Common use of Collateral Event Clause in Contracts

Collateral Event. In the event that Bank, for any reason, draws upon the Collateral or provides notice to Guarantor of its intent to draw upon the Collateral (an “Event”), Guarantor will provide immediate notice to nFinanSe of such Event. nFinanSe shall, within 10 days of the receipt of such notice from Guarantor, do one of the following, at its discretion: i. Pay directly to Bank any sum sought by Bank; or ii. Provide such additional collateral to Bank to prevent Bank from drawing upon the Collateral; or iii. In the event that Bank draws upon the Collateral, pay to Guarantor any sum drawn plus an amount equal to 5% of the sum drawn as a penalty.