LETTER OF CREDIT

CHECKLIST OF REQUIREMENTS AND SAMPLE LANGUAGE

Updated April 2020
This document provides an example format for California cap-and-trade program
entities to submit a Letter of Credit (LOC or L/C) as a bid guarantee for an auction or
reserve sale. A LOC submitted as a bid guarantee must be issued in a form that may
be accepted by the Financial Services Administrator (FSA) consistent with U.S. banking
laws and bank practices. Auction or reserve sale applicants are encouraged to work
with their financial institutions to ensure that all of the bid guarantee requirements are
met, as described in the Detailed Auction Requirements and Instructions (and
summarized in the checklist below), prior to submitting any bid guarantee documents to
the FSA. Auction and reserve sale applicants are also encouraged to submit a sample
LOC to the FSA for review in advance of the bid guarantee deadline.

Checklist of Requirements:
The following non-negotiable terms must be met in order to submit a LOC.
 The LOC must refer to the Financial Services Account Name and Financial
Services Account Number as provided in the Financial Services Delivery
Instructions available in CITSS.
 Deutsche Bank National Trust Company must be listed as the beneficiary.
BENEFICIARY:
DEUTSCHE BANK NATIONAL TRUST COMPANY
DBTCA FOR DBNTC AS FSA FOR WCI, INC
60 WALL STREET, 24TH FLOOR
NEW YORK, NY 10005-2836
 The LOC must be irrevocable.
 The amount of the LOC must be included.
 The expiration or maturity date must be at least twenty-six (26) days after the
scheduled auction.
 There must be instructions included indicating where to submit the LOC for
payment.
 The LOC must allow for presentment by facsimile (Fax). Delivery in person or by
courier cannot be required. Include the fax and phone number of the contact.

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  There must be a payment certificate/form of draw included as an exhibit or annex
to the LOC.
 The LOC must be payable within three (3) business days of a payment request.
 There must be a draw cut off time of no earlier than 9:00 AM Pacific Time (PT) /
12:00 PM (Noon) Eastern Time (ET) for same day draw.
If any of these terms are not met by the date and time provided in the Auction or
Reserve Sale Notice for receipt of all bid guarantees by the Financial Service
Administrator, the submitted LOC will be rejected. If the submitted LOC requires
revisions, all revisions must be completed and received in physical form by the deadline
for receipt of bid guarantees or the LOC will not be accepted.
For questions on bid guarantee submittal for an auction or reserve sale, please contact
Deutsche Bank National Trust Company at [email protected] or call (212) 250-
2885 or (212) 250-2679.

Sample Language:
Provided below is sample LOC language, with areas highlighted in grey that need to be
completed by the issuing bank or beneficiary bank. These areas include a description
of the information to be entered in brackets, for example [Insert Information]. Language
underlined by double red lines would require revision to use this example letter of credit
language to submit a bond as a bid guarantee. To submit a bond as a bid guarantee,
remove section nine (underlined by double red lines), which is LOC-specific. A bond
delivered as a bid guarantee must be in a form that may be accepted by the financial
services administrator consistent with U.S. banking laws and bank practices. Please note
that language provided here is meant as a guide only; all submitted LOCs must, at
minimum, meet the required non-negotiable terms provided in the Checklist of
Requirements above or will be rejected.

[Insert Date:]
[Insert Issuing Bank – Branch]
---------------------------------------------------------------------------------

PLEASE ISSUE AN IRREVOCABLE STANDBY L/C AS DESCRIBED BELOW AND

EMAIL A COURTESY COPY AND SEND ORIGINAL L/C TO:
Mailing Address:
AUCTION AND RESERVE SALE FINANCIAL SERVICES ADMINISTRATOR
C/O DEUTSCHE BANK TRUST COMPANY AMERICAS
60 WALL STREET, 24TH FLOOR
MAILSTOP: NYC60-2409

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NEW YORK, NY 10005-2836
PHONE: (212) 250-2885
EMAIL: [email protected]

BENEFICIARY:
DEUTSCHE BANK NATIONAL TRUST COMPANY
DBTCA FOR DBNTC AS FSA FOR WCI, INC
60 WALL STREET, 24TH FLOOR
NEW YORK, NY 10005-2836
LADIES AND GENTLEMEN:
BY THE ORDER OF:
LEGAL OR OPERATING NAME OF AUCTION APPLICANT: [Insert Applicant Name]
ADDRESS OF APPLICANT: [Insert Address of Applicant]
REFERENCE: [Insert Financial Services Account Number]
FAX: [Insert Fax Number]
ATTN: [Insert Applicant Contact]
1. WE HEREBY ESTABLISH IN YOUR FAVOR THIS IRREVOCABLE LETTER OF
CREDIT (THIS “LETTER OF CREDIT”) FOR THE ACCOUNT OF [Insert
appropriate identifying information such as the Applicant’s Entity Legal or
Operating Name], IN THE AMOUNT OF USD [Insert Amount in the format
XX,XXX,XXX.XX or XXXXX MILLION US DOLLARS], EFFECTIVE
IMMEDIATELY AND AVAILABLE TO YOU AT SIGHT UPON DEMAND BY YOU
AT OUR COUNTERS AT [Insert Contact Information Details Including Phone
Number and Location] and expiring on [Insert Date of Expiration (Note: the
earliest expiration date for a Letter of Credit is twenty-six (26) days after the date
that the subject auction or reserve sale is conducted.] UNLESS TERMINATED
EARLIER IN ACCORDANCE WITH THE PROVISIONS HEREOF OR
OTHERWISE EXTENDED.
2. THIS LETTER OF CREDIT IS ISSUED AT THE REQUEST OF THE
APPLICANT, AND WE HEREBY IRREVOCABLY AUTHORIZE YOU TO DRAW
ON US, IN ACCORDANCE WITH THE TERMS AND CONDITIONS HEREOF,
UP TO THE MAXIMUM AMOUNT OF THIS LETTER OF CREDIT, SUBJECT TO
REDUCTION AS PROVIDED IN PARAGRAPH 8 HEREOF. THIS LETTER OF
CREDIT MAY BE DRAWN BY PRESENTING THE FOLLOWING DOCUMENTS:
A. YOUR SIGHT DRAFT DRAWN ON US IN THE FORM OF ANNEX 1
HERETO (THE "SIGHT DRAFT"); AND

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 B. A DATED PAYMENT CERTIFICATE PURPORTEDLY SIGNED BY A DULY
AUTHORIZED OFFICER OF THE BENEFICIARY IN THE FORM OF ANNEX
2 HERETO (THE "PAYMENT CERTIFICATE").
3. DEMANDS PRESENTED BY FACSIMILE: [Insert Facsimile Number / ATTN]
ARE ACCEPTABLE. THE ORIGINAL DEMAND DRAW IS NOT REQUIRED
AND ORIGINAL LETTER OF CREDIT IS NOT REQUIRED.

4. ONLY YOU MAY MAKE ANY PAYMENT CERTIFICATE AND SIGHT DRAFT
UNDER THIS LETTER OF CREDIT.

5. ALL BANK CHARGES INCLUDING BUT NOT LIMITED TO, FEES OR

COMMISSIONS, SHALL BE FOR APPLICANT’S ACCOUNT.

6. THIS LETTER OF CREDIT SHALL AUTOMATICALLY TERMINATE AND BE

DELIVERED TO US FOR CANCELLATION ON THE EARLIEST OF (I) THE
MAKING BY YOU AND PAYMENT BY US OF THE DRAWINGS IN AN
AMOUNT EQUAL TO THE MAXIMUM AMOUNT AVAILABLE TO BE MADE
HEREUNDER, (II) THE ABOVE-STATED EXPIRATION DATE HEREOF. (III)
RETURN OF THE ORIGINAL LETTER OF CREDIT FOR CANCELLATION
PLUS AN EMAIL AUTHORIZATION FROM THE BENEFICIARY TO CANCEL
THE LETTER OF CREDIT IN LIEU OF AN EXECUTED CANCELLATION
LETTER.
7. AS USED HEREIN:

“BUSINESS DAY” SHALL MEAN ANY DAY ON WHICH COMMERCIAL BANKS

ARE NOT AUTHORIZED OR REQUIRED TO CLOSE IN NEW YORK, NEW
YORK AND ANY DAY ON WHICH PAYMENTS CAN BE EFFECTED ON THE
FEDWIRE SYSTEM.

8. THE AMOUNT WHICH MAY BE DRAWN BY YOU UNDER THIS LETTER OF

CREDIT SHALL BE AUTOMATICALLY REDUCED BY THE AMOUNT OF ANY
DRAWINGS PAID THROUGH US REFERENCING THIS LETTER OF CREDIT
NO. [Insert Letter of Credit No.]. PARTIAL DRAWINGS ARE PERMITTED
HEREUNDER.

9. THIS LETTER OF CREDIT IS NOT TRANSFERABLE, AND EXCEPT AS

OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS
SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS (2007 REVISION), INTERNATIONAL CHAMBER
OF COMMERCE PUBLICATION 600 (PROVIDED, AS TO MATTERS NOT
GOVERNED BY THE UCP, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND
APPLICABLE U.S. FEDERAL LAW.

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10. WE HEREBY AGREE WITH YOU THAT EACH DULY COMPLETED PAYMENT
CERTIFICATE AND SIGHT DRAFT DRAWN UNDER AND IN COMPLIANCE
WITH THE TERMS OF THIS LETTER OF CREDIT WILL BE DULY HONORED
UPON PRESENTATION TO US ON OR BEFORE THE EXPIRY DATE. IF
DOCUMENTS ARE PRESENTED PRIOR TO 12:00 PM EASTERN TIME ON
ANY BUSINESS DAY, WE WILL HONOR THE SAME IN FULL IN
IMMEDIATELY AVAILABLE FUNDS ON THE SAME BUSINESS DAY AND, IF
SO PRESENTED AFTER 12:00 PM EASTERN TIME ON ANY BUSINESS DAY,
WE WILL HONOR THE SAME IN FULL IN IMMEDIATELY AVAILABLE FUNDS
ON THE NEXT BANKING DAY FOLLOWING PRESENTATION.

VERY TRULY YOURS,

[Insert Name and Address of Issuing Bank and Name of Contact Individual]

NAME: [Insert Name of Issuing Bank]

ADDRESS: [Insert Address of Issuing Bank]

NAME: [Insert Name of Contact]

TITLE: [Insert Title of Contact]

====================================
BY: [Executed by issuing bank]
Authorized Signature

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 ANNEX 1 IRREVOCABLE LETTER OF CREDIT
SIGHT DRAFT
LETTER OF CREDIT NO.: [Insert Letter of Credit No.]

DATE OF LETTER OF CREDIT: [Insert the Date of the Letter of Credit]

DATE OF DRAFT: [Insert the Date of the Draft]

TO: [Insert Bank Name]

[Insert Address]
[Insert Fax Number]:

ATTENTION: [Insert Contact Name]

FOR VALUE RECEIVED

PAY ON DEMAND TO: DEUTSCHE BANK NATIONAL TRUST COMPANY, DBTCA
FOR DBNTC AS FSA FOR WCI, INC, USD [Insert Amount of the LOC] DOLLARS
(USD $ [Insert Amount of the LOC] ). THE AMOUNT OF THIS DRAFT DOES NOT
EXCEED THE AMOUNT AVAILABLE TO BE DRAWN BY THE BENEFICIARY UNDER
THE LETTER OF CREDIT.
WE ACKNOWLEDGE THAT, UPON YOUR HONORING THE DRAWING HEREIN
REQUESTED, THE AMOUNT OF THE LETTER OF CREDIT AVAILABLE FOR
DRAWING SHALL BE AUTOMATICALLY DECREASED BY AN AMOUNT EQUAL TO
THIS DRAWING.
CHARGE TO ACCOUNT OF [Insert Applicant Name].
DRAWN UNDER [Insert the Name of Bank] LETTER OF CREDIT NO. [Insert LOC No.]
FUNDS TO BE WIRED TO:
ABA ROUTING NUMBER: [Insert the ABA Routing number of the Receiving Bank]
RECEIVING BANK: [Insert the Name of the Receiving Bank]
BENEFICIARY: [Insert the Name of the Beneficiary]
ORIGINATING BANK INFORMATION (OBI FIELD): [Insert the Name of the Originating
Bank Information]

VERY TRULY YOURS,

BY [Signed by the Beneficiary Bank]
NAME: [Completed by the Beneficiary Bank]
TITLE: [Completed by the Beneficiary Bank]
DATE: [Completed by the Beneficiary Bank]

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 ANNEX 2 IRREVOCABLE LETTER OF CREDIT
PAYMENT CERTIFICATE
TO: [Insert Issuing Bank Name]
[Insert Issuing Bank Address]
RE: IRREVOCABLE LETTER OF CREDIT NO: [Insert Letter of Credit No.]
THE UNDERSIGNED, A DULY AUTHORIZED OFFICER OF DEUTSCHE BANK
NATIONAL TRUST COMPANY, DBTCA FOR DBNTC AS FSA FOR WCI, INC,
HEREBY SUBMITS THIS PAYMENT CERTIFICATE TO [Insert Issuing Bank Name]
WITH REFERENCE TO THE IRREVOCABLE LETTER OF CREDIT NO: [Insert Letter
of Credit No.] (“LETTER OF CREDIT”), IN CONNECTION WITH A WINNING BID IN
THE GHG ALLOWANCE AUCTION OR RESERVE SALE AND DEUTSCHE BANK
NATIONAL TRUST COMPANY, DBTCA FOR DBNTC AS FSA FOR WCI, INC IS
AUTHORIZED AND ENTITLED TO DRAW ANY AMOUNT UP TO THE MAXIMUM
ALLOWED BY THE ATTACHED LETTER OF CREDIT.
THE TERMS USED HEREIN WHICH ARE NOT SPECIFICALLY DEFINED HEREIN
ARE DEFINED IN THE LETTER OF CREDIT, A COPY OF WHICH IS ANNEXED
HERETO.
IN WITNESS WHEREOF, THE BENEFICIARY HAS EXECUTED AND DELIVERED
THIS PAYMENT CERTIFICATE AS OF THE [Insert the Day of the Date] DAY OF
[Insert the Month, Year of the date].

VERY TRULY YOURS,

BY [Signed by the Beneficiary Bank]

NAME: [Completed by the Beneficiary Bank]
TITLE: [Completed by the Beneficiary Bank]
DATE: [Completed by the Beneficiary Bank]