Common use of Standby Letter of Credit Clause in Contracts

Standby Letter of Credit. (a) The amount of the Aggregate Protection which Servicer or Member may maintain pursuant to this Exposure Protection Schedule shall include the sum of (a) the amount remaining to be drawn upon any valid and outstanding Letter of Credit, in lieu of maintaining the amount of the Deposit in an amount equal to the Required Amount and (b) the proceeds of any previous draw on a Letter of Credit held by Servicer or Member and not applied. Any such letter of credit shall be in form and substance acceptable to Servicer and issued by a financial institution acceptable to Servicer, as determined by Servicer in its sole discretion. Notwithstanding any initial acceptance of a Letter of Credit, Servicer reserves the right at any time to either (i) demand delivery of a substitute Letter of Credit issued by different institution or (ii) withhold as Reserved Funds amounts necessary so that the Deposit equals the Required Amount if, in Servicer’s sole discretion, it determines that it cannot or will not continue to accept non-payment risk from the institution obligated on a Letter of Credit previously delivered to Servicer. At such time as the Servicer may no longer draw on a Letter of Credit, Servicer may require that the Deposit equal the Required Amount.