DWC225 Texas Department of Insurance Division of Workers' Compensation Self-Insurance Regulation · MS 60 7551 Metro Center Drive, Suite 100 · Austin, Texas 78744-1645 (512) 804-4775 · (512) 804-4776 fax · www.tdi.texas.gov SELF-INSUER'S AGREEMENT TO POST DOCUMENTARY IRREVOCABLE STANDBY LETTER OF CREDIT Date: Employer: (Name and Address) Issuing Bank: (Name and Address) Letter of Credit (LOC) Number Amount: Confirming Bank (if required): (Name and Address) Confirmation Number: DWC225 Rev. 01/07 1 of 6 American LegalNet, Inc. www.FormsWorkFlow.com DWC225 This Agreement is made on Date by and between the parties signatory hereto. I. Definitions applicable herein: A. The "Commissioner" means the Commissioner of the Texas Department of Insurance, Division of Workers' Compensation. B The "Division" means the Division of Workers' Compensation. C. The "Act" refers to the Texas Workers' Compensation Act. D. The "Comptroller" means the Comptroller of Public Accounts ­ Treasury Operations. E. The "Association" means the Texas Certified Self-Insurer Guaranty Association. F. The "Bank" will include any Bank issuing documentary irrevocable standby letters of credit and any Confirming Bank issuing confirmations, whether one or more. G. The "Employer" will include all employers listed under this agreement and their parent organization, if any. H. The "LOC" will include any documentary irrevocable standby letter of credit and any confirmation, whether one or more. I. The "primary term" means the period from the effective date of the documentary irrevocable standby letter of credit until the original expiration date of the documentary irrevocable standby letter of credit. J. The "impaired employer" means an employer who has become impaired as defined by the Texas Workers' Compensation Act. II. Purpose. The above named Employer hereby agrees to deposit one or more LOC issued in favor of the Commissioner under the LOC number(s) listed above. This LOC is submitted to qualify, or continue to qualify the Employer as a certified self-insurer under the Act. As part of the Employer's obligations as a certified self-insurer, any LOC issued hereunder is for the purpose of securing the payment of the Employer's obligations and liabilities as a certified self-insurer under the Act. If one or more Confirming Banks are named above, the Employer shall deposit with the Commissioner, confirmation of the above identified documentary irrevocable standby Letter(s) of Credit. III. Effect of termination of certified self-insurer status. Termination of the Employer's status as a certified self-insurer will not terminate this agreement, nor will it terminate the Employer's obligation to provide security satisfactory to the Commissioner in an amount sufficient to secure payment of the Employer's obligations and liabilities as a certified self-insurer under the Act. IV. Return, supplementation and replacement of security. Upon request of the Employer, the Commissioner shall return the LOC to the Bank, provided that: A. The Commissioner first determines in his or her sole discretion that the Employer, as a certified self-insurer, has no obligations or liabilities under the Act; or DWC225 Rev. 01/07 American LegalNet, Inc. www.FormsWorkFlow.com 2 of 6 DWC225 B. The Employer continues as a certified self-insurer under the Act and provides substitute security acceptable to the Commissioner. With the written approval of the Commissioner, the LOC covered by this Agreement may be supplemented or replaced by another LOC in the event that the Employer or the Bank changes its name or in the event that the amount of security, which the Employer is required to provide, changes. Any LOC, which supplements or replaces the LOC identified above, shall also be held by the Commissioner for the purpose of qualifying, or continuing to qualify, the Employer as a certified self-insurer under the Act. V. Permissible draws; impaired employer: A. Whenever the Employer is declared impaired by the Division, the Commissioner may draw all or part of the LOC, and in the exercise of his or her sole discretion, may: 1.Deliver the proceeds of the LOC, or any part thereof, to the Association for the immediate payment of the Employer's obligations and liabilities under the Act; or 2. Use the proceeds of the LOC, or any part thereof, for the immediate payment of the Employer's liabilities under the Act. B. If the Commissioner determines that a security deposit has not been made immediately available for the payment of the employer's workers' compensation obligations, the Commissioner shall determine, in the exercise of his or her sole discretion, the appropriate method of payment and claims administration, and the Commissioner may draw all or any part of any LOC and may use the proceeds of such draw for the immediate payment of the Employer's obligations and liabilities either directly or through the Association. If a particular LOC shall fail to be renewed under conditions that would not entitle the Employer to a return of the LOC, as provided in Section IV, or whenever the Commissioner shall determine that the Bank fails to satisfy the requirements provided by the Act or the applicable administrative rules of the Division, the Commissioner may draw the entire amount of any LOC and may, in the exercise of his or her sole discretion, deliver the proceeds to the Comptroller, who shall receive, hold, and keep safe said proceeds in a trust fund entitled the Self-Insurance Security Trust Fund. After all of the Employer's obligations and liabilities as a certified self-insurer under the Act have been satisfied, any remaining balance from the draw shall be returned to the Bank from which it was originally drawn. In the event that draws came from multiple Banks, any sums remaining shall be returned to those Banks on a pro-rata basis. C. D. VI. Defense of claims; settlement. For as long as the Employer has not been declared impaired, the Employer shall have the right, at its own expense, to defend and settle any claims against the Employer in accordance with the Act; however, no payment, settlement, or judgment of any claim shall be paid from the proceeds of any LOC as long as the Employer has not been declared impaired. DWC225 Rev. 01/07 American LegalNet, Inc. www.FormsWorkFlow.com 3 of 6 DWC225 In the event that the Division determines the Employer is impaired, the Commissioner is authorized to administer, defend, and settle, in lieu of the Employer, any and