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The Letter of Credit Facility Agreement is a crucial document in Malaysian trade finance, used when companies require banking support for their international trade operations. This agreement is essential for businesses engaged in import/export activities who need a reliable payment mechanism through letters of credit. It establishes the legal framework under which a bank provides letter of credit facilities to its customers, covering aspects such as facility limits, security arrangements, operational procedures, and compliance requirements. The document must comply with Malaysian banking regulations, including the Financial Services Act 2013 and Bank Negara Malaysia directives, while also adhering to international banking practices. It's particularly relevant in Malaysia's robust international trade sector and can be structured to accommodate both conventional and Islamic banking requirements.

1. Parties: Identifies the financial institution (the issuing bank) and the customer (applicant) entering into the facility agreement

2. Background: Sets out the context of the agreement and the customer's request for letter of credit facilities

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. The Facility: Details the nature, amount, and purpose of the letter of credit facility being granted

5. Conditions Precedent: Lists the conditions that must be satisfied before the facility can be utilized

6. Utilization: Specifies the procedures and requirements for using the letter of credit facility

7. Commission, Fees and Charges: Sets out all applicable fees, commissions and charges for the facility

8. Security: Details the security arrangements required to support the facility

9. Representations and Warranties: Contains the customer's representations and warranties

10. Covenants: Lists the positive and negative covenants the customer must comply with

11. Events of Default: Specifies circumstances that constitute default and their consequences

12. Bank's Rights and Remedies: Outlines the bank's rights and available remedies upon default

13. Indemnity: Contains customer's obligations to indemnify the bank

14. Miscellaneous: Includes standard boilerplate provisions such as notices, amendments, and governing law