Common use of Performance Security Requirements Clause in Contracts

Performance Security Requirements. 13.3.1 Contractor shall furnish to County within ten (10) days after Contractor’s execution of this Agreement, and in all events prior to the commencement of the Term of this Agreement, an irrevocable Letter of Credit (LOC) for the County of Los Angeles in the amount of $200,000 (United States currency), and shall be drawn on an institution licensed to transact business in the State of California. Such LOC shall be in the form and substance satisfactory to County’s Risk Manager, or County’s Treasurer and Tax Collector, as applicable. Such LOC shall be maintained by County in full force and effect until released by County’s Risk Manager upon the County Project Director’s written determination that Contractor shall have fully performed all of its obligations under this Agreement as evidenced by Contractor’s receipt of Acceptance from County as defined in the Agreement, Paragraph 5.7. Any modification, extension or termination of this Agreement shall in no way release Contractor or any of its sureties from any of their obligations under such LOC. Such LOC shall contain a waiver of notice of any Change Notices, Change Orders and Amendments to this Agreement. 13.3.2 The LOC shall be irrevocable. The LOC shall be drawn on an institution that meets or exceeds the rating standards established by the County’s Treasurer and Tax Collector. If the institution receives more than one rating, the rating considered in the analysis will be the lower rating, if applicable. Questions regarding the current rating standards may be submitted to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Los Angeles County Sheriff Contracts ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Room 214 ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇ The LOC shall be subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, and should be in accordance with the terms thereof. (Reference: ▇▇▇▇://▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and California Commercial Code Sections 5101-5118.) 13.3.3 At its sole option, County may accept certificates of deposit, cash deposits, or United States government securities payable to County on demand, in lieu of the LOC to meet this provision. County shall have no responsibility to Contractor to pay any such deposit, and any loss by reason of the failure of any institution issuing such collateral shall be solely the responsibility of Contractor. 13.3.4 Prior to County’s request for payment under the LOC, County shall provide written notice to Contractor of County’s intent to seek payment under the LOC. Such notice shall cite the reasons for said request. County shall provide Contractor thirty (30) calendar days to cure any alleged or actual failures or deficiencies. Upon expiration of the notice period and Contractor’s failure to cure, the LOC shall be payable to the County upon demand when 1) Contractor has failed to achieve County’s Acceptance for Contractor’s Work by failing to meet the Deliverables defined in the Statement of Work, and failing to correct such deficiencies upon the County’s written notice; 2) Contractor has failed to achieve any portion of County’s Acceptance for Contractor’s Work by failing to meet the Deliverables defined in the Statement of Work, and failing to correct such deficiencies upon the County’s written notice, in which case a portion of the LOC shall be payable to County on a pro-rata basis; 3) Contractor has failed to remedy Deficiencies of Severity Level 3, after receiving written notice from County of such Deficiencies; or 4) County has Terminated the Agreement, excepting Termination for Convenience, for Contractor’s default or material breach of this Agreement. In no event shall County make a request for payment under the LOC which exceeds the progress payments made to date, as of the date of the notice to Contractor pursuant to this Subparagraph 13.3.4. 13.3.5 Prior to acceptance of Contractor’s LOC, Contractor shall submit to County the form of the proposed LOC or alternative security for approval by County’s Risk Manager or County’s Treasurer and Tax Collector, as applicable, and as determined by the County. All performance security costs and expenses shall be paid by Contractor.

Performance Security Requirements. 13.3.1 Contractor shall furnish to County within ten (10) days after Contractor’s execution of this Agreement, and in all events prior to the commencement of the Term of this Agreement, an irrevocable Letter of Credit (LOC) for the County of Los Angeles in the amount of $200,000 (United States currency), and shall be drawn on an institution licensed to transact business in the State of California. Such LOC shall be in the form and substance satisfactory to County’s Risk Manager, or County’s Treasurer and Tax Collector, as applicable. Such LOC shall be maintained by County in full force and effect until released by County’s Risk Manager upon the County Project Director’s written determination that Contractor shall have fully performed all of its obligations under this Agreement as evidenced by Contractor’s receipt of Acceptance from County as defined in the Agreement, Paragraph 5.7. Any modification, extension or termination of this Agreement shall in no way release Contractor or any of its sureties from any of their obligations under such LOC. Such LOC shall contain a waiver of notice of any Change Notices, Change Orders and Amendments to this Agreement. 13.3.2 The LOC shall be irrevocable. The LOC shall be drawn on an institution that meets or exceeds the rating standards established by the County’s Treasurer and Tax Collector. If the institution receives more than one rating, the rating considered in the analysis will be the lower rating, if applicable. Questions regarding the current rating standards may be submitted to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Los Angeles County Sheriff Contracts ▇▇▇▇ Unit ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Room 214 ▇▇▇▇▇▇▇▇ ▇▇▇▇Monterey Park, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ California 91754 Fax: ▇▇▇-▇▇▇-▇▇▇▇ The LOC shall be subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, and should be in accordance with the terms thereof. (Reference: ▇▇▇▇://▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and California Commercial Code Sections 5101-5118.) 13.3.3 At its sole option, County may accept certificates of deposit, cash deposits, or United States government securities payable to County on demand, in lieu of the LOC to meet this provision. County shall have no responsibility to Contractor to pay any such deposit, and any loss by reason of the failure of any institution issuing such collateral shall be solely the responsibility of Contractor. 13.3.4 Prior to County’s request for payment under the LOC, County shall provide written notice to Contractor of County’s intent to seek payment under the LOC. Such notice shall cite the reasons for said request. County shall provide Contractor thirty (30) calendar days to cure any alleged or actual failures or deficiencies. Upon expiration of the notice period and Contractor’s failure to cure, the LOC shall be payable to the County upon demand when 1) Contractor has failed to achieve County’s Acceptance for Contractor’s Work by failing to meet the Deliverables defined in the Statement of Work, and failing to correct such deficiencies upon the County’s written notice; 2) Contractor has failed to achieve any portion of County’s Acceptance for Contractor’s Work by failing to meet the Deliverables defined in the Statement of Work, and failing to correct such deficiencies upon the County’s written notice, in which case a portion of the LOC shall be payable to County on a pro-rata basis; 3) Contractor has failed to remedy Deficiencies of Severity Level 3, after receiving written notice from County of such Deficiencies; or 4) County has Terminated the Agreement, excepting Termination for Convenience, for Contractor’s default or material breach of this Agreement. In no event shall County make a request for payment under the LOC which exceeds the progress payments made to date, as of the date of the notice to Contractor pursuant to this Subparagraph 13.3.4. 13.3.5 Prior to acceptance of Contractor’s LOC, Contractor shall submit to County the form of the proposed LOC or alternative security for approval by County’s Risk Manager or County’s Treasurer and Tax Collector, as applicable, and as determined by the County. All performance security costs and expenses shall be paid by Contractor.