V 1.1 – Statutory Defect LOC – Revised 05/02
STATUTORY DEFECT LETTER OF CREDIT
61 O.S. 1991, Section 113 (B)(3)
State of Oklahoma, Oklahoma Energy Resources Board
3555 N.W. 58th Street, Suite 430
Oklahoma City, Oklahoma 73112
Date: ______________________ 20 _______ Irrevocable Letter of Credit Number
Gentlemen:
We, (hereinafter the “Bank”) hereby open our irrevocable Letter of Credit in favor of (Name of Bank)
the State of Oklahoma, Oklahoma Energy Resources Board (hereinafter the “Agency”) for the account of (Partnership, Individual, Company)
_____ (hereinafter the “Contractor”) for the sum or sums not exceeding a total of
/Dollars ($ ________________________) available by Agency draft(s) on the Bank at Sight when accompanied by a copy of the Agency’s Order of Forfeiture.
It is a condition of this Letter of Credit that it will be automatically extended for additional periods of sixty (60) days from the then relevant expiry date unless thirty (30) days prior to that date, the Bank notifies the Agency that the Bank elects not to extend this Letter of Credit whereupon the Agency may elect either to obtain cash collateral by drawing on a sight draft on the Bank for an amount not to exceed the unused balance of this Letter of Credit, or to let the Letter of Credit expire.
For the purpose of this credit, the Bank notice not to extend shall mean:
(1) that the Bank send notification to the Agency at the above listed address by mail (return receipt requested) dated not less than ninety (90) days prior to expiration; and
(2) that, in the event, prior to fifteen (15) days before the then relevant expiry date, the Bank has not received either the Agency draft or the Agency’s written notice that the Agency does not intend to draw a draft on the Bank, the Bank will notify the Agency, in writing, not less than five (5) days prior to the then relevant expiry date. In the event the Bank shall have failed to notify the Agency as described above, this Letter of Credit shall be automatically extended for a period of sixty (60) days; and
(3) that, in the event the Agency draws a draft upon the Bank in response to the Bank not to extend, such draft need not be accompanied by an Order of Forfeiture.
Draft must be negotiated not later than (or one (1) year from date the work is accepted by the (1 year after acceptance of completed project)
Agency, whichever is later). All drafts drawn under this credit shall state that they are “drawn under Letter of Credit No.
issued by dated .”
(Name of Bank)
The purpose of this Letter of Credit is to fill the requirement of 61 O.S. 1991, Section 113 (B)(3) by protecting the State of Oklahoma against defective workmanship and materials used on OERB Project No. for a one (1) year period after the acceptance of said project. An Order of Forfeiture shall be issued by the Agency when it is determined that defective workmanship and/or materials were used on the project. The Agency acknowledges that this Letter of Credit is issued as one of three Letters of Credit for this Project, the others being Letters of Credit Nos.___________ and ___________, and that the total of any draft submitted to the Bank for this Project for all three Letters of Credit will not exceed the amount shown above.
__________________________________________ ________________________________________ _____________________
Signature: President / Vice President Bank Name Date
Attest (Seal)
__________________________________
Secretary / Cashier
ACKNOWLEDGEMENT (Corporation): The foregoing instrument was acknowledged before me this day of , 20___,
by (Vice) President of corporation, on behalf of the corporation.
Notary Public My commission expires
Please submit four (4) original copies of this document to the Agency.
