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| {{pgmslaprov|11}} '''{{pgmslaprov|Consequences of an Event of Default}}''' <br> | | {{pgmslaprov|11}} '''{{pgmslaprov|Consequences of an Event of Default}}''' <br> |
| {{pgmslaprov|11.1}} If an {{pgmslaprov|Event of Default}} occurs to either Party: <br> | | {{pgmslaprov|11.1}} If an {{pgmslaprov|Event of Default}} happens to either Party: <br> |
| {{pgmslaprov|11.2}} {{pgmslaprov|Borrower}}’s obligations under the {{pgmslaprov|Agreement}} will be accelerated so as to require immediate performance at the time of the {{pgmslaprov|Event of Default}} (the '''{{pgmslaprov|Termination Date}}'''). Performance will happen as follows.<br> | | {{Nutshell Pledge GMSLA 11.2}} |
| :{{pgmslaprov|11.2(a)}} The {{pgmslaprov|Non-Defaulting Party}} will determine the {{pgmslaprov|Default Market Value}} of the {{pgmslaprov|Borrower}}’s delivery and payment obligations as at the {{pgmslaprov|Termination Date}} as set out in paragraph {{pgmslaprov|11.4}}.
| | {{Nutshell Pledge GMSLA 11.3}} |
| :{{pgmslaprov|11.2(b)}} Using those {{pgmslaprov|Default Market Value}}, [the {{pgmslaprov|Non-Defaulting Party}} will determine ''and notify'']<ref>Well, we ''assume'' it will be the [[Non-Defaulting Party - Pledge GMSLA Provision|NDP]]: the {{pgmsla}} rather brilliantly puts it into an unattributed [[passive]], as if God is going to to it, or it will magically happen by itself. Go, {{islacds}}.</ref>what each Party owes under this Agreement as at the {{pgmslaprov|Termination Date}}, converting amounts into the {{pgmslaprov|Base Currency}} where necessary, will set those sums off against each other and Party owing the greater amount must pay the balance on the {{pgmslaprov|Business Day}} after notification.
| | {{Nutshell Pledge GMSLA 11.4}} |
| {{pgmslaprov|11.3}} The {{pgmslaprov|Non-Defaulting Party}} will determine the '''{{pgmslaprov|Default Market Value}}''' of any {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} according to paragraphs {{pgmslaprov|11.4}} to {{pgmslaprov|11.6}}, where the '''{{pgmslaprov|Appropriate Market}}''' is the most appropriate market for {{pgmslaprov|Securities}} of that description, as determined by the {{pgmslaprov|Non-Defaulting Party}}, the '''{{pgmslaprov|Default Valuation Time}}''' means the {{pgmslaprov|Close of Business}} in the {{pgmslaprov|Appropriate Market}} on the fifth dealing day after the {{pgmslaprov|Termination Date}}, '''{{pgmslaprov|Net Value}}''' means the {{pgmslaprov|Non-Defaulting Party}}’s reasonable opinion of their fair {{pgmslaprov|Market Value}} less (where {{pgmslaprov|Lender}} is the {{pgmslaprov|Defaulting Party}}) or plus (where {{pgmslaprov|Borrower}} is the {{pgmslaprov|Defaulting Party}}), all reasonable costs of any transaction needed under paragraph {{pgmslaprov|11.4}} or {{pgmslaprov|11.5}} ('''{{pgmslaprov|Transaction Costs}}''').
| | {{pgmslaprov|11.5}} '''Where there’s no [[commercially reasonable]] value''': If, having tried in [[good faith]], the {{pgmslaprov|Non-Defaulting Party}} has not been able to sell nor purchase {{pgmslaprov|Securities}} under paragraph {{pgmslaprov|11.4(a)}} or obtain quotations under paragraph {{pgmslaprov|11.4(b)}}, or it considers the quotations it did obtain are not commercially reasonable, it may determine the {{pgmslaprov|Net Value}} of the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} and treat that as their {{pgmslaprov|Default Market Value}}. <br> |
| {{pgmslaprov|11.4}} If, between the {{pgmslaprov|Termination Date}} and the {{pgmslaprov|Default Valuation Time}}, as {{pgmslaprov|Non-Defaulting Party}} :
| | {{pgmslaprov|11.6}} If the {{pgmslaprov|Non-Defaulting Party}} has not determined the {{pgmslaprov|Default Market Value}} under {{pgmslaprov|11.4}}, it will equal the {{pgmslaprov|Net Value}} of the securities in question at the {{pgmslaprov|Default Valuation Time}}. However, if the {{pgmslaprov|Non-Defaulting Party}} determines it is not practicable to calculate a [[commercially reasonable]] {{pgmslaprov|Net Value}} at that time, the {{pgmslaprov|Default Market Value}} will be the {{pgmslaprov|Net Value}} it determines as soon as reasonably practicable after the {{pgmslaprov|Default Valuation Time}}. <br> |
| :{{pgmslaprov|11.4(a)}} {{pgmslaprov|Borrower}} has sold, or {{pgmslaprov|Lender}} has purchased, [[fungible]] {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} it may treat as the {{pgmslaprov|Default Market Value}}:
| | {{Nutshell Pledge GMSLA 11.7}} |
| ::{{pgmslaprov|11.4(a)(i)}} in the case of such a sale by {{pgmslaprov|Borrower}} as {{pgmslaprov|Non-Defaulting Party}}, the net proceeds of such sale after deducting all {{pgmslaprov|Transaction Costs}}; provided that, where the {{pgmslaprov|Securities}} sold are not identical in amount to the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}}, {{pgmslaprov|Borrower}} as {{pgmslaprov|Non-Defaulting Party}} may, acting [[in good faith]], either
| | {{pgmslaprov|11.8}} '''{{pgmslaprov|Set-off}}''': The {{pgmslaprov|Non-Defaulting Party}} may [[set off]] any amount due under paragraph {{pgmslaprov|11.2(b)}} against any amount payable the other way under any other agreement between the {{pgmslaprov|Parties}}. The {{pgmslaprov|Non Defaulting Party}} may estimate any [[unascertained obligation]] but must account for any difference once finally ascertained. This paragraph does not create a [[security interest]], or prejudice any other rights either party may have. <br> |
| :::(A) elect to treat such net proceeds of sale divided by the amount of {{pgmslaprov|Securities}} sold and multiplied by the amount of the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} as the {{pgmslaprov|Default Market Value}} or
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| :::(B) elect to treat such net proceeds of sale of the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} actually sold as the {{pgmslaprov|Default Market Value}} of that proportion of the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}}, <br>
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| ::and, in the case of (B), the {{pgmslaprov|Default Market Value}} of the balance of the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} shall be determined separately in accordance with the provisions of this paragraph {{pgmslaprov|11.4}}; or
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| ::{{pgmslaprov|11.4(a)(ii)}} in the case of such a purchase by {{pgmslaprov|Lender}} as {{pgmslaprov|Non-Defaulting Party}}, the aggregate cost of such purchase, including all {{pgmslaprov|Transaction Costs}}; provided that, where the {{pgmslaprov|Securities}} purchased are not identical in amount to the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}}, {{pgmslaprov|Lender}} as {{pgmslaprov|Non-Defaulting Party}} may, acting in good faith, either
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| :::(A) elect to treat such aggregate cost divided by the amount of {{pgmslaprov|Securities}} purchased and multiplied by the amount of the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} as the {{pgmslaprov|Default Market Value}} or
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| :::(B) elect to treat the aggregate cost of purchasing the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} actually purchased as the {{pgmslaprov|Default Market Value}} of that proportion of the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}},
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| ::and, in the case of (B), the {{pgmslaprov|Default Market Value}} of the balance of the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} shall be determined separately in accordance with the provisions of this paragraph {{pgmslaprov|11.4}};
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| :{{pgmslaprov|11.4(b)}} the {{pgmslaprov|Non-Defaulting Party}} has received, where the {{pgmslaprov|Non-Defaulting Party}} is {{pgmslaprov|Borrower}}, [[bid]] quotations or, where the {{pgmslaprov|Non-Defaulting Party}} is {{pgmslaprov|Lender}}, [[offer]] quotations in respect of {{pgmslaprov|Securities}} which form part of the same issue and are of an identical type and description as the relevant {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} from two or more market makers or regular dealers in the {{pgmslaprov|Appropriate Market}} in a commercially reasonable size (as determined by the {{pgmslaprov|Non-Defaulting Party}}) the {{pgmslaprov|Non-Defaulting Party}} may elect to treat as the {{pgmslaprov|Default Market Value}} of the relevant {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}}:
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| ::{{pgmslaprov|11.4(b)(i)}} the price quoted (or where more than one price is so quoted, the arithmetic mean of the prices so quoted) by each of them for, where the {{pgmslaprov|Non-Defaulting Party}} is {{pgmslaprov|Borrower}}, the purchase by the relevant market marker or dealer of such {{pgmslaprov|Securities}} or, where the {{pgmslaprov|Non-Defaulting Party}} is {{pgmslaprov|Lender}}, the sale by the relevant market maker or dealer of such {{pgmslaprov|Securities}}, provided that such price or prices quoted may be adjusted in a commercially reasonable manner by the {{pgmslaprov|Non-Defaulting Party}} to reflect accrued but unpaid coupons not reflected in the price or prices quoted in respect of such {{pgmslaprov|Securities}};
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| ::{{pgmslaprov|11.4(b)(ii)}} after deducting, in the case where the {{pgmslaprov|Non-Defaulting Party}} is {{pgmslaprov|Borrower}}, or adding, in the case where the {{pgmslaprov|Non-Defaulting Party}} is {{pgmslaprov|Lender}}, the {{pgmslaprov|Transaction Costs}} which would be incurred or reasonably anticipated in connection with such transaction.
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| {{pgmslaprov|11.5}} If, acting in [[good faith]], either
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| :(A) the {{pgmslaprov|Non-Defaulting Party}} has endeavoured but been unable to sell or purchase {{pgmslaprov|Securities}} in accordance with paragraph {{pgmslaprov|11.4(a)}} above or to obtain quotations in accordance with paragraph {{pgmslaprov|11.4(b)}} above (or both) or
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| :(B) the Non- {{pgmslaprov|Defaulting Party}} has determined that it would not be commercially reasonable to sell or purchase {{pgmslaprov|Securities}} at the prices bid or offered or to obtain such quotations, or that it would not be commercially reasonable to use any quotations which it has obtained under paragraph 11.4(b) above <br>
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| the {{pgmslaprov|Non-Defaulting Party}} may determine the {{pgmslaprov|Net Value}} of the relevant {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} (which shall be specified) and the {{pgmslaprov|Non-Defaulting Party}} may elect to treat such {{pgmslaprov|Net Value}} as the {{pgmslaprov|Default Market Value}} of such {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}}.
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| {{pgmslaprov|11.6}} To the extent that the {{pgmslaprov|Non-Defaulting Party}} has not determined the {{pgmslaprov|Default Market Value}} in accordance with paragraph {{pgmslaprov|11.4}}, the {{pgmslaprov|Default Market Value}} of the relevant {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} shall be an amount equal to their {{pgmslaprov|Net Value}} at the {{pgmslaprov|Default Valuation Time}}; provided that, if at the {{pgmslaprov|Default Valuation Time}} the {{pgmslaprov|Non-Defaulting Party}} reasonably determines that, owing to circumstances affecting the market in the {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} in question, it is not reasonably practicable for the {{pgmslaprov|Non-Defaulting Party}} to determine a {{pgmslaprov|Net Value}} of such {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} which is commercially reasonable (by reason of lack of tradable prices [[or otherwise]]), the {{pgmslaprov|Default Market Value}} of such {{pgmslaprov|Equivalent}} {{pgmslaprov|Securities}} shall be an amount equal to their {{pgmslaprov|Net Value}} as determined by the {{pgmslaprov|Non-Defaulting Party}} as soon as reasonably practicable after the {{pgmslaprov|Default Valuation Time}}. <br> | |
| {{pgmslaprov|11.7}} '''{{pgmslaprov|Other costs, expenses and interest payable in consequence of an Event of Default}}''': The {{pgmslaprov|Defaulting Party}} shall be liable to the {{pgmslaprov|Non-Defaulting Party}} for the amount of all reasonable legal and other professional expenses incurred by the {{pgmslaprov|Non-Defaulting Party}} in connection with or as a consequence of an {{pgmslaprov|Event of Default}}, together with interest thereon at such rate as is agreed by the Parties and specified in paragraph 10 of the Schedule or, failing such agreement, the overnight [[LIBOR]] as at 11.00 a.m., London time, on the date on which it is to be determined or, in the case of an expense attributable to a particular transaction and, where the Parties have previously agreed a rate of interest for the transaction, that rate of interest if it is greater than [[LIBOR]]. Interest will accrue daily on a compound basis. <br> | |
| {{pgmslaprov|11.8}} '''{{pgmslaprov|Set-off}}''': Any amount payable to one Party (the {{pgmslaprov|Payee}}) by the other Party (the {{pgmslaprov|Payer}}) under paragraph {{pgmslaprov|11.2(b)}} may, at the option of the {{pgmslaprov|Non-Defaulting Party}}, be reduced by its [[set-off]] against any amount payable (whether at such time or in the future or upon the occurrence of a contingency) by the {{pgmslaprov|Payee}} to the {{pgmslaprov|Payer}} (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement between the {{pgmslaprov|Payee}} and the {{pgmslaprov|Payer}} or instrument or undertaking issued or executed by one Party to, or in favour of, the other Party. If an obligation is unascertained, the {{pgmslaprov|Non-Defaulting Party}} may in [[good faith]] estimate that obligation and set off in respect of the estimate, subject to accounting to the other Party when the obligation is ascertained. Nothing in this paragraph shall be effective to create a charge or other security interest. This paragraph shall be [[without prejudice]] and in addition to any right of [[set-off]], [[combination of accounts]], [[lien]] or other right to which any {{pgmslaprov|Party}} is at any time otherwise entitled (whether by operation of law, contract or otherwise). <br> | |
11 Consequences of an Event of Default
11.1 If an Event of Default happens to either Party:
11.2 Acceleration: Borrower’s obligations will be accelerated as at the time of the Event of Default (the Termination Date) as follows:
- 11.2(a) The Non-Defaulting Party will determine the Default Market Value of the Borrower’s delivery and payment obligations under paragraph 11.4 as at the Termination Date.
- 11.2(b) Using those values, [the Non-Defaulting Party will determine and notify][1]what each Party owes as at the Termination Date, converting amounts into the Base Currency at the Spot Rate where necessary, and will set those sums off against each other. The Party owing the greater amount must pay the difference on the Business Day after notification.
11.3 The Default Market Value of any Equivalent Securities will be determined under paragraphs 11.4 to 11.6 below, where:
- Appropriate Market is the most appropriate market for any securities determined by the Non-Defaulting Party;
- Default Valuation Time means the Close of Business in the Appropriate Market on the fifth dealing day after the Event of Default;
- Net Value of any securities means the Non-Defaulting Party’s reasonable opinion of their fair Market Value less (where Lender is the Defaulting Party) or plus (where Borrower is the Defaulting Party), all reasonable costs of any transaction needed under paragraph 11.4 or 11.5 (Transaction Costs).
11.4 Transactions and quotes: If, between the Termination Date and the Default Valuation Time:
- 11.4(a) Actual sale or purchase: as Non-Defaulting Party, the Borrower has sold or the Lender has purchased, fungible Equivalent Securities it may treat as the Default Market Value the net proceeds of any sale (after deducting Transaction Costs) or the total cost of any purchase (including Transaction Costs). Were the securities sold or purchased are not in identical in amount to the Equivalent Securities, Non-Defaulting Party may in good faith pro rate those values to determine the necessary Default Market Value.
- 11.4(b) Market quotes: the Non-Defaulting Party has received bids (where it is Borrower) or offers (where it is Lender) for fungible Equivalent Securities from at least two regular participants in the Appropriate Market in what it determines to be a commercially reasonable size, it may treat as the Default Market Value the arithmetic mean of the quoted prices as reasonably adjusted to account for for accrued but unpaid interest and Transaction Costs.
11.5 Where there’s no commercially reasonable value: If, having tried in good faith, the Non-Defaulting Party has not been able to sell nor purchase Securities under paragraph 11.4(a) or obtain quotations under paragraph 11.4(b), or it considers the quotations it did obtain are not commercially reasonable, it may determine the Net Value of the Equivalent Securities and treat that as their Default Market Value.
11.6 If the Non-Defaulting Party has not determined the Default Market Value under 11.4, it will equal the Net Value of the securities in question at the Default Valuation Time. However, if the Non-Defaulting Party determines it is not practicable to calculate a commercially reasonable Net Value at that time, the Default Market Value will be the Net Value it determines as soon as reasonably practicable after the Default Valuation Time.
11.7 Costs and expenses following an Event of Default: The Defaulting Party must pay the Non-Defaulting Party’s reasonable professional expenses in connection with the Event of Default plus interest at the rate agreed by the Parties or, failing that, the overnight LIBOR rate as at 11.00 a.m., London time. Interest will accrue and compound daily.
11.8 Set-off: The Non-Defaulting Party may set off any amount due under paragraph 11.2(b) against any amount payable the other way under any other agreement between the Parties. The Non Defaulting Party may estimate any unascertained obligation but must account for any difference once finally ascertained. This paragraph does not create a security interest, or prejudice any other rights either party may have.