06/21/2006 Agreement
DANNY L. KOLHAGE
CLERK OF THE CIRCUIT COURT
DATE:
June 22. 2006
TO:
Suzanne Hutton
County Attorney
ATTN:
FROM:
Kathy Peters
Executive Assistant
Pamela G. Ha~
Deputy Clerk '0
At the June 21, 2006, Board of County Commissioner's meeting the Board granted
approval and authorized execution of a Revenue Guaranty Agreement Delta Airlines, Inc. and
Monroe County to provide scheduled air service between Atlanta, Georgia and Florida Keys
Marathon Airport.
Enclosed is duplicate original of the above-mentioned for your handling. Should you have
any questions please do not hesitate to contact this office.
cc: Finance
File/
Execution CODY
REVENUE GUARANTEE AGREEMENT
This Revenue Guaranty Agreement (this "Agreement") made and entered into as
of the 21st day of June, 2006, is between DELTA AIR LINES, INC. ("Delta") and
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS ("Guarantor").
Recitals:
Monroe County Board of County Commissions is the government entity operating
the Marathon / Keys Airport. Atlantic Southeast Airlines ("ASA") is a Delta Connection
carrier and an airline providing scheduled air transportation to United States and
international destinations. Guarantor desires that Delta cause ASA, or a similar Delta
Connection carrier (the "Operator"), to provide scheduled air service between Atlanta,
Georgia (A TL) and Florida Keys Marathon Airport, Florida (MTH), and Guarantor is
willing to provide Delta with a revenue guaranty for causing the Operator to operate such
service. In consideration of the revenue guaranty provided by Guarantor, Delta is willing
to cause the Operator to provide ATL-MTH service on the terms and conditions set forth
herein.
The parties agree as follows:
1. Definitions:
The defined terms set forth below shall have the meanings assigned to them:
1.1 "Average Fare" shall mean the total Passenger Revenues for the applicable
Scheduled Service divided by the number of revenue passengers traveling on such
Scheduled Service, as determined at the end ofthe Revenue Guaranty Period.
1.2 "Material Cost Circumstance" shall mean that, at any time during the term of
this Agreement, Delta's average domestic system-wide cost per gallon of jet fuel
increases or decreases by twenty-five percent (25%) or more over, or under, such cost as
of the date of this Agreement.
1.3 "Minimum Revenues" shall mean the amount specified in Exhibit A
multiplied by the number of one way Scheduled Flights operated as part of the applicable
Scheduled Service.
1.4 "Passenger Revenue" shall mean the prorated on-segment passenger
revenues Delta receives for tickets sold on the Scheduled Flights, plus any cargo and
other revenue on the Schedule Flights, less the amount of applicable taxes, user fees and
other similar charges ("Government Fees"). For local ATL-MTH origin and destination
passengers, the Passenger Revenue amount shall be the ticket price minus Government
Fees. For passengers who purchase a ticket that includes a segment beyond ATL-MTH,
the Passenger Revenue amount shall be the ticket price minus Government Fees prorated
using the SlF pro-ration methodology. For domestic itineraries, the SlF Prorate Factor
equals (5.8871)(miles^0.375). For itineraries which include an international leg, the SlF
Prorate Factor equals the PMP Weighted Miles Factor.
For example, if the fare paid by a passenger for a trip from Boston to Marathon /
Keys Airport via Atlanta is $350 dollars after the subtraction of Government Fees, then
the Passenger Revenue amount is calculated as follows:
Mileage
Mileage Boston - Atlanta 946 miles
Mileage Atlanta- Marathon / Keys Airport + 647 miles
Total Trip Mileage = 1,593 miles
SlF Pro-rate
77 factor
67 factor
144 total factor
A TLMTH Passenger Revenue =
$162.56
1.5 "Revenue Guarantv Period" shall mean November 16, 2006 through
November 15, 2007.
1.6 "Scheduled Flight" shall mean each scheduled flight operated on the
applicable Scheduled Service during the Revenue Guaranty Period.
1.7 "Scheduled Service" shall mean nonstop scheduled air transportation
service by Operator between ATL and MTH using forty-seat Canadair CRJ-200 regional
jets or similar equipment, in accordance with the schedule set forth in Exhibit A. The
schedule times in Exhibit A are approximate and may be adjusted by Delta.
2. Scheduled Service.
2.1 In consideration of the revenue guaranty provided by Guarantor (as
described in Section 3 hereof) Delta agrees to cause Operator to operate the Scheduled
Service during the Revenue Guaranty Period.
2.2 Delta reserves the right to cancel any Scheduled Flight for any reason,
including for weather, maintenance or operational reasons. If a Scheduled Flight is
cancelled, such flight will not be counted for purposes of this Agreement, and passengers,
tickets and revenues for such flights will not be included in calculating Average Fare,
Minimum Revenues, Passenger Revenues, Scheduled Flight or Scheduled Service.
3. Revenue Guarantv.
3.1 In order to induce Delta to cause the Operator to operate the Scheduled
Service, Guarantor has agreed to guaranty that Delta will receive the Minimum Revenues
for causing the Operator to operate the Scheduled Service during the Revenue Guaranty
Period. Upon the completion of the Revenue Guaranty Period, Delta will calculate the
number of Scheduled Flights operated, Passenger Revenues and Minimum Revenues, and
Delta will deliver an operational report summarizing this data to Guarantor. Delta
expects to issue this operational report within sixty (60) days following the close of the
Revenue Guaranty Period.
3.1.1 If the Passenger Revenues exceed the Minimum Revenues during
the Revenue Guaranty Period, then no payment by Guarantor will be due to Delta
with respect to the Scheduled Service.
3.1.2 If the Minimum Revenues exceed the Passenger Revenues with
respect to the Scheduled Service, then Guarantor shall remit the difference (the
"Guaranty Payment") to Delta within thirty (30) days of receipt of Delta's
operational report. Delta's calculation of Scheduled Flights operated, Passenger
Revenues and Minimum Revenues in the operational report shall be binding and
conclusive on Guarantor, absent manifest error.
3.1.3 The Guaranty Payment shall not exceed Five Hundred Thousand
and 00/100 Dollars ($500,000.00) (the "Guaranty Cap").
3.2 The parties recognize that there is an inherent risk that the bookings on the
Scheduled Service may not be sufficient to generate the Minimum Revenues required to
avoid the payment of the revenue guaranty by Guarantor. Nevertheless, Guarantor is
willing to assume that risk in order to induce Delta to enter into this Agreement.
3.3 The parties agree that Delta may cancel one or more individual flights
included in the Scheduled Flights based on advance bookings or for any other
reason, subject to the prior consent of Guarantor (such consent not to be unreasonably
withheld or delayed). If an individual flight is cancelled pursuant to this Section 3.3, such
flight will not be counted for purposes ofthis Agreement, and passengers, tickets and
revenues for such flights will not be included in calculating Average Fare, Minimum
Revenues, Passenger Revenues, Scheduled Flight or Scheduled Service.
3.4 Delta and Guarantor agree that it is in both parties' best interest to
maximize revenues and minimize the "no show" factor on Scheduled Flights. As a result,
appropriate personnel from the revenue management department of Delta and the
Guarantor shall cooperate to achieve the same.
4. Revenue Adiustment.
In the event that Delta notifies Guarantor of a Material Cost Circumstance, Delta
may request a renegotiation of the amount of Minimum Revenues if the Material Cost
Circumstance is an increase in jet-fuel cost and Guarantor may request a renegotiation of
the amount of Minimum Revenues if the Material Cost Circumstance is a decrease in jet-
fuel cost. If, within seven (7) days of any such request, negotiations do not result in the
establishment of a revised Minimum Revenues amount acceptable to the requesting party,
the requesting party may terminate this Agreement upon five (5) days' written notice to the
other party, at which time all of the obligations under this Agreement shall cease other
than amounts owed by Guarantor to Delta in connection with any Scheduled Flights
operated prior to any such termination.
5. Reports.
5.1 On a weekly basis begiuning no later than sixty (60) days prior to the start
of the Revenue Guaranty Period, Delta shall provide Guarantor with a report setting forth
the current status of passenger bookings on each future Scheduled Flight. During the
Revenue Guaranty Period, such reports shall include the passenger loads for the
Scheduled Flights flown the previous week.
5.2 On or before sixty (60) days following the end of each month during the
Revenue Guaranty Period, Delta shall provide Guarantor with a statement setting forth,
for each Scheduled Flight operated during such month, the following data:
Number ofrevenue passengers flown;
. Passenger Revenues received by Delta for each Scheduled Flight;
. The variance between Passenger Revenues received and the Minimum Revenues
for Scheduled Flights operated; and
. Summary of passengers and Passenger Revenues carried on the ATL-MTH route
broken down by actual Origin and Destination market.
These figures shall be provided for the applicable month and, on an aggregate
basis, for all Scheduled Flights operated prior to the end of such month. Delta's
calculations included in such statements shall be binding and conclusive on Guarantor,
absent manifest error.
6. Letter of Credit.
Guarantor and Delta agree that an irrevocable letter of credit will be provided by
the Florida Keys Airport Initiative, Inc. in the amount of$125,000 substantially in the
form attached hereto as Exhibit B. The letter of credit shall be issued by a financial
institution acceptable to Delta, and shall contain the terms specified in Exhibit B or terms
as mutually agreed upon by Delta and the Florida Keys Airport Initiative, Inc. The letter
of credit is due by August 31, 2006. In the event the letter of credit is not received or is
subsequently canceled for any reason, Delta shall have the right to immediately terminate
this Agreement.
7. Term and Termination.
7.1 This Agreement shall be effective on the date first set forth above and
shall continue thereafter until six months following the end of the Revenue Guaranty
Period. The termination of this Agreement shall not affect outstanding rights and
obligations existing as of the date oftermination.
7.2 Either party may terminate the Agreement upon the occurrence of an
"Event of Default." For purposes of this Agreement an "Event of Default" shall be
defined as a party's failure to comply with the material terms of this Agreement within
thirty (30) days of receipt of written notice from the non-defaulting party.
7.3 Excluding Delta's filing for bankruptcy protection under Ch. II of the
U.S. Bankruptcy Code on September 14, 2005, in the United States Bankruptcy Court for
the Southem District of New York, in the event that one party shall be declared bankrupt
or petition under the bankruptcy laws for protection from creditors, either as a voluntary
or involuntary matter, then the other party shall have the right, upon immediate written
notice, to declare this Agreement to be terminated, provided, however, that the foregoing
shall in no way constitute a waiver of any obligations accrued and existing upon date of
termination under this Agreement.
8. Miscellaneous.
8.1 This Agreement constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating thereto. This Agreement may be modified and amended only
by a writing signed by the party against whom enforcement of the modification or
amendment is sought. All indemnities, agreements and covenants made by any party
herein shall survive any termination of this Agreement.
8.2 Neither this Agreement nor any ofthe rights or obligations hereunder may
be assigned or transferred, by operation of law or otherwise, by either party without the
prior written consent of the other party, such consent not to be umeasonably withheld or
delayed. Any attempted assignment or transfer without such consent shall be of no force
or effect.
8.3 All notices, requests, demands, consents and other communications
to or upon the parties to this Agreement shall be in writing and shall be delivered
by hand or sent by facsimile transmission or other written telecommunication in
any such case with mechanical or other proof of delivery or deposited in the mail
by first-class registered or certified mail, return-receipt requested, postage prepaid,
addressed as follows:
Notices to Guarantor:
James R. Paros
Marathon Airport Manager
9400 Overseas Highway, Suite 200
Marathon, Florida 33050
Phone 305 289 6002
Fax 305 2896071
Notices to Delta:
Delta Air Lines, Inc.
1030 Delta Boulevard
Hartsfield International Airport
Atlanta, Georgia 30320-6001
Attention: Vice President - Network Analysis
Fax: 404-715-6018
or to such other address as may be hereafter designated in writing by the respective
parties hereto by notice similarly given. All notices shall be effective upon receipt
thereof, provided that absent such receipt, no notice shall be deemed to have been
given.
8.4 No third party is intended to benefit from, nor may any third party
seek to enforce any of the provisions of, this Agreement.
8.5 Guarantor will indemnify, defend, and hold harmless Delta, its directors,
officers, employees, and agents, from and against all claims and liabilities of any kind
whatsoever, including attorneys' fees, court costs and other costs and expenses, incurred
by Delta in connection with collecting any payments due from Guarantor pursuant to this
Agreement.
8.6 Neither party will be liable for delays or failure in its performance
under the Program caused by any act of God, war, strike, labor dispute, work
stoppage, substantial reduction of services from any country or region, fire, act of
government, or any other cause, whether similar or dissimilar, beyond the control
of that party (any single or combination of such excuses is a "Force Majeure
Event").
8.7 EACH PARTY WAIVES AND RELEASES THE OTHER PARTY
FROM ANY AND ALL CLAIMS FOR CONSEQUENTIAL DAMAGES, IN
CONNECTION WITH THIS AGREEMENT.
8.8 The parties expressly agree that the laws of the State of Florida will govern
this Agreement and the validity, construction, interpretation, and effect of this
Agreement, without regard to principles of conflicts of laws. Each party agrees, that any
civil suit or action brought against it as a result of any of its obligations under this
Agreement may be brought against it either in the state or federal courts of Florida and
each party hereby irrevocably submits to the jurisdiction of such courts and irrevocably
waives, to the fullest extent permitted by law, any objections that it may now or hereafter
have to the laying of the venue of such civil suit or action and any claim that such civil
suit or action has been brought in an inconvenient forum, and each party further agrees
that final judgment in any such civil suit or action shall be conclusive and binding upon it
and shall be enforceable against it by suit upon such judgment in any court of competent
jurisdiction. Further, the parties mutually agree that they will waive trial by jury in any
action, proceeding or counterclaim brought by either party against the other arising out of
or in any way connected with the Agreement.
8.9 Guarantor represents to Delta that no airport revenues or other revenues of
the Florida Keys Marathon Airport will be used to fund this Revenue Guaranty or any
other payments to Delta under this Agreement.
8.10 Delta shall maintain, during the Revenue Guaranty Period and for eighteen
(18) months thereafter, all books, records and documents that maybe reasonably
necessary for Guarantor to verify the accuracy of any statements or reports that Delta is
required to provide to Guarantor hereunder (collectively, the "Records"). Guarantor,
acting through its Finance Director or other authorized representative, shall have the right
to inspect and audit the Records, provided, any such inspection and audit shall occur
during normal business hours and not interfere with the day to day operations of Delta.
Delta retains the right to have one or more representatives be present during any
inspection or audit by Guarantor. Ten (10) business days notice must be given to Delta
by Guarantor of its intent to audit the Records to allow Delta sufficient time to schedule
said presence. Nothing contained herein waives any attorney/client or attorney work
product privilege or confidentiality
9. Relationship of the Parties. For the purposes of this Agreement, neither party
shall be deemed to be the agent, partner, employee, joint venturer, or fiduciary of the
other party.
10. Severabilitv. If any clause or provision of this Agreement shall be held to be
invalid in whole or in part, then the remaining clauses and provisions, or portions thereof,
shall nevertheless be and remain in full force and effect.
11. Captions. The captions of each section are added as a matter of convenience only
and shall be considered of no effect in the construction of any provision of this
Agreement.
12. Attornev's Fees. If either party hereto shall bring any suit, action or
administrative proceeding against the other for relief, declaratory or otherwise, arising out
of this Agreement, the substantially prevailing party shall have and recover against the
other party, in addition to all court costs and disbursements, such sum as the court may
adjudge to be reasonable attorneys' fees, at the time such judgment becomes a final
judgment, following exhaustion of all appeals.
13. Binding Effect. The terms, covenants, conditions, and proVISIOns of this
Agreement shall bind and inure to the benefit of Guarantor and Delta and their respective
legal representatives, successors, and assigns.
14. Claims for Federal or State Aid. Each party agrees that each shall be, and is,
empowered to apply for, seek, and obtain federal and state funds to further the purpose of
this Agreement; provided that all applications, requests, grant proposals, and funding
solicitations shall be approved by each party prior to submission.
15. Adiudication of Disputes or Disagreements. Each party agrees that all disputes
and disagreements shall be attempted to be resolved by meet and confer sessions between
representatives of each of the parties. If no resolution can be agreed upon within thirty
(30) days after the first meet and confer session, the issue or issues may be discussed at a
public meeting of the Monroe County Board of County Commissioners. If the issue or
issues are still not resolved to the satisfaction of the parties, then either party shall have
the right to seek any such judicial or equitable relief or remedy as may be provided by this
Agreement
16. Nondiscrimination. Each party agrees that there will be no discrimination against
any person, and it is expressly understood that upon a determination by a court of
competent jurisdiction that a party has discriminated against any person, this Agreement
automatically terminates without any further action on the part of any party, effective the
date of the Court order. Each party agrees to comply with all Federal and Florida Statutes,
and all local ordinances, as applicable, relating to nondiscrimination. These include but
are not limited to: 1) Title VI of the Civil Rights Act of 1964 (pL 88-352) which prohibits
discrimination on the basis of race, color or national origin; 2) Title IX of the Education
Amendment of 1972, as amended (20 USC ss. 1681-1683, and 1685 -1686), which
prohibits discrimination on the basis of sex; 3) Section 504 of the Rehabilitation Act of
1973, as amended (20 USC s. 794), which prohibits discrimination on the basis of
handicaps; 4) The Age Discrimination Act of 1975; as amended (42 USC ss. 6101-6107)
which prohibits discrimination on the basis of age; 5) The Drug Abuse Office and
Treatment Act of 1972 (PL 92-255), as amended, relating to nondiscrimination on the
basis of drug abuse; 6) The Comprehensive Alcohol Abuse and Alcoholism Prevention,
Treatment and Rehabilitation Act of 1970 (PL 91-616), as amended, relating to
nondiscrimination on the basis of alcohol abuse or alcoholism; 7) The Public Health
Service Act of 1912, ss. 523 and 527 (42 USC ss. 690dd-3 and 290ee-3), as amended,
relating to confidentiality of alcohol and drug abuse patent records; 8) Title VIII of the
Civil Rights Act of 1968 (42 USC s. et seq.), as amended, relating to nondiscrimination in
the sale, rental or financing of housing; 9) The Americans with Disabilities Act of 1990
(42 USC s. 1201 Note), as may be amended from time to time, relating to
nondiscrimination based of disability; 10) Secs. 13-101, et seq., Monroe County Code,
relating to discrimination based on race, color, sex, religion, disability, national origin,
ancestry, sexual orientation, gender identify or expression, familial status or age; 11) Any
other nondiscrimination provisions in any Federal or state statutes which may apply to the
parties to, or the subject matter of, this Agreement.
17. Covenant of No Interest. Each party covenants that it presently has no interest, and
shall not acquire any interest, which would conflict in any manner or degree with its
performance under this Agreement, and the only interest of each is to perform and receive
benefits as set forth in this Agreement.
18. Code of Ethics. Guarantor covenants and agrees that officers and employees of the
County of Monroe (the "County") recognize and will be required to comply with the
standards of conduct for public officers and employees as delineated in Section 112.313,
Florida Statutes, regarding, but not limited to solicitation or acceptance of gifts; doing
business with one's agency; unauthorized compensation; misuse of public position,
conflicting employment or contractual relationship; and disclosure or use of certain
information.
19. Public Access. The parties shall allow and permit reasonable access to, and
inspection of, all documents, papers, letters or other materials in its possession or under
its control subject to the provisions of Chapter 119, Florida Statutes, and made or
received by the parties in conjunction with this Agreement; and either party shall have the
right to unilaterally terminate this Agreement upon violation of this provision by the other
party. This section shall not apply to confidential commercial information. Moreover,
nothing contained within this section waives attorney/client or attorney work product
privilege.
20. Non-Waiver of Immunitv. Notwithstanding the provisions of Sec. 286.28, Florida
Statues, the participation of the parties in this Agreement and the acquisition of any
commercial liability insurance coverage, self-insurance coverage, or local govemment
insurance pool coverage shall not be deemed a waiver of immunity to the extent of
liability coverage.
21. Legal Obligations and Responsibilities. Non-Delegation of Constitutional or
Statutorv Duties. This Agreement is not intended to, nor shall it be construed as, relieving
any participating entity from any obligation or responsibility imposed upon the entity by
law except to the extent of actual and timely performance thereof by any participating
entity, in which case the performance may be offered in satisfaction of the obligation or
responsibility. Further, this Agreement is not intended to, nor shall it be construed as,
authorizing the delegation of the constitutional or statutory duties ofthe County, except to
the extent permitted by the Florida Constitution, State Statute, and case law.
22. Prior to being allowed to begin air transportation service at the Florida Keys
Marathon Airport, Operator shall provide copies of its certificates of insurance to the
Guarantor showing that the carrier has obtained insurance coverage(s) as reasonably
required by the Guarantor.
(Remainder of Pafle Intentionallv Left Blank)
IN WITNESS WHEREOF, the parties have signed this agreement by their undersigned
duly authorized representatives.
Delta Air Lines, Inc.
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Monroe County Board of County
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Name: Charles "Sonny" McCoy
Title: Mayor/Chairman
06/21/2006
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EXHIBIT A
[To the Agreement between Delta and Monroe County Board of County Commissioners]
Name of Guarantor Monroe County Board of County Commissioners
Guarantor Address Marathon Airport Manager
9400 Overseas Highway, Suite 200
Marathon, Florida 33050
Effective Date June 21,2006
Terms of the Letter of Credit
Letter of Credit - Effective Date: Within 60 days of the execution
of this Agreement
Letter of Credit Provider
Letter of Credit - Amount: USD$ 125,000.00
Letter of Credit - Earliest Expiration Date: January 15,2008
Minimum Revenue Amount
ATL-MTH: $ 5,100.00
Schedule Daily Service:
ATL-MTH: Depart ATL at 11 :OOAM and arrive at MTH at 12:45PM.
Depart MTH at 1 :20PM and arrive at A TL at 3 :20PM.
Friday Only:
Depart ATL at 7:30PM and arrive at MTH at 9:15PM.
Saturday Only:
Depart MTH at 9:00AM and arrive at A TL at 1 0:40AM.
Revenue guaranty period November 16,2006 through November 15,2007
Aircraft Forty-seat CRJ-200 or similar equipment
Note: Delta reserves the right to substitute similar aircraft for operational reasons.
EXHIBIT B
Form Letter of Credit
(Issuing Bank Name and Address)
(Date of Effectiveness)
Fax Number:
Telex Number:
Cash Management - 857
Account:
Delta Air Lines, Inc.
Post Office Box 20533
Applicant:
Letter of Credit
No.:
Expiration Date:
1030 Delta Boulevard
Atlanta, Georgia 30320-2533
Attention: General Manager - Cash Management
We hereby establish this irrevocable Letter of Credit No. in your favor for
an amount of One Hundred Twenty Five Thousand United States Dollars (US
$125,000.00) for the account of Applicant.
The term "Beneficiary" includes any successor by operation oflaw of the named
Beneficiary including, without limitation, any liquidator, rehabilitator, receiver or
conservator.
This Letter of Credit is effective and will expire on
unless renewed as hereinafter provided.
Funds under this Letter of Credit are available to you against your sight draft(s),
purportedly signed by your authorized corporate officer, drawn on us bearing the clause
"Drawn under Letter of Credit No. ". Partial drawings are permitted
hereunder.
Upon receipt by you of our notice of election not to renew this Letter of Credit, you may
draw hereunder by your sight draft(s) drawn on us and bearing the clause "Drawn under
Letter of Credit No. "
This Letter of Credit sets forth in full the terms of our undertaking. Such undertaking
shall not in any way be modified, amended or amplified by reference to any document or
instrument referred to herein or in which this Letter of Credit is referred to or to which
this Letter of Credit related and any such reference shall not be deemed to incorporate
herein by reference any document or instrument.
All bank charges and commissions incurred in this transaction are for the Applicant's
account.
We hereby agree with drawers, endorsers and bona fide holders of drafts drawn under and
in compliance with the terms of this credit that such drafts will be duly honored upon
presentation to the drawee. The obligation ofIssuing Bank, under this Letter of Credit is
the individual obligation of Issuing Bank, and is in no way contingent upon
reimbursement with respect thereto.
Except as otherwise expressly stated herein, this credit is subject to the Uniform Customs
and Practice for Documentary Credits (1993 Revision) LC.C. Publication No. 500.
Notwithstanding Article 17 of said publication, if this credit expires during an
interruption of business as described in Article 17, we agree to effect payment ifthe credit
is drawn against within thirty (30) days after resumption of business. As to matters not
covered by UCP then the laws ofthe Applicant's Country shall prevail.
Very truly yours,
By:
Counter Signature