Irrevocable Standby Letter of Credit
| To: | Commonwealth of Massachusetts Banking Institution |
| From: | Office of Proprietary Schools |
The instructions below and the attached sample letter of credit are being provided to you by an entity that is either licensed or is applying for licensure as a private occupational school within the Commonwealth of Massachusetts. The entity is in the process of establishing a letter of credit to satisfy the indemnification requirement of Massachusetts General Laws Chapter 75C, § 4; or 75D, § 14; or 93, § 21F; whichever is appropriate.
In order for the irrevocable standby letter of credit (LOC) to be accepted by the Department of Elementary and Secondary Education (Department), it must meet the following criteria:
- Be issued by a financial institution authorized by the Massachusetts Commission of Banking to operate a banking business within the Commonwealth (M.G.L. c.140E, § 1 and c. 167, § 1).
- Be in the amount designated by the Office of the State Auditor (OSA). Said amount shall be amended as determined by the OSA, which may occur annually.
- Have a minimum term of one year, in accordance with the above statutes; and, at the bank's discretion, a maximum term of five years.
- Be payable to the "Commonwealth of Massachusetts, Department of Elementary and Secondary Education," with the Commonwealth of Massachusetts, Department of Elementary and Secondary Education designated as beneficiary.
- The following statement must be included: "This Irrevocable Standby Letter of Credit is deemed to be automatically extended and the date set forth in the immediately preceding paragraph shall be extended, without amendment for one (1) year from the expiration date or any future expiration date thereof, unless sixty (60) days prior to the then prevailing expiration date, we notify the Department in writing via certified mail, return receipt requested, that we elect not to renew the subject letter of credit for such additional period. Anything contained herein to the contrary notwithstanding this letter of credit will expire on [insert date up to five years from effective date]."
If you have any questions, or would like the Department to review a draft LOC prior to execution, please feel free to contact the Department. Please note that all correspondence regarding this LOC must be directed to:
Massachusetts Department of Elementary and Secondary Education
Office of Proprietary Schools
350 Main Street, P.O. Box 5023
Malden, MA 02148-5023
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