Common use of Payment SecurityMechanism Clause in Contracts

Payment SecurityMechanism. LetterofCredit(LC): a) shallprovidetotheSPG,inrespectofpaymentofitsMonthlyBillsand/or Supplementary Bills, a monthly unconditional, revolving and irrevocableletter of credit (“Letter of Credit”), opened and maintained which may be drawnupon bytheSPGinaccordancewith thePPA. b) Notlaterthanone(1)Monthbeforethestartofsupply,throughascheduledbankope naLetterofCreditinfavouroftheSPG,tobemadeoperative from a date prior to the Due Date of its first Monthly Bill under thisAgreement. The Letter of Credit shall have a term of twelve (12) Months andshallberenewed annually,foranamountequalto: i. forthefirstContractYear,equaltotheestimatedaveragemonthlybilling; ii. for each subsequent Contract Year, equal to the average of the monthlybillingoftheprevious ContractYear. c) Provided that the SPG shall not draw upon such Letter of Credit prior to the DueDate of the relevant Monthly Bill and/or Supplementary Bill, and shall not makemorethanonedrawal ina Month. d) Provided further that if at any time, such Letter of Credit amount falls short ofthe amount specified above due to any reason whatsoever, shall restoresuch shortfallwithinfifteen(15)days. e) shallcausethescheduledbankissuingtheLetterofCredittointimatetheSPG, inwritingregardingestablishingofsuchirrevocableLetterofCredit. f) shall ensure that the Letter of Credit shall be renewed not later than itsexpiry. g) All costs relating to opening, maintenance of the Letter of Credit shall be bornebythe SPG. h) If fails to pay undisputed Monthly Bill or Supplementary Bill or a partthereof within and including the Due Date, then, subject to above, the SPG maydraw upon the Letter of Credit, and accordingly the bank shall pay without anyreference or instructions from , an amount equal to such Monthly Bill orSupplementary Bill or part thereof, in accordance with above, by presenting tothescheduled bankissuingtheLetterofCredit,thefollowingdocuments: i. a copy of theMonthly Bill or Supplementary Bill which has remainedunpaidto SPGand; ii. a certificate from the SPG to the effect that the bill at item (a) above, orspecifiedpartthereof,isinaccordancewiththeAgreement, is not disputedandhasremainedunpaidbeyondtheDueDate;