Template:Nutshell Equity Derivatives 12

Article 12 Extraordinary Events
12.1. General Provisions Relating to Extraordinary Events.

12.1(a) “Extraordinary Event” means a Merger Event, Tender Offer, Index Adjustment Event, Nationalization, Insolvency, Delisting or Additional Disruption Event.

12.1(b) A “Merger Event” relating to any Shares means:

(i) a mandatory requirement to transfer all of those Shares to another entity;

(ii) the Issuer merges with another entity (except where the Issuer is the continuing entity and the Shares are not changed)

(iii) any entity offers to acquire 100% of the outstanding Shares and that offer results in an irrevocable commitment to transfer all the Shares to the offeror, or

(iv) the Issuer or its subsidiaries merges with another entity where the Issuer is the continuing entity and the Shares are not changed, but the outstanding Shares (not controlled by the other entity) immediately before the merger represented less than 50% of the outstanding Shares left after the merger (a “Reverse Merger”),

in each case if the Merger Date is on or before,

(A) for Physically-settled Option Transactions the later of the Expiration Date and the final Settlement Date,

(B) for Physically-settled Forward Transaction or Equity Swap Transactions, the relevant Settlement Date or,

(C) in any other case, the final Valuation Date.

12.1(c) “Merger Date” means the closing date of a Merger Event or, if one can’t be determined the date determined by the Calculation Agent.

12.1(d) “Tender Offer” means the Calculation Agent determines there has been a takeover offer or other event that results in an entity obtaining or having the right to obtain more than 10% and less than 100% of the outstanding voting shares of the Issuer.

12.1(e) “Tender Offer Date” means, for a Tender Offer, the date the Calculation Agent determines on which the applicable percentage threshold of voting shares are actually purchased.

12.1(f) “Share-for-Share” means

(i) for a Merger Event or Tender Offer, that the consideration for the relevant Shares consists (or, at the option of the holder of such Shares, will consist) solely of New Shares, and

(ii) a Reverse Merger.

12.1(g) “Share-for-Other” means a Merger Event or Tender Offer where the consideration is solely Other Consideration.

12.1(h) “Share-for-Combined” means a Merger Event or Tender Offer where the consideration is Combined Consideration.

12.1(i) “New Shares” means ordinary shares of any entity, that following the Merger Date or Tender Offer Date will be:

(i) publicly quoted, on a venue located in the same country as the Exchange (or, for European Union Exchanges, in the European Union) and

(ii) not subject to any exchange controls or trading limitations.

12.1(j) “Other Consideration” means consideration other than New Shares.

12.1(k) “Combined Consideration” means a combination of New Shares and Other Consideration.

12.1(l) “Announcement Date” means, in respect of an Extraordinary Event,

(i) for a Merger Event, the date when a firm intention to merge is first publicly announced,

(ii) for a Tender Offer, the date when a firm intention to purchase the requisite number of voting shares that leads to the Tender Offer is first publicly announced,

(iii) for an Index Disruption or Index Cancellation, the date when the Index Sponsor publicly announces any adjustment or cancellation causing an Index Disruption or Index Cancellation and in the case of an Index Modification, the Exchange Business Day before the Index Modificationis effective,

(iv) for a Nationalization, when the proposed Nationalization is first publicly announced,

(v) for an Insolvency, when institution of insolvency proceedings, presentation of an insolvency petition or similar action that leads to the Insolvency is publicly announced; and

(vi) for a Delisting, when the Exchange first publicly announces that the Shares will cease to be listed as contrampled in Section 12.6(a)(iii).

If any Extraordinary Event (other than an Index Disruption) is announced after the actual closing time for the ordinary regular trading session on Exchange, the Announcement Date will be the next Scheduled Trading Day.

12.1(m) “Implied Volatility” means for any Exchange Business Day, the mid-market implied volatility of the Shares the Calculation Agent determines by reference to the most comparable listed option on the relevant Shares considering such factors as it considers appropriate. If there is no such listed option or the Calculation Agent considers it is not sufficiently liquid, it will determine Implied Volatility at it sees fit.

12.1(n) “Affected Shares” means Shares affected by a Merger Event or Tender Offer.

12.2. Consequences of Merger Events.
For any Merger Event if, under “Consequences of Merger Events” for “Share-for-Share”, “Share-for-Other” or “Share-for-Combined”, the specified consequence is:

12.2(a) “Alternative Obligation”, then except for Reverse Mergers, following the Merger Date:

(i) the relevant New Shares or Other Consideration (as modified by any relevant terms and including any proceeds of any redemption) will be deemed to be the “Shares”

(ii) if relevant, the new issuer will be deemed to be the “Issuer”;

(iii) those New Shares or Other Consideration to which an existing shareholder would be entitled upon completion of the Merger Event will be deemed the relevant “Number of Shares”; and

(iv) the Calculation Agent will make other adjustments to the terms, as necessary (but will not adjust to account solely for changes in volatility, expected dividends, stock loan rate or liquidity).

12.2(b) “Cancellation and Payment”, the Transaction will be cancelled as of the Merger Date and:

(i) Option Transactions: Seller will pay Buyer the Section 12.7(b) amount, and

(ii) Forward Transactions and Equity Swap Transactions: one party will pay the other a 12.7(c) amount;

12.2(c) “Options Exchange Adjustment”, then the Calculation Agent will adjust the Transaction per Options Exchange Adjustment in Section 11.2(b) (but ignoring the words “diluting or concentrative”);

12.2(d) “Calculation Agent Adjustment”, the Calculation Agent must either:

(i) adjust the Transaction to account for the economic effect of the Merger Event (excluding changes in volatility, expected dividends, stock loan rate or liquidity of the Shares or the Transaction), or

(ii) if it considers that that could not produce a commercially reasonable result, notify the parties that the Transaction will be terminated, in which case Cancellation and Payment will apply and any necessary payments will be calculated under Section 12.7 (and for Option Transactions, the Calculation Agent must determine the payment as if “Calculation Agent Determination” applied);

12.2(e) If “Modified Calculation Agent Adjustment” is specified then, after the Merger Date, the Calculation Agent will either

(i) adjust the Transaction to account for the economic effect of the Merger Date in its determination, or

(ii) if that would not produce a commercially reasonable result, terminate the Transaction, at “Cancellation and Payment” (or, for an Option Transaction, “Calculation Agent Determination”) under Section 12.7.

12.3(e) “Partial Cancellation and Payment”, then the portion of a Share Basket Transaction represented by Affected Shares will be cancelled as of the Merger Date, the amount calculated under Section 12.7 for such Affected Shares will be paid by one party to the other, the Share Basket Transaction will continue with the Basket comprising the remaining Shares, and the Calculation Agent will adjust any terms if necessary to preserve as nearly as practicable the economic terms of the Transaction for the remaining Shares; or

12.2(g) “Component Adjustment”, then, where a Merger Event is “Share-for-Combined”, the option chosen for “Share-for-Share” will apply to the New Shares component and the option chosen for “Share-for-Other” will apply to the Other Consideration component (as the Calculation Agent determines).

12.3. Consequences of Tender Offers. If “Tender Offer” applies, then if, under “Consequences of Tender Offers” for “Share-for-Share”, “Share-for-Other” or “Share-for-Combined”, the specified consequence is:

12.3(a) “Cancellation and Payment”, then the Transaction in question will be cancelled as of the Tender Offer Date and:

(i) Under an Option Transaction, Seller will pay Buyer the amount calculated under Section 12.7(b), and

(ii) Under a Forward Transaction or a Equity Swap Transaction one party will pay to the other the amount calculated under Section 12.7(c);

12.3(b)“Options Exchange Adjustment”, then following each adjustment to the settlement terms of any relevant Options Exchange-traded options, the Calculation Agent will make adjustments per Section 11.2(b) (ignoring the words “diluting or concentrative” in the second sentence);

12.3(c) “Calculation Agent Adjustment”, then, following the Tender Offer Date the Issuer and the Shares will not change, but the Calculation Agent shall either:

(i) adjust the Transaction to account for the economic effect of the Tender Offer on the Transaction (but not solely for changes in volatility, expected dividends, stock loan rate or liquidity on the Shares), which it may do by reference to corresponding adjustments made by an options exchange to options on the Shares and determine the effective date of that adjustment, or

(ii) if it determines that no adjustment under (i) would produce a commercially reasonable result, notify the parties that the Transaction will terminate and “Cancellation and Payment” will apply and will be calculated under Section 12.7 (for Option Transactions as if “Calculation Agent Determination” applied;

12.3(d) If “Modified Calculation Agent Adjustment (Tender Offers)” is specified then, after the Tender Offer Date, Calculation Agent will either (i) adjust the Transaction to account for the economic effect of the Tender Offer in its determination, or (ii) if that would not produce a commercially reasonable result, terminate the Transaction, in which case “Cancellation and Payment” will under Section 12.7 (and for an Option Transaction, “Calculation Agent Determination” will apply).

12.3(e) “Partial Cancellation and Payment”, then the portion of a Share Basket Transaction represented by Affected Shares will be cancelled as of the Tender Offer Date, the amount calculated under Section 12.7 for such Affected Shares will be paid by one party to the other, the Share Basket Transaction will continue with the Basket comprising the remaining Shares, and the Calculation Agent will adjust any terms if necessary to preserve as nearly as practicable the economic terms of the Transaction for the remaining Shares; or

12.3(f) “Component Adjustment”, then for a Share-for-Combined Tender Offer:

(i) “Share-for-Share” will apply to the part of the consideration comprising New Shares and

(ii)“Share-for-Other” will apply to the part of the consideration comprising Other Consideration.

12.4. Settlement Following a Merger Event or Tender Offer.
Where, following a Merger Event or Tender Offer and adjustment of:

(a) A Cash-settled Transaction: the Calculation Agent will value the Other Consideration as necessry on each Valuation Date or Averaging Date.

(b) A Physically-settled Transaction:Where:

(i) New Shares are required to be delivered, the deliveror will deliver them per the settlement terms in the Confirmation (though, if it would not have received its New Share entitlement by the Settlement Date, the relevant Settlement Date will be postponed to the first Clearance System Business Day on which it would be able to deliver New Shares to the other party.

(ii) Other Consideration is required to be delivered, the deliveror will deliver it to the other party as the other party directs, as soon as reasonably practicable after the later of:

(1) the Settlement Date; and

(2) the first day on which Shareholder, having received the Other Consideration, would be able to deliver it to the other party.

12.5. Composition of Combined Consideration. For any “Share-for-Combined” Merger Event or Tender Offer:

(a) If “Composition of Combined Consideration” applies:

(i) where a holder of the Option Entitlement or Number of Shares could determine the Combined Consideration and could receive New Shares as part of it, the Combined Consideration will be New Shares to the maximum permitted value; and

(ii) if such a holder could make any election other than New Shares, the Combined Consideration will be determined as follows:

(A) the deliveree/payee may determine the composition by giving to the deliveror/payor at least two Scheduled Trading Days’ notice before the deadline for the relevant election; and

(B) otherwise, the deliveror/payor will determine the Composition of Combined Consideration.

(b) If “Composition of Combined Consideration” does not apply:

(i) to where a holder of the Option Entitlement or Number of Shares could determine the Combined Consideration and could receive New Shares as part of it, the Combined Consideration will be New Shares to the maximum permitted value; and

(ii) if such a holder could make any election other than New Shares, the Calculation Agent will determine Combined Consideration.

12.6 Nationalization, Insolvency and Delisting
12.6(a) The following definitions apply:

(i) “Nationalization” means all an Issuer’s Shares or substantially all of its assets have to be transferred to a government;

(ii) “Insolvency” means that an Issuer becomes insolvent and:

(A) all its Shares have to be transferred to an insolvency administrator or

(B) Shareholders of that Issuer are prohibited from transferring them; and

(iii) “Delisting” means that the Exchange announces that the Shares will cease to be listed on the Exchange (except because of a Merger Event or Tender Offer) and are not immediately re-listed on another exchange in the same country (or, where the Exchange is in the European Union, in the European Union).

12.6(b) If either party becomes aware of a Nationalization, Insolvency or Delisting, it will promptly tell the other party.
12.6(c) When determining the consequence of any Nationalization, Insolvency or Delisting:

(i)if “Negotiated Close-out” applies, then unless the parties agree to terminate the Transaction it will continue, but either party may choose to cash settle a Physically-settled Transaction, and if a Scheduled Valuation Date is a Disrupted Day, the Calculation Agent will ignore Section 6.6 (Disrupted Days) and use its good faith estimate to determine the Settlement Price or Final Price as of the Valuation Time on that Valuation Date;

(ii) “Cancellation and Payment” means that the Transaction will be cancelled as of the Announcement Date and

(A) For Option Transactions, Seller will pay Buyer an amount calculated per Section 12.7(b);

(B) For Forward Transactions or Equity Swap Transactions, one party will pay the other an amount calculated per Section 12.7(c); and

(iii) “Partial Cancellation and Payment” means that the portion of a Share Basket Transaction representing Affected Shares will be cancelled as of the Announcement Date, the amount for the Affected Shares will be calculated and paid per Section 12.7 and the remainder of the Share Basket Transaction will continue with the non-Affected Shares, the Calculation Agent adjusting any terms as necessary to preserve as far as possible the economic terms for the remaining Share Basket.

12.7 Payment upon Certain Extraordinary Events
12.7(a) If “Cancellation and Payment” or “Partial Cancellation and Payment” applies, then one party will pay the other the amounts described below no later than three Currency Business Days after notice of the determination, which must be given promptly, is effective.
12.7(b) Option Transactions: The parties must promptly agree within five Exchange Business Days of the relevant event (the “Closing Date”) the amount Seller must pay Buyer. If they cannot:

12.7(b)(i) if “Agreed Model” applies, the Calculation Agent will determine the sum of the Unadjusted Value and the Adjustment Value, (noting that the Buyer will not have to pay the Seller anything on cancellation of an Option Transaction other than unpaid Premium).

(A) the Calculation Agent will determine the “Unadjusted Value” as the value of the relevant portion of the Option Transaction on the Closing Date based on:

(1) the average Implied Volatility of the relevant Shares over the 15 Exchange Business Days up to the Closing Date;

(2) expected dividends between the Closing Date and the Expiration Date based on, and payable on the same dates as:

(a) gross ordinary cash dividends due on the relevant Shares in the one-year period ending on the Closing Date or

(b) if the Calculation Agent determines the Issuer has changed its dividend policies before the Closing Date, the expected dividends per the changed policy

in each case excluding Extraordinary Dividends;

(3) the Calculation Agent’s valuation of the Shares and any consideration provided for the Shares to holders at the time of the Extraordinary Event;

(4) a combined interest rate and stock loan rate as specified in the related Confirmation from the Closing Date to the Expiration Date; and

(5) a term of the Option Transaction from the Closing Date to the Expiration Date.

(B) “Adjustment Value” means the difference between the amounts determined pursuant to (B)(1) and (B)(2) below:

(1) the Calculation Agent’s valuation of the relevant portion of the Option Transaction based on:

(a) the average Implied Volatility of the relevant Shares over the 15 Exchange Business Days up to the Announcement Date;

(b) expected dividends between the Announcement Date and the Expiration Date based on, and payable on the same dates as:

(x) gross ordinary cash dividends due on the relevant Shares in the one-year period ending on the Announcement Date or

(y) if the Calculation Agent determines the Issuer has changed its dividend policies before the Announcement Date, the expected dividends per the changed policy

in each case excluding Extraordinary Dividends;

(c) its valuation (as of the Announcement Date) of the Settlement Price (assuming Cash Settlement) of the relevant Shares as of the Valuation Time;

(d) a combined interest rate and stock loan rate as specified in the related Confirmation from the Announcement Date to the Expiration Date; and

(e) a term of the Option Transaction from the Announcement Date to the Expiration Date.

(2) a value for the relevant portion of the Option Transaction based on the factors listed in (1)(a)-(e) above, but with an average Implied Volatility over the 15 Exchange Business Days from the Announcement Date.

12.7(b)(ii) If “Calculation Agent Determination” applies, then the Calculation Agent will determine the amount.

12.7(c) Forward Transactions and Equity Swap Transactions: Any Forward Transaction or Equity Swap Transaction, will be cancelled and the Cancellation Amount determined as follows:

(i) where there is one Determining Party, it will calculate the Cancellation Amount and who has to pay it.

(ii) where there are two Determining Parties, each will calculate a Cancellation Amount and they will split the difference.

12.8. Cancellation Amount.

12.8(a): “Cancellation Amount” means the gains or losses the Determining Party would incur under prevailing circumstances in replacing (i) the material terms of the Transaction, including payments and deliveries that would, but for the Extraordinary Event, have been required after termination and (ii) the parties’ option rights under the Transaction.

12.8(b): Any Cancellation Amount will be determined by the Determining Party in good faith using commercially reasonable procedures as of the date the Transaction was terminated (or such other dates as would be commercially reasonable).

12.8(c): In determining a Cancellation Amount, the Determining Party may consider:

(i) Dealer quotations: dealer quotations for replacement transactions

(ii) Market data: market data; and

(iii) Internal valuations: similar material from internal sources and Affiliates where they are regularly used by the Determining Party in its business for similar valuations.

12.8(d): The Determining Party will consider quotations under Section 12.8(c)(i) or relevant market data under Section 12.8(c)(ii) unless it reasonably believes in good faith that they are not readily available or would produce a result that would not satisfy standards described in this definition. The Determining Party may include costs of funding. Third parties supplying quotations or market data pursuant may include dealers, end-users, information vendors, brokers and other sources.

12.8(e): Without duplication and when it is commercially reasonable to do so, when calculating a Cancellation Amount the Determining Party may consider any loss or cost (or gain) incurred in terminating, liquidating or re-establishing any hedge.

12.8(f): The Determining Party will be specified in the confirmation.

12.8(g): “Commercially reasonable procedures” may include:

(i) Determining Party’s pricing and valuation models for similar transactions with third parties; and

(ii) different valuation methods depending on the type, complexity or size of the Transaction.

12.9. Additional Disruption Events.

12.9(a) Additional Disruption Event definitions: The following terms are defined as follows:

12.9(a)(i) “Additional Disruption Event” means any of the events in paragraphs 12.9(a)(ii) to 12.9(a)(viii):

12.9(a)(ii) “Change in Law” means either party determines that, due to a change in law or regulation:

(X) it becomes illegal to buy, sell or hold underlying Shares or;

(Y) it becomes materially more expensive to perform the Transaction.

12.9(a)(iii) “Failure to Deliver” means a party’s failure to deliver Shares when due under a Transaction because of market illiquidity;

12.9(a)(iv) “Insolvency Filing” means that the Issuer commences or agrees to insolvency proceedings or a winding-up petition (or has one instituted against it by a regulator or insolvency administrator). Non-consensual insolvency action taken by creditors is not an Insolvency Filing;

12.9(a)(v) “Hedging Disruption” means that the Hedging Party cannot reasonably acquire, hold, replace or unwind any transactions hedging its equity price risk, or realise, recover or pay the proceeds of any hedging transactions.

12.9(a)(vi) “Increased Cost of Hedging” means that the Hedging Party would incur a materially increased cost under the Transaction to:

(A) hedge its equity price risk; or

(B) realise the proceeds of its hedge.

This excludes costs arising solely from the deterioration of its own creditworthiness.

12.9(a)(vii) “Loss of Stock Borrow” means that, having used commercially reasonable efforts, the Hedging Party cannot borrow the Shares it needs to hedge the Transaction at a rate equal to or lower than the Maximum Stock Loan Rate;

12.9(a)(viii) “Increased Cost of Stock Borrow”: the rate the Hedging Party incurs to borrow Shares for the Transaction exceeds the Initial Stock Loan Rate;

12.9(a)(ix) “Hedging Party”: The party specified as such in the Confirmation or, if none, either party;

12.9(a)(x) “Hedging Shares” means the number of Shares the Hedging Party needs to hedge the equity price risk under a Transaction;

12.9(a)(xi) “Lending Party” means a counterparty that the Hedging Party reasonably and in good faith selects;

12.9(a)(xii) “Non-Hedging Party” is not the Hedging Party;

12.9(a)(xiii) “Maximum Stock Loan Rate” for any “Loss of Stock Borrow” will be specified in the Confirmation;

12.9(a)(xiv) “Initial Stock Loan Rate” for any Increased Cost of Stock Borrow will be specified in the Confirmation; and

12.9(a)(xv) “Price Adjustment” means an adjustment to a price, spread or other variable in a Transaction.

In a super nutshell:

Event	Section	What happens?	At what price?
Change in Law or Insolvency Filing	12.9(b)(i)	Either party gives 2 Scheduled Trading Days’ notice to terminate	Cancellation Amount
Hedging Disruption	12.9(b)(iii)	The Hedging Party may terminate on 2 Scheduled Trading Days’ notice	Cancellation Amount
Increased Cost of Hedging	12.9(b)(iv)	Hedging Party notifies a Price Adjustment. Non-Hedging Party may (i) agree to amend Transaction; (ii) pay the Price Adjustment outright; or (iii) terminate. If NHP has done none within 2 Scheduled Trading Days the Hedging Party can terminate.	Cancellation Amount
Loss of Stock Borrow	12.9(b)(iv)	The Hedging Party notifies the LOSB, the Non-Hedging Party has two Scheduled Trading Days to come up with a stock loan at a rate no higher than the Maximum Stock Loan Rate, failing which the Hedging Party may terminate	Cancellation Amount
Increased Cost of Stock Borrow	12.9(b)(iv)	The Hedging Party notifies the ICOSB and a proposed Price Adjustment. Non-Hedging Party has two Scheduled Trading Days to (i) agree to amend Transaction; (ii) pay the Price Adjustment outright; or (iii) terminate on the second Scheduled Trading Day.	Cancellation Amount

In a normal nutshell:

12.9(b) For the purpose of determining the consequence of an Additional Disruption Event:

12.9(b)(i) If Change in Law or Insolvency Filing applies and one happens, either party may terminate the Transaction two Scheduled Trading Days’ notice (or less, if required under Change in Law), and the Determining Party will determine the Cancellation Amount.

12.9(b)(ii) If “Failure to Deliver” applies, then a Failure to Deliver will not be an Event of Default but the “Delivering Party” must:

(A) notify the “Receiving Party” that the Failure to Deliver has occurred within one Clearance System Business Day of the Exercise Date (for Option Transactions) and at least one Settlement Cycle prior to the Settlement Date (for Forward Transactions and Equity Swap Transactions; and

(B) deliver to the Receiving Party on the Settlement Date the Shares that it can deliver on such date;

and the Receiving Party’s corresponding payment or delivery obligation to the Delivering Party will be proportionately reduced.

Thereafter:

(I) For European Options and Forward Transactions: The Receiving Party may terminate the remaining Transaction effective immediately by notice to the Delivering Party and must (as Determining Party) determine the related Cancellation Amount;

(II) For American Options and Bermuda Options: The Receiving Party may terminate that part of the Transaction comprising the exercised but not settled Options effective immediately by notice to the Delivering Party and must (as Determining Party) determine the related Cancellation Amount;

(III) For Equity Swap Transactions: The Receiving Party may terminate that part of the Transaction consisting of the unsettled deliveries effective immediately by notice to the Delivering Party and must (as Determining Party) determine the Cancellation Amount;

(IV) For unexercised American Options and Bermuda Options to which Multiple Exercise applies, and for Equity Swap Transactions where a Settlement Date has not occurred: The Receiving Party may elect within one Settlement Cycle of the affected Settlement Date to terminate the remainder of the Transaction upon two Scheduled Trading Days’ notice, and must (as Determining Party) determine the Cancellation Amount.

12.9(b)(iii) If “Hedging Disruption” applies and it happens, the Hedging Party may terminate the Transaction on 2 Scheduled Trading Days’ notice, and the Determining Party will determine the Cancellation Amount payable under the Transaction.

12.9(b)(iv) If “Loss of Stock Borrow” applies, then if the Hedging Party notifies the Non-Hedging Party of a Loss of Stock Borrow, the Non-Hedging Party may, within 2 Scheduled Trading Days of notice, lend the Hedging Party the necessary Shares at a rate no greater than the Maximum Stock Loan Rate. If it does not, the Hedging Party may terminate the Transaction on notice and the Determining Party will determine the Cancellation Amount.

12.9(b)(v) If “Increased Cost of Stock Borrow” applies, the Hedging Party may tell the Non-Hedging Party that an Increased Cost of Stock Borrow has happened and that it will make a Price Adjustment to the Transaction.

Within 2 Scheduled Trading Days of that notice the Non-Hedging Party must:

(A) amend the Transaction to make the Price Adjustment,

(B) pay the Hedging Party the Price Adjustment or

(C) terminate the Transaction as of that second Scheduled Trading Day.

Within this period, the Non-Hedging Party may lend the Hedging Party, the necessary Hedging Shares at no more than the Initial Stock Loan Rate.

Absent such an election the Hedging Party may terminate the Transaction. On any termination of the Transaction, the Determining Party will determine the Cancellation Amount.

12.9(b)(vi) If “Increased Cost of Hedging” applies and it occurs, the Hedging Party will so notify the Non-Hedging Party and that it will make a Price Adjustment. Within 2 Scheduled Trading Days the Non-Hedging Party must elect to the Hedging Party either to:

(A) amend the Transaction to cater for the Price Adjustment,

(B) pay the Hedging Party the Price Adjustment or

(C) terminate the Transaction as of that second Scheduled Trading Day. Absent such an election the Hedging Party may terminate the Transaction. On any termination of the Transaction, the Determining Party will determine the Cancellation Amount.

12.9(b)(vii) If both “Hedging Disruption” and “Loss of Stock Borrow” apply and an event happens that could be either, it will be treated as a Loss of Stock Borrow and not a Hedging Disruption.

12.9(b)(viii) Any Shares the Non-Hedging Party or Lending Party provides relating to a Loss of Stock Borrow or Increased Cost of Stock Borrow must be in freely tradable book-entry form and documented under suitable stock lending documentation acceptable to the Hedging Party.

12.9(b)(ix) Any Cancellation Amount must be paid in the Transaction settlement currency no later than three Currency Business Days after the Determining Party’s notice of its determination is effective.