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The Letter of Credit Reimbursement Agreement is essential in international trade finance transactions where letters of credit are used as payment mechanisms. This document, governed by Hong Kong law, becomes necessary when a company (the applicant) requires a bank to issue a letter of credit in favor of a beneficiary, typically a seller in an international trade transaction. The agreement protects the issuing bank by ensuring it will be reimbursed for payments made under the L/C, and includes specific provisions for payment terms, security arrangements, and default scenarios. It must comply with Hong Kong's Banking Ordinance, contract law, and international banking practices such as the UCP 600. The agreement is particularly relevant in Hong Kong's position as a major international financial center, where many cross-border trades are financed through letters of credit.

1. Parties: Identification of the Applicant (requesting the L/C), the Issuing Bank, and the Reimbursing Bank

2. Background: Context of the agreement including the underlying commercial transaction and L/C arrangement

3. Definitions: Definitions of key terms used throughout the agreement including 'Letter of Credit', 'Reimbursement Obligations', 'Drawing', etc.

4. Reimbursement Commitment: Core obligation of the applicant to reimburse the issuing bank for payments made under the L/C

5. Payment Terms: Timing, currency, and method of reimbursement payments

6. Fees and Charges: Details of all fees, charges, and interest applicable to the reimbursement obligation

7. Security Arrangements: Details of any collateral or security provided to secure the reimbursement obligations

8. Representations and Warranties: Standard representations and warranties from the applicant regarding capacity, authority, and financial condition

9. Covenants: Ongoing obligations of the applicant including financial covenants and reporting requirements

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

11. Governing Law and Jurisdiction: Specification of Hong Kong law as governing law and jurisdiction for disputes

12. Notices: Process and requirements for giving formal notices under the agreement