Example Letter of Credit

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LETTER OF CREDIT OR BOND

CHECKLIST OF REQUIREMENTS AND SAMPLE LANGUAGE

Updated March 15, 2024

This document provides an example format for California Cap-and-Trade program

entities to submit a Letter of Credit (LOC or L/C) or a Bond as a bid guarantee for an

auction or reserve sale. A LOC or Bond 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 or Bond 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 or Bond.

 The LOC or Bond 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

1 COLUMBUS CIRCLE, 17TH FLOOR

MAILSTOP: NYC01-1710

NEW YORK, NY 10019

 The LOC must be irrevocable. For Bonds the party named as “Principal” in the

bond must be identical to that named in the applicant’s application.

 The amount of the LOC or Bond 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 or

Bond for payment.

 The LOC or Bond 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.

 There must be a payment certificate/form of draw included as an exhibit or

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annex to the LOC or Bond.

 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.

 An entity submitting multiple LOCs and/or Bonds must designate the order that

the bid guarantees should be drawn upon in the event the FSA does not

receive funds by the financial settlement deadline.

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 Services

Administrator, the submitted LOC or Bond will be rejected. If the submitted LOC or Bond

requires revisions, all revisions must be completed and received in physical form by the

deadline for receipt of bid guarantees or the LOC or Bond will not be accepted.

For questions on bid guarantee submittal for an auction or reserve sale, please contact

Deutsche Bank National Trust Company at db.wcisupport@db.com or call (714) 247-

6167 or (212) 250-3018.

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]

If multiple bid guarantees are a combination of cash and another form of bid guarantee (LOC or Bond),

the cash bid guarantee will be drawn upon first and only the remaining funds due will be drawn from the

other form(s) of bid guarantee.

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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

ATTN: JIBRIL SEMBENE

1 COLUMBUS CIRCLE, 17

FLOOR

MAILSTOP: NYC01-1710

NEW YORK, NY 10019

PHONE: (212) 250-3018

EMAIL: DB.WCISUPPORT@DB.COM

Beneficiary:

DEUTSCHE BANK NATIONAL TRUST COMPANY

DBTCA FOR DBNTC AS FSA FOR WCI, INC

1 COLUMBUS CIRCLE, 17TH FLOOR

MAILSTOP: NYC01-1710

NEW YORK, NY 10019

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.

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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

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").

C. IN THE EVENT THE BENEFICIARY DRAWS ON THIS LETTER OF

CREDIT, THIS INSTRUMENT WILL SERVE AS THE

[Primary/Secondary/Etc.] DRAWING INSTRUMENT.

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

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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.

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]

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]