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Res 1429 - Cont CIS Ins Gnl Lia COUNCIL BILL NO. 1816 RESOLUTION NO. 1429 A RESOLUTION ENTERING INTO A CONTRACT WITH CITY/COUNTY INSURANCE SERVICES TRUST FOR MEMBERSHIP IN THE GENERAL LIABILITY AND AUTOMOBILE LIABILITY RISK SHARING POOL. WHEREAS, the City/County Insurance Services Trust (CIS) offers pooled self-insurance offering cost stability and the potential for long-term savings, and WHEREAS, CIS is sponsored by the League of Oregon Cities and the Association of Oregon Counties as a service to Oregon cities and counties, and WHEREAS, the City of Woodburn finds that membership in CIS is of benefit in managing the risks involved in providing services to its citizens, and WHEREAS, the City of Woodburn has been provided with an opportunity to review the Trust Agreement, Bylaws, and Rules of CIS, and WHEREAS, the City of Woodburn has submitted the Trust Agreement, Bylaws, and Rules to its legal counsel to review for compliance with the Charter and Ordinances of the City of Woodburn, now, therefore THE CITY OF WOODBURN RESOLVES AS FOLLOWS: Section 1. That the City of Woodburn does hereby enter into a contract with CIS and becomes a member of the CIS Trust for General Liability and Automobile Liability for a three-year period commencing July 1, 1997 and agrees to abide by the terms of the Trust Agreement, Bylaws, and Rules of CIS which, along with this Resolution, constitutes the contract between the City of Woodburn and CIS. A copy of said contract is attached hereto and by this reference incorporated herein. The City Administrator is hereby authorized to execute such documents as are necessary p~~~o_ th~s~es~. Approved as to For~:~ j...lZ1':)-- City Attorney Date APPROVED~--/~~" 7 N~SEY, MAygk Passed by the Council Submitted to the Mayor Approved by the Mayor Filed in the Office of the Recorder ATTEST Ma~~ City Recorder Page 1 - Council Bill No. 1816 Resolution No. 1429 July 28, 1997 July 29, 1997 July 29, 1997 July 29, 1997 ~'" -T'" '''-'.'''' ,~,,,~ ,,-_., , 11' 1 CITY/COUNTY INSURANCE SERVICES DECLARATION AND AGREEMENT OF TRUST THIS DEClARATION AND AGREEMENT creating the "CITY/COUNTY INSURANCE SERVICES TRUST," hereinafter called "the TRUST," is made by and between the LEAGUE OF OREGON CITIES and the ASSOCIATION OF OREGON COUNTIES for the purposes set forth in the following Recitals and implemented in the provisions hereof: RECITALS The LEAGUE OF OREGON CITIES (hereinafter the LEAGUE), and the ASSOCIATION OF OREGON COUNfIES (hereinafter the ASSOCIATION), are voluntary associations of cities' and counties, respectively, in the State of Oregon organized to promote the common interests of their member governments, and to institute programs to assist those members in performing their proper functions at the least cost to their taxpayers. In furtherance of those objectives, the LEAGUE and the ASSOCIATION, for the benefit. of their respective members, desire to establish a program . whereby the risks incurred by their member governments in the areas of tort liability, property loss, and workers' compensation may be effectively and economically managed, and whereby insurance and self-insured retention of such risks may be most responsibly and economically funded. The purpose of this Agreement, therefore, is to establish a TRUST which will protect and manage insurance premiums, contributions, and other collections related to the program; oversee the management and administration of the program; and approve the necessary contracts, insurance policies, premium and fee schedules, and other arrangements necessary to implement the program for the benefit of those member governments of the LEAGUE and the ASSOCIATION who choose to participate. IN CONSIDERATION of the benefits to be derived for their respective members, and the mutual covenants and conditions herein contained, the LEAGUE and the ASSOCIATION declare and agree as follows: ARTICLE 1. CREATION OF TRUST AND BOARD OF TRUSTEES. .- 1.1 The LEAGUE and the ASSOCIATION hereby establish a trust to be known as the "CITY/COUNTY INSURANCE SERVICES TRUST," which shall in all respects be governed by the laws of the State of Oregon, and which shall be' administered as herein provided to accomplish the purposes contained expressly and by necessary implication herein. 1.2 The TRUST shall be governed by a Board of Trustees composed of eight trustees. Three Trustees shall be appointed by the Board of Directors of the LEAGUE and three shall be appointed by the Board of Directors of the ASSOCIATION. The Executive Directors of the LEAGUE and the ASSOCIATION, or such persons whom they may ....~.,,- "_...._.._.~..~'-~...__..._.,--,...,.... . .....,..,.....--,-...,---. , l r-.p'.'-' designate, shall serve as ex officio Trustees to advise the Board. The LEAGUE and the ASSOCIATION, with respect to the trustees appointed by each, shall adopt their own rules and procedures for the appointment, tenure, and removal of trustees, subject to the following minimum standards: 1.2.1 If trustees are appointed for a fixed term, terms shall be for no less than one year, and shall be staggered so that no more than one LEAGUE trustee's term, and no more than one ASSOCIATION trustee's term expires during any calendar year. 1.2.2 As a qualification for appointment and continued service, each appointed trustee shall be elected or appointed official of a city or county which is a member of the LEAGUE or ASSOCIATION appointing the trustee. 1.2.3 In order to insure the faithful, independent, and impartial exercise of judgment and discharge of their obligations, trustees shall, during their term of office, be subject to removal only for just cause. 1.2.4 No trustee shall serve, and no appointment shall be effective until such appointee acknowledges in writing full and unconditional acceptance of the terms of this Declaration and Agreement. 1.3 In the event of a trustee's resignation, inability (including disqualification under Paragraph 1.2.2 hereof), removal, or refusal to act, a successor trustee shall be appointed as provided in Section 1.2 hereof. 1.3.1 If the trustee being replaced was serving a fixed tel111, the successor trustee shall be appointed to serve the remainder of the unexpired term. 1.3.2 In the event that a Trustee shall cease to be qualified pursuant under paragraph 1.2.2 hereof, such Trustee may continue to selVe for a period of 90 days or until appointment of a successor, whichever shall come first. 1.4 Should a vacancy exist among the trustees, the remaining trustees shall have full power to act as the Board of Trustees. ARTICLE 2. PURPOSES OF TRUST. 2.1 The express purposes and primary objectives of the TRUST are: 2.1.1 To insure that there is available to LEAGUE and ASSOCIATION members a market for liability, property, and workers' compensation insurance coverage appropriate to the risks to which such members are exposed; 2.1.2 To aggregate the collective buying power of those LEAGUE and ASSOCIATION members, and the economic advantages of individual and pooled risk retention where lawful and actuarially sound, to reduce and stabilize the cost of funding those risks; ......- . ~.- ~.._---" '''--r''.''---'''''.' ...---.---....-".. ~, 2.1.3 To make available to LEAGUE and ASSOCIATION members a resource of expertise in the management of risk through loss prevention and loss control programs, claims management and consulting, data gathering, information sharing, and related services. 2.1.4 To act as an information resource to members and to the LEAGUE and the ASSOCIATION in presenting to appropriate legislative bodies and committees data related to the cost of public body risk in Oregon; 2.1.5 To act, upon such joint authorization as the LEAGUE and the . ASSOCIATION may hereafter grant, as a pooled self-insured retention fund for participating members of the LEAGUE and ASSOCIATION, and such other local governments whose participation may be approved by the LEAGUE and ASSOCIATION, and to establish actuarially sound contribution schedules for participants in such a pool at appropriate retention levels; 2.1.6 To receive, account for, invest, and disburse as lawfully due and payable moneys collected from participating cities, counties and other local governments as premiums, fees, and other contributions to the TRUST. 2.2 The foregoing expression of purposes is not exhaustive, and in addition to other related objectives reasonably inferred from that list, the TRUST shall have such other objectives as may be lawful for an intergovernmental association under Oregon law. ARTICLE 3. POWERS, DUTIES, AND FUNCTIONS OF BOARD OF .TRUSTEES. 3.1 In furtherance of the purposes set forth in Article 2, the Board of Trustees shall have the following powers and duties: 3.1.1 To engage in and oversee, as the Board deems appropriate, the services of competent insurance agents and brokers to negotiate on behalf of the TRUST with insurance underwriters, and to market coverage and services to prospective participants in the TRUITs services. 3.1.2 To engage and oversee, as the Board deems' appropriate, the services of competent professionals to manage or assist in the management of the collection, investment, and disbursement of TRUST income; provided that the LEAGUE and the ASSOCIATION have first approved the proposed management plan. .- 3.1.3 To engage and oversee the setvices of competent program administrators and other staff to provide risk management and insurance related services to the TRUST and its participants, including such claims reporting and adjusting record keeping, information sharing, loss control and prevention consulting, and related administrative and consulting services as the Board deems appropriate. 3.1.4 To review and approve policy forms, service contract forms, and other documents appropriate to the operation of the TRUST, and to establish,the limits of authority of the persons engaged under Paragraphs 3.1.1, 3.1.2, and 3.1.3. .,.. .~'" ..........."......'-..---' t--_.._..._..~. ._- " 3.1.5 To establish methods of calculating premiums for insurance coverages offered, and other service fees to be charged to participants in the TRUST's services; and to establish procedures for the collection, investment, and disbursement of moneys owed to and by the fund, and actions to be taken with respect to delinquent accounts receivable. 3.1.6 To provide for complete accounting, and at least annually, audit of the funds received, invested, kept and disbursed by the TRUST; and to establish such accounts with financial and investment institutions and brokerages as may be necessary and prudent for the proper management of TRUST funds. All such funds of the TRUST may be aggregated for purposes of deposit, investment and disbursement However, records of moneys received and disbursed shall also be maintained by classes of local governments participating in the programs and services of the TRUST. 3.1.7 To contract with the LEAGUE and the ASSOCIATION for the services of staff members and for such support services and facilities as the Board shall consider appropriate. The Board may pay for such seIVices and facilities out of TRUST funds. 3.1.8 To contract with the LEAGUE and the ASSOCIATION for,eompensation of their support in marketing the products and. services of the TRUST, including but" not limited to use of the names and goodwill of the LEAGUE and the ASSOCIATION. The Board may pay such compensation out of TRUST funds. 3.1.9 To establish such advisory committees as the Board deems advisable to assist in policy and operations of the TRUST; and to appoint qualified persons to such committees to selVe at the pleasure of the Board. 3.1.10 To promulgate bylaws and regulations for the operation of the Board and the TRUST consistent with the provisions of this Declaration and Agreement 3.1.11 To exercise such other powers as may be lawful and necessary to implement more fully this Declaration and Agreement 3.1.12 The Board shall require all persons performing services to the TRUST under the above provisions to be bonded or insured in a form and amount set by the Board. 3.2 The Board of Trustees shall be chaired by one of the appointed members chosen in accordance with the Board's bylaws, and, in the absence of the chair, by a vice-chair chosen in accordance with the bylaws; provided, however, that the chair and vice-chair shall alternate annually between appointees of the LEAGUE and the ASSOCIATION so that each body is represented by an appointee holding one office or the other in any year, and the following year the representation is reversed. ....,0.;. 3.3 The Board of Trustees shall hold an annual meeting between J anuaryl and June 15 of each year, and shall meet at such other times as may be necessary with the concurrence of any four trustees or upon call of the chair. .'~- -~.__.._,. I-'--"---'~".'----' 'I 3.4 Two trustees appointed by the LEAGUE and two trustees appointed by the. ASSOCIATION shall constitute a quorum; provided, however, that if there are two or more vacancies in trusteeships subject to appointment by either body, the remaining appointed trustees shall constitute a quorum and shall have full power to transact business and act for the TRUST. 3.5 All TRUST action shall require affirmative votes of a majority of appointed trustees constituting a quorum. The votes of ex officio trustees in attendance shall be recorded in the minutes. 3.6 The chair or vice-chair of the Board of Trustees shall execute on behalf of the TRUST all contracts, documents, and pleadings as may be approved by the Board; provided that the Board may delegate to any person or firm engaged pursuant to Paragraphs 3.1.1, 3.1.2,3.1.3 or 3.1.7 a limited agency authority to bind the TRUST in certain cases or kinds of transactions to be specified by the Board. ARTICLE 4. USE OF TRUST FUNDS. 4.1 Without further specific action of the Board of Trustees, but subject to any limitations or conditions set by the Board in its bylaws or regulations, the administrators designated by the Board shall disburse or authorize disbursement of moneys from funds of the TRUST for any of the following purposes: 4.1.1 Payment 'of moneys due and certain under or by virtue of any contract, bond, or policy of insurance made or obtained by or on behalf of the TRUST, or pursuant to any pooled self-insured retention fund established in accordance. with Section 2.1.5, including the costs of audits pursuant to Section 4.3; 4.1.2 Investment and reinvestment of TRUST funds under such standards and limitations as may be approved by the Board; 4.1.3 Payment of premiums due on fidelity, performance, errors and omissions, or other bonds and insurance which the Board may require in its bylaws to protect the TR UST and the trustees; 4.1.4 Reasonable and necessary expenses incurred by trustees for such items as travel, meals, lodging, telephone calls, and other out-of-pocket expenses incurred in performing their duties as trustees; provided that the personal services and time devoted by trustees shall not be compensated by TRUST funds. 4.2 Except as provided in Section 4.1, TRUST funds shall not be disbursed, expended, or indebted without express approval of the Board. Such approval may be solicited from each trustee in writing without necessity for a meeting of the Board. 4.3 The Board shall provide for an annual audit of TRUST funds and operations, and for such interim audits as it deems necessary. Copies of such audits shall be furnished to each trustee, and to the LEAGUE and the ASSOCIATION. The cost of such audits shall be paid out of TRUST funds. -..,'- ...- ._~- '-'T-"'~+--'~"--"--"'--"""-_. . 4.4 Income from investments of the TRUST in excess of obligations payable under this Article may, at the direction of the Board, be distributed in whole or in part, from time to time, to local government participants in the program, either directly or by way of reduction of premiums, contributions, or other fees assessed to participants. Such distributions shall be based upon such formula as the TRUST shall approve which includes both losses incurred and proportionate premiums, contributions, and fees paid by individual local governments participating in the program during the period since the last distribution, if any. Except as provided in this section, investment income shall remain with the TRUST for reinvestment or satisfaction of the obligations of the TR UST as provided in Sections (1 through 4.3. ARTICLE 5. ELIGIBILITY FOR PARTICIPATION. 5.1 Subject to the bylaws and regulations adopted by the Board of Trustees, each city and county in the State of Oregon which is a member of either the LEAGUE or the ASSOCIATION shall be eligible to participate in the coverage and services offered by or through the TRUST. 5.2 A city's or county's participation may be terminated or not renewed by the Board in the event it ceases to be qualified under Section 5.1, subject to any vested rights, not otherwise subject to termination for cause, which the city or county may have acquired in such participation. 5.3 As used'in Sections 5.1 and 5.2, "cityl and "county" include districts, agencies, and instrumentalities which are "public bodies" as defined in ORS 30.260, and which are created by a city or county under statutory or home rule charter authority. Such districts, agencies, and instrumentalities, though separate legal entities, are entitled under this Declaration and Agreement to separate participation in the TRUST. 5.4 Subject to the bylaws and regulations adopted by the Board of Trustees, and section 2.1.5 above, districts, agencies and instrumentalities which are "public bodies" as defined in ORS 30.260 (4) (b) and (c), though separate legal entities, are entitled under this Declaration and Agreement to separate participation in the TRUST. ARTICLE 6. DISSOLUTION OR 1ERMINATION OF TRUST. 6.1 This TRUST may be voluntarily dissolved upon declaration of the LEAGUE, acting through its Board of Directors, or the ASSOCIATION, acting through its Board of Directors. Such declaration of dissolution shall not become effective until delivered, in -.... writing, to each trustee, and to the chief administrative officer or governing body of each participating city and county, and then not until the happening of either of the following: 6.1.1 Expiration or termination of every policy, contract, or other agreement under which any city or county participates in the services offered by or is indemnified or insured by or through the TRUST; or 6.1.2 The adoption and approval of a distribution plan pursuant to paragraph 6.3. .'.,w,. '-T"""'~""""""'-"" 6.2 This TRUST shall automatically terminate and dissolve upon the first occurrence of any of the following: 6.2.1 The date after January 1, 1982, on which there are no members of the LEAGUE or ASSOCIATION then participating in the seIVices offered by or indemnified or insured by or through the TRUST; 6.2.2 The date on which all cities and counties theIl participating in the TRUST cease to be members of the LEAGUE or the ASSOCIATION; or 6.2.3 Upon the dissolution, adjudication of bankruptcy, or appointment of a receiver for either the LEAGUE or the ASSOCIATION. 6.3 Upon dissolution of termination of the TRUST, any assets remammg after satisfaction of all obligations of the TRUST shall be distributed according to a plan furthering the purposes of this TRUST and adopted by the Board of Trustees with the approval of the LEAGUE and the ASSOCIATION. In the event such a plan is not approved within 180 days of such termination or dissolution, such remaining assets shall be distributed among those local governments who were participants in the TRUST at any time during the 12 months immediately preceding dissolution or termination, in proportion to their individual actual payments made to the TRUST of premiums, contributions, and fees during that 12 month period. 6.4 Automatic termination as provided in Section 6.2 shall not affect the rights of any participating local government under any "policy" of "insurance" undeIWritten by an "insurer" other than the TRUST, as the terms "policy", "insurance", and "insurer" are defined in the Oregon Insurance Code. ARTICLE 7. AMENDMENTS. 7.1 This Declaration and Agreement may be amended from time to time by mutual written agreement of the LEAGUE and the ASSOCIATION acting through their respective Boards of Directors; provided that the LEAGUE and the ASSOCIATION deliver to each trustee a full copy of the proposed amendment at least ten days prior to taking any action approving the amendment, and consider any written or oral comments by the trustees either individually or as a Board prior to such action. 7.2 No amendment shall operate to the prejudice of any vested rights held by any ,00-' participant in the program under a policy, contract, or other document for the benefit of such participants. ARTICLE 8. SEVERABILITY. If any provision of this Declaration and Agreement is adjudicated to be invalid, unenforceable, or unconstitutional, the remainder of the provisions not subject to such adjudication shall not be affected and shall continue in full force and effect. -.--- ^-^~^"",,"^'--- """--r-".--"'''''--'''-''-~---' 1 IN WITNESS WHEREOF, the LEAGUE and the ASSOCIATION have approved the foregoing amendments to this Declaration and Agreement as of the 16th day of April, 1993. ASSOCIATION OF OREGON COUNTIES pr~den'U~~ 47/d~- Executive Director LEAGUE OF OREGON CITIES . ~~:~ Cr ~J2. ....L~ T ,_._.."-_..~ .'''-..---.",',''''---- l CITY/COUNTY INSURANCE SERVICES TRUST BYLAWS ARTICLE 1 DEFINmONS Terms as utilized in the Bylaws shall have the meanings as set forth in this Article. 1.1 Administrator. The Administrator shall mean the person appointed by the Trustees, pursuant to Article 3.13 of the Trust Agreement or any other power, to be responsible for the daily activities of the Trust 1.2 Administration. Administration shall mean, without limitation, costs and expenses related to loss prevention, claims administration, data processing, financial accounting and other Trust expenses, whether performed by the Trust or a Service Company. Capital expenditures for facilities and equipment necessary to cany out the purposes of the Trust shall be deemed as part of Administration. 1.3 Association of Oregon Counties. Association of Oregon Counties ("AOe") shall mean the Association of Oregon Counties, an intergovernmental agency established under the laws of the State of Oregon and having a principal place of business in Salem, Oregon. 1.4 Bylaws. The Bylaws shall mean the Bylaws of the City/County Insurance Services Trust as set forth herein and as amended from time to time whether before or after the date hereof. 1.5 Contribution. Contribution shall mean required payments to purchase excess insurance in the name of the Trust, to establish Loss Funds and any other necessary or prudent reserves, and to provide administration. Contributions shall include payments made pursuant to Article 7.4 hereof. In general and without limiting the foregoing, such Contribution shall be developed in accordance, to the extent pertinent hereunder, with rating guidelines adopted by the Trustees. The term Contribution does not include premiums paid to CIS for any insurance coverage provided on a group purchase or individual basis. Payment of any Contribution does not constitute guarantee of any debt of or a lending of credit to CIS or any other Member. 1.6 Fund Year. The Fund Year shall mean a twelve (12) consecutive month period chosen from time to time by the Trustees. The initial Fund Year shall end on June 30 unless the Board of Trustees shall provide othetwise. A Fund Year may be any period less than twelve (12) months if it is the first or last such year of the Fund or a year or years involving a change in the Fund Year. 1 ...'........, '~~"'"..."...-"""'--9......~...-"._-"'--"'.;'''''.- t ~1 1.7 Governing Body. Governing Body shall mean the City Council in cities, the Board of Commissioners or County Court in counties, and other similar governing bodies of authorities, agencies or entities eligible to become Members. 1.8 Insurer. Insurer shall mean any insurance company providing any insurance contract to the Trust through the Trustees or Administrator and providing any benefit, directly or indirectly, for any Member or Participant, including, but not limited to, any such policy required by the Bylaws or that the Trustees deem necessary or prudent for the proper operation of the Trust 1.9 League of Oregon Cities. League of Oregon Cities ("We') shall mean the League of Oregon Cities, an intergovernmental agency established under the laws of the State of Oregon and having a principal place of business in Salem, Oregon. 1.10 Loss Fund. Loss Fund shall mean all Contributions made by Members for coverage pursuant to the Trust Agreement, Bylaws, Rules or other agreements pursuant or incident thereto; all of the sums, contracts, policies or properties received by the Trustees from the Members or other persons pursuant to the Trust Agreement, Bylaws, Rules or other agreements pursuant or incident thereto for the uses, purposes and trusts as set forth in the Trust Agreement, Bylaws and Rules; and all income, gains, and all other increments of any nature whatsoever, if any, therefrom. 1.11 Member. Member shall mean any city, county or other entity which becomes a Member pursuant to Article 2 of the Bylaws and whose membership has not been terminated or suspended pursuant to the Bylaws. 1.12 Net Income. Net Income shall mean those monies remaining in a Loss Fund after the payment of the costs of Administration and excess insurance, payment of claims and establishment of prudent reserves for outstanding claims. 1.13 Official. Official shall mean any publicly elected or appointed official or employee of a Member or entity eligible to become a Member. 1.14 Participant Participant shall mean any city, county or other entity purchasing insurance coverage through CIS which is offered on a group purchase or individual basis. 1.15 Premium. Premium shall mean any sum due to an Insurer. 1.16 Risk Management Programs or Loss Prevention Programs. Risk Management Programs or Loss Prevention Programs shall mean a program which may include but shall not be limited to arrangements on behalf of Members or entities eligible to become Members to avoid or limit losses, injuries, illness, damage or destruction; to transfer the risk of or provide for reimbursement for losses in the areas of property and casualty and may include but shall not be limited to the following: (a) loss control activities; (b) purchase of commercial insurance; (c) investigation and defense of claims; 2 ,.- ~----, T ._-"'_......~.~._~---'""'-, l (d) payment of losses; (e) administration; and (f) any other activities of a similar nature 1.17 Rules. Rules shall mean any Rules adopted by the Trustees pursuant to _ authority granted in the Trust Agreement or Bylaws, as amended from time to time whether before or after the date of adoption of the Bylaws. 1.18 Service Company. Service Company shall mean any person or agency (other than CIS) designated to operate or provide a claims administration service, a Loss Prevention Program or insurance accounting program or perform similar or other services as directed by the Board. 1.19 Trust. Trust shall mean the City/County Insurance Trust ("CIS") and as the context requires all funds, property and assets of the Trust. 1.20 Trust Agreement. Trust Agreement shall mean the Declaration and Agreement of Trust entered into by AOC and the LOC July 1, 1981 and as amended from time to time whether before or after the date hereof. 1.21 Trustee. Trustee shall mean each person then seIVing as Trustee pursuant to the Trust Agreement, including ex officio Trustees unless specifically indicated otherwise. 1.22 Trustees or Board of Trustees. Trustees or Board of Trustees shall mean the Board of Trustees of the City/County Insurance Trust. ARTICLE 2 MEMBERSHIP AND P ARTICIP A TION 2.1 Eligibility to Become Member. Entities eligible to become Members or Participants of the Trust are: 2.1.1 Any Oregon city which is a member of the LOC. 2.1.2 Any Oregon county which is a member of the AOC. 2.1.3(a) Any other public body, as defined by ORS 30.260, which is created by a city or county under statutory or home rule charter authority. 2.1.3 (b) Any Oregon community college created under ORS Chapter 341. [3-18-94] 2.1.4 Further, such entities prior to become a Member or Participant must: (a) Complete such written application as the Trustees shall determine; 3 ...'- ...._..,.-..~ ..,..... ..,-....- ..~_.._-..". "'*" ., (b) Pass by its governing body such resolution or contract as the Trust may prescribe; (c) Pay the Contributions or Premiums to the Trust determined pursuant to the provisions of the Bylaws and the Rules; (d) Meet all other criteria established and provide all information requested by the Trustees or an Insurer which Trustees deem necessary and prudent for the proper administration of the Trust, including but not limited to underwriting criteria; and (e) Receive. written acceptance of Membership or Participation from the Trust 2.2 Acceptance as Member or Participant by Trustees. As set forth in Section 2.1 of the Bylaws, an entity shall be accepted as a Member or Participant only upon the approval of the Trustees and any Insurer whose approval is required as a condition of providing insurance. The decision of the Trustees in this regard shall be final. Any such entity which has been refused the status as a Member or Participant in the Fund may again request such status after a period determined by the Trust 2.3 Effective Time of Becoming a Member or Participant. The effective date upon which an entity may become a Member or Participant shall be determined by the Trustees and set forth in the Trustee's written notice of acceptance of membership or participation. Notwithstanding the foregoing, the date for commencement of membership or participation may be specified by such entity in its written request to become a Member or Participant, in which case such entity shall become a Member or Participant upon such date if approved by the Trustees. 2.4 Effective Date of Acceptance. Each entity, on becoming a Member or Participant, thereby agrees to be bound by the provisions and terms of the Trust Agreement, Bylaws, Rules, other agreements pursuant thereto and any documents required by an Insurer, then in effect or that may be adopted from time to time by the Trustees. 2.5 Appeal from Denial of Membership or Participation. In the event an entity eligible to become a Member or Participant and which has made application therefor, has had membership or participation denied by the Administrator or any Committee of the Board of Trustees, such entity may request the Board of Trustees to review such decision of denial. Such request for review shall be made within thirty (30) days of such denial by written notice to the Chairman of the Trust with a copy to the Administrator. The Trustees shall meet at the time and place designated by the chairman. Procedural matters regarding the conduct of the hearing shall be the same as set forth in Section 2.6.4 hereof regarding membership and participation review and termination. 4 .....,..~ .. _,_M ,._....,.......~._..__+-.__. >>.___ ."..._, ~.. No appeal shall lie from a denial of membership or participation as a result of any Insurer failing to give its required approval. 2.6 Tenn of Membership. Status as a Member will be continuous unless tenninated by the Member or the Trust pursuant to the provisions of the Bylaws. 2.6.1 Tennination of Membership. A Member mayor shall be suspended or expelled from the Trust in accordance with the provisions set forth below. (a) Conduct that is determined by the Trustees in their sole absolute discretion pursuant to 2.6.4 of the Bylaws to warrant suspension or termination. (b) Failure to pay any Contribution to the Loss Funds or Premium required by the Trustees when due and owing. Any Member failing to make a Contribution or Premium required by proper notice be immediately suspended from Membership by action of the Administrator without further action by the Board of Trustees. The Member's coverage and benefits hereunder shall immediately cease on the effective date of such notice. If the Member shall subsequently submit its payment, the Administrator may, in his discretion, reinstate such Membership. (c) Failure to continue to comply with the Trust Agreement, Bylaws, or Rules. (d) Failure to continue to meet the criteria required by any Insurer or the Trust including, without limitation, undeIWriting criteria. (e) Failure to comply in good faith with Loss Prevention Programs instituted by the Trust or non-cooperation with staff of the Trust regarding loss prevention procedures including, without limitation, training programs. Such suspension or expulsion shall be evidenced and preceded by a sixty (60) day written notice to the Member from the Trustees or Administrator except that ten (10) days notice shall be sufficient for non-payment of all or any part of a Contribution or Premium as provided herein. 2.6.2 Tennination of Participation. A Participant may be suspended or expelled from the Trust in accordance with, and for the reasons set forth in 2.6.1 above. Time limits and notice provisions shall be as set forth in the policy of insurance involved and applicable laws and regulations. 5 .,..-.. .-.,,',," "--r---'--"-"- 2.6.3 Withdrawal. (a) Each Member shall continue its membership for a period not less than that established for a coverage by the Trost, which period shall not exceed three (3) full Fund Years. If no such period is established, the membership period shall be one (I) full Fund Year. A Member may withdraw prior to the end of such period upon delivery to the Trust of a resolution adopted by the Member's governing body authorizing withdrawal. Such resolution shall be delivered 180 days prior to the effective date of withdrawal for three year membership periods and 60 days In all other cases. A Member withdrawing shall have no claim on the reserves being maintained by the Trost for losses incurred by the withdrawing Member. The Trust shall continue the servicing of any covered claim after the withdrawal of a Member. [12-3-92] (b) If a Member does not give notice required pursuant to 2.6.3(a) above, a sum calculated as set forth below shall be deducted from any Distribution of Net Income, or any number of such Distributions, otherwise due to such Member, until total deduction(s) equals: The contribution for the coverage from which the Member is withdrawing without notice, multiplied by 1.0 minus the loss ratio for the Trust for that coverage for the most current three-year period, as of the end of the Fund Year during which the notice was required to be given, multiplied by one-half if less than two full calendar years of a three-year membership period shall have been completed prior to withdrawal and by one-quarter otherwise. [6-28-94] (c) In the case of withdrawal a Member shall remain liable for any Contribution which has or will have accrued for any Fund Year prior to the effective date of such withdrawal. (d) Participants may withdraw at any time upon 30 days written notice to CIS. Refund of any Premium will be determined in accordance with the terms of the insurance policy involved. 6 ~,....- -~... "'~'--~~~'-t-'_._---~-~'-""'. ~l 2.6.4 AOC and LOC Membership. All Members and Participants shall maintain membership in the AOC or LOC. On failure to do so Members or Participants shall be notified that their membership or participation in the Trust shall be terminated if AOC or LOC membership is not renewed prior to the due date of the next Contribution to the Trust in the case of a Member, or policy expiration in the case of a Participant which comes due thirty (30) days or more from the lapse in membership in the AOC or LOC. Such termination shall be effective as of the due date of such Member's next Contribution to the Trust or Participant's policy expiration. A Member or Participant not eligible to maintain full membership in AOC or LOC may satisfy the provisions of this section by maintaining any other membership status in AOC or LaC for which it is eligible. 2.6.5 Membership and Participation Review and Termination. (a) When in the determination of the Administrator a Member has engaged in conduct, other than non-payment of Contributions or Premiums, that warrants review of that membership or participation status, the Administrator shall file a written report with the Trustees. Said report shall contain a summary of the facts and the Administrator's recommendations regarding continued membership or participation status. (b) A copy of the Administrator's report shall be served by mail on the Member or Participant along with a notice of hearing of the Trustees. Such notice of hearing shall include the place, date and time of the hearing and a request for attendance at the hearing. At their discretion the Trustees may submit written questions to the Member or Participant, written answers to which must be mailed to the Administrator no later than seven (7) calendar days prior to the date of the hearing. A Member or Participant objecting to the report and recommendations of the Administrator shall have the right to submit a written statement to the Trustees setting out in detail the basis of the objection and any other information the Member or Participant desires to submit Said statement must be mailed to the Administrator no later tban five (5) calendar days prior to the hearing. Such hearing shall be scheduled no less than ten (10) nor no more than twenty (20) days from the date of such notice of the Trustees; provided, however, that if the Trustees submit written questions to tbe Member or Participant, the date of such hearing 7 .~_. -.- "-'-r-'~--"-""'~'-""-"'-'-'-"-""- - shall be set or re-set so that such Member or Participant shall have at least fifteen (15) days from the mailing of such questions by or on behalf of the Trustees to prepare such written answers. (c) The Trustees shall meet at the time and place designated in the notice of hearing. The Member or Participant shall be entitled to be represented at the hearing and present an oral statement and other information. (d) Following the hearing, the Trustees shall affirm, modify, or reject the recommendation of the Administrator. The Board shall have the authority to place a Member or Participant on probation, the terms and duration of which it shall determine. A copy of the Trust's decision shall be served - by mail on the Member or Participant. (e) The action of the Trustees shall be final and binding. 2.7 Meetings of the Membership. One or more meetings of the Members of the Trust shall be held annually at such time and place as determined by the Trustees. Members shall be notified of the time and place of each meeting by at least ten (10) days written notice. Such notice may be by first class mail and may be included as part of any Trust publication. ARTICLE 3 OBLIGATIONS OF MEMBERS AND P ARTICIP ANTS 3.1 Obligations of Members and Participants. The obligations of Members and Participants of the Trust shall be as follows: 3.1.1 To appropriate all adequate available revenues, as permitted by applicable law, for and to pay promptly all Contributions and Premiums to the Trust at such times and in such amounts as shall be established by the Trustees within the scope of the Trust Agreement, Bylaws and Rules. 3.1.2 To allow the Trust and its agents reasonable access to all facilities of the Member or Participant and all records, including but not limited to financial records, which relate to the purposes or powers of the Trust. 8 ,.-- ._----_.",,------,-_. .. - 3.1.3 To allow attorneys selected by the Trust or Service Company to represent the Member or Participant in investigation, settlement discussions and all levels of litigation arising out of any claim made against the Member or Participant within the scope of coverage furnished by the Trust. 3.1.4 To furnish full cooperation with the claims adjusters, the Service Company and any agent, employee, officer or independent contractor of the Trust relating to the purposes and powers of the Trust. 3.1.5 To follow loss reduction and prevention procedures established by the Trust within the purposes and powers of the Trust. 3.1.6 To furnish to the Trust any budget and audit information of revenues and expenditures of the Member or Participant for any fiscal year for which figures are requested by the Trust. 3.1. 7 To report as promptly as possible all incidents which could result in the Trust being required to consider a claim within the scope of coverage undertaken by the Trust in accordance with such rules as the Trustees shall prescribe. 3.1.8 All information gathered or received by the Trust pursuant to any provision of these Bylaws shall be utilized by the Administrator only in connection with the operation of and to further the purposes of the Trust and shall not otherwise be distributed, disseminated or communicated to any person unless authorized by the Board of Trustees or required by law. 3.2 Optional Defense by Member. The Trustees shall promulgate Rule(s) to permit Members a reasonable opportunity in casualty cases or claims to participate in their own defense or to prevent the settlement of such cases or claims by the Trust in a manner contrary to the wishes of the Member. The Rule(s) shall provide that in the event that a Member exercises its privilege to prevent the settlement of a case or claim, the Member shall be responsible for any additional cost, including but not limited to legal and investigation expense and subsequent judgment or settlement, above the costs which would have been incurred had the Member not elected to prevent the acceptance of a settlement offer or proposal pursuant to this section. 3.3 Contractual Obligation. The Trust Agreement, Bylaws, Rules and Resolution shall constitute a contract between each Member and Participant and the CIS Trust. The obligations and responsibilities of the Members and Participants set forth therein include the obligation to take no action inconsistent with the Trust Agreement, Bylaws and Rules as originally written or validly amended. Such obligation shall continue, as necessary, after cessation, for whatever reason, of membership or participation. The agreement of a Member or Participant thereto shall be evidenced by a properly signed application for Membership or Participation and a signed copy of a resolution or contract adopted by its governing body. No Member or Participant agrees or contracts herein to be held responsible for any claims, in tort, contract or otherwise, made against any other 9 ....,...-.~,...~.,..~. ...........--.-- - .--., Member or Participant. Nothing herein contained shall be deemed to create any relationship of surety, indemnification guarantee or responsibility between Members or Participants for the debts of or claims against any other Member or Participant or on the part of any Member or Participant with respect to CIS or the Trust. ARTICLE 4 APPOINTMENT AND RESIGNATION OF TRUSTEES 4.1 Number of Trustees. The Board of Trustees will be composed of eight (8) individuals as provided in the Trust Agreement 4.2 Qualification of Trustees. (a) Each Trustee shall at the time of appointment and at all times while serving in such office be an elected or appointed official of a member of AOC or LOC as provided in the Trust Agreement. (b) In the event that a Trustee shall cease to be qualified pursuant under paragraph 4.2(a) above, such Trustee may continue to serve for a period of 90 days or until appointment of a successor, whichever shall come first. [3-18-94] 4.3 Appointment of Trustees. The Board of Directors of AOC and LOC shall each appoint three (3) Trustees as provided in the Trust Agreement The Executive Directors of AOC and LOC, or their designees, shall seIVe as ex officio Trustees as provided in the Trust Agreement. 4.4 Acceptance of Office of Trustee. Each Trustee shall accept the office of Trustee by execution and delivery to the Secretary of a full and unconditional written acceptance of such appointment as provided in the Trust Agreement. 4.5 Resignation of a Trustee. A Trustee may resign by notification to the Secretary of the Trust. If such notification is made orally, the Secretary shall reduce it to writing. The written notice of resignation shall be delivered to the Executive Director of AOC or LOC, with a copy to the Chairman of the Trust. Such written notice of resignation may state a prospective date upon which such resignation shall become effective; othelWise, such resignation shall become effective upon acceptance by the Board of Directors of the AOC or LOC. Upon the effective date of any such resignation, such Trustee shall become and be fully discharged from all further duties, responsibilities or liabilities associated with such office. A Trustee, upon vacating such office shall promptly deliver to the remaining Trustees or Administrator any and all records, books, documents, monies or other property of the Trust in the possession or under the control of such Trustee. 4.6 Removal of a Trustee. An appointed Trustee may be removed from office for just cause by the Board of Directors of AOC or LOC as the case may be. Without limiting the f9regoing, the unexcused failure to attend two consecutive meetings of the 10 ~-~. 'I - Board or two consecutive meetings of a Committee of the Board or four unexcused failures to attend, in the aggregate, meetings of the Board or a Committee of the Board in any twelve (12) month period shall be deemed prima facie evidence of just cause. 4.7 Regular Meetings. The Board of Trustees may provide, by resolution, the time and place, either within or without the State of Oregon, for the holding of regular meetings without other notice than such resolution. 4.8 Special Meetings. Special Meetings of the Board of Trustees may be called by the Chairman or any four (4) Trustees. The person or persons authorized to call any such Special Meeting may fix the time and any place, within the State of Oregon, for the holding of any such Special Meeting of the Board of Trustees called by him or them. Any such meeting may be called upon at least five (5) days written notice delivered personally or mailed to each such Trustee at his or her business address or residential address, or by telegram. Such notice shall sp~ify the date, time, place and purposes thereof. 4.9 Attendance at Meeting. The attendance of a Trustee at any meeting of the Board of Trustees shall constitute a waiver of notice of such meeting, except where a Trustee attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. 4.10 Action by Trustees Without a Meeting. Any action, other than an appeal pursuant to sections 2.5, 2.6 or 5.1.15, which may be taken at a meeting of the Trustees may be taken without a meeting if a consent in writing setting forth the actions so taken shall be signed by all of the Trustees then seIVing. 4.11 Officers of the Board of Trustees. The Trustees shall annually elect from themselves, as provided by the Trust Agreement, a Chairman and a Vice-Chairman, for a term from July 1 of the year in which elected to June 30 of the following year. The Chairman shall preside at all meetings of the Trustees. The Vice-Chairman shall preside at all meetings in the absence of the Chairman. In the absence of both the Chairman and the Vice-Chairman the Trustees constituting a quorum may elect a Chairman pro-tern for purposes of conducting a meeting and transacting Trust business. The Trustees shall also elect a Secretary who mayor may not also be a Trustee. The Secretary shall cause the records of the proceedings of the meetings of the Trustees to be kept and maintained. All such officers of the Board of Trustees who are also Trustees may vote on any issue or matter properly before the Board of Trustees. 4.12 Compensation of Trustees. The Trustees may reimburse themselves for reasonable expenses properly and actually incurred in the course of acting as Trustees. To the extent that such Trustee is reimbursed by a Member or other entity for expenses as Trustee, such Trustee shall not be so reimbursed, but such reimbursement may be paid to the Member or other entity, as the case may be, with respect to which such Trustee is an Official. 4.13 Liability of Trustees. Trust Officers or Agents. Trustees, officers and agents of the Trust shall use ordinary care and reasonable diligence in the exercise of their powers and in the performance of their duties. They shall not be liable for any mistakes of 11 T-" ",-".""-",,--,,-,, I -- judgment or other action made, taken or omitted by them in good faith, nor for any action taken or omitted by any agent, employee or independent contractor selected with reasonable care, nor for loss incurred through investment of funds or failure to invest. No Trustee shall be liable for any action taken or omitted by any other Trustee. No Trustee shall be required to give a bond or other security to guarantee the faithful performance of their duties hereunder. To the extent permitted by law, the Trust shaH indemnify, defend and hold harmless any Trustee, officer or agent of the Trust for actions taken by the Board or performed by such Trustee. officer or agent within the scope of his duties for the Trust. The Trust may purchase insurance providing similar coverage for such Trustees, officers or agents. ARTICLE 5 POWERS AND DUTIES OF THE BOARD OF TRUSTEES 5.1 General Powers of the Board of Trustees. The Trustees shall have such powers as may be necessary or prudent to discharge their responsibilities in managing and controIling the Trust, whether or not mentioned herein, including but not limited to the following: 5.1.1 To accept, determine and make reasonable arrangements for the payment by or on behalf of each Member or Participant of all Contributions and Premiums due. 5.1.2 Administer the Loss Funds, collect Contributions thereto and pay authorized losses in behalf of its Members. 5.1.3 Establish loss control procedures and advise and educate Members and Participants in loss control and risk reduction. 5.1.4 Provide risk management services, including defense of and settlement of claims, and engage a Service Company. 5.1.5 Purchase reinsurance or excess insurance as necessary to protect the interests of the Members and the Trust. 5.1.6 Determine the general policy for operation of the Trust that shall be followed by all committees, officers, agents and independent contractors employed by the Trust. 5.1. 7 Adopt rules for the conduct of the affairs of the Trust and in recording of data required by law or sound management. 5.1.8 Terminate membership and participation of any Member or Participant who fails to comply with the reasonable requirements of the Trustees concerning payment of Contributions or Premiums, compliance with loss prevention programs or cooperation 12 ..,.-""---- , , '1 '-, with the Trust staff and agents or for any other reason that may be detrimental to the fiscal soundness or efficiency of the Trust 5.1.9 To designate a bank or banks as a depository of the Trust and to designate one or more persons to withdraw sums therefrom for the purposes of the Trust 5.1.10 To purchase contracts of insurance and to hold all insurance policies issued by Insurers and to deal with Insurers. on behalf of the Members and Participants with respect to all matters pertaining to the Trust, including without limitatio~ agreeing with Insurers regarding insurance programs and the requirements for insurance thereunder for the Members and Participants of the Trust The Trustees may enter into such other risk management related agreements, insurance programs or authorized self-insurance programs as they deem necessary or advisable for the benefit of Members and Participants. 5.1.11 To receive, hold, manage, invest and reinvest such monies and property of the Fund in such bonds or other securities as pennitted by applicable law. 5.1.12 To require and receive such reports from the Members, Participants or Administrator as they deem necessary or advisable for the proper management of the Trust and the fulfillment of the duties of the Trustees. 5.1.13 To employ such agents, advisors and counsel as may be reasonably necessary in collecting, managing. administering, investing and distributing the assets of the Fund, and to charge the expense thereof to the Trust. 5.1.14 To sue and be sued, or to prosecute and defend any and all actions affecting the Trust or its property either in the name of the Trust or in their own names; to compromise or settle any suit, claims or demands, or waive or release any rights relating to the Trust or its property. 5.1.15 To interpret the tenns of documents under which coverages are offered to Members and to consider appeals relating to such interpretations in accordance with the notice and procedural provisions of 2.6.4. 5.1.16 To adopt and enforce Rules not inconsistent with the provisions of the Bylaws or Trust Agreement as the Trustees may from time to time deem expedient 5.1.17 To make, execute, acknowledge and deliver any and all documents that may be necessary or appropriate to carry out the powers herein granted. 5.1.18 To appoint from among themselves such committees as the Trustees shall deem expedient which may be vested with such powers as the Trustees in their sole discretion shall detennine. 5.1.19 To borrow or raise money for the purpose of the Trust in such amount, and upon such terms and conditions as the Trustees shall deem advisable; and for any sum so borrowed to issue the promissory note of the Trust, and to secure the repayment thereof by creating a security interest in all or any part of the property of the Trust; and no person 13 . .,..- . ""1 - lending such money shall be obligated to see that the money lent is applied to Trust purposes or to inquire into the validity, expedience or propriety of such borrowing. No such debt incurred by the Trust shall be deemed a debt of any Participant or Member. 5.1.20 To hold cash, uninvested, for such length of time as the Trustees may determine without liability for interest thereon. 5.1.21 To continue to have and to execute, after the termination of the Trust and until final distribution. all of the title, powers. discretions. rights and duties conferred or imposed upon the Trustees hereunder. or by law. 5.1.22 To construe and interpret the Trust Agreement 5.1.23 To have a judicial settlement of their accounts and judicial determination of any questions in connection with their duties and obligations hereunder, or in connection with the administration or distribution thereof. The costs and expenses, including accounting and legal fees. for such judicial settlement of accounts or other judicial determination shall be paid by the Trust as a general administrative expense to the extend permitted by applicable law. 5.1.24 To purchase as a general administrative expense of the Trust general liability insurance and other insurance for the benefit of the Trust or the protection of the Trustees, Trust employee or agents against any losses by reason of errors or omissions. breach of fiduciary duty or negligence. 5.1.25 To enter into any and all contracts and agreements to carry out the purposes of the Trust or to administrate and operate the Trust and to do all acts as they, in their discretion, may deem necessary or advisable. Such contracts and agreements and acts shall be binding and conclusive on Members, Participants, employee and agents. 5.1.26 To appoint one or more investment managers to supervise and direct the investment and reinvestment of a portion or all of the Fund in accordance with the provisions hereof and applicable law and in the same manner and with the same powers, duties, obligations, responsibilities and limitations as apply to the Trustees as set forth herein and to pay reasonable compensation for such services. 5.1.27 To acquire, hold, own, rent or lease, alone or in conjunction with any other party or parties, and for use in connection with the purposes of the Trust, any property, real or personal, and to pay the appropriate pro rata part of the mortgage payments, property taxes, assessments, insurance, maintenance and ordinary repairs on all such property. 5.1.28 To employ staff upon such terms and conditions as the Trust shall deem necessary to carry out the purposes of the Trust. 5.1.29 To do all acts, whether or not expressly authorized herein, which the Trustees may deem necessary or proper in connection with the Trust. 14 . .,.---.- T .-......... 5.2 Investment Committee. The Trustees may establish an Investment Committee. In selecting committee members the Board shall consider investment expertise and personal and professional qualifications and shall make appointments for such terms as it may deem desirable. 5.3 Underwriting Committee. The Trustees may establish an Underwriting Committee. The duties of the Underwriting Committee shall be determined by the Trustees but may include recommendations regarding development of underwriting standards and rating procedures, and review of applications for membership or participation. 5.4 Loss Prevention Committee. The Board of Trustees may establish a Loss Prevention Committee. The duties of the Loss Prevention Committee shall be determined by the Trustees, but may include arranging for and evaluating the regular conduct of loss control services, production of recommendations to prevent losses, maintenance of a loss control manual and the conduct of seminars regarding loss control. 5.5 Appointment of an Administrator. The Trustees shall appoint an Administrator to manage the daily affairs of the Trust The Administrator shall serve under such terms and conditions as the Trustees shall prescribe. Such Administrator shall not be an owner, officer or employee of any Service Company. The duties of the Administrator shall include, without limitation, carrying out of policies established by the Board, locating and recommending various contractors, supervising and reporting on contractor's performance, the provision of financial and accounting reports and the maintenance of excess reinsurance or other insurance. 5.6 Bonds and Insurance. Any Administrator, employee or agent shall be required to be bonded or insured in a form and amount set by the Trustees. The cost of such bonds or insurance shall be paid as an expense of the Trust 5.7 Service Company. If services are not otherwise provided by the Trust, the Board shall obtain the services of a Service Company for the purpose of servicing claims. The Service Company shall adhere to guidelines for the performance of its duties as set forth by the Trustees. 5.8 Duties of the Board of Trustees. In connection with their management and control of the Trust, the Trustees shall: 5.8.1 Pay claims to or on behalf of the Members in accordance with purposes of the Trust Agreement, Bylaws, Rules and coverage documents. 5.8.2 Create a reserve for the payment of claims. 5.8.3 Payor provide for the payment on behalf of Members and Participants hereunder all Premiums as they become due to an Insurer on any policy of Insurance. 15 """_..~. t 1 ~,,--...... 5.8.4 Cause to be maintained accounts of all investments, receipts, disbursements and all other transactions affecting funds or property of the Trust. 5.8.5 Engage an independent certified public accountant to perform a financial audit of the Trust at least once per Fund Year and to report regarding such audit to the Members at the meetings of the Members. 5.8.6 Engage an independent and qualified actuary to perform actuarial calculations and provide advice regarding the sufficiency of the Loss Funds as frequently as is required for prudent management. 5.8.7 Maintain minutes of all meetings of the Trustees and Members and cause copies thereof to be distributed in a timely manner to all Trustees. 5.8.8 Publish such claim reports, financial statements and actuarial projections as necessary to advise Members of the current and projected financial status of the Trust. 5.8.9 Pay all taxes and assessments that may be levied or aSsessed under existing or future laws upon, or in respect of, the Trust or its income. 5.8.10 Cause the tenns and provisions of the Trust Agreement, the Bylaws and the Rules to be performed and carried out and the assets of the Trust to be properly held and administered. 5.8.11 Payor provide for the payment of all reasonable and necessary expenses of administering the Trust and all charges reasonably incurred by the Trustees in protecting the funds and property of the Trust and in carrying out the purposes of the Trust. 5.9 Advisory Committees. The Board of Trustees may, in its sole, absolute discretion appoint advisory committees to the Board of Trustees or any Committee of the Board comprised of individuals who are not Trustees but whose expertise, experience or knowledge may be helpful to the Trustees in the performance of their duties. The Board of Trustees may provide for such compensation to such members of any advisory committee as it shall in its sole discretion determine. ARTICLE 6 ACCRUAL OF NET INCOME 6.1 Accrual of Net Income. Net Income, if any, shall accrue to the Loss Funds as it is earned. No Member shall have a legal enforceable right to any specific share thereof except as herein provided. If the Trustees should determine that the amount in a Loss Fund shall be greater than is required to pay claims and maintain prudent reserves, such surplus funds shall be distributed to the Members as provided herein. Such distribution 16 -r-...----- I '1 -............. shall be by means of reduction in Contributions for similar coverage due in the next Fund Year, or at the sole discretion of the Trustees, by means of cash payments to current Members. 6.1.1 Distribution of Net Income to entities which, at the time of distribution, are not Members for the coverage for which the distribution is made shall be by means of credits. Such credits may be applied to contributions for the same coverage for which the distribution was made if such entity shall become a Member in a Fund Year beginning not later than three (3) years from the date of the distribution. 6.1.2 No distribution of Net Income, accrued to any Fund Year beginning after June 30, 1988, if any, shall be made in any manner to any Member which withdraws prior to the end of the period of Membership established by the Trust, which period shall not exceed three (3) full Fund-Years. [3-18-94] 6.2 Proportions of Net Income Distribution. In connection with any coverage which the Trust may offer to its Members in any Fund Year the Net Income attributable to said coverage shall be distributed as provided under 6.1 above, at such time as the Trustees shall determine, to those Members participating in said coverage in such proportions as the Trustees may by Rule determine. Such determination shall be non- discriminatory among such Members making similar Contributions and having similar payments of, or reservations for, claims. The Trustees may furthermore, from time to time, modify or change the determination as to the Members' proportionate shares 9f the future Net Income attributable to a coverage, provided that no modification or change shall be made after the start of any Fund Year beginning after June 30, 1988 to which the distribution applies. In the event the Trust shall have any Net Income as to which the distribution among its members has not been determined by the Trustees, then such net income, if and when distributed, shall be in proportion to the Members' respective Contribution during the Fund Year to which the net income applies. ARTICLE 7 LOSS FUND PROTECTION 7.1 Limits of Liability. The Trust will make or secure payment on behalf of each Member for payment or settlement of claims in accordance with the coverage documents. 7.2 Excessive Losses. In the event that a single loss or series of losses should exceed the amount of protection afforded by the Loss Fund, other insurance carried by the Trust and provisions for future Contributions, then payment of valid losses shall be the obligation of the individual Member or Members against whom the c1aim(s) were made and perfected by judgment or settlement. ..~ 7.3 Transfers Among Loss Funds. The Trustees may, in their sole discretion, transfer monies among Loss Funds, in the event of excessive losses in anyone Loss Fund. However, such transfers shall be made only when the deficit can be reasonably expected to 17 ..,-- - . "1 --......., be made up from future Contributions and earnings of the Loss Fund, which would otherwise show a deficit, by the end of the next full Fund Year after the transfer is made. 7.4 Deferred Contributions. As indicated in Section 1.5, the Contributions of a Member shall include a deferred Contribution for protection of the Loss Fund. The deferred Contribution due shall be limited, in anyone year, and in the aggregate, to fifty percent (50%), of the share of the Contribution initially paid for the coverage in the Fund Year to which the deferred Contribution applies. In the event that payment of a deferred Contribution is required, such deferred Contribution shall be paid by the Members who' participated for such coverage during the Fund Year for which such deferred Contribution applies and in the proportion that each such Member's Contribution amount bears to the total Contribution amount of all Members for such coverage in such Fund Year. The Board of Trustees shall determine the Contribution of the Members prior to the beginning of every Fund Year upon the advice of the actuary required by these Bylaws. 7.5 Additional Insurance. Membership in the Trust shall not preclude any Member from purchasing insurance in addition to any coverage provided by the Trust. The Trust shall be notified of any purchase of such other insurance. ARTICLE 8 TERMINATION 8.1 Term of Trust. The Trust shall continue until terminated in accordance with the terms of the Trust Agreement. Notwithstanding the foregoing, the Trustees shall continue to selVe in office until all obligations of the Trust have been fully and finally discharged or adequately provided for. Thirty (30) days prior to the termination of the Trust the Trustees shall notify each Member of such termination. 8.2 Distribution of Trust Assets. As soon as practicable after termination of the Trust, the Trustees shall make appropriate provisions for the payment of all liabilities incurred prior to such termination and for liquidation of all assets of the Trust. Upon the satisfaction of all obligations of the Trust, the Trustees shall return all remaining assets of the Trust to the Members in proportion that each such Member's Contributions in connection with coverage offered by the Trust to its Members during each Fund Year during which it was a Member, bears to the total Contributions of all such Members during each Fund Year of the Trust. 8.3 Deficiencies. No Member shall be responsible for any claim or judgment against any other Member or the Trust except to the extent of the assets of the Loss Fund, any insurance carried by the Trust and future Contributions as provided herein. 18 T-...-------.. I' -......, ARTICLE 9 AMENDMENTS 9.1 Method of Amendment. The Bylaws may be amended at any time by a written instrument approved by the Trustees then serving, a copy of which shall be furnished to each Trustee. 9.2 Umitation on Amendments. No amendment shall be adopted which alters the basic purpose of the Trust, conflicts with the Trust Agreement or with any applicable law or government regulation, causes the use or diversion of any part of the Trust for purposes other than those authorized by the Trust Agreement, or retroactively deprives any person of a vested right or interest ARTICLE 10 GENERAL PROVISIONS 10.1 Title to Trust Assets. Title to the funds and property of the Trust, including without limitation Loss Funds, shall be vested in and remain exclusively in the Trustees and no Member shall have any right, title or interest in the Loss Funds nor any right to Contributions made or to be made thereto, nor any claim against any Member on account thereof, except only as provided from time to time by the Bylaws. 10.2 Nonalienation of Benefits. The funds and property of the Trust, including withou t limitation Loss Funds, shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge by any person other than the Trustees and their duly authorized representative to the extent and for the purposes as herein specifically provided. 10.3 Examination of Books and Records by the Trust The Trust, its agents, employee or attorneys shall be permitted at all reasonable times prior to the expiration of two (2) years after the termination of a Member's participation in the Trust to examine the Member's books, vouchers, contracts, documents and records of any and every kind which show or tend to show or verify the amount which is payable from the Fund to such Member or any of its Employee. 10.4 Examination of Books and Records by Members. Any member, or their designated representative, shall be permitted to examine the Trust's books, contracts, documents and records. However, such examination shall not extend to matters relating to other Members. Such examination shall be limited to such times and places as is reasonable. The cost of copying, transcribing or abstracting records shall be borne by the Member. 19 ~....""~.._-" I -- 10.5 Right to Obtain Adiudication of Disputes. In the event any question or dispute shall arise as to the property or person or persons to whom any payment shall be made from the Fund, the Trustees may withhold such payment until an adjudication of such question or dispute satisfactory to the Trustees in their sole absolute discretion shall have been made, or the Trust shall have been adequately indemnified against loss. 10.6 Notice of Delivery of Documents. Any notice required to be given hereunder, except as otherwise provided, shall be in writing and by certified mail, return receipt requested and shall be deemed to have been given as of the date of posting to whomever may properly receive legal service of process for the addressee of such notice. Any notice actually received shall be deemed properly given whether or not pursuant to the provisions of the Bylaws. 10.7 Gender. Number and Captions. Wherever any words are used herein in the masculine gender, they shall be construed as though they were also used in the feminine or neuter gender in all cases where they would so apply, and wherever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. Titles of articles and headings of sections and subsections are inserted for convenience of reference only and are not to be considered in the construction hereof. to.8 Construction. This Agreement is created and shall be construed in accordance with the laws of the State of Oregon. All questions pertaining to its validity or construction not otheIWise preempted shall be determined in accordance with the laws of the State of Oregon. If any provision contained in the Bylaws or Rules should be held invalid, unenforceable or unconstitutional the remainder of the provisions not subject to such adjudication shall not be affected and shall continue in full force and effect. If any provision contained in the Bylaws or Rules should be held invalid, unenforceable or unconstitutional as to any Member or Participant, the provisions of the Bylaws and Rules shall continue in full force and effect as to any or all other Members and Participants. Date of Adoption: March 16, 1988 20 . ..,-...----- . ~-, CITY/COUNTY INSURANCE SERVICES TRUST APPLICATION OF AGGREGATE PAID WSS DEDUCfIBLE RULE NUMBER 3 The City/County Insurance Services Trust (CIS) adopts the following Rule regarding the application of aggregate paid loss deductibles and retrospective rating plans for all Fund Years beginning on or after July 1, 1987. 1. Paid losses shall be invoiced and paid quarterly. Amounts due under the deductible shall be considered Contributions subject to the provisions of Articles 2.6.1 and 3.1.1 of the CIS Bylaws. 2. For ease of administration, the liability deductible shall apply jointly to general and automobile liability losses. The obligation of the Member to pay for losses shall cease when the aggregate amount paid equals the amount of the deductible. regarding of the type of the claims involved. 3. CIS and any Member with a deductible or retrospective rating plan may, by mutual written agreement, agree to a liquidated value for the remaining payments due under the deductIble. 4. Net Income Distribution which may be due to a Member pursuant to Rule Number 1 shall be computed as if the Member had no deductible or retrospective rating plan. From such distribution shall be deducted the savings, if any, resulting to the Member from the deductible or retrospective rating plan. For liability coverage such savings shall be computed by allocating the deductible between general liability and automobile liability based on initial contributions, less paid losses for each coverage. 5. For liability coverage, Contributions and Loss Allocation pursuant to Rule Number 2 shall be computed as if the Member had no deductible and the full amount of the initial Contributions had been paid. ADOPTED: 3-18-94 .,.--'-- I'