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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 .
 Fillable pdf Last Modified 2/26/2008
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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 mayrequire 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 The Letter of Credit must be issued by a Michigan chartered bank, a federal ly chartered bank with a Michigan branch office, or be confirmed by a Michigan chartered bank or a federally chartered bank with a Michigan branch office from which funds will be immediately payable on demand. 3. Memorandum of Understanding The employer must furnish a Memorandum of Understanding with the Letter of Credit on a form provided by the Bureau of Workers Compensation (the Bureau). See attached form. In summary, the Memorandum of Understanding confirms the following: a. The Letter of Credit is in lieu of a surety bond and is a requirement to obt aining self- insured authority. b. The Letter of Credit is automatically extended every year. c. 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 Bureau. d. The employer affirms that the Letter of Credit can be called if in the judgement of the Bureau it is needed to cover any workers disability claims or if the Bureau receives notice of termination of the Letter of Credit. If drawn, all monies from the Lett er of Credit shall be paid and used in accordance with paragraph 4, number 6 of the Memorandum of Understanding, which is attached. e. Legal proceedings shall be subject to Michigan courts and law. Rev iew the Memorandum of Understanding and Rule R408.43q for complete terms an d conditions. The Letter of Credit together with the Memorandum of Understanding must be furnished to and accepted by the Bureau before an effective date will be granted for self -insured authority.MAIL COMPLETED DOCUMENTS TO: Department of Consumer & Industry Services Bureau of Workers Compensation Self-Insured Programs State Secondary Complex, General Office Bldg. 7150 Harris Drive Lansing, MI 48913 If you have any questions, please contact us at (517) 322-1868Revised 05/03 <<<<<<<<<********>>>>>>>>>>>>> 2Required Language: For Reference Only Entity IRREVOCABLE LETTER OF CREDIT No. Department of Consumer & Industry Services Bureau of Workers Compensation Self-Insured Programs State Secondary Complex, General Office Bldg. 7150 Harris Drive Lansing, MI 48913 Dear Madam or Sir: We have established this Irrevocable Letter of Credit solely in your favor for drawing up to the U.S. $ effective immediately and expiring at (bank address) with our close o f businesson . We hereby undertake to promptly honor your sight draft(s) drawn on us, indicatin g our Letter of Credit No. , for all or any part of this Letter of Credit if presented at (bank address)on or before the expiry date or any automatically extended date. Except as stated herein, this undertaking is not subject to any condition or q ualification. The obligationof 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 addi tional period. It is a further condition of this Letter of Credit that any interruptions of the Banks conduct of business,on the date of expiration, caused by an Act of God, riot, civil commotion, insurre ction, war or other cause beyond the Banks control, or by any strike or lockout, will autom atically 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. S hould you have occasion to communicate with us regarding this Letter of C redit, 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 Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication No. 500) to the ext ent not inconsistent with Michigan Law. If any legal proceedings are initiated with respect to paym ent of this Letter of Credit it is agreed that such proceedings shall be subject to Michigan c ourts and law. Sincerely, Revised 05/03 <<<<<<<<<********>>>>>>>>>>>>> 3 MEMORANDUM OF UNDERSTANDING This is a Memorandum of Understanding between and the Bureau of Workers Compensation (the "Bureau"). As used in the Memorandum of Understanding, "Employer" means and all subsidiaries and affiliated entitiesof listed below that have been approved as self-insurers andany new entities approved as self-insurers as a result of future amendme nts to the application. WHEREAS , Employer has applied for the privilege of self-insuring its obligations under the Workers Disability Compensation Act; and WHEREAS , the Bureau has approved that application contingent upon Employer posti ng security in the initial amount of $ ; and WHEREAS , Employer wishes to meet this security requirement by posting a Letter of Credit issued by or confirmed by a Michigan state chartered bank or a federally chartered bank with a Michigan branch office; therefore, The Bureau and Employer agree as follows: 1. The Letter of Credit is being furnished to the Bureau in lieu of a surety bond in order t o meet the condition established by the Bureau for approval of self-insured status. 2. Unless the Bureau is notified otherwise by registered mail at least 60 days before an expiry date, the Letter of Credit will be automatically extended without amendment for an additional one-year period. 3. Employer may, at any time, substitute a surety bond in an amount equal to the Letter of Credit or a workers disability compensation insurance policy for the Letter of Credit. The insurance policy or surety bond furnished shall be subject to the prior approval of the B ureau. 4. If the Bureau is notified that the Letter of Credit will not be renewed
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