(a) If any of the following events (each an “Event of Default”) occurs in relation to either party (the "Defaulting Party”, the other party being the “non-Defaulting Party”) whether acting as Seller or Buyer -

(i) Buyer fails to pay the First Purchase Price upon the applicable First Purchase Date or Seller fails to pay the Second Purchase Price upon the applicable Second Purchase Date; or

(ii) if the parties have specified in Annex I that this sub-paragraph shall apply, Seller fails to deliver the First Purchased Securities on the First Purchase Date or Buyer fails to deliver the Second Purchased Securities on the Second Purchase Date, in either case within the standard settlement time for delivery of the Securities concerned; or

(iii) Seller or Buyer fails to pay when due any sum payable under sub-paragraph (i) or (j) below; or

(iv) Seller or Buyer fails to:

(A) make a Margin Transfer within the minimum period in accordance with paragraph 6(g) or, in the case of an obligation to deliver Equivalent Margin Securities, either to deliver the relevant Equivalent Margin Securities or to pay Cash Margin in accordance with paragraph 6(h)(i) or to pay the Cash Equivalent Amount in accordance with paragraph 6(h)(ii); or

(B) where paragraph 6(i) applies, to provide margin in accordance with that paragraph; or

(v) Seller or Buyer fails to comply with paragraph 7; or

(vi) an Act of Insolvency occurs with respect to Seller or Buyer; or

(vii) any representations made by Seller or Buyer are incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; or

(viii) Seller or Buyer admits to the other that it is unable to, or intends not to, perform any of its obligations hereunder or in respect of any Transaction; or

(ix) Seller or Buyer being declared in default or being suspended or expelled from membership of or participation in, any securities exchange or suspended or prohibited from dealing in securities by any Competent Authority, in each case on the grounds that it has failed to meet any requirements relating to financial resources or credit rating; or

(x) Seller or Buyer fails to perform any other of its obligations hereunder and does not remedy such failure within 30 days after notice is given by the non-Defaulting Party requiring it to do so,

then sub-paragraphs (b) to (h) below shall apply.

(b) If at any time an Event of Default has occurred and is continuing the non-Defaulting Party may, by not more than 20 days’ notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in Annex I with respect to the Defaulting Party, then an Early Termination Date in respect of all outstanding Transactions will occur at the time immediately preceding the occurrence with respect to the Defaulting Party 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.

(c) If an Early Termination Date occurs, subject to sub-paragraph (d) below, the Exercise Date for each Transaction hereunder shall occur on the Early Termination Date and the parties acknowledge and agree that the Exercising Party shall have the right to exercise the undertaking(s) of the Undertaking Party in respect of all (but not some only) of the Non-Exercised Transactions (for which purpose, the Seller Exercise Conditions and the Buyer Exercise Conditions shall be disregarded), by delivering an Exercise Notice to the Undertaking Party (and, for the avoidance of doubt, the same Exercise Notice may cover any number of Transactions), on any day in the period from (and including) the date that the statement under sub-paragraph (e)(iii) below is effective to (but excluding) the day falling 30 calendar days after such date (the “Termination Long Stop Date"); provided that, if the Exercising Party has not delivered an Exercise Notice in accordance with paragraph 5 and this sub-paragraph (c) on or prior to the Termination Long Stop Date, such Exercise Notice will be deemed to have been delivered on the Termination Long Stop Date.

(d) If the Exercising Party exercises the undertaking(s) of the Undertaking Party in accordance with paragraph 5 and sub-paragraph (c) above, subject to the following provisions in respect of each Transaction: (i) all Cash Margin shall be repayable and Equivalent Margin Securities shall be deliverable and Cash Equivalent Amounts shall be payable, in each case on the Cash Settlement Payment Date; and (ii) performance of the respective obligations of the parties with respect to the delivery of Securities, the payment of the Second Purchase Price for any Second Purchased Securities, the repayment of any Cash Margin and the payment of Cash Equivalent Amounts shall be deemed to be discharged and replaced with an obligation on the Undertaking Party to pay the Cash Settlement Amount to the Exercising Party in accordance with the provisions of sub-paragraph (e) below.

(e)    (i) The Default Market Values of the Second Purchased Securities and any equivalent Margin Securities to be transferred, the amount of any Cash Margin to be transferred and the Second Purchase Prices and Cash Equivalent Amounts to be paid by each party shall be established by the non-Defaulting Party for all Transactions as at the Early Termination Date, provided that, if the parties have specified in Annex I that "Zero Price Differential on Default” shall apply, then, for the purpose of determining the Second Purchase Price in respect of each Non-Exercised Transaction, the Price Differential shall be deemed to be zero;

        (ii) on the basis of the sums so established, an account shall be taken (as at the Early Termination Date) of what is due from each party to the other under this Agreement (on the basis that each party's claim against the other in respect of the transfer to it of Second Purchased Securities or Equivalent Margin Securities under this Agreement equals the Default Market Value therefor and including amounts payable under paragraphs 12(h) and 14 (if applicable)) 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). For the purposes of this calculation, all Transactions shall be deemed to be Exercised Transactions and all sums not denominated in the Base Currency shall be converted into the Base Currency at the Spot Rate; and

       (iii) as soon as reasonably practicable after effecting the calculation above, the non-Defaulting Party shall provide to the Defaulting Party a statement showing in reasonable detail such calculations and specifying the balance payable by one party to the other (such balance, the "Cash Settlement Amount”) and such balance shall be due and payable on the later of the Business Day following (A) the date of such statement and (B) the date on which the Exercising Party exercises the undertaking(s) of the Undertaking Party (the later of such dates, the “Cash Settlement Payment Date”).

(f) For the purposes of this Agreement, the "Default Market Value” of any Second Purchased Securities or Equivalent Margin Securities shall be determined by the non-Defaulting Party on or as soon as reasonably practicable after the Early Termination Date in accordance with sub-paragraph (g) below, and for this purpose - 

(i) 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;

(ii) "Deliverable Securities” means Second Purchased Securities or Equivalent Margin Securities to be delivered by the Defaulting Party (in the case of Second purchased Securities, following the exercise by the Exercising Party of the Undertaking Party’s undertaking(s));

(iii) "Net Value” means at any time, in relation to any Deliverable Securities or Receivable Securities, the amount which, in the reasonable opinion of the non-Defaulting Party, represents their fair market value, having regard to such pricing sources (including trading prices) and methods (which may include, without limitation, available prices for Securities with similar maturities, terms and credit characteristics as the relevant Second Purchased Securities or Equivalent Margin Securities) as the non-Defaulting Party considers appropriate, less, in the case of Receivable Securities, or plus, in the case of Deliverable Securities, all Transaction Costs which would be incurred or reasonably anticipated in connection with the purchase or sale of such Securities;

(iv) "Receivable Securities” means Second Purchased Securities or Equivalent Margin Securities to be delivered to the Defaulting Party (in the case of Second Purchased Securities, following the exercise by the Exercising Party of the Undertaking Party’s undertaking(s)); and

(v) "Transaction Costs” in relation to any transaction contemplated in paragraph 12(f) or (g) means the reasonable costs, commissions, fees and expenses (including any mark-up or mark-down or premium paid for guaranteed delivery) incurred or reasonably anticipated in connection with the purchase of Deliverable Securities or sale of Receivable 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.

(g) If-

(i) on or about the Early Termination Date the non-Defaulting Party has sold, in the case of Receivable Securities, or purchased, in the case of Deliverable Securities, Securities which form part of the same issue and are of an identical type and description as those Second Purchased Securities or Equivalent Margin Securities (regardless as to whether or not such sales or purchases have settled), the non-Defaulting Party may elect to treat as the Default Market Value -

(A) in the case of Receivable Securities, the net proceeds of such sale after deducting all reasonable costs, commissions, fees and expenses incurred in connection therewith (provided that, where the Securities sold are not identical in amount to the Second Purchased Securities or Equivalent Margin Securities, the non-Defaulting Party may, acting in good faith, either (x) elect to treat such net proceeds of sale divided by the amount of Securities sold and multiplied by the amount of the Second Purchased Securities or Equivalent Margin Securities as the Default Market Value or (y) elect to treat such net proceeds of sale of the Second Purchased Securities or Equivalent Margin Securities actually sold as the Default Market Value of that proportion of the Second Purchased Securities or Equivalent Margin Securities, and, in the case of (y), the Default Market Value of the balance of the Second Purchased Securities or Equivalent Margin Securities shall be determined separately in accordance with the provisions of this paragraph 12(g)); or

(B) in the case of Deliverable Securities, the aggregate cost of such purchase, including all reasonable costs, commissions, fees and expenses incurred in connection therewith (provided that, where the Securities purchased are not identical in amount to the Second Purchased Securities or Equivalent Margin Securities, the non-Defaulting Party may, acting in good faith, either (x) elect to treat such aggregate cost divided by the amount of Securities sold and multiplied by the amount of the Second Purchased Securities or Equivalent Margin Securities as the Default Market Value or (y) elect to treat the aggregate cost of purchasing the Second Purchased Securities or Equivalent Margin Securities actually purchased as the Default Market Value of that proportion of the Second Purchased Securities or Equivalent Margin Securities, and, in the case of (y), the Default Market Value of the balance of the Second Purchased Securities or Equivalent Margin Securities shall be determined separately in accordance with the provisions of this paragraph 12(g));

(ii) on or about the Early Termination Date the non-Defaulting Party has received, in the case of Deliverable Securities, offer quotations or, in the case of Receivable Securities, bid quotations in respect of Securities of the relevant description from two or more market makers or regular dealers in the Appropriate Market in a commercially reasonable size, using pricing methodology which is customary for the relevant type of security (as determined by the non-Defaulting Party) the non-Defaulting Party may elect to treat as the Default Market Value of such Securities -

(A) the price quoted (or where a price is quoted by two or more market makers, the arithmetic mean of such prices) by each of them for, in the case of Deliverable Securities, the sale by the relevant market maker or dealer of such Securities or, in the case of Receivable Securities, the purchase 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 (x) to reflect accrued but unpaid coupons not reflected in the price or prices quoted in respect of such securities and (y) in respect of any Pool Factor Affected Security, to reflect the realisable value of such Security, taking into consideration the Pool Factor Distortion (and for this purpose, “Pool Factor Affected Security” means a security other than an equity security in respect of which the decimal value of the outstanding principal divided by the original principal balance of such Security is less than one (as indicated by any pool factor applicable to such security), such circumstance a “Pool Factor Distortion”);

(B) after deducting, in the case of Receivable Securities, or adding, in the case of Deliverable Securities the Transaction Costs which would be incurred or reasonably anticipated in connection with such a transaction; or

(iii) if, acting in good faith the non-Defaulting Party either -

(A) has endeavoured but been unable to sell or purchase Securities in accordance with sub-paragraph (i) above or to obtain quotations in accordance with sub-paragraph (ii) above (or both); or

(B) 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 sub-paragraph (ii) above, the non-Defaulting Party may determine the Net Value of the relevant Second Purchased Securities or Equivalent Margin Securities (which shall be specified) and may treat such Net Value as the Default Market Value of the relevant Second Purchased Securities or Equivalent Margin Securities.

(h) The Defaulting Party shall be liable to the non-Defaulting Party for the amount of all reasonable and legal and other professional expenses incurred by the non-Defaulting Party in connection with or as a consequence of an Event of Default.

(i) If Seller fails to deliver the First Purchased Securities to Buyer on the applicable First Purchase Date, Buyer may -

(i) if it has paid the First Purchase Price to Seller, require Seller immediately to repay the sum so paid;

(ii) if Buyer has a Transaction Exposure to Seller in respect of the relevant Transaction, require Seller from time to time to pay Cash Margin at least equal to such Transaction Exposure;

(iii) at any time while such failure continues, terminate the Transaction by giving written notice to Seller. On such termination the obligations of Seller and Buyer with respect to delivery of the First Purchased Securities, and their respective undertakings, shall terminate and, unless "Zero Price Differential on Default" is specified as applicable in Annex I and the Transaction is a Non-Exercised Transaction, Seller shall pay to Buyer an amount equal to the excess of the Second Purchase Price at the date of Termination over the First Purchase Price.

(j) If Buyer fails to deliver some or all of the Second Purchased Securities to Seller on the applicable Second Purchase Date, Seller may -

(i) if it has paid the Second Purchase Price to Buyer, require Buyer immediately to repay the sum so paid;

(ii) if Seller has a Transaction Exposure to Buyer in respect of the relevant Transaction, require Buyer from time to time to pay Cash Margin at least equal to such Transaction Exposure;

(iii) at any time while such failure continues, by written notice to Buyer declare that that Transaction or part of that Transaction corresponding to the Second Purchased Securities that have not been delivered (but only that Transaction or part of Transaction) shall be terminated immediately in accordance with sub-paragraph (d) above (disregarding for this purpose references in that sub-paragraph to transfer of Cash Margin, delivery of Equivalent Margin Securities and payment of Cash Equivalent Amount and as if references to the Second Purchase Date were to the date on which notice was given under this sub-paragraph).

(k) The provisions of this Agreement constitute a complete statement of the remedies available to each party in respect of any Event of Default.

(l) Subject to paragraph 12(m), neither party may claim any sum by way of consequential loss or damage in the event of a failure by the other party to perform any of its obligations under this Agreement.

(m)(i) Subject to sub-paragraph (ii) below, if as a result of a Transaction terminating before the scheduled Second Purchase Date under paragraphs 12(b), 12(i)(iii) or 12(j)(iii), the non-Defaulting Party, in the case of paragraph 12(b), Buyer, in the case of paragraph 12(i)(iii), or Seller, in the case of paragraph 12(j)(iii), (in each case the "first party”) incurs any loss or expense in entering into replacement transactions or in otherwise hedging its exposure arising in connection with a Transaction so terminating, the other party shall be required to pay to the first party the amount determined by the first party in good faith and without double counting to be equal to the loss or expense incurred in connection with such replacement transactions or hedging (including all fees, costs and other expenses) less the amount of any profit or gain made by that party in connection with such replacement transactions or hedging; provided that if that calculation results in a negative number, an amount equal to that number shall be payable by the first party to the other party.

(ii) If the first party reasonably decides, instead of entering into such replacement transactions, to replace or unwind any hedging transactions which the first party entered into in connection with the Transaction so terminating, or to enter into any replacement hedging transactions, the other party shall be required to pay to the first party the amount determined by the first party in good faith to be equal to the loss or expense incurred in connection with entering into such replacement or unwinding (including all fees, costs and other expenses) less the amount of any profit or gain made by that party in connection with such replacement or unwinding; provided that if that calculation results in a negative number, an amount equal to that number shall be payable by the first party to the other party.

(n) Each party shall immediately notify the other if an Event of Default, or an event which, upon the service of a notice or the lapse of time, or both, would be an Event of Default, occurs in relation to it.

(o) Any amount payable to one party (the Payee) by the other party (the Payer) under paragraph 12(e) 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).