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Title: |
Master Letter of Credit Agreement |
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Date: |
2003 |
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105KB total |
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$37 |
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#350430 |
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MASTER LETTER OF CREDIT AGREEMENT
Dated as of June 11, 2003
THIS MASTER LETTER OF CREDIT AGREEMENT (this "Agreement") is issued by the
undersigned applicant (the "Applicant") in favor of LaSalle Bank National
Association (together with its affiliates as set forth in Section 11.8, the
"Bank").
The Applicant may from time to time request that the Bank issue letters of
credit for the account of the Applicant. The Applicant agrees that, except as
provided below, any such letter of credit shall be subject to the terms and
provisions of this Agreement, and the Applicant further agrees with and for the
benefit of the Bank as follows:
SECTION 1 CERTAIN DEFINITIONS. When used herein the following terms shall have
the following meanings (such definitions to be applicable to both the singular
and plural forms of such terms):
Application means, at any time, an application (which shall be in writing,
including by facsimile, or made by electronic transmission) for a letter of
credit to be issued by the Bank, specifying (a) the requested issuance date, the
amount, the beneficiary and the expiration date of such letter of credit, (b)
the documentary requirements for drawing thereunder and (c) such other
information as the Bank may reasonably request.
Business Day means any day on which the Bank is open for commercial banking
business at its principal office in Chicago, Illinois.
Event of Default means any of the events described in Section 9.1.
Item means any draft, order, instrument, demand or other document drawn or
presented, or to be drawn or presented, under any Letter of Credit.
ISP means at any time the most recent International Standby Practices issued by
the Institute for International Banking Law & Practice, Inc.
Letter of Credit means any letter of credit issued (including any letter of
credit issued prior to the date hereof) by the Bank for the account of the
Applicant (including any letter of credit issued jointly for the account of the
Applicant and any other Person), in each case as amended or otherwise modified
from time to time, but excluding any letter of credit that is issued pursuant to
an Application which expressly provides that such letter of credit is not issued
pursuant to this Agreement. A letter of credit issued by the Bank pursuant to an
Application from the Applicant (either individually or together with any other
Person) shall be a Letter of Credit hereunder even if another Person is names a
the "Applicant" or "Account Party" in such letter of credit.
Liabilities means all obligations of the Applicant to the Bank and its
successors and assigns, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing or due or to
become due, arising out of or in connection with this Agreement, any Letter of
Credit, any Application or any instrument or document delivered in connection
herewith or therewith.
Person means any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual fiduciary or other capacity.
Prime Rate means the rate per annum established by the Bank from time to time as
its "Prime Rate" for commercial customers. The Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged to
any customer.
UCC means at any time the Uniform Commercial Code as in effect in the State of
Illinois.
UCP means at any time the most recent Uniform Customs and Practice for
Documentary Credits issued by the International Chamber of Commerce.
Unmatured Event of Default means any event which if it continues uncured will,
with lapse of time or notice or both, constitute an Event of Default.
SECTION 2 LETTER OF CREDIT PROCEDURES.
2.1 Issuance of Letters of Credit. Subject to the terms and conditions of
this Agreement, the Bank shall from time to time, issue Letters of Credit for
the account of the Applicant; provided that the terms and provisions of each
Letter of Credit and the Application therefor shall be satisfactory to the Bank
in its discretion.
2.2 Applications. Not later than three Business Days prior to the date of
the proposed issuance of a Letter of
{PAGE}
Credit (or such later date as the Bank shall agree), the Applicant shall deliver
an Application for such Letter of Credit to the Bank. An Application may be sent
by facsimile, by United States mail, by overnight courier, by electronic
transmission using the system provided by the Bank , by personal delivery or by
another means acceptable to the Bank.
2.3 Form of Letters of Credit. (a) The Applicant authorizes the Bank to set
forth the terms of each Application in the Letter of Credit corresponding to
such Application (and in any amendment thereto) in such language as the Bank
deems appropriate, with such variations from such terms as the Bank may in its
discretion determine to be necessary (which determination shall be conclusive)
and not materially inconsistent with such Application. The Bank may, but shall
not be obligated to, request the Applicant to review the form of a Letter of
Credit prior to issuance thereof, in which case the Applicant shall be deemed to
have approved the form of such Letter of Credit. With respect to any other
Letter of Credit, the Applicant agrees that such Letter of Credit shall be
conclusively presumed to be in proper form unless the Applicant notifies the
Bank in writing of any inconsistency in such Letter of Credit within three
Business Days of issuance. Upon receipt of timely notice of any discrepancy in
any Letter of Credit, the Bank will endeavor to obtain the consent of the
beneficiary and any confirming bank for an appropriate modification to such
Letter of Credit; provided that the Bank shall have no liability or
responsibility for its failure to obtain such consent.
(b) The Applicant accepts the risk that a Letter of Credit will be
interpreted or applied other than as intended by the Applicant to the extent
such Letter of Credit, (i) permits presentation at a place other than the place
of issuance, (ii) permits application of laws or practice rules with which the
Applicant is unfamiliar, (iii) includes ambiguous, inconsistent or impossible
requirements, (iv) requires termination or reduction against a presentation made
by the Applicant rather than the beneficiary or, (v) fails to incorporate
appropriate letter of credit practice rules.
2.4 Representation and Warranties. The delivery of each Application shall
automatically constitute a representation and warranty by the Applicant to the
Bank to the effect that on the requested date of issuance of such Letter of
Credit, (a) the representations and warranties of the Applicant set forth in
Section 4 shall be true and correct as of such requested date as though made on
the date thereof and (b) no Event of Default or Unmarred Event of Default shall
have then occurred and be continuing or will result from such issuance.
SECTION 3 REIMBURSEMENT OBLIGATIONS; RESPONSIBILITIES, ETC.
3.1 Reimbursement Obligations. The Applicant hereby agrees to reimburse the
Bank forthwith upon demanding an amount equal to any payment or disbursement
made by the Bank under any Letter of Credit or any time draft issued pursuant
thereto, together with interest on the amount so paid or disbursed by the Bank
from and including the date of payment or disbursement to but not including the
date the Bank is reimbursed by the Applicant at a rate per annum equal to the
Prime Rate from time to time in effect plus 2% (or, if less, the maximum rate
permitted by applicable law). The obligation of the Applicant to reimburse the
Bank under this Section 3 for payments and disbursements made by the Bank under
any Letter of Credit or any time draft issued pursuant thereto shall be absolute
and unconditional under any and all circumstances including, without limitation,
the following:
(a) any failure of any Item presented under such Letter of Credit to
strictly comply with the terms of such Letter of Credit;
(b) the legality, validity, regularity or enforceability of such Letter of
Credit or of any Item presented thereunder;
(c) any defense based on the identify of the transferee of such Letter of
Credit or the sufficiency of the transfer if such Letter of Credit is
transferable;
(d) the existence of any claim, set off, defense or other right that the
Applicant may have at any time against any beneficiary or transferee of
such Letter of Credit, the Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or
any unrelated transaction;
(e) any Item presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(f) honor of a demand for payment presented electronically even if such
Letter of Credit requires that demand be in the form of a draft;
(g) waiver by the Bank of any requirement that exists for the Bank's
protection and not the protection of the Applicant or any waiver by the
Bank which does not in fact materially prejudice the Applicant;
(h) any payment made by the Bank in respect of an Item presented after the
date specified as the expiration of, or the date by which documents
must be received under, such Letter of Credit if payment after such
date is authorized by the ISP, the UCC or the UCP, as applicable; or
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{PAGE}
(i) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing;
provided that the Applicant shall not be obligated to reimburse the Bank for any
wrongful payment or disbursement made by the Bank under any Letter of Credit as
a result of any act or omission constituting gross negligence or willful
misconduct on the part of the Bank.
3.2 Discrepancies. (a) The Applicant agrees that it will promptly examine
any and all instruments and documents delivered to it from time to time in
connection with any Letter of Credit, and if the Applicant has any claim of
non-compliance with its instructions or of discrepancies or other irregularity,
the Applicant will immediately (and, in any event, within three Business Days)
notify the Bank thereof in writing, and the Applicant shall be deemed to have
waived any claim against the Bank unless such notice is given within such time
period. Without limiting the foregoing, if the Bank makes any payment or
disbursement under a Letter of Credit and the Applicant does not send a notice
to the Bank within three Business Days objecting to such payment or disbursement
and specifying in reasonable detail the discrepancy or irregularity which is the
basis for such objection, then the Applicant shall be precluded from making any
objection to the Bank's honor of the presentation with respect to which such
payment or disbursement was made (but shall not be precluded from making any
objection to the Bank's honor of the presentation with respect to which such
payment or disbursement was made but shall not be precluded from asserting any
objection to any different presentation under the same or a different Letter of
Credit).
(b) The Applicant's acceptance or retention of any documents presented
under or in connection with a Letter of Credit (including originals or copies of
documents sent directly to the Applicant) or of any property for which payment
is supported by a Letter of Credit shall ratify the Bank's honor of the
documents and absolutely preclude the Applicant from raising a defense or claim
with respect to the Bank's honor of the relevant presentation.
3.3 Documents. Unless specified to the contrary in the relevant
Application, the Applicant agrees that the Bank and its correspondents: (a) may
accept as complying with the applicable Letter of Credit any Item drawn, issued
or presented under such Letter of Credit which is issued or purportedly issued
by an agent, executor, trustee in bankruptcy, receiver or other representative
of the party identified in such Letter of Credit as the party permitted to draw,
issue or present such Item; and (b) may in its or their discretion, but shall
not be obligated to, accept or honor (i) any Item which substantially complies
with the terms of the applicable Letter of Credit; (ii) any Item which
substantially complies under the laws, rules, regulations and general banking or
trade customs and usages of the place of presentation, negotiation or payment;
(iii) drafts which fail to bear any or adequate reference to the applicable
Letter of Credit; (iv) any Item presented to the bank after the stated
expiration date of a Letter of Credit may be honored in accordance with the UCP,
the UCC and/or the ISP, as applicable (and, in any event, any Item presented to
the Bank on the Business Day immediately following the stated expiration date of
any Letter of Credit, if such stated expiration date falls on a day which is not
a Business Day, or (v) any Item which substantially complies with the
requirements of the UCP, the UCC and/or the ISP, as applicable. In determining
whether to pay under any Letter of Credit, the Bank shall have no obligation to
the Applicant or any other Person except to confirm that the Items required to
be delivered under such Letter of Credit appear to have been delivered and
appear on their face to substantially comply with the requirements of such
Letter of Credit. For purposes of the foregoing, an Item "substantially
complies" unless there are discrepancies in the presentation which appear to be
substantial and which reflect corresponding defects in the beneficiary's
performance in the underlying transaction. A discrepancy is not substantial if
it is unrelated or immaterial to the nature or amount of the Applicant's loss.
For example, documents honored by the Bank that do not comply with the timing
requirements of the Letter of Credit for presenting or dating any required
beneficiary statement nonetheless substantially comply if those timing
requirements are not material in determining whether the underlying agreement
has been substantially performed or violated.
3.4 Exculpation. In addition to the exculpatory provisions contained in the
UCP, the UCC and/or the ISP, as applicable, the Bank and its correspondents
shall not be responsible for, and the Applicant's obligation to reimburse the
Bank shall not be affected by, (a) compliance with any law, custom or regulation
in effect in the country of issuance, presentation, negotiation or payment of
any Letter of Credit, (b) any refusal by the Bank to honor any Item because of
an applicable law, regulation or ruling of any governmental agency, whether now
or hereafter in effect, (c) any action or inaction required or permitted under
the UCC, the UCP, the ISP or the United Nations Convention on Independent
Guarantees and Stand-by Letters of Credit, in each case as applicable, or (d)
any act or the failure to act of any agent or correspondent of
3
{PAGE}
the Bank, including, without limitation, failure of any such agent or
correspondent to pay any Item because of any law, decree, regulation, ruling or
Interpretation of any governmental agency.
3.5 Risks. The Applicant assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit (it being understood that such
assumption is not intended to, and shall not, preclude the Applicant from
pursuing any right or remedy it may have against any such beneficiary or
transferee). The Applicant further agrees that any action or omission by the
Bank under or in connection with any Letter of Credit or any related Item,
document or property shall, unless in breach of good faith, be binding on the
Applicant and shall not put the Bank under any resulting liability to the
Applicant. Without limiting the foregoing, the Applicant agrees that in no event
shall the Bank be liable for incidental, consequential, punitive, exemplary or
special damages.
3.6 Limitation on Bank's Obligation. Without limiting any other provision
herein, the Bank is expressly authorized and directed to honor any request for
payment which is made under and in compliance with the terms of any Letter of
Credit without regard to, and without any duty on the part of the Bank to
inquire into, the existence of any dispute or controversy between any of the
Applicant, the beneficiary of any Letter of Credit or any other Person, or the
respective rights, duties or liabilities of any of them, or whether any facts
represented in any Item presented under a Letter of Credit are true or correct.
Furthermore, the Applicant agrees that the Bank's obligation to the Applicant
shall be limited to honoring requests for payment made under and in compliance
with the terms of any Letter of Credit, and the Bank's obligation remains so
limited even if the Bank may have prepared or assisted in the preparation of the
wording of any Letter of Credit or any Item required to be presented thereunder
or the Bank may otherwise be aware of the underlying transaction giving rise to
any Letter of Credit.
3.7 Automatic Renewal of Letters of Credit. IF ANY LETTER OF CREDIT
CONTAINS ANY PROVISION FOR AUTOMATIC RENEWAL, THE APPLICANT IRREVOCABLY CONSENTS
TO THE AUTOMATIC RENEWAL OF EACH SUCH LETTER OF CREDIT IN ACCORDANCE WITH ITS
TERMS IF THE BANK ALLOWS SUCH RENEWAL TO OCCUR; PROVIDED THAT THE APPLICANT
SHALL HAVE THE RIGHT TO REQUEST THE BANK TO DISALLOW ANY SUCH RENEWAL ON THE
CONDITION THAT THE APPLICANT SHALL GIVE THE BANK PRIOR WRITTEN NOTICE OF SUCH
REQUEST NOT LESS THAN 30 DAYS PRIOR TO THE DEADLINE IMPOSED UPON THE BANK FOR
NOTIFICATION TO THE BENEFICIARY OF NON-RENEWAL OF ANY SUCH LETTER OF CREDIT.
SECTION 4 REPRESENTATIONS AND WARRANTIES. The Applicant represents and warrants
to the Bank that:
(a) Organization, etc. The Applicant is duly organized or formed, validly
existing and (to the extent applicable under the laws of the relevant
jurisdiction) in good standing under the laws of the jurisdiction of
its organization or formation, and the Applicant is duly qualified and
is good standing as a foreign entity authorized to do business in each
other jurisdiction where, because of the nature of the activities or
properties, such qualification is required, except where the failure to
so qualify or be licensed would not have a material adverse affect on
the Applicant or its business.
(b) Authorization: No Conflict: The execution and delivery by Applicant of
this Agreement and each Application, the issuance of Letters of Credit
for the account of the Applicant hereunder and the performance by the
Applicant of its obligations under this Agreement and the Applications
are within the organizational powers of the Applicant, have been duly
authorized by all necessary organizational action, have received all
necessary governmental approval (if any shall be required), and do not
and will not contravene or conflict with, or result in or require the
imposition of any lien or security interest under, any provision of law
or of the charter or by-laws of the Applicant or of any material
post-petition indenture, loan agreement or other contract, or any
judgment, or decree, which is binding upon the Applicant.
(c) Validity and Binding Nature. This Agreement is, and upon delivery to
the Bank each Application will be, the legal, valid and binding
obligation of the Applicant, enforceable against the Applicant in
accordance with its terms, subject to bankruptcy, insolvency and
similar laws of general application affecting the rights of creditors
and to general principles of equity.
(d) Approvals. No authorization, approval or consent of, or notice to or
filing with, any governmental or regulatory authority is required to be
made in connection with the execution and delivery by the Applicant of
this Agreement or the issuance of any Letter of Credit for the account
of the Applicant pursuant hereto.
4
{PAGE}
SECTION 5. FEES. The Applicant agrees to pay the Bank all reasonable fees of the
Bank (at the rates specified by the Bank from time to time in schedules
delivered by the Bank to the Applicant) with respect to each Letter of Credit
(including, without limitation, all fees associated with any amendment to,
drawing under, banker's acceptance pursuant to, or transfer of a Letter of
Credit), such fees to be payable on demand by the Bank therefor.
SECTION 6 COMPUTATION OF INTEREST AND FEES. All Interest and fees hereunder
shall be computed for the actual number of days elapsed on the basis of a year
of 360 days. The interest rate applicable to Letter of Credit reimbursement
obligations shall change simultaneously with each change in the Prime Rate.
SECTION 7 MAKING OF PAYMENTS. (a) All payments of principal of, or interest on,
letter of credit reimbursement obligations, all payments of fees and all other
payments hereunder shall be made by the Applicant in immediately available funds
to the Bank at its principal office in Chicago not later than 12:30 P.M.,
Chicago time, on the date due, and funds received after that time shall be
deemed to have been received by the Bank on the next Business Day. If any
payment of principal, interest or fee falls due on a Saturday, Sunday or other
day which is not a Business Day, then such due date shall be extended to the
next Business Day, and additional interest shall accrue and be payable for the
period of such extension.
(b) The Applicant irrevocably agrees that the Bank or any affiliate thereof
may (but neither the Bank nor any such affiliate shall be obligated to) debit
any deposit account of the Applicant in an amount sufficient to pay any fee,
reimbursement obligation or other amount that is due and payable hereunder. The
Bank or the applicable affiliate shall promptly notify the Applicant of any such
debit (but failure of the Bank or any such affiliate to do so shall not impair
the effectiveness thereof or impose any liability on the Bank or such
affiliate).
(c) The applicant shall reimburse the Bank for each payment under a Letter
of Credit in the same currency in which such payment was made; provided that, if
the Bank so requests (in its discretion), the Applicant shall reimburse the Bank
in United States dollars for any payment under a Letter of Credit made in a
foreign currency at the rate at which the Bank could sell such foreign currency
in exchange for United States dollars for transfer to the place of payment of
such payment or, if there is no such rate, the United States dollar equivalent
of the Bank's actual cost of settlement. The Applicant agrees to pay the Bank on
demand in United States dollars such amounts as the Bank may be required to
expend to comply with any and all governmental exchange regulations now or
hereafter applicable to the purchase of foreign currency.
(d) All payments by the Applicant hereunder shall be made free and clear of
and without deduction for any present or future income, excise or stamp taxes
and any other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise taxes and
taxes imposed on or measured by the Bank's net income or receipts (such
non-excluded items being called "Taxes"). If any withholding or deduction from
any payment to be made by the Bank hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Applicant will
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Bank an official receipt or other
documentation satisfactory to the Bank evidencing such payment to such
authority; and
(iii) pay to the Bank such additional amount as is necessary to
ensure that the net amount actually received by the Bank will equal the
full amount the Bank would have received had no such withholding or
deduction been required.
Moreover, if any Taxes are directly asserted against the Bank or on any payment
received by the Bank hereunder, the Bank may pay such Taxes and the Applicant
will promptly pay such additional amount (including any penalty, interest or
expense) as is necessary in order that the net amount received by the Bank after
the payment of such Taxes (including any Taxes on such additional amount) shall
equal the amount the Bank would have received had no such Taxes been asserted.
If the Applicant fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Bank the required receipts or other required
documentary evidence, the Applicant shall indemnify the Bank for any Incremental
Tax, interest, penalty or expense that may become payable by the Bank as a
result of such failure.
SECTION 8 INCREASED COSTS. If, after the date hereof, the adoption of, or any
change in, any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
5
{PAGE}
interpretation or administration thereof, or compliance by the Bank with any
request, guideline or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency,
(a) affects or would affect the amount of capital required or expected to
be maintained by the Bank or any corporation controlling the Bank and
(taking into consideration the Bank's or such controlling corporation's
policies with respect to capital adequacy) the Bank determines that the
amount of such capital is increased as a consequence of this Agreement
or the Letter of Credit; or
(b) imposes, modifies or deems applicable any reserve (including, without
limitation, any reserve imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by
the Bank with respect to letters of credit, or imposes on the Bank any
other condition affecting this Agreement or the Letters of Credit, and
the Bank determines that the result of any of the foregoing is to
increase the cost to, or to impose a cost on, the Bank of issuing or
maintaining any Letter of Credit or of making any payment or
disbursement under any Letter of Credit, or to reduce the amount of any
sum receive or receivable by the Bank under this Agreement;
then within five Business Days after demand by the Bank (which demand shall be
accompanied by a statement setting forth in reasonable detail the basis of such
demand and a calculation thereof in reasonable detail), the Applicant shall pay
directly to the Bank such additional amount as will compensate the Bank for such
increased capital requirement, such increased cost or such reduction as the case
may be. Determinations and statements of the Bank pursuant to this Section 8
shall be conclusive absent manifest error, and the provisions of this Section 8
shall survive termination of this Agreement.
SECTION 9 EVENTS OF DEFAULT AND THEIR EFFECT.
9.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
9.1.1 Non-Payment of Liabilities, etc. Default in the payment when
due of any principal of or interest on any Liabilities; or default, and
continuance thereof for five days after notice thereof from the Bank,
in the payment when due of any fees or other amounts payable by the
Applicant hereunder.
9.1.2 [Paragraph stricken]
9.1.3 Other Agreements with Bank. Any default shall occur (subject
to any applicable grace period) under any other agreement between the
Applicant and the Bank or any of its affiliates (including any
agreement under which the Applicant is a borrower and the Bank or any
such affiliate and one or more other financial institutions are the
lenders); or the Applicant shall fail to comply with or to perform
(subject to any applicable grace period) any covenant set forth in any
such other agreement as such covenant is in effect on the date hereof
or is amended from time to time with the consent of the Bank (but
without giving effect to the expiration or termination of any such
agreement unless such agreement is replaced by another agreement to
which the Bank is a party).
9.1.4 Representations and Warranties. Any representation or warranty
made by the Applicant herein or in any writing furnished in connection
with or pursuant to this Agreement shall be false or misleading in any
material respect on the date made.
9.2 Effect of Event of Default. If any Event of Default shall occur, the
Bank shall promptly advise the Applicant of any such termination, but failure to
do so shall not impair the effect of such termination. The Applicant hereby
grants the Bank a security interest in all cash collateral delivered hereunder.
All cash collateral shall be held by the Bank and applied to Liabilities arising
in connection with any drawing under a Letter of Credit. After all Letters of
Credit have been fully drawn, expired or been terminated, such cash collateral
shall be applied by the Bank, first, to any remaining Liabilities and, then, to
any other liabilities of the Applicant to the Bank, and any excess shall be
delivered to the Applicant or as a court of competent jurisdiction may direct.
SECTION 10 SECURITY.
10.1 Grant of Security Interest. The Applicant further agrees that the Bank
or any of its affiliates may set off and apply to any of the Liabilities which
are then due and payable (by acceleration or otherwise) any deposit of the
Applicant at any time held by the Bank or any of its affiliates. The Applicant
agrees that this Agreement (or a carbon or photographic copy hereof) may be
filed
6
{PAGE}
as a financing statement to the extent permitted by law. The Applicant
authorizes the Bank to file such financing statements as may be required by the
Bank to perfect the security Interest of the Bank hereunder. The Applicant also
agrees that, on request by the Bank the Applicant shall execute and deliver such
financing statements and other documents or instruments as may be required by
the Bank to perfect or maintain the security interest of the Bank hereunder.
10.2 Rights and Remedies. The Bank shall have all rights and remedies of a
secured party under the UCC. If prior notice to the Applicant is required for
any action, the Bank shall give the Applicant at least five days' notice in
writing of the time and place of the sale, disposition or other event giving
rise to such required notice, and the Applicant agrees that such notice will be
deemed commercially reasonable. Any property or document representing collateral
pay be held by the Bank in its name or in the name of the Bank's nominee, all
without prior notice. Proceeds of any sale or other disposition of collateral
shall be applied, in order, to the expenses of retaking, holding and preparing
the collateral for sale (including reasonable attorneys' fees and legal
expenses), and then to the obligations of the Applicant hereunder until paid in
full. The Applicant shall be liable for any deficiency.
SECTION 11 GENERAL.
11.1 Waiver; Amendments. No delay on the part of the Bank in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement shall be effective unless the same shall be in
writing and signed and delivered by the Bank, and then any such amendment,
modification, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
11.2 Notices. (a) Except as otherwise expressly provided herein, all notices
hereunder shall be in writing (including facsimile and electronic transmission,
which shall be considered original writings). Notices given by mail shall be
deemed to have been given three Business Days after the date sent if not by
registered or certified mail, postage prepaid, to the applicable party at its
address shown below its signature hereto or at such other address as such party
may, by written notice received by the other party to this Agreement, have
designed as its address for notices. Notices given by facsimile or electronic
transmission shall be deemed to have been given when sent. Notices sent by any
other means shall be deemed to have been given when received (or when delivery
is refused).
(b) The Bank may rely on any writing (including any facsimile, any
electronic transmission or any information on a computer disk or similar medium
which may be reduced to writing), or any telephonic or other oral message or
instruction (including, without limitation, any oral waiver of any discrepancy
with respect to any Item), that the Bank believes in good faith to have been
received from an authorized officer, employee or representative of the
Applicant, and the Bank shall not be liable for any action taken in good faith
with respect to any writing, message or instruction from an unauthorized person.
The Bank shall not be under any duty to verify the identify of any person
submitting any Application or other writing or making any other communication
hereunder. Notwithstanding the foregoing, the Bank is not obligated to recognize
the authenticity of any request to issue, amend, honor or otherwise act on any
Letter of Credit that is not evidenced to the Bank's satisfaction by a writing
originally signed by a person the Applicant has certified is authorized to act
for the Applicant hereunder or by a message or instruction authenticated to the
Bank's satisfaction.
11.3 Costs, Expenses and Taxes; Indemnification. (a) The Applicant agrees to
pay on demand all reasonable out-of-pocket costs and expenses of the Bank
(including the reasonable fees and charges of counsel for the Bank) in
connection with the enforcement of this Agreement. In addition, the Applicant
agrees to pay, and to save the Bank harmless from all liability for, any stamp
or other taxes which may be payable in connection with the execution or delivery
of this Agreement, the issuance of Letters of Credit hereunder, or the issuance
of any other instrument or document provided for herein or delivered or to be
delivered hereunder or in connection herewith.
(b) The Applicant agrees to indemnify the Bank and each of its affiliates
and each of their respective officers, directors, employees and agents (each an
"Indemnified Party") against, and to hold each Indemnified Party harmless from,
any and all actions, causes of action, suits, losses, costs, damages, expenses
(including reasonable attorneys' fees and charges, expert witness fees and other
dispute resolution expenses) and other liabilities (collectively the
"Indemnified Liabilities") incurred by any Indemnified Party as a result of, or
arising out of, or relating to, this Agreement or any Letter of Credit (and
without regard to whether the applicable Indemnified Party is a party to any
proceeding out of which such Indemnified Liabilities arise), except to the
extent that a court of
7
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competent jurisdiction determines in a final, non-appealable order that any
Indemnified Liability resulted directly from the gross negligence or willful
misconduct of such Indemnified Party. Without limiting the generality of he
foregoing sentence, the term "Indemnified Liabilities" includes any claim or
liability in which an advising, confirming or other nominated bank, or a
beneficiary requested to issue its own undertaking, seeks to be reimbursed
indemnified or compensated. If and to the extent the foregoing undertaking may
be unenforceable for any reason, the Applicant agrees to make the maximum
contribution to the payment of each of the Indemnified Liabilities which is
permitted under applicable law.
(c) Without limiting clause (b), the Applicant agrees to indemnify the
Bank, and to hold the Bank harmless from, any loss or expense incurred by the
Bank as a result of any judgment or order being given or made for the payment of
any amount due hereunder in particular currency (the "Currency of Account") and
such judgment or order being expressed in a currency (the "Judgment Currency"
other than the Currency of Account and as a result of any variation having
occurred in the rate of exchange between the date which such amount is converted
into the Judgment Currency and the date of actual payment pursuant thereto. The
foregoing indemnity shall constitute a separate and independent obligation of
the Applicant.
(d) All obligations provided for in this Section 11.3 shall survive any
termination of this Agreement.
11.4 Captions. Section captions used in this Agreement are convenience only
and shall not affect the construction of this Agreement.
11.5 Governing Law. This Agreement shall be a contract made under and
governed by the laws of the State of Illinois applicable to contracts made and
to be performed entirely within such State. Except to the extent inconsistent
with such state law or otherwise expressly stated in any Letter of Credit, each
Letter of Credit and this Agreement also are subject to the terms of (i) with
respect to matters relating to standby Letters of Credit and Applications
therefor, the ISP, and (ii) with respect to matters relating to commercial
Letters of Credit and Applications therefor, the UCP. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the applicant and rights of the Bank express
herein shall be in addition to and not in limitation of those provided by
applicable law.
11.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Agreement.
11.7 Successors and Assigns. This Agreement shall be binding upon the
Applicant and its successors and assigns, provided that the Applicant may not
assign any of its rights or obligations hereunder without the prior written
consent of the Bank.
11.8 Right of Bank to Act through Branches and Affiliates. The Bank may
cause any Letter of Credit requested by the Applicant to be issued by a branch
or affiliate of the Bank, and all references to the "Bank" herein or in any
related document shall include each applicable branch or affiliate.
11.9 Foreign Assets Control Regulations. The Applicant certifies that no
transaction in foreign commodities covered by any Application will be prohibited
under the foreign assets control regulations of the United States Treasury
Department and that any importation related to any Letter of Credit will conform
with all applicable laws, rules and regulations.
11.10 Mitigation: Limitation of Liability. The Applicant agrees to take
action to void or reduce the amount of any damages which may be claimed against
the Bank. For example, (a) in the case of wrongful honor, the Applicant agrees
to enforce its rights arising out of the underlying transaction (except to the
extent that enforcement is impractical due to the insolvency of the beneficiary
or other person from whom the Applicant agrees to specifically and timely
authorize the Bank to effect a cure and give written assurances to the
beneficiary that a cure is being arranged. The Applicant's aggregate remedies
against the Bank for honoring a presentation or retaining honored documents in
breach of the Bank's obligations to the Applicant (whether arising under this
Agreement, applicable letter of credit practice or law, or any other agreement
or law) are limited to the aggregate amount paid by the Applicant to the Bank
with respect to the honored presentation.
11.11 Subrogation. The Bank shall be subrogated (for purposes of defending
against the Applicant's claims and proceeding against others to the extent of
any liability of the Bank to the Applicant) to the Applicant's rights against
any Person who may be liable to the Applicant on any underlying transaction, to
the
8
{PAGE}
rights of any holder in due course or Person with similar status against the
Applicant and to the rights of the beneficiary of any Letter of Credit or its
assignee or any person with similar status against the Applicant.
11.12 Co-Applicants. (a) If this Agreement is signed by two or more Persons
(each a "Co-Applicant"), then the term "Applicant" shall mean each such Person
and all such persons shall be jointly and severally liable for all obligations
of the "Applicant" hereunder and in respect of the Letters of Credit issued
pursuant hereto. Any Co-applicant shall have the right to issue all instructions
relating to Letters of Credit (including, without limitation, instructions as to
the disposition of documents and waiver of discrepancies) and to agree with the
Bank upon any amendment, extension, renewal or modification of, or change in the
amount of, any Letter of Credit, and such instructions and agreements shall be
binding upon all Co-Applicants. Each Co-Applicant shall be bound by (i) any
notice from the Bank to any other Co-Applicant, (ii) any other Co-Applicant's
settlement or release of any claim against the Bank arising under this
Agreement, and (iii) any default under this Agreement attributable to any other
Co-Applicant.
(b) Each Co-Applicant agrees that if at any time all or any part of any
payment theretofore applied by the Bank to any of the Liabilities is or must be
rescinded or returned by the Bank for any reason whatsoever (including the
insolvency, bankruptcy or reorganization of any Co-Applicant), such Liabilities
shall, to the extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such application by the
Bank, and the obligations of such Co-Applicant with respect thereto shall
continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Bank had not been made.
(c) The Bank may, from time to time, in its sole discretion and without
affecting the obligation of any Co-applicant, take any or all of the following
actions: (a) retain or obtain the primary or secondary obligation of any other
obligor, in addition to such Co-Applicant, with respect to any of the
Liabilities, and take any security for the obligations of any such other
obligor, (b) extend or renew any of the Liabilities for one or more periods
(whether or not longer than the original period), alter or exchange any of the
Liabilities, or release or compromise any obligation of any other Co-applicant
or any obligation of any nature of any other obligor with respect to any of the
Liabilities, (c) release its security interest in, or surrender, release or
permit any substitution or exchange for, all or any part of any property
securing any of the Liabilities, or extend or renew for one or more periods
(whether or not longer than the original period) or release, compromise, alter
or exchange any obligations of any nature of any obligor with respect to any
such property, and (d) resort to such Co-Applicant for payment of any of the
Liabilities when due, whether or not the Bank shall have resorted to any
property securing any of the Liabilities or shall have resorted to any property
securing any of the Liabilities or shall have proceeded against any other
Co-Applicant or any other obligor primarily or secondarily obligated with
respect to any of the Liabilities.
11.13 Continuation of Liability. Regardless of the expiry date of any Letter
of Credit, the Applicant shall remain liable hereunder until the Bank is
released from liability by every person that is entitled to draw or demand
payment under each Letter of Credit issued pursuant hereto.
11.14 Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS AGREEMENT OR ANY APPLICATION, SHALL BE BROUGHT AND
MAINTAINED IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE,
WHILE THE BANKRUPTCY CASE OF APPLICANT IS PENDING, AND FOLLOWING THE BANKRUPTCY
CASE EXCLUSIVELY IN THE COURT OF COOK COUNTY, ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVED THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE BANK'S OPTION; IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE APPLICANT HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF COOK COUNTY, ILLINOIS AND OF THE
UNTIED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION. THE APPLICANT FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET
FORTH BENEATH ITS SIGNATURE HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE
SPECIFIED IN WRITING TO THE BANK AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE APPLICANT
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
9
{PAGE}
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
11.15 Waiver of Jury Trial. EACH OF THE APPLICANT AND, BY ISSUING ANY LETTER
OF CREDIT, THE BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY
APPLICATION, INSTRUMENT, DOCUMENT, AMENDMENT OR AGREEMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Delivered at Chicago, Illinois, as of the day and year first above written.
USG Corporation, a Delaware corporation
[Applicant]
By ____________________________________
Title Vice President and Treasurer
By _____________________________________
Title Corporate Secretary
Address: 125 South Franklin Street
Chicago, IL 60606
10
{PAGE}
RIDER TO MASTER LETTER OF CREDIT AGREEMENT
RIDER TO MASTER LETTER OF CREDIT AGREEMENT (this "Rider") dated as of
June 11, 2003, by and between USG CORPORATION, a Delaware corporation
("Applicant"), and LASALLE BANK NATIONAL ASSOCIATION, a national banking
association ("Bank").
A. Applicant is a debtor and debtor-in-possession in a Chapter 11
case (case no. 01-2094) in the pending United States Bankruptcy Court (the
"Court") for the District of Delaware.
B. This Rider shall constitute part of the Master Letter of
Credit Agreement dated as of the date hereof by and between Applicant and Bank
(the "Agreement") and is hereby incorporated therein by this reference.
Notwithstanding anything contained in the Agreement to the contrary,
Applicant and Bank hereby agree as follows:
R-1 LETTER OF CREDIT COMMITMENT. Prior to April 30, 2006 and
provided that no Event of Default then exists, Bank will issue letters of credit
with an aggregate stated amount not in excess of $100,000,000.00 at any one time
(the "Letter of Credit Commitment") in each case containing such terms and
conditions as are reasonably satisfactory to Bank, provided, however, no letter
of credit shall have an expiry date later than the earlier to occur of (a) one
year after the date of issuance thereof, and (b) April 30, 2007. Bank
acknowledges that the forms of Letters of Credit previously provided to Bank are
satisfactory to Bank, with such changes as Bank shall reasonably require.
R-2 LETTER OF CREDIT FEES. Applicant agrees to pay to Bank the
following fees:
(a) LC Fee. One-half of one percent (0.5%) of the undrawn
amount of each letter of credit (computed for the actual number of days
elapsed on the basis of a year of 360 days), payable in arrears on the
last day of each quarter and on April 30, 2007 (for any period then
ending for which such fee shall not have previously been paid).
(b) Non-Use Fee. One-quarter of one percent (0.25%) of
the unused amount of the Letter of Credit Commitment, payable in
arrears on the last day of each quarter and on April 30, 2007 (for any
period then ending for which such non-use fee shall not have previously
been paid). For purposes of calculating usage under this subsection,
the Letter of Credit Commitment shall be deemed used to the extent of
the stated face amount of all Letters of Credit. The non-use fee shall
be computed for the actual number of days elapsed on the basis of a
year of 360 days.
(c) Issuance Fee. Such fees and expenses as Bank
customarily requires in connection with the issuance, negotiation,
processing and/or administration of Letters of Credit in similar
situations.
R-3 Conditions Precedent.
(a) The obligation of Bank to issue any Letters of Credit
is subject to the following:
11
{PAGE}
(i) Applicant pledging cash collateral in a
trust account with Bank (time deposit open account or
certificate of deposit) to Bank for all outstanding Letters of
Credit pursuant to documentation satisfactory to Bank in the
amount of 103% of the face amount of all outstanding Letters
of Credit; provided, however, for cash collateral requirements
in excess of $50,000,000, Bank will, at Applicant's election,
permit the pledge of Cash Equivalent Investments (in lieu of
cash) maintained in a trust account with Bank pursuant to
documentation satisfactory to Bank which, when multiplied by
the Bank's advance rates for collateral of such type (as from
time to time determined by the Bank), will equal or exceed
103% of the face amount of all outstanding Letters of Credit.
As used herein, "Cash Equivalent Investments" shall mean, at
any time, (a) any evidence of debt, maturing not more than one
year after such time, issued by the United States Government,
(b) commercial paper, maturing not more than one year from the
date of issue, or corporate demand notes, in each case (unless
issued by a Bank or its holding company) rated at least A-l by
Standard & Poor's Credit Market Services, a division of The
McGraw-Hill Companies, Inc., or P-l by Moody's Investors
Service, Inc., (c) any certificate of deposit (or time
deposits represented by such certificates of deposit) or
banker's acceptance, maturing not more than one year after
such time, or overnight federal funds transactions that are
issued or sold by any LaSalle Bank or its holding company or
by a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $500,000,000, (d) any
repurchase agreement entered into with LaSalle Bank which (1)
is secured by a fully perfected security interest in any
obligation of the type described in any of clause (a) above,
and (2) has a market value at the time such repurchase
agreement is entered into of not less than 102% of the
repurchase obligation thereunder, and (e) any mutual fund
which invests solely in the investments described in any of
clauses (a) through (c).
(ii) The representations and warranties of the
Applicant shall be true and correct as of such requested date
as though made on the date thereof.
(iii) No Event of Default or Unmatured Event of
Default shall have then occurred and be continuing or will
result from such issuance.
For the elimination of any doubt, the Bank's obligation to
issue any Letter of Credit is subject to the condition precedent that
the Applicant deliver cash collateral to Bank in the amount of 103% of
the face amount of the proposed Letter of Credit (the "Required
Collateral"). Any commitment the Bank may have to issue a particular
Letter of Credit hereunder is conditionally cancelable by the Bank
absent the prior delivery by the Applicant to the Bank of the Required
Collateral.
(b) The obligation of Bank to enter into this Agreement
is subject to the Bank receiving all of the following:
(i) The Agreement with this Rider, which has
been duly executed by Applicant.
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{PAGE}
(ii) a Secretary's Certificate from Applicant,
which contains the certified Certificate of Incorporation,
By-laws and Incumbency of Signatures.
(iii) good standing certificates for Applicant
from the State of Illinois and the State of Delaware.
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