Template:Nutshell Equity Derivatives 1.45

Section 1.45. Knock-out Event.

1.45(a) If “Knock-out Event” applies then unless otherwise specified in the related Confirmation, a party's right to exercise an Option under an Option Transaction and its right to receive, or its obligation to make, a payment or delivery under an Option Transaction (once exercised or deemed exercised), a Forward Transaction or Equity Swap Transaction where such right or obligation is subject to a Knock-out Event shall be conditional upon the Knock-out Event not having occurred on any Knock-out Determination Day as of the time of such exercise, deemed exercise, payment or delivery, and the parties shall have any other rights and obligations set forth in the related Confirmation from and after the occurrence of the Knock-out Event.

1.45(b) “Knock-out Event” means the event or occurrence specified as such in the related Confirmation. In the event that the related Confirmation does not specify such an event or occurrence but specifies a Knock-out Reference Security and/or a Knock-out Price, a Knock-out Event shall occur for a Transaction for which such Knock-out Reference Security is also the Index, Share or Basket specified in the related Confirmation: (i) where, on the Trade Date, the Knock-out Price is greater than the Initial Price, Strike Price, Forward Price or other initial level set for the Transaction, when the level, price or amount of the Knock-out Reference Security determined as of the Knock-out Valuation Time on any Knock-out Determination Day is greater than or equal to the Knock-out Price; and (ii) where, on the Trade Date, the Knock-out Price is less than the Initial Price, Strike Price, Forward Price or other initial level set for the Transaction, when the level, price or amount of the Knock-out Reference Security determined as of the Knock-out Valuation Time on any Knock-out Determination Day is less than or equal to the Knock-out Price. In the event of a dispute between the parties as to whether a Knock-out Event has occurred, the Calculation Agent shall determine whether a Knock-out Event has occurred.

1.44. Knock-in Event.

(a) If “Knock-in Event” applies, a party’s right to exercise an Option under an Transaction such Option will be conditional upon the Knock-in Event occurring on any Knock-in Determination Day as of the time of such exercise and the parties’ respective rights and obligations will be altered from the occurrence of the Knock-in Event as specified in the Confirmation.

(b) “Knock-in Event” must be specified in the Confirmation. If it is not, but the Confirmation specifies a Knock-in Price for a Knock-in Reference Security that is also the specified Index, Share or Basket for that Transaction, the Knock-in Event will occur:

(i) If the Knock-in Price on the Trade Date was higher than the initial level set for the Transaction: when the level of the Knock-in Reference Security at the Knock-in Valuation Time on any Knock-in Determination Day is at least equal to the Knock-in Price; and

(ii) If the Knock-in Price on the Trade Date was lower than the initial level set for the Transaction: when the level of the Knock-in Reference Security at the Knock-in Valuation Time on any Knock-in Determination Day is equal to or lower than the Knock-in Price.

If the parties cannot agree whether a Knock-in Event has occurred, the Calculation Agent will decide.