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3. Approving Revised Interlocal Agreement - MMIAREPORT o: FROM: SUBJECT. city of Kalispell Honorable Mayor and City Council Terry Mitton, Director of Human Resources James H. Patrick, City Manager Revised Interlocal greem.ent and New Memorandum of Liability Coverage MEETING E# October 171, Zoo BACKGROUND: The original Interloeal Agreement under which the Montana Municipal Insurance Authority MMIA currently operates was created in 1986. Overtime, the MMIA has expanded operations and services and have adjusted those operations to meet the members changing needs. The MMIA Board has detennined that revisions to the Agreement to reflect those changes were in order. See attached letter and revised agreement. MMIA is requesting action by the City of Kalispell. RECOMMENDATION: Council approve revised Interioeai Agreement and New Memorandum of Liability Coverage Respectively submitted, `erry ; xttor Dire e or o Human Resources Attachment f x a .lames H. Patrick City Manager Montana Municipal Insurance Authority IMPORTANT DOCUMENTS ATTACHED IMMEDIATE ACTION REQUESTED September 30, 200 Army Robertson Personnel specialist City of Kalispell PO Box 1997 Kalispell NIT 9903-199 ICE: Revised Interloc l Agreement and New Memorandum of Liability coverage Dear Ills. Robertson: Your MMIA Board of Directors has been working to refine two key documents governing the operations of the MIA. Attached are copies of those two documents, which require your immediate attention. You will find 1 Revised and Restated Interlocl Agreement Governing the Montana Municipal Insurance Authority (Revised Agreement), and 2 new Memorandum m of Liability coverage (Devised Memorandum), Form A, Effective October 1, 2005. The original Interloc l Agreement (Agreement) under which the MMIA currently operates, was created in 1986 and addressed the formation of the MMIA and its initial operations. over time, the MMIA has expanded the services provided to the membership and adjusted operations to meet the members changing needs. Thus, the Board determined it was time to revise the Agreement. The Devised Agreement better reflects the current operations of the MMIA and incorporates several operational changes. It requires the action of your governing body. The Memorandum has been revised to address two specific matters. It should be brought to the appropriate individuals within your operations. All occurrences occurring after October 1, 2005 will be handled under this Revised Memorandum. No action is required by your governing body. 1. Revised and Restated Interlocall Agreement Governing the Montana Municipal insurance Authority: The Revised Agreement sets forth the operations of the MMIA as agreed by the participants. A. Recitals: Page 2, # ; "jointly provides such other administrative services to political subdivisions of the state.' The original document limited the MMIA 11A o the provision of joint services with our membership. bership. The MMIA has been approached by other political subdivisions to jointly conduct administrative services. This will allow the MMIA to enjoy the savings of joint service operations, just as many of our members currently enjoy amongst themselves, but which was previously unavailable to the MIMIA. B. Article villa Page 7, 8.01, B "Automatic Expansion of the Board." This has been added to allow for expansion of the Board of Directors as needed. currently, the MMIA Board consists of membership by the sic entities with populations greater than 20,000 and six members elected from representatives of entities with a population less than 20}000. thirteenth member is elected by the other twelve. There is no provision to increase the Board if a municipality grocers to a population greater that 20,000. Therefore, this charge P.O. Box 6669, Helena, Montana 04 -6669 (406) 443-0907 In MT 1- ; 5- Fax i449-7440 allows for automatic expansion of the Board by two -- one representing a member whose population grows beyond 20,000 and a corresponding addition of an elected seat from members with a population less than 20,00. C. Article X : Page 1, 5.02, "Inter -Program Loans." This allows for one 1 1M1 Program to loan funds to be used to develop new Programs of the Authority, when secured by a promise to repay the funds to the leading Program. This allows the MMI flexibility in the consideration of requests of the membership for the development of new programs. D. Article XX1I: Page 20, 22.03 "Indemnification." The indemnification language of the document ent has been emended to meet the current standards for indemnification of Directors, officers or Committee members representing Member Entities. E. Article XXV: Page 2 "Amendment." This sets forth the process for emending the Revised ed Agreement. The Revised ed Agreement may be amended by two-thirds of the Member Entities, acting through their governing bodies. F. Article XX1X: Page 22, "Filing with Secretary of state and county Clerk and Recorders." Upon acceptance of the Revised Agreement, the MMIA will file the signed documents with the Secretary of State and then with the various county clerk and recorders of Member Entities, in keeping with the current statutory requirements for filing Interlocal Agreements. + We are asking this mafter be presented to your governing body at the earliest possible time for consideration and adoption. Upon adoption of the Revised Agreement, please complete three originals of the Signature Page (Page 23), Retain one for your files and return two original copies to the-MMIA with of the resolution pas adopting the Revised Agreement. ent. It is our desire to obtain signed documents en from the membership no later than November 25,2005. The Revised Agreement will become effective upon receipt of the signature pages of to thirds(eighty ore) of the Member Entitles, thus indicating your entity's adoption. 2# Memorandum of Liability Coverage, e, Form A, Effective October 1, 2 : The Memorandum of Liability Coverage (Revised Memorandum) has been amended to affect two areas. A. of DEFINITIONS: Page 3, "Air Navigation Facility," and IX, EXCLUSIONS, Page 91 #7. A. definition for "Air Navigation Facility" has been added. The current Memorandum excludes, and the Revised Memorandum will continue to exclude, coverage for airport and aircraft related facilities. The documents do not exclude coverage for non aviation related operations of airports. The added definition and emended language of Exclusion are intended to further clarify this ratter. B. Section X; Page 1"ADDITIONAL COVERED PARTY." Previously, the Memorandum did not contain language authorizing e Member Entity to obtain an Additional Covered Warty Endorsement. The addition of Section X addresses this matter. As Member Entities expend their operations and interactions with other organizations, they have been approached repeatedly to request coverage of an additional party. The addition of this section establishes the process to obtain that endorsement. K o obtain an Endorsement for an Additional covered Party: you must submit a written application to the MMIA. The Memorandum sets forth the process and the criteria that will be used in this process. This process has been added to assist the membership i the execution of certain actions. It is not intended as a risk transfer process for those seeking Member Entities to assure liability for which they would not otherwise be responsible for. The MMA policy authorizes serious scrutiny of each request. Endorsements will be granted only upon provision of complete information and an assessment of the exposure the endorsement brings to the Authority. The revisions of these two documents represent the continued refinement of our operations. would like to thank each of you in advance for your prompt attention to these matters. If you have any questions, please call me at 1-800-635-3089. sincerely Bob Worthington co 2 Attachments o:N Wor ington\B 1Admini tra onkint ocal gmtMe oOfLii ion vrLp# o 0 .dn 3 Table of Contents ARTICLE, DEFINITIONS............,...... ......... .............................. ......... ...............rrr......r*MMY.**......F#...#........ ARTICLE 11,PURPOSES ...r........ss....r............ r.s.■s......■..■.......s..rrrsr..■..................Yas.a.YYraar ...................wK*.M4*rt.AYY TIC 1 1� PARTIES TO AGREEMENT ■..........................rrr........................**#Y...ik#.Yksir.....................x....... ARTICLEIV, TERM ........... #;yrtrr.*#wa#x*i.rr■■.#■*rtrt.rsrrtyr�y4##.»�FYMM»kkrRirrrrta.rrrrrtrr.rr.rrs4rY.Y7M#�*FkYY•�rrsr ARTICLE # CREATION ■ H AUTHORITY ......rY........ S..a........ ....................rrr....................... rtF#iFk*Yrrarear ARTICLE V1, POWERS OF THE AUTHORITY m ars.....rrrsrrrarrrtaraa.......%...............................................rss*rkyw... ARTICLE II, MEMBER ENTITY RESPONSIBILITIES AND POWERS ..................... .............................. ARTICLE V 1, T H E BOARD OF .......................... s............ ............................. ARTICLE X, MEETINGS N RECORDS ..................................................ar m s....rarrtsyM*z*#w...................... a...... ARTICLE X, POWERS OF THE BOARD ....................rrt.... 1 ARTICLEXI, OFFICERS.., .............. ............rrrarr......Fl......Yrk............srrsarrtarrss...... y*rMw##ww*........... %................. 2 ARTICLE L X11, EXECUTIVE COMMITTEE ....................................... s ...................................................... x....... ARTICLE XIII, STANDING AND SPECIAL M M ITT E S ......*w»..k...........YrF.ar.....%.......s................ .......%.... ARTICLEXI, STAFF ......i...... a.......... s rrrss..........rr s.asrrr.....rr t sarr..... ................. rr1 ARTICLE X , DEVELOPMENT, FUNDING, IMPLEMENTATION AND JOINING INSURANCE PR G RAM ■sarw*yM+MY MkXYk31MFw*#baarrrrsa...s.ar.. s r...rt..r... s.s.. s.r...■.rrrs...r...................*rrt...................■ s.......... t....w#M»FiFi ■aa ARTICLE XVI, # C C O U N S ANDRECORDS .......................................... ................... S............rrar+arr.yk**Y... 17 ARTICLE XVII,RESPONSIBILITIES FOR FUNDS AND PRRTY rFt.......r.a:army.aarY*........................rsirrl ARTICLE X I, WITHDRAWAL ........... ARTICLE XIX, N C E L L T 1#.......r;*y*w*rtA.**YM*A..........**KyM4M#.......#MSAikirrr.. ...............ss*4............ .................. # ARTICLE CL X, WITHDRAWAL OR CANCELLATION OF PARTICIPATION IN A PROGRAM ................1 ARTICLE XXI, TERMINATION AGREEMENT AND DISTRIBUTION OF ASSETS .........................*.. 19 ARTICLE L XXiI, LIABILITY Y BOARD OF DIRECTORS, ■.air.+rFsrrsrrirr.rrs.'raMrw.y##wwwkk��rrars.erartar.artararkyrtrt�rt**Ykk iF OFFICERS ANDCOMMITTEE MEMBERS ........ *. k ........... # A ............. # ............................... ................... s. 20 ARTICLEXXII , BYLAWS.rrr.................sr................rrs.rar..........S..................rrr.......................................k...µ.. ARTICLE 21 XX, .....................*y*w*............YkYrrWks*re*aaeri....... %...... s.......t**k.t............. 21 ARTICLE XX, AMENDMENT ■tas.rtt..s....ar..........rr..arsr■kr.a.■aat....r.......sr.s..r..rs... s..s........r#......M*»w♦.r#rs.ra........... ARTICLE XXVI, PROHIBITION AGAINST ASSIGNMENT ....................................................... : .................. 21 ARTICLE XXVII, AGREEMENT COMPLETE ......... ..................................... ...................... ................ :.......21 ARTICLE XXVIII, EFFECTIVE DATE OF AM ENDM ENTS ....... .............................. 22 ARTICLE XXIX, FILING WITH SECRETARY OF STATE AND .................................. ..................... 22 COUNTY CLERK AND RECORDERS Y M. K. r# .......................... : ........................................................................ 22 ARTICLE XXX, EXECUTION ................................................. ....................... ........... .....22 SIGNATURE PAGE ............................................................. : ........ .......... 23 REVISED AND RESTATED INTERLOCAL AGREEMENT GOVERNING THE M NTANA MUNICIPAL. INSURANCE AUTHORITY EFFECTIVE AS of OCTO ER 12005 THIS AGREEMENT is made in the State of Montana by and among local political subdivisions organized and existing under the laws of the State of Montana (the ,Mate), hereinafter referred to as "Member Entities" which are parties signatory to the Agreement. Member ntity ie are sometimes referred to in this Agreement as 4Zprtyie. RECITALS WHEREAS, Article Xi, Section 7 of the Montane Constitution provides that political subdivision may cooperate in the exercise of a function, power, or responsibility with, share the services of any officer or facilities with, and e transfer or delegate any function, power, responsibility, or duty of any officer to one or more other local government units, school districts, the state or the United States; and WHEREAS, Title 7, Chapter 11, Part 1, Montane Code Annotated (MCA), authorizes political subdivisions to create interioo i agreements to jointly perform any undertaking that each of them is authorized by lair to perform; and WHEREAS, Section 2-9-21 , MCA authorizes political subdivisions of the state, separately or jointly with other subdivisions, to procure insurance to use a deductible or self-insurance plan, wholly or in part, and to establish e self-insurance or deductible reserve fund; and WHEREAS, Section 2-9-211 y MCA authorizes political subdivisions or e board created pursuant to an interlocl agreement, acting on behalf of such political subdivisions to issue and sell bonds or notes for the purposes of funding e self- insurance or deductible reserve fund; and WHEREAS, the Member Entities executing this Agreement desire to join together for the purposes of: Developing effective risk management programs to reduce the amount and frequency of their losses; 2. Sharing some portion, or all, of their losses; 3. Jointly purchasing other insurance, reinsurance} or excess insurance; 4. Jointly make Premium deposits which may take the form of contributions to n account or surplus account and pay premiums for the purposes of participating in group or captive insurance, excess insurance or reinsurance programs, in whole or in part# Page I of 23 5# Jointly issuing bonds or notes to fund e self-insurance or deductible reserve; 6. Jointly purchasing administrative and other services when related to any of the other purposes; and . Jointly provide such other administrative services to political subdivisions of the State; WHEREAS, the governing board of each Member Entity has determined that It i in its own best interest, and in the public interest that this Agreement be executed and that it participate as a member of the public entity created by this Agreement. NOW, THEREFORE, in consideration of the mutual benefits, promises and agreements set forth below, the parties hereby agree as follows: ARTICLE 1, DEFINITIONS "Authority" shell mean the Montane Municipal Insurance Authority created by this Agreement. "Board of Directors" or "Board" shall mean the governing body of the Authority. "Bon ds and Notes" shall mean Bonds or Notes issued by the Authority pursuant to the Law or other enabling legislation as may hereafter be enacted on behalf of, and authorized by, Participating Entities for the purpose of financing e Program. "Bond or Note Resolution" shall mean the Bond or Moto Resolution adopted by a Participating Entity authorizing the Authority to issue Bonds or Dotes on its behalf. "Bylaws" shall mean the bylaws adopted by the Board prescribing the rules for the operations of the Authority. "Chair" shall mean the Chair of the Board of Directors. "Claim" shall mean a claim made against e Member Entity arising out of a Loss which is covered by a Program of the Authority in which the Member Entity is a participant. "Deductible" shell mean that portion of a loss experienced by a Participating Entity which is retained as a liability or potential liability of the Participating Entity, and i not subject to payment by the Authority under an Agreement. "Director" shall mean a member of the Board of Directors. Page 2 of 23 "Execuflive c mmi " shall mean the Executive Committee of the Board of Directors of the Authority. "Excess Insurance" shall mean one or more additional policies or programs of insurance or risk sharing purchased or participated in by the Authority as part of a Program to provide for the payment of Losses in excess of the types and amounts of coverage provided by the Authority directly in the primary Program Agreement(s) or applicable Memorandum of coverage with respect to a Program. "Fiscal year" shell mean that period of twelve months which is established by the Board of Directors as the Fiscal Year of the Authority. "Interlocall cooperation Acts" shall mean Title 7, chapter 11, Part 1, MCA, as amended. "Law" shall mean Sections 2- -211 MCA, as amended and such other lags of the state of Montana which authorize the Member Entities either jointly or severally t engage in activities in furtherance of the purposes for which this Authority was created, "Loss" shall mean a liability or potential liability of a Member Entity, including, if applicable by Program Agreement or Memorandum of Coverage, litigation expenses, attorneys' fees and other defense costs, which is covered by a Program of the Authority in which the Member Entity is a participant, "MCA" shall mean the Montana code Annotated. "Member Entity(*Is)" shall .mean any political subdivision which has executed this Agreement and become a member of the Authority, "Memorandum of Coverage" shall mean the document or documents issued b the Authority with respect to each Program specifying the type and amount of coverages provided to the Participating Entities by the Authority. "Open MeetingLaw" shall mean Title 2, chapter 3, Pants 1 and 2, MCA, as amended. "Participating E E y i s ##, as used in reference to o Program of the Authority, shall mean any Member Entity which has Joined a Program pursuant to Article XV of this Agreement, and has not withdrawn or been cancelled therefrom pursuant to Articles X flI and XIX "Policy Year" shall mean, with the exception of the initial coverage period, for each Program of the Authority, that period of twelve months beginning and ending as set forth in the Program Agreement. "Policies and Procedures" shall mean the Policies and Procedures manual(s) adopted by the Board specifying the policies and procedures to be followed by the Authority and Participating Entities in the Programs of the Authority. Page 3 of 23 "Premium" shall mean with respect to each Program the charges, fees and assessments made by the Authority for participation in a Program. "Program" shall mean arrangements to insure against or cover specific types of claims, losses, damages and liabilities of Member Entities, which may include, but not be limited to, liability, property, workers' compensation, employee health benefits, life, disability, vision and dental benefits. "Program Agreement" shall mean the agreement or agreements y and between the Authority and the Participating Member setting forth the terms and conditions of each Program offered by the Authority, "Reinsurance" shall moan either treaty reinsurance or facultative reinsurance purchased by the Authority, as part of a Program.. ARTICLE II, PURPOSES This Agreement is entered into by the Member Entities for the following purposes: y To jointly develop and fund, as provided by applicable law, programs for: ar. workers' compensation and occupational disease insurance; b. comprehensive liability insurance; C. property insurance d. employee health, dental, vision and life insurance o. disability and group disability insurance; f. other forms of insurance coverage as the Member Entities or some of them may doom appropriate; 9. participation in group or captive insurance, excess insurance or reinsurance programs, in whole or In part. 2. To develop or procure, as the Board of Directors of the Authority may from time -to -time determine, administrative services in support of the programs developed and funded by the Member Entities pursuant to this Agreement, including but not limited to: a. risk management consulting; b. loss prevention and control; C. centralized loss reporting; d, actuarial consulting; ow claims adjusting; and f. general legal services and legal defense. 3. To provide such administrative services through the Authority to political subdivisions of the state on such terms and conditions as the Board of Directors of the Authority may establish, provided that the Authority must, Page 4 of 23 t a minimum, recover the costs associated with each such service made available to such political subdivisions. All such purposes shall be accomplished through c h joint exercise of powers by Member Entities pursuant to this Agreement, to be administered by a separate legal entity, the Montana Municipal Insurance Authority, as created herein. ARTICLE III, PARTIES TO AGREEMENT Each Member Entity, as a party to this Agreement, certifies that it intends to and does contract with, for the purposes and to the extent as herein provided, all other parties who are signatories of this Agreement and, in addition, with such other political subdivisions asmay later be added as parties to, and signatories of, this Agreement. Each party also certifies that the removal of any party from this Agreement, pursuant to Articles XV Ill o r XIX, shall not affect this Agreement o r the rem i n i ng parties' intent t contract as described above with the other parties to the Agreement then remaining. ARTICLE IV, TERM This Agreement shall become effective as of the date it has been duly approved and executed by two-thirds of the Member Entities and upon filing with the Secretary of State and the various county clerks and recorders of the county or counties where the individual Member Entities are situated. This Agreement shall continuo in effect until terminated or amended as provided heroin. ARTICLE V, CREATION OF THE AUTHORITY Pursuant to the intrlool Cooperation Act, there is hereby created a public entity separate and apart from the parties hereto, to be known as the Montana Municipal Insurance Authority, with such powers as are hereinafter set forth. ARTICLE VI, POWERS OF THE AUTHORITY The Authority shall have all of the powers common to its Member Entities under the Law and the lntrll Cooperation Act, and is hereby authorized to do all things necessary and proper for the exercise of said powers. Such powers include, but are not limited to, the following: (1) To make and enter into contracts. (2) To incur debts, liabilities, and obligations. Page 5 of 23 (3) issue Bonds and Notes on behalf of its Member Entities for authorized purposes when expressly authorized by Member Entities. (4) o acquire, hold, or dispose of property, contributions and donations of property, funds, services, and other forms of assistance from persons, firms, corporations, and government entities. (5) sue and be sued in its own name, and to settle any claim against it. (6) To receive contributions and donations of property, funds, services and other forms of assistance from any source. (7) o receive and use contributions and advances from Member Entities, including contributions or advances of personnel, equipment, or property. (8) Employ agents and employees. (9) Receive, collect, and disburse monies. (10) o invest any money in its treasury that is not required for its immediate necessities, in the sane manner and on the same conditions as Member Entities pursuant to law. Jointly make Premium deposits which may take the form of contributions to an account or surplus account, and pay premiums for the purposes o participating in group or captive insurance, excess insurance or reinsurance programs, in whole or in part. (12) Jointly purchasing other insurance, reinsurance, or excess insurance. (13) To carry out all provisions of this Agreement, (14) To provide such administrative services through the Authority to political subdivisions of the state on such terms and conditions as the Board o Directors of the Authority may establish. Said pourers shall be exercised pursuant to the terns hereof and in the manner provided by law. ARTICLE VII, MEMBER ENTITY RESPONSIBILITIES AND POWERS 7.01 Responsibilities. Each Member Entity participating in a Program shall have the following responsibilities: ilities: Pepe 6 of 23 A. To provide the Authority with such statistical and less experience data and ether information s may be necessary or desirable for the Authority to carry out the purposes of this Agreement; B. To pay Premiums to the Authority when due; C. To cooperate fully with the Authority in determining the cause of Losses, and -in the settlement of Claims; D. To cooperate with and assist the Authority and any insurer, claims adjuster legal counsel or ether service provider engaged or retained by the Authority, in all ratters relating to this Agreement and e Program Agreement; E. To comply with and keep and perform its obligations under the Program Agreements, Motes and Note Resolutions to which each Member Entity is a party or si r et r thereto, the Bylaws, and all Policies and Procedures of the Authority not inconsistent with the provisions of thisAgreement; F. To have an audit of its risk management activities as required by the Authority. such audit shall be at the expense of each Member Entity but the charge for such audit may be included within the Premiums to be charged for a Program; G. To maintain its on Claims and Lass records in each program of the Authority in which the entity is a Participating Member, and to provide copies of such records to the Authority or to such other committees as directed by the Board. 7.02 Powers. Member Entities shell have the following powers: A. To appoint, elect or remove members of the Board of Directors as set forth in Article VlII; B. To expel Member Entities as set forth in Article Xl; �y To approve amendments to this Agreement as set forth in Article XXV. ARTICLE Vill, THE BOARD OF DIRECTORS 8.01 Membershi of Board Procedure for Electinq and Term in Officer A. Membership. subject to section 8.01 of this Agreement below, the Board shall be composed of a minimum of 13 Directors, elected in the following manner: Page 7 of 23 (1) Each Member Entity participating in one or more of the Authority's programs and has a population in excess of 20,000 is entitled to appoint a Director; and (2) equal number of Directors to the number of those Directors appointed In Section .o above, shall be elected by and representing Member Entities participating in one or more of the Authority's programs, and having a population of less than 20,000; and (3) one "At -large Director'from a member Entity participating In one or more of the Authority' programs appointed by the Directors selected in Sections .o A)(1) and 2 above. B. Automatic Expansion of the Board. In the event that a Member Entity, during the time it is a participant in one or more of the Authority's programs, has an increase in its population to a number in excess of 20,000 as determined in subparagraph C herein, then such Member Entity shall be entitled to a seat on the Board, and the totes number of Directors shall increase by two, one of whom shall be appointed by the Member Entity which has experienced the described increase in population, and one of whom shall be an additional representative elected by and representing Member Entitles who have a population of less than 20,000. The expansion n the number of Directors shall occur at the next annual meeting of the Member Entities following the annual census that established said population. C. Procedure. The nomination and election of Board of Directors will be conducted at the regular annual meeting of the Authority. Each Member Entity shell appoint and elect Directors for its respective category as herein provided. No Member Entity shall have more than one Director at any time. To be eligible to vote for the Board of Directors, a Member Entity must be a participant in one or more of the Authority's programs at the time of the annual meeting. For purposes of this Article, the population of the Member Entity shall be s determined by the most recent census statistics published by the United ,states Census Bureau. D. Terms. (1) Directors shall serve a term of two (2) years from the date of the Annual meeting of which heir appointment under Section 8.01(A)(1) and (3) or their election under Section 8.01(A)(2) occurred. Page 8 of 23 (2) A Director shall hold office until: i the expiration of his or her term of office or the Member Entity it represents no longer participates in a Program of the Authority and ii until a successor has been elected or appointed. In the event of a vacancy, the remaining Directors shall appoint a replacement Director who shall serge until the expiration of the predecessor's term or the next Annual meeting, whichever occurs first. 8.02 Re.signation of a Director. A Director may resign upon giving thirty(30) days' notice in writing to the Authority. 8.03 Removal of a Director. Any director may be removed from office at any time by a majority vote of the Board, for neglect of duty or malfeasance in office. Notification of such removal r appointment of a successor shall be by instrument in writing by the Board and delivered to all Member Entities. Compensation f Directors. The Directors shall receive no salary but may be compensated for any reasonable and necessary expenses incurred in connection with the performance of their duties. 8.05 Vacancies. Vacancies on the Board elected by Member Entities pursuant to Sections 8.01 A 2) or 3 may be filled by a majority of the remaining Directors, and each Director so elected shall hold office until the next meeting f Member Entities and until that Directors successor has been elected and qualified. At the next Annual Meeting, Member Entities shall have the power to appoint a Director to fill the remaining terra of office. Vacancies on the Board for a Director appointed pursuant to Section 8.01 (A)(1) shall be filled by the Member Entities which appointed the representative whose position is vacant. ARTICLE IX, MEETINGS AND RECORDS 9.01 Mernber Entity i leetin_ . Member Entities shall hold at least one regular meeting each year which will be designated the "Annual Meeting", and the Board shall fix the date, hour and place at which the Annual Meeting or other meetings of the Member Entities are to be held. Member Entities may vote by absenteeballots or by proxy according to rules established by the Bylaws of the Authority. The Chair shall preside at all meetings f the Member Entities. Special meetings may be called upon written request by the Chair, by one-third or more of the Directors, r by one-third or more of the Member Entities. 9.02 Member y ... V En .. Each Member Entity shall have one vote on each matter presented to Member Entities, but in election of Directors, shall have one (1) vote for each Director to be elected and may not cumulate votes; provided however that in the event that the matter presented to the Member Entities for a vote involves specific Program, then only those Member Entities which are participants in such Program may Grote on such matter. Page 9 of 23 9.03 Board Meet. The Board shell hold at least four 4 regular meetings each year. The Board shall provide by resolution or in the Bylaws, the time for holding regular meetings. The Board shall fix the place where each regular meeting is to be held. Special meetings may be called upon written request by the Chair or one-third or ore of the Directors. 9.04 Meeting Minutes. The Board shall have minutes of all regular, adjourned regular, special and adjourned special meetings of the Member Entities, and of the Board kept and available for inspection at any reasonable time. As soon as possible after each meeting, a copy of the minutes of each Member Entity meeting and each Board meeting shali be forwarded to each member of the Board. 9.05 er _Meeti-m-Law. All meetings of the Member Entities and the Board shall be called, noticed, held and conducted in accordance with the provisions of the Open Meeting Law. .06 Quorum and Conduct of Business. A majority of the authorized number o Directors constitutes a quorum. Member Entities representing a majority of the Member Entities constitutes a quorum. Every act done or decision rude by a majority of Member Entities, present in person or by proxy at a Member Entity Meeting, or Directors present in person at a Board meeting duly held at which a quorum is present shall be the act of that body~ unless a vote by a greater number is required by law, this Agreement, or the Bylaws. Provided, however, er, that any action required to be taken by the Board or the Member Entities, as the case may be, which is restricted in effect to one of the Authority's Programs, as determined by the Chair of the Board, shall also require the affirmative vote of a majority of those Directors in person at a Board meeting, or Member Entities present in person or by proxy and voting at a Member Entity Meeting who represent or are Participating Entities in that Program. No business may be transacted by the Board or by the Member Entities without a quorum of their respective members ers being present; provided however, less than a quorum may adjourn from time to time. Meetings of the Board and the Member Entities shall be conducted in accordance with Roberts Rules of order, except when in conflict with applicable lave, this Agreement or the Bylaws. 9.07 Bylaws and Policies and Procedure Manual. The Board shall cause Bylaws to govern the day--to-day operations of the Authority, and one or more Policies and Procedures Manual(s) to govern the day-to-day operations of the Programs to be developed, which shall not be inconsistent either with applicable lave or with this Agreement. Each Director shall receive a copy of the Bylaws and Policies and Procedures Manual s developed under this Section. Each member Entity shall receive a copy of the Bylaws and Policies and Procedures Manua s developed under this Section upon request made to the Chief Executive officer of the Authority. The Board may adopt additional Bylaws and Policies and Procedures or change existing ones so long as the additions or changes shall be, and remain consistent with both applicable laver and with this Agreement. The Chief Executive Officer shall send, or cause to be sent, each Bylaw amendment and Policy and Procedure change to each Director promptly after its adoption by the Board. The Chief Executive Officer shall send, or Page 10 of 23 cause to be sent, a summary of each such Bylaw amendment and Policy and Procedure change to each Member Entity in a timely manner. ARTICLE X, POWERS OF THE BOARD OF DIRECTORS The Board of Directors shall have the following powers and functions: A. The Board shall exercise all powers and conduct all business of the Authority, either directly or by delegation of authority to other bodies or persons unless otherwise prohibited elsewhere in this Agreement or by applicable law. B. The Board may form an Executive Committee from its membership, as provided in Article Xll, and may delegate to that Committee such powers as it sees fit, provided that all powers of the Executive Committee shall be exercised under the direction of the Board, Cr The Board shall fora, as provided in Article X111, such other committees a it deems appropriate in conducting the business of the Authority. The membership of any such other committee may consist in whole or in part of non -Board members; rs; provided, that the Board may delegate its pourers and duties only to a committee of the Board composed of a majority of Board members, Any committee which is not composed of a majority of Board members may function only in an advisory capacity, D. The Board shall elect the officers of the Authority, shall appoint the staff members designated in Article X 1 , and shall provide for the appointment of such other staff as may be necessary for the administration of the Authority, pursuant to that article. E. The Board shall cause to be prepared, and shall renew, modify as necessary, and adopt the annual operating budget of the Authority. The Board shall develop, or cause to be developed, and shall review, modify as necessary, and adopt each Program of the Authority, including all provisions for reinsurance and administrative services necessary to carry out such Program. G. The Board shall provide for necessary services to the Authority and to Member Entities, by contract or otherwise, which may include, but shall not be limited to, risk management er ent consulting, loss prevention and control, centralized loss reporting, actuarial consulting, claims adjusting, and legal defense services. H. The Board shall provide general supervision and policy direction to the Chief Executive officer, either directly or through the Executive Committee. Page 11 of 23 The Board shall receive and act upon reports of the committees as established by the Board, and the Chief Executive Officer, either directly or through the Executive Committee. J. The board shall act upon each claim involving liability of the Authority, either directly or by delegation of authority to the Executive Committee r other commiftee, body or person, provided that the Board shall establish monetary limits upon any delegation of claims settlement authority, beyond which h proposed settlement must be referred to the Board for approval. K. The Board may require that the Authority review, audit, report upon, and make recommendations with regard to the safety or claims administration functions of any Member Entity, insofar as those functions are affecting the liability or potential liability of the Authority. The Board may forward any or all such recommendations to the Member Entity with a request for compliance and a statement of potential consequences for noncompliance. L. The Board shall receive, review and act upon periodic reports and audits of the funds of the Authority, as required under Articles XVl and XVI l of this Agreement. M. The Board shall provide for the creation of positions through its budget process as may y be necessary for the administration of the Authority. The Chief Executive Officer will recommend to the Board for its approval the necessary positions for the administration of the Authority. N. The Board shall have such other pourers and functions as are provided for in this Agreement, in the Bylaws of the Authority, and in applicable lair. ARTICLE XI, OFFICERS The Board of Directors shaN.11 elect from its membership a Chair, Vice Chair* Secretary and Treasurer, to serve for one-year terms. The Chair, or in his or her absence, the Vice Chair, shall preside at and conduct all meetings of the Board, the Member Entities and shall chair the Executive Committee. The Secretary shall have those duties normally associated with such office. The Treasurer shall have those duties normally associated with such offiCe. Page 12 of 23 ARTICLE XII, EXECUTIVE COMMITTEE 12.0Composition. The Board of [directors may establish an Executive Committee of the Board which shall consist of five members: the Chair and vice Chair of the Board, and three members elected by the Board from its membership. . 12.02 Term. The Terms of office of the three non -officer members shall be as provided for in the Bylaws of the Authority. 12.03 Responsibility. If established, the Executive Committee shall conduct the business of the Authority between meetings of the Board, exercising such powers as are delegated to it by the Board, through the adoption of Board resolutions, under the direction of the Board. ARTICLE X111, STANDING AND SPECIAL COMMITTEES 13.01 Standing committees. The Board shall establish Standing Committees, as it deems appropriate to conduct the business of the Authority consisting of at least five members. bers. Members of the Standing Committees shall be appointed by the Chair with approval of the Board. Members of Standing Committees shell serve two year terns, subject to reappointment by the Chair with the approval of the Board. The members bers of each Standing Committee shall annually select one of its members to chair the Committee. 3.02 Speoi l Committees. The Board may also establish Special Committees, as it deers appropriate. Members bers of such Special CommitteesCommiftees shall be appointed by Chair with the approval of the Board for terns as specified by the Board. The Chair of Special Committees shall be designated by the Chair of the Board. 13.03 Duties. Each committee shall have those duties as determined by the Board, or if so directed, by the Executive Committee, or as otherwise sot forth in the Bylaws. 3.0Meet in g. Each Committee shall meet on the call of its Chair, and shall report to the Executive Committee and the Board as directed by the Board. ARTICLE XIV, STAFF Principal Staff. The following staff members shall be appointed by and serve at the pleasure of the Board: A. Chief Executive officer. The Chief Executive officer shall administer the business and activities of the Authority, subject to the general supervision and policy direction of the Board or Executive Committee; shall be responsible along with the Secretary for all minutes, notices and records of the Authority; and shall perform such Page 13 of 23 other duties as are assigned by the Board or Executive committee. The principal staff shall be appointed by and serve at the pleasure of the chief Executive officer. B. Chief Financial officer. The chief Executive officer shall appoint a chief Financial Officer. The Chief Financial Officer shall be responsible for the financial, banking and investment activities of the Authority, and shall perform such other duties a.s are assigned by the chief Executive officer, Except for those independent duties that the chief Financial officer may owe to the Board or Finance Committee, the chief Financial officer shall report to the chief Executive officer. ARTICLE XV, DEVELOPMENT, FUNDING, IMPLEMENTATION and JOINING INSURANCE PROGRAMS 15,01 Program Cover e. Insurance programs of the Authority may provide coverages for one or more or any combination of the following: (1) Workers' compensation; (2) Comprehensive liability, including but not limited to general, automobile, personal injury, contractual, malpractice liability, (3) Property; (4) Employee health, vision and dental benefits; (5) Life and disability; and (6) Any other coverages authorized by the Board. The Board shall determine, for each such Program, a minimum number of participants required for Program implementation. 5.02 Program and AuthorLty Funding. The Member Entities developing or participating in a Program shall fund all costs of that program, including administrative costs as hereinafter provided, or as provided in the Program Agreement relating to that Program. costs of staffing and supporting the Authority, hereinafter called Authority general expenses, shall be equitably allocated among the various Programs by the Board, and shall be funded by the Member Entities developing or participating in such Programs in accordance with such allocations, as hereinafter provided or as provided in the Program Agreements. R Develop.ment char e. Development costs of a Program may be funded by a development charge, as fined by this Agreement or determined by the Board of Directors. The development charge shall be paid by each Member Entity which wishes to join in development of the Program, and thereby reserve the option to participate in the Program following adoption by the Board# Development costs are those costs incurred by the Authority in developing a Program for review and adoption by the Board of Directors, including but not limited to: research, feasibility studies, information and liaison work among political subsidiaries, and preparation and consulting services. The development charge may also include a share of Authority general expense,, as allocated to the Program development function by the Board. Page 14 of 23 The development charge shall be billed by the Authority to all Member Entities upon authorization of Program development by the Board and shall be payable within thirty 3 days of the billing date. Upon the conclusion of Program development, any deficiency in development funds shall be billed to all Member Entities which have paid the development charge, on pro -ratan or other equitable basis, as determined by the Board; and any surplus in such funds shall be transferred into the loss reserve funds for the Program, or, if the Program is not implemented, into the Authority's general expense funds. B. Inter-Prog.ram Loans. Except to the extent otherwise prohibited by any Program Agreement, one Program may loan funds to be used to develop any new Program of the Authority, provided however, that any such loan shall be secured by the promise of one or more Member Entitles to repay the amount f any such loan with interest, if any, as may be established by the Board to the Program lending the funds in the event that the new Program is not created or has inadequate funds to repay such loan. Cr Fremium,. Except provided in Section 15.03 below, all post - development costs of a Program shall be funded by Premiums charged to the Participating Entities in the Program each Policy Year, and by interest earnings on the funds so accumulated. ,such premiums shall be determined by the Board upon the basis of a cost allocation plan and rating formula developed by the Authority with the assistance of a casualty actuary, risk management consultant, or other qualified parson and set forth in the Program Agreement. The premium for each participating entity may include that entity's share of expected program losses, program reinsurance costs, and program administrative costs for the year, that Participating Entity's share of Authority general expense allocated to the program by the Board, plus that Participating Entity's share of any principal and interest that may become due in that year and a debt service reserve fund payment with respect to any notes or bonds issued by the Authority for such Program on behalf of that Participating Entity, as authorized by such Participating Entity, Premiums shall be billed by the Authority at the beginning of each policy year or more frequently and shall be due and payable as provided in a Program Agreement. At the end of each policy year, program costs shall be audited by the Authority. Any deficiency or surplus in the Premiums paid by a Participating Entity, as shown by such audit, may be adjusted by a corresponding increase or decrease in the Premiums charged to that Participating Entity for the next succeeding year, as provided in the Program Agreement, unless the Participating Entity withdraws or is cancelled from Program,, in which case the provisions of Article Xvl l l and XIX shall control. D. Premium Adjustrnents. if the Authority experiences an unusually largo number of losses under a Program during a policy year, such that notwithstanding reinsurance coverage for large individual losses, the joint insurance funds for the Program may be exhausted before the next annual premiums are due, the Board of Directors may, upon consultation with a casualty actuary, impose premium surcharges Page 15 of 23 n all participating cities, which, in total amount, will assure adequate funds to the Authority for the payment of all such losses; provided, that the Program Agreements shall provide the maximum surcharge to be levied against any Participating Entity in any year. Y 3 Program Implementation and Effective Date. Following development of Program and upon its adoption by the Board, the Authority shall give each Member Entity which has paid the development charge,, if such charge has been levied for the Program, a written notice of the Program, which shall include: a form of the Program Agreement, the minimum number of participants required for the Pr r r ' implementation, and the estimated first year premium to the Member Entities for Program participation. Each such Member Entity may elect to enter the Program by giving written notice of such election, in a form prescribed by the Authority, to the Chief Executive Officer within thirty 3 days of the date of the Authority's notice of the Program. Any Member Entity which has not paid the development charge as of the date of the Program notice may enter the Program only if it pays such charge and gives notice of such election within the above ,fig -day period and executes a Program Agreement. When at least the minimum number of participating Member Entities required for program implementation shall have elected to enter a Program, the Authority shall determine the actual first -year premium for each participating Member Entity so electing and shall give each such entity written notice thereof. If a Participating Entity's actual first -year r r i.urr is more than that estimated by the Authority, the entity may revoke its election to enter the Program by giving the Chief Executive Officer written notice of such decision within thirty 3 days of the date of the actual premium notice. When the Authority determines that at least the minimum mum number of participating Member Entities required for Program implementation remain entered in a Program, it shall give written notice to that effect to all Participating Entities which have elected t enter, and the Program shall become effective on the date of such notice. All such entities shall thereafter be considered Participating Entities in the Program,, except for any entity which has revered its entry into the Program under the terms and within the time period above provided. 15.04 Late Ent into Pro ram. A member Entity which does not elect to enter Program upon its implementation, pursuant to section 15.03 above, or a political subdivision which becomes a Member Entity and a party to this Agreement following implementation of a Program, may petition the Board for late entry into the Program. Such request may be granted, if authorized in the Program Agreement, upon a vote of majority of all Directors present and voting, such a vote to include a majority of those Directors present and voting who represent Participating Entities in the Program, upon satisfaction of requirements set forth in the Program Agreement, provided that the applicant meets the various underwriting criteria of the individual Program, As a condition of late entry, the Participating Entity shall pay the development charge for a Program, if required by the Board, as adjusted at the conclusion of the development period,, but not subject to further adjustment, and also any costs incurred Page 16 of 23 by the Authority in analyzing the Participating Entity's loss data and determining its annual premium as of the time of entry. ARTICLE XV1, ACCOUNTS AND RECORDS 6.01 Annual Bu t4 The Authority shall annually adopt an operating budget pursuant to Article X of this Agreement, which shall include a separate budget for each Program under development or adopted and implemented by the Authority. 16.02 funds and Accounts. The Chief Financial officer of the Authority, under the direction of the Finance Committee, shall establish and maintain such funds and accounts as may be required by good accounting practices and by the Board. Separate accounts shall be established and maintained for each Program under development or adopted and implemented by the Authority. Books and records of the Authority shall b open to inspection at all reasonable tires by authorized representatives of Member Entities. The Authority shall adhere to the standard of strict accountability of public funds. 16.03 nl...F Report. The Authority, within one hundred and eighty days after the close of each fiscal year, shall give a complete written report of all financial activities for such Fiscal Year to the Board and to each Member Entity. 16.03 Annual Audit. The Authority shall either make or contract with a certified public accountant or the Audit Division of the Department of Commerce pursuant to Title 2, Chapter 7, Part 5, MCA to make an annual fiscal year edit of all accounts and records of the Authority. A report of the audit shall be filed as a public record with each Member Entity within six months of the end of the fiscal year under examination, Costs of the audit shall be considered a general expense of the Authority, ARTICLE XV11, RESPONSIBILITIES FOR FUNDS AND PROPERTY Custody ....Funds. The Chief Financial Officer, under the direction of the Finance Committee, shall have the custody of and disburse the Authority's funds. 17.01 Duties of the Chief Financial officer, The Chief Financial Officer shall: A. Receive and acknowledge receipt for all funds of the Authority and place them in the treasury to the credit of the Authority. B. Be responsible upon his or her official bond for the safekeeping and disbursement of all Authority funds so held by hire or her. Page 17 of 23 C. Pay any sums due from the Authority, as approved for payment by the Board or by any body or person to whom the Board has delegated approval authority, making such payments from Authority funds. D. Verify and report in writing to the Authority and to Member Entities, as of the first day of each quarter of the fiscal year, the amount of money then held for the Authority, the amount of receipt since the last year, and the amount paid out since the last report. 17.02 Property f the Author'lt F The Chief Executive Officer, the Chief Financial Officer and such other persons as the Board of Directors may designate shall have charge of, handle, and have access to the property of the Authority. 17.03 .fidelity Bonds. The Authority shall secure and Pay for a fidelity bond or bonds, and/or crime and fidelity coverage, in an amount or amounts and in the form specified by the Board of Directors, covering all officers and staff of the Authority who are authorized to hold or disburse funds of the Authority, and all officers and staff who are authorized to have charge of, handle, and have access to property of the Authority. ARTICLE XVIII, WITHDRAWAL 18.01 Withdrawal Prior to BecomingPartici.pati.n.g Entity. A Member Entity may withdraw as a party to this Agreement upon thirty 3 days advance written notice t the Authority if it has Heger become a participant in any Program pursuant to Article XV, r if it has withdrawn from all Programs in which it was a participant, pursuant to 18.02 below. 18.02 Withdrawal Subseguent to Becoming a Participating Entity. . After becoming a participant in any Program pursuant to Article ACV,' a Participating Entity may withdraw w from that Program only asprovided in the respective Program Agreement. ARTICLE XIX, CANCELLATION 19.01 Cancellation th� , Notwithstanding the provisions of Article X 1, but subject to the terms of the Program Agreements., the Board of Directors may; A. Cancel any Member Entity from this Agreement and membership in the Authority, upon a vote of a majority of the Directors present and voting. Such action shall have the effect of canceling the Member Entity's participation in all insurance programs of the Authority as of the date that all membership is cancelled. 13Cancel any Member Entity's participation in a Program, without canceling the Member Entity's membership p n the Authority or participation in other Programs, upon a vote of a majority of the Directors present and voting, such Grote t Page 18 of 23 include a majority of those Directors present and voting who represent Participating Entities in the Program from which the Member Entity is to be expelled. The Board shall give sixty days advance wriften notice of the effective date f any cancellation under the foregoing provisions, unless otherwise provided in Program Agreement. Upon such effective date, the Member Entity shall be treated the sane as if it had voluntarily withdrawn from this Agreement. 9#2 Automatic Cancellation. A. A Member Entity that does not enter one or more Programs within the Member Entity's first year period of twelve months member of the Authority shall be considered to have withdrawn party to this Agreement at the end of such period, and its membership in the Authority shall be automatically cancelled as of that time, without action of the Board. B. A Member Entity which withdraws from all programs in which it was participant and does not eater any other Program for a period of six months thereafter shall be considered to have withdrawn as a party to this Agreement at the end of such period, and its membership in the Authority shall be automatically cancelled s of that time, without action of the Board. ARTICLE XX, WITHDRAWAL OR CANCELLATION OF PARTICIPATION IN A PROGRAM The effect of withdrawal or cancellation of participation in a Program and the terms and conditions governing such withdrawal shall be as set forth in each of the Program Agreements. ARTICLE XXI, TERMINATION OF AGREEMENT AND DISTRIBUTION OF ASSETS 21.01 Termination of Agreement. This Agreement may be terminated t any time upon the election to terminate of three -fourths of the Member Entities, acting through their governing bodies; provided, however, that this Agreement and the Authority shall continue to exist after such election for the purpose of retiring any debt, disposing of all claims, distributing all assets, and performing all other functions necessary to conclude the affairs of the Authority and any program' 21.02 Distribution of Assets. Upon termination of this Agreement, all assets of the Authority in each Program shall be distributed among Participating Members in proportion to their contributions to the program, including premiums paid cash and property contributed or revenues attributed to the Participating Member t market value when contributed) in accordance with the terms of the Program Agreement. Page 19 of 23 1. 3 future Assessments* Following termination f this Agreement., any participating Entity in a Program may be required to pay an additional amount of Premium, n ium, determined by the Board in accordance with the terns of the Program Agreement, which may be necessary to enable final disposition of all Claims arising from Losses under that Program during the Participating Entity's period of participation, ARTICLE XXII, LIABILITY OF BOARD OF DIRECTORS, OFFICERS AND COMMITTEE MEMBERS 22.01 Standard of Care. The Directors, Officers and commiftee members of the Authority shall use ordinary care and reasonable diligence in the exercise of their power and in the performance of their duties pursuant to this Agreement. They shall not b liable for any mistake of judgment r any other action made, taken or omitted by them in good faith, nor for any action taken or omitted by any agent, employee or independent contractor selected with reasonable care, nor for loss incurred through investment of Authority funds, or failure t 'Invest. 22.02 Not Liable for Action of Others. No Director, Officer or committee member shall be responsible for any action taken or omitted by any other Director, Officer or committee member. No Director, Officer or cornmiftee member shell be required to give e bond or other security to guarantee the faithful performance of their duties pursuant t this Agreement, 22.03 Indemnification. Any person who at any time shall serve, or shaft have served as a Director, Committee Member, or Officer of the Authority, shell b indemnified, held harmless and defended by the Authority against all costs and expenses (including but not limited to attorneys fees of an attorney approved by the Authority), amounts of judgments, and settlements reasonably incurred In connection with the defense of any claim, action, suit, or proceeding, whether civil, criminal, administrative, or other, in which he,, she, or they may be involved by virtue of such rs n's being or having been e Director, Committee Member, or Officer; provided however, that such indemnity shall not be operative with respect to: the Director, Commiftee Member, or Officer gaining any personal profit or advantage in his or her capacity as Director, Committee Member, or Officer,, the dishonesty of a Director, Committee, or Officer, 3 e Director's, Committee er b r's, or Officer's conflict of interest, willful violation of a statute or ordinance committed by a Director, Committee Member, or Officer or with the Director s, Committee Mmber's, or Officer's knowledge or consent, or 5 any ma t r as to which the Director, Committee Member, r Officer shall have been finally adjudged in such action, suit or proceeding to be liable for misconduct in the performance of his or her duties as Director, Committee Member, r Officer. The indemnification will not be operative for any settlement unless the settlement is approved by e majority of the Directors. Page 20 of 23 ARTICLE XXIII, BYLAWS The Bylaws of the Authority, or any subsequent amendment thereto,, shall be in conformity with the pr vi i n f this Agreement. ARTICLE XXIV, NOTICES The Authority shall address notices, billings and other communications to a Member Entity at the address and to the attention of the individual set forth on each Member Entities' signature page hereto or as otherwisedirected by the Member Entity. Member Entities shall address notices and other communications to the Authority to the Chief Executive Officer of the Authority, at the office address of the Authority which shall be, until otherwise notified, PO Box 6669, Helena MT 59 -666 . ARTICLE XXV, AMENDMENT This Agreement may be amended at any time by approval of any amendments by tiro -thirds of the Member Entities, acting through their governing bodies, either at :meeting in person, by proxy, or by nail ballot: provided however, that no amendment may be :Wade which would have the effect of altering or amending any Program Agreement or altering or limiting any obligations of the Authority or Member Entities thereunder. ARTICLE XXV1, PROHIBITION AGAINST ASSIGNMENT No Member Entity may assign any right, claim or interest it may have under this Agreement, and no creditor, assignee or third party beneficiary of any Member Entity shall have any right, claim r title to any part, share, interest, fund, premium or asset of the Authority. ARTICLE XXV11, AGREEMENT COMPLETE The foregoing constitutes the full and complete Agreement ofth parties with respect to the Authority. There are no oral understandings or agreements not set forth in writing herein, provided, however, that participation in any insurance program of the Authority is subject to the terms and conditions of separate Program Agreements not inconsistent herewith. Page 21 of 23 ARTICLE XXVIII, EFFECTIVE DATE OF AMENDMENTS ,any amendment of this Agreement shall become effective upon the Authority receiving notice of the approval of any Amended Agreement by the Governing bodies of tiro -thirds of the Member Entities and upon filing with the Secretary f State and the various county clerk and recorders of the counties In which Member Entities are located. ARTICLE XXIX, FILING WITH SECRETARY OF STATE AND COUNTY CLERK AND RECORDERS Within thirty 3 days after the approval of any amendment, the Chief Executive Officer of the Authority shall file a copy of this Agreement with the Secretary of State and the county clerk and recorder of each county in which Member Entities are located. ARTICLE XXX, EXECUTION This lnterll Agreement shall be executed on behalf of the Member Entity by its Chief Future Officer and attested by the Clerk only upon approval thereof by the governing body. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. Page 22 of 23 REVISED AND RESTATED INTERLOCAL AGREEMENT GOVERNING THE MONTANA MUNICIPAL INSURANCE AUTHORITY EFFECTIVE AS OF OCTOBER , 2005 Signature Page N WITNESS WHEREOF, the undersigned parties hereto have executed this agreement on the date indicated below, Attest: Clerk City of By Its Date Signed Notices required to be mailed to the City/Town under the foregoing Agreement shall be mailed t: City/Town of Attention: :\ t orthin tcnt cb�Boar \cover ance documents\] nterlalA re r entHNALOctober2005-doc Page 23 of 23 MONTANA MUNICIPAL INSURANCE AUTHORITY MEMORANDUM OF LIABILITY COVERAGE Form A EFFECTIVE October 1, 2005 TABLE OF CONTENTS M COVERAGE r■##MM*wF«#3■E■t■a#Err#M*Mw Mw Ma#■i#\#MM**MIRk M14W W11*WM*M#**ra#■■E#E##■a\lrrF*!►MkM#r\a Ei Elilr****R#iF\#E■#ri**MI 1* BENS, JUDGMENT, AND SETTLEMENT Ill. COVERED PARTY....,,,,,,,,,,, EFSE so EaMM*xM#FM Esas ESE#s#E#EE EE on EEi sF*w*%vm Ems EEsE#Y**M#F#FE mm2 IV. TERRITORY.....#EEaEliE#aarrMwkMM*FvER■a■awmwil pawRsa#EEa#EEa momaw as moms r*M* *swoon *Mae amos*o Rems2 V. DEFINITIONS......... *M#t&M*#si*sco#e so amazon rsE•WWatvAq"tmass r■EaE■Ea*vw*v#s EE EE#Ea3Mi4M**Ilf#EE#E� V1; DEDUCTIBLE Ban pa#FM#**MME##E#■#EE##Ragso**rMMMWM%*WoAWM*Rsa#EE*EaMWo*#«**W#EEEMORON wm*wuass ■nsEamov#"M I1M LIMIT OF LIABILITY ... Wp***M IMamoomm Evongsom man mom *eaEEaEESW Vill. PAYMENT I ADDITION TO LIMIT OF LIABILITY ...... * mAom *wmm EE EE#Ea MM.EEE on EEE nmmo*M*EEEE Erb X. EXCLUSIONS *#E........*do K WUN#E am a am RAN* raj#**41 WESaEEEEaass aasaA#E#s*****itamen a■am* aaK&**o*wwa■Eam* RM*m**wm as a■#■a***m X. ADDITIONAL COVERED PARTY■#EE3 ME CONDITIONS EW IW*"o*bMmMv Ea ■ ■a:ww *o*v*Eir#E KEa msoowwm sE#Era ■s*v*#W*M*■ sE#a#Er r***M#a#Ea E■#rw r*M#EEr EEE MONTANA MUNICIPAL INSURANCE AUTHORITY MEMORANDUM OF LIABILITY COVERAGE EFFECTIVE October 1, 2005 In consideration of the payment of the premium, the Montana Municipal Insurance Authority (Authority) agrees,, subject to the LIMITS of LIABILITY, EXCLUSIONS, CONDITIONS and other terns of this Memorandum and DECLARATIONS, to pay on behalf of the named Entity in the DECLARATIONS (the Entity) as follows: I. COVERAGE The Authority agrees to pay on behalf of the Entity all sums in excess of the DEDUCTIBLE which the Entity shall become legally obligated to pay as Damages because of: A. Bodily Injury B. Personal Injury C. Property Damage D. Public Officials Errors and omissions As those terms are herein defined and to which the Memorandum applies, caused by an Occurrence during the COVERAGE PERIOD. II. DEFENSE, JUDGMENT, AND SETTLEMENT The Authority shall have the right and duty to defend any suit against the Entity claiming monetary damages for which coverage is afforded under this Memorandum for an Occurrence during the COVERAGE TRIO, even if any of the allegations of the suit are groundless, false, or fraudulent, and may make such investigation and settlement of any claim or suit as it deers expedient. The Authority's duty to defend shall arise when the complaint or claim alleges facts which would obligate the Authority to indemnify the insured if the alleged facts were proven. The Authority shall be responsible for payment of all reasonable attorney fees and costs for defense of a COVERED PARTY and shall only be responsible for payment of that portion of a settlement or judgment which relates to claims for which coverage is afforded under the terms of this Memorandum. Provided, however, the Authority shall not be obligated to pay any settlement or judgment or to defend any suit after the applicable LIMITS of LIABILITY have been exhausted by payment of seftlemnts or judgments. Page I of 22 III. COVERED PARTY Each one of the following is a COVERED PARTY under this Memorandum: A. The Entity B. While acting within the scope of his or her duties for the Entity: Those individuals who were, or are now, elected or appointed officials of the Entity, whether or not compensated (including volunteers), including members of the Entity's governing body or any other committees, boards,, omissions or special districts of the Entity, while acting for or on behalf f the Entity during the Coverage Period. 2, Past or present employees of the Entity, whether or not compensated (including volunteers), while acting for or on behalf of the Entity during the Coverage Period. 3. Any peace officer or law enforcement entity which may render assistance during the Coverage Period upon request of a peace officer or lair enforcement organization of the Entity pursuant to applicable lair,(Retro- active to 7/1/96 and each Policy Year thereafter). C. A governmental or intergovernmental agency, board or commission which is governed directly by the Entity by having a majority of the members of such agency, board, or commission representing or appointed by the Entity. D. Additional Covered Party. IV. TERRITORY This Memorandum applies to any Personal injury, Property Damage, Bodily injury, or Public officials Error or Omission occurring during the Coverage Period anywhere in the world provided a claim is made or suit is brought within the United states of America, its territories or possessions, or Canada. V. DEFINITIONS The following definitions shall govern the moaning of the defined terms for the purpose of this Memorandum. . Defined terms have special meaning and are capitalized where used In this Memorandum, lords that appear entirely In capital letters have reference to the like -titled section in this Memorandum or In the DECLARATIONS, "Additional Covered Party" means any other entity, agency, board commission Page 2 of 22 person, or other private party named by endorsement to this Memorandum as an Additional Covered Party pursuant to section X of this Memorandum, below. "Aircraft" means any contrivance invented, used, or designed to navigate, or fly in, the air, "Air N i t'loreFacility" means a facility, personnel, mechanism, or equipment used, available for use, or designed for use in aid of air navigation, including runways, taxiways, places on lard or water, including a landing field, used or intended to be used, for the takeoff and landing of Aircraft, lights, apparatus or equipment for distributing weather information, signaling, radio -directional finding, or radio or other electromagnetic communication, and any other structures or mechanism for monitoring, directing, guiding or controlling flight In the air or the larding, taxing, or taking off of Aircraft, but does not include Airport Premises. "Ai Premises' means those premises including buildings, parking lots, sidewalks, streets, alleys, and structures that are not Air Navigation Facilities and are used for sheltering, receiving or discharging passengers or cargo. "Authority" means the Montana Municipal Insurance Authority. "Automobile" means a lard rotor vehicle, trailer or semi -trailer. "BodilyInjury" means physical injury, slickness or disease sustained by a person including death resulting therefrom. "CoverParty" means any person or Entity qualifying as a Covered Party as set forth n Section III of this Memorandum. "Dam" means any artificial barrier, together with appurtenant works, used to impound or dim water with an impounding capacity of 50 acre feet or greater, and shall include a barrier designated as a `high hazard darn" pursuant to Montana Code Annotated Sections 85-15-106 and 5-15-2 . "Damages" means Los s . "Defense Costs" means all reasonable fees and expenses caused by and relating t the adjustment, investigation, defense or appeal of a claim for which coverage is afforded under this Memorandum, including attorney fees, court costs and interest on judgments accruing after entry of 1 udgment; Howeve r, Defense Costs Shall not include the office expenses or salaries of employees or officials of the Authority or any Entity nor expenses of claims administrators engaged by any Entity. "Entity" means the city or town named in the DECLARATIONS, including any and all commissions, agencies, districts, authorities, councils or similar entities coming under the Entity's direction or control or for which the Entity's council members sit as the sole governing body. 'age 3 of 22 "all Haas the sum actually paid or payable in cash in the settlement or satisfaction oflosses for which the Entity is liable either by adjudication or by compromise after making proper deduction for all recoveries and salvages. "Memorandumpf means this Memorandum of Liability Coverage for the Montana Municipal Insurance Authority and any endorsements attached thereto. "Nuclear Material" means source material, special nuclear material, or by-product material. Source material, special nuclear material and by-product material have the meanings given to them by the Atomic Energy Act of 1954 or in any law amendatory thereof. 1 r l� means an accident or event, including injurious exposure to conditions, which results, during the COVERAGE PERIOD, in Injury, Property Damage, Personal Injury, or Public Officials Errors and Omissions neither expected nor intended from the standpoint of the Covered Party, All Losses or Damages arising out of a continuous or repeated exposure to substantially the sane general conditions shall b considered arising out of one Occurrence, "Personal Injury" moans injury, other than Bodily injury, including but not limited to one or more of the following: I, False arrest, detention, imprisonment, or malicious prosecution; 2. Wrongful entry or eviction or other invasion of private occupancy; 3* The publication or utterance of a libel or slander, including disparaging statements concerning the condition, valuer quality or use of real or personal property; or a publication or utterance in violation of the rights of privacy; Unlawful discrimination or violation of civil rights; 5. Shock,fright, mental anguish or mental injury; 6. Assault and battery, committed by, at the discretion of, or with the consent f a COVERED PARTY, for the purpose of protecting persons from injury, death, or property from carnage. "Pollutants" means any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes materials which are intended to be or have been recycled, reconditioned or reclaimed. "PropertyDamage" means: Physical injury t, or destruction of, tangible property which occurs during the COVERAGE PERIOD, including loss of use thereof at any time Page 4 of 22 resulting therefrom; or Loss of use of tangible property that is not physically injured provided such loss of use is caused by an occurrence during the COVERAGE PERIOD. "Public Officials Errors and Omissions" means any act, omission, neglect, or breach of duty, including nonfeasance, misfeasance, and malfeasance by the COVERED PARTY in the discharge of their duties with the Entity, but shall not mean or include Bodily Injury, Personal Injury, or Property Damage. "Quantum M it" means "as much as he deserves'. An equitable doctrine, based on the concept that no one who benefits by the labor and materials of another should be unjustly enriched. Under those circumstances, the law implies a promise to pay a reasonable amount of the labor and materials furnished, even absent a specific contract. "Work lace Torts" means defamation, negligent infliction of emotional distress, invasion of privacy, wrongful discipline, negligent evaluation, and other torts arising from the facts or circumstances underlying any claim of Employment ent Termination, Unlawful Discrimination, or Sexual Harassment. Workplace lace Torts does not mean failure to hire or promote. "Wrongful Land use Practices" means actual or alleged liability, including property damage or diminution of property value, arising out of, or based upon, the principles of eminent domain, condemnation, inverse condemnation, land use regulation, grecondemnati n activities, interim takings, takings, down -zoning, zoning, general planning regulations, easements., nuisance, or annexation, including deprivation of constitutional or civil rights related thereto, regardless of whether such claims are made directly against the Entity or pursuant to an agreement entered into b, or on behalf of, the Entity. "Wrongful Employment Practice" means the actual or alleged wrongful employment ent termination, unlawful discrimination, sexual harassment, the violation of civil rights, or the commission of Workplace Torts by the Entity of any member of the governing body of the Entity, any member of any board or commission of the Entity or in which the Entity participates as a member, any elected or appointed official of the Entity, or any employee or authorized volunteer of the Entity* VI. DEDUCTIBLE The obligation of the Authority to pay Damages on behalf of the Entity shall apply only to the amount of Loss and Defense costs in excess of the DEDUCTIBLE amount stated in the' DECLARATIONS. The DEDUCTIBLE amount so stated applies on a per occurrence basis to all Loss(es) and Defense costs caused by an occurrence. The terms of the Memorandum, including thou with respect to the Authority's rights and duties for the defense of suits, apply irrespective of the application of the DEDUCTIBLE Wage 5 of 22 amount. The Authority may pay any part or all of the DEDUCTIBLE amount to effect a settlement f any claim or suit, and upon notification of the action, the Entity shall promptly reimburse the Authority for such part of the DEDUCTIBLE amount as has been paid by the Authority. V11. LIMIT OF LIABILITY Regardless of the number of Covered Parties under the Memorandum, 2 persons r organizations who sustain injury or damage, 3 claims rude or suits brought on account of Personal Injury, Property Damage, Bodily Injury, or Public Officials Errors and Omissions the Authority's liability for Damages as the result of any one Occurrence shall be only the MAXIMUM POLICY LIMIT less the amount of the Entity's DEDUCTIBLE as specified in the DECLARATIONS. For the purpose of determining the LIMIT OF LIABILITY, all damages arising out of continuous or repeated exposure to substantially the salve general conditions shall b considered as arising out of one Occurrence. In the. event that any combination of the COVERAGE applies to the sane Entity for loss, claim or suit, the Authority's liability shall be limited to the LIMIT OF LIABILITY for one Occurrence. Vill. PAYMENT IN ADDITION TO LIMIT OF LIABILITY The Authority will pay, in addition to the applicable LIMIT OF LIABILITY all expenses incurred by the Authority, all costs toned against the COVERED PARTY at any inquest r criminal proceeding or in any suit defended by the Authority and all interest on the entry of any judgment therein which accrues after entry ofth judgment and before the Authority has paid or tendered or deposited in court that -part of the judgment which does not exceed the Authority's LIMIT OF LIABILITY thereon: Premiums iums n appeal bonds required in any such suit, premiums s n bonds to release attachments in any such suit for an amount not in excess of the applicable LIMIT OF LIABILITY; Expenses incurred by the COVERED PARTY for first aid to others at the time f an accident, for Bodily Injury to which this Memorandum applies; 3 Reasonable expenses incurred by the COVERED PARTY at the Authority's request, including loss of wages or salary (but not loss of other income) not to exceed $100 per day, because of attendance of the COVERED PARTY at hearings or trials; Page 6 of 22 Defense Costs, IX. EXCLUSIONS This Memorandum does not cover: Any liability arising out of claims, demands, or actions seeking relief or redress In any fora other than money damages; or for fees or expenses relating to claims, demands or actions seeking relief or redress in any form other than money damages, unless otherwise provided under Article 11 of the Memorandum. 2. Any liability arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of Pollutants: A. At or from any premises, site or location which is or was at any time owned, leased to, or occupied by the Entity, but this exclusion does not apply if an actual discharge, dispersal, release or escape of Pollutants arises out of an Automobile not owned by, leased to, hired by, or loaned to the Entity while being used on a public street or road owned or maintained by the Entity; B. At or from any premises, site or location which is or was used at any time by or for the Entity or others for the handling,, storage, disposal processing or treatment of waste; Cr which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for the Entity or any person or organization for whom the Entity may be legally responsible; or from any site or location on which the Entity or any contractors or subcontractors working directly or indirectly on the Entity's behalf are performing operations: If the Pollutants are brought on or to the site or location in connection with such operations.; or 2 if the operations are to test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize the Pollutants, D. This exclusion does not apply to fire fighting activities, including training burns, or intentional demolition or burns for the purpose of limiting a firm or the discharge of pollutants for the purpose of controlling a fire; or to the police use of mace, oleoresin, capsicum, (O.C.), pepper gas or tear gas, or any other chemical recognized and authorized for use by law enforcement authorities; or to wood abatement, tree spraying or insect or mosquito control conducted by a licensed operator using herbicides or pesticides which have been duly Page 7 of 2 licensed by any federal* state or local governmental agency are being used or applied by the operator for the intended use, E. This exclusion does not apply to cairns arising from sudden and accidental sewer backups on any property intended for use or occupancy. F. This exclusion does not apply to claims arising from the sudden and accidental discharge, dispersal, release, or escape of chlorine or other chemicals (gas, liquid or solid) which are being used or being prepared for use in fresh or waste water treatment or in water used in swimming pools, grading pools, or decorative fountains owned and operated by the Entity. G. This exclusion does not apply to claims arising from mate6ais being collected as part of any drop-off or curbside recycling program implemented and operated by the Entity, or any claims arising from materials collected by the Entity which were abandoned on public property; if the materials have not been stored by the Entity for a continuous period exceeding ninety 9 days. H. This exclusion does not apply to bodily Injury or Property Damage caused by heat, smoke, or fumes from a hostile fire. As used in this exclusion, a hostile fire means one which becomes uncontrollable or break out where It was not intended to be. 3. Any loss, cost or expense arising out of: A. Any governmental directions or request that the Entity test for, monitor, clean up, remove, contain, treat, detoxify, neutralize, or in any way respond to, or assess the effect of Pollutants pursuant to the Comprehensive Environmental response, Compensation and Liability Act CERCLA , the Resource conservation and recovery Act RCRA , or any other environmental statute or regulation promulgated by any federal, state or local authority, including any Loss, cost or expense arising out of any governmental directions or request that the Entity test for,, monitor, clean up# remove, contain, treat., detoxify or neutralize Pollutants situated on any premises which the Entity owns, rents or otherwise occupies, or will own, rent or occupy in the future, B. Any claim or suit by or on behalf of a governmental authority for damages because of testing for monitoring, clearing up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of Pollutants. 4. Any Liability arising out of Wrongful Employment Practices. However, the Authority agrees to pay on behalf of an Entity that has Page 8 of 22 applied for and received from the Authority an Employment Practices Liability Endorsement, all reasonable and necessary Defense Costs, on behalf of the Entity in the defense of a Wrongful Employment Practice claim. . The payment of Defense Costs on behalf of the Entity in defense of ar Wrongful Employment Practice claim shall not be construed to require the Authority to pay any Loss or Damages other than Defense Costs in connection with any 'wrongful Employment Practices claim. The following are not covered for purposes of this Defense Cost coverage for Wrongful Employment practice: A. Claims and grievances resulting from collective bargaining negotiations or collective bargaining agreements. Claims involving the failure or refusal to modify buildings for disabled access, C. Claims involving retaliation for whistle blowing. 1 . Claims arising from strikes or lockouts. outs. E. Claims arising out of the Entity's failure to pay wages or overtime compensation to an employee. 5. Bodily Injury or Personal Injury to an employee of the Entity arising out of and in the course of employrn nt , y the Entity, or for the spouse, child, parent, brother or sister of that employee as a consequence of actions of the employee arising out of and in the course of employment by the Entity. This exclusion applies whether the Entity may be liable as an employer or in any other capacity, except with respect to liability of others assumed under contract. This exclusion shall not apply where the Bodily Injury or the Personal Injury alleged to have occurred is determined not to be a compensable injury within the meaning of the Workers Compensation and occupational Disease Acts of the state of Montana, . Any obligation for which the Entity or any insurance company as its insurer may be held liable under anyworkers' compensation or disability benefits lave or any similar 1. ' Any liability arising out of any Air Navigation Facility, or any activities associated with, or related to the ownership or operation of any Air Navigation Facility. This exclusion shall not apply to liability arising out of the ownership or operation of Airport Premises, or to emergency activities and vehicles responding to an aviation emergency. . Any liability arising out of, or in connection with, the ownership or Page 9 of 22 operation of any hospital, clinic, or established health care facility. This exclusion also applies to liability arising out of, or in connection with, the ownership or operation of any hospital, clinic, or established health care facility owned or operated by the Entity due to: A. The rendering of or failure to render: 1 Medical, surgical, dental, X-ray or nursing service or treatment, or the furnishing of food or beverages in connection therewith; (2) Any service or treatment related to physical or mental health or of a professional nature or; (3) Any cosmetic or tonsorial service or treatment; The furnishing of or dispensing of drugs or medical, dental, or surgical supplies or appliances. This exclusion shall not apply, however, to any professional activities arising out of the performance ofoccupation physical examinations, paramedics, merg ncy first aid, or emergency medical technicians. 9. Any liability arising out of partial or complete structural failure of a Darr. 10. Any liability arising out of fires, punitive damages, penalties, exemplary damages, or damage multiples such as double or treble damages awardable pursuant to statute. 11. Any liability for Property Damage to property owned by the Entity, or property rented to or leased to the Entity where it has assumed liability for damage to or destruction of such property, unless the Entity would have been liable in the absence of such assumption of liability. 12. Any liability arising out of the ownership, rental, lease, borrowing, loaning', navigation, operation, piloting, use or maintenance of any Aircraft. 13. Any liability arising out of Wrongful Land Use Practices. This exclusion shall apply to any substantive decisions of the Entity or other Covered Party, but shall not apply to alleged procedural defects in the decision raking process employed by the Covered Party. However, the Authority agrees to pay on behalf of the Entity all reasonable and necessary Defense Costs, on behalf of the Entity in the defense of Wrongful land Use Practices claim that is otherwise excluded from coverage under this Exclusion. The payment of Defense Costs shrill not be construed to require the Authority to pay any Loss or Damages other than Defense Costs in connection with any claim subject to this Exclusion. Page 10 of 2 . Any liability arising out of the failure to supply or provide an adequate supply of gas, water or electricity when such failure is a result of the inadequacy of the Entity's facilities to supply or produce sufficient gas, water or electricity to meet the demand. 15. Any liability for Bodily injury or Property Damage arising out of the hazardous properties of Ruler Material, M Any liability arising out of sexual abuse, mistreatment, or harassment. . Any liability arising out of the following special events: I Air shows involving the aerial display of Aircraft; (2) Circuses; (3) Rodeos; (4) Fireworks involving the ignition of a commercial or Entity sponsored display; (5) Animal racing; (6) Carnival of amusement rides; (7) Motorized vehicle racing; (8) Water sports other than those associated with municipal swimming pools, lakes or other municipal designated aquatic areas; (9) The rental of any motorized vehicle or apparatus used for individual conveyance or entertainment; (10) Boxing or other martial competition. . Any liability arising out of the willful violation of a statute, ordinance or regulation, where the violation can result in the imposition of criminal or civil penalties, committed by or with the knowledge or consent of the Entity; except that no violation by any CEO PARTY shall be imputed to any other COVERED PARTY. I 19. Any liability arising out of a publication or utterance concerning any organization or business enterprise, or its products or services, made by or at the direction of any Entity with knowledge of the falsity thereof. 2 .' Any liability arising out of any employee benefit plan, whether the plan is voluntarily established by the Entity or mandated by statutes, because of unlawful discrimination. 21. Any liability arising out of failure to refund taxes, fees or assessments: 22. Any liability arising out of failure to perform, or breach of, a contractual obligation* This exclusion also applies to liability arising out of,, including but not limited to, defaulting on municipal financing instruments such Page 11 of 22 (1) Special Obligation Bonds (2) Special Tax Bonds (3) Special Assessment Bonds and Notes (4) Revenue Bonds (5) Industrial Revenue Bonds (6) Moral Obligation Bons (7) Short-term Debt Bonds (8) Particular Obligations Issued Pursuant to Federal Programs 23. Any liability of the COVERED PARTY arising in whole or in part out of the COVERED PARTY obtaining remuneration or financial gain to which the COVERED PARTY was not legally entitled. 2. Any liability arising out of any deliberately dishonest or fraudulent act or omission, or any criminal or malicious act or omission, or any willful violation of the lair. However, the COVERED PARTY shall be protected under the terms of this Memorandum for any claims against them by reason of any alleged dishonesty on the part of the COVERED PARTY unless a judgment or other final adjudication thereof adverse to the COVERED PARTY shall establish that acts of deliberate dishonesty committed by the COVERED PARTY were material to the claim. 25. Any liability arising out of estimates of probable costs or cost estimates being exceeded or faulty preparation of bid specifications or plans including architectural plans or failures to award contracts in accordance with a statute or ordinance which under law must be submitted for bids. 26. The Employee Retirement Income Security Act of 1974, and any lair amendatory thereof, or similar provisions of any federal, state or local statutory law or common lair. 27. Any claim based on or arising out of a notarized certification of a signature without the physical appearance before a notary public. 28. Any claim for Property Damage arising solely out of an act of vandalism, theft or other criminal act. 29. Any claim arising out of Property Damage to personal property loaned to the Entity for temporary use or claim arising out of Property Damage to personal property belonging to another, but stored by the Entity, with or without charge. However, this exclusion does not apply to a property of persons who are involuntarily confined by the Entity, orb property held as evidence or otherwise seized or impounded by the Entity; provided that in either the case of a or b, above, the property has been accurately recorded by the Entity and is reasonably secured by the Entity. Page 12 of 22 30. Any liability arising out of the use of a structure designed to facilitate the operation or use of a skateboard,, whether or not the structure is utilized for skateboarding purposes. However, this exclusion does not apply to liability arising out of the use of a structure designed.to facilitate the operation or use of a skateboard if the Entity has applied for and received from the Authority an Endorsement for Skateboard Facilities. 31. The Entity's contractual assumption of liability for damages, unless the Entity would otherwise have been liable for such damages in the absence of the assumption. 32. Any liability arising out of, or based on, principles of Quantum Moruit. 33. Any liability arising out of the Entity's failure to pay wages or overtime compensation to employees of the Entity. X. ADDITIONAL COVERED PARTY A. In order to obtain an Additional Covered Party Endorsement, a Member Entity must submit a written request to the MMIA for issuance of an Additional Covered Party Endorsement stating the name, address, and description of the person or entity to be named in the Endorsement, including a description of the need for such Endorsement and the time period for which an Endorsement is sought. Such request shall also contain information including, but not limited to, the criteria set forth in Paragraph B, below; and include the person or entity to be named in the Endorsement's executed agreement to abide by the terns of the applicable Memorandum of Liability coverage if such Endorsement is granted. It shall also include an acknowledgment by the Member Entity that it is aware that Losses and Defense costs paid on behalf of the Additional covered Party will b assessed to the Member Entity pursuant to the MMIA's Program and lnterlocal Agreements. B. MMIA staff will maintain absolute discretion in determining whether to issue an Additional Covered Party Endorsement, and will review requests and make decisions on the issuance of an Endorsement based on such criteria that may include, but is not limited to: a# Proposed Additional covered Partys authority to conduct business in Montana. b, Experience and expertise in the Proposed Additional Covered Party's area of service or purpose c. risk management training, practices or programs by the person or entity seeping to be named in the Endorsement. Page 13 of 22 d. Loss or lawsuit history of the person or entity seeking to he named in the Endorsement. e. Risk associated with service provided or purpose of the person or entity seeking to he named in the Endorsement. f. Time period of Endorsement.. g. Any other criteria MMIA staff determines to he applicable. C. The MMIA may either issue the Endorsement as requested,, issue the Endorsement with conditions, request additional information before making decision, or deny the request for Endorsement. [ . The MMIA reserves the right to deny an Endorsement for coverage for Proposed Additional Covered Party that in the MMI 's estimation poses unreasonable risk or exposure to the Liability Program. E. The MMIA's decision to deny or conditionally approve a request for an Additional Covered Party Endorsement may be appealed to the MMIA Underwriting Committee pursuant to the provisions of the Memorandum of Liability Coverage. XI. CONDITIONS A. Payment of Premium. The Entity agrees to pay all risk premiums, s, risk premium adjustments, deferred risk premium adjustments, debt service premiums and supplemental debt service premiums as specified in the Liability Insurance Coverage Program Agreement, as the same may be amended from time to time. B. Inspection of Entity's Property and operations. The Authority shall he permitted but not obligated to inspect the Entity's property and operations at any time, Neither such right to make inspections nor the making thereof nor any report thereon shall constitute an undertaking on behalf f, or for the benefit of, the Entity or others to determine or warrant that such property or operations are safe. The Authority may examine the Entity's hooks and records at any time during the COVERAGE PERIOD and extensions thereof and within three years after the final termination of this Memorandum as they relate to the subject matter of this Memorandum. C. Entity's Duty in the went of any occurrence, Claim or suit. In the event of an occurrence reasonably likely to involve the Authority, written notice containing particulars sufficient to identify the Entity and reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the Entltyles and of available witnesses, shall be given by or for the Entity to the Authority or any of its authorized agents as soon as practicable. Pepe 14 of 2 2. If a claim is made or suit brought against the Entity, the Entity shall forward to the Authority every demand, notice, summons or other process received by the Entity or the Entity's representative. 3. The Entity shall cooperate with the Authority and upon its request assist in making ettlement , in the conduct of suits, and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the Entity because of an occurrence with respect to which coverage is afforded under this Memorandum; and the Entity shall attend hearings and trials and assist in securing and giving evidence and obtaining the attendance of witnesses. The Entity shall not, except at its own cost, voluntarily make any payment, assume any obligation or incur any expense. D. Bankruptcy or Insolvency., Bankruptcy or insolvency of the Entity shall not re ie e the Authodty of any of its obligations hereunder* E. Other Insurance. f the COVERED PARTY has collectible insurance for Damages also covered hereunder (whether primary, excess, contributory, contingent or otherwise), the coverage provided by this Memorandum shall be in excess of and shell not contribute with, such other insurance. This clause does not apply with respect to excess insurance purchased specifically to be in excess of this Memorandum. F Reimbursement from Entity. In the evert the Authority has paid any amounts in settlement or satisfaction of claims, judgments, or awards, including interest, or for claim expenses in excess of the applicable LIMITS of LIABILITY, or within the amount of the applicable DEDUCTIBLE, or if the Authority in good faith has paid any amounts for which the Authority has no liability under this Memorandum, the Entity shall be jointly and severally liable to the Authority for any and all such amounts, and upon demand, shall pay such amounts to the Authority. G , occurrence. n occurrence with a duration of more than one COVERAGE PERIOD shall be treated as a single occurrence arising during the COVERAGE PERIOD when the Occurrence began. H. opportunity to Remedy in Event of Breach. In the event the Authority considers the Entity in breach of a term or conditions of this Memorandum, the Interiocal Agreement creating the Montana Municipal Page 15 of 22 Insurance Authority, or the Liability Insurance Coverage Program Agreement, the Authority shall first give notice to the Entity of the alleged breach and allover the Entity the opportunity to remedy the same. In the event the Entity considers the Authority 1n breach of a term or condition of this Memorandum, the Interlocal Agreement creating the Montana Municipal insurance Authority, or the Liability Insurance Coverage Program Agreement, the Entity shall first give notice to the Authority of the alleged breach and allow the Authority the opportunity to remedy the sere, 1. Selection of Counsel. The Authority shall have the sale authority to select legal counsel to defend any Covered Party in any suit brought against such Covered Party as provided in Article 11 of this Memorandum. J. Authority to Settle Claims, The Authority shall have the discretion to settle or compromise any monetary claim made against e Covered Party by paying such Loss without the consent of the Covered Party, provided, however, that 1n cases 1n which the claimant seeks both a monetary and a non -monetary recovery against the Entity or other Covered Party, the Authority shall have the discretion to seftle or compromise the monetary ry portion of such claim by paying such Loss only with the consent of the Covered Party. if the Covered Party shall not consent to payment of such Loss for whatever reason, the Covered Party shall then and thereafter be responsible for the amount of any Loss, whether paid by way of monetary settlement or judgment, in excess of the amount which the Authority was grilling to pay to compromise r settle the claim. K. Dispute resolution for Contested Coverage Determinations 1, Scope of Coverage The Dispute resolution Procedures set forth in this Section shall be followed in resolving any dispute, claim, or controversy arising between the Authority and member Entity concerning determinations of coverage under the applicable Memorandum of Liability Coverage, including both determinations to deny coverage and/or defense or to provide a defense subject to a reservation of rights ("Coverage Determination"). 2. Procedure for Resolving Disputes . Appeal to Underwriting Committee. i. In the event that a member Entity is aggrieved by Coverage Determination, the member Entity shall initially appeal any adverse determination to the Underwriting Committee of the Page 16 of 22 Board of Directors within thirty 3 calendar days of receiving the adverse determination. ii. This appeal shall be initiated by sending written notification of the desire to appeal and the basis for the appeal to the Chief Executive officer. iii. The Chief Executive officer shall, within three 3 business days of receipt of the appeal submit the documents received from the Entity, together with such additional explanatory material as the Chief Executive officer deems appropriate, to the members of the Underwriting committee in writing. iv. if either the appealing Entity or any member of the Underwriting vriting Committee or the Chief Executive Officer so requests, the Committee shall be convened within ten 1 business days after the chief Executive officer has sent to the Committee the appeals materials. Such meeting shall be conducted either by telephone conference call or in person at the discretion of the Committee chair. Representatives of the Entity and the Chief Executive officer shall participate in any such conference call or meeting of the Committee and shall have an opportunity to b heard. V. The Committee may accept, reject, or modify in whole or in part the initial coverage determination which is the subject of the appeal and shall render its decision at the time of such meeting or, if no meeting is held, within ten o business days after the chief Executive Officer has sent to the Committee the appeals materials. vrt The chief Executive Officer shall prepare a written statement of the reason(s) for the decision of the Underwriting Committee within five 5 business days after the Committee has made its decision. This statement of decision shall be provided to the member Entity. b� Appeal of the Decision of Underwriting Committee to Board of Directors. L if either the appealing Entity or the Chief Executive Officer is aggrieved by the decision of the Underwriting Committee, that decision may be appealed to the Board of Directors of the Authority. ii. The aggrieved party shall file a written notice of appeal, together with the basis for the appeal, with the Chief Executive Officer of the Authority within thirty 3 calendar days of the date of receipt of the written decision of the Underwriting Committee. if filed Page 17 of 22 by the Authority,, a copy of this notice of appeal shall be mailed to the chief appointed or elected official of the Entity. ii. The non -appealing paw shali haveseven business days from the date of the notice to submit to the Chief Executive officer any additional information which it may desire to be submitted to the Board of Directors. i. The Chief Executive Officer shall, within three 3 business days thereafter, submit the documents received from the parties, together with such additional explanatory material as the Chief Executive officer deems appropriate to the members of the Board of Directors in writing, V. If either of the parties or a member of the Board of Directors so requests, the Board of Directors shall be convened within tern (10) business days after the Chief Executive Officer has sent to the Board of Directors the appeals material. Such meeting shall b conducted either by telephone conference call or in person at the discretion of the Board Chair, Representatives of the parties shall participate in any such conference call or meeting of the Board of Directors and shall have an opportunity to be hoard. Vi. The Board of Directors may accept, reject, or modify in whole or in part the Coverage Determination of the Underwriting Committee and shall render its decision at the time of such meeting, or, if no meeting is held,, within ten o business days after the Chief Executive Officer has sent to the Board of Directors the appeals materials. ViL The Chief Executive Officer shall prepare a written statement of the reason(s) for the decision of the Board of Directors within five (5) business days of the Board of Directors' determination. This statement of decision shall be provided to each party, 3. Voluntary Submission to Binding Arbitration, a. in the event either the Entity or the Chief Executive Officer is aggrieved by the decision of the Board of [directors, the matter may be voluntarily submitted to binding arbitration. The agreement between the Entity and the Chief Executive Officer to submit to arbitration shall be in writing and the party requesting arbitration shall submit a request to arbitrate to the other party within fourteen (14) calendar days of the date of the written decision of the Board of Directors. The request for agreement to submit to arbitration shall, if requested by the Authority, be sent to the chief elected or appointed official of the Entity or, if requested by the Entity, shall be mailed to the Chief Executive Officer of the Authority. Page 18 of 22 b. once a request for agreement to submit to arbitration has been made by the aggrieved party, the other party must provide its decision to the aggrieved party within ten 1calendar days of the date the request to submit to arbitration was received. In entering into an agreement to submit to arbitration both parties must certify that they are voluntarily submitting to binding arbitration for that particular dispute, and that both parties voluntarily agree that the arbitrator's decision is binding upon both parties. C. Once an agreement to submit to arbitration is made, the Authority and the Entity shall agree upon a single arbitrator within ton o business days of the riling of an agreement to submit to arbitration. In the event that the Authority and the Entity cannot agree on the choice of an arbitrator, each party shad designate in writing within five 5 business days thereafter an arbitrator and the two arbitrators shall select a single arbitrator within fire 5 business days thereafter who alone shall preside at the bearing and render decision. In selecting an arbitrator, consideration may be given to candidate's prior experience with, and knowledge of, natters related to insurance coverage disputes. dt The arbitrator shall commence hearing within forty-five 5 calendar days of his/her designation. e. The Authority and the Entity shall each pay one-half of the fees and costs of the arbitrator; and, each party shall pay its own fees and costs for representation at the arbitration* f. Discovery shall be limited to an exchange of documents, list of export and lay witnesses, a statement of the substance of the facts and opinions to which the expert is expected to testify and summary of the grounds for each opinion as contemplated b Montana Rules of Civil Procedure 2bA1, and a list of exhibits to be used at the hearing* . Written interrogatories, requests for admission, and depositions shall not be permitted unless the parties stipulate otherwise, and such discovery is completed within the time set for the arbitration hearing, h. Upon appointment, the arbitrator shall convene as soon as practicable a preliminary prehearing conference, at which time the parties shall submit their respective Statement of Facts', Contentions, Issues of Law, and preliminary disclosure of witnesses and documents relevant to the arbitration. Page 19 of 22 t the preliminary hearing, the arbitrator and the parties $hall identify factual and legal issues and establish a schedule for the exchange of documents, ents, reports, and other prehearing matters. Thereafter, the arbitrator shah issue a prehe ring order setting forth agreed facts, facts in dispute, legal issues,, and the timetable for further proceedings. . The parties may stipulate to a determination by the arbitrator by way of summary judgment rather than hearing if there are no material facts in dispute. k. The arbitrator may require the filing of prehearing memoranda by the parties, which shall set forth the contested facts,, the summary of applicable law, anticipated evidentiary issues which may arise at the hearing, and any other matters which the arbitrator may identify. iThe hearing shall be governed by the Montana Rules of Cirri Procedure and the Montana Rules of Evidence. Testimony shall be under oath administered by the arbitrator; however, there shall be no stenographic transcript or other "official" record of hearing. M. Posthe rir g briefs shall not be permitted. n. The arbitrator shall reader his or her decision in writing within thirty (30) calendar days of the close of the hearing. o. All decisions on appeals, whether by the Board of Directors (after the time to request arbitration has expired) or by the arbitrator shall be final and binding upon the Authority and the Entity. . General Provisions . Admissibility of Certain Statements, The deliberations of the Underwriting Committee and the Board of Directors concerning any such appeal shall be deemed to be settlement discussions within the meaning of Rule 408 of the Montage Rules of Evidence and no statements of any committee member or board member or any other participant to such appeals shall be admissible in any subsequent proceedings, and only the final written decision of the Committee or the Board of Directors, as may be the case, shall form the basis for any subsequent appeal. b. Funding of Defense and Claims Pending Resolution of Dispute. During the course of any appeal to the Underwriting Committee or to the Board of Directors or during the arbitration proceedings provided herein, the Entity will be responsible for all fees and Page 20 of 22 expenses for the defense or litigation,of the claim or lawsuit, the coverage of which is the subject of the appeal as provided herein. In the event that the final decision of the appeal proceedings as set forth herein is that a duty to defend exists, the Authority will reimburse the Entity for defense costs incurred during the pendency of the appeal for the defense of the underlying claim or lawsuit. L. Cancellation. This Memorandum may be canceled by the Authority for non-payment of premium iur in accordance with Article ill, Section 6.4 of the Liability Insurance Coverage Program Agreement, The Authority shall mail written notice to the Entity at the address shaven in this Memorandum stating when such cancellation shall he effective. The nailing of notice as aforesaid shall be sufficient proof of notice. The time of surrender or the effective date and hour of cancellation stated in the notice shall become the end of the COVERAGE PERIOD. Delivery of such mitten notice by the Authority shall be the equivalent to mailing. M. Action against Authority. No action shall lie against the Authority with respect to the coverages and related provisions defined in this Memorandum unless, as condition precedent thereto, there shell have been full compliance with all the terms of this Memorandum, nor until the amount of the Entity's obligations to pay shall have been finally determined either by judgment against the Entity after actual trial or by written agreement of the Entity, the claimant and the Authority* Any person or organization or the representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recovery under this Memorandum to the extent of the coverage afforded by this Memorandum. N person or Entity shell have any right under this Memorandum to join the Authority as a party to any action against the Entity to determine the Entity's liability, nor shall the Authority be inple d d by the Entity or its legal representative. N. Subrogation The Authority shall be suhreted to the extent of any payment hereunder to all the Entity's rights of recovery thereof, and the Entity shell do nothing after Loss t prejudice such right and shall do everything necessary to secure such right. Any amount so recovered shall be apportioned as follows: The highest layer of coverage shall be reimbursed fiat and if there are sufficient recoveries, then the next highest layer until all recoveries are used up. 2 The expenses of all such recovery proceedings shall he paid before any Page 21 of 22 reimbursements are made for the highest layer of coverage. If there is n recovery in the proceedings conducted by the authority, it shall bear the expenses thereof. 0. Assignment. Assignment of interest under this Memorandum shall not bind the Authority unless and until its consent is endorsed herein. P. Notice. Notice to any agent or Knowledge possessed by any agent or by any other person shall not effect a waiver or change in any part of this Memorandum or stop the Authority from asserting any right under the terms of this Memorandum, nor shall the terms of this Memorandum be waived or changed, except b endorsement issued to form a part hereof. P. Memorandum to -Conform to statutes, Case Laver# Regulations, Mules. Any and all provisions of this Memorandum which are in conflict with the statutes, case lair, regulations, or rules of the United states or the state of Fontana wherein this Memorandum is issued are understood, declared and acknowledged by the Authority to be amended to conform to such statutes, case law, regulations, or rules, Q. Entire Contract. y acceptance of this Memorandum, the Entity agrees that the Entity's statements in the MMIA Exposure survey, in the DECLAMATIONS, and in the application for this Memorandum are true and correct, and the MMIA Exposure Survey, DECLARATIONS: and application form a part of this Memorandum, that this Memorandum is issued in reliance upon the truth of such representations, and that endorsements issued by the Authority are part of this Memorandum. The Memorandum, together with the Interlocal Agreement creating the Montana Municipal Insurance Authority -and Liability Insurance Coverage Program Agreement, embody all agreements and constitute the entire contract existing between the Authority and the Entity pertaining to this insurance. AAdmini tration - MMI UabilityNemorand m of Coverage\MemorandumOfLiabilityForrnA-FINALOctl2OO5.doc Page 22 of 22