Cash Cover by Borrower Clause Samples
The 'Cash cover by Borrower' clause requires the borrower to provide a specified amount of cash as security to the lender, typically to cover potential liabilities or obligations under the agreement. This cash is usually held in a designated account and may be used by the lender if the borrower defaults or certain conditions are triggered, such as a missed payment or a drop in collateral value. The core function of this clause is to protect the lender by ensuring immediate access to funds, thereby reducing credit risk and providing a straightforward mechanism for recourse in case of borrower default.
Cash Cover by Borrower. (a) If a Lender which is a Non-Acceptable L/C Lender fails to provide cash collateral (or notifies the relevant L/C Bank that it will not provide cash collateral) in accordance with Clause 7.4 (Cash Cover by Non-Acceptable L/C Lender and Borrower’s option to provide cash cover) and that L/C Bank notifies the Obligors’ Agent (with a copy to the Facility Agent) that it requires the relevant Borrower of the relevant Documentary Credit or proposed Documentary Credit to provide cash cover to an account with that L/C Bank in an amount equal to that Lender’s L/C Proportion of the outstanding amount of that Documentary Credit and in the currency of that Documentary Credit then that Borrower shall do so within 5 Business Days after the notice is given.
(b) Notwithstanding paragraph (a)(xii) of Clause 1.2 (Construction), the relevant Borrower shall be entitled to withdraw amounts up to the level of that cash cover from the account if:
(i) the relevant L/C Bank is satisfied that the relevant Lender is no longer a Non-Acceptable L/C Lender; or
(ii) the relevant Lender’s obligations in respect of the relevant Documentary Credit are transferred to a New Lender in accordance with the terms of this Agreement; or
(iii) an Increase Lender has agreed to undertake the obligations in respect of the relevant Lender’s L/C Proportion of the Documentary Credit.
(c) To the extent that a Borrower has complied with its obligations to provide cash cover in accordance with this Clause 7.9, the relevant Lender’s L/C Proportion in respect of that Documentary Credit will remain (but that Lender’s obligations in relation to that Documentary Credit may be satisfied in accordance with Clause 1.2 (Construction)). However, the relevant Borrower’s obligation to pay any Documentary Credit fee in relation to the relevant Documentary Credit to the Facility Agent (for the account of that Lender) in accordance with Clause 15 (Fees) will be reduced proportionately as from the date on which it complies with that obligation to provide cash cover (and for so long as the relevant amount of cash cover continues to stand as collateral).
(d) The relevant L/C Bank shall promptly notify the Facility Agent of the extent to which the relevant Borrower provides cash cover pursuant to this Clause 7.9 and of any change in the amount of cash cover so provided.
Cash Cover by Borrower. (a) If a Lender which is a Non-Acceptable L/C Lender fails to provide cash collateral (or notifies the Issuing Bank that it will not provide cash collateral) in accordance with Clause 7.4 (Cash collateral by Non-Acceptable L/C Lender) and the Issuing Bank notifies the Obligors’ Agent (with a copy to the Agent) that it requires the Borrower of the relevant Letter of Credit or proposed Letter of Credit to provide cash cover to an account with the Issuing Bank in an amount equal to that Lender’s L/C Proportion of the outstanding amount of that Letter of Credit and in the currency of that Letter of Credit, then that Borrower shall do so within five Business Days after the notice is given.
(b) Notwithstanding paragraph (d) of Clause 1.2 (Construction), the Issuing Bank may agree to the withdrawal of amounts up to the level of that cash cover from the account if:
(i) it is satisfied that the relevant Lender is no longer a Non-Acceptable L/C Lender; or
(ii) the relevant Lender’s obligations in respect of the relevant Letter of Credit are transferred to a New Lender in accordance with the terms of this Agreement; or
(iii) an Increase Lender has agreed to undertake the obligations in respect of the relevant Lender’s L/C Proportion of the Letter of Credit.
Cash Cover by Borrower. If the Issuing Bank notifies any Borrower that it requires that the Borrower of the Letter of Credit or proposed Letter of Credit (or any other Obligor) to provide cash cover to an account with the Issuing Bank in an amount equal to the outstanding amount of the Letter of Credit and in the currency of the Letter of Credit then that Borrower shall do so within 30 days after the notice is given. The Borrower at the Letter of Credit is allowed to return the Letter of Credit if it fails to provide cash cover refund to in the preceding sentence.