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Sight Letter of Credit Agreement

AGREEMENT FOR LETTER OF CREDIT | Document Parties: SHERWIN WILLIAMS CO | Citibank, N.A. You are currently viewing:
This Letter of Credit involves

SHERWIN WILLIAMS CO | Citibank, N.A.

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Title: AGREEMENT FOR LETTER OF CREDIT
Governing Law: New York     Date: 4/26/2007
Industry: Retail (Home Improvement)    

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Exhibit 4.2

AGREEMENT FOR LETTER OF CREDIT

dated as of April 26, 2007

Unless otherwise defined in this Agreement, capitalized terms used in this Agreement shall have the meanings set forth in Section 26.

Citibank, N.A. (“ Citibank ”) agrees to issue at the request and for the account of the undersigned (the “ Applicant ”) one or more irrevocable letters of credit, each in a form satisfactory to the Applicant and Citibank (each a “ Credit ”, and collectively, the “ Credits ”), up to an aggregate maximum amount not to exceed the amount of the Security Letter of Credit, substantially in accordance with the terms and conditions hereof. In consideration of your issuing, from time to time, one or more Credits substantially in accordance with the terms and conditions provided by the Applicant, Applicant unconditionally agrees with Citibank as follows:

1.  Condition to Issuance of any Credit. The obligation of Citibank to issue a Credit hereunder, on any Business Day, is subject to (a) the Security Letter of Credit having an available amount not less than the sum of (i) the aggregate amount of the Credits outstanding on such date, plus (ii) the aggregate amount of Drafts, if any, not reimbursed by or on behalf of Applicant on such date, plus (iii) the amount of the Credit that Applicant has requested Citibank to issue on such date, (b) any such Credit having a maturity date that is no later than five Business Days prior to the expiration date of the Security Letter of Credit and (c) Citibank having received at least one Business Day’s prior written notice at its office specified below requesting such Credit in the form attached as Annex I.

2.  Reimbursement. Applicant will pay Citibank the amount of each draft or other request for payment (each, a “ Draft ”) drawn under any Credit, whether drawn before, on or, if in accordance with applicable law, after the expiry date stated in any such Credit. Each such payment shall be made, following payment by Citibank, on demand.

3.  Commissions, Fees, Charges and Expenses. Applicant will pay Citibank within ten Business Days of demand therefor, all expenses, charges and other amounts which Citibank may actually pay or actually incur in connection with the Credits, it being agreed that Applicant is not obligated to pay to Citibank any commitment commission, facility fee or letter of credit fee in respect of the Credits.

4.  Payments; Interest on Past Due Amounts; Computations. All amounts due from Applicant shall be paid to Citibank at 399 Park Avenue, New York, New York 10043 (or such other address notified to Applicant in writing), with-out defense, set-off, cross-claim, or counterclaim of any kind, in U.S. dollars and in same day funds, provided, however, that if any such amount is denominated in a currency other than U.S. Dollars, Applicant will pay the equivalent of such amount in U.S. Dollars computed at Citibank’s selling rate for cable transfers to the place where and in the currency in which such amount is payable, or such other currency, place, form and manner acceptable to Citibank in its sole discretion. Any amount not paid when due shall bear interest until paid in full at a daily fluctuating interest rate per annum equal to two percent per annum above the rate of interest announced publicly from time to time by Citibank in New York as Citibank’s Base Rate. Applicant authorizes Citibank to charge any account of Applicant for any amount when due. Unless otherwise agreed in writing as to any Credit, all computations of commissions, fees and interest shall be based on a 360-day year and actual days elapsed.

5.  Additional Costs. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, Citibank; or

(ii) impose on Citibank any other condition affecting this Agreement or the Credits;

and the result of any of the foregoing shall be to increase the cost to Citibank in an amount Citibank deems material of issuing or maintaining the Credits or reduce the amount of any sum received or receivable by Citibank hereunder (whether of principal, interest or

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otherwise), other than any increase in costs resulting from (i) Excluded Taxes or (ii) Indemnified Taxes or Other Taxes to which Section 6 is applicable, then Applicant will pay to Citibank in accordance with Section 4 such additional amount or amounts as will compensate Citibank for such additional costs incurred or reduction suffered.

(b) If Citibank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on Citibank’s capital or on the capital of Citibank’s holding company, if any, as a consequence of this Agreement or the Credits to a level below that which Citibank or Citibank’s holding company could have achieved but for such Change in Law (taking into consideration Citibank’s policies and the policies of Citibank’s holding company with respect to capital adequacy), then from time to time Applicant will pay to Citibank in accordance with Section 4 such additional amount or amounts as will compensate Citibank or Citibank’s holding company for any such reduction suffered.

(c) A certificate of Citibank setting forth the amount or amounts necessary to compensate Citibank or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section, and explaining in reasonable detail the method by which such amount or amounts shall have been determined, shall be delivered to Applicant and shall be conclusive absent manifest error; provided that Citibank shall not be required to deliver information pursuant to this Section relating to its business, other than any such information that is available to the Applicant on a nonconfidential basis prior to the date of such certificate. Applicant shall pay to Citibank the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Failure or delay on the part of Citibank to demand compensation pursuant to this Section shall not constitute a waiver of Citibank’s right to demand such compensation; provided that Applicant shall not be required to compensate Citibank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that Citibank notifies Applicant of the Change in Law giving rise to such increased costs or reductions and of Citibank’s intention to claim compensation therefor.

6.  Taxes. Any and all payments by or on account of any obligation of Applicant hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if Applicant shall be required by applicable law to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) Citibank receives an amount equal to the sum it would have received had no such deductions been made, (ii) Applicant shall make such deductions and (iii) Applicant shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) In addition, Applicant shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Applicant shall indemnify Citibank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by Citibank on or with respect to any payment or an account of any Obligation of the Applicant hereunder and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Applicant by Citibank shall be conclusive absent manifest error. Notwithstanding the foregoing, the Applicant shall have no obligation to indemnify Citibank for any interest, penalties or expenses described above and arising from the gross negligence or willful misconduct of Citibank in taking any action it was required to take including, but not limited to, filing any tax return or report in a timely manner.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Applicant to a Governmental Authority,

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Applicant shall deliver to Citibank the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Citibank.

(e) Any foreign assignee that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which Applicant is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall, upon request of Applicant, deliver to Applicant, at the time or times prescribed by applicable law or reasonably requested by Applicant, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

(f) If Citibank determines that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Applicant or with respect to which the Applicant has paid additional amounts pursuant to this Section 6, it shall pay over such refund to the Applicant (but only to the extent of indemnity payments made, or additional amounts paid, by the Applicant under this Section 6 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of Citibank and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Applicant, upon the request of Citibank, agrees to repay the amount paid over to the Applicant (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Citibank in the event Citibank is required to repay such refund to such Governmental Authority. This Section shall not be construed to require Citibank to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Applicant or any other Person.

7.  Indemnification. (a) Applicant agrees to pay (i) all reasonable out-of-pocket expenses incurred by the Citibank and its Affiliates, including the reasonable fees, charges and disbursements of counsel for Citibank, in connection with the preparation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable out-of-pocket expenses incurred by Citibank, including the reasonable fees, charges and disbursements of any counsel for Citibank, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Credits, including in connection with any workout, restructuring or negotiations in respect thereof.

(b) Applicant agrees to indemnify Citibank, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the transactions contemplated hereby, (ii) any Credit or the use of the proceeds thereof (including any refusal by Citibank to honor a demand for payment under any Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by Applicant or any of its Subsidiaries, or any Environmental Liability related in any way to Applicant or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or its Affiliates or from a breach of this Agreement by such Indemnitee.

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(c) To the extent permitted by applicable law, each party hereto shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, any Credit or the use of the proceeds thereof.

(d) All amounts due under this Section shall be payable promptly after written demand therefor accompanied by the appropriate invoice or other detail supporting such amount.

8.  Obligations Absolute: Limitations of Liability. (a) Applicant’s obligation to repay the Drafts and to make the other payments provided herein (the “ Obligations ”) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of the Credits or this Agreement, or any term or provision therein, (ii) the existence of any claim, set-off, defense or other right that Applicant, or any Affiliate of Applicant may have at any time against the beneficiary or any transferee of the Credits (or any Persons or entities for whom such beneficiary or transferee may be acting), Citibank or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction; (iii) without limiting Section 8(b) below, any Draft, demand certificate or any other document presented under the Credits proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iv) without limiting Section 8(b) below, payment by Citibank under the Credits against presentation of a Draft or other document that does not comply with the terms of the Credits, (v) the surrender or impairment of any security for the performance or observance of any of the terms of this Agreement or any Credit; (vi) any non-application or misapplication by the beneficiary the Credits of the proceeds of any drawing under the Credits; (vii) the fact that a Default shall have occurred and be continuing; or (viii) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, Applicant’s obligations hereunder.

(b) Neither Citibank nor any of its Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of the Credits or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding subsection (a)), or any error, omission, interruption, loss or delay in transmission or delivery of any Draft, notice or other communication under or relating to the Credits (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of Citibank; provided that the foregoing shall not be construed to excuse Citibank from liability to Applicant to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by Applicant to the extent permitted by applicable law) suffered by Applicant that are caused by Citibank’s failure to exercise care when determining whether Drafts and other documents presented under the Credits comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of Citibank (as finally determined by a court of competent jurisdiction), Citibank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of the Credits, Citibank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary (other than a valid injunction issued by a court of competent jurisdiction), or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of the Credits.

9.  Independence. Applicant acknowledges that the rights and obligations of Citibank under the Credits are independent of the existence, performance or nonperformance of any contract

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or arrangement underlying the Credits, including contracts or arrangements between Citibank and Applicant and between Applicant and the beneficiary of any Credit. Citibank shall have no duty to notify Applicant of its receipt of a Draft, certificate or other document presented under any Credit or of its decision to honor any such Credit. Citibank may, without incurring any liability to Applicant or impairing its entitlement to reimbursement under this Agreement, honor any Credit despite notice from Applicant of, and without any duty to inquire into, any defense to payment or any adverse claims or other rights against the beneficiary of any Credit or any other Person. Citibank shall have no duty to request or require the presentation of any document, including any default certificate, not required to be presented under the terms and conditions of any Credit. Citibank shall have no duty to seek any waiver of discrepancies from Applicant, nor any duty to grant any waiver of discrepancies which Applicant approves or requests. Citibank shall have no duty to extend the expiration date or term of any Credit or to issue a replacement letter of credit on or before the expiration date of any Credit or the end of such term.

10.  Non-Documentary Conditions. Citibank is authorized (but shall not be required) to disregard any non-documentary conditions stated in any Credit.

11.  Transfers. If, at Applicant’s request, any Credit is issued in transferable form, Citibank shall have no duty to determine the proper identity of anyone appearing in any transfer request, Draft, or other document as transferee, nor shall Citibank be responsible for the validity or correctness of any transfer.

12.  Extensions and Modifications of the Credit. This Agreement shall be binding upon Applicant with respect to any extension or modification of any Credit made at Applicant’s request or with Applicant’s consent. Applicant’s Obligations shall not be reduced or impaired in any way by any agreement by Citibank and the beneficiary of any Credit extending Citibank’s time to honor or to give notice of discrepancies and any such agreement shall be binding upon Applicant.

13.  Covenants of Applicant. Applicant will, so long as any Credit or any reimbursement or other payment obligation of Applicant under this Agreement remains outstanding, comply with the covenants set forth below:

(a) Applicant will furnish to Citibank (i) within 90 days after the end of each fiscal year of Applicant, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the consolidated financial condition and results of operations of Applicant and the Subsidiaries on a consolidated basis in accordance with GAAP; (ii) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of Applicant, its consolidated balance sheet and related statements of operations and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of Applicant and the Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes; (iii) concurrently with any delivery of financial statements under clause (i) or (ii) above, a certificate of a Financial Officer of Applicant certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto; (iv) promptly after the same become publicly available, copies of all reports on Forms 10-K, 10-Q and 8-K (or any substitute or successor forms) filed by Applicant with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or distributed by Applicant to its shareholders generally, as the case may be; (v) promptly following a request therefor, all documentation and other information that Citibank reasonably

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requests as necessary in order for it to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act; and (vi) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of Applicant or any Material Subsidiary, or compliance with the terms of this Agreement, as Citibank may reasonably request. Information required to be delivered pursuant to this Section shall be deemed to have been delivered if such information, or one or more annual or quarterly reports containing such information, shall be available on the website of the Securities and Exchange Commission at http://www.sec.gov and a confirming electronic correspondence shall have been delivered or caused to be delivered to Citibank providing notice of such posting or availability; provided that Applicant shall deliver paper copies of such information to Citibank if Citibank requests such delivery. Information required to be delivered pursuant to this Section may also be delivered by electronic communications pursuant to procedures approved by the Citibank.

(b) Applicant will furnish to Citibank prompt written notice of the occurrence of any Default promptly after any Financial Officer becomes aware thereof. Each notice delivered under this subsection (b) shall be accompanied by a statement of a Financial Officer or other executive officer of Applicant setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

(c) Applicant will, and will cause each of the Material Subsidiaries to, (i) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, and (ii) maintain, with financially sound and reputable insurance companies, insurance or maintain a self-insurance program in such amounts and against such risks as are customarily maintained by companies of similar size and financial strength engaged in the same or similar businesses operating in the same or similar locations (including without limitation by the maintenance of adequate self-insurance reserves to the extent customary among such companies).

(d) Applicant will, and will cause each of the Material Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Applicant will, and will cause each of the Material Subsidiaries to, permit any representatives designated by Citibank, at its own expense if an Event of Default has not occurred and is continuing, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers, all at such reasonable times and as often as reasonably requested.

(e) Applicant will, and will cause each of the Material Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually and in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(f) Applicant will observe or perform each coven


 
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