Loading...
HomeMy WebLinkAboutCC RESO 15,088 San Diego Pooled Insurance Program Authority (SANDPIPA)RESOLUTION NO. 15,088 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY ENTERING SAN DIEGO POOLED INSURANCE PROGRAM AUTHORITY (SANDPIPA) WHEREAS, pursuant to the provisions of sections 990, 990.4, 990.8, and 6500 et seq. of the Government Code, the City of National City wishes to enter into a joint powers agreement with various other cities, entitled "San Diego County Cities Joint Powers Agreement Creating the San Diego Pooled Insurance Protection Authority For Municipal Entities" ("Agreement"), for the purpose of participating in the joint powers authority ("Authority") created thereby, to provide for and administer a risk management and insurance program, as more fully set forth in said Agreement; and WHEREAS, the proposed liability insurance coverage to be offered by said joint powers authority under the Memorandum of Insurance proposed shall be effective as of April 1, 1986; and WHEREAS, said risk management program offers significant advantages to the city in terms of cost, liability protection, and services, and entering such program, on the conditions hereinafter set forth, appears to be in the best interest of the city. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of National City as follows: Section 1. That the City of National City hereby agrees, pursuant to the aforementioned Joint Powers Agreement, a copy of which is attached hereto as Exhibit "A" and incorporated herein by reference, to enter said risk management program on the following conditions: a. The total cost for the city for the first year of participation in such risk management and insurance program, to be offered by the Authority upon its formation, shall be paid in the amount of $374,473 to obtain coverage as of April 1, 1986; b. The pooled insurance program coverage shall be offered by the Authority in accordance with the terms and conditions of the proposed "Memorandum of Insurance," dated September 4, 1986, a copy of which is attached hereto as Exhibit "B" and incorporated herein by reference. Section 2. That the city hereby agrees to $150,000 as its retained limit for the first year of participation in the Authority for such pooled insurance coverage. Section 3. That the Treasurer of the City of National City is hereby authorized to pay to the Authority, upon its formation and its delivery to the city of the proposed Memorandum of Insurance after its approval by the Authority, the amount required for its first premium together with other costs of participation after such amount is confirmed by the Authority in writing. Section 4. That the Mayor is authorized and directed to execute the aforementioned Joint Powers Agreement. Section 5. That the Clerk is directed to certify a copy of this resolution and to forward the same resolution and the signed Agreement to the Authority immediately upon its formation. PASSED and ADOPTED this 23rd day of September, 1986. ATTEST: Campbell, Ci C1erk APPROVED AS TO FORM: A}LGeo iser, III -City Attorney SAN DIEGO COUNTY CITIES JOINT POWERS AGREEMENT FOR RISK MANAGEMENT AND RELATED INSURANCE COVERAGES CREATING THE SAN DIEGO POOLED INSURANCE PROGRAM AUTHORITY FOR MUNICIPAL ENTITIES (SANDPIPA) WHEREAS, certain signatory members of the San Diego County Cities Joint Powers Agreement for Risk Management and Related Insurance Coverages desire to create a separate and independent joint powers authority for the purpose of establishing and administering an insurance program involving risk sharing; and WHEREAS, participation by eligible municipal entities shall be wholly voluntary; and WHEREAS, Government Code Section 6500 et seq. provides that two or more public agencies may, by agreement, jointly exercise any power common to the contracting parties; and WHEREAS, 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 broker, or any combination of these; and WHEREAS, 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 specified in Government Code Section 990.4; and WHEREAS, each of the parties to this agreement desires to join together with the other parties for the purpose of pooling certain self -insured claims and losses, as provided in Government Code Section 990.8,-and jointly purchasing excess insurance and administrative services in connection with an insurance program for said parties; NOW, THEREFORE, for and in consideration of the mutual advantages to be derived therefrom and in consideration of the execution of this agreement by other local public entities, it is hereby agreed that the San Diego Pooled Insurance Program Authority For Municipal Entites be created as follows: SAN DIEGO POOLED INSURANCE PROGRAM AUTHORITY FOR MUNICIPAL ENTITES This agreement is made and entered into in the County of San Diego, State of California, by and among the cities organized and existing under the laws of the State of California, hereinafter referred to collectively as "cities" and individually as "city," which are parties signatory to this agreement. Said cities are sometimes referred to herein as "parties." EXHIBIT A ARTICLE 1 DEFINITIONS The following definitions shall apply to the provisions of this agreement: A. "Assessment" shall mean the amount due and payable by a city in excess of premium for valid claims. B. "Auditor" shall mean that person appointed by the Board who is required to draw warrants on behalf of the Authority and provide for an annual audit, in accordance with law and the bylaws. C. "Authority" or "SANDPIPA" shall mean the San Diego Pooled Insurance Program Authority for Municipal Entities created by this agreement. D. "Board of Directors" or "Board" shall mean the governing body of the Authority. E. "City" or "cities" shall mean general law or charter cities, established under the laws of the State of California, which are signatory members of the Authority; provided, however, that this definition shall not be construed to prevent the Authority from extending insurance coverage to any subsidiary, wholly -owned, or affiliated municipal entity upon terms and conditions approved by the Board. F. "Claim" shall mean demands made against the cities which are within the Authority's insurance program. G. "Clerk" shall mean that person of the Authority who is so appointed by the Board under the bylaws. H. "Earned premium" shall mean earned premium as defined in the California Insurance Code. I. "Excess Insurance" shall mean that insurance which may be purchased on behalf of the Authority to protect the funds of the cities against catastrophic losses or an unusual frequency of losses during a single year. J. "Executive Committee" shall mean the Executive Committee of the Board of Directors of the Authority. K. "Fiscal Year" shall mean that period of twelve months which is established as the fiscal year of the Authority. L. "Incurred Loss" shall mean total expenses for payment of a claim, including reserves therefor. 2 M. "Insurance" shall mean self-insurance through a risk - pooling funded program, and/or any commercial insurance contract, as the context requires. N. "Insurance Program" shall mean insurance and risk management programs offered by or through the Authority. 0. "Insurance Year" shall mean a period of time, usually twelve (12) months, determined by the Executive Committee into which each element of the insurance program is segregated for ease in determining premiums, incurred losses, and assessments. P. "Memorandum of Insurance" shall mean the basic liability self-insurance program funded by risk -sharing, issued through the Authority in policy form. Q. "Premium" shall mean the amount determined by the Board annually as necessary to fund the insurance program of the Authority. R. "Pro forma statement" shall mean a projection of estimated losses, expenses, premiums, assessments, and other revenues for a reasonable period, for any insurance offered by the Authority. S. "Program Underwriter" shall mean an individual or legal entity, either under contract with or employed by SANDPIPA, to provide underwriting services. T. "Reserves" shall mean funds not yet committed to the payment of a valid claim but held for the payment of claims. U. "Risk management" shall mean the process of identifying, evaluating, reducing, transferring, sharing, and eliminating risk. Risk management includes various elements of insurance, law, administration, technology, accounting, and general business to effectively manage hazards and losses to which member cities may be exposed. V. "Risk Manager" shall mean the manager of the day-to-day affairs of the Authority, appointed by the Board. W. "Risk pooling or sharing" shall mean any common fund: (1) which is composed of cash, investments permitted by Government Code Section 53601 et seq., or other assets; (2) to which two or more members of the Authority have agreed to contribute in accordance with the terms of a contract or memorandum of insurance in which participation is voluntary; (3) from which claims and risk management costs of any contributor to that common fund shall be paid; and (4) which operates in accordance with this joint powers agreement. 3 X. "Self-insurance" shall mean providing for claims, losses, and risk management by risk -pooling and the maintenance of reserve funds by a city. Y. "Self -insured retention" or "retained limit" shall mean the amount below which a city is liable, at its own expense, under the Memorandum of Insurance. Z. "Underwriting Committee shall mean a standing committee to be established by the Board, comprised of a chairman (elected from the Board) and two or more members -at -large from participating agencies. ARTICLE 2 PURPOSES This agreement is entered into by cities pursuant to the provisions of Government Code Sections 990, 990.4, 990.8, and 6500 et seq. in order to provide comprehensive and economical public liability coverage and coverage for other risks to which the Board of Directors may agree. Additional purposes are to reduce the amount and frequency of losses and to decrease the cost incurred by cities in the handling and litigation of claims. These purposes shall be accomplished through the exercise of the power of such cities jointly in the creation of a separate entity, the San Diego Pooled Insurance Program Authority For Municipal Entities (the "Authority"), to administer an insurance program pursuant to which cities will pool certain losses, claims, and funds, jointly purchase excess insurance (if available) and administrative and other services, including claims adjusting, data processing, risk management consulting, loss prevention, legal, and related services. It is also the purpose of this agreement to provide, to the extent permitted by law, for the inclusion, at a subsequent date, of such additional cities as may desire to become parties to this agreement and members of the Authority, subject to approval by the Board of Directors. ARTICLE 3 PARTIES TO AGREEMENT Each party to this agreement certifies that it intends to and does contract with all other parties who are signatories of this agreement and, in addition, with such other parties as may later be added as parties to and signatories of this agreement pursuant to Article 21. Each party to this agreement also certifies that the deletion of any party from this agreement, pursuant to Articles 22 and 23, shall not affect this agreement nor such party's intent to contract, as described above, with the other parties to the agreement then remaining. ARTICLE 4 TERM OF AGREEMENT This agreement shall become effective upon the first day it has been executed by two cities. ARTICLE 5 CREATION OF AUTHORITY Pursuant to Section 6500 et seq. of the Government Code, there is hereby created a public entity, separate and apart from the parties hereto, to be known as the San Diego Pooled Insurance Program Authority For Municipal Entities. Pursuant to Government Code Section 6508.1, the debts, liabilities, and obligations of the -Authority shall not constitute debts, liabilities, or obligations of any party to this agreement or to any city. ARTICLE 6 POWERS OF AUTHORITY A. The Authority shall have the powers common to cities and is hereby authorized to do all acts necessary for the exercise of said common powers, including, but not limited to, any orall of the following: 1. To make and enter into contracts, including contracts of insurance and self-insurance for its members providing for risk -pooling or sharing, whether or not subject to regulation under the Insurance Code, to the extent and in the manner permitted under Government Code Sections 990, 990.4, 990.8, and 6508, or any other provision of law; 2. To incur debts, liabilities, or obligations; 3. To acquire, hold, or dispose of property, contributions and donations of property, funds, services, or other forms of assistance from persons, firms, corporations, and governmental entities; 4. To sue and be sued in its own name; and 5. To exercise all powers necessary and proper to carry out the terms and provisions of this agreement, or otherwise authorized by law. B. Said powers shall be exercised pursuant to the terms hereof and in the manner provided by law. 5 ARTICLE 7 BOARD OF DIRECTORS A. The Authority shall be governed by the Board of Directors which is hereby established and which shall be composed of one representative from each city, who shall be selected by the city manager of that city. Each city, in addition to appointing its member of the Board, shall appoint at least one alternate. Each director and alternate shall be a staff employee of that city. The alternate appointed by a city shall have the authority to attend, participate in, and vote at any meeting of the Board when the regular member for whom he or she is an alternate is absent from said meeting. B. Each director or alternate of the Board shall serve until a successor is appointed. Each director or alternate shall serve at the pleasure of the city by which he or she has been appointed. C. Each director or alternate shall have one vote. ARTICLE 8 POWERS OF THE BOARD OF DIRECTORS The Board of Directors of the Authority shall have the following powers and functions: A. The Board shall elect from its members, pursuant to Article 10 of this agreement, an Executive Committee. B. The Board may review all acts of the Executive Committee and shall have the power to modify and/or override any decision or action of the Executive Committee upon a majority vote of the entire Board of Directors. C. The Board shall review, modify, if necessary, and approve the annual operating budget of the Authority prepared by the Executive Committee, pursuant to Article 11(d). D. The Board shall receive and review periodic accountings of all funds under Articles 16 and 17 of this agreement. E. The Board shall have the power to conduct, on behalf of the Authority, all business of the Authority, including that assigned to the Executive Committee which the Authority may conduct under the provisions hereof and pursuant to law. F. The Board shall have such other powers and functions as are provided for in this agreement or in the bylaws. 6 ARTICLE 9 MEETINGS OF THE BOARD OF DIRECTORS A. Meetings. The Board shall provide for its regular, adjourned regular, and special meetings upon call of the president of the Board; provided, however, that it shall hold at least one regular meeting annually, as set forth in the bylaws. B Minutes. The clerk of the Authority shall cause minutes of regular, adjourned regular, and special meetings to be kept and shall, as soon as possible after each meeting, cause a copy of the minutes to be forwarded to each member of the Board and to each city. C. Quorum. A majority of the members of the Board shall constitute a quorum for the transaction of business, except that' less than a quorum may adjourn from time to time. A vote of the majority of those members present at a meeting shall be sufficient to constitute action by the Board, except as otherwise specifically set forth in this agreement or in the bylaws. D. Compliance With the Brown Act. All meetings of the Board, including, without limitation, regular, adjourned regular, and special meetings, shall be called, noticed, held, and conducted in accordance with the provisions of the Ralph M. Brown Act, Government Code Section 54950 et seq. ARTICLE 10 EXECUTIVE COMMITTEE A. There shall be an Executive Committee of the Board of Directors which shall consist of at least three members, as provided in the bylaws. The members of the Executive Committee shall include the president of the Board of Directors; the remainder of the members shall be elected by the Board of Directors from its members, as provided in the bylaws. B. Vacancies on the Executive Committee shall be filled as provided in the bylaws. ARTICLE 11 POWERS OF THE EXECUTIVE COMMITTEE The Executive Committee may be delegated the following powers: A. Determine details of and select the insurance program of the Authority. B. Determine and select all insurance, including excess insurance, necessary to carry out the programs of the Authority. 7 C. Have authority to contract for or develop various services for the Authority, including, but not limited to, claims adjusting, loss control, legal defense, and risk management consulting. D. Cause to be prepared the operating budget of the Authority for each fiscal year, subject to review, modification, and approval by the Board, as provided for in Article 8(c). E. Receive and act upon reports of the risk manager and committees of the Authority, as provided in the bylaws. F. The authority to hire persons as the Executive Committee deems necessary for the administration of the Authority. G. Exercise general supervisory and policy control over the risk manager. H. Direct investment of funds collected by the Authority. I. Such other powers and functions as are provided for pursuant to this agreement. ARTICLE 12 MEETINGS OF THE EXECUTIVE COMMITTEE The meetings of the Executive Committee shall be held and conducted as provided in the bylaws. The Committee shall make periodic reports to the Board of Directors, advising the Board of its decisions and activities. ARTICLE 13 OFFICERS OF THE AUTHORITY A. President and Vice President. The Board shall elect a president and vice president of the Authority at its first meeting in Janaury of even -numbered years, each to hold office until a successor is elected. In the event the president or vice president so elected ceases to be a member of the Board, the resulting vacancy in the office of president or vice president shall be filled at the next regular meeting of the Board held after such vacancy occurs. The Executive Committee may appoint an interim president or vice president pending action by the Board of Directors. In the absence or inability of the president to act, the vice president shall act as president. 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. - 8 B. Treasurer. The treasurer shall be appointed by the Board. The duties of the treasurer are set forth in Articles 16 and 17 of this agreement. C. Attorney. the Authority. D. Other Officers. The Board shall have the power to appoint, or to delegate to the Executive Committee the power to appoint, the auditor and clerk and such other officers as may be necessary to carry out the purposes of this agreement. The Board shall appoint an attorney for ARTICLE 14 INSURANCE COVERAGE A. The Authority shall maintain levels of insurance coverage for cities determined by the Board of Directors to be reasonably adequate. B. The insurance coverages provided by the Authority may include protection for motor vehicle, personal injury, property damage, errors and omissions, contractual, or comprehensive general liability, or such other areas Of coverage as the Executive Committee may recommend to the Board. C. The risk -sharing insurance program of the Authority shall permit a city to select legal counsel for defense of a claim prior to its tender to the Authority, and provide for recovery of such defense costs in proportion to the share of any resulting settlement or judgment which is in excess of the city's retained limit; provided that the Authority shall have the right and opportunity to associate with thecityin the defense and control of such claims which are reasonably likely to exceed the city's retained limit and that no expenses shall be incurred on behalf of the Authority without its consent, which shall not be unreasonably withheld. D. The Board may arrange for a group policy to be issued for cities interested in obtaining additional coverage at an additional cost to those cities. E. The Board may arrange for the purchase of excess insurance. The Board may discontinue purchase of excess insurance if no longer available or needed to protect the Authority's funds. - 9 ARTICLE 15 IMPLEMENTATION OF THE INSURANCE PROGRAM A. Program Formulation; Appointments. As soon as practicable after the effective date of this agreement, the Board of Directors shall determine the insurance coverages to be provided as permitted in Article 14, the amount of the premiums therefor, establish precise cost allocation plans and formulas, provide for the handling of claims, establish pro forma statements of each risk -pooling or other type of insurance program, and specify the amounts and types of excess insurance, if any, to be procured. In addition, the Board shall appoint an Underwriting Committee, Claims Review Committee, and Program Underwriter as soon as practicable. Vacancies on such committees shall be filled by action of the Executive Committee on an interim basis until such time as the Board acts to fill such vacancies. B. Premiums and Assessments. The premiums and assessments for each city for any risk -pooling program shall be recommended by the Underwriting Committee and approved by the Board. C. Annual Adjustments. The cost allocation plans and formulas adopted by the Board shall provide for an adjustment in each city's premiums following the first year of operation of each program, and annually thereafter, to produce a premium for each year, for each city, for each risk -pooling program, which shall consider the following five items: 1. The city's incurred losses for each risk -pooling program; and 2. The city's share of such losses and other expenses for each risk -pooling program as a proportion of all cities' such losses; and 3. The city's contribution to reserves, including reserves for incurred -but -not -reported losses, for each risk - pooling program; and 4. The city's share of costs to purchase excess insurance, if any; and 5. The city's share of costs to purchase any additional coverage, as provided in Article 14(c). D. Notice of Premiums. Premium adjustments shall be made annually, and notices of premiums shall be distributed at least sixty (60) days prior to the close of each insurance year. All premiums shall be due and payable within thirty (30) days - 10 - after the effective date of coverage, except as provided in Article 20. E. Payment of Premiums or Assessments Over Time. Inasmuch as some cities may experience an unusual frequency of losses during a single insurance year which would increase their subsequent premium substantially above the premium for that risk - sharing program for that insurance year, or result in an assessment, and cause budgetary problems, the Board may allow for payment of a portion of such subsequent premium or assessment to be made over a period of time not to exceed five years, with reasonable interest. F. Underwriting Practices. Underwriting practices shall be generally consistent with industry standards in order to stabilize premiums and permit purchase of excess coverage, and other coverages supplemental to the Memorandum of Insurance. 1. Underwriting Committee. All matters dealing with the scope of coverage and limits of liability provided under the Memorandum of Insurance shall be the primary responsibility of a standing committee established by the Board called the "Underwriting Committee." The Committee shall also be responsible for recommending premiums and assessments to the Board. The Underwriting Committee shall receive advice from the Program Underwriter Decisions of the Underwriting Committee will be reviewed and acted upon by the Board. A majority of vote of the entire Board shall be required to overrule a decision of the Underwriting Committee in all matters. 2 Program Underwriter. The Program Underwriter selected by the Board shall be independent of any broker or insurer with contracts with the Authority and shall not be a staff employee of any party. The Program Underwriter shall. advise the Authority concerning its underwriting decisions. 3. Limits. The limits of liability offered under the Memorandum of Insurance shall be established by the Underwriting Committee, using the following general guidelines: a. Per -occurrence limits shall approximate two times the annual premiums collected under the program. The limits of liability shall be established annually (at each anniversary) and shall not be amended with the mid-term addition or deletion of insureds. b. Annual aggregate limits shall approximate four times the annual premiums collected under the Memorandum of Insurance. The purpose of this limitation is to assure that potential assessments are limited to a maximum relative to the annual aggregate exposure. The Program Underwriter shall recommend limits of liability to the Underwriting Committee. The Underwriting Committee shall approve, disapprove, or modify such recommendation with just cause. 4. Assessments. In the event assessments are necessary, the Program Underwriter shall make recommendations to the Underwriting Committee. The committee, with good cause, may amend, reject, or accept the proposed assessment, and make a recommendation to the Board. In the event a recommended assessment is reduced or rejected, an alternate funding mechanism shall be adopted by the Board as necessary to assure solvency of the program. The assessment amount shall be allocated based on the following criteria: 1. The extent by which any City's losses have exceeded its total payments to the insurance program. 2. In any insurance year, the ratio of a city's claims pending to all cities' claims pending. 3. In any insurance year, the ratio of a city's premiums and other contributions to the total thereof of all cities. G. Assessment Payment. Assessments are due and payable within 30 days of date of mailing of notice by the Board. H. Exhaustion of Annual Aggregate Limits. In the event annual aggregate limits are reached for any insurance year, claims payments shall be made proportionally, based on the ratio total claims under the program bear to the annual aggregate limits under the Memorandum of Insurance. ARTICLE 16 ACCOUNTS AND RECORDS A. Annual Budget. The Authority shall annually adopt an operating budget, pursuant to Article 8(c) of this agreement. B. Funds and Accounts. The treasurer of the Authority shall establish and maintain such funds and accounts as required by the Executive Committee and as required by good accounting practice. Books and records of the Authority in the hands of the treasurer shall be open to any inspection at all reasonable times by authorized representative of cities and as otherwise required by law. C. Treasurer's Report. The treasurer, within 120 days after the close of each fiscal year, shall give a complete - 12 - written report of all financial activities for such fiscal year to the Board and to each city. D. Annual Audit. The auditor shall provide for a certified, annual audit of the accounts and records of the Authority, which audit shall be made by a certified public accountant and shall conform to generally accepted auditing standards. A report thereof shall be filed as a public record with each of the cities. Such report shall be filed within six months of the end of the year under examination. ARTICLE 17 RESPONSIBILITY FOR MONIES A. The treasurer of the Authority shall have the custody of and disburse the Authority's funds. He or she shall have the authority to delegate the signatory function of treasurer to such persons as are authorized by the Board. B. A bond in the amount determined adequate by the Board shall be required of all officers and personnel authorized to disburse funds of the Authority, such bond to be paid for by the Authority. C. The treasurer of the Authority shall assume the duties described in Government Code Section 6505.5, including: 1. Receive and acknowledge receipt for all money of the Authority and place it in the treasury of the Authority; 2. Be responsible, upon his or her official bond, for the safekeeping and disbursement of all of the Authority's money so held by him or her; 3. Pay, when due, out of money of the Authority so held by him or her, all sums payable on outstanding bonds and coupons of the Authority; 4. Pay any other sums due from Authority money only upon warrants approved by the president of the Board or his or her designee and the risk manager. The warrants shall be drawn by the auditor, who shall be selected by the Board in accordance with the bylaws and law. 5. Verify and report monthly to the Authority and to cities the amount of money held for the Authority, the amount of receipts since the last report, and the amount paid out since the last report. D. The treasurer shall deposit the funds of the Authority in accordance with the investment policy required by law, and - 13 - C C 4-77 II approved by the Board, in those institutions and investments permitted pursuant to Government Code section 53601 et seq. ARTICLE 18 RESPONSIBILITIES OF THE AUTHORITY The Authority shall perform the following functions in discharging its responsibilities under this agreement: A. Provide an insurance program, as necessary, including, but not limited to, a self-insurance risk -sharing fund, and commercial insurance (which may include excess coverage and umbrella insurance), by negotiation, bid, or purchase. B. Assist cities in obtaining insurance coverage for risks not included within the insurance program of the Authority, as permitted in Article 14(C). C. Assist each city with the implementation of risk management programs related to risks covered by the Authority's insurance program within the city. D. Provide loss prevention and safety consulting services to cities, as required. E. Provide claims adjusting and subrogation services for claims covered by the Authority's insurance program, as required. F. Provide loss analysis and control by the use of statistical analysis, data processing, and record and file - keeping services, in order to identify high exposure operations and to evaluate proper levels of self -insured retention (as to risk -sharing programs) and deductibles (as to commercial insurance). G. Conduct risk management audits to review the participation of each city in the insurance program. H. The Authority shall have such other responsibilities as deemed necessary by the Board of Directors in accordance with this agreement. ARTICLE 19 RESPONSIBILITIES OF CITIES Cities shall have the following responsibilities: A. Each city shall appoint a representative and at least one alternate to the Board of Directors, pursuant to Article 7 of this agreement. - 14 - B. Each city shall maintain an active safety program and shall consider all recommendations of the Authority concerning unsafe practices. C. Each city shall maintain its own set of records in all categories of risk covered by the insurance program of the Authority to insure accuracy of the Authority's loss reporting system until no longer deemed necessary by the Board. D. Each city shall pay its premium, and any assessment, within thirty (30) days of the invoice date. After withdrawal or termination, each city shall pay promptly to the Authority its share of any additional assessment when and if required of it by the Executive Committee under Article 24 or 25 of this agreement. E. Each city shall provide the Authority with such other information or assistance as may be necessary for the Authority to carry out the insurance program under this agreement. F. Each city shall, in any and all ways, cooperate with and assist the Authority, and any insurer of the Authority, in all matters relating to this agreement and covered claims and will comply with all bylaws, rules, and regulations adopted or approved by the Board of Directors. ARTICLE 20 INTERIM PERIOD AND EFFECTIVE DATE OF PROGRAM A. Interim Period. Concurrently with approval of this agreement, each city shall approve and accept the proposed premium, fee quote, and Memorandum of Insurance from Driver Insurance. Such approval and acceptance shall be conditioned upon the formation of the Authority and the Authority's approval of the proposed premium fee and Memorandum of Insurance. Each city shall have thirty (30) days from the date of receiving such items in writing to consent by resolution to enter the Authority and accept the provisions of the Memorandum of Insurance. B. Effective Date. The proposed Memorandum of Insurance shall be effective no earlier than April 1, 1986. ARTICLE 21 NEW MEMBERS The Authority shall allow entry into its insurance program by new members only upon approval by the Board, or by the Executive Committee if specifically delegated such authority by resolution of the Board, which resolution may impose such conditions or limitations upon such authority of the Executive Committee as the Board deems appropriate. Cities entering under - 15 - this article shall be required to pay their share of the organizational expenses, as determined by the Board, including expenses necessary to analyze their loss data and determine their premiums. ARTICLE 22 WITHDRAWAL After an initial one-year, noncancellable commitment to the Memorandum of Insurance, a city may withdraw, provided it has given the Authority a six-month written notice of its intent to withdraw from this agreement and the Memorandum of Insurance. ARTICLE 23 CANCELLATION Notwithstanding the provisions of Article 22, the Authority shall have the right to cancel, for good cause as determined by a two-thirds vote of the entire Board of Directors, any city's participation in the Authority and Memorandum of Insurance, provided that a reasonable time shall be afforded, in the discretion of the Board of Directors, to place coverage elsewhere. ARTICLE 24 EFFECT OF WITHDRAWAL A. The withdrawal of any city from this agreement shall not terminate the same, and a city, by withdrawing, shall not be entitled to payment or return of any earned premium, consideration, or property paid or donated by the city to the Authority, or to any distribution of assets, except as provided in Article 25(c). B. The withdrawal or cancellation of any city after the effective date of the Memorandum of Insurance or other elements of the insurance program shall not terminate its responsibility to contribute its share of premium or funds to the insurance program of the Authority, until all claims or other unpaid liabilities covering the period the city'was a participant have been finally resolved and a determination of the final amount of payments due by the city or credits to the city for such period has been made by the Executive Committee. In connection with this determination, the Executive Committee may exercise similar powers to those provided for in Article 25(b) of this agreement. - 16 ARTICLE 25 TERMINATION AND DISTRIBUTION A. This agreement may be terminated any time during the first year by the written consent of all cities and thereafter by the written consent of three -fourths of the cities; provided, however, that this agreement and the Authority shall continue to exist for the purpose of disposing of all claims, distribution of assets, and all other functions necessary to windup the affairs of the Authority. B. The Executive Committee is vested with all powers of the Authority for the purpose of winding up and dissolving the business affairs of the Authority. These powers shall include the power to require cities, including those which were signatory hereto at the time a claim arose or was incurred, to pay:their share of any additional assessment, in accordance with loss allocation formulas for final disposition of all claims and losses covered by this agreement. A city's share of such assessment shall be determined on the same basis as that provided for assessments in Article 15(c) and (d) of this agreement. C. Upon termination of this agreement, all assets of the Authority shall be distributed only among the parties that have been signatories hereto, including any of the cities which previously withdrew pursuant to Article 22 or were canceled pursuant to Article 23 of this agreement, in accordance with and proportionate to their cash contributions (including premium payments and property at market value when received) made during the term of this agreement. The Executive Committee shall determine such distribution within six months after disposal of the last pending claim or loss covered by this agreement. D. In the absence of an Executive Committee, the risk manager shall exercise all powers and authority under this Article. The decision of the Executive Committee or risk manager under this article shall be final. ARTICLE 26 PROVISION FOR BYLAWS AND PLAN DOCUMENT As soon as practicable after the first meeting of the Board of Directors, the Board shall cause to be developed and shall adopt Authority bylaws and a plan document to govern the day-to- day operations of the Authority. Each city shall receive a copy of any bylaws, plan document, or other document developed under this article. - 17 - C ARTICLE 27 NOTICES Notices to cities hereunder shall be sufficient if delivered to the clerk of the respective city. ARTICLE 28 ENFORCEMENT The Authority shall have the right to enforce this agreement. If any suit or other proceeding or arbitration is brought by the Authority, or any member, to enforce this agreement, the prevailing party shall be entitled to recover costs and expenses, including reasonable attorneys fees. No court proceedings shall be initiated by the Authority, affected member, or withdrawn member agency, other than for the collection or return of assessments or premiums. Other disputes shall be resolved as provided in the bylaws. ARTICLE 29 INVALIDITY Should any portion, term, condition, or provision of this agreement be determined by a court of competent jurisdiction to be illegal and in conflict with any law of the State of California, or be otherwise rendered unenforceable or ineffectual, the validity of the remaining portion, terms, conditions, and provisions shall not be affected thereby. ARTICLE 30 TORT LIABILITY Section 895.2 of the Government Code imposes certain tort liability jointly upon public entities solely by reason of such entities being parties to an agreement as defined in Section 895 of said Code. Therefore, the parties hereto, as between themselves pursuant to the authorization contained in Sections 895.4 and 895.6 of the Government Code, each assumes the full liability imposed upon it or any of its officers; agents or employees by law for injury caused by a negligent or wrongful act or omission occurring in the performance of the Agreement, to the same extent that such liability would be imposed in the absence of Section 895.2 of said Code. To achieve this purpose each party indemnifies and hold harmless the other party for any loss, cost or expense that may be imposed upon such other party solely by virtue of Section 895.2 of the Government Code. Upon exhaustion of aggregate policy limits, as described in Article 15, under the Memorandum of Insurance (and excess insurance, if obtained) for any insurance year, no city or party - 18 - shall be assessed or held in any way responsible for the claims or losses of any other city which are excess of such limits; and each party shall indemnify and holds harmless the other party for any expenses that may reasonably be incurred as a result of such excess claims. Accordingly, this agreement does not affect city claims processing or payment after exhaustion of aggregate policy limits; however, such claims management procedures may be considered .by -the Authority in evaluating the conformance of city risk -management practices with Authority standards. ARTICLE 31 CLAIMS, LITIGATION, OR JUDGMENTS AGAINST THE AUTHORITY A. Defense of Claims. As to any claim or action against the Authority which is based on or arises out of an occurrence involving an officer or employee of the Authority during the course and in the scope of -such duties, who is also an officer or - employee of a city, such claim or action against the Authority will be defended by the Authority to the extent required by law. Such claims or actions shall not be considered claims or actions against such city solely as a result of employment by the Authority. B. Claims and Judgment Against the Authority. Claims and judgments against the Authority shall be paid from, or charged to, the appropriate coverages or self -insured funds the Authority has established against such claims, judgments or losses. Such amounts shall be paid from the Authority's own coverage or self -insured funds. - C. Arbitration. Any differences, claims or matters in dispute arising between or among members shall, if such differences arise out of this agreement or the bylaws, be submitted by such members to arbitration by the American Arbitration Association or its successor under the pertinent provisions of the laws of the State of California relating to arbitration, except as provided below. The decision of the arbitrator(s) may be entered as a judgment in any court of the State of California or elsewhere. Costs of arbitration, including reasonable attorneys fees, shall be recoverable in arbitration. D. Authority Representation Conflicts. Any differences, claims or matters in dispute arising between or among members shall, if such differences do not arise out of this agreement or the bylaws, be handled as follows: 1. After being notified in writing that one member agency has filed a formal claim against another in accordance with provisions of the Government Code, the Authority can no longer act on behalf of either member insofar as the case giving rise to the claim is concerned if the claim involves a risk - 19 - covered by the Memorandum of Insurance, or other risk -sharing insurance policy of the Authority in which each of the involved members is a participating member. 2. Conversely, the Authority may continue to act on behalf of a participating member, even after receipt of written notice of a formal claim filed by one member agency against another, provided the claim only involves a risk -sharing insurance policy of the Authority in which only one of the involved member agencies is participating. In any: case falling within the boundaries of (1) or (2) above, the Authority may, in its discretion, act on behalf of one or all involved members, provided that the Authority first obtains the written consent of each involved member with coverage; provided that the failure of the Authority to act on behalf of any member under this section shall not affect the Authority's obligation to provide coverage, including coverage of legal defense costs under the Memorandum of Insurance or other risk -sharing insurance of the Authority. ARTICLE 32 PROHIBITION AGAINST ASSIGNMENT No city may assign any right, claim, or interest it may have under this agreement, and no creditor, assignee, or third -party beneficiary of any city shall have any right, claim, or title to any part, share, interest, fund, premium, or asset of the Authority. ARTICLE 33 AGREEMENT COMPLETE The foregoing constitutes the full and complete agreement of the parties. There are no oral understandings or agreements not set forth in writing herein. IN WITNESS WHEREOF,the parties hereto have first executed this agreement by authorized officials thereof on the date indicated. below. Date: CITY OF By Authoriz: d •y Resolution No. /S, Qgg - 20 - Date: Date: CITY OF By Authorized by Resolution No. CITY OF By Authorized by Resolution No. CITY OF Date: By (GMSDCC.A) Authorized by Resolution No. - 21 - r SAN DIEGO POOLED INSURANCE PROGRAM AUTHORITY (HEREINAFTER CALLED THE "AUTHORITY") MEMORANDUM OF INSURANCE September 4, 1986 THIS IS A CLAIMS MADE CONTRACT READ CAREFULLY I. INSURING AGREEMENTS IN CONSIDERATION OF THE PAYMENT OF PREMIUM, THE SAN DIEGO POOLED INSURANCE PROGRAM AUTHORITY HEREAFTER CALLED THE "AUTHORITY", AGREES TO IDEMNIFY THE INSURED FOR THE ULTIMATE NET LOSS IN EXCESS OF THE RETAINED LIMIT AS STATED IN ITEM 3 OF THE DECLARA- TIONS BUT ONLY UP TO THE AMOUNT NOT EXCEEDING THE "AUTHORITYS" LIMIT OF LIABILITY AS STATED IN ITEM 4 OF THE DECLARATIONS AS A RESULT OF CLAIMS FIRST MADE AGAINST THE INSURED AND REPORTED IN WRITING TO THE 'AUTHORITY" OR ITS DESIGNATED REPRESENTATIVE DURING THE COVERAGE PERIOD FOR WHICH THE INSURED SHALL BECOME LEGALLY OBLIGATED TO PAY BY REASON OF LIABILITY IMPOSED BY LAW, INCLUDING CHAPTER 1681 OF THE STATE OF CALIFORNIA INSURANCE STATUTES OF 1963, OR LIABILITY ASSUMED BY CONTRACT, INSOFAR AS THE NAMED INSURED MAY LEGALLY DO SO, FOR DAMAGES CAUSED BY: COVERAGE A - BODILY INJURY LIABILITY COVERAGE B - PROPERTY DAMAGE LIABILITY COVERAGE C - ERRORS AND OMISSIONS LIABILITY COVERAGE D - PERSONAL INJURY LIABILITY II. DEFENSE, SETTLEMENT AND SUPPLEMENTARY PAYMENTS THE "AUTHORITY" SHALL HAVE THE RIGHT AND OPPORTUNITY TO ASSOCIATE WITH THE INSURED IN THE DEFENSE AND CONTROL OF ANY CLAIM OR PROCEEDING ARISING OUT OF AN OCCURRENCE REASONABLY LIKELY TO INVOLVE THE "AUTHORITY". IN SUCH EVENT, THE INSURED AND THE "AUTHORITY" SHALL COOPERATE FULLY. EXHIBIT B SHOULD ANY CLAIM APPEAR LIKELY TO EXCEED THE RETAINED LIMIT, NO LOSS EXPENSES OR LEGAL EXPENSES SHALL BE INCURRED ON BEHALF OF THE "AUTHORITY" WITHOUT ITS PRIOR CONSENT. SUCH CONSENT SHALL NOT BE UNREASONABLY WITHHELD. SHOULD ANY CLAIM ARISING FROM SUCH LOSS BE ADJUSTED PRIOR TO TRIAL COURT JUDGEMENT FOR A TOTAL AMOUNT NOT MORE THAN THE RETAINED LIMIT, THEN NO LOSS EXPENSES OR LEGAL EXPENSES SHALL BE PAYABLE BY THE "AUTHORITY". HOWEVER, SHOULD THE TOTAL AMOUNT FOR WHICH SUCH CLAIM MIGHT BE ADJUSTED PRIOR TO SUCH JUDGEMENT EXCEED THE RETAINED LIMIT, THEN, IF THE "AUTHORITY" CONSENTS TO FURTHER TRIAL COURT PROCEEDINGS, IT SHALL CONTRIBUTE TO LEGAL EXPENSES IN THE RATIO WHICH ITS PROPORTION OF THE. LIABILITY FOR THE JUDGEMENT RENDERED, OR SETTLEMENT MADE, BEARS TO THE WHOLE AMOUNT OF SAID JUDGEMENT OR SETTLEMENT, HOWEVER, IN NO EVENT SHALL THE INSURED'S PARTICIPATION IN SUCH LEGAL EXPENSES EXCEED THE RETAINED LIMIT STATED AND MORE FULLY DEFINED IN SECTION V OF THE COVERAGE PROVISIONS. THE "AUTHORITY" SHALL NOT BE OBLIGATED TO PAY ANY CLAIM OR JUDGE- MENT OR TO DEFEND ANY SUIT AFTER THE APPLICABLE LIMIT OF THE "AUTHORITY'S" LIABILITY HAS BEEN EXHAUSTED BY PAYMENT OF JUDGEMENTS, SETTLEMENTS OR ALLOCATED CLAIMS EXPENSES. III. PERSONS INSURED EACH OF THE FOLLOWING. IS AN INSURED TO THE EXTENT SET FORTH BELOW: A. THE NAMED INSURED; B. WHILE ACTING WITHIN THE SCOPE OF HIS EMPLOYMENT AS SUCH: 1. ANY OFFICER, SERVANT OR EMPLOYEE OF THE NAMED INSURED. 2. ANY MEMBER OF BOARDS OR COMMISSIONS OF THE NAMED INSURED; C. UNDER COVERAGE (A) AND (B), ANY PERSON WHILE USING AN OWNED AUTOMOBILE OR HIRED AUTOMOEILE AND ANY PERSON OR ORGANIZATION LEGALLY RESPONSIBLE FOR THE USE THEREOF, PROVIDED THE ACTUAL USE OF THE AUTOMOBILE iS BY OR WITH THE PERMISSION OF THE NAMED INSURED. 2 L THE COVERAGE WITH RFSPEr'•T TO ANY PERSON OR (RGANI'ATTON OTHER THAN THE NAMED INSURED DOES NOT APPLY TINDER DIVISION (C) OF THIS MEMORANDUM OF COVERAGE: 1. TO ANY PERSON OR ORGANIZATION, OR TO ANY AGENT OR EMPLOYEE THEREOF, ENGAGED IN SELLING, REPAIRING, SERVICING, DELIVERING, TESTING, ROAD TESTING, PARKING OR STORING AUTOMOBILES, WITH RESPECT TO ANY OCCURRENCE ARISING OUT OF ANY SUCH OCCUPATION, IF THERE IS OTHER VALID AND COLLECTIBLE INSURANCE AVAILABLE TO SUCH PERSON AS NAMED INSURED UNDER A POLICY WITH LIMITS AT LEAST EQUAL TO THE REQUIREMENTS OF THE APPLICABLE FINANCIAL RESPONSIBILITY LAWS; 2. WITH RESPECT TO ANY HIRED AUTOMOBILE, TO THE OWNER, OR A LESSEE THEREOF OTHER THAN THE NAMED INSURED, OR TO ANY AGENT OR EMPLOYEE OF SUCH OWNER OR LESSEE. IV. LIMITS OF LIABILITY REGARDLESS CF THE NUMBER OF (1) INSUREDS UNDER THIS COVERAGE, (2) PERSONS OR ORGANIZATIONS WHO SUSTAIN INJtJRY OR DAMAGE, OR (3) CLAIMS MADE OR SUITS BROUGHT ON ACCOUNT OF SUCH INJURY OR DAMAGE, TP:E "AUTHORITY'S" LIABILITY IS AS FOLLOWS: THE TOTAL LIABILITY OF THE "AtUTHORITY" FOR DAMAGES CAUSED BY COVERAGE (A) BODILY INJURY LIABILITY, COVERAGE (B) PROPERTY DAMAGE LIABILITY, COVERAGE (C) ERROR'S AND OMISSIONS LIABILITY, COVERAGE (D) PERSONAL INJURY LIABILITY; AND INCLUDING ALLOCATED CLAIMS EXPENSES ARISING OUT OF ANY CNE OCCURRENCE SHALL NOT EXCEED THE T.IMIT OF LIABILITY STATED IN THE DECLARATIONS AS APPLICABLE TO EACH OCCURRENCE. SUBJECT THE ABOVE PROVISIONS TO IONS RESPECTING EACH.00CURRENCE , THE S ^" TOTAL LI F I_ ITY THE "AUTHORITY" u ITY" O ALI- M GE CAUSED 1 OF ,-;t;T _Q4-- - � FOR >L_� DAMAGES By COVERAGE (2=0 BODILY INJURY LIABILITY, COVERAGE (B) PROPERTY DAMAGE LIABILITY, COVERAGE (C) ERRORS AND OMISSICNS LIABILITY, COVERAGE (D) PERSONAL -INJURY LIABILITY; ANL' INCLUDING ALLOCATED CLAIMS EXPENSES ARISING OUT OF ALL OCCURRENCES DURING EACH ANNUAL PERIOD WHILE THIS COVERAGE IS IN FORCE COMMENCING FROM TTS THELIMIT OF LIABILITY O T TY STATED I•. EFFECTIVE DATE SHALL NOT EXCEED L t4I.. _.r _-A�•ILT_1. .,_AT THE DECLARATIONS AS AGGREGATE. FOR THE PURPOSE OF DFTERMINTNCG THE LIMIT CF THE "AUTHORITY" LIABILITY, =LL DAMAGES AR1S1NG OUT OF CONTINUOUS R FE^EA-F"._ EXPOSURE _U1D'_TJ NTt . j.r THE SAME (GENERAL - ITI DNS SHALL -- CONSIDERED AS ARISING OUT OF nNE OCCURRENCE. C V. RETAINED LIMIT PROVISION A. THE NAMED INSURED SHALL BE LIABLE AT ITS OWN EXPENSE FOR THE FIRST $ SEE ITEM 3 OF THE DECLARATIONS PAGE, OF ALL BODILY INJURY, PROPERTY DAMAGE, ERRORS AND OMISSIONS LIABILITY, AND PERSONAL INJURY LIABILITY ARISING OTJT OF EACH OCCURRENCE; B. THE NAMED INSURED SHALL BE LIABLE AT ITS OWN EXPENSE FOR ALL ALLOCATED CLAIMS EXPENSES FOR ANY ONE OCCURRENCE WHICH IS SETTLED OR ADJUDGED AT ANY AMOUNT EQUAL TO OR LESS THAN THE RETAINED LIMIT IN (A) ABOVE; C. THE NAMED INSURED SHALL BE LIABLE AT ITS OWN EXPENSE FOR THE SAME PROPORTION OF ALLOCATED CLAIMS EXPENSES AS ITS RETAINED LIMIT IN (A) ABOVE BEARS TO THE FINAL SETTLEMENT OR JUDGMENT FOR ANY ONE OCCURRENCE WHICH IS SETTLED OR ADJUDGED AT ANY AMOUNT MORE THAN THE RETAINED LIMIT IN.(A) ABOVE. IV. EXCLUSIONS THIS COVERAGE DOES NOT APPLY: A. TO BODILY INJURY OR PROPERTY DAMAGE ARISING OUT OF THE OWNERSHIP MAINTENANCE, OPERATION, USE, LOADING OR UNLOADING OF ANY AIRCRAFT OWNED OR OPERATED BY OR RENTED OR LOANED TO ANY INSURED, OR ANY OTHER AIRCRAFT OPERATED BY ANY PERSON IN THE COURSE OF HIS EMPLOYMENT BY AN INSURED; B. TO ANY OBLIGATION FOR WHICH THE INSURED OR ANY CARRIER AS HIS INSURER MAY BE HELD LIABLE MILER ANY WORKERS COMPENSATION, UNEMPLOYMENT COMPEN7;ATTON OR DISABILITY BENEFITS LAW, OR UNDER ANY SIMILAR LAW; C. EXCEPT WITH RESPECT TO LIABILITY `ITvFD BY THE INSURED UNDER CONTRACT, TO BODILY T_NTT'"Y TO ':F SICKNESS, DISEASE OR DEATH CF ANY EMPLOYEE `:F THE INSURED ARISING OUT OF AND IN THE COURSE CF EMPt. ".' '-'t'' F;Y THE INSURED; D TO INJURY TO OR DESTRUCTION OF (: - . ERTY OWNED BY THE INSURED, OR (2) PROPERTY FE:NI= P LEASED TO THE INSURED WHERE THE INSURED HAS ." MEI: LIABILITY FOR DAMAGE TO OR DESTRUCTION OF "':'H PR1-7 'EFTY UNLESS THE NAMED INSURED WOULD HAVE BEEN LI - _.'.E IN THE ABSENCE OF SUCH ASS'J:-PTIO OF LIABILITY, AIRCRAFT IN THE CARE, CUSTODY OF CONTROI. or AN.' TN^URFD; E. UNDER COVERAGE (C) TO (1) LIABILITY OF THE INSURED ARISING IN WHOLE, OR IN PART, OUT OF ANY INSURED OBTAINING REMUNERATION OR FINANCIAL GAIN TO t7HICH THE INSURED WAS NOT LEGALLY ENTITLED, (2) LIABILITY ARISING OUT OF THE WILLFUL VIOLATION OF A PENAL CODE OR ORDINANCE COMMITTED BY OR WITH THE KNOWLEDGE OR CONSENT OF ANY INJURED; EXCEPT THAT ANY FACT PERTAINING TO ANY ONE INSURED SHALL NOT BE IMPUTED TO ANY OTHER INSURED FOR THE PURPOSE OF DETERMINING THE APPLICATION OF THESE EXCLUSIONS; F. UNDER COVERAGE C TO (1) LIABILITY OF ANY INSURED ARISING OUT OF ESTIMATES OF PROBABLE COSTS OR COST ESTIMATES BEING EXCEEDED OR FAULTY PREPARATION OF BID SPECIFICATIONS OR PLANS, OR (2) TO INJURY TO, DESTRUCTION OR DISAPPEARANCE OF ANY TANGIBLE PROPERTY (INCLUDING MONEY) OR THE LOSS OF USE THEREOF; G. TO ANY LIABILITY ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE OPERATION OF THE PRINCIPLES OF EMINENT DOMAIN, CONDEMNATION PROCEEDINGS, OR INVERSE CONDEMNATION, BY WHATEVER NAME CALLED, WHETHER SUCH LIABILITY ACCRUES DIRECTLY AGAINST THE INSURED OR BY VIRTUE OF ANY AGREEMENT ENTERED INTO BY OR ON BEHALF OF THE INSURED; H. TO BODILY INJURY OR PROPERTY DAMAGE ARISING OUT OF THE DISCHARGE, DISPERSAL, RELEASE OR ESCAPE OF SMOKE, VAPORS, SOOT, FUMES, ACIDS, ALKALIS, TOXIC CHEMICALS, LIQUIDS OR GASES, WASTE MATERIAL OR OTHER IRRITANTS, CONTAMINANTS OR POLLUTANTS INTO OR UPON LAND, THE ATMOSPHERE OR ANY WATER COURSE OR BODY OF WATER. I. TO ANY LIABILITY ARISING OUT OF THE PROVISIONS OF THE: 1. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA), PUBLIC LAW 93-406; COMMONLY REFERRED TO AS THE PENSION REFORM ACT OF 1974. 2. SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934; AND ANY AMENDMENTS THERETO; OR THE PROVISIONS OF ANY SIMILAR FEDERAL, STATE OR LOCAL STATUTE, OR COMMON LAW. J. ARISING OUT OF OR CAUSED BY OR CONTRIBUTED BY ANY: OWNERSHIP, MAINTENANCE, OPERATION, USE OR CONTROL OF OR RESPONSIBILITY FOR ANY AIRFIELD, AIRPORT, RUNWAY, HANGAR, BUILDING OR OTHER PROPERTY OR FACILITY DESIGNED FOR, USED, CONNECTED, ASSOCIATED OR AFFILIATED WITH OR IN ANY WAY RELATED TO AVIATION OR AVIATION ACTIVITIES. K. FOR INJURY, SICKNESS, DISEASE, DEATH OR DESTRUCTION DUE TO THE RENDERING OF OR. FAILURE TO RENDER ANY PROFESSIONAL SERVICE BY ANY DOCTOR, SURGEON, DENTIST, HOSPITAL OR CLINIC. L. ARISING OUT OF OR CAUSED OR CONTRIBUTED TO BY ANY A. WAR, WHETHER OR NOT DECLARED, B. CIVIL WAR, C. INSURRECTION, REBELLION OR REVOLUTION OR ANY ACT, ERROR, OMISSION OR CONDITION INCIDENT TO ANY 1. OF THE FOREGOING OR 2. SUPPRESSION OF ATTEMPTED THREAT WITH RESPECT TO ANY OF THE FOREGOING. M. ARISING OUT OF, IN CONNECTION WITH OR CAUSED OR CONTRIBUTED TO BY ANY FAILURE OR INABILITY TO SUPPLY ANY ADEQUATE QUANTITY OF POWER, STEAM, PRESSURE, FUEL, OR WATER. N. ARISING OUT OF OR CAUSED OR CONTRIBUTED TO BY ANY ACTUAL OR ALLEDGED ILLEGAL DISCRIMINATION. 0. TO ANY LIABILITY, CLAIM, DEMAND OR CAUSES OF ACTION ARISING OUT OF OR RESULTING FROM EITHER SEXUAL ABUSE OR LICENTIOUS, IMMORAL OR SEXUAL BEHAVIOR, WHETHER CAUSED BY, OR AT THE INSTIGATION OF, OR AT THE DIRECTION OF OR OMISSION BY, THE INSURED, IT'S EMPLOYEES, SERVANTS OR ANY OTHER INSUREDS UNDER THIS COVERAGE. P. TO ANY LIABILITY ARISING OUT OF INJURY TO VOLUNTEER FIREMEN. VII. DEFINITIONS "AUTOMOBILE". EXCEPT WHERE STATED TO THE CONTRARY, THE WORD "AUTOMOBILE" MEANS A LAND MOTOR VEHICLE OR TRAILER AS FOLLOWS: A. OWNED AUTOMOBILE - AN AUTOMOBILE OWNED BY THE NAMED INSURED; B. HIRED AUTOMOBILE - AN AUTOMOBILE USED UNDER CONTRACT IN BEHALF OF, OR LOANED TO, THE NAMED INSURED PROVIDED SUCH AUTOMOBILE IS NOT OWNED BY OR REGISTERED IN THE NAME OF (A) THE NAMED INSURED OR (B) AN OFFICER, SERVANT OR EMPLOYEE OF THE NAMED INSURED WHO IS GRANTED AN OPERATING ALLOWANCE OF ANY SORT FOR THE USE OF SUCii AUTOMOBILE; C. NON -OWNED AUTOMOBILE - ANY OTHER AUTOMOBILE. THE FOLLOWING DESCRIBED EQUIPMENT SHALL BE DEEMED AN AUTOMOBILE WHILE TOWED BY OR CARRIED ON AN AUTOMOBILE NOT SO DESCRIBED, BUT NOT OTHERWISE: IF OF THE CRAWLER -TYPE, ANY TRACTOR, POWER CRANE OR SHOVEL, DITCH OR TRENCH DIGGER; ANY ARM -TYPE TRACTOR; ANY CONCRETE MIXER OTHER THAN OF THE MIX -IN TRANSIT TYPE; ANY GRADER, SCRAPER, ROLLER OR FARM IMPLEMENT; AND, IF NOT SUBJECT TO MOTOR VEHICLE REGISTRATION, ANY OTHER EQUIPMENT NOT SPECIFIED BELOW, WHICH IS DESIGNED FOR USE PRINCIPALLY OFF PUBLIC ROADS. THE FOLLOWING DESCRIBED EQUIPMENT SHALL BE DEEMED AN AUTOMOBILE WHILE TOWED BY OR CARRIED ON AN AUTOMOBILE AS ABOVE DEFINED SOLELY FOR PURPOSES OF TRANSPORTATION OR WHILE BEING OPERATED SOLELY FOR LOCOMOTION, BUT NOT OTHERWISE. IF OF THE NON -CRAWLER TYPE, ANY POWER CRANE OR SHOVEL, DITCH OR TRENCH DIGGER; AND ANY AIR COMPRESSING, BUILDING OR VACUUM CLEANING SPRAYING OR WELDING EQUIPMENT OR WELL DRILLING MACHINERY. "USE". USE OF AN AUTOMOBILE OR AIRCRAFT INCLUDES THE LOADING AND UNLOADING THEREOF. "COMPLETED OPERATIONS HAZARD". "COMPLETED OPERATIONS HAZARD" MEANS BODILY INJURY AND PROPERTY DAMAGE ARISING OUT OF OPERATIONS OR RELIANCE UPON A REPRESENTATION OR WARRANTY MADE AT ANY TIME WITH RESPECT THERETO, BUT ONLY IF THE BODILY INJURY OR PROPERTY DAMAGE OCCURS AFTER SUCH OPERATIONS HAVE BEEN -COMPLETED- OR ABANDONED AND OCCURS AWAY FROM PREMISES OWNED BY OR RENTED TO THE NAMED INSURED. "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 NAMED INSURED UNDER THE CONTRACT HAVE BEEN COMPLETED. WHEN ALL OPERATIONS TO BE PERFORMED BY OR ON BEHALF OF THE NAMED INSURED AT THE SITE OF THE OPERATIONS HAVE BEEN COMPLETED, OR C. WHEN THE PORTION OF THE WORK OUT OF WHICH THE INJURY OR DAMAGE ARISES HAS BEEN PUT TO ITS INTENDED USE BY ANY PERSON OR ORGANIZATION OTHER THAN OTHER CONTRACTOR OR SUBCONTRACTOR ENGAGED IN PERFORMING OPERATIONS FOR A PRINCIPAL AS A PART OF THE SAME PROJECT. OPERATIONS WHICH OR CORRECTION, DEFICIENCY, BUT COMPLETED. THE COMPLETED OPERATIONS HAZARD DOES NOT INCLUDE BODILY INJURY OR PROPERTY DAMAGE ARISING OUT OF: MAY REQUIRE FURTHER SERVICE OR MAINTENANCE WORK, REPAIR OR REPLACEMENT BECAUSE OF ANY DEFECT OR WHICH ARE OTHERWISE COMPLETE, SHALL BE DEEMED 7 A. OPERATIONS IN CONNECTION WITH THE TRANSPORTATION OF PROPERTY, UNLESS THE BODILY INJURY OR PROPERTY DAMAGE ARISES OUT OF A CONDITION IN OR ON A VEHICLE CREATED BY THE LOADING OR UNLOADING THEREOF, B. THE EXISTENCE OF TOOLS, UNINSTALLED EQUIPMENT OR ABANDONED OR UNUSED MATERIALS, OR C. OPERATIONS FOR WHICH THE CLASSIFICATION STATED IN THE INSURANCE SERVICES OFFICE (ISO) MANUAL SPECIFIED "IN- CLUDING COMPLETED OPERATIONS". "ERRORS AND OMISSIONS". "ERRORS AND OMISSIONS" MEANS MISFEASANCE, MALFEASANCE OR NONFEASANCE BY ANY INSURED. "INSURED". t� INSURED MEANS ANY PERSON OR ORGANIZATION QUALIFYING AS AN INSURED UNDER THE PERSONS OR ENTITIES INSURED SECTION OF THIS- MEMORANDUM OF INSURANCE. THE WORD."INSURED" INCLUDES THE NAMED INSURED. "NAMED INSURED'S PRODUCTS". "NAMED INSURED'S PRODUCTS" MEANS GOODS OR PRODUCTS MANUFACTURED, SOLD, HANDLED OR DISTRIBUTED BY THE NAMED INSURED OR BY OTHERS TRADING UNDER HIS NAME INCLUDING ANY CONTAINER THEREOF (OTHER THAN A VEHICLE) BUT "NAMED INSURED PRODUCTS" SHALL NOT INCLUDE A VENDING MACHINE OR ANY PROPERTY OTHER THAN SUCH Al CONTAINER, RENTED TO OR LOCATED FOR USE OF OTHERS BUT NOT SOLD. - "OCCURRENCE". AS RESPECTS COVERAGES A AND B, OCCURRENCE MEANS AN ACCIDENT, _OR EVENT INCLUDING CONTINUOUS OR REPEATED EXPOSURE TO CONDITIONS, WHICH RESULTS IN BODILY INJURY OR PROPERTY DAMAGE NEITHER EXPECTED NOR INTENDED FROM THE STANDPOINT OF THE INSURED; AS RESPECT COVERAGE (C), "OCCURRENCE" MEANS ANY ACTUAL OR ALLEGED ERRORS OR OMISSIONS BY AN INSURED WHICH RESULTS IN INJURY OR DAMAGE NEITHER EXPECTED NOR INTENDED FROM THE STANDPOINT OF THE INSURED; AS RESPECTS COVERAGE (D) "OCCURRENCE" MEANS ANY INJURY OR DAMAGES SUSTAINED BY -ANY PERSON OR ORGANIZATION AND ARISING OUT OF PERSONAL INJURY AS DEFINED HEREIN. "PERSONAL INJURY". "PERSONAL INJURY" MEANS (A) FALSE ARREST, DETENTION, OR IMPRISONMENT OR MALICIOUS PROSECUTION; (B) PUBLICATION OR UTTERANCE OF A LIBEL OR SLANDER OR OF OTHER DEFAMATORY OR DEROGATORY MATERIAL, OR A PUBLICATION OR UTTERANCE. IN VIOLATION OF AN INDIVIDUAL'S RIGHT OF PRIVACY EXCEPT WHEN ANY OF THE FOREGOING OF THIS PART (B) ARISES FROM PUBLICATIONS OR UTTERANCES IN THE COURSE OF OR RELATED TO ADVER:'ISING, BROADCASTING, OR TELECASTING ACTIVITIES CONDUCTED BY OR ON BEHALF OF THE NAMED INSURED; (C) WRONGFUL ENTRY OR EVICTION OR OTHER INVASION.OF THE RIGHT OF PRIVATE OCCUPANCY; (D) ASSAULT AND BATTERY, NOT COMMITTED BY OR AT THE .DIRECTION OF THE NAMED INSURED UNLESS COMMITTED FOR THE PURPOSE OF PROTECTION OF PERSONS OR PROPERTY; (E) RACIAL OR RELIGIOUS DISCRIMINATION, NOT COMMITTED BY OR AT THE DIRECTION OF THE NAMED INSURED. "BODILY INJURY". "BODILY INJURY" MEANS BODILY INJURY, SICKNESS, OR DISEASE, INCLUDING DEATH AT ANY TIME RESULTING THEREFROM AND ALSO INCLUDES CARE AND LOSS OF SERVICES SUSTAINED BY ANY PERSON OR PERSONS. "COVERAGE TERRITORY". "COVERAGE TERRITORY" MEANS ANYWHERE IN THE WORLD. "PRODUCTS HAZARD". "PRODUCTS HAZARD" INCLUDES BODILY INJURY AND PROPERTY DAMAGE ARISING OUT OF THE NAMED INSURED'S PRODUCTS OR RELIANCE UPON A REPRESENTATION OF WARRANTY MADE AT ANY TIME WITH RESPECT.THERETO,' BUT --ONLY IF -THE BODILY INJURY OR PROPERTY DAMAGE OCCURS AWAY FROM PREMISES OWNED BY OR RENTED TO THE NAMED INSURED AND AFTER PHYSICAL POSSESSION OF SUCH PRODUCTS HAS BEEN RELINGUISHED TO OTHERS. "PROPERTY DAMAGE". "PROPERTY DAMAGE" MEANS (1) PHYSICAL INJURY TO OR DESTRUCTION OF TANGIBLE PROPERTY WHICH OCCURS DURING COVERAGE PERIOD, INCLUDING THE LOSS OF USE THEREOF AT ANY TIME RESULTING THEREFROM, OR (2) LOSS OF USE OF TANGIBLE PROPERTY WHICH HAS NOT BEEN PHYSICALLY INJURED OR DESTROYED, SUCH LOSS OF USE IS CAUSED BY AN OCCURRENCE DURING THE COVERAGE PERIOD. "ALLOCATED CLAIMS EXPENSES". "ALLOCATED CLAIMS EXPENSES" SHALL C MEAN ALL COURT COSTS, FEES, AND EXPENSES; FEES FOR SERVICE OR PROCESS; FEES TO ATTORNEYS; COSTS OF UNDERCOVER OPERATIVE AND DETECTIVE SERVICES; COSTS OF EMPLOYING EXPERTS FOR PREPARATION OF MAPS, PHOTOGRAPHS, DIAGRAMS, CHEMICAL OR PHYSICAL ANALYSIS OR FOR ADVICE, OPINION OR TESTIMONY CONCERNING CLAIMS UNDER INVESTIGA- TION; COSTS FOR LEGAL TRANSCRIPTS OR TESTIMONY TAKEN AT CORONER'S INQUEST, CRIMINAL OR CIVIL PROCEEDING; COSTS FOR COPIES OF ANY PUBLIC RECORDS; COSTS OF DEPOSITIONS AND COURT REPORTER OR RECORDED'STATEMENTS; AND ANY -OTHER SIMILAR FEE, COST, OR EXPENSE REASONABLY CHARGEABLE TO THE INVESTIGATION, SETTLEMENT, OR DEFENSE OF A CLAIM OR LOSS, OR TO THE PROTECTTo`. AND PERFECTION OF THE SUBROGATION RIGHT: OF THE NAMED INSURED ALLOCATED CLAIMS EXPENSES SHALL NOT INCLUDE FEES PAID To ANY "AUTHORITY" FOR ANY CLAIMS SERVICES WHICH CANNOT BE CHARGED TO A - T IC CLAIM OR LOSS. "ULTIMATE NET --LOSS".- "ULTIMATE NET LOSS" `".'•'?'T' THE SUM ACTUALLY PAID OR PAYABLE. IN CASH IN THE SETTLEMENT SATISFACTION OF LOSSES FOR WHICH THE INSURED IS LIABLE EITH7R ArITIDToATION OR 1 z COMPROMISE WITH THE WRITTENWRITTENCONSENT_; F THE ._ "-*THOR 1TY" , AFTER• MAKING PROPER DEDUCTION FOR ALL RECO':FR'E'^ AND SALVAGES COLLECTIBLE, AND INCLUDES ATTORNEY'S FEES, Cr4IRT COSTS AND INTEREST ON ANY JUDGEMENT OR AWARD, BUT _ LTTDES ALL LOSS ADJUSTMENT EXPENSES AND ALI. SALARIES OF "-'L:'YFE`. AND OFFICE EXPENSES OF THE INST1 EL, THE "AUTHORITY" _-_ • UNDERLYING INSURER OR SELF INSURER SO INCTP?REF'. VIII.CONDITIONS A. INSPECTION AND AUDIT THE "AUTHORITY" SHALL BE PERMITTED BUT NOT OBLIGATED TO INSPECT THE INSURED'S 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 BENEFITS OF THE INSURED OR OTHERS, TO DETERMINE OR WARRANT THAT SUCH PROPERTY OR OPERATIONS ARE SAFE OR HEALTHFUL, OR ARE IN COMPLIANCE WITH ANY LAW, RULE OR REGULATIONS, THE "AUTHORITY" MAY EXAMINE AND AUDIT THE INSURED'S BOOKS AND RECORDS AT ANYTIME DURING THE COVERAGE PERIOD AND EXTENSIONS THEREOF AND WITHIN THREE YEARS AFTER THE FINAL TERMINATION OF THIS COVERAGE, AS FAR AS THEY RELATE TO THE SUBJECT MATTER OF THIS MEMORANDUM OF INSURANCE. B. SEVERABILITY OF INTEREST THE TERMS "THE INSURED" IS USED SEVERALLY AND NOT COLLECTIVELY, BUT THE INCLUSION HEREIN OF MORE THAN ONE INSURED SHALL NOT OPERATE TO INCREASE THE LIMITS OF THE "AUTHORITY'S" LIABILITY. C. INSURED'S DUTIES IN THE -EVENT OF OCCURRENCE, CLAIM OR SUIT 1, IN THE EVENT OF AN OCCURRENCE, WRITTEN NOTICE CONTAINING PARTICULARS SUFFICIENT TO IDENTIFY THE INSURED AND ALSO REASONABLY OBTAINABLE INFORMATION WITH RESPECT TO THE TIME, PLACE AND CIRCUMSTANCE THEREOF, AND THE NAMES AND ADDRESSES OF THE INJURED AND OF AVAILABLE WITNESSES, SHALL BE GIVEN BY OR FOR THE INSURED TO THE "AUTHORITY" OR ITS DESIGNATED REPRESEN- TATIVE AS SOON AS PRACTICABLE. WHENEVER THE INSURED HAS INFORMATION FROM WHICH THE INSURED MAY REASONABLY CONCLUDE THAT AN OCCURRENCE COVERED HEREUNDER INVOLVES INJURIES OR DAMAGE WHICH, IN THE EVENT THAT THE INSURED BE HELD LIABLE, IS LIKELY TO INVOLVE THIS COVERAGE, NOTICE SHALL BE GIVEN BY OR ON BEHALF OF THE INSURED TO THE "AUTHORITY" OR ITS DESIGNATED REPRESENTATIVE AS SOON AS PRACTICABLE, PROVIDED HOWEVER, THAT FAILURE TO GIVE NOTICE OF ANY OCCURRENCE WHICH AT THE TIME CF ITS HAPPENING DID NCT APPEAR TO INVOLVE THIS COVERAGE BUT WHICH, AT A LATER DATE, WOULD APPEAR TO GIVE RISE TO CLAIMS HEREUNDER SHALL NCT PREJUDICE SUCH CLAIMS. 3. THE INSURED SHALL COOPERATE WITH THE "AUTHORITY" AND, UPON THE "AUTHORITY'S" REQUEST ASSIST IN MAKING SETTLE- MENTS, IN THE CONDUCT OF SUITS AND IN ENFORCING ANY RIGHT OF CONTRIBUTION OR INDEMNITY AGAINST ANY PERSON OR ORGANIZATION WHO MAY BE LIABLE TO THE INSURED BECAUSE OF INJURY OR DAMAGE WITH RESPECT TO WHICH COVERAGE IS AFFORDED UNDER THIS MEMORANDUM. THE INSURED SHALL ATTEND HEARINGS AND TRIALS AND ASSIST IN SECURING AND GIVING EVIDENCE AND OBTAINING THE ATTENDANCE OF WITNESSES. THE INSURED SHALL NOT, EXCEPT AT HIS OWN COST, VOLUNTARILY MAKE ANY PAYMENT, ASSUME ANY OBLIGA- TION OR INCUR ANY EXPENSE; HOWEVER, IN THE EVENT THAT THE AMOUNT OF ULTIMATE NET LOSS BECOMES CERTAIN EITHER THROUGH TRIAL COURT JUDGEMENT OR AGREEMENT AMONG THE INSURED, THE CLAIMANT, AND THE "AUTHORITY", THEN THE INSURED 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 INSURED FOR THAT PART OF SUCH PAYMENT WHICH IS IN EXCESS OF THE RETAINED LIMIT , OR THE "AUTHORITY" WILL UPON REQUEST OF THE INSURED, MAKE SUCH PAYMENT TO THE CLAIMANT ON BEHALF OF THE INSURED. D. APPEALS IN THE EVENT THE INSURED ELECTS NOT TO APPEAL A JUDGEMENT IN EXCESS OF THE RETAINED LIMIT, THE "AUTHORITY" MAY ELECT TO DO SO AT ITS OWN EXPENSE, AND SHALL BE LIABLE FOR THE COST, DISBURSEMENTS AND INTEREST INCIDENTAL THERETO, BUT IN NO EVENT SHALL THE LIABILITY OF THE AUTHORITY FOR ULTIMATE NET LOSS EXCEED THE AMOUNT SPECIFIED IN THE LIMIT OF LIABILITY SECTION OF THE DECLARATIONS, PLUS THE COST, DISBURSEMENTS, AND INTEREST INCIDENTAL TO SUCH APPEAL. ACTION AGAINST THE AUTHORITY NO ACTION SHALL LIE AGAINST THE "AUTHORITY" UNLESS, AS A CONDITION PRECEDENT THERETO, THE INSURED SHALL HAVE FULLY COMPLIED WITH ALL THE TERMS OF THIS COVERAGE, NOR UNTIL THE AMOUNT OF THE INSURED'S OBLIGATION TO PAY AN AMOUNT OF ULTIMATE NET LOSS IN EXCESS OF THE RETAINED LIMIT SHALL HAVE BEEN FINALLY DETERMINED EITHER BY JUDGEMENT AGAINST THE INSURED AFTER ACTUAL TRIAL OR BY WRITTEN AGREEMENT OF THE INSURED, THE CLAIMANT, AND THE "AUTHORITY". THE INSURED SHALL MAKE A DEFINITE CLAIM FOR ANY LOSS IN WHICH THE "AUTHORITY" MAY BE LIABLE WITHIN A REASONABLE TIME AFTER SUCH FINAL DETERMINATION. IF ANY SUBSEQUENT PAYMENTS ARE MADE BY THE INSURED ON ACCOUNT OF THE SAME OCCURRENCE, THE INSURED SHALL MAKE ADDITIONAL CLAIMS FROM TIME TO TIMME AND THESE CLAIMS SHALL BE PAYABLE WITHIN THIRTY (30) DAYS AFTER PROOF IN CONFORMITY WITH THIS COVERAGE. ANY PERSON OR ORGANIZATION OR THE LEGAL REPRESENTATIVE THEREOF WHO HAS SECURED SUCH JUDGEMENT OR WRITTEN AGREEMENT SHALL THEREAFTER BE ENTITLED TO RECOVER UNDER THIS MEMORANDUM OF INSURANCE TO THE EXTENT OF THE COVERAGE AFFORDED BY THIS MEMORANDUM OF INSURANCE. NOTHING CONTAINED IN THIS COVERAGE SHALL GIVE ANY PERSON OR ORGANIZATION ANY RIGHT TO JOIN THE "AUTHORITY" E. 11 AS A CO-DEFENDANT IN ANY ACTION OF BANKRUPTCY, OR THE INSOLVENCY OF THE INSURED SHALL NOT RELIEVE THE "AUTHORITY" OF ANY OF ITS OBLIGATIONS HEREUNDER. C F. OTHER INSURANCE IF COLLECTIBLE INSURANCE WITH ANY INSURER IS AVAILABLE TO THE INSURED COVERING A LOSS ALSO COVERED HEREUNDER, THE COVERAGE HEREUNDER SHALL BE IN EXCESS OF, AND NOT CONTRIBUTE WITH, SUCH OTHER INSURANCE PROVIDED, HOWEVER, THIS DOES NOT APPLY TO COVERAGE WHICH IS WRITTEN AS EXCESS INSURANCE OVER THE "AUTHORITY'S" LIMIT OF LIABILITY PROVIDED IN THIS MEMO- RANDUM. WHEN BOTH THIS COVERAGE AND OTHER INSURANCE APPLY TO THE LOSS ON THE SAME BASIS, WHETHER PRIMARY, EXCESS OR CONTINGENT, THE "AUTHORITY" SHALL NOT BE LIABLE UNDER THIS MEMORANDUM FOR GREATER PROPORTION OF THE LOSS THAN THAT STATED IN THE APPLICABLE CONTRIBUTION PROVISION BELOW: 1. CONTRIBUTION BY EQUAL SHARES. IF ALL OF SUCH OTHER VALID AND COLLECTIBLE INSURANCE PROVIDES FOR CONTRIBUTION BY EQUAL SHARES, THE "AUTHORITY" SHALL NOT BE LIABLE FOR A GREATER PROPORTION OF SUCH LOSS THAN WOULD BE PAYABLE -IF EACH INSURER CONTRIBUTES AN EQUAL SHARE UNTIL THE SHARE OF EACH INSURER EQUALS THE LOWEST APPLICABLE LIMIT OF LIABILITY UNDER ANY ONE COVERAGE OR THE FULL AMOUNT OF THE LOSS IS PAID, AND WITH RESPECT TO ANY AMOUNT OF LOSS NOT SO PAID THE REMAINING INSURERS THEN CONTINUE TO CONTRIBUTE EQUAL SHARE OF THE REMAINING AMOUNT OF THE LOSS UNTIL EACH SUCH INSURER HAS PAID ITS LIMIT IN FULL OR THE FULL AMOUNT OF THE LOSS IS PAID.- 2. CONTRIBUTION BY LIMITS. IF ANY OF SUCH OTHER INSURANCE DOES NOT. PROVIDE FOR CONTRIBUTION BY EQUAL SHARES, THE "AUTHORITY" SHALL NOT BE LIABLE FOR GREATER PROPORTION nF SUCH LOSS THAN THE APPLICABLE LIMIT OF LIABILITY UNLER THIS MEMORANDUM FOR SUCH LOSS BEARS TO THE TOTAL APPLICABLE LIMIT OF LIABILITY OF ALL VALID AND COLLECTIBLE INSURANCE AGAINST SUCH LOSS. • G. SUBROGATION THE "AUTHORITY" SHALL BE SUBROGATED TO THE EXTENT OF ANY PAYMENT HEREUNDER TO ALL THE INSURED'S RIGHTS OF RECOVERY THEREOF; AND THE INSURED 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;. 12 ANY INTEREST (INCLUDING THE INSURED'S) HAVING PAID AN AMOUNT IN EXCESS OF THE RETAINED LIMIT PLUS THE LIMIT OF LIABILITY HEREUNDER SHALL BE REIMBURSED FIRST TO THE EXTENT OF THE 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 INSURED OR ANY UNDERLYING INSURER, AS THEIR INTEREST MAY APPEAR. THE EXPENSES OF ALL SUCH RECOVERY PROCEEDINGS SHALL BE APPORTIONED IN THE RATIO OF RESPECTIVE RECOVERIES. IF THERE IS NO RECOVERY IN PROCEEDINGS CONDUCTED SOLELY BY THE "AUTHORITY", IT SHALL BEAR THE EXPENSES THEREOF. H. CHANGES NOTICE TO ANY DESIGNATED REPRESENTATIVE OR KNOLEDGE POSSESSED BY ANY DESIGNATED REPRESENTATIVE. OR BY ANY-- OTHER PERSON SHALL NOT EFFECT -A WAIVER OR A CHANGE IN ANY PART OF THISMEMORANDUM OR ESTOP THE "AUTHORITY" FROM ASSERTING ANY RIGHT UNDER THE TERMS OF THIS MEMORANDUM; NOR SHALL THE TERMS OF THIS MEMORANDUM BE WAIVED OR CHANGED, EXCEPT BY ENDORSEMENT ISSUED TO FORM A PART OF THIS MEMORANDUM. I. ASSIGNMENT ASSIGNMENT OF INTEREST UNDER THIS COVERAGE SHALL NOT BIND THE "AUTHORITY" UNTIL ITS CONSENT IS ENDORSED HEREON; IF, HOWEVER, THE NAMED INSURED SHALL BE ADJUDGED BANKRUPT OR INSOLVENT, SUCH COVERAGE AS IS AFFORDED BY THIS MEMORANDUM SHALL APPLY (A) TO THE NAMED INSURED'S LEGAL REPRESENTATIVE, AS THE NAMED INSURED, BUT ONLY WHILE ACTING WITHIN THE SCOPE OF HIS DUTIES AS SUCH, AND (B) WITH RESPECT TO THE PROPERTY OF THE NAMED INSURED, TO THE PERSON HAVING PROPER TEMPORARY CUSTODY THEREOF, AS INSURED, BUT ONLY UNTIL THE APPOINTMENT AND QUALIFICATION OF THE LEGAL REPRESENTATIVE. J. CANCELLATION THIS MEMORANDUM MAY BE CANCELLED BY THE NAMED INSURED BY SURRENDER THEREOF TO THE "AUTHORITY" OR ITS DESIGNATED REPRESENTATIVE OR BY MAILING TO THE "AUTHORITY" WRITTEN NOTICE STATING WHEN THEREAFTER THE CANCELLATION SHALL BE EFFECTIVE. THIS COVERAGE MAY BE CANCELLED BY THE "AUTHORITY" BY MAILING TO THE NAMED INSURED, AT THE ADDRESS SHOWN IN THIS COVERAGE, WRITTEN NOTICE STATING WHEN NOT LESS THAN FORTY-FIVE (45) DAYS THEREAFTER SUCH CANCELLATION SHALL BE EFFECTIVE. THE MAILING OF NOTICE AS AFORESAID SHALL BE SUFFICIENT PROOF OF NOTICE. THE TIME OF SURRENDER OR THE EFFECTIVE DATE AND HOUR OF CANCELLATION STATED IN THE NOTICE SHALL BECOME THE END OF THE COVERAGE PERIOD. DELIVERY OF SUCH WRITTEN NOTICE EITHER BY THE NAMED INSURED OR BY THE "AUTHORITY" SHALL BE EQUIVALENT TO MAILING. , IF THE NAMED INSURED CANCELS, EARNED PREMIUM SHALL BE COMPUTED IN ACCORDANCE WITH THE CUSTOMARY SHORT RATE TABLE AND PROCEDURE. IF THE "AUTHORITY" CANCELS, THE EARNED PREMIUM SHALL BE COMPUTED PRO RATA. WHEN THIS MEMORANDUM OF INSURANCE INSURES MORE THAN ONE NAMED INSURED, CANCELLATION MAY BE EFFECTIVE BY THE FIRST NAMED OF SUCH NAMED INSUREDS FOR THE ACCOUNT OF ALL NAMED INSUREDS. NOTICE OF CANCELLATION BY THE "AUTHORITY" TO THE FIRST NAMED SHALL BE DEEMED NOTICE TO ALL NAMED INSUREDS AND PAYMENT OF ANY UNEARNED PREMIUM TO SUCH FIRST NAMED INSURED SHALL BE FOR THE ACCOUNT OF ALL NAMED INSURED. K. EXTENDED REPORTING PERIOD OPTION 1. :THE AUTHORITY SHALL PROVIDE AN EXTENDED REPORTING PERIOD ONLY IF THE COVERAGE IS EITHER CANCELLED OR NOT RENEWED FOR ANY REASON EXCEPT NONPAYMENT OF PREMIUM. 2. A CLAIM FIRST MADE DURING THE EXTENDED REPORTING PERIOD WILL BE DEEMED TO HAVE BEEN MADE ON THE LAST DAY OF THE COVERAGE PERIOD, PROVIDED THAT THE CLAIM IS FOR DAMAGES THAT OCCURRED BEFORE THE END OF THE COVERAGE PERIOD BUT NOT BEFORE ANY APPLICABLE RETROACTIVE DATE. 3. THE EXTENDED REPORTING PERIOD WILL NOT REINSTATE OR INCREASE THE LIMITS OF LIABILTY OR EXTEND THE COVERAGE PERIOD. 4. THE EXTENDED REPORTING PERIOD WILL BE AS SET FORTH BELOW: A. IF NO OTHER INSURANCE YOU PURCHASE TO REPLACE THIS COVERAGE APPLIES TO THE CLAIM OR WOULD APPLY BUT FOR THE EXHAUSTION OF ITS APPLICABLE LIMITS OF LIABILITY, AN -.EXTENDED REPORTING PERIOD OF 60 DAYS FROM THE END OF THE COVERAGE PERIOD WILL APPLY. THIS EXTENDED REPORTING PERIOD MAY NOT BE CANCELLED AND REQUIRES NO ADDITIONAL PREMIUM. B. IF THE "INSURED" MAKES A WRITT'.-'N RFC'..'EST FOR AN EXTENDED REPORTING PERIOD WITHIN 30 DA'_'S AFTER THE EXPIRATION OF THE COVERAGE PERT:: A?:D PAYS THE ADDITIONAL PREMIUM WITHIN 30 DAY`, tkFTFR' MAID REQUEST; WE MAY AT THE DISCRETION OF THE ".['Tu0RITY" OR IT'S DESIGNATED REPRESENTATIVE(S) I''•TE AN EXTENDED REPORTING ENDORSEMENT FOR A PERIi:r= OF TWO YEARS FROM THE END OF THE COVERAGE PERIOD. ;4 THE EXTENDED REPORTING PERIOD ENDORSEMENT WILL ALSO AMEND THE OTHER INSURANCE CONDITIONS SO THAT THE COVERAGE PROVIDED WILL BE EXCESS OVER ANY OTHER VALID AND COLLECTIBLE INSURANCE AVAILABLE TO THE "INSURED" WHETHER PRIMARY, EXCESS, CONTINGENT OR ON ANY OTHER BASIS, WHOSE COVERAGE PERIOD BEGINS OR CONTINUES AFTER THE ENDORSEMENT TAKES EFFECT. 5. THE PREMIUM FOR THE EXTENDED REPORTING PERIOD ENDORSEMENT (SECTION 4. (B) ABOVE) WILL NOT EXCEED 200 % OF THE ANNUAL PREMIUM FOR THIS COVERAGE AND WILL EE FULLY EARNED WHEN THE ENDORSEMENT TAKES EFFECT. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO WAIVE THE ASSESSMENT PROVISIONS OF THIS COVERAGE. L. ASSESSMENTS EACH INSURED SHALL BE OBLIGATED TO AND SHALL PAY AMOUNTS AS HEREINAFTER PROVIDED WHICH AMOUNTS ARE HEREIN CALLED "ASSESSMENTS." SUBJECT TO THE PROVISIONS HEREOF, THE "AUTHORITY" OR ITS DESIGNATED REPRESENTATIVE(S), SHALL HAVE THE POWER AND AUTHORITY TO DETERMINE ALL MATTERS IN CONNECTIONS WITH ASSESSMENTS, INCLUDING WITHOUT LIMITATION, POWER AND AUTHORITY TO DETERMINE WHERE, WHEN AND HOW ASSESS- MENT SHOULD BE PAID AND EACH INSURED SHALL COMPLY WITH SUCH DETERMINATIONS. M. DETERMINATION OF ASSESSMENTS THE "AUTHORITY" OR ITS.DESIGNATED REPRESENTATIVE(S) SHALL LEVY ASSESSMENTS TO COVER ANY DEFICIENCY AT ANY TIME AND FOR WHATEVER REASONS THE "AUTHORITY" DETERMINES IN THE EXERCISE OF ITS GOOD FAITH JUDGEMENT THAT THE AMOUNT OF FUNDS AVAILABLE IS LESS THAN THE AMOUNTS REASONABLY ANTICIPATED TO BE NECESSARY TO PAY CLAIMS COVERED UNDER THIS MEMORANDUM. "-AUTHORITY" OR ITS DESIGNATED REPRESENTATIVE(S) SHALL NOTIFY IX WRITING (THE "ASSESSMENT NOTICE") EACH INSURED OF THE LEVY -OF ASSESSMENT AND THE DATE FIXED FOR THE PAYMENT THEREOF. N. APPORTIONMENT OF ASSESSMENTS THE AMOUNT OF ANY ASSESSMENT PAYABLE BY EACH INSTJRED SHALL BE COMPUTED BY MULTIPLYING THE TOTAL AMOUNT TO BE RAISED =;_• EACH INSURED' S ORIGINAL PERCENTAGE TO THE ORIGINAL CAPITALIZATION. FOR THE COVERAGE TERM DETERMINED TO HAVE A SHORTAGE OF FuNDs TO PAY CLAIMS AND EXPENSES. SUCH ORIGINAL PERCENTAGE CAN.SF INCREASED UP TO 100% FOR NEGATIVE CLAIMS EXPERIENCE. 15 O. TIME FOR PAYMENTS OF ASSESSMENTS THE AMOUNT OF ANY ASSESSMENT SHALL BECOME DUE AND PAYABLE AS SPECIFIED IN THE ASSESSMENT NOTICE OR, IF NOT SO SPECIFIED, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF THE ASSESSMENT NOTICE. ANY INSURED SHALL BE DEEMED DELINQUENT IN THE PAY- MENT OF ANY ASSESSMENT IF SUCH INSURED FAILS TO PAY THE SAME WHEN IT IS DUE AND PAYABLE. DELINQUENTPAYMENTSSHALL BE SUBJECT TO A PENALTY TO COVER LIQUIDATED DAMAGES, COVERING ADMINISTRATIVE AND OTHER COSTS OF COLLECTION, WHICH CANNOT BE ACCURATELY ESTIMATED IN ADVANCE, WHICH SHALL ACCRUE AT A RATE EQUAL TO TWO PERCENT (2 %) OVER THE PREVAILING PRIME INTEREST RATE, BEGINNING ON THE DATE WHEN ASSESSMENT IS DUE AND PAYABLE. P. ACCEPTANCE BY ACCEPTANCE OF THIS MEMORANDUM OF INSURANCE, THE NAMED INSURED AGREES TO BE BOUND BY THE TERMS OF THIS MEMORANDUM OF INSURANCE. ATTACHED TO AND FORMING PART OF CONTRACT NUMBER SDC 0001 OF THE SAN DIEGO POOLED INSURANCE PROGRAM AUTHORITY MEMORANDUM OF INSURANCE. • DATED AT: 4 4THIS 74KtIA DAY OF BY: REPRESENTATIVE 16 SAN DIEGO POOLED INSURANCE PROGRAM AUTHORITY DECLARATIONS CONTRACT NUMBER SDC 0001 THIS PAGE WITH "CONTRACT PROVISIONS ATTACHED" COMPLETES THIS NUMBERED MEMORANDUM OF INSURANCE. Item 1. Named Insured: Item 2. Address Coverage Period: From To 12:01 A.M. Standard Time Item 3. Self -Insured $ each occurrence as more Retention fully defined in section V of the Retained limits Provisions of the contract Item 4. Limit(s) of Coverage $ 5,000,000 each occurrence, Hereunder: $10,000,000 in the aggregate as more fully defined in section IV of the contract provsions Item 5. Premium: Item 6 Cancellation: