BICEP BIG INDEPENDENT CITIES EXCESS POOL 3-2006

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ARTICLE IV PREMIUMS 4.1 Member's Premium Costs. 4.1.1 Appropriation of Premium Payments. Each Member shall take such action as may be necessary to include Participation Premium payments payable hereunder in its annual agency budget and to make the necessary annual appropriations for all such payments to BICEP. The obligations on the part of each Member herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of each Member to take such action and do such things as are required by law in the performance of the official duty of such officials to enable each Member to carry out and perform its obligations herein. 4.1.2 The Participation Premium payments are made in consideration for Coverage for each Coverage Period. The entire amount of Participation Premium is due on the Premium Payment Date, which shall be August 1 of each Fiscal Year which is coextensive with the applicable Coverage Period. The determination of the amount of the Participation Premium payable for such Coverage Period by each Member shall be made as soon as reasonably possible but no later than the day before the renewal date preceding the next Coverage Period. Each Member shall be obligated to pay the Participation Premium, which is determined as follows: 4.1.2.1. Administrative Premium. Each Member shall pay to BICEP an Administrative Premium. The method for charging Administrative Premium may be to apply the Experience Percent Contribution set forth in the Liability Rating Plan, Exhibit A, or to divide all administrative costs equally between the Members, as annually determined by the Board. 4.1.2.2 Risk Sharing Premium. Each Member shall be responsible for its proportion of the Risk Sharing Premium, as calculated in the Liability Rating Plan, Exhibit A. The Risk Sharing Premium shall be calculated in the following manner. With respect to each Coverage Period, BICEP shall determine the total of the Risk Sharing Premium by retaining an Actuary to prepare a report to be delivered to BICEP preceding the beginning of such Coverage Period which recommends the amount of funds to be deposited in the Claims Payment Fund such that the deposit, along with anticipated investment income, equals the expected value of all pooled losses, plus any margin for _ contingency the Board may determine appropriate for the Risk Sharing Layer retained by BICEP for said Coverage Period. In no event will Risk Sharing Premium be payable to establish Case Reserves for Coverage in excess of $10 million per occurrence unless the Board raises the limit above $10 million per occurrence. Liability Program OS-31-06 -5-