Exhibit 4.1
FORM OF
MACROSHARES DOWN OIL BENCHMARK
HOLDING TRUST AGREEMENT
===============================================================================
MACRO SECURITIES DEPOSITOR, LLC,
as Depositor,
[ ],
not in its individual capacity but solely as
Trustee
and
[ ],
not in its individual capacity but solely as
Administrative Agent and Marketing Agent
MACROSHARES DOWN OIL BENCHMARK HOLDING TRUST
TRUST AGREEMENT
===============================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.....................................................................................2
Section 1.2 Other Definitional Provisions..................................................................18
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................................................................................19
Section 2.2 Acceptance by Trustee..........................................................................19
Section 2.3 Limited Purpose of the Down-MACRO Holding Trust................................................19
Section 2.4 Representations and Warranties of the Depositor................................................19
Section 2.5 Form of Certificates; Book-Entry System; Transferability of Down-MACRO Holding Shares..........21
Section 2.6 Paired Subsequent Issuances....................................................................25
Section 2.7 Down-MACRO Recapitalization Issuance Following a Recapitalization Event........................26
Section 2.8 Down-MACRO Recapitalization Condition..........................................................27
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.......30
Section 3.4 Representations, Warranties and Covenants of the Administrative Agent and Marketing Agent......31
Section 3.5 Establishment of the Securities Account........................................................33
Section 3.6 Establishment of the Distribution Account......................................................34
Section 3.7 Administration of Treasuries...................................................................35
Section 3.8 Establishment of the Fee Payment Account.......................................................36
i
ARTICLE IV
CALCULATIONS
Section 4.1 Calculations on Price Determination Days.......................................................37
Section 4.2 Calculation of Intraday Indicative Values......................................................38
Section 4.3 Calculation of Income Distribution Payments and Settlement Payments............................39
Section 4.4 Calculations Relating to Paired Subsequent Issuances...........................................39
ARTICLE V
RIGHTS OF HOLDERS OF THE DOWN-MACRO HOLDING SHARES
Section 5.1 Rights of Holders of the Down-MACRO Holding Shares.............................................39
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...............................................42
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 Mandatory Redemptions..........................................................................45
Section 6.3 Redemptions on Early Termination Date and Final Scheduled Termination Date.....................45
Section 6.4 Settlement of the Settlement Contracts.........................................................45
Section 6.5 Settlement.....................................................................................45
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.............................................................48
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.................................................................52
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............................................................................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......................................................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 AND RECAPITALIZATION
Section 11.1 Recapitalization Events........................................................................61
Section 11.2 Termination Triggers...........................................................................61
ARTICLE XII
TRUSTEE TERMINATION EVENTS
Section 12.1 Trustee Termination Events.....................................................................63
Section 12.2 Force Majeure..................................................................................63
Section 12.3 Notification to Holders of the Down-MACRO Holding Shares.......................................64
ARTICLE XIII
THE TRUSTEE
Section 13.1 Duties of Trustee..............................................................................64
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...................................................................................67
Section 13.6 Indemnification................................................................................67
Section 13.7 Eligibility Requirements.......................................................................67
Section 13.8 Resignation or Removal of Trustee..............................................................68
Section 13.9 Successor Trustee..............................................................................68
Section 13.10 Merger or Consolidation........................................................................69
Section 13.11 Appointment of Co-Trustee or Separate Trustee..................................................69
Section 13.12 Books, Records; Taxes; Audit...................................................................70
iii
Section 13.13 Trustee May Enforce Claims Without Possession of Down-MACRO Holding Shares.....................71
Section 13.14 Suits for Enforcement..........................................................................71
Section 13.15 Maintenance of Office or Agency................................................................72
ARTICLE XIV
TERMINATION
Section 14.1 Termination of Trust...........................................................................72
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....................................................................................74
Section 15.3 Prospectus Delivery............................................................................74
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...............................75
Section 15.6 Certain Rights of Holders of Down-MACRO Holding Shares; Voting.................................76
Section 15.7 MACRO Licensing Agreement with MacroMarkets....................................................76
Section 15.8 Governing Law; Jurisdiction....................................................................76
Section 15.9 Notices........................................................................................77
Section 15.10 Severability of Provisions.....................................................................78
Section 15.11 Down-MACRO Holding Shares Nonassessable and Fully Paid.........................................78
Section 15.12 Further Assurances.............................................................................78
Section 15.13 Non-Petition Covenant; No Proceedings..........................................................78
Section 15.14 No Waiver; Cumulative Remedies.................................................................79
Section 15.15 Counterparts...................................................................................79
Section 15.16 Third-Party Beneficiaries......................................................................79
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
MACROSHARES DOWN OIL BENCHMARK
HOLDING TRUST AGREEMENT
This TRUST AGREEMENT, dated as of June [ ], 2006 (this "Trust
Agreement"), is hereby entered into among MACRO SECURITIES DEPOSITOR, LLC, a
Delaware limited liability company, as Depositor (the "Depositor"), [ ], not in
its individual capacity but solely as Trustee (the "Trustee"), and [ ], 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 New York trust known as the "MACROShares Down Oil Benchmark
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 New York trust that shall be known as the "MACROShares Up Oil
Benchmark 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 "MACROShares Down Oil Benchmark 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 "MACROShares Up Oil Benchmark 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 initial issuance of Down-MACRO Holding Shares, and the
Trustee hereby acknowledges receipt of such Initial Deposit in the Down-MACRO
Holding Trust, which deposit shall constitute the initial trust estate; 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 or the Fee Payment Account, as applicable.
"Acquisition Guidelines" shall have the meaning set forth in Section
3.7(a).
"Administrative Agent" shall mean [ ], 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, initially, the
Light Sweet Crude Oil Price and, in the event that the NYMEX Sublicensing
Agreement is terminated by NYMEX, a Substitute Crude Oil Price.
"Authorized Participant" shall mean any entity that (1) is a
registered broker-dealer 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 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) is a party to the Participants Agreement.
"Available Income" shall mean with respect to any Calculation Period,
the Up-MACRO Available Income or the Down-MACRO Available Income, as
applicable.
2
"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 except Saturday, Sunday or any day
on which banks and stock exchanges are generally not open for business in New
York, New York.
"Calculation Agency Agreement" shall mean the Calculation Agency
Agreement, dated as of the date hereof, by and among the Trustee, the Up-MACRO
Holding Trustee, the Down-MACRO Tradeable Trustee, the Up-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 Down-MACRO
Holding Shares.
"Closing Date" shall mean June [ ], 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.
"Daily Fee Accrual Rate" shall mean, with respect to any date of
determination during the first two years following the Closing Date, an amount
equal to 1.70% per annum, and with respect to any date of determination during
any year thereafter, 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 Type of 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 Type of Treasury divided by the actual number of days in
the current calendar year (as calculated to the tenth decimal place).
3
"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, up to and including the tenth day of the calendar month in which
such date of determination occurs, the next succeeding calendar month and, from
the eleventh day of the calendar month in which such date of determination
occurs until the last day thereof, the second calendar month succeeding the
calendar month in which such date of determination occurs.
"Distribution Account" shall have the meaning set forth in Section
3.6(a).
"Distribution Date" shall mean the 25th day of each March, June,
September and December, or if any such day is not a Business Day, the following
Business Day.
"Distribution Payment Date" shall mean the tenth day following each
Distribution Date.
"Distribution Record Date" shall mean the second Business Day
following each Distribution Date.
"Down-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 [ ]% multiplied by
the Down-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 Down-MACRO Holding Trust.
"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 on such date of determination.
"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 that is not a Distribution Date, an amount equal
to: (A) the Down-MACRO Investment Amount plus (B) the Down-MACRO Earned Income
Accrual Amount.
"Down-MACRO Available Income" shall mean with respect to any
Distribution Date, 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.
"Down-MACRO Available Income Accrual Amount" shall mean, on any day of
a Calculation Period, the sum of, for each Treasury on deposit in the
Down-MACRO Holding Trust
4
on such date, the product of (i) the purchase price of that Treasury multiplied
by (ii) the Daily Yield Rate applicable to that Treasury.
"Down-MACRO Calculation Agent 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 [ ]% multiplied by the
Down-MACRO Asset Amount on such day, which shall be payable to the Calculation
Agent for services rendered under the Calculation Agency Agreement to the
Down-MACRO Holding Trust and the Down-MACRO Tradeable Trust.
"Down-MACRO Daily Fee Accrual Amount" shall mean for any Calculation
Period and any date of determination occurring during such Calculation Period,
the sum of, for each day that has elapsed during such Calculation Period up to
but not including the date of determination, the product of the Daily Fee
Accrual Rate and the Down-MACRO Asset Amount on each day of such Calculation
Period.
"Down-MACRO Expenses" shall have the meaning specified in Section 5.3
of this Trust Agreement.
"Down-MACRO Earned Income Accrual Amount" shall mean, with respect to
any date of determination, the sum of, for each day that has elapsed during the
related Calculation Period up to but not including the date of determination,
the Down-MACRO Daily Income for each such day.
"Down-MACRO Fee Deposit" shall mean, with respect to any Distribution
Date and the related Calculation Period, the aggregate Down-MACRO Daily Fee
Accrual Amount that has accrued during such Calculation Period.
"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 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.
5
"Down-MACRO Income Make-Whole Amount" shall mean, with respect to any
Paired Subsequent Issuance and the Calculation Period during which such Paired
Subsequent Issuance is being made, an amount equal to the product of (a) the
difference between (i) the average Daily Yield Rate of the Treasuries on
deposit in the Down-MACRO Holding Trust prior to such Paired Subsequent
Issuance and (ii) the average Daily Yield Rate of the Treasuries available to
be acquired by the Down-MACRO Holding Trust with the proceeds of the Paired
Subsequent Issuance, and (b) the Aggregate Par Amount of the Down-MACRO Holding
Shares being created in such Paired Subsequent Issuance.
"Down-MACRO Investment Amount" shall mean, with respect to any
Calculation Period and any date of determination occurring during such
Calculation Period, the amount of cash and Treasuries (that have not yet
matured) on deposit in the securities account of the Down-MACRO Holding Trust
(not including cash in the Down-MACRO Distribution Account) on such date. All
Treasuries on deposit in the Down-MACRO Holding Trust shall be counted for
purposes of this definition at their aggregate purchase price.
"Down-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 0.40% multiplied by the
Down-MACRO Asset Amount on such day, which shall be payable to MacroMarkets
pursuant to the MACRO Licensing Agreement.
"Down-MACRO Price Range" shall mean the difference between (i) the
Ending Level of the Applicable Reference Price of Crude Oil at which the
Down-MACRO Underlying Value is equal to zero and (ii) the Starting Level, as
such range may be changed in connection with an Up-MACRO Recapitalization Event
and the related Up-MACRO Recapitalization Issuance.
"Down-MACRO Proportional Mandatory Redemption" shall have the meaning
specified in Section 6.2(a) hereof.
"Down-MACRO Proportionate Mandatory Redemption Percentage" shall mean,
with respect to any Redemption Date on which an Up-MACRO Recapitalization
Issuance and the related Down-MACRO Proportional Mandatory Redemption are
scheduled to occur, a fraction, expressed as a percentage, the numerator of
which is the Aggregate Par Amount of Up-MACRO Holding Shares issued in such
Up-MACRO Recapitalization Issuance and the denominator of which is twice the
Up-MACRO Aggregate Par Amount immediately prior to the occurrence of the
Up-MACRO Recapitalization Event which preceded such Up-MACRO Recapitalization
Issuance.
"Down-MACRO Recapitalization Condition" shall have the meaning
specified in Section 2.8 of this Trust Agreement.
"Down-MACRO Recapitalization Event" shall have the meaning specified
in Section 11.1(a) hereof.
"Down-MACRO Recapitalization Issuance" shall have the meaning
specified in Section 2.7(a) or (b) of this Trust Agreement.
"Down-MACRO Recapitalization Redemption" shall have the meaning set
forth in Section 6.2(b) of this Trust Agreement.
6
"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 Termination Trigger Date 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 Asset Amount on such date, zero; and
(b) if the Down-MACRO Underlying Value on such Redemption Date,
the Termination Trigger Date preceding such Early Termination Date or preceding
the Final Scheduled Termination Date is less than the Down-MACRO Asset Amount
on such date, an amount equal to (i) the excess of such Down-MACRO Asset 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 (i) prior to the events
described in clause (ii) of this definition, the stated par amount of $[ ] per
Down-MACRO Holding Share and (ii) following any Down-MACRO Recapitalization
Event and a related Down-MACRO Recapitalization Issuance, the stated par amount
per Down-MACRO Holding Share set forth in the Down-MACRO Holding Trust
Agreement, as amended in connection with such Down-MACRO Recapitalization Event
and Down-MACRO Recapitalization Issuance.
"Down-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.
"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 MACROShares Down Oil
Benchmark 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 [ ] not in its
individual capacity but solely as trustee of the Down-MACRO Tradeable Trust.
"Down-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 Down-MACRO Aggregate Par
Amount on such day, which shall be payable to the Trustee pursuant to this
Trust Agreement.
"Down-MACRO Underlying Value" shall mean with respect to any date of
determination:
(a) if the Ending Level is below the Starting Level, an amount
equal to (i) the Down-MACRO Asset Amount on such date of determination plus
(ii) (x) the Up-MACRO Asset Amount on such date of determination multiplied by
(y) the Price Level Percentage Change on
7
such date of determination or, if such date is not a Price Determination Day,
on the last preceding Price Determination Day;
(b) if the Ending Level is above the Starting Level, an amount
equal to (i) the Down-MACRO Asset Amount on such date of determination, minus
(ii) (x) such Down-MACRO Asset Amount multiplied by (y) the Price Level
Percentage Change on such date of determination or, if such date is not a Price
Determination Day, on the last preceding Price Determination Day; and
(c) if the Ending Level is equal to the Starting Level, the
Down-MACRO Asset Amount.
"DTC Participant" shall mean a participant of the Depository.
"Early Termination Date" shall mean with respect to any date of
determination, the Distribution Date following a Termination Trigger Date.
"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 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, on any day on which the Trustee
acquires Treasuries on behalf of the Down-MACRO Holding Trust, any United
States treasury ▇▇▇▇, note or bond, issued by the United States Department of
the Treasury 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.
"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
8
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.
"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 Down-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 June 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.
"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 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
9
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 Down-MACRO
Holding Trust to the Up-MACRO Holding Trust under the Income Distribution
Agreement, a Down-MACRO Income Distribution Payment or (ii) if a payment is
required to be made by the Up-MACRO Holding Trust to the Down-MACRO Holding
Trust and to the extent Up-MACRO Available Income exists, an Up-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 mean the proceeds of the Down-MACRO Holding
Shares issued and sold and the proceeds of the Down-MACRO Tradeable Shares
issued with respect to the Down-MACRO Holding Shares deposited into the
Down-MACRO Tradeable Trust and sold on the Closing Date.
"Light Sweet Crude Oil Futures Contracts" shall mean NYMEX Division
light sweet crude oil futures contracts of the Designated Maturity.
"Light Sweet Crude Oil Price" shall mean, with respect to any Price
Determination Day, the settlement price of the Light Sweet Crude Oil Futures
Contracts established by the NYMEX based upon the trading that has occurred in
such contracts by open outcry on such Price Determination Day and published to
the consolidated tape; provided, that if the NYMEX abandons its open outcry
format for the Light Sweet Crude Oil Futures Contract, then the Light Sweet
Crude Oil Price shall be based on trading of the Light Sweet Crude Oil Futures
Contracts on the substitute electronic trading platform established by the
NYMEX.
"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.
"MacroMarkets" shall mean MacroMarkets LLC, and its successors and
assigns.
"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.
"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.
10
"MACRO Unit" shall consist of, 100,000 Up-MACRO Holding Shares and
100,000 Down-MACRO Holding Shares.
"Marketing Agent" shall mean [ ], 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 Down-MACRO Holding
Trust and the Up-MACRO Holding Trustee, acting on behalf of the Up-MACRO
Holding Trust, as amended and supplemented by the schedule relating thereto.
"Net Par Amount Change" shall mean, with respect to any Business Day,
the net increase or decrease in the Down-MACRO Aggregate Par Amount, after
giving effect to any Paired Subsequent Issuances, any Down-MACRO
Recapitalization Issuance, Paired Optional Redemption or Down-MACRO
Proportional Mandatory Redemption 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 the New York Mercantile Exchange, Inc. and its
successors and assigns.
"NYMEX Sublicensing Agreement" shall mean the sublicensing agreement,
dated as of June [ ], 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 Light Sweet Crude Oil Price 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.
"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 or in Up-MACRO or Down-MACRO Recapitalization
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.
11
"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 Up-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 creation and redemption of the Paired
Holding Shares and the exchange of Tradeable Shares for Holding Shares and vice
versa.
"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 (i) for so long as the Light
Sweet Crude Oil Price is the Applicable Reference Price of Crude Oil, each day
on which trading of the Light Sweet Crude Oil Futures Contracts occurs on the
NYMEX by open outcry and a settlement price is established by the NYMEX for
such contracts not later than the end of trading in the Light Sweet Crude Oil
Futures Contracts on such day, and (ii) if a Substitute Crude Oil Price is the
Applicable Reference Price of Crude Oil, each day on which a settlement price
for the substitute crude oil price is established.
"Price Level Percentage Change" shall mean with respect to each Price
Determination Day, the absolute value of (a)(i) the Ending Level on such Price
Determination Day minus (ii) the Starting Level divided by (b)(i) if the Ending
Level on such Price Determination Day exceeds the Starting Level, the
Down-MACRO Price Range, and (ii) if the Ending Level on such Price
Determination Day is less than the Starting Level, the Up-MACRO Price Range.
"Prospectus" shall mean the prospectus, in the form filed by the
Depositor on behalf of the Down-MACRO Holding 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, file no. 333-[ ],
dated as of [ ], 2006, on and after the date on which such registration
statement becomes effective.
"Purchase Order" shall have the meaning set forth in Section 3(b) of
the Participants Agreement.
"Quarterly Distribution" shall mean with respect to each Distribution
Date, an allocation for distribution to be made to the Holders of the
Down-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 Down-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).
12
"Recapitalization Date" shall mean any Business Day on which an order
is placed with the Trustee for an Up-MACRO Recapitalization Issuance or a
Down-MACRO Recapitalization Issuance.
"Recapitalization Event" shall mean either an Up-MACRO
Recapitalization Event or a Down-MACRO Recapitalization Event, as applicable.
"Redemption Cash Component" shall have the meaning set forth in
Section 6.1(d)(iii)
"Redemption Date" shall mean any Business Day on which a Redemption
Order for a Paired Optional Redemption is submitted or an Down-MACRO
Recapitalization Redemption or an Down-MACRO Proportional Mandatory Redemption
occurs.
"Redemption Order" shall have the meaning set forth in Section 3(b) of
the Participants Agreement.
"Redemption Percentage Value" shall have the meaning set forth in
Section 6.1(d)(ii).
"Registered Owner" shall mean the Person in whose name the Down-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 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 Price Determination Day
preceding the Final Scheduled Termination Date, on the Termination Trigger Date
preceding an Early Termination Date or on the relevant Redemption Date, as
applicable.
"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 was the Applicable
Reference Price of Crude Oil on June [ ], 2006.
13
"Subsequent Issuance" shall mean an Up-MACRO Recapitalization Issuance
or a Down-MACRO Recapitalization Issuance, as applicable.
"Subsequent Issuance Date" shall have the meaning set forth in Section
2.6(a) hereof.
"Substitute Crude Oil Index" shall mean any one of the following [ ].
"Substitute Crude Oil Price" shall mean, with respect to any Price
Determination Day, [ ].
"Substitute Index Licensing Agreement" shall mean any licensing
arrangement pursuant to which the Down-MACRO Holding Trust acquires the right
to use a Substitute Crude Oil Price for the purposes of calculating the
Down-MACRO Underlying Value under this Trust Agreement in accordance with
Section [ ] of this Trust Agreement.
"Successor Trustee" shall have the meaning set forth in Section
13.8(c) hereof.
"Termination Trigger" shall have the meaning set forth in Section
11.2(a) hereof.
"Termination Trigger Date" shall mean the date on which a Termination
Trigger occurs.
"Tradeable Trusts" shall mean the Up-MACRO Tradeable Trust and the
Down-MACRO Tradeable Trust.
"Transaction Documents" shall mean this Trust Agreement, theUp-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.
"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 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 [ ], 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 Up-MACRO
Holding Trustee.
14
"Type" shall mean, with respect to any Treasury, all Treasuries in the
applicable Paired Holding Trust with the same maturity, the same purchase
price, the same stated interest rate, if any, the same applicable discount, if
any, and the same purchase date.
"UCC" shall mean the Uniform Commercial Code as amended and in effect
from time to time in the State of New York.
"Up-MACRO Aggregate Par Amount" shall mean with respect to any date of
determination, an amount equal to the product of (a) the aggregate Outstanding
number of Up-MACRO Holding Shares and (b) the Up-MACRO Stated Par Amount on
such date of determination.
"Up-MACRO Asset Amount" shall mean, (i) with respect any Distribution
Date, the aggregate amount of funds transferred to the Distribution Account on
such Distribution Date, and (ii) with respect to any other date of
determination that is not a Distribution Date, an amount equal to: (A) the
Up-MACRO Investment Amount plus (B) the Up-MACRO Earned Income Accrual Amount
minus (C) the Up-MACRO Daily Fee Accrual Amount.
"Up-MACRO Available Income" shall mean with respect to any
Distribution Date and the related Calculation Period, the funds remaining on
deposit in the Up-MACRO Distribution Account after payment priorities first
through fourth of Section 5.2(a) of the Up-MACRO Holding Trust Agreement have
been satisfied in full.
"Up-MACRO Available Income Accrual Amount" shall mean, on any day of a
Calculation Period, the sum of, for each Treasury on deposit in the Up-MACRO
Holding Trust on such date, the product of (i) the purchase price of that
Treasury multiplied by (ii) the Daily Yield Rate applicable to that Treasury.
"Up-MACRO Distribution Account" shall mean the distribution account
for the Up-MACRO Holding Trust established pursuant to the Up-MACRO Holding
Trust Agreement.
"Up-MACRO Daily Fee Accrual Amount" shall mean for any Calculation
Period and any date of determination occurring during such Calculation Period,
the sum of the following products obtained for each day that has elapsed during
such Calculation Period (up to but not including the date of determination):
the Daily Fee Accrual Rate multiplied by the Up-MACRO Asset Amount on each such
day.
"Up-MACRO Earned Income Accrual Amount" shall mean, with respect to
any date of determination, the sum of the Up-MACRO Available Income Accrual
Amount for each day that has elapsed during the current Calculation Period up
to but not including such date of determination.
"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.
"Up-MACRO Holding Trust" shall have the meaning specified in the
Recitals to this Trust Agreement.
15
"Up-MACRO Holding Trust Agreement" shall mean the MACROShares Up Oil
Benchmark Holding Trust Agreement, dated as of the date hereof, among the
Depositor, the Administrative Agent, the Marketing Agent and the Up-MACRO
Holding Trustee, as such agreement may be amended from time to time.
"Up-MACRO Holding Trustee" shall mean [ ], not in its individual
capacity but solely as trustee of the Up-MACRO Holding Trust.
"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 Income Make-Whole Amount" shall have the meaning set forth
in the Up-MACRO Holding Trust Agreement.
"Up-MACRO Increase Amount" shall mean, with respect to any Subsequent
Issuance Date, an amount equal to (a) the number of Up-MACRO Holding Shares
requested by an Authorized Participant and created on that Subsequent Issuance
Date multiplied by (b) the Up-MACRO Stated Par Amount.
"Up-MACRO Investment Amount" shall mean, with respect to any
Calculation Period and any date of determination occurring during such
Calculation Period, the amount of cash and Treasuries (that have not yet
matured) on deposit in the Up-MACRO Holding Trust on such date. All Treasuries
on deposit in the Up-MACRO Holding Trust shall be counted for purposes of this
definition at their aggregate purchase price.
"Up-MACRO Price Range" shall have the meaning set forth in the
Up-MACRO Holding Trust Agreement.
"Up-MACRO Recapitalization Condition" shall have the meaning specified
in Section 2.8 of the Up-MACRO Holding Trust Agreement.
"Up-MACRO Recapitalization Event" shall have the meaning specified in
Section 11.1(c) of the Up-MACRO Holding Trust Agreement.
"Up-MACRO Recapitalization Issuance" shall mean an issuance of
Up-MACRO Holding Shares made following an Up-MACRO Recapitalization Event
pursuant to Section [2.7(b)] of the Up-MACRO Holding Trust Agreement..
"Up-MACRO Recapitalization Redemption" shall mean a redemption of all
Outstanding Up-MACRO Holding Shares following the occurrence of an Up-MACRO
Recapitalization Event.
16
"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 Par Amount of Up-MACRO Holding Shares that are being redeemed
on such date and the denominator of which is the Up-MACRO Aggregate Par Amount
on such Redemption Date prior to giving effect to the Paired Optional
Redemption order placed on such Redemption Date and prior to giving effect to
any Paired Subsequent Issuance orders that may also have been placed on such
date, and (ii) with respect to any Recapitalization Date, 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
Termination Trigger Date 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 Asset Amount on such date, zero; and
(b) if the Up-MACRO Underlying Value on such Redemption Date, the
Termination Trigger Date preceding such Early Termination Date or preceding the
Final Scheduled Termination Date is less than the Up-MACRO Asset Amount on such
date, an amount equal to (i) the excess of such Up-MACRO Asset 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 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 Light Sweet Crude Oil
Up-MACRO 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 [ ], not in its
individual capacity but solely as trustee of the Up-MACRO Tradeable Trust.
"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 Up-MACRO Asset Amount on such date of determination plus (ii)
(x) the Down-MACRO Asset Amount on such date of determination multiplied by (y)
the Price Level Percentage Change on such date of determination or, if such
date is not a Price Determination Day, on the last preceding Price
Determination Day;
(b) if the Ending Level is below the Starting Level, an amount
equal to (i) the Up-MACRO Asset Amount on such date of determination minus (ii)
(x) such Up-MACRO Asset
17
Amount multiplied by (y) the Price Level Percentage Change on such date of
determination or, if such date is not a Price Determination Day, on the last
preceding Price Determination Day; and
(c) if the Ending Level is equal to the Starting Level, the
Up-MACRO Asset Amount.
"Value" shall mean, with respect to any Treasury on deposit at any
time in either of the Paired Holding Trusts, the par amount of such Treasury
that will be repaid upon the maturity thereof.
"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."
18
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, the Depositor does hereby transfer, assign, set over and otherwise
convey to the Down-MACRO Holding Trust, for the benefit of the Holders of the
Down-MACRO Holding Shares, all right, title and interest of the Depositor in
and to the Initial Deposit deposited into the Distribution Account and used to
acquire Treasuries in accordance with the provisions of Section 3.5 and Section
3.7 hereof. Such property, together with all monies on deposit in the
Distribution Account and the Fee Payment Account from time to time 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, 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.
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:
(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.
19
(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 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.
20
(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.
(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
21
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
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.
22
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 and
each Authorized Participant, in the case of a Paired Subsequent Issuance or
Paired Optional Redemption of MACRO Units. Except as otherwise described in
Section 2.5([ ]), ownership of beneficial interests in Down-MACRO Holding
Shares will be limited to DTC Participants, Indirect Participants and persons
holding interests through DTC Participants and Indirect Participants. 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 Trustee
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 Trustee shall provide each such DTC Participant with
sufficient copies of such notice, statement or other communication, in such
form, number and at such place as such DTC Participant may reasonably request,
in order that such notice, statement or communication may be transmitted by
such DTC Participant, directly or indirectly, to such Beneficial Owners. In
addition, the Trust shall pay to each such DTC Participant an amount as
reimbursement for the expenses attendant to such transmittal, all subject to
applicable statutory and regulatory requirements.
(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 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
23
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.
Every Certificate of 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 cancelled and disposed of in a manner
satisfactory to the Trustee.
(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 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
24
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 or any Early Termination Date,
the Trustee may issue and deliver additional Down-MACRO Holding Shares
contemporaneously with the issuance of additional Up-MACRO Holding Shares in
the form of MACRO Units (such an issuance, a "Paired Subsequent Issuance") upon
instruction from any Authorized Participant. As provided in the Participants
Agreement, a Paired Subsequent Issuance may be directed solely by one or more
Authorized Participants on any Business Day by delivering a Purchase Order to
the Trustee and the Administrative Agent on such 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 CUSIP Numbers for
the Paired Holding Shares to be created, and (v) the number of Paired Holding
Shares to be issued in the form of MACRO Units. 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 Aggregate
Par Amount of the Down-MACRO Holding Shares requested by that Authorized
Participant, plus (ii) the Aggregate Par Amount of the Up-MACRO Holding Shares
requested by that Authorized Participant, plus (iii) the Down-MACRO Income
Make-Whole Amount, plus (iv) the Up-MACRO Income Make-Whole Amount. 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.
(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 Purchase Orders from Authorized Participants that have
executed a Participants Agreement that is in full force and effect at the time
when a Purchase Order is placed. The Administrative Agent will maintain and
make available at its offices specified in Section [ ] 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 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
25
Participants Agreement and this Trust Agreement, the provisions of the
Participants Agreement shall govern.
(c) Concurrently with any Paired Subsequent
Issuance, the Trustee, as directed by the Administrative Agent, acting together
with the Up-MACRO Holding Trustee, each on behalf of their respective Paired
Holding Trust, shall adjust the aggregate amount of the Income Distribution
Agreement and enter into additional Settlement Contracts based on the Net Par
Amount Change to the Down-MACRO Aggregate Par Amount and the Up-MACRO Aggregate
Par Amount, after giving effect to any Paired Subsequent Issuances or Paired
Optional Redemptions occurring on that Business Day.
(d) The Trustee shall have the absolute right, but
shall have no obligation, to reject any Purchase Order (i) if the
Administrative Agent determines that the Authorized Participant directing the
Paired Subsequent Issuance has not deposited sufficient funds with the Trustee,
(ii) if the Depositor determines that such Purchase 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 that it has rejected or shall
reject the Purchase Order for additional Up-MACRO Holding Shares made in
connection with such issuance 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 Purchase Order.
(e) A non-refundable transaction fee will be payable
to the Trustee for its own account in connection with each Purchase Order
pursuant to this Section 2.6 in the amount specified in Section 6 of the
Participants Agreement.
(f) Only global Certificates will be issued to 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.
Section 2.7 Down-MACRO Recapitalization Issuance Following a
Recapitalization Event.
(a) If, on any Price Determination Day, the
Applicable Reference Price of Crude Oil increases to an Ending Level at which
the Down-MACRO Underlying Value is less than or equal to zero, then the
Administrative Agent shall promptly, but not later than the close of business
on such Price Determination Day, send both an electronic notice and a written
notice thereof (via overnight courier) to the Depositor, the Trustee, the
Up-MACRO Holding Trustee, the Down-MACRO Tradeable Trustee and the Up-MACRO
Tradeable Trustee. The
26
Administrative Agent shall also immediately commence soliciting orders from
each of the Authorized Participants and any other Persons meeting the
requirements for an Authorized Participant but not otherwise a party to the
Participants Agreement to participate in an issuance of additional Down-MACRO
Holding Shares if an Down-MACRO Recapitalization Event occurs (such issuance,
an "Down-MACRO Subsequent Issuance").
(b) If the Applicable Reference Price of Crude Oil
remains at or above an Ending Level at which the Down-MACRO Underlying Value is
less than or equal to zero for 10 consecutive Price Determination Days and an
Down-MACRO Recapitalization Event occurs pursuant to Section 11.1, and (ii) the
Administrative Agent has received sufficient orders from Authorized
Participants or any other similarly situated Person described in paragraph (a)
of this Section 2.7 to issue Down-MACRO Holding Shares in an Aggregate Par
Amount equal to at least [ ]% of the Aggregate Par Amount of the currently
Outstanding Down-MACRO Holding Shares, then the Administrative Agent shall
communicate such orders to the Trustee. Concurrently, the Depositor, the
Trustee, acting together with the Up-MACRO Holding Trustee, each on behalf of
their respective Paired Holding Trust, the Administrative Agent, and any Person
who wishes to purchase newly issued Down-MACRO Holding Shares shall enter into
a purchase agreement, mutually acceptable to the parties thereto, under which
additional Down-MACRO Holding Shares shall be issued following the occurrence
of an Down-MACRO Recapitalization Event (such additional issuance, an
"Down-MACRO Recapitalization Issuance"). Such Down-MACRO Subsequent Issuance
shall be conditioned upon (i) the effectiveness of a new registration statement
containing an updated prospectus relating to the Down-MACRO Holding Shares,
(ii) the delivery by the Depositor of such new prospectus relating to the new
Down-MACRO Holding Shares and (iii) satisfaction of the Down-MACRO
Recapitalization Condition.
(c) Upon the closing date of the Down-MACRO
Subsequent Issuance (as set forth in the purchase agreement described in
paragraph (b) of this Section 2.7), the parties hereto shall enter into an
amendment to this Trust Agreement and the Up-MACRO Holding Trust Agreement in
order to reflect a new Starting Level.
(d) Concurrently with the creation of additional
Down-MACRO Holding Shares in an Down-MACRO Subsequent Issuance pursuant to
paragraph (b) of this Section 2.7, or the creation of additional Up-MACRO
Holding Shares pursuant to Section [2.7(b)] of the Up-MACRO Holding Trust
Agreement, the Trustee, acting together with the Up-MACRO Holding Trustee, each
on behalf of their respective Paired Holding Trust and as instructed by the
Administrative Agent, shall adjust, on the Down-MACRO Subsequent Issuance date,
the aggregate amount of the Income Distribution Agreement and the notional
amount of the Settlement Contracts based on the Net Par Amount Change to the
Down-MACRO Aggregate Par Amount and the Up-MACRO Aggregate Par Amount, if any,
occurring due to the Down-MACRO Recapitalization Issuance.
(e) 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 an
Down-MACRO Recapitalization Issuance is unlimited.
Section 2.8 Down-MACRO Recapitalization Condition. A
Down-MACRO Recapitalization Issuance may be effected in connection with a
Down-MACRO Recapitalization Event only if, following such Down-MACRO
Recapitalization Issuance, the Down-MACRO Settlement Payment and the Up-MACRO
Settlement Payment, as applicable, that would be due in connection with a
movement in the Applicable Reference Price of Crude Oil of any specified
27
magnitude measured from any one point to any other point within the applicable
Down-MACRO or Up-MACRO Price Range would be equal to the Down-MACRO or Up-MACRO
Settlement Payment that was payable prior to such Down-MACRO Recapitalization
Issuance in connection with a movement in the Applicable Reference Price of
Crude Oil of the same magnitude. The foregoing limitation on the ability of the
Trustee, acting on behalf of the Down-MACRO Holding Trust, to effect a
Down-MACRO Recapitalization Issuance is referred to herein as the "Down-MACRO
Recapitalization Condition."
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) [ ] 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 [ ] acting as Trustee under this Trust Agreement and as trustee for
the Up-MACRO Holding Trust under the Up-MACRO Holding Trust Agreement.
(b) Without limiting the generality of the
foregoing, the Trustee is hereby authorized 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 at all times on and prior to the Closing Date, the Depositor
shall make all filings with the SEC and under state securities laws on behalf
of the Down-MACRO Holding Trust.
(c) The Trustee agrees that upon a request by the
Depositor it will use its best efforts to obtain and maintain the listing of
the Down-MACRO Holding Shares on any specified stock exchange as directed by
the Depositor. If any such request is made, the Trustee shall give notice to
the Depositor and the Administrative Agent of the date on which such Down-MACRO
Holding Shares are approved for such listing promptly, but in no event longer
than two (2) Business Days, after such listing has been obtained. Within three
(3) Business Days following receipt of notice from the Administrative Agent to
the Trustee of any actual, proposed or contemplated de-listing of such
Down-MACRO Holding Shares by any such stock exchange,
28
the Trustee, upon direction from the Depositor, will terminate any listing on
any such stock exchange.
(d) The Trustee shall be responsible for the accrual
of the Trust expenses and for payment of any expenses incurred by it in
connection with the performance of its duties under this Trust Agreement,
including, without limitation, the fees and disbursements of any Transfer Agent
and Registrar, the fees and expenses of its legal counsel, the fees and
disbursements of independent accountants 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.
Section 3.2 Representations, Warranties and Covenants of the
Trustee. [ ], 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
[ ] 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 [ ] (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 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
29
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, [except in the case
where it is instructed to do so by the Administrative Agent in connection with
a revised calculation pursuant to Section 4.1(e) hereof], 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.
(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) [ ] 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 [ ] 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.
30
(b) The Administrative Agent shall administer the
Treasuries and direct the Trustee (i) to invest the proceeds from such
Treasuries and from creations of new Down-MACRO Holding Shares and (ii) to
settle payments of Treasuries or cash or the combination of the two in
redemptions of Down-MACRO Holding Shares as provided herein, 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 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 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) [ ] 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 [ ] 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. [ ], 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
31
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 (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 [ ] (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).
(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
32
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
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.
33
(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 the Closing Date, using the Initial Deposit, (ii) 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), (iii) 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 or
the Down-MACRO Recapitalization Issuance, as applicable, that is being effected
on such Subsequent Issuance Date and (iv) on any day on a day, 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(b) and shall deliver such assets in the amounts and to the parties
entitled thereto, as specified in such Section 5.2(b).
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
34
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, 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 Treasuries in
accordance with the following "Acquisition Guidelines":
(i) all Treasuries must mature on or prior to
the next scheduled Distribution Date; and
(ii) subject to the foregoing clause (i), all
funds shall be invested in:
(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) and (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
35
(D) thereafter, to the extent that
Treasuries satisfying the foregoing subclauses (A), (B) and
(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.
(b) On each Distribution Date, the Administrative Agent
shall, subject to, and in accordance with, the Acquisition Guidelines, solicit
offers from the three (3) largest nationally recognized dealer markets in
Treasuries. 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 Amount and Up-MACRO Available
Income Accrual Amount 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.
All such Treasuries shall be allocated pro rata by type 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 other Business Day during any Calculation Period,
other than the last Business Day prior to a Distribution Date, when cash is
available in the Securities Account or the Distribution Account for
reinvestment in Treasuries, the Administrative Agent shall provide instructions
to the Trustee to purchase only Eligible Treasuries maturing prior to the next
scheduled Distribution Date, if possible, in accordance to the Acquisition
Guidelines provided in paragraph (a) of 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 Deposit 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 priority 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.
36
ARTICLE IV
CALCULATIONS
Section 4.1 Calculations on Price Determination Days.
(a) On each Price Determination Day, the
Administrative Agent shall calculate and provide to the Trustee not later than
5:00 p.m. New York City Time on such Price Determination Day:
(i) the Down-MACRO Investment Amount;
(ii) the Down-MACRO Earned Income Accrual
Amount;
(iii) the Down-MACRO Daily Fee Accrual Amount;
(iv) the Down-MACRO Asset Amount; and
(v) the Down-MACRO Underlying Value 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 Price
Determination Day, and (B) one Down-MACRO Tradeable Share calculated
by multiplying the sum reached in the foregoing subclause (A) by the
number of Down-MACRO Holding Shares held by the Down-MACRO Tradeable
Trust on such Price Determination Day and dividing this amount by the
number of Down-MACRO Tradeable Shares that are Outstanding on such
Price Determination Day. The calculation of the Down-MACRO Underlying
Value shall be based upon the Price Level Percentage Change as
calculated by the Administrative Agent.
(b) The Administrative Agent 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, (ii) the
Price Level Percentage Change as calculated by the Administrative Agent based
on the Applicable Reference Price of Crude Oil and (iii) its own calculations,
relating to the Up-MACRO Asset Amount, as it is required to calculate in
accordance with Section 4.1 of the Up-MACRO Holding Trust Agreement.
For purposes of calculating the foregoing amounts, any Paired
Optional Redemptions, Down-MACRO Recapitalization Redemptions, Down-MACRO
Proportional Mandatory Redemptions, Paired Subsequent Issuances or Down-MACRO
or Up-MACRO Recapitalization Issuances scheduled to occur on the relevant Price
Determination Day shall be disregarded.
(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 price provider, the Administrative Agent shall calculate
and provide to the Trustee (i) the Down-MACRO Income Distribution Payment, if
any, that is payable under the Income Distribution Agreement by the Down-MACRO
37
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) Not later than 7:15 p.m. New York City Time on
the Business Day preceding the Final Scheduled Termination Date, any Early
Termination Date and each Redemption Date assuming that the Applicable
Reference Price of Crude Oil has been established by the NYMEX or the
applicable substitute price provider, the Administrative Agent shall calculate
and provide to the Trustee (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 on 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 on such Final Scheduled Termination Date, Early
Termination Date or Redemption Date.
(e) The Administrative Agent's calculations,
pursuant to clauses (a) through (d) of this Section 4.1, of the Down-MACRO
Investment Amount, the Down-MACRO Earned Income Accrual Amount, the Down-MACRO
Daily Fee Accrual Amount, the Down-MACRO Asset Amount, the Down-MACRO Income
Distribution Payment and the Down-MACRO Settlement Payment 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.
(a) Not later than 4:30 p.m. New York City Time on
each Price Determination Day, the Calculation Agent shall calculate and publish
an unofficial Down-MACRO Underlying Value, for informational purposes only, in
accordance with the definition thereof, subject to receipt of, and based upon,
the following information from the relevant parties:
(i) the Applicable Reference Price of Crude Oil
from the NYMEX or from the provider of any Substitute Crude Oil Price;
(ii) the Down-MACRO Asset Amount from the
Administrative Agent pursuant to Section 4.1 of this Trust Agreement;
and
(iii) the Up-MACRO Asset Amount from the
Administrative Agent pursuant to Section 4.1 of the Up-MACRO Holding
Trust Agreement.
(b) Not later than 4:30 p.m. New York City Time on
each Price Determination Day, the Calculation Agent shall calculate and
publish, for informational purposes only, the portion of the Down-MACRO
Underlying Value that is represented by each Down-MACRO Holding Share and each
Down-MACRO Tradeable Share. Such calculation will be performed by dividing such
Down-MACRO Underlying Value by the number of Down-MACRO Holding Shares that are
Outstanding on the relevant Price Determination Day. For purposes of this
calculation, the number of Down-MACRO Holding Shares that are Outstanding on
such Price Determination Day shall include all Down-MACRO Holding Shares issued
by the Down-MACRO Holding Trust and not redeemed prior to such date, without
giving effect to any Paired Optional Redemptions or Paired Subsequent Issuances
that are scheduled to occur on such date.
38
(c) During each Price Determination Day, the
Calculation Agent shall collect intraday settlement prices from the NYMEX or
the applicable substitute price provider and, on the basis thereof, calculate
and publish on its website every fifteen (15) seconds the per share indicative
intraday value of one Down-MACRO Holding Share, (i) beginning at the earlier of
(A) 10:00 a.m. New York City Time or (B) the open of trading in futures
contracts from which the Applicable Reference Price of Crude Oil is derived and
(ii) ending at the earlier of (A) 2:30 p.m. New York City Time or (B) the close
of trading in the futures contracts from which the Applicable Reference Price
of Crude Oil is derived, the Down-MACRO Underlying Value and the portion
thereof that is represented by one Down-MACRO Holding Share, disregarding any
Paired Optional Redemptions and Paired Subsequent Issuances which may be
scheduled to occur on the date of calculation.
(d) The calculations made by the Calculation Agent
hereunder shall be made in good faith upon the basis of information reasonably
available to it, and the Calculation Agent shall not be liable for any
calculation errors contained in the data that is furnished to it by the NYMEX
or the Administrative Agent and used by it to make such calculations.
Section 4.3 Calculation of Income Distribution Payments and
Settlement Payments.
(a) Prior to each Distribution Date (i) the
Administrative Agent shall use the Price Level Percentage Change for the last
Price Determination Day preceding such Distribution Date to 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 -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 Final Scheduled Termination Date, an
Early Termination Date or any Redemption Date, the Administrative Agent shall
use the Price Level Percentage Change to determine the Down-MACRO Settlement
Payment, if any, that is payable by the Down-MACRO Holding Trust to the
Up-MACRO Holding Trust or the Up-MACRO Settlement Payment, if any, that is
payable to the Down-MACRO Holding Trust by the Up-MACRO Holding Trust pursuant
to the Settlement Contracts that are being settled on such Final Scheduled
Termination Date, Early Termination Date or Redemption Date.
Section 4.4 Calculations Relating to Paired Subsequent
Issuances. The Administrative Agent shall determine the Down-MACRO Income
Make-Whole Amount and the Up-MACRO Income Make-Whole Amount for each MACRO Unit
in accordance with the definitions set forth in Section 1.1. The Administrative
Agent's determination of the Down-MACRO Income Make-Whole Amount and the
Up-MACRO Income Make-Whole Amount, if any, required for each MACRO Unit shall
be final and binding upon all interested Persons.
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
39
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 apply 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, to deposit an amount equal to the
Down-MACRO Fee Deposit into the Fee Payment Account to apply it for
the payment of Down-MACRO Expenses incurred during the preceding
Calculation Period;
(ii) second, to apply the amount remaining in
the Fee Payment Account to 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
in connection with a Paired Optional Redemption or an Down-MACRO
Proportional Mandatory Redemption, 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 or Down-MACRO
Proportionate Mandatory Redemption Percentage, as applicable, for such
Redemption Date, and to apply such funds (A) in the case of a Paired
Optional Redemption only, 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 Redemption Date and then
(B) to make a Final Distribution to the Holders of the Down-MACRO
Holding Shares being redeemed on such Redemption Date;
(iv) fourth, to reinvest in Treasuries 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, to make 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, to allocate 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
shareholders who are registered Holders of the Down-MACRO Holding
Shares on the related Distribution Record Date.
40
(b) Distributions on Redemption Dates that are not
Distribution Dates. With respect to each Redemption Date that is scheduled to
occur on a 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 in accordance with the procedures specified in
Section 6.1(d), 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 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) to the Administrative Agent, the expenses
of negotiating and settling the purchase of Treasuries 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, Paired Subsequent Issuances and Down-MACRO
Recapitalization Issuances);
(ii) taxes, and any other governmental charges;
(iii) any taxes, fees and charges relating to a
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 Down-MACRO Tradeable Trust as required by Section 15.2;
(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 or
Down-MACRO Recapitalization Issuances of Down-MACRO Holding Shares or
Down-MACRO Tradeable Shares (including but not limited to, associated
legal, auditing, underwriting and rating agency costs); and
(vii) any other third-party expenses of the
Down-MACRO Holding Trust or the Down-MACRO Tradeable Trust not
otherwise stated above incurred by either trust, the Depositor, the
Trustee, the Down-
41
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 all other expenses
incurred by it on behalf of, or in the course of, administering the Down-MACRO
Holding Trust.
Section 5.4 Payment of Fees. On each Distribution 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 Down-MACRO Licensing
Fee for the preceding Calculation Period; and
(iv) to MacroMarkets, the Down-MACRO
Sublicensing Fee for the preceding Calculation Period;
(v) to the Calculation Agent, the Down-MACRO
Calculation Agent Fee for the preceding Calculation Period.
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 to
MacroMarkets.
Section 5.5 Payments under the Income Distribution Agreement.
(a) On each Distribution 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 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 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.
42
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 cause the Down-MACRO Holding Trust to
make to the Up-MACRO Holding Trust, the Down-MACRO Settlement Payment, if any,
from amounts on deposit in the Distribution Account. On any Redemption Date
occurring on any day other than a Distribution Date, the Trustee shall cause
the Down-MACRO Holding Trust to deliver Treasuries in accordance with Section
5.2(b) 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, one or more Authorized
Participants may direct the redemption of Paired Holding Shares by delivering a
Redemption Order to the Trustee and 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 which
are being tendered for redemption on the records of the Depository.
Alternatively, the Authorized Participants directing the Paired Optional
Redemption may be holders of Up-MACRO and/or Down-MACRO Tradeable Shares and
may deliver such shares to the Up-MACRO Tradeable Trust and/or the Down-MACRO
Tradeable Trust to be exchanged for Up-MACRO and/or Down-MACRO Holding Shares
and redeemed in a Paired Optional Redemption in accordance with the terms of
the Participants Agreement.
(b) To effectuate a Paired Optional Redemption, the
redeeming Authorized Participants which are registered holders of Paired
Holding Shares, 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.
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, 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.
In the event that the redeeming Authorized
Participants wish to present Tradeable Shares for redemption,
such Authorized Participants must transfer the requisite number of Down-MACRO
and Up-MACRO Tradeable Shares equivalent to one or more MACRO Units
43
of Paired Holding Shares plus any applicable Redemption Cash Component, to the
Trustee by 10:00 a.m. New York City Time, on the third Business Day following
the Redemption Date.
(c) The Trustee or the Administrative Agent may
reject any Redemption Order (i) if the Trustee or the Administrative Agent
determines that the Redemption Order is not in proper form, (ii) Paired Holding
Shares in a sufficient number to constitute one or more whole MACRO Units are
not presented for redemption, (iii) if the Depositor has determined and advised
the Trustee that such Redemption Order would have adverse tax consequences to
the Down-MACRO Holding Trust or the Holders of the Down-MACRO Holding Shares,
(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 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 pursuant to this
Section 6.1(c).
(d) If the date on which a Paired Optional
Redemption that is scheduled to occur is not a Distribution Date, the
Administrative Agent shall perform the following calculations and take the
following actions with respect to the Treasuries:
(i) identify each Type of Treasury on deposit
in the Down-MACRO Holding Trust on such Redemption Date;
(ii) calculate the Value of each Treasury and
the aggregate Value of the Treasuries representing each Type and, with
respect to each such Type, the product of the applicable Down-MACRO
Redemption Percentage and such aggregate Value (for each Type, the
"Redemption Percentage Value");
(iii) with respect to each Type, identify and
segregate Treasuries with an aggregate Value equal to the applicable
Redemption Percentage Value of the Treasuries of that Type and, of the
Treasuries so segregated, (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 on 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
(iv) 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
44
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.
Section 6.2 Mandatory Redemptions.
(a) On any Distribution Date following the
occurrence of an Up-MACRO Recapitalization Event and a related Up-MACRO
Recapitalization Issuance, the Trustee, upon receipt of a notice from the
Depositor pursuant to Section [ ] of the Up-MACRO Trust Agreement, shall redeem
the applicable Down-MACRO Proportionate Mandatory Redemption Percentage of the
Down-MACRO Holding Shares by making a Final Distribution to the Holders of such
Down-MACRO Holding Shares pursuant to priority third of Section 5.2(a) (such
redemption, an "Down-MACRO Proportional Mandatory Redemption").
(b) On the next Distribution Date following the
occurrence of an Down-MACRO Recapitalization Event followed by an Down-MACRO
Recapitalization Issuance, the Trustee shall redeem all Down-MACRO Holding
Shares that are Outstanding on such Distribution Date (other than the
Down-MACRO Holding Shares that are being issued as part of the Down-MACRO
Recapitalization Issuance) for a redemption price equal to $0 (such redemption,
an "Down-MACRO Recapitalization Redemption"). The Down-MACRO Holding Trust
shall have no further obligations with respect to the redeemed Down-MACRO
Holding Shares which shall cease to be Outstanding.
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 11.2, or the Final
Scheduled Termination Date, the Trustee shall redeem all of the Down-MACRO
Holding Shares that are Outstanding on such Distribution Date 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. On any
Redemption Date on which a Paired Optional Redemption occurs, the Trustee,
acting together with the Up-MACRO Holding Trustee on behalf of their respective
Paired Holding Trusts, shall settle one Settlement Contract for each MACRO Unit
of Paired Holding Shares being redeemed. On any Redemption Date on which an
Down-MACRO Proportional Mandatory Redemption occurs, the Trustee shall settle
Settlement Contracts with an aggregate amount equal to twice the Aggregate Par
Amount of Down-MACRO Holding Shares being redeemed in such redemption. No
Settlement Contracts will be settled in connection with an Down-MACRO
Recapitalization Redemption.
Section 6.5 Settlement.
(a) By 5:00 p.m. New York City Time on the Final
Scheduled Termination Date, Early Termination Date or applicable Redemption
Date, if the Trustee's account at the Depository has been credited with the
Paired Holding Shares being tendered for redemption, the Administrative Agent
has received the electronic notice of such tender and the Trustee has received
the transaction fee and the Redemption Cash Component, if applicable, payable
by the redeeming Authorized Participants in accordance with Section 2.6(e), the
Trustee shall deliver:
45
(i) if the relevant Redemption Date is 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) if the relevant date of redemption is the
Final Scheduled Termination Date, an Early Termination Date or a
Redemption 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 Trustee or the Administrative Agent may, in
its discretion, and will when so directed by the Depositor, suspend the right
of redemption, or postpone a scheduled Redemption Date:
(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; or
(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.
(c) The Down-MACRO Holding Shares redeemed on the
Final Scheduled Termination Date, an Early Termination Date or any Redemption
Date shall be cancelled by the Trustee, on behalf of the Down-MACRO Holding
Trust, in accordance with the Depository's procedures.
(d) In the event that, with regard to the redemption
procedures as set forth in this Article VI, the provisions of this Trust
Agreement and the Participants Agreement contradict in any way, the provisions
of the Participants Agreement will prevail.
46
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 or an Down-MACRO Recapitalization
Issuance by such Holder during such Calculation Period; and (B) such
Holder's interest in the Net Profit (and items thereof) of the
Down-MACRO Holding Trust on 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 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 4.3, 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 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
47
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.
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
48
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 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.
(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
49
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.
(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
50
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 Trust 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.
(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
51
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 contra ry, upon the liquidation of the Down-MACRO Holding Trust,
no Holder 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.
52
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 or an
Down-MACRO Recapitalization 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 or an
Down-MACRO Recapitalization 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).
(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).
53
(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 Light Sweet Crude Oil
Price, 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 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;
(v) the Up-MACRO Daily Fee Accrual Amount and
the Down-MACRO Daily Fee Accrual Amount on that Distribution Date;
(vi) the Down-MACRO Earned Income Accrual
Amount and the Up-MACRO Earned Income Accrual Amount on that
Distribution Date;
54
(vii) the amount of the Down-MACRO Available
Income in the Down-MACRO Holding Trust and the amount of the Up-MACRO
Available Income in the Up-MACRO Holding Trust 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 aggregate Down-MACRO Income Make-Whole
Amount associated with any MACRO Unit created during such period and
the Up-MACRO Income Make-Whole Amount associated with any MACRO Unit
created during such period and the aggregate amount of the transaction
fee payable to the Trustee;
(xii) 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;
(xiii) the net increase or decrease in the
Down-MACRO Aggregate Par Amount and the Up-MACRO Aggregate Par Amount;
(xiv) the number of Down-MACRO Holding Shares
redeemed in any mandatory redemptions during the preceding Calculation
Period, as well as the amount of cash or Treasuries delivered in such
redemptions and the number of Up-MACRO Holding Shares redeemed in any
mandatory redemptions during the preceding Calculation Period, as well
as the amount of cash and Treasuries delivered in such redemptions;
(xv) 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
55
(xvi) 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 Holder at any time
during the current calendar year a statement containing the information set
forth above. The Trustee will also furnish to each 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.
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 Trustee pursuant to Section 13.1(x).
(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 report shall be
prepared separately from any other reports prepared by the Trustee for the
Up-MACRO Holding Trust, the Down-MACRO Tradeable Trust or the Up-MACRO
Tradeable Trust.
56
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 Trustee 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;
(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, a successor Trustee or Up-MACRO Holding Trustee;
(vi) the occurrence of an Down-MACRO or
Up-MACRO Recapitalization Event;
(vii) the occurrence of a Termination Trigger;
(viii) 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;
(ix) 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
(x) 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.
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.
Neither the Depositor nor any of the directors, officers, employees or agents
of the Depositor 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 Down-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 pursuant to this Trust Agreement; provided, however, that this
provision shall not protect the Depositor or
57
any of the directors, officers, employees or agents of the Depositor 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 and any director, officer, employee or agent of the Depositor may
rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person (other than the Depositor) respecting any matters
arising hereunder.
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 (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; 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, 2.7, 3.5, 3.6, 3.7, 4.1, 4.2, 4.3, 4.4, 5.2,
6.1, 6.2, 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
59
by any of them in their capacities as 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 AND RECAPITALIZATION
--------------------------------------
Section 11.1 Recapitalization Events.
(a) If on any Price Determination Day, the
Applicable Reference Price of Crude Oil (i) decreases to an Ending Level at
which the Up-MACRO Underlying Value is less than or equal to zero and (ii)
remains at such level for a period of ten (10) consecutive Price Determination
Days, a recapitalization event with respect to the Up-MACRO Holding Shares
shall be deemed to have occurred (such event, a "Up-MACRO Recapitalization
Event").
(b) Upon the occurrence of an Up-MACRO
Recapitalization Event, all of the Outstanding Up-MACRO Holding Shares shall be
redeemed pursuant to Section 6.2 of the Up-MACRO Holding Trust Agreement and
an Up-MACRO Recapitalization Issuance may be made pursuant to Section 2.7 of
the Up-MACRO Holding Trust Agreement. If an Up-MACRO Recapitalization Issuance
is effected and if the Aggregate Par Amount of the Up-MACRO Holding Shares
issued in such Up-MACRO Recapitalization Issuance is less than twice the
Aggregate Par Amount of the Outstanding Down-MACRO Holding Shares, the Trustee
shall effect a Down-MACRO Proportional Mandatory Redemption pursuant to Section
6.2 hereof.
60
(c) If on any Price Determination Day, the
Applicable Reference Price of Crude Oil (i) increases to an Ending Level at
which the Down-MACRO Underlying Value is less than or equal to zero and (ii)
remains at such level for a period of ten (10) consecutive Price Determination
Days, a recapitalization event with respect to the Down-MACRO Holding Shares
shall be deemed to have occurred (such event, a "Down-MACRO Recapitalization
Event").
(d) Upon the occurrence of a Down-MACRO
Recapitalization Event, all of the Outstanding Down-MACRO Holding Shares shall
be redeemed pursuant to Section 6.2 of this Trust Agreement in a Down-MACRO
Recapitalization Redemption and a Down-MACRO Recapitalization Issuance may be
made pursuant to Section 2.7 hereof. If the Aggregate Par Amount of the
Down-MACRO Holding Shares issued in such Down-MACRO Recapitalization Issuance
is less than the Aggregate Par Amount of the Outstanding Up-MACRO Holding
Shares, the Trustee shall effect an Up-MACRO Proportional Mandatory Redemption
pursuant to Section 6.2 of the Up-MACRO Holding Trust Agreement.
(e) In connection with an Down-MACRO
Recapitalization Issuance made following an Down-MACRO Recapitalization Event
and an Down-MACRO Recapitalization Redemption, this Trust Agreement shall be
amended by the parties hereto to set forth the terms of the new Down-MACRO
Holding Shares, provided that no such amendment may be made in violation of the
Down-MACRO Recapitalization Condition.
Section 11.2 Termination Triggers.
(a) The Down-MACRO Holding Trust shall terminate if
any one of the following events (each, a "Termination Trigger") occurs:
(i) the Light Sweet Crude Oil Price is not
established by the NYMEX or the NYMEX refuses to make that price
available to the Administrative Agent for the purposes of calculating
the Down-MACRO Underlying Value for five consecutive Business Days, or
the NYMEX Sublicensing Agreement is terminated by the NYMEX and no
Substitute Crude Oil Price is available;
(ii) (A) a Down-MACRO Recapitalization Event
occurs and no Down-MACRO Recapitalization Issuance is made within 30
Business Days of the Down-MACRO Recapitalization Event or (B) an
Up-MACRO Recapitalization Event occurs and no Up-MACRO
Recapitalization Issuance is made within 30 Business Days of the
Up-MACRO Recapitalization Event;
(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-
61
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) if 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 will 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) Upon obtaining knowledge or receiving notice of
the occurrence of any Termination Trigger, the Trustee will give prompt notice
of that event to the Depositor, the Administrative Agent, 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 two (2) 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 two (2) or more Business
Days;
62
(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
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 Trustee becomes aware of
any Trustee Termination Event, the Trustee shall give notice thereof to the
Depositor 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;
63
(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) effecting mandatory redemptions and
recapitalizations in accordance with the provisions of Sections 6.2
and 11.1 hereof;
(ix) preparing and delivering any notices
required hereunder;
(x) preparing and distributing reports to the
Holders of the Down-MACRO Holding Shares as applicable; and
(xi) performing all of the other obligations
required of it under this Trust Agreement and the other Transaction
Documents.
(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 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
64
accordance with the direction of 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 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 Calculation Agent or 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.
(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.
65
(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.
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, willful misconduct and willful malfeasance 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
66
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 Trust 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 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
67
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 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.
(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
68
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
(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
69
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 its office
located in New York, Boston or such office as it may subsequently designate
upon notice to the other parties hereto. The books and records of the Trustee
maintained by the Trustee shall be open to inspection by any person
establishing to the Trustee's reasonable satisfaction that such person is a
Beneficial Owner upon reasonable advance notice at all reasonable times during
the usual business hours of the Trustee. The Trustee shall keep proper record
of the creation of the MACRO Units and redemption of MACRO Units at its offices
located in [New York]. Such records shall be open to inspection upon reasonable
advance notice at all reasonable times during the usual business hours of the
Trustee. Such records shall be preserved for such 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 Trustee shall prepare or cause to be
prepared, 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 Trustee 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 Calculation Agent and the Depositor, upon request, shall
each furnish the Trustee with any 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 Trustee to the Beneficial Owners
upon request.
70
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.
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 trust 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
71
(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. This Trust
Agreement may also be amended without the consent of the Holders of the
Down-MACRO Holding Shares in connection with (i) any Down-MACRO
Recapitalization Issuance following an Down-MACRO Recapitalization Event,
subject to satisfaction of the Down-MACRO Recapitalization Condition, and (ii)
any Up-MACRO Recapitalization Issuance following an Up-MACRO Recapitalization
Event, subject to satisfaction of the Up-MACRO Recapitalization Condition.
(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
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 prepare and
file a Form 8-K regarding such amendment.
72
(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 theUp-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 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 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 from time to time with copies, including
copies in electronic form, of the prospectus, in such quantities as the Trustee
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 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 13.1(a)(iii).
Section 15.3 Prospectus Delivery. The Trustee shall, if
required by the federal securities laws of the United States, in any manner
permitted by such laws, deliver at the time of issuance of Down-MACRO Holding
Shares, a copy of the relevant Prospectus, as most recently furnished to the
Trustee by the Depositor, to each person submitting a Purchase 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
73
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 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
74
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
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 from the Down-MACRO Fees.
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
75
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: ( ) [ ]
With a copy to: [ ]
Attention: [ ]
Facsimile: ( ) [ ]
If to the Trustee, to: [ ]
Attention: [ ]
Facsimile: ( ) [ ]
With a copy to: [ ]
Attention: [ ]
Facsimile: ( ) [ ]
If to the Administrative Agent, to: [ ]
Attention: [ ]
Facsimile: ( ) [ ]
With a copy to: [ ]
Attention: [ ]
Facsimile: ( ) [ ]
If to the Marketing Agent, to: [ ]
Attention: [ ]
Facsimile: ( ) [ ]
76
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
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
77
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
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:
[ ],
not in its individual capacity but solely as
Trustee
By _________________________________________
Name:
Title:
[ ]
not in its individual capacity but solely as
Administrative Agent
By _________________________________________
Name:
Title:
[ ]
not in its individual capacity but solely as
Marketing Agent
By _________________________________________
Name:
Title:
Acknowledged and Accepted By:
[ ],
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]