Threshold Event Collateral Clause Samples
The Threshold Event Collateral clause establishes the conditions under which a party must provide collateral when certain financial thresholds are met or exceeded. Typically, this clause specifies the types of events or exposures that trigger the requirement to post additional collateral, such as a decline in creditworthiness or a significant change in market value. By setting clear parameters for collateralization, the clause helps manage counterparty risk and ensures that parties are protected against potential losses arising from adverse events.
Threshold Event Collateral. (a) Notwithstanding the foregoing, the Note-B Holders shall be entitled to avoid a Control Appraisal Period caused by the application of an Appraisal Reduction Event upon satisfaction of the either of the following (which must be completed within sixty (60) days following Note-B Holders’ receipt of written notice from the Administrative Agent of the occurrence of a Control Appraisal Period): (x) Note-B Holders pay to Administrative Agent for application to the reduction of the principal balance of the A-Note, one hundred percent (100%) of the amount by which the principal balance of the Loan must be reduced to cause such Control Appraisal Period to no longer be continuing or (y)
(i) the Note-B Holders shall have delivered as a supplement to the appraised value of the Property, in the amount specified in clause (ii) below, to Administrative Agent together with documentation to create and perfect a first-priority security interest in favor of the Administrative Agent for the benefit of Note-A Holders in such collateral in form and substance reasonably acceptable to Administrative Agent and the Note-B Holders)
(a) cash collateral for the benefit of the Note-A Holders, and/or (b) an unconditional and irrevocable standby letter of credit payable on sight demand with Administrative Agent for the benefit of the Note-A Holders as beneficiary issued by a domestic bank or other financial institutions the long-term unsecured debt obligations of which are rated at least “A+” by S&P and “A1” by ▇▇▇▇▇’▇ (either (a) or (b), the “Threshold Event Collateral”), and (ii) the Threshold Event Collateral shall be an amount equal to one hundred percent (100%) of the amount which, when added to the appraised value of the Property, would cause the Control Appraisal Period not to occur. If the requirements of this paragraph are satisfied by the Note-B Holders (a “Threshold Event Cure”), no Control Appraisal Period caused by application of an Appraisal Reduction Amount shall be deemed to have occurred. If a letter of credit is furnished as Threshold Event Collateral, the Note-B Holders shall be required to renew such letter of credit not later than 30 days prior to expiration thereof or to replace such letter of credit with a substitute letter of credit or other Threshold Event Collateral with an expiration date that is greater than 180 days from the date of substitution; provided, however, that if a letter of credit is not renewed prior to 30 days prior to the expiration date of su...
Threshold Event Collateral. The Providence Biltmore Hotel Threshold Event Cure shall continue until the Appraised Value of the related Mortgaged Property plus the value of the Providence Biltmore Hotel Threshold Event Collateral would not be sufficient to prevent a Providence Biltmore Hotel Change of Control Event from occurring. Upon a Final Recovery Determination with respect to the Providence Biltmore Hotel Whole Loan, such Providence Biltmore Hotel Threshold Event Collateral shall be paid to reimburse the Trust Fund for any realized loss with respect to the Providence Biltmore Hotel Whole Loan after application of the net proceeds of liquidation, not in excess of the Stated Principal Balance of the Providence Biltmore Hotel Mortgage Loan, plus accrued and unpaid interest thereon at the applicable interest rate and all other Additional Trust Fund Expenses and other amounts reimbursable under this Agreement and under the Providence Biltmore Hotel Intercreditor Agreement. In addition, the Master Servicer, in accordance with the Servicing Standard, shall have the right to draw on the Providence Biltmore Hotel Threshold Event Collateral at any time in the event that the value of Providence Biltmore Hotel Whole Loan is materially and adversely affected due to any action or inaction taken by the Providence Biltmore Hotel B Note Holder (including while acting as or through the Providence Biltmore Hotel Operating Advisor) with respect to the administration of the Providence Biltmore Hotel Whole Loan during the continuance of a Providence Biltmore Hotel Threshold Event Cure.
Threshold Event Collateral. Upon a Final Recovery Determination with respect to the [DEF] Loan Combination, any [DEF] Threshold Event Collateral held by the Special Servicer shall be available to reimburse the Trust for any realized loss of principal and/or interest incurred with respect to the [DEF] Mortgage Loan (or any successor REO Loan with respect thereto), up to the maximum amount permitted under the [DEF] Co-Lender Agreement, together with all other amounts (including, without limitation, Additional Trust Fund Expenses related to the [DEF] Loan Combination or any related REO Property) reimbursable under the [DEF] Co-Lender Agreement and this Agreement. To the extent necessary to effect such reimbursement, the Special Servicer shall draw down upon or otherwise liquidate all non-cash [DEF] Threshold Event Collateral and shall forward the reimbursement payment to the Master Servicer for deposit in the Certificate Account. Such reimbursement or payment shall, except for purposes of Section 3.11 hereof, constitute "Liquidation Proceeds". The Special Servicer may not release any [DEF] Threshold Event Collateral to a [DEF] B-Noteholder, except as expressly required under Section 17(f) of the [DEF] Co-Lender Agreement (including, in connection with a Final Recovery Determination with respect to the [DEF] Loan Combination, following the reimbursement of the Trust as contemplated above in this Section 6.12(e)). The arrangement by which the [DEF] Threshold Event Collateral is held shall constitute an "outside reserve fund" within the meaning of Treasury Regulation Section 1.860G-2(h) and such property (and the right to reimbursement of any amounts with respect thereto) shall be beneficially owned by the applicable [DEF] B-Noteholder, who shall be taxed on all income with respect thereto.