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1995 Overseas Securities Lender’s Agreement
A Jolly Contrarian owner’s manual™
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Clause 12 in a Nutshell™
Use at your own risk, campers!
12. Events of Default
The following events occurring to a Party (Defaulting Party) will be Events of Default under Clause 8 upon the other Party (Non-Defaulting Party) serving written notice on it:
- 12(A) Failure to pay: It fails to pay Cash Collateral or deliver Collateral or Equivalent Collateral when due;
- 12(B) Failure to provide Collateral: It breaches its obligations under Clause 6;
- 12(C) Failure to manufacture Income: As Borrower it breaches Clause 4(B)(i), (ii) or (iii);
- 12(D) Bankruptcy: It suffers an Act of Insolvency (provided that where the Act of Insolvency is the presentation of a winding-up petition or appointment of a liquidator, written notice from the Non-Defaulting Party is not required);
- 12(E) Breach of representations and warranties: the representations or warranties of either Party are materially false when made or repeated, ;
- 12(F) Repudiation: admits to the other that it is cannot or will not perform any of its obligations under the Agreement;
- 12(G) Regulatory default: It is declared in default by the appropriate authority under the Rules or is suspended or expelled from any securities exchange or other self-regulatory organisation, or is suspended from securities dealing by any government agency;
- 12(H) Seizure of assets: its own asset those it holds for investors held are ordered to be transferred to a trustee by a regulatory authority under securities regulation legislation, or
- 12(I) Other breach of Agreement: the Lender or the Borrower fails to perform any other obligations under this Agreement and does not remedy its failure within 30 days after the Non-Defaulting Party serves notice requiring it to remedy such failure on it.
Each Party must notify the other if it suffers an Event of Default.
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Full text of Clause 12
12. Events of Default
Each of the following events occurring in relation to either Party (the “Defaulting Party”, the other Party being the “Non-Defaulting Party”) shall be an Event of Default for the purpose of Clause 8:
- 12(A) the Borrower or Lender failing to pay or repay Cash Collateral or deliver or redeliver Collateral or Equivalent Collateral upon the due date, and the Non-Defaulting Party serves written notice on the Defaulting Party;
- 12(B) the Lender or Borrower failing to comply with its obligations under Clause 6, and the Non-Defaulting Party serves written notice on the Defaulting Party;
- 12(C) the Borrower failing to comply with Clause 4(B)(i), (ii) or (iii) hereof, and the Non-Defaulting Party serves written notice on the Defaulting Party;
- 12(D) an Act of Insolvency occurring with respect to the Lender or the Borrower and (except in the case of an Act of Insolvency which is the presentation of a petition for winding up or any analogous proceeding or the appointment of a liquidator or analogous officer of the Defaulting Party in which case no such notice shall be required) the Non-Defaulting Party serves written notice on the Defaulting Party;
- 12(E) any representations or warranties made by the Lender or the Borrower being incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, and the Non-Defaulting Party serves written notice on the Defaulting Party;
- 12(F) the Lender or the Borrower admitting to the other that it is unable to, or it intends not to, perform any of its obligations hereunder and/or in respect of any loan hereunder, and the Non-Defaulting Party serves written notice on the Defaulting Party;
- 12(G) the Lender (if appropriate) or the Borrower being declared in default by the appropriate authority under the Rules or being suspended or expelled from membership of or participation in any securities exchange or association or other self-regulatory organisation, or suspended from dealing in securities by any government agency, and the Non-Defaulting Party serves written notice on the Defaulting Party;
- 12(H) any of the assets of the Lender or the Borrower or the assets of investors held by or to the order of the Lender or the Borrower being transferred or ordered to be transferred to a trustee by a regulatory authority pursuant to any securities regulating legislation and the Non-Defaulting Party serves written notice on the Defaulting Party, or
- 12(I) the Lender or the Borrower failing to perform any other of its obligations hereunder and not remedying such failure within 30 days after the Non-Defaulting Party serves written notice requiring it to remedy such failure, and the Non-Defaulting Party serves a further written notice on the Defaulting Party.
Each Party shall notify the other if an Event of Default occurs in relation to it.
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Related agreements and comparisons
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Related agreements: Click here for the equivalent clause in the 2010 GMSLA
Comparison: Click to compare the 2010 GMSLA and 1995 OSLA versions of this clause.
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Content and comparisons
Template:M comp disc OSLA 12
Summary
Note by contrast to the ISDA Master Agreement the Event of Default is only an Event of Default upon written notice to the other party: in the ISDA Master Agreement it is an Event of Default in itself, and it gives rise to a non-defaulting party’s right designate a termination event.
A subtle difference but one which calls for a little bit of caution: for example, a party may have failed to pay or deliver: if you want to simply remind the defaulting party to make the payment without inadvertently triggering a termination, you need to be careful about how you do that so as to not trigger!
See also
Template:M sa OSLA 12
References