IRREVOCABLE STANDBY LETTER OF CREDIT

IRREVOCABLE STANDBY LETTER OF CREDIT

Letter of Credit Number: [L/C NUMBER]

Issuance Date: [DATE]

Expiration Date: [EXPIRATION DATE]
(At Issuing Bank's counters on or before [TIME] local time)

Amount: [DOLLAR AMOUNT IN WORDS] United States Dollars (USD $[NUMERICAL AMOUNT])

PARTIES

ISSUING BANK:
[ISSUING BANK LEGAL NAME]
[ADDRESS]
[CITY, STATE ZIP]
SWIFT/BIC: [SWIFT CODE]
(hereinafter "Issuer")

APPLICANT:
[APPLICANT LEGAL NAME]
[ADDRESS]
[CITY, STATE ZIP]
(hereinafter "Applicant")

BENEFICIARY:
[BENEFICIARY LEGAL NAME]
[ADDRESS]
[CITY, STATE ZIP]
(hereinafter "Beneficiary")

LETTER OF CREDIT TEXT

At the request and for the account of Applicant, we, [ISSUING BANK NAME], hereby issue this Irrevocable Standby Letter of Credit No. [L/C NUMBER] in favor of Beneficiary.

1. UNDERTAKING

We hereby irrevocably undertake to pay Beneficiary, or Beneficiary's designee, any amount or amounts up to an aggregate of [DOLLAR AMOUNT IN WORDS] United States Dollars (USD $[NUMERICAL AMOUNT]) upon presentation of the documents specified below at our counters at [PRESENTATION ADDRESS] on or before the Expiration Date.

2. AVAILABLE FOR

This Letter of Credit is available for:

☐ Sight Payment - upon presentation of complying documents

☐ Deferred Payment - [___] days after sight/presentation

☐ Partial Drawings - Partial drawings are permitted. The amount available under this Letter of Credit shall be reduced by the amount of each drawing.

☐ Multiple Drawings - Multiple drawings are permitted until the aggregate amount drawn equals the face amount of this Letter of Credit.

3. DOCUMENTS REQUIRED FOR DRAWING

A drawing under this Letter of Credit shall be made by presentation of the following documents:

(a) Drawing Certificate/Demand:
Beneficiary's signed and dated demand for payment in the form of Exhibit A attached hereto, stating:
(i) The amount of the drawing;
(ii) That Applicant has failed to perform its obligations under [DESCRIPTION OF UNDERLYING CONTRACT/AGREEMENT] dated [DATE] (the "Underlying Agreement"); and
(iii) A brief description of the nature of the default.

(b) Draft:
Beneficiary's sight draft drawn on Issuer for the amount of the drawing.

(c) Copy of Letter of Credit:
The original of this Letter of Credit (for endorsement of drawings) or, in the case of the final drawing, the original Letter of Credit for cancellation.

4. PRESENTATION

(a) Place of Presentation:
Documents must be presented at:
[ISSUING BANK NAME]
[PRESENTATION ADDRESS]
Attention: [DEPARTMENT/CONTACT]

(b) Method of Presentation:
Documents may be presented in person, by courier, or by SWIFT message (if applicable).

(c) Time for Examination:
Issuer shall have [5] banking days following the day of presentation to examine documents and determine whether to honor or refuse.

5. EXPIRATION

This Letter of Credit shall expire at our counters on [EXPIRATION DATE] at [5:00 PM] local time (the "Expiration Date").

☐ Check if Automatic Extension (Evergreen) applies:
This Letter of Credit shall be automatically extended for additional periods of [ONE (1) YEAR] each from the current or any future Expiration Date, unless at least [60] days prior to any Expiration Date we notify Beneficiary by registered mail or courier that we elect not to extend this Letter of Credit. Such notice shall be sent to Beneficiary at the address stated above. Upon receipt of such non-renewal notice, Beneficiary may draw on this Letter of Credit in full by presenting the documents required above together with a statement that Beneficiary has received notice of non-renewal.

6. AMOUNT REDUCTION

☐ Check if automatic reduction applies:
The amount available under this Letter of Credit shall be automatically reduced by:
(a) The amount of each drawing honored hereunder; and/or
(b) [DESCRIBE ANY SCHEDULED REDUCTIONS, e.g., "by $[AMOUNT] on [DATE]"].

7. TRANSFERABILITY

☐ This Letter of Credit is TRANSFERABLE in whole but not in part. Transfer shall be effected by presentation to Issuer of the original Letter of Credit accompanied by a transfer request in the form attached as Exhibit B, together with payment of Issuer's transfer fee of $[AMOUNT]. Upon transfer, Issuer will issue a substitute Letter of Credit to the transferee.

☐ This Letter of Credit is NOT TRANSFERABLE.

8. GOVERNING RULES

This Letter of Credit is subject to and governed by:

☐ International Standby Practices 1998 (ISP98), International Chamber of Commerce Publication No. 590

☐ Uniform Customs and Practice for Documentary Credits (UCP 600), International Chamber of Commerce Publication No. 600

☐ United Nations Convention on Independent Guarantees and Stand-by Letters of Credit

Except to the extent inconsistent with the express terms hereof, this Letter of Credit is also subject to the Uniform Commercial Code as adopted in the State of [GOVERNING LAW STATE] (Article 5 - Letters of Credit, U.C.C. §§ 5-101 to 5-118).

9. ISSUER'S UNDERTAKING

This Letter of Credit constitutes our irrevocable undertaking to honor drawings made in compliance with the terms hereof. Our obligation to honor is independent of:

(a) Any underlying agreement between Applicant and Beneficiary;
(b) Any right of Applicant to reimbursement from Beneficiary;
(c) Any claim or defense arising from the underlying transaction;
(d) Any demand, request, or instruction from Applicant not to pay; and
(e) Any other circumstance other than document compliance.

This is the independence principle under U.C.C. § 5-103(d) and ISP98 Rule 1.06.

10. HONOR OR REFUSAL

(a) Complying Presentation: If documents presented comply with the terms and conditions of this Letter of Credit, we shall honor.

(b) Discrepant Presentation: If documents do not comply, we shall give notice of refusal to Beneficiary stating all discrepancies, within [5] banking days after presentation. Beneficiary may correct discrepancies and re-present within the validity of this Letter of Credit.

(c) Waiver by Applicant: We may, but are not obligated to, seek Applicant's waiver of discrepancies. Any waiver shall be at our sole discretion.

11. FRAUD EXCEPTION

This Letter of Credit is subject to U.C.C. § 5-109 (Fraud and Forgery). In case of material fraud by the beneficiary, Issuer may refuse to honor or Applicant may seek injunctive relief from a court of competent jurisdiction.

12. BANK CHARGES

All bank charges outside [COUNTRY] are for the account of Beneficiary. [OR: All bank charges are for the account of Applicant.]

13. COMMUNICATIONS

All communications regarding this Letter of Credit should reference our Letter of Credit Number [L/C NUMBER] and be directed to:

[ISSUING BANK NAME]
[ADDRESS]
Attention: [DEPARTMENT]
Phone: [PHONE]
Email: [EMAIL]
SWIFT: [SWIFT CODE]

IMPORTANT NOTICES

TO BENEFICIARY:
This is an irrevocable undertaking by the Issuing Bank. The bank's obligation is independent of any underlying transaction between you and the Applicant. You should retain the original of this Letter of Credit in a secure location and present it with any drawing request.

TO APPLICANT:
By applying for this Letter of Credit, you have agreed to reimburse the Issuing Bank for any drawings honored hereunder, plus fees and expenses, pursuant to your Letter of Credit Application and Agreement with the Bank.

AUTHORIZED SIGNATURE

This Irrevocable Standby Letter of Credit is issued and effective as of the Issuance Date.

[ISSUING BANK LEGAL NAME]

By: _____________________________________
Name: ___________________________________
Title: Authorized Signatory
Date: ____________________________________

By: _____________________________________
Name: ___________________________________
Title: Authorized Signatory
Date: ____________________________________

[Bank Seal/Stamp]

EXHIBIT A: DRAWING CERTIFICATE/DEMAND

[BENEFICIARY LETTERHEAD]

Date: _______________

To: [ISSUING BANK NAME]
[ADDRESS]

Re: Irrevocable Standby Letter of Credit No. [L/C NUMBER]
Amount: USD $[AMOUNT]
Applicant: [APPLICANT NAME]
Beneficiary: [BENEFICIARY NAME]

DRAWING CERTIFICATE AND DEMAND FOR PAYMENT

The undersigned, [BENEFICIARY NAME], as Beneficiary under the above-referenced Irrevocable Standby Letter of Credit (the "Letter of Credit"), hereby certifies and demands as follows:

1. The undersigned is the Beneficiary under the Letter of Credit, or the duly authorized representative of the Beneficiary.

2. The undersigned hereby demands payment of [DOLLAR AMOUNT IN WORDS] United States Dollars (USD $[NUMERICAL AMOUNT]) under the Letter of Credit.

3. [APPLICANT NAME] has failed to perform its obligations under [DESCRIPTION OF UNDERLYING AGREEMENT] dated [DATE] (the "Underlying Agreement").

4. The nature of such default is as follows:
   [DESCRIBE DEFAULT]

5. This drawing, together with all previous drawings (if any) under the Letter of Credit, does not exceed the amount available under the Letter of Credit.

6. The original Letter of Credit [is attached hereto / accompanies this demand] [for endorsement / for cancellation].

[BENEFICIARY NAME]

By: _____________________________________
Name: ___________________________________
Title: ___________________________________
Date: ____________________________________

EXHIBIT B: TRANSFER REQUEST

[TO BE USED ONLY IF LETTER OF CREDIT IS TRANSFERABLE]

Date: _______________

To: [ISSUING BANK NAME]
[ADDRESS]

Re: Transfer of Irrevocable Standby Letter of Credit No. [L/C NUMBER]

The undersigned, [CURRENT BENEFICIARY NAME], as Beneficiary under the above-referenced Irrevocable Standby Letter of Credit (the "Letter of Credit"), hereby requests that the Letter of Credit be transferred to the following transferee:

Transferee:
Name: ________________________________
Address: ________________________________
City, State, Zip: ________________________________

Amount to be Transferred: USD $[AMOUNT] (full amount)

The undersigned certifies that this transfer is in accordance with the terms of the Letter of Credit and applicable law. The original Letter of Credit is attached hereto. Please issue a substitute Letter of Credit in favor of the transferee.

The undersigned agrees to pay the transfer fee of $[AMOUNT].

[CURRENT BENEFICIARY NAME]

By: _____________________________________
Name: ___________________________________
Title: ___________________________________
Date: ____________________________________

LEGAL REFERENCE NOTES

UCC Article 5 Key Provisions

U.C.C. § 5-103(d) - Independence Principle:
Rights and obligations of an issuer to a beneficiary under a letter of credit are independent of the existence, performance, or nonperformance of a contract or arrangement out of which the letter of credit arises.

U.C.C. § 5-108 - Issuer's Rights and Obligations:
An issuer shall honor a presentation that appears on its face strictly to comply with the terms and conditions of the letter of credit.

U.C.C. § 5-109 - Fraud and Forgery:
If a presentation is made that appears on its face strictly to comply with the terms and conditions of the letter of credit, but a required document is forged or materially fraudulent, or honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, the issuer may honor or dishonor.

ISP98 Key Rules

Rule 1.06 - Nature of Standbys:
A standby is an irrevocable, independent, documentary, and binding undertaking.

Rule 2.01 - Undertaking to Honor:
An issuer undertakes to the beneficiary to honor a presentation that appears on its face to comply with the terms and conditions of the standby.

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