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Irrevocable Letter Of Credit And Memorandum Of Understanding (Self Insurer) BWC-402 - Michigan

Irrevocable Letter Of Credit And Memorandum Of Understanding (Self Insurer) Form. This is a Michigan form and can be used in Workers Comp .
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WORKERS' DISABILITY COMPENSATION SELF-INSURER LETTER OF CREDIT INFORMATION Pursuant to the Michigan Workers' Disability Compensation Act, Sec. 418.611 (1) (a), the director may require and accept a Letter of Credit as one condition for granting self-insured authority. 1. Letter of Credit Required Language Specific language is required and any deviations will not be accepted. See attached sample. 2. Acceptable Banks Irrevocable letters of credit shall be issued by a state-chartered bank, a federally chartered bank or foreign bank. Funds shall be immediately payable on demand. The director may require confirmation of acceptable letters of credit from any state, federally or foreign chartered bank without state operations or branch services within this state. If a confirmation is required, it shall be by a State of Michigan chartered bank or federally chartered bank with Michigan branch operations and state that the confirmation bank is primarily obligated on the letter of credit. 3. Memorandum of Understanding The employer must furnish a Memorandum of Understanding with the Letter of Credit on a form provided by the Workers' Compensation Agency (Agency). See attached form. In summary, the Memorandum of Understanding confirms the following: a. b. c. d. The Letter of Credit is in lieu of a surety bond and is a requirement to obtaining self-insured authority. The Letter of Credit is automatically extended every year. A policy of insurance or a surety bond of equal amount may be substituted for a Letter of Credit subject to prior approval by the Agency. The employer affirms that the Letter of Credit can be called if in the judgment of the Agency it is needed to cover any workers' disability claims or if the Agency receives notice of termination of the Letter of Credit. If drawn, all monies from the Letter of Credit shall be paid and used in accordance with paragraph 4, number 5 of the Memorandum of Understanding, which is attached. Legal proceedings shall be subject to Michigan courts and law. e. Review the Memorandum of Understanding and Rule R408.43q for complete terms and conditions. The Letter of Credit together with the Memorandum of Understanding must be furnished to and accepted by the Agency before an effective date will be granted for self-insured authority. MAIL COMPLETED DOCUMENTS TO: Department of Licensing and Regulatory Affairs Workers' Compensation Agency Self-Insured Programs P.O. Box 30016 Lansing, MI 48909 If you have any questions, please contact us at (517) 284-8939 (Rev. 8/11) American LegalNet, Inc. www.FormsWorkFlow.com Required Language: For Reference Only Entity IRREVOCABLE LETTER OF CREDIT No._____________ Department of Licensing and Regulatory Affairs Workers' Compensation Agency Self-Insured Programs P.O. Box 30016 Lansing, MI 48909 Dear Madam or Sir: We have established this Irrevocable Letter of Credit solely in your favor for drawing up to U.S. $_________________(__________________________________________) effective immediately and expiring at (bank address) with our close of business on________________________. We hereby undertake to promptly honor your sight draft(s) drawn on us, indicating our Letter of Credit , for all or any part of this Letter of Credit if presented at (bank address) No. on or before the expiry date or any automatically extended date. Except as stated herein, this undertaking is not subject to any condition or qualification. The obligation of the Bank under this Letter of Credit shall be the individual obligation of the Bank, in no way contingent upon reimbursement with respect thereto. It is a condition of this Letter of Credit that it shall be deemed automatically extended without amendment for one year from the expiry date hereof, or any future expiry date, unless at least sixty (60) days prior to any expiry date we shall notify you by Registered Mail or Overnight Mail Service that we elect not to consider this Letter of Credit renewed for any such additional period. It is a further condition of this Letter of Credit that any interruptions of the Bank's conduct of business, on the date of expiration, caused by an Act of God, riot, civil commotion, insurrection, war or other cause beyond the Bank's control, or by any strike or lockout, will automatically extend the expiry date hereof, as well as future expiry dates, by a period of 30 days after the resumption of business for you to draw against this Letter of Credit. Should you have occasion to communicate with us regarding this Letter of Credit, kindly direct your communication to the attention of our Letter of Credit Department, making specific reference to our Letter of Credit No. . This Letter of Credit is subject to and governed by the International Chamber of Commerce Publication No. 590 ("ISP 98") to the extent not inconsistent with Michigan Law. If any legal proceedings are initiated with respect to payment of this Letter of Credit it is agreed that such proceedings shall be subject to Michigan courts and law. Sincerely, (Rev. 8/11) American LegalNet, Inc. www.FormsWorkFlow.com MEMORANDUM OF UNDERSTANDING This is a Memorandum of Understanding between _________________ (Employer) and the Workers' Compensation Agency (Agency). As used in the Memorandum of Understanding, "Employer" means ____________________ and all its subsidiaries and affiliated entities that have been approved as self-insurers and any new entities approved as self-insurers as a result of future amendments to the application. Employer has applied for the privilege of self-insuring its obligations under the Workers' Disability Compensation Act; and The Agency has approved that application contingent upon Employer posting security in the initial amount of $______________, with said amount subject to change as directed by the Agency; and Employer wishes to meet this security requirement by posting a Letter of Credit issued by a Michigan state chartered bank, federally chartered bank, or a foreign bank. If a confirmation is required, it shall be by a State of Michigan chartered bank or a federally chartered bank with Michigan branch operations. Pursuant to administrative rule 408.43q, the Employer agrees: 1. The Letter of Credit is being furnished to the Agency in order to meet the condition established by the agency for approval of self-insured status. 2. Unless the Agency is notified otherwise by registered mail, at least 60 days before the expiration date, the Letter of Credit will be automatically exten
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