Cross-Product Master Agreement

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The Cross-Product Master Agreement of February 2000 is a master netting agreement designed to allow managing counterparty risk and netting across different financial product types and industry standard master agreements to reduce financial system risk.

It is a joint publication of International Capital Markets Assocition (ICMA), the British Bankers Association (BBA), the Emerging Markets Traders Association (EMTA), the Foreign Exchange Committee, the International Swaps and Derivatives Association (ISDA), the Japan Securities Dealers Association (JSDA) and the London Investment Banking Association (LIBA) (collectively referred to as the “Publishing Associations")

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Extract

2. Close-Out of all Principal Agreements
2.1 Right to Close Out If any of the following events has occurred and is continuing:
(a) a Close-Out Event in respect of a Party under the terms of a Principal Agreement,
(b) a representation or warranty made or repeated by a Party hereunder proves to have been incorrect or misleading in any material respect when made or repeated, or
(c) a Party is in violation of a covenant made hereunder,
then, the Party which has the right to Close Out the Principal Agreement referred to in paragraph (a) above or the Party to whom the representation, warranty or covenant was made as referred to in paragraph (b) or (c) above (in each case, the “Closing-Out Party") shall be entitled to Close Out all (but not fewer than all) of the Principal Agreements which in the good faith judgment of the Closing-Out Party legally may be Closed Out under applicable law by providing a Close-Out Notice under Section 2.2(a) hereof, except that no Close-Out Notice shall be required for the Close-Out of any Principal Agreement which has been Closed Out by its terms prior to the delivery of a Close-Out Notice. For the purposes of paragraph (a) above, a Close-Out Event under the terms of a Principal Agreement will be deemed to be continuing until the earlier of such time as the conditions that constituted the Close-Out Event under such Principal Agreement cease to exist or the Settlement Amount that is due and payable under such Principal Agreement has been paid in full. Each Principal Agreement is hereby amended accordingly.
2.2 Exercise of Rights
(a) Close-Out Notice The Closing-Out Party shall specify in a notice to the Closed-Out Party (the “Close-Out Notice") the date on which the Principal Agreements are Closed Out pursuant to Section 2.1. The Close-Out Notice given in the manner specified in this Agreement shall satisfy the notification requirements (if any) under each Principal Agreement for accelerating and/or terminating transactions under such Principal Agreement. Each Principal Agreement is hereby amended accordingly.
(b) Notice for Settlement of Automatically Closed-Out Agreements If all of the Principal Agreements have Closed Out automatically by their terms, the Settlement Amount under each such Principal Agreement shall be settled at the times and in the manner set forth in Sections 3.3 and 4 hereof if the Closing-Out Party so specifies in a notice to the Closed-Out Party promptly after all Principal Agreements are Closed Out. Each Principal Agreement is hereby amended accordingly.
(c) The Closing-Out Party's Election For the avoidance of doubt, the Closing-Out Party may elect to exercise its rights under this Agreement by providing a Section 2 Notice. If one of the events listed in Section 2.1 hereof has occurred, unless and until a Closing-Out Party gives a Section 2 Notice, each Party shall retain its rights and obligations under each Principal Agreement without regard to Sections 3 and 4 hereof.

3. Determination and Settlement of Settlement Amounts

3.1 Determination of Settlement Amount The Settlement Amount under each Closed-Out Agreement shall be determined in accordance with the terms of such Closed-Out Agreement.
3.2 Determination of the Base Currency Equivalent of the Settlement Amount When a Section 2 Notice has been given and there is more than one Settlement Amount and a Settlement Amount is denominated in a currency other than the Base Currency (the “Other Currency"), the Closing-Out Party shall determine the amount in the Base Currency (the “Base Currency Equivalent") that would result from the conversion of such Settlement Amount into the Base Currency at the spot exchange rate at which the Closing-Out Party can buy the Base Currency with the Other Currency, as determined in any commercially reasonable manner, for value on the relevant Settlement Date for the Settlement Amount under Section 4 hereof. If all Settlement Amounts are denominated in a single currency other than the Base Currency, the Closing-Out Party may designate such other currency to be the Base Currency.
3.3 Settlement of Settlement Amounts in Accordance with this Agreement When a Section 2 Notice has been given, all Settlement Amounts of Principal Agreements Closed Out pursuant to Section 2 (or Closed Out according to their terms on or prior to the delivery of the Section 2 Notice) shall be settled at the times and in the manner set forth in this Section 3.3 and Section 4 hereof (unless, in the good faith judgment of the Closing-Out Party, it is unlawful to do so), notwithstanding any provision to the contrary in any Closed-Out Agreement, and notwithstanding that Settlement Amounts may be payable by different branches of a Party at different locations or in different currencies pursuant to the terms of the relevant Principal Agreements. The date for settlement of such Settlement Amounts shall be deferred (with interest accruing at the rate and for the period specified in Section 4.5(a) hereof) until the occurrence of a Settlement Date hereunder. Each Principal Agreement is hereby amended accordingly.

4. Set-Off of Settlement Amounts; Accrual of Interest

4.1 Set-Off On the first date and any subsequent date on which both Parties owe one or more Settlement Amounts under two or more Closed-Out Agreements (a “Set-Off Date"), the Closing-Out Party shall aggregate and set off all Settlement Amounts and accrued interest thereon owed by Party A to Party B against the aggregate of the Settlement Amounts and accrued interest thereon owed by Party B to Party A, and only the difference between the aggregate amounts (a “Net Set-Off Amount") shall be owed on such Set-Off Date by the Party with the larger aggregate obligation. The obligation of a Party to settle a Net Set-Off Amount on the Set-Off Date shall be deferred (with interest accruing at the rate and for the period specified in Section 4.5(b) hereof) until the occurrence of the first subsequent Settlement Date if any Settlement Amount is still to be determined.
4.2 Discharge of Settlement Amount If a Settlement Amount has been set off in whole or in part on a Set-Off Date, such Settlement Amount shall, to the extent of such set-off, be deemed to have been discharged and no longer due under the relevant Closed-Out Agreement.
4.3 Further Set-Offs Subject to Section 4.4 hereof, each Net Set-Off Amount shall be treated as if it were a Settlement Amount for purposes of Section 4.1 hereof and shall, with the interest accrued thereon, be included in the set-off on the first subsequent Set-Off Date.
4.4 Final Net Settlement Amount
(a) Final Net Settlement Amount for Closed-Out Agreements On the first date on which the Settlement Amounts in respect of all Closed-Out Agreements have been determined, the Closing-Out Party shall determine the single amount (if any) payable by one Party hereunder (the “Final Net Settlement Amount") and provide to the Closed-Out Party a statement showing the calculation of the Final Net Settlement Amount (which may be provided at the same time and as part of the Section 2 Notice).
(b) Final Settlement Date; Place of Payment The Final Net Settlement Amount shall be payable by the Party from whom such payment is due on the same Business Day on which the statement is provided under Section 4.4(a) hereof, if such statement is delivered by 10:00 a.m. on a Business Day (or, if the euro is the Base Currency, 10:00 a.m. Central European time); otherwise payment shall be made on the following Business Day (the “Final Settlement Date"). Subject to the last sentence of Section 3.2 hereof, the Final Net Settlement Amount shall be paid in the Base Currency, together with interest thereon, from (and including) the Final Settlement Date to (but excluding) the date such amount is paid, at the rate specified in Section 4.5(c) hereof. If the Party owing the Final Net Settlement Amount has more than one branch, there shall be no limitation as to the place of payment of the obligation, unless otherwise specified by the Parties hereto.
4.5 Interest
(a) Interest on Settlement Amounts Each Settlement Amount shall bear interest at the relevant rate specified in the relevant Principal Agreement from (and including) the date on which it falls due under the Principal Agreement to (but excluding) the relevant Settlement Date for such Settlement Amount.
(b) Interest on Net Set-Off Amounts Each Net Set-Off Amount shall bear interest (computed on the basis of daily compounding and the actual number of days elapsed over a year of such number of days as is customary for transactions involving the Base Currency in the London interbank market) at a rate per annum equal to the average of the rates at which overnight deposits in the Base Currency are offered by two major banks (selected by the Closing-Out Party) in the London interbank market at or about 11:00 a.m. (London time) on the Set-Off Date and each day for which such amount remains unpaid, or, if no such rate is available, at such rate as the Closing-Out Party may reasonably select, from (and including) the Set-Off Date therefor to (but excluding) the earlier of the next subsequent Set-Off Date or the Final Settlement Date.
(c) Interest on the Final Net Settlement Amount The Final Net Settlement Amount shall bear interest at the rate specified in Section 4.5(b) hereof plus 1% per annum from (and including) the Final Settlement Date to (but excluding) the date of actual payment.
4.6 No Limitation of Other Rights The Closing-Out Party's rights under this Section 4 shall be in addition to, and not in limitation or exclusion of, any other rights, including rights of set-off which the Closing- Out Party may have (whether by agreement, operation of law or otherwise.

References

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