Talk:Consequences of an Event of Default - GMSLA Provision

Nutshell 2018

11 Consequences of an Event of Default 11.1 If an Event of Default occurs to either Party: 11.2 Acceleration: Borrower’s obligations under the Agreement will be accelerated so as to require immediate performance at the time of the Event of Default (the Termination Date). Performance will happen as follows. 11.2(a) The Non-Defaulting Party will determine the Default Market Value of the Borrower’s delivery and payment obligations as at the Termination Date as set out in paragraph 11.4. 11.2(b) Using those Default Market Value, [the Non-Defaulting Party will determine and notify][1]what each Party owes under this Agreement as at the Termination Date, converting amounts into the Base Currency where necessary, will set those sums off against each other and Party owing the greater amount must pay the balance on the Business Day after notification. 11.3 Determining the Default Market Value: The Non-Defaulting Party will determine the Default Market Value of any Equivalent Securities according to paragraphs 11.4 to 11.6, where the Appropriate Market is the most appropriate market for Securities of that description, as determined by the Non-Defaulting Party, the Default Valuation Time means the Close of Business in the Appropriate Market on the fifth dealing day after the Termination Date, Net Value means the Non-Defaulting Party’s reasonable opinion of their fair Market Value less (where Lender is the Defaulting Party) or plus (where Borrower is the Defaulting Party), all reasonable costs of any transaction needed under paragraph 11.4 or 11.5 (Transaction Costs). 11.4 Transactions and quotes: If, between the Termination Date and the Default Valuation Time: 11.4(a) as Non-Defaulting Party, the Borrower has sold or the Lender has purchased, fungible Equivalent Securities it may treat as the Default Market Value: 11.4(a)(i) in the case of a sale, the net proceeds of sale after deducting all Transaction Costs; 11.4(a)(ii) in the case of a purchase, the aggregate cost of such purchase, including Transaction Costs; provided that, where the Securities sold or purchased are not in identical in amount to the Equivalent Securities, Non-Defaulting Party may in good faith pro rate those values to determine the necessary Default Market Value. 11.4(b) the Non-Defaulting Party has received bids (where it is Borrower) or offers (where it is Lender) for fungible Equivalent Securities from at least two regular participants in the Appropriate Market in what it determines to be a commercially reasonable size, it may treat as the Default Market Value the arithmetic mean of the quoted prices as reasonably adjusted to account for for accrued but unpaid interest and Transaction Costs. 11.5 Where there’s no commercially reasonable value: If, having tried in good faith, the Non-Defaulting Party has managed neither to sell nor purchase Securities under paragraph 11.4(a), nor obtain quotations under paragraph 11.4(b), or it has determined that the quotations are not commercially reasonable, it may determine the Net Value of the Equivalent Securities treat that Net Value as their Default Market Value. 11.6 If the Non-Defaulting Party has not determined the Default Market Value under paragraph 11.4, it will equal the Net Value of the Equivalent Securities at the Default Valuation Time unless it is not commercially reasonable to determine such Net Value at that time, in which case it will equal the Net Value that the Non-Defaulting Party determines 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 must pay the Non-Defaulting Party all its reasonable professional expenses in connection with the Event of Default with interest at the rate specified in paragraph 10 of the Schedule or, if not specified, the overnight LIBOR rate as at 11.00 a.m., London time. Interest will accrue daily on a compound basis. 11.8 Set-off: The Non-Defaulting Party may set off any amount due under paragraph 11.2(b) against any amount payable the other way under any other agreement between the Parties and for that purpose may in good faith estimate any unascertained obligations but must account for any difference when the obligation is finally ascertained. This paragraph does not create a security interest and operates in addition to and without affecting any other right of set-off, combination of accounts, lien or other right to which any Party may be entitled.