Talk:Consequences of an Event of Default - GMSLA Provision

2018

11 Consequences of an Event of Default 11.1 If an Event of Default occurs in relation to either Party then paragraphs 11.2 to 11.8 below shall apply. 11.2 Borrower’s Delivery and payment obligations (and any other obligations Borrower has under the Agreement including, without limitation, any obligation to pay amounts which have accrued under paragraph 7) shall be accelerated so as to require performance thereof at the time such Event of Default occurs (the date of which shall be the Termination Date) so that performance of such obligations shall be effected only in accordance with the following provisions. 11.2(a) The Default Market Value of the Equivalent Securities to be delivered by Borrower and any amount (including interest accrued) to be paid by Borrower shall be established by the Non-Defaulting Party in accordance with paragraph 11.4 and deemed as at the Termination Date. 11.2(b) On the basis of the sums so established, an account shall be taken (as at the Termination Date) of what is due from each Party to the other under this Agreement (on the basis that Lender's claim against Borrower in respect of Delivery of Equivalent Securities is equal to the Default Market Value thereof) and the sums due from one Party shall be set off against the sums due from the other and only the balance of the account shall be payable (by the Party having the claim valued at the lower amount pursuant to the foregoing) and such balance shall be payable on the next following Business Day after such account has been taken and such sums have been set off in accordance with this paragraph. For the purposes of this calculation, any sum not denominated in the Base Currency shall be converted into the Base Currency at the spot rate prevailing at such dates and times determined by the Non-Defaulting Party acting reasonably. 11.3 For the purposes of this Agreement, the Default Market Value of any Equivalent Securities shall be determined in accordance with paragraphs 11.4 to 11.6 below, and for this purpose: 11.3(a) the Appropriate Market means, in relation to Securities of any description, the market which is the most appropriate market for Securities of that description, as determined by the Non-Defaulting Party; 11.3(b) the Default Valuation Time means, in relation to an Event of Default, the Close of Business in the Appropriate Market on the fifth dealing day after the day on which that Event of Default occurs; 11.3(c) Net Value means at any time, in relation to any Equivalent Securities, the amount which, in the reasonable opinion of the Non-Defaulting Party, represents their fair Market Value, having regard to such pricing sources and methods (which may include, without limitation, internal and external pricing sources, and available prices for Securities with similar maturities, terms and credit characteristics as the relevant Equivalent Securities) as the Non- Defaulting Party considers appropriate less, where Lender is the Defaulting Party, or plus, where Borrower is the Defaulting Party, all Transaction Costs incurred or reasonably anticipated in connection with the purchase or sale of such Securities; and 11.3(d) Transaction Costs in relation to any transaction contemplated in paragraph 11.4 or 11.5 means the reasonable costs, commissions (including internal commissions), fees and expenses (including any mark-up or mark-down or premium paid for guaranteed Delivery) incurred or reasonably anticipated in connection with, where Borrower is the Defaulting Party, the purchase of Equivalent Securities or, where Lender is the Defaulting Party, the sale of Equivalent Securities, calculated on the assumption that the aggregate thereof is the least that could reasonably be expected to be paid in order to carry out the transaction. 11.4 If between the Termination Date and the Default Valuation Time:

11.4(a) Borrower as Non-Defaulting Party has sold, or Lender as Non-Defaulting Party has purchased, Securities which form part of the same issue and are of an identical type and description as the relevant Equivalent Securities, (and regardless as to whether or not such sales or purchases have settled) such Non- Defaulting Party may elect to treat as the Default Market Value: 11.4(a)(i) in the case of such a sale by Borrower as Non-Defaulting Party, the net proceeds of such sale after deducting all Transaction Costs; provided that, where the Securities sold are not identical in amount to the Equivalent Securities, Borrower as Non-Defaulting Party may, acting in good faith, either (A) elect to treat such net proceeds of sale divided by the amount of Securities sold and multiplied by the amount of the Equivalent Securities as the Default Market Value or (B) elect to treat such net proceeds of sale of the Equivalent Securities actually sold as the Default Market Value of that proportion of the Equivalent Securities, and, in the case of (B), the Default Market Value of the balance of the Equivalent Securities shall be determined separately in accordance with the provisions of this paragraph 11.4; or 11.4(a)(ii) in the case of such a purchase by Lender as Non-Defaulting Party, the aggregate cost of such purchase, including all Transaction Costs; provided that, where the Securities purchased are not identical in amount to the Equivalent Securities, Lender as Non-Defaulting Party may, acting in good faith, either (A) elect to treat such aggregate cost divided by the amount of Securities purchased and multiplied by the amount of the Equivalent Securities as the Default Market Value or (B) elect to treat the aggregate cost of purchasing the Equivalent Securities actually purchased as the Default Market Value of that proportion of the Equivalent Securities, and, in the case of (B), the Default Market Value of the balance of the Equivalent Securities shall be determined separately in accordance with the provisions of this paragraph 11.4; 11.4(b) the Non-Defaulting Party has received, where the Non-Defaulting Party is Borrower, bid quotations or, where the Non-Defaulting Party is Lender, offer quotations in respect of Securities which form part of the same issue and are of an identical type and description as the relevant Equivalent Securities from two or more market makers or regular dealers in the Appropriate Market in a commercially reasonable size (as determined by the Non-Defaulting Party) the Non-Defaulting Party may elect to treat as the Default Market Value of the relevant Equivalent Securities: 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 Non-Defaulting Party is Borrower, the purchase by the relevant market marker or dealer of such Securities or, where the Non-Defaulting Party is Lender, the sale by the relevant market maker or dealer of such Securities, provided that such price or prices quoted may be adjusted in a commercially reasonable manner by the Non-Defaulting Party to reflect accrued but unpaid coupons not reflected in the price or prices quoted in respect of such Securities; 11.4(b)(ii) after deducting, in the case where the Non-Defaulting Party is Borrower, or adding, in the case where the Non-Defaulting Party is Lender, the Transaction Costs which would be incurred or reasonably anticipated in connection with such transaction. 11.5 If, acting in good faith, either (A) the Non-Defaulting Party has endeavoured but been unable to sell or purchase Securities in accordance with paragraph 11.4(a) above or to obtain quotations in accordance with paragraph 11.4(b) above (or both) or (B) the Non- Defaulting Party has determined that it would not be commercially reasonable to sell or purchase 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 the Non-Defaulting Party may determine the Net Value of the relevant Equivalent Securities (which shall be specified) and the Non-Defaulting Party may elect to treat such Net Value as the Default Market Value of such Equivalent Securities. 11.6 To the extent that the Non-Defaulting Party has not determined the Default Market Value in accordance with paragraph 11.4, the Default Market Value of the relevant Equivalent Securities shall be an amount equal to their Net Value at the Default Valuation Time; provided that, if at the Default Valuation Time the Non-Defaulting Party reasonably determines that, owing to circumstances affecting the market in the Equivalent Securities in question, it is not reasonably practicable for the Non-Defaulting Party to determine a Net Value of such Equivalent Securities which is commercially reasonable (by reason of lack of tradable prices or otherwise), the Default Market Value of such Equivalent Securities shall be an amount equal to their Net Value as determined by the Non-Defaulting Party as soon as reasonably practicable after the Default Valuation Time. 11.7 Other costs, expenses and interest payable in consequence of an Event of Default: The Defaulting Party shall be liable to the Non-Defaulting Party for the amount of all reasonable legal and other professional expenses incurred by the Non-Defaulting Party in connection with or as a consequence of an 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. 11.8 Set-off: Any amount payable to one Party (the Payee) by the other Party (the Payer) under paragraph 11.2(b) may, at the option of the 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 Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement between the Payee and the 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 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 Party is at any time otherwise entitled (whether by operation of law, contract or otherwise).