Template:Nutshell Pledge GMSLA 11

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]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.