LETTER OF CREDIT AGREEMENT NO.

LETTER OF CREDIT AGREEMENT NO. Riga, 200_ BANK AS LTB Bank Reg. No.: 40003043232 Grēcinieku iela, Rīga, LV 1050 and CUSTOMER BANK S REPRESENTATIVE: Inna Harčenko acting under procuration registered in the Register of Enterprises of the Republic of Latvia on 29 December 2005. CUSTOMER S REPRESENTATIVE Company name Reg. No.: Address: hereinafter collectively referred to as the Parties, enter into the following Agreement: SUBJECT OF AGREEMENT The Bank undertakes to open an Import Letter of Credit upon the Customer s request under the Letter of Credit Terms and Conditions and to make payment to the Seller (Beneficiary) under the Letter of Credit Terms and Conditions. Customer s current acc. No.: Signatures of the Parties BANK CUSTOMER I hereby confirm that I have become acquainted with, fully agree and undertake to comply with the provisions of this Agreement, including but not limited to the provisions specified on the reverse side of this page, as well as with the Bank s Service Fees on banking operations and other financial services. seal seal

PROVISIONS OF ISSUING OF LETTER OF CREDIT 1. General Provisions 1.1. These Letter of Credit Terms and Conditions govern the relations between the Bank and the Customer pertaining to Letters of Credit. The terms and definitions listed below have the following meanings within these Letter of Credit Terms and Conditions, unless specifically stated otherwise in these Letter of Credit Terms and Conditions: The Bank The Customer The Agreement Current Account Terms and Conditions Application Letter of Credit Import Letter of Credit Export Letter of Credit Seller Purchaser L/C Amount Bank Business Day Financial Collateral Service Fees Commission fee Cash Collateral Account Force Majeure AS LTB Bank; A legal entity or a private individual (or their representative), who holds a Current Account with the Bank and upon whose request the Letter of Credit is opened by the Bank; The Letter of Credit Agreement between the Parties; The Customer s current account with the Bank; Letter of Credit Terms and Conditions; An irrevocable application for Letter of Credit opening filled in according to the Bank s established standards and submitted to the Bank in writing; The Bank s commitment issued upon the Purchaser s request to pay a certain amount of money to the Seller in line with the relevant documents that comply with the Letter of Credit Terms and Conditions and that prove that the goods/services specified in the Letter of Credit have been dispatched/provided to the Purchaser; The Bank s commitment issued upon the Purchaser s (the Customer s) request to pay a certain amount of money to the Seller upon receipt of the relevant documents that comply with the Letter of Credit Terms and Conditions and that prove that the goods/services specified in the Letter of Credit have been dispatched/provided to the Purchaser; The Bank s commitment issued upon the Purchaser s request to pay a certain amount of money to the Seller (the Customer) upon receipt of the relevant documents that comply with the Letter of Credit Terms and Conditions and that prove that the goods/services specified in the Letter of Credit have been dispatched/provided to the Purchaser; The seller of goods/services; The purchaser of goods/services who is the initiator of the Letter of Credit opening; The amount of money covered by the Letter of Credit; Any calendar day, on which banks are open for business in the country, in which the respective transaction is to take place; Pledging to the Bank the Customer s financial resources deposited on the Cash Collateral Account in the L/C Amount. The effective prices established by the Bank for banking transactions and other financial services; Remuneration paid by the Customer to the Bank for the Bank s services; An account, which is opened with the Bank in the Customer s name prior to the opening of the Letter of Credit and to which the amount specified in the Letter of Credit is credited; Circumstances or events caused by or following out of Force Majeure, including the following: regulatory or administrative enactments by local or foreign institutions, 2

Parties riots, strikes, military actions, natural disasters, acts of terrorism, power supply failures, interruptions in the Bank s business activities as a result of fire, failures of mail or automatic data transmission equipment or other electronic communication facilities; The Bank and the Customer. 1.2. By his signature, the Customer confirms that he has become acquainted with the Agreement and the Terms and Conditions, understands them and fully agrees with them. 1.3. By his signature, the Customer confirms that the source of origin of all the funds credited to the Current Account will be legal and will not be related to money laundering. 1.4. The Bank opens Import Letters of Credit and processes Export Letters of Credit. 1.5. All activity related to the Letters of Credit is governed by the Uniform Customs and Practice for Documentary Credits, Publication No.600, of the International Chamber of Commerce. 2. Import Letters of Credit 2.1. The procedure of opening an Import Letter of Credit is subject to this Agreement and these Terms and Conditions. 2.2. The Bank only opens Letters of Credit for the Customers who have a Current Account opened in their name in the Bank. 2.3. Letter of Credit guarantees that the Bank will pay the invoice rendered by the Seller (Beneficiary) only upon the receipt of documentary evidence for the fact that the goods have been dispatched or services provided to the Purchaser in compliance with the Terms and Conditions of the Letter of Credit; the payment will be made only in case the documents received fully comply with the conditions of the Letter of Credit set forth by the Purchaser. 2.4. Applying for the opening of a Letter of Credit, the Customer is required to submit a copy of the agreement certifying the respective deal to the Bank for consideration, simultaneously confirming the accuracy of the submitted copy by sending an authorized letter in the Internet banking system, on the basis of which the Letter of Credit can be opened. 2.5. If the Bank concludes that the submitted copy of the agreement certifying the deal is accurate and meets all the requirements set by the Bank, the Customer further submits the following documents, either personally or electronically, to the Bank: 2.5.1. Two (2) copies of the relevant application; 2.5.2. Signed commercial invoice; 2.5.3. Delivery documents; 2.5.4. Transport documents; 2.5.5. Insurance documents covering all kinds or risks; 2.5.6. Certificates of the origin, quality and weight of goods. 2.6. In order to verify the compliance of the agreement certifying the deal with the Letter of Credit, the Bank is entitled to request other documents certifying the deal in addition to the documents mentioned in section 2.5 hereof. 2.7. The agreement certifying the deal between the Purchaser and the Seller is not binding upon the Bank. 2.8. Only the persons specified in the documents available to the Bank as the Customer s authorized signatories have rights to sign the application on the Customer s behalf. 2.9. After the Bank has confirmed that the copies or originals of all the submitted documents meet the Bank s requirements, the Customer shall submit to the Bank all or missing originals. 3

2.10. The Bank considers the Customer s Application repeatedly and, in case the Customer s contingent liabilities to the Bank are provided for, the Bank opens a Letter of Credit within five (5) Bank Business Days from the date of the Cash Collateral Account opening with the Bank. 2.11. The terms and conditions of the Letter of Credit can be modified based on a relevant written application submitted by the Customer and by mutual agreement between the Purchaser and the Seller. 2.12. The Bank is entitled to refrain from opening a Letter of Credit if: 2.12.1. Application contains contradictory information; 2.12.2. Application does not contain all the information requested in the Bank s Application form; 2.12.3. The signature on the Application does not correspond to the signatures of persons specified in the documents available to the Bank as the Customer s authorized signatories, or the stamp impression differs from the sample submitted to the Bank; 2.12.4. The Customer has failed to comply with this Agreement and these Terms and Conditions. 2.13. All Letters of Credit opened by the Bank are irrevocable, i.e., if the Bank receives documents that fully comply with the terms and conditions of the Letter of Credit, the Purchaser cannot prevent the Bank from making the payment even in case the goods or services received are not satisfactory to the Customer. 3. Export Letters of Credit 3.1. The Bank notifies the Customer of an Export Letter of Credit opened by a third bank, but it does not impose any obligations on the Bank itself as long as the Bank has not confirmed the respective Letter of Credit. 3.2. If the Customer does not agree with the conditions of the Letter of Credit, he notifies the Bank thereof in writing, specifying the reason why he does not agree with the conditions of the Letter of Credit, whereof the Bank then informs the issuing bank of the Letter of Credit. 4. Financial Collateral 4.1. To provide a Financial Collateral, the Customer pledges the funds owned by the Customer and placed on the Cash Collateral Account, in the amount of the Letter of Credit and currency specified in the Application for an Import Letter of Credit, to the Bank. 4.2. The pledge of the Financial Collateral provides for the claims that the Seller may have against the Customer under the Letter of Credit. 4.3. The Financial Collateral secures the payment of any claim resulting from the Letter of Credit. 4.4. In case the conditions of the Letter of Credit are modified the respective changes are also made to the Financial Collateral. 4.5. In case the Financial Collateral fails to cover all expenses and losses incurred to the Bank in connection with the Letter of Credit, the Bank is entitled to levy execution upon any other property of the Customer in the amount necessary to cover all such expenses and losses. 4.6. In case the Letter of Credit is issued without a Financial Collateral, or the Bank is provided with a guarantee or surety issued by a company accepted by the Bank, or with a guarantee of a third bank, which may serve as a provision for the Customer s possible payments to the Bank, the Cash Collateral Account requirement may be omitted. 4.7. The Customer has no rights to dispose of the Financial Collateral up to the moment when the Bank is released from its obligations under the issued Letter of Credit. 5. Cash Collateral Account 5.1. The Cash Collateral Account opening procedure is governed by these Terms and Conditions. 5.2. The Cash Collateral Account must be opened before an Import Letter of Credit may be opened. 4

5.3. The Cash Collateral Account is opened as a multi-currency account, the currency mentioned in the Application being specified as the principal currency. 5.4. As soon as the Parties have concluded the Agreement and the Bank has accepted the Application, the Bank is entitled to transfer the amount of the Letter of Credit from the Customer s Current Account to the Cash Collateral Account directly, without further authorization. 5.5. The Customer has no right to use the Cash Collateral Account for any settlements. 5.6. The Bank is entitled to write off the funds placed on the Cash Collateral Account without the Customer s consent in the following cases: 5.6.1. the Bank must make payment under the Letter of Credit; 5.6.2. to extinguish the Bank s claims against the Customer. 6. Rights and Obligations of the Customer 6.1. The Customer s responsibility is to become acquainted with the Terms and Conditions and to keep track of any changes made to the aforementioned document. 6.2. The Customer is responsible for the authenticity and completeness of information provided to the Bank. The Customer must notify the Bank immediately of any changes in the information provided in the Agreement and/or the Application. In case of untimely, inauthentic or incomplete information the Customer must compensate for any and all losses incurred to the Bank in this connection, and the Bank is not responsible for the losses incurred to the Customer as a result of such untimely, inauthentic or incomplete information. 6.3. In case of untimely, inauthentic or incomplete information the Customer must compensate for any and all losses incurred to the Bank as a result of the above circumstances. 6.4. It is the Customer s responsibility to present additional documents immediately upon the Bank s request, as well as take other measures required to enable the Bank to verify the Customer s identity. 6.5. The Customer is entitled to refuse to accept a Letter of Credit issued by a third bank. 6.6. The Customer must cover any expenses incurred to the Bank in relation to the opening of the Letter of Credit, including postage, telecommunication, special delivery charges, and other expenses. 7. Rights and Obligations of the Bank 7.1. The Bank is entitled to forward information about the Customer and the Customer s transactions 7.1.1. to third parties with whom the Bank is preparing to conclude or has concluded assignment or participation agreements of any type; 7.1.2. to third parties, if the Customer fails to fulfill his obligations to the Bank. 7.2. The Bank makes payment under the Letter of Credit within the time limits specified in the Letter of Credit. 7.3. The Bank is entitled, in accordance with the Seller s written order, to transfer the amount of the Letter of Credit to the Seller s supplier, i.e., to a different Seller, withholding a Commission Fee in accordance with the Bank s Service Fees. 7.4. The Bank returns the L/C Amount or a part of this amount to the Customer in the following cases only: 7.4.1. A third bank has refused to accept the Letter of Credit opened by the Bank and the Bank, within 3 (three) Bank Business Days, transfers the L/C Amount from the Cash Collateral Account to the Current Account, withholding the Commission Fee for the opening of the Letter of Credit according to the Service Fees; 7.4.2. The L/C Amount is cancelled or reduced with the knowledge and acceptance of the Seller; 5

7.4.3. Upon expiry of the Letter of Credit the Bank receives from the bank of the Customer s cooperation partner information confirming that the Seller has not submitted the documents required in order to use the remaining amount of the Letter of Credit in due time or that the Seller does not intend to use the remaining amount of the Letter of Credit. 7.5. The Bank hereby undertakes to exercise due care and diligence in selecting the banks that announce or confirm Letters of Credit, but the Bank is not responsible for the actions of such banks. At the Customer s request, the Bank may solicit confirmation of the Letter of Credit by a specific bank. 7.6. During the validity term of this Agreement, the Bank can issue an unlimited number of Letters of Credit that will be governed by this Agreement and the Terms and Conditions. 7.7. The Bank shall be responsible for losses incurred to the Customer through the fault of the Bank s employees. The Bank shall not be held responsible for any losses incurred as a result of the Customer s acts or omissions. 8. Commission Fees, Service Fees and Amendments thereto 8.1. The Bank s Commission Fees for operations with Letters of Credit are calculated in line with the Service Fees established by the Bank. 8.2. Commission Fees for services provided by the Bank are withheld from the Customer s Current Account without further authorization on the date of the respective transaction. 8.3. Commission Fees due to other banks for operations with Letters of Credit are calculated in line with the Service Fees established by the Bank. 8.4. If a third bank has calculated a Commission Fee payable by the Customer based on that bank s Service Fees, the Bank shall notify the Customer thereof and pay the respective Commission Fee. 8.5. Currency exchange operations are made based on the currency exchange rates established by the Bank for the respective day. 8.6. The Bank is entitled to unilaterally introduce amendments and additions into the Bank s Service Fees. 8.7. The Bank s Service Fees are available to the Customer at the Bank s premises during the Bank s business hours and on the Bank s website: www.ltblv.com. 8.8. Any amendments and/or additions to the Bank s Service Fees shall come into force on the 7th (seventh) day after their approval and are binding upon the Customer, such amendments and additions are available to the Customer at the Bank s premises during the Bank s business hours and on the Bank s website: www.ltblv.com not later than 4 (four) days before their effective date. 8.9. If the Customer has not submitted an application for the closing of the Cash Collateral Account prior to the effective date of the respective amendments or additions to the Service Fees the Customer is deemed to have fully agreed with them. 9. Amendments to Terms and Conditions 9.1. The Bank is entitled to amend the Agreement and the Terms and Conditions at any time by notifying the Customer thereof in writing or electronically. 9.2. If the Customer, within 1 (one) calendar month from the receipt of notification, has not informed the Bank in writing (and electronically) about his objections to such amendments or has not notified the Bank of the termination of this Agreement, the Customer is deemed to have agreed with the respective amendments. 9.3. If the Customer, within 1 (one) calendar month from the receipt of notification, informs the Bank about the termination of this Agreement, the Agreement is terminated not later than within 10 (ten) Bank Business Days from the termination notice, and during this period the Agreement and the Terms and Conditions as in effect before the respective amendments are applied. 6

10. Other Provisions 10.1. This Agreement is made in duplicate (2 copies) in the Latvian language on six (6) pages, each page is signed by both Parties, one copy to the Customer, the other copy to the Bank, both copies have equal legal force. 10.2. Any appendices, amendments or additions to the Terms and Conditions are their integral part. 10.3. This Agreement is governed by the effective rules of substantive and procedural law of the Republic of Latvia. Any disputes arising under or out of this Agreement shall be resolved by negotiation. If no agreement satisfactory to both Parties is reached by negotiation, the dispute shall be referred to the court of justice in the regular order or to the Court of Arbitration of Commercial Banks of Latvia at the discretion of the plaintiff. If a dispute is referred to the Court of Arbitration of Commercial Banks of Latvia in Riga, the proceedings are governed by the Court of Arbitration of Commercial Banks of Latvia Bylaws, Regulations and Regulations on the ACBL Court of Arbitration Costs, the provisions of the aforementioned documents are regarded as incorporated into this Clause. 10.4. The Parties shall be released from liability for complete or partial failure to discharge their obligations under this Agreement, if such failure is caused by Force Majeure (natural disasters, accidents, fire, mass riots, strikes, military actions, enactment of laws or legislative acts that directly or indirectly prohibit (restrict) the activities or operations specified in this Agreement or otherwise restrict the ability of the Parties to discharge their obligations under this Agreement) and other circumstances or events regarded as Force Majeure under this Agreement. 10.5. This Agreement shall remain in force until terminated by the Parties in writing. 7