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1995-004 Interlocal Agreement for Southeast Risk Mgmt AssocRESOLUTION NO. 4-95 ' A RESOLUTION OF THE VILLAGE COUNCIL OF THE VILLAGE OF NORTH PALM BEACH, FLORIDA, APPROVING AND AUTHORIZING THE MAYOR AND VILLAGE CLERK TO EXECUTE AN INTERLOCAL AGREEMENT TO CREATE THE SOUTH EAST RISK MANAGEMENTASSOCIATION; PROVIDING FORTERMSAND CONDITIONS FOR SAID APPROVAL; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, by agreement dated July 13, 1989, an Amended Interlocal Agreement to create the Florida Intergovernmental Risk Management Association ("FIRMA") was entered into by and among the City of Greenacres, Town of Jupiter, Town of Lake Clarke Shores, Town of Lake Park, City of Lake Worth, Town of Lantana, and Village of North Palm Beach; and WHEREAS, the City of Greenacres and the Town of Jupiter have withdrawn from FIRMA and it is now the desire of the Town of Lake Clarke Shores, the Town of Lake Park, the City of Lake Worth, the Town of Lantana, and the Village of North Palm Beach to enter into a new Interlocal Agreement with the Cities of Coconut Creek, North Lauderdale, Oakland Park, Parkland and Wilton Manors to create the South East Risk Management Association ("SERMA"-; ' NOW, THEREFORE BE IT RESOLVED BY THE VILLAGE COUNCIL OF NORTH PALM BEACH, FLORIDA: Section 1. The Village Council of the Village of North Palm Beach hereby approves the Interlocal Agreement establishing SERMA effective March 1, 1995, and retroactive to October 1, 1994, and authorizes the execution thereof by the appropriate officials of the Village of North Palm Beach. Section 2. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED THIS 12TH DAY OF JANUARY 1995. iayor ATTEST: Village C er c O INTERLOCAL AGREEMENT ESTABLISHING THE SOUTH EAST RISK MANAGEMENT ASSOCIATION This is an Agreement ("Agreement") entered into by and among the CITY OF COCONUT CREEK, the TOWN OF LAKE CLARKS SHORES, the TOWN OF LAKE PARK, the CITY OF LAKE WORTH, the TOWN OF LANTANA, the CITY OF NORTH LAUDERDALE, the VILLAGE OF NORTH PALM BEACH, the CITY OF OAKLAND PARK, the CITY OF PARKLAND, and the CITY OF WILTON MANORS,- all of said cities being municipal corporations organized and existing under the laws of the State of Florida. WITNESSETH, in consideration of the mutual terms, conditions, promises, covenants and payments hereinafter set forth, the parties hereto agree as follows: ARTICLE I - NAME The name of the association created pursuant to this Agreement is the South East Risk Management Association ("SERMA"). ARTICLE II - DEFINITIONS As used in this Agreement, the following terms shall have the meaning hereinafter set forth: "Annual Payment" - The amount each Member must annually pay to fund the anticipated costs of the full operation of SERMA, as determined pursuant to the terms of this Agreement. "Excess insurance" - Insurance purchased by SERMA from insurance companies with a "BEST" rating of B + V or better and/or Lloyds of London to cover losses over a pre-set aggregate or specific amount up to a pre-set maximum amount of coverage. "Joint Self-Insurance" or "Self-Funded" - A self-insurance or self-funded program in which Members agree to an Annual Payment, and where required, Supplementary Payments to support the Risk Management Pool. "Members" - The public agencies of the State of Florida which initially or later enter into SERMA as established by this Agreement. "Risk Management" - A program attempting to reduce or limit casualty and property losses to Members and injuries to employees caused by or arising out of the operations of Members. Where claims arise SERMA will provide processing of claims, investigation, defense and settlement within the financial limits of SERMA as established in accordance with this Agreement and will tabulate such claims, costs and losses. "Risk Management Pool" - Public moneys established by SERMA to jointly self-insure and self-fund Property Coverages, General Liability, Automobile Liability, Professional Liability, Public Officials Liability and Workers' Compensation, and other coverage lines approved by the Board of Directors. "Self-Insurance" - The decision by a public agency not to purchase insurance coverage for risks below certain limits; to seek and maintain immunities provided by law for a non-insured. public agency; to rely upon its financial capabilities to pay covered losses which occur in case third party claims are held valid and not barred or capped by available immunities"and to purchase some insurance to protect against catastrophic or aggregate losses. "Supplementary Payments" - Members shall also be obligated, as required, to make supplementary payments, based upon the formula established for supplementary assessments in this Agreement and the Bylaws, if the amount of the Annual Payments shall be insufficient to fund the operations of SERMA. ARTICLE III - PURPOSE SERMA is a cooperative agency voluntarily established by the Members pursuant to Sections 163.01, 768.28 and 440.38, Florida Statutes, for the purpose of seeking the prevention or reduction of casualty and property losses to Members and injuries to persons or employees which might result in claims being made against Members. The purpose of SERMA is to carry out and effect the agreed upon functions and purposes of this Agreement as stated herein. It is the intent of the Members of SERMA to create an entity which will administer a Risk Management Pool and utilize such funds to defend and protect, in accordance with this Agreement, any Member of SERMA against liability for a covered loss. All funds contained within the Risk Management Pool are funds directly derived from its Members which are public agencies of the State of Florida. it is the intent of the Members in entering into this Agreement that, to the fullest extent possible, the scope of Risk Management undertaken by them through a Joint Self-Insurance or Self-Funded program using governmental funds, including the purchase of any insurance hereunder, pursuant to Section 768.28 Florida Statutes, shall not waive, on behalf of any Member or such Member's employees, any defenses or immunities therein provided, or provided by the laws of the State of Florida. SERMA and its Members intend to effect no waiver of Sovereign Immunities through their use of public funds retained within the Risk Management Pool. Such funds utilized to protect against risks in accordance with Section 768.28, Florida Statutes, are not intended to constitute the existence, issuance or purchase of a policy for insurance. This Agreement is not intended to create an "insurer" within the meaning of any legislation giving rise to liability or applicability to "insurer", for damages, costs, fees or expenses, 2 etc., under Sections 624.155, 626.9541, 627.426, 627.428 Florida Statutes, or other statutes applicable to insurers in the State of Florida. ARTICLE IV - POWERS AND DUTIES The powers of SERMA to perform and accomplish the functions and purposes set forth herein, within the budgetary limits and procedures set forth in this Agreement, shall be as follows: a. To establish Bylaws and operational procedures governing the operations of SERMA which are consistent with this Agreement; b. To employ agents, employees and independent contractors and approve the rate of compensation, benefits and/or contracts that apply to SERMA employees, officers and service providers, and to ensure all benefits of Section 163.01(9)(a), Florida Statutes, and all other applicable Florida Statutes; c. To lease real property and to purchase or lease equipment, machinery or personal property necessary for the carrying out of the purposes of SERMA; d. To carry out educational and other programs relating to risk reductions; e. To assure collection of funds for the continued administration of the Risk Management Pool; f. To purchase Excess Insurance to supplement the Risk Management Pool without such purchase constituting a waiver of Sovereign Immunity under Florida Law; g. To provide Risk Management services including the defense of and settlement of claims and to exercise the authority granted by Section 768.28, Florida Statutes. h. To act solely within the budgetary limits established by the Members to carry out such other activities as are necessarily implied or required to carry out the purposes of SERMA. i. To sue or be sued as a separate legal entity. j. To exercise such other powers and duties consistent with the purposes of this Agreement in accordance with Florida Law. ARTICLE V - COMMENCEMENT DATE, PARTICIPATION, AND TERM SERMA shall commence its operations as of October 1, 1994. SERMA shall continue in existence for an initial term ending September 30, 1996 including all Members executing this Agreement commencing October 1, 1994. Thereafter, the Members may, through 3 the manner provided in Article VI b.10., extend the term of SERMA for individual extended terms each of which may not. be for more than two (2) years. So long as SERMA shall continue in existence, any new Member joining SERMA shall remain a Member for a two (2) year term. Thus, a new Member joining SERMA for the second year of a two (2) year term shall be obligated to continue as a Member for at least the first year of the new two (2) year term if such an extended term is authorized. Subject to the provisions of this Article, any Member may withdraw from SERMA at the end of a fiscal year upon the giving of at least one (1) year's prior written notice. Such notice shall be addressed to the Claims Administrator, sent by certified mail, return receipt requested, and shall be accompanied by a resolution of the governing body of the Member electing to withdraw from SERMA. SERMA shall establish and periodically review standards for the admission of new Members, not inconsistent herewith. ARTICLE VI - BOARD OF DIRECTORS OF SERMA a. Appointment. There is hereby established a Board of Directors (sometimes hereinafter referred to as the "Board") of SERMA. Each Member shall appoint by motion or resolution one (1) person to represent that body (the "Representative") on the Board of Directors for a term specified in the motion or .resolution along with another person to serve as an alternate representative (the "Alternate") when the Representative is unable to carry out that Representative's duties. The Representative and Alternate shall be appointed by the governing body of the Member and a copy of written appointment shall be provided to SERMA. The persons appointed shall remain in office until SERMA receives evidence in writing of the appointment of other persons by the governing body. The Representative selected must be an employee of the entity. The Alternate selected must be either an employee or elected official of the entity. Whenever in this Agreement there is reference to, or act required of, a Representative, such reference or act shall apply to the Alternate when acting in the stead of the Representative. No Representative or Alternate serving on the Board of Directors, nor Representative or Alternate serving as an officer, shall receive any salary from SERMA. b. Additional Duties. in carrying out the powers set forth in Article IV hereof, the Board of Directors shall have the responsibility for: 1. Employing SERMA officers, agents, non-clerical employees and independent contractors; 4 Setting of compensation for all persons, firms and corporations employed by SERMA; 3. Recommending to the governing bodies of the Members any amendments to the Agreement. Any .such proposed amendments must receive the approval for recommendation of two-thirds (2/3) of the total number of Representatives on the Board of Directors. No amendments may be considered by the governing bodies of the Members that have not received such approval by the Board of Directors; 4. Approval of the acceptance of new Members and expulsion of_Members. The expulsion of a Member shall require the two-thirds (2/3) vote of all Representatives serving on the Board of Directors; 5. Approval and amendment of the annual budget of SERMA; 6. Approval of the operational procedures developed by the Chair; 7. Approval of educational and other programs relating to risk reduction; Approval of reasonable and necessary loss reduction and prevention procedures which shall be followed by all Members; 9. Approval of annual Supplementary Payments to the Risk Management Pool for each Member; 10. Approval, by Resolution of the Board, of additional terms of not more than two (2) years for the extension of the term of SERMA, subject to the following notice provisions to the Members. SERMA shall provide specific written notice of the proposed Resolution to extend the term of SERMA, by certified mail, to the Mayor or Chief Elected Official of the governing body of the Members and to the Representatives and Alternates thereof, no less than ten (10) days prior to the meeting at which such Resolution is proposed to be adopted. Such approval shall require an affirmative vote of two-thirds (2/3) of all the Representatives serving on the Board of Directors of SERMA. All requirements of this Paragraph VIb.10. shall be completed prior to June 30 of the year in which the Board of Directors of SERMA is required to determine whether or not to extend the term of $ERMA; and 11. Approval of a reduction or elimination in the scope of loss protection set forth in Article XI to be furnished by the Risk Management Pool derived from payments from the Members. Such approval shall require the affirmative vote of two-thirds (2/3) of all the Representatives serving on the Board of Directors and only upon compliance with the notice requirements set forth in Article VI b.10. above. c. Vacancies. The Representative selected by a Member shall serve until a successor has been selected. The Representative chosen may be removed at any time by the-vote of the governing body of a Member. In the event that a vacancy occurs in the position of Representative or Alternate selected by the governing body, that body shall appoint a successor in writing within sixty (60) days of such vacancy occurring. The failure of a Member to select a Representative or the failure of that person to participate shall not affect the responsibilities or duties of a Member under this Agreement. d. Aooointment of Chair and Vice-Chair. The Board of Directors shall bi-annually select a Chair and Vice Chair during the final quarter of each two (2) year term to serve during the subsequent two (2) year term. The Chair• shall vote on all matters that come before the Board. The Chair shall have such other powers as may be given from time to time by action of the Board. The Vice Chair shall carry out all duties of the Chair of the Board during the absence or inability of the Chair to perform such duties and shall carry out such other functions as may be assigned from time to time by the Chair of the Board of Directors. The Board of Directors may from time to time appoint other officers to the Board. ARTICLE VII - MEETINGS, NOTICE, RECORDS AND VOTING REQUIREMENTS a. The Board of Directors shall meet at least quarterly for consideration of general business matters and at least quarterly for consideration of claims matters. The Bylaws shall make provision for the call of regular, special and emergency meetings. The Chair, or in the absence of the Chair, the Vice-Chair, shall give ten (10) days prior written notice of regular or special meetings. b. The Board shall provide notice of meetings as required by Section 286.011, Florida Statutes, and as provided in the Bylaws, subject to any exceptions provided by Florida law and the Bylaws. c. The Board shall maintain its records as required by Florida Law and as provided in the Bylaws. d. At all meetings of the Board, a majority of the Representatives serving on the Board of Directors of SERMA shall constitute a quorum for the transaction of business. 6 Except as set forth to the contrary in this Agreement, the act of the majority of Representatives present at a meeting at which a quorum is present is the act of the Board. Each Member shall be entitled to one (1) vote on the Board of Directors. Such vote may be cast only by the Representative or in the Representative's absence by the Alternate. No proxy votes or absentee votes shall be permitted. The Board may establish within its Bylaws a rule that a vote greater than a majority of a quorum is required for passage of a given matter provided, however, that such rule can only be established by a vote equal to or greater than the extraordinary voting requirements imposed by the proposed rule. ARTICLE VIII - OFFICERS AND EMPLOYEES a. Employees: The Board may, as it from time to time determines and within the confines of SERMA's annual budget, employ an executive director, treasurer, secretary, staff, personnel, technical experts, legal counsel, and, such other agents and employees, permanent or temporary, as it requires, and determine their qualifications, duties and compensation. The Board may approve and authorize contracts with other persons, firms and individuals to provide services for and on behalf of SERMA as provided herein. b. Officers: In addition to the Chair and Vice-Chair, the Board may establish and provide for, in its Bylaws, such officers as it deems appropriate. The Bylaws shall establish qualifications and prescribe the duties of each officer. ARTICLE IR - COA4tITTEES The Board of Directors of SERMA may create, from time to time, such standing or ad hoc committee or committees, including an Executive Committee, as shall be necessary or desirable. to carry out the functions and purposes of SERMA and in the Bylaws shall provide for their creation, membership, dissolution and the removal of members. ARTICLE X - FINANCES AND RISK MANAGEMEN_T_POOL a. Fiscal Year: The fiscal year of SERMA shall be as provided in the Bylaws of SERMA. b. Budget and Provisions Governing Payments: The Board of Directors shall adopt procedures within its Bylaws for preparation and approval of preliminary and final budgets for the administration of SERMA. 7 The Board shall establish a schedule of payments, both for Annual Payments, or installments thereof, and for Supplementary Payments due hereunder and shall provide for additional payments, in its discretion, for delinquency in any of the payments due hereunder. c. Cost Allocation Formula: The Board of Directors shall establish in its Bylaws a formula for the allocation of costs among its Members (the "Cost Allocation Formula"). The adoption of, and any amendment to, the Cost Allocation Formula shall require a two-thirds (2/3) affirmative vote of the entire membership of the Board of Directors. d. SuDnlementarv Assessments and Surplus Distribution: The Board of Directors shall establish in its Bylaws a formula for Supplementary Assessments and Surplus Distribution. The adoption of, and any amendment to, the formulas shall require a two-thirds (2/3) affirmative vote of the entire membership of the Board of Directors. e. Amendment to Budget: Budgets may be amended at any time and calls for Supplementary Payments may be made by the Board of Directors, pursuant to the terms of the Bylaws. Members shall be responsible for Supplementary Payments during the entire term of SERMA and any later period when claims or expenses must be paid which are attributable to a prior fiscal year during which the expense or claim occurred. f. Annual Audit: The Board of Directors shall provide to the Members an annual audit report, actuarial report and any other related auditor reports of the financial affairs of SERMA to be made by a certified public accountant at the end of each fiscal year. ARTICLE XI - EXCESS INSURANCE SERMA will purchase Excess Insurance from underwriters of insurance with a "BEST" rating of B+V or better and/or Lloyds of London in such amounts as shall be approved by the Board of Directors, but such purchase does not, and is not intended to waive Sovereign Immunity under Florida Law. In the event that a series of losses should exceed the amount of coverage provided by SERMA, the Excess Insurance coverage for any one (1) year, then the determination of whether to pay such uncovered loss shall be the obligation of the individual Member against whom the claim was made and judgment perfected or settlement under Florida Law. 8 ARTICLE %II - OBLIGATIONS OF MEMBERS The obligations of Members of SERMA shall be as follows: a. To budget for, and where necessary, to levy for, and to promptly pay all Annual and Supplementary Payments to SERMA at such times and in such amounts as shall be established by the Board of Directors as set forth in this Agreement and in the Bylaws. b. To select, in writing, a Representative.to serve on the Board of Directors and to select an Alternate Representative; c. To allow SERMA reasonable access to all facilities of the Member and all records including but not limited to financial records which relate to the purpose or powers of SERMA. d. To allow attorneys employed by SERMA to represent the Member in investigation, settlement discussions and all levels of litigation arising out of any claim made against the Member within the scope of loss protection furnished by SERMA. e. To furnish full' cooperation with SERMA attorneys, claims adjusters, and any agent, employee, officer or independent contractor of SERMA relating to the purpose or powers of SERMA. f. To follow in its operations all loss reduction and prevention procedures established by SERMA within its purpose or powers. g. To report to the Claims Administrator within the time limit specified in the following items: 1. within ten (10) days of receipt, any and all statutory notices of claims, as well as summons and complaint or other pleading before a court or agency,•involving any claim for which SERMA coverage is sought. 2. Any oral or written demand for monetary relief for which coverage is sought. 3. At the earliest practicable time any information of an occurrence, claim or incident received by the Member and from which the Member could reasonably conclude that coverage will be sought by said Member for such an occurrence, claim or incident. In the event that the information set forth above is not submitted to the Claims Administrator within the time periods set forth above, the Board of Directors of SERMA may decline, in whole or part, to provide a defense to the Member or to extend the funds of SERMA for the payment of losses or damages incurred. In 9 reaching its decision, the Board shall consider whether and to which extent SERMA was prejudiced in its ability to investigate and defend the claim due to the failure of the Member to promptly furnish timely notice of the occurrence, claim or incident to the Claims Administrator. ARTICLE RIII - LIABILITY OF BOARD OF DIRECTORS OR OFFICERS OF SERMA The Representatives serving on the Board of Directors or officers of SERMA shall use ordinary care and reasonable diligence in the exercise of their power, and in the performance of their duties hereunder; they shall not be liable for any mistake of judgment or 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 with reasonable care; nor for loss incurred through investment of SERMA funds or failure to invest. No Director shall be liable for any action taken or omitted by any other Director. Directors shall have the immunities provided by law and in particular Section 163.01, Florida Statutes. SERMA may purchase insurance providing liability coverage for such Directors or officers. ARTICLE RIV - ADDITIONAL INSURANCE SERMA, through the distribution of the minutes of the Board of Directors or through other means, shall inform all Members of the scope and amount of Excess Insurance in force at all times. Membership in SERMA shall not preclude any Member from purchasing any insurance coverage above those amounts purchased by SERMA. Such purchase shall not be construed to waive Sovereign Immunity of the Members of SERMA. SERMA shall make its facilities available to advise Members of the types of additional or different coverages available to SERMA. ARTICLE RV - CONTRACTUAL OBLIGATION This document shall constitute a binding contract under the Florida Interlocal Cooperation Act of 1969 among those public agencies comprising SERMA. The obligations and responsibilities of the Members set forth herein including the obligation to take no action inconsistent with this Interlocal Agreement as originally written or validly amended shall remain a continuing obligation and responsibility of the Member. The terms of this Interlocal Agreement may be enforced in a court of law by'SERMA. Except to the extent of the limited financial contributions to SERMA agreed to herein or such additional obligations as may be assumed through amendments to this Agreement, no Member agrees or contracts herein to be held responsible for any claims in tort or contract made against any other Member. The Members intend in the creation of SERMA to establish an organization for Risk Management only within the scope herein set forth and have not herein created, 10 as among themselves, any relationship of surety, indemnification or responsibility for the debts of claims against any Member. ARTICLE XVI - EXPULSION OR TERMINATION OF MEMBERS By the vote of two-thirds (2/3) of all Representatives serving on the Board of Directors, any Member may be expelled. Such expulsion may be carried out for one (1) or more of the following reasons: a. Failure to make any timely payments as provided in the Bylaws or assessments due to SERMA. b. Failure to undertake or continue loss reduction and prevention procedures adopted by SERMA. c. Failure to allow SERMA reasonable access to all facilities of the member and all records which relate to the purpose, powers or functioning of SERMA. d. Failure to furnish full cooperation with SERMA's attorney(ies) claims adjuster(s), and any agent, employee, officer or independent contractor of SERMA relating to the purpose, powers and proper functioning of SERMA. e. Failure to carry out any obligation of a Member which impairs the ability of SERMA to carry out its purpose or powers or functions. No Member may be expelled except after notice from SERMA of the alleged failure along with a reasonable opportunity of not less than thirty (30) days to cure the alleged failure. The Member may request a hearing before the Board before any decision is made as to whether the expulsion shall take place. The Board shall set the date for a hearing which shall not be less than fifteen (15) days after the expiration of the time to cure has passed. The Board of Directors may establish the date at which the expulsion of the Member shall be effective at any time not less than sixty (60) days after the vote to expel has been made by the Board of Directors. If the motion to expel made by the Board of Directors or a subsequent motion does not state the time at which the expulsion shall take place, such expulsion shall take place sixty (60) days after the .date of the vote by the Board of Directors expelling the Member. ARTICLE XVII - TERMINATION OF SERMA If at the conclusion of any fixed term of SERMA, the Board of Directors does not vote to continue the existence of SERMA, pursuant to the provisions of Article VIb.10. hereof, then SERMA shall cease its existence at the close of the then current fiscal year. Under those circumstances, the Board of Directors shall 11 continue to meet on such a schedule as shall be necessary to carry out the termination of the affairs of SERMA. it is contemplated that the Board of Directors may be required to continue to hold meetings for some substantial period of time in order to accomplish this task, including the settlement of all covered claims incurred during the term of SERMA. All Members upon a general termination of SERMA, shall remain fully obligated for their portion of any covered claims and expenses which were incurred or created during the term of their membership, along with any other unfulfilled obligations, including but not limited to calls for Supplementary Payments for years of their membership which may be required and called for in subsequent years. All then current Members of SERMA, upon a general termination of SERMA, shall continue to hold membership on the Board of Directors but only for the purpose of voting on matters affecting their limited continuing interest in SERMA for such years as they were Members of SERMA. In the event of the general termination of SERMA, the Board of Directors shall request a formal report on the adequacy or redundancy of its Loss and Loss Adjustment Expense Reserves as of the date of dissolution from a qualified and designated member of the Casualty Actuarial Society. In addition, the Board of Directors shall obtain an estimate as of the date of dissolution from its claims servicing company as to the anticipated value of services to be performed after the date of dissolution to continue the administration of the claims in reserve as of that date until all claims obligations will have been met. Distribution of surplus funds shall be made. in accordance with this Agreement and the Bylaws. ARTICLE RVIII - WITHDRAWAL OR ERPULSION FROM SERMA a. withdrawal. After the initial term of SERMA, any Member of SERMA may withdraw from SERMA at the end of the fiscal year upon the giving of at least one (1) year's prior written notice. Such notice shall be addressed to the Chair, and shall be accompanied by a resolution of the governing body of the Member electing to withdraw. b. Expulsion. A Member of SERMA may be expelled according to the provisions and procedures of Article XVI of the Agreement and Bylaws. c. Obligations of Withdrawina or Expelled Members. After any withdrawal or expulsion as provided herein, the former Member shall continue to be fully responsible and obligated for its portion of covered claims and expenses against $ERMA, which covered claims were incurred during the term of membership, along with any other unfulfilled obligations, and shall be entitled to a return of surplus as provided in this Agreement, and the Bylaws, as if it were still a member of SERMA. The withdrawing or expelled Member shall, after withdrawal or 12 expulsion, no longer be entitled to participate or vote as a member of the Board of Directors of SERMA. ARTICLE XIX - CONTINUED EXISTENCE OF THE BROWARD RISK MANAGEMENT ASSOCIATION ("HRMA") and THE FLORIDA INTERGOVERNMENTAL RISK MANAGEMENT ASSOCIATION ("FIRMA") The Members recognize and acknowledge that BRMA and FIRMA continue to exist, under valid interlocal agreements, as entities independent of SERMA for the purpose of administering the affairs, business, and obligations of each Association incurred through and including September 30, 1994. SERMA shall assume no liability, responsibility, or benefit whatever from the continued operation of BRMA and FIRMA. All resources, claims, liabilities and surplus fund balances of BRMA and FIRMA shall be legally and financially segregated from the resources and liabilities of SERMA. ARTICLE XX - AMENDMENT OF AGREEMENT Any amendment or modification to this Agreement shall be contained in a written document executed with the same formality and of equal dignity herewith. Any amendment or modification to be effective shall be approved by no less than a two-third (2/3) vote of approval of the governing bodies of the Members, and.only upon the favorable recommendation of no less than two-thirds (2/3) vote of all Representatives of the Board of Directors. ARTICLE XXI - SEVERABILITY In the event that any provision of this Agreement shall be determined to be invalid and unenforceable by any court of competent jurisdiction, the remaining terms and conditions of this Agreement shall continue in full force and effect. ARTICLE XXII - ENTIRE AGREEMENT it is agreed among the parties that this Agreement shall comprise the entire agreement containing all terms and conditions agreed to among the parties, and no deviation from the terms hereof shall be predicated upon any prior representation or agreements whether oral or written. ARTICLE XXIIZ - EFFECTIVE DATE This Agreement shall become effective and retroactive to October 1, 1994. ARTICLE XRIV - EXECUTION This Agreement shall be executed in eleven (11) counterparts, each of which shall be deemed an original. 13 ARTICLE RSV - FILING OF AGREEMENT Pursuant to the requirements of Section 163.01(11), Florida Statutes, this Agreement shall be filed with the Clerks of .the Circuit Court in and for Broward County, Florida; and Palm Beach County, Florida. FTL-122656.4 14 IN WITNESS WHEREOF made and executed this A 1999., duly authorized by attachard hereto, and 11d 1, ~iLr , reoY,e~sen~E~a,t fives . "~, ~, e'~,~'lp~~)P1,'""~', the reement on the ~2th day of Resolution, a certified copy duly executed by its A~PTEST: ;'~ ~„'~ Village Clerk APPROVED AS TO FORM: A n FTL-122656.4 11/30/94 has fVwhich is authorized V Mayor 15 BYLAWS OF SOUTB EAST RISK MANAGEMENT ASSOCIATION Article I. Name, Purpose and Duration Section 1. Name: The name of this risk management and self insurance association shall be the South .East Risk Management Association, referred to hereinafter as the Pool. Section 2. Purpose: This Pool is an agency voluntarily established by the municipalities and local governmental entities which are the members of the Pool pursuant to the Agreement ("Members") and pursuant to Florida Statutes Sections 163.01, 768.28 and 440.38 for the purpose of seeking' the prevention or lessening of casualty and property losses to Members and injuries to persons or employees which might result in claims being made against Members. Further, the Pool will administer and utilize the funds of the Pool to defend and protect any Member of the Pool against liability for a covered loss. The purpose of this Pool is to carry out and effect the agreed upon functions and purposes of the Interlocal Agreement (the "Agreement") approved for execution by each Member. Section 3. Duration: The Pool shall commence its operation effective and retroactive to October 1, 1994. Provided the Pool is affirmatively extended every two (2) years as provided in the Agreement, the Pool shall continue in existence for consecutive periods as set forth in the Agreement until it is terminated pursuant to the Agreement. If at the conclusion of any fixed term of the Pool, the Board of Directors of the Pool does not vote to continue the existence of the Pool, as provided in the Agreement, then the termination provisions of the Agreement, as set forth in Article X hereof, shall come into effect. Section 4. Definitions: Any and all terms used in these Bylaws shall have the meaning, and shall be defined, as provided in the Agreement. Article II. Governing Board Section 1. Board: The affairs of the Pool shall be under the direct supervision and control of a governing Board of Directors, as established in the Agreement, and sometimes referred to hereinafter as the Board. Section 2. Authority: The Board, subject to the provisions of Florida Statutes Section 163.01 and other applicable provisions of law, shall have all powers customarily vested in the governing body of a risk management association and as provided in the Agreement and as provided by the Members from time to time. Section 3. Appointment: Each Member of the Pool shall appoint one (1) person to represent ("Representative or Director") that Member on the Board of Directors of the Pool along with another person to serve as an alternate representative ("Alternate") when the Representative is unable to carry out that Representative's duties. The Representative and the Alternate shall be appointed in writing by the governing body of the Member and a copy of the written appointment shall be provided to the Pool. Each Representative selected must be an employee of the Member he or she represents. Each Alternate selected must be either an employee or elected official of the Member he or she represents. Whenever in these By-laws there is reference to, or act required of, a Representative, such reference or act shall apply to the Alternate when acting in the stead of the Representative. Section 4. Vacancies: Appointments to fill vacancies on the Board in the position of Representative or Alternate selected by the governing body of a Member shall be filled by appointment of a successor Representative or Alternate by the governing body of that Member within sixty (60) days of such vacancy occurring. The failure of a Member to select a Representative or the failure of that person to participate shall not affect the responsibilities or duties of a Member under the Agreement. Section 5. Chair., Vice-Chair. and Voting Rights: The Board of Directors shall bi-annually select a Chair and a Vice Chair during the final quarter of each term to serve during the subsequent term. The Chair and the Vice Chair shall not be from the same county. The Vice Chair shall succeed the Chair upon the completion of the Chair's two-year term. The Chair and Vice Chair shall hold office until their successors have been designated or elected and have been qualified or until their earlier resignation, removal from office or death. The Chair shall vote on all matters that come before the Board. The Chair shall have such other powers as he or she may be given from time to time by action of the Board. The Vice-Chair shall carry out all duties of the Chair of the Board during the absence or inability of the Chair to perform such duties and shall carry out such other functions as may be assigned from time to time by the Chair or the Board of Directors. The Board of Directors may from time to time appoint other officers to the Board. Section 6. Employees: The Board may, as it from time to time determines, employ a treasurer, secretary, staff, personnel, technical experts, legal counsel, and such other agents and employees, permanent or temporary, as it requires, and determine their qualifications, duties and compensation. The Board may approve and authorize contracts with other persons, firms and individuals to provide services for and on behalf of the Pool as provided herein and in the Agreement. 2 Section 7. Salaries: No Representative or Alternate serving on the Board of Directors, nor in the capacity of an officer of the Board, shall receive any salary from the Pool. Article III. Officers and Employees. Section 1. Officers and Employees: The Chair and the Claims Administrator shall perform the following duties: (a) Chair: The Chair shall be the chief administrative officer of the Pool and shall supervise and control the day to day operations and shall carry out the policy and operational procedures of the Pool as established in the Agreement, in the Bylaws, and by the Board of Directors. The Chair shall: i. Sign, with such other person authorized by the Board of Directors, any instruments which the Board of Directors has authorized to be executed and, in general, shall perform all duties incident to the office of Chair and such other duties as may be prescribed by the Board of Directors. ii. Where necessary, make recommendations regarding policy decisions, the appointment of officers and the employment of agents and independent contractors. At each general business meeting of the Board and at such other times as required he or she shall present a full report of the activities of the Chair and the financial condition of the Pool. (b) Claims Administrator: The Claims Administrator shall perform the following functions: i. Prepare and recommend a proposed annual budget and proposed Annual Risk Management Pool Payments pursuant to the formula set forth in the Agreement and, where required, Supplementary Payments to the Risk Management Pool and shall submit such proposals to the Board of ,Directors. ii. Report as established by the Board to all Members on all claims filed and payouts made, and carry out the policy of the Board regarding settlement of claims. iii. Have charge and custody of and be responsible for all funds and securities of the Pool; receive and give all receipts for moneys due and payable to the Pool from any source, whatsoever; deposit all such moneys in the name of the Pool in such banks, 3 savings and loan depositories, that are Public Depositories" operating under Chapter shall be selected by the the funds of the Pool required in such secu Directors shall specific from time to time; and me and records of the Pool. associations or other recognized as "Qualified ~y the State Treasurer 280 Florida Statutes, as Board of Directors; invest as are not immediately rities as the Board of :ally or generally select intaih the financial books iv. In general, perform all duties normally performed by a treasurer and such other duties as from time to time may be assigned to him or her by the Chair or the Board of Directors. v. Keep the minutes of the meetings of the Pool. vi. See that all notices are duly given in accordance with the provisions of the Bylaws or as required by law. vii. Maintain custody of records of the Pool, attest the signatures of officers who execute documents on behalf of the Pool, and authenticate records of the Pool. viii. In general perform all duties normally performed by a secretary and other duties as from time to time may be prescribed by the Chair or the Board. (c) In the event of the inability or refusal of the Claims Administrator assigned to the above-described functions to act, the Chair of the Board of Directors may perform such duties and, when so acting, shall have all of the powers of and be subject to all of the restrictions upon such employee. Section 4. Vacancy: If a vacancy exists in an office of this Pool, then the Board shall select, as appropriate, a new officer. Section 5. Resignation of Chair or Vice Chair: The Chair or Vice Chair may resign at any time by delivering notice thereof to the Board. A resignation is effective when the notice is delivered unless the notice specifies a later effective date. If a resignation is made effective at a later date and the Board accepts the future effective date, the Board may fill the pending vacancy before said effective date if the Board provides that the successor does not take office until said effective date. Article IV. Committees Section 1. Creation: The Board of Directors of the Pool may create, from time to time, such standing or ad hoc committee or committees as shall be necessary or desirable to carry out the functions and purposes of the Pool. Section 2. Dissolution: Any such committee or committees may be dissolved by the Board. Section 3. Members: Unless the Board of Directors establishes some other procedure, the members and chairs of such committee or committees shall be appointed by the Chair of the Board from the Representatives or Alternates serving on the Board. The Chair of the Board of Directors may appoint non-voting and non- paid persons who are not Representatives or Alternates of the Board of Directors to serve on committees of the Pool. All of such' committee members shall serve for such term and shall have such qualifications as the Board may determine. Section 4. Removal: The Board may remove any committee member with or without cause. Section 5. Executive Committee: If established by. the Board of Directors of the Pool, the Executive Committee shall consist of the Chair of the Board, the Vice Chair and a third Representative appointed by the Board. The Board of Directors may grant to the Executive Committee the authority to approve a preliminary budget for the administration of SERMA by June 1 of each year, to approve expenditures, to authorize a settlement of claims and suits and to take such other action as shall be specifically delegated to it. Article V. Meetings Section 1. Meetings: All meetings of the Board shall be categorized as General Business or Claims meetings. Claims meetings shall be those meetings of the Board relating solely to the evaluation of claims filed with the Pool and subject to the jurisdiction of the Pool, including an offer of compromise or settlement of a claim, discussion of a claim for tort liability or worker's compensation, or any matters strictly related to claims administration. General Business meetings are those meetings at which all business of the Board is considered or discussed, other than discussions relating to claims which shall be the subject of claims meetings as above described. All business of the Board shall be conducted at either General Business or Claims meetings, as appropriate, which meetings shall be separately convened with the appropriate notice and call given, pursuant to Section 3 of this Article V. (i) Regular General Business Meetings: Regular General Business meetings of the Board shall be held at least four (4) S times a year, once during each quarter of the fiscal year, at such date, time and place as may be determined by the Chair, or, in his or her absence, the Vice-Chair. The dates of regular meetings of the Board shall be established by the Chair at the beginning of each fiscal year. The Chair or, in his or her absence, the Vice- Chair, shall give at least ten (10) days prior written notice of regular meetings to the Representative and Alternate of each Member. (ii) Regular Claims Meetings: Regular Claims meetings of the Board shall be held at least four (4) times a year approximately six (6) weeks subsequent to the Regular General Business meeting for each quarter of the fiscal year. All other provisions relating to the call, date, time and place of such Regular Claims meetings shall be as set forth for Regular General Business meetings. (iii) Special: Special meetings of the Board for any purpose, whether for General Business or Claims, shall be held when called by the Chair, or when demanded in writing by any three (3) Representatives of the Board, at such date, time and place as may be determined by the Chair. The Chair shall give at least ten (10) days prior written notice of any special meeting and an agenda specifying the subject of any special meeting shall accompany such notice. At a special meeting, the Board may transact only business that is related to the purposes stated in the notice of the special meeting and its agenda. (iv) Emergency: The Chair may call an emergency meeting of the Board, whether for General Business or Claims, if, in the Chair's judgment, a bona fide emergency exists requiring the immediate attention and action of the Board, at such date, time and place as may be determined by the Chair. The Chair shall issue the call of the emergency meeting. At such meeting, the Board may transact only business that is related to the emergency purpose of the meeting. The Chair shall provide such notice of the meeting as is possible. Section 2. Ouorum and Voting: At all regular, special or emergency meetings of the Board, a majority of the Representatives serving on the Board of Directors of the Pool shall constitute a quorum for the transaction of business. Except as set forth to the contrary herein or in the Agreement, the act of the majority of Representatives present at a meeting at which a quorum is present is the act of the Board. Each Member of the Pool shall be entitled to one (1) vote on the Board of Directors. Such vote may be cast only by the Representative of the Member or in the Representative's absence by the Alternate of the Member. No proxy votes or absentee votes shall be permitted. Provided a quorum is present, a simple majority vote of those Representatives present shall be required to pass on any motion or action except as may be otherwise required herein or in the Agreement. 6 Section 3. Notice and Publication: The Board shall post notice at each city hall pursuant to Section 286.011, Florida Statutes, of the day, time, place, and purpose of any General Business meeting or any recessed and reconvened General Business meeting of the Board, at least three days prior to such meeting, unless a bona fide emergency situation exists in which case a meeting to deal with the emergency may be held as necessary, upon reasonable notice. - Section 4. Meetinas and Records: All meetings and records of the Board, or any committee thereof, shall.be open to the public and governed by the provisions of Chapters 119.07(1) and 286.011, Florida Statutes, except that Claims meetings, whether regular, special or emergency, shall not be subject to the provisions of Chapter 286.011, Florida Statutes, nor shall claims files and records be subject to inspection under the provisions of Section 119.07(1), Florida Statutes, pursuant to Section 768.28(14)(a), Florida Statutes. All claims files and records shall be kept separate and apart from other files and records of the Board. Section 5. Minutes: The minutes of all meetings shall be promptly recorded, and all records of the Board shall be open to public inspection, iri accordance with applicable law, except as provided in Section 768.28(14)(a), Florida Statutes. Section 6. Location: Meetings of the Board or any committee of the Pool shall be held in accordance with the requirements of Chapter 286.011, Florida Statutes and as determined by the Board. Section 7. Meeting Aqenda: The agenda for each meeting of the Board or any committee shall be prepared by the Chair or the Claims Administrator. Any Representative of the Board in the case of a Board meeting, or any committee member in the case of that member's committee or the Chair may place an item on the agenda by submitting it to the Chair or the Claims Administrator prior to the deadline for publishing the ,notice of such meeting. Section 8. Meetina Rules of Conduct and Procedure: The Board of Directors may establish rules governing its own conduct and procedure not inconsistent with the Agreement and these Bylaws. If no other rules have been adopted, Roberts Rules of Order, latest edition, shall govern all meetings of the Board of Directors. Minutes of all regular and special meetings of the Board of Directors shall be sent to all Representatives (or in their absence their Alternates) serving on the Board of Directors. Article Vi. Fiscal Year Section 1. Fiscal Year: The fiscal year of the Pool shall be the twelve calendar month period commencing October 1 and ending on September 30. 7 Section 2. Budget and Provisions Governing Payments: The Board of Directors or the Executive Committee, if authority is granted pursuant to these Bylaws, shall. approve a preliminary budget for the administration of SERMA by June 1 of each year. The Board of Directors shall, by July 1 of the year, prior to the start of each fiscal year adopt a final budget and determine the amount of the Annual Payment to be made by each Member and the date upon which the payment is due. Copies of all preliminary and final- budgets shall be promptly mailed to each Representative. Failure of the Board of Directors or the Executive Committee to approve a preliminary or final budget within the times set forth within this Section shall not relieve the Members of the obligation to make Annual or Supplementary Payments to SERMA so long as such budgets are finally adopted, and the Members are given at least thirty (30) days after notification of the adoption of the final budget in which to make the first installment of the Annual Payment or any other payment due to SERMA. Members as determined in the Agreement. and herein will be allowed thirty (30) days after notification to make Supplementary Payments. The Board shall establish a schedule of payments, both for Annual Payments, or installments thereof, and for Supplementary Payments due hereunder and shall provide for additional payments, in its discretion, for delinquency in any of the payments due hereunder. Article VIi. Financial Re4uirements Section 1. Definitions: As used in these Bylaws the following terms shall have the meaning hereinafter set forth: "Actuarially Determined Deficit" - The amount of deficit in each and all fiscal years of the Pool as determined by the actuary engaged by the Pool to provide the annual actuarial report. "Actuarially Determined IBNR" - The amount of IBNR in each and all fiscal years of the Pool as determined by the actuary engaged by the Pool to provide the annual actuarial report. "Actuarially Determined Surplus" - The amount of surplus in each and all fiscal years of the Pool as determined by .the actuary engaged by the Pool to provide the annual actuarial report. "IBNR" - Losses incurred but not reported. Section 2. Cost Allocation Formula: Pursuant to the Agreement, the following Cost Allocation Formula is effective for the Pool: (a) For the Fiscal Year October 1, 1994 through September 30, 1995, the Members acknowledge and approve the Annual 6 Payment already established for the budget adopted for said Fiscal Year. (b) Effective for the Fiscal Year beginning October 1, 1995, and thereafter, at such time as the Board .has determined the budget and the total amount of revenue necessary to be contributed to the Pool by the Members as a whole for each ensuing fiscal year, the following Cost Allocation Formula will be applied to determine the Annual Payment of each Member. Zn determining the manner in which the Cost Allocation Formula will be applied, each Member shall provide all information and data reasonably requested by the Pool to calculate the exposures and apply the Cost Allocation Formula established below. The Cost Allocation Formula shall be applied to determine the percentage relationship of each Member to the total for that exposure, as defined below, for all Members. The percentages (carried to two decimal places) are weighted, if required, and added together. The total Annual Payment to be made by all Members is the pro rata share for each Member of the annual revenue contributed. The share will be the average of the weighted exposure percentages. The percentage so determined is applied to the adopted budget to determine the Annual Payment of each Member. The exposures used to calculate the Cost Allocation Formula are as follows. (i) Payroll (108 weight). The amount reported to the State of Florida for calculation of the Standard Worker's Compensation Premium for the period ending the preceding September 30. (ii) Standard workers' Compensation Premium (208 weiaht). An amount determined based upon Worker's Compensation rates established by the State of Florida for the Standard Worker's Compensation Premium for the period ending the preceding September 30. (iii) Total Property Values (108 weight). The values are determined by adding the replacement cost for all real property and the actual cash value for all other property as of September 30 of the previous fiscal year. (iv) Three Year Loss History (408 weight). The loss history includes all paid and reserved claims for the previous three year period ending on September 9 30 of the previous year and valued as of March 31 of the current year. It does not include IBNR. (v) Employee Count 1108 weightl. The employee count is the budgeted number of employees as of September 30 of the preceding fiscal year. Full time employees count as 1 and part time employees count as 1/2. - (vi) Vehicle Count (108 weight). Vehicle count is the total number of all licensed vehicles as of September 30 of the preceding fiscal year. It does not include water craft or mobile equipment. The Board, in its discretion, may grant adjustments in the Annual Payment to be made by Members with above or below average loss or claims records. Any change in the Member's governmental operations that would cause an adjustment, upward or downward, in the Member's budget in excess of 108 of the Member's total budget will result in a corresponding increase or decrease in the Member's Annual Payment to SERMA. In evaluating the loss and claims experience of the Member, the Board may utilize the loss and claims experience of the Member during the preceding three (3) fiscal years. Section 3. Limitation on Annual Payments: Notwithstanding any other provisions of these Bylaws: (a) For the fiscal year beginning October 1, 1995 and ending September 30, 1996, the maximum amount of increase or decrease incurred by any Member over or below the Annual Payment contributed for the preceding year is limited to 108. (b) For the fiscal year beginning October 1, 1996 and ending September 30, 1997, the maximum amount of increase or decrease incurred by any Member over or below the Annual Payment contributed for the preceding year is limited to 158. (c) For all future fiscal years, the maximum amount of increase or decrease incurred by any Member over or below the Annual Payment contributed for the preceding year is limited to 258. (d) If the amount of the Annual Payment for a Member is limited by the application of Section 3 (a), (b) or (c) above, the amount of the difference will be shared by the other Members in the same percentage as the Cost Allocation Formula has been applied to each Member. 10 Section 4. It shall be the obligation of the Board of Directors, within thirty (30) days of the receipt of the audit report prepared by the Pool's Auditors, which report shall be provided to the Pool within one hundred (120) days of the close of any fiscal year, to levy a supplementary assessment or return surplus to the Members as provided below. The formulas shall be as follows: (a) Supplementary Assessments: (i) A Required Surplus (as defined below) must be maintained for each fiscal year until such time as the Board elects to return same to the Members. Zf Total Revenues (as defined below) do not exceed Total Expenses (as defined below), the Board must levy an assessment. The Board will determine the payment terms for the assessment at the time it is levied. The assessment will be levied against all current or former Members which were participants in the Pool during the fiscal year for which the assessment is levied. The amount assessed to any Member shall be in the same percentage as the percentage of the total paid by the Member determined by the application of the Cost Allocation Formula for the applicable fiscal year. Total surplus for all years will be maintained at a minimum of $500,000. Surplus to be returned to Members will be distributed starting with the oldest year. These formulas will remain in effect until 9-30-99. (ii) Definitions: (a) Required Surplus: A surplus must be maintained for each fiscal year to achieve a surplus equal to 58 of the total of Annual Payments for that year. Surplus will be determined by subtracting Total Expenses from Total Revenues. (b) Total Revenues: Total Revenues include (but are not limited to) annual payments, interest and recoveries. (c) Total Expenses: are not limited administration, reserved, ZBNR SERMA. Total Expenses include (but to) loss control, reinsurance, assessments, claims paid and and other expenses as paid by 11 There must be an assessment for any fiscal year in which the Actuarially Determined Deficit is greater than $25,000. In the event that an assessment is required to be made for any fiscal year pursuant to this Section, such assessment shall be sufficient to maintain an Actuarially Determined Surplus of at least $100,000, until the Actuarially Determined IBNR falls below $25,000. When the Actuarially Determined IBNR for a fiscal year falls below $25,000, the Pool may maintain $0 surplus for that fiscal year. (b) Surplus Return: No surplus may be considered for return which would cause the total Actuarially Determined Surplus to fall below 508 of the current fiscal year's Loss Fund. "Loss Fund" shall mean the amount of annual contributions allocated to pay losses incurred by the Pool. No surplus may be considered for return, for a fiscal year that shows a surplus balance, until at least the close of the second fiscal year following the close of the fiscal year under consideration. Surplus will be returned to any current or former Member that participated in the Pool during the applicable fiscal year. The return of surplus to a Member shall be in the same percentage as the percentage of total paid by the Member determined by the application of the Cost Allocation Formula for the applicable fiscal year. The amount of the surplus available for return to any current or former Member is determined by subtracting projected operating expenses from the Actuarially Determined Surplus for the fiscal year under consideration. The surplus is returned at a rate of 508 of the Actuarially Determined Surplus each succeeding year until the return of surplus would cause the surplus to fall below $100,000 for that fiscal year. Any surplus available for return from previous or subsequent fiscal years must first be used to offset any assessments for fiscal years in which the same Members are liable for supplementary assessments. The formula established above for determining the surplus return shall be reviewed by the Board of Directors as appropriate, but not less than every five (5) years with any 12 resulting recommendations for amendment of this Agreement to amend the formula to be submitted to the governing bodies in accordance with this Agreement. Section 5. Additional Pat does not submit its Annual Supplementary Payment, on the Member shall pay an additional delinquency, equal to one pert the payment due. nnents: In the event that any Member Payment, or installment, or its date such payment is due, then the charge, calculated from the date of ent (1$) per month of the amount of Section 1. Aperoval of Defense Counsel: The Board of Directors shall approve a list of counsel to be engaged in defense of all claims or lawsuits against SERMA. Each Member has the right to approve the counsel assigned by the Claims Administrator from the approved list for each and any matter involving the Member. Section 2. Settlement of Claims or Suits: The Claims Administrator shall have the authority to settle any claim up to an amount of $5,000.00.' The Claims Administrator shall have the authority to settle any claims for an amount in excess of $5,000.00 up to $25,000.00 only upon approval of the Member against which the claim is made. The Board of Directors shall have the authority to approve any settlement of claims in excess of $25,000.00. The monetary limits set forth above shall apply to the settlement of lawsuits by the Claims Administrator except that such settlement authority shall be subject to such public hearing or other requirements of law as determined by each individual Member. Section 3. Optional Defense by Members: Each Member through its Representative to the Board of Directors shall be granted a reasonable opportunity to prevent the Claims Administrator from settling a case or claim in a manner contrary to the wishes of the Member. Should a Member exercise this privilege to prevent the settlement of a claim or lawsuit, such Member shall be responsible for any later payment in an amount greater than the settlement which was previously reached or which could have been reached between the claimant/plaintiff and the Claims Administrator. Article IX. Extraordinary Voting Requirements The Board may establish within these Bylaws a rule that a vote greater than a majority of a quorum is required for passage of a given matter, provided, however, that such rule can only be established by a vote equal to or greater than the extraordinary voting requirements imposed by the proposed rule. 13 Article F. Termination of the Pool If at the conclusion of any fixed term of the Pool, the Board of Directors does not vote to continue the existence of the Pool, then the Pool shall cease its existence at the close of the then current fiscal year. Under those circumstances, the Board of Directors shall continue to meet on such a schedule as shall be necessary to carry out the termination of the affairs of the Pool.- It is contemplated that the Board of Directors may be required to continue to hold meetings for some substantial period of time in order to accomplish this task, including the settlement of all covered claims incurred during the term of the Pool. All Members, upon a general termination of the Pool, shall remain fully obligated for their portion of any covered claims and expenses against the Pool which were incurred or created during the term of their membership, along .with any other unfulfilled obligations, including but not limited to calls for Supplementary Payments for years of their membership which may be required and called for in subsequent years. All Members of the Pool, upon a general termination of the Pool, shall continue to hold membership on the Board of Directors but only for the purpose of voting on matters affecting their limited continuing interest in the Pool for such years as they were Members of the Pool. In the event of the general termination of the Pool, the Board of Directors shall request a formal report on the adequacy or redundancy of its Loss and Loss Adjustment Expense Reserves as of the date of dissolution from a qualified and designated member of the Casualty Actuarial Society. in addition, the Board of Directors shall obtain an estimate as of the date of dissolution from its claims servicing company as to the anticipated value of services to be performed after the date of dissolution to continue the administration of the claims in reserve as•of that date until all claims obligations will have been met. Distribution of surplus funds shall be made in accordance with these Bylaws. Article RI. Withdrawal or Expulsioa from the Pool Section 1. Withdrawal. After the initial term of the Pool, any Member of the Pool may withdraw from the Pool at the end of the fiscal year upon the giving of at least one (1) year's prior written notice. Such notice shall be addressed to the Claims Administrator by certified mail, return receipt requested, and shall be accompanied by a resolution of the governing body of the Member electing to withdraw from the Pool. Section 2. Expulsion. A Member of the Pool may be expelled based upon the reasons and according to the provisions and procedures of Article XVI of the Agreement. Section 3. Obligations of withdrawing or expelled Members. After any withdrawal or expulsion as provided herein, the former 14 Member shall continue to be fully responsible and obligated for its portion of covered claims and expenses against the Pool, which covered claims were incurred during the term of the Member s membership, along with any other unfulfilled obligations, and shall be entitled to a return of surplus as provided in th.e Bylaws, as if it were still a member of the Pool. The withdrawing or expelled Member shall, after withdrawal or expulsion, no longer be entitled to participate or vote as a Member of the Board of Directors of the.. POOL. Article %I. Amendments These Bylaws may be amended from time to time at any duly called General or Special Business meeting of the Board. Any proposed amendment shall be approved only upon thirty (30) days advance notice in writing including the text of the proposed amendment prior to adoption; provided, however, that in the event the Board of Directors, by two-thirds vote of all Representatives comprising the Board, declares an emergency, such notice may be waived and the Board, by vote of two-thirds of the Representatives may adopt an amendment to the Bylaws. In order to be effective, any amendment approved hereby must be in writing and attached to these Bylaws. FTL-124056.4 11/30/94 15