Template:Nutshell Pledge GMSLA 11

11 Consequences of an Event of Default
11.1 If an Event of Default occurs to either Party:
11.2 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]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 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 If, between the Termination Date and the Default Valuation Time, as Non-Defaulting Party :

11.4(a) Borrower has sold, or Lender has purchased, fungible Equivalent Securities it may 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).