The Letter of Credit Facility Agreement is a fundamental document in trade finance, particularly crucial in Hong Kong's role as an international trading and financial hub. It is used when companies require documentary credit support for their international trade operations, enabling them to conduct secure import/export transactions. The agreement sets out the complete framework for the issuance of letters of credit, including facility limits, conditions precedent, operational procedures, security requirements, and compliance obligations. Being governed by Hong Kong law, it incorporates local banking regulations while adhering to international banking practices and UCP 600 guidelines. This document is essential for businesses seeking to establish or maintain trade finance facilities with banks, providing them with the necessary credit support for their cross-border trading activities.

1. Parties: Identification of the financial institution (lender) and the customer (borrower)

2. Background: Context of the facility arrangement and relationship between parties

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. The Facility: Details of the letter of credit facility including type, purpose, and limit

5. Conditions Precedent: Documents and conditions required before the facility becomes available

6. Utilization: Process and requirements for utilizing the facility, including application procedures

7. Letter of Credit Terms: Specific terms governing the issuance and operation of letters of credit

8. Fees and Charges: All applicable fees, commission, and charges

9. Payments and Cash Cover: Payment obligations and requirements for cash collateral

10. Representations and Warranties: Standard declarations made by the borrower

11. Undertakings: Ongoing obligations of the borrower throughout the facility period

12. Events of Default: Circumstances that constitute default and consequences

13. Changes to Parties: Rules regarding assignment and transfer of rights and obligations

14. Notices: Communication procedures between parties

15. General Provisions: Miscellaneous legal and operational provisions

16. Governing Law and Jurisdiction: Application of Hong Kong law and jurisdiction