Template:IETA Master Agreement 14

14 Termination
14.1 Termination Rights. If, at any time, an Event of Default (as defined below) has occurred and is continuing, the Non-Defaulting Party may designate a day as an early termination date (the “Early Termination Date”) in respect of all outstanding Transactions between the Parties by giving not more than twenty (20) days’ notice to the Defaulting Party. This notice must specify the relevant Event of Default. The Early Termination Date may not be earlier than the day the notice is effective. If, however, “Automatic Early Termination” is specified in Schedule 2 (Elections) as applying to a Party then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such Party or its Credit Support Provider (as applicable) of an Event of Default specified in Clause 14.2(d)(i), (iii), (v), (vi), (vii) (Insolvency), or to the extent analogous thereto, (viii), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such Party or its Credit Support Provider (as applicable) of an Event of Default specified in Clause 14.2(d)(iv) (Insolvency) or, to the extent analogous to it, (viii).
14.2 Events of Default. Subject to Clauses 13.1, 13.4, 14.2 and 14.7 (Events of Default, Illegality, Force Majeure and Suspension Event), an “Event of Default” means the occurrence at any time with respect to a Party or, if applicable, any Credit Support Provider of that Party (the “Defaulting Party”), of any of the following events:

14.2(a) Non-payment. The Party fails to pay any amount when due under this Agreement, and that failure is not remedied on or before the third (3rd) Banking Day after the Non-Defaulting Party gives the Defaulting Party notice of that failure.

14.2(b) Representation or Warranty. Any representation or warranty made, or deemed to have been made, by the Party or any Credit Support Provider of that Party in this Agreement or any Credit Support Document proves to have been false or materially misleading at the time it was made or was deemed to have been made.

14.2(c) Material Obligations. The Party fails to perform a material obligation under this Agreement (other than an obligation referred to in Clauses 14.2(a) (Non-payment) and 14.2(b) (Representation or Warranty) and 5.3 (No Encumbrances) and that failure is not remedied within five (5) Banking Days of the Non-Defaulting Party giving the Defaulting Party notice of that failure.

14.2(d) Insolvency. The Party or any Credit Support Provider of the Party:

14.2(d)(i) is dissolved (other than pursuant to a consolidation, amalgamation or merger);

14.2(d)(ii) becomes insolvent or is unable to pay its debts generally as they fall due, fails generally to pay, or admits in writing its inability generally to pay its debts as they become due;

14.2(d)(iii) makes a general assignment, arrangement, composition or other arrangement with or for the benefit of its creditors;

14.2(d)(iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, that proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not withdrawn, dismissed, discharged, stayed or restrained in each case within thirty (30) days of the institution or presentation of that proceeding or petition;

14.2(d)(v) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

14.2(d)(vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets;

14.2(d)(vii) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and that secured party maintains possession, or that process is not withdrawn, dismissed, discharged, stayed or restrained, in each case within fifteen (15) days of that event;

14.2(d)(viii) causes or is subject to any event with respect to it that, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in sub-paragraphs (i) to (vii) (inclusive) of this Clause 14.2(d); or

14.2(d)(ix) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts referred to in this Clause 14.2(d).

14.2(e) Credit Support.

14.2(e)(i) The Party or any Credit Support Provider or Performance Assurance Provider of the Party fails to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document or Performance Assurance if that failure is not remedied within three (3) Banking Days of notification;

14.2(e)(ii) any Credit Support Document or Performance Assurance expires or terminates, is due to expire or terminate within thirty (30) days or such other period as is specified in Schedule 2 (Elections), or fails or ceases to be in full force and effect for the purpose of this Agreement (in each case other than in accordance with its terms) prior to the satisfaction of all obligations of the Party under each Transaction to which that Credit Support Document or Performance Assurance (as the case may be) relates without the written consent of the other Party and such expiration or termination is not remedied within three (3) Banking Days of notification; or

14.2(e)(iii) the Party or any Credit Support Provider or Performance Assurance Provider of that Party disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, that Credit Support Document or Performance Assurance or otherwise fails to comply with or perform its obligations under or in respect of a Credit Support Document and that failure is continuing after any applicable grace or cure period.

14.2(f) Cross Default. Unless cross default is specified not to apply to the Party in Schedule 2 (Elections), there occurs or exists:

14.2(f)(i) a default, event of default or other similar condition or event (however described) in respect of the Party or any Credit Support Provider of the Party under one or more agreements or instruments relating to Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the Cross Default Threshold that has resulted in that Indebtedness becoming due and payable under those agreements or instruments before it would otherwise have been due and payable; or

14.2(f)(ii) a default by that Party or that Credit Support Provider (individually or collectively) in making one or more payments on the due date for those purposes under those agreements or instruments in an aggregate amount of not less than the Cross Default Threshold (after giving effect to any applicable notice requirement or grace period).

14.2(g) Default under Specified Transaction. The Party or any Credit Support Provider of the Party:

14.2(g)(i) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction;

14.2(g)(ii) defaults (A) in making any payment due on the last date for that payment under the Specified Transaction, or (B) in making any payment on early termination of a Specified Transaction, after giving effect to any applicable notice requirement or grace period or, in each case where there is no applicable notice requirement or grace period, where that default continues for at least three (3) Banking Days; or

14.2(g)(iii) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or that action is taken by any Entity appointed or empowered to act on its behalf).

14.2(h) Material Adverse Change. The Party fails, within three (3) Banking Days of receipt of the notice referred to below, to provide the other Party (the “Requesting Party”) with, or increase the amount of, Performance Assurance when the Requesting Party believes in good faith that a Material Adverse Change has occurred or its exposure in respect of such Party under a continuing Material Adverse Change has increased and the Requesting Party serves written notice on that Party. For the purposes of this Event of Default, a “Material Adverse Change” has occurred if any one or more of the following events has occurred and is continuing:

14.2(h)(i) Credit Rating. If the Credit Rating (where available) of an Entity listed in paragraph (A), (B) or (C) below, each such Entity being a “Relevant Entity”, is withdrawn or downgraded below the ratings specified in Schedule 2 (Elections):

(1) the Party in question (unless all that Party’s financial obligations under this Agreement are fully guaranteed or assured under a Credit Support Document or there is a Control and Profit Transfer Agreement in place in respect of that Party); or

(2) that Party’s Credit Support Provider (other than a bank); or

(3) that Party’s Controlling Party.

14.2(h)(ii) Credit Rating of a Credit Support Provider that is a bank. If the Credit Rating of a bank serving as the Party’s Credit Support Provider is withdrawn or downgraded below Standard & Poor’s Rating Group “A-” or Moody’s Investor’s Service Inc. or Fitch Ratings Ltd. equivalent rating.

14.2(h)(iii) Failure of a Control and Profit Transfer Agreement. If any Control and Profit Transfer Agreement entered into by any Controlling Party of the Party expires (and is not renewed) or terminates in whole or in part or ceases to be in full force and effect for the purpose of this Agreement (in any case other than in accordance with its terms) prior to the satisfaction of all obligations of the Party under each Transaction.

14.2(h)(iv) Impaired Ability to Perform. If in the reasonable and good faith opinion of the Requesting Party, the ability of the Relevant Entity to perform its obligations under this Agreement, any Credit Support Document or any Control and Profit Transfer Agreement, as the case may be, is materially impaired.

14.2(h)(v) Credit Event upon Merger. If the Party or any Credit Support Provider of the Party or Controlling Party undergoes a change of control, consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, or reorganises, incorporates, reincorporates or reconstitutes into or as another Entity, or another Entity transfers all or substantially all its assets to, or reorganises, incorporates, reincorporates or reconstitutes into or as such Party or any Credit Support Provider of the Party or Controlling Party, and the creditworthiness of such Party, such Credit Support Provider or Controlling Party or the resulting surviving transferee or successor Entity is, in the reasonable and good faith opinion of the Requesting Party, materially weaker than that of the Party or such Credit Support Provider or Controlling Party, as the case may be, immediately prior to such action.

14.2(h)(vi) Decline in Tangible Net Worth. If the Tangible Net Worth of any Relevant Entity falls below the amount specified in Schedule 2 (Elections).

14.2(h)(vii) Financial Covenants. If a Party does not have a Credit Rating, any Relevant Entity fails to fulfil any of the following requirements as determined by reference to the most recent relevant financial statements:

(A) the ratio of (1) earnings before interest and taxes to (2) the sum of all interest and any amounts in the nature of interest charged to expense relating to Total Debt is for the Party or its Credit Support Provider in any fiscal year greater than the ratio specified in Schedule 2 (Elections);

(B) the ratio of (1) the amount of cash generated or employed by the Party or its Credit Support Provider in its operating activities to (2) Total Debt of the Party or its Credit Support Provider in any fiscal year is greater than the ratio specified in Schedule 2 (Elections); and

(C) the ratio of (1) Total Debt to (2) the sum of Total Debt and all paid up shareholder cash contributions to the share capital account or any other capital account of the Party or its Credit Support Provider ascribed for such purposes is less than the ratio specified in Schedule 2 (Elections).

14.2(i) Merger Without Assumption. The Party or any Credit Support Provider of the Party or Controlling Party undergoes a change of control, consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, or reorganises, incorporates, reincorporates or reconstitutes into or as another Entity, or another Entity transfers all or substantially all its assets to, or reorganises, incorporates, reincorporates or reconstitutes into or as such Party or any Credit Support Provider of the Party or Controlling Party, and, at the time of such consolidation, amalgamation, merger, transfer, reorganisation, reincorporation or reconstitution,

14.2(i)(i) the resulting surviving transferee or successor Entity fails to assume all the obligations of that Party or such Credit Support Provider or Controlling Party under this Agreement or any Credit Support Document to which it or its predecessor was a Party; or

14.2(i)(ii) the benefits of any Credit Support Document cease or fail to extend (without the consent of the Requesting Party) to the performance by such resulting surviving transferee or successor Entity of its obligations under this Agreement.

14.2(j) Repudiation of Agreement. The Party disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, this Agreement, any Schedule, any Confirmation executed and delivered by that Party or any Transaction evidenced by such a Confirmation (or such action is taken by any person or Entity appointed or empowered to operate it or act on its behalf).

14.3 Suspension following Event of Default. Notwithstanding any other provision of this Agreement, after the occurrence of either an Event of Default or an event that, with the giving of notice or the passage of time or both, would constitute an Event of Default with respect to a Party, the other Party may, in addition to any other remedies that it may have and subject to Clause 17 (Liabilities), for the period that the relevant event subsists or, if shorter, thirty (30) days, do any one or more of the following:

14.3(a) withhold or suspend payments under this Agreement; or

14.3(b) suspend its compliance with Clauses 5 (Allowance Transfers) and 6 (Effecting Transfers) or both of them.

14.4 Survival of Obligations. Any obligation of a Party that would have become due under a Transaction but for Clause 14.3 (Suspension following Event of Default) will, notwithstanding the occurrence of the last scheduled due date for performance by that Party under that Transaction, become due (together with interest in accordance with Clause 9.5 (Interest)) on the first to occur of (a) the date that the relevant event ceases to subsist, or (b) thirty (30) days following the occurrence of such event.
14.5 Early Termination Date. If notice designating an Early Termination Date is given under Clause 14.1 (Termination Rights), the Early Termination Date occurs on the date so designated even if the circumstances giving rise to the Event of Default are no longer continuing. Upon the effective designation of an Early Termination Date: (a) no further payments or compliance with Clauses 5 (Allowance Transfers) or 6 (Effecting Transfers) or both of them is required in respect of any Transaction, and (b) the amount, if any, payable in respect of an Early Termination Date is to be determined pursuant to Clause 14.6 (Termination Payments).
14.6 Termination Payments.

14.6(a) On, or as soon as reasonably practicable after, the Early Termination Date, the Non- Defaulting Party shall in good faith calculate the termination payment (the “Termination Payment”), which is an amount equal to:

14.6(a)(i) the Loss for all Transactions unless the Market Amount is specified as the Termination Payment method in Schedule 2 (Elections) (in which case it is the Market Amount); and

14.6(a)(ii) the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-Defaulting Party,

less the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party.

14.6(b) The Non-Defaulting Party shall notify the Defaulting Party of the Termination Payment including detailed support for the Termination Payment calculation.

14.6(c) A Party is not required to enter into Replacement Transactions in order to determine the Termination Payment.

14.6(d) If the Termination Payment is a positive number, the Defaulting Party shall pay the Termination Payment to the Non-Defaulting Party within three (3) Banking Days of invoice or notification of the Termination Payment amount (the “Termination Payment Date”), which amount bears interest in accordance with Clause 9.5 (Interest).

14.6(e) If the Termination Payment is a negative number, the Non-Defaulting Party shall pay an amount equal to the absolute value of the Termination Payment to the Defaulting Party within thirty (30) Banking Days of the Termination Payment Date, which amount bears interest in accordance with Clause 9.5 (Interest).

14.6(f) The Non-Defaulting Party may, at its option, set off the Termination Payment against any other amounts owing (whether or not matured, contingent or invoiced) between the Parties under this Agreement or under any other agreements, instruments or undertakings between the Parties. The right of set-off is without prejudice and in addition to any other right of set-off, combination of accounts, lien, charge or other right to which any Party is at any time otherwise entitled (whether by operation of law, by contract or otherwise). If an amount is unascertained, the Non-Defaulting Party may reasonably estimate the amount to be set off. The Parties shall make any adjustment payment required within three (3) Banking Days of the amount becoming ascertained.

14.6(g) Disputed amounts under this Clause 14.6 are to be paid by the Defaulting Party subject to refund with interest calculated in accordance with Clause 9.5(b) (Interest) if the dispute is resolved in favour of the Defaulting Party.

14.7 Illegality. If, due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after that date, it becomes unlawful (other than as a result of a breach by the relevant Party of Clause 4.2 (Holding Accounts and Registries)) for a Party (the “Affected Party”):

14.7(a) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of that Transaction or to comply with any other material provision of this Agreement relating to that Transaction; or

14.7(b) to perform, or for any Credit Support Provider of that Party to perform, any contingent or other obligation that the Party (or that Credit Support Provider) has under any Credit Support Document relating to that Transaction (in either case, an “Illegality”),

then, unless the Parties otherwise agree in writing, either Party may elect to terminate that Transaction in accordance with Clauses 14.1 (Termination Rights), 14.5 (Early Termination Date) and 14.6 (Termination Payments), except that, for the purposes of Clause 14.1 (Termination Rights), either Party may designate an Early Termination Date and, for the purposes of Clause 14.6 (Termination Payments), (i) the Termination Payment shall be calculated in the Termination Currency on the basis of Loss and (ii) references to the Defaulting Party are to be read as references to the Affected Party, references to the Non-Defaulting Party are to be read as references to the Party that is not the Affected Party, and references to “all Transactions” are to be read as references to only those Transactions affected by the Illegality (“Illegality Affected Transactions”). However, if both Parties are Affected Parties, each Party will determine its Loss in respect of the affected Transaction and an amount will be payable in the Termination Currency equal to one half of the difference between the Loss of the Party with the higher Loss (“X”) and the Loss of the Party with the lower Loss (“Y”). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of such amount to Y.
14.8 Event of Default, Illegality, Force Majeure and Suspension Event. If an event or circumstance that would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it is to be treated as an Illegality and does not constitute an Event of Default. If an event or circumstance that would otherwise constitute or give rise to Force Majeure or to a Suspension Event (as the case may be) also constitutes an Illegality, it is to be treated as an Illegality and does not constitute Force Majeure or a Suspension Event.
14.9 Change in Taxes. If change in taxes is specified as applying in Schedule 2 (Elections) and, due to any action taken by a taxing authority or brought in a court of competent jurisdiction on or after the date on which a Transaction is entered into (regardless of whether that action is taken or brought with respect to a Party) or to a Change in Tax Law, a Party (the “Affected Tax Party”) will, or there is a substantial likelihood that it will, on the next Payment Due Date either:

14.9(a) be required to pay an amount in respect of a Relevant Tax; or

14.9(b) receive a payment from which an amount is required to be deducted or withheld for or on account of a Relevant Tax and no additional amount is required to be paid in respect of that Relevant Tax,

other, in either case, than in respect of interest payable under this Agreement (a “Relevant Change in Tax”), then the Affected Tax Party may give a notice electing to terminate, liquidate and accelerate any uncompleted portions of that Transaction in accordance with Clauses 14.1 (Termination Rights), 14.5 (Early Termination Date) and 14.6 (Termination Payments), except that, for the purposes of Clause 14.1 (Termination Rights), either Party may designate an Early Termination Date and, for the purposes of Clause 14.5 (Early Termination Date) and 14.6 (Termination Payments), references to the Defaulting Party are to be read as references to the Affected Tax Party, references to the Non-Defaulting Party are to be read as references to the Party that is not the Affected Tax Party, references to “all Transactions” are to be read as references to only those Transactions affected by the Relevant Change in Tax, and the notice given by the Affected Tax Party electing to terminate, liquidate and accelerate any uncompleted portions of the Transaction is deemed to be the notice to terminate, liquidate and accelerate to be given by the Non-Defaulting Party for the purposes of Clause 14.1 (Termination Rights). However, if both Parties are Affected Tax Parties, each Party shall determine its Termination Payment in respect of all Transactions and an amount will be payable in the Termination Currency equal to one half of the difference between the Termination Payment of the Party with the higher Termination Payment (“X”) and the Termination Payment of the Party with the lower Termination Payment (“Y”). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of such amount to Y.