Collateral Allocation Mechanism
(CAM Exchange) Clauses (Credit Agreement)

Summary

These Collateral Allocation Mechanism (CAM Exchange) clauses are used in loan agreements with a tranche structure to equalize recoveries for lenders with allocation of payments on a pro rata basis. They are placed after the events of default section of the agreement. These clauses include practical guidance and drafting notes. These clauses should be read in conjunction with the practice notes Cross-Border Financing Transactions and Tranches of Loans and Loan Mechanics in Credit Agreements. For a full listing of key content covering a credit agreement, see Credit Agreement Resource Kit.