Talk:Change in Law - Commodity Definitions Provision

If “Change in Law” applies and a Change in Law occurs, the Hedging Party may terminate the affected portion of the Transaction upon at least two Business Days’ notice to the other party specifying the date of such termination (or such lesser notice as may be required to comply with the Change in Law). Upon such notice the Transaction will terminate and the Hedging Party will determine the Cancellation Amount payable by one party to the other in good faith using commercially reasonable procedures as of the date the Transaction was terminated (or such other dates as would be commercially reasonable), which may include dealer quotations, market data and Hedging Party’s internal pricing and valuation models for similar transactions with third parties. In this section:

“Cancellation Amount” means the gains or losses the Hedging Party would incur under prevailing circumstances in replacing (i) the material terms of the Transaction, including payments and deliveries scheduled for after termination and (ii) any option rights under the Transaction. “Change in Law” means that due to any change in any Rule, or any Regulator promulgating or changing its interpretation of any Rule, after the Trade Date, the Hedging Party determines in good faith that it is not permitted by such Rule to hold, acquire or dispose of its Hedge Positions, including where such change the Hedging Party’s Hedge Positions would exceed any permitted position limits on any exchange or trading facility (it being within the Hedging Party’s sole discretion to determine which of its positions count towards any such limit).

“Hedge Position” means any position in commodities, exchange-traded commodity derivatives or over-the-counter commodity derivatives entered into in order to hedge the Hedging Party’s obligations under this Transaction.

“Hedging Party” means the party specified as such in the Confirmation or, if none, either party.

“Regulator” means any court, tribunal or regulatory authority with competent jurisdiction.

“Rule” means any applicable law, regulation or rule binding on the hedging Party, including the rules of any Exchange.