Current through Register 2024 Notice Reg. No. 38, September 20, 2024
DEPOSITORY AGREEMENT
THIS AGREEMENT is made and entered into at
_________________________, California, on ____________________,20_______________,by
and among ______________________________(Insurer), an insurer authorized to write
workers' compensation insurance in the State of California, hereinafter called
"Insurer," ______________________________ (Name of Bank, Savings and Loan
Association or Trust Company) ______________________________(Address) authorized to
carry on business in the State of California, hereinafter called "Depository" and
the Insurance Commissioner of the State of California, hereinafter called
"Commissioner."
WHEREAS, workers' compensation insurers writing such insurance
in the State of California are authorized to establish a deposit and enter into a
depository agreement with a bank, savings and loan association or trust company
under Section
11691 of the
Insurance Code and regulations set forth in Article 9.5, Subchapter 3, Chapter 5,
Title 10, of the California Administrative Code, and
WHEREAS, said deposit placed pursuant to the requirements set
forth in Sections
2509.1 through
2509.21, Title 10, of the California
Administrative Code, may be retained by a bank, savings and loan association or
trust company duly-licensed in California, and
WHEREAS, the Depository qualifies as such a bank, savings and
loan association or trust company and is duly-licensed in California.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
DEPOSIT
Insurer deposits with Depository and Depository accepts the
securities set forth in Schedule "A," attached hereto and made a part hereof,
hereinafter called "deposit." In accepting said deposit, Insurer and Depository
agree to abide by the terms herein, the California Insurance Code, and Article 9.5,
Subchapter 3, Chapter 5, Title 10, of the California Administrative
Code.
ARTICLE II
DUTIES AND
POWERS
A. Depository agrees to render to the
Commissioner a report, as of December 31st, and at any time upon the request of the
Commissioner, but in no event to exceed ten (10) business days from the date of
request, containing an accounting identifying and listing the deposit. All
accounting shall be certified to be true and correct according to the best
information and belief of the Depository.
B. Current deposit value for securities shall be
the lower of par or market, except that preferred stock and common stock are to be
valued at market value. As respects promissory notes which are placed on deposit,
the Depository may rely, in good faith, upon representations of the Insurer as to
the deposit value of such notes. All valuations must be made within thirty (30) days
prior to submission of the report. All accounting shall be certified to be true and
correct according to the best information and belief of the Depository.
C. The Depository shall indemnify the Insurer for
any loss, damage or injuries sustained by the Insurer with respect to any securities
deposited pursuant to this Agreement including loss occasioned by employee
dishonesty, burglary, robbery, theft or mysterious disappearance, unless such loss
should be caused by nuclear contamination from a cause other than the industrial use
of nuclear energy, expropriation by governmental authority, war, insurrection or
revolution. The Depository agrees that if there is a loss of securities in its
custody, the Depository will replace them or the monetary value thereof, and the
monetary value of any loss of rights or privileges resulting from said loss of
securities, within ten (10) business days, unless, pursuant to an agreement with the
Commissioner extra time is granted, from the date that said securities cannot be
accounted for by the Depository. Also, immediately upon discovery, the Depository
shall notify the Commissioner of the loss and the proposed action to be taken by the
Depository in connection therewith.
D.
The Depository agrees to hold said deposits separate from its own assets and all of
the deposits held by it, except where it uses the Federal Reserve Bank book-entry
account, or, where it has its own internal FOSBI system (filing of securities by
issuer), or uses an outside depository trust company previously approved by the
Commissioner, which maintains its records and the insurer's deposit in this State.
In using such outside depository, the Depository herein agrees to and is obligated
to indemnify the Insurer for loss or damage based upon the actual omissions of its
agent (here the depository utilized by the institutional Depository) so as to
protect the Insurer's deposit in connection with such transaction. The Depository
agrees that it shall assume the same responsibility and liability to the Insurer for
the loss of such securities in connection with the entrusting to and handling of the
securities by the outside depository, to the same extent that the Depository would
be responsible for his handling of the securities directly and exclusively. Insurer
assigns its rights, if any, to recover from the outside depository to the Depository
in return for this indemnification and agrees that it will provide reasonable
assistance to the Depository in order that the Depository may recover any loss or
liability from the outside depository.
E. (For use where ownership is evidenced by credit
on the books of account and records in the Federal Reserve Bank.) Said Depository,
in the exercise of its powers as such Depository, has caused to be credited in its
name on the books and records of the Federal Reserve Bank the sum of $__________,
representing the face amount of eligible United States Government and Agency
securities listed in Schedule "B" attached hereto and made a part hereof,
hereinafter called "deposit." The Depository represents to all parties hereto that
such schedule is a true and complete statement of the eligible United States
Government and Agency securities included among the total of such securities held in
a "General" book-entry account maintained in the name of such Depository on the
books and records of the Federal Reserve Bank as of the close of business on___. The
Depository undertakes to clearly indicate in its books and records the purpose of
this deposit.
F. Insurer shall submit
and Depository shall accept for deposit such securities, including preferred and
common stock, only in coupon or bearer form, negotiable form, registered to the
Insurance Commissioner, or in the name of the Depository, or in the name of a
nominee of such Depository, or its agent in accord with the laws of this State
permitting use of nominees. If registered in the Insurer's name, the securities must
be accompanied by a power of attorney and a board of directors' resolution on forms
approved by the Commissioner, as set forth in the Insurance Commissioner's
Securities Transactions Instructions, and as required by Section
2509.15, Title 10 of the California
Administrative Code.
G. Insurer agrees
to submit for deposit only such securities as are acceptable for deposit pursuant to
Article 9.5, Subchapter 3, Chapter 5, Title 10 of the California Administrative
Code.
H. At any time, Insurer may
substitute approved securities of at least equal value for those held by the
Depository or place additional securities on deposit in accordance with the
requirements set forth herein. Insurer shall certify that the substituted or
additional deposit is in compliance with Section
943,
944,
951 and
11691 of the
California Insurance Code and Article 9.5, Subchapter 3, Chapter 5, Title 10 of the
California Administrative Code. The certification shall be signed by two (2)
authorized officers of the Insurer and submitted to the Depository. Withdrawal
without replacement is permitted only with the Commissioner's prior written
approval.
The Depository shall have no responsibilities with respect to
the investment and reinvestment of the property held by it under this Agreement. All
sales, purchases, exchanges or other transactions respecting securities or other
property which may be made by the Depository for the account of the Insurer shall be
made only pursuant to instructions of the Insurer of the Insurer's designated
representative except upon written request of the Commissioner, pursuant to Article
I, Chapter 3, Part 3, Division 2 of the California Insurance Code to immediately
assign and deliver to the Commissioner upon demand any and all securities deposited
or held under the terms of this Agreement. Absent such instructions, the Depository
shall have no responsibility for the investment or reinvestment of such property nor
liability for any omission to act in the absence of instructions.
The Insurer and not the Depository shall be responsible for all
property held under this agreement paid and/or delivered to any broker or other
person specified by Insurer in such manner as Insurer may direct. The Depository is
directed to sell all fractional shares received by it unless notified to the
contrary by the Insurer. The Depository shall not vote proxies. All proxies shall be
forwarded to the Insurer.
The Depository shall either reinvest net income or distribute it
as Insurer may direct from time to time. The Depository shall distribute principal
cash as Insurer may direct from time to time. Securities may likewise be withdrawn
pursuant to such direction subject to qualification that the Depository may retain
such funds and securities as it determines to be necessary to complete any pending
buy or sell transactions. The Depository shall prepare a monthly statement, in the
usual form for accounts of this type and shall deliver the same to The Insurer and
to any representative designated by Insurer.
I. The Insurer shall furnish to the Commissioner
and the Depository its determination of its current deposit requirements under
Sections
11690 through
11703 of the
California Insurance Code, prior to the effective date of this Agreement, and
thereafter on the same basis as reported to the Commissioner on Schedule P, as of
December 31st, of each year.
J. Written
notice of the sale or substitution of any security or the deposit of additional
security as well as an accounting which reflects a deposit value of the security
being placed on deposit shall be prepared by the Insurer and signed, sealed and
dated by two (2) authorized officers of the Depository and shall be provided to the
Commissioner by the Depository within ten (10) business days of the settlement or
deposit date.
K. Depository will, at all
times and without prior notice, make available its books and records of such deposit
held under this Agreement for audit, examination and inspection by the Insurer or by
the Commissioner.
L. Insurer hereby
directs and Depository agrees, upon written request of the Commissioner, pursuant to
Article I, Chapter 3, Part 3, Division 2 of the California Insurance Code to
immediately assign and deliver to the Commissioner upon demand any and all
securities deposited or held under the terms of this Agreement.
M. Depository agrees that it shall not and does
not have the power to use, pledge, invest, encumber or subject said deposit to any
lien or claim by Depository.
ARTICLE
IIIEXCULPATORY CLAUSES
A. Other than under the terms of any instrument
deposited pursuant to the terms of this Agreement, Depository shall not be under any
liability for payment of interest on a deposit made hereunder.
B. Depository shall be entitled to reasonable
compensation from Insurer for all services, ordinary and extraordinary, rendered by
it pursuant to the terms of this Agreement, including reasonable attorneys' fees for
services of counsel. Depository shall not be required to comply with any direction
of the Insurer which in its judgment may subject it to liability or expense, or to
prosecute or defend any action, unless indemnified in a manner and amount
satisfactory to it.
C. Depository may
terminate this Agreement and become and remain fully discharged from all further
duties and liabilities hereunder upon giving at least sixty (60) days notice by
certified mail in writing to the Insurer and the Commissioner. Insurer may terminate
this Agreement by giving at least sixty (60) days notice by certified mail in
writing to the Depository and the Commissioner. In such event, any successor
Depository shall be appointed in the same mode and manner as provided for under
section 11961 of the California Insurance Code, Article 9.5, Subchapter 3, Chapter
5, Title 10 of the California Administrative Code and as hereinafter provided in
Paragraph D next following.
D. Upon the
effective date of termination and withdrawal of the deposit, Insurer shall deliver,
in the required amount, a letter of credit to the Commissioner or
the deposit of securities with any other approved depository, as set forth in
Section
11691 of the
California Insurance Code, all in compliance with the requirements set forth herein,
the California Insurance Code, and the regulations of the Insurance Commissioner set
forth in Article 9.5, Subchapter 3, Chapter 5, Title 10 of the California
Administrative Code, and pursuant to the prior written approval of the
Commissioner.
ARTICLE IV
MISCELLANEOUS
A. Nothing in this
Agreement shall give, or be construed to give, any person, firm or corporation,
other than the parties hereto, any legal or equitable right, remedy or claim under
this Agreement or under any covenant or provisions contained herein, all the
covenants and provisions being for the sole benefit of the parties hereto.
B. Depository affirms, to the best of its
knowledge and belief that said securities are owned by the insurer and are free and
clear of all liens, claims and encumbrances and do not constitute security for any
loans.
C. This Agreement shall be
executed in quadruplicate and each copy shall be deemed an original; two (2) copies
shall be submitted to the Commissioner.
D. All notices, requests, consents and other
communications, required or permitted with respect to the Agreement, shall be in
writing and shall be addressed as follows:
Insurer:
Depository:
Insurance Commissioner
State of California:
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
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_________________ |
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By _______________ |
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(Seal) |
By _______________ |
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Insurer |
| |
_________________ |
|
|
By _______________ |
|
(Seal) |
By _______________ |
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Depository |
| |
Commissioner of Insurance |
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State of California |
|
(Seal) |
By _______________ |
1. Change without
regulatory effect amending section and NOTE filed 4-28-2014 pursuant to section
100, title 1, California Code of
Regulations (Register 2014, No. 18).
Note: Authority cited: Section
11691, Insurance
Code. Reference: Sections
943,
944,
951,
11690,
11691,
11691.1,
11691.2,
11691.3,
11692,
11692.5,
11693,
11693.5,
11694,
11694.5,
11695,
11696,
11697,
11698,
11698.01,
11698.02,
11698.1,
11698.2,
11698.21,
11698.22,
11698.3,
11699,
11700,
11701,
11702 and
11703, Insurance
Code.
