                                 CODE OF VIRGINIA

ASSIGNMENT OF PROCEEDS (§ 8.5A-114)

a. In this section, &#8220;proceeds of a letter of credit&#8221; means the cash,
check, accepted draft, or other item of value paid or delivered upon honor or
giving of value by the issuer or any nominated person under the letter of
credit. The term does not include a beneficiary&#8217;s drawing rights or
documents presented by the beneficiary.

b. A beneficiary may assign its right to part or all of the proceeds of a letter
of credit. The beneficiary may do so before presentation as a present assignment
of its right to receive proceeds contingent upon its compliance with the terms
and conditions of the letter of credit.

c. An issuer or nominated person need not recognize an assignment of proceeds of
a letter of credit until it consents to the assignment.

d. An issuer or nominated person has no obligation to give or withhold its
consent to an assignment of proceeds of a letter of credit, but consent may not
be unreasonably withheld if the assignee possesses and exhibits the letter of
credit and presentation of the letter of credit is a condition to honor.

e. Rights of a transferee beneficiary or nominated person are independent of the
beneficiary&#8217;s assignment of the proceeds of a letter of credit and are
superior to the assignee&#8217;s right to the proceeds.

f. Neither the rights recognized by this section between an assignee and an
issuer, transferee beneficiary, or nominated person nor the issuer&#8217;s or
nominated person&#8217;s payment of proceeds to an assignee or a third person
affect the rights between the assignee and any person other than the issuer,
transferee beneficiary, or nominated person. The mode of creating and perfecting
a security interest in or granting an assignment of a beneficiary&#8217;s rights
to proceeds is governed by Title 8.9A or other law. Against persons other than
the issuer, transferee beneficiary, or nominated person, the rights and
obligations arising upon the creation of a security interest or other assignment
of a beneficiary&#8217;s right to proceeds and its perfection are governed by
Title 8.9A or other law.

HISTORY: 1997, c. 343.