S&P Substitution Events Clause Samples
The S&P Substitution Events clause defines the circumstances under which a party may replace or substitute an entity or asset referenced in a contract due to changes in S&P (Standard & Poor's) credit ratings or related events. Typically, this clause applies when a referenced entity is downgraded, placed on watch, or otherwise affected by S&P's actions, allowing the contract party to substitute a different entity or asset that meets specified credit criteria. Its core function is to manage credit risk and maintain the integrity of the contract by ensuring that the referenced entities or assets continue to meet agreed-upon credit standards.
S&P Substitution Events. If an S&P Substitution Event occurs with respect to each Relevant Entity, Party A shall (a) within 10 Local Business Days of the occurrence of such S&P Substitution Event and at its sole expense, post Eligible Collateral for the benefit of Party B in the amount and on the terms then applicable under the Credit Support Annex, and (b) use commercially reasonable efforts to, within 60 calendar days of the occurrence of such S&P Substitution Event, assign its rights and obligations under all Transactions to an Eligible Replacement in accordance with Part 5(k)(ii) above, provided that (A) no termination payments or other settlement amounts are payable by Party B to either Party A or the Transferee at the time of or as a result of such assignment by Party A and (B) any termination payments or other settlement amounts are to be settled directly between Party A and the Transferee. Upon the successful consummation of any assignment to a Transferee as contemplated in this Part 5(l)(A), any obligation of Party A to post and maintain collateral under the Credit Support Annex in respect of such S&P Substitution Event shall terminate and Party B shall release its security interest in, and return to Party A, any then-posted collateral.
S&P Substitution Events. If an S&P Substitution Event occurs with respect to each Relevant Entity, Party A shall (a) within 10 Local Business Days of the occurrence of such S&P Substitution Event and at its sole expense, post Eligible Collateral for the benefit of Party B in the amount and on the terms then applicable under the Credit Support Annex, and (b) use commercially reasonable efforts to, within 60 calendar days of the occurrence of such S&P Substitution Event, either (1) assign its rights and obligations under all Transactions to an Eligible Replacement in accordance with Part 5(k)(ii) above, provided that (A) no termination payments or other settlement amounts are payable by Party B to either Party A or the Transferee at the time of or as a result of such assignment by Party A and (B) any termination payments or other settlement amounts are to be settled directly between Party A and the Transferee; or (2) procure an Eligible Guarantee of Party A's obligations hereunder by a guarantor that satisfies the Hedge Counterparty Ratings Requirement and has the ▇▇▇▇▇'▇ Required Hedge Ratings. Upon the successful consummation of any assignment to a Transferee or the delivery of any Eligible Guarantee as contemplated in this Part 5(l)(B), any obligation of Party A to post and maintain collateral under the Credit Support Annex shall terminate and Party B shall release its security interest in, and return to Party A, any then-posted collateral.