Common use of Application of the Payments Clause in Contracts

Application of the Payments. One of the following two scenerios shall be used in the application of payments received on loans originated by FSNB in which UG has an interest. Each loan shall in its individual agreement identify which payment application method will be utilized for that particular loan. (a) FSNB and UG shall each share in all principal and interest payments and other collections under the Loan in proportion to their respective percentage ownership interests in the Loan (with appropriate provisions made for differences in interest rates between FSNB and UG). (b) All principal payments under the Loan shall be first applied towards payment of UG's ownership interest in the Loan, until such time as UG's ownership interest is paid in full. However, if there should be an event of default under the Loan (as provided under the Loan documents), FSNB and UG shall thereafter each share in subsequent principal and interest payments and/or collections in proportion to their respective percentage ownership interests in the Loan as existing at time of default (with appropriate provisions made for differences in interest rates between FSNB and UG). Principal and interest payments and/or other amounts collected by FSNB under the Loan shall be held in trust for the benefit of UG, until such funds, representing UG's ownership interest in such payments under (a) or (b) above, are actually paid to and received by UG.