A Cash Collateralized Letter of Credit is a specialized banking instrument commonly used in international trade and commercial transactions where enhanced security is required. This document, governed by German law, is typically used when a party needs to provide a letter of credit but must secure it with cash collateral, often due to credit considerations or regulatory requirements. The agreement details the mechanism for establishing and maintaining the letter of credit, the handling of the cash collateral, and the rights and obligations of all parties involved. It incorporates provisions compliant with German banking regulations, including the German Banking Act (KWG) and relevant EU regulations, while also adhering to international banking standards such as UCP 600. This structure is particularly valuable in transactions where the beneficiary requires strong payment security, and the applicant is able and willing to provide cash backing.

1. Parties: Identification of all parties to the agreement: the issuing bank, the applicant providing the cash collateral, and the beneficiary

2. Background: Context of the transaction, including the underlying commercial relationship and purpose of the letter of credit

3. Definitions: Key terms used throughout the agreement, including banking, financial and technical terms

4. Letter of Credit Terms: Core terms of the letter of credit including amount, validity period, and conditions for drawing

5. Cash Collateral Arrangements: Details of the cash collateral including amount, account arrangements, and maintenance requirements

6. Security Interest: Creation and perfection of security interest in the cash collateral

7. Drawing Procedures: Process and requirements for drawing under the letter of credit

8. Bank's Rights and Obligations: Detailed provisions regarding the bank's role, responsibilities, and rights

9. Applicant's Representations and Warranties: Standard and transaction-specific representations and warranties

10. Fees and Expenses: All fees, charges, and expense reimbursement provisions

11. Events of Default: Circumstances constituting default and consequences

12. Governing Law and Jurisdiction: Choice of German law and jurisdiction provisions