KRS 355.5-114: Assignment of proceeds.

(1) In this section, "proceeds of a letter of credit" 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's drawing rights or documents presented by the beneficiary.

(2) 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.

(3) An issuer or nominated person need not recognize an assignment of proceeds of a

letter of credit until it consents to the assignment.

(4) An issuer or nomin ated 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.

(5) Rights of a transferee beneficiary or nominated person are independent of the

beneficiary's assignment of the proceeds of a letter of credit and are superior to the

assignee's right to the proceeds.

(6) Neither the rights r ecognized by this section between an assignee and an issuer,

transferee beneficiary, or nominated person nor the issuer's or nominated person'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's rights to proceeds is governed by Article 9 of this

chapter 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's right to proceeds and its perfection are

governed by Article 9 of this chapter or other law.