The Guarantee Facility Agreement is essential for businesses requiring regular issuance of bank guarantees or similar instruments to support their operations. This document type is commonly used when a company needs ongoing access to guarantees for various business purposes such as bid bonds, performance bonds, or payment guarantees. The agreement, governed by U.S. law, establishes a master facility framework that streamlines the process of obtaining individual guarantees while setting out comprehensive terms for fees, conditions, and obligations. It incorporates relevant U.S. regulatory requirements and market practices, providing flexibility for multiple guarantee types while maintaining proper risk management and compliance standards. The Guarantee Facility Agreement is particularly valuable for companies engaged in regular contracting, international trade, or project-based work where guarantees are frequently required.
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1. Parties: Identification of the guarantee facility provider, the applicant/obligor, and any other key parties
2. Background: Context of the agreement and commercial purpose of the guarantee facility
3. Definitions and Interpretation: Defined terms, construction rules, and interpretation principles
4. The Facility: Nature, purpose, and amount of the guarantee facility
5. Conditions Precedent: Documents and conditions required before the facility becomes available
6. Utilization: Process and requirements for requesting and issuing guarantees under the facility
7. Fees and Expenses: Fee structure, payment terms, and allocation of costs
8. Tax Provisions: Tax-related obligations, gross-up provisions, and tax indemnities
9. Representations and Warranties: Statements of fact and assurances given by the parties
10. Undertakings: Ongoing obligations and covenants of the parties
11. Events of Default: Circumstances constituting default and their consequences
12. Changes to Parties: Transfer and assignment provisions
13. Payment Mechanics: Payment procedures, currency provisions, and set-off rights
14. Administration: Notice requirements and calculation conventions
15. Governing Law and Jurisdiction: Choice of law and dispute resolution provisions
16. Boilerplate: Standard contractual provisions including severability, entire agreement, etc.
1. Security: Required if the facility is secured by collateral or other security interests
2. Counter-Indemnities: Used when counter-indemnities are required from third parties
3. Multiple Guarantor Provisions: Required when there are multiple guarantors, addressing joint and several liability
4. Syndication Provisions: Needed for syndicated facilities, including agency and majority lender provisions
5. Regulatory Compliance: Special provisions required for regulated entities or transactions
6. Currency Options: Required if guarantees can be issued in multiple currencies
7. Special Purpose Provisions: Specific provisions for particular types of guarantees (e.g., performance bonds, tender guarantees)
8. Bank Products: Required if the facility includes other banking products besides guarantees
1. Form of Utilization Request: Standard form for requesting issuance of guarantees
2. Form of Guarantee: Template(s) for guarantees to be issued under the facility
3. Conditions Precedent Documents: List of required documents and evidence
4. Fee Schedule: Detailed breakdown of fees and charges
5. Authorized Signatories: List of persons authorized to request guarantees
6. Form of Transfer Certificate: Template for transferring rights/obligations under the facility
7. Guarantee Facility Letter: Form of facility letter to be issued for each guarantee
8. Compliance Certificate: Template for periodic compliance certification
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