Substitute or Additional Collateral Clause Samples
The Substitute or Additional Collateral clause allows a party to replace existing collateral with new assets or to provide extra collateral to secure an obligation. In practice, this means that if the value of the original collateral decreases or if the secured party requests, the pledging party can offer different or additional assets, such as cash, securities, or property, to maintain the required level of security. This clause ensures that the secured party remains adequately protected against default risk, even if the original collateral becomes insufficient or unsuitable.
Substitute or Additional Collateral. (i) The Borrower shall have the right, from time to time at its election but subject to the terms of this Section 3.2 and the other provisions of this Agreement, to add one or more Eligible Underlying Loans to the Collateral pledged to the Bank hereunder and/or to remove one or more Eligible Underlying Loans from the Collateral pledged to the Bank hereunder.
(ii) In connection with the addition of any new Eligible Underlying Loan to the Collateral pledged to the Bank hereunder:
(A) The Borrower shall give the Bank at least three (3) Business Days’ prior written notice of the Borrower’s intention to add such new Eligible Underlying Loan to the Collateral, which notice shall be accompanied by such documents, instruments and other materials as shall be reasonably required by the Bank in order to enable the Bank to assess and evaluate the value and adequacy of such new Eligible Underlying Loan. The Bank shall be deemed to have approved such addition if the Bank has not objected to same within three (3) Business Days after the Borrower has provided all of the materials required by this clause (A).
(B) The Borrower shall mortgage, pledge, hypothecate, transfer and grant to the Bank (or cause one or more Pledgors to mortgage, pledge, hypothecate, transfer and grant to the Bank) a first position security interest in and lien on each such new Eligible Underlying Loan.
(iii) No Eligible Underlying Loan shall be removed from the Collateral pledged to the Bank hereunder unless all of the following conditions are satisfied:
(A) No Default or Event of Default then exists hereunder, and no Default of Event of Default will result from such removal.
(B) Immediately after such removal, the aggregate principal amount of all Advances outstanding under this Agreement will not exceed the lesser of (1) the Maximum Amount or (2) the Borrowing Base.
(C) The Borrower shall have given the Bank at least three (3) Business Days’ prior written notice of the Borrower’s intention to remove such Eligible Underlying Loan(s), which notice shall be accompanied by a Borrowing Base Certificate effective as of the date of such notice and prepared and calculated as if the Eligible Underlying Loans to be removed had already been removed. The Bank shall be deemed to have approved such removal if the Bank has not objected to same within three (3) Business Days after the Borrower has provided all of the materials required by this clause (C).
(b) In addition to the foregoing, if at any time and for w...
Substitute or Additional Collateral. Anything in Section 8.01, Section 8.02 or Section 8.03 hereof to the contrary notwithstanding, in any instance that the Borrower is required, pursuant to one of those Sections, to grant the Agent First Mortgages on Real Estate owned by the Borrower and selected by the Agent, the Borrower may, subject to the consent of the Required Lenders (which may be granted or denied in their sole and absolute discretion), grant the Agent, in lieu of or in addition to those First Mortgages, a security interest in Mortgage Receivables owned by the Borrower and selected by the Agent, and/or Junior Mortgages of highest available priority on Real Estate owned by the Borrower and selected by the Agent (with the approval of the Required Lenders), having an aggregate Collateral Value sufficient to satisfy the requirements of the relevant Section.
Substitute or Additional Collateral. Upon the request of Borrower, Lender may accept as substitute or additional collateral such other securities or property or types of securities or property as may be satisfactory to Lender in its sole discretion; and Borrower may not substitute, withdraw, exchange, replace or add Collateral without Lender’s prior written consent, which may be withheld in Lender’s sole discretion.