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A Bank Guarantee Facility agreement is essential for businesses requiring multiple bank guarantees for their commercial operations. This document, governed by Hong Kong law, establishes a framework under which a bank agrees to issue guarantees up to a specified limit, eliminating the need for separate negotiations for each guarantee. It is commonly used in construction projects, international trade, and tender submissions, where the applicant needs to provide financial security to beneficiaries. The agreement includes comprehensive terms covering facility limits, validity periods, issuance procedures, fees, security arrangements, and compliance with Hong Kong banking regulations and Monetary Authority requirements. It's particularly relevant in Hong Kong's role as a major financial center, where bank guarantees frequently support cross-border transactions and local commercial activities.

1. Parties: Identification of the bank (guarantor), the applicant, and the beneficiary

2. Background: Context of the facility, relationship between parties, and purpose of the guarantee

3. Definitions and Interpretation: Key terms used in the agreement, including facility-specific terminology and interpretation rules

4. Facility Terms: Core terms including facility limit, availability period, and purpose

5. Issuance of Guarantees: Process and conditions for issuing individual guarantees under the facility

6. Fees and Charges: Commission, handling fees, and other charges applicable to the facility

7. Payment and Reimbursement: Terms for payment under guarantees and reimbursement obligations of the applicant

8. Representations and Warranties: Standard banking facility representations and specific guarantee-related warranties

9. Covenants: Ongoing obligations of the applicant during the facility period

10. Events of Default: Circumstances constituting default and consequences thereof

11. Indemnity: Applicant's indemnification obligations to the bank

12. Set-off Rights: Bank's rights to set off amounts due against applicant's accounts

13. Communications: Methods and requirements for notices and other communications

14. Governing Law and Jurisdiction: Hong Kong law as governing law and jurisdiction provisions