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HomeMy WebLinkAbout93-012WHEREAS, the Board of Supervisors {the "Board") of the County of Butte (the "County"} pursuant to Resolution No, 87-3 adapted an _ NiarCtl 3 2987, {the "Resolution" } , authorized the execution of a Liability Risk Coverage Agreement dated as of June 1, 1987 as amended as of July 1, 1988 {the "1987 Liability Agreement"} by and among the CSAC Excess Insurance Authority (the "Authority"}, the County and certain counties within the State of California named therein (collectively the "Counties"}, which 1987 Liability Agreement established a pooled self-insurance program {the "Insurance Program"); and WHEREAS, the Resolution authorized the execution of a Trust Agreement dated as of June 1, 1987 the "Trust Agreement"} by and among the Authority, the Counties and Seattle-First National Bank, as trustee, which Trust Agreement provided far the execution and delivery of $3,020,000 CSAC Excess Insurance Authority Certificates of Participation {Liability Insurance Program) {the "Certificates") ; and WHEREAS, on March 31, 1992 the Board of the Authority fully paid and defeased the outstanding Certificates {as defined in the Trust Agreement} and discharged the Trust Agreement, as provided therein; and WHEREAS, Section 4.1 of the 1987 Liability Agreement provides that upon the discharge of the Trust Agreement, the coverage {as defined in the 1987 Liability Agreement) {the "Coverage") provided by the Insurance Program terminates unless the Board of the Authority elects to continue such program; and WHEREAS, Resolution No. 92-002 adopted by the Governing Board of the Authority on March 6, 1992 continued the Coverage provided by the 1987 Liability Agreement; and WHEREA5, the Board of the Authority and the Counties have determined that it is desirable to terminate the 1987 Liability Agreement and to continue the Coverage upon. the terms set forth herein; A RESOLUTION OF THE BOARD OF SUPERVISORS OF BUTTE COUNTY TERMINATING THAT CERTAIN LIABILITY RISK COVERAGE AGREEMENT DATED AS OF JUNE 1, 198'? AND EXTENDING COVERAGE A5 PROVIDED HEREIN NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF THE COUNTY OF BUTTE AS FOLLOWS: correct. Section 1. A11 of the recitals hereto are true and Section 2. The Board hereby approves the Authority's Joint Powers Agreement (the "JPA") as amended, which is attached hereto as Exhibit A and is incorporated as if fully set forth herein, and hereby instructs the chairman to sign the JPA an behalf of the County. Section 3. The Board hereby approves the termination of the coverage provided by the 1987 Liability Agreement for all occurrences an or after March 1, 1993, provided however, that coverage under said agreement shall continue to be provided, pursuant to its terms, for all occurrences prior to March 1, 1993, and that all rights and obligations of the parties thereto concerning claims, settlements, and risk premium adjustments (as defined in the 1987 Liability Agreement) shall continue. Section 4. The Board hereby acknowledges that effective March 1, 2993, excess liability coverage wi11 be provided by the Memorandum of Liability Gaverage attached hereto as Exhibit B and incorporated by reference as if fully set forth herein. the Board further acknowledges that said Memorandum of Liability Coverage may be amended from time to time by an affirmative vote of the majority of the Board of Authority representing the Counties participating in the Insurance Program. Section 5. The Board hereby acknowledges receipt of the Authority's Liability Claims Quality Control Guidelines attached hereto as Exhibit C and incorporated by reference as if fully set forth herein, and hereby instructs the County's Risk Manager and Claims Administrator to implement said Guidelines. The Board further acknowledges that said Liability Claims Quality Control Guidelines may be amended from time to time by an affirmative vote of the majority of the Board of the Authority representing the Counties participating in the Insurance Program. Section 6. The Board hereby acknowledges receipt of the Basic Methodology for Calculation of Annual Risk Premium, Risk Premium Proportion and Risk Premium Adjustments attached hereto as Exhibit D and incorporated by reference as if fully set Earth herein. The Board further acknowledges that said Basic Methodology far Calculation of Annual Risk Premium, Risk Premium Proportion and Risk Premium Adjustments may be amended from time to time by an affirmative vote of the majority of, the Board of the Authority representing the Counties participating in the Insurance Program. Section 7. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED this 9~h day of February 193 ._. r by the following vote, to wit: AYES: Supervisors Meyer, Dolan, McLaughlin, Thomas and Chair Houx NOES : None ABSTAIN: Nane ABSENT : None i , ,~' Mary A e Hoax, Chair o the Butte ounty Board of Supervisors ATTEST: John S. Blacklockg Chief Administrative Officer and Cle~,k of the hoard By. ~y Exhibit A - JPA Adopted: Amended: Amended: Amended: Amended: JOINT POWERS AGREEMENT CREATING THE CSAC EXCE55 INSURANCE AUTHORITY October 5, 1979 May 12, 1980 January 23, 1987 4ctaber 7, 1988 March 1993 This Agreement is executed in the State of California by and among those counties organized and existing under the Constitution of the State of California which are parties signatory to this Agreement. The CSAC Excess insurance Authority was #ormed under the sponsorship of the County Supervisors Association of California. A11 such counties, hereinafter called member counties, shall be listed in Appendix A, which shaif be attached hereto and made a part hereof. RECITALS WHEREAS, Article 1, Chapter 5, Division 7, Title 1 of the California Government Code {Section 8500 et seq.) permits two ar more public agencies by agreement to exercise jointly powers common to the contracting parties; and WHEREAS, Article 16, Section 6 of the California Constitution provides that insurance pooling arrangements under joint exercise of power agreements shall not be considered the giving or lending of credit as prohibited therein; and WHEREAS, California Government Code Section 990.4 provides that a local public entity may self-insure, purchase insurance through an authorized carrier, or purchase insurance through a surplus line broi<er, or any combination of these; and WHEREAS, pursuant to California Government Code Section 990.6, the cost of insurance provided by a local public entity is a proper charge against the focal public entity; and 3/93 JPA, CSAGEIA Amended 3/93 Page 2 WHEREAS, California Government Code Section 990.8 provides that two or more local entities may, by a joint powers agreement, provide insurance for any purpose by any one or more of the methods specE~ed in Government Code Section 990.4 and such pooling of self- insured claims or losses is not considered insurance nor subject to regulation under the Insurance Code; and WHEREAS, the counties executing this Agreement desire to join together #or the purpose of jointly funding programs of excess insurance far workers' compensation, comprehensive liability, property and other coverages to be determined; NOW THEREFORE, the parties agree as follows: ARTICLE 1 >DEF[NITIONS 'CSAC" shall mean the County Supervisors Association of California. "Authority" shall mean the CSAC 1=xcess Insurance Authority created by this Agreement. "Board of Directors' or `Board" shall mean the governing body of the Authority. 'Claim" shall mean a claim made against a member county arising out of an occurrence which is covered by an excess insurance program of the Authority in which the member county is a participant. 'Dependent district" shall mean a special district or county service area within a member county which is governed by the county's board of supervisors. "Executive Committee" shall mean the Executive Committee of the Board of Directors of the Authority. "Excess insurance program' shall mean a program of the Authority under which participating counties are protected against designated losses in excess of their self-insured retention levels or deductibles as the case may be. 3/93 ,fPA, CSAGEIA Amended 3/93 Page 3 "Fiscal year" shall mean that period of twelve months which is established by the Board of Directors as the fiscal year of the Authority. 'Government Code" shalt mean the California Government Code. ".foint powers law" shat[ mean Article 1, Chapter 5, Dhrision 7, Titie 1 {commencing with Section 6500} of the Government Code. 'Loss" shall mean a liability or potential liability of a member county, including litigation expenses, attorneys' fees and other costs, which is covered by an excess insurance program of the Authority in which the member county is a participant. "Member county" shalt mean any county which, through the membership of its supervisors in CSAC, has executed this Agreement and become a member of the Authority. "Member county" shaft include a dependent district or other focal entity within such county which is included under this Agreement pursuant to Artlcie 3 (b}. "Occurrence" shall mean an event which is more fu11y defined in the memorandums of coverage and/ar paiicies of an excess insurance program in which the participating county is a member. "Participating county" shad mean any member county which has entered into a program offered by the Authority pursuant to Article 14 of this Agreement and has not withdrawn or been cancelled therefrom pursuant to Articles 20 or 21. "Self-insured retention" shalt mean that portion of a loss resulting from an occurrence experienced by a member county which is retained as a liability ar patentiai liability of the county and is not subject to payment by the Authority. "Reinsurance" shall mean insurance purchased by the Authority as part of an excess insurance program to cover that portion of any loss which exceeds the joint funding capacity of that program. 3/93 JPA, CSAC-EIA Amended 3/93 Page 4 ARTICLE 2 PURPOSES This Agreement is entered into by the member counties in order that they may jointly develop and fund programs of excess insurance for workers' compensation, comprehensive liability, property and other coverages to be determined. Such programs may include, but shall not be limfted to, the creation of joint insurance funds, the purchase of reinsurance, and the provision of necessary administrath+e services. Such administraYnre services may include, but shall not be limited to, risk management consulting, loss prevention and control, centralized loss reporting, actuarial consulting, claims adjusting, and legal defense services. ARTICLE 3 PARTIES TO AGREEMENT (a) Each member county, as a party to this Agreement, certifies that it intends to and does contract with all other member counties as parties to this Agreement and, with such other counties as may later be added as parties to this Agreement pursuant to Article 19 as to all programs of which it is a participating county. Each member county also certi#ies that the removal of any party from this Agreement, pursuant to Articles 2Q or 21, shall not affect this Agreement or the member county's obligations hereunder. (b) A member county may contract on behalf of, and shall be deemed to include: {1) Any dependent district, from the time that the county provides the Authority written notice of the name and inclusion of such district. {2) Any other local enYrty which prior to the member county's entry into an excess insurance program received insurance coverage from the member county, at the request of the member county to the Soard of Directors and from the time that such entity is 3/93 JPA, CSAC-EEA Amended 3/93 Page 5 accepted by the Authority Board. Such district ar other locaE entity sha[I not be considered a separate party to this Agreement, sha11 not affect the member county's representation on the Board of Directors, and shall be part of and represented by the member county for all purposes under this Agreement. ARTICLE ~ TERM This Agreement shall become effective when executed and returned to the Authority by at least two-thirds {2/3) of the member counties. The Authorrty shah promptly notify all member counties in writing of such effective date. This Agreement sha11 continue in effect until terminated as provided herein. ARTICLE 5 CREATION OF THE AUTHORITY Pursuant to the joint powers law, there is hereby created a public entity separate and apart from the parties hereto, to be known as the CSAC Excess Insurance Authority, with such powers as are hereinafter set forth. ARTICLE 6 POWERS OF THE AUTHORITY The Authority shall have all of the powers common to counties in Cal'rfomia and all additional powers set forth in the joint powers law, and is hereby authorized to da all acts necessary for the exercise of said powers. Such powers include, but are not limited to, the following: {a) To make and enter into contracts. 3/93 JPA, CSAGEIA Amended 3/93 rage 6 (b) To Incur debts, liabilities, and obligations. (c} To acquire, hold, ar dispose of property, contributions and donations of property, funds, services, and other forms of assistance from persons, firms, corporations, and govemment entities. (d} To sue and be sued in its own name, and to settle any claim against it. (e} Ta receive and use contributions and advances from member counties as provided in Government Code Section 6504, including contributions or advances of personnel, equipment, or property. (f) To invest any money in its treasury that is not required far its immediate necessities, pursuant to Government Code Section 6509.5. {g) To carry out all provisions of this Agreement. Said powers shall be exercised pursuant to the terms hereof and in the manner provided by law. ARTICLE 7 BOARD OF DIRECTORS The Authority shall be governed by the Board of Directors, which shall be composed of one director from each member county, appointed by the member county board of supervisors and serving at the pleasure of that body. Each member county board of supervisors shall also appoint an alternate director who shall have the authority to attend, participate in and vote at any meeting of the Board when the director is absent. A director or altemate director shall be a county supervisor, other county offlciai, or staff person of the member county, and upon termination of office or employment with the county, shall automatically terminate membership or altemate membership on the Saard. 3/93 JPA, CSAC-EIA Amended 3/93 Page fi Any vacancy in a director or alternate director position shall be Oiled by the appointing county's board of supervisors, subject to the provisions of this Article. A majority of the membership of the Board shall constitute a quorum for the transaction of business. Each member of the Board shad have one vote. Except as otherwise provided in this Agreement or any other duly executed agreement of the member counties, action of the Board shall require the affirmative vote of a majordy of the members present and voting; provided, that any action which is restricted in effect to one of the Authority's excess insurance programs, shall only require the affirmative vote of a majority of those members present and voting who represent counties participating in that program. At any meeting at which a quorum is initially present the Board may continue to transact business notwithstanding the withdrawal of enough members to leave less than a quorum, provided that each action is approved by at least a majority of the number required to constitute a quorum, and Is taken subject to the above stated proviso concerning actions restricted to one program and to special voting requirements stated elsewhere in this Agreement. ARTICLE 8 POWERS OF THE BOARD OF DIRECTORS The Board of Directors shall have the following powers and functions: (a} The Board shat[ exercise all powers and conduct afi business of the Authority, either directly or by delegation to other bodies or persons unless otherwise prohibited by this Agreement, or any other duly executed agreement of the member counties or by law. {b) The Board shall form an Executive Committee, as provided in Article 11. The Board may delegate to the Executive Committee and the Executive Committee may discharge any powers or duties of the Board except adoption of the Authority's annual budget. The powers and duties so delegated shall be specified in a resolution adopted by the Board. 3/93 JPA, CSAGEIA Amended 3/93 Page 13 (c) The Board may form, as provided in Article 12, such other commitkees as it deems appropriate to conduct the business of the Authority. The membership of any such other committee may consist in whole or in part of persons who are not members of the Board; provided that the Board may delegate its powers and duties only to a committee of the Board composed of a majority of Board members. Any committee which is not composed of a majority of Board members may function only in an advisory capacity. {d} The Board shall elect the officers of the Authority and shall appoint or employ necessary staff in accordance with Article 13. (e) The Board shall cause to be prepared, and shall review, modify as necessary, and adopt the annual operating budget of the Authority. Adoption of the budget may not be delegated. (f) The Board sha11 develop, ar cause to be developed, and shall review, modify as necessary, and adopt each excess insurance program of the Authority, including all provisions far reinsurance and administrative services necessary to carry out such program. (g) The Board, directly or through the F~cecutive Committee, shalt provide for necessary services to the Authority and to member counties, by contract or otherwise, which may include, but shall not be limi#ed to, risk management consulting, loss prevention and control, centralized loss reporting, actuarial consulting, claims adjusting, and legal services. (h) The Board shall provide general supervision and policy direction to the General Manager/Secretary. (i} The Board shah receive and act upon reports of the committees as established by the Board, and the General Manager/Secretary. (j} The Board shall act upon each claim involving liability of the Authority, directly or by delegation of authority to the F~cecutive Committee or other committee, body or person, provided, that the Board shall establish monetary limits upon any delegation of 3/93 JPA, CSAGEIA Amended 3/93 Page 9 claims settlement authority, beyond which a proposed settlement must be referred to the Board for approval. (k} The Board may require that the Authority review, audit, report upon, and make recommendations with regard to the safety or claims administration functions of any member county, insofar as those functions are affecting the liability or potential liability of the Authority. The Board may forward any or all such recommendations to the county with a request for compliance and a statement of potential consequences for noncompliance. {I} The Board shall receive, review and act upon periodic reports and audits of the funds of the Authority, as required under Articles 15 and 16 of this Agreement. (m} The Board may, upon consultation with a casualty actuary, declare that any funds established for any excess program has a surplus of funds and determine a formula to return such surplus to the participating counties which have contributed to such fund. (n} The Board shall have such other powers and duties as are reasonably necessary to carry out the purposes of the Authority. ARTICLE 9 MEETINGS OiF THE BOARD OF DIRECTORS {a} The Board shall hold at least one regular meeting each year and shall provide for such other regular meetings and for such special meetings as it deems necessary. (b} The General Manager/Secretary of the Authortty shall provide far the keeping of minutes of regular and special meetings of the Board, and shall provide a copy of the minutes to each member of the Board at the next scheduled meeting. (c} All meetings of the Board shall be called, noticed, held and conducted in accordance with the provisions of Government Code Section 54950 et seq. 3/93 JPA, CSAGEIA Amended 3/93 Page 10 ARTICLE 10 OFFICER5 The Board of Directors shall elect from its membership a President and Vice President of the Board, to serve for ane-year terms. The President, or in his or her absence, the Vice President, shall preside at and conduct all meetings of the Board and shall chair the Executive Committee. ARTICLE 11 EXECUTIVE COMMITTEE The Board of Directors shall establish an Executive Committee of the Board which shall consist of nine members: the President and Vice President of the Board, and seven members elected by the Board from its membership. The terms of office of the seven non-officer members shall be as provided in the Byiaws of the Authority. The Executive Committee shall conduct the business of the Authority between meetings of the Board, exercising all those powers as provided for in Article 8, or as otherwise delegated to it by the Board. ARTICLE 12 COMMITTEES The Board of Directors may establish committees, as ft deems appropriate to conduct the business of the Authority. Members of the committees shall be appointed by the Board, to serve two year terms, subject to reappointment by the Board. The members of each committee shall annually select ane of their members to chair the Committee. Each committee shall be composed of at least five members and shall have those duties 3/93 JPA, CSAGI=IA Amended 3/93 Page 11 as determined by the Board, or as otherwise set forth in the Byiaws. Each committee shah meet on the call of its chair, and shali report to the Executive Committee and the Board as directed by the Board. ARTICLE 73 STAFF (a} Princi}7aI Staff. The following staff members shall be appointed by and serve at the pleasure of the Board of Directors: {i) General Manager/Secretary. The General Manager/Secretary shall administer the business and activities of the Authority, subject to the general supervision and policy direction of the Board of Directors and Executive Committee; shall be responsible for all minutes, notices and records of the Authority and shall perform such other duties as are assigned by the Board and Executive Committee. (2) Treasurer. The duties of the Treasurer are set forth in Article 16 of this Agreement. Pursuant to Govemment Code Section 6505.5, the Treasurer shall be the county treasurer of a member county of the Authority, or, pursuant to Govemment Code Section 6505.6, the Board may appoint one of its officers or employees to the position of Treasurer, who shall cvmpiy with the provisions of Government Code Section 6505.5 (a-d). (3) Auditor. The Auditor sha[I draw warrants to pay demands against the Authority when approved by the Treasurer. Pursuant to Government Code Section 6505.5, the Auditor shall be the Auditor of the county from which the Treasurer is appointed by the Board under (2} above, or, pursuant to Govemment Code Section 6505.6, the Board may appoint one of its officers or employees to the position of Auditor, who shall comply with the provisions of Government Code Section 6505.5 (a-d}. (b} Charges for Treasurer and Auditor Services. Pursuant to 3/93 .iPA, CSAGEIA Amended 3/93 Page 12 Government Code Section B5Q5, the charges to the Authority for the services of Treasurer and Auditor shall be determined by the board of supervisors of the member county from which such staff members are appointed. {c) Other Staff. The Board, i=xecutive Committee or General Manager/Secretary shall provide for the appointment of such other staff as may be necessary for the administration of the Authority ARTICLE 14 DEVELOPMENT, FUNDING AND IMPLEMENTATION OF EXCESS INSURANCE PROGRAMS (a) Program Coverage. Excess insurance programs of the Authority may provide coverage far: {1 } ~ Workers' compensation; (2) Comprehensive Ilability, including but not limited to general, personal injury, contractual, public officials errors and omissions, and incidental malpractice Iiabllity; {3) Comprehensive automobile liability; (4) Hospital malpractice liability; (5) Property and related programs; and may provide any other coverages authorized by the Board of Directors. The Board shah determine, for each such program, a minimum number of county participants required for program implementation and may develop specific program coverages requiring detailed agreements for implementation of the above programs. (b) Program and Authority Funding. The member counties developing or participating in an excess insurance program shall fund all casts of that program, including administrative costs, as hereinafter provided. Costs of staffing and supporting the 3/93 JPA, CSAGI=IA Amended 3/93 Page 13 Authority, hereinafter called Authority general expenses, shall be equitably allocated among the various programs by the Board, and shall be funded by the member counties developing or participating in such programs in accordance with Such allocations, as hereinafter provided. in addition, the Board may, in its discretion, allocate a share of such Authority general expense to those member counties which are not developing or participating in any program, and require those counties to fund such share through a prescribed charge. (1) Development Charge. Development costs of an excess insurance program shall be funded by a development charge, as fixed by this Agreement or determined by the Board of Directors. The development charge shall be paid by each member county which wishes to join in development of the program and thereby reserve the option to participate in the program following its adoption by the Board. Development costs are those costs incurred by the Authority in developing a program far review and adoption by the Board of Directors, including but not limited to: research, feasibility studies, information and liaison work among counties, preparation and review of documents, and actuarial and risk management consulting services. The development charge may also include a share of Authority general expenses, as allocated to the program development function by the Board. The development charge shall be billed by the Authority to all member counties upon authorization of program development by the Board and shall be payable within thirty (30) days of the billing date. Upon the conclusion of program development: any deficiency in development funds shall be billed to all counties which have paid the development charge, on a pro- rata or other equftable basis, as determined by the Board; and any surplus in such funds shall be transferred into the loss reserve funds for the program, or, if the program is not implemented, into the Authority's general expense funds. (2) Annual Premium. Except as provided in (3) below, ail 3/93 JPA, CSAC-EIA Amended 3/93 Page i4 post{ievelopment casts of an excess insurance program shall be funded by annual premiums charged to the member counties participating in the program each policy year, and by interest earnings on the funds so accumulated. Such premiums shall be determined by the Board of Directors upon the basis of a cost allocation plan and rating formula developed by the Authority with the assistance of a casualty actuary, risk management consultant, or other qualified person. 'i'he premium far each participating county shall include that county's share of expected program losses, program reinsurance costs, and program administrative costs for the year, plus that county's share of Authority general expense allocated to the program lay the Board. Annual premiums shall be billed by the Authority at the beginning of each policy year and shall be payable wi#hin thirty (30) days of the billing date. At the end of each policy year, program costs shall be audited by the Authority. Any deficiency or surplus in the premium paid by a participating county, as shown by such audit, shaii be adjusted by a corresponding increase or decrease in the premium charge to that county for the next succeeding year, unless the county withdraws or Is cancelled from the program, in which case the provisions of Article 22 shaii control. (3) Premium Surcharge (i) If the Authority experiences an unusually large number of losses under a program during a policy year, such that notwithstanding reinsurance coverage for large individual losses, the joint insurance funds far the program may be exhausted before the next annual premiums are due, the Board of Directors may, upon consultation with a casualty actuary, impose premium surcharges on all participating counties; or (ii) If it is determined by the Board of Directors, upon consultation with a casualty actuary, that the joint insurance funds for a program are insufficient to pay losses, fund known estimated losses, and fund estimated losses which have been incurred but not reported, the Board of Directors may impose a surcharge on a!I participating counties. 3/93 JPA, CSAGEIA Amended 3/93 Page 15 (iii) Premium surcharges imposed pursuant to (i) and/or {ii} above shall be in an amount which will assure adequate funds for the program to be actuariai[y sound; provided that the surcharge to any participating county shall not exceed an amount equal to three (3) times the county's annual premium for that year, unless otherwise determined by the Board of Directors. Provided, however, that no premium surcharge in excess of three times the county's annual premium far that year may be assessed unless, ninety days prior to the Board of Directors taking action to detemline the amount of the surcharge, the Authority notifies the Board of Supervisors of each participating county in writing of its recommendations regarding its intent to assess a premium surcharge and the amount recommended to be assessed each county. The Authority shall, concurrently with the written notification, provide each participating county with a copy of the actuarial study upon which the recommended premium surcharge is based. {iv) A member county which is no longer a participating county at the time the premium surcharge is assessed, but which was a participating county during the policy years} for which the premium surcharge was assessed, shall pay such premium surcharges as it would have otherwise been assessed in accordance with the provisions of (i}, (ii), and (iii) above. (c) Program implementation and Effective Date. Following development of an excess insurance program and upon its adoption by the Board of Directors, the Authority shall give each member county which has paid the development charge for the program a written notice of the program, which shah include: the coverage and terms of coverage of the program, the minimum number of counties required for program implementation, and the estimated first-year premium to the county for program participation. Each such county may elect to enter the program by giving written notice of such election, in a form prescribed by the Authority, to the 3/93 JPA, CSAC-EIA Amended 3/93 Page 7 6 General Manager/Secretary within thirty (30) days of the date of the Authority's notice of the program. Any member county which has not paid the development charge as of the date of the program notice may enter the program oniy if It pays such charge and gives notice of such of ection within the above 30-day period. When at least the minimum number of member counties required for program impfementation have elected to enter the program, the Authority shall determine the actua! first-year premium to each county so eiecting and shall give each such county written notice thereof. If a county's actual first-year premium is the same as or less than that estimated by the Authority, the county shall remain bound by its election to enter. if the actual first year is more than that estimated by the Authority, the county may revolve its election to enter the program by giving the Generai Manager/Secretary written notice of such decision within thirty (3d] days of the date of the actual premium notice. When the Authority determines that at least the minimum number of counties required for program implementation remain entered in the program, it shall given written notice to that effect to all counties which have elected to enter, and the program shall become effect'n~e on the date of such notice. All such counties shall thereafter be considered participants in the program, except for any county which revokes its entry into the program under the terms and within the time period above provided. (d) La#e Entry Into Program. A member county which does not elect to enter an excess insurance program upon its implementation, pursuant to (c) above, or a county which becomes a party to this Agreement following implementation of the program, may petition the Board of Directors for late entry into the program. Such request may be granted upon a vote of two-thirds of all members present and voting, plus a vote of two-thirds of those members present and voting who represent counties participating in the program. As a condition of late entry, the county shall pay the development charge 3/93 JPA, CSAGEIA Amended 3/93 Page 17 for the program, as adjusted at the conclusion of the development period, but not subject to further adjustment, and also any costs incurred by the Authority in analyzing the county's loss data and determining its annual premium as of the time of entry. ARTICI,.E 15 ACCOUNTS AND RECORDS (a) Annuat Budget. The Authority shall annually adopt an operating budget pursuant to Article 8 of this Agreement, which shall include a separate budget for each excess insurance program under development or adopted and implemented by the Authority. {b) Funds and Accounts. The Auditor of the Authority shall establish and maintain such funds and accounts as may be required by good accounting practices and by the Board of Directors. Separate accounts sha11 be established and maintained for each excess insurance program under development or adopted and implemented by the Authority. Books and records of the Authority in the hands of the Auditor shalt be open to inspection at all reasonable times by authorized representatives of member counties. The Authority shalt adhere to the standard of strict accountability far funds set forth in Government Code Section 6505. (c) Auditor's Report. The Auditor, within one hundred and twenty (120) days after the close of each fiscal year, shall give a complete written report of all financial activities for such fiscal year to the Board and to each member county. {d) Annual Audit. Pursuant to Government Code Section 6505, the Authority shall either make or contract with a certified public accountant to make an annual fiscal year audit of all accounts and records of the Authortty, conforming in all respects with the requirements of that section. A report of the audit shall be filed as a public record with the county auditor of each member county within six months of the end of the #iscal year under examination, 3/93 JPA, CSAGEIA Amended 3/93 Costs of the audit shall be considered a general expense of the Authority. ARTICLE 16 RESPONSIBILITIES FOR FUNDS AND PROPERTY Page 18 {a} The Treasurer shall have the custody of and disburse the Authority's funds. He or she may delegate disbursing authority to such persons as may be authorized by the Board of ©irectors to per€orm that function, subject to the requirements of {b) below. (b} Pursuant to Government Code Section 6505.5, the Treasurer shall: (1} Receive and acknowledge receipt for all funds of the Authority and place them in the treasury of the Treasurer to the credit of the Authority. {2) Be responsible upon his or her official bond for the safekeeping and disbursements of all Authority funds so held by him or her. (3) Pay any sums due #orm the Authority, as approved for payment by the Board of Directors or by any body or person to whom the Board has delegated approval authority, making such payments from Authority funds upon warrants drawn by the Auditor. {4) Verify and report in writing to the Authority and to member counties, as of the first day of each quarter of the fiscal year, the amount of money then held for the Authority, the amount of receipts since the last report, and the amount paid out since the last report. (c} Pursuant to Government Code Section 6505.1, the General Manager/Secretary, the Treasurer, and such other persons as the Board of Iirectors may designate steal[ have charge of, handle, and have access to the property of the Authority. {d} The Authority shall secure and pay for a fidelity bond or bands, 3/93 JPA, CSAC-EIA Amended 3/93 Page 19 in an amount or amounts and in the form spec~ied by the Board of Directors, covering all officers and staff of the Authority, and ail afFcers and staff who are authorized to have charge af, handle, and have access to property of the Authority. ARTICLE 17 RESPONSIBILITIES OF MEMBER COUNTIES Member counties shall have the following responsibilities under this Agreement. {a} The board of supervisors of each county shall appoint a representative and one alternate representative to the Board of Directors, pursuant to Article 7. (b) Mach county shall appoint an officer or employee of the county to be responsible for the risk management function within that county and to serve as a liaison between the county and the Authority for ail matters relating to risk management. (c] Each county shall maintain an ac#ive safety program, and shall consider and act upon ail recommendations of the Authority concerning the reduction of unsafe practices. (d} Each county shall maintain its own claims and lass records in each category of liability covered by an excess insurance program of the Authority in which the county is a participant, and shall provide copies of such records to the Authority as directed by the Board of Directors or Executive Committee, or to such other committee as directed by the Board or Executive Committee. (e) Each county shall pay development charges, premiums, and premium surcharges due to the Authority within thirty {30) days of the billing date, as required under Article 14. Penalties for late payment of such charges, premiums and/or premium surcharges may be determined and assessed by the Board of Directors. After withdrawal, cancellation, ar termination action under Articles 20, 21, or 23, each county shall pay promptly to the Authority any 3/93 JPA, CSAGEIA Amended 3/93 Page 20 additional premiums due, as determined and assessed by the Board of Directors under Articles 22 or 23. Any costs incurred by the Authority associated with the collection of such premiums or other charges, shall be recoverable by the Authority. {f) Each county shall provide the Authortty such other infarmatfon or assistance as may be necessary for the Authority to develop and implement excess insurance programs under this Agreement. (g} Each county shall cooperate with and assist the Authority, and any insurer of the Authority, in all matters refa#ing to this Agreement, and shat[ comply with all Bylaws, and other rules by the Board of Directors. {h} Each county shall maintain the membership of its supervisors in CSAC. {i} Each county shall have such other responsibilities as are provided elsewhere in this Agreement, and as are established by the Board of Directors in order to carry out the purposes of this Agreement. ARTICLE 18 ADMINlSTRATEON Olr CLAIMS {a} SubJect to subparagraph {e}, each member county shall be responsible for the investigation, settlement or defense, and appeal of any claim made, suit brought, or proceeding instituted against the county arising out of a loss. (b) 'The Authorrty may develop standards for the administration of claims for each excess insurance program of the AuthorEty so as to permit oversight of the administration of claims by the member counties. (c} Each participating county shall give the Authority timely written notice of excess claims in accordance with the provisions of the Bylaws. 3/93 JPA, CSAC-EfA Amended 3/93 Page 21 (d} A member county shall not enter into any settlement involving liability of the Authority without the advance written consent of the Authority. {e} The Authority, at its own election and expense, shall have the right to participate with a member county in the settlement, defense, or appeal of any claim, suit or proceeding which, in the judgement of the Authority, may involve Liability of the Authority. ARTICLE 99 NI=W MEMBERS Any non-member county maintaining the membership of its supervisors in CSAC may become a parry to this Agreement and participate in any excess insurance program in which it is not presently participating upon approval of the Board of Directors, by a vase of two-thirds of the members present and voting. ARTICLE 20 WITHDRAWAL (a} A member county may withdraw as a party to this Agreement upon thirty {30} days advance written notice to the Authority if tt has never become a participant in any excess insurance program pursuant to Article 14, or if it has previously withdrawn from all excess insurance programs in which it was a participant. {b} After becoming a participant in an excess insurance program, a member county may withdraw from that program only at the end of a policy year for the program, and oniy if it gives the Authority at least sixty (60} days advance written notice of such action. 3/93 JPA, CSAGI=IA Amended 3/93 Page 22 ARTICLE 2i CANCELLATION (a) IVotwithstandingthepravisions of Article 20, the Board of Directors may: {1) Cancel any county from this Agreement and membership in the Authority, on a vote of two-thirds of the Board members present and voting. Such action shall have the effect of cancelling the county's participation in all excess Insurance programs of the Authority as of the date that all membership is cancelled. {2) Cancel any county's participation in an excess insurance program of the Authority, without canceEfing the county's membership in the Authority or participation in other programs, on a vote of two-thirds of the Board members present and voting who represent counties participating in the program. The Board shall give sixty (60) days advance written notice of the effective date of any cancellation under the foregoing provisions. Upon such effective date, the county shall be treated the same as iF it had voluntarily withdrawn from this Agreement, or from the excess insurance program, as the case may be. (b) A member county that does not enter one ar more of the excess insurance programs developed and implemented by the Authority within the member county's first year as a member of the Authority shall be considered to have withdrawn as a parry to this Agreement at the end of such period, and its membership in the Authority shall be automatically cancelled as of that time, without action of the Board of Directors. (c) A member county which withdraws from all excess insurance programs of the Authority in which ft was a participant and does not enter any program for a period of six (6) months thereafter shall be considered to have withdrawn as a party to the Agreement at the end of such period, and its membership in the Authority shad be automatically cancelled as of 3/93 JPA, CSAC-EIA Amended 3/93 Page 23 that time, without action of the Board of Directors. (d) A member county that terminates the membership of its supervisors in CSAC shall be considered to have thereby withdrawn as a party to this Agreement, and its membership in the Authority and participation in any excess insurance programs of the Authority shall be automatically cancelled as of that time, without the action of the Board of Directors. ARTICLE 22 EFFECT OF WITHDRAWAL OR CANCELLATION (a) If a county's participation in an excess insurance program of the Authority is cancelled under Article 21, with or without cancellation of membership in the Authority, and such canceElation is effective before the end of the policy year for that program, the Authority shall promptly determine and return to that county the amount of any unearned premium payment from the county for the policy year, such amount to be computed on a pro-rata basis from the effective date of cancellation. (b) Except as provided in (a} above, a county which withdraws or is cancelled from this Agreement and membership in the Authority, or from any program of the Authority, shall not be entitled to the return of any premium or other payment to the Authority, or of any property contributed to the Authority. However, in the event of termination of this Agreement, such county may share in the distribution of assets of the Authority to the extent provided in Article 23 provided; however, that any withdrawn or cancelled county which has been assessed a premium surcharge pursuant to Article i4 {b} {3} {ii} shall be entitled to return of said county's unused surcharge, pins interest accrued thereon, at such time as the Board of Directors declares that a surplus exists in any insurance fund for which a premium surcharge was assessed. (c} Except as provided in (d} below, a county shall pay any premium 3/93 JPA, CSAGI=IA Amended 3/93 Page 24 charges which the Board of Directors determines are due from the county for losses and costs incurred during the entire coverage year in which the county was a participant in such program regardless of the date of entry into such program. Such charges may include any deficiency in a premium previously paid by the county, as determined by audit under Article 14 (b} (2}; any premium surcharge assessed to the county under Article 14 (b) (3); and any additional amount of premium which the Board determines to be due from the county upon final disposition of all claims arising from losses under the program during the entire coverage year in which the county was a participant regardless of date of entry into such program. Any such premium charges shall be payable by the county within thirty {30) days of billing by the Authority. (d} Those counties which who have withdrawn or been cancelled pursuant to Articles 20 and 21 from any excess program of the Authority during a coverage year shall pay any premium charges which the Board of Directors determines are due from the counties for losses and costs which were incurred during the county's participation in any program. ARTICLE 23 TERMINATEON AND DISTRIBUTION OF ASSETS {a) This Agreement may be terminated bythree-fourths of the member counties, acting through their boards of supervisors; provided, however, that this Agreement and the Authority shalE continue to exist after such election for the purpose of disposing of all claims, distributing a!I assets, and performing all other functions necessary to conclude the affairs of the Authority. {b} Upon termination of this Agreement, all assets of the Authority in each excess insurance program shall be distributed among those counties which participated in chat program in proportion to their cash contributions, including premiums paid and property contributed {at market value when contributed}. The Board of Directors shall determine such distribution within 3/s3 JPA, CSAC-EIA Amended 3/93 Page 25 six {6) months after disposal of the last pending claim or other liability covered by the program. (c} Following termination of this Agreement, any county which was a participant in an excess insurance program of the Authority shall pay any additional amount of premium, determined by the Board of Directors in accordance with a loss allocation formula, which may be necessary to enable Tinai disposition of all claims arising from losses under that program during the entire coverage year in which the county was a participant regardless of the date of entry into such program. ARTICLE 24 LIABILITY OF BOARD OF DIRECTORS, OFFICERS, COMMITTEE M1E:MBERS AND LEGAL ADVISORS The members of the Board of Directors, Officers, committee members and legal advisors to any committees of the Authority shall use ordinary care and reasonable diligence in the exercise of their powers and in the performance of their duties pursuant to this Agreement. They shall not be liable for any mistake of judgment ar any other action made, taken or omitted by them in good faith, nor for any action taken or omitted by any agent, employee or independent contractor selected wfth reasonable care, nor for loss incurred through investment of Authority funds, ar failure to invest. No Director, Ofticer, committee member, or legal advisor to any committee sha11 be responsible for any action taken or omitted by any other Director, Officer, committee member, or legal advisor to any committee. Na Director, Officer, committee member or legal advisor to any committee shall be required to give a bond or other security to guarantee the faithful performance of their duties pursuant to this Agreement. The funds of the Authority shall be used to defend, indemnify and hold harmless the Authortty and any Director, Officer, committee member or legal advisor to any committee for their 3/93 JPA, CSAGEIA Amended 3/93 Page 26 actions taken within the scope of the authority of the Authority. Nothing herein shall limit the right of the Authority to purchase insurance to provide such coverage as is hereinabove set forth. ARTICLE 25 BYLAWS The Board may adopt Byiaws consistent with this Agreement which shall provide far the administration and management of the Authority. ARTICLE 26 NOTICES The Authority shall address notices, billings and other communications to a member county as directed by the county. Each member county shall provide the Authority with the address to which communications are to be sent. Member counties shah address notices and other communications to the Authority to the General Manager/Secretary of the Authority, at the office address of the Authority as set faith in the Bylaws. ARTICLE 2T AMENDMENT This Agreement may be amended at any time by vote of two thirds of the member counties, acting through their boards of supervisors. ARTICLE 28 PROHIBITION AGAINST ASSIGNMENT No member county may assign any right, claim or interest it may have under this Agreement, and no creditor, assignee or third party beneficiary of any county shall have any right, 3/93 JPA, CSAC-EIA Amended 3/93 Page 27 claim or tftle to any part, share, interest, fund, premium or asset of the Authority. ARTICLE 29 AGREEMENT COMPLETE This Agreement constitutes the fttll and complete Agreement of the parties. ARTICLE 30 EFFECTIVE DATE OF AMENDMENTS Any amendment of this Agreement shall become effective upon the Authority receiving notice of the approval of any Amended Agreement by the board of supervisors of two thirds of the member counties. ARTCCLI: 31 FILING WITH 5ECRETARY OF STATE The General Manager/Secretary of the Authority shall file a notice of this Agreement with the office of California Secretary of State within 30 days of its effective date, as required by Government Code Section 65x3.5 and within 70 days of its effective date as required by Government Code Section 53Q5~. 3/93 JPA, CSAC-EIA Amended 3/93 Page 28 IN WITNESS WHEREOF, the undersigned party hereto has executed this Agreement on the date indicated below. DATE: February 9, 1993 COUNTY OF: Butte i Seal: BY: Mary Butte e Houx, Chair of the unty Berard of S~u~e ~ ~ s~~~ ~t'~ ~aurtsel ;' ~, ~y 3/93 Exhibit B -Memorandum of Liability Coverage MEMORANDUM OF COVERAGE FOR THE CSAG EXCESS INSURANCE AUTHORITY (HEREINAFTER REFERRED TO AS MEMORANDUM} 1N CONSIDERATION OF THE PAYMENT OF THE PREMIUM, IF PAID, IN RELIANCE UPON THE STATEMENTS IN THE DECLARATIONS MADE A PART HEREOF AND SUBJECT TO ALL OF THE TERMS OF THIS MEMORANDUM, THE AUTHORITI AGREES WITH THE MEMBER COUNTY AS FOLLOWS: COVERAGE AGREEMENT THE AUTHORITY WILL PAY ON BEHALF OF TWE COVERED PARTY FOR ULTIMATE NET LOSS IN EXGESS OF THE RI=PAINED LIMIT HEREINAFTER STATED WHICH THI= COVI-cRED PARTY SHW.I. BEGOMI= LEGALLY OBLIGATED TO PAY AS DAMAGES BY REASON OF LIABtLII'Y IMPOSED BY LAW OR LIABILITY ASSUMED BY CONTRACT BECAUSE OF: COVERAGE A PERSONAL INJURY OR COVERAGE B. PROPERTY DAMAGE OR COVERAGE G. PUSLiC OFFICIALS ERRORS AND OMISSIONS LIABILITY TO WHICH THIS MEMORANDUM APPLIES, CAUSED BY AN OCCURRENCE. DEFENSE COSTS AFTER THE AMOUNT OF THE COVERED PARTY'S RETAINED LIMIT HAS BEEN EXHAUSTED BY PAYMENT OF JUDGMENTS, SETTLEMENTS AND/OR DEFENSE COST5, THE AUTHORITY WILL REIMBURSE THE COVERED PARTY FOA EXCESS DEFENSE COSTS INCURRED BY THE COVERED PARTY. THE AUTHORITY'S LIABILITY FOR EXCESS DEFENSE COSTS IS SUBJECT T0, AND NOT 1N ADDITION TO, THE LIMIT OF THE AUTHORITY'S LIABILITY. THE AUTHORITY, AT ITS OWN EXPENSE, SHALL HAVE THE RIGHT TO ASSOCIATE ITSELF WRH THE COVERED PARTY IN THE CONTROL, INVESTIGATION, DEFENSE OR APPEAL OF ANY CLAIM OR PROCEI=171NG WHICH, IN THE OPINION OF AUTHORITY, IS OR MAY BE COVERED BY THE MEMORANDUM. THE COVERED PARTY SHALL FULLY COOPERATE IN ALL MATTERS PERTAINING TO SUCH CLAIM OR PROCEEDING. NO CLAIM SHALL BE SETTLED FOR AN AMOUNT IN IXCESS OF THE COVERED PARTY'S RETAINED LIMIT WITHOUT THE PRIOR WRITTEN CONSENT OF THE AUTHORITY. RETAINED LIMIT -THE AUTHORITY'S LIMIT OF LIABILITY REGARDLESS OF THE NUMBER OF (1} COVERED PARTIE5 UNDER THIS MEMORANDUM, (2} PERSONS OR ORGANIZAT1pNS WHO SUSTAIN INJURY OR DAMAGE, OR (3} CLAIMS MARE OR SUITS BROUGHT ON ACCOUNT OF PERSONAL INJURY, PROPERTY DAMAGE OR PUBLIC OFFICIALS ERRORS AND OMISSIONS, THE AUTHORITY'S LIABILITY lS LIMITED AS FOLLOWS: EIA 7/1/90 (A) WITH RESPECT TO PERSONAL 1NJURY, PROPERTY DAMAGE, PUBLIC OFFICIALS ERRORS AND OMISSIONS, ORANY GOMB1NATiON THEREOF, THE AUTHORITY'S LIABILITY SHALL BE ONLY FORTHE ULTIMATE HET LOSS IN EXCESS OF THE COVERED PARTY'S RETAINED LIMIT AS SPECIFIED IN ITEM l OF THE LIMITS OF LIABILITY SECTION OF THE DECLARATIONS AS THE RESULT OF ANY ONE OCCURRENCE, AND THEN FOR AN AMOUNT NOT IXCEEDING 7HE AMOUNT SPECIFIED IN ITEM 2A OF THE LIMITS OF LIABILITY SECTION OF THE DECLARATIONS AS THE RESULT OF ANY ONE OCCURRENCE. (B) THERE IS NO L1MET TO THE NUMBER OF OCCURRENCES DURING THE MEMORANDUM PERIOD FOR WHICH CLAIMS MAY BE MADE, EXCEPT THAT THE LIABILITY OF THE AUTHORITY ARISING OUT OF COMPLETED OPERATIONS HAZARD OR OUT OF PUBLIC OFFICIALS ERRORS AND OMISSIONS, BECAUSE OF ALL OCCURRENCES DURING EACH MEMORANDUM PERIOD SHALL NOT EXCEED THE AMOUNT SPECIFED IN ITEM 2B OF THE LIMITS OF LIABELITY SECTION OF THE DECLARATIONS. (C) FOR THE PURPOSE OF DETERMINING THE LEM1T OF THE AUTHORITY'S LIABILITY, ALL DAMAGES ARESiNG OUT OF CONTINUOUS OR REPEATED EXPOSURE TO SUBSTANTWLLY THE= SAME GENERAL CONDITIONS SHAI1 BE CONSIDERED AS ARISING OUT OF ONE OCCURRENCE. (D) PUBLIC OFFICIALS ERRORS AND OMISSIONS TAKING PLACE OVER MORE THAN ONE MEMORANDUM PERIOD SHALL BE DEEMED TO HAVE TAKEN PLACE DURING THE LAST MEMORANDUM PERIOD AND ONLY THAT LIMIT SHALL APPLY. MEMORANDUM PERIOD; TERRITORY THIS MEMORANDUM APPLIES TO PERSONAL INJURY, PROPERTY DAMAGE, OR PUBLIC OFFICIALS ERRORS AND OMISSIONS WHICH OCCURS ANYWHERE IN THE WORLD DURING THE MEMORANDUM PER10D. THE CLAIM OR LEGAL ACTION MUST 8E MADE WRHEN THE JURISDICTION OFA UNITED STATES DISTRICT COURT OR A DULY CONSTITUTED STATE COURT. COVERED PARTY COVERED PERSONS OR ENTITIES (A} THE MEMBER COUNTY; (e} THOSE INDMDUALS WHO WERE OR ARE NOW ELECTED OR APPOINTED OFFECIALS OF THE MEMB>WR COUNTY, WHETHER OR NOT COMPENSATED QNGLUDING VOLUNTEERS}, INCLUDING MEMBERS OF THE M>wMBER COUNTY'S GOVERNING BODY OR ANY OTHER COMMITTEES, BOARDS, COMMISSIONS OR SPECIAL DISTRICTS OF THE MEMBER COUNTY, WHELE ACTING FOR OR ON BEHALF OF THE MEMBER COUNTY; (G} ALL SPECAL DISTRICTS GOVERNED DIRECTLY BY THE BOARD OF SUPERVISORS AND OTHER DISTRICTS OR AGENCIES WHICH ARE NAMED ON THE MEMORANDUM; (D) PAST OR PRESENT EMPLOYEES OF THE MEMBER COUNTY, WHETHER OR NOT COMPENSATED, (INCLUDING VOLUNTEERS), WHILE ACTENG FOR OR ON BEHALF OF THE MEMBER COUNTY; (E) LOCAL AGENCY FORMATION COMMISSION HAVING JURISDICTION WITHIN THE MEMBER COUNTY. EIA 7/1 /90 2 EXCLUSIONS AS RESPECTS ULTIMATE NET LOSS, TH[S MEMORANDUM DQES NOT APPLY: (A) TO ANY 08UGATION FOR WHICH ANY COVERED PARTY OR ANY CARRIER AS ITS INSURER MAY SE HELD LIABLE UNDER ANY WORKERS' COMPENSATION, UNEMPLOYMENT COMPENSATION OR DISABILITY BENEFITS LAW, OR UNDER ANY SIMILAR LAW; (B) TO BODILY INJURY TO ANY EMPLOYEE OF ANY COVERED PARTY ARISING OUT OF AND IN THE COURSE OFHIS/HER EMPLOYMENT BY SUCH COVERED PARTY; BUT THIS EXCLUSION DOES NOT APPLY TO LIABILITY ASSUMED BY THE COVERED PARTY UNDER ANY WRITTEN CONTRACT; (C) TO ENJURY TO OR DESTRUCTION OF (1) PRDPERTY OWNED BY A COVERED PARTY, OR (2) PROPERTY RENTED TO OR LEASED TO THE COVERED PARTY WHERE THE COVERED PARTY HAS ASSUMED LIABILITY FOR DAMAGE TO OR DESTRUCTION OF SUCH PROPERTY UNLESS THE MEMBER COUNTY WOULD HAVE BEEN LL4BLE IN THE ABSENCE OF SUCH ASSUMPTION OF LIABILITY, OR (3) AIRCRAFT OR WATERCRAFT IN THE CARE, CUSTODY OR CONTROL OF ANY COVERED PARTY; (D) A5 RESPECTS LIABILIN ASSUMED BY THE COVERED PARTY UNDER ANY CONTRACT; (1) TO ANY CLAIM, JUDGMENT OR AGREEMENT FROM ANY ARBITRATION PROCEEDING WHEREIN THE AUTHORITY IS NOT ENTITLED TO EXERCISE WITH THE COVERED PARTY, THE COVERED PARTY'S RIGHTS IN THE CHOICE OF ARBITRATORS, AND IN THE CONDUCT OF SUCH PROCEEDINGS. (2) TO ANY OBLIGATION FDR THE RENDERING OR FAILURE TO RENDER PROFESSIONAL SERVICES FOR THE COVERED PARTY, IFTHE INDEMNITEE OF THE COVERED PARTY 1S AN ARCHITECT, ENGINEER OR SURVEYOR, ARISING OUT OF: (iy THE PREPARATION OR APPROVAL OF CONTRACTS, MAPS, PLANS, DRAWINGS, OPINIONS, REPORTS, TESTS, SURVEYS, CHANGE ORDERS, DESIGNS OR SPECIFICATIONS; {I~ THE GMNG OR THE FAILURE TO GNE DIRECTIONS OR INSTRUCTIONS BY THE INDEMNITEE, THE INDEMNITEE'S AGENTS OR EMPLOYEES, PROVIDED SUCH GMNG OR FAILURE TO GNE IS THE PRIMARY CAUSE OF PItRSONAt INJURY OR PROPERTY DAMAGE; {E) TO LIABILITY ARISING OUT OF THE OWNERSHIP, MAINTENANCE, LOADING OR UNLOADING_ , OR OPERATION OF ANY: (1) AIRCRAFT, OTHER THAN NON-OWNED AIRCRAFT; (2) AIRFlELDS; (3) RUNWAYS; (4) HANGARS; {5) OR OTHER PROPERTEES IN CONNECTION WITH AVIATION ACTMTIES.; (F) TO LIABILITY ARISING OUT OF OR IN CONNECTION WITH THE OPERATION OFANY HOSPITAL.; EIA 7/1 /90 g (G) TO LIABILITY ARISING OUT OF OR IN CONNECTION WITH THE OPERATION OFANY CLINIC OR ESTABLISHED HEALTH CARE FACILITIES, OTHER THAN A HOSPITAL, OWNED OR OPERATED 8Y THE MEMBER COUNTY DUE T0: {i) THE RENDERING OF OR FAILURE TO RENDER: (I) MEDICAL, SURGICAL, DENTAL., X RAY OR NURSING SERVICE ORTREATMENT, OA THE FURNISHING OF FOOD OA BEVERAGES IN CONNECTION THEREWITH; {[I) ANY SERVICE OR TREATMENT RELATED TO PHYSICAL OR MENTAL HEALTH OR OF A PROFESSIONAL NATURE OR; (Ill) ANY C05MI"TlC OR TONSORIAL SERVICE OR TREATMENT. (2) THE FURNISHING OF OR DISPENSING OF DRUGS OR MEDICAL, DENTAL OR SURGICAL SUPPLIES OR APPLWNCES. THIS EXCLUSION SHALL NOT APPLY, HOWEVER, TO ANY PROFESSIDNALACTMTIES ARISING OUT OF THE PERFORMANCE OF OCCUPATIONAL PHYSICAL EXAMINATIONS, PARAMEDICS, EMERGENCY FlRST AID, ALCOHOLISM TREATMENT CENTERS, DRUG ABUSE TREATMENT CENTERS, CHILD HEALTH CARE OR CRIPPLED CHILDREN TREATMENT CENTERS, VENEREAL DISEASE CLlN1GS, T.B. CLINICS, AND FAMILY PLANNING CLINICS.; (H) TO LIABELffY ARISING OUT OF OR iN CONNECTION WITH THE PR1NGlPLES OF EMINENT DOMAIN, CONDEMNATION PROCEEDINGS OR INVERSE CONDEMNATION BY WHATEVER NAME REGARDLESS OF WHETHER SUCH CLAIMS ARE MADE DIRECTLY AGAINST THE COVERED PARTY OR BY VIRTUE OF ANY AGREEMENT ENTERED INTO BY OR ON BEHALF OF THE COVERED PARTY. THIS EXCLUSION S1~AI..L NOT APPLY TO PROPERTY DAMAGE CAUSED BY THE NEGt1GENCE OR OTHER FAULT OF THE COVERED PARTY EVEN THOUGH A LEGAL THEORY UPON WHICH A CLAIMANT SEEKS RECOVERY IS THE PRINCIPLE OF INVERSE CONDEMNATION.; (I) TO LIABILITY ARISING OUT OF THE FAILURE TO SUPPLY OR PROVIDE AN ADEQUATE SUPPLY OF GAS OR WATER OR ELECTRICITY WHEN SUCH FWtURE IS A RESULT OF THE INADEQUACY OF THE GOVERN PARTY'S FACILITIES TO SUPPLY OR PRODUCE SUFFICIENT GAS OR WATER OR ELECTRICITY TO MEET THE DEMAND.; (J) TO PROPERTY DAMAGE ARISING OUT OF SUBSIDENCE.; (K) TO LIABILITY ARISING OUT OF ANY TRANSIT AUTHQAiTY, TRANSIT SYSTEM OR PUBLIC TRANSPORTATION SYSTEM OWNED OR OPERATED BY ANY COVERED PARTY, THIS EXCLUSION SHALL NOT APPLY TO TRANSIT OR PUBLIC TRANSPORTATION SYSTEMS OPERATING OVER NON-FIXED ROUTES SUCH AS DEAL-A-RIDE, SENIOR CITIZEN TRANSPORTATION, OR HANDICAPPED PERSONS TRANSPORTATION.; (t) TO LIABILITY ARISWG OUT OF THE HAZARDOUS PROPERTIES OF NUCLEAR MATERIAL; {M) TO L~ABILITYARiSING OUT OFTHE CONTAMINATION OFTHE ENVIRONMENT BY POLLUTANTS INTRODUCED AT ANYTIME INTO OR UPON LAND, THEATMOSPHERE OR ANY UNDERGROUND WATER OR WATER TABLE OR AQUIFER. THIS EXCLUSION APPLIES WHETHER OR NOT THE CONTAMINATION 1S INTRODUCED INTO THE ENVIRONMENT INTENTIONALLY OR ACCIDENTALLY OR GRADUALLY OR SUDDENLY AND WHETHER OR NOT THE COVERED PARTY OR ANY OTHER PERSON OR ORGANIZATION IS RESPONSIBLE FOR THE CONTAMINATION. EIA 7/1 /90 CONTAMINATION INCLUDES ANY UNCLEAN, UNSAFE OR UNHEALTHFUL CONDITION EITHER ACTUAL OR POTENTIAL, WH1CW ARISES OUT OF THE PRESENCE IN THE ENVIRONMENT OF ANY POLLUTANT, WHETHER PERMANENT OR TRANSIENT, ENVIRONMENT INCLUDES LAND, BODIES OF WATER, UNDERGROUND WATER OR WATERTABLE OR AQUIFER, THE ATMOSPHERE AND ANY DTHI=R NATURAL FEATURE OF THE EARTH, WHETHER OR NOT ALTERED, DEVELOPED OR CULTNATED. POLLUTANTS INCLUDE SMOKE, VAPORS, SOOT, FUMES, ACID5, ALKALIS, CHEMICALS, LIQUIDS OR GASES, THERMAL POLLUTANTS AND ALL OTHER IRRITANTS OR CONTAMINANTS. TH[S EXCLUSION DOES NOT APPLY TO LIABILITY CAUSED BY HEAT, SMOKE OR FUMES FROM A HOSTILE FlRE. AS USED IN THE EXCLUSION, A HOSTILE FIRE MEANS ONE WHICH BECOMES UNCONTROLLABLE OR BREAKS OUT WHERE IT WAS NOT INTENDED TO BE.; (N) TO LIABILITY IMPOSED UPON A COVERED PARTY (OR WHICH IS IMPUTED TO A COVERED PARTY) UNDER THE "EMPLOYMEM RETIREMENT INCOME SECURITY ACT OF 197a"AND ANY LAW AMENDATORY THEREOF. (O} TO LIABILITY ARISING OUT OF PARTIAL OR COMPLETE FAILURE OF ANY DAMS}.; (P) TO ANY LIABILITY FOR PAST, PRESENT, OR FUTURE CLAIMS ARISING IN WHOLE OR IN PART, EITHER DIRECTLY OR INDIRECTLY, OUT OF THE MANUFACTURE, DISTRIBUTION, SALE, RESALE, REBRANDING, INSTALLATION, REPAIR, REMOVAL, ENCAPSULATION, ABATEMENT, REPLACEMENT OR HANDLING OF, OR EXPOSURE TO, ASBESTOS OR PRODUCTS CONTAINING ASBESTOS WHETHER OR NOT THE ASBEST05 IS OR WAS AT ANY TIME AIRBORNE AS A FIBER OR PARTICLE, CONTAINED IN A PRODUCT, CARRIED ON CLOTHING, INHALED, TRANSMITTED IN ANY FASHION, OR FOUND IN ANY FORM WHATSOEVER.; (O) TO LIABILITY ARISING OUT OF (1) THE OWNERSHIP, MAINTENANCE, OPERATION, USE, LOADING OR UNLOADING OF ANY MOBILE EQUIPMENT OR VEHICLE WHILE BEING USED 1N ANY PREARRANGED OR ORGANIZED RACING, SPEED OR DEMOLITION CONTEST OA IN ANY STUNTING ACTMTY OR IN PRACTICE IN PREPARATION FOR ANY SUCH CONTEST QR ACTMTY OR (2) THE OPERATION OA USE OF ANY SNOWMOBILE OR TRAILER DESIGNED FOR USE THEREWITH WHEN USED FOR RECREATIONAL, STUNTING OR RACING ACTMTIES.; (R) TO LIABILITY ARISING OUT OF THE OPERATION OR USE OF ANY OFF HIGHWAY VEHICLE PARK OR AREA.; (S) TO ANY LIABILITY ARl51NG OUT OF OR IN CONNECTION WITH THOSE CAUSES OF ACTION OR COUNTS IN ANY SUIT WHICH DO NOT CONTAIN DEMANDS OR PRAYERS FOR MONETARY DAMAGE.; m UNDER covERAGE c To: (1) PERSONAL INJURY OR PROPERTY DAMAGE AS DEFINED IN THE MEMORANDUM; (2) THE REFUND OF TAXES, FEES OR ASSESSMENTS; (3) Q) LIABILITY OF A COVERED PARTY ARISING 1N WHOLE OR IN PART, OUT QF ANY COVERED PARTY OBTAINfNG REMUNERATION OR FINANCIAL GAIN TO WHICH THE COVERED PARTY WA5 NOT LEGALLY ENTITLED; (II) LIABILITY ARISING OUT OF THE WILLFUL VIOLATION OF A PENAL STATUTE, CODE OR ORDINANCE COMMITTED BY OR WITH THE KNOWLEDGE OR EIA 7/1/90 CONSENT OF ANY COVERED PARTY; EXCEPT THAT ANY ACT FOR WHICH A COVERED PARTY IS RESPONSIBLE SHALL NOT BE IMPUTED TO ANY OTHER COVERED PARTY FOR PURPOSES OF THIS SUBPART (T) (3); (4} LIABILITY OF ANY COVERED PARTY ARISING OUT OF ESTIMATES OF PROBABLE COSTS OR COST ESTIMATES BEING IXCEEDE^ OR FOR FAULTY PREPARATION OF BID 5PlrCIFIGATIONS OR PLANS OR FAILURE TO AWARD CONTRACTS IN ACCORDANCE WITH STATUTE OR ORDINANCE WHICH UNDER LAW MUST BE SUBMITTED FOR BIDS; (5) INJURY TO, DESTRUCTION OR DISAPPEARANCE OF ANY TANGIBLE PROPERTY (INCLUDING MONEY) OR THE LOSS OF USE THEREOF; (6} FAILURE TO PERFORM OR BREACH OF, A CONTRACTUAL OBLIGATION; NOTHkNG CONTAINED IN THIS EXCLUSION SHALL LEMIT THE COVERED PARTY'S RIGHTS OF RECOVERY, WHERE APPLICABLE, UNDER COVERAGES A AND B OF THIS M£MORANDUIut,; (U) TO PAST SALARY OR WAGES DUE BECAUSE OF ACTUAL. OR CONSTRUCTIVE WRONGFUL TERMINATION OF ANY EMPLDYEE OR OFFICIAL OF THE COVERED PARTY; (V} TO BENEFITS PAYABLE UNDER AN EMPLOYEE BENEFIT PLAN (WHETHER THE PLAN IS VOLUNTARILY ESTABLISHED BY THE COVERED PARTY OR MANDATED BY STATUTE) BECAUSE OF UNLAWFUL DISCRIMINATION; (W) TO PAST SALARY OF WAGES BECAUSE DF UNLAWFUL DISCRIMINATION; (X) TO ANY LIABILITY ARISING OUT OF OR kN CONNECTION WITH ANY GLAlM FOR PUNITIVE DAMAGES. DEFINITIONS THE FOLLOWING DEFINITIONS SHALL GOVERN THE MEANING OF THE DEFINED TERMS FOR THE PURPOSES OF THIS MEMORANDUM. THE DEFINED TERMS ARE SET FORTH IN'BOLD FACE" TYPE WHERE USED HEREIN. "AIRCRAFT" MEANS A VEHICLE DESIGNED FOR THE TRANSPORT OF PERSONS OR PROPERTY PRINCIPALLY IN THE AIR. "COMPLETED OPERATIONS HAZARD" INCLUDES PERSONALINJURY AND PROPERTY DAMAGEARISING OUT 20F OPERATIONS OR RELIANCE UPON A REPRESENTATION OR WARRANTY MADE AT ANY TIME WITH RESPECT THERETO, BUT ONLY IF THE PERSONAL INJURY OR PROPERTY DAMAGE OCCURS AFTER SUCH OPERATIONS HAVE BEEN GOMPI.E'CED OR ABANDONED AND OCCURS AWAY FROM PREMISES OWNED BY OR RENTED TO THE COVERED PARTY. "OPERATIONS' INCLUDE MATERIALS, PARTS OR EQUIPMENT FURNISHED IN CONNECTION THEREWITH. OPERATIONS SHALL BE DEEMED COMPLETED AT THE EARLIEST OF THE FOLLOWING TIMES: (A) WHEN ALL OPERATIONS TO BE PERFORMED BY OR ON BEHALF OF THE COVERED PARTY UNDER THE CONTRACT HAVE BEEN COMPLETED, OR (B) WHEN ALL OPERATIONS TO 8E PERFORMED BY OR ON BEHALF OF THE COVERED PARTY AT THE SITE OF THE OPERATIONS HAVE BEEN COMPLETED, OR EIA 7/1/90 (C) WHEN THE PORTION OF THE WORK OUT OF WHICH THE INJURY OR DAMAGE ARISES HAS BEEN PUT TO TTS INTENDED USE BY ANY PERSON OR ORGANIZATION OTHER THAN ANOTHER CONTRACTOR OR SUBCONTRACTOR ENGAGED IN PERFORMING OPERATIONS FOR A PRINCIPAL AS A PART OF THE SAME PROJECT. OPERATIONS WHICH MAY REQUIRE FURTHER SERVICE OR MAINTENANCE WORK, OR CORRECTION, REPAIR OR REPLACEMENT BECAUSE OF ANY DEFECT OR DEFICIENCY, eUT WHICH ARE OTHERWISE COMPLETE SHALL BE DEEMED COMPLETED. THE COMPLETED OPERATIONS HAZARD DOES NOT INCLUDE LIABILITY ARISING OUT OF: {1) OPERATIONS IN CONNECTION WITH THE TRANSPORTATION OF PROPERTY UNLESS THE LIABILITY ARISES OUT OF A CONDITION IN OR ON A VEHICLE CREATED BY THE LOADING OR UNLOADING THEREOF, (2) THE EXISTENCEOFTOOLS,UNINSTALLEDEQUIPMENTORABANDONEDORUNUSED MATERUILS. "COVERED PARTY" MEANS ANY PERSON OR ORGANIZATION QUALIFYING AS A COVERED PARTY UNDER THE "COVERED PARTY, COVERED PERSONS OR ENTITIES' SECTION OF THIS MEMORANDUM. THE COVERAGE AFFORDED APPLIES SEPARATELY TO EACH COVERED PARTY AGAINST WHOM CLAIM IS MADE OR SUIT IS BROUGHT, EXCEPT WITH RESPECT TO THE LIMITS OF THE AUTHORITY'S LIABILITY. "DAM" MEANS ANY ARTIFICIAL SARREER TOGETHER WITH APPURTENANT WORKS WHICH: (1) IS 25 FEET OR MORE IN HEEGHT FROM THE FOOT OF A NATURAL BED OF STREAM OR WATERCOURSE; OR (2) HAS WATER IMPOUNDING CAPACITY OF 56 ACRE FEET OR MORE. EXCEPT THAT NO STRUCTURE SPECIFICALLY EXEMPTED FROM JURISDICTION BYTHE STATE OFCALIFORNIA DEPARTMENT OF WATER RESOURCES, DMSION OF SAFETY OF DAMS SHALL BE CONSIDERED A DAM, UNLESS SUCH STRUCTURE ES UNDER THE JURESDICTION OF ANY AGENCY OF THE FEDERAL GOVERNMENT. "DAMAGES" MEANS MONETARY COMPENSATION: (A) FOR DEATH AND FOR CARE AND LOSS OF SERVICES RESULTING FROM PERSONAL INJURY; (B) FOR LOSS OF USE OF PROPERTY RESULTING FROM PROPERTY DAMAGE; (G) RESULTING FROM PUBLIC OFFICIALS ERRORS AND OMISSIONS. "DEFENSE COSTS" MEANS REASONABLE FEES CHARGED BY AN ATTORNEY, INCLUDING EXPENSES OF A CLAIMS SERVICING ORGANIZATION THE COVERED PARTY HAS ENGAGED, AND ALL OTHER REASONABLE FEES, COSTS AND EXPENSES ATTRIBUTABLE TO THE INVESTIGATION, DEFENSE OR APPEAL OF A CLAIM WITHIN THE SCOPE OF COVERAGE AFFORDED BY THIS MEMDRANDUM EXCEPT SALARIES OF EMPLOYEES OF A COVERED PARTY AND THE OVERHEAD AND OTHER OFFlCE EXPENSES OF A COVERED PARTY SHALL NOT BE CONSIDERED DEFENSE COSTS. "EXCESS DEFENSE COSTS" MEANS DEFENSE COSTS WCURRED BY THE COVERED PARTY WITH THE WRITTEN CONSENT OF THE AUTHORITY AFTER THE SELF INSURED RETENTION HAS BEEN EXHAUSTED 13Y PAYMENT OF JUDGMENTS, SETTLEMENTS AND DEFENSE COSTS. "GOVERNED DIRECTLY" MEANS THE COUNTY BOARD OF SUPERVISORS SITS AS THE GOVERNING BOARD. "NUCLEAR MATERIAL" MEANS SOURCE MATERIAL, SPECIAL NUCLEAR MATERIAL, OR BYPRODUCT MATERIAL; 'SOURCE MATERIA! ', 'SPEGWL NUCLEAR MATERIAL', AND 'BYPRODUCT MATERIAL` HAVE THE MEANINGS GIVEN THEM IN THE ATOMIC ENERGY ACT OF ~54 OR IN ANY LAW AMENDATORY THEREOF. EIA 7/1/96 "OCCURRENCE" MEANS AN ACCIDENT OR EVENT, INCLUDING INJURIOUS EXPOSURE TO CONDITIONS, WHICH RESULTS, DURING THE MEMORANDUM PERIOD, IN PERSONAL INJURY, PROPERTY DAMAGE, OR PUBLIC OFFICIALS ERRORS AND OMISSIONS NEITHER EXPECTED NOR INTENDED FROM THE STANDPOINT OF THE COVERED PARTY. AS RESPECTS COVERAGES A, B AND C, "OCCURRENCE" SHALL APPLY SEPARATELY TO EACH MEMBER COUNTY OF THE AUTHDRRY NAMED IN THIS MEMORANDUM. "OFF HIGHWAY VEHICLE PARK OR AREA" MEANS ANY OFF HIGHWAY PARK OR AREA SPECIFlCALLY DESIGNATED FOR THE RECREATIONAL OR SPORT ACTNITIES OF OFF ROAD VEHICLES. RECREATIONAL OR SPORT ACTNITY l5 NOT MEANT TO INCLUDE ACCESS OR EGRESS TO PARK AREAS. "PERSONAL INJURY" MEANS (A) BODILY INJURY, DEATH, SICKNESS, DISEASE, DISABILITY, SHOCK, MENTAL ANGUISH AND MENTAL INJURY RESULTING FROM BODILY INJURY; (B) FALSE ARREST, DETENTION OR kMPRISONMENT OR MALICIOUS PROSECUTION; (C) THE PUBLICATION OR UTTERANCE OF LIBEL OR SLANDER, INCLUDING DISPARAGING STATEMENTS CONCERNING THE CONDITION, VALUE, QUALITY OR USE OF REAL OR PERSDNAL PROPERTY, OR PUBLICATION OR UTTERANCE 1N VIOLATION OF RIGHTS pF PRNAGY; (D) WRONGFUL ENTRY OR EVICTION, OR OTHER INVASION OF THE RIGHT OF PRNATE OCCUPANCY; (E) ASSAULT AND BATTERY, NOT COMMITTED BY, AT THE DIRECTION OF OR WITH THE CONSENT OF THE COVERED PARTY, UNLESS COMMITTED OR DIRECTED FOR THE PURPOSE OF PROTECTING PERSONS OR PROPERTY FROM INJURY OR DEATH; (F) DISCRIMINATEON BASED UPON RACE, RELIGION, NATIONALITY, NATIONAL ORIGIN, COLOR, GREED, SEX, SIXUAL PREFERENCE, AGE OR EMPLOYMENT. "PROPERTY DAMAGE" MEANS (1) Pi-IYSICAL INJURY TO OR DESTRUCTION OF TANGIBLE PROPERTY WHICH OCCURS DURING THE MEMORANDUM PERIOD, INCLUDING THE LOSS OF USE THEREOF AT ANY TIME RESULTING THEREFRDM; OR (2) LOSS OF USE OFTANGIBLE PROPERTY WHICH HAS NOT BEEN PHY5ICALLY INJURED OR DESTROYED PROVIDED SUCH L05S OF USE IS CAUSED BY AN OCCURRENCE DURING THE MEMORANDUM PERIOD. "PUBLIC OFFICIALS ERRORS ANp OMISSIONS" SHALL MEAN ANY ACTUAL OR ALLEGED ERROR OR MISSTATEMENT OR ACT OF OMISSION OR NEGLECT OR BREACH OF DUTY INCLUDING MISFEASANCE, MALFEASANCE OR NONFEASANCE BY THE COVERED PARTIES IN THE DISCHARGE OF THEIR DUTIES WITH THE PUBLIC ENTITY INDMDUALLY OR COLLECTNELY, OR ANY MATTER CLAIMED AGAINST THEM 50LELY BY REASON OF THEIR BEING OR HAVING BEEN COVERED PARTIES. "ULTIMATE NET LOSS" MEANS THE SUMS, INCLUDING EXCESS pEFENSE COSTS, FOR WHICH THE COVEREp PARTY IS LEGALLY LIABLE A5 pAMAGES BY REASON OF JUDGMENT OR A SETTLEMENT MADE WITH THE WRITTEN CONSENT OF THE GI_AIMAN7, THE COVERED PARTY AND THE AUTHORITY. "WATERCRAFT" MEANS A VEHICLE DESIGNED FOR THE TRANSPORT OF PERSONS OR PROPERTY PRINCIPALLY ON WATER. CONDITIONS 1. PREMIUM THE PREMIUM DESIGNATED IN THE DECLARATIDNS AS 'RISK PREMIUM" 15 A DEPOSIT PREMIUM ONLY, AND SHALL BE ADJUSTED ANNUALLY IN ACCORDANCE WITH THE PROVISIONS FOR "RISK PREMIUM ADJUSTMENTS' AS ADOPTED BY THE BOARD OF DIRECTORS OF THE AUTHORITY. 2. INSPECTION THE AUTHORITY SHALL BE PERMITTED BUT NOT OBLIGATED TO INSPECT THE COVERED PARTY'S EW 7/1/90 PROPERTY AND OPERATIONS AT ANY TIME, NEITHER THE AUTHORITY'S RIGHT TO MAKE INSPECTIONS NOR THE MAKING THEREOF NOR ANY REPORT THEREON SHALL CONSTITUTE AN UNDERTAKING, ON BEHALF OF OR FOR THE BENEFIT OF THE COVERED PARTY OR OTHERS, TO DETERMINE OR WARRANT THAT SUCH PROPERTY OR OPERATIONS ARE SAFE. THE AUTHORITY MAY EXAMINE THE COVERED PARTY'S BOOKS AND RECORDS AT ANY TIME DURING THE MEMORANDUM PERIOD AND EXTENSIONS THEREOF AND WITHIN THREE YEARS AFTER THE FINAL TERMINATION OF THIS MEMORANDUM, AS FAR A5 THEY RELATE TO THE SUBJECT MATTER OF THIS COVERAGE. 3. COVERED PARTY'S DUTIES IN THE EVENT OF OCCURRENCE, CLAIM OR SUIT (A) IN THE EVENT OF AN OCCURRENCE REASONABLY LIKELY TO INVOLVE THE AUTHORITY, WRITTEN NOTICE CONTAINING PARTICULARS SUFFlCIENT TQ IDENTIFY THE COVERED PARTY AND ALSO REASONABLY OBTAINABLE INFORMATION WITH RESPECT TO THE TIME, PLACE AND CiRCUMSTANGES THEREOF, AND THE NAMES AND ADDRESSES OF THE INJURED AND OF AVAILABLE WITNESSES, SHALL BE GNEN BY OR FOR THE COVERED PARTY TO THE AUTHORITY OR ANY OF RS AUTHORIZED AGENTS AS SOON AS PRACTICABLE, AFTER THE INDMDUAL RESPONSIBLE FOR THE COVERAGE AT THE MEMBER COUNTY, OR HIS/HER DESIGNEE, HAS KNOWLEDGE OF THE OCCURRENCE. (B) IF CLAIM IS MADE OR SUIT IS BROUGHT AGAINST THE COVERED PARTY WHICH APPEAR5 LIKELY TO INVOLVE THE AUTHORITY, THE COVERED PARTY SHALL FORWARD TO THE AUTHORITY EVERY DEMAND, NOTICE, SUMMONS OR OTWER PROCESS RECENED BY HIM/HER ORHIS/HER REPRESENTATNE, IMMEDIATELY OR WITHIN A REASONABLE AMOUNT OF TIME AFTER THE INDMDUAL RESPONSIBLE FOR COVERAGE AT THE MEMBER COUNTY OR MIS/HER DESIGNEE HA5 KNOWLEDGE OF THE CLAIM OR SUIT. (C) THE COVERED PARTY SHALL COOPERATE WITH THE AUTHORITY AND UPON ITS REQUEST, ASSIST IN MAKING SETTLEMENTS, iN THE CONDUCT OF 5UITS AND IN ENFORCING ANY RIGHT TO CONTRIBUTION OR 1NDEMNIFY AGAINST ANY PERSON OR ORGANIZATION WHO MAY BE LIABLE TO THE COVERED PARTY BECAUSE OF LIABiLII'Y WITH RESPECT TO WHICH COVERAGE IS AFFORDED UNDER THIS MEMORANDUM, AND THE COVERED PARTY SHALL ATTEND HEARINGS AND TRIALS AND ASSIST IN SECURING AND GMNG EVIDENCE AND OBTAINING THE ATTENDANCE OF WITNESSES. THE COVERED PARTY SHALL NOT, EXCEPT AT ITS OWN COSTS, VOLUNTARILY MAKE ANY PAYMENT, ASSUME ANY OBLIGATION OR INCUR ANY EXPENSE; HOWEVER, IN THE EVENT THAT THE AMOUNT OF ULTIMATE NET LOSS BECOMES CERTAIN EITHER THROUGH TRIAL COURT JUDGMENT OR AGREEMENT AMONG THE COVERED PARTY, THE CLAIMANT AND THE AUTHORITY THEN THE COVERED PARTY MAY PAY THE AMOUNT OF ULTIMATE NET LOSS TO THE CLAIMANT TO EFFECT SETTLEMENT AND, UPON SUBMISSION OF DUE PROOF THEREOF, THE AUTHORITY SHALL INDEMNIFY THE COVERED PARTY FOR THAT PART OF SUCH PAYMENT WHICH lS IN EXCESS OF THE RETAINED LIMIT, OR WILL, UPON REQUEST OF THE COVERED PARTY, MAKE SUCH PAYMENT TO THE CLAIMANT ON BEHALF OF THE COVERED PARTY. (D) THE AUTHORITY, AT ITS OPTION, SHALL HAVE THE RIGHT AT ITS OWN EXPENSE TO INVESTIGATE ANY CLAIM AND/OR NEGOTIATE THE SETTLEMENT THEREOF, AS R DEEMS EXPEDIENT, BUT THE AUTHORITY SHALL NOT COMMIT THE COVERED PARTY TO ANY SETTLEMENT WITHOUT THE COVERED PARTY'S CONSENT. SHOULD THE CLAIMANT OR PLAINTIFF, AS THE CASE MIGHT BE, TENDER ABONA-FIDE, GOOD FAITH, SETTLEMENT DEMAND WHICH WHEN ADDED TO THE INCURRED DEFENSE COSTS IS IN EXCESS OF THE COVERED PARTY'S RETENTION, THE PAYMENT OF WHICH WOULD RESULT IN THE FULLAND FlNAL DISPOSITION OF SAID CLAIM OR SUIT, THEN IF SUCH SETTLEMENT DEMAND IS ACCEPTABLE TO EITHER (1) THE COVERED PARTY, OR (2) THE AUTHORITY (BUT NOT BOTH), THEN WITH REGARD TO THAT SETTLEMENT DEMAND: (7) IF SUCH SETTLEMENT DEMAND IS NOT ACCEPTABLE TO THE AUTHORITY AND THE COVERED PARTY TENDERS TO THE AUTHORITY AN AMOUNT EQUAL TO THE COVERED PARTY'S RETENTION LESS INCURRED DEFENSE COSTS, IF ANY, THE AUTHORITY SHALL THEN PAY ON BEHALF OF THE COVERED PARTY ALL SUMS WHICH THE COVERED PARTY SHALL BE LEGALLY OBLIGATED TO PAY AS DAMAGES, INCLUDING WITHOUT LIMITATION, THE COVERED PARTY'S RETENTION, PLUS FUTURE INVESTIGATION, ADJUSTMENT, APPRAISAL, APPEAL, POST JUDGMENT EIA T/1/90 INTEREST AND DEFENSE COSTS. SUCH INVESTIGATION, ADJUSTMENT, APPRAISAL, APPEAL, POSTJUDGMENT INTEREST AND DEFENSE COSTS SHALL 8E PAID BY THE AUTHORITY IN ADDITION TO THE APPLICABLE, MAXIMUM LIMIT OF LIABILITY UNDER THIS MEMORANDUM. HOWEVER, IN NO EVENT SHALL THE AUTHORITY'S AGREEMENT TO PAY ON BEHALF OF THE COVERED PARTY IXCEED THE LIMIT OF LIABILITY A5 STATED IN THE DECLARATIONS 1N ADDITION TO SUGH INVESTIGATION, ADJUSTMENT, APPRAISAL, APPEAL, POSTtiJUDGMENT INTEREST AND DEFENSE COSTS. SHOULD THE FULL AND FINAL DISPOSITION OF THE CLAIM, INCLUDING JUDGMENTS, SETTLEMENTS, INVESTIGATION, ADJUSTMENT, APPRAISAL, APPEAL, POST~JUDGMENT INTEREST AND DEFENS>= COSTS BE LESS THAN THE AMOUNT TENDERED BY THE COVERED PARTY, THE UNUSED PORTION OF THE TI=NDI=RED AMOUNT SHALL BE RETURNED TO THE COVERED PARTY BY THE AUTHORITY. (2) IF SUGH SETTLEMENT DEMAND iS NOT AGGEPTABI.E TO THE COVERED PARTY AND THE AUTHORITY TENDERS TO THE COVERED PARTY AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN THE COVERED PARTY'S RETENTION, LESS INCURRED DEFENSE COSTS, AND SAID SETTLEMENT DEMAND, OR THE APPLICABLE AMOUNT SPECIFIED IN THE LIMITS OF LIABILITY SECTION OF THE DECLARATIONS, WHICHEVER IS LESS, THEN THE AUTHORITY'S AGREEMENT TO PAY ON BEHALF OF THE COVERED PARTY FOR THE ULTIMATE NET LOSS HEREUNDER SHALL BE DISCHARGED AND TERMINATED AND THE AUTHORITY SHALL HAVE NO FURTHER OBIGAT[ONS WITH RESPECT THERETO. 4. APPEALS WHEN A LAWSUIT HAS PROCEEDED TO TRIAL COURT JUDGMENT AND NEITHER THE COVERED PARTY NOR THE AUTHORITY HAVE INVOKED THE PROVISIONS OF CONDRION 3. D (1) OR (2) ABOVE AND THE COVERED PARTY ELECTS NOT TO APPEAL A JUDGMENT IN EXCESS OF THE RETAINED LIMIT, THE AUTHORITY MAY ELECT TO DO SO AT ITS OWN EXPENSI=, BUT IN NO EVENT SHALL THE LIABILITY OF THE AUTHORITY FOR ULTIMATE NET LOS5 EXCEED THE APPLICABLE AMOUNT SPECIFIED IN THE LIMITS OF LIABILITY SECTION OF THE DECLARATIONS PLUS ALL DEFENSE COSTS NECESSARY AND INCIDENT TO SUCH APPEAL 5. ACTION AGAINST THE AUTHORITY NO ACTION SHALL LIE AGAINST THE AUTHORITY WITH RESPECT TO ANY ONE OCCURRENCE UNLESS, AS A CONDITION PRECEDENT THERETO, THE COVERED PARTY SHALL HAVE FULLY COMPLIED WITH ALL THE TE=RMS OF THIS MEMORANDUM, NOR UNTIL THE AMOUNT OF THE COVERED PARTY'S OBLIGATION TO PAY AN AMOUNT OF ULTIMATE NET LOSS IN EXCESS OF THE RETAINED LIMIT SHALL HAVE BEEN FINALLY DETERMINED EITHER 13Y JUDGMENT AGAINST THE COVERED PARTY AFTERACTUAL TRWL OR BY WRITTEN AGREEMENT OF THE COVERED PARTY, THE CLAIMANT AND THE AUTHORITY. ANY PERSON OR ORGANIZATION OR THE LEGAL REPRESENTATIVE THEREOF WHO HAS SECURED SUCH JUDGMENT OR WRITTEN AGREEMENT SHALL THEREAFTER BE ENTITLED TO RECOVER UNDER THIS MEMORANDUM THE EXTENT OF THE COVERAGE AFFORDED BY THIS MEMORANDUM. NOTHING CONTAINED IN THIS MEMORANDUM SHALL GIVE ANY PERSON OR ORGANIZATION ANY RIGHT TO JOIN THE AUTHORITY AS A CO-DEFENDANT IN ANY ACTION AGAINST THE COVERED PARTY TO DETERMINE THE COVERED PARTY'S LIABILITY. BANKRUPTCY OR INSOLVENCY OF THE COVERED PARTY SMALL NOT RELIEVE THE AUTHORITY OF ANY OF RS OBLIGATIONS HEREUNDER. 6. INSURANCE IF COLLECTIBLE INSURANCE WITH AN INSURER ES AVAILABLE TO THE COVERED PARTY COVERING A LOSS ALSO COVERED HEREUNDER (WHETHER ON A PRIMARY, IXCESS OR CONTINGENT BASIS), THE COVERAGE HEREUNDER SHALL BE IN EXCESS OF, AND SHALL NOT CONTREBUTE WITH, SUCH INSURANCE; PROVIDED THAT THIS CLAUSE DOES NOT APPLY WITH RESPECT TO EXCESS INSURANCE PURCHASED SPECIFICALLY TO I3E kN EXCESS OF THIS MEMORANDUM, OR TO INSURANCE OR REINSURANCE WHICH IS INTENDED TO PROVIDE THE REMAINDER OF THE LIMIT OF EIA 7/i/9D 10 LIABILITY STATED fN THE DECLARATIONS OF THIS MEMORANDUM WHEN THE COVERAGE AFFORDED UNDER THIS MEMORANDUM PROVIDES LESS THAN 100 PERCENT OF TWE LIMIT SET FORTW IN THE DECLARATIONS. 7. SUBROGATION THE AUTHORITY SHALL BE SURROGATED TO THE EXTENT OF ANY PAYMENT HEREUNDER TO ALL THE COVERED PARTY'S RIGHTS OF RECOVERY THEREFORE; AND THE COVERED PARTY SHALL DO NOTHING AFTER LOSS TO PREJUDICE SUCH RIGHTS AND SHALL DO EVERYTHING NECESSARY TO SECURE SUCH RIGHTS. ANY AMOUNT SO RECOVERED SHALL BE APPORTIONED AS FOLLOWS: ANY INTEREST {INCLUDING THE COVERED PARTY'S) HAVING PAID AN AMOUNT IN EXCESS OF THE RETAINED LIMCf PLUS THE LIMIT OF LIABILITY HEREUNDER SHALL SE REIMBURSED FIRST TO THE EXTENT OF ACTUAL PAYMENT. THE AUTHORITY SHALL BE REIMBURSED NEXT TO THE EXTENT OF ITS ACTUAL PAYMENT HEREUNDER. IF ANY BALANCE THEN REMAINS UNPAID, IT SHALL BE APPLIED TO REIMBURSE THE COVERED PARTY. THE EXPENSES OF ALL SUCH RECOVERY PROCEEDINGS SHALL BE APPORTIONED IN THE RATIO OF RESPECTNE RECOVERIES. IF THERE IS NO RECOVERY IN PROCEEDINGS CONDUCTED SOLELY BY THE AUTI-[ORITY, IT SHALL BEAR THE EXPENSES THEREOF. 6. CHANGES NOTICE TO THE AUTHORITY OR ANY AGENT OF THE AUTHORITY OR KNOWLEDGE POSSESSED BY THE AUTHORITY OR ANY AGENT OF THE AUTHORITY OR SY ANY OTHER PERSON SHALL NOT EFFECT A WANER OR GRANGE 1N ANY PART OF THIS MEMORANDUM OR STOP THE AUTHORITY FROM ASSERTING ANY RIGHT UNDER THE TERMS OF THIS MEMORANDUM, NOR SHALL THE TERMS OF THIS MEMORANDUM BE WANED OR CHANGED, EXCEPT BY ENDORSEMENT ISSUED TO FORM A PART OF THIS MEMORANDUM. 9. ASSIGNMENT ASSIGNMENT OF INTEREST UNDER THIS MEMORANDUM SHALL NOT BIND THE AUTHORITY UNTIL ITS CONSENT 15 ENDORSED HEREON; IF, HOWEVER, THE COVERED PARTY SHALL DIE, SUCH COVERAGE AS IS AFFORDED BY THIS MEMORANDUM SHALL APPLY [A) TO THE CavEREg PARms LEGAL REPRESENTATNE, A5 THE COVERED PARTY, BUT ONLY WHILE ACTING WITHIN THE SCOPE OF HIS/HER DUTIES A5 SUCH, AND [B) WITH RESPECT TO THE PROPERTY OF THE COVERED PARTY, TO THE PERSON HAVING PROPER TEMPORARY CUSTODY THEREOF, AS COVERED PARTY, BUT ONLY UNTIL TWE APPOINTMENT AND QUALIFICATION OF THE LEGAL REPRESENTATNE. 10. FUNDING OF MEMBER COUNTY'S RETAINED LIMIT THE MEMBER COUNTY AGREES TD MAINTAIN A LOSS FUND fN AN AMOUNT TO BE DETERMENED BY MUTUALAGREEMI=NT AMONG THE MEMBER COUNTY, THE SERVICING ORGANIZATION DESIGNATED 1N THE MEMORANDUM DECLARATIONS [IF ANY}, AND THE AUTHORITY FOR THE PAYMENT OF ALL CLAIMS AND EXPENSES FAI..LING WffHIN THE MEMBER COUNTY'S RETAINED LIMIT. THES FUND SHALL BE REIMBURSED AS NECESSARY TO MAINTAIN A BALANCE IN ACCORDANCE WITH THETERMS OFTHE 5ERVICING AGREEMENT BETWEEN THE MEMBER COUNTY AND THE SERVICWG ORGANIZATION (IF ANY). IN THE EVENT OF CANCELLATION, EXPIRATION OR REVISION OF THE CONTRACT BETWEEN THE MEMBER COUNTY AND THE SERVICING ORGANIZATION, THE MEMBER COUNTY SHALL NOTIFY THE AUTHORITY THEREOF WITHIN THIRTY DAYS OF THE EFFECTNE DATE OF SUCH CANCELLATION, EXPIRATION OR REVISION; BUT FAILURE TO NOTIFY THE AUTHORITY SHALL NOT INVALIDATE THE COVERAGE. EIA 7/1 /90 11 ~ 3. CANCELLATION THIS MEMORANDUM MAYBE CANCELLED BY THE AUTHORITY IN ACCORDANCE WITH SECTION 10.2, REMEDIES ON DEFAULT, OF THE LIAB1LITY RISK COVERAGE AGREEMENT. 12. MEMBER COUNTY THE MEMBER COUNTY NAMED iN THE DECLARATIONS IS AUTHORIZED TO AGT ON BEHALF OF ALL COVERED PARTIES WITH RESPECT TO THE GMNG AND REGEMNG OF NOTICE OF CANCELLATION AND RECEMNG ANY RETURN PREMIUM THAT MAY BECOME PAYABLE UNDER THIS MEMORANDUM. THE MEMBER COUNTY NAMED iN THE DECLARATIONS iS RESPONSIBLE FOR THE PAYMENT OF ALL PREMIUMS BUT THE OTHER COVERED PARTIES JOINTLY AND SEVERALLY AGREE TO MAKE SUCH PREMIUM PAYMENTS IN FULL IF THE MEMBER COUNTY FAILS TO PAY THE AMOUNT DUE WITHIN THIRTY DAYS AFTER THE AUTHORITY GNES A WRITTEN DEMAND FOR PAYMENT TO THE MEMBER COUNTY. 13. SEVERABILITY OF INTERESTS THE TERM "THE COVERED PARTY" IS USED SEVERALLY AND NOT COLLECTNELY, BUT THE INCLUSION HEREIN OF MORE THAN ONE COVERED PARTY SHALL NOT OPERATE TO INCREASE THE LIMITS OF THE AUTHORITY'S LIABILITY. 14. NON-RENEWAL IN THE ANT OF NON-RENEWAL BY THE AUTHORITY, NOTICE SHALL BE GNEN TO THE MEMBER COUNTY NOT LESS THAN SIXTY DAYS PRIOR TO EXP1RATlDN. EIA 7/9/90 12 Exhibit C -Liability Claims Quality Con#rol Guidelines CSAC-ETA LIABII.ITY CLAIMS QUALITY CONTROL GUIDELINES I. Claims Investigation A. Factual investigation within 45 days of Count}~s knowledge of claim, including statements from participants and witnesses. (Answer questions whv, what, where, when, and why.} B. Deveivp liability issues, including immunities, comparative negligence, joint tort feasors and joint and several liability. C. Begin to develop information of damages. 1. Property damage. 2. Nature and extent of injuries. 3. Medical costs. 4. Lost wages. 5. Other damages. D. Obtain and review contracts that may be in effect relating to specific accidents. L Hold-harmless indemnity agreements. 2. Additional insured requirements. E. Obtain defective products and/or other evidence, and hold if at all possible, or at least locate where it is being held. Obtain product information for the file. F. Utilize experts appropriately on cases. 1 G. Maintain membership in Index Bureau. 1. Report all claims to Index Bureau 2. Follow up on Index Bureau information H. Arrange appraisals far damaged property. I. Timely report to excess carrier. II. Tort Claim Requirements All notices (pertaining to claim insufficiency, returzung late claims, claims rejections, etc.) shall be timely done in accordance with the relevant Government Code provisions. III. Documentation A. Accurate reserves shall be done, with facts lmown, within thirty days of receipt of investigative report. Expenses shall be included. B. File shall contain reports necessary to document the decisions made. C. Photos, diagrams, plans, contracts, medical and law enforcement reports shall be in the claims file in a timely fashion. IV. Case Settlement Factors A. Reasonable settlement in light of damages, injury and liability. B. Timeliness of settlement. C. Contributions from joint tort feasors considered. D. Settlement evaluation and authority documented. E. Proper releases secured. 2 V. Litigated Files A. Defense plan in file. B. Defense attorney evaluation in file. C. Proper follow up for investigation requested by defense attorney. D. Defense cost controlled by the county and depositions and other defense expenses approved by the county. E. Timely recommendations from defense firms regarding settlements and trial preparation. F. Results and total expenses documented. 3 Exhibit D -Formulas METHODOLOGY FOR CALCULATING TOTAL RI5K PREMIUM AND FORMULA FOR CALCULATING RISK PREMIUM PROPORTION I. METHODOLOGY FOR CALCULATING TOTAL RI5K PREMIUM Ultimate Primary Limits Lasses far prior years should be determined using the actual historical experience of the counties participating in the CSAC-EIA pooled self-insurance program. For example, in the 1986 CSAC-EIA premium study conducted by Coopers & Lybrand dated March, 1986 (the "1986 Study"}, analyses were performed with loss and ALAE were limited to $50,000 and $100,000. Other loss limits should be acceptable {e.g. $25,000, $75,000 or $150,000}. Ultimate Primary Limits Losses were determined in the 198b Study by averaging the estimates obtained from an incurred loss development projection and a paid loss development projection. Other acceptable actuarial techniques include: Frequency times Severity projections; and Exposure times Pure Premium projections. Additional tests and procedures may be required if changes in reserve strength and Payout Patterns appear in future evaluations. Trended Ultimate Losses shall be determined by adjusting Ultimate Primary Limits Losses to current levels to reflect Frequency, Severity and exposure inflation trends. All such trend rates should be developed from a large body of insurance data for risks similar to those of the participating counties. The Trended Ultimate Losses should be converted to an expected risk premium rate by relating the losses to a selected exposure base. The 1985 Study used payroll as the exposure base; other acceptable exposure bases would include budget or a composite base made up of several components such as payroll, budget, population, vehicles, police officers, etc. The expected risk Pure Premium rate for losses falling in the pooled layer should be calculated by fitting a theoretical claim size distribution to actual claims data. It would be appropriate to use a body of data significantly larger than that comprised by the participating counties for this calculation. The resulting distribution can be used to project excess losses as a percentage of primary losses. A 1 modified, shifted pareto distribution was used in the 1986 Study. Future tests may indicate that alternate distributions produce a better fit of the data. The undiscounted Total Risk Premium will equal the exposure base times the Pure Premium rate. The selected claim size distribution, the claim count distribution and the expected claim count are used to estimate the probability that the actual losses will exceed a specified level. Several levels of confidence are evaluated and the minimum aggregate risk premium is set at the expected level of ultimate losses or at such other higher level which the actuary states is the minimum acceptable level given the current status of the program. The present value of the Total Risk Premium is calculated using an expected Payout Pattern and an assumed interest rate. An interest rate of 8% was used in the 1986 Study. Other actuarial methods may be used to supplement the methods set forth herein. Defined Terms: ALAS - (Allocated Loss Adjustment Expense) - means the allocated legal costs and expenses per claim. Fre enc means the number of claims divided by the exposure base. ISO means Insurance Services Office, a national ratemaking and advisory organization. Payout Pattern means the expected rate at which ultimate losses are to be paid out. ~, Pure Premium means the average loss per unit of exposure. Severity means the average claim size. SIR means self-insured retention; in the Memorandum SIR is referred to as Insured's Retained Limit. Trended Ultimate Losses means projected ultimate losses for the proposed period of coverage. 2 Ultimate Primary Limits Losses means the ultimate undiscounted cost of liability claims, capped at a specified amount, arising out of occurrences that take place in a specified period of time. 3 - iI. FoRMULA FoR CALCULATING RisK PREMIUM PROPORTION ISO FORMULA A-iso = Net expenditures for each county for year prior to coverage year. Net expenditures = (total estimated expenditures} - (capital expenditures + public assistance). B-iso = ISO rate determined in accordance with the fallowing schedule: County Population ISO Rate under 30,DOp 14.787 10,001-25,000 9.626 25,001-50,000 9.513 50,001-100,000 8.8D3 100,001-250,000 8,626 over 250,000 6.9008 C-iso ~ Base premium = {A-iso/1000 for each county) X (B-iso for each county). D-iso = Roads charge = (number of miles of county owned/maintained roads) X $85.30. E-iso = Base premium including roads = {C-iso + D-iso for each county). F-iso = Adjustment for 100,000 SIR base = (E-iso X 40% for each county}. G-iso =SIR discount factors for 100,000 - $1 million layer as determined by independent actuary. These factors subject to change annually. The 1986-87 factors are: SIR SIR Factor SiR SIR Factor 100,000 1.000 450,000 .326 150,D00 .812 500,000 .281 200,000 .681 600,000 .206 250,000 .581 700,000 .143 300,000 .501 800,000 .089 350,000 .433 900,000 .042 400,000 .376 1,000,000 .000 4 H-iso = Premium charge for each county for SIR to $1 million layer = (~'-].50 X G-iso) I=iso = SIR discount factors for $~.-5 million layer as determined by independent actuary and subject to annual revision. The 1986-87 factors are: SIR 1,000,000 1,500,000 2,000,000 CTT? T.'~r~nr 1.000 .733 .549 SIR 3,000,000 4,000,000 5,000,000 SIR Factor .300 .129 .ooo J-iso = Premium charge for each county for $1-S million layer = [(E-iso X 10%) + (65% X 10% X E-iso)] X I-iso. K-iso = Premium charge for each county for $5-10 million layer = [{J-iso / I-iso) X 65%]. L-iso - Premium charge for each county for SIR - $10 million _ {H-iso + J-iso + K-iso). ISO ALLOCATION PERCENTAGES M-iso = Percent participation from SIR to $1 million W [(H-iso for each county / sum of all H-iso) X 100]. Sum of all M-iso = 100%. N-iso = Percent participation $1-5 million = [(J-iso for each county / sum of all J-iso) X 100]. Sum of all N-iso = 100%. O-iso =Percent participation from $5-10 million = [(K-iso for each county / sum o£ all K-iso) X 100j. Sum of all O-iso -= 100%. P-iso = Percent participation £rom SIR to $10 million = [(L-iso for each county / sum of all L-iso) X 100]. Sum of all P-iso = 100%.. MATRIX FORMULA A-mrx = Total payroll for each county for covered operations (excludes hospital, transit, and airport) for year prior to coverage year less sheriff department payroll. 5 -- B-mrx = Sheriff department payroll for each county for year prior to coverage year. C-mrx = Base premium charge far first $100,000 limits for each county = [(2.5% X A-mrx) + {3.5% X B-mrx)]. D-mrx = Base premium charge for $100,000 to $1 million layer for each county = (40% X C-mrx} ~ (30% X [(40% X C-mrx} ~ C-mrx]}. E-mrx = Base premium charge far SIR to $1 million layer for each county = (D-mrx X G-iso}. F-mrx =Base premium charge for $1-5 million layer for each county = [10% X {C-mrx + D-mrx)] + (65% X [10% X (C-mrx + D-mrx)]) G-mrx = Base premium charge for $1-5 million layer adjusted for SIR for each county = (F-mrx X I-iso). H-mrx = Base premium charge for $5--10 million layer for each county = 65% X (F-mrx - [10% X (C-mrx ~- D-mrx)}}. I-mrx = Total base premium from SIR to $10 million for each county = ( E-mrx -~ G-mrx + H-mrx) . J-mrx = Ratio of street mileage to population for each county = (number of miles of county owned/maintained roads / county population). ADJUSTMENTS TO BASE PREMIUM K-mrx = Roads surcharge = If J-mrx is greater than or equal to .003, then K-mrx = (10% X I-mrx). If J-mrx is less than .003, then K-mrx = 0. L-mrx = Waterfront surcharge = If county has exposure of county owned/maintained waterfront property {i.e., beaches, river, lake, etc.), then L-mrx = (25% X I-mrx). If county has no waterfront property, then L-mrx = 0. M-mrx = Credit for no large cities = If county has no cities over 200,000 in population, then M-mrx = (15% X I-mrx). If county has one or more cities over 200,000 in population, then M-mrx = 0. N-mrx = Loss prevention credit = Percent of time a county staff person spends on loss prevention/safety is determined 6 -~ {i.e. full-time loss specialist = 100%}. N-mrx = {percent of time X 10% X I-mrx). 0-mrx = Risk management credit = Percent of time a county staff person spends on risk management is determined (i.e. full-time risk manager = 100%). 0-mrx = (percent of time X 10% X I-mrx). P-mrx =Size credit = Determined by population of each county in accordance with the following schedule. Population Size Credit under 10,000 0 10,001-25,000 5% 25,001-50,000 YO% 50,001-100,000 15% 100,001-250,000 20% over 250,000 25% P-mrx = (size credit X I-mrx). 0-mrx = Total adjustments to base premium = [K-mrx + L-mrx - (M-mrx + N-mrx + 0-mrx ~- P-mrx)]. ADJUSTED PREMIUM CHARGES R-mrx = Premium charges for each county for the SIR to $1 million layer = [E-mrx + (E-mrx / I-mrx X Q-mrx)]. S-mrx = Premium charges £or each county for the $1-5 million - layer = [G-mrx + (G-mrx / I-mrx X Q-mrx}]. T-mrx =Premium charges for each county for the $5-10 million layer = [H-mrx + (H-mrx / I-mrx X Q-mrx)]. U-mrx = Total premium charges for each county far limits SIR to $10 million = (R-mrx + S-mrx -~ T-mrx). MATRIX ALLOCATION PERCENTAGES V-mrx = Percent participation from SIR to $1 million = [(R-mrx far each county / sum of all R-mrx) X 100]. Sum of all V-mrx = 100%. W-mrx = Percent participation $1-5 million = [S-mrx for each county / sum of all S-mrx) X 100]. Sum of all W-mrx = 100%. 7 -- X-mrx =Percent participation $5-10 million = [T-mrx for each county / sum of all T=mrx) X 100]. Sum of all X-mrx = 100%. Y-mrx = Percent participation SIR to $10 million = [U-mrx for each county / sum of all U-mrx} X 100]. Sum of all Y-mrx - 100%. ACTUARY'S FORMULA A-act = Total payroll for each county for covered operations {excludes hospital, transit, and airport) for year prior to coverage year. B-act = Rate per $100 of payroll for layer $100,000 to $1 million as determined by an independent actuary. C-act = Rate per $100 of payroll for layer $1-5 million as determined by an independent actuary. - D-act = Rate per $100 of payroll for layer $5-10 million as determined by an independent actuary. E-act = Initial premium charge for each county far layer SIR to $1 million = [{A-act / 100) X B-act X G-iso]. F-act = Initial premium charge far each county for layer $1-5 million = ((A-act / 100) X C-act X I-iso]. G-act = Initial premium charge for each county for layer $5-10 million = [{A-act / 100} X D-act]. ACTUARY'S ALLOCATION PERCENTAGES H-act = Percent participation from SiR to $1 million = [(E-act for each county / sum of all E-act) X 100]. Sum of all H-act ~ 100%. I-act = Percent participation of $1-5 million = [(F-act for each county / sum a£ all F-act) X 100]. Sum of all I-act 100%. J-act = Percent participation $5-10 million = [(G-act for each county / sum of all G-act) X 100]. Sum of all J-act = 100%. s _ COMPOSITE PREMIUMS K-act = Composite premium for each county SIR to $l million [M-iso X {sum of all E-act / 3)] + [V-mrx X {sum of all E-act / 3}] + [H-act X (sum of all E-act / 3)]. L-act = Composite premium for each county $1-S million = [N-iso X (sum of all F-act / 3)] + [W-mrx X (sum of all F-act / 3}] + [I-act X {sum of all F-act / 3)]. M-act = Composite premium for each county $5-10 million [0-iso X (sum of all G-act / 3)] + [X-mrx X (sum of all G-act / 3)] + [J-act X (sum of all G-act / 3)]. X-MOD CALCULATION A-xmd = Total of all total incurred losses between $0 and $50,000 for each county for the most recent 5 fiscal years ending with the fiscal year 2 years prior to the coverage year. B-xmd = Total of all incurred losses between $50,000 and $Z million for each county far the most recent 5 fiscal years ending with the fiscal year 2 years prior to the coverage year. C-xmd = Total of all total incurred losses between $0 and• $1 million = (A-xmd + B-xmd). D-xmd = Total payroll for each county for covered operations for the most recent 5 fiscal years ending with the fiscal year 2 years prior to the coverage year. E-xmd = Primary rate = [(sum of all A-xmd} / (sum of all D-xmd)]. F-xmd = Excess rate = [(sum of all B-xmd) / (sum of all D-xmd)]. G-xmd = Overall rate = [(sum of all C-xmd) / (sum of all D-xmd). H-xmd = Expected losses for each county = (D-xmd X G-xmd). I-xmd = Expected primary losses for each county = (D-xmd X E-xmd). J-xmd = Expected excess losses for each county = (D-xmd X_ F-xmd). 9 K-xmd ~ "W" value based upon 10% H-xmd) taken from the California Plan--1951 using the mast recent L-xmd = "B" value based upon 10% H-xmd) taken from the California Plan--3951 using the most recent M-xmd = "1-w" value = (1 - K-xmd of expected losses (10% X Experience_Ratin available rate pages. of expected losses (10% X Experience_Rating available rate pages. N-xmd ~ Rated excess losses = (K-xmd X B-xmd). 0-xmd = Rated expected excess losses = (M-xmd X J-xmd). P-xmd = Ratable losses = (A-xmd + N-xmd ~- O-xmd + L-xmd). -xmd = Expected losses plus "B" _ (H-xmd + L-xmd). R-xmd = Experience modification = (P-xmd / Q-xmd). FINAL PREMIUM CALCULATIONS N-act = Experience modification far layers $1-10 million in accordance with the following schedule: R-xmd N-act R-xmd N-act .00-.50 .9D 1.51-1.70 1.03 .51-.60 .92 1.71-1.90 1.04 .61-.7D .94 1.91-2.10 1.05 .71-.80 .96 2.11-2.30 1.06 .81-.90 .98 2.31-2.50 1.07 .91-1.10 1.00 2.51-2.70 1.08 1.11-1.30 1.01 2.71-2.90 1.09 1.31-1.50 1.02 2.90 1.10 0-act ~ Modified premium for each county SIR to $1 million limits = (K-act X R-xmd). P-act = Modified premium for each county $1-5 million limits _ (L-act X N-act). -act = Modified premium for each county $5-10 million limits = (M-act X N-act). R-act = Final premium charge for each county SIR to $1 million limits = ([(sum o£ all E-act) / (sum of all O-act}] X O-act). 10 - S-act = Final premium charge for each county $1-5 million limits = {[(sum of all F-act) / (sum of all P-act)] X P-act). T-act = Final premium charge far each county $5-10 million limits = {[(sum of all G-act) / (sum of all Q-act)] X Q-act). U-act = Total final annual risk premium for each county = {R-act + S-act + T-act}. FINAL RISK PREMIUM PROPORTIONS V-act = Final percent participation from SIR to $1 million = [{R-act for each county / sum of all R-act} X 100]. Sum of all V-act = 100%. W-act = Final percent participation from $1 - 5 mil lion [(S-act for each county / sum o£ all S-act) X 100]. Sum of all W-act = 100%. X-act = Einal percent participation from $5 - 10 mi llion [(T-act for each county / sum of all T-act} X 100]. Sum of all X-act ~ 100%. Y-act = Final percent participation from SIR to $1D million = [(U-act for each count y / sum of all U-act} X 100]. Sum of all Y-act = 100%. 11 FORMULA FOR CALCULATING RISK PREMIUM ADJUSTMENT STEP 1 - DEVELOP DATA INPUTS Axp = Projected ultimate net losses and total paid losses to date (as calculated in Section ~#.S in this agreement} for a given coverage year {x) for a given pool (p). Bxyp = Risk Premium for a given Providee (y} for a given coverage year (x} far a given pool (p}. Ixyp = Risk Premium Proportion for a given Providee (y) for a given coverage year {x) for a given pool (p). Zyp = Risk Premium Adjustments already collected and/or scheduled to be collected in the future for a given Providee (y) for a given pool {p). C = Total investment income for ali prior coverage years on the Claims Payment Fund not transferred to the Basic Premium Payment Fund. Cy ~ C(the sum of By divided by the sum of B} x = a given coverage year y = a given Providee p = a given risk sharing pool {e.g. SiR to $1,000,000; - $1,000,000 to $5,000,000; $5,000,000 to $10,000,000); provided that when all Providees are in all pools, p = one pool. STEP 2 Determine Incremental Increase in Amount of Risk Premium Adjustment Required for a Given Providee {y}. Qsyp = Incremental increase to Risk Premium Adjustment for current coverage year (s) for a given pool (p) for a given Providee (y). Dxyp = Axp {Ixyp) s = current coverage year Eyp = The sum o£ Dyp for all coverage years - (the sum of Byp for all coverage years + Zyp + Cy). 12 TEST 1 If Eyp is greater than or equal to 0 then Qsyp = Eyp/5 for next five succeeding coverage years. TEST 2 If Eyp is less than or equal to 0, then Qsyp = 0. STEP 3 Calculate Risk Premium Adjustment for Current Coverage Year {s}. Rsyp = Risk Premium Adjustment for current coverage year {s) for a given pool (p), for a given County (y). This equals the sum of Oyp for last four coverage years + 4syp. Rsy = Total Risk Premium Adjustment to be levied and collected for a given County in current coverage year, or the sum of Rysp for all pools for a given coverage year for a given County. STEP 4 Calculate Maximum Refund for current Coverage Year Mp = Maximum refund for a given pool If the sum of Eyp for all Counties is greater than or equal to 0, then Mp ~ 0. If the sum of Eyp for all Counties is less than or equal to 0, then Mp = the sum of Ep. 13