Utilization Margin Clause Samples
The Utilization Margin clause defines the additional margin or collateral required when a borrower utilizes a certain portion of their available credit or facility. Typically, as the usage of the credit facility increases, the margin rate may also increase, meaning the borrower must provide more collateral or pay a higher interest rate on the utilized amount. This mechanism is often used in lending agreements to manage the lender's risk exposure as the borrower's indebtedness rises. The core function of this clause is to incentivize prudent borrowing and protect the lender by ensuring adequate security as credit utilization grows.
Utilization Margin. If on any day the sum of the aggregate outstanding principal amount of all Loans plus the L/C Obligations then outstanding exceeds the product of (A) one-half (1/2) times (B) the Loan Commitment (or if all of the Commitments shall have been terminated, the Loan Commitment in effect immediately prior to such termination), the Applicable Percentage otherwise applicable to the Loans shall be increased by a per annum percentage set forth under the heading "Applicable Percentage for Utilization Margin" in the table included in the definition of "Applicable Percentage" (the "Utilization Margin"). The accrued Utilization Margin shall be due and payable quarterly in arrears on each Interest Payment Date (as well as on any date that the Loan Commitment is reduced), beginning with the first of such dates to occur after the Closing Date.
Utilization Margin. For each day from and after the date hereof to but not including the Revolving Termination Date on which the Aggregate Outstanding Credit Exposure exceeds fifty percent (50%) of the aggregate Commitments (or if all of the Commitments shall have been terminated, the aggregate Commitments in effect immediately prior to such termination), the interest rate otherwise applicable to the Loans and the LC Fee, respectively, shall be increased at a rate per annum equal to the Applicable Utilization Margin in effect from time to time. Such Applicable Utilization Margin shall (i) be computed on a quarterly basis in arrears on the last Business Day of each calendar quarter, (ii) accrue for all such days from the Closing Date to the date on which this Agreement is terminated and all of the Obligations hereunder have been paid in full, and (iii) be payable in arrears on the last Business Day of each such quarter commencing on the last Business Day of the fiscal quarter following the Closing Date through the date on
Utilization Margin. (i) (x) If on any day the sum of the aggregate outstanding principal amount of all Loans plus the L/C Obligations then outstanding exceeds the product of (A) one-half (1/2) times (B) the Loan Commitment (or if all of the Commitments shall have been terminated, the Loan Commitment in effect immediately prior to such termination), and (y) from and after the Conversion Date, the Applicable Percentage otherwise applicable to the Loans shall be increased by a per annum percentage set forth under the heading “Applicable Percentage for Utilization Margin” in the table included in the definition of “Applicable Percentage” (the “Utilization Margin”).
(ii) The accrued Utilization Margin shall be due and payable on each Interest Payment Date (as well as on any date that the Loan Commitment is reduced), beginning with the first of such dates to occur after the Closing Date.