Irrevocable Standby Letter of Credit. A. As a condition precedent to Contractor’s right to receive any payments under this Agreement (except payments expressly permitted pursuant to an LNTP), Contractor shall deliver to Owner an irrevocable standby letter of credit, naming Owner as beneficiary, in the amount of ten percent (10%) of the Contract Price (as adjusted by Change Order) and in the form of Attachment R, and issued and confirmed by a commercial bank in the United States of America reasonably acceptable to Owner with a long-term rating of at least Investment Grade (“Letter of Credit”). Upon Owner’s written request, Contractor shall increase the dollar value of the Letter of Credit issued to Owner in proportion to any increases to the Contract Price pursuant to a Change Order, or the aggregate of multiple Change Orders, that equal or exceed one hundred million U.S. Dollars (U.S. $100,000,000); provided that if Owner so requests an adjustment to the value of the Letter of Credit, Contractor shall be entitled to a Change Order for the cost of the increase in the Letter of Credit. If at any time the rating of the U.S. commercial bank that issued the Letter of Credit falls below Investment Grade, Contractor shall replace the Letter of Credit within [***] ([***]) Days with a letter of credit or, if permitted by Owner in its sole discretion, an equivalent instrument, issued by a commercial bank in the United States of America reasonably acceptable to Owner meeting such rating requirements. Owner shall have the right to draw down on or collect against such Letter of Credit upon Owner’s demand in the event of the following: (a) a Default by Contractor or the owing by Contractor to Owner under this Agreement for Liquidated Damages or any other liabilities, damages, costs, losses or expenses arising out of or relating to a breach of any obligation under this Agreement by Contractor, such Default or otherwise and (b) Owner has provided [***] ([***]) Business Days’ written notice to Contractor stating Owner’s intent to draw against the Letter of Credit and the amount to be drawn and specifying the reason for the draw on the Letter of Credit. The amount drawn on the Letter of Credit shall not be greater than the amount that Owner, at the time of the drawing, reasonably estimates is owed it under this Agreement for Liquidated Damages, liabilities, damages, costs, losses or expenses or is necessary to remedy the Default or breach of this Agreement. In addition to the foregoing draw rights, (i) Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds in the Letter of Credit upon Owner’s demand if Contractor has not, prior to [***] ([***]) Days before the then current expiration date, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit and from a U.S. commercial bank meeting the requirements in this Section 9.2 and extending the expiration date for the shorter of (a) a period of one (1) year, or (b) the expiration of such Defect Correction Period, and (ii) Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds available under such Letter of Credit upon Owner’s demand if the issuing bank is no longer Investment Grade and Contractor has not, within the applicable time period set forth in this Section 9.2, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit from a U.S. commercial bank meeting the requirements set forth in this Section 9.2. Except for sums due and owing for LNTP Work (if any), Contractor shall not be entitled to any compensation under this Agreement unless and until Contractor provides the Letter of Credit to Owner in accordance with this Section 9.2. 1. Contractor may fulfill the requirements set forth in this Section 9.2 through multiple, co-existent Letters of Credit issued to Owner with no more than a total of two (2) Letters of Credit being provided under this Section 9.2; provided
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Irrevocable Standby Letter of Credit. A. As a condition precedent to Contractor’s right to receive any payments under this Agreement (except payments expressly permitted pursuant to an LNTP), Contractor shall deliver to Owner an irrevocable standby letter of credit, naming Owner as beneficiary, in the amount of ten [***] percent (10[***]%) of the Contract Price (as adjusted by Change Order) and in the form of Attachment R, and issued and confirmed by a commercial bank in the United States of America reasonably acceptable to Owner with a long-term rating of at least Investment Grade (“Letter of Credit”). Upon Owner’s written request, Contractor shall increase the dollar value of the Letter of Credit issued to Owner in proportion to any increases to the Contract Price pursuant to a Change Order, or the aggregate of multiple Change Orders, that equal or exceed one hundred million [***] U.S. Dollars (U.S. $100,000,000U.S.$ [***]); provided that if Owner so requests an adjustment to the value of the Letter of Credit, Contractor shall be entitled to a Change Order for the cost of the increase in the Letter of Credit. If at any time the rating of the U.S. commercial bank that issued the Letter of Credit falls below Investment Grade, Contractor shall replace the Letter of Credit within [***] ([***]) Days with a letter of credit or, if permitted by Owner in its sole discretion, an equivalent instrument, issued by a commercial bank in the United States of America reasonably acceptable to Owner meeting such rating requirements. Owner shall have the right to draw down on or collect against such Letter of Credit upon Owner’s demand in the event of the following: (a) a Default by Contractor or the owing by Contractor to Owner under this Agreement for Liquidated Damages or any other liabilities, damages, costs, losses or expenses arising out of or relating to a breach of any obligation under this Agreement by Contractor, such Default or otherwise and (b) Owner has provided [***] ([***]) Business Days’ written notice to Contractor stating Owner’s intent to draw against the Letter of Credit and the amount to be drawn and specifying the reason for the draw on the Letter of Credit. The amount drawn on the Letter of Credit shall not be greater than the amount that Owner, at the time of the drawing, reasonably estimates is owed it under this Agreement for Liquidated Damages, liabilities, damages, costs, losses or expenses or is necessary to remedy the Default or breach of this Agreement. In addition to the foregoing draw rights, (i) Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds in the Letter of Credit upon Owner’s demand if Contractor has not, prior to [***] ([***]) Days before the then current expiration date, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit and from a U.S. commercial bank meeting the requirements in this Section 9.2 and extending the expiration date for the shorter of (a) a period of one (1) year, or (b) the expiration of such Defect Correction Period, and (ii) Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds available under such Letter of Credit upon Owner’s demand if the issuing bank is no longer Investment Grade and Contractor has not, within the applicable time period set forth in this Section 9.2, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit from a U.S. commercial bank meeting the requirements set forth in this Section 9.2. Except for sums due and owing for LNTP Work (if any), Contractor shall not be entitled to any compensation under this Agreement unless and until Contractor provides the Letter of Credit to Owner in accordance with this Section 9.2.
1. Contractor may fulfill the requirements set forth in this Section 9.2 through multiple, co-existent Letters of Credit issued to Owner with no more than a total of two (2) Letters of Credit being provided under this Section 9.2; providedprovided that each Letter of Credit shall meet the requirements of Section 9.2 and the amounts of such Letters of Credit shall, in the aggregate, equal an amount equal to [***] percent ([***]%) of the Contract Price (as may be increased or decreased pursuant to Section 9.2). Owner may in accordance with Section 9.2 draw down or collect on any one of the Letters of Credit, or all of the Letter of Credits, or any combination thereof, in any amounts Owner determines with respect to each Letter of Credit in order to collect all the amounts permitted under Section 9.2,
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Irrevocable Standby Letter of Credit. A. As a condition precedent to Contractor’s right to receive any payments under this Agreement (except payments expressly permitted pursuant to an LNTP)Concurrently with the issuance of NTP, Contractor shall deliver provide to Owner an irrevocable standby standby, on-demand letter of credit, naming Owner as beneficiary, in the amount of ten *** percent (10***%) of the Contract Price (as adjusted by Change Order) and in the form of Attachment R, and issued and or confirmed by a commercial bank in the United States of America reasonably acceptable to Owner with a long-term rating of at least Investment Grade (“Letter of Credit”). Upon Owner’s written request, Contractor shall increase the dollar value of the Letter of Credit issued to Owner in proportion to any increases to the Contract Price pursuant to a Change Order, or the aggregate of multiple Change Orders, that equal or exceed one hundred million *** U.S. Dollars (U.S. $100,000,000***); provided that if Owner so requests an adjustment to the value of the Letter of Credit, Contractor shall be entitled to a Change Order for the cost of the increase in the Letter of Credit. If at any time the rating of the U.S. commercial bank that issued the Letter of Credit falls below Investment Grade, Contractor shall replace the Letter of Credit within [***] ten ([***]10) Days with a an equivalent letter of credit or, if permitted by Owner in its sole discretion, an equivalent instrumentcredit, issued by a commercial bank in the United States of America reasonably acceptable to Owner meeting such rating requirementsrequirements and meeting the requirements of this Section 9.2 or, if permitted by Owner in its sole discretion, an equivalent instrument. Owner shall have the right to draw down on or collect against such Letter of Credit upon Owner’s demand in the event of the following: (a1) a Default by Contractor or the owing by Contractor to Owner under this Agreement for Liquidated Damages or any other liabilities, damages, costs, losses or expenses arising out of or relating to a breach of any obligation under this Agreement by Contractor, Contractor or such Default or otherwise Default; and (b2) Owner has provided [***] Contractor with seven ([***]7) Business Days’ written notice (except in the event of Contractor’s bankruptcy, in which event, no such notice is required) (a) specifying the nature of such Default or the owing by Contractor to Owner under this Agreement for Liquidated Damages or any other liabilities, damages, costs, losses or expenses arising out of or relating to a breach of any obligation under this Agreement by Contractor and (b) stating Owner’s intent to draw against the Letter of Credit and the amount to be drawn and specifying the reason for the draw on the Letter of Creditdrawn. The amount drawn on the Letter of Credit shall not be greater than the amount that Owner, at the time of the drawing, reasonably estimates is owed it under this Agreement for Liquidated Damages, liabilities, damages, costs, losses or expenses or is necessary to remedy the Default or breach of this Agreement. In addition to the foregoing draw rights, (i) Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds in the Letter of Credit upon Owner’s demand if Contractor has not, prior to [***] thirty ([***]30) Days before the then current expiration date, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit and from a U.S. commercial bank meeting the requirements in this Section 9.2 and extending the expiration date for the shorter of (a) a period of one (1) year, year or (b) the expiration of such the period specified in clause (viii) of the definition of “Defect Correction Period” (i.e., the eighteen (18) month period following Substantial Completion of Train 7 and any extension pursuant to Section 12.3C, if applicable), and (ii) Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds available under such Letter of Credit upon Owner’s demand if the issuing bank is no longer Investment Grade and Contractor has not, within the applicable time period set forth in this Section 9.2, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit from a U.S. commercial bank meeting the requirements set forth in this Section 9.2. Except for sums due and owing for LNTP Work (if any), Contractor shall is not be entitled to any compensation under this Agreement (other than for any compensation owed under an LNTP) unless and until Contractor provides the Letter of Credit to Owner in accordance with this Section 9.2.
B. The amount of the Letter of Credit shall decrease to an aggregate amount equal to:
1. percent (***%) of the Contract Price upon the commercial bank’s receipt from Owner of a written notice that (a) Substantial Completion of Train 1 has occurred (including Contractor’s payment to Owner of all Delay Liquidated Damages due and owing under this Agreement for Train 1), and (b) Contractor may fulfill has achieved the requirements set forth Performance Guarantees for Train 1 or paid to Owner all Train 1 Performance Liquidated Damages due and owing;
2. provided that the conditions of clauses (a) and (b) of Section 9.2B.1 have occurred, *** percent (***%) of the Contract Price upon the commercial bank’s receipt from Owner of a written notice that (a) Substantial Completion of Train 2 has occurred (including Contractor’s payment to Owner of all Delay Liquidated Damages due and owing under this Agreement for Train 2), and (b) Contractor has achieved the Performance Guarantees for Train 2 or paid to Owner all Train 2 Performance Liquidated Damages due and owing;
3. provided that the conditions of clauses (a) and (b) of Section 9.2B.2 have occurred, *** percent (***%) of the Contract Price upon the commercial bank’s receipt from Owner of a written notice that (a) Substantial Completion of Train 3 has occurred (including Contractor’s payment to Owner of all Delay Liquidated Damages due and owing under this Agreement for Train 3), and (b) Contractor has achieved the Performance Guarantees for Train 3 or paid to Owner all Train 3 Performance Liquidated Damages due and owing;
4. provided that the conditions of clauses (a) and (b) of Section 9.2B.3 have occurred, *** percent (***%) of the Contract Price upon the commercial bank’s receipt from Owner of a written notice that (a) Substantial Completion of Train 4 has occurred (including Contractor’s payment to Owner of all Delay Liquidated Damages due and owing under this Agreement for Train 4), and (b) Contractor has achieved the Performance Guarantees for Train 4 or paid to Owner all Train 4 Performance Liquidated Damages due and owing;
5. provided that the conditions of clauses (a) and (b) of Section 9.2B.4 have occurred, *** percent (***%) of the Contract Price upon the commercial bank’s receipt from Owner of a written notice that (a) Substantial Completion of Train 5 has occurred (including Contractor’s payment to Owner of all Delay Liquidated Damages due and owing under this Agreement for Train 5), and (b) Contractor has achieved the Performance Guarantees for Train 5 or paid to Owner all Train 5 Performance Liquidated Damages due and owing;
6. provided that the conditions of clauses (a) and (b) of Section 9.2B.5 have occurred, *** percent (***%) of the Contract Price upon the commercial bank’s receipt from Owner of a written notice that (a) Substantial Completion of Train 6 has occurred (including Contractor’s payment to Owner of all Delay Liquidated Damages due and owing under this Agreement for Train 6), and (b) Contractor has achieved the Performance Guarantees for Train 6 or paid to Owner all Train 6 Performance Liquidated Damages due and owing;
7. provided that the conditions of clauses (a) and (b) of Section 9.2B.6 have occurred, *** percent (***%) of the Contract Price upon the commercial bank’s receipt from Owner of a written notice that (a) Substantial Completion of Train 7 has occurred (including Contractor’s payment to Owner of all Delay Liquidated Damages due and owing under this Agreement for Train 7), and (b) Contractor has achieved the Performance Guarantees for Train 7 or paid to Owner all Train 7 Performance Liquidated Damages due and owing;
8. provided that the conditions of Section 9.2B7 have occurred and if the Defect Correction Period has been extended for any Work pursuant to Section 12.3C, *** percent (***%) of the Contract Price upon the commercial bank’s receipt from Owner of a written notice (i) of the expiration of the period specified in clause (viii) of the definition of “Defect Correction Period” (i.e., the eighteen (18) month period following Substantial Completion of Train 7, and (ii) that the Defect Correction Period has been extended pursuant to Section 12.3C); and
9. provided that the conditions of Section 9.2B7 have occurred and (a) if the Defect Correction Period has not been extended for any Work pursuant to Section 12.3C or (b) if the Defect Correction Period has been extended for any Work pursuant to Section 12.3C and such extension has expired, *** percent (***%) of the Contract Price upon the issuing commercial bank’s receipt from Owner of a written notice of the expiration of the period specified in clause (viii) of the definition of “Defect Correction Period” (i.e., the eighteen (18) month period following Substantial Completion of Train 7 plus (if applicable) the expiration of any extensions to this eighteen (18) month period pursuant to Section 9.2 through multiple, co-existent Letters 12.3C of the Agreement) and provided further that no existing claims of Owner under this Agreement remain unresolved.
C. The Letter of Credit issued to Owner with no more than a total shall remain in full force and effect without any lapse whatsoever in the amounts specified in Section 9.2B from the issuance of two (2) Letters the Letter of Credit being through the expiration of the period specified in clause (viii) of the definition of “Defect Correction Period” (i.e., the eighteen (18) month period following Substantial Completion of Train 7 and any extension of the Defects Correction Period pursuant to Section 12.3C, if any) in accordance with Section 9.2B.9. Partial drawings are permitted under the Letter of Credit.
D. No later than thirty (30) Days after the satisfaction of any of the conditions listed in Section 9.2B above, Owner shall provide the commercial bank that issued the Letter of Credit with the written notice as specified in that particular section. No later than thirty (30) Days after expiration of the eighteen (18) month Defect Correction Period for Train 7 (as may be extended pursuant to Section 12.3C), Owner shall provide the commercial bank that issued Letter of Credit with written notice of the expiration of such period pursuant to Section 9.2B.8 or 9.2B.9, as applicable. Owner shall copy Contractor on the notices provided under to the commercial bank described in Section 9.2B.
E. The Letter of Credit may only be transferred by Owner to a permitted assignee of this Section 9.2; providedAgreement. Owner may for the purpose of providing collateral, assign, pledge and/or grant a security interest in the Letter of Credit to any Lender without Contractor’s consent by providing notice to Contractor.
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Samples: Fixed Price Separated Turnkey Agreement (Cheniere Energy, Inc.)
Irrevocable Standby Letter of Credit. A. As a condition precedent to Contractor’s right to receive any payments under this Agreement (except payments expressly permitted pursuant to an LNTP), Contractor shall deliver to Owner an irrevocable standby letter of credit, naming Owner as beneficiary, in the amount of ten percent (10%) of the Contract Price (as adjusted by Change Order) and in the form of Attachment R, and issued and confirmed by a commercial bank in the United States of America reasonably acceptable to Owner with a long-term rating of at least Investment Grade (“Letter of Credit”). Upon Owner’s written request, Contractor shall increase the dollar value of the Letter of Credit issued to Owner in proportion to any increases to the Contract Price pursuant to a Change Order, or the aggregate of multiple Change Orders, that equal or exceed one hundred million U.S. Dollars (U.S. $100,000,000); provided that if Owner so requests an adjustment to the value of the Letter of Credit, Contractor shall be entitled to a Change Order for the cost of the increase in the Letter of Credit. If at any time the rating of the U.S. commercial bank that issued the Letter of Credit falls below Investment Grade, Contractor shall replace the Letter of Credit within [***] ([***]) Days with a letter of credit or, if permitted by Owner in its sole discretion, an equivalent instrument, issued by a commercial bank in the United States of America reasonably acceptable to Owner meeting such rating requirements. Owner shall have the right to draw down on or collect against such Letter of Credit upon Owner’s demand in the event of the following: (a) a Default by Contractor or the owing by Contractor to Owner under this Agreement for Liquidated Damages or any other liabilities, damages, costs, losses or expenses arising out of or relating to a breach of any obligation under this Agreement by Contractor, such Default or otherwise and (b) Owner has provided [***] ([***]) Business Days’ written notice to Contractor stating Owner’s intent to draw against the Letter of Credit and the amount to be drawn and specifying the reason for the draw on the Letter of Credit. The amount drawn on the Letter of Credit shall not be greater than the amount that Owner, at the time of the drawing, reasonably estimates is owed it under this Agreement for Liquidated Damages, liabilities, damages, costs, losses or expenses or is necessary to remedy the Default or breach of this Agreement. In addition to the foregoing draw rights, (i) Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds in the Letter of Credit upon Owner’s demand if Contractor has not, prior to [***] ([***]) Days before the then current expiration date, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit and from a U.S. commercial bank meeting the requirements in this Section 9.2 and extending the expiration date for the shorter of (a) a period of one (1) year, or (b) the expiration of such Defect Correction Period, and (ii) Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds available under such Letter of Credit upon Owner’s demand if the issuing bank is no longer Investment Grade and Contractor has not, within the applicable time period set forth in this Section 9.2, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit from a U.S. commercial bank meeting the requirements set forth in this Section 9.2. Except for sums due and owing for LNTP Work (if any), Contractor shall not be entitled to any compensation under this Agreement unless and until Contractor provides the Letter of Credit to Owner in accordance with this Section 9.2.
1. Contractor may fulfill the requirements set forth in this Section 9.2 through multiple, co-existent Letters of Credit issued to Owner with no more than a total of two (2) Letters of Credit being provided under this Section 9.2; providedprovided that each Letter of Credit shall meet the requirements of Section 9.2 and the amounts of such Letters of Credit shall, in the aggregate, equal an amount equal to ten percent (10%) of the Contract Price (as may be increased or decreased pursuant to Section 9.2). Owner may in accordance with Section 9.2 draw down or collect on any one of the Letters of Credit, or all of the Letter of Credits, or any combination thereof, in any amounts Owner determines with respect to each Letter of Credit in order to collect all the amounts permitted under Section 9.2, which such allocation and collection on any one or more of the Letters of Credit shall be determined in Owner’s sole discretion. Any reference to “Letter of Credit” in this Agreement shall mean any one, any combination, or all of the Letters of Credit provided under this Agreement pursuant to this Section 9.2A.1, at Owner’s sole discretion.
B. The amount of the Letter of Credit shall decrease to an aggregate amount equal to:
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