SAMPLE IRREVOCABLE LETTER OF CREDIT
(On Bank/Issuer Letterhead)
BENEFICIARY: Village of Diamond APPLICANT:
1750 E. Division Street
Diamond, Illinois 60416
DATE: NUMBER:
EXPIRATION: [Not less than two years from date first above named]
PRINCIPAL AMOUNT:
Ladies and Gentlemen:
We hereby issue this Irrevocable Letter of Credit (the “Credit”) in your favor up to the aggregate amount of U.S. [insert dollar amount equal to 125% of the costs of completing all public improvements required of the developer or subdivider together with the costs of performing all other obligations for which financial security is required under the ordinances of the village, or under the terms of any relevant annexation agreement, development agreement or performance guarantee agreement].
This Credit is issued to secure the completion and installation of [list all public improvements required of the developer or subdivider, either specifically, by reference to any relevant annexation agreement or performance guarantee agreement, or by citation to pertinent sections of the village ordinances] and the performance of [list all other obligations of the developer or subdivider for which financial security is required under the ordinances of the village, or under the terms of any relevant annexation agreement, development agreement or performance guarantee agreement], all on or before [insert a date which is at least 90 days before the expiration date of the Credit].
We engage with you that we will fully honor any draft drawn at sight under this Credit provided that:
1. Such draft is presented at our counters on or before [the above-stated expiration date], or before such other extended expiration date as may result from any automatic renewal of this Credit as hereinafter set forth;
2. Such draft is accompanied by this original Credit;
3. Such draft is marked “Drawn under [Issuer's] Irrevocable Letter of Credit No. , dated [insert date first above named];
4. Such draft is accompanied by either (a) a statement signed by the Village Mayor and the Village Engineer certifying that as of the date of such draft, the [developer or subdivider] has failed or defaulted in [the completion and installation of all public improvements required of the developer or subdivider, and/or the performance of any other obligation for which financial security is required under the ordinances of the village, or under the terms of any relevant annexation agreement, development agreement or performance guarantee agreement], or (b) a statement signed by the Village Mayor certifying that the Village of Diamond has received written notice of [Issuer’s] election riot to renew this Credit for an additional 1-year term as hereinafter set forth.
The principal amount of this Credit shall automatically be deemed to be reduced by the amount of any drafts drawn hereunder and honored by [Issuer]. Furthermore, the principal amount of this Credit may from time to time be reduced to such amounts as may be approved in writing by the Village of Diamond Board of Commissioners pursuant to the written recommendation of the Village Engineer, provided, however, that neither the issuance of this Credit nor any such reduction shall constitute any waiver of any rights that the Village of Diamond may have against [developer or subdivider], nor shall the issuance of this Credit or any such reduction serve to limit, modify or otherwise excuse the [developer or subdivider's] performance of any other obligation owed to the Village of Diamond. However, unless and until the Village Board of Commissioners accepts in writing and pursuant to the written recommendation of the Village Engineer [the completion and installation of all public improvements required of the developer or subdivider, and/or the performance of any other obligation for which financial security is required under the ordinances of the village, or under the terms of any relevant annexation agreement, development agreement or performance guarantee agreement], in no event shall the Village of Diamond Board of Commissioners and Village Engineer be obligated to issue or recommend in writing any reduction of this Credit which would reduce the then-current principal balance of this Credit to an amount which is less than the sum of (a) 10% of the original principal amount of this Credit, and (b) the Village Engineer’s estimate of the cost necessary to [complete the construction and installation of all public improvements required of the developer or subdivider, and/or the performance of any other obligation for which financial security is required under the ordinances of the village, or under the terms of any relevant annexation agreement, development agreement or performance guarantee agreement].
Notwithstanding anything herein to the contrary, this Credit shall automatically renew itself for successive terms of 1 year from the above-stated expiration date or any future expiration date and without other amendment or modification hereto unless and until the Mayor of the Village of Diamond and the Village Attorney receives, not less than 90 days before the above-stated expiration date or any future expiration date, written notice from [Issuer], via registered mail, return receipt requested or via nationally recognized overnight courier, that [Issuer] elects not to renew this Credit for any such additional successive terms. All drafts drawn at sight hereunder during any such additional successive term shall be fully honored by [Issuer] when presented at our counters in accordance with the terms hereinabove set forth. In the event that the Mayor of the Village of Diamond receives such a notice from the [Issuer] prior to the expiration of the then-current term of this Credit, then the Village may at any time thereafter within such then-current term of this Credit draw its draft on sight for the remaining balance of this Credit in accordance with the terms and conditions hereinabove set forth.
In the event that [Issuer] fails to honor any draft of the Village of Diamond drawn under this Credit and in conformity with its terms, [Issuer] shall pay to the Village of Diamond, in addition to any and all damages resulting from such dishonor, all attorney, expert witness fees, professional service fees, court costs incurred by the Village of Diamond in connection with its efforts to obtain the honor of such draft, regardless of whether or not litigation ensues in relation thereto. The Thirteenth Circuit Court, Grundy County, shall be the sole and exclusive venue for any and all litigation so ensuing from any dispute involving or arising from this Credit.
This Credit is subject to the provisions of Article 5 of the Uniform Commercial Code, ILCS Ch. 810, Act 5, §§ 5-101 et seq. Furthermore, this Credit is subject to the then-current Uniform Customs and Practice for Documentary Credits (the “UCP”), International Chamber of Commerce Publication No. 500, as revised from time to time, except to the extent that the UCP conflicts with the Article 5, or with an express term of this Credit.
Very truly yours,
[Issuer]
BY:
ITS:
ATTEST:
ITS:
(Am. Ord. 2021-03, passed 3-9-2021)