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event shall BICEP be obligated to pay any covered Claim in excess of the maximum <br />amount of $10 million per occurrence or $25 million annual aggregate for all Claims. <br />ARTICLE III <br />PAYMENT OF CLAIMS <br />3.1 Case Reserves. <br />BICEP shall retain a Claims Auditor for the purpose of submitting an annual <br />report to BICEP setting forth (a) the amount of Case Reserves necessary to be <br />established with respect to each Claim arising during the preceding full Coverage <br />Period and a breakdown of the amount of Case Reserves applicable to each Risk <br />Sharing Pool, and (b) any adjustments (whether upward or downward) necessary to be <br />made in the amount of each Case Reserve previously established pursuant to this <br />Section. <br />3.2 Payment of Settlements. <br />BICEP shall establish a Claims Payment Fund for the payment of Settlements. <br />Settlements shall be paid upon submission to BICEP in accordance with the procedures <br />of the Liability Risk Management Requirements, attached as Exhibit A to the <br />Memorandum, and incorporated herein by reference, as approved and adopted by the <br />Board. <br />3.3 Structuring Settlements. <br />Each Member hereby covenants to cooperate with BICEP in the settlement <br />and/or litigation of Claims in excess of the Member's Self-Insured Retention. To the <br />extent such Member has control over any negotiation or structuring of a Settlement and <br />subject to the limitations as determined by BICEP in accordance with Section 2.1.2., <br />above, each Member shall not allow Settlement payment dates earlier than the date the <br />Claims Payment Fund has been or will be fully funded to cover Case Reserves <br />established for the payment of such Claim. With respect to any judgment (as defined in <br />California Government Code Section 970 or in accordance with the laws applicable to <br />any out-of-state member) in an amount which exceeds such Member's Self-Insured <br />Retention, each Member shall petition the court for payment of such judgment in <br />installments pursuant to the provisions of California Government Code Section 970.6 or <br />in accordance with the laws applicable to any out-of-state member upon request by <br />BICEP after consideration by the BICEP Board of its Target Retained Earnings Policy <br />Statement attached hereto as Exhibit B and incorporated herein by reference. <br />Liability Program <br />US-37-06 <br />-4- <br />