Collateralization of Letters of Credit Clause Samples
The Collateralization of Letters of Credit clause requires a party to provide collateral to secure obligations under a letter of credit. In practice, this means the party requesting the letter of credit must pledge assets, such as cash or securities, to the issuing bank as security for repayment or performance. This clause ensures that the bank is protected against default by the applicant, thereby reducing the risk of non-payment and facilitating the issuance of the letter of credit.
Collateralization of Letters of Credit. (i) If, after giving effect to any Remargining Payment, the undrawn amount of Letters of Credit exceed the Available Commitment, upon demand by Administrative Agent, Borrower will pledge to Administrative Agent cash in the amount by which the undrawn amount of Letters of Credit exceed the Available Commitment as security for any amounts that become payable under the Letters of Credit and all other Obligations.
(ii) Upon demand by Administrative Agent after the occurrence and during the continuance of an Event of Default, Administrative Agent may cause an Advance to be made in the undrawn amount of all Letters of Credit. Borrower shall have no right to require Administrative Agent to demand or make such Advances. The proceeds of any such Advance will be pledged to and held by Administrative Agent as security for any amounts that become payable under the Letters of Credit and all other Obligations.
(iii) In the alternative, if demanded by Administrative Agent after the occurrence and during the continuance of an Event of Default, Borrower will deposit with and pledge to Administrative Agent cash in an amount equal to the undrawn amount of all Letters of Credit, as further security for any amounts that become payable under the Letters of Credit and all other Obligations.
(iv) Upon any draws under Letters of Credit, Administrative Agent will apply those amounts pledged and held pursuant to Sections 2.21(d)(i), 2.21(d)(ii) and 2.21(d)(iii) to the payment of Reimbursement Amounts, and upon the expiration of the Letters of Credit any remaining amounts will be applied to the repayment of outstanding Obligations or, if all Obligations have been paid in full, such proceeds will be released to Borrower.
(v) Borrower hereby grants to Administrative Agent a security interest in all pledged amounts referred to in Sections 2.21(d)(i), 2.21(d)(ii) and 2.21(d)(iii) as security for the Obligations. Borrower agrees to execute and deliver such additional security agreements, control agreements and other documents as Administrative Agent may reasonably require from time to time with respect to such security interest and pledged funds.
Collateralization of Letters of Credit. (a) At any time and from time to time (i) upon the Administrative Agent’s request given in accordance with Section 9.2 after the occurrence and during the continuance of an Event of Default and (ii) on the L/C Maturity Date, each Borrower shall deliver to the Administrative Agent as cash collateral in an amount in cash equal to the aggregate Stated Amount of all Letters of Credit issued for the account of such Borrower outstanding at such time (whether or not any beneficiary under any Letter of Credit shall have drawn or be entitled at such time to draw thereunder). The Administrative Agent shall deposit such cash in a special collateral account of such Borrower pursuant to arrangements satisfactory to the Administrative Agent (such account, the “Cash Collateral Account”) for the benefit of the Administrative Agent, the Issuing Banks and the Lenders.
(b) At any time and from time to time pursuant to Section 2.6(b), each Borrower shall deliver to the Administrative Agent such additional amount of cash to the extent required by such Section as cover for the aggregate Letter of Credit Exposure of such Borrower, and such cash shall be deposited in such Borrower’s Cash Collateral Account for the benefit of the Administrative Agent, the Issuing Banks and the Lenders.
(c) Each Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Banks and the Lenders, a Lien upon and security interest in its Cash Collateral Account and all amounts held therein from time to time as security for the Letter of Credit Exposure of such Borrower, and for application to its aggregate Reimbursement Obligations as and when the same shall arise. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account for the benefit of the Fronting Banks and the Lenders and such Borrower shall have no interest therein except as set forth in Section 3.7(d). Other than any interest on the investment of such amounts in Cash Equivalents, which investments shall be made at the direction of such Borrower (unless a Default or Event of Default shall have occurred and be continuing, in which case the determination as to investments shall be made at the option and in the discretion of the Administrative Agent), amounts in the Cash Collateral Account shall not bear interest. Interest and profits, if any, on such investments shall accumulate in such account.
(d) In the event of a drawing, and subsequent payment by ...
Collateralization of Letters of Credit. With respect to funding the cash collateralization of unexpired Letters of Credit to the extent required hereunder (it being acknowledged that any requirement to pay or prepay or collateralize Letters of Credit prior to their expiry date shall be construed as a requirement to provide cash collateral under this provision), it is agreed that Company shall provide for the funding of such unexpired Letters of Credit by paying to and depositing with the Administrative Agent for the benefit of the Issuing Lender cash collateral for each such unexpired Letter of Credit; such cash collateral deposited by Company shall be held by the Administrative Agent for the benefit of the Issuing Lender in the Collateral Account with interest to be credited to Company at rates prevailing at the time of deposit for similar accounts with the Administrative Agent. Such Collateral Account shall be held as security for the obligations of Company in relation to such Letters of Credit and the security of the Administrative Agent and Issuing Lender thereby created in such cash collateral shall rank in priority to all other Liens and adverse claims against such cash collateral. Such cash collateral shall be applied to satisfy the obligations of Company for such Letters of Credit as payments are made thereunder and the Issuing Lender is hereby irrevocably directed by Company to so apply any such cash collateral. Amounts held in such Collateral Account may not be withdrawn by Company; however, interest on such deposited amounts shall be for the account of Company and may be withdrawn by Company so long as no Potential Event of Default or Event of Default is then continuing. If after expiry of the Letters of Credit for which such funds are held and application by the Administrative Agent and Issuing Lender of the amounts in such Collateral Account to satisfy the obligations of Company hereunder with respect to the Letters of Credit being repaid, any excess remains, such excess shall be promptly paid by Administrative Agent to Company so long as no Potential Event of Default or Event of Default is then continuing.
Collateralization of Letters of Credit. If Bank approves issuance of a Letter of Credit that expires after the Maturity Date, Borrower shall, upon Bank’s demand, deliver to Bank cash, or other collateral acceptable to Bank in its sole and absolute discretion, having a value, as determined by Bank, at least equal to 105% of the face amount of such Letter of Credit. Any such collateral and/or any amounts received by Bank shall be held by Bank in a separate account at Bank appropriately designated as a cash collateral account in relation to this Agreement and the Letters of Credit and retained by Bank as collateral security for the payment of the Reimbursement Obligations, and Borrower grants a security interest to Bank in such cash collateral account. Such amounts may be applied to reimburse Lender for Reimbursement Obligations, or if no such reimbursement is required to the payment of the Loans as Bank shall determine. Any amounts remaining in any cash collateral account established pursuant hereto after the payment in full of all of the Obligations and the expiration or cancellation of all of the Letters of Credit shall be returned to Borrower (after deduction of Lender’s expenses, if any).
Collateralization of Letters of Credit. (i) Upon (A) the Administrative Agent’s request given in accordance with Section 7.02 during the existence of an Event of Default, and (B) the L/C Maturity Date, each Borrower shall deliver to the Administrative Agent Cash Collateral in an amount equal to the aggregate Stated Amount of all Letters of Credit Issued for the account of such Borrower outstanding at such time (whether or not any beneficiary under any Letter of Credit shall have drawn or be entitled at such time to draw thereunder) and (ii) in the event of a payment under Section 2.06(b), the Administrative Agent will retain such amount as may then be required to be retained, and the Administrative Agent shall deposit such amounts in each case under clauses (i) and (ii) in a special collateral account of such Borrower pursuant to arrangements satisfactory to the Administrative Agent (such account, the “Cash Collateral Account”) for the benefit of the Administrative Agent, the Issuing Banks, and the Banks.
Collateralization of Letters of Credit. 35 Section 4.1 FPL Termination Fee Letter of Credit................................................... 35 Section 4.2 ESA Letter of Credit................................................................... 37 Section 4.3 Fuel Supply Coverage Event............................................................. 37 Section 4.4 Replacement of Performance Letters of Credit........................................... 39 ARTICLE V. INVESTMENTS............................................................................................ 39 Section 5.1 Investment of Monies................................................................... 39 EXHIBIT 10.1 Section 5.2 Valuation and Sale of Investments...................................................... 40
Collateralization of Letters of Credit. Upon demand by the LC Bank in its absolute and sole discretion after the occurrence of an Event of Default, and regardless of whether the conditions precedent in this Agreement for Advances have been satisfied, the Agent will cause an Advance to be made in the undrawn amount of all Letters of Credit. The proceeds of any such Advance will be pledged to and held by the Agent pursuant to the Cash Collateral Agreement as security for any amounts that become payable under the Letters of Credit. Upon any draws under Letters of Credit and upon demand by the LC Bank, the Agent will apply any such amounts in the Cash Collateral Account to the payment of Reimbursement Amounts and upon the expiration of the Letters of Credit any remaining amounts in the Cash Collateral Account will be applied to the repayment of outstanding Advances or if the outstanding Advances have been paid in full, such proceeds will be released to Borrower. In the alternative, if demanded by the LC Bank in its absolute and sole discretion after the occurrence of an Event of Default, Borrower will deposit in the Cash Collateral Account and pledge to the Agent, as agent for and on behalf of the Banks, cash in an amount equal to the amount of all undrawn Letters of Credit. Such amounts will be pledged to and held by the Agent pursuant to the Cash Collateral Agreement as security for any amounts that become payable under the Letters of Credit. Upon any draws under Letters of Credit, upon demand by the LC Bank, the Agent will apply any such amounts in the Cash Collateral Account to the repayment of Reimbursement Amounts and upon the expiration of the Letters of Credit any remaining amounts in the Cash Collateral Account will be applied to the repayment of outstanding Advances or if the outstanding Advances have been paid in full, such proceeds will be released to Borrower.
Collateralization of Letters of Credit. Borrower shall deposit into and maintain in a money market account established at SouthTrust Securities and pledged to Bank (and no other creditor) as security for Bank's extensions or renewals on Borrowers' account pursuant to the Letters of Credit amounts in the form of cash equal to $130,000 per month, beginning July 1, 1997, and continuing until December 31, 1998 or until all outstanding Letters of Credit are fully collateralized. If, at any time, the Bank further issues or extends Letters of Credit for the account of Borrowers, which further issuances or extensions are not fully collateralized, Borrower will be obligated to begin making the monthly cash deposits of $130,000 per month, in the same manner and subject to the same conditions.