Exhibit 10.4
Execution
Copy
Agreement for
Standby Letters of Credit (this “Agreement”)
In
consideration of the issuance by Citibank, N.A. (
“Citibank” ) of irrevocable standby or direct
pay
letters of credit
(collectively, the “Credits” and individually, a
“Credit” ) substantially in accordance with the
terms and conditions provided by Legg Mason, Inc., a Maryland
corporation ( “LM” ) and LM Capital
Support V, LLC, a Maryland limited liability company (
”Capital Support” ; together with LM, the
“Applicants” ) on the applications corresponding
hereto (the “Applications” ) or as otherwise
requested by Applicants in writing, and as the same may be amended
from time to time, Applicants unconditionally jointly and severally
agree with Citibank as follows:
1.
Reimbursement.
Applicants will,
jointly and severally, reimburse Citibank, on demand, for the
amount of each payment Citibank makes against a corresponding
demand under each Credit. Reimbursement shall be due on the day on
which Citibank makes such payment under each Credit.
2.
Commissions, Fees,
Charges and Expenses.
Applicants will,
jointly and severally, pay Citibank (a) commissions and fees
on
each Credit at such
rates and times as Applicants and Citibank may agree in writing or,
in the absence of such an agreement, in accordance with
Citibank’s standard commissions and fees then in effect, to
cover the full tenor of such Credit without refund for any
unused portion of such tenor, and (b) on demand, all reasonable
out-of-pocket expenses which Citibank may pay or incur in
connection with each
Credit.
3.
Payments; Interest
on Past Due Amounts; Computations.
All
amounts due from Applicants shall be paid to Citibank at 399 Park
Avenue, New York, New York 10043 (or such other address notified to
Applicants in writing), without defense, set-off, cross-claim or
counterclaim of any kind, in U.S. Dollars and in same day funds,
provided that if the amount due is based on Citibank’s
payment in a currency other than U.S. Dollars, Applicants will,
jointly and severally, pay the equivalent of such amount in U.S.
Dollars computed at Citibank’s market selling rate for cable
transfers to the place where, and in the currency in which,
Citibank paid such amount, or, at Citibank’s reasonable
request in accordance with normal banking procedures, Applicants
will, jointly and severally, pay in such other currency, place,
form and manner as Citibank finds reasonably acceptable.
Applicants’ obligations to make payments in U.S.
Dollars shall not be satisfied by any tender, or any recovery by
Citibank pursuant to any judgment, which is expressed in or
converted into any currency other than U.S. Dollars, except to the
extent that Citibank may in accordance with normal banking
procedures convert such currency on the Business Day after such
tender or recovery into U.S. Dollars in the full amount of U.S.
Dollars payable under this Agreement. 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. After an Event
of Default shall have occurred and be continuing, each Applicant
authorizes Citibank to charge any account of such Applicant for any
amount when due in accordance with Section 17. Unless otherwise
agreed in writing as to any Credit and subject to any other
provision of this Agreement, all computations of commissions, fees
and interest shall be based on a 360-day year and actual days
elapsed.
4.
Additional
Costs.
If
Citibank determines that the introduction or effectiveness of, or
any change in, any law or regulation or compliance with any
guideline or request from any central bank or other government or
quasi-government authority (whether or not having the force of law)
affects or would affect the amount of capital or reserves required
or expected to be maintained by Citibank or any corporation
controlling Citibank and Citibank determines that the amount of
such capital or reserve is increased by or based upon the existence
of any Credit, then Applicants shall, jointly and severally, pay
Citibank on demand from time to time additional amounts sufficient
in Citibank’s judgment to compensate for the increase.
Citibank’s certificate as to amounts due shall be conclusive,
in the absence of manifest error.
5.
Taxes.
All
payments made to Citibank shall be made free and clear of and
without deduction for any present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all related liabilities,
excluding income taxes imposed by the jurisdiction of
Citibank’s head office or the office issuing any Credit (all
non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities are called “Taxes”
). If any Taxes shall be required by law to be withheld or deducted
from or in respect of any sum payable under this Agreement, (a) the
sum payable under this
Exhibit 10.4
Agreement shall be
increased as may be necessary so that after making all required
withholding or deductions Citibank receives an amount equal to the
sum Citibank would have received had no such withholding or
deductions been required, (b) Applicants shall be jointly and
severally responsible for payment of the amount to the relevant
taxing authority, (c) Applicants shall jointly and severally
indemnify Citibank on demand for any Taxes paid by Citibank and any
liability (including penalties, interest and expenses) arising from
such payment or in respect of such Taxes, whether or not such Taxes
were correctly or legally asserted, and (d) Applicants shall
provide Citibank with the original or a certified copy of the
receipt evidencing each Tax payment within 30 days of the tax
payment date.
6.
Indemnification.
Applicants will
jointly and severally indemnify and hold Citibank and its officers,
directors, affiliates, employees, attorneys and agents (each, an
“Indemnified Party” ) harmless from and against
any and all claims, liabilities, losses, damages, costs and
expenses, including reasonable attorneys’ fees and
disbursements, other dispute resolution expenses (including
reasonable fees and expenses in preparation for a defense of any
investigation, litigation or proceeding) and costs of collection
that arise out of or in connection with: (a) the issuance of any
Credit, (b) any payment or action taken or omitted to be taken in
connection with any Credit (including any action or proceeding
seeking (i) to restrain any drawing under any Credit, (ii) to
compel or restrain the payment of any amount or the taking of any
other action under any Credit, (iii) to compel or restrain the
taking of any action under this Agreement, or (iv) to obtain
similar relief (including by way of interpleader, declaratory
judgment, attachment or otherwise), regardless of who the
prevailing party is in any such action or proceeding) or (c) the
enforcement of this Agreement, except in each of (a) through (c)
above, to the extent such claim, liability, loss, damage, cost or
expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence or willful misconduct. Applicants
will, jointly and severally, pay on demand from time to time all
amounts owing under this section.
7.
Obligations
Absolute.
Applicants’
obligations under this Agreement (the
“Obligations” ) shall be unqualified,
irrevocable and payable in the manner and method provided for under
this Agreement irrespective of: (i) any lack of validity or
enforceability of this Agreement, any Credit, or any other
agreement, application, amendment, guaranty, document, or
instrument relating thereto, (ii) any change in the time, manner or
place of payment of or in any other term of all or any of the
Obligations of any Applicant or the obligations of any person or
entity that guarantees the Obligations, (iii) the existence of any
claim, set-off, defense or other right that any Applicant may have
at any time against any beneficiary or any transferee of any Credit
(or any person or entity for whom any such beneficiary or
transferee may be acting), Citibank or any other person or entity,
whether in connection with any transaction contemplated by this
Agreement or any unrelated transaction, or any claim by Citibank or
any Applicant against the beneficiary of any Credit for breach of
warranty, (iv) any exchange, release or non-perfection of any
collateral or release or amendment or waiver of or consent to
departure from the terms of any guarantee or security agreement,
for all or any of the Obligations, (v) any draft, or other document
presented under any Credit being forged, fraudulent or invalid or
any statement therein being untrue or inaccurate, (vi) any failure
by Citibank to issue any Credit (or any amendment thereto) in the
form requested by or agreed with Applicants, unless Citibank
receives written notice from Applicants of such failure within
three business days after Applicants shall have received a copy of
such Credit (or such amendment) and such failure is material and
consequential, (vii) any previous Obligation, whether or not paid,
arising from Citibank’s payment against any draft,
certificate or other document which appeared on its face to be
signed or presented by the proper party but was in fact signed or
presented by a party posing as the proper party, (viii) payment by
Citibank under any Credit against presentation of a draft or other
document that does not comply with the terms and conditions of such
Credit unless Citibank receives written notice from Applicants of
such discrepancy within five business days following
Applicants’ receipt of such draft or other document, and (ix)
any action or inaction taken or suffered by Citibank or any of its
affiliates or correspondents in connection with any Credit or any
relevant draft, certificate or other document, if taken in Good
Faith (as defined in Article 5 of the New York Uniform Commercial
Code).
8.
Limitations of
Liability.
Without
limiting any other provision of this Agreement, Citibank: (i) may
rely upon any oral, telephonic, telegraphic, facsimile, electronic,
written or other communication believed in Good Faith to have been
authorized by any Applicant, whether or not given or signed by an
authorized person, (ii) shall not be responsible for errors,
omissions, interruptions or delays in transmission or delivery of
any message, advice or document in connection with any Credit,
whether transmitted by courier, mail, telex, any other
telecommunication, or otherwise, or for errors in interpretation of
technical terms or in translation (and Citibank and its
correspondents may transmit Credit terms without translating them),
(iii) shall not be responsible for the identity or authority of any
signer or the form, accuracy, genuineness, falsification or legal
effect of any draft, certificate or other document presented under
any Credit if such draft, certificate or other document on its face
appears to comply with the terms and conditions of such Credit,
(iv) shall not be responsible for any acts or omissions by or the
solvency
Exhibit 10.4
of the
beneficiary of any Credit, (v) may accept or pay as complying with
the terms and conditions of any Credit any draft, certificate or
other document appearing on its face (A) substantially to comply
with the terms and conditions of such Credit, (B) to be signed or
presented by or issued to any successor of the beneficiary or any
other person in whose name such Credit requires or authorizes that
any draft, certificate or other document be signed, presented or
issued, including any administrator, executor, personal
representative, trustee in bankruptcy, debtor in possession,
liquidator, receiver, or successor by merger or consolidation, or
any other person or entity purporting to act as the representative
of or in place of any of the foregoing, or (C) to have been signed,
presented or issued after a change of name of any such beneficiary,
(vi) may disregard (A) any requirement stated in any Credit that
any draft, certificate or other document be presented to it at a
particular hour or place and (B) any discrepancies that do not
reduce the value of the relevant beneficiary’s performance to
any Applicant in any transaction underlying any Credit, (vii) may
accept as a ”draft” any written or electronic demand or
other request for payment under any Credit, even if such demand or
other request is not in the form of a negotiable instrument, (viii)
shall not be responsible for the effectiveness or suitability of
any Credit for any Applicant’s purpose, or be regarded as the
drafter of such Credit regardless of any assistance that Citibank
may, in its discretion, provide to any Applicant in preparing the
text of such Credit or amendments thereto, (ix) shall not be liable
to any Applicant for any consequential or special damages, or for
any damages resulting from any change in the value of any foreign
currency, services or goods or other property covered by any
Credit, (x) may assert or waive application of any UCP or ISP (in
each case, as defined below) article primarily benefiting bank
issuers, (xi) may honor a previously dishonored presentation under
any Credit, whether pursuant to court order, to settle or
compromise any claim that it wrongfully dishonored or otherwise and
shall be entitled to reimbu
