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HomeMy WebLinkAboutRESOLUTION - 11-87 - 2/10/1987 - H.E.L.P.RESOLUTION NO. _ 11-87 RESOLUTION AGREEING TO AMENDMENTS IN THE CONTRACT AND BY-LAWS ON THE HIGH-LEVEL EXCESS LIABILITY POOL (H.E.L.P.) AND EXTENDING THE DATE DURING WHICH THIS MUNICIPALITY AGREES TO BECOME A MEMBER OF THAT POOL. WHEREAS, in Resolution No. 93-86, Resolution Authorizing Member- ship in the High -Level Excess Liability Pool (H.E.L.P.), the Corporate Authorities of this municipality approved membership in that intergovern- mental self-insurance pool and authorize the execution of the H.E.L.P. Contract and By -Laws; and, WHEREAS, the Contract and By -Laws authorized in that Ordinance/ - Resolution require that the organization come into existence by January 1, 1987; and, WHEREAS, that Ordinance/Resolution permitted this municipality to withdraw its membership in the H.E.L.P. Pool if the Pool did not come into existence by January 1, 1987, and the requisite first year's annual payments were not achieved prior to the fixed commencement date of the Pool; and, WHEREAS, the Corporate Authorities of this municipality and many other municipalities are still desirous of causing the commencement of a High -Level Excess Liability Pool and wish to extend their commitment to become Members of the Pool; and, WHEREAS, only minimal changes in the Contract and By -Laws of the Pool are necessary to reconfirm the desire of Member municipalities to become Members of the Pool; and, WHEREAS, the Corporate Authorities find that it is advantageous to this municipality to extend our commitment to become a Member of the Pool and to encourage other prospective Pool members to commit them- selves to membership in this entity; NOW, THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF ELK GROVE VILLAGE, COUNTIES OF COOK AND DUPAGE, STATE OF ILLINOIS, as follows: Section 1: That the Village President and Village Clerk are hereby authorized to execute on behalf of the municipality a Contract and By -Laws of the High -Level Excess Liability Pool (hereinafter "Agency"); identical to that document authorized in Resolution No. 93-86, with the exception of those changes noted in those pages of the Contract which are appended to and made a part of this Resolution, as Appendix A. In addition, this municipality agrees to the addition of Wilmette as a prospective Member of the Pool. Section 2: That the powers of the Agency, unless the Contract and By -Laws be amended, shall be limited to those contained within Appen- dix 1. Section 3: The commencement of the operations of the Agency and the obligation of this municipality to fully participate in such operations shall be effectuated in accordance with the Contract and By -Laws. Section 4: Except to the extend of the limited financial contributions to the Agency set forth in the Contract and By -Laws, this municipality by its entry as a member of the Agency shall not be held responsible in any way for the claims in tort made against any other Member of the Agency; and the financial obligations are limited to the payment of claims above the self-insured retention with claims and costs below this amount individually assumed by each Member. Section 5: This Resolution shall be in full force and effect from and after its passage and approval as provided by law. ATTEST: PASSED this 10th day of February , 1987. AYES: 5 NAYS: 0 ABSENT: 1 APPROVED this 10th day of February , 1987. Patricia S. Smith Village Clerk Charles J. Zettek Village President H.E.L i0/1J,�5 85, Section 9-103 of the Illinois Revised Statutes. Nor do the MEMBERS, if permitted by law, intend to waive any immunities by the purchase of conventional insurance by the AGENCY. In order to give the MEMBERS the ability to partially pre -fund the joint risk management pool, through the possible sale of debt instruments, it is necessary to establish an extended term for the AGENCY. The obligation of the MEMBERS to repay their proportional share of the retirement of debt instruments shall, however, continue for whatever repayment schedule is contained within the debt instruments. In addition, by entering into a contract which will provide some coverage on an occurrence basis, even if the claim is filed at some time after eleven years from the date of the commencement of this contract, the MEMBERS state and acknowledge their continuing contractual obligations arising out of occurrences which take place during the term of this contract. In creating an excess self-insurance pool, the MEMBERS of this AGENCY are entering into a type of intergovernmental contract which has not previously existed in Illinois. In forming such an AGENCY, the MEMBERS state and acknowledge that the AGENCY has no responsibility for the payment of claims for amounts less than the level at which the scope of coverage of this AGENCY shall from time to time commence. The scope of coverage to be provided by the AGENCY is excess coverage to commence only after the MEMBER or some other party on behalf of the MEMBER has fully paid the amount of its self-insured APPENDIX A -5- H.F P. 10/10/86 11/14/86 1/20/87 ARTICLE IV. Commencement of the Agency. The AGENCY will commence its term at the first of the month of any month prior to and including May 1, 1987, if by the 15th day of the prior month the corporate authorities of at least 10 municipalities listed on Appendix A, whose first year's initial payments total at least $650,000.00, shall have passed the sample ordinance or resolution agreeing to be bound by the terms of this Contract and By -Laws. If the requisite number of municipalities and initial payments are achieved by the 15th of the month, other municipalities listed upon Appendix A can still join the pool by passing the ordinance or resolution before the end of that month. The municipalities shall then promptly submit a certified copy of the resolution or ordinance approving the Contract and By -Laws of the AGENCY to the Steering Committee, enclosing, if they have not already done so, a check in the amount of 50% of the first year's initial payment to the AGENCY as is shown on Appendix A. The other 50% shall be due within 30 days after the AGENCY commences its term. If the required acts necessary to bring about the commence- ment of the AGENCY have not occurred by May 1, 1987, the obliga- tion of those governmental bodies which have passed the resolu- tion or ordinance to become a MEMBER of the AGENCY shall cease and all funds sent to the Steering Committee will be returned with any interest earned. -12- H.E. 10/10/86 1/20/87 WHEREUPON under the authority granted to me by OXXXtXA(3(lU (Resolution) No. 11-87 passed by the Corporate Authorities on the 10th day of February 1982 , I do hereby execute and the Clerk does hereby attest to my signature as evidence that the Village of Elk Grove Village has approved participation in the HIGH-LEVEL EXCESS LIABILITY POOL (HELP), in accordance with this Contract and By -Laws in its executed form and as it may subsequently be validly amended. Village President ATTEST: Village Clerk This 10th day of February 19$7 OWE H.E ? CONTRACT AND BY-LAWS HIGH-LEVEL EXCESS LIABILITY POOL I N D E X 10/10/86 11/14/86 1/20/87 Page No. 1 ARTICLE I. Definitions and Purpose. 7 ARTICLE II. Powers. 9 ARTICLE III. Participation and Term. 12 ARTICLE IV. Commencement of the Agency. 13 ARTICLE V. Board of Directors. 24 ARTICLE VI. Board of Directors Meetings. 26 ARTICLE VII. Finances and Risk Management Pool. 36 ARTICLE VIII. Scope and Amount of Loss Protection. 40 ARTICLE IX. Obligations of Members. 44 ARTICLE X. Liability of Board of Directors or Officers. 46 ARTICLE XI. Additional Coverage. 47 ARTICLE XII. Optional Defense by Member. 50 ARTICLE XIII. Contractual Obligation. 52 ARTICLE XIV. Host Member 53 ARTICLE XV. Expulsion of Members. 56 ARTICLE XVI. Termination of the Agency. APPENDIX 1 H. L.P. 10/10/86 CONTRACT AND BY-LAWS HIGH-LEVEL EXCESS LIABILITY POOL ARTICLE I. Definitions and Purpose. DEFINITIONS: As used in this agreement, the following terms shall have the meaning hereinafter set out: AGENCY - The High -Level Excess Liability Pool (H.E.L.P.) established pursuant to the Constitution and the statutes of this State by this intergovernmental agreement. ANNUAL PAYMENT - The minimum amount a MEMBER shall be obligated to pay to the AGENCY during a fiscal year. CLAIMS ADMINISTRATOR - A person or group of persons who either as employees or independent contractors are employed to administer the claims made against the MEMBERS.- CONVENTIONAL EMBERS:CONVENTIONAL INSURANCE - Insurance coverage which may from time to time be purchased by or through the AGENCY from an insurance company approved by the Department of Insurance to write such coverage in Illinois for risks. which the MEMBERS determine will not be covered or be entirely covered by the JOINT RISK MANAGEMENT POOL; also excess insurance. DEBT INSTRUMENTS - Bonds, letters of credit, loan agree- ments, or other documents by which funds are borrowed _ L.P. 10/10/86 by the AGENCY or by a MEMBER of the AGENCY to fund in whole or in part the Joint Risk Management Pool. HOST MEMBER - A MEMBER of the AGENCY which issues or becomes principally obligated for a debt instrument. JOINT RISK MANAGEMENT POOL - A fund of public monies established by the AGENCY to provide risk management services, administer and jointly self -insure certain claims within an agreed scope, to purchase conventional insurance where such coverage is available in reasonable amounts and, where issued, to repay debt instruments and to pay other costs within the purposes of the AGENCY; also RISK MANAGEMENT POOL. JOINT SELF-INSURANCE - A self-insurance program in which MEMBERS agree to contribute annual, and where required, supplementary payments and other required payments such as interest payments to support the costs of administra- tion, a risk management program and a joint risk management pool. MEMBERS - Units of local government and joint contractual agencies composed of units of local government which initially or later enter into the intergovernmental con- tract established by this intergovernmental agreement. POOL CONTRIBUTION FORMULA - A formula approved by the Board of Directors which will establish the amount of required annual payment to the AGENCY. -2- H.r L.P. 10/10/86 RISK MANAGEMENT - A program attempting to reduce or limit injuries to persons or property caused by the operations of MEMBERS. STEERING COMMITTEE - A committee organized to bring about the creation of the AGENCY. Documents or funds to be sent to the Steering Committee should be sent to: George Coney Steering Committee Chairman High -Level Excess Liability Pool c/o Village of Elk Grove Village 901 Wellington Avenue Elk Grove Village, Illinois 60007 SUPPLEMENTARY PAYMENTS - Payments which may be called for, in accordance with the Contract and By -Laws, by the Board of Directors from time -to -time if the amount of the annual payment is insufficient to fund the AGENCY. PURPOSE: The AGENCY is a cooperative agency voluntarily established by contracting units of local governments and similar govern- mental entities as defined in the Illinois Constitution of 1970 pursuant to Article VIZ, Section 10 of the 1970 Constitu- tion of the State of Illinois, Chapter 85, Sections 1-101 through 9-107, and Chapter 127, Section 746 of the Illinois Revised Statutes for the purpose of seeking the prevention or lessening of liability claims for injuries to persons or property or claims for errors and omissions made against the MEMBERS and other parties included within the scope of coverage of the AGENCY. -3- H. `,.P. 10/10/86 It is the intent of the MEMBERS of the AGENCY to create an entity which will administer a joint risk management pool and utilize such funds contributed by the MEMBERS to defend and protect, in accordance with these By -Laws, any MEMBER of the AGENCY and other parties against stated liability. Such By -Laws shall constitute the substance of a contract among the MEMBERS. All fundscontained within the Risk Management Pool are funds directly derived from its Members which are units of local government or similar governmental entities within the State of Illinois. It is the intent of the parties in entering into this agreement that, to the fullest extent possible, the scope of risk management undertaken by them through a joint self-insurance program using governmental funds shall not waive, on behalf of any local public entity or public employees as defined in the Local Governmental and Governmental Employees Tort Immunity Act, any defenses or immunities therein provided. Specifically, the MEMBERS of this AGENCY intend to effect no waiver of immunities through their contribution of public funds retained within the risk management pool. Such contribu- tions being reserves to protect against uninsured risks in accordance with Chapter 127, Section 746, are not intended to constitute the issuance of a policy for insurance coverage, (by an insurance company authorized by the Department of Insur- ance to write such coverage in Illinois), as provided in Chapter MIC H.E. 10/10/86 1/20/87 85, Section 9-103 of the Illinois Revised Statutes. Nor do the MEMBERS, if permitted by law, intend to waive any immunities by the purchase of conventional insurance by the AGENCY. In order to give the MEMBERS the ability to partially pre -fund the joint risk management pool, through the possible sale of debt instruments, it is necessary to establish an extended term for the AGENCY. The obligation of the MEMBERS to repay their proportional share of the retirement of debt instruments shall, however, continue for whatever repayment schedule is contained within the debt instruments. In addition, by entering into a contract which will provide some coverage on an occurrence basis, even if the claim is filed at some time after eleven years from the date of the commencement of this contract, the MEMBERS state and acknowledge their continuing contractual obligations arising out of occurrences which take place during the term of this contract. In creating an excess self-insurance pool, the MEMBERS of this AGENCY are entering into a type of intergovernmental contract which has not previously existed in Illinois. In forming such an AGENCY, the MEMBERS state and acknowledge that the AGENCY has no responsibility for the payment of claims for amounts less than the level at which the scope of coverage of this AGENCY shall from time to time commence. The scope of coverage to be provided by the AGENCY is excess coverage to commence only after the MEMBER or some other party on behalf of the MEMBER has fully paid the amount of its self-insured -5- L.P. 10/10/86 retention. At the commencement of the term of the AGENCY, the amount of that retention is $1,000,000, per occurrence. The AGENCY, always subject to any limit on aggregate payments, shall not be obligated to expend any funds or pay any claim until the MEMBER, or some party on behalf of the MEMBER, has paid $1,000,000, including costs of defense, for each occurrence against which a claim is made against the assets of the AGENCY. Q� H.. .P. 10/10/86 ARTICLE II. Powers. The powers of the AGENCY to perform and accomplish the purposes set forth in Article I shall, within the budgetary limits and procedures set forth in these By -Laws, be the fol- lowing: (a) To employ agents, employees and independent contrac- tors, (b) To lease real property and to purchase or lease equip- ment, machinery, or personal property necessary for the carrying out of the purpose of the AGENCY,. (c) To carry out educational and other programs relating to risk reductions, (d) to cause the creation of, see to the collection of funds for, and administer a joint risk management pool and to repay debt instruments of the AGENCY, its MEMBERS, or both, (e) To purchase conventional insurance to supplement the joint risk management pool, (f) To establish reasonable and necessary loss reduction and prevention procedures which shall be followed by the MEMBERS. It is the intent of the MEMBERS -7- H." L.P. 10/10/86 that the use of this power shall be exercised with discretion with a goal of undertaking oversight re- sponsibilities rather than the direction by the AGENCY of the day-to-day operations of a MEMBER, (g) To provide risk management services, and, where re- quired, the investigation, defense,litigation, or settlement of claims, (h) To admit and expel MEMBERS as provided herein, (i) 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 the AGENCY specified in Article I or the specific powers enumerated in Article II. H. P. 10/10/86 ARTICLE III. Participation and Term. All MEMBERS of the AGENCY, except for those whose member- ship is terminated in accordance with the expulsion provisions of Article XV, and such extension of the term as may be made if the fiscal year of the AGENCY is changed, shall remain MEMBERS of the AGENCY for a period of eleven (11) years after the AGENCY shall have commenced its operations. New MEMBERS, including those units of local government listed in Appendix A, which do not join at the inception of the AGENCY, shall be admitted only by a two-thirds (2/3) affir- mative vote of the entire membership of the Board of Directors and subject to the payment of such funds and under such condi- tions as the Board shall in each case or from time to time establish. Provided further that before new MEMBERS may be admitted these by-laws will be amended to provide for the method by which the payments received from new MEMBERS will be used in the JOINT RISK MANAGEMENT POOL and the manner in which such new MEMBERS will receive the payment of any funds available after all claims have been paid or provision has been made for the payment of all claims. H L.P. 10/10/86 It is anticipated that within the first year of the term of the AGENCY, the amount of coverage as specified in Article VIII to be provided will be increased to not less than $5,000,000 per occurrence and in the aggregate for each MEMBER. This increased amount of coverage is expected to be backed by the issuance of bonds by a host MEMBER, the pro- curement of a Letter of Credit, or through some other debt instrument. In the event that the amount of coverage provided by the AGENCY should not be increased to at least $5,000,000 per occurrence and in the aggregate during the first year of its term or to commence at the beginning of the second year, any MEMBER of the AGENCY may withdraw from the AGENCY by giving written notice to the Chairman of the Board of Direc- tors within fifteen (15) days after the close of the first fiscal year. Such withdrawal shall relate back to the end of the first fiscal year. In addition, if the AGENCY should vote to increase its scope of coverage to not less than $5,000,000 at some time during the first fiscal year and should require all MEMBERS to execute documents providing in more detail the manner in which they shall be obligated to pay their propor- tional share of the retirement or repayment of a debt instru- ment, a MEMBER may withdraw from the AGENCY by refusing to execute such documents. Such withdrawal shall be effective at the date that the AGENCY shall increase the amount of its coverage, but in no case later than the end of the first fiscal year. Any MEMBER which withdraws from the AGENCY in the manners -10- H.r ".P. 10/10/80 specified above shall, however, be responsible for its propor- tional share of claims within the scope of coverage of the AGENCY as it existed prior to the effective date of its with- drawal. The proportional share due from that MEMBER shall be that proportion which its annual payments bear to those annual payments of all of the other MEMBERS. -11- H. P. 10/10/86 11/14/86 1/20/87 ARTICLE IV. Commencement of the Agency. The AGENCY will commence its term at the first of the month of any month prior to and including May 1, 1987, if by the 15th day of the prior month the corporate authorities of at least 10 municipalities listed on Appendix A, whose first year's initial payments total at least $650,000.00, shall have passed the sample ordinance or resolution agreeing to be bound by the terms of this Contract and By -Laws. If the requisite number of municipalities and initial payments are achieved by the 15th of the month, other municipalities listed upon Appendix A can still join the pool by passing the ordinance or resolution before the end of that month. The municipalities shall then promptly submit a certified copy of the resolution or ordinance approving the Contract and By -Laws of the AGENCY to the Steering Committee, enclosing, if they have not already done so, a check in the amount of 508 of the first year's initial payment to the AGENCY as is shown on Appendix A. The other 508 shall be due within 30 days after the AGENCY commences its term. If the required acts necessary to bring about the commence- ment of the AGENCY have not occurred by May 1, 1987, the obliga- tion of those governmental bodies which have passed the resolu- tion or ordinance to become a MEMBER of the AGENCY shall cease and all funds sent to the Steering Committee will be returned with any interest earned. -12- H.- P. 10/10/86 ARTICLE V. Board of Directors. (a) There is hereby established a Board of Directors of the AGENCY. Each MEMBER shall appoint one (1) person to represent that body on the Board of Directors along with another person to serve as an alternate representative when the initial representative is unable to carry out that representative's duties. The representative and alternate shall be appointed in the same manner as other appointive officers are selected when no specific method for such office is established by statute. Once such appointments are made known to the AGENCY the persons appointed shall remain in office until the AGENCY receives evidence of the appointment of other persons. The AGENCY shall be the judge of the proper appointment of representatives and alternates to the Board of Directors and shall utilize in case of dispute general principles of Illinois law. The representative and alternate selected need not be elected officials of the MEMBER. It is anticipated, but not required, that persons chosen to serve on the Board will have responsibilities within their MEMBER community for some management duties relating to the AGENCY. -13- F ".L.P. 10/10/86 The Board of Directors shall select from among the representatives a Chairman, Vice Chairman, Secre- tary and Treasurer. In the first fiscal year of the AGENCY, these persons shall be selected during the first quarter of the fiscal year to serve terms of two (2) years from the commencement date. There- after, they will be selected during the final quarter of the appropriate fiscal year to serve two year terms commencing at the start of the next fiscal year. No person may serve as Chairman of the Board of Directors for more than two (2) consecutive full two-year terms. The Chairman shall be the chief executive officer of the AGENCY. The Chairman shall preside at all meetings of the Board and the Executive Committee at which the Chairman is present. The Chairman may request information from any officer of the Board or the AGENCY or any employee or independ- ent contractor of the AGENCY. The Chairman shall vote on all matters that come before the Board or Committees on which the Chairman serves. The Chairman shall be a non-voting ex -officio member of all commit- tees of the AGENCY on which the Chairman does not directly serve. The Chairman shall have such other powers as are set forth in these By-laws and such -14- K L.P. 10/10/86 other powers as he may be given from time to time by action of the Board. The Vice Chairman shall carry out all duties of the Chairman of the Board during the absence or inabil- ity of the Chairman to perform such duties and shall carry out such other functions as are assigned from time to time by the Chairman or the Board of Directors. The Treasurer shall have charge and custody of and be responsible for all funds and securities of the AGENCY; receive and give all receipts for moneys due and payable to the AGENCY from any source whatso- ever; deposit all such moneys in the name of the AGENCY in such banks, savings and loan associations or other depositories as shall be selected by the Board of Directors; invest the funds of the AGENCY as are not immediately required in such investments as the Board of Directors shall specifically or gener- ally select from time to time; and maintain the finan- cial books and records of the AGENCY. Provided, however, that all investments of AGENCY funds shall be made only in the manner permitted to an Illinois home rule community. The Treasurer shall, in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors. -15- H - L.P. 10/10/86 The Secretary shall keep the official records of the AGENCY. The Secretary shall see to the keeping of the minutes of meetings of the AGENCY and shall retain past financial records of the AGENCY. The Secretary shall see to the sending of all notices required by these By -Laws and shall carry out other clerical duties of the AGENCY. The AGENCY shall purchase a bond in the cumulative amount of at least $2,500,000.00 to assure the fidelity of the Chairman and Vice Chairman of the Board, the Treasurer and any other officer, committee member, or employee who shall have the right to authorize the transfer or payment of AGENCY funds. Without amending these By -Laws, the Board of Directors, by motion, may increase the amount of the bonds or the persons covered. The Board may select a financial institution to carry out some or all of the functions which would otherwise be assigned to a Treasurer and may select a risk management company or agent to serve as claims administrator. The Board may also employ persons or companies as independent contractors to carry out some of the functions of officers of the AGENCY. The Board of Directors may from time to time establish other officers of the Board and may elect a representa- tive on the Board to serve in any of such offices. -16- H -,.p. 10/10/86 The Board shall fill any vacancies which may occur in any offices for the remainder of the term. (b) The Board of Directors shall determine the general policy of the AGENCY which policy shall be followed by the AGENCY officers, agents, employees and indepen- dent contractors employed by the AGENCY. Among other items, it shall have the responsibility for (1) Hiring of AGENCY officers, agents, employees and independent contractors; (2) Setting of compensation for all persons, firms and corporations employed by the AGENCY; (3) Setting of fidelity bonding requirements for officers, employees or other persons; (4) Approval of amendments to the By -Laws; (5) Approval of the acceptance of new MEMBERS and expulsion of MEMBERS; (6) Approval and amendment of the annual budget of the AGENCY; (7) Establishment and amendment of the scope and amount of pooled self-insurance coverage offered by the AGENCY; (8) Resolution of disputes over the scope of pooled self-insurance coverage provided by the AGENCY; (9) Approval of educational and other programs relating to risk reduction; (10) Approval of reasonable and necessary loss reduction and prevention procedures which shall be followed by all MEMBERS; (11) Purchase of conventional insurance; (12) Authorization to a host MEMBER to issue debt instruments when all other contractual prerequi- -17- H '..P. 10/10/86 sites for such issuance have been effected; (13) Approval of annual and supplementary payments to the Risk Management Pool for each MEMBER; (14) Approval of rules and regulations regarding the payout of funds from the Risk Management Pool as shall from time -to -time seem appropriate. (c) Each MEMBER shall be entitled to one (1) vote on the Board of Directors. Such vote may be cast only by the designated representative of the MEMBER or in the representative's absence, by an alternate selected by the MEMBER in the same manner as specified for the selection of the principal representative. No proxy votes or absentee votes shall be permitted. Voting shall be conducted by voice vote unless one (1) or more MEMBERS of the Board of Directors shall request a roll call vote; provided, however that: 1. Any vote which requires a greater than majority vote for passage shall be by roll call vote, and 2. Any member of the Board who abstains or casts a vote in a minority position on a matter upon which a voice vote is taken may have that vote specifically recorded in the minutes by indicating such desire to the presiding officer. (d) The representative selected by the MEMBER shall serve until a successor has been selected. The representa- CHM H - T�.P. 10/10/86 tive chosen by the MEMBER may be removed in the same manner as other non -tenured appointive officers within the MEMBER. In the event that a vacancy occurs in the representative or alternate representative selected by the Corporate Authorites of a MEMBER, that body shall appoint a successor. The failure of.a MEMBER to select a representative or the failure of that person to participate shall not affect the responsibi- lities or duties of a MEMBER under this Contract. (e) The Board of Directors shall have the power to esta- blish both standing and ad hoc committees. It is contemplated that the AGENCY will have at least the following standing committees: Finance, Risk Manage- ment, Claims Review and Membership and Revenue. The Chairman of the Board may also establish ad hoc committees which do not conflict with those established by the Board. Unless the Board of Directors shall establish some other procedure, the selection of members of the Board of Directors who shall serve on such committees and chair them shall reside with the Chairman of the Board of Directors, but such decisions shall be confirmed by the Board. The Chair- man may make interim appointments to fill vacancies which occur between Board meetings. The Board of Directors may assign to a committee the authority to authorize the expenditure of funds -19- H. P. 10/10/86 for administrative expenses, but the settlement of claims or suits to be paid from the joint risk manage- ment pool shall be decided by the Board of Directors, except as the Board shall specifically assign in whole or in part such function to a person or com- mittee. The Board of Directors shall create an Executive Committee. That Executive Committee shall at a minimum consist of the Chairman and Vice Chairman of the Board, the Treasurer, the representative or alternate of any host MEMBERS, and the Chairman of the other standing committees of the AGENCY along with other persons. The Executive Committee shall make recommenda- tions to the Board and shall undertake other functions as the Board shall assign. (g) A quorum shall consist of a majority of the MEMBERS of the Board of Directors. Except as provided in Subsection (h), herein, or elsewhere in these By -Laws, a simple majority of a quorum shall be sufficient to pass upon all matters. (h) A greater vote than a majority of a quorum shall be required to approve the following matters: (i) Such matters as the Board of Directors shall establish within its rules as requiring for passage a vote greater than a majority of a quorum, provided, however, that such a rule -20- H T.I.P. 10/10/86 can only be established by a greater than a majority vote at least equal to the greater than majority percentage within the proposed rule. (ii) The approval of the payment of the settlement of claims from the joint risk management pool shall require the concurrence of a majority of the entire membership of the Board of Direc- tors. By such a vote, the Board of Directors may also establish procedures whereby in cases where a rapid decision on the terms of a prospec- tive settlement must be made, a committee or person may approve settlements in an amount higher than that previously authorized by the Board. (iii) The admission of a new MEMBER and the expulsion of a.MEMBER shall require at least the concur- rence of two-thirds (2/3) of the entire member- ship of the Board of Directors. (iv) The purchase of excess or aggregate insurance shall require at least the concurrence of two- thirds (2/3) of the entire membership of the Board of Directors. (v) Any amendment of these By -Laws except as provided in Subsection (vi) below, shall require at least the concurrence of two-thirds (2/3) of the entire membership of the Board of Directors. -21- —L.P. 10/10/86 (vi) The amendment of these By -Laws to cause the termination of this agreement sooner than eleven (11) years after its commencement but only if any debt instruments issued have been entirely paid or provision has been made for their payment, or the amendment of these By -Laws to cause a modification of more or less than the high or low range of the debit -credit formula, as provided for in Article VII(i), or the modifi- cation of the scope or amount of coverage of the AGENCY and the authorization to a host MEMBER which has specifically agreed by resolu- tion of its corporate authorities to obligate itself to execute a debt instrument shall require that specific written notice of the proposed change be sent by registered or certified mail to the chief executive officer of the MEMBER and to the regular and alternate representative of the MEMBER on the Board of Directors, no less than ten (10) days prior to a meeting at which this matter is proposed and that the amendment as proposed or as amended at a Board meeting shall require concurrence of at least two-thirds (2/3) of the entire membership of the Board of Directors. -22- F L.P. 10/10/86 (i) No one serving on the Board of Directors shall receive any salary or other payment from the AGENCY. Any salary, compensation, payment or expenses for such representative, shall be paid by each MEMBER separate from this Contract. Provided, however, that the Chairman of the Board, Vice Chairman, Treasurer and Secretary and such other Board officers as are given by the Board of Directors a right to reimbursement may submit to the Board of Directors for its approval claims for reimbursement of expenses incurred in the pursuit of their positions as officers of the AGENCY. The reimbursement for such expenses shall include amounts advanced on behalf of the AGENCY either by the officer himself or by a MEMBER of the AGENCY. A host MEMBER may be compensated for agreeing to issue or issuing a debt instrument, be reimbursed for expenses or be granted credits for sums otherwise .due the AGENCY. -23- H.i P. 10/10/86 ARTICLE VI. Board of Directors Meetings. (a) Regular meetings of the Board of Directors shall be held at least three (3) times a year. The dates of regular meetings of the Board shall be established at the beginning of each fiscal year. Any item of business may be considered at a regular meeting. A special organizational meeting may be held within thirty (30) days prior to the commencement date of the AGENCY upon not less than seven (7) days' written notice from the Chairman of the Steering Committee. At least one (1) meeting must be held during the first half of the fiscal year. Special meetings of the Board of Directors may be called by its Chairman, or by representatives of any three (3) MEMBERS. Ten (10) days' written notice of regular or special meetings shall be given to the official representatives of each MEMBER government and an agenda specifying the subject of any special meeting shall accompany such notice. Business conducted at special meetings shall be limited to those items specified in the agenda. Provided, however, that where it is necessary to call a special meeting of the Board to authorize -24- -.L.P. 10/10/86 the payment of the settlement of a claim or claims or other matter requiring rapid attention, such a meeting may be called by delivered written or tele- phonic notice of no less than 48 hours. (b) The time, date and location of regular and special meetings of the Board of Directors shall be determined by the Chairman of the Board of Directors or by the convening authority. (c) To the extent not contrary to these By-laws, and except as modified by the Board of Directors, Roberts Rules of Order, latest edition, shall govern all meetings of the Board of Directors. (d) Minutes of all regular and special meetings of the Board of Directors shall be sent to all members and alternate members of the Board of Directors within twenty (20) days after each meeting. •The Board shall subsequently vote on the approval of the minutes. -25- H.1 P. 10/10/86 ARTICLE VII. Finances and Risk Management Pool. (a) The fiscal year of the AGENCY shall commence on the date the AGENCY comes into existence and shall be for a twelve (12) month period except that the Board may change the date of the commencement of the fiscal year. In the event that the Board chooses to change the fiscal year of the AGENCY, the term of this con- tract shall be extended for the number of months necessary to accommodate the new fiscal year, provided, however, that the right of withdrawal accorded MEMBERS during the first fiscal year of the AGENCY shall terminate twelve (12) months from the commencement date without regard to any change in the fiscal year. (b) The Board of Directors shall approve a preliminary budget for the administration of the AGENCY for each forthcoming year during the final quarter of the prior fiscal year. Copies of all preliminary and final budgets shall be promptly mailed to each member of the Board of Directors. The Board of Directors shall, before the end of the year prior to the start of each fiscal year, approve a final budget, the -26- I L.P. 10/10/86 pool contribution formula, and the amount of annual payments due from each MEMBER, including, where applic- able, a debit and credit calculation for each MEMBER and the date upon which the payment is due. Provided, however, in its first year of operations, the initial annual payment for the first year of the AGENCY shall be that amount shown on Appendix A and the budget shall be that approved by the Board of Directors during the first quarter of the fiscal year. Failure 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 the AGENCY so long as such budgets are finally adopted, and the MEMBERS are given at least thirty (30) days after the passage of the final budget or the determination of amounts due in which to make payments to the AGENCY. Where the proceeds of a debt instrument have been received, the obligation of MEMBERS to repay that debt shall not be dependent upon the approval of a budget. Budgets may be amended at any time by majority vote of the Board of Directors. (c) Calls for supplementary payments shall be made by the Board of Directors. Supplementary payments shall be called for where required in order that the scope and amount of coverage of the AGENCY can be provided -27- H I.P. 10/10/86 to all MEMBERS. The Board shall, where necessary, make calls for supplementary payments from MEMBERS, including expelled MEMBERS, claims which occurred during the time of their membership. Provided, that in any year in which the scope of coverage is provided on a "claims made" basis, supplementary payments may only be used to pay and administer claims made during the subject year or such later period as assumed by the AGENCY or specified in a conventional insurance policy purchased by the AGENCY. The forwarding of annual and supplementary payments within a time specified in notices to the MEMBERS giving them not less than thirty (30) days to make such payments, shall be of the essence of this con- tract. Supplementary payments shall only be required by the Board of Directors in a situation in which there is a reasonable concern that the sum remaining from the annual payment or prior supplementary payments will not be sufficient to meet the responsibilities of the AGENCY. MEMBERS shall be responsible for supplementary payments during the entire life of the AGENCY and any later period when claims or expenses need be paid which are attributable to the year of membership when the event out of which the expense or claim occurred or for "claims made" coverage during that claim year or such later period assumed by the COM I L.P. 10/10/86 AGENCY or specified in a conventional policy. In years after the first fiscal year, the Board of Direc- tors may permit annual or supplementary payments to be made on a monthly or quarterly basis. (d) Each MEMBER shall have prepared and submit to the AGENCY an annual audited statement of all revenues prepared by a certified public accountant on a G.A.A.P. basis. For the purpose of computing amounts due for participation in the AGENCY, revenues shall be classified by fund type as follows: General Fund: Included: 1). taxation of all types; real estate, sales, utility, income tax etc. 2). license and permit fees 3). intergovernmental revenue 4). fines and forfeitures 5).. interest earnings 6). fees charges or service 7). franchise revenues Excluded: 1). refunds 2). interfund transfers Special Revenue Funds Included: 1). taxation of all types 2). intergovernmental revenue 3). interest earnings 4). grant funds Excluded: 1). interfund transfers 2). refunds Debt Service Funds Special Assessment/Special Service District Funds -29- H P. 10/10/86 Included: 1). taxation of all types 2). interest earnings Excluded: 1). proceeds from new debt where proceeds are to be used to retire existing debt 2). interfund transfers Caoital Proiect Funds Included: 1). taxation of all types 2). interest earnings 3). developer contributions 4). grant funds Excluded: 1). interfund transfers 2). bond proceeds Enterprise Funds Included: 1). all sales 2). license and permit fees 3). service charges 4). interest earnings 5). taxation 6). grant funds Excluded: 1). interfund transfers 2). revenues collected while acting as an agent for another governmental body where amounts collected are passed through Internal Service Funds - Excluded Trust and Agency Funds - Excluded General Exclusion All revenues associated with a specifically excluded risk or activity will not be included for the calcula- tion of premiums. Revenues shall be computed using the figures shown in the annual audit statement of the MEMBER for the -30- H .P. 10/10/86 last fiscal year available on the date at which the audits are due. In the event a current audited finan- cial statement is not available, or, if available, does not present revenues in the manner required, the Board of Directors shall estimate the revenues of the MEMBER based upon the best figures then avail- able. The decision of the Board shall be final. For the first year of the existence of the AGENCY, revenues shall be those utilized in the development of the computation of the annual payment shown in Appendix A. (e) The Board of Directors shall in subsequent years after reviewing the audit submitted from each MEMBER establish a tentative computation of the revenues of each MEMBER. Written notice of this tentative determination shall be sent to each MEMBER. If a MEMBER wishes to contest the determination of the amounts, it may request a hearing before the Board of Directors. The decision by the Board after such hearing shall be final unless the Board shall be found by a court to have committed a clear abuse of discretion. (f) During the final quarter of each fiscal year, the Board of Directors shall establish the pool contribu- tion formula which will be used in determining the annual payments due from each MEMBER for the next -31- H L.P. 10/10/85 succeeding fiscal year. The four factors which will be equally weighted in creating the formula are: Revenues, as defined in Article VII(d), Miles of Streets, Full -Time Equivalent Employees and the Total Number of State Licensed Vehicles. MEMBERS shall be required to provide information to the AGENCY which will allow the Board of Directors to quantify each of these four factors. All questions relating to the computation of these four factors will be resolved by the Board of Directors and will be applied equally to all MEMBERS. The assessment of supplemen- tary payments, whenever required to be paid, will be based upon the same proportion which the payment of one MEMBER bears to the payment of another MEMBER in the annual payment, except where the Board of Directors should modify that proportion based upon an error in the information reported or an error in computation. In the event that for any reason the proportional payments due from a MEMBER shall be adjusted, the amounts due from other MEMBERS shall likewise be subject to adjustment but the implementa- tion of the adjustment may be delayed until the funds are needed. (g) If all claims known or unknown within the scope of coverage provided by the AGENCY, plus any other amounts owed by the AGENCY during any particular period for -32- B L.P. 10/10/86 which funds of the AGENCY were combined to create the joint risk management pool, have either been paid or provision has been made for such payment, the Board of Directors as then constituted shall distribute any surplus funds to the MEMBERS which constituted the membership of the Pool during that period after first deducting therefrom reasonable administrative and other non -allocated costs incurred by the AGENCY in the processing of the claims in years other than the period for which the claim was made. The distribution among the MEMBERS shall be in the same proportion to the total as their payments during the period bore to the payments of all MEMBERS less any sums owed the AGENCY. Provided, however, that a MEMBER may elect to transfer such excess funds to the Joint Risk Management Pool for any later or prior period for which it owes or will owe funds to the AGENCY. MEMBERS shall remain obligated for all payments due the AGENCY under this Contract and By -Laws if it should be determined even after the payment of any rebate that additional sums are neces- sary to fulfill the contractual obligations agreed to herein. Such obligation shall continue so long as there are claims made against the AGENCY for in- juries that fall within the scope of coverage provided by the AGENCY for the period in question. -33- F L.P. 10/10/86 (h) The Board of Directors shall provide to the MEMBERS an annual audit of the financial affairs of the AGENCY to be made by a certified public accountant at the end of each fiscal year in accordance with the gener- ally accepted auditing principles. The annual report shall be delivered to each MEMBER within 180 days after the close of the prior fiscal year. (i) The Board of Directors may require reports from all agents and independent contractors including attorneys with regard to the status of their work for the AGENCY, problems encountered during the performance of their duties, and recommendations for improvements in the performance of the AGENCY including their efforts on the AGENCY'S behalf. (j) The Board of Directors may, commencing with the fourth year of the AGENCY, apply to the annual and supplemen- tary payments due from a MEMBER a debit or credit computed in a manner determined by the Board of Direc- tors which shall affect the payment due from the MEMBER to the extent that the number and the amount of reserved claims and losses attributable to that MEMBER in no more than three prior years, in amounts of at least $10,000.00, shall compare with the general frequency and amount of similar claims and losses attributable to MEMBERS of the AGENCY in proportion to the level of their payments to the AGENCY in rela- -34- F L.P. 10/10/86 tionship to all payments made to the AGENCY. In developing a debit -credit formula, the AGENCY may also consider the existence and effectiveness of the loss prevention programs put in place by the MEMBERS. All adjustment shall not result in a credit of more than 25% nor a debit of more than 25% from the average. The Board of Directors shall approve the debit or credit formulation either directly or in the approval of the adjusted annual payment due from the MEMBERS. Provided, however, that the Board of Directors shall, for each year of the existence of the AGENCY provide a sum in the joint risk manage- ment pool which, after the debit or credit adjustment has been made, shall be in a gross amount sufficient to pay for the anticipated total costs required to fully fund the operations of the AGENCY. (k) Those MEMBERS which did not contribute to the initial developmental costs of the AGENCY and became MEMBERS at the commencement date shall be required to pay an additional sum to the AGENCY such that all initial MEMBERS shall have equally contributed to such costs. Any excess sums may be returned or placed within the joint risk management pool. -35- H.E P. 10/10/86 ARTICLE VIII. Scope and Amount of Loss Protection. Scope of coverage and the amount of coverage to be provided by the AGENCY shall be determined from time to time by the Board of Directors. The AGENCY may modify both the scope of coverage and the amount of coverage, both upward and down- ward, provided, however, that any modifications shall only apply prospectively. The AGENCY shall provide coverage for each MEMBER up to $1,000,000 in the aggregate for losses in excess of $1,000,000 per occurrence. No indemnification shall be provided by the AGENCY until the MEMBER has expended $1,000,000 in loss payments as a result of the occurrence. Defense costs shall be included toward satisfying both the loss payment by the MEMBER and the coverage provided by the AGENCY. Coverage, other than errors and omissions coverage, is provided by the AGENCY only for those occurrences which occur during a fiscal year for which the MEMBER has made an ANNUAL PAYMENT and all required SUPPLEMENTARY PAYMENTS and for which written notice is given to the AGENCY within ten (10) years subsequent to the date of occurrence. Where an occurrence is continuous and involves more than one such fiscal year, -36- E.L.P. 10/10/86 coverage is provided only to the extent of the coverage amounts in effect, as regards the MEMBER, during the fiscal year in which the occurrence began. Errors and omissions coverage is provided by the AGENCY only for those occurrences which occur subsequent to the first day of continuous membership in the AGENCY by the MEMBER and for which written notice is first given to the AGENCY during a fiscal year for which the MEMBER has made an ANNUAL PAYMENT and all required SUPPLEMENTARY PAYMENTS. Aggregate limits are provided on a fiscal year basis and all payments to or on behalf of a MEMBER for occurrences, other than errors and omissions, occurring during the fiscal year plus all payments to or on behalf of that MEMBER for errors and omissions occurrences for which written notice is first given during the fiscal year accumulate towards the satisfaction of the aggregate limit for the fiscal year. The amount of money which a member must pay before the obligation of the AGENCY shall commence is known as the self- insured retention. The AGENCY will commence with a self-insured retention by its MEMBERS of $1,000,000 per occurrence. Under no circumstances shall the obligation of this AGENCY commence until a MEMBER has paid for that occurrence the amount of the self-insured retention established by the AGENCY from time to time. The MEMBERS of the AGENCY are aware of a limited number of cases in the United States in which insurance companies purporting to offer coverage excess of a deductible or a self- -37- H L.P. 10/10/85 insured retention amount have been compelled by courts to commence the level of their coverage at lower levels. By entering into this contract each MEMBER acknowledges that it is the absolute understanding of the MEMBERS of this AGENCY that under no circumstances shall the AGENCY be compelled to make any payments until a MEMBER has fulfilled the full responsibility of paying the total amount of the self-insured retention. MEMBERS may fund the amount of the self-insured retention through reserve funds, conventional insurance, membership in pools, the issuance of judgment funding bonds or other methods. The method by which a member of the AGENCY fulfills its responsibility to fund the self-insured retention is a matter of no consequence to this AGENCY. This AGENCY intends to offer a scope of coverage which will commence only in excess of the self-insured retention. The extent of intergovernmental cooperation or contractual obligation of the MEMBERS to fund the AGENCY does not extend whatever to any primary coverage or obligations below the amount of the self-insured retention. The MEMBERS of the AGENCY would not have entered into this Contract'and By -Laws if any MEMBER understood the obligation of the AGENCY to its MEMBERS to extend in any manner below the level of the self-insured retention. For the first year of the existence of the AGENCY the MEMBERS intend to provide excess coverage which would typically be provided by conventional comprehensive general liability I" E.L.P. 10/10/86 vehicular liability, and errors and omissions policies. Because the parties desire to commence the term of this AGENCY as soon as possible, they have not agreed upon the text of such coverage, including provisions relating to the obligation of the members to report claims, to defend the claims within the level of their self-insured retention, dispute resolutions and other items typically found in conventional insurance policies. The parties intend to adopt such provisions as are applicable for a joint governmental self-insurance pool. Within the first six (6) months of the commencement of the AGENCY, the Board of Directors shall, by a vote of at least the concurrence of a majority of the entire membership of the Board of Directors, approve a specific text of the scope of coverage offered which document shall apply to all claims which occurred prior to the approval of the textural material, and to all subsequent claims until the nature of the scope of coverage shall be modified in the manner provided in Article V(h)(vi). In the event that there should be a conflict between the text of the scope of coverage document and the Contract and By -Laws, this later document shall prevail. The AGENCY may from time to time expand the scope or amount of coverage to be provided, which expansion may be extended to the payment of claims which occurred prior to the date of the expansion. In the event that the AGENCY should reduce or modify the amount or scope of coverage to be provided, such reduction shall only apply to claims which occurred subsequent to the date of the modification. -39- H L.P. 10/10/35 ARTICLE IX. Obligations of Members. The obligations of MEMBERS of the AGENCY shall be as follows: (a) To appropriate, budget for, where necessary to levy for and to promptly pay all annual and supplementary or other payments to the AGENCY at such times and in such amounts as shall be established by the Board of Directors within the scope of this agreement. MEMBERS shall also be required to pay their propor- tional share of the repayment of principal and interest obligations and other costs incurred by a host MEMBER in obligating itself under a debt instrument. The proportional share of each MEMBER shall be that propor- tion its annual payment for that fiscal year bears to the annual payments of the other MEMBERS. Any delinquent payments shall be paid with a penalty which shall be equal to the highest interest rate allowed by statute to be paid by an Illinois home rule municipality or the prime rate then in effect at the Continental Illinois National Bank, or the First National Bank of Chicago, whichever rate is lower. -40- F ^.L.P. 10/10/66 (b) To select a person.to serve on the Board of Directors and to select an alternate representative. (c) To allow the AGENCY reasonable access to all facilities of the MEMBER and all records relating to claims and the financial obligations of a MEMBER. (d) To provide the Pool the right and give it the opportu- nity to associate with the MEMBER or any conventional insurance carrier providing coverage to the MEMBER, or both, in the defense and control of any claim, suit or proceeding which involves or may involve the Pool and in which event the MEMBER, such insurers and the Pool shall cooperate in all things in defense of such claim, suit or proceeding. (e) To furnish full cooperation with the AGENCY'S attor- neys, claims administrator and any agent, employee, officer or independent contractor of the AGENCY relat- ing to the purpose and powers of the AGENCY. (f) To follow in its operations all loss reduction and prevention procedures established by the AGENCY within its purpose and powers, including, but not limited to the use of release forms, posting of notice, parti- cipation in educational and record-keeping programs, limitations in activities offered, and the use of loss preventative techniques and devices. (g) To furnish to the AGENCY an audit prepared by a Certi- fied Public Accountant of all revenues of the MEMBER -41- I L.P. 10/10/86 for any fiscal year of the MEMBER for which figures are requested by the AGENCY. If an audit is not furnished, the AGENCY may employ an auditor to peform such an audit and the MEMBER shall be required to pay the reasonable cost of such audit. (h) To report to the Secretary of the AGENCY and the claims administrator, at the earliest practicable moment, any information of a claim received by the MEMBER and from which the MEMBER could reasonably conclude that coverage from the AGENCY will be sought. In the event that the required information is not submitted to the Secretary and claims administrator within the time periods set forth above, the Board of Directors of the AGENCY, may in whole or in part decline to provide a defense to the MEMBER or to extend the funds of the AGENCY for the payment of losses or damages incurred. In reaching its deci- sion, the Board shall consider whether and to what extent the AGENCY was prejudiced in its ability to investigate, defend or earlier settle the claim due to the failure of the MEMBER to'promptly furnish notice of the claim to the Secretary. In the absence of a fraud or a clear abuse of discretion, the decision of the Board of Directors shall be final. Information must be furnished to the AGENCY not only at the time that a claim is made which could reasonably be expected -42- F L.P. 10/10/86 to be within the scope of coverage of the AGENCY, but also updated information must be provided as the nature of the claim becomes more fully known and litigation occurs and proceeds. Information must also be furnished if a claim reasonably thought to be below the level of the amount of coverage provided by the AGENCY should approach or be asserted by the claimant to fall within the amount of coverages. (i) To either employ a professional claims administration firm to handle all self-insured claims, enter into an insurance contract (for claims at lower levels of coverage than those provided for by the AGENCY) which includes an obligation of that insurance company to furnish information to the AGENCY of pending claims or, if the MEMBER performs claims administration utilizing its own personnel, the obligation to employ a firm to perform claims auditing. The claims auditing firm will be chosen by the AGENCY and the reasonable cost of such audit will be borne by the MEMBER. (j) In the event that the AGENCY shall be required to expend funds for administrative, legal or other costs brought about by the failure of a MEMBER to pay sums owed the AGENCY or to take other actions required under this Contract and By -Laws, such amounts expended shall be added to the sums due the AGENCY and shall be payable by the MEMBER. -43- H.E P. 10/10/86 ARTICLE X. Liability of Board of Directors or Officers. The members of the Board of Directors or officers of the AGENCY should 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 reason- able care; nor for loss incurred through investment of AGENCY funds, or failure to invest. No Director shall be liable for any action taken or omitted by any other Director. No Director shall be required to give a bond or other security to guarantee the faithful performance of the Director's duties hereunder. The Board of Directors shall authorize, if neces- sary, the use of the joint risk management pool to defend and hold harmless any Director or officer for actions taken by the Board or performed by the Director or officer within the scope of his authority for the AGENCY. The AGENCY may purchase conventional insurance providing similar coverage for such Directors and officers and if such coverage has been purchased shall require that the coverage of the insurance -44- P L.P. 10/10/86 company shall be relied upon before utilizing the funds of the joint risk management pool to provide a defense or make a settlement. -45- H. P. 10/10/86 ARTICLE XI. Additional Coverage. Membership in the AGENCY shall not preclude any MEMBER from purchasing any insurance coverage above those amounts purchased by the AGENCY. The AGENCY shall make its facilities available to advise MEMBERS of the types of additional or different coverages available to units of local government. -46- H_.P. 10/10/86 ARTICLE XII. Optional Defense by Member. The scope of coverage provided by this AGENCY shall only commence at such point that the MEMBER has made a good faith offer to settle the claim at a level within the self-insured retention of the MEMBER and that offer has been rejected. Where the scope of coverage of the AGENCY is activated, the MEMBER, through the procedure set out in this article, shall have an opportunity to object to a settlement whenever the AGENCY proposes to settle any pending claim or suit. The MEMBER shall be given advance notice of any proposed settlement. Such notice may be given by the establishment of a reserve amount in documents provided to the MEMBER by or through the AGENCY, provided that the amount of the settlement does not exceed the amount reserved. The officers and employees of the AGENCY shall, however, endeavor to give specific oral or written notice to a MEMBER of the exact amount of any pro- posed settlement at least fourteen (14) days prior to the date at which the AGENCY proposes to bind itself to pay such settlement amount. It is recognized by the MEMBERS that under some circumstances the AGENCY may not be able to give fourteen (14) days' prior oral or written notice of the proposed settle- -47- F L.P. 10/10/86 ment. The officers, employees or independent contractors of the AGENCY shall attempt to give the MEMBERS as much notice of the settlement as is possible under the circumstances of each case. If a MEMBER should disagree with the amount for which the AGENCY proposes to settle a case or claim, the represent- ative of the MEMBER on the Board of Directors of the AGENCY, the alternate member, the local governmental attorney or the chief administrative officer of the MEMBER may notify the claims administrator of the AGENCY that the MEMBER exercises its right to prevent the AGENCY from reaching a settlement at the agreed-upon amount. The claims administrator may require that such information be transmitted in writing. In the event that the case or claim is eventually resolved through a settlement or judgment within the dollar limits of coverage provided by the AGENCY and in an amount less than the amount at which the case could have been previously settled by the AGENCY, then the MEMBER which has undertaken the costs of its defense shall be entitled to its additional actual costs including reasonable attorneys' fees, up to the level at which its costs and the prior allocated costs of the AGENCY, including reasonable attorneys' fees, equal the amount at which the case could have been settled by the AGENCY. To the extent that the case or claim is resolved through settlement or judgment at an amount greater than that at which the case or claim could have been previously settled by the AGENCY ■a F -.L.P. 10/10/86 and a claim is thereby made within the dollar limits of coverage provided by the AGENCY, the MEMBER shall be obligated for that portion of the settlement or judgment which exceeds the sum of money at which the case could have been earlier settled by the AGENCY including all allocated costs of the AGENCY. If at any time the amount of the allocated. costs of the AGENCY devoted to the case shall equal or exceed the amount at which the case could have been settled and the AGENCY is providing a defense, the AGENCY may require periodic supplementary pay- ments from the MEMBER if the MEMBER wishes to have the AGENCY continue to provide the defense. Allocated costs shall mean those costs which are allocated to individual cases under the bookkeeping and accounting system utilized by the AGENCY. The AGENCY may establish the amount at which it could have settled the case through a written settlement offer by the plaintiff or through other competent evidence of the availability of the settlement at a particular sum and the desire of the MEMBER to preclude settlement discus- sions and the sum at which the AGENCY believed the case could have been settled. -49- H. P. 10/10/86 ARTICLE XIII. Contractual Obligation. This document shall constitute a contract among those entities which become MEMBERS of the AGENCY. The obligations and responsibilities of the MEMBERS set forth herein, including the obligation to take no action inconsistent with these By -Law as originally written or validly amended shall remain a contin- uing obligation and responsibility of each MEMBER. The terms of this Contract may be enforced in a court of law by the AGENCY or any of its MEMBERS. The consideration for the duties herewith imposed upon the MEMBERS to take certain actions and to refrain from certain other actions is based upon the mutual promises and agreements of the MEMBERS set forth herein. If any dispute arises regard- ing this Contract, the MEMBERS agree that a court shall inter- pret the actions and duties of the parties in accordance with the specific standard or burden of proof set out in this Contract and By -Laws. This Contract and By -Laws may be executed in duplicate originals and its passage by entities listed in Appendix A shall be evidenced by a certified copy of an ordi- nance or resolution passed by a majority of the members of -50- F L.P. 10/10/85 the governing board then in office. Provided, however, that except to the extent of the financial contributions of the AGENCY agreed to herein or such additional obligations as may come about through amendments to these By -Laws no MEMBER agrees or contracts herein to be held responsible for any claims in tort or contract made against any other MEMBER. The contracting parties intend in the creation of the AGENCY to establish an organization for joint risk management only within the scope herein set out and have not herein created as between MEMBER and MEMBER, except for that limited extent, any relationship of surety, indemnification or responsibility for the debts of or claims against any MEMBER. -51- H.F P. 10/10/86 ARTICLE XIV. Host Member. The Village of Elk Grove Village has agreed to consider serving as a host MEMBER for the AGENCY. During its first fiscal year, the AGENCY shall produce documents to present to its host MEMBER and all other MEMBERS to cause the issuance or commitment to issue a debt instrument. It is anticipated that the debt instrument will be general obligation bonds in the amount of $15,000,000 or a letter of credit in that amount. Elk Grove Village shall not be required to execute any document obligating itself to be a host MEMBER with which it does not agree. All of the reasonable costs incurred by Elk Grove Village in considering whether to fulfill its role as a host MEMBER shall be paid for by the AGENCY. If the AGENCY has on hand funds other than those received from the debt instrument, Elk Grove Village may require that any claims be paid first out of such funds before funds procured from a debt instrument are utilized. Funds procured by Elk Grove Village through the issuances of a debt instrument issued to benefit the AGENCY shall be paid directly to the AGENCY. Other MEMBERS of the AGENCY may also voluntarily agreed to be a host MEMBER. -52- H. ".P. 10/10/86 ARTICLE XV. Expulsion of Members. By the concurrence of two-thirds (2/3) of the entire membership of the Board of Directors present at a regular or special meeting, any MEMBER may be expelled. Such expulsion may be carried out for one or more of the following reasons: (a) Failure to make any payments due to the AGENCY. (b) Failure to undertake or continue loss reduction and prevention procedures adopted by the AGENCY. (c) Failure to allow the AGENCY reasonable access to all facilities of the MEMBER and all records which relate to the purpose or powers of the AGENCY. (d) Failure to furnish full cooperation with the AGENCY'S attorneys, claims administrator and any agent, employ- ee, officer or independent contractor of the AGENCY relating to the purpose and powers of the AGENCY. (e) Furnish incorrect financial, claims history or other information to the AGENCY. (f) A history of excessive pending or closed claims or losses which in the absolute discretion of the Board of Directors creates an unacceptable risk of similar adverse future claims or losses. -53- H.F.L.P. 10/10/86 (g) Failure to carry out any obligation of a MEMBER which impairs the ability of the AGENCY, to carry out its purpose or powers. No MEMBER may be expelled except after written notice from the AGENCY of the alleged failure along with a reasonable opportunity of not less than thirty (30) days to cure the alleged failure. Provided, however, that no opportunity to cure shall be necessary for an expulsion brought in whole or in part because of a poor loss or claim history. The MEMBER may request a hearing before the Board before any decision is made as to whether the expulsion shall take place. The hearing must be requested in writing not later than five (5) days after the time to cure has expired or in case no time to cure is required within 30 days of the notice by the Board of an intent to expel. Times required for notices under this contract shall be measured from the date of mailing or delivery if personally delivered. The Board shall set the date for a hearing which shall not be less than ten (10) days after the request for the hearing. If the time to request a hearing has passed and the MEMBER has not requested a hearing or if no hearing is required or if such a hearing has been requested, no later than sixty (60) days after the close of that hearing, the Board shall determine whether the MEMBER will be expelled. A decision by the Board to expel a MEMBER shall be final unless the Board shall be found by a Court to have committed a clear abuse of discretion. The Board of Directors may establish the date at which the expulsion of the MEMBER shall be effective -54- F E.L.P. 10/10/36 at any time not less than thirty (30) days after the vote expelling the MEMBER has been made by the Board of Directors. If the motion to expel the MEMBER 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 thirty (30) days after the date of the vote by the Board of Directors expelling the MEMBER. After expulsion, the former MEMBER shall continue to be fully obligated for any annual or supplementary payments for which it was delinquent at the time of its expulsion and supplementary payments later voted by the AGENCY for losses which were within the scope of coverage of the AGENCY during the time of its membership, along with any other unfulfilled obligation as if it was still a MEMBER of the AGENCY. The expelled MEMBER shall, after expulsion, no longer be entitled to participate or vote on the Board of Directors or to receive the benefits of self-insurance coverage for any claim made after the date of expulsion and depending upon the nature and amount of pending claims against an expelled MEMBER, the Board of Directors may limit the amount of coverage to be provided or require the expelled MEMBER to make additional payments to the AGENCY to retain the coverage. No MEMBER expelled from the AGENCY, except for the payment of third -party claims, shall receive any return from the AGENCY of funds paid into the Joint Risk Management Pool. -55- H.F `.P. 10/10/86 ARTICLE XVI. Termination of the Agency. At the conclusion of the eleven -year term of this Contract and By -Laws, all MEMBERS shall remain fully obligated for their portion of any claim against the assets of the joint risk management pool which is within the scope of coverage of the AGENCY along with any other unfulfilled obligation, including but not limited to calls for supplementary payments attributable to the period of their membership which may be called for in subsequent years. The Board of Directors shall continue to meet on such a schedule as shall be necessary to carry out the winding up of the affairs of the AGENCY. Because of the nature of claims filed against governmental bodies, it is contemplated that the Board may be required to meet for some time to conclude all matters relating to the termination of the AGENCY. When all of the affairs of the AGENCY are wound up and all claims and expenses of the AGENCY are paid, the members of the Board of Directors shall distribute any funds remaining in the joint risk management pool to the MEMBERS in the proportion which those MEMBERS contributed funds to the AGENCY. MEMBERS expelled from the -56- H -,L.P. 10/10/86 AGENCY shall not be entitled to the return of any funds. At the conclusion of the eleven (11) year term of this Contract and By -Laws, if all debt instruments shall have been repaid, MEMBERS of the AGENCY may elect to distribute to the then existing members some of the funds contained within the joint risk management pool. The distribution of those funds, however, shall not affect the obligation of the MEMBERS to make supple- mentary payments to the joint risk management pool in the event that claims which fall within the scope of coverage of the AGENCY need to be paid at subsequent times. In deter- mining the amount of funds which may be returned to the MEMBERS, the AGENCY shall procure the recommendation of an actuary. The AGENCY may also purchase conventional insurance to fund either the remaining known claims against the AGENCY or incurred but not reported claims. DATED: February 10 , 19_7 Patricia S. Smith Village Clerk A C C E P T E D -57- Charles J. Zettek Village Presi:dent H.E ?. 10/10/86 1/20/87 WHEREUPON under the authority granted to me by (Resolution) No. 11-87 , passed by the Corporate Authorities on the loth day of February 1987, I do hereby execute and the Clerk does hereby attest to my signature as evidence that the—Vi I lage of Elk Grove Village has approved participation in the HIGH-LEVEL EXCESS LIABILITY POOL (HELP), in accordance with this Contract and By -Laws in its executed form and as it may subsequently be validly amended. f'harles J. Zettek Village President ATTEST: Patricia S. 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N 7 0 r C d 0 N 0 0 O :J ti N O u7 O 0 •j O ui M APPENDIX A