The LC Commitment Sample Clauses
The LC Commitment clause defines the obligations and responsibilities of a party, typically a lender, to issue or maintain a Letter of Credit (LC) under a contract. In practice, this clause outlines the conditions under which the LC will be provided, such as meeting certain financial covenants or milestones, and may specify the maximum amount, duration, and renewal terms of the LC. Its core function is to ensure that the beneficiary has a reliable financial guarantee, thereby reducing credit risk and providing assurance that payment or performance will be secured if contractual obligations are not met.
The LC Commitment. (i) Subject to the terms and conditions set out in this Agreement, Lender agrees, (A) from time to time on any Business Day during the period from the Closing Date until the Revolving Credit Termination Date, to issue LCs for the account of Borrower, and to amend or renew LCs previously issued by it, in accordance with subsection (b) below, and (B) to honor drafts under the LCs; provided that, Lender shall not be obligated to make any LC Credit Extension with respect to any LC, if, as of the date of and after giving effect to, such LC Credit Extension, the Revolving Credit Exposure would exceed the Revolving Credit Limit. Within the foregoing limits, and subject to the terms and conditions hereof, Borrower’s ability to obtain LCs shall be fully revolving, and accordingly Borrower may, prior to the LC Termination Date, obtain LCs to replace LCs that have expired or that have been drawn upon and reimbursed.
(ii) Lender shall be under no obligation to issue any LC if:
(A) the expiry date of such requested LC would occur after the Revolving Credit Termination Date, unless Lender has approved such expiry date;
(B) the issuance of such LC would violate one or more policies of Lender; or
(C) it is denominated in a currency other than Dollars.
(iii) Lender shall be under no obligation to amend any LC if (A) Lender would have no obligation at such time to issue such LC in its amended form under the terms of this Agreement, or (B) the beneficiary of such LC does not accept the proposed amendment to such LC.