Exhibit 2.1
AMENDED AND RESTATED INDEMNITY
AGREEMENT
THIS AMENDED AND RESTATED INDEMNITY
AGREEMENT (“Agreement”), dated this 2nd day
of November, 2005, is entered into between The Options Clearing
Corporation, a Delaware corporation (the “Clearing
Corporation”) and Pacific Exchange, Inc., a Delaware
corporation (“Exchange”).
RECITALS
WHEREAS , the Clearing Corporation and Exchange are
parties to the Restated Participant Exchange Agreement
(“Participant Exchange Agreement”), dated July 28,
1983, as amended, under the terms of which the Clearing Corporation
has agreed to issue options and to clear and settle trades on
options listed and traded by Exchange; and
WHEREAS , Exchange desires to list and trade options on
exchange traded funds (“ETFs”) based on proprietary
securities indexes without obtaining licenses to trade such options
from the owners of such indexes, and to have the Clearing
Corporation issue such options and to clear and settle such trades
pursuant to the provisions of the Participant Exchange
Agreement;
WHEREAS , the Clearing Corporation is willing to do so
on the condition that Exchange enter into this
Agreement;
WHEREAS , Exchange and the Clearing Corporation
acknowledge and agree that nothing contained in this Agreement
shall constitute a legal waiver or equitable estoppel concerning
the rights of the Exchange or the Clearing Corporation or their
respective parents, subsidiaries, or affiliates to assert any and
all defenses or claims against third parties in connection with any
current or future dispute, claim, arbitration or
litigation;
NOW THEREFORE
, in consideration of the premises
and of the mutual covenants, terms and conditions set forth herein,
and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. ETF Options .
The Clearing Corporation agrees to issue options on ETFs
(“ETF Options”) listed and traded on Exchange, and to
clear and settle those trades in accordance with the terms of the
Participant Exchange Agreement and the applicable rules of the
Clearing Corporation, whether or not Exchange has obtained a
license to trade such options from the owner of the securities
index upon which the underlying ETF is based; provided that, before
initiating trading in options on any particular ETF, the Exchange
has been advised that the Clearing Corporation’s outside
counsel has delivered either (a) an opinion satisfactory to
management of the Clearing Corporation as to the legality of
clearing options on the particular ETF, or (b) an opinion
satisfactory to such management as to the legality of clearing
unlicensed ETF options generally, which such management deems
applicable to options on the particular ETF, and provided further
that the Clearing Corporation reserves the right, without waiving
its rights under this Agreement: (i) to cease issuing any ETF
Options; and (ii) to cease clearing and settling trades on
such ETF Options, if (w) the Opinion and
Order of Judge Denise Cote dated
September 15,2004, in The Nasdaq Stock Market Inc. v.
Archipelago Holding, LLC, et al , 03 CV 8231 (DLC), presently
pending in the United States District Court for the Southern
District of New York, is withdrawn, modified or reversed for any
reason; (x) the Opinion and Order of Judge Harold Baer, Jr.,
dated September 1, 2005, in The McGraw-Hill
Companies, Inc. v. International Securities
Exchange, Inc., et al , 05 Civ. 112 (HB), presently under
appeal to the United States Court of Appeals for the Second
Circuit, is withdrawn, modified or reversed for any reason; (y) the
reasoning of either Opinion is disapproved in pertinent part or is
not followed by another court in a jurisdiction in which either the
Exchange or the Clearing Corporation is resident in a way that
would tend to derogate the right of Exchange to trade or the
Clearing Corporation to issue, clear and settle ETF Options; or (z)
in the discretion of the Clearing Corporation, accumulated
potential damages from the unlicensed trading in ETF Options may
exceed, in the reasonable judgment of the Clearing Corporation,
Exchange’s ability to perform its obligations to indemnify
the Clearing Corporation, provided that, before exercising that
discretion, the Clearing Corporation shall first provide the
Exchange with a reasonable ability to present the Clearing
Corporation evidence that it can meet its indemnification
obligations. In the event that the Clearing Corporation exercises
its rights under the preceding sentence, the Clearing Corporation
will continue to accept for clearance and settlement transactions
having the effect of closing out open positions except to the
extent it is prohibited from doing so by the action of any court or
regulatory authority having jurisdiction over it.
2. Indemnification
Obligations . Exchange agrees to defend, indemnify
and hold harmless the Clearing Corporation and each of its
directors, officers, committee members, employees and agents (each
an “Indemnified Party”) against and from any and all
liabilities, judgments, claims, losses, damages, expenses
(including reasonable attorney’s fees and expenses) and
amounts incurred and/or paid in settlement (collectively referred
to as “Losses”) (whether or not, in the case of the
Clearing Corporation, such Losses are reimbursable by pro rata
charges to the Clearing Fund contributions of clearing members of
the Clearing Corporation) in connection with any action, suit,
litigation, claim or proceeding commenced by any person, asserted
against an Indemnified Party or to which an Indemnified Party is
made a party defendant or is threatened to be made such a party, or
is subjected to discovery or testimonial obligations, whether
before or after the date of this Agreement, arising out of or based
on: (i) any allegation that Exchange does not have the right
to list and trade any ETF Options; or (ii) any allegation that
the listing and trading of an ETF Option by Exchange, the issuance
by the Clearing Corporation of an ETF Option so listed and traded,
or the clearance and settlement of such trade by the Clearing
Corporation, constitutes unfair competition or infringes,
interferes with or misappropriates the intellectual property,
contrac
