may also have been placed on such date and (ii) with
respect to an Early Termination Date or the Final Scheduled Termination Date,
100%.
"Up-MACRO Settlement Payment" shall mean, with respect to any
Redemption Date, an Early Termination Date or the Final Scheduled Termination
Date, an amount equal to:
(a) if the Up-MACRO Underlying Value on such Redemption Date, the
last Price Determination Day preceding such Early Termination Date, or the last
Price Determination Day preceding the Final Scheduled Termination Date is
greater than or equal to the Up-MACRO Investment Amount on such date, zero; and
17
(b) if the Up-MACRO Underlying Value on such Redemption Date, the
last Price Determination Day preceding such Early Termination Date or the last
Price Determination Day preceding the Final Scheduled Termination Date is less
than the Up-MACRO Investment Amount on such date, an amount equal to (i) the
excess of such Up-MACRO Investment Amount over such Up-MACRO Underlying Value
multiplied by (ii) the Up-MACRO Redemption Percentage for such Redemption Date,
Early Termination Date or Final Scheduled Termination Date.
"Up-MACRO Stated Par Amount" shall mean the stated par amount of $[ ]
per Up-MACRO Holding Share.
"Up-MACRO Sublicensing Fee" shall mean, with respect to any
Distribution Date, the sum of, for each day during the related Calculation
Period, an amount equal to a per annum rate of 0.06% multiplied by the Up-MACRO
Asset Amount on such day, which shall be payable to MacroMarkets pursuant to the
NYMEX Sublicensing Agreement.
"Up-MACRO Tradeable Shares" shall mean the pass-through securities
issued by the Up-MACRO Tradeable Trust pursuant to the Up-MACRO Tradeable Trust
Agreement.
"Up-MACRO Tradeable Trust" shall mean the Claymore MACROshares Oil Up
Tradeable Trust created under the Up-MACRO Tradeable Trust Agreement.
"Up-MACRO Tradeable Trust Agreement" shall mean the Up-MACRO Tradeable
Trust Agreement, dated as of the date hereof, among the Depositor, the
Administrative Agent, the Marketing Agent and the Up-MACRO Tradeable Trustee.
"Up-MACRO Tradeable Trustee" shall mean Investors Bank & Trust Company,
not in its individual capacity but solely as trustee of the Up-MACRO Tradeable
Trust.
"Up-MACRO Trustee Fee" shall mean, with respect to any Distribution
Date, the sum of, for each day during the related Calculation Period, an amount
equal to a per annum rate of 0.08% multiplied by the Up-MACRO Aggregate Par
Amount on such day, which shall be payable to the Trustee pursuant to this Trust
Agreement.
"Up-MACRO Underlying Value" shall mean, with respect to any Price
Determination Day:
(a) if the Ending Level is above the Starting Level, an amount
equal to (i) the sum of the Up-MACRO Earned Income Accruals for each day that
has elapsed during the current Calculation Period, up to and including the
current Price Determination Day plus (ii) the Up-MACRO Investment Amount for
that Calculation Period plus (iii) (x) the Down-MACRO Investment Amount for that
Calculation Period multiplied by (y) the Price Level Percentage Change for the
Up-MACRO Holding Trust on such Price Determination Day;
(b) if the Ending Level is below the Starting Level, an amount
equal to (i) the sum of the Up-MACRO Earned Income Accruals for each day that
has elapsed during the current Calculation Period, up to and including the
current Price Determination Day plus (ii) the Up-MACRO Investment Amount for
that Calculation Period minus (iii) (x) the Up-MACRO Investment Amount for that
Calculation Period multiplied by (y) the Price Level Percentage Change for the
Down-MACRO Holding Trust on such Price Determination Day; and
(c) if the Ending Level is equal to the Starting Level, an amount
equal to the sum of the Up-MACRO Earned Income Accruals for each day that has
elapsed during the current Calculation Period, up to and including the current
Price Determination Day plus the Up-MACRO Investment Amount.
18
"Value" shall mean, with respect to any Treasury on deposit at any time
in either of the Paired Holding Trusts, the purchase price at which the
applicable trust acquired that Treasury plus all interest and/or discount
accrued on that Treasury since its acquisition date.
"Yield Rate" shall mean, with respect to any Treasury on deposit at any
time in either of the Paired Holding Trusts, the stated interest rate of such
Treasury, if any, plus any discount rate applicable to such Treasury, based on
the purchase date and purchase price at which the applicable Paired Holding
Trust acquired that Treasury (which discount rate may be negative for any
Treasury that was purchased at a premium).
Section 1.2 Other Definitional Provisions.
(a) All terms defined in this Trust Agreement shall have the
defined meanings when used in any share, certificate or other document made or
delivered pursuant hereto or thereto unless otherwise defined therein.
(b) As used in this Trust Agreement and in any share,
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Trust Agreement or in any such share,
certificate or other document, and accounting terms partly defined in this
Trust Agreement or in any such share, certificate or other document to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Trust Agreement or in any such share, certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Trust
Agreement or in any such share, certificate or other document shall control.
(c) The agreements, representations and warranties of MACRO
Securities Depositor, LLC in this Trust Agreement in its capacity as Depositor
shall be deemed to be the separate agreements, representations and warranties
of MACRO Securities Depositor, LLC solely in such capacity for so long as MACRO
Securities Depositor, LLC acts in such capacity under this Trust Agreement.
(d) Unless otherwise specified, references to any amount as
on deposit or outstanding on any particular date shall mean such amount at the
close of business on such day.
(e) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Trust Agreement shall refer to this Trust
Agreement as a whole and not to any particular provision of this Trust
Agreement; references to any Article, Section, Schedule or Exhibit are
references to Articles, Sections, Schedules and Exhibits in or to this Trust
Agreement unless otherwise specified; and the term "including" means "including
without limitation."
19
ARTICLE II
CREATION AND DECLARATION OF THE TRUST;
FORM OF THE CERTIFICATES; THE INITIAL DEPOSIT;
DELIVERY, REGISTRATION OF TRANSFER AND
SURRENDER OF DOWN-MACRO HOLDING SHARES
--------------------------------------
Section 2.1 Initial Deposit. By execution of this Trust
Agreement, each of the Depositor and the Administrative Agent does hereby
transfers, assigns, sets over and otherwise conveys to the Down-MACRO Holding
Trust, cash in an amount of $500 for a total initial deposit of $1,000 (the
"Initial Deposit" in exchange for 1,000 Founders' Shares, of which 500 are
being issued to the Depositor and 500 are being issued to the Administrative
Agent. The Initial Deposit will be deposited into the Founders' Equity Account
and shall not be included in the calculation of the Down-MACRO Asset Amount at
any time. The Initial Deposit, together with all Treasuries on deposit from
time to time in the Securities Account, all monies on deposit from time to time
in the Distribution Account and the Fee Payment Account and the Down-MACRO
Holding Trust's rights under the Master Agreement, the Income Distribution
Agreement, the Settlement Contracts (whether executed on the Closing Date or on
any Subsequent Issuance Date), the MACRO Licensing Agreement, the NYMEX
Sublicensing Agreement and any Substitute Index Licensing Agreement, shall
constitute the assets of the Down-MACRO Holding Trust (the "Trust Assets").
Section 2.2 Acceptance by Trustee. The Trustee hereby (i)
acknowledges its acceptance on behalf of the Down-MACRO Holding Trust of all
right and title to and interest in the property, both now existing and
hereafter created, conveyed to the Down-MACRO Holding Trust pursuant to Section
2.1 and (ii) declares that it shall maintain such right, title and interest,
upon the Down-MACRO Holding Trust herein set forth, for the benefit of all
Holders of the Down-MACRO Holding Shares.
Upon the execution of this Trust Agreement, the Trustee is hereby
directed to cause the Down-MACRO Holding Trust to enter with the Up-MACRO
Holding Trust into the Master Agreement, the Income Distribution Agreement and
one Settlement Contract for each MACRO Unit of Paired Holding Shares created on
the Closing Date and additional Settlement Contracts on each day on which a Net
Par Amount Increase in Paired Holding Shares is created as a result of Paired
Subsequent Issuances.
Section 2.3 Limited Purpose of the Down-MACRO Holding Trust. The
Down-MACRO Holding Trust shall not engage in any business or activity other
than those authorized by this Trust Agreement or incidental and necessary to
carry out the duties and responsibilities set forth in this Trust Agreement.
Other than the issuance of the Down-MACRO Holding Shares on the Closing Date or
on any Subsequent Issuance Date, the Down-MACRO Holding Trust shall not issue
or sell any shares, certificates or other obligations or, except in accordance
with this Trust Agreement, otherwise incur, assume or guarantee any
indebtedness for money borrowed.
Section 2.4 Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Down-MACRO Holding Trust (and
agrees that the Trustee may rely on each such representation and warranty in
accepting the Initial Deposit in the Down-MACRO Holding Trust and in
authenticating the Down-MACRO Holding Shares) as of the Closing Date that:
20
(a) Organization and Good Standing. The Depositor is a
limited liability company validly existing and in good standing under the laws
of the State of Delaware and has full corporate power, authority and legal
right to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Trust Agreement.
(b) Due Qualification. The Depositor is duly qualified to do
business and is in good standing as a foreign corporation (or is exempt from
such requirements) and has obtained all necessary licenses and approvals in
each jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would render any transfer of the Initial Deposit to the Down-MACRO
Holding Trust by the Depositor unenforceable and would have a material adverse
effect on the interests of the Holders of the Down-MACRO Holding Shares
hereunder.
(c) Due Authorization. The execution, delivery and
performance of this Trust Agreement by the Depositor, the execution and
delivery to the Trustee of the Down-MACRO Holding Shares by the Depositor and
the consummation by the Depositor of the transactions provided for in this
Trust Agreement have been duly authorized by the Depositor by all necessary
corporate action on the part of the Depositor and this Trust Agreement will
remain, from the time of its execution, an official record of the Depositor.
(d) No Conflict. The execution and delivery by the Depositor
of this Trust Agreement and the Down-MACRO Holding Shares, the performance by
the Depositor of the transactions contemplated by this Trust Agreement and the
fulfillment by the Depositor of the terms hereof will not conflict with, result
in any breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust, or other instrument to
which the Depositor is a party or by which it or any of its properties are
bound.
(e) No Violation. The execution and delivery by the Depositor
of this Trust Agreement and the Down-MACRO Holding Shares, the performance by
the Depositor of the transactions contemplated by this Trust Agreement and the
fulfillment by the Depositor of the terms hereof will not conflict with or
violate any Requirements of Law applicable to the Depositor.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Depositor, threatened
against the Depositor before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality (i) asserting the invalidity
of this Trust Agreement or the Down-MACRO Holding Shares, (ii) seeking to
prevent the issuance of the Down-MACRO Holding Shares or the consummation of
any of the transactions contemplated by this Trust Agreement or the Down-MACRO
Holding Shares, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Depositor, would materially and adversely affect the
performance by the Depositor of its obligations under this Trust Agreement,
(iv) seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Trust Agreement or the Down-MACRO
Holding Shares or (v) seeking to affect adversely the income tax attributes of
the Down-MACRO Holding Trust under the federal or applicable state income or
franchise tax systems.
(g) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery by the
Depositor of this Trust Agreement and the Down-MACRO Holding Shares, the
performance by the Depositor of the transactions
21
contemplated by this Trust Agreement or the Down-MACRO Holding Shares and the
fulfillment by the Depositor of the terms hereof and thereof have been obtained.
(h) Bankruptcy; Insolvency. No Event of Bankruptcy with
respect to the Depositor has occurred and the transfer of the Initial Deposit
by the Depositor to the Down-MACRO Holding Trust has not been made in
contemplation of the occurrence thereof.
(i) Binding Obligation. This Trust Agreement constitutes a
legal, valid and binding obligation of the Depositor, enforceable against the
Depositor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect which affect the enforcement of
creditors' rights in general, and except as such enforceability may be limited
by general principles of equity (whether considered in a suit at law or in
equity).
(j) Unencumbered Title to Initial Deposit. The Depositor is
the legal and beneficial owner of all right, title and interest in and to the
Initial Deposit and the Depositor has the full right to transfer the Initial
Deposit to the Down-MACRO Holding Trust, and the Initial Deposit conveyed to
the Down-MACRO Holding Trust by the Depositor has been conveyed to the
Down-MACRO Holding Trust free and clear of any lien of any Person claiming
through or under the Depositor or any of its Affiliates and in compliance, in
all material respects, with all Requirements of Law applicable to the
Depositor.
(k) Governmental Authorization. All authorizations, consents,
orders or approvals of or registrations or declarations with any Governmental
Authority required to be obtained, effected or given by the Depositor in
connection with the conveyance by the Depositor of the Initial Deposit to the
Down-MACRO Holding Trust have been duly obtained, effected or given and are in
full force and effect.
(l) Valid Transfer. This Trust Agreement constitutes a valid
transfer and assignment to the Down-MACRO Holding Trust of all right, title and
interest of the Depositor in and to the Initial Deposit and other Trust Assets
conveyed to the Down-MACRO Holding Trust by the Depositor and all monies due or
to become due with respect thereto and the proceeds thereof and constitutes a
grant of a "security interest" (as defined in the UCC) in such property to the
Down-MACRO Holding Trust, which, in the case of the Initial Deposit and the
proceeds thereof, is enforceable upon execution and delivery of this Trust
Agreement.
(m) No Conflicting Claim. Neither the Depositor nor any
Person claiming through or under the Depositor has any claim to or interest in
the Securities Account or the Distribution Account.
The representations and warranties of the Depositor set forth
in this Section 2.4 shall survive the transfer and deposit by the Depositor of
the Initial Deposit to the Down-MACRO Holding Trust. Upon discovery by the
Depositor, the Trustee or the Administrative Agent of a breach of any of the
representations and warranties by the Depositor set forth in this Section 2.4,
the party discovering such breach shall give prompt written notice to the other
parties hereto. The Depositor agrees to cooperate with the Trustee and the
Administrative Agent in attempting to cure any such breach.
Section 2.5 Form of Certificates; Book-Entry System;
Transferability of Down-MACRO Holding Shares.
22
(a) Form of Certificates. The Certificates evidencing the
Down-MACRO Holding Shares shall be substantially in the form set forth in
Exhibit A attached hereto, with appropriate insertions, modifications and
omissions as hereinafter provided. No Down-MACRO Holding Shares shall be
entitled to any benefits under this Trust Agreement or be valid or obligatory
for any purpose unless a Certificate evidencing those Down-MACRO Holding Shares
has been executed by the Trustee by the manual or facsimile signature of a duly
authorized signatory of the Trustee and countersigned by the manual signature
of a duly authorized officer of the Depositor. The Trustee shall maintain books
on which the registered ownership of each Down-MACRO Holding Share and
transfers, if any, of such registered ownership shall be recorded. Certificates
evidencing the Down-MACRO Holding Shares bearing the manual signature of a duly
authorized signatory of the Trustee and the manual or facsimile signature of a
duly authorized officer of the Depositor, if applicable, who was, at the time
such Certificates were executed, a proper signatory of the Trustee or the
Depositor, as applicable, shall bind the Trustee, notwithstanding that such
signatory has ceased to hold such office prior to the delivery of such
Certificates.
The Certificates may be endorsed with or have incorporated in the
text thereof such legends or recitals or modifications not inconsistent with
the provisions of this Trust Agreement as may be required by the Trustee or
required to comply with any applicable law or regulations thereunder or with
the rules and regulations of any securities exchange upon which the Down-MACRO
Holding Shares may be listed or to conform with any usage with respect thereto,
or to indicate any special limitations or restrictions to which the Down-MACRO
Holding Shares evidenced by a particular Certificate are subject.
(b) Book-Entry Settlement. The Depositor and the Trustee
shall apply to the Depository for acceptance of the Down-MACRO Holding Shares
in its book-entry settlement system. The Down-MACRO Holding Shares deposited
with the Depository shall be evidenced by one or more global Certificates which
shall be registered in the name of Cede & Co., as nominee for the Depository,
and shall bear the following legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
"DEPOSITORY"), TO THE AGENT AUTHORIZED BY THE DEPOSITOR FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
So long as the Down-MACRO Holding Shares are eligible for
book-entry settlement with the Depository and such settlement is available,
unless otherwise required by law, all Down-MACRO Holding Shares shall be
evidenced by one or more global Certificates the Registered Owner of which is
the Depository or a nominee of the Depository and (i) no Beneficial Owner of
Down-MACRO Holding Shares will be entitled to receive a separate Certificate
evidencing those shares, (ii) the interest of a Beneficial Owner in the
Down-MACRO Holding Shares represented by a global Certificate will be shown
only on, and transfer of that interest will be effected only through, records
maintained by the Depository or a DTC Participant or Indirect Participant
through which the Beneficial Owner holds that interest and (iii) the rights of
23
a Beneficial Owner with respect to Down-MACRO Holding Shares represented by a
global Certificate will be exercised only to the extent allowed by, and in
compliance with, the arrangements in effect between such Beneficial Owner and
the Depository or the DTC Participant or Indirect Participant through which
that Beneficial Owner holds an interest in Down-MACRO Holding Shares.
As provided in the Depository Agreement, upon the settlement date
of any creation, transfer or redemption of the Down-MACRO Holding Shares, the
Depository will credit or debit, on its book-entry registration and transfer
system, the amount of Down-MACRO Holding Shares so created, transferred or
redeemed to the accounts of the appropriate DTC Participants. The accounts to
be credited and charged shall be designated by the Trustee, as instructed by
the Administrative Agent, and each Authorized Participant, in the case of a
Paired Subsequent Issuance or Paired Optional Redemption of MACRO Units. Owners
of beneficial interests in Down-MACRO Holding Shares ("Beneficial Owners") will
be shown on, and the transfer of beneficial ownership by Beneficial Owners will
be effected only through, in the case of DTC Participants, records maintained
by the Depository and, in the case of Indirect Participants and Beneficial
Owners holding through a DTC Participant or an Indirect Participant, through
those records or the records of the relevant DTC Participants. Beneficial
Owners are expected to receive from or through the broker or bank that
maintains the account through which the Beneficial Owner has purchased
Down-MACRO Holding Shares a written confirmation relating to their purchase of
Down-MACRO Holding Shares.
(c) Notices to Beneficial Owners. As described above, the
Trustee will recognize the Depository or its nominee as the owner of all
Down-MACRO Holding Shares for all purposes except as expressly set forth in
this Trust Agreement. Conveyance of all notices, statements and other
communications to Beneficial Owners will be effected as follows. The
Administrative Agent shall inquire of each such DTC Participant as to the
number of Beneficial Owners holding Down-MACRO Holding Shares, directly or
indirectly, through such DTC Participant. The Administrative Agent shall
provide each such DTC Participant with sufficient copies of such notice,
statement or other communication, in such form, number and at such place as
such DTC Participant may reasonably request, in order that such notice,
statement or communication may be transmitted by such DTC Participant, directly
or indirectly, to such Beneficial Owners. In addition, the Down-MACRO Holding
Trust shall pay to each such DTC Participant an amount as reimbursement for the
expenses attendant to such transmittal, all subject to applicable statutory and
regulatory requirements.
(d) Distributions on Book-Entry Certificates. Distributions
on Down-MACRO Holding Shares pursuant to Section 5.2 and Section 6.1 shall be
made to the Depository or its nominee, Cede & Co., as the registered owner of
all Down-MACRO Holding Shares. The Trustee and the Depositor expect that the
Depository or its nominee, upon receipt of any payment of distributions in
respect of Down-MACRO Holding Shares, shall credit immediately the DTC
Participant's accounts with payments in amounts proportionate to their
respective beneficial interests in Down-MACRO Holding Shares as shown on the
records of the Depository or its nominee. The Trustee and the Depositor also
expect that payments by DTC Participants to Indirect Participants and
Beneficial Owners held through such DTC Participants and Indirect Participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in a "street name," and shall be the responsibility of such DTC
Participants and Indirect Participants. Neither the Trustee nor the Depositor
will have any responsibility or liability for any aspects of the records
relating to or notices to Beneficial Owners, or payments made on account of
beneficial ownership interests in Down-MACRO Holding Shares, or for
maintaining, supervising or reviewing any records relating to such beneficial
24
ownership interests or for any other aspect of the relationship between the
Depository and the DTC Participants or the relationship between such DTC
Participants and the Indirect Participants and Beneficial Owners owning through
such DTC Participants or Indirect Participants or between or among the
Depository, any Beneficial Owner and any person by or through which such
Beneficial Owner is considered to own Down-MACRO Holding Shares.
(e) Registration of Transfer, Exchange and Surrender of the
Down-MACRO Holding Shares. The Trustee shall cause to be kept at the office or
agency to be maintained in accordance with the provisions of Section 13.15 a
register (the "Share Register") in which, subject to such reasonable
regulations as it may prescribe, a transfer agent and registrar (the "Transfer
Agent and Registrar") shall provide for the registration of the Down-MACRO
Holding Shares and of transfers and exchanges of such shares as herein
provided. The Transfer Agent and Registrar shall initially be the Trustee.
The Depositor may revoke such appointment and remove any Transfer
Agent and Registrar if the Depositor determines in its sole discretion that
such Transfer Agent and Registrar failed to perform its obligations under this
Trust Agreement in any material respect. Any Transfer Agent and Registrar shall
be permitted to resign as Transfer Agent and Registrar upon thirty (30) days'
notice to the Depositor and the Trustee; provided, however, that such
resignation shall not be effective and such Transfer Agent and Registrar shall
continue to perform its duties as Transfer Agent and Registrar until the
Trustee has appointed a successor Transfer Agent and Registrar reasonably
acceptable to the Depositor.
At the option of a Holder, Down-MACRO Holding Shares may be
registered for transfer at any office or agency of the Transfer Agent and
Registrar maintained for such purpose, upon presentation of an ownership
Certificate of an Down-MACRO Holding Share by the Holder to be registered for
transfer or exchanged. When an ownership Certificate of Down-MACRO Holding
Share is presented for registration of transfer, the Depositor shall execute,
the Trustee shall authenticate and the Transfer Agent and Registrar shall
register one or more new Down-MACRO Holding Shares in the Down-MACRO Holding
Trust in the name of the designated transferee or transferees.
Each Certificate of a Down-MACRO Holding Share presented for
registration of transfer shall be accompanied by a written instrument of
transfer in a form satisfactory to the Trustee or the Transfer Agent and
Registrar duly executed by the Holder or the attorney-in-fact thereof duly
authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Down-MACRO Holding Shares, but the Transfer Agent and Registrar
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such transfer or exchange.
All Certificates surrendered for registration of transfer or
exchange or for payment shall be held by the Down-MACRO Holding Trust as
treasury stock in the Treasury Stock Account.
(f) Mutilated, Destroyed, Lost or Stolen Shares. If (a) any
mutilated Certificate is surrendered to the Transfer Agent and Registrar, or
the Transfer Agent and Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to the
Transfer Agent and Registrar and the Trustee such security or indemnity as may
25
be required by them to save each of them harmless, then in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Depositor shall execute, the Trustee shall authenticate and the
Transfer Agent and Registrar shall deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like tenor and aggregate beneficial interest. In connection with the issuance
of any new Certificate under this Section 2.5(f), the Trustee or the Transfer
Agent and Registrar may require the payment by the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Transfer Agent and Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 2.5(f) shall constitute complete
and indefeasible evidence of ownership in the Down-MACRO Holding Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 2.6 Paired Subsequent Issuances.
(a) At any time following the Closing Date, but prior to the
Final Scheduled Termination Date, the Trustee shall issue and deliver
additional Down-MACRO Holding Shares (using, first, any treasury stock it has
on deposit in the Treasury Stock Account) contemporaneously with the issuance
of additional Up-MACRO Holding Shares in the form of MACRO Units (such an
issuance, a "Paired Subsequent Issuance") following the receipt of, and in
accordance with, a Creation Order delivered by an Authorized Participant and
forwarded to the Trustee by the Administrative Agent. As provided in the
Participants Agreement, a Paired Subsequent Issuance may be made only upon the
direction of one or more Authorized Participants delivered in the form of a
Creation Order to Administrative Agent on any Business Day (such date, the
"Subsequent Issuance Date"), prior to the earlier of (i) 2:00 p.m., New York
City Time, or (ii) half an hour before the end of trading in the futures
contracts from which the Applicable Reference Price of Crude Oil is derived,
designating, inter alia, (i) the name of the Authorized Participant, (ii) the
Submission Number (as defined in the Participants Agreement), (iii) the PIN
Number (as defined in the Participants Agreement), (iv) the number of MACRO
Units composed of Paired Holding Shares to be issued and (v) the number and
type of Holding Shares to be, concurrently, exchanged to their related
tradeable shares. On the next Business Day after the Subsequent Issuance Date,
not later than 10:00 a.m., New York City Time, the Authorized Participant
directing the Paired Subsequent Issuance shall deliver available funds to the
Trustee in an amount equal to (i) the Down-MACRO Per Share Underlying Value of
the Down-MACRO Holding Shares being created by that Authorized Participant,
plus (ii) the Up-MACRO Per Share Underlying Value of the Up-MACRO Holding
Shares being created by that Authorized Participant, plus (iii) the
non-refundable transaction fee as provided below. On the same Business Day,
upon the satisfaction of the procedures and conditions for a Paired Subsequent
Issuance that are specified in the Participants Agreement and no later than
3:00 p.m., New York City Time, the Trustee, acting together with the Up-MACRO
Holding Trustee, each on behalf of their respective Paired Holding Trust, shall
issue and deliver to the Depository account of the Authorized Participant who
directed such Paired Subsequent Issuance, Paired Holding Shares constituting
the number of MACRO Units ordered by such Authorized Participant, or if so
requested, not later than 3:00 p.m. New York City Time on the third Business
Day after the Subsequent Issuance Date, the applicable Tradeable Shares, in
lieu of all, or part, of the Paired Holding Shares issued
(b) Subject to the requirements and limitations set forth
herein and in the Participants Agreement, the number of Down-MACRO Holding
Shares that the Down-MACRO Holding Trust may issue as part of a Paired
Subsequent Issuance is unlimited. The Trustee and the Administrative Agent
shall only process Creation Orders from Authorized Participants that have
26
executed a Participants Agreement that is in full force and effect at the time
when a Creation Order is placed. The Administrative Agent will maintain and
make available at its Corporate Trust Office during normal business hours a
current list of the Authorized Participants eligible to participate in a Paired
Subsequent Issuance. Each Paired Subsequent Issuance shall be effected in
accordance with the procedures set forth in Attachment A.I to the Participants
Agreement, which may be amended from time to time in accordance with the
provisions of the Participants Agreement; provided, however that any such
amendment shall not constitute an amendment of this Trust Agreement. In the
event of any conflict between the Participants Agreement and this Trust
Agreement, the provisions of the Participants Agreement shall govern insofar as
they relate to the procedures for effecting Paired Optional Redemptions and
Paired Subsequent Issuances.
(c) Concurrently with Paired Subsequent Issuances, the
Trustee, acting together with the Up-MACRO Holding Trustee, each on behalf of
their respective Paired Holding Trust, shall adjust, on a Net Daily Basis (as
defined in the Participants Agreement) the aggregate amount of the Income
Distribution Agreement and enter into additional Settlement Contracts, if a Net
Par Amount Increase occurred on that day, calculated based upon the number of
MACRO Units specified in the Creation Orders and the number of MACRO Units
specified in any Redemption Order, if applicable, delivered on the same day.
Each amendment to the Income Distribution Agreement shall be
in the form of Exhibit B hereto and each Settlement Contract shall be in the
form of Exhibit C hereto and shall constitute an additional confirmation to the
Master Agreement. The original, executed Income Distribution Agreement, each
amendment thereto and each original, executed Settlement Contract shall be
maintained by the Trustee among the books and records of the Down-MACRO Holding
Trust.
(d) The Administrative Agent shall have the absolute right,
but shall have no obligation, to reject any Creation Order (i) if the Trustee
determines that the Authorized Participant directing the Paired Subsequent
Issuance has not deposited sufficient funds with the Trustee, (ii) if the
Depositor determines, based upon an opinion of counsel, that such Creation
Order would have adverse tax or securities law consequences for either of the
Paired Holding Trusts or the holders of the Paired Holding Shares, (iii) the
acceptance or fulfillment of which would, in the opinion of counsel to the
Depositor acceptable to the Trustee, be unlawful, (iv) in the case of a Paired
Subsequent Issuance, if the Up-MACRO Holding Trustee notifies the Trustee the
Creation Order for additional Up-MACRO Holding Shares made in connection with
such issuance has been or will be rejected by it, by the Depositor or by the
Administrative Agent for the Up-MACRO Holding Trust, or (v) if circumstances
outside the control of the Trustee, the Depositor or the Administrative Agent
make it impractical or not feasible to cause the Down-MACRO Holding Trust to
issue additional Down-MACRO Holding Shares. None of the Trustee, the Depositor
or the Administrative Agent shall be liable to any Person by reason of the
rejection of any Creation Order.
(e) The Administrative Agent may, in its discretion, and will
when so directed by the Depositor, suspend the right of creation of any
Down-MACRO Holding Shares:
(i) for any period during which the AMEX is closed
other than customary weekend or holiday closings, or trading is
suspended or restricted;
27
(ii) for any period during which an emergency exists
as a result of which delivery, disposal or evaluation of cash and/or
the Treasuries is not reasonably practicable;
(iii) for any period during which, such creation
will cause the Down-MACRO Tradeable Trust to hold fifty percent or
less of the outstanding Down-MACRO Holding Shares; and
(iv) for such other period as the Depositor, the
Trustee or the Administrative Agent determines to be necessary for the
protection of Beneficial Owners.
None of the Depositor, the Trustee or the Administrative Agent
will be liable to any Person for any loss or damages that may result from any
such suspension or postponement.
(f) A non-refundable transaction fee will be payable to the
Trustee for its own account in connection with each Creation Order in the
amount specified in Section 7 of the Participants Agreement.
(g) Only global Certificates will be issued to the
Depository, and retained by the Trustee, as custodian for the Depository, upon
the Paired Subsequent Issuance of additional Down-MACRO Holding Shares. So long
as the Depository Agreement is in effect, the Down-MACRO Holding Shares will be
transferable solely through the book-entry systems of the Depository, and DTC
Participants and their Indirect Participants, as more fully described in
Section 2.5 hereof. The Depository may discontinue providing its services with
respect to the Down-MACRO Holding Shares by giving notice to the Trustee, the
Administrative Agent and the Depositor pursuant to and in conformity with the
provisions of the Depository Agreement and discharging its responsibilities
with respect thereto under applicable law. Under such circumstances, the
Trustee, the Administrative Agent and the Depositor shall find a replacement
for the Depository to perform its functions at a comparable cost and on terms
acceptable to the Trustee and the Depositor.
(h) In the event that a Creation Order has been cancelled, in
connection with which the Down-MACRO Holding Trust incurred expenses not
payable by an Authorized Participant, the Trustee will incur such expenses and
will be reimbursed by the Down-MACRO Holding Trust pursuant to Section 3.1(c)
herein.
ARTICLE III
APPOINTMENT OF THE TRUSTEE, ADMINISTRATIVE AND MARKETING AGENT;
THE ADMINISTRATION AND REINVESTMENT OF THE TREASURIES;
ESTABLISHMENT OF ACCOUNTS
Section 3.1 Acceptance of Appointment and Matters Relating to the
Trustee.
(a) Investors Bank & Trust Company agrees to act as Trustee,
Transfer Agent and Registrar under this Trust Agreement and has concurrently
agreed to act as the Up-MACRO Holding Trustee under the Up-MACRO Holding Trust
Agreement. The Holders of the Down-MACRO Holding Shares by their acceptance of
their shares consent to Investors Bank & Trust Company acting as Trustee under
this Trust Agreement and as trustee for the Up-MACRO Holding Trust under the
Up-MACRO Holding Trust Agreement.
28
(b) Without limiting the generality of the foregoing, the
Trustee is hereby authorized, instructed and empowered (i) to make withdrawals
and payments or to instruct any paying agent or custodian appointed by the
Trustee to make withdrawals and payments from the Securities Account and the
Distribution Account, as set forth in this Trust Agreement, (ii) to enter into
the Income Distribution Agreement, the Settlement Contracts, the Participants
Agreement, the MACRO Licensing Agreement, the NYMEX Sublicensing Agreement and
any other agreement related to the powers and purposes of the Down-MACRO
Holding Trust, (iii) to settle the purchase of Treasuries at the direction of
the Administrative Agent and (iv) to take any action required or permitted
under the Income Distribution Agreement, the Settlement Contracts, the
Participants Agreement, the MACRO Licensing Agreement and the NYMEX
Sublicensing Agreement, as set forth in this Trust Agreement and any such
action needed for the daily operation of the Trust. Without limiting the
generality of the foregoing and with the prior written consent of the
Depositor, the Trustee is hereby authorized and empowered to make any filings,
reports, notices, applications and registrations with, and to seek any consents
or authorizations from, the SEC and any state securities authority on behalf of
the Down-MACRO Holding Trust as may be necessary or advisable to comply with
any federal or state securities laws or reporting requirements; provided,
however, that the Depositor shall make all filings with the SEC and under state
securities laws on behalf of the Down-MACRO Holding Trust to the extent
required to do so hereby.
(c) The Trustee shall be entitled to be reimbursed for any
expenses incurred by it, with the prior approval of the Depositor or the
Administrative Agent, in connection with the performance of its duties under
this Trust Agreement, including, without limitation, the fees and disbursements
of any custodian, Transfer Agent and Registrar, the fees and expenses of its
legal counsel, the fees and disbursements of independent accountants, the
expenses associated with the cancellation of an order under the Participants
Agreement and all other fees and expenses, including the costs of any filing
and the costs and expenses relating to obtaining and maintaining the listing of
the Down-MACRO Holding Shares on any stock exchange. If so instructed by the
Depositor or the Administrative Agent, the Trustee shall expend its own funds
on behalf of the Down-MACRO Holding Trust and shall be reimbursed therefore on
the next scheduled Distribution Payment Date.
Section 3.2 Representations, Warranties and Covenants of the
Trustee. Investors Bank & Trust Company, in its capacity as initial Trustee
under this Trust Agreement, hereby makes, and any successor Trustee by its
appointment hereunder shall make, on the Closing Date (and on the date of any
such appointment), the following representations, warranties and covenants to
the Down-MACRO Holding Trust in accepting the Treasuries in trust and executing
this Trust Agreement (and agrees that the Depositor, the Administrative Agent
and the Holders, as applicable, may rely on each such representation, warranty
and covenant):
(a) Organization and Good Standing. The Trustee is a
Massachusetts trust company and a wholly-owned subsidiary of a bank holding
company (or with respect to any successor Trustee, such other corporate entity
as may be applicable), duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts (or with respect to any
successor Trustee, under the laws of the applicable jurisdiction of
organization), and has full trust power, authority and legal right to execute,
deliver and perform its obligations under this Trust Agreement and, in all
material respects, to own its properties and conduct its business as such
properties are presently owned and as such business is presently conducted.
(b) Due Qualification. The Trustee is duly qualified to do
business and is in good standing as a foreign trust company (or is exempt from
such requirements), and has obtained all necessary licenses and approvals in
29
each jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would have a material adverse effect on the interests of the Holders
of the Down-MACRO Holding Shares hereunder.
(c) Due Authorization. The execution, delivery, and
performance of this Trust Agreement has been duly authorized by the Trustee by
all necessary trust action on the part of the Trustee.
(d) Binding Obligation. This Trust Agreement constitutes a
legal, valid and binding obligation of the Trustee, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect, affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(e) No Violation. The execution and delivery of this Trust
Agreement by the Trustee, the performance of the transactions contemplated by
this Trust Agreement and the fulfillment of the terms hereof applicable to the
Trustee, will not conflict with, violate, result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or
lapse of time or both) a material default under, any Requirement of Law
applicable to the Trustee or any indenture, contract, agreement, mortgage, deed
of trust or other instrument to which the Trustee is a party or by which it or
any of its properties are bound.
(f) No Proceedings. There are no proceedings or
investigations pending or threatened against the Trustee before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality seeking to prevent the issuance of the Down-MACRO Holding
Shares or the consummation of any of the transactions contemplated by this
Trust Agreement, seeking any determination or ruling that, in the reasonable
judgment of the Trustee, would materially and adversely affect the performance
by the Trustee of its obligations under this Trust Agreement, or seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Trust Agreement.
(g) Compliance with Requirements of Law. The Trustee shall
duly satisfy all of its obligations and duties under this Trust Agreement and
shall maintain in effect all qualifications and will comply in all material
respects with all of the Requirements of Law in connection with its duties
hereunder, inasmuch as a failure to comply with such requirements would have a
material adverse effect on the interests of the Holders of the Down-MACRO
Holding Shares.
(h) Protection of the Rights of Holders of the Down-MACRO
Holding Shares. The Trustee shall take no action which, nor omit to take any
action the omission of which, would substantially impair the rights of Holders
of the Down-MACRO Holding Shares nor shall it revise amounts to be distributed
on the Down-MACRO Holding Shares.
(i) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery by the Trustee
of this Trust Agreement, the performance by the Trustee of the transactions
contemplated by this Trust Agreement and the fulfillment by the Trustee of the
terms hereof, have been obtained; provided, however, that the Trustee makes no
representation or warranty regarding state securities or "blue sky" laws in
connection with the distribution of the Down-MACRO Holding Shares.
30
(j) Maintenance of Records and Books of Account. The Trustee
shall maintain and implement administrative and operating procedures (including
the ability to recreate records evidencing any transaction entered into by the
Down-MACRO Holding Trust in the event of the destruction of the originals
thereof), and keep and maintain all documents, books, computer records and
other information, reasonably necessary or advisable. Such documents, books and
computer records shall reflect all facts giving rise to such transactions, all
payments and credits with respect thereto, and, to the extent required, such
documents, books and computer records shall indicate the interests of the
Down-MACRO Holding Trust in such transactions.
Section 3.3 Acceptance of Appointment and Matters Relating to the
Administrative and Marketing Agent.
(a) Claymore Securities, Inc. agrees to act as Administrative
Agent under this Agreement and the Holders of the Down-MACRO Holding Shares by
their acceptance of their shares consent to Claymore Securities, Inc. acting as
Administrative Agent under this Trust Agreement and as administrative agent for
the Up-MACRO Holding Trust under the Up-MACRO Holding Trust Agreement.
(b) The Administrative Agent shall administer the Treasuries
and direct the Trustee (i) in investing the proceeds from such Treasuries and
the proceeds of the creation of new Down-MACRO Holding Shares in Paired
Subsequent Issuances and (ii) in selecting Treasuries and/or cash for delivery
to the Down-MACRO Holding Trust as settlement payments under the Settlement
Contracts and to shareholders as a Final Distribution in accordance with the
terms set forth in this Trust Agreement and its customary and established
procedures relating to administering Treasuries and other comparable
investments. The Administrative Agent shall have full power and authority,
acting alone or through any party properly designated by it hereunder, to do
any and all things in connection with such administration, reinvestment,
payment and management of the Treasuries which it may deem necessary or
desirable. The Administrative Agent shall not be obligated to use separate
offices, employees or accounts for administering the Treasuries in connection
with the administration and reinvestment of the proceeds from the Treasuries in
new Treasuries in accordance with Section 3.7 hereof. The Depositor and the
Trustee shall furnish to the Administrative Agent any powers of attorney or
other documents necessary or appropriate to enable the Administrative Agent to
carry out its administrative and investment duties hereunder.
(c) The Administrative Agent shall comply with and perform
its administrative and investment obligations with respect to the Treasuries in
accordance with Section 3.5, Section 3.6, Section 3.7, and Section 6.1.
(d) The Administrative Agent shall not be liable for the
payment of expenses incurred in connection with the Down-MACRO Holding Trust
but shall be liable for its administrative and investment activities undertaken
pursuant to this Trust Agreement including any expenses related to its
administration of the Treasuries, disbursements or any other fees and expenses
related thereto.
(e) The Administrative Agent shall maintain and implement
administrative and operating procedures (including the ability to recreate
records evidencing the Down-MACRO Holding Trust's ownership interest in the
Treasuries in the event of the destruction of the originals thereof), and keep
and maintain all documents, books, computer records and other information,
reasonably necessary or advisable which is related to the purchase, holding and
sale of Treasuries. Such documents, books and computer records shall reflect
31
all facts giving rise to the Treasuries, all payments and credits with respect
thereto, and, to the extent required pursuant to Section 3.4(j), such
documents, books and computer records shall indicate the interests of the
Down-MACRO Holding Trust in the Treasuries.
(f) Claymore Securities, Inc. agrees to act as Marketing
Agent under this Trust Agreement and the Holders of the Down-MACRO Holding
Shares by their acceptance of their shares consent to Claymore Securities, Inc.
acting as Marketing Agent under this Trust Agreement and as marketing agent for
the Up-MACRO Holding Trust under the Up-MACRO Holding Trust Agreement.
(g) The Marketing Agent shall comply and perform its
obligations with respect to the Holding Shares as set forth in a separate
letter agreement between the Depositor and the Marketing Agent.
Section 3.4 Representations, Warranties and Covenants of the
Administrative Agent and Marketing Agent. Claymore Securities, Inc., in its
capacity as initial Administrative Agent and Marketing Agent, hereby makes, and
any successor Administrative Agent and Marketing Agent by its appointment
hereunder shall make, on the Closing Date (and on the date of any such
appointment), the following representations, warranties and covenants to the
Down-MACRO Holding Trust (and agrees that the Trustee may rely on each such
representation, warranty and covenant in accepting the Treasuries in trust and
in authenticating the Down-MACRO Holding Shares):
(a) Organization and Good Standing. Each of the
Administrative Agent and the Marketing Agent is a Kansas corporation (or with
respect to any successor Administrative Agent or Marketing Agent, such other
corporate entity as may be applicable) duly organized, validly existing and in
good standing under the laws of the State of Kansas (or with respect to any
successor Administrative Agent or Marketing Agent, the applicable jurisdiction
of its organization), and has full corporate power, authority and legal right
to execute, deliver and perform its obligations under this Trust Agreement and,
in all material respects, to own its properties and conduct its business as
such properties are presently owned and as such business is presently
conducted.
(b) Due Qualification. Each of the Administrative Agent and
the Marketing Agent is duly qualified to do business and is in good standing as
a foreign corporation (or is exempt from such requirements), and has obtained
all necessary licenses and approvals in each jurisdiction in which failure to
so qualify or to obtain such licenses and approvals would have a material
adverse effect on the interests of the Holders of the Down-MACRO Holding Shares
hereunder.
(c) Due Authorization. The execution, delivery and
performance of this Trust Agreement has been duly authorized by the
Administrative Agent and the Marketing Agent by all necessary corporate action
on the part of the Administrative Agent and the Marketing Agent.
(d) Binding Obligation. This Trust Agreement constitutes a
legal, valid and binding obligation of the Administrative Agent and the
Marketing Agent, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect,
affecting the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
32
(e) No Violation. The execution and delivery of this Trust
Agreement by the Administrative Agent and the Marketing Agent, the performance
of the transactions contemplated by this Trust Agreement and the fulfillment of
the terms hereof applicable to the Administrative Agent and the Marketing
Agent, will not conflict with, violate, result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or
lapse of time or both) a material default under, any Requirement of Law
applicable to the Administrative Agent and the Marketing Agent or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which each of the Administrative Agent and the Marketing Agent is a party or by
which it or any of its properties are bound.
(f) No Proceedings. There are no proceedings or
investigations pending or threatened against the Administrative Agent or the
Marketing Agent before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality seeking to prevent the
consummation of any of the transactions contemplated by this Trust Agreement,
seeking any determination or ruling that, in the reasonable judgment of the
Administrative Agent or the Marketing Agent, would materially and adversely
affect the performance by the Administrative Agent or the Marketing Agent of
its obligations under this Trust Agreement, or seeking any determination or
ruling that would materially and adversely affect the validity or
enforceability of this Trust Agreement.
(g) Compliance with Requirements of Law. The Administrative
Agent shall duly satisfy all obligations on its part to be fulfilled under or
in connection with the Treasuries and the Securities Account, will maintain in
effect all qualifications required under Requirements of Law in order to
properly service the Treasuries and the Securities Account and will comply in
all material respects with all other Requirements of Law in connection with
servicing the Treasuries and the Securities Account, inasmuch as the failure to
comply with such requirements would have a material adverse effect on the
interests of the Holders of the Down-MACRO Holding Shares.
(h) Protection of the Rights of the Holders of the Down-MACRO
Holding Shares. The Administrative Agent shall take no action which, nor omit
to take any action the omission of which, would substantially impair the rights
of Holders of the Down-MACRO Holding Shares in any Treasury or in the
Securities Account.
(i) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery by the
Administrative Agent and the Marketing Agent of this Trust Agreement, the
performance by the Administrative Agent and the Marketing Agent of the
transactions contemplated by this Trust Agreement and the fulfillment by the
Administrative Agent and the Marketing Agent of the terms hereof, have been
obtained; provided, however, that each of the Administrative Agent and the
Marketing Agent makes no representation or warranty regarding state securities
or "blue sky" laws in connection with the distribution of the Down-MACRO
Holding Shares.
(j) Maintenance of Records and Books of Account. The
Administrative Agent shall maintain and implement administrative and operating
procedures (including the ability to recreate records evidencing the Down-MACRO
Holding Trust's ownership interest in the Treasuries in the event of the
destruction of the original records relating thereto), and keep and maintain
all documents, books, computer records and other information, reasonably
necessary or advisable for the collection of all amounts due on the Treasuries.
Such documents, books and computer records shall reflect all facts giving rise
33
to the Treasuries, all payments and credits with respect thereto, and, to the
extent required pursuant to Section 3.3(e), such documents, books and computer
records shall indicate the interests of the Down-MACRO Holding Trust in the
Treasuries.
Section 3.5 Establishment of the Securities Account.
(a) The Trustee, for the benefit of the Holders of the
Down-MACRO Holding Shares, shall establish and maintain in the name of the
Trustee, on behalf of the Down-MACRO Holding Trust, an Eligible Deposit Account
bearing a designation clearly indicating that the Treasuries deposited therein
are held for the benefit of the Holders of the Down-MACRO Holding Shares (the
"Securities Account").
(b) The Securities Account shall initially be established
with the Trustee. The Trustee shall possess all right, title and interest in
and to all of the Treasuries on deposit from time to time in the Securities
Account and in all proceeds thereof for the benefit of the Holders of the
Down-MACRO Holding Shares.
(c) The Securities Account shall be under the sole dominion
and control of the Trustee for the benefit of the Holders of the Down-MACRO
Holding Shares. Except as expressly provided in this Trust Agreement, each of
the Depositor, the Administrative Agent and the Trustee agree that it shall
have no right of set-off or banker's lien against, and no right to otherwise
deduct from, any funds or assets held in the Securities Account for any amount
owed to it by the Down-MACRO Holding Trust or any Holder of Down-MACRO Holding
Shares. If at any time the Securities Account ceases to be an Eligible Deposit
Account, the Trustee shall within twenty (20) Business Days establish a new
account, transfer any cash or any investments to such new account, and from the
date such new account is established it shall be the "Securities Account" for
purposes of this Trust Agreement.
(d) The Trustee shall, in accordance with the trade
instructions received from the Administrative Agent, invest the funds of the
Down-MACRO Holding Trust in Treasuries and deposit such Treasuries into the
Securities Account, (i) on each Distribution Date, using the maturity proceeds
of the Treasuries on deposit in the Distribution Account on such Distribution
Date and required to be reinvested in the amount specified under Section
5.2(a)(iv), (ii) on each Subsequent Issuance Date, other than a Subsequent
Issuance Date which occurs prior to a Distribution Date, using the funds
delivered to the Trustee by Authorized Participants in connection with the
Paired Subsequent Issuance that is being effected on such Subsequent Issuance
Date and (iii) on any day during a Calculation Period, using any proceeds of
the Treasuries received on or prior to that day.
(e) On each Distribution Date, the Trustee shall transfer to
the Distribution Account all of the maturity proceeds of the Treasuries that
were on deposit in the Securities Account during the preceding Calculation
Period, to the extent that such proceeds remain on deposit in the Securities
Account on such date.
(f) On any Redemption Date occurring on a date that is not a
Distribution Date, the Trustee shall withdraw the portion of the Treasuries and
cash on deposit in the Securities Account that is specified by the
Administrative Agent with respect to such Redemption Date pursuant to Section
5.2(c) and shall deliver such assets in the amounts and to the parties entitled
thereto, as specified in such Section 5.2(c).
34
Section 3.6 Establishment of the Distribution Account.
(a) The Trustee, for the benefit of the Holders of the
Down-MACRO Holding Shares, shall establish and maintain in the name of the
Trustee, on behalf of the Down-MACRO Holding Trust, an Eligible Deposit Account
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Holders of the Down-MACRO Holding Shares (the
"Distribution Account").
(b) The Distribution Account shall initially be established
with the Trustee. The Trustee shall possess all right, title and interest in
and to all funds on deposit from time to time in the Distribution Account and
in all proceeds thereof. The Distribution Account shall be under the sole
dominion and control of the Trustee for the benefit of the Holders of the
Down-MACRO Holding Shares.
(c) Except as expressly provided in this Trust Agreement,
each of the Depositor, the Administrative Agent and the Trustee agree that it
shall have no right of set-off or banker's lien against, and no right to
otherwise deduct from, any funds held in the Distribution Account for any
amount owed to it by the Down-MACRO Holding Trust or any Holder of Down-MACRO
Holding Shares. If, at any time, the Distribution Account ceases to be an
Eligible Deposit Account, the Trustee shall within twenty (20) Business Days
establish a new account, transfer any cash or any investments to such new
account, and from the date such new account is established, it shall be the
"Distribution Account" for purposes of this Trust Agreement.
(d) The Trustee shall deposit into the Distribution Account
on or prior to each Distribution Date, (i) all interest and other income on the
Treasuries held in the Securities Account that is received within one Business
Day preceding any Distribution Date, (ii) all payments received by the
Down-MACRO Holding Trust under the Income Distribution Agreement and the
Settlement Contracts, and, (iii) pursuant to Section 3.5(e), all proceeds of
the Treasuries remaining on deposit in the Securities Account on any
Distribution Date.
(e) Not later than the Distribution Payment Date that follows
each Distribution Date, including any Distribution Date that is also the Final
Scheduled Termination Date, an Early Termination Date or a Redemption Date, the
Trustee shall withdraw all funds on deposit in the Distribution Account and
shall apply such funds for the purposes and in accordance with the priorities
specified in Section 5.2(a).
Section 3.7 Administration of Treasuries.
(a) On each Distribution Date and on each Business Day on
which funds are received by the Trustee in connection with a Paired Subsequent
Issuance,, the Administrative Agent, on behalf of the Down-MACRO Holding Trust,
shall direct the Trustee to reinvest the funds available pursuant to Section
5.2(a)(iv) in U.S. Treasury obligations or in repurchase agreements in U.S.
Treasury obligations in accordance with the following "Acquisition Guidelines":
(i) all Treasuries must mature on or prior to the
next scheduled Distribution Date;
(ii) no Treasury may be purchased at a premium to
its stated par amount; and
35
(iii) subject to the foregoing clauses (i) and (ii),
all funds shall be invested in:
(1) in the case that they are being invested in U.S. Treasury obligations:
(A) Treasuries with the most recent date of
issuance that mature on the twenty-fifth day of the month in
which the next scheduled Distribution Date occurs;
(B) to the extent that Treasuries satisfying
the foregoing subclause (A) are not available in sufficient
amounts to allow investment of all funds that are required to
be invested pursuant to Section 5.2(a)(iv), Treasuries with
the most recent date of issuance that mature on the fifteenth
day of the month in which the next scheduled Distribution
Date occurs;
(C) to the extent that Treasuries satisfying
the foregoing subclauses (A) or (B) are not available in
sufficient amounts to allow investment of all funds that are
required to be invested pursuant to Section 5.2(a)(iv),
Treasuries with the most recent date of issuance that mature
on the first day of the month in which the next scheduled
Distribution Date occurs; and
(D) thereafter, to the extent that Treasuries
satisfying the foregoing subclauses (A), (B) or (C) are not
available in sufficient amounts to allow investment of all
funds that are required to be invested pursuant to Section
5.2(a)(iv), Treasuries with the most recent date of issuance
that mature closest to the next scheduled Distribution Date.
(2) in the case that they are being invested in repurchase agreements in U.S.
Treasury obligations, repurchase agreements issued by [ ], and, to the extent
that such counterparty no longer has capacity, [ ], and, to the extent that
such counterparty no longer has capacity, [ ], and, to the extent that such
counterparty no longer has capacity, [ ], and, to the extent that such
counterparty no longer has capacity, [ ], and, to the extent that such
counterparty no longer has capacity, [ ]; provided, that the Administrative
Agent may direct the acquisition of repurchase agreements from each of the
foregoing entities only to the extent that such entities are, at the time of
acquisition, either (x) banks with at least $1 billion in capital or (y)
registered securities dealers deemed to be credit-worthy by the Administrative
Agent.
(b) On each Distribution Date, the Administrative Agent may,
subject to, and in accordance with, the Acquisition Guidelines, solicit offers
from the three (3) largest nationally recognized dealer markets in U.S.
Treasury obligations. Upon the receipt of such offers, the Administrative Agent
shall determine the offer price and execution terms that will yield the
greatest expected Down-MACRO Available Income Accrual and Up-MACRO Available
Income Accrual for the next Calculation Period and shall direct the Trustee to
purchase Treasuries, subject to, and in accordance with, the Acquisition
Guidelines, from the dealer or dealers who submitted such offers. Instead of or
in addition to the foregoing acquisition of U.S. Treasury obligations, the
36
Administrative Agent may, on each Distribution Date, solicit offers, in
accordance with the Acquisition Guidelines, from the counterparties designated
in Section 3.7(a)(2) for U.S. Treasury repurchase arrangements and, based upon
the Administrative Agent's determination of the best offer price and execution
terms yielding the greatest Down-MACRO and Up-MACRO Available Income Accrual,
shall direct the Trustee to enter into repurchase arrangements with the
counterparty or counterparties who submitted such offers. All Treasuries
acquired as described above shall be allocated ratably between the Down-MACRO
Holding Trust and the Up-MACRO Holding Trust. Treasuries purchased on each
Distribution Date, Subsequent Issuance Date or any other date shall be
deposited by the Trustee into the Securities Account.
(c) On any Business Day during any Calculation Period, when
cash is available in the Securities Account or the Distribution Account for
reinvestment in Treasuries, (other than the last Business Day prior to a
Distribution Date), the Administrative Agent shall provide instructions to the
Trustee to purchase Eligible Treasuries maturing prior to the next scheduled
Distribution Date, in accordance with the Acquisition Guidelines set forth in
paragraph (a) of this Section 3.7.
(d) Without limiting the generality of Section 13.1 and
Section 13.2, the Trustee shall not under any circumstances be held liable
under this Trust Agreement for any action it takes in accordance with
directions provided to it by the Administrative Agent under this Section 3.7 or
for any omission on the part of the Trustee to take any action in the absence
of receiving instructions from the Administrative Agent pursuant to this
Section 3.7.
Section 3.8 Establishment of the Fee Payment Account.
(a) The Trustee shall establish and maintain in the name of
the Trustee, on behalf of the Down-MACRO Holding Trust, an Eligible Deposit
Account bearing a designation that the funds deposited therein are held for the
benefit of the Depositor (the "Fee Payment Account").
(b) The Fee Payment Account shall initially be established
with the Trustee. The Trustee shall possess all right, title and interest in
and to all funds on deposit from time to time in the Fee Payment Account and in
all proceeds thereof. The Fee Payment Account shall be under the sole dominion
and control of the Trustee for the benefit of the Depositor.
(c) On each Distribution Date, the Trustee shall deposit an
amount equal to the Down-MACRO Fee Deduction Amount into the Fee Payment
Account and shall use such funds, based on standing instructions from the
Depositor, to pay all Down-MACRO Expenses and all Down-MACRO Fees pursuant to
priorities first and second of Section 5.2(a) on the related Distribution
Payment Date.
(d) On each Distribution Payment Date, all funds remaining on
deposit in the Fee Payment Account after the Down-MACRO Expenses and Down-MACRO
Fees have been paid in full shall be delivered by the Trustee to the Depositor.
37
ARTICLE IV
CALCULATIONS
Section 4.1 Calculations on Price Determination Days.
(a) With respect to each Price Determination Day, the Trustee
shall calculate and provide to the Administrative Agent and the Calculation
Agent not later than 5:00 p.m. New York City Time on the preceding day:
(i) the Down-MACRO Investment Amount for that Price
Determination Date;
(ii) the Down-MACRO Available Income Accrual for the
previous day;
(iii) the Down-MACRO Earned Income Accrual for the
previous day;
(iv) the Down-MACRO Daily Fee Accrual for that Price
Determination Date;
(v) the Down-MACRO Asset Amount for that Price
Determination Date; and
(vi) the Price Level Percentage Change for the
preceding day and the Down-MACRO Underlying Value for the preceding
day and the portion thereof that is allocable to (A) one Down-MACRO
Holding Share, calculated by dividing the Down-MACRO Underlying Value
by the number of Down-MACRO Holding Shares that are Outstanding on
such day, and (B) one Down-MACRO Tradeable Share, calculated by
dividing (1) the product of (x) the number of Down-MACRO Holding
Shares held by the Down-MACRO Tradeable Trust on such day and (y) the
quotient calculated in the foregoing subclause (A) by (2) the number
of Down-MACRO Tradeable Shares that are outstanding on such day. The
calculations in clauses (ii) and (v) for any day that was not a Price
Determination Day shall be made using the Applicable Reference Price
of Crude Oil on the last preceding Price Determination Day.
(b) The Trustee shall calculate the Down-MACRO Underlying
Value as provided in clause (a)(v) of this Section 4.1, subject to receipt of,
and based upon (i) the Applicable Reference Price of Crude Oil as of the close
of trading on such Price Determination Day, and (ii) its own calculations of
the Down-MACRO Asset Amount pursuant to Section 4.1 of the Up-MACRO Holding
Trust Agreement.
For purposes of calculating the foregoing amounts, any Paired
Optional Redemptions or Paired Subsequent Issuances scheduled to settle on the
relevant Price Determination Day shall be taken into account.
(c) Not later than 7:15 p.m. New York City Time on the
Business Day preceding each Distribution Date, assuming that the Applicable
Reference Price of Crude Oil has been established by the NYMEX or the
applicable Substitute Oil Price Provider, the Trustee shall calculate and
38
provide to the Administrative Agent (i) the Down-MACRO Income Distribution
Payment, if any, that is payable under the Income Distribution Agreement by the
Down-MACRO Holding Trust to the Up-MACRO Holding Trust and (ii) the Up-MACRO
Income Distribution Payment, if any, that is payable under the Income
Distribution Agreement by the Up-MACRO Holding Trust to the Down-MACRO Holding
Trust.
(d) The Trustee's calculations, pursuant to clauses (a)
through (c) of this Section 4.1 shall be conclusive and binding upon the
Holders of the Down-MACRO Holding Shares and all other Persons.
Section 4.2 Calculation of Intraday Indicative Values.
Intraday indicative values for the Underlying Value of the
Up-MACRO Holding Trust based on the intraday trading prices of the Applicable
Reference Price of Crude Oil will be calculated by the Calculation Agent under
the Calculation Agency Agreement.
Section 4.3 Calculation of Income Distribution Payments and
Settlement Payments.
(a) Prior to each Distribution Date, the Trustee shall
calculate the Down-MACRO Income Distribution Payment, if any, that the
Down-MACRO Holding Trust is required to make to the Up-MACRO Holding Trust on
such Distribution Date or the Up-MACRO Income Distribution Payment, if any,
that the Up-MACRO Holding Trust is required to make to the Down-MACRO Holding
Trust on such Distribution Date pursuant to the Income Distribution Agreement.
(b) On the Business Day preceding the Final Scheduled
Termination Date, any Early Termination Date and the New York Business Day on
which a Paired Optional Redemption settles, assuming that the Applicable
Reference Price of Crude Oil has been established by the NYMEX or the
applicable Substitute Oil Price Provider on the last Price Determination Day
preceding such Final Scheduled Termination Date or Early Termination Date or on
the applicable Redemption Date, the Trustee shall calculate and provide to the
Administrative Agent (i) the Down-MACRO Settlement Payment, if any, required to
be made by the Down-MACRO Holding Trust to the Up-MACRO Holding Trust under the
Settlement Contracts that are being settled in connection with such Final
Scheduled Termination Date, Early Termination Date or Redemption Date and (ii)
the Up-MACRO Settlement Payment, if any, required to be made by the Up-MACRO
Holding Trust to the Down-MACRO Holding Trust under the Settlement Contracts
that are being settled in connection with such Final Scheduled Termination
Date, Early Termination Date or Redemption Date.
Section 4.4 Calculations Relating to Paired Subsequent Issuances
and Paired Optional Redemptions. The Trustee shall confirm the Administrative
Agent's determination of the Redemption Cash Component, if any, that must be
delivered by the redeeming Authorized Participants in connection with each
Paired Optional Redemption. The Trustee's determination of the Redemption Cash
Component, if any, required for each Paired Optional Redemption shall be final
and binding upon all interested Persons.
39
ARTICLE V
RIGHTS OF HOLDERS OF THE DOWN-MACRO HOLDING SHARES
Section 5.1 Rights of Holders of the Down-MACRO Holding Shares.
The Down-MACRO Holding Shares represent beneficial interests in the Down-MACRO
Holding Trust and are entitled to receive distributions on the dates and in the
amounts specified in Section 5.2 from assets on deposit in the Distribution
Account and the Securities Account.
Section 5.2 Priority of Payments.
(a) Allocations on each Distribution Date. On each
Distribution Date, the Trustee, on behalf of the Down-MACRO Holding Trust,
shall allocate the amounts on deposit in the Distribution Account, including
without limitation amounts deposited therein pursuant to Section 5.5(b) and
Section 5.6(b), in accordance with the following priority of payments:
(i) first, for deposit of an amount equal to the
Down-MACRO Fee Deposit into the Fee Payment Account for application to
the payment of Down-MACRO Expenses incurred during the preceding
Calculation Period;
(ii) second, the amount remaining in the Fee Payment
Account after the payment of the Down-MACRO Expenses, for the payment
of the Down-MACRO Fees incurred during the preceding Calculation
Period pursuant to Section 5.4 hereunder;
(iii) third, if such Distribution Date is an Early
Termination Date, the Final Scheduled Termination Date or a Redemption
Date for all or a portion of the Down-MACRO Holding Shares to
segregate funds in an amount equal to the product of (A) all funds
remaining after satisfying priorities first and second of this Section
5.2(a) and (B) the applicable Down-MACRO Redemption Percentage for
such Redemption Date for application of such funds (A) to make the
Down-MACRO Settlement Payment to the Up-MACRO Holding Trust if any
such payment is owed under the Settlement Contracts being settled on
such date and then (B) to make a Final Distribution to the Holders of
the Down-MACRO Holding Shares being redeemed on such date;
(iv) fourth, for reinvestment in Treasuries of an
amount equal to the lesser of (x) the Down-MACRO Aggregate Par Amount
on such Distribution Date (after deducting an amount equal to the
Aggregate Par Amount of the Down-MACRO Holding Shares being redeemed
on such Distribution Date), and (y) all funds remaining after
satisfying priorities first through third of this Section 5.2(a);
(v) fifth, for making the Down-MACRO Income
Distribution Payment to the Up-MACRO Holding Trust, if such a payment
is due under the Income Distribution Agreement; and
(vi) sixth, for distribution as the Quarterly
Distribution on the Distribution Payment Date that follows such
Distribution Date all funds that are remaining after satisfying
priorities first through fifth of this Section 5.2(a) to those
40
shareholders who are registered Holders of the Down-MACRO Holding
Shares on the related Record Date.
(b) Distributions on Distribution Payment Dates. On the
settlement date for a Paired Optional Redemption directed on a Distribution
Date, the Trustee shall distribute to the Holders of the Down-MACRO Holding
Shares the Final Distribution provided for under priority third of clause (a)
above in cash and, on the Distribution Payment Date that follows each
Distribution Date, the Trustee shall distribute to the Holders of the
Down-MACRO Holding Shares who were registered holders on the related Record
Date the Quarterly Distribution provided for under priority sixth of clause (a)
above in cash.
(c) Distributions on Redemption Dates that are not
Distribution Dates. With respect to each Redemption Date that is not a
Distribution Date, the Trustee, as instructed by the Administrative Agent, will
segregate a portion of the Treasuries on deposit in the Securities Account such
that the Value of the Treasuries so segregated is equal to the product of the
applicable Down-MACRO Redemption Percentage for such Redemption Date and the
Down-MACRO Asset Amount on that Redemption Date. The Trustee, as instructed by
the Administrative Agent, will then deliver Treasuries and cash with a Value
equal to the Down-MACRO Settlement Payment that is owed, if any, under each
Settlement Contract that is being settled on that Redemption Date to the
Up-MACRO Holding Trustee and deliver the remaining Treasuries that were
segregated to the holders of the Down-MACRO Holding Shares that are being
redeemed on that Redemption Date in accordance with the procedures specified in
such Section 6.1(d).
Section 5.3 Payment of Expenses. On each Distribution Payment
Date, the Trustee, on behalf of the Down-MACRO Holding Trust, shall apply funds
on deposit in the Fee Payment Account to pay the following expenses (such
expenses, the "Down-MACRO Expenses"):
(i) taxes, and any other governmental charges;
(ii) to the Administrative Agent, the expenses of
negotiating the purchase of Treasuries and, to the Trustee, the
expenses of settling the purchase of the Treasuries in each case,
pursuant to Section 3.7 (exclusive of any expenses required to be
borne by the Depositor or redeeming Authorized Participant as provided
herein or in the Participants Agreement in connection with Paired
Optional Redemptions and Paired Subsequent Issuances;
(iii) any taxes, fees and charges relating to each
Paired Subsequent Issuance or Paired Optional Redemption of MACRO
Units (exclusive of fees and expenses required to be borne by the
Authorized Participants directing the creating or redemption of MACRO
Units);
(iv) extraordinary legal expenses of the Trustee and
auditing expenses of the Down-MACRO Holding Trust or the Down-MACRO
Tradeable Trust;
(v) federal and state registration fees incurred to
comply with the public registration requirements and reporting
obligations thereunder for the Down-MACRO Holding Trust and the
41
Down-MACRO Tradeable Trust, as required pursuant to Section 15.2
hereof and Section 2.4 of the Down-MACRO Tradeable Trust Agreement;
(vi) expenses of the Depositor relating to the
printing and distribution of offering and marketing materials relating
to the initial issuance and any Paired Subsequent Issuances (including
but not limited to, associated legal, auditing, underwriting and
rating agency costs); and
(vii) any other expenses of the Down-MACRO Holding
Trust or the Down-MACRO Tradeable Trust not otherwise described above
which are incurred by either trust, or on behalf of either trust by
the Depositor, the Trustee, the Down-MACRO Tradeable Trustee, the
Calculation Agent under the Calculation Agency Agreement and the
Administrative Agent pursuant to actions permitted or required under
this Trust Agreement, the Down-MACRO Tradeable Trust Agreement or the
Calculation Agency Agreement, as applicable.
The Trustee shall be responsible for recording all expenses
incurred by it on behalf of, or in the course of, administering the Down-MACRO
Holding Trust.
To the extent that the funds on deposit in the Fee Payment
Account are insufficient to pay in full all of the Down-MACRO Expenses, such
funds shall be applied first, to pay all taxes payable by the Down-MACRO
Holding and Tradeable Trusts and, thereafter, shall be applied ratably to pay
all other expenses. The Depositor shall pay the unpaid portion of any of the
Down-MACRO Expenses on behalf of the Down-MACRO Holding and Tradeable Trusts.
Section 5.4 Payment of Fees. On each Distribution Payment Date,
after all Down-MACRO Expenses have been paid, the Trustee, on behalf of the
Down-MACRO Holding Trust, shall apply funds on deposit in the Fee Payment
Account to pay the following fees (collectively, the "Down-MACRO Fees"):
(i) to the Trustee, the Down-MACRO Trustee Fee for
the preceding Calculation Period;
(ii) to the Administrative Agent and the Marketing
Agent, the Down-MACRO Administration and Marketing Fee for the
preceding Calculation Period;
(iii) to MacroMarkets, the MACRO Licensing Fee for
the preceding Calculation Period;
(iv) to MacroMarkets, the MACRO Sublicensing Fee for
the preceding Calculation Period;
(v) to the Calculation Agent, the Down-MACRO
Calculation Agent Fee for the preceding Calculation Period; and
(vi) fees payable to any other entities which
provide services to the Down-MACRO Holding Trust or the Down-MACRO
Tradeable Trust.
42
To the extent that the funds on deposit in the Fee Payment
Account are insufficient to pay in full all of the Down-MACRO Fees, such funds
will be applied ratably for the payment of each Person listed above in (i),
(ii), (iv) and (v) and the remaining amount, if any, will be paid on behalf of
the Down-MACRO Holding Trust by the Depositor.
To the extent any funds remain on deposit in the Fee Payment
Account after payment of all Down-MACRO Expenses and Down-MACRO Fees on any
Distribution Payment Date, such funds will be delivered on such date to the
Depositor.
Section 5.5 Payments under the Income Distribution Agreement.
(a) On each Distribution Payment Date, in accordance with
priority fifth of Section 5.2(a) and the terms of the Income Distribution
Agreement, the Down-MACRO Holding Trust shall pay to the Up-MACRO Holding Trust
the Down-MACRO Income Distribution Payment, if any, from amounts on deposit in
the Distribution Account. If the Down-MACRO Holding Trust has no Down-MACRO
Available Income on such Distribution Date, then the Down-MACRO Holding Trust
shall not be required to make any payment under the Income Distribution
Agreement on such Distribution Date or on any subsequent date and no interest
shall accrue on any such unpaid amounts.
(b) On each Distribution Payment Date, any Up-MACRO Income
Distribution Payment, received from the Up-MACRO Holding Trust under the Income
Distribution Agreement shall be deposited into the Distribution Account for
application in accordance with Section 5.2(a) on such Distribution Date.
Section 5.6 Payments under the Settlement Contracts.
(a) On the Final Scheduled Termination Date, an Early
Termination Date or any Redemption Date occurring on a Distribution Date, in
accordance with priority third of Section 5.2(a) and the terms of the
Settlement Contracts, the Trustee shall, on the related Distribution Payment
Date, cause the Down-MACRO Holding Trust to make the Down-MACRO Settlement
Payment, if any, to the Up-MACRO Holding Trust from amounts on deposit in the
Distribution Account. On any Redemption Date occurring on any day other than a
Distribution Date, the Trustee, as instructed by the Administrative Agent,
shall cause the Down-MACRO Holding Trust to deliver Treasuries in accordance
with Section 5.2(c) and the terms of the Settlement Contracts to make an
Down-MACRO Settlement Payment, if any, due under the Settlement Contracts being
settled on such Redemption Date.
(b) On the Final Scheduled Termination Date, an Early
Termination Date or a Redemption Date, any Up-MACRO Settlement Payment received
from the Up-MACRO Holding Trust under one or more Settlement Contracts shall be
deposited into the Distribution Account for application in accordance with
Section 5.2(a) on such date.
ARTICLE VI
REDEMPTIONS OF THE DOWN-MACRO HOLDING SHARES
Section 6.1 Paired Optional Redemptions.
(a) On any Business Day, up to the last Business Day
preceding the Final Scheduled Termination Date, one or more Authorized
43
Participants may direct the redemption of Paired Holding Shares by delivering a
Redemption Order to the Administrative Agent (such redemption, a "Paired
Optional Redemption") and satisfying the conditions set forth in this Section
6.1. The Authorized Participants directing the Paired Optional Redemption must
be the registered holders of the Paired Holding Shares and/or the Down-MACRO
and/or Up-MACRO Tradeable Shares which are being tendered for redemption, as
shown on the records of the Depository.
(b) To effectuate a Paired Optional Redemption, the redeeming
Authorized Participants must place a Redemption Order on the applicable
Redemption Date not later than the earlier of (i) 2:00 p.m., New York City
Time, and (ii) half an hour before the end of trading in the futures contracts
from which the Applicable Reference Price of Crude Oil is derived, which shall
be the Light Sweet Crude Oil Futures Contract unless and until a Substitute
Reference Oil Price is selected by the Depositor and the Administrative Agent
or the shareholders.
On the next Business Day that follows the Redemption Date,
the redeeming Authorized Participant must transfer to the Trustee by 10:00
a.m., New York City Time, the requisite number of Paired Holding Shares
constituting at least one MACRO Unit or integral multiples thereof or the
requisite number of Tradeable Shares and Holding Shares which together, upon
the exchange of the Tradeable Shares to their related Holding Shares will
constitute at least one MACRO Unit or integral multiples thereof, plus any
applicable Redemption Cash Component, and provide written or electronic
evidence of such deposit to the Administrative Agent in accordance with the
Participants Agreement.
(c) The Trustee or the Administrative Agent may reject any
Redemption Order (i) if the Administrative Agent determines that the Redemption
Order is not in proper form, (ii) if Paired Holding Shares and/or Down-MACRO
and/or Up-MACRO Tradeable Shares in a sufficient number to constitute one or
more whole MACRO Units are not tendered to the Trustee for redemption, (iii) if
the Depositor has determined, based on the opinion of counsel, and advised the
Trustee that such Redemption Order would have adverse tax consequences to the
Down-MACRO Holding Trust, (iv) the acceptance or receipt of which would, in the
opinion of counsel to the Depositor acceptable to the Trustee, be unlawful, (v)
if circumstances outside the control of the Trustee, the Depositor or the
Administrative Agent make it impractical or not feasible to process a Paired
Optional Redemption on the Redemption Date designated in such Redemption Order
or (vi) if the Up-MACRO Holding Trustee has notified the Trustee that it has
rejected the related Redemption Order or the related Exchange Order delivered
under the Up-MACRO Holding Trust Agreement for one of the reasons described in
Section 6.1(c) of the Up-MACRO Holding Trust Agreement. None of the Trustee,
the Depositor or the Administrative Agent shall be liable to any Person for
rejecting a Redemption Order or an Exchange Order pursuant to this Section
6.1(c).
(d) If the Redemption Date on which a Paired Optional
Redemption was directed is not a Distribution Date, the Administrative Agent
shall perform the following calculations and deliver the following instructions
with respect to the Treasuries, employing "last in, first out" methodology:
(i) identify the Treasuries on deposit in the
Down-MACRO Holding Trust that are the most recently-acquired
44
Treasuries with a Value equal to the product of the Down-MACRO
Redemption Percentage and the Down-MACRO Asset Amount;
(ii) (A) select Treasuries with a Value equal to the
Down-MACRO Settlement Payment, if any such payment is required to be
made by the Down-MACRO Holding Trust with respect to the Redemption
Date pursuant to priority third of Section 5.2(a), (B) allocate the
remaining Treasuries to be delivered as a Final Distribution to the
Authorized Participants directing the Paired Optional Redemption
pursuant to priority third of Section 5.2(a) and (C) in the event that
the remaining Treasuries to be delivered as a Final Distribution
exceed the amount due to the Authorized Participants directing the
Paired Optional Redemption, calculate the amount to be paid by the
Authorized Participants to the Down-MACRO Holding Trust to compensate
the trust for the excess Value of the Treasuries being delivered to
the Authorized Participants as a Final Distribution (such amount, the
"Redemption Cash Component"); and
(iii) deliver written instructions to the Trustee
identifying the Treasuries to be used to effect the Paired Optional
Redemption and, of those, the Treasuries to be used for the making of
the Down-MACRO Settlement Payment, if any, the Treasuries to be used
to make the Final Distribution to the redeeming Holders of the
Down-MACRO Holding Shares and the Redemption Cash Component to be paid
by the Authorized Participants, if any.
The Treasuries selected by the Administrative Agent to be delivered as the Final
Distribution in a Paired Optional Redemption shall be distributed ratably, by
type, to each redeeming Authorized Participant.
(e) A non-refundable transaction fee will be payable to the
Trustee for its own account in connection with each Redemption Order and
Exchange Order in the amount specified in Section 7 of the Participants
Agreement.
Section 6.2 Cancellation of a Redemption Order(a) . In the event
that a Redemption Order has been cancelled, in connection with which the
Down-MACRO Holding Trust incurred expenses not payable by an Authorized
Participant, the Trustee will incur such expenses and will be reimbursed by the
Down -MACRO Holding Trust as provided in Section 3.1(c) herein.
Section 6.3 Redemptions on Early Termination Date and Final
Scheduled Termination Date. On any Distribution Date that is an Early
Termination Date, as determined pursuant to Section 11.1, or the Final
Scheduled Termination Date, the Trustee shall redeem all of the Down-MACRO
Holding Shares that are Outstanding on such Distribution Date at their
Down-MACRO Per Share Underlying Value, using the funds that are on deposit in
the Distribution Account, as specified in priority third of Section 5.2(a).
Section 6.4 Settlement of the Settlement Contracts and Adjustment
to the Aggregate Amount of the Income Distribution Agreement. Concurrently with
Paired Optional Redemptions, the Trustee, acting together with the Up-MACRO
Holding Trustee, each on behalf of their respective Paired Holding Trust, shall
adjust, on a Net Daily Basis (as defined in the Participants Agreement) the
aggregate amount of the Income Distribution Agreement and enter into additional
Settlement Contracts, if a Net Par Decrease occurred on that day, calculated
45
based upon the number of MACRO Units specified in the related Redemption Orders
and the number of MACRO Units specified in any Creation Orders delivered on the
same day.
Section 6.5 Settlement.
(a) By 10:00 a.m. New York City Time on the Business Day
following the Final Scheduled Termination Date or applicable Redemption Date,
if the Trustee's account at the Depository has been credited with the Paired
Holding Shares, the Tradeable Shares or both, as applicable, being tendered for
redemption, the Administrative Agent has received the electronic confirmation
of such tender and the Trustee has received the transaction fee as provided in
Section 7 of the Authorized Participants Agreement and the Redemption Cash
Component, if applicable, payable by the redeeming Authorized Participants in
accordance with Section 2.6(e) and Section 6.1(d)(ii), respectively, the
Trustee shall deliver:
(i) if the relevant Redemption Date was not a
Distribution Date, a Final Distribution consisting of the Treasuries
and/or cash in accordance with the instructions from the
Administrative Agent and in the manner specified in Section 6.1(d) by
effecting the necessary transfers of Treasuries and/or cash to the
Participant Custodian Account of the redeeming Authorized Participant;
or
(ii) in the case of the Final Scheduled Termination
Date that is scheduled to occur on a Distribution Date, a Final
Distribution of cash in the amount specified in priority third of
Section 5.2(a) by effecting the necessary transfers of cash to the
Participant Custodian Account of the redeeming Authorized Participant
not later than the related Distribution Payment Date.
(b) The Administrative Agent may, in its discretion, and will
when so directed by the Depositor, suspend the right of redemption, or postpone
the date of settlement for any redemption of Down-MACRO Holding Shares:
(i) for any period during which the AMEX is closed
other than customary weekend or holiday closings, or trading is
suspended or restricted;
(ii) for any period during which an emergency exists
as a result of which delivery, disposal or evaluation of the
Treasuries is not reasonably practicable;
(iii) if such redemption would cause the Down-MACRO
or Up-MACRO Investment Amount to equal less than 10 million dollars;
(iv) for any period which, such redemption will
cause the Down-MACRO Tradeable Trust to hold fifty percent or less of
the outstanding Down-MACRO Holding Shares; and
(v) for such other period as the Depositor, the
Trustee or the Administrative Agent determines to be necessary for the
protection of Beneficial Owners.
46
None of the Depositor, the Trustee or the Administrative Agent
will be liable to any Person for any loss or damages that may result from any
such suspension or postponement.
(c) The Down-MACRO Holding Shares redeemed on the Final
Scheduled Termination Date shall be cancelled by the Trustee, on behalf of the
Down-MACRO Holding Trust, in accordance with the procedures of the Depository.
(d) In the event that the provisions of this Trust Agreement
and the Participants Agreement conflict in any way, the provisions of the
Participants Agreement will prevail insofar as they relate to a Paired Optional
Redemption or a Paired Subsequent Issuance.
ARTICLE VII
CAPITAL ACCOUNTS OF HOLDERS
AND OPERATION THEREOF; TAX ALLOCATIONS
Section 7.1 Capital Contributions.
(a) Each Holder has made an initial Capital Contribution (as
defined below) to the Down-MACRO Holding Trust in cash equal to the amount paid
for its Down-MACRO Holding Shares. Except as provided for herein, a Holder
shall not be required to make any further Capital Contributions to the
Down-MACRO Holding Trust.
(b) Except as expressly set forth herein, no Holder shall be
entitled to any return of capital, interest or compensation by reason of its
Capital Contributions.
Section 7.2 Capital Accounts; Allocations. There shall be
established in respect of each Holder a separate capital account in the books
and records of the Down-MACRO Holding Trust in respect of the Holder's Capital
Contributions to the Down-MACRO Holding Trust (each, a "Capital Account"), to
which the following provisions shall apply:
(a) The Capital Account of each Holder initially shall be
equal to the cash contributed in exchange for its Down-MACRO Holding Shares
(each, a "Capital Contribution") and, at the end of each day shall be:
(i) increased by (A) an amount equal to any amounts
paid with respect to Down-MACRO Holding Shares issued as part of a
Paired Subsequent Issuance by such Holder during such day; and (B)
such Holder's interest in the Net Profit (and items thereof) of the
Down-MACRO Holding Trust during such day as allocated under Section
7.2(b); and
(ii) decreased by (A) any distributions made in cash
by the Down-MACRO Holding Trust to such Holder on such day ; (B) the
fair market value of any property other than cash distributed by the
Down-MACRO Holding Trust to such Holder on such day; and (C) such
Holder's interest in the Net Loss (and items thereof) of the
Down-MACRO Holding Trust for such Day as allocated under Section
7.2(b).
(b) Except pursuant to the Regulatory Allocations set forth
in Section 7.3, or as otherwise provided in this Trust Agreement, Net Profit
and Net Loss (and items of each) of the Down-MACRO Holding Trust shall be
provisionally allocated as of the end of each day among the Holders in a manner
47
such that the Capital Account of each Holder immediately after giving effect to
such allocation, is, as nearly as possible, equal (proportionately) to the
amount equal to the distributions that would be made to such Holder during such
fiscal year pursuant to Article V if (i) the Down-MACRO Holding Trust were
dissolved and terminated; (ii) its affairs were wound up and each Trust Asset
was sold for cash equal to its book value; (iii) all Down-MACRO Holding Trust
liabilities were satisfied (limited with respect to each nonrecourse liability
to the book value of the assets securing such liability); and (iv) the net
assets of the Down-MACRO Holding Trust were distributed in accordance with
Article V to the Holders immediately after giving effect to such allocation.
The Depositor may, in its discretion, make such other assumptions (whether or
not consistent with the above assumptions) as it deems necessary or appropriate
in order to effectuate the intended economic arrangement of the Holders. Except
as otherwise provided elsewhere in this Trust Agreement, if upon the
dissolution and termination of the Down-MACRO Holding Trust pursuant to Section
14.1 and after all other allocations provided for in this Section 7.2 have been
tentatively made as if this Section 7.2(b) were not in this Trust Agreement, a
distribution to the Holders under Section 14.1 would be different from a
distribution to the Holders under Article V then Net Profit (and items thereof)
and Net Loss (and items thereof) for the fiscal year in which the Down-MACRO
Holding Trust dissolves and terminates pursuant to Section 14.1 shall be
allocated among the Holders in a manner such that the Capital Account of each
Holder, immediately after giving effect to such allocation, is, as nearly as
possible, equal (proportionately) to the amount of the distribution that would
be made to such Holder during such last fiscal year pursuant to Article V. The
Depositor may, in its discretion, apply the principles of this Section 7.2(b)
to any fiscal year preceding the fiscal year in which the Down-MACRO Holding
Trust dissolves and terminates (including through application of Section 761(e)
of the Code) if delaying application of the principles of this Section 7.2(b)
would likely result in distributions under Section 14.1 that are materially
different from distributions under Article V in the fiscal year in which the
Down-MACRO Holding Trust dissolves and terminates.
(c) Before any distribution of property (other than cash)
from the Down-MACRO Holding Trust to a Holder (including without limitation,
any non-cash asset which shall be deemed distributed immediately prior to the
dissolution and winding up of the Down-MACRO Holding Trust), the Capital
Accounts of all Holders of the Down-MACRO Holding Trust shall be adjusted and,
upon the occurrence of one or more of the other events described in Section
1.704-1(b)(2)(iv)(f) of the Regulations, may be adjusted to reflect the manner
in which any unrealized income, gain, loss or deduction inherent in such
property (that has not been previously reflected in the Holders' Capital
Accounts) would be allocated among the Holders if there were a taxable
disposition of such property by the Down-MACRO Holding Trust on the date of
distribution, in accordance with Section 1.704-1(b)(2)(iv)(f) and (g) of the
Regulations.
(d) In determining the amount of any liability for purposes
of this Section 7.2, there shall be taken into account Section 752 of the Code
and any other applicable provisions of the Code and any Regulations promulgated
thereunder.
(e) Notwithstanding any other provision of this Trust
Agreement to the contrary, the provisions of this Section 7.2 regarding the
maintenance of Capital Accounts shall be construed so as to comply with the
provisions of the Code and any Regulations thereunder. The Depositor in its
sole and absolute discretion and whose determination shall be binding on the
Holders is hereby authorized to interpret and to modify the foregoing
provisions to the extent necessary to comply with the Code and Regulations.
48
Section 7.3 Regulatory and Related Allocations. Notwithstanding
any other provision in this Article VII to the contrary, the following special
allocations shall be made to the Capital Accounts of the Holder in the
following order:
(a) Minimum Gain Chargeback. If there is a net decrease in
Partnership Minimum Gain during any taxable year, each Holder shall be
specially allocated items of Down-MACRO Holding Trust income and gain for such
taxable year (and, if necessary, subsequent taxable years) in an amount equal
to the greater of (A) the portion of such Holder's share of the net decrease in
such Partnership Minimum Gain, determined in accordance with Regulations
Section 1.704-2(d)(1), or (B) if such Holder would otherwise have an Adjusted
Capital Account Deficit attributable solely to such Holder's Capital Account at
the end of such taxable year, an amount sufficient to eliminate such Adjusted
Capital Account Deficit. Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to the
Holders pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2. This Section 7.3(a) is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(f) of
the Regulations and shall be interpreted consistently therewith. To the extent
permitted by such section of the Regulations and for purposes of this Section
7.3(a) only, each Holder's Adjusted Capital Account Deficit shall be determined
prior to any other allocations with respect to such taxable year.
(b) Partner Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to Partner Nonrecourse Debt during
any taxable year, each Holder shall be specially allocated items of Down-MACRO
Holding Trust income and gain for such taxable year (and, if necessary,
subsequent taxable years) in an amount equal to such Holder's share, if any, of
the net decrease in Partner Nonrecourse Debt Minimum Gain attributable to such
Holder's Partner Nonrecourse Debt, as determined in accordance with Regulations
Section 1.704-2. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Holder
pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2. This Section 7.3(b) is intended to
comply with the minimum gain chargeback requirements in such Regulations and
shall be interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Holder
unexpectedly receives any adjustments, allocations, or distributions described
in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) with respect to
such Holder's Capital Account, items of Down-MACRO Holding Trust income and
gain shall be specially allocated to each such Holder in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Holder as quickly as possible;
provided that an allocation pursuant to this Section 7.3(c) shall be made only
if and to the extent that such Holder's Capital Account would have an Adjusted
Capital Account Deficit after all other allocations provided for in this Trust
Agreement have been tentatively made as if this Section 7.3(c) were not in this
Trust Agreement. This Section 7.3(c) is intended to constitute a "qualified
income offset" within the meaning of Regulations Section 1.704-1 and shall be
interpreted consistently therewith.
(d) Nonrecourse Deductions. Any Nonrecourse Deductions for
any taxable year or other period shall be allocated to the Capital Accounts of
the Holders in accordance with their respective Capital Accounts.
49
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any taxable year (or portion thereof) of the Down-MACRO Holding
Trust shall be allocated to the Holder who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable, in accordance with Regulations Section 1.704-2.
(f) Gross Income Allocation. In the event any Holder has an
Adjusted Capital Account Deficit, items of Down-MACRO Holding Trust income and
gain shall be specially allocated to the Capital Account of such Holder in an
amount and manner sufficient to eliminate such Holder's Adjusted Capital
Account Deficit as quickly as possible; provided that an allocation pursuant to
this Section 7.3(f) shall be made only if and to the extent that such Holder's
Capital Account would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Article VII (other than this Section 7.3(f))
have been tentatively made as if this Section 7.3(f) were not in this Trust
Agreement.
(g) Loss Allocation Limitation. No allocation of Net Loss (or
items thereof) shall be made to any Holder to the extent that such allocation
would create or increase an Adjusted Capital Account Deficit with respect to
such Holder.
(h) Curative Allocations. The allocations set forth in this
Section 7.3 (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations under Section 704 of the Code. Notwithstanding
any other provision of this Trust Agreement (other than the Regulatory
Allocations), the Regulatory Allocations shall be taken into account in
allocating other Down-MACRO Holding Trust items of income, gain, loss,
deduction and expense among the Holders so that, to the extent possible, the
net amount of such allocations of other Down-MACRO Holding Trust items and the
Regulatory Allocations shall be equal to the net amount that would have been
allocated to the Holders pursuant to this Trust Agreement if the Regulatory
Allocations had not been made.
Section 7.4 Transfer of or Change in Down-MACRO Holding Shares.
The Depositor may use any convention or combination of conventions that it
believes is reasonable for U.S. federal income tax purposes regarding the
allocation of items of income, gain, loss, deduction and expense with respect
to transferred Down-MACRO Holding Shares and redeemed Down-MACRO Holding
Shares. A transferee who takes all or part of a Holder's Down-MACRO Holding
Shares shall succeed to the Capital Account maintained in respect of the
transferor Holder to the extent of such transfer.
Section 7.5 Tax Allocations. As of the end of each day, income,
expense, deduction, gain or loss of the Down-MACRO Holding Trust, all as
determined for U.S. federal income tax purposes, shall be allocated among the
Holders pursuant to the following subsections solely for U.S. federal and other
applicable tax purposes (both U.S. and non-U.S. taxes) as provided below. Such
allocations shall be pro rata from short-term capital gain or loss and
long-term capital gain or loss and operating income or loss recognized by the
Down-MACRO Holding Trust. Such allocations shall be made, to the extent
required, in a manner consistent with the principles of Section 7.2(b).
(a) Except as provided in the second and third sentences of
Section 7.5(b)(ii), items of ordinary income (such as interest income),
deduction and expense (such as advisory fees and brokerage fees) shall be
allocated in a manner consistent with the economic allocations described in
Section 7.2.
50
(b) Items of recognized capital gain or loss from the
Down-MACRO Holding Trust's trading activities shall be allocated as follows:
(i) There shall be established a tax basis account
with respect to each Holder's shares in the Down-MACRO Holding Trust.
The initial balance of each tax basis account shall be the amount
contributed to the capital of the Down-MACRO Holding Trust for such
shares.
(1) Each tax basis account shall be increased
by the amount of (I) any additional contributions made with
respect to such Holder's shares in the Down-MACRO Holding
Trust and (II) any taxable income or gain allocated to such
Holder pursuant to Section 7.5(a) above and this Section
7.5(b);
(2) Each tax basis account shall be decreased
by the amount of (I) taxable expense, deduction or loss
allocated to such Holder pursuant to Section 7.5(a) above and
this Section 7.5(b) and (II) any distribution received by
such Holder with respect to its Down-MACRO Holding Shares
other than as a consequence of a partial redemption of
Down-MACRO Holding Shares; and
(3) When any Down-MACRO Holding Share is
redeemed, the tax basis account attributable to such redeemed
Down-MACRO Holding Share shall be eliminated.
(ii) Items of recognized capital gain shall be
allocated first to each Holder who has fully or partially redeemed its
Down-MACRO Holding Shares on such day up to any excess of (A) the
amount received upon such redemption over (B) the tax basis account
attributable to the redeemed Down-MACRO Holding Shares in the
Down-MACRO Holding Trust. If the aggregate amount of recognized
capital gain to be so allocated to all Holders who have redeemed
Down-MACRO Holding Shares on such day is less than the excess of all
such amounts received upon redemption over all such tax basis
accounts, then items of ordinary income shall be allocated first to
all such Holders up to any excess of all such amounts. If the
aggregate amount of recognized capital gain and ordinary income to be
so allocated to all Holders who have redeemed Down-MACRO Holding
Shares on such day is less than the excess of all such amounts
received upon redemption over all such tax basis accounts, the entire
amount of capital gain and ordinary income for such day shall be
allocated among all such Holders in the ratio that each such Holder's
allocable share of such excess bears to the aggregate excess of all
such Holders who redeemed any of their Down-MACRO Holding Shares on
such day.
(iii) Items of recognized capital gain remaining
after the allocations in subsection (ii) above shall be allocated
among all Holders whose Capital Accounts are in excess of their tax
basis accounts (after the adjustments in subsection (ii)) in the ratio
that each such Holder's allocable share of such excess bears to all
such Holders' excesses. If the aggregate amount of recognized capital
gain to be so allocated is greater than the aggregate excess of all
such Holders' Capital Accounts over all such tax basis accounts, the
excess amount of gain shall be allocated among all Holders in the
ratio that each Holder's Capital Account bears to all Holders' Capital
Accounts.
51
(iv) Items of recognized capital loss shall be
allocated first to each Holder who has redeemed any of its Down-MACRO
Holding Shares on such day up to any excess of (A) the tax basis
account attributable to the redeemed Down-MACRO Holding Share over (B)
the amount received upon such redemption. If the aggregate amount of
recognized capital loss to be so allocated to all Holders who have
redeemed any Down-MACRO Holding Shares on such day is less than the
aggregate excess of all such tax basis accounts over all such amounts
received upon redemption, the entire amount of loss for such Day shall
be allocated among all such Holders in the ratio that each such
Holder's excess bears to the aggregate excess of all such Holders who
redeemed any of their Down-MACRO Holding Shares on such day.
(v) Items of recognized capital loss remaining after
the allocations in subsection (iv) above shall be allocated among the
Holders whose tax basis accounts are in excess of their Capital
Accounts (after the adjustments in subsection (iv)) in the ratio that
each such Holder's allocable share of such excess bears to all such
Holders' excesses. If the aggregate amount of loss to be so allocated
is greater than the aggregate excess of all such tax basis accounts
over all such Holders' Capital Accounts, the excess amount of
recognized capital loss shall be allocated among all Holders in the
ratio that each Holder's Capital Account bears to all Holders' Capital
Accounts.
(vi) The allocations of profit and loss to the tax
basis accounts of Holders in respect of the Down-MACRO Holding Shares
shall not exceed the allocations permitted under Subchapter K of the
Code as determined by the Depositor in its sole and absolute
discretion, whose determination shall be binding on the Holders.
(c) The allocation of income, gain, loss, deduction and
expense for U.S. federal income tax purposes set forth herein is intended to
allocate such items so as to eliminate, to the extent possible, any disparity
between a Holder's Capital Account and its tax basis account, consistent with
principles set forth in Section 704(c) of the Code.
Section 7.6 Determination of Certain Matters. Notwithstanding
anything express or implied to the contrary in this Trust Agreement, all
matters concerning the computation of Capital Accounts and tax basis accounts,
the allocation of Net Profit (and items thereof) and Net Loss (and items
thereof), the allocation of items of income, gain, loss, deduction and expense
for tax purposes, the adoption or modification of any accounting procedures,
any adjustments to the books and records of the Down-MACRO Holding Trust and
all matters related to liquidation and dissolution of the Down-MACRO Holding
Trust shall be determined by the Depositor, in its sole and absolute
discretion. Such determination shall be final and conclusive as to all Holders
and be in accordance with the Code and Regulations. Notwithstanding anything
expressed or implied in this Trust Agreement, in the event the Depositor, shall
determine, in its sole and absolute discretion, that it is prudent to modify
the manner in which the Capital Accounts and tax basis accounts, or any debits
or credits thereto, are computed in order to effectuate the intended economic
sharing arrangement of the Holders, the Depositor may make such modification.
Allocations of Net Profit and Net Loss to a Holder's Capital Account shall be
made for each day as soon as practicable thereafter.
Section 7.7 No Deficit Makeup. Notwithstanding anything herein to
the contrary, upon the liquidation of the Down-MACRO Holding Trust, no Holder
52
shall be required to make any contribution to the Down-MACRO Holding Trust in
respect of any deficit in such Holder's Capital Account.
Section 7.8 U.S. Partnership Tax Treatment. It is the intent of
the Holders and the Depositor that the Down-MACRO Holding Trust be governed by
the applicable provisions of Subchapter K, of Chapter 1, of the Code. The
Depositor may file such forms and make such elections as the Depositor deems
appropriate to effect such intent.
Section 7.9 Definitions. For the purposes of this Trust
Agreement, unless the context otherwise requires:
(a) "Adjusted Capital Account Deficit" shall mean, with
respect to any Holder, the deficit balance, if any, in such Holder's Capital
Account as of the end of the relevant taxable year, after giving effect to the
following adjustments:
(i) credit to such Capital Account any amounts which
such Holder is obligated to restore or is deemed to be obligated to
restore pursuant to Regulations Sections 1.704-1(b)(2)(ii)(c),
1.704-2(g) and 1.704-2(i)(5); and
(ii) debit to such Capital Account the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and
(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-l(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
(b) "Capital Account" shall have the meaning specified in
Section 7.2.
(c) "Capital Contribution" shall have the meaning set forth
in Section 7.2(a).
(d) "Code" shall mean the U.S. Internal Revenue Code of 1986,
as amended.
(e) "Net Loss" shall mean the net decrease in the Down-MACRO
Asset Amount on a day, excluding from such calculation the increase due to any
contributions with respect to a Paired Subsequent Issuance made with respect to
the Down-MACRO Holding Trust for such day and any decrease due to any
redemptions made on such day.
(f) "Net Profit" shall mean the net increase in the
Down-MACRO Asset Amount on a day, excluding from such calculation the increase
due to any contributions with respect to a Paired Subsequent Issuance made on
such day and any decrease due to any distributions or redemptions made on such
day.
(g) "Nonrecourse Deductions" shall have the meaning set forth
in Regulations Section 1.704-2(b)(1).
(h) "Nonrecourse Liability" shall have the meaning set forth
in Regulations Section 1.752-1(a)(2).
53
(i) "Partner Nonrecourse Debt" shall have the meaning set
forth in Regulations Section 1.704-2(b)(4).
(j) "Partner Nonrecourse Debt Minimum Gain" shall have the
meaning set forth in Regulations Section 1.704-2(i)(3).
(k) "Partner Nonrecourse Deductions" shall have the meaning
set forth in Regulations Section 1.704-2(i)(2).
(l) "Partnership Minimum Gain" shall have the meaning set
forth in Regulations Section 1.704-2(b)(2).
(m) "Regulations" shall mean United States Treasury
Regulations.
(n) "Regulatory Allocations" shall have the meaning set forth
in Section 7.3(h).
ARTICLE VIII
REPORTS TO HOLDERS OF THE DOWN-MACRO HOLDING SHARES
Section 8.1 Reports to Holders of the Down-MACRO Holding Shares.
(a) On each Price Determination Day [the Calculation Agent]
shall publish, prior to the open of the next trading day, the Down-MACRO
Underlying Value, the Up-MACRO Underlying Value, the Applicable Reference Price
of Crude Oil, the Down-MACRO Asset Amount and the Up-MACRO Asset Amount, each
as determined pursuant to Section 4.1 and Section 4.2 herein and Section 4.1
and Section 4.2 of the Up-MACRO Holding Trust Agreement.
(b) On the Business Day preceding each Distribution Date, the
Trustee, together with the Administrative Agent and the Calculation Agent, will
prepare and forward to the Depository, the Depositor, [NASD] and the Holders of
Down-MACRO Holding Shares, a statement as of that Distribution Date setting
forth:
(i) the Down-MACRO Aggregate Par Amount of the
Down-MACRO Holding Trust and the Up-MACRO Aggregate Par Amount of the
Up-MACRO Holding Trust on such Distribution Date;
(ii) the Down-MACRO Asset Amount and the Up-MACRO
Asset Amount on such Distribution Date;
(iii) the Down-MACRO Underlying Value and the
Up-MACRO Underlying Value for that Distribution Date and the
Down-MACRO Underlying Value allocable to each Down -MACRO Holding
Share and the Up-MACRO Underlying Value allocable to each Up-MACRO
Holding Share, prior to any distribution being made on such
Distribution Date;
(iv) the Down-MACRO Fees and the Up-MACRO Fees on
that Distribution Date;
54
(v) the Up-MACRO Daily Fee Accrual and the
Down-MACRO Daily Fee Accrual on that Distribution Date;
(vi) the Down-MACRO Earned Income Accrual and the
Up-MACRO Earned Income Accrual on that Distribution Date;
(vii) the amount of the Down-MACRO Available Income
in the Down-MACRO Holding Trust and the amount of the Up-MACRO
Available Income and the amount of the Down-MACRO Available Income and
the amount of the Up-MACRO Available Income allocable to each
Down-MACRO Holding Share and Up-MACRO Holding Share, respectively;
(viii) the Down-MACRO Income Distribution Payment,
if any, paid by the Down-MACRO Holding Trust to the Up-MACRO Holding
Trust and the Up-MACRO Income Distribution Payment, if any, paid by
the Up-MACRO Holding Trust to the Down-MACRO Holding Trust under the
Income Distribution Agreement on such Distribution Date;
(ix) the Down-MACRO Settlement Payment, if any, paid
by the Down-MACRO Holding Trust to the Up-MACRO Holding Trust and the
Up-MACRO Settlement Payment, if any, paid by the Up-MACRO Holding
Trust to the Down-MACRO Holding Trust under the Settlement Contracts
on such Distribution Date;
(x) the number of Down-MACRO Holding Shares and
Up-MACRO Holding Shares issued in Paired Subsequent Issuances during
the preceding Calculation Period;
(xi) the number of Down-MACRO Holding Shares and
Up-MACRO Holding Shares redeemed in a Paired Optional Redemption
during the preceding Calculation Period, as well as the amount of cash
or Treasuries delivered in such Paired Optional Redemption;
(xii) the net increase or decrease in the Down-MACRO
Aggregate Par Amount and the Up-MACRO Aggregate Par Amount;
(xiii) the Quarterly Distribution to be made by the
Down-MACRO Holding Trust on the Distribution Payment Date and the
portion of the Quarterly Distribution allocable to each Down-MACRO
Holding Share; and
(xiv) if such Distribution Date is a Redemption
Date, the Down-MACRO Redemption Percentage and the Up-MACRO Redemption
Percentage.
On or before the fifth Business Day after each Distribution Date,
the Trustee will furnish to each Person who was a registered Holder at any time
during the current calendar year a statement containing the information set
forth above. The Trustee will also furnish to each registered Holder, within
the time periods specified herein, a notice of any merger or consolidation to
which the Trustee is a party, or in the case of the Trustee's resignation, the
name of the successor Trustee.
55
Any notice required to be given to a Holder of a registered
certificate representing Down-MACRO Holding Shares will be mailed to the last
address of the Holder set forth in the applicable Share Register.
(c) On the Final Scheduled Termination Date, the Trustee,
together with the Administrative Agent and the Calculation Agent, will prepare
and forward to the Depository, the Depositor and the Holders of Down-MACRO
Holding Shares, a statement setting forth:
(i) the Down-MACRO Underlying Value and the Up-MACRO
Underlying Value on the Final Scheduled Termination Date, as
calculated by the Administrative Agent in accordance with the method
specified in this Trust Agreement and the Up-MACRO Holding Trust
Agreement;
(ii) the Down-MACRO Underlying Value allocable to
each Down-MACRO Holding Share and Up-MACRO Underlying Value allocable
to each Down-MACRO Holding Share on the Final Scheduled Termination
Date;
(iii) the payments to be made by either the
Down-MACRO Holding Trust or the Up-MACRO Holding Trust under any
Settlement Contracts that are being settled on that Final Scheduled
Termination Date and the portion of such payments that are allocable
to each Down-MACRO Holding Share and Up-MACRO Holding Share,
respectively; and
(iv) the Final Distribution and the portion thereof
that is allocable to each Down-MACRO Holding Share.
(d) Reports pursuant to the Securities Act or the Exchange
Act will be prepared by the Depositor as provided in Section 15.2 herein, and
distributed by the [Administrative Agent] pursuant to Section 13.1(ix).
(e) Reports to Holders pursuant to this Section 8.1 (except
for Section 8.1(a)) shall be made in accordance with accounting principles
generally accepted in the United States. Such reports shall be prepared
separately from any other reports prepared by the [Depositor] for the Up-MACRO
Holding Trust, the Down-MACRO Tradeable Trust or the Up-MACRO Tradeable Trust.
Section 8.2 Form 8-K Disclosure. Within four Business Days (or
such shorter period as required under the general instructions to Form 8-K),
the Depositor shall file a Form 8-K with the SEC disclosing the occurrence of:
(i) a Trustee Termination Event;
(ii) the occurrence of a trading halt on any stock
exchange on which the Up-MACRO Holding Shares are listed and the
reason for such trading halt;
(iii) the appointment of a Successor Trustee;
56
(iv) the resignation of the Trustee, the Down-MACRO
Tradeable Trustee, the Up-MACRO Holding Trustee, the Administrative
Agent, the Marketing Agent or the Calculation Agent;
(v) the appointment of a successor Administrative
Agent or a successor Up-MACRO Holding Trustee;
(vi) the occurrence of a Termination Trigger;
(vii) an amendment to this Trust Agreement, the
Down-MACRO Tradeable Trust Agreement, the Up-MACRO Holding Trust
Agreement or the Participants Agreement, which amendment would have a
material adverse effect on the rights of the Holders;
(viii) at the sole discretion of the Depositor, a
change to the list of Authorized Participants set forth on Schedule I
to the Participants Agreement; and
(ix) any other event that would be material to the
Holders of the Down-MACRO Holding Shares or notices that the Trustee
must deliver in accordance with the provisions of this Trust
Agreement.
Section 8.3 Listing and De-Listing of the Up-MACRO Holding
Shares. The Depositor shall use its best efforts to obtain and maintain the
listing of the Down-MACRO Holding and/or Down-MACRO Tradeable Shares on a
national stock exchange. Within three (3) Business Days following receipt of
notice of any actual, proposed or contemplated de-listing of such Down-MACRO
Holding Shares by any such stock exchange, the Depositor shall terminate any
listing on any such stock exchange.
ARTICLE IX
OTHER MATTERS RELATING TO THE DEPOSITOR
Section 9.1 Liability of the Depositor. The Depositor shall be
liable in all respects for the obligations, covenants, representations and
warranties of the Depositor arising under or related to this Trust Agreement.
The Depositor shall be liable only to the extent of the obligations
specifically undertaken by it in its capacity as Depositor.
Section 9.2 Limitations on Liability of the Depositor and
Claymore Securities, Inc.. None of the Depositor, Claymore Securities, Inc. or
any of their respective directors, officers, employees or agents acting in such
capacities shall be under any liability to the Down-MACRO Holding Trust, the
Trustee, the Holders of the Down-MACRO Holding Shares, the Up-MACRO Holding
Trust, the Up-MACRO Holding Trustee, the Holders of the Up-MACRO Holding Shares
or any other Person for taking any action or for refraining from taking any
action in good faith in their capacities as Depositor, Administrative Agent or
Marketing Agent, as applicable, pursuant to this Trust Agreement; provided,
however, that this provision shall not protect the Depositor, Claymore
Securities, Inc. or any of their respective directors, officers, employees or
agents against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties
hereunder. The Depositor, Claymore Securities, Inc. and each of their
respective directors, officers, employees and agents may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person (other than, in the case of the Depositor, the Depositor and, in the
case of Claymore Securities, Inc., Claymore Securities, Inc.) respecting any
matters arising hereunder.
57
Section 9.3 Liabilities; Indemnification.
(a) Notwithstanding the other provisions of this Trust
Agreement, the Depositor, by entering into this Trust Agreement, agrees to be
liable, directly to the injured party, for the entire amount of any losses,
claims, damages or liabilities (other than those incurred by a Holder as a
result of the performance of the Treasuries, market fluctuations or other
similar market or investment risks associated with ownership of the Down-MACRO
Holding Shares) arising out of or based on the arrangement created by this
Trust Agreement or the actions of the Depositor taken pursuant hereto or
arising from any allegation of infringement of the intellectual property rights
of third parties (to the extent that, if the Trust Assets at the time the claim
is made were not used to pay in full all Outstanding Down-MACRO Holding Shares,
the Trust Assets would be used to pay any such losses, claims, damages or
liabilities). To the extent provided in Section 10.4, the Administrative Agent
will (from its own assets and not from the assets of the Down-MACRO Holding
Trust) indemnify and hold harmless the Depositor against and from certain
losses, claims, damages and liabilities of the Depositor as described in this
Section 9.3 arising from the actions or omissions of the Administrative Agent.
(b) The Depositor shall indemnify and hold harmless the
Trustee and its officers, directors, employees and agents from and against any
loss, liability, expense, damage or injury (collectively, a "Loss") suffered or
sustained by reason of the acts performed or omitted by the Trustee pursuant to
this Trust Agreement, including any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any action, proceeding or claim including, without limitation, any
action, proceeding or claim relating to or arising from any alleged
infringement of intellectual property rights of third parties; provided,
however, that the Depositor's duty to indemnify under this Section 9.3(b) shall
not extend to any Losses (i) for which the Trustee has a right to
indemnification under any other provision of this Trust Agreement, or (ii) that
are caused by or result from the breach of contract by, or the fraud,
negligence or willful misconduct of, the Trustee or its officers, directors,
employees or agents.
(c) The Depositor and its members, managers, officers,
employees, affiliates (as such term is defined in Regulation S-X of the
Securities Act) and subsidiaries (each, a "Depositor Indemnified Party") shall
be indemnified by the Down-MACRO Holding Trust and held harmless against any
loss, liability or expense incurred hereunder without (1) gross negligence, bad
faith, willful misconduct or willful malfeasance on the part of such Depositor
Indemnified Party arising out of or in connection with the performance of its
obligations hereunder or any actions taken in accordance with the provisions of
this Trust Agreement or (2) reckless disregard on the part of such Depositor
Indemnified Party of its obligations and duties under this Trust Agreement.
Each Depositor Indemnified Party shall also be indemnified by the Down-MACRO
Holding Trust and held harmless against any loss, liability or expense arising
under the Income Distribution Agreement, the Settlement Contracts or any
Participants Agreement insofar as such loss, liability or expense arises from
any untrue statement or alleged untrue statement of a material fact contained
in any written statement provided to the Depositor by any of the Calculation
Agent, the Administrative Agent and the Trustee. Such indemnity shall include
payment from the Down-MACRO Holding Trust of the costs and expenses incurred by
such Depositor Indemnified Party in defending itself against any such
indemnified claim or liability.
58
ARTICLE X
MATTERS RELATING TO THE ADMINISTRATIVE AGENT
Section 10.1 Role of the Administrative Agent. The Administrative
Agent hereby acknowledges and accepts its role pursuant to its duties set forth
in Sections 2.6, 3.5, 3.6, 3.7, 4.1, 4.2, 4.3, 4.4, 5.2, 6.1, 6.5 and 8.1 of
this Trust Agreement.
Section 10.2 Liability of the Administrative Agent. The
Administrative Agent shall be liable under this Trust Agreement only to the
extent of the obligations specifically undertaken by the Administrative Agent
in its capacity as Administrative Agent.
Section 10.3 Limitation on Liability of the Administrative Agent
and Others. Neither the Administrative Agent nor any of the directors,
officers, employees or agents of the Administrative Agent in its capacity as
Administrative Agent shall be under any liability to the Down-MACRO Holding
Trust, the Trustee, the Holders of the Down-MACRO Holding Shares, the Up-MACRO
Holding Trust, the Up-MACRO Holding Trustee, the Holders of the Up-MACRO
Holding Shares or any other Person for any action taken or for refraining from
taking any action in good faith in its capacity as Administrative Agent
pursuant to this Trust Agreement; provided, however, that this provision shall
not protect the Administrative Agent or any director, officer, employee or
agent of the Administrative Agent against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of reckless disregard of its
obligations and duties hereunder. The Administrative Agent and any director,
officer, employee or agent of the Administrative Agent may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person (other than the Administrative Agent) respecting any matters arising
hereunder. The Administrative Agent shall not be under any obligation to appear
in, prosecute or defend any legal action which is not incidental to its duties
as Administrative Agent in accordance with this Trust Agreement and which in
its reasonable judgment may involve it in any expense or liability. The
Administrative Agent may, in its sole discretion, undertake any such legal
action which it may deem necessary or desirable for the benefit of the Holders
of the Down-MACRO Holding Shares with respect to this Trust Agreement and the
rights and duties of the parties hereto and the interests of the Holders of the
Down-MACRO Holding Shares hereunder.
Section 10.4 Administrative Agent Indemnification of the
Down-MACRO Holding Trust and the Trustee. The Administrative Agent shall
indemnify and hold harmless the Down-MACRO Holding Trust, the Depositor and the
Trustee and its officers, directors, employees and agents (each, an
"Administrative Agent Indemnified Party") from and against any loss, liability,
expense, damage or injury suffered or sustained by reason of any acts or
omissions of the Administrative Agent with respect to the Down-MACRO Holding
Trust pursuant to this Trust Agreement, including any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any action, proceeding or claim; provided,
however, that the Administrative Agent shall not indemnify the Trustee if such
acts or omissions, or alleged acts or omissions, constitute or are caused by
fraud, negligence, or willful misconduct of the Trustee; provided, further,
that the Administrative Agent shall not indemnify the Down-MACRO Holding Trust
or the Holders of the Down-MACRO Holding Shares for any liabilities, costs or
expenses of the Down-MACRO Holding Trust with respect to any action taken by
the Trustee at the request of the Holders of the Down-MACRO Holding Shares;
provided, further, that the Administrative Agent shall not indemnify the
Down-MACRO Holding Trust or the Holders of the Down-MACRO Holding Shares as to
any losses, claims or damages incurred by any of them in their capacities as
59
investors, including, without limitation, losses with respect to market or
investment risks associated with ownership of the Down-MACRO Holding Shares or
losses incurred as a result of a default in the underlying Treasuries; and
provided, further, that the Administrative Agent shall not indemnify the
Down-MACRO Holding Trust or the Holders of the Down-MACRO Holding Shares for
any liabilities, costs or expenses of the Down-MACRO Holding Trust or the
Holders of the Down-MACRO Holding Shares arising under any tax law, including
any federal, state, local or foreign income or franchise taxes or any other tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by
the Down-MACRO Holding Trust or the Holders of the Down-MACRO Holding Shares in
connection herewith to any taxing authority. Indemnification pursuant to this
Section 10.4 shall not be payable from the Trust Assets. The provisions of this
indemnity shall run directly to and be enforceable by an Administrative Agent
Indemnified Party subject to the limitations hereof. The obligations of the
Administrative Agent under this Section 10.4 shall survive the termination of
the Down-MACRO Holding Trust and the resignation or removal of the Trustee.
Section 10.5 Delegation of Duties. In the ordinary course of
business, the Administrative Agent may at any time delegate any duties
hereunder to any Person who agrees to conduct such duties in accordance with
this Trust Agreement. Any such delegations shall not relieve the Administrative
Agent of its liability and responsibility with respect to such duties and shall
not constitute a resignation, and the Administrative Agent will remain jointly
and severally liable with such Person for any amounts which would otherwise be
payable pursuant to this Article X as if the Administrative Agent had performed
such duty; provided, however, that in the case of any significant delegation to
a Person other than an Affiliate of the Administrative Agent, (1) at least
thirty (30) days' prior written notice shall be given to the Trustee and the
Depositor of such delegation to any entity that is not an Affiliate of the
Administrative Agent and (2) the prior written consent of the Depositor must be
obtained. Furthermore, any delegation of duties by the Administrative Agent
with respect to the Down-MACRO Holding Trust shall be accompanied by the
delegation of such similar duties with respect to the Up-MACRO Holding Trust,
unless the prior written consent of the Depositor is obtained.
ARTICLE XI
EARLY TERMINATION
Section 11.1 Termination Triggers.
(a) The Down-MACRO Holding Trust shall terminate if any one
of the following events (each, a "Termination Trigger") occurs:
(i) any of the following circumstances persists for
five (5) consecutive Business Days: (i) the Applicable Reference Price
of Crude Oil is not established by NYMEX or the Substitute Oil Price
Provider; (ii) NYMEX or such Substitute Oil Price Provider refuses to
make that price available to the Administrative Agent for the purpose
of calculating the Up-MACRO Underlying Value; or (iii)(a) NYMEX
terminates the NYMEX License and the Depositor and MacroMarkets LLC
are unable to enter into a Substitute Index Licensing Agreement with
the Dow ▇▇▇▇▇ Energy Service or (b) in the event that the Depositor
and MacroMarkets LLC have already entered into a Substitute Index
Licensing Agreement, the Substitute Oil Price Provider which is a
party to such agreement terminates that license and, in the case of
60
either (a) or (b), the shareholders do not select a Substitute Oil
Price Provider or the Depositor and MacroMarkets LLC are unable to
enter into a Substitute Index Licensing Agreement with the Substitute
Oil Price Provider that was selected by the shareholders;
(ii) the Applicable Reference Price of Crude Oil
falls to or below $[ ] or rises to or above $[ ] and, in either case,
remains at that level for three consecutive Price Determination Days;
(iii) any of the Down-MACRO Holding Trust, the
Up-MACRO Holding Trust, the Down-MACRO Tradeable Trust or the Up-MACRO
Tradeable Trust becomes an "investment company" within the meaning of
the Investment Company Act of 1940, as amended;
(iv) a decree or order is entered by a court having
competent jurisdiction adjudging any of the Down-MACRO Holding Trust,
the Up-MACRO Holding Trust, the Down-MACRO Tradeable Trust or the
Up-MACRO Tradeable Trust to be bankrupt or insolvent or granting an
order for relief or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of any of the Down-MACRO Holding Trust, the Up-MACRO Holding
Trust, the Down-MACRO Tradeable Trust or the Up-MACRO Tradeable Trust
under the Bankruptcy Code or any other applicable law, or appointing a
receiver, liquidator, assignee or sequestrator (or other similar
official) of any of the Down-MACRO Holding Trust, the Up-MACRO Holding
Trust, the Down-MACRO Tradeable Trust or the Up-MACRO Tradeable Trust
or of any substantial part of its property, or ordering the winding up
or liquidation of its affairs, or, in a court having jurisdiction, any
of the Down-MACRO Holding Trust, the Up-MACRO Holding Trust, the
Up-MACRO Tradeable Trust or the Up-MACRO Tradeable Trust commences a
voluntary case or proceeding under the Bankruptcy Code or any other
applicable law, or an involuntary case or proceeding is commenced
against any of the Down-MACRO Holding Trust, the Up-MACRO Holding
Trust, the Down-MACRO Tradeable Trust or the Up-MACRO Tradeable Trust,
seeking any of the foregoing and such case or proceeding continues
undismissed or unstayed and in effect for a period of 90 consecutive
days; or
(v) the Up-MACRO or Down-MACRO Investment Amount is
reduced to less than ten (10) million dollars.
(b) On the next Distribution Date following the occurrence of
the Termination Trigger (the "Early Termination Date"), the Trustee and the
Up-MACRO Holding Trustee shall terminate the Income Distribution Agreement and
settle all of the Settlement Contracts on behalf of the Paired Holding Trusts.
The Trustee shall make a Final Distribution on all Outstanding Down-MACRO
Holding Shares being redeemed, as set forth in Section 5.2. Upon receipt of
this Final Distribution, all Outstanding Down-MACRO Holding Shares shall be
deemed to be redeemed in full.
(c) The Trustee, upon obtaining knowledge or receiving notice
of the occurrence of a Termination Trigger described in subclause (a)(iii),
(iv) or (v) of this Section 11.1, or the Administrative Agent, upon obtaining
knowledge or receiving notice of the occurrence of a Termination Trigger
described in subclause (a)(i) or (ii) of this Section 11.1, will give prompt
61
notice of that event to the Depositor, the Administrative Agent, or the
Trustee, as applicable, to the Calculation Agent, the Down-MACRO Holding
Trustee, the Up-MACRO Tradeable Trustee, the Down-MACRO Tradeable Trustee and
each Holder of the Up-MACRO Holding Shares.
ARTICLE XII
TRUSTEE TERMINATION EVENTS
Section 12.1 Trustee Termination Events. Any one of the following
events shall constitute a Trustee Termination Event (a "Trustee Termination
Event"):
(a) to the extent that funds are available in the Down-MACRO
Holding Trust to make any Quarterly Distribution, any failure by the Trustee to
make such Quarterly Distribution in the amount determined in accordance with
the calculations required to be made hereunder, which failure continues
unremedied for a period of five (5) or more Business Days;
(b) any failure by the Trustee to distribute the proceeds of
all of the Trust Assets on the Final Scheduled Termination Date, which failure
continues unremedied for a period of five (5) or more Business Days;
(c) to the extent that funds are available in the Down-MACRO
Holding Trust, any failure by the Trustee to make any payment required to be
made under the Income Distribution Agreement or the Settlement Contracts;
(d) any failure by the Trustee to observe or perform in any
material respect any of its other covenants or obligations hereunder, which
failure continues unremedied for thirty (30) days after the giving of written
notice of such failure to the Trustee by the Depositor or by not less than 25%
of the Holders, voting by par amount;
(e) the Trustee becomes ineligible or incapable of acting as
Trustee hereunder;
(f) the occurrence of a Trustee Termination Event under the
Up-MACRO Holding Trust Agreement, as set forth in the Up-MACRO Holding Trust
Agreement;
(g) the occurrence of a Trustee Termination Event under the
Down-MACRO Tradeable Trust Agreement, as set forth in the Down-MACRO Tradeable
Trust Agreement; or
(h) the occurrence of a Trustee Termination Event under the
Up-MACRO Tradeable Trust Agreement, as set forth in the Up-MACRO Tradeable
Trust Agreement.
Section 12.2 Force Majeure. Notwithstanding the foregoing, any
delay in or failure of performance under Section 12.1 shall not constitute a
Trustee Termination Event if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Trustee and such delay or failure
was caused by an act of God or the public enemy, terrorism, acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods or similar causes. The
preceding sentence shall not relieve the Trustee from the obligation to use its
62
best efforts to perform its obligations in a timely manner in accordance with
the terms of this Trust Agreement and the Trustee shall provide the Depositor
with immediate notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations.
Section 12.3 Notification to Holders of the Down-MACRO Holding
Shares. Within two (2) Business Days after the Administrative Agent becoming
aware of any Trustee Termination Event, the Administrative Agent or the Trustee
obtaining actual knowledge of any Trustee Termination Event, shall give notice
thereof to the Depositor, or the Trustee obtaining actual knowledge of any
Trustee Termination Event, the Administrative Agent or the Trustee, as
applicable and the Holders of the Down-MACRO Holding Shares.
ARTICLE XIII
THE TRUSTEE
Section 13.1 Duties of Trustee.
(a) The Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Trust Agreement, including:
(i) causing the Down-MACRO Holding Trust to make its
required payments under the Income Distribution Agreement and the
Settlement Contracts;
(ii) making distributions on the Down-MACRO Holding
Shares in accordance with Section 5.2 hereof;
(iii) administering the Down-MACRO Holding Trust;
(iv) at the direction of the Administrative Agent,
purchasing, and reinvesting in, Treasuries;
(v) paying the fees and expenses of the Down-MACRO
Holding Trust, including but not limited to the payment of the
Down-MACRO Licensing Fee;
(vi) administering Paired Optional Redemptions in
accordance with the provisions of Section 6.1 hereof;
(vii) administering the creation of new MACRO Units
in accordance with the provisions of Section 2.6 hereof;
(viii) preparing and delivering any notices required
hereunder;
(ix) preparing and distributing reports to the
Holders of the Down-MACRO Holding Shares; and
(x) performing all of the other obligations required
of it under this Trust Agreement and the other Transaction Documents.
63
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments that are specifically required to be furnished to the Trustee
pursuant to any provision hereof, shall examine them to determine whether they
conform on their face to the requirements of this Trust Agreement. The Trustee
shall give prompt written notice to the Holders of the Down-MACRO Holding
Shares of any material lack of conformity of any such instrument to the
applicable requirements of this Trust Agreement which would entitle a specified
percentage of the Holders of the Down-MACRO Holding Shares to take any action
pursuant to this Trust Agreement.
(c) No provision of this Trust Agreement shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, its own bad faith, its own reckless disregard of its
duties hereunder or its own willful misconduct; provided, however, that:
(i) the Trustee shall not be personally liable for
an error of judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was grossly negligent in ascertaining the
pertinent facts; and
(ii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted by it in good faith
and in accordance with the direction of the Administrative Agent, the
Depositor, the Calculation Agent or Holders relating to the time,
place or method of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Trust Agreement; provided that, with respect to
Holders, such direction is delivered by Holders evidencing not less
than 66 and 2/3% of the Down-MACRO Aggregate Par Amount.
(d) The Trustee shall not be required to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of any of its rights or powers
hereunder, if it has reasonable grounds for believing that repayment of such
funds or adequate indemnity against any related risk or liability is not
reasonably assured to it.
(e) The Trustee shall have no power to vary the corpus of the
Down-MACRO Holding Trust, except as expressly provided in this Trust Agreement.
(f) In the event that the Transfer Agent and Registrar (if
not also the Trustee) fails to perform any obligation, duty or agreement in the
manner or on the day required under this Trust Agreement, the Trustee shall be
obligated, as soon as possible upon knowledge of a Trust Officer of such
failure and receipt of appropriate records, if any, to perform such obligation,
duty or agreement in the manner required hereunder.
Section 13.2 Rights of the Trustee.
(a) The Trustee may rely on and shall be protected in acting,
or in refraining from acting, in accord with any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented to it pursuant to this Trust
Agreement by the proper party or parties.
64
(b) The Trustee may consult with counsel, and any advice of
such counsel or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted hereunder by the
Trustee in good faith and in accordance with such advice or Opinion of Counsel.
(c) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement or to institute,
conduct or defend any litigation in relation to this Trust Agreement at the
request, order or direction of any of the Holders of the Down-MACRO Holding
Shares pursuant to the provisions of this Trust Agreement unless such Holders
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
(d) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and reasonably believed by it to
be authorized or within the discretion, rights or powers conferred upon it by
this Trust Agreement.
(e) The Trustee shall not be bound to make any investigation
into the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond or other paper or document, unless requested in writing to do
so by Holders evidencing more than 25% of the Down-MACRO Aggregate Par Amount.
(f) The Trustee may execute any of the trusts or powers
granted herein or perform any duties set forth herein either directly or by or
through agents or attorneys or a custodian. The Trustee shall not be
responsible for any willful misconduct or negligence on the part of any such
agent, attorney or custodian appointed by the Trustee.
(g) Except as may be required by Section 13.12, the Trustee
shall not be required to make any initial or periodic examination of any
documents or records for the purpose of establishing the presence or absence of
defects, the compliance by the Depositor with its representations and
warranties or for any other purpose.
Section 13.3 Trustee Not Liable for Recitals in Down-MACRO
Holding Shares. The Trustee assumes no responsibility for the correctness of
the recitals contained herein and in the Down-MACRO Holding Shares (other than
the certificate of authentication on the Down-MACRO Holding Shares). Except as
set forth in Section 3.2, the Trustee makes no representations as to the
validity or sufficiency of this Trust Agreement or of the Down-MACRO Holding
Shares (other than the certificate of authentication on the Down-MACRO Holding
Shares).
Section 13.4 Individual Rights of the Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Down-MACRO
Holding Shares with the same rights as it would have if it were not the
Trustee.
Section 13.5 Compensation. The Down-MACRO Holding Trust shall
cause to be paid in the manner provided for in Section 5.4, and the Trustee
shall be entitled to receive, on each Distribution Date, the Down-MACRO Trustee
Fee for all services rendered by it in the execution of the Down-MACRO Holding
Trust hereby created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee. The obligations of the Down-MACRO Holding
Trust under this Section 13.5 shall survive the termination of the Down-MACRO
Holding Trust.
65
Section 13.6 Indemnification. The Trustee and its directors,
shareholders, officers, employees, agents, affiliates (as such term is defined
in Regulation S-X of the Securities Act) and subsidiaries (each, a "Trustee
Indemnified Party") shall be indemnified from the assets of the Trust and held
harmless against any loss, liability or expense (a) arising out of or in
connection with the acceptance or administration of this Trust and any actions
taken in accordance with the provisions of this Trust Agreement or the
administration of any Section of this Trust Agreement or that arises out of or
is related to any offer or sale of Down-MACRO Holding Shares incurred without
(i) gross negligence, bad faith, and willful misconduct on the part of such
Trustee Indemnified Party and (ii) reckless disregard on the part of such
Trustee Indemnified Party of its obligations and duties under this Trust
Agreement, or (b) that arises out of or is related to any filings with or
submissions to the SEC in connection with or with respect to the Down-MACRO
Holding Shares (which by way of illustration and not by way of limitation,
include any Registration Statement and any amendments thereof or supplements
thereto filed with the SEC or any periodic reports or updates that may be filed
under the Exchange Act) or out of any information provided in writing by the
Trustee to the Depositor for use in any Registration Statement or annual or
other periodic report filed on behalf of the Down-MACRO Holding Trust that is
not materially altered by the Depositor or omissions from that information, if
provided. Such indemnity shall include payment from the Down-MACRO Holding
Trust of the costs and expenses incurred by such Trustee Indemnified Party in
investigating or defending itself against any claim or liability relating to
this Trust Agreement or the Down-MACRO Holding Trust, including any loss,
liability or expense incurred in acting pursuant to written directions or
instructions given by the Depositor or counsel to the Down-MACRO Holding Trust
to the Trustee from time to time in accordance with the provisions of this
Trust Agreement or in undertaking actions from time to time which the Trustee
deems necessary in its discretion to protect the Down-MACRO Holding Trust and
the rights of all Beneficial Owners pursuant to the terms of this Trust
Agreement. Any amounts payable to a Trustee Indemnified Party under this
Section 13.6 may be payable in advance or shall be secured by a lien on the
Trust Assets.
Section 13.7 Eligibility Requirements. The Trustee hereunder
shall at all times: (i) be a bank, a trust company or a corporation organized
and doing business under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authority, (ii) have
a combined capital and surplus of at least $15,000,000, (iii) maintain any
credit or deposit rating required by nationally recognized rating organizations
(as of the date hereof "A-1" for Standard & Poor's Rating Service or "P-1" for
▇▇▇▇▇'▇ Investors Service, Inc.) and (iv) hold the position of both the Trustee
and the Down-MACRO Tradeable Trustee. If such bank, trust company or
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 13.7, the combined capital and surplus of
such bank, trust company or corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee ceases to be eligible in accordance with
the provisions of this Section 13.7, the Trustee shall resign immediately in
the manner and with the effect specified in Section 13.8.
Section 13.8 Resignation or Removal of Trustee.
(a) Subject to the provisions of this Section 13.8, the
Trustee may be appointed, removed or replaced without cause at any time by the
Depositor, upon written notice, or with cause upon the occurrence of a Trustee
Termination Event; provided, however, that the Trustee shall not be removed in
accordance with this Section 13.8 until a successor Trustee possessing the
qualifications to act as Trustee under Section 13.8 (a "Successor Trustee") has
66
been appointed by the Depositor and has accepted such appointment by written
instrument executed by such Successor Trustee and delivered to the Depositor.
(b) A trustee appointed to office shall hold office until its
successor shall have been appointed by the Holders in accordance with this
Trust Agreement or until its termination, removal or resignation. Any trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing signed by the trustee and delivered to the Depositor, the
Trust and all of the Holders, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that no such resignation of a Trustee shall be effective:
(i) until a Successor Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor
Trustee and delivered to the Trust, the Depositor and the resigning
trustee; or
(ii) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to the
Holders.
(c) If no Successor Trustee shall have been appointed and
accepted appointment as provided in this Section 13.8 within thirty (30) days
after delivery to the Depositor and the Trust of an instrument of resignation,
the resigning Trustee may petition at the expense of the Trust any court of
competent jurisdiction for appointment of a Successor Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Successor Trustee.
(d) No Trustee shall be liable for anything that occurs after
it has ceased to act in such capacity, including without limitation, the acts
or omissions to act of any Successor Trustee.
Section 13.9 Successor Trustee.
(a) Any Successor Trustee appointed as provided in Section
13.8 shall execute, acknowledge and deliver to the Depositor and to its
predecessor Trustee an instrument in a form acceptable to the Depositor
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor Trustee shall become effective and such Successor Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as Trustee herein. The predecessor
Trustee shall deliver to the Successor Trustee all documents and statements
held by it hereunder, and the Depositor and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the Successor
Trustee all such rights, powers, duties and obligations within thirty days of
execution of such instrument.
(b) No Successor Trustee shall accept appointment as provided
in this Section 13.9 unless at the time of such acceptance such Successor
Trustee is eligible under the provisions of Section 13.7.
(c) Upon acceptance of appointment by a Successor Trustee as
provided in this Section 13.9, such Successor Trustee shall provide prompt
notice of its succession hereunder to the Depositor, and the Depositor shall
file a Form 8-K indicating such change.
67
(d) Without the consent of 66 and 2/3% of the Holders of the
Down-MACRO Holding Shares, voting by Down-MACRO Aggregate Par Amount, the
compensation to be paid to the Successor Trustee may not be greater than the
compensation paid to the terminated Trustee hereunder.
Section 13.10 Merger or Consolidation.Any corporation into which
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee shall be the
successor of the Trustee hereunder; provided, however, that such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
Section 13.11 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Trust
Agreement, the Trustee shall have the power and may execute and deliver all
instruments to appoint, at any time, one or more Persons to act as a co-trustee
or co-trustees, or a separate trustee or separate trustees, of all or any part
of the Trust Assets, and to vest in such Person or Persons, in such capacity
and for the benefit of the Holders of the Down-MACRO Holding Shares, such title
to the Trust Assets or any part thereof and, subject to the other provisions of
this Section 13.11, such powers, duties, obligations, rights and trusts as the
Trustee may consider necessary or desirable, for the purpose of meeting any
legal requirements of any jurisdiction in which any part of the Trust Assets
may at the time be located; provided, however, that such co-trustee or
co-trustees, or separate trustee or separate trustees, shall also assume the
rights, duties and obligations of the Trustee under each of the Up-MACRO
Holding Trust Agreement, the Down-MACRO Tradeable Trust Agreement and the
Up-MACRO Tradeable Trust Agreement; further provided, however, that the Trustee
shall exercise due care in the appointment of any co-trustee or separate
trustee. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility for a successor trustee under Section 13.9 and no
notice to Holders of the Down-MACRO Holding Shares of the appointment of any
co-trustee or separate trustee shall be required under this Section 13.11.
(b) Every co-trustee and separate trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such co-trustee or
separate trustee jointly (it being understood that such co-trustee or
separate trustee shall not be authorized to act unless the Trustee
joins in such act) except to the extent that under any laws of any
jurisdiction in which any particular act or acts are to be performed
the Trustee is incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Assets or any portion thereof in any
such jurisdiction) shall be exercised or performed singly by such
co-trustee or separate trustee, but solely at the direction of the
Trustee;
(ii) no co-trustee or separate trustee hereunder
shall be personally liable by reason of any act or omission of any
other trustee hereunder; and
68
(iii) the Trustee may at any time accept the
resignation of or remove any co-trustee or separate trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then co-trustees and separate
trustees as effectively as if given to each of them. Every instrument
appointing any co-trustee or separate trustee shall refer to this Trust
Agreement and the conditions of this Article XIII. Upon its acceptance of the
trusts conferred by its instrument of appointment, each co-trustee and separate
trustee shall be vested with the estates or property specified in such
instrument, either jointly with the Trustee or separately, as may be provided
therein, subject to all of the provisions of this Trust Agreement, specifically
including every provision of this Trust Agreement relating to the conduct of,
affecting the liability of or affording protection to the Trustee. Every such
instrument shall be filed with the Trustee.
(d) Any co-trustee or separate trustee may at any time
constitute the Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect to this Trust Agreement on its behalf and in its name. If any
co-trustee or separate trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts under
or in respect to this Trust Agreement shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 13.12 Books, Records; Taxes; Audit.
(a) The Trustee shall keep proper books of record and account
of all the transactions under this Trust Agreement at Corporate Trust Office or
such office as it may subsequently designate upon notice to the other parties
hereto. The books and records of the Administrative Agent maintained by the
Trustee shall be open to inspection by any person establishing to the Trustee's
reasonable satisfaction that such person is a Beneficial Owner upon reasonable
advance notice at all reasonable times during the usual business hours of the
Trustee. The Administrative Agent shall keep proper record of the creation of
the MACRO Units and redemption of MACRO Units at its Corporate Trust Office.
Such records shall be open to inspection upon reasonable advance notice at all
reasonable times during the usual business hours of the Administrative Agent.
Such records shall be preserved for such times as the Depositor may direct.
(b) The Trustee shall provide the Depositor such financial
and other information regarding the operation of the Down-MACRO Holding Trust
as may be required for the Depositor to prepare such reports and filings
required under the federal securities laws as provided in Section 15.2. Unless
otherwise required by applicable law or regulation, the Depositor shall be
responsible for any certification of any such reports or the contents thereof,
other than the certification requirements pursuant to Section 8.2 herein, and
shall receive from the Trustee such representations with respect to information
within the Trustee's control as shall be required for the Depositor to make
such certification.
(c) The [Depositor] shall prepare or cause to be prepared,
and the Trustee shall sign (if it is determined that the Trustee's signature is
required thereon) and file any tax returns required to be filed by the
Down-MACRO Holding Trust. The [Depositor] shall also prepare or cause to be
prepared all tax information required by law to be distributed to Holders of
the Down-MACRO Holding Shares. The Trustee, the Calculation Agent and the
Depositor, upon request, shall each furnish the [Depositor] with any
69
information known to it that may be reasonably required in connection with the
preparation of such duties set forth in the preceding two sentences.
(d) In no event shall the Trustee, the Depositor or the
Administrative Agent be personally liable for any taxes or other governmental
charges imposed upon or in respect of the Down-MACRO Holding Shares, which it
may be required to pay under any present or future law of the United States of
America or of any other taxing authority having jurisdiction in the premises.
For all such taxes and charges and for any expenses, including counsel's fees,
which the Trustee may sustain or incur with respect to such taxes or charges,
the Trustee shall be reimbursed and indemnified out of the assets of the
Down-MACRO Holding Trust and the payment of such amounts shall be secured by a
lien on the Down-MACRO Holding Trust. Any payments by the Trustee shall be
subject to withholding regulations then in force with respect to the Untied
States taxes. This paragraph shall survive notwithstanding any termination of
this Trust Agreement and the Down-MACRO Holding Trust or the resignation or
removal of the Trustee.
(e) The accounts of the Down-MACRO Holding Trust shall be
audited, as required by law and as may be directed by the Depositor, by
independent certified public accountants designated from time to time by the
Depositor and the cost of such audit shall be borne by the Trustee. The report
of such accountants shall be furnished by the [Administrative Agent] to the
Beneficial Owners upon request.
Section 13.13 Trustee May Enforce Claims Without Possession of
Down-MACRO Holding Shares. All rights of action and claims under this Trust
Agreement or the Down-MACRO Holding Shares may be prosecuted and enforced by
the Trustee without the possession of any of the Down-MACRO Holding Shares or
the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as
trustee. Any recovery of judgment shall, after provision for payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Down-MACRO Holding Shares in respect of which such judgment has been obtained.
Section 13.14 Suits for Enforcement. If a Termination Trigger
occurs and is continuing, the Trustee (or the Depositor, in the case of a
Trustee Termination Event) in its discretion may proceed to protect and enforce
its rights and the rights of the Holders of the Down-MACRO Holding Shares under
this Trust Agreement by a suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained in this Trust Agreement, in aid of the execution of any power granted
in this Trust Agreement or for the enforcement of any other legal, equitable or
other remedy as the Trustee (or the Depositor, in the case of a Trustee
Termination Event), being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Holders of the Down-MACRO Holding
Shares.
Section 13.15 Maintenance of Office or Agency. The Trustee will
maintain at its expense an office or agency (the "Corporate Trust Office")
where notices and demands to or upon the Trustee in respect of the Down-MACRO
Holding Shares and this Trust Agreement may be served. The Corporate Trust
Office shall initially be located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Trustee will give prompt notice to the Depositor and
to Holders of the Down-MACRO Holding Shares of any change in the location of
the Corporate Trust Office.
70
ARTICLE XIV
TERMINATION
Section 14.1 Termination of Trust. The Down-MACRO Holding Trust
and the respective obligations and responsibilities of the Depositor, the
Calculation Agent, the Administrative Agent, Marketing Agent and the Trustee
created hereby shall terminate on the Final Scheduled Termination Date. The
Down-MACRO Holding Trust shall not terminate in the event that the Depositor is
adjudged to be insolvent or is liquidated or dissolved for any reason.
Upon the termination of the Down-MACRO Holding Trust, the Trustee
shall wind up the activities and affairs of the Down-MACRO Holding Trust and
shall cause its certificate of designation to be cancelled by filing a
certificate of cancellation with the New York Secretary of State, terminating
the Down-MACRO Holding Trust.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1 Amendment; Waiver of Past Defaults and Termination.
(a) This Trust Agreement may be amended from time to time by
the Depositor and the Trustee without the consent of the Holders of Down-MACRO
Holding Shares (i) to cure any ambiguity or to correct or supplement any
provision which may be defective or inconsistent with any other provision of
this Trust Agreement, the Up-MACRO Holding Trust Agreement, the Down-MACRO
Tradeable Trust Agreement or the Up-MACRO Tradeable Trust Agreement, (ii) to
modify any provision or add a provision to this Trust Agreement to conform it
to the description of the terms of the Down-MACRO Holding Shares contained in
the Prospectus, (iii) to add to the covenants, restrictions or obligations of
any entity under this Trust Agreement for the benefit of the Holders of the
Down-MACRO Holding Shares or to modify any provisions of this Trust Agreement,
(iv) to evidence and provide for the acceptance of appointment hereunder of a
Successor Trustee, and (v) to comply with any requirements imposed by the Code,
or any securities laws; provided that an opinion in form and substance
satisfactory to the Depositor that such amendment will not cause the Down-MACRO
Holding Trust to be treated as an association taxable as a corporation is
delivered in connection with any amendment referenced in clause (iii) or clause
(v) above.
(b) This Trust Agreement may also be amended from time to
time by the Depositor and the Trustee, with the written consent of the Holders
of Down-MACRO Holding Shares evidencing not less than 66 and 2/3% of the
Down-MACRO Aggregate Par Amount, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Trust
Agreement or of modifying in any manner the rights of the Holders of the
Down-MACRO Holding Shares; provided, however, that the Up-MACRO Holding Trust
Agreement shall similarly be amended or modified; further provided, however,
that, without the written consent of each Holder of the Down-MACRO Holding
Trust and the Up-MACRO Holding Trust that would be adversely affected, no
amendment may (i) modify Sections 4.1, 4.2, 4.3, 4.4, 5.1, 5.2, 5.3 and 5.4 or
the definitions set forth therein; (ii) modify the amount or timing of any
distributions that are required to be made on the Down-MACRO Holding Shares;
(iii) modify the minimum number of Paired Holding Shares that constitute a
MACRO Unit; or (iv) reduce the percentage of Holders that are required to
consent to any of the foregoing amendments, and if such amendment is adopted
and approved by each Holder of the Down-MACRO Holding Trust, such amendment
71
shall not be effective unless and until a similar amendment has been made to
the Up-MACRO Holding Trust Agreement. The Trustee and the Depositor further
agree not to amend the Income Distribution Agreement or the Settlement
Contracts if such amendment would have a material adverse effect on the Holders
of the Paired Holding Shares unless the Trustee has received the prior written
consent of not less than 66 and 2/3% of each of the Holders of Down-MACRO
Holding Shares based on the Down-MACRO Aggregate Par Amount. The Trustee shall
not enter into any amendment or modification which would cause the Down-MACRO
Holding Trust to be required to register as an investment company under the
Investment Company Act of 1940, as amended. The Trustee may, but shall not be
obligated to, enter into any amendment which affects the Trustee's rights,
duties or immunities under this Trust Agreement or otherwise.
(c) Promptly after the execution of any amendment or consent
pursuant to this Section 15.1, the Trustee shall furnish notification of the
substance of such amendment or consent to each Holder and the Depositor shall
prepare and file a Form 8-K regarding such amendment.
(d) Where the consent of Holders is required under this
Section 15.1 in order to amend this Trust Agreement, it shall be sufficient if
such consent approves the substance of the proposed amendment; the particular
form of such amendment need not be approved. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Holders of the Down-MACRO Holding Shares shall be subject to such reasonable
requirements as the Trustee may prescribe.
(e) Holders evidencing not less than 66 and 2/3% of the
Down-MACRO Aggregate Par Amount and the Up-MACRO Aggregate Par Amount (pursuant
to the Up-MACRO Holding Trust Agreement) may, on behalf of all Holders, waive
any default by the Depositor, the Trustee, the Calculation Agent or the
Administrative Agent in the performance of their obligations hereunder and its
consequences, and the occurrence of any Termination Trigger and its
consequences, except the failure to make any distributions required to be made
to Holders of the Down-MACRO Holding Shares or to make any required deposits of
any amounts to be so distributed. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising therefrom shall be deemed
to have been remedied for every purpose of this Trust Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived.
Section 15.2 Registration (Initial and Continuing) of Down-MACRO
Holding Shares; Certain Securities Law Filings. The Depositor agrees to (i)
prepare and file a Registration Statement (or amend the existing Registration
Statement) with the SEC under the Securities Act, and take such action as is
necessary from time to time to qualify the Down-MACRO Holding Shares for
offering and sale under the federal securities laws of the United States,
including the preparation and filing of amendments and supplements to such
Registration Statement, (ii) promptly notify the Trustee and the Administrative
Agent of any such amendment or supplement to the Registration Statement or
Prospectus and of any order preventing or suspending the use of the Prospectus,
(iii) provide the Trustee and the Administrative Agent from time to time with
copies, including copies in electronic form, of the Prospectus, in such
quantities as the Trustee and the Administrative Agent may reasonably request,
(iv) prepare and file any periodic reports or updates that may be required
under the Exchange Act, and (v) take such action as is necessary from time to
time to register or qualify the Down-MACRO Holding Shares for offering and sale
under the securities or blue sky laws of those states of the United States or
other jurisdictions as the Depositor may select or as may be necessary to
72
continue that registration or qualification in effect for so long as the
Depositor determines that the Down-MACRO Holding Trust shall continue to offer
or sell Down-MACRO Holding Shares in that jurisdiction. Registration charges,
blue sky fees, printing costs, mailing costs, attorney's fees, and other
miscellaneous out-of-pocket expenses shall be borne by the Down-MACRO Holding
Trust in the manner provided for in Section 5.3.
Section 15.3 Prospectus Delivery. The Administrative Agent shall,
if required by the federal securities laws of the United States, in any manner
permitted by such laws, deliver at the time of issuance of Down-MACRO Holding
Shares, a copy of the relevant Prospectus, as most recently furnished to the
Administrative Agent by the Depositor, to each person submitting a Creation
Order.
Section 15.4 Protection of Right, Title and Interest to Trust
Assets.
(a) The Depositor shall cause this Trust Agreement, all
amendments and supplements hereto and all financing statements, continuation
statements and any other necessary documents covering the right, title and
interest of the Holders of the Down-MACRO Holding Shares and of the Trustee in
and to the Trust Assets to be promptly recorded, registered and filed, and at
all times to be kept recorded, registered and filed, all in such manner and in
such places as may be required by law fully to preserve and protect the right,
title and interest of the Holders of the Down-MACRO Holding Shares and the
Trustee hereunder in and to all property comprising the Trust Assets. The
Depositor shall deliver to the Trustee file-stamped copies of, or filing
receipts for, any document recorded, registered or filed as provided above, as
soon as available following such recording, registration or filing.
(b) Within 30 days after the Depositor makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a)
above seriously misleading within the meaning of Section 9-402(7) (or any
comparable provision) of the UCC, the Depositor shall give the Trustee notice
of such change and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Down-MACRO Holding Trust's security
interest in the Trust Assets and the proceeds thereof.
(c) The Depositor shall give the Trustee prompt notice of any
relocation of its principal executive offices or of any office from which it
performs its duties hereunder or keeps records concerning this transaction. If,
as a result of any such relocation, the applicable provisions of the UCC
require the filing of any new financing statement or of any amendment to any
previously filed financing or continuation statement, the Depositor shall file
such financing statements or amendments as may be necessary to perfect or to
continue the perfection of the Down-MACRO Holding Trust's security interest in
the Trust Assets and the proceeds thereof. The Depositor shall at all times
maintain its principal executive offices and each office from which it performs
its duties hereunder within the United States.
Section 15.5 Limitation on Rights of Holders of the Down-MACRO
Holding Shares.
(a) The death or incapacity of any Holder of the Down-MACRO
Holding Shares shall not operate to terminate this Trust Agreement or the
Down-MACRO Holding Trust, nor shall such death or incapacity entitle the legal
representatives or heirs of such Holder to claim an accounting or to take any
action or commence any proceeding in any court for a partition or winding-up of
73
the Down-MACRO Holding Trust, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Holder of the Down-MACRO Holding Shares shall have any
right to vote (except as expressly provided in this Trust Agreement) or in any
manner otherwise control the operation and management of the Down-MACRO Holding
Trust, or the obligations of the parties hereto, nor shall any Holder of the
Down-MACRO Holding Shares be under any liability to any third person by reason
of any action by the parties to this Trust Agreement pursuant to any provision
hereof.
(c) No Holder of the Down-MACRO Holding Shares shall have any
right by virtue of any provisions of this Trust Agreement to institute any
suit, action or proceeding in equity or at law upon, under or with respect to
this Trust Agreement unless such Holder previously has made, and unless the
Holders of Down-MACRO Holding Shares representing the beneficial ownership of
at least 25% of all Outstanding Down-MACRO Holding Shares have made, written
request to the Trustee to institute such suit, action or proceeding in its own
name as Trustee hereunder and have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby and the Trustee, for sixty (60) days after its
receipt of such request and offer of indemnity, has neglected or refused to
institute any such action, suit or proceeding; it being understood and
intended, and expressly covenanted by each Holder with every other Holder and
the Trustee, that no one or more Holders of the Down-MACRO Holding Shares shall
have any right in any manner whatsoever by virtue of or by availing itself or
themselves of any provisions of this Trust Agreement to affect, disturb or
prejudice the rights of any other Holder of the Down-MACRO Holding Shares, to
obtain or seek to obtain priority over or preference to any other Holder of the
Down-MACRO Holding Shares or to enforce any right under this Trust Agreement
except in the manner herein provided and for the equal, ratable and common
benefit of all Holders of the Down-MACRO Holding Shares. For the protection and
enforcement of the provisions of this Section 15.5, each and every Holder and
the Trustee shall be entitled to such relief as can be obtained either at law
or in equity.
Section 15.6 Certain Rights of Holders of Down-MACRO Holding
Shares; Voting. Each Holder of Down-MACRO Holding Shares shall be able to vote
on all matters on which shareholders may or are required to vote under this
Trust Agreement for the Down-MACRO Holding Shares. Holders of Down-MACRO
Holding Shares evidencing not less than 66 and 2/3% of the Down-MACRO Aggregate
Par Amount shall have the right to direct the time, place and method of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee relating to such
proceeding; provided, however, that, subject to Section 15.1, the Trustee shall
have the right to decline to follow any such direction if the Trustee, being
advised by counsel, determines that the action so directed may not lawfully be
taken, or if a Trust Officer in good faith determines that the proceedings so
directed would be illegal or involve the Trustee in personal liability or be
unduly prejudicial to the rights of Holders of the Down-MACRO Holding Shares
not party to such direction; and provided further that nothing in this Trust
Agreement shall impair the right of the Trustee to take any action deemed
proper by the Trustee and not inconsistent with such direction.
In accordance with Section 11.1 of the Down-MACRO Tradeable Trust
Agreement, the holders of the Down-MACRO Tradeable Shares shall be able to
direct the Trustee in the exercise of the voting rights associated with the
Down-MACRO Holding Shares held on deposit in the Down-MACRO Tradeable Trust.
Each holder of Down-MACRO Tradeable Shares shall be entitled to vote on (i) any
amendments to this Trust Agreement that require the prior written consent of
74
the shareholders as described in Section 15.1, (ii) any amendment to the Income
Distribution Agreement and the Settlement Contracts, (iii) the termination of
the Trustee, (iv) the appointment of a Successor Trustee, (v) the termination
of the Calculation Agent, (vi) the appointment of a successor Calculation
Agent, and (vii) any amendments to the certificate of trust filed with the New
York Secretary of State.
Section 15.7 MACRO Licensing Agreement with MacroMarkets. On the
Closing Date, the Trustee shall enter into the MACRO Licensing Agreement with
MacroMarkets. Under such licensing agreement, MacroMarkets shall be entitled to
the receipt of the Down-MACRO Licensing Fee. The Trustee, on behalf of the
Down-MACRO Holding Trust, shall pay to MacroMarkets the Down-MACRO Licensing
Fee in arrears on each Distribution Date in accordance with Section 5.4 hereof.
Section 15.8 Governing Law; Jurisdiction. THIS TRUST AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS. Each of the parties hereto hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
New York and of the federal courts sitting in the State of New York for any
litigation arising out of or relating to this Trust Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts) and further agrees that service of any
process, summons, notice or document by prepaid certified mail with proof of
mailing receipt validated by the United States Postal Service to the address of
such party as set forth in Section 15.9 (or to the agent of such party
appointed and maintained in the State of New York as such party's agent for
acceptance of legal process) shall be effective service of process for any
litigation brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any litigation arising out of this Trust Agreement or the transactions
contemplated hereby in the courts of the State of New York or of the federal
courts sitting in the State of New York and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such litigation brought in any such court has been brought in an
inconvenient forum.
Section 15.9 Notices.
(a) All demands, notices, instructions, directions and
communications (collectively, "Notices") under this Trust Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered,
mailed by registered mail, return receipt requested, or sent by facsimile
transmission to the following addresses:
If to the Depositor, to: MACRO Securities Depositor, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇]
75
With a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee, to: Investors Bank & Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: [ ]
Facsimile: ( ) [ ]
With a copy to: [ ]
[ADDRESS]
Attention: [ ]
Facsimile: ( ) [ ]
If to the Administrative
Agent, to: Claymore Securities, Inc.
Attention: [ ]
Facsimile: ( ) [ ]
With a copy to: [ ]
Attention: [ ]
Facsimile: ( ) [ ]
If to the Marketing
Agent, to: Claymore Securities, Inc.
Attention: [ ]
Facsimile: ( ) [ ]
With a copy to: [ ]
Attention: [ ]
Facsimile: ( ) [ ]
Any notice to be given to a Beneficial Owner shall be duly given
if mailed or delivered to Authorized Participants designated by the Depository
for delivery to Beneficial Owners.
(b) Any Notice required or permitted to be given to a Holder
of the Down-MACRO Holding Shares shall be given by first-class mail, postage
prepaid, at the address of such Holder as shown in the Share Register. Any
Notice so mailed within the time prescribed in this Trust Agreement shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such Notice.
Section 15.10 Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Trust Agreement is held
invalid for any reason whatsoever, then such provision shall be deemed
severable from the remaining provisions of this Trust Agreement and shall in no
way affect the validity or enforceability of the remaining provisions or of the
Down-MACRO Holding Shares or the rights of the Holders of the Down-MACRO
Holding Shares.
Section 15.11 Down-MACRO Holding Shares Nonassessable and Fully
Paid. It is the intention of the parties to this Trust Agreement that the
Holders of the Down-MACRO Holding Shares shall not be personally liable for
76
obligations of the Down-MACRO Holding Trust, that the interests in the
Down-MACRO Holding Trust represented by the Down-MACRO Holding Shares shall be
nonassessable for any losses or expenses of the Down-MACRO Holding Trust or for
any reason whatsoever and that the Down-MACRO Holding Shares upon
authentication thereof by the Trustee pursuant to Section 2.5 are and shall be
deemed fully paid.
Section 15.12 Further Assurances. The Depositor agrees to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Trustee more fully to
effect the purposes of this Trust Agreement, including the execution of any
financing statements or continuation statements relating to the Trust Assets
for filing under the provisions of the UCC of any applicable jurisdiction.
Section 15.13 Non-Petition Covenant; No Proceedings.
(a) Notwithstanding any prior termination of this Trust
Agreement, the Trustee, the Calculation Agent, the Administrative Agent,
Marketing Agent and the Depositor shall not, prior to the date which is one
year and one day after the termination of this Trust Agreement with respect to
the Down-MACRO Holding Trust or the Depositor acquiesce in, petition for or
otherwise invoke or cause the Down-MACRO Holding Trust or the Depositor to
invoke the process of any Governmental Authority for the purpose of (x)
commencing or sustaining a case against the Down-MACRO Holding Trust or the
Depositor under any federal or state bankruptcy, insolvency or similar law, (y)
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Down-MACRO Holding Trust or the Depositor or
any substantial part of their respective property or (z) ordering the
winding-up or liquidation of the affairs of the Down-MACRO Holding Trust or the
Depositor.
(b) Each of the Trustee, the Depositor, the Administrative
Agent and Marketing Agent and each Holder, by acceptance of its Down-MACRO
Holding Share, hereby agrees that it will not institute against a Holder, or
join any other Person in instituting against a Holder, on account of its
ownership of an Down-MACRO Holding Share or its obligations hereunder, any
bankruptcy, insolvency, liquidation, readjustment of debt, marshalling of
assets or any similar proceeding so long as there has not elapsed one year plus
one day since the last day on which any Down-MACRO Holding Shares shall have
been Outstanding.
Section 15.14 No Waiver; Cumulative Remedies. No failure by the
Trustee or the Holders of the Down-MACRO Holding Shares to exercise any right,
remedy, power or privilege under this Trust Agreement, and no delay in such
exercise, shall operate as a waiver of such right, remedy, power or privilege;
nor shall any single or partial exercise of any right, remedy, power or
privilege under this Trust Agreement preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided under this Trust Agreement are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
Section 15.15 Counterparts. This Trust Agreement may be executed
in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.
Section 15.16 Third-Party Beneficiaries. This Trust Agreement
will inure to the benefit of and be binding upon the parties hereto, the
Holders of the Down-MACRO Holding Shares, the Holders of the Up-MACRO Holding
Shares, the Holders of the Down-MACRO Tradeable Shares, the Holders of the
Up-MACRO Tradeable Shares and their respective successors and permitted
77
assigns. Except as otherwise expressly provided in this Trust Agreement, no
other Person will have any right or obligation hereunder.
Section 15.17 Actions or Notices by Holders of the Down-MACRO
Holding Shares.
(a) Wherever a provision in this Trust Agreement states that
an action may be taken or a Notice given by Holders of the Down-MACRO Holding
Shares, such action or Notice may be taken or given by any Holder, unless such
provision requires a specific percentage of Holders of the Down-MACRO Holding
Shares.
(b) Any Notice, request, authorization, direction, consent,
waiver or other act by the Holder of an Down-MACRO Holding Share shall bind
such Holder and every subsequent Holder of such share and of any share issued
upon the registration of transfer thereof, in exchange therefor or in lieu
thereof in respect of anything done or omitted to be done by the Trustee in
reliance thereon, whether or not notation of such action is made upon such
share.
Section 15.18 Merger and Integration. Except as specifically
stated otherwise herein, this Trust Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Trust Agreement.
This Trust Agreement may not be modified, amended, waived or supplemented
except as provided herein.
Section 15.19 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
78
IN WITNESS WHEREOF, the Depositor, the Trustee, the
Administrative Agent and the Marketing Agent have caused this Trust Agreement
to be duly executed by their respective officers as of the day and year first
above written.
MACRO SECURITIES DEPOSITOR, LLC,
as Depositor
By
----------------------------------
Name:
Title:
INVESTORS BANK & TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By
---------------------------------
Name:
Title:
CLAYMORE SECURITIES, INC.
not in its individual capacity but
solely as Administrative Agent
By
----------------------------------
Name:
Title:
CLAYMORE SECURITIES, INC.
not in its individual capacity but
solely as Marketing Agent
By
----------------------------------
Name:
Title:
Acknowledged and Accepted By:
INVESTORS BANK & TRUST COMPANY
as Up-MACRO Holding Trustee
By
------------------------------
Name:
Title:
EXHIBIT A
FORM OF DOWN-MACRO HOLDING SHARE
[TO COME]
EXHIBIT B
FORM OF INCOME DISTRIBUTION AGREEMENT
Filed as Exhibit 4.5 to this Registration Statement
EXHIBIT C
FORM OF SETTLEMENT CONTRACT
Filed as Exhibit 4.6 to this Registration Statement
EXHIBIT D
FORM OF PARTICIPANTS AGREEMENT
Filed as Exhibit 4.3 to this Registration Statement
EXHIBIT E
FORM OF MACRO LICENSING AGREEMENT
Filed as Exhibit 4.7 to this Registration Statement]
EXHIBIT F
NYMEX SUBLICENSING AGREEMENT
Filed as Exhibit 4.8 to this Registration Statement
EXHIBIT G
FORM OF QUARTERLY SHAREHOLDER STATEMENT
[TO COME]
