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HomeMy WebLinkAbout2962 Contract Number: Vendor: Subject: Department: File Class: Begin Date: End Date: Review Date: Vault Date: Comments: 2962 HOUSING AUTHORITIES Risk Retention Pool Risk LEG 12-1 02/03/1988 06/15/2010 Review date for tracking only HOUSING AUTHORITIES RISK RETENTION POOL INTERGOVERNMENTAL COOPERATION AGREEMENT This Intergovernmental Cooperation Agreement (the "Agreement") is made and entered into by and among the participating Public Housiog Authorities that have executed counterpart copies of this Agreement and have become parties to this Agreement. RECITALS: A. Chapter 39.34 of the Revised Code of Washington entitled "Interlocal Cooperation Act" provides authority for public agencies to enter into intergovernmental cooperation agreements. Sections 190.003 to 190.250 of the Oregon Revised Statutes entitled "Intergovernmental Cooperation Act" provide authority for Oregon public agencies to enter into intergovernmental cooperation agreements. California Government Code Section 6500, et seq., provides authority for California public agencies to enter into ~ntergovernmental cooperatlon agreements. The Nevada Interlocal Cooperation Act, Chapter 277 of the Nevada Revised Statutes, provides authority for Nevada public agencies to enter into intergovernmental cooperation agreements. B. The public interest requires and it is to the mutual interest of the parties hereto to join together to establish and operate a cooperative program of risk management and indemnification and financial protection against risks of loss for the government sponsored housing industry in the States of Washington, Oregon, California, and Nevada. C. Each of the Public Housing Authorities which is a party to this Agreement has the power and authority to establish, operate and participate in a cooperative program of risk management and indemnification and financial protection against risks of loss. D. The governing board of each of the Public Housing Authorities which is a party to this Agreement has duly authorized the execution, delivery and performance of this Agreement. - 1 - E. Each of the Public Housing Authorities which is a party to this Agreement desires to join together with the other Public Housing Authorities which are parties hereto for the purpose of creating funds to indemnify and otherwise protect the parties against losses as more fully set forth in this Agreement and jointly purchase excess insurance, reinsurance and administrative services in connection with a cooperative program of risk management. AGREEMENT: In consideration of the mutual advantages to be derived from this Agreement and in consideration of the execution of this Agreement by the participating Public Housing Authorities, each of the parties hereto agrees as follows: SECTION 1. DEFINITIONS The following definitions shall apply to the provisions of this Agreement: 1.1 Bylaws. "Bylaws" shall mean the Bylaws of HARRP that address the governance and management of HARRP. 1.2 Capital and Surplus Contribution. "Capital and Surplus Contribution" shall mean the amount which shall be contributed to HARRP by or on behalf of a Public Housing Authority as a condition precedent to its becoming a Member. The Capital and Surplus Contribution shall be determined and set by the HARRP Board with respect to all Members, any individual Member or otherwise. 1.3 Claims Management. "Claims Management" shall mean the process of identifying, resolving and planning for the funding of eligible claims made by or against any Member of HARRP. 1.4 Coverage Terms. "Coverage Terms" shall mean those provisions and conditions which define the indemnification and financial protection to be provided by HARRP to its Members. The Coverage Terms may be modified or altered from time to time with respect to all Members, any individual Member or otherwise within the applicable notice and procedural requirements as set forth in the Bylaws or any other rules and regulations adopted by the HARRP Board. 1.5 Existing Insurance Coverage. "Existing Insurance Coverage" shall mean insurance coverage which is placed with any insurance entity other than through HARRP or some other program - 2 - of self-funding and which provides coverage substantially the same as that provided by HARRP and which is in effect during the same period of time as the coverage provided by HARRP. Notwithstanding the foregoing, Existing Insurance Coverage shall not include coverage procured by an individual Member on its own behalf to the extent such coverage is only in excess of limits of coverage provided by HARRP. 1.6 HARRP. "HARRP" shall mean the Housing Authorities Risk Retention Pool created by this Agreement. 1.7 HARRP Board. "HARRP Board" shall mean the Board of Directors of HARRP. 1.8 HARRP Board Member. "HARRP Board Member" shall mean a member of the HARRP Board. 1.9 Member. "Member" shall mean a Public Housing Authority which has ~-~-~y executed this Agreement and otherwise has complied with all the provisions of this Agreement and which thereafter is entitled to all of the rights and benefits conferred and subject to all of the conditions and obligations imposed by this Agreement or in the Bylaws, Coverage Terms or any rules and regulations which may be adopted by the ~ARRP Board. 1.10 Noncompliance. "Noncompliance" shall mean any failure to comply with the terms of this Agreement, the Bylaws, Coverage Terms or any rules and regulations which may be adopted by the HARRP Board, but only to the extent that such noncompliance is deemed material by and within the sole discretion of the HARRP Board. Notwithstanding the foregoing, Noncompliance shall not include any failure to comply if such failure to comply is the result of any specific Department of Housing and Urban Development directive or administrative Order. 1.11 Periodic Contribution. "Periodic Contribution shall mean any assessment, charge or other consideration imposed or collected by or on behalf of HARRP on or from its Members other than the Capital and Surplus Contribution. All Periodic Contributions shall be determined and set by the ~L~RRP Board based on factors adopted from time to time by the HARRP Board. Periodic Contributions may be determined and set with respect to all Members, any individual Member or otherwise. 1.12 Public Housing Authority. "Public Housing Authority" shall mean any state, county, municipality, or other governmental entity or public body (or agency or instrumentality thereof) that is authorized to engage in or assist in the development or operation of housing for low-income families, including, without limitation, any housing authority established pursuant to the Washington Housing Authorities Law (RCW 35.82), the Oregon Housing Authorities Law (ORS 456.055 e__t seq.), the California Housing Authorities Law (California Health and Safety Code Section 34200 et seq.), or the Nevada Housing Authorities Law of 1947 (NRS 315.140 et seq.). 1.13 Reserve Fund. "Reserve Fund" shall mean that fund which consists of amounts received as Capital and Surplus Contributions and all investment income associated with such amounts. The Reserve Fund may be accessed only after all other funds and resources of HARRP have been exhausted. 1.14 Retrospective Contribution. "Retrospective Contribution" shall mean a retrospective increase in Periodic Contributions payable on account of a specific calendar year as provided in Section 6.3. 1.15 Risk Management. "Risk Management" shall mean the process of identifying, evaluating, reducing, transferring, and eliminating factors and circumstances which could result in physical property damage, liability to third persons and public official and employee liability. Risk Management includes various safety procedures and educational programs and incorporates elements of insurance law, technology and general business administration utilized to effectively manage risks. 1.16 Self Insured Retention Fund. "Self Insured Retention Fund" shall mean that general fund which consists of amounts received as periodic Contributions, reinsurance or similar recoveries, subrogation and salvage, and which shall include all investment income associated with such amounts. 1.17 Third Party Claims Manager. "Third Party Claims Manager" shall mean an individual or organization which is well experienced in Claims Management and currently is in the business of providing Claims Management services to organizations similar to HARRP. 1.18 Third Party Risk Manager. "Third Party Risk Manager" shall mean an individual or organization which is well experienced in Risk Management and currently is in the business of providing Risk Management services to organizations similar to ~IARRP. SECTION 2. HOUSING AUTHORITIES RISK RETENTION POOL 2.1 Establishment. There is hereby established an entity, the full legal name of which shall be Housing Authorities Risk Retention Pool (defined as "I{ARRP"), which shall have the powers described in Section 2.4. - 4 2.2 Offices. HARRP shall have such offices in the states of Washington, Oregon, California, and Nevada as the I{ARRP Board may designate or as the business of HARRP may from time to time require. 2.3 Purposes. HARRP is established for the purposes of providing each Member with indemnification and financial protection against and risk management services with respect to any risk of loss as may be agreed upon by the Member and HARRP, including, but not limited to, physical property damage, liability to third persons'and public official and employee liability. 2.4 Powers. HARRP is hereby granted all of the power and authority ~ is necessary to accomplish the purposes described in Section 2.3, including, but not limited to, the following: (a) The power and authority to fix and require of its Members Capital and Surplus Contributions, Periodic Contributions, and Retrospective Contributions to the extent such contributions are deemed necessary or appropriate to facilitate the general purposes stated in this Agreement, which power and authority shall include the power and authority to adjust any contribution with respect to any individual Member to reflect the type and degree of indemnification and financial protection provided to and the risk exposure and loss experience of the Member. ~ARRP shall not have the power or authority to assess any Member individually with respect to any specific claim or claims incurred by such Member, but shall have the authority to call for Retrospective Contributions in accordance with Section 6.3. (b) The power and authority to establish the Self Insured Retention Fund, the Reserve Fund, and such other funds and accounts as HARRP shall deem necessary and appropriate and to cause such funds to be invested. (c) The power and authority to make, enter into and arrange for insurance and reinsurance contracts for excess, catastrophic, stop-loss or any other such coverage as HARRP shall deem necessary and appropriate. (d) The power and authority to establish and operate a program of Risk Management, which power and authority shall include the power and authority to engage the services of a Third Party Risk Manager. (e) The power and authority to establish and operate a program of Claims Management, which power and authority shall - 5 - include the power and authority to engage the services of a Third Party Claims Manager. (f) The power and authority to pay or approve the payment of any expenses and fees associated with the operation of HARRP. (g) The power and authority to indemnify and hold harmless any HARRP Board Member, officer of HARRP or any person acting on behalf of HARRP to the extent such indemnification is not prohibited under applicable law. (h) The power and authority that is necessary or incidental to the foregoing power and authority or that may be necessary or appropriate to protect or enhance the assets of HARRP. SECTION 3. HARRP BOARD 3.1 Power and Authority. The HARRP Board shall be the governing body of HARRP and shall manage the business and affairs of ~IARRP. The HARRP Board shall have all necessary and incidental power and authority to manage the business and affairs of F~%RRP, including, but not limited to, the following: (a) The power and authority to impose any qualifications for membership. (b) The power and authority to adopt or amend any Coverage Terms. (c) The power and authority to adopt, alter, amend or repeal the Bylaws; (d) The power and authority to adopt rules and regulations from time to time. (e) The power and authority to fix and adjust the Capital and Surplus Contribution or any Periodic Contributions with respect to any Member and to call for Retrospective Contributions in accordance with Section 6.3. (f) The power and authority to establish and operate a program of Risk Management and to engage the services of a Third Party Risk Manager. (g) The power and authority to establish and operate a program of Claims Management and to engage the services of a Third Party Claims Manager. (h) The power and authority to cause the funds of HARRP to be invested and to engage the services of one or more investment advisors. (i) The power and authority to declare non-liquidating distributions to the Members and to make such distributions to the Members in the manner set forth in this Agreement. (j) The power and authority to terminate and wind up the affairs of ~ARRP, including the power and authority to make liquidating distributions to Members in the manner set forth in this Agreement. (k) The power and authority to establish any committees it deems necessary and appropriate. (1) The power and authority to determine who shall be authorized to sign on behalf of HARRP documents, contracts, policies, instruments, checks, acceptances, endorsements, and releases. (m) The power and authority, subject to the provisions of this Agreement and the Bylaws, to appoint, elect, and remove all agents, officers, and employees of HARRP and to designate their duties and remuneration. (n) The power and authority to determine the manner of acquiring, holding, and disposing of personal property and real property (and interests therein) used by or on behalf of HARRP. (o) The power and authority to direct the conduct of the business and affairs of HARRP. (p) The power and authority that is necessary or incidental to effect or facilitate the purposes for which HARRP was established, that is necessary or incidental to the foregoing power and authority, and that may be necessary or appropriate to protect or enhance the assets of HARRP. 3.2 Number, Qualifications, and Election of Members of HARRP Board. The number of HARRP Board Members shall not be less than six. Each ~IARRP Board Member shall serve for a one-year term, but may be re-elected for one or more successive one-year terms. The HARRP Board Members shall be elected as follows: (a) One-third of the HARRP Board Members shall be elected by the Members that are represented in the Association of Washington Housing Authorities. (b) One-third of the HARRP Board Members shall be elected by the Members that are represented in the Association of Oregon Housing Authorities. (c) One-third of the HARRP Board Members shall be elected by the Members that are represented in the Northern California/Nevada Executive Directors Association. Each director must be affiliated at all times during his or her tenure in office with a Public Housing Authority that is a Member of HARRP. SECTION 4. MEMBERS 4.1 Admission. For admission to membership in HARRP, each Member must satisfy the following requirements: (a) Such Member must be a Public Housing Authority that is represented in the Association of Washington Housing Authorities, the Association of Oregon Housing Authorities, or the Northern California/Nevada Executive Directors Association; (b) Such Member must be a Public Housing Authority that is engaged in or assisting in the development or operation of housing for low-income families; (c) Such Member must satisfy the underwriting criteria established by the HARRP Board from time to time; (d) Such Member must satisfy the eligibility requirements set forth in the Bylaws; and (e) Such Member must execute a counterpart copy of this Agreement, as amended from time to time, pursuant to which it agrees to be bound by the provisions of this Agreement, as amended from time to time. 4.2 Obligations. A Member shall possess the rights and obligations of membership in ~IARRP. Each Member shall comply with the following obligations of membership: (a) Each Member shall remit to HARRP the Capital and Surplus Contribution which is applicable at the time such Member executes this Agreement. Such Member shall pay the Capital and Surplus Contribution in one lump sum contemporaneous with the execution of this Agreement. (b) Each Member shall remit to HARRP its Periodic Contribution at such time or times as the HARRP Board shall specify. To the extent that a Member has Existing Insurance - 8 - Coverage, the Periodic Contribution with respect to such Member shall be reduced by an amount which reflects the proportion of the Periodic Contribution attributable to the coverage provided by F~%RRP in relation to the Existing Insurance Coverage, which proportion shall be determined in a reasonable manner by the F~%RRP Board. No Member shall procure or renew any insurance coverage whereby such procurement or renewal would create Existing Insurance Coverage. (c) Each Member shall remit to HARRP any Retrospective Contribution called in accordance with Section 6.3 at such time or times as the FJ~RRP Board shall specify. (d) Each Member hereby agrees that it will not make or in any way assist in the making of any claim against HARRP to the extent that any Existing Insurance Coverage is applicable to the loss upon which such claim is based or to the extent that such claim is not protected against by the applicable Coverage Terms; provided, however, that a Member shall not be precluded from pursuing any legal or equitable remedy with respect to the coverage provided by HARRP or its membership in HARRP. (e) Each Member hereby agrees to allocate each year or otherwise provide for, through its powers under applicable law or otherwise, a sum of money sufficient to pay any amounts due with respect to its Periodic Contribution and any Retrospective Contribution. (f) Each Member hereby agrees to comply with the terms of any Risk Management program developed by ~/ARRP or any Third Party Risk Manager engaged by F~ARRP. (g) Each Member hereby agrees to comply with the Bylaws, as amended from time to time. (h) Each Member hereby agrees to comply with any rules and regulations, which from time to time may be adopted by the F~RRP Board. (i) Each Member hereby agrees to comply with the Coverage Terms. (j) Each Member hereby agrees to comply with the provisions of this Agreement, as amended from time to time. (k) Each Member, for itself and for each--person insured as a result of such Member's membership in HARRP, hereby agrees to waive any claim it may have against any other Member based on the insolvency of IA~RRP or the unenforceability or invalidity of this Agreement; provided, however, any such waiver shall not - 9 - include the waiver of any claim which the Members of HARRP may have with respect to any Member's non-payment of its Capital and Surplus Contribution, any Periodic Contributions, or any Retrospective Contributions. 4.3 Votin~ Rights. Each Member shall be entitled to one vote for each director for which such Member is entitled to vote and one vote upon each other matter submitted to a vote at a meeting of the Members. The vote of the majority of the Members present, in person or by proxy, and entitled to vote at any duly organized meeting of the Members, shall decide any question unless the vote of a greater number shall be required by this Agreement. One-third of the Members entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of the Members. 4.4 Limited Liability. The liability of each Member shall be limited to the Capital and Surplus Contribution, any Periodic Contributions and any Retrospective Contributions determined by the I{ARRP Board and required to be paid by such Member; no Member shall be required to pay to F~RRP or any of its Members, or any other persons insured under any Coverage Terms, any amount in addition to the Capital and Surplus Contribution, any Periodic Contributions and any Retrospective Contributions required to be paid by such Member, it being understood that the cash funds and investments of ~ARRP shall be solely liable for its debts, obligations and liabilities. 4.5 Minimum Term of Membership; Termination of Membership. Each Member hereby agrees to remain a Member of ~RRP for a period of not less than three years beginning on the date upon which the first of any Coverage Terms first become effective with respect to the Member, and shall be liable completely for its full Capital and Surplus Contribution, any Periodic Contributions, and any Retrospective Contributions required to be paid by such Members that are attributable to such three-year period. Notwithstanding the foregoing, if the Periodic Contributions (excluding any Retrospective Contributions) attributable to a Member on an earned basis with respect to any 12-month period during such three-year period exceed 70 percent of the current Insurance Service Organization rates for property damage and general liability insurance applicable to such Member, manually computed, as determined by the HARRP Board, such Member shall have the option to terminate membership in HARRP; provided, however, that such termination of membership shall not create the right to receive from HARRP the refund of any contributions made through the date of such termination, and the terminating Member shall remain liable for any Periodic Contributions and Retrospective Contributions attributable to such Member for membership in HARRP through the - 10 - date of its termination of membership. A Member may terminate its membership in ~IARRP at any time after such three-year period has elapsed upon complying with the applicable notice and procedural requirements as set forth in the Bylaws, Coverage Terms and any rules and regulations adopted by the HARRP Board. Upon terminating membership in HARRP at any time after such three-year period has elapsed, the Member shall receive a refund of that portion of its Capital and Surplus Contribution set forth in Section 4.7. 4.6 Member Noncompliance. In the event of Noncompliance by any Member, ~IARRP shall have the power and authority to do any one or combination of the following: (a) Expel the Member from membership in HARRP, thereby excluding such Member from any indemnification and financial protection provided by HARRP, subject to the applicable notice and procedural requirements as set forth in the Bylaws, Coverage Terms or any rules and regulations adopted by the HARRP Board, which power and authority shall include the power and authority to retain and cause the forfeiture of the Capital and Surplus Contribution, any Periodic Contributions, and any Retrospective Contributions paid or payable by such Member. (b) Offset against any amounts due from FJ~RRP to or payable on behalf of the Member, based on claims made or any distributions which may be declared from time to time by the HARRP Board, any amounts which the Member owes to F~%RRP, based on . its Capital and Surplus Contribution, any Periodic Contributions, any Retrospective Contributions, or otherwise. (c) Accrue and charge interest at a reasonable rate on any amounts which the Member owes to F~RRP, based on its Capital and Surplus Contribution, any Periodic Contributions, any Retrospective Contributions, or otherwise. (d) Impose any reasonable penalties, but only to the extent that any financial penalty imposed approximates the actual monetary loss suffered by HARRP as a result of the Noncompliance. (e) Pursue any other remedy available at law or in equity. 4.7 Refund of Portion of Capital and Surplus Contribution on Termination of Membership. A Member whose membership in HARRP shall terminate for a reason other than Noncompliance shall be entitled within one year after such termination of membership to receive a refund equal to the following percentage of the Capital and Surplus Contribution made by such Member based on such Member's complete years of membership in HARRP: - 11 - Number of Complete Years of Percentage Membership in HARRP Refund Less than four years 0% Four years, but less than five years 20% Five years, but less than six years 40% Six years, but less than seven years 60% Seven years, but less than eight years 80% Eight or more years 100% Notwithstanding the foregoing, such refund to a Member upon termination of membership shall not exceed such Member's proportionate share of the aggregate net balances in the Capital and Surplus Contribution and surplus accounts of HARRP at the end of the calendar year during which such termination of membership occurs, which proportionate share shall be based on the ratio that such Member's Periodic Contributions (excluding any Retrospective Contributions) during the calendar year prior to the calendar year in which such termination of membership occurs bears to the aggregate Periodic Contributions (excluding any Retrospective Contributions) of all Members during the calendar year prior to the calendar year in which such termination of membership occurs. HARRP shall have the right to defer the payment of such refund to a Member whose membership in HARRP has terminated if the aggregate Periodic Contributions (excluding any Retrospective Contributions) of all Members during the calendar year in which such termination of membership occurs exceed one- third of the aggregate net balances in the Capital and Surplus Contribution and surplus accounts of HARRP at the end of such calendar year. ~{ARRP shall not be obligated to refund all or any portion of a Member's Capital and Surplus Contribution if such Member's termination of membership in HARRP shall result from such Member's Noncompliance or if such Member's complete years of membership in HARRP shall be less than four years on the date of such termination of membership. 4.8 Obligations on Termination of Membership. The termination of membership in ~{ARRP by any Member shall not relieve such Member of any liabilities or obligations accrued or accruing to HARRP, including, without limitation, the payment of such Member's Capital and Surplus Contribution, any Periodic Contribution payable by such Member for periods attributable to such Member's membership in I{ARRP, and any Retrospective Contributions for periods attributable to such Member's membership in HARRP which may be called for by the NARRP Board before or after such termination of membership. - 12 - SECTION 5. COVERAGE TERMS F,%RRP shall indemnify and financially protect each Member against any risk of loss as may be agreed upon by the Member and HARRP and which is embodied in written Coverage Terms issued to the Member. Such indemnification and financial protection shall not exist and HARRP shall make no payment on any claim with respect to any risk of loss to the extent the Member has any Existing Insurance Coverage applicable to such risk of loss. A Member may apply for and procure from an insurance entity other than F~ARRP insurance coverage in excess of limits of coverage provided by HARRP. It is the intention of all Members that neither this Agreement, the Coverage Terms, nor any insurance or reinsurance procured on behalf of HARRP shall extend to or provide coverage for any liability from which any Member is immune under applicable law, as it is now constituted or may hereafter be amended. SECTION 6. CONTRIBUTIONS 6.1 Capital and Surplus Contribution. Until changed by the HARRP Board (which shall not be earlier than January 1, 1988), the Capital and Surplus Contribution of each Member shall be equal to 25 percent of the current Insurance Service Organization rates for property damage and general liability insurance applicable to such Member, manually computed, as determined by the ~{ARRP Board. On or after January 1, 1988, the I~ARRP Board may change the amount of or the basis for computation of the Capital and Surplus Contribution to be paid by each new Member. The Capital and Surplus Contribution of a Member shall be paid in one lump sum contemporaneous with the execution of this Agreement by such Member. 6.2 Periodic Contributions. The Periodic Contributions payable by a Member shall be determined by the I{ARRP Board from time to time using appropriate underwriting standards. In the exercise of its discretion, the F~%RRP Board may rely on loss data relating to specific factors, including, without limitation, geographic location, scope of operations, and compliance with the Risk Management program. Periodic Contributions shall be payable at such time or times as the HARRP Board shall specify. Each Member's Periodic Contribution shall not be less than $1,000 per year. Subject to the right of the HARRP Board to determine Periodic Contributions, subject to the application of appropriate underwriting standards, and subject to any right of a Member to withdraw in accordance with Section 4.5, the anticipated Periodic Contributions for each Member for the period from February 1, 1987 to December 31, 1989 shall be as follows: - 13 - (a) With respect to property damage insurance, such anticipated Periodic Contributions shall be the following percentages of Insurance Service Organization rates for property damage insurance, manually computed, as determined by the HARRP Board, for the following periods: Percentage of Insurance Service Period Organization Rate February 1, 1987 to December 31, 1987 35% January 1, 1988 to December 31, 1988 50% January 1, 1989 to December 31, 1989 50% (b) With respect to general liability insurance, such anticipated Periodic Contributions shall be the following percentages of Insurance Service Organization rates for general liability insurance, manually computed, as determined by the F. ARRP Board, for the following periods: Percentage of Insurance Service Period Organization Rate February 1, 1987 to December 31, 1987 35% January 1, 1988 to December 31, 1988 50% January 1, 1989 to December 31, 1989 50% (C) With respect to Coverage Terms not described in subparagraphs (a) and (b) above, the Periodic Contributions shall be determined by the HARRP Board from time to time. 6.3 Retrospective Contributions. The HARRP Board may call for retrospective increases ("Retrospective Contributions") in the Periodic Contributions payable by a Member at such time or times as the HARRP Board shall specify; provided, however, that the HARRP Board may call for Retrospective Contributions only once before January 1, 1990 and the Retrospective Contribution payable by a Member shall not exceed the Periodic Contribution (excluding any Retrospective Contribution) payable by such Member for the calendar year during which such Retrospective Contribution is called; provided further, however, that after December 31, 1989, within five years after the close of any calendar year commencing after December 31, 1989, but only with respect to Members for all or part of such calendar year, the HARRP Board may call for Retrospective Contributions up to 25 percent of the Periodic Contributions (excluding any Retrospective Contribution) attributable to such Member on an - 14 - earned basis with respect to such calendar year. The HARRP Board may cancel or reduce Retrospective Contributions and may accelerate, combine, or postpone the date(s) of payment. No call for Retrospective Contributions shall be made against individual Members, but only against all Members. The HARRP Board shall have the sole authority to call for Retrospective Contributions. SECTION 7. DISTRIBUTIONS 7.1 Non-Liquidating Distributions. The HARRP Board may from time to time declare hon-liquidating distributions to be paid to the Members as a class. For purposes of allocating non- liquidating distributions under this Section 7.1, the Periodic Contributions (excluding any Retrospective Contributions) for the five most recent calendar years ending prior to the record date for such distribution for each Member (whose membership is current on the record date for such distribution) shall be added, and the sum thereof (the "Total Periodic Contributions") for such Member shall be compared wifh the Total Periodic Contributions for all Members (whose membership is current on the record date for such distribution). Each such Member shall be entitled to receive an amount equal to that percentage of such non- liquidating distribution that the Total Periodic Contributions for such Member bears to the aggregate Total Periodic Contributions for all such Members. Notwithstanding the foregoing, in the event the foregoing allocation of non- liquidating distributions shall not be in accordance with HARRP's exemption from Federal income taxation, the HARRP Board may allocate such non-liquidating distributions among its Members in a fair and equitable manner, determined in the discretion of the HARRP Board, which shall be in accordance with ~IARRP's exemption from Federal income taxation. The F~%RRP Board shall fix a record date for non-liquidating distributions under this Section 7.1 in accordance with the Bylaws. Any reasonable determination by the HARRP Board in accordance with this Section 7.1 with respect to the allocation of any non-liquidating distribution under this Section 7.1 among the Members shall be conclusive and binding upon the Members. 7.2 Liquidating Distributions. The HARRP Board may terminate and wind up the business and affairs of HARRP, in which event the assets of HARRP, after the payment of or provision for all liabilities, obligations, and expenses of HARRP, that are available for distribution to the Members (the "Assets Available for Distribution") shall be distributed to the Members in accordance with this Section 7.2. The Assets Available for Distribution shall be allocated among the Members (whose membership in HARRP is current on the record date for such distribution) in the following order of priority: - 15 - (a) First, the Assets Available for Distribution shall be distributed to each such Member in an amount equal to the Capital and Surplus Contribution of such Member; if the Assets Available for Distribution shall be less than the aggregate Capital and Surplus Contributions of such Members, then the Assets Available for Distribution shall be distributed pro rata among all such Members in the proportion that the Capital and Surplus Contribution of each such Member bears to the Assets Available for Distribution; and (b) Second, the'balance of the Assets Available for Distribution, if any, shall be distributed pro rata among all such Members in the same ratio as non-liquidating distributions are allocated among the Members under Section 7.1. Notwithstanding the foregoing, in the event the foregoing allocation of liquidating distributions shall not be in accordance with HARRP's exemption from Federal income taxation, the ~3~RRP Board may allocate such liquidating distributions among its Members in a fair and equitable manner, determined in the discretion of the HARRP Board, which shall be in accordance with IA~RRP's exemption from Federal income taxation. The HARRP Board shall fix a record date for liquidating distributions under this Section 7.2 in accordance with the Bylaws. Any reasonable determination by the HARRP Board in accordance with this Section 7.2 with respect to the allocation of any liquidating distribution under this Section 7.2 among the Members shall be conclusive and binding upon the Members. SECTION 8. BYLAWS. Provisions for the governance and management of ~ARRP, including, without limitation, the respective functions, rights, and obligations of the Members, HARRP Board, and officers of ~ARRP, shall be set forth in the Bylaws. The F~ARRP Board shall have the power and authority to alter, amend, or repeal the Bylaws and to adopt new bylaws; provided, however, that not less than 20 days prior to the effective date of any such alteration, amendment, or repeal of the Bylaws or adoption of new bylaws, written notice describing such alteration, amendment, repeal, or adoption shall be delivered to each Member of record in the same manner as notice of meetings of the Members. All rights and obligations of the Members are subject to the reservation of the right of the Board of Directors to amend, alter, change, or repeal any provision contained in the Bylaws. SECTION 9. INDEMNIFICATION. 9.1 Limitation of Liability. A HARRP Board Member shall not be personally liable to HARRP or the Members for monetary - 16 damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to HARRP or the Members, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) for any transaction from which the director derived an improper personal benefit. 9.2 Right of Indemnity. HARRP may indemnify any person who is or was a party, or is threatened to be made a party, to any threatened, pending, or. completed action, suit, or proceeding, whether civil, administrative, or investigative (other than an action by or in the right of HARRP) by reason of the fact that such person is or was a director, officer, employee, or agent of ~IARRP or is or was serving at the request of ~ARRP as a director, officer, employee, or agent of another risk retention pool, corporation, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit, or proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of ~IARRP. The determination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of HARRP. HARRP shall not indemnify any person who is or was a party, or is threatened to be made a party, to any threatened, pending, or completed criminal action or proceeding. 9.3 Claims by or in the Right of F_ARRP. ~{ARRP may indemnify any person who is or was a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of HARRP to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee, or agent of ~{ARRP, or is or was serving at the request of HARRP as a director, officer, employee, or agent of another risk retention pool, corporation, partnership, joint venture, trust, or other enterprise against expenses, including attorneys' fees, actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of HARRP, provided that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to HARRP unless and only to the extent that the court in which such action or suit was brought shall determine upon - 17 - application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. 9.4 Successful Defense. To the extent that a director, officer, employee, or agent of HARRP has been successful on the merits or otherwise in the defense of any action, suit, or proceeding referred to in Section 9.2 or 9.3, or in the defense of any claim, issue, or matter therein, such person shall be indemnified against expenses, including attorneys' fees, actually and reasonably incurred by him or her in connection therewith. 9.5 Determination of Indemnity. Any indemnification under Section 9.2 or 9.3, unless ordered by a court, shall be made by HARRP only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances because he or she has met the applicable standards set forth in Section 9.2 or 9.3. Such determination shall be made: (a) by the HARRP Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding; or (b) if such quorum is not obtainable or, even if obtainable, in the event a quorum of disinterested directors so direct, by independent legal counsel in a written opinion; or (c) by the Members. 9.6 Expenses an~ Advances. Expenses incurred in defending a civil or administrative action, suit, or proceeding may be paid by ~A~RP in advance of the final disposition of such action, suit, or proceeding, as authorized by the F~RRP Board in the specific case, upon receipt of an undertaking by or on behalf of the director, officer, employee, or agent to repay such amount unless it shall ultimately be determined that he or she is entitled to be indemnified by ~ARRP as authorized in this Section 9 or otherwise. 9.7 Other Rights. The indemnification provided in this Section 9 shall not be deemed exclusive of any other rights to which those persons seeking indemnification may be entitled under any bylaw, agreement, vote of the Members or disinterested directors, or otherwise, both as to actions in such person's official capacity and as to actions in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators - 18 - of such person. The provisions of this Section 9 shall be deemed a contract between f~ARRP and any person entitled to indemnification hereunder. 9.8 Insurance. HARRP shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of HARRP or is or was serving at the request of HARRP as a director, officer, employee, or agent of another risk retention pool, corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against such person or incurred by such person in any such capacity or arising out of his or her status as such, whether or not HARRP would have the power to indemnify such person against such liability under this Section 9. SECTION 10. ACCOUNTING. True and complete accounts shall be kept of all transactions and of all assets and liabilities of }{ARRP. The accounts of I{ARRP shall be audited each calendar year. SECTION 11. DURATION. This Agreement shall continue in effect until it is terminated by the mutual consent of all of the Members; provided, however, that this Section 11 shall not be construed to preclude the termination and winding up of ~/ARRP within the discretion of the HARRP Board and the amendment of this Agreement pursuant to Section 12. SECTION 12. AMENDMENT. This Agreement may be amended only upon the affirmative vote or written consent of at least two-thirds of the Members. A copy of any amendment to this Agreement shall be delivered to each Member prior to the effective date of such amendment. All rights and obligations of the Members are subject to the reservation of the right to amend this Agreement. SECTION 13. MISCELLANEOUS PROVISIONS. 13.1 Prohibition Against Assignment. No Member may assign any right, claim, or interest it may have under this Agreement or any Coverage Term, and no creditor, assignee, or third party beneficiary of any Member shall have any right, claim, or title to any part, share, interest, funds, or assets of HARRP, except as specifically may be agreed to by I{ARRP. - 19 - 13.2 Enforcement. HARRP and its Members shall have the power to enforce this Agreement by action brought in any court of law having proper jurisdiction. 13.3 Severability. If any term or provision of this Agreement or the application of such term or provision to any person or circumstance shall to any extent be invalid or unen- forceable, the remainder of this Agreement and the application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable shall not be affected, and each term or'provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 13.4 Integration. This Agreement, including the Bylaws, Coverage Terms, and any applicable rules and regulations that may be adopted from time to time by the HARRP Board, constitute the full and complete terms of the agreement among the Members and HARRP. There are no oral understandings or agreements not set forth in writing in this Agreement or in the Bylaws, Coverage Terms, or any applicable rules and regulations. This Agreement is binding on each Member and may be executed in multiple counterparts by each Member and HARRP executing a full and complete copy of this Agreement, and all such counterparts shall be deemed originals and together shall constitute one and the same agreement among the Members and HARRP. IN WITNESS WHEREOF, the parties have caused this agreement to be executed this 3rd day of February , 1988 KITSAP COUNTY Its: Chairman, Board of Commissioers HOUSING AUTHORITIES RISK RETENTION POOL By: ' - 20 - JMKsgc1422