THE LONDON CLUB GLOSSARY OF SELECTED TERMS (continued)

Set-off
This is a bank's right to apply unrestricted or general deposits of the obligor with the bank against obligations of the obligor to the bank.

Sharing Clause
This clause is designed to ensure that each bank in a syndicated credit facility receives equality in the rateable repayment of its loan and thus places all lenders under a single loan agreement on an equal footing in the event that one bank, for example, receives a non-pro rata payment from the obligor. It is thus a restriction on the borrower's right to give any preference to any particular creditor. In a major rescheduling providing for payments to hundreds of banks in several different currencies on staggered repayment dates, administering the workings of a sharing clause can be enormous. It should also be noted that the cost of administering a sharing clause is expected to be borne by the borrower.

Sovereign Immunity
Ability of a sovereign state to claim it is not liable for an obligation it may have incurred or that a court has no jurisdiction to hear a claim against it.

Stand-by Arrangement
An IMF programme under which a member country is able to borrow Fund resources for a period of up to three years, to restore domestic and external balance to its economy. Such programmes often require the country to adopt more restrictive monetary and fiscal policies.

Syndicated Loan
A loan where a group of banks known as a syndicate is making the loan and sharing the risk although they are separately, not jointly, liable to make the loan.

Trade Creditors
Trade creditors have no direct role in the rescheduling process of bank creditors as they are usually given special status by not being included in the debts to be rescheduled (since trade credits are of a short-term nature). This facilitates the repayment of existing and extension of future suppliers credits and other trade financing.

Unanimity Rule
This rule states that all participants to a rescheduling agreement must be unanimous in respect of any amendment or waiver and especially as regards loan commitment of all creditors, interest payable, amortization dates and amounts of repayment.

Voluntary Repayment or Prepayment
This is a clause stating that the obligor will not voluntarily repay or agree to repay nor allow any of its public sector entities to voluntarily repay or agree to repay any external debt (except for short-term debt) incurred prior to its originally specified maturity without the consent of a percentage of the rescheduled creditors unless the transaction involves a refinancing whereby the creditors under the refinancing end up with repayment terms, interest and other fees which are not better than those set out in the original financing which is being refinanced. The aim is to avoid creditors (who are owed debt as of the same cut-off date by debtors who are being rescheduled) being paid earlier than is envisaged in their existing credit agreements since this may have adverse impact on the foreign exchange available to the obligor.

Voluntary Standstill Request
A document sent by a Sovereign to all bank and financial institution creditors asking for an extension of upcoming public sector principal maturities and stating intention of Sovereign to contact banks with the greatest exposure with the aim of suggesting a meeting to discuss the situation. After the establishment of a Bank Advisory Committee (BAC), a renewed standstill request may be sent out to all creditors with the endorsement of the advisory committee.

Warranties
See representations and warranties.

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