OPERATIONAL RULES

FOR THE

PURMS JOINT SELF-INSURANCE AGREEMENT

Adopted as of March 30, 1995

TABLE OF CONTENTS

SECTION I - Interlocal Agreement 2

6. Board of Directors. 2

7. Board Meetings. 3

7.2 Notice of Special Meetings. 3

7.3 Notice of Emergency Meetings. 3

7.4 Establishment of Board Meeting Agenda. 3

7.7 Pre-Vote Analysis. 4

8. Fund Officers. 4

8.2 Succession and Vacancies. 4

9. Committees. 5

10. Fund Administration. 10

11. Fund Records and Board and Committee Meeting Minutes. 11

11.1 Official Fund Records. 11

11.2 Custodian and Right to Inspect Records. 12

11.3 Approval of Board, Executive and Operations Committee Minutes. 12

11.4 Distribution of Administrative Committee Minutes. 12

12. Fund Auditor, Fund Accounting and Financial Reporting Requirements. 12

12.2 Fund's Investment Related Bookkeeping Procedures. 12

12.4 Fund Disbursement Procedures When the Administrator Physically Makes the Disbursements. 12

12.5 Accounting Guidelines, Financial Statements and Fiscal Year 12

12.6 Fund's Monthly Receipts and Expenditures Analyses. 13

12.7 Financial Reporting Requirements. 13

16. Subgroups and the Purchase of Additional Excess or Different Excess Insurance. 13

17. Risk Management Procedures. [Reserved] 18

18. New Members. 18

18.1 New Member Admission Requirements. 18

19. Appeal Procedures and Administrative Committee's Primary Jurisdiction. 18

30. Supplemental General Provisions. [Reserved] 20

SECTION II - Definitions. 20

30. Supplemental General Provisions. [Reserved] 20

SECTION III – Commercial General Liability Coverage. 20

2. Insuring Agreement and Conditions for CGL Coverage. 20

2.2 Coverage Limit 21

2.3 Deductible. 21

2.5 Pre-Approval Procedures. 21

2.7 Other Insurance and Third Party Indemnifications. 27

3. Exclusions for CGL Coverage. 27

3.9 Procedures for Determining a Member's Good Faith and Reasonable Belief that the Action Giving Rise to the Claim was Lawful. 27

3.15 Requirements for Indemnification and Hold Harmless Agreement Re: "Loaned Equipment 28

3.16 Procedures for Determining and Pre-Approving Coverage for "Extraordinary Activities" of Members. 28

30. Supplemental General Provisions. [Reserved] 29

SECTION IV – Public Officials & Entity Coverage. 29

30. Supplemental General Provisions. [Reserved] 29

SECTION V - Auto Liability Coverage. 29

30. Supplemental General Provisions. [Reserved] 29

SECTION VI - Pollution Liability Coverage. 29

2. Insuring Agreement and Conditions for Pollution Coverage. 29

3. Exclusions for Pollution Coverage. 29

30. Supplemental General Provisions. [Reserved] 30

SECTION VII - Claims Resolution Rules & Procedures. 30

1. Members' Duties. 30

6. Settlements. 31

6.3 Member Settlement Ceiling. 31

7. Payment of Coverage. 31

7.1 Fund Reimbursement of the Costs Incurred by a Member to Repair or Replace Damaged Property. 31

30. Supplemental General Provisions. [Reserved] 32

SECTION VIII – Liability Pool General Assessment Formula. 32

30. Supplemental General Provisions. [Reserved] 32

SECTION IX - Premium Assessment Formula. 32

30. Supplemental General Provisions. [Reserved] 32

SECTION X – General Property Coverage. 32

30. Supplemental General Provisions. [Reserved] 32

SECTION XI – Auto Physical Damage Coverage. 32

30. Supplemental General Provisions. [Reserved] 32

SECTION XII – Property Pool General Assessment Formula. 32

30. Supplemental General Provisions. [Reserved] 32

SECTION XIII – Property Pool Premium Assessment Formula. 32

30. Supplemental General Provisions. [Reserved] 32

SECTION XIV – Health & Welfare Coverage. 32

30.