Indemnity for failure to redeliver Equivalent Non-Cash Collateral - GMSLA Provision

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2010 Global Master Securities Lending Agreement
A Jolly Contrarian owner’s manual

Section 6.4 in a Nutshell
Use at your own risk, campers!

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Section 6.4 in full

6.4 Indemnity for failure to redeliver Equivalent Non-Cash Collateral
Unless paragraph 1.6 of the Schedule indicates that this paragraph does not apply, where:

(a) prior to any Income Record Date in relation to Non Cash Collateral, Borrower has in accordance with paragraph 5.3 called for the Delivery of Equivalent Non Cash Collateral;
(b) Borrower has given notice of such call to Lender so as to be effective, at the latest, five hours before the Close of Business on the last Business Day on which Lender would customarily be required to initiate settlement of the Non Cash Collateral to enable settlement to take place on the Business Day immediately preceding the relevant Income Record Date;
(c) Borrower has provided reasonable details to Lender of the Non Cash Collateral, the relevant Income Record Date and the proposed Alternative Collateral;
(d) Lender, acting reasonably, has determined that such Alternative Collateral is acceptable to it and Borrower shall have delivered or delivers such Alternative Collateral to Lender; and
(e) Lender has failed to make reasonable efforts to transfer Equivalent Non Cash Collateral to Borrower prior to such Income Record Date,

Lender shall indemnify Borrower in respect of any cost, loss or damage (excluding any indirect or consequential loss or damage or any amount otherwise compensated by Lender, including pursuant to paragraphs 6.3 and/or 9.3) suffered by Borrower that it would not have suffered had the relevant Equivalent Non Cash Collateral been transferred to Borrower prior to such Income Record Date.
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Related agreements and comparisons

Related agreements: Click here for the same clause in the 2018 Pledge GMSLA
Comparison: Click to [[special:diff/{{{1}}}/{{{2}}}|compare]] the 2010 GMSLA and 2018 Pledge GMSLA versions of this clause.

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Pledge GMSLA: Hard copy (ISLA) · Full wikitext · Nutshell wikitext |
1995 OSLA: Full wikitext · Nutshell wikitext | GMSLA Netting
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Content and comparisons

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Summary

Where a Borrower has called for redelivery of equivalent non-cash collateral prior to an income record date and the Lender fails to make reasonable efforts to effect the redelivery, paragraph 6.4 provides for the Lender to indemnify the Borrower against any loss directly resulting from such failure.

The indemnity only applies where the Borrower has agreed with the Lender to provide acceptable alternative collateral and has given sufficient notice of its call for redelivery of the non-cash collateral. The Lender, acting reasonably, must also have indicated to the Borrower that the proposed alternative collateral is acceptable to it (as to which, see 5.15 below). These provisions are modelled on those contained in the equities annex to the 2000 version of the 2010 GMSLA.

The parties may disapply paragraph 6.4 under paragraph 1.6 of the Schedule.
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See also

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References