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1 <br />2 <br />1. <br />BICEP shall have the right but not the duty to participate at its own expense in the defense of <br />3 CLAIM against a COVERED PARTY that BICEP determines will likely result in a COVER: <br />4 ULTIMATE NET LOSS. <br />5 <br />6 2. After the amount of the SELF-INSURED RETENTION has been exhausted by payment <br />7 judgments, settlements and DEFENSE COSTS, BICEP shall reimburse the COVERED PAR' <br />8 for any further DEFENSE COSTS within the LIMIT OF LIABILITY even if the allegatic <br />9 against the COVERED PARTY are groundless, false or fraudulent. <br />10 <br />11 3. Notwithstanding the above, BICEP shall not have the obligation to defend or reimburse <br />12 DEFENSE COSTSofanEMPLOYEEiftheMEMBERdeterminesunderCaliforniaGovenun <br />13 Code section 995.2(a) that the EMPLOYEE is not entitled to a defense. BICEP shall, howe~ <br />14 reimburse DEFENSE COSTS if a court determines that the MEMBER has an obligation to I <br />15 them. <br />16 <br />17 4. A COVERED PARTY shall not settle a CLAIM For an amount in excess of the MEMBEf <br />18 SELF-INSURED RETENTION without the consent of BICEP's Board of Directors. <br />19 <br />20 5. BICEP shall not settle a CLAIM without the MEMBER'S consent. However, in the even <br />21 MEMBER does not give its consent to accept a bona fide monetary settlement offer, BICE] <br />22 liability shall be limited to the amount that BICEP would have paid in such settlement if: <br />23 <br />24 a. Such settlement demand exceeds the MEMBER'S SELF-INSURED RETENTION <br />25 $500,000; and <br />26 <br />27 b. The Member shall have expended or incurred $250,000 or more in DEFENSE COSTS. <br />28 <br />29 6. BICEP shall not be obligated to pay any CLAIM or reimburse DEFENSE COSTS after the LIM <br />30 OF LIABILITY over the SELF-INS URED RETENTION has been tendered for settlements and <br />31 DEFENSE COSTS or has been exhausted by payment of judgments, settlements and <br />32 DEFENSE COSTS. <br />33 <br />34 <br />35 SECTION IV --MEMBER'S SELF-INSURED RETENTION <br />36 AND BICEP'S LIMIT OF LIABILITY <br />37 <br />38 <br />39 1. BICEP's liability to a COVERED PARTY as the result of any one OCCURRENCE is only t <br />40 COVERED ULTIMATE NET LOSS. <br />41 <br />42 2. For the purpose of determining the SELF-INSURED RETENTION and LIMIT OF LIABILIT <br />43 all DAMAGES arising out of continuous or repeated exposure to substantially the same genes <br />44 conditions or course of conduct shall be considered as arising out of one OCCURRENCE durii <br />45 the first applicable coverage period. <br />46 <br />47 <br />48 <br />49 <br />a <br />s <br />03-OS-06 6 <br />