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1987-177 2038L NO AN oRDINANCE ACCEPTING THE PROPOSAL OF WASHINGTON NATIONAL INSURANCE COMPANY FOR EXCESS INSURANCE FOR THE CITY'S HEALTH INSURANCE PLAN AND FOR LIFE INSURANCE FOR CITY EMPLOYEES, AUTHORIIZING THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIIVE DATE ~HEREAS, the City has advertised and accepted proposals for life ~nsurance coverage for its employees and for excess ~nsura~ce for ~ts health insurance program for City employees, and ~HEIREAS, the City Manager having recommended to the C~ty Council that the proposal of Washington National for said ~nsurance coverages be accepted as being the lowest and best proposal received by the City, NON, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I. That the City hereby accepts the proposal of ~ashinglon National Insurance Company for excess stop loss insurance for the City's employee health insurance and for life insurance for its employees, a copy o£ which proposal is attached hereto and incorporated by reference here~n SECTION II. That the expenditure of funds for such ~nsurance coverages is hereby authorized SECTION III That this ordinance shall become effective immediately upon ~ts passage and approval PASSED AND APPROVED this the~O~'~day of October, 1987 ATTEST AP~ROVE~ AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY C Aggregate Deductible shah mean for the Imtml Agreement Period the amount deternnned at the close of the Imt~al Agreement Period by the use of the Aggregate Deductible Formula set forth m Part III of tins Agreement, for a Subsequent Agreement Period the amount deternnned at the close of that Subsequent Agreement Period by the use of the Aggregate Deduct~bla Formula set forth m Part III or by the use of the reweed Aggregate Deductible Formula then in effect for that Subsequent Agreement Penod D Inchwdual Deduct~bla shah mean the amount of Ind~wdual Loss shown as the Deductible on the Addendum under In&wdual Stop Loss Specificat~ons winch must be pa~d under the Plan in any one Agreement Period for any one covered mchwdual before the Company wall re~mburee the Plan Sponsor as set forth ~n Part II E Inchv~dual Loss for each Agreement Penod shah mean only such amounts winch were incurred by any o.ns person covered under the Plan and actually prod by the Plan Sponsor in cash w~thm the period of txme re&cared in the Addendum under Losses Ehg~ble for Reimbursement m payment of the benefits specified ~n the Plan that are prod to one p~rt~cular person or to Ins or her asa~gnees ~n settlement of the claim made by that person Amounts are considered to be incurred on those days the service(s) or the supply(~es) are provided If included under tIns Agreement, Dlsainhty In come Beneht amounts are considered to be ~ncurred dunng the days a D~sainhty Income Benefit ~s payable under the Plan In no event shah Inchwdual Loss include amounts prod after the ternnnat~on of the Agreement F Aggregate Loss for each Agreement Period shah mean (1) such amounts winch were incurred by aH persons covered under the Plan and actually paid by the Plan Sponsor in cash w~tinn the period of time indicated in the Addendum under Losses Ehg~ble for Reimbursement in payment of the beneh~s speclhed ~n the Plan to all persons covered under the Plan, or to their ass~gneee, m settle merit of clmms made by such persons (2) minus those amounts ehg~ble for reimbursement under the Individual Stop Loss provision of tins Agreement and (3) plus an amount equal to the Inchwd ual Stop Loss Prermum payable to the Company by the Plan Sponsor Amounts are considered to be incurred on those days the serwce(s) or the supphee(~es) are pro vlded If included under tins Agreement, Dlsainhty Income amounts are considered to be incurred dunng the days D~sainhty Income is payable under the Plan In no event shall Aggregate Loss in clude amounts prod after the ternunat~on of the Agreement G Inchwdual Loss or Aggregate Loss shall at no time include extra contractual damages of any nature, compensatory damages or any putative damages assessed agmnst the Plan Sponsor and the Company shall not be hable for any such damages The Plan Sponsor hereby agrees to hold harmless the ComPany from any such damages assessed agmnst the Plan Sponsor and also agrees that such damages w~H not be used to satisfy any In&wdual Loss Deductible or Aggregate Loss Deductible H Amounts actually prod shah mean the checks or drafts msued for payment of Individual Loss or Aggregate Loss and honored, but it shah not mean court cost penalties ~ntereet upon judgments or ~nvest~gat~on expense adjustment expense, or legal expense The date of ~ssue of each check or draft shall be conmdered the date of payment I Monthly Deductible Informatmn shall mean that ~nformat~on needed to compute the Monthly De ductlble amount as set forth m Part III of tIns Agreement or any rewslon of Part III wInch is then in force PART II INDI¥IDUAL STOP LOSS AND AGGREGATE STOP LOSS PRO¥ISION The Company ~n consideration of the payment by the Plan Sponsor of the Individual Stop Loss Prennum and the Aggregate Stop Loss Prennum reqmred by the Company HEREBY AGREES TO REIMBURSE the Plan Sponsor for A The percent shown on the Addendum under the Ind~wdnal Stop Loss Specifications of the amount by wInch the Ind~wdual Loss incurred by the Plan Sponsor ~n settlement of a clmm for any one covered m&wdual exceeds the Individual Deductible amount dunng a particular Agree ment Period, subject to an Ind~vidual M~mmum Benefit for any one ~nd~vldual of the amount shownl on the Addendum under the Ind~wdual Stop Loss Specifications and B The percent, shown on the Addendum under the Aggregate Stop Loss Specifications of the amount by winch the Aggregate Loss recurred by the Plan Sponsor exceeds the Aggregate De duct~bte amount during each separate Agreement Period subject to the m~x~mum rennbursement as shoWn on the Addendum under the Aggregate Stop Loss Specifications F16526 Page 2 of 7 uasninaton national' INSURANCE COMPANY EVANSTON ILLINOIS 60201 INDIVIDUAL STOP LOSS AND AGGREGATE STOP-LOSS AGREEMENT EFFECTIVE DATE November ], 1987 THE PLAN SPONSOR City of Denton STATE OF DELIVERY Texas INITIAL AGREEMENT PERIOD Begmmng on November 1, 1987 Closing on October 3l, 1988 SUBSEQUENT AGREEMENT PERIOD Beg~nmng on November 1 and Closing on October 31 of each year thereafter dunng the continuance of tins Agreement AGGREGATE STOP LOSS PREMIUM The amount shown on the Addendum under PREMIUMS will be payableon November ], 1987 and Annually on November ] of each year thereafter until tins Agreement ~s amended to rewse the prenuum INDIVIDUAL STOP LOSS PREMIUM (See Part IV ) Smce the Plan Sponsor has estabhshed a welfare benefit plan for payment of certain ehg~ble expenses on behalf of all persons for whom contributing employers accepted by the Plan Sponsor for coverage under tins Plan are reqmred to make contributions to the "Plan Sponsor's Welfare Benefit Plan" and all such persons ehg~bledependents, and Since the Plan Sponsor ~s destrous of lmut~ng that portmn of their habdtty under tins welfare benefit plan winch exceeds the Aggregate Deductible amount and the Individual Deducttble Amount and S~nce Wasinngton National Insurance Company ~s w~lhng to re~mburee the Plan Sponsor for a certain port~on of that bab~hty The Plan Sponsor and Wasinngton Natmnal mutually agree to the following terms and conditions PART I DEFINITIONS Where the followtng words and phrases appear ~n tins Agreement they shall have the reepect~ve meamng set forth below unless their context clearly ~nd~catee to the contrary, A Company shall mean Waslungton Natmnal Insurance Company B Plan shall mean the welfare benefit plan of the Plan Sponsor, a copy of tins Plan ~s attached and labeled Article A and ~s hereby made a part of tins Agreement The prows~ons of Article A (or Temporary Article A ff a formal Plan Document ~s unavmlable) that are pertinent to deternune wluch ~nd~wduals are to be covered under the Plan the tnne period they wdl be covered under the Plan and the benefits for winch they are covered under the Plan wdl be conmdered perbnent to tins Stop Loss Agreement The Plan Sponsor agrees that IA) all hainht~ee created by Article A (or temporary Artmle A ff a formal Plan Document m unavailable) belong only to the Plan Sponsor and (B) Waelnngton Natmnal's hainhty shall be lmuted to the rennbureement F16526 Page l of 7 B The sum of the first twe~,e Monthly Deductible amounts w~ll be the AGGREGATE DEDUCT IBLE, except that, regardless of such actual total, the rmmmum AGGREGATE DEDUCTIBLE amount shall not be less than 90% of the first Monthly Deductible amount mult~phed by twelve C The MONTHLY DEDUCTIBLE FACTORS and the mimmum AGGREGATE DEDUCTIBLE shall apply untd the end of the Imtlal Agreement Period, unless changed by agreement between the Plan Sponsor and the Company dunng the Agreement Period as a result of a change m the Plan l~or Subsequent Agreement Periods the MONTHLY DEDUCTIBLE FACTOR and the immm~m AGGREGATE DEDUCTIBLE wall be determined by mutual agreement between the Plan Sponsor and the Company and set forth m an Addendum to tins Agreement s~gned by the partms hereto D If tins ,Stop Loss Agreement should tenmnate on any date other than the closing date of the Imtml Agreement Period or of any Subsequent Agreement Period, there wall be no pro-rattan of the nnmmum AGGREGATE DEDUCTIBLE On the contrary the entire nnmmum AGGRE GATE I)EDUCTIBLE or the total o! Monthly Deductible amounts detornnned for such partml Agreement Period, whichever ~s greater, w~ll be apphed to determine the Company's hahibty for any pa/tml Agreement Period PART IV THE INDIVIDUAL STOP LOSS PREMIUM The rates used to compute the first monthly In&wdual SWp Loss Premium for the Imtlal Agreement Period are set forth on the Addendum These rates shall apply untd the end of the Imtlal Agreement Per~od unless changed by mutual agreement between the Plan Sponsor and the Company dumng the Agreement Period as a result of a change m the Plan For Subsequent Agreement Periods, the rates used to compute each monthly Indlwdual Stop Loss Prennum shall be those mutually agreed upon by the Plan Sponsor and the Company The MONTHLY PREMIUM RATE COVERED PERSON UNIT and COVERED BENEFIT are shown on the Addendum]undor PREMIUMS To compute the monthly In&wdual Stop-Lees Prennum, the number of COVERED PERSON UNITS covered under the Plan on the first day of that month m each category shown on the Addendum must be mult~phed by the MONTHLY PREMIUM RATE shown opposite the category The monthly Inchwduel Stop-Loss Prenuum shall be this product or the sum of these products depen&ng on whether there ~s one or more than one category shown PART V CONTINUATION AND TERMINATION This Agreement will cont4nue m force during the Imtial Agreement Pemod and dumng each Subsequent Agreement Per~od subject to the Plan Sponsor's payment of premium at such rates as may be reqmred by the Company and subject to ternnnat~un as provided in Part VI or as set forth below Tbs Agreement shall ternnnate ~mmedmtely upon the occurrence of the first of the following (a) mutual consent by the ~Plan Sponsor and the Company, (b) dlscentmuance of the Plan by the Plan Sponsor, (c) any attempt by thePlan Sponsor to amend the Plan w~thout the prmr wnttan approval of the Company ad]u&cat~on of f bankruptcy or insolvency of the Plan Sponsor, (e) upon nonpayment of any premium when due or (f) delegetlon of the Plan Sponsor's duties under this Agreement to a Thn'd Party Adrmmstrator/Cla~ms Adrmmstrator which has not been approved by the Company Tins Agreement may also be ternunated by written notice Of either party to the other by regmtered mad but not less than tinrty one days m advance of the ternunat~on date set out in such written not~ce PART VI YEARLY ADDENDUM W~ttnn tlnrty days after the Company's receipt of all the Loss data for the preceding Agreement Period, ~n the format reqmred by the Company, the Company wdl msue and dehver to the Plan Sponsor a completed Addendum to this Agreement m&catmg the terms for the renewal Agreement Pemod Tins Addendum shall be s~gned m d2phcato by the Plan Sponsor and an executed copy returned to the Company If the Plan Sponsor shouldlrefuse to accept such Addendum for tins Agreement Period and fad to execute and dahver the smd Addendum and any ad&tlanal prenuums due to the Company by the tlurtmth day after the date the Addendum m marled to the Plan Sponsor, this entire Agreement will be deemed to have ternunated at the close of the preceding Agreement Period, and the Company shall thereupon refund the Prenuums prod for tins Agreement Period The Plan Sponsor agrees to return any clanns amounts re~mbureed for tins Agreement Period F16526 Page 4 of 7 The Company at ~ts own elect~on and expense shall have the r~ght to participate w~th the Plan Sponsor ~n the defense or appeal of any action, su~t, or proceeding ~n which ~t may, ~n ~ts judgment, become ~nvolved The Company shall have no obhgat~on to defend the Plan Sponsor m any action arising under the Plan Sponsor s welfare benefit plan W~th regard to the AGGREGATE STOP LOSS the Company shall have no obhgat~on to make payment to the Plan Sponsor until the thirtieth day following the Plan Sponsor s subnuee~on of a claim to the Company contmmng all necessary Aggregate Loss data and all Monthly Deductible Information for a part~cnlar Agreement Per~od W~th regard to the INDIVIDUAL STOP LOSS the Company shall have no obhgat~on to make payment to the Plan Sponsor until the thirtieth day follovang the Plan Sponsor's subrmssmn of a clmm to the Company contmmng any necessary data regarding an Ind~wdual Loss which has exceeded the Indlwdual Deductible If the Addendum ~nd~catee Actively at Work ~s reqmred then Inchwdual Loss or Aggregate Loss as used here~n wall not ~nclude amounts of loss ~ncurred by any person covered under the Plan or loss pa~d for by the Plan Sponsor unless the covered person was actively at work on the later of 1 The effective date of tins Agreement or 2 The first day the ~nd~wdual ~s ehg~ble for coverage under the Plan For a covered person not actively at work on the later of these two dates, only those losses which were ~ncurred by such person on or after the date the covered person ~s again ect~vely at work vail be ~nchided under the meamng of Indlwdual Loss or Aggregate Loss An employee ~s actively at work ~f he or she ~s working full t~me at Ins or her regular job or ~f the date ~n queet~on ~s not a day when the employee ~s required to work then the employee must be able to work full t~me at the regular place of employment A dependent or a retired person ~s actively at work ~f, on the date ~n queetmn he or she ~s not hospital confined for at least one day ~mme&ately prmr to that date and ~s able to perform his or her normal duties and activities PART III THE AGGREGATE DEDUCTIBLE FORMULA The formula for and the factors used to compute the AGGREGATE DEDUCTIBLE for the Imt~al Agree ment Per~od are eetabhshad as of the Effective Date of this Agreement The formula for and the factors used to compute the AGGREGATE DEDUCTIBLE for any Subsequent Agreement Period shall be estabhshad as deecnbed ~n Section C below of tins Part The AGGREGATE DEDUCTIBLE shall be deternuned at the end of the Agreement Period by use of the follovang formula method, and factors unless rewsed as set forth m Section C below, of tins Part The factors are shown on the Addendum under MONTHLY DEDUCTIBLE FACTORS They ~nclude the COVERED BENEFIT COVERED PERSON UNIT and the MONTHLY DEDUCTIBLE FACTOR A Starting vath the first month of the Agreement Period, the number of COVERED PERSON UNITS covered under the Plan on the first day of that month m each category shown on the Addendum vail be mult~phed by the factor shown opposite the category The Monthly Deductible amount shall be tins product or the sum of these products depending on whether there ~s one or more than one category shown, except that (1) ~n the event of a str~ke, lcckout or work stoppage caused by any disagreement between an employer and all or certmn persons covered under the Plan the number of COVERED PERSON UNITS used to compute the Monthly Deductible Amount m the month ~mme&ately precechng such str~ke lockout or work stoppage vail be used to determine the Monthly Deductible amount for the month or months during winch the str~ke lockout or work stoppage ex~ste (2) ~n the event of a reduction of COVERED PERSON UNITS regardless of the reason the Monthly Deductible amount shall reduce no more than 5% from the month ~mmediately preeed~ng the one ~n winch the reduction occurs and no more than 5% additionally each month thereafter durmg the continuance of the reduction F16526 Page3of7 PART IX TAXES The Company shall be held harmless by the Plan Sponsor from any state prenuum taxes winch the Company may ,ncur w~th respect to claims prod {as distract from the prennums peAd to the Company by the Plan Sponsorl under the Plan Sponsor's Plan, and the Plan Sponsor shall re,mburse the Company annually for such tax expense ,f any, as daternnned by the Company PART X PAYMENT OF PREMIUMS The Plan Sponsor shall remit all premiums as reqmred by the Company to the Company at ,ts Home Office ,n Evanston, Illinois Except as otberw~ee provided under the Sectaon ent,tled "Grace Per~od, ' tins Agreement shall automat,cally ternnnate ,f any prennum ,s not prod when due PART XI GRACE PERIOD A grace perwd of tinrty one (31) days without mtereet charge ,s allowed for the payment of every prenuum after the first PART XII DATA The Plan Sponsor shall mmntmn such records as are reasonably requmed by the Company and shall furmsh to the Company all pertinent data w~th respect to persons covered under the Plan The Company shall have the r,ght to respect the records of the Plan Sponsor at reasonable ,ntervale during bus,neee hours for any purpose rclat,ng to tins Agreement PART XIII MODIFICATION Upon wr,ttan request by the Plan Sponsor and w, th the consent of the Company tins Agreement may be mo~hfled ,n writing vnthout not,ce to or consent by any persons covered under tins Plan Only the Pres,dent a Vice Pres,dent or the Secretary of the Company is anthonzed to modify tins Agreement No other person has the author, ty to change tins Agreement or to weave any of ,ts prows,one PART XIV PARTIES TO AGREEMENT Tins Agreement Is only between the Plan Sponsor and the Company and tins Agreement shall not create any right or legal relation whatever between the Company and any covered person or benefic,ary under the Plan Sponsor s Weffare Plan PART XV OVER REIMBURSEMENT The Plan Sponsor agrees that should the Company over reimburse Aggregate Losses due ether to clerical error or lack of i~dormat,on on Ind~wdnal Loss(es) such over re,mbursement wdl be credited towards any re ,mbureemente due to Ind~v,dual Lossiee) The Plan Sponsor further agrees that should such over reimburse ment exceed any re, mbursemente due to Indlwdual Loesies), tins excess wdl be refunded to the Company PART XVI ARBITRATION All d~sputee between the part,ee to tins Agreement upon winch an anncable understanding cannot be reached may be dec,ded by arbitrat, on The Court of Arintrators winch ,s to be held m the city where the Home Office of the Plan Sponsor is dormcded, shall cons,st of three arintrators famihar w~th employee beneht plans One of the arintrators shall be appo,nted by the Plan Sponsor one by the Company and the tinrd shall be selected by the first two appointees prior to the begmmng of the arintratmn Should the two arb,trators be unable to agree upon the cho,ce of a tinrd the appo,ntment shall be left to the Pres,dent or any V,ce Pres,dent of the Amer,can Arb,trat~on Assocmtlon The arb,trators are empowered to decide all queet,0na or ,eeuee and shall be free to reach their dec,s,on by apphcat,on of pr,nc,plee of eqmty and customary pract, cee of the ,nsurance and reinsurance industry rather than by str,ct apphcat, on of all rules of evidence and law They shall dec,de by a majority of votes and there will be no r,ght of appeal from the,r wr,tten dec, stun The cost of arb,trat,on, mcluchng the fees of the arintrators shall be borne by the los,ng party unless the arb,trators shall dec, de otherw, se F16526 Page6 of 7 PART VII PLAN CHANGES The Plan Sponsor shall promptly furnish the Company with aH proposed Plan amendments endorsements, or riders If any change in the Plan if effected shah in the opiman of the Company increase the risk assumed by the Company, the Company shah have the option of notifying the Plan Sponsor of la) an increase m the MONTHLY DEDUCTIBLE FACTORS and the nnmmum Aggregate Clmm Deduct2ble to be effective for the Agreement Period m winch such change becomes effective and lb) an increase In the Ind~wdual Stop Loss Prennum Rate and the Individual Stop Loss Deductible to be effective for the remmnder of the Agreement Period in winch such change becomes effective Upon the written agreement of the Plan Sponsor to the increases, an executed copy of such agreement, endorsement or rider shah be returned to the Company witinn 30 days of the effective date and shah be made a part of Article A and thereafter be considered as a part of the Plan If written acceptance is not prov~dsd to the Company wltinn thirty days of notification from the Company the change wall not be effective as part of tins Agreement until the first of the month following the return of the written acceptance If any change in the Plan shall not m the opnuon of the Company increase the risk assumed by the Company if that change were to become effective the Company shah so notify the Plan Sponsor If the Plan Sponsor sends an executed copy of tins amendment, endorsement, or rider to the Company for attachment to Article A the Plan wdl be deemed so changed as of the effective date shown on such amendment, endorsement or rider PART VIII DUTIES OF THE PLAN SPONSOR The parties agree that the Plan Sponsor shall have the following duties and obhgations A The Plan Sponsor shall be responsible for auditing and calculating and paying all clmms, preparation of periodic reports including but not hnnted to monthly reports of the number of COVERED PERSON UNITS by category, and shall maintain and make avmlable to the Company at all times such information as the Company may reasonably reqmre for proof of payment of Indiwdual Loss and Aggregate Loss by the Plan Sponsor B The Plan Sponsor will maintain a record of any and aH amounts paid m excess of payments required by the provisions of the Plan C The Plan Sponsor agrees to pay all clmms wltinn tlnrty days of the time that proofs of claims are adequate to the extent that payment can properly be made Failure of the Plan Sponsor to pay such claims w~tlnn the time hnut (tturty days) shah cause any such clmm to be excluded from counting toward the satisfaction of any Individual Deductible or AGGREGATE DEDUCTIBLE amount D The Plan Sponsor agrees to pay proper chums made by persons covered under this Plan and that funds as necessary ~ be prowded for tins purpose Fadure of tho Plan Sponsor to prov~ds funds when needed for such timely payment wdl cause the Agreement to lmmedmtely lapse the Grace Period will be considered satisfied and the AGGREGATE DEDUCTIBLE and any In&wdual Deductible yah be considered as not satisfied E The Plan Sponsor shall prepare and sublmt to the Company on a monthly basis a report of the total of all claims paid during such month and a report of the total number of COVERED PERSON UNITS in each category described on the Addendum under the PREMIUM section and the MONTHLY DEDUCTIBLE FACTOR section The Plan Sponsor shall maintain such other records as are reasonably required by the Company and shall furmsh them to the Company upon request The parties also agree that the Plan Sponsor may retain a Tlurd Party Adrmmstrator/Claims Admimstrator, that has been approved by the Company to perform any or aH of the above-hsted duties If the Plan Sponsor delegates duties under tl~s Agreement to an approved Tfurd Party Admimstrator/Clalms Adrmmstrator, the Plan Sponsor shall subrmt the Agreement between it and the Tlurd Party Admimstrator/Claims Adnumstra tor to the Company Tlus Tturd Party Adnumstrator/Clmms Adnumstrator shall be retained and compen sated for admimstrative and claims paying services by the Plan Sponsor and shah not be considered as the agent of the Company for administrative and claims paying services Should the Plan Sponsor desire to change Tinrd Party Administrator/Claims Admimstrator while tins Agreement is in effect the new Tinrd Party Adrmmstrator/Claims Adnumstrator must be approved by the Company and the Agreement vnth the new Third Party Admimstrater/Claims Adnumstrator must be submitted to the Company F16526 Page 5 of 7 IN WITNESS WHEREOF, the Plan Sponsor and the Company have by their respective officers caused tlus Agreement to be executed and dehvered on the dates shown below, replacing and superseding all prior agreements ti ty of Denton Washington National Insurance Company (I-I_erem called_the Plan Sponsor) ]/~-Ier~catted the Company) By .~ ~ T~tle Sen~or Vice President Title Date /'- / ~' -- ~;~ Date January 19, 1988 F16526 Page7of7 AGREEMENT AMENDMENT The Company and City of Denton (Plan Sponsor) agree that effective on November 1, 1987 the items on the attached page(s) wluch follow be added to and made a part of the Individual Stop Loss Agreement which was effective on Nnvomha~ I: lq~7 Except as expressly stated this Amendment does not waive or extend any of the other provmlons of said Agreement Tlus Amendment expires with the Agreement Clty of Denton PLAN SPONSOR WASHINGTON NATIONAL INSURANCE COMPANY ~/ %~f)r~/ ~"/~, Senior V,re President T~tle T~tle ~ /--/~g'~ff Bv~ston, IL J~ry 19, 1988 S~ed at Da~ S~ed at Date F16532 (1 87) Except as expresely stated, tbs Amendment does not wmve alter or extend any of the other provlmons o~ s~dd A~reement This Amendment expires w~th the A~reement Cltyof Denton PLAN SPONSOR WASHINGTON NATIONAL INSURANCE COMPANY ~t T~tle Signed at Date Signed at Date F16527 (1 87) AMENDMENT C~ty of The Company and Denton (Plan Sponsor) agree that effective on 1 i / 1/87 , the follovnng will be added to and made part of the Inchwdual Stop Loss Agreement Notw~thstanchng anytinng m the Agreement for the contrary amounts actually paid by the Plan Sponsor m payment of benefits specified in the Plan for purposes of calculating Loss shall not include the following I Benefits covered by any Workers Compensation or Occupational Disease Law whether or not such pohcy is in force 2 Benefits winch are not ehgible expenses under the terms of the Plan, 3 Benefits prod under the Plan winch are ~n excess of usual and customary charges for the locahty where admlmstered 4 Benefits prod under the Plan for any Employee or Dependent whose ewdence of good health as a Late Apphcant (as defined by Wasinngton National Insurance Company) is not satisfactory to Washington National, 5 Benefits pa~d for charges or treatment not reqmred because of an accidental injury or dlness or not necessary to the care or treatment of such accidental injury or ~llnees 6 Benefits prod for charges or treatment not recommended and approved by a physicmn or practitioner whose inclusion ~n the term "phymcmn" is reqmred by law, 7 Benefits paid under the Plan winch would not have been prod if benehts had been coor~hnated under the provisions of the National Association of Insurance CormmssIoners Model COB Guldehnes as amended from time to t~me 8 Benefits paid for losses winch are due to war or any act of war whether declared or undeclared, 9 Benefits paid for trea/~ment for cosmetic purposes or for cosmetic surgery, Except cosmetic treat ment or surgery due solely to a An acadentel bod~y ~njury winch occurred winle the mihvldual was covered under the plan, or b Surgical removal of all or part of the breast tissue as a result of an ~liness, or c Correct a congemtel b~rth defect of an mchv~dual who was covered under the Plan on the date of Ins of her birth 10 Benefits paid for serv~cee of a person who usually hves m the same household as the covered ln&v~dual or who ~s a member of Ins or her ~mmechate fannly or the fannly of ins or her spouse 11 Benefits paid for any procedure that is deemed to be experimental or mveet~gatlonal In nature by an appropriate technological assessment body estabhshed by any state or Federal government, 12 Benehts paid for winch the Plan Sponsor is not legally obhgated to pay These would include but not be hrmted to deductibles coinsurance and amounts ~n excess of mammums in the Plan, 13 Benefits prod for a mental or nervous conchtlon or for any substance abuse conihtlon winch for any covered Ind~wdual exceed the lesser of a The mammum(s) in the Plan or b $50 000 during any Agreement Period F16527 over (1 87) ARTICLE A The attached pages are Article A, the Plan Sponsor s Plan ,Document 1T, hel ~n Sponsor certifies that the Covered Benefits described therein were first ~n effect on movemoer The attached pages replace those wluch were previously ~dent~fied as Article A or Temporary Article A It is the intent of both part,es to tins Stop Loss Agreement that any reference m tlus Article A to the prior group insurance company, no matter how named shall be deemed to mean 'Plan Sponsor Any and all use of terms referring to "insured or "insurance shall mean coverage under the Plan Sponsor s Plan City of Denton ~/ Signature Signature / ~tle T,tle S~edat ~ ( ~ /~//~ ~van~ton. IL Jan~ 19, 1988 D~ S~od at - Date F16531 7 MONTHLY iDEDUCTIBLE - ACTORS (USED TO COMPUTE THE AoGREGATE DEDUCTIBLE} COVERED COVERED PERSON MONTHLY BENEFIT UNIT DEDUCTIBLE FACTOR Medical Employee $106 88 Medical Spouse 99 12 Medical Chlld(ren) 62 70 Medical Famlly 136 99 8 PREMIUMS a Aggregate Stop-Loss $ 9,075 (Annual) b Ind~wdnal Stop Loss COVERED COVERED MONTHLY BENEFIT UNIT PREMIUM RATE Medical Employee $ ~ 2~ Medical Dependent 3 39 9 Agreement Period to winch tins Addendum ~s apphcable Begins Nnv~mber 1st 1987 andEnds October 31st 19 88 If the effective date of tlus Addendum ~s after the beg~nmng of the Agreement Pemod tlus Addendum wdl replace and ,supersede any other Addendum for the same Agreement Perled for the t~rne pemod beg~nmng v~th the effective date of ttns Addendum and ending w~th the end of the Agreement Period 10 Full Legal name and address of Tlnrd Party Adnnmstrator/Clmm Adnnmstrator Coordinated Benefits Systems [] None 6301 Gas%on Ave , Sulte bSO ~allas. l~exas 75214 City of Denton PLAN SPONSOR WASHI}N~]~IDN/~ATIONAL INSURANCE COMPANY By Signature ~~ ~~-e~~/ ~--~, Sen,or ,,ce Pres,dent "~i(~-7 I~ ~ ~tle ~tle 1988 S~ at Da~ ~ed at F16529 (1 87) INDIVIDUAL STOP-LOSS AND AGGREGATE STOP.LOSS ADDENDUM 1 PLAN SPONSOR FullLegalName City of Denton Street Address 324 E McKinney City State and Zlp Code Denton, Texas 76201 2 AGREEMENT EFFECTIVE DATE 11- 1-87 ADDENDUM EFFECTIVE DATE 11-1-87 3 Aggregate Stop Loss Specifications M~mmum Maximum DeductibleS 760,500 Percent 100 % Reimbursements 1.000.000 4 In&wdual Stop Loss Spec~flcataons Mammum Deductibles 60,000 Percent 100 .% Benefits 250,000 5 COVERED BENEFITS a INDIVIDUAL STOP LOSS b AGGREGATE STOP LOSS [] Me&cai [] Me&cal [] Dental [] Vision [] [] RXfDrugs [] Dlsab~hty Income 6 LOSSES ELIGIBLE FOR REIMBURSEMENT a [] I&P 12/12 wluch means the Losses were Incurred and Pa~d w~ttnn the Agreement period for the Imtial Agreement Per~od For subsequent Agreement Permds, Paid w~tlun the Agreement Pened and Incurred on or after effective date of the Agreement Actively at work ~s reqmred b [] I&P 12/15 wluch means the Losses were Incurred w~tlnn each Agreement Period and Paid vnttnn that Agreement Period plus the 3 months following the end of that Agreement Per~od Actively at work is required c [] DSR 12/12 wtuch means the Losses were Incurred and Paid vntlnn the Agreement Period for the Imtlal Agreement Period For subsequent Agreement Periods Paid w~tlnn the Agreement Period and Incurred on or after effective date of the Agreement d [] DSR 12/15 winch means the Losses were Incurred w~thln each Agreement Period and Paid vntlnn that Agreement Period plus the 3 months follovnng the end of that Agreement Period e [] PAID which means the Losses were prod wltlun each Agreement Period Imtlal Agreement Period lncludee Losses winch were Incurred at most 60 days prior to the effective date of tlns Agreement Losses for subsequent Agreement Pemods must have been Incurred on or after the effective date F16529 over (1 87) 2038L NO AN ORDINANCE ACCEPTING THE PROPOSAL OF WASHINGTON NATIONAL INSURANCE COMPANY FOR EXCESS INSURANCE FOR THE CITYtS HEALTH INSURANCE PLAN AND FOR LIFE INSURANCE FOR CITY EMPLOYEES, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City has advertised and accepted proposals for life insurance coverage for its employees and for excess Insurance for ~ts health insurance program for City employees, and WHEREAS, the C~ty Manager having reconnended to the City Council that the proposal of Washington National for said ~nsurance coverages be accepted as being the lowest and best proposal received by the City, NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the City hereby accepts the proposal of Washington National Insurance Company for excess stop loss insurance for the City's employee health insurance and for life insurance for its employees, a copy of which proposal is attached hereto and incorporated by reference here~n SECTION II That the expenditure of funds for such ~nsurance coverages is hereby authorized SEqTION III, That th~s ordinance shall become effective immediately upon ~ts passage and app~l PASSED AND APPROVED this the~day of October, 1987 ATTEST: J~IFER ~ALTE'RS, EITY SECRETARY AI~I~ROVED AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH~ CITY ATTORNEY C Aggregate Deductible shall mean for the initial Agreement Period the amount determined at the close of the Initial Agreemeut Per~od by the use of the Aggregate Deductible Formula set forth m Part Iii of th~s agreement for a ~uhsequent Agreement Period tile amount determined at tile close of that ~ubsequeut Agreement Period b:~ tile use of the Aggregate Deductible Formula set forth in Part III or b~ lhe use of tile revised Aggregate Dedu~ t~ble Formula then m effect for that Subsequent Agreement Period D Individual Deductible shall mean $ 60 000 of Individual Loss which must be pa~d under the Plan m anx one Agreement Period for any Grig coverod individual before the Company will reimburse tile Plan Spoosor as set forth m Part II E Indlxldt~al Loss for the [mttal Agreement Period shall mean onl} such amounts actuail~ prod b} the Plan Sponsor m (a~h on or after the Effective Date of this Agreemeot but prior to the begmmog of the Subsequent Agreement Ptrlod In pa}merit of the beoefits specified m the Plan that are paid to one particular person or to her or h~s a~s~gneqs in settlement of the claim made by that person [nd~l~dual Loss tot auy Subsequeot Agreement Per~od shall mean oul~ soch amounts actnaily paid by the Plan Sponsor m cash on or after the begmmng date of that Subsequent Agreement Period and prior to the begmmng date of the next Subsequent Agreement Per, od m payment of tile benefits specified m the Plan that are paid to one particular person or to her or his assignees m settlemeot of tile claim made b~ that persoo F Aggregate Loss shall mean (1} snth amounts actually paid by the Plan Spousor in cash m payment of the ben, fits specified in the Plau to all persons co~ered nnder that Plao or to their assignees in settlement of claims made by such persons innms ttlo~e amounts eligible for reimbursement under the Individual Stop Loss provision of thts agreement and 12) all amount equal to the Individual Loss Premium paid to the Compan~ bv the Plan Sponsor Aggregate Los~ applicable to the Imtlel Agreement Period shall be such amouots set forth in (1) above *h.t ale actuall~ paid on or after the Effective Date of this Agreement but prior to the beginning of the next Subsequeot Agreement Per~od and the Indlxidual Loss Premium paid for the [mt~ai Agreement Per,od Aggregate Loss appl~cabts to each Subsequent Agreement Period sl~ail be such amounts set fortll u~ (ll abo~e tlllt are actually paid on or after tile beginning date of that bubsequeut Agreement Period and prior to the begmmng dat~ of tile next Subsequent Agreemeot Per~od and the Iudiwduai Loss Premmm paid for that Subsequeut Agreeme~lt Per~od G Individual Loss or Aggregate Loss shall at no t~me mclode extra contractual damage~ of any nature compensator', damages or any punitive damages assessed against tile Plan Sponsor and the Compan~ shatl not be habte for ~uch damages The Plan Spousor hereby agrees to tlold harmless tile Compan~ from any such damages assessed against the Plan Sponsor and also agrees that such damages w~ll not be used to satlsf> an) Indiwdual Loss Deductible or Aggregate Loss Deductible H Amouuts actually pa~d ~hall mean the checks or drafts ~ssued for paymeut of Individual Loss or Aggregate Loss but ~t shall not mean court cost penalties interest upon judgments or ulvestlgat~loo adlustment or legal expense The date of issue of each check or draft shall be considered the date of payment Mout:4l~ Deductible information shall mean that information needed to compute the Monthly Deductible amount a~ set forth m Part III of tills agreement ot any rewslon of Part III which ~s then m force PART 11 INDIVIDUAL STOP LOSS AND AGGREGATE STOP LOSS PROVISION The Compan} in consideration of the payment by the Plan Sponsor of the Individual Stop Loss Premium and tile ~.?regate Stop Loss Premium required by the Company HEREBY AGREES TO REIMBURSE tile Plan Sponsor for A 'I 0 0 ~ per cent of the amount by which the Individual Loss recurred by the Plan Sponsor m settlement of a claim for any one covered individual exceeds the Individual Deductible amonnt during a particular Agreement Per~od sublect to an Individual Lifetime Maximum Benefit for any one individual of $ 'i ~ 0 0 0 ~ 0 0 0 and B ].00 per cent of the amount by which the Aggregate Loss recurred by the Plan Spoosor excteds the Aggregate Deductible amount dunng each separate Agreement Period sublect to maximum reimbursement of $ 2 ~ 0 ~ 0 0 0 per Agreement Period The Company at its own election and expense shall have the right to participate w~th the Plan Sponsor in the defense or appeal of aoy actloo suit or proceeding in which it may in its ludgment become involved The Company shall have GO obligation to defend the Plan Spousor in any action arising under the Plan Sponsor s welfare benefit plan Page 2 of b F10979D , U as in ton nationBl' INSURANCE COMPANY INDIVIDUAL STOP LOSS AND AGGREGATE STOP LOSS AGREEMENT E~EECTIVEDATE October 1, 1987 THE PLAN SPONSOR City of Denton STATE OF DELIVERY Tex~ls INITIAL AGREEMENT PERIOD Begll~,ning on 10/1/87 Closing 011 10/~/88 SUBSEQUENT AGREEMENT PERIOD Begllmlng oil ~0/]/8S and Closmg on 9/30/89 of each year thereafter durmg tile contmuance o{' th~s agreement AGGREGATE STOP LOSS PREMIUM $ ~} ~ 07~ Payable and Annually on 3. 0/]. of each year thereafter until this Agreement ~s amended to revise the premmm INDIVIDLAL STOP LOSS PREMIUM (See Par~ IV ) Since the Plan Sponsor has estabhshed a welfare benefit plan for payment of certain hospital surgical medical and related expense on behalf of all persons for whom ¢ontnbut ng employers accepted by the Plan Sponsor for coverage under thl~ Plan are required to makt contribution to the City of Denton and all such persons eligible dependents and Since the Plan Sponsor is desirous of limiting that portion of their liability under this welfare benefit plan which exceeds tile Aggregate Deductible amount and the Individual Deductible Amount and S~nce Waahmgton National Insurance Company ~s wflhng to ra~mbutse the Plan Sponsor for a certain portmn of that liability The Plan Sponsor and Washington National mutually agree to the following terms and conditions PART I DEFINITIONS Where the followmg words and phrases appear m thru agreement they shall have the respective meanmg set forth below unless their context clearly red,cares to the contrary A The Company shall mean Washington Nabonal Insurance Company B Plan shall mean the welfare benefit plan of the Plan Sponsor a copy of this Plan m attached and labeled Article A and is hereby made a part of this agreement F10979D Page 1 of 6 PART IV THE INDIVIDUAL STOP LOSS PREMIUM Tbe rates used tO compute the first monthl~ Individual Stop Loss Premium for the Initial Agreement Period are set fortll below These rates shall apply until the end of the Initial Agreement Period unless changed by agreement b~tween the Plan Sponsor and thel Company dugng the Agreement period as a result of a change in the Plan For Subsequent Agreemeni, Pertods tbe mte~ used to compute each monthly Individual Stop I ess Premmm shall be those mutually agreed upon by tile Plan Sponsor and the Comp~'n~ A Premium Rate Covered Parse I Unit Month y Premmm Rate Employees $3 29 I Dependents $3 39 To compute the monthly Individual Stop Loss Premium the number of Covered Person Units covered under the Plan on the first da~ of that month m each category thown above must be multiplied by the Monthly Premium Rate shown opposite the categoo The monthly Individual Stop Loss Premmm shall be th~s product on the sum of these products depending on whether there IS one or more than one categorY shown PART V CONTINUATION AND TERMINATION Tins Agreement will continue m force during tile imtlal Agreement Per~od and during each Subsequent Agreement Period sub~ect to the Plan Sponsor s payment of plemmm at such rates as may be required b~, tile Company and subject to termination as ~ro~lded in Part VI or as set forth below This Agreemen~ shall term hate ~mmed ate y upon the occurrence of t se f rst of the following (a) mutual consent of the Plan Sponsor aid the Company (b d scontinnance of the Plan by tie Plan Sponsor c) any attempt by the Plan Sponsor to amend the Plan, without the prior written approve of t~e Company (d ad ud cat on of bankruptcy or ~solvency of the Plan Sponsor or (e) upon nonpayment of any premmm when due Tius Agreement may also be terminated by written not,ce of e~ther party to the other by registered mall but not less than thirty one days m advance of the termination date set o.t m ~uch written notice PART VI YEARLY ADDENDUM Within thirty doys after the Company s receipt of all Aggregate Loss data for the preceding Agreement Period the Company will issue and ellver to the Plan Spa ~sor an Addendum to this Agreement setting forth the Aggregate Stop Loss Premmm the Monthl D~duetlble Factors, and the minimum Aggregate Deductthie for the current Agreement Period Thru Addendum shall be sl~ed m duplicate by the Plan Sponsor and an executed copy returned to the Company lo the event the Plan ~.ponsor should refuse to accept such Addendum for this Agreement Period and fall to execute and deliver the smd Addendum and any additional Aggregaila Stop Loss Premium due to the Company by the thirtieth day after the date the Addendum m mailed to the Plan Sponsor, tbm entire Agreement will be deemed to have terminated at the close of the preceding Agreement Period, and the Company shall thereupon refund the Aggregate Stop Loss Premium paid for Agreement Pelflod and shall if the Individual Stop Loss Premium is greater also refund the difference between (a) the ind~vidual Sro Loss P~mium paid by the Plan Sponsor during thru Agreement Period and (b) the amount paid by the Company undi! the Individual Stop Loss Provision, Part II A in re~mburseme ~t of specified Individu~l Loss recurred by the Plan S anser uring this Agreement Period In the event of such deemed termination the Plan Spon~or hereby agrees that ,f (b) abPove ex ads (a) above the Plan Sponsor shall refund to the Company an amount equal to the excess of Ihe~r re~mbursemenV after the premium PART VII PI~AN (~HANOES The Plan Sponlor shall promptly furnish the Company with all proposed Plan amendments endorsements, or riders If any change m Plan if effected shall in the opinion of the Company increase the risk assumed by the Company the Company shall have the option of notifying the Plan Sponsor of (al all increase in the Monthly Deductible factors and the mm~mum Ag~egate Claim Deductible to be effective for the Agreement Period in which socb change become~ effective (b) an mcreas~ in the Individual Stop Loss Premium Rate aud the [nd~wdual Stop Loss Deductible to be effective for the remainder of tht Agreement Period m which such change becomes ef~'oct~ve F10979D Page I of Wtth regard to the Aggregate Stop Loss tile Company shall have no obbgat~on to make pa~,ment to tile Plan Sponsor until tile thirtieth day following the Plan Sponsor s sublmsslon to the Companx of ~11 Aggregate Loss data and all ~.[onthly Deductible [nformatlou tora particular Agleement Period W~th regard to the Indlvidual Stop Loss the Companx shall ha~e no obligation to make payment to the Phln Sponsor until the thirtieth day following the Plan Sponsor s submission to the Compauy of an~ data regarding an Individual Loss which has exceeded the Individual Deductible PART III THE AGGREGATE DEDUCTIBLE FORMULA The formula for and the factors used to compute the Aggregate Deductible for the In~tml Agreement Period are establmhed as of the Effective Date of this agreement The tormula for and the factors used to ~ompute tile Aggregate Deductible for any Subaequent Agreement Per.od shall be establmhed as described in Section D below of th~s Part The Aggregate C~mm Deductible shall be determined at the end of tile Agreement Period bv use of the follown~g formula method and factors unles~ re~med as set forth In Section D below of thru Part A Monthly Deductible Factor Covered Persou Ut~it l~ionthl,~ Deductible Factor Employee $106 ~8 Spouse $ 99 12 Child(ten) $ 62 70 Family $136 99 8(artn~g ~th tile f~rst month of the ~grcement Per~od tile number of Covered Person Units eo~ered under the Plan ou the first day of that month ~n each category shown above ~wll be mult~phad b~ the factor shown opposite ~l~e categow The Monthl~ Deductible amount shall be this product or the suln of the~e products depondmg on whether tbe~ ~s one or more than one catego~ ~hown ~xcept that (1 ~ m the event of a str~ke lockout or work stoppage ~aused by any d~sagreoment between an employer and all or cerLa~l~ persons covered Ullder fl~e Plan the number of Co~ered Person Un~ts nsod to coulpute the Monthly Deductible Amount ut the month ,mmedmtely p~ecedmg ~t~h str~ke Io~kout or work stoppage will be used to determine the Monthl~ D~duct~ble Amount for the month or months du~ng ~vh~ch the str~ke lockout or work s~oppage exmts (2) m the event of a reduction of Co~ered Person Un~t~ mgardle~ of the reason tbe Monthly Deductible a~ount shall reduce no more than 5% from the month ~mmed~ately preceding the one ~n which the mduct~on occurs and no more than 5~ additionally each month thereafter du~ng the continuance of the reduction Tbe sum of the first twelve Monthly Deductible amounts will be the Ag~gate ~ductible except that regardless of such actual to~l the mm~mum Aggregate Deductible amount shall not be less than 90% of the fi~t Monthl~ Deductible amount multiplied by twelve The above Monthly Deductible Facto~ and the minimnm A~regate Deductible shall apply uutd the end of tl~e Initial Ag~ement Period unless changed by agreement between the ~an Sponsor and the Company during the Ag~ement Period as a result of a change m the ~an For Sub.quant Ag~ement Periods the Monthly Deductible Factor and the mlmmum Aggmga~ Deductible wdl be de~rmh~ed by mutual agreement of the Plan Sponsor and the Company and set forth m an Addendum to thru Agreement signed by the part,es hereto If thru Stop Loss Agreement should terminate on any date other than the closing date of the Imt~al Ag~ement Period or of any Subsequent Agreement Per~od there will be no pro ration of the minimum Aggregate Deductible On the contraw the entire m~mmum Aggregate ~duct~ble or the total of Monthly Deductible amounts determined for such partial Agreement Per~od wln~lrever ~ greater wdl be applied to determine the Company's habN~y for any part~al Agreement Period F10979D Page 3 of 6 PART XIV PARTIES TO AGREEMENT ni between the Plan Sponsor and the Company and this Agreement shall not create any right or legal TIn~ Agreemeut ~s~o y XV OVERSIGHTS [t n uuderstood and sifteed that if failure to comply with sny terms of this A~reement is shown to be unintentional and the result of misunderstanding or oversight on the part of either the Plan Sponsor or Company both parties shall be restored to the positlous they would have occupied had not misunderstanding or oversight occurred XVl ARBITRATION All d~sputes between the parties to this Agreement upon which an amicable understanding cannot be reached may be decided by arbitration q~e Court of A~bJtrators, which is to be held in the city where the Home Office of the Plan Sponsor is domiciled shall consist of three 'arbitrators familiar with employee benefit plans One of the arbitrators shall be appointed by the Plan Sponsor, one by the Company and the third shall be selected by the first two appointees prior to the beginning of the arbitration Should the two arbitrators be unabia to agree upon the choice of a third the appointment shall b~ laft to the l~sidant or any Vice President of the Ameflcan Arbitration Association The arbitrators a~ empowared to declda all questions or issues and shall be free to reach their daeision by application of principles of equity and customary praetices of the insurance and reinsurance industrY rather than by strict application of all rules of evidence and law They shall decide by a majority of votes and there will be no right of appeal from their written decision The cost of arbitration including the fees of the arbitrators shall be borne by tile losing party unless the arbitrators shall decide otherwise IN WITNESS WIIEREOF the Plan Sponsor and the Company have by their respective officers caused this Agreement to be executed and delivered on the dates shown below replacing and superseding all prior agreements City Of 0eflT.01*l Washin~tonNationallnsuranceCompan¥ (Ilo rein called the Plan Sponsor) (Herein call~l the Company B~ By Title Title Date Date B~ By Title Title Date Date B', By q~tlc Title Date Date Paga 6 of 6 Flaq79D PART ~CIV PARTIES TO AGREEMENT Thiq Agreement ts Duly between the Plan Sponsor and tile Company and this Agreement shall not create any right or legal relation whatever between the Company and any covered person or beneficiary under the Plan Sponsor XV OVERSIGHTS It is understood and agreed that ~f failure to comply with any terms of this Agreement la shown to be unintentional and the result of misunderstanding or oversight on the part of e~ther the Plan Sponsor or Company both parties shall be restored to the poslt~ons they would have occupied had not mlsundetstending or oversight occurred XVI ARBITRATION All d~sputes between the patt~es to this Agreement upon which an amzcable understanding cannot be reached may be dec~ded by arbztraUon ['he Court of Arbitrators which ~s to be held ~n the c~ty where the Home Office of the Plan Sponsor is domiciled shall consist of three arbitrators famihar w~th employee benefit plans One of the arbztrators shall be appointed by the Plan Sponsor one by the Company and the third shall be selected by the first two appointees prior to the beginning of the arbitration Should the two arbitrators be unable to agree upon the choice of a third the appointment shall be left to the President or any Vice President of the American Arbitration A~ocmtion The arbitrators are empowered to decide all questions or ~s~ues and shall be free to reach their decision by application of principles of eqmty and customary penctlees of the insurance and reinsurance industry ratber than by strict apphcation of all rules of evidence and law They shall decide by a malorlty of votes and there will be no right of appeal from their written decision The cost of arbitration including the fees of the arbitrators shall be borne by the losing party unless the arbitrators shall dec,de otherwise IN WITNESS WIIEREOF the Plan Sponsor and the Company have by thmt respective officers caused this Agreement to be executed and dehvered on the dates shown below replacing and superseding all prior agreements CLty Of Denton Washington National Insurance Company (II, rem called the Plan Sponsor) (Here~n called the Company) T~tle Title Date Date llv By Title Title Date Date B', By Date Date Firlq79D Page 6 of 6 STOP-LOSS COVERAGE QUOTATION FOR: INDIVIDUAL AND AGGREGATE STOP-LOSS COVERKGE PLANSPONSOR City of Denton LOCATION Denton ~ Texas EFFECTI~ DATE 10/1/87 i~EIt OP CO~q~l~m~n P~-RSONS Employees 424 Dependent Unit~ 208 LOSSES FJ~IGIB~ FOR R~IMBIJRSEM.~Fr C1 i&P12/19. [] I&PI~/I§ [] DSR19~II2 [] DSR12115 ~ PAID INDI¥IDUAL ~1%)P LO$B [] Mod l [] Individual Deductible (Pe~ AIF~mment Period) $ 60,000 Indivtdpal Maximum Benefit I $ 1 Percentage of Reimbursement for Cl,im, m ExceSs of the Individual DedUctible 1OO AGGREGATE STOP LOSS Per Employee Unit $ 106,88 [] Medical [] Dental Per Spouse Unit $. 99 12 Monthly Deductible Factor Per Chi ld Unit $ bp_ 70 Per Family Unit $ Eet.(_m~ ~tod Aggregate Deductible (~nnual) $ Q4S.000 Estimated Minknnn~ Aggregate Doduct4ble (~nnval) $ 760.500 Maximum Rehnbursmnent Under the Agreement 2S0,000 Pee Agreement Period $ Percentage of Reimbursement for C!n(~n m Excess of the Aggregate I)eductible 100 % PREMIUM Aggregate Stop. Lose Premium ~Payable Annually in Advance) $ 9.07 Individual Stop-Leee Preminmm Monthly Rate per Covered Person (Payable Monthly in Advance) Employees $ 3. Dependents $ 3.39 Estimated Annual Individual Stop. Loss Prend-m $ 25.20 Est(m~t~l Total ~nnnel Stot~Loee Premium $ 34.276 LuasnlnClcon national' IN~UI~NCI~' COMFYkNY JOHN S BREW'TON Regional Groul) Manager ROBERT M DICKSON Regional Account Executive ROSA BYERS Group Serwce ReDresentat~ve LARRY A FALDET Associate Groul3 Manager TIMOTHY P HENRIKSEN Group Sales Rel)resantat~ve DEREK S MARSH GrouD Rel)resentat~ve Park Central II - Suite 520 7540 LBJ Freeway October 6, 1987 Dallas Texas 75251 2141233 9894 Ms Nedra White Insurance Dept City of Denton 324 E McKtnney Denton, TX 76201 Dear Nedra Attached ts a completed master application for group life and AD&D along with a suppllment to the application which covers mental illness Also attached is a new replacement page describing the group life and AD&D Rest assured that Washington National will service your employees in a manner which will warrant your continued confidence S~ely yours, , ~ ~ S Brewton -~- T-~ ~gzona] Group Manager ~ ~ ~ ~ ~ Eveneton, IIIInole 80~01 · A VVeihlngton NitJofll! ¢orlx)ritlon/=lnlnclil Berrie Comp&ny schedule of benefits and/or cost LIFE AND AD&D INSURANCE CLASS AMOUNT All Employees Amount of coverage one time annual one time annual earning rounded to the next hlghest$1,O00 RATES CLASs PREMIUM FOR LIFE AND AD&D All Employees $ 2~ per $1,000 Life & AD&D coverage Is tn compliance with the new ADEA laws and coverge Is as follows Active Employees under age 70 ix Annual Earnings Reduction to 65% at age 70 Reduction to 45% at age 75 Reduction to 30% at age 80 City of Denton October 6, 1987 wmmnlno:on nm:lonmm · (. IN~U~(~NC[ COM~NY MASTER APPLICATION FOR GROUP INSURANCE made to WASHINGTON NATIONAL INSURANCE COMPANY, EVANSTON, ILLINOIS 90~01 Full Lngll Nlllm OI PnRIomed INllk~ohter ~tt_v nf n~ntnn Denton ~ Texas zm~ ~ ~ Cl~ , Au~ R~n~ ~mm el Bu~ m O~on~ C~y Employees Polk)yholdor Contribution EmFIoyee Premium Lite 1 DelNmdeflt Pramlum Life 90 Hcalth Waiting Period II. [] 1M o~ Month After of Employment I-I 1at o~ Month After Date of Empioymeflt [] Other Waiting Padod [] IS [] 18 NOT applicable on polloy effective (kite INDICATE BELOW ALL OF THE COVERAGE8 FOR WHICH APPLICATION 18 MADE I?t Lite Iniurm~e I'! Bilk) Medk)M with [] Dentil Exlmnle Supplemontel Major MedlMI ITl Aoeldentel Death, Olmmborment [] Comprehen,.Ive Major Medical f-I Vlilon Care [] Dependent Lite r-I [] Preledptlon Drug [] Disability Inoome I'1 I-I DESCRIPTION OF ELIGIBLE CLA881FICATION8 AND BENEFIT LEVEL8 ARE DETAILED ON THE SCHEDULE OF BENEFITE PAGE CONTAINED IN THE WASHINGTON NATIONAL PROPOSAL DATED , Tho pmposacl efteoUv® date requeMed for this grout) Inaumnca 18 11 / 1/87 The mJm of $ ham been tendered as a clepoeit to be applied toward prm~lum due I UNDEROTAND THAT THE POLICY(lES) WILL NOT BECOME EFFECTIVE UNLESS AND UNTIL WASHINGTON NATIONAL,INSURANCE COMPANY'8 HOME OFFICE APPROVE8 THIS APPLICATION 81gnarl M this d~y of 19 81gnuture of WItcasa Authorized Biprsaentotlva SUP lENT TO MASTER APr'L. JATION WASHINGTON NATIONAL INSURANCE COMPANY State law r~lu~ree that the Company offer each Policyholder certain coverage(s) which the Pohcyholder may e~ther accept or reject A Policyholder who accepts tlus coverage must complete and s~gn section I of tlus form A policyholdee who rejects it muat sign section II I In consideration of the additwnal premium reqmred if any I request that the Company add the optional coverage(s) liet~i below to my new or revised group health pohcy [] Mental Illness Tlus adchtional coverage shall become effective on the date the pohcy is effective d it is a new policy or the date of the revision wluch caused tlus optwnal coverage to be offered if the pohcy Is being revised Date S~gnature of Pohcyholder II I do not want the adcht~onal optional coverage(s) offered above Date Signature of Policyholder If this coverage is being offered because tlus is a new Policyholder this form shall be attached to and made a part of the Master Application and subrmtted with the Master Apphcat~on If tius coverage is being offered because aa existing policy Is being revised this form shall be considered a supplement to the ongtnal Master Apphcat~on the Pohcyholder has already subnutted (9 86) F15767 TX schedule of benefits and/or cost LIFE AND AD&D INSURANCE CLASS AMOUNT AIl Employees Amount of coverage one time annual one time annua! earning rounded to the next hlghest$1,O00 RATES CLASS PREMIUM FOR LIFE AND AD&D All Employees $ 21 per $1,000 Llfe& AD&D coverage ls In compliance with the new ADEA laws and coverge ls as follows Actxve Employees under age 70 ix Annual Earnings Reduction to 65% at age 70 Reduction to 45% at age 75 Reduction to 30% at age 80 City of Denton October 6, 1987 uJmmnmnm:on nmcmonmm · <,. MASTER APPLICATION FOR GROUP INBURANCE made lo WAEHINOTON NATIONAL INEURANCE COMPANY, EVANETON, ILLINOIE ~0201 Full Legal N~me of I~ I~lioyhMder City ~f n.ntnn L~M 8t~t Addr~ 324 ~K~ nney Cl~ Denton ~ Texas Zip C~ ~ Au~o~ R~~ N.~m of B~ln~ ~ O~lnl,ll~ C~[y EmDlovees Pol~h~r C~Mbul~n Em~oy~ P~m LI~ 1~0 ~ H~I~ ~ D~nt P~lum LI~ ~ H~l~ ~ WlltlnE hdod I~. I'1 lit of Month A/tlr of Eml)k)yment [] lit of Month Alter Dele of Employment [] Othe- Wilting Peri,el I'1 18 [] IE NOT applioabio on I~ltey e#eetl~e INDICATE BELOW ALL OF THE COVERAGE8 FOR WHICH APPLICATION 18 MADE [~ Life Inlumnue [] Bllio Midioll with [] Dentil Expenea Eupptementil MlJor MedlMI I~1 A~ldentil Death, Diomemberment [] Comprehenalve Major Medical [] Vlalon C~re [] Dependent Life [] [] Preeadptten Drag [] DleaMIIty Inomne [] [] DEECRII~ION OF ELIGIBLE CLABBIFICATIONE AND BENEFIT LEVELE ARE DETAILED ON THE ECHEDULE OF BENEFITS' PAGE CONTAINED IN THE WAaHINOTON NATIONAL PROPOEAL DATED , The propoNd effeeflve dire requeited for thla group Inaumrme la 11 / 1/87 The eum of $ hie been tendered Il a dlp(mB lo be appliod towlrd premium due I UNDEROTAND THAT THE POLICY(leS) WILL NOT BECOME EFFECTIVE UNLEEE AND UNTIL WAEHINGTON NATIONAl. INEURANCB COMPANY'E HOME OFFICE APPROVEB THIB APPLICATION ElgnmJ It thio dly of 19 Elgnitum of Wltnm Authodz~J R~pmeantetlve ?L..MENT TO MASTER APP ,iCATION WASHINGTON NATIONAL INSURANCE COMPANY $~ate law requires that the Company offer each Policyholder certain coverageis) which the Pohcyholder may either accept or reject A Policyholder who accepts this coverage must complete and sign section I of this form A Policyholder who rejects it must sign section II I In consideration of the additional premium required if any I request that the Company add the optional coverage(s) hsted below to my new or revised group health policy [] Mental Illness Tbas adchtlonal coverage shall become effective on I the date the pohcy ~s effective ~f it ~s a new policy or 2 the date of the revision which caused this optional coverage to be offered ~f the pohcy ~s being revised Date Signature of Pohcyholder II I do not want the adcht~onal optional coverage(si offered above Date Signature of Policyholder If tlus coverage is being offered because this is a new Policyholder this form shall be attached to and made a part of the Master Apphcation and subrmtted w~th the Master Application If this coverage ~s being offered because an ex,sting policy ~s being revised this form shall be considered a supplement to the original ~laster Apphca~ion the Pohcyholder has already submitted F15767 ~9 $6) TX u asnlnc ton n a I o n a r INSURANCE COMPANY INDIVIDUAL STOP-LOSS AND AGGREGATE STOP-LOSS AGREEMENT EFFECTIVE DATE November 1, 1987 THE PLAN SI~ONSOR ¢1 ty of Denton STATE OF DELIVERY Texas INITIAL AGREEMENT PERIOD Beg~mung on November I 198? Closing on October 31 ', 1988 SUBSEQUE .N~ AGREEMENT PERIOD Beg~nmng on November 1 and Closing on October 31 of each year thpreafter during the continuance of tins Agreement AGGREGATE STOP LOSS PREMIUM The amount shown on the Addendum under PREMIUMS vnll be payableon N~,vember l, 1987 and Annually on November 1 of each year therl after until tins Agreement is amended to rewse the prermum INDIVIDUAl STOP LOSS PREMIUM (See Part IV ) Since the Plan Sponsor has eatabhshed a welfare benefit plan for payment of certain ehg~ble expenses on behalf of all pe 'sons for whom contributing employers, accepted by the Plan Sponsor for coverage under tins Plan, are reqm ~d to make contnbutmns to the "Plan )onsor's Welfare Benefit Plan" and all such persons' ehlpble dependents, and Since the Planl Sponsor m desirous of hnutmg that port~on of their hainhty under tins welfare benefit plan winch exceeds itbe Aggregate Deductible amount and the Individual Deductible Amount and Since Wasinng~on Natmnal Insurance Company m wlllmg to reimburse the Plan Sponsor for a certmn portmn of that hainht~, The Plan Sponsor and Wasinngton Natmnal mutually agree to the following terms and con&tmns PART I DEFINITIONS Where the fell~vnng words and phrases appear in tins Agreement, they shall have the respective meamng set forth below ualass their context clearly indicates to the contrary A Comp~ ny shall mean Wasinngton National Insurance Company B Plan s*, ~ mean the welfare benefit plan of the Plan Sponsor, a copy of tins Plan is attached and labele¢ Article A and ~s hereby made a part of tins Agreement The pr )wsions of Article A (or Temporary Article A if a formal Plan Document m unavadable) that are pel ~nent to deterrmne winch mdi~duals are to be covered under the Plan, the tnne period they w~ b~ ~or~ und~ the P~m and the behests for winch they ~ eove~ u.~? ~? ~),~ ~ cons~d ~d pertinent to tins Stop Loss Agreement The Plan Sponsor agrees ~na~ iA) ~m aanmu creat~ [ by Art~cla A (or temporary Arbcla A if a formal Plan Document ~s unavailable) belong only to the Plan Sponsor, and (B) Washington National s hainhty shall be hrmted to the reunbursement the ~ the terms of tins F16526 Page 1 of 7 C Aggregate Deductible shall mean for the Imt~al Agreement Permd tho amount deternnned at the close of the Imtlal Agreement Period by the use of the Aggregate Deductible Formula set forth ~n Part III of tins Agreement for a Subsequent Agreement Per~od, the amount deterrmned at the close of that Subsequent Agreement Per~od by the use of the Aggregate Deductible Formula set forth in Part III or by the use of the rewsed Aggregate Deductible Formula then in effect for that Subsequent Agreement Period D Individual Deductible shall mean the amount of Ind~wdual Loss shown as the Deductible on the Addendum under Ind~wdual Stop Loss Specifications winch must be paid under the Plan m any one Agreement Per~od for any one covered lnd~wdual before the Company wdl re~mburee the Plan Sponsor as set forth in Part II E Individual Loss for each Agreement Per~od shall mean only such amounts winch were incurred by any one person covered under the Plan and actually pa~d by the Plan Sponsor in cash w~tinn the per~od of time indicated in the Addendum under Losses Ehg~ble for Re~mbureemant ~n payment of the benefits specified ~n the Plan that are pa~d to one particular person, or to Ins or her assignees m settlement of the claim made by that person Amounts are considered to be incurred on those days the service(s) or the supply(lee) are prowded If ~ncluded under tIns Agreement, D~sainhty In come Benefit amounts are considered to be ~ncurred during the days a Dlsainhty Income Benefit ~s payable under the Plan In no event shall Ind~wdual Loss include amounts prod after the tom. nation of the Agreement F Aggregate Loss for each Agreement Period shall mean (1) such amounts winch were incurred by all persons covered under the Plan and actually paid by the Plan Sponsor in cash wltInn the period of time indicated In the Addendum under Losses Ehg~ble for Reimbursement in payment of the benefits specified ~n the Plan to all persons covered under the Plan or to their ass~gneee m settle ment of claims made by such persons, (2) nunus those amounts ehglble for re~mbureement under the Ind~wdual Stop Loss prowslon of tins Agreement and (3) plus an amount equal to the Ind~wd ual Stop Loss Prenuum payable to the Company by the Plan Sponsor Amounts are considered to be ~ncurred on those days the serwce(s) or the supphes(les) are pro vlded If included under tins Agreement Dmainhty Income amounts are considered to be incurred during the days D~sab~hty Income is payable under the Plan In no event shall Aggregate Loss ~n clude amounts paid after the ternnnat~on of the Agreement G In&wdual Loss or Aggregate Loss shall at no time ~nclude extra contractual damages of any nature compensatory damages or any putative damages assessed age~nst the Plan Sponsor and the Company shall not be hable for any such damages The Plan Sponsor hereby agrees to hold harmless the Company from any such damages assessed agmnst the Plan Sponsor and also agrees that such damages w~ll not be used to satisfy any Ind~wdual Loss Deductible or Aggregate Loss Deductible H Amounts actually paid shall mean the checks or drafts issued for payment of Indlwdual Loss or Aggregate Loss and honored but it shall not mean court cost penalties, interest upon Judgments or investigation expense adjustment expense or legal expense The date of issue of each check or draft shall be considered the date of payment I Monthly Deductible Information shall mean that reformation needed to compute the Monthly De ductible amount as set forth m Part III of tIns Agreement or any rews~on of Part III winch is then ~n force PART II INDIVIDUAL STOP LOSS AND AGGREGATE STOP LOSS PROVISION The Company in cons~deration of the payment by the Plan Sponsor of the Ind~wdual Stop Loss Prermum and the Aggregate Stop Loss Prennum reqmred by the Company HEREBY AGREES TO REIMBURSE the Plan Sponsor for A The percent shown on the Addendum under the Ind~wdual Stop Loss Specifications of the amount by winch the Indlwdual Loss incurred by the Plan Sponsor in settlement of a claim for any one covered lndlwdual exceeds the Ind~wdual Deductible amount during a particular Agree ment Period subject to an Ind~wdual Maximum Benefit for any one lndlwdual of the amount shown on the Addendum under the Indlwdual Stop Loss Specifications, and B The percent shown on the Addendum under the Aggregate Stop Loss Specifications of the amount by winch the Aggregate Loss ~ncurred by the Plan Sponsor exceeds the Aggregate De duct~ble amount during each separate Agreement Period, subject to the maximum reimbursement as shown on the Addendum under the Aggregate Stop Loss Speclflcatmns F16526 Page 2 of 7 The Company, at its own electron and expense, shall have the right to participate with the Plan Sponsor in the defense or appeal of any action, suit, or procee&ng m wfuch it may, m its judgment, become involved The Company shah have no obhgation to defend the Plan Sponsor m any action arising under the Plan Sponsor s welfare benefit plan With regard to ~he AGGREGATE STOP LOSS the Company shall have no obhgatlon to make payment to the Plan Sponsor untd the tlurtieth day following the Plan Sponsor s subnnssion of a claim to the Company contaimng all necessary Aggregate Loss data and aH Monthly Deductible Information for a particular Agreement Per~0d With regard to the INDIVIDUAL STOP LOSS, the Company shall have no obhgatlon to make payment to the Plan Sponsor until the tlurtieth day following the Plan Sponsor's subnnss~on of a claim to the Company contalmng any necessary data regarchng an In&vidual Loss wluch has exceeded the Individual Deductible If the Addendum md~eates Actively at Work is required then In~hv~dual Loss or Aggregate Loss as used hereto, wdl not include amounts of loss ~ncurred by any person covered under the Plan or loss pa~d for by the Plan Sponsor unless the covered person was actively at work on the later of i The effective date of tins Agreement or 2 The f~rst day the ~nchwdual ~s ehg~ble for coverage under the Plan For a covered person not actively at work on the later of these two dates, only those losses wluch were incurred by such person on or after the date the covered person is again actively at work wdl be included under the meamng of Ind~wdual Loss or Aggregate Loss An employee is actively at work if he or she is working full t~me at fus or her regular job or ~f the date m queet~on ~s not a day when the employee ~s reqmred to work then the employee must be able to work full time at the regular place of employment A dependent or a retired person is actively at work if on the date m question he or she is not hospital confined for at least one day lmmedmtely prior to that date and is able to perform Ins or her normal duties and act~vit~es PART III THE AGGREGATE DEDUCTIBLE FORMULA The formula forland the factors used to compute the AGGREGATE DEDUCTIBLE for the Imtial Agree- ment Period arelestabhshed as of the Effective Date of ttus Agreement The formula for and the factors used to compute the AGGREGATE DEDUCTIBLE for any Subsequent Agreement Period shall be estebhshed as described in Section C below of tlus Part The AGGREGATE DEDUCTIBLE shah be deternnned at the end of the Agreement Per~od by use of the following formula method and factors unless rewsed as set forth in Section C below of tIns Part The factors are shown on the Addendum under MONTHLY DEDUCTIBLE FACTORS They include the COVERED BENEFIT COVERED PERSON UNIT and the MONTHLY DEDUCTIBLE FACTOR A Starting w~th the first month of the Agreement Period the number of COVERED PERSON UNITS covered under the Plan on the first day of that month m each category shown on the Addendum will be multlphed by the factor shown opposite the category The Monthly Deductible amount shah be tlus product or the sum of these products depen&ng on whether there is one or more than one category shown except that (1) m the event of a str~ke, lockout, or work stoppage caused by any disagreement between an employer and all or certam persons covered under the Plan the number of COVERED PERSON UNITS used to compute the Monthly Deductible Amount in the month lmmechately preceding sucl~ strike, lockout, or work stoppage w~H be used to deterwane the Monthly Deductible amount for the month or months during which the strike, lockout or work stoppage emsts (2) in tke event of a reduction of COVERED PERSON UNITS, regardless of the reason the Monthly Deductible amount shall reduce no more than 5% from the month ~mmed~ately preceding the one in winch the reduction occurs and no more than 5% ad&tlonally each month thereafter during the continuance of the reduction F16526 Page3of7 B The sum of the first twelve Monthly Deductible amounts w~ll be the AGGREGATE DEDUCT IBLE except that regardless of such actual total, the nummum AGGREGATE DEDUCTIBLE amount shall not be less than 90% of the first Monthly Deductible amount multlphed by twelve C The MONTHLY DEDUCTIBLE FACTORS and the nummum AGGREGATE DEDUCTIBLE shall apply until the end of the Imtlai Agreement Per~od unless changed by agreement between the Plan Sponsor and the Company during the Agreement Period as a result of a change ~n the Plan For Subsequent Agreement Periods the MONTHLY DEDUCTIBLE FACTOR and the rmmmum AGGREGATE DEDUCTIBLE will be deternuned by mutual agreement between the Plan Sponsor and the Company and set forth m an Addendum to tins Agreement signed by the partxes hereto D If tins Stop Loss Agreement should terrmnate on any date other than the closing date of the Imtml Agreement Permd or of any Subsequent Agreement Per~od there w~ll be no pro ration of the nnmmum AGGREGATE DEDUCTIBLE On the contrary, the entire nnmmum AGGRE GATE DEDUCTIBLE or the total of Monthly Deduct~bla amounts deternuned for such partml Agreement Period winchever is greater wall be apphed to deternnne the Company's hainhty for any partial Agreement Per~od PART IV THE INDIVIDUAL STOP LOSS PREMIUM The rates used to compute the first monthly Ind~wduai Stop Loss Prennum for the Imt~ai Agreement Period are set forth on the Addendum These rates shall apply untd the end of the Imtiai Agreement Period, unless changed by mutual agreement between the Plan Sponsor and the Company dunng the Agreement Period as a result of a change m the Plan For Subsequent Agreement Per~ods the rates used to compute each monthly Inchwdual Stop Loss Prenuum shall be those mutually agreed upon by the Plan Sponsor and the Company The MONTHLY PREMIUM RATE, COVERED PERSON UNIT and COVERED BENEFIT are shown on the Addendum under PREMIUMS To compute the monthly Ind~wdual Stop-Loss Prennum the number of COVERED PERSON UNITS covered under the Plan on the first day of that month ~n each category shown on the Addendum must be multiphed by the MONTHLY PREMIUM RATE shown opposite the category The monthly Inchwduai Stop-Loss Prennum shall be tins product or the sum of these products dependmg on whether there ~s one or more than one category shown PART V CONTINUATION AND TERMINATION Tins Agreement will continue ~n force during the Imt~al Agreement Per~od and during each Subsequent Agreement Period subject to the Plan Sponsor s payment of prermum, at such rates as may be reqmred by the Company and subject to termination as provided m Part VI or as set forth below Tins Agreement shall ternnnate immediately upon the occurrence of the first of the following (a) mutual consent by the Plan Sponsor and the Company, (b) d~scontmuance of the Plan by the Plan Sponsor {c) any attempt by the Plan Sponsor to amend the Plan w~thout the prior written approval of the Company, Id) adjuchcation of bankruptcy or meelvency of the Plan Sponsor (e) upon nonpayment of any prennum when due or (i~ dalegat~on of the Plan Sponsor's dut~ee under tins Agreement to a Tinrd Party Admunstrator/Clmms Adnnmstrator winch has not been approved by the Company Tins Agreement may also be ternnnated by written notice of e~ther party to the other by registered mad but not less than tinrty one days in advance of the terrmnatlon date set out in such wrxtten notxce PART VI YEARLY ADDENDUM Wltinn tinrty days after the Company s receipt of all the Loss data for the prece&ng Agreement Period, xn the format reqmred by the Company, the Company will xssue and dehver to the Plan Sponsor a completed Addendum to tins Agreement ~nchcat~ng the terms for the renewal Agreement Per~od Tins Addendum shall be signed in duphcate by the Plan Sponsor and an executed copy returned to the Company If the Plan Sponsor should refuse to accept such Addendum for this Agreement Period and fail to execute and dehver the smd Addendum and any adcht~onal prennums due to the Company by the tlnrtleth day after the date the Addendum ~s mailed to the Plan Sponsor tins entire Agreement will be deemed to have ternnnated at the close of the preceding Agreement Per~od and the Company shall thereupon refund the Prennums prod for tins Agreement Per~od The Plan Sponsor agrees to return any clmms amounts reimbursed for tins Agreement Per~od F16526 Page 4 of 7 PART VII PLAN CHANGES The Plan SponSor shah promptly furmeh the Company vnth all proposed Plan amendments endorsements, or riders If any change m the Plan, ~f effected, shall, m the oplmon of the Company, increase the r~sk assumed by the Company, the Company shall have the option of notifying the Plan Sponsor of ~al an increase m the MONTHLY DEDUCTIBLE FACTORS and the nummum Aggregate Clmm Deductible to be effective for the Agreement Period m winch such change becomes effective and Ib~ an increase m the In&vldual Stop-Loss Prermum Rate and the In&v~dual Stop Loss Deductible to be effective for the remmnder of the Agreement Period m winch such change becomes effective Upon the written agreement of the Plan Sponsor to the increases an executed copy of such agreement, endorsement or r~der shall be returned to the Company w~tinn 30 days of the effective date and shall be made a part of Article A and thereafter be considered as a part of the Plan If written acceptance ~s not prowded to the Company w~tlun thirty days of notification from the Company, the change will not be effective as part of tins Agreement until the first of the month fuHowing the return of the written acceptance If any change m the Plan shall not, m the oplmon of the Company, increase the risk assumed by the Company if that change were to become effective the Company shall so notdy the Plan Sponsor If the Plan Sponsor sends an executed copy of this amendment, endorsement or rider to the Company for attachment to Article A, the Plan wall be deemed so changed as of the effective date shown on such amendment endorsement, or r~der PART VIII DUTIES OF THE PLAN SPONSOR The part~es agree that the Plan Sponsor shall have the following dut~ee and obhgat~ons A The Plan Sponsor shall be responsible for au&ting and calculating and paying all claims preparation of penodac reports lnclu&ng but not hnnted to monthly reports of the number of COVERED PERSON UNITS, by category and shall maintain and make avadable to the Company, at all t~mee such information as the Company may reasonably require for proof of payment of In&wdual Loss and Aggregate Loss by the Plan Sponsor B The Plan Sponsor wdl maintain a record of any and aH amounts paid ~n excess of payments reqmred by the provisions of the Plan C The Plan Sponsor agrees to pay all clmms w~tlun thirty days of the time that proofs of claims are adequate to the extent that payment can properly be made Fadure of the Plan Sponsor to pay such clmms w~thm the t~me lnmt (tlurty days) shall cause any such claim to be excluded from counting toward the satisfaction of any Ind~wdual Deductible or AGGREGATE DEDUCTIBLE amount D The Plan Sponsor agrees to pay proper clmms made by persons covered under tins Plan and that funds is necessary will be prowded for tins purpose Fadure of the Plan Sponsor to prowde funds when needed for such tnnely payment vnll cause the Agreement to ~mmed~ately lapse the Grace Permd wdl be considered satisfied, and the AGGREGATE DEDUCTIBLE and any Individual Deductible will be considered as not satisfied E The Plan Sponsor shall prepare and subnnt to the Company on a monthly bas~s a report of the total of aH claims prod during such month and a report of the total number of COVERED PERSON UNITS In each category deecnbed on the Addendum under the PREMIUM section and the MONTHLY DEDUCTIBLE FACTOR section The Plan Sponsor shall mainte~n such other records as are reasonably reqmred by the Company and shall furmsh them to the Company upon request The part~es also agree that the Plan Sponsor may retain a Tlnrd Party Adnumstrator/Cla~ms Adnnmstrator that has been approved by the Company to perform any or all of the above hsted duties If the Plan Sponsor delegates dut~s under tins Agreement to an approved Tinrd Party Adnumstrator/Clmms,~A. dnum??tor .the Plan Sponsor Shall subrmt the Agreement between ~t and the Tlurd Party Adnumstrator/t~lmms Aanums~ra tor to the Company This Tlnrd Party Adnnmstrator/Clmms Adrmmstrator shall be retained and compen sated for administrat~ve and claims paying serwces by the Plan Sponsor and shall not be considered as the agent of the Company for adnnmstrat~ve and claims paying services Should the Plan Sponsor desire to change Tinrd Party Adnumstrator/Clmms Adnumstrator winle this Agreement ~s in effect the new Tinrd Party Adnumstrator/Clmms Admimstrator must be approved by the Company and the Agreement w~th the new Tlurd Party Adnumstrator/Cla~ms Adrrnmstrator must be subnutted to the Company F16526 Page 5 of 7 PART IX TAXES The Company shall be held harmless by the Plan Sponsor from any state prermum taxes which the Company may mcur wuth respect to cia, ms paid (as distinct from the premiums paid to the Company by the Plan Sponsor) under the Plan Sponsor s Plan and the Plan Sponsor shah reimburse the Company annually for such tax expense, if any, as determined by the Company PART X PAYMENT OF PREMIUMS The Plan Sponsor shall remit all premiums as required by the Company to the Company at its Home Office m Evanston llhno~s Except as otherwise prowded under the Section ent, tled 'Grace Period,' this Agreement shall automatically terminate ~f any premium is not paid when due PART XI GRACE PERIOD A grace pormd of thirty one (31) days w~thout interest charge is allowed for the payment of every premium after tho f~rst PART XII DATA The Plan Sponsor shall maintmn such records as are reasonably required by the Company and shah furmsh to tho Company all pertinent data with respect to persons covered under the Plan The Company shah have the right to ~nspect the records of the Plan Sponsor at reasonable intervals dunng business hours for any purpose relating to this Agreement PART XlII MODIFICATION Upon written request by the Plan Sponsor and vnth the consent of the Company this Agreement may be modified m writing vnthout not~ce to or consent by any persons covered under this Plan Only the President, a Vice President, or the Secretary of the Company ~s authorized to modify this Agreement No other person has the anthonty to change this Agreement or to waive any of ~ts proxuslons PART XIV PARTIES TO AGREEMENT This Agreement is only between the Plan Sponsor and the Company and this Agreement shah not create any right or legal relataon whatever between the Company and any covered person or beneficiary under the Plan Sponsor's Welfare Plan PART XV OVER REIMBURSEMENT Tho Plan Sponsor agrees that should the Company over re~mburee Aggregate Losses due either to clencai error or lack of information on Ind~wduai Loee(ee) such over rexmbureement vail be credited towards any re- imbureoments due to Indiwdual Loss(es) The Plan Sponsor further agrees that should such over reimburse- ment exceed any reunbursements due to Indlwdual Lossiee), this excess wdl be refunded to the Company PART XVI ARBITRATION AH disputes between the part~ee to this Agreement upon winch an amicable understanding cannot be reached may be decided by arb, tratlon The Court of Arhitretors which is to be held ~n the city where the Home Office of the Plan Sponsor is domicded, shah consist of three arhitrators farmhar with employee benefit plans One of tho arhitrators shall bo appointed by the Plan Sponsor one by the Company and the third shah be selected by the frrst two appointees prior to the beginmng of the arbitration Should the two arbitrators be unable to agree upon the choice of a third the appointment shall be left to the President or any Vice Preeldent of the American Arhitration Association The arhitrators are empowered to decide all questions or issues and shah be free to reach their decks,on by apphcatlon of pr,nc~ples of equity and customary practices of the insurance and reinsurance industry rather than by strict apphcatlon of aH rules of e~dence and law They shah dec~de by a majority of votes and there vnll be no r,ght of appeal from their written decision The cost of arhitratlon, including the fees of the arhitrators shall be borne by the losing party unless the arhitrators shah dec~de otherw~ee F16526 Page6of7 IN WITNESS WHEREOF, the Plan Sponsor and the Company have by their respective ofhcers caused tins Agreement to be executed and dehvered on the dates shown below replacing and superse&ng all prior agreements C1 ty of Denton Wssh,n~ion NAt, onsl Insurance Company By g - . , ~ ~tle ~~ ~tle Sen~°r V~ce Pressmen' Date /--~/~ Date J~ua~ 19, 1988 Page 7 of 7 F16526 INDIVIDUAL STOP-LOSS AND AGGREGATE STOP-LOSS ADDENDUM 1 PLAN SPONSOR FullLegalName ~ ~ty of Denton StreetAdd~ss 324 E McKinney City State and Zlp Code Denton, Texas 76201 2 AGREEMENT EFFECTIVE DATE 11-1-87 ADDENDUM EFFECTIVE DATE 11 - 1-87 3 Aggregate Stop Loss Specificat~ns Mlmmum , Maximum Deductible $ 760,500 Percent 100 % Relmbureement $ 1,000,000 4 Indiwdual Stop Loss Specifications Max2mum Deductibles 60,000 Percent 100 % BenefitS 250,000 5 COVERED BENEFITS a INDI¥IDUAL STOP LOSS b AGGREGATE STOP LOSS ~ Medical [] Medical [] Dental [] Vm~on [] [] RX/Drugs [] Dmainhty Income 6 LOSSES ELIGIBLE FOR REIMBURSEMENT a [] I&P 12/12 winch means the Losses were Incurred and Paid wtinn the Agreement permd for the Imtial Agreement Period For subsequent Agreement Periods, Paid w, tinn the Agreement Period and Incurred on or after effective date of the Agreement Actively at work m reqmred b [] I&P 12/15 winch means the Losses were Incurred vntinn each Agreement Period and Prod wltinn that Agreement Period plus the 3 months follovnng the end of that Agreement Period Actively at work Is reqmred c [] DSR 12/12 winch means the Losses were Incurred and Prod vntinn the Agreement Period for the Initml Agreement Period For subsequent Agreement Periods, Prod w~tinn the Agreament Period and Incurred on or after effective date of the Agreement d [] DSR 12/15 winch means the Losses were Incurred vntinn each Agreement Period and Paid witinn that Agreement Period plus the 3 months following the end of that Agreement Pened e [] PAID winch means the Losses were prod vntinn each Agreement Period Imtial Agreement Period includes Losses winch were Incurred, at most, 60 days prior to the effective date of tins Agreement Losses for subsequent Agreement Periods must have been Incurred on or after the effective date F16529 over (1 87) 7 MONTHLY DEDUCTIBLE FACTORS (USED TO COMPUTE THE AGGREGATE DEDUCTIBLEt COVERED COVERED PERSON MONTHLY BENEFIT UNIT DEDUCTIBLE FACTOR Medlcal Employee $106 88 Medical Spouse 99 12 Medlcal4 Chi ld(ren) 62 70 Medical Famlly 136 99 8 PREMIUMS a Aggregate Stop Loss $ 9 ~075 (Annual) b Indiwdual Stop-Loss COVERED COVERED MONTHLY BENEFIT UNIT PREMIUM RATE ~ Employee $:~ z~ Medical Dependent 3 39 9 Agreement Period to winch tins Addendum is apphcable Begins November 1st 19 87 andEnds October 31st 19. 88 If the effective date of this Addendum is after the beginmng of the Agreement Period this Addendum wffi replace and supersede any other Addendum for the same Agreement Penod for the time penod beginning w~th the effective date of this Addendum and ending w~th the end of the Agreement Period 10 Full Legal name and address of Third Party Adnumstrator/Claun Admimstrator Coordinated Benefits Systems [] None 6301 Gaston Ave, Suite 550 Dallas. Texas 75214 City of Denton PLAN SPONSOR WASHINIG~3N ~TIONAL INSURANCE COMPANY Signature Signature ~. ~~/~'~ Sen,or V,ce Pres,de,t Signed at Da~- Signed at Date F16529 (1 87] AMENDMENT ~lt~ of The Company and Den,;oil (Plan Sponsor} agree that effective on _ 11 / 1/87 the following will be added to and made part of the Individual Stop Loss Agreement Notwithstanding anything in the Agreement for the contrary, amounts actually paid by the Plan Sponsor in payment of benefits specified in the Plan for purposes of calculating Loss, shall not include the following 1 Benefits covered by any Workers' Compensation or Occupational Disease Law whether or not such pohcy iS in force, 2 Benefits which are not ehglble expenses under the terms of the Plan 3 Benefits paid under the Plan which are in excess of usual and customary charges for the locahty where admlmstered, 4 Benefits paid under the Plan for any Employee or Dependent whose evidence of good health as a Late Apphcant (as defined by Washington National Insurance Companyl is not satisfactory to Washington National, 5 Benefits paid for charges or treatment not required because of an accidental mlury or illness or not necessary to the care or treatment of such accidental m]ury or illness, 6 Benefits paid for charges or treatment not recommended and approved by a physician or practitioner whose inclusion in the term "physician" is required by law, ? Benefits paid under the Plan winch would not have been paid if benefits had been coordinated under the provisions of the National Association of Insurance Commissioners Model COB Gtndehnes as amended from time to time, 8 Benefits paid for losses winch are due to war or any act of war whether declared or undeclared, 9 Benefits paid for treatment for cosmetic purposes or for cosmetic surgery Except cosmetic treat ment or surgery due solely to a An accidental bodily lnlury winch occurred while the individual was covered under the plan, or b Surgical removal of all or part of the breast tissue as a result of an illness or c Correct a congemtal birth defect of an individual who was covered under the Plan on the date of ins of her birth 10 Benefits paid for services of a person who usually hves in the same household as the covered individual, or who is a member of ins or her immediate family or the family of ins or her spouse 11 Benaflts paid for anY Procedure that is dcemed t° be experimental °r mvestigatl°nal m nature by an appropriate technological assessment body eetabhshed by any state or Federal government, 12 Benefits paid for which the Plan Sponsor is not legally obhgated to pay These would include but not be hrmted to, deductibles, coinsurance and amounts in excess of maximums in the Plan, 13 Benefits paid for a mental or nervous condition or for any substance abuse condition winch for any covered Individual exceed the lesser of a The mammum(sl in the Plan, or b $50 000 during anY Agreement Period F1652'/ over {1 8"/) Except as expressly stated, tins Amendment does not wmve, alter, or extend any of the other prowstons of said Agreement Tins Amendment expires w~th the Agreement i~L1 tv of Denton A~N SPONSOR WASHINGTON NATIONAL INSURANCE COMPANY Signature ~ at Da~ ~ at Da~ F16527 I1 87) AGREEMENT AMENDMENT The Company and ~itY of Denton {Plan Sponsor) affree that effectzve on November 1, 1987 the ztems on the attached page(s) winch follow, be added to and made a part of the In&wdual Stop Loss Agreement winch was effective on November 1. 1987 Except as expressly stated tins Amendment does not wmve or extend any of the other prows~ons of sa~d Agreement Tins Amendment expires w~th the Agreement Clty of Denton PLAN SPONSOR WASHINGTON NATIONAL INSURANCE COMPANY By Signature  / Title T~tle S~gned at Date Signed at Date (1 87) F16532 ARTICLE A The attached pages are Article A the Plan Sponsor's Plan Document The Plan Sponsor certifies that the Covered Benefits described there~n were first m effect on Novme~er 1, 1987 The attached pages replace those winch were previously identified as Article A or Temporary Article A It ~s the intent of both par~les to thts Stop Loss Agreement that any reference ~n tins Arttcle A to the prior group insurance company, no ma~ter how named shall be deemed to mean "Plan Sponsor Any and all use of terms referring to "insured" or "insurance' shall mean coverage under the Plan Sponsor s Plan i~XYN ~P(~I~ WASHiNi:~.~ INSURANCE COMPANY By ~0 ~/~~-~P~s~ Signature BY tv v"-'or ~ ~ S~ature ~ ~ ~ [ ' ' Txtle T~tle ~, ~ /-/,~ Bv~ston, IL J~ry 19, 1988 S~d ae ~ Da~ ~ a~ Da:a F16531