Cross-acceleration

A clause which operates by defaulting a borrower under Agreement A when it defaulted under Agreement B and the lender under Agreement B accelerates repayment. A cross-acceleration provision effectively gives the lender under Agreement A the benefit of the default provisions in Agreement B.

In contrast to a cross-acceleration, a cross-default (www.practicallaw.com/1-382-3377) clause in Agreement A causes an automatic event of default under that agreement when the borrower defaults under Agreement B, even if the lender under Agreement B does not accelerate repayment.

Cross-acceleration clauses are common in indentures (www.practicallaw.com/0-382-3537) and investment-grade credit agreements.

For more information, see Standard Clause, Loan Agreement: Cross-acceleration Event of Default (www.practicallaw.com/7-500-3392).

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