Security shortfall - Additional Security Clause Samples
The 'Security shortfall - Additional Security' clause requires a party to provide extra security if the value of existing security falls below a specified threshold. In practice, this means that if collateral or guarantees held by the secured party decrease in value due to market fluctuations or other factors, the party providing security must promptly supply additional assets or assurances to restore the agreed security level. This clause ensures that the secured party remains adequately protected against credit risk throughout the contract term, addressing potential gaps in security coverage and maintaining financial stability in the relationship.
Security shortfall - Additional Security. If at any time during the Security Period, the Security Value shall be less than the Security Requirement, the Lender may give notice to the Borrower requiring that such deficiency be remedied and then the Borrower shall (unless the sole cause of such deficiency is the Total Loss of the Vessel and the Borrower in full compliance with its obligations in relation to such Total Loss) either:
(i) prepay (in accordance with Clause 4.2 (Voluntary prepayment) (but without regard to the requirement for five (5) days’ notice) within a period of thirty (30) days of the date of receipt by the Borrower of the Lender’s said notice (the “Prepayment Date”) such sum in Dollars as will result in the Security Requirement after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being at least equal to the Security Value; or
(ii) on or before the Prepayment Date constitute to the satisfaction of the Lender such further security for the Loan as shall be acceptable to the Lender having a value for security purposes (as determined by the Lender in its absolute discretion) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Security Requirement as at such date. Such additional security shall be constituted by: