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HomeMy WebLinkAboutAgenda 06-03-2025; 8-q - Approval to Increase in the Letter of Credit Required from Travelers Indemnity Company for Secure Payment of Workers Compensation Deductibles 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 3, 2025 Action Agenda Item No. 8-q SUBJECT: Approval to Increase in the Letter of Credit Required from Travelers Indemnity Company for Secure Payment of Workers Compensation Deductibles DEPARTMENT: Human Resources (Risk Management) ATTACHMENT(S): INFORMATION CONTACT: Attachment 1: Request to Amend to John Roberts, County Attorney, 919-245- Standby Letter of Credit 2318 Attachment 2: August 1, 2022 BOCC Gary Donaldson, Chief Financial Officer, Special Meeting Agenda 919-245-2453 Abstract Package Melissa Tegeder, Risk Management Director, (919) 245-2155 PURPOSE: To approve an increase in the Letter of Credit (LOC) required from Travelers Indemnity Company (Travelers), the County's insurance carrier, from $500,000 to $1,000,000. BACKGROUND: The Board of County Commissioners (BOCC) approved the County Manager's execution of an agreement with Travelers Indemnity Company for Casualty and Workers' Compensation insurance coverage and approved a Letter of Credit for Travelers Indemnity Company at a Special Meeting on August 1, 2022 (Attachment 2). This was a transition of services from the North Carolina Association of County Commissioners' Risk Pool. A Letter of Credit of $300,000 was requested by Travelers at that time to secure funding if the County failed to pay a part or all the worker compensation deductibles. Truist Bank provided a letter of credit not to exceed $500,000. This practice is consistent with industry standards for loss programs. The National Association of Insurance Commissioners (NAIC) requires insurance carriers to secure credit risk under loss responsive programs (called "receivables") with acceptable forms of collateral. Failure to secure receivables results in a percentage of those receivables being classified as a non-admitted asset, which reduces the carrier's regulatory capital and surplus. For larger carriers, this capital and surplus "hit" is substantial and can impact their ability to write insurance across lines of coverage. The intent of the NAIC regulations is to ensure that insurance carriers remain strong, solvent financial institutions capable of meeting financial responsibilities to all their customers. Workers Compensation claims can span over several years; subsequently impacting financial liabilities year over year. As such, the collateral amount or Letter of Credit requested by Travelers is evaluated each year based on the County's loss experience and financial stability. It typically takes three to five years for the collateral amount to be fully determined and funded by the insurance carrier. As part of Traveler's continued re-evaluation of coverage, the company required 2 an increase from $300,000 to $500,000 in FY 2023-24. Additional BOCC approval was not necessary then given the LOC limit was not to exceed $500,000. The FY 2024-25 renewal requested an additional $250,000 LOC, but Travelers agreed to forgo an increase in FY 2025 to give more time to access loss experience. For the County's FY 2025-26 renewal, Travelers is requiring an additional $500,000 to the letter of credit, representing a total letter of credit of $1,000,000. Claims Summary FY 2023 to FY 2025 As shown below, paid losses for worker compensation claims only total $936,471 through 2025 to date. Total incurred losses are $1,579,951. A large part of the collateral calculation for LOC is based on the number of losses incurred by the County, subsequently increasing Travelers duty to pay obligation if the County fails to pay these claims. Fiscal Year Row Labels Sum of Incurred Dollars Sum of Paid Dollars Sum of Outstanding Dollars Count of Line of Insurance 22-23 $ 180,029.00 $ 180,027.49 $ - 43 23-24 $ 759,299.00 $ 467,517.76 $ 291,779.28 53 24-25 $ 640,623.00 $ 288,926.49 $ 351,696.96 55 Grand Total $ 1,579,951.00 $ 936,471.74 $ 643,476.24 151 Letter of Credit Protocol This additional request for letter of credit with Truist Bank requires BOCC approval because it is a contingent liability having potential for the draw down of County funds. The process and requirements of a letter of credit is outlined as follows: • Bank sets aside a portion of the County's credit capacity (not actual cash) as a guarantee. • Travelers (the beneficiary) holds the LOC as a security to ensure performance or payment. • The funds remain at the bank unless Travelers makes a claim to draw. If Travelers requests to draw on the LOC: • Travelers submits a valid draw demand to the County's bank. • The bank transfers the funds to Travelers, fulfilling the LOC obligation. • The County then reimburses the bank for the amount paid out. FINANCIAL IMPACT: There is no immediate financial impact associated with this item. However, if the County fails to pay a deductible, Travelers will have the ability to make a claim against the County's letter of credit, and the County would be responsible for paying Truist Bank that amount with interest accumulating at a rate of 0.5%. ALIGNMENT WITH STRATEGIC PLAN: This item supports: • GOAL 2. HEALTHY COMMUNITY OBJECTIVE 5. Invest in, support, train, and retain our community safety, health, and emergency services employees and direct care workforce. RECOMMENDATION(S): The Manager recommends the Board: 1) Authorize the County Manager or his designee, the Chief Financial Officer, to execute the increase of $500,000 to the Letter of Credit for Travelers Indemnity Company; and 3 2) Authorize the County Manager or his designee, the Chief Financial Officer, to execute any renewals, amendments, or extensions, and other associated legal documents necessary to meet Travelers Indemnity Company's Letter of Credit and Guaranty Agreement requirements; and 3) Authorize the County Manager or his designee, the Chief Financial Officer, to make changes to legal documents prior to execution, consistent with this approval; and 4) Authorize the County Manager or his designee, the Chief Financial Officer, to sign and submit an application to Truist Bank for a Letter of Credit cap not to exceed $1,000,000. Request to Amend to Standby Letter of Credit 4 To: Truist Bank Greensboro,NC Attention: Letter of Credit and Trade Services Letter of Credit Number: ............................................-............................................--............................. ... (required) Applicant hereby requests you to issue and transmit to the Beneficiary an amendment to your Letter of Credit referenced above,(the"Letter of Credit")issued pursuant to the Applicant's Application and Agreement for the Letter of Credit and any modifications and amendments thereof (the"Agreement"). It is understood that this amendment is subject to the beneficiary's consent. All other terms and conditions of the credit remain unchanged. ❑ Amend Applicant name and/or address: ......................................................................................................................................................................................... ................. ............... ❑ Amend Beneficiary name and/or address: ......................................................................................................................................................................................... ......................................................................................................................................................................................... ❑ Amend Expiration date to: (MM/DD/YY) ......................................................................................................................................................................................... ❑ Increase amount by: $500,000.00 ❑ Decrease amount by: ............. ❑ To create a new total (balance) of: $1,000,000.00 ...........................................................I........ ................................................................ ❑Other: ............................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... ...............................................................................................................................................................................................................................................................................................................................................................................................................................................................................-- The undersigned (jointly and severally) agrees that all terms and conditions of the Agreement, except as expressly amended hereby, shall be applicable to the Letter of Credit as amended and agrees to bear the cost of the relevant amendment processing fee of$150.00 and additional fees and commissions as applicable below: If this Amendment increases the amount of the letter of credit,the commission will be applied to the increased amount until the next billing period. If this Amendment extends the expiry of the letter of credit,the commission will be applied to the extended period. Commission .50 %. If the commission rate calculates to less than $1,000 for a period of one year on the full amount of the letter of credit,then the minimum charge of$1,000 will apply. If the commission rate is not completed,the commission will be charged at 3%or minimum$1,000,whichever is greater. ***AMENDMENTS ARE SUBJECT TO BENEFICIARY AGREEMENT*** If Applicable: Applicant Company i Co-Applicant Company (Obligor) name ORANGE COUNTY,NORTH CAROLINA i (Account Party) name printed or typed: printed or typed: .................................................................................................................................................................................. : ............................................................................................................................................................... By: (Signature of By: (Signature of Applicant) ' Co-Applicant) .................................................................................................................................................................................. : ............................................................................................................................................................... Name and title, Name and title,printed printed or typed: or typed: ............................................................................................................................................................... Date: (MM/DD/YY) Date: (MM/DD/YY) ............................................................................................................................................................................... Page 2 to be completed by Truist Bank Relationship Manager Rev 8/23 Tuesday,May 13,2025-7:30:49 AM Page 1/2 Request to Amend to Standby 5 Letter of Credit (Cont.) To be completed by Truist Bank Relationship Manager Fax the completed,approved,and signed SBLC form to (801)567-6205 or email a scanned copy to your Region support Specialist. Send original to Truist Bank, Domestic Letters of Credit, 7701 Airport Center Drive,Suite 2600,Greensboro, NC 27409. If you require assistance, please call Production Support at 1-866-228-4685 Option 1. To avoid duplication of issuance,please clearly indicate,by attaching to cover of application,the evidence of fax sent to Letters of Credit. Letter of Credit Number: (required) If this Amendment Request increases the amount of the Letter of Credit or extends the expiry,please complete the appropriate section below: For Increases or extensions approved by a WLS Production Center ❑ nCino Work Package Number Request Number Date of Approval Certificate of Deposit# Amount Date Issued For increases or extensions approved in the region (including overridden from WLS Production Center) X] nCino Work Package Number Request Number Date of Approval 05/14/2025 1 certify that I have received appropriate credit approval for any increases or extensions and that pricing is in accordance with the standards for my Line of Business. RM Signature RM Name Printed Date Special Instructions Rev 8/23 Tuesday,May 13,2025-7:30:49 AM Page 2/2 6 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: August 1, 2022 Action Agenda Item No. 2 SUBJECT: Ratification of County Manager's Execution of an Insurance Coverage Agreement with Travelers Insurance and Approval of a Letter of Credit Agreement DEPARTMENT: County Attorney's Office ATTACHMENT(S): INFORMATION CONTACT: Executed Insurance Coverage John Roberts, County Attorney, (919) Agreement with Travelers 245-2318 Standby Letter of Credit Application and Gary Donaldson, Chief Financial Officer, Agreement (919) 245-2450 Letter of Credit— Travelers Alisa Cornetto, Risk Manager, (919) 245- 2155 PURPOSE: To ratify the County Manager's execution of an agreement with Travelers Indemnity Company for Casualty and Workers' Compensation insurance coverage and approve a Letter of Credit for Travelers Indemnity Company. BACKGROUND: As part of a comprehensive risk management program, the County purchases liability, property, and workers compensation insurance. Those programs had been purchased through the North Carolina Association of County Commissioners' Risk Pools. The County marketed these programs in 2022 and has moved these programs to Travelers Indemnity Company (Travelers). The Travelers coverage offered a premium savings of over $250,000, provided more robust risk control and claim advocacy, and provided access to a state of the art risk management information system. The Travelers proposal also included a dedicated, as opposed to shared, policy limits for each claim category with the same or better coverage limits and deductibles compared to the County's former provider. Due to the timing of this conversion, the County Manager signed the agreement to purchase this insurance coverage from Travelers. This agenda item seeks ratification of the County Manager's signature from the Board of Commissioners. In addition, Travelers is requiring the County to secure a $300,000 letter of credit to guarantee the County is in a position to meet its financial obligations under the terms and conditions of the policy. This amount is equivalent to the per claim deductible for the Workers Compensation 7 coverage. The letter of credit would only be accessed if the County failed to pay a part or all of the deductible. This practice is consistent with industry standards for loss programs. The County's current bank, Truist, will provide a letter of credit not to exceed $500,000 for a rate of 0.5% if it needs to be accessed by Travelers. Even though the FY2022-23 Budget contains sufficient funding to pay deductibles, Truist is requiring Board approval of the letter of credit since the bank considers it a debt instrument. FINANCIAL IMPACT: There is no immediate financial impact. However, if the County failed to pay a deductible, Travelers would have the ability to make a claim against the County's letter of credit, and the County would be responsible to pay Truist Bank that amount with interest accumulating at a rate of 0.5%. SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated with this item. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends the Board: 1) Ratify the County Manager's execution of an agreement with Travelers Indemnity Company for insurance coverage; 2) Authorize the County Manager or her designee, the Chief Financial Officer, to execute the required $300,000 Letter of Credit for Travelers Indemnity Company; 3) Authorize the County Manager or her designee, the Chief Financial Officer, to execute any renewals, amendments, or extensions, and other associated legal documents as necessary to meet Travelers Indemnity Company's Letter of Credit and Guaranty Agreement requirements; 4) Authorize the County Manager or her designee, the Chief Financial Officer, to make changes to any of the legal documents prior to execution, consistent with this approval; and 5) Authorize the County Manager or her designee, the Chief Financial Officer, to sign and submit an application to Truist Bank for a Letter of Credit cap not to exceed $500,000. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C INSURANCE PROGRAM AGREEMENT Between THE TRAVELERS INDEMNITY COMPANY ("Travelers') And Orange County ("Insured") EFFECTIVE DATE: 07/01/2022 WHEREAS, the Insured wishes to obtain the Policies from Travelers, which policies contain loss sensitive components; and WHEREAS, Travelers is willing to issue the Policies pursuant to the Collateral and Payment requirements in this Insurance Program Agreement; and WHEREAS, Travelers and Insured (collectively hereinafter "the Parties") wish to enter into an agreement for the receipt and provision of insurance and insurance-related services; and WHEREAS, this Agreement is effective on the Effective Date listed above and remains in effect until terminated pursuant to its terms; and WHEREAS, this Agreement applies to each Program Term for which a Program Exhibit is attached and to all Obligations regardless of the Program Term from which the Obligation arises. NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties agree as follows: A. DEFINITIONS Capitalized terms in this Agreement are either defined in this "Definitions" section or are defined elsewhere in this Agreement (including the Exhibits). "Agreement" means this Insurance Program Agreement between the Parties, and includes Exhibits, Integrated Agreements and amendments thereto, if any. "Collateral" means security for your Obligations which you are required to provide to us pursuant to this Agreement and which is acceptable to us in form, content, issuer and amount. "Insured", "you", and "your" means the Insured listed above and each of its affiliates, divisions, subsidiaries, general partners and limited partners who are named insureds on any of the Policies Version 11.09.20 Program Agreement-Orange County Page 1 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 9 referenced in the Program Exhibit(s) and, with respect to workers compensation insurance, who are employers referenced in Item 1. of the Information Pages of the workers compensation Policies, and each of its predecessors and successors, and includes those affiliates, divisions, and subsidiaries who are or were named as the principal on any surety bonds identified in the Program Exhibit(s). "Maximum Billed Losses" is the most we will charge and the most you will pay for losses listed in the applicable Program Exhibit, and is, subject to the formula listed in the applicable Program Exhibit. Claim Handling Charges, premium tax, surcharges and assessments associated with these losses are not part of the Maximum Billed Losses and will continue to be billed and payable until the Maximum Billed Losses amount is reached. "Minimum Billed Amount" is the least we will charge you for the Policies in a Program Term, subject to the formula listed in the applicable Program Exhibit. "Obligations" means any indebtedness or liability of any kind owed or owing by you to us, whether direct or indirect, joint or several, now existing or hereafter arising in connection with this Agreement, the Policies, any past agreement letters or past or future insurance program agreements, surety bonds, any agreements incorporated herein by reference, and any other similar agreements, including, but not limited to, any indemnity or self-funded retention agreements between you and United States Fidelity and Guaranty Company, Discover Property & Casualty Insurance Company or any of our other affiliates, including, but not limited to, attorneys' fees incurred by us in enforcing your Obligations. "Plan Adjustment" means the periodic valuation of your Obligations pursuant to the terms set forth in the Payment Schedule of the applicable Program Exhibit. "Plan Losses" means all losses actually paid within the Amounts Retained By You layer applicable to a Policy. The Amounts Retained By You section of the applicable Program Exhibit denotes whether Allocated Loss Adjustment Expense or Defense Expenses are included in or are in addition to Plan Losses. "Policy(ies)" means the insurance policies listed in the applicable Program Exhibit(s). "We", "our" and "us" means Travelers and all if its property casualty insurance and service subsidiaries and affiliates, but only to the extent such companies have issued Policies or are performing services for you under this Agreement. B. PAYMENT You agree to pay all your Obligations when due according to all applicable Program Exhibits. This Payment Section sets forth the manner in which certain of your Obligations will be paid. All the dates and frequencies referenced herein are set forth in the applicable Program Exhibit(s). 1. Rating Plan Obligations, Taxes, Surcharges and Assessments. The estimated rating plan obligations, taxes, surcharges and assessments are set forth in the applicable Program Exhibit. We will credit to you any overpayment of these charges as may be subsequently determined by audit and/or other adjustment as provided for in this Agreement, the Policies or applicable TRAVELERS J� Version 11.09.20 Program Agreement-Orange County Page 2 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 10 state law or regulation. If an additional amount is determined to be due, you will pay any additional amount following our notice to you that additional funds are required. You agree to pay any additional surcharges, taxes, or other assessments, whether or not known at the time of this Agreement, as required by law. 2. Loss Fund Requirements. The amount of any loss fund requirements is set forth in the applicable Program Exhibit. We reserve the right to increase the amount required, and you agree to pay such additional amount following our notice to you that additional funds are required. 3. Plan Losses, Claim Handling Charges and Other Fees. You agree to pay all Plan Losses, Claim Handling Charges, and annual Premium Tax, Surcharges and Assessments (if any) associated with your Policies pursuant to the Payment Schedule in any applicable Program Exhibit. 4. Plan Adjustments. You agree to pay all Plan Adjustments, subject to any minimum or maximum billed amounts agreed to by the Parties, on the commencement date, and according to the billing frequency and basis, as set forth in the applicable Program Exhibit. 5. Services. You agree to pay all expenses for Supplemental Services provided pursuant to the Supplemental Services section of the applicable Program Exhibit. 6. You agree to the terms and conditions for billing and payment as set forth in all applicable supplements, exhibits and/or schedules. You agree to pay each bill or invoice that is submitted to you within 30 days of the date of such bill or invoice, unless other terms are set forth in the bill or invoice or as otherwise agreed to between you and us. All payments will be in U.S. Dollars. Either of the Parties may offset any balance due to it under this Agreement, or any other property casualty agreements heretofore or hereafter entered into between you and us. C. COLLATERAL AND REMEDIES 1. In order to assure payment and performance of your Obligations to us, you agree to pledge, deliver to us and maintain Collateral in the amount, form, content and issuer acceptable to us and on or before any due date(s) as set forth in the applicable Program Exhibit and pursuant to the terms of the Collateral Exhibit, if any. You acknowledge that we would not provide the Policies or enter into this Agreement without the Collateral. We will hold the Collateral until we determine all of your Obligations to us are final, or until we, in our sole, good faith discretion, decide that we no longer need the Collateral. 2. If you request and we agree in our sole, good faith discretion that Collateral to secure all or a portion of your Obligations will be provided by an entity or entities other than you, and the Collateral is in fact so provided, the entity providing the Collateral acknowledges that it derives direct and substantial benefits from this Agreement, and that we would not provide the Policies or this Agreement without the Collateral. Each entity providing Collateral agrees that it is bound by all of the terms and conditions of this Agreement, including but not limited to the provisions that the Collateral secures all Obligations under this Agreement and under all of the Policies (regardless of the amount of Collateral provided by that entity) and that the duties and TRAVELERS J� Version 11.09.20 Program Agreement-Orange County Page 3 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 11 Obligations of that entity and you and your successors and affiliates, divisions and subsidiaries are joint and several. 3. The parties shall in good faith attempt to agree upon each calculation of Collateral. In the absence of mutual agreement as to any such calculation, our calculation of Collateral shall be binding and conclusive for purposes of this Agreement, absent our bad faith or manifest error. 4. If we do not presently require Collateral from you, we reserve the right to require, and you agree to provide, such Collateral within 10 days of our written notice to you that Collateral will be required. If Collateral is required at any time pursuant to this Agreement, you agree to abide by the terms set forth in this Agreement. 5. We may change the Collateral requirements when we determine, in our sole, good faith discretion, any of the following circumstances has occurred: a. We determine that an increase in the Collateral held by us is required; or b. A change in the form of, or an increase in the total amount of, Collateral we hold is required in order to comply with applicable law/regulation or in order for us to obtain a benefit under applicable law/regulation; or C. There is a material change in the financial condition of the issuer of any Letter of Credit or other Collateral, or the financial institution holding any Collateral is no longer acceptable to us. Within 15 days after we give you written notice of a change in the Collateral requirements, you will deliver such Collateral. Upon cancellation or non-renewal of your insurance program with us, we may require a Letter of Credit as substitution for any other form of Collateral we hold. 6. You will be in default of this Agreement if you: a. fail to pay any amount to us when due; or b. fail to perform any Obligation or satisfy any requirements under this Agreement or any other Exhibits or Amendments thereto; or C. fail to deliver to us within the time specified or fail to maintain any Collateral required by this Agreement, or fail to deliver or keep available, as Collateral, any Collateral or increase thereof required by this Agreement; or d. become insolvent or unable to pay your debts as they become due or you are declared bankrupt or insolvent, or if a debtor relief proceeding has been brought by or against you; or e. make misrepresentations to us or breach any representations you have made to us, either orally or in writing; or f. fail to sign Integrated Agreements. TRAVELERS J� Version 11.09.20 Program Agreement-Orange County Page 4 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 12 7. If you are in default, then we may immediately terminate some or all of your rights to defer payment of your Obligations, as such rights are set forth in this Agreement, and we may also immediately: a. consider due and payable all of your Obligations to us including, but not limited to, those Obligations accruing in the future; and b. satisfy amounts due us by (i) executing immediately, drawing upon or making a claim upon any Collateral we hold, in whole or in part, and applying the proceeds thereof to any amounts due and/or (ii) by holding the proceeds thereof until such time as we, in our sole, good faith discretion, have determined your Obligations to us to be final, and/or we collect from you all amounts that remain outstanding; and C. where permitted by and in compliance with applicable law, (i) terminate your insurance program or any Policy, (ii) terminate any surety bond issued or identified in the applicable Program Exhibit and (iii) cancel or non-renew any certificates of insurance or financial responsibility filings made on your behalf; and d. subject to the terms and conditions of the applicable Policies, cease administering future Plan Losses within the Amounts Retained By You; and e. pursue any and all other legal and equitable rights and remedies available to us under applicable law, including, but not limited to, seeking injunctive relief for your failure to provide us with Collateral, pursuant to the terms of this Agreement. 8. After any default, we may recalculate your Obligations pursuant to the terms of this Agreement and exercise at that time, or at any time thereafter, any of our rights and remedies described in this Agreement until we determine, in our sole, good faith discretion, that your Obligations are final. 9. After default, you agree that we may charge you interest on any of your Obligations that remain outstanding beyond 5 days of our demand. You shall also reimburse us for any and all costs and expenses incurred by us in connection with the collection or enforcement of any of your Obligations to us, including, but not limited to, our attorneys' fees and expenses (including those associated with Arbitration as further set forth in Section 4 of the General Provisions section of this Agreement). Interest shall accrue daily, at the prime rate of interest in effect daily at J.P. MORGAN CHASE & CO., 270 PARK AVENUE, NEW YORK CITY, NEW YORK 10017- 2070, plus 200 basis points, not to exceed the highest rate allowed by law, from the due date on the bill or invoice until the date we receive payment. 10. After default, any credit or return due to you pursuant to this Agreement will be held by us without interest to you as security for payment of any future Obligations that may develop. Also, we may hold the proceeds of any Collateral we execute, draw or make a claim upon, without interest to you, and we may, from time to time, apply such Collateral proceeds to any of your Obligations. We will return to you any proceeds from any Collateral other than a Letter of Credit or surety bond that we have not applied to Obligations when we, in our sole, good faith discretion, determine that all Obligations finally developed have been paid, or that we no longer need the Collateral. We will return to the issuer any Letters of Credit, surety bonds or TRAVELERS Version 11.09.20 Program Agreement-Orange County Page 5 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 13 proceeds therefrom we have not applied to Obligations, when we, in our sole, good faith discretion, determine that all Obligations finally developed have been paid, or that we no longer need the Collateral. Pursuant to this Agreement and the Collateral, whichever Travelers company is named in the Collateral as beneficiary pursuant to the requirements of this Agreement has the authority and ability to exercise those rights as an agent for any and all Travelers company(ies). D. GENERAL PROVISIONS 1. Cancellation of Insurance Policies. a. If, pursuant to the conditions of any Policy, such Policy is cancelled by either Party prior to its expiration, the audited exposure base for that Policy shall be calculated by adding the audited exposure base from the beginning of the Policy period to the date of the cancellation and the estimated exposure base for the balance of the original Policy period for the purpose of calculating your Maximum Billed Losses, audited Non- Loss Responsive Premium(s) and/or audited Expense(s). Your Minimum Billed Amount will remain calculated or defined as set forth in the applicable Program Exhibit. b. All other Obligations will not be affected by such cancellations. 2. Termination of Agreement. This Agreement shall terminate when we determine, in our sole, good faith discretion that all of your Obligations are final, have been paid and/or otherwise performed, unless we terminate the Agreement earlier pursuant to its terms. 3. Choice of Law, Venue and Jurisdiction. Your insurance program is deemed made in CONNECTICUT, evidences a transaction involving interstate commerce, and shall be governed by the internal laws of CONNECTICUT without regard to its rules regarding conflict of laws. Any arbitration conducted pursuant to the terms of this Agreement shall be governed by the Federal Arbitration Act (9 U.S.C, Section 1 et seq.) ("FAA") and, to the extent not inconsistent with the FAA, CONNECTICUT arbitration law, and shall take place in CONNECTICUT. The exclusive venue (subject to the applicable rules of the courts concerning the assignment or transfer of cases) for any action to enforce any rights under this Agreement shall lie in the State or Federal Court in HARTFORD County, CONNECTICUT. 4. Agreement to Arbitrate a. The Parties will attempt to resolve any dispute arising under this Agreement without resort to formal procedures. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, which cannot be resolved by informal means shall be determined by arbitration before three arbitrators ("Arbitration Panel"), or, in matters where the amount claimed in the claimant's demand for arbitration is less than $250,000, by one arbitrator. Unless otherwise agreed to by the Parties, the arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and TRAVELERS J� Version 11.09.20 Program Agreement-Orange County Page 6 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 14 Procedures, including the Expedited Procedures therein if agreed to by the Parties, or, for matters where claimant's demand is less than $250,000, the JAMS Streamlined Arbitration Rules and Procedures. Judgment on the award may be entered in any court having jurisdiction. b. Neither Party shall submit to arbitration (i) any coverage disputes which arise under or in connection with claims or suits brought against the Policies; (ii) claims by or against you and other Travelers policyholders with respect to other insurance programs with us; (iii) claims by or against you and other policyholders of any other commercial lines property casualty insurer(s), including but not limited to any claim under (ii) or (iii) which you purport to arbitrate as a representative or member of a class or as a private attorney general; (iv) any matter seeking to restrict our right to draw upon the Collateral or which would have the effect of restricting our right to draw upon the Collateral; (v) any matter by us pursuant to subsection 7(e) of Collateral and Remedies Section of this Agreement. In addition, in the context in the Workers' Compensation coverage, neither Party shall submit to arbitration any dispute, the resolution of which has been committed to or the resolution of which is within, the exclusive jurisdiction of any state or federal governmental entity. c. The arbitrator or Arbitration Panel has no authority, and is not empowered, to consolidate or direct class-action arbitration as to any disputes between the Parties to this Agreement with other disputes between us and any other of our policyholders or other third parties. Nor shall the arbitrator(s) have authority or be empowered to consolidate or direct disputes brought by you as a private attorney general. Any determination by the arbitrator(s) to so consolidate or direct class-action arbitration or to consolidate or direct disputes brought by you as a private attorney general shall be beyond the arbitrator's authority and jurisdiction and shall be void. d. The arbitrator or Arbitration Panel shall have authority to award pre-judgment interest, post-judgment interest, interim relief, pre-hearing security, and summary judgment. The arbitrator or Arbitration Panel is not empowered to award punitive or exemplary damages, and the Parties waive any right to recovery of such damages in arbitration. e. Each arbitrator shall be a disinterested, active or retired: (i) judge; (ii) executive officer of a property-casualty insurance company admitted or otherwise authorized to transact business in the United States; or (iii) executive officer of a property-casualty broker licensed in the United States. All arbitrators shall serve as neutral, independent and impartial arbitrators. f. Within 15 days after the commencement of arbitration, each Party shall select one person to act as arbitrator, and the two so selected shall select a third arbitrator within 30 days of the commencement of the arbitration. If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator within the allotted time, the third arbitrator shall be appointed by JAMS in accordance with its rules. g. The Parties shall maintain the confidential nature of the arbitration proceeding and any award, including the hearing, except as may be necessary to prepare for or conduct the arbitration hearing on its merits, or except as may be necessary in TRAVELERS J� Version 11.09.20 Program Agreement-Orange County Page 7 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 15 connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision. h. Each Party shall bear the initial expense of its own arbitrator and shall jointly and equally bear with the other Party all expenses of the umpire and of the arbitration. In arbitrations and related actions required in connection with the collection or enforcement of any of your Obligations to us, the arbitrator(s) may award costs and attorneys' fees reasonably incurred by us in connection with the arbitration as well as interest on those Obligations. 5. Large Risk Alternative Rating Option; Consent to Rate. You acknowledge and agree that your Obligations under this Agreement are rated and priced in accordance with the terms of the National Council on Compensation Insurance ("NCCI") Large Risk Alternative Rating Option (Filing Memorandum R-1295), the Travelers large risk filings and any amendments of either, as filed in the applicable state(s). The Parties recognize and acknowledge that you are paying certain rates and charges for your Obligations that may be more or less than the sum of charges that would be part of filed and approved rating plans for the underlying insurance coverages. You acknowledge that you have negotiated and consented to the prices and rates set forth in this Agreement 6. Audit; Review of Books and Records. We will audit your records on either a physical or statement basis, at our option and as otherwise required by law, to (i) determine your actual exposure base and (ii) calculate those charges which are subject to audit on the applicable Program Exhibit. We may also conduct periodic review of your financial condition. You will furnish us with such financial information and other books and records as we may reasonably request, including but not limited to certified financial statements. 7. Conflict with Laws or Regulations/Severability. Nothing in this Agreement shall be construed to require the commission of any act contrary to law. In the event of a conflict between any provision herein and any applicable law or regulation, the latter shall prevail. But, the provision so affected shall be limited only to the extent necessary to permit compliance with the minimum applicable legal requirement, and all other provisions of this Agreement shall continue in full force and effect. In the event of a conflict between any provision of this Agreement and any provision of any Policy, the Policy shall control. 8. Failure of Enforcement. Any failure by us to enforce any provision, exercise any option, or require any performance by you of any of the provisions of the Agreement shall in no way be construed to be a waiver, nor shall such failure in any way affect the validity of this Agreement or any part of it, or our right to thereafter enforce any provision of this Agreement or to exercise any right or remedy available to us under applicable law. TRAVELERS J� Version 11.09.20 Program Agreement-Orange County Page 8 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 16 9. General Representations and Warranties. You warrant and represent that the person who signs this Agreement has been duly authorized to execute the Agreement for and on behalf of You, and that he or she has the authority to bind you jointly and severally to the terms of this Agreement. 10. Compliance Warranties. You represent and warrant that your performance under this Agreement will comply with all applicable federal, state, local, and international laws, regulations and orders of any governmental, judicial or administrative authority including, but not limited to, the following: a. Economic Sanctions. You represent and warrant that you are not, nor are you owned or controlled by, nor do you own or control, a person or entity that is (i) on the list of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or any list of known or suspected terrorists, terrorist organizations or other prohibited persons published by any jurisdiction in which the Insured is doing business, or (ii) subject to economic or trade sanctions imposed by the United States Government, which restrict U.S. companies from engaging in financial or other transactions with such entity for any reason, including but not limited to being resident or headquartered in or a governmental entity of a country subject to such sanctions. b. Anti-Bribery and Corrupt Practices Controls. You represent and warrant that you are familiar with, have complied with, and will comply, in all respects, with laws, regulations, ordinances, and codes regarding anti-bribery, anti-corruption and the offering of unlawful or improper inducements, including but not limited to the U.S. Foreign Corrupt Practices Act, as amended, and other applicable anti-corruption and anti-bribery laws (collectively, the "Corrupt Practices Laws") and will not engage in any transaction that could be deemed bribery. You shall maintain in place throughout the term of this Agreement policies and procedures to prevent corruption and bribery, including adequate procedures as required by applicable laws, and will enforce them where appropriate. You shall immediately notify Travelers in writing of any actual or suspected violation of any Corrupt Practices Laws. Notwithstanding anything in this Agreement to the contrary, if at any time during the term of this Agreement you breach the terms of this Section 10, then in addition to any other rights Travelers may have under the Agreement, Travelers may immediately terminate the Agreement without any obligation, liability or penalty of any kind. 11. Hold Harmless. You may be required to provide evidence of insurance, which may or may not include the amount of any Retention, to interested persons, boards, bureaus, lessors or other organizations. Your agent or broker will provide such evidence of insurance. You agree to indemnify and hold us harmless against any and all claims, settlements, lawsuits, payments, penalties, administrative proceedings, judgments, damages, interest charges, costs or expenses, including reasonable attorneys' fees, resulting from or arising out of or in connection with any errors or omissions related to the issuance of such evidence of insurance. These hold harmless provisions survive termination of this Agreement. TRAVELERS J� Version 11.09.20 Program Agreement-Orange County Page 9 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 17 12. Electronic Signature and Reproductions. This Agreement and any of its Integrated Agreements or Exhibits may be executed and delivered by electronic signature and transmission, each with the same force and effect as if the same were an original manual counterpart. Both Parties may retain an electronic reproduction (e.g. electronic image, PDF, photocopy of facsimile) of this Agreement, each of which shall be considered an original and shall be admissible in any action arising out of this Agreement. 13. Assignment. This Agreement is not assignable by you, without our prior written consent. 14. Notice. Any notices or communications required under this Agreement shall be in writing and sent by (i) overnight mail or (ii) electronic mail to the other Party at the address set forth in the Notices section of the most recent Program Exhibit. Such notices shall be deemed delivered when sent. 15. Acceptance - Entire Agreement. This Agreement, the Program Exhibit(s) and any other Exhibits referenced in this Agreement or the Program Exhibit(s), and including any Integrated Agreements and any Policies or other documents incorporated herein by reference, constitute the entire, integrated agreement of the parties with respect to the subject matter of this Agreement. This Agreement may not be amended or modified except pursuant to a written agreement executed by authorized officers of both parties. TRAVELERS J� Version 11.09.20 Program Agreement-Orange County Page 10 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 18 Orange County THE TRAVELERS INDEMNITY COMPANY DocuSigned by: _�EUflll-l7fP Q.�T11.�E/I Name: Bonnie H o�s�9s4a���Ea�7 - Address: Travelers,385 Washington Street Address: 208 SOUTH CAMERON STREET St. Paul, MN 55102 HILLSBOROUGH, NC 27278 Attn: Stephanie Gardner BHAMMERSLEY@ORANGECOUNTYNC.GOV Email: SGARDNE2@travelers.com DATE: DATE: 6-30-2022 Docusignedby: ttl�IACC1409 Name: Gary D�.._ .-. Address: 208 SOUTH CAMERON STREET HILLSBOROUGH, NC 27278 GDONALDSON@ORANGECOUNTYNC.GOV DATE: TRAVELERS A110111111, Version 10.14.19 Program Agreement-Orange County Page 11 CA Form-WC 99 06 Q6(B) ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 19 PROGRAM EXHIBIT 4? Your Insurance Program is comprised of your Insurance Policies and any services charged separately. This Program Exhibit outlines how your Obligations to us are calculated and paid. INSURED: Orange County PROGRAM TERM: 07/01/2022 TO 07/01/2023 RATING PLAN(S) Your Rating Plan Obligation(s) is a combination of all of the below plans and amounts: (1) LOSS RESPONSIVE RATING PLAN(S) (INCLUDING EXPENSES, CLAIM HANDLING CHARGES, PREMIUM TAXES) +(2) NON-LOSS RESPONSIVE RATING PLAN(S)+ (3) SURCHARGES AND ASSESSMENTS+(4) SERVICES CHARGED SEPARATELY(IF ANY). Deductible Plan Computation Formula Deductible Plan Paid Losses+Deductible Plan Claim Handling Charges+ Administrative Expense Reimbursement=Deductible Plan Charges EXPENSES EXPENSE TYPE RATE(IF APPLICABLE) MINIMUM ESTIMATED AMOUNT AMOUNT Administrative Expense Reimbursement' $0.1356 Per$100 of Audited Total WC Payroll $74,775 $74,775 Excluding Monopolistic States Payroll TOTAL EXPENSES INCLUDED IN THE INSTALLMENT SCHEDULE $74,775 Administrative Expense Reimbursement is the amount we charge for our annual,non-risk bearing expenses for certain policies,and is in addition to the Claim Handling Charges outlined below. Administrative Expense Reimbursement includes Risk Management Information System(RMIS)Charges,if purchased. If this program is non-renewed,and the parties agree that continued RMIS services will be provided to you,such continued services will be charged on an annual basis at a rate to be negotiated by the parties. CLAIM HANDLING CHARGES Workers Compensation and Employers Liability Claim Handling Charges Basis Rate Loss Conversion Factor(LCF) LCF .080 The LCF will be multiplied by the first$250,000 of each Workers Compensation and Employers Liability Loss and Allocated Loss Adjustment Expense associated therewith. The LCF will be applied beginning on the first day of the Program Term for this Program Exhibit and according to the billing basis and billing frequency noted in the Payment Schedule section of this Program Exhibit. Medical Cost Containment Component of Allocated Loss Adjustment Expense Version 02.01.22 2022 Program Exhibit Orange County Page 12 CA Form-W04M8F19 ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 20 The Medical Cost Containment Components are charged pursuant to the Allocated Loss Adjustment Expense Exhibit to the Insurance Program Agreement. Allocated Loss Adjustment Expense has the same meaning as Allocated Loss Adjustment Expense', ALAE"or "claim expense"in any applicable Policy, or, if the Policy has no such definition, it shall have the same meaning as set forth in the Allocated Loss Adjustment Exhibit. Savings Expense Fee Percentage of 27% Savings Achieved Non-Loss Responsive Premium Formula 7N!onLossResponsive Rate(s)x Corresponding Exposure Base(s),but in no event (other than Guaranteed Cost Policies) ny stated Minimum Non-Loss Responsive Premium shown in the Non- ponsive Premium section of this Program Exhibit(below). NON-LOSS RESPONSIVE PREMIUM TYPE OF COVERAGE RATE MINIMUM ESTIMATED AMOUNT AMOUNT Workers Compensation Deductible $0.2767 Per$100 of Audited Total WC Payroll $152,583 $152,583 Premium Excluding Monopolistic States Payroll TOTAL ESTIMATED NON-LOSS RESPONSIVE PREMIUM $152,583 Your premium amounts referenced above will include any residual market charges which may be assessed by the various states. You will pay Surcharges and Assessments pursuant to individual state law or regulation. Surcharges and Assessments are exclusive of, and in addition to,your Rating Plans CHARGE TYPE RATE DEPOSIT/ESTIMATED AMOUNT TOTAL CHARGE INCLUDED IN THE INSTALLMENT SCHEDULE $0 THE FOLLOWING APPLY TO YOUR PROGRAM: AMOUNTS RETAINED BY YOU, ESTIMATED MAXIMUM AND MINIMUM BILLED AMOUNTS AND ESTIMATED EXPOSURES Workers Compensation and Employers Liability Loss including ALAE $300,000 TRAVELERS Version 02.01.22 2022 Program Exhibit Orange County Page 13 CA Form-W04M81`19 ©(2019)The Travelers Indemnity Company.All rights reserved DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 21 Workers Compensation and Employers Liability Losses including Allocated Loss Adjustment Expenses (ALAE) arising out of a single accident shall be limited to the amount indicated above. For Occupational Disease Claims,this limitation shall apply to each employee. 7YourLOSMSResponsive Rating Plan is subject to this section. All other rating plans are NOTsubject to the r the Minimum Billed Amount. CHARGE TYPE RATE AMOUNT Estimated Maximum Billed Losses $2.1444 Per$100 of $1,182,500 Audited Total WC Payroll Excluding Monopolistic States Payroll Your Maximum Billed Losses will not be less than$1,182,500 Rating Plan Components Subject to Maximum Billed Losses: WC Deductible Plan Losses Minimum Billed Amount $0.4122 Per$100 of $227,358 Audited Total WC Payroll Excluding Monopolistic States Payroll,but in no event less than the sum of the minimum amounts shown in other parts of the Program Summary Rating Plan Components Subject to Minimum Billed Amount: Administrative Expense Reimbursement Workers Compensation Deductible Premium EXPOSURES APPLICABLE TO OTHER THAN GUARANTEED COST • RATING PLAN EXPOSURE LOCATION ESTIMATED EXPOSURE AMOUNT WC Payroll Deductible Plan States NC $55,143,903 TOTAL WC PAYROLL EXCLUDING MONOPOLISTIC STATES $55,143,903 YOU HAVE AGREED TO PROVIDE COLLATERAL AND LOSS FUNDS IN THE AMOUNT AND OF THE TYPE DESCRIBED BELOW, AS FURTHER SET FORTH IN THE COLLATERAL AND REMEDIES SECTION AND THE COLLATERAL EXHIBIT OF THE INSURANCE PROGRAM AGREEMENT. TRAVELERS Version 02.01.22 2022 Program Exhibit Orange County Page 14 CA Form-W04M8F19 ©(2019)The Travelers Indemnity Company.All rights reserved DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 22 AMOUNT REQUIRED FOR AMOUNT CURRENTLY ADDITIONAL(RETURN) LOSS FUND TYPE ALL YEARS(HISTORICAL HOLDING(HISTORICAL AMOUNT DUE AND CURRENT) POLICIES) Deductible Plan Deposit $25,000 $0 $25,000 TOTAL LOSS FUND DUE(OR RETURN) $25,000 COLLATERAL TYPE AMOUNT REQUIRED FOR AMOUNT CURRENTLY ADDITIONAL(RETURN) ALL YEARS(HISTORIC AND HOLDING AMOUNT DUE CURRENT) Letter Of Credit $300,000 $0 $300,000 TOTAL $300,000 $0 $300,000 TOTAL COLLATERAL DUE PER COLLATERAL SCHEDULE $300,000 COLLATERAL TYPE AMOUNT DUE DATE Letter Of Credit $300,000 07/01/2022 TOTAL COLLATERAL DUE $300,000 PAYMENT TYPE DUE DATE AMOUNT DUE Rating Plan Obligations Payable in 4 equal installments,beginning July 01,2022 and $227,358 the 1st day of each succeeding quarter thereafter. Loss Fund Due with First installment $25,000 Installment Payments:Remit to Agent/Broker Plan Loss Payments:Pay Direct to Travelers Plan Adjustment Payments:Pay Direct to Travelers It is the agent's or broker's responsibility to comply with any applicable laws regarding disclosure to the policyholder of commission or other compensation We pay,if any,in connection with any Policy or program. TRAVELERS Version 02.01.22 2022 Program Exhibit Orange County Page 15 CA Form-W04M8F19 ©(2019)The Travelers Indemnity Company.All rights reserved DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 23 PAYMENT SCHEDULE COMMENCEMENT BILLING BILLING BASIS DATE FREQUENCY Deductible Plan Plan Losses 07/01/2022 DB-Monthly Paid Issued Claim Handling Charges Workers Compensation 07/01/2022 DB-Monthly Paid Issued Administrative Expense Reimbursement Adjustment Administrative Expense Reimbursement 01/01/2024 Once As per Expenses Section of Adjustment the Program Exhibit Non-Loss Responsive Premium(s) Non-Loss Responsive Premium(s)Adjustment 01/01/2024 Once As per Non-Loss Responsive Section of the Program Exhibit • Paid Basis means the amount of each loss actually paid within your plan layer. POLICY NUMBER TYPE OF COVERAGE STATES PLAN TYPE COMPANY UB-5T768836-22-PB-D Workers Compensation NC Deductible Farmington Casualty and Employers Liability Company The Company(ies)listed above have an address of One Tower Square,Hartford, CT 06183-7312. The omission of,or failure to include, any Policy in this Program Exhibit shall not relieve you of any of your duties or Obligations under this Agreement or under the Policies. Orange County THE TRAVELERS INDEMNITY COMPANY 208 SOUTH CAMERON STREET Travelers,385 Washington Street HILLSBOROUGH,NC 27278 St.Paul,MN 55102 Attention: Bonnie Hammersly,County Manager Attention:Stephanie Gardner BHAMMERSLEY@ORANGECOUNTYNC.GOV Email:SGARDNE2@travelers.com TRAVELERS J~ Version 02.01.22 2022 Program Exhibit Orange County Page 16 CA Form-W04M8F19 ©(2019)The Travelers Indemnity Company.All rights reserved DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 24 Orange County THE TRAVELERS INDEMNITY COMPANY DocuSigned by: 208 SOUTH CAME.._. 20637994B755E477Travelers,385 Washington Street HILLSBOROUGH,NC 27278 St. Paul,MN 55102 Attention:Bonnie Hammersly,County Manager Attention:Stephanie Gardner BHAMMERSLEY@ORANGECOUNTYNC.GOV Email:SGARDNE2@travelers.com Date: Date: 6-30-2022 Docusigned by: Arx.e&Iart. 208 SOUTH CAM 704E5181ACC1469... HILLSBOROUGH,NC 27278 Attention:Gary Donaldson,Chief Financial Officer GDONALDSON@ORANGECOUNTYNC.GOV Date: TRAVELERS Version 02.01.22 2022 Program Exhibit Orange County Page 17 CA Form-W04M8F19 ©(2019)The Travelers Indemnity Company.All rights reserved DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 25 COLLATERAL EXHIBIT As security for the payment and performance of your Obligations to us, you shall unconditionally pledge and deliver to us and maintain the Collateral in the type and amount set forth in the Collateral Requirements section of the applicable Program Exhibit. In addition to the terms contained elsewhere in the Agreement,you agree to the provisions listed in this Collateral Exhibit concerning the Collateral provided. The following provisions apply to any Letters of Credit provided under the Agreement. 1. Any Collateral delivered to us and maintained by you under this section shall be clean, irrevocable, unconditional and automatically renewing and in form,content and by issuer satisfactory to us. You acknowledge that any failure by you to provide us with pursuant to our requirement will cause irreparable harm to us. 2. At least sixty (60) days prior to the expiration of any Collateral held by us, you shall deliver to us renewal or replacement Collateral in form,content and by issuer satisfactory to us.The aggregate amount of such renewal or replacement Collateral shall be the same amount as the expiring Collateral, unless we tell you in writing of such other amount as we, in our sole discretion, determine necessary to secure all of your Obligations to us. 3. At any time, we may require changes in the form, content, issuer or amount of any Collateral held by us to secure your Obligations. You shall provide such amended Collateral within 15 days after your receipt of our notice of the need for any such changes. Orange County THE TRAVELERS INDEMNITY COMPANY DocuSigned by: �1�.(� Bonnie Hammersly ocs�ssae�ssEa��.. Travelers,385 Washington Street 208 SOUTH CAMERON STREET St.Paul,MN 55102 HILLSBOROUGH,NC 27278 Attn:Stephanie Gardner BHAMMERSLEY@ORANGECOUNTYNC.GOV Email:SGARDNE2@travelers.com DocuSignedbyy: SU.&I. Gary Donaldson 704E51S1ACC14d9_. 208 SOUTH CAMERON STREET HILLSBOROUGH,NC 27278 GDONALDSON@ ORANGECOUNTYNC.GOV Version 09.14.20 Collateral Exhibit Orange County Page 18 CA Form-W04M5F19 ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 26 ALLOCATED LOSS ADJUSTMENT EXPENSE EXHIBIT In addition to the terms contained elsewhere in the Agreement,you agree to the provisions listed in this Allocated Loss Adjustment Exhibit. 1. Allocated Loss Adjustment Expense ("ALAE") has the same meaning as "Allocated Loss Adjustment Expense" or "ALAE" or "Defense Expense" or"claim expense" in the applicable Policy or, if the Policy contains no such definition, means the following costs which can be directly allocated to a particular claim: A. Fees of attorneys or other authorized representatives where permitted for legal services, whether by outside or staff representatives. B. Court,Alternate Dispute Resolution and other specific items of expense whether incurred by an outside vendor or by one of our employees,including but not limited to: • Medical examinations of a claimant to determine the extent of our liability, degree of permanency or length of disability; • Expert medical or other testimony; • Autopsy; • Witnesses and summonses; • Copies of documents such as birth and death certificates and medical treatment records; • Arbitration fees; • Fees or costs for surveillance or other professional investigations which are conducted as part of the handling of a claim; • Fees or costs for Risk Control personnel, rehabilitation nurses or other nurses, if the cost of such nurses is not included in losses,for services which are conducted as part of the handling of a claim; • Appeal bond costs and appeal filing fees;and • All reasonable expenses incurred by you in the investigation or defense of a claim. C. Medical cost containment expenses incurred with respect to a particular claim, whether by an outside vendor or done internally by an employee for the purpose of controlling losses, to ensure that only reasonable and necessary costs of services are paid. The expenses include but are not limited to: • Bill auditing expenses for any medical or vocational services rendered,including hospital bills(inpatient or outpatient), nursing home bills, physician bills, chiropractic bills, medical equipment charges, pharmacy charges, physical therapy bills,medical or vocational rehabilitation vendor bills; • Hospital and other treatment utilization reviews, including pre-certification/pre-admission,concurrent or retrospective reviews; • Preferred Provider Network/Organization expenses;and • Medical fee review panel expenses. D. Expense(s) not defined as losses which are directly related to and directly allocated to the handling of a particular claim and are required to be performed by statute or regulation. E. Supplementary Payments,as defined in those Policies which have a Supplementary Payments provision,except for salaries, overhead and traveling expenses of carrier employees who are not doing activities previously listed as allocated expenses. F. Defense Costs, as defined in those Policies which have a Defense Cost provision,except for salaries,overhead and traveling expense of carrier employees who are not doing activities previously listed as allocated expenses. G. The following shall not be included as"Allocated Loss Adjustment Expense"or"Defense Expense": • Salaries,overhead and traveling expenses of carrier employees, except for employees while doing activities previously listed as ALAE; • Fees paid to independent claims professionals or attorneys (hired to perform the function of claim investigation normally performed by claim adjusters)for developing and investigating a claim so that a determination can be made Version 09.16.19 ALAE Exhibit Orange County Page 19 CA Form-W041V16F19 ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 27 of the cause,extent or responsibility for the injury,disease,or damage, including evaluation and settlement of covered claims;and • Expenses which are defined as either an indemnity or medical loss. 2. Medical cost containment expenses consist of the following components, which apply to Workers Compensation claims with a date of accident beginning with the first date of the Program Term of the applicable Program Exhibit. A. There is a 27%charge applied to any savings resulting from the following medical bill repricing, pharmacy bill repricing and hospital bill audit activity: • Application of preferred provider network discounts to physicians'bills,hospital bills and pharmacy bills,including: 1. Repricing as a result of negotiation of out-of-network physicians'bills,pharmacy bills and hospital bills;and 2. Repricing of medical bills,pharmacy bills and hospital bills by reviewing the bills and applying state rules/edits and proprietary rules/edits. • Repricing of medical bills,pharmacy bills and hospital bills by manual bill review by our medical review team B. Savings realized from medical bill,pharmacy bill and hospital bill review to which the 27%charge is not applied are: 1. Savings realized from the detection and elimination of duplicate bills 2. Savings achieved by the claim case manager,i.e.bills containing unrelated/unauthorized treatment 3. Savings achieved by the medical case manager,i.e.bills containing unapproved medical treatment 4. Savings realized from medical bill repricing, pharmacy bill repricing and hospital bill audit activity achieved by applying any state-mandated schedule 5. Savings realized from the elimination of non-compensable bills. For purposes of this Exhibit, the term "savings" shall refer to the difference between the amount billed by physician, hospital, pharmacy and other medical providers and the amount ultimately paid. adhere to state-mandated fee schedules and/or usual and customary pricing for certain procedures, may contract with preferred provider networks which have contractual arrangements with certain of those providers to perform certain procedures at pre-determined rates (which may be below fee schedule), and may utilize other fee negotiation resources determine are necessary and appropriate to determine the amount that should pay on any given medical bill. C. The 27%charge will be capped at$10,000 per bill and charged to the claim file as an Allocated Loss Adjustment Expense, unless required by state law to charge it to the claim file as a different component of the applicable rating plan. The $10,000 per bill cap applies to bills with a date of service beginning with the first day of the Program Term set forth in the applicable Program Exhibit. D. Certain items are still charged separately to the claim file as Allocated Loss Adjustment Expenses. These items include but are not limited to: 1. Utilization Review(pre-certification and concurrent review)services charged on a per activity basis; 2. Independent medical examinations*; 3. Second opinions by a physician*; 4. Chiropractic reviews;and 5. Physician advisor programs. *unless ordered by an industrial board or state equivalent,in which case it is treated as Medical. TRAVELERS Version 09.16.19 ALAE Exhibit Orange County Page 20 CA Form-W041V16F19 ©(2019)The Travelers Indemnity Company.All rights reserved. DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 28 LOSS FUND EXHIBIT In connection with your Workers Compensation & Employers Liability program,we will make Plan Losses,Allocated Loss Adjustment Expenses and Claims Handling Charges(together referred to as"Loss Transaction"or"Loss Transactions")on your behalf under your insurance or self-insured program using checks drawn against one of our bank accounts. You acknowledge that these Loss Transactions are Obligations as defined in your Insurance Program Agreement. In exchange for our agreement to pay Loss Transactions on your behalf,you agree to the following: • You will designate a bank and account("Source Account")against which monthly Automated Clearing House("ACH")debits will be drawn by us as payment of your Loss Transactions. • You will provide us with the documentation authorizing Bank of America to make monthly charges and reimbursements at our direction including a signed authorization letter to direct Bank of America to draw ACH debits against your Source Account,along with the Source Account codes and Source Account's bank ABA Code. • We will determine the amount due to us by combining the monthly Loss Transaction payments,along with any corrections caused by edits on each Loss payment.This amount will be sent electronically to Bank of America with instructions to draw an ACH debit on your Source Account. In addition to deposit amount agreed to in the Loss Fund Requirements section of the applicable Program Exhibit,we will periodically perform an analysis of Loss Transactions based upon data from our billing systems to determine the adequacy of the deposit amount. If we, in the exercise of our good faith discretion, determine additional deposits to the Loss Fund Requirements are necessary, this amount will be sent electronically to Bank of America with instructions to draw an ACH debit on your Source Account. Upon request, we will provide you with documentation of the Loss Transactions payment analysis. Reports identifying Loss(es) and Allocated Loss Adjustment Expense payments must be accessed electronically by you via e-TRACER reporting.These reports identify the Loss Transactions and a premium tax,if applicable for your program with us. We may automatically continue these payment and billing arrangements if your Insurance program is renewed. If your Insurance program is cancelled or not renewed, we reserve the right to continue or discontinue these payment and billing. If TRACER is discontinued by either of us,your program will change to a monthly billed program,and each month after TRACER is discontinued,we will send you an invoice for the total amount of Loss Transactions due. Upon receipt,you will pay the amount due on or before the date set forth on the invoice. Version 08.19.19 Loss Fund Exhibit Orange County Page 21 ©(2019)The Travelers Indemnity Company.All rights reserved. Standby Letter of Credit Application and AgWement **If this application is faxed or emailed to a client, include Standby Letter of Credit Application and Agreement Instructions.** International Operations Use Only Truist Reference Number To:Truist Bank Please issue an irrevocable Letter of Credit substantially in accordance with this application. In issuing the Letter of Credit, Truist Bank is authorized to make such changes from the terms below as Truist Bank, in its sole discretion, may deem advisable provided that such changes shall not vary the principal terms hereof. Letter of Credit Amount in Figures Amount in Words 300,000.00 Three hundred thousand dollars Partial Drawings Special Conditions ® Permitted ❑Not Permitted Applicant(Obligor) Legal Entity Name Contact Name Orange County, North Carolina Gary Donaldson Physical Address(No post office boxes allowed.) City State ZIP Code 405 Meadowlands Drive Hillsborough NC 27278- Telephone Number Fax Number Email Address 919-245-2453 donaldson Oran ecount nc. ov Co-Appli cant/Account Party Name to be shown on Letter of Credit if different than Applicant above. Contact Name Physical Address(No post office boxes allowed.) City State ZIP Code Telephone Number Fax Number Email Address Beneficiary Beneficiary Name(In favor of) Attention To(Courier Purposes) Telephone Number Travelers Indemnity Company Credit Risk Mgt, R Thomas 860.954.9531 Coffey Physical Address(No post office boxes allowed.) City State ZIP Code ONe Tower Square, GS05 Harford CT 06183- Advising/Confirming Bank Bank Name Request Bank To SWIFT Code ❑Advise ❑ Confirm Department/Contact Name Telephone Number Physical Address(No post office boxes allowed.) City State ZIP Code ❑Issue Letter of Credit in favor of Advising/Confirming bank requesting the issuance of a guarantee/Performance bond in favor of the beneficiary stated above with an expiry date of 30 days prior to the expiry date of this letter of credit. Please indicate the type of local guarantee that is being requested. ❑ Bid Bond ❑Advance Payment Guarantee ❑ Performance Guarantee ® Payment Guarantee ❑Warranty Guarantee ❑Other(specify)Letter Of Credit ❑ Please have local guarantee issued in accordance with the attached format ❑ No format provided—request issuance in accordance with local practice If the locally issued guarantee is to be delivered to a party other than the named beneficiary,please provide the following Name Telephone Number Address E-mail Address Standby Letter of Credit Application and ATement Initial Expiration Date One year If this Letter of Credit is to have an Automatic Extension, complete the information below. ® Automatic Extension-The Letter of Credit may be automatically extended for: ® One Year or ❑ Other from the present or any future expiration date.The Applicant(s)will pay the applicable extension processing fee of$100.00 in addition to commissions as detailed in this application. If the Letter of Credit is not extended,the Bank will provide notice to the Beneficiary at least 90 days prior to expiration. Such extension or termination of the Letter of Credit shall be at the sole discretion of Bank. ❑ Notwithstanding the above, in no event may the Letter of Credit be renewed beyond The Applicant requests Bank to issue its irrevocable Letter of Credit,pursuant to the terms and conditions of this Agreement. Drawing(s)under this Letter of Credit are available against: 1. Beneficiary's draft(s)drawn at sight on Truist Bank at the address shown in the Letter of Credit unless the Letter of Credit is to be confirmed by a Confirming Bank, in which case the draft will be drawn at sight on the Confirming Bank at the address shown above. 2. Original of the Letter of Credit and any amendments 3., 0 Issue clean Letter of Credit:We understand that by not instructing Truist Bank to require any documentation that would evidence a default on our part,the presentation of a draft,regardless of any disputes or claims made outside this Standby Letter of Credit constitutes a draw which would obligate us to reimburse Truist Bank. 0 A certificate purportedly signed by the Beneficiary or a duly authorized officer(or one describing himself therein as such officer)of the Beneficiary stating 0 Issue Letter of Credit in accordance with the attached document.Applicant must sign the attached document and state the following on the document:"This attachment forms an integral part of our application dated in the amount of 300,000.00 4. Other Documents DESCRIPTION OF THE UNDERLYING TRANSACTION. This information will not be a part of the Letter of Credit but is required for compliance with government regulations. Please provide a general description of the transaction to which this letter of credit relates. To fund Workers Compensation expenses. See sample attached. Please list the full name and address of any party to this transaction which is not listed elsewhere on this application such as a supplier or end user. Please list any merchandise associated with this transaction and any countries not mentioned elsewhere in this application 318048(11/21) Page 2 of 10 Truist Corporate Forms Standby Letter of Credit Application and Ags?ement Additional Terms and Conditions If the Letter of Credit is to be issued pursuant to a Syndicated Credit Agreement,complete the following: The Applicant(s)requests Bank to issue its irrevocable Letter of Credit pursuant to the terms and conditions of this Agreement and the Syndicated Credit Agreement dated as of among which terms and conditions are subject to this Application by reference thereto, provided,that in event of any conflict between this Application and the Syndicated Credit Agreement, the terms of the Syndicated Credit Agreement shall control. Notwithstanding the terms above, upon termination of the Syndicated Credit Agreement or upon the Bank no longer being a lender under the Syndicated Credit Agreement, the terms of this Agreement will control and be in full force and effect for any Letters of Credit issued pursuant to this Agreement. In addition to the preceding terms and conditions described in this Application and Agreement ("Agreement"), the Applicant further agrees with Truist Bank("Truist"or"Bank")as follows: 1. The Bank is authorized to honor drafts presented to it pursuant to the Letter of Credit and in accordance with the terms thereof. It is expressly agreed that the Bank shall honor any draft without requiring additional evidence other than as stated in the Letter of Credit. 2. The Applicant promises to pay to the Bank,on demand and in immediately available funds at any of its offices,or at such place as the Bank may in writing designate the following amounts(hereinafter"Obligations"). (a) The amount of each draft or other request for payment("draft")drawn under or purporting to be drawn under the Letter of Credit. (b) Applicant further agrees to pay the bank, on demand, its commissions,fees and any and all charges and expenses(including all charges for legal services)which may be paid or incurred by Bank in connection with the Letter of Credit, including but not limited to costs of complying with any and all applicable governmental exchange regulations and all correspondent's charges, for applicant accounts. Any amounts which are not paid when due shall bear interest, payable on demand, until paid in full. Interest payable hereunder shall be at a fluctuating rate, calculated on the basis of 360-day year and actual days elapsed, which is four percent (4%)above the prime rate with each change in the prime rate automatically and immediately changing the rate applicable hereto. For purposes hereof, "prime rate"means the fluctuating rate in effect at the time in question that is publicly announced by you from time to time as being your prime rate hereafter in effect. Such payment shall be subject to a minimum late payment fee.Applicant shall not be entitled a rebate of any portion of the commissions,fee,or charges paid to Bank if the Letter of Credit shall expire or terminate,or if the amount available under the Letter of Credit shall be reduced prior to the end of the period for which such commissions,fee,or charges are paid. (c) All expenses which the Bank may pay or incur in connection with issuing,confirming or advising the Letter of Credit,including but not limited to Telex/Swift transmissions fee, overnight domestic courier fee,foreign courier fee and faxing fee, any fees charged to the Bank by any other third parties in connection with the issuance, advise/confirmation, negotiation, amendment or collection of the Letter of Credit, any stamp taxes, recording taxes or similar taxes or fees payable in connection with the Letter of Credit or this Agreement, and reasonable attorney's fees and disbursements and other dispute resolution expenses to protect or enforce the Bank's rights and remedies under or in connection with the Letter of Credit,this Agreement or other related documents including to respond to any notice of fraud,forgery,illegality, presentation under the Letter of Credit,or to defend against any action in which an injunction is sought or obtained. (d) Upon issuance of the Letter of Credit,the Applicant agrees to pay the Issuance Processing Fee described below. In addition, and as long as the Bank is obligated under the Letter of Credit, the Applicant agrees to pay the commission described below, and in the absence of such description, in such amounts and at such commission rates as the Bank may in its discretion reasonably determine. In addition,the Applicant agrees to pay the following items as applicable(i)a late charge equal to 5%of any amount more than 15 days past due;and(ii)a reasonable amendment fee for processing any amendment or extension to the Letter of Credit. (e) As to drafts which are payable in currency other than United States currency,the amount to be paid by Applicant will be the amount required to purchase the currency from Bank at Bank's current selling rate for cable transfers to the place of payment in the currency and amount in which such draft was drawn. If there is then no current selling rate generally offered by Bank for effecting such cable transfers, Applicant agrees on demand to pay Bank an amount, which Bank then deems necessary to pay or provide for the payment of Applicant's Obligations hereunder. By prior arrangement satisfactory to Bank, as to any draft payable in currency other than United States currency,Applicant may pay to Bank the amount of such draft by making such amount immediately available to Bank by the deposit of such amount(in the currency in which such draft is payable)to an account maintained by Bank at a financial institution to be specified by Bank under advice to the Bank. Notwithstanding the manner of payment or the currency in which any draft is drawn,Applicant shall remain liable for any deficiency which may result if the actual cost to Bank or settlement of Bank's obligation under the Letter of Credit proves to be in excess of the amount so paid by Applicant and Applicant shall be entitled to a refund,without interest,of any excess payment made to Bank. (f) Applicant authorizes Bank to debit any of Applicant's accounts at Bank for any payments due under this Agreement,Applicant further certifies that it holds legitimate ownership of each of these accounts and preauthorizes this debit as part of its ownership rights. 3. Claims against Bank; Waivers; Exculpations; Limitations of Liability, Ratification; Accounting. (A)Applicant's Obligations shall be irrevocable and unconditional and performed strictly in accordance with the terms of this Agreement, irrespective of: (i)any change or waiver in the time,manner or place of payment of or any other term of the Obligations (including any release)of any other party who, if applicable, has guaranteed or is jointly and severally liable for any of the Obligations or granted any security therefore; (ii) any exchange, change or release of any Collateral or other collateral (including any failure of Bank to perfect any security interest therein),for any of the Obligations, (iii)any presentation under the Letter of Credit being forged,fraudulent or any statement therein being untrue or inaccurate, (iv)any agreement by Bank and any Beneficiary extending or shortening Bank's time after presentation to examine documents or to honor or give notice of discrepancies. (B)Without limiting the foregoing, it is expressly agreed that the obligations of Applicant to reimburse or to pay Bank pursuant to this Agreement will not be excused by ordinary negligence, gross negligence, wrongful conduct or willful misconduct of Bank. However, the foregoing shall not excuse Bank from liability to Applicant in any independent action or proceeding brought by Applicant against Bank following such reimbursement or payment by Applicant to the extent of any unavoidable direct damages suffered by Applicant that are caused directly by Bank's gross negligence or willful misconduct is found in a final, non-appealable judgment by a court of competent jurisdiction; provided that(i)Bank shall be deemed to have acted with due diligence and reasonable care if it acts in accordance with standard Letter of Credit practice of commercial banks located in the place that the Letter of Credit is 318048(11/21) Page 3 of 10 Truist Corporate Forms Standby Letter of Credit Application and ATement issued; and (ii) Applicant's aggregate remedies against Bank for wrongfully honoring a presentation or wrongfully retaining honored documents shall in no event exceed the aggregate amount paid by Applicant to Bank with respect to the honored presentation, plus interest. (C) Without limiting any other provision of the Agreement, Bank and, as applicable, its correspondents: (i) may rely upon any oral, telephonic, telegraphic, facsimile,electronic,written or other communication believed in good faith to have been authorized by Applicant,whether or not given or signed by an authorized person; (ii)shall not be responsible for any acts or omissions by, or the solvency of, any Beneficiary, any nominated person or any other person; (iii)may honor any presentation or drawing under the Letter of Credit that appears on its face substantially to comply with the terms and conditions of the Letter of Credit; (iv)may honor or reimburse the issuing bank for any presentation under any Guarantee, requested pursuant to this Agreement,that appears on its face to substantially comply with the terms and conditions of such requested Guarantee and may honor or reimburse the issuing bank for a demand for payment under a demand Guarantee or any counter guarantee(which includes but is not limited to a letter of credit)that is issued subject to the Uniform Rules for Demand Guarantees,2010 Revision, International Chamber of Commerce Publication No 758("URDG")including but not limited to: (1)in the case of a demand guarantee other than a counter-guarantee,such demand for payment is not supported by a statement indicating in what respect the Bank or other applicant named in such Guarantee is in breach of its obligations under any underlying agreement or transaction, unless the demand guarantee expressly requires presentation of such supporting statement and regardless of whether such demand guarantee expressly excludes any requirement for such a supporting statement or(2)in the case of a counter- guarantee, such demand is not supported by a statement by the party to whom such counter-guarantee was issued indicating that such party has received a complying demand under the demand guarantee or counter-guarantee issued by such party, unless the counter-guarantee expressly requires presentation of such supporting statement and regardless of whether the related counter-guarantee expressly excludes the requirement for such a supporting statement, (v) may permit partial drawings under the Letter of Credit, except as otherwise expressly stated in the Letter of Credit,and may honor the relative Drafts without inquiry(vi)may disregard any requirement of the Letter of Credit that presentation be made to it at a particular place or by a particular time of day(but not any requirement for presentation by a particular day)or that notice of dishonor be given in a particular manner, and Bank may amend or specify any such requirement in the Letter of Credits; (vii) may accept as a draft any written or electronic demand or request for payment under the Letter of Credit, even if nonnegotiable or not in the form of a draft, and may disregard any requirement that such draft, demand or request bear any or adequate reference to the Letter of Credit; (viii) may honor, before or after its expiration,a previously dishonored presentation under the Letter of Credit,whether pursuant to court order,to settle or compromises any claim that is wrongfully dishonored or otherwise, and shall be entitled to reimbursement to the same extent (if any) as if it had initially honored plus reimbursement of any interest paid by it; (ix) may honor, upon receipt, any drawing that is payable upon presentation of a statement advising negotiation or payment(even if such statement indicates that a draft or other document is being separately delivered)and shall not be liable for any failure of any Draft or document to arrive or to conform with the Draft or document referred to in the statement or any underlying transaction; (x) may retain proceeds of the Letter of Credit based on a valid exercise of Bank's set off rights or an apparently applicable attachment order or blocking regulation; (xi)may select any branch or affiliate of Bank or any other bank to act as advising,transferring, confirming and/or nominated bank under the law and practice of the place where it is located; (xii)shall not be responsible for any other action or inaction taken or suffered by Bank or its correspondents under or in connection with the Letter of Credit, with any presentation thereunder or with any Collateral, if required or permitted under any applicable domestic or foreign law or Letter of Credit practice. Examples of laws or practice that may be applicable,depending upon the terms of the Letter of Credit and where and when it is issued, include the UCC,the Uniform Rules for Demand Guarantees("URDG")the UCP,the ISP, published rules of practice, applicable standard practice of banks that regularly issue Letters of Credit, and published statements or interpretations on matters of standard bank practice.(D)Neither Bank nor any of its correspondents shall be liable in contract,tort,or otherwise,for any punitive, exemplary, consequential, indirect or special damages. Any claim by Applicant under or in connection with this Agreement or the Letter of Credit shall be reduced by an amount equal to the sum of(i)the amount(if any) saved by Applicant as a result of the breach or other wrongful conduct complained of;and (ii)the amount(if any)of the loss that would have been avoided had Applicant taken all reasonable steps to mitigate any loss, including by enforcing its rights in the transaction(s)underlying the Letter of Credit, and in case of a claim of wrongful dishonor, by specifically and timely authorizing Bank to effect a cure. 4. As security for the performance of all present or future Obligations of every kind and description, however evidenced, of the Applicant, whether such Obligations are direct or indirect, fixed or contingent, liquidated or unliquidated, including any extensions, amendments, modifications or renewals thereof the Applicant hereby grants the Bank a security interest in and the right of possession and disposal of the following collateral ("Collateral"): (a) Bank shall be subrogated to the Applicant's rights in respect of any transaction in any way related to the Letter of Credit or any Drafts, including rights against Beneficiary,any collateral,all of the Applicant's rights and causes of action against any and all parties arising from or in connection with any contract of sale or purchase of property covered by the Letter of Credit or any other transaction involving the Letter of Credit,or any guarantees,agreements or other undertakings(including those in effect between the Applicant and any Account Party named in the Letter of Credit),Letters of Credit,policies of insurance or other assurances in connection therewith;and (b) To the extent permitted by applicable law, all tangible and intangible property, rights, claims and demands of every kind (including deposit balances)now or hereafter belonging to the Applicant and which may now or hereafter be in the possession,custody or control of,or in transit to,or set apart for the Bank or its Agents for any purpose;and (c) The following specifically described collateral,if applicable: None The terms and covenants of the security instruments(s)covering such collateral are hereby made a part of this Agreement and incorporated herein by this reference. The above described property shall be held by Bank as collateral for: (a) any and all Obligations and liabilities of Applicant to Bank hereunder, and (b) any and all other Obligations and liabilities of Applicant to Bank, whether now existing or hereinafter arising, due or to become due, whether individually or jointly with others, and whether direct, indirect, absolute or contingent as maker, endorser,guarantor,surety or otherwise. 5. Each Applicant warrants and represents to Bank that it has all requisite power and authority to conduct its business, to own its properties and to execute and deliver and perform all its Obligations under this Application. (a) The execution and delivery by each Applicant of, and the performance by each Applicant of its Obligations hereunder have been duly authorized by all requisite action on the part of each Applicant,and do not and will not(i)violate any provision of any law, rule or regulation,or any order,writ,judgment,injunction,or ruling of any court or governmental agency,or(ii)be in conflict with,result in a breach of,or constitute, with notice or lapse of time or both, a default under any indenture, agreement or other instrument to which each Applicant is a parry or by which each Applicant or any of its property is bound or under its organizational documents. (b) The Application, when executed and delivered to the Bank, will be the legal, valid and binding agreement of each Applicant, enforceable against Applicant in accordance with its terms. 318048(11/21) Page 4 of 10 Truist Corporate Forms Standby Letter of Credit Application and ATement 6. Upon the occurrence of any of the following events of default(hereinafter"Event of Default"),the Bank,at its option, may declare the amount of the Letter of Credit and any or all of the other Obligations of the Applicant to the Bank immediately due and payable and the Bank may exercise any and all of the rights and remedies of a secured party under the Uniform Commercial Code and other applicable law and all rights provided herein, all of which rights and remedies shall,to the full extent permitted by law,be cumulative: (a) The Applicant fails to pay when due any Obligation or is otherwise in default under this Agreement or any other agreement; (b) The falsity or the appearance of falsity made by the Applicant in this Agreement or in connection with this Agreement or any other agreement with the Bank; (c) The failure of the Applicant to observe or perform any of the terms or provisions of this Agreement,or any such default by any guarantor of this Agreement; (d) The breach of any of the Applicant's representations or warranties in this Agreement or any other agreement with the Bank; (e) Applicant grants a security interest in or a lien on any of its assets to any person without granting the Bank a security interest in or lien on the same assets on a pari passu basis. (f) The death,dissolution,merger,consolidation or termination of existence of the Applicant or any guarantor; (g) The insolvency or inability to pay debts as they mature of the Applicant or any guarantor, or the application for the appointment of a receiver for any of them, or the filing of a petition under any provision of the Bankruptcy Code or other insolvency law or statute by or against any of them,or any assignment for the benefit of Creditors by or against any of them; (h) The entry of a judgment against the Applicant or any guarantor or the issuance or service of any attachment, levy or garnishment against the Applicant or any guarantor or the repossession or seizure of property of any of them. (i) Any deterioration or impairment of the Collateral or any part of the Collateral or any decline or depreciation in the value or market value of the Collateral(whether actual or reasonably anticipated),which causes the Collateral,in the judgment of the Bank,to become unsatisfactory as to character or value; (j) A material change in the ownership,control or management of the Applicant or any guarantor unless such change is approved by the Bank or the sale or transfer by any Applicant or any guarantor of all or substantially all of such party's assets other than in the ordinary course of business; (k) As permitted by applicable law, a determination by the Bank a material adverse change in the financial condition, business results, assets,or liabilities of the Applicant or any guarantor has occurred since the date of this Agreement;or (1) Applicant shall fail to pay any principal,premium,interest or if any event shall occur or any condition shall exist in respect of any indebtedness, including but not limited to(any Credit agreement outstanding with Truist, if any)owed by Applicant the effect of which is to cause(or permit the holder or owner of such indebtedness to cause)such indebtedness or any portion thereof, to become due prior to its stated maturity or prior to its regularly scheduled dates of payment. The Bank shall have no obligation or commitment to issue,extend,or amend or renew any Letter of Credit if an Event of Default has occurred and is continuing.On the date of any issuance, extension, renewal or amendment of any Letter of Credit,Applicant represents and warrants that(1)no Event of Default exists or would result from the issuance hereof and (ii)that all the representations and warranties herein are true and correct on and as of such date. 7. The Applicant shall comply with all foreign and US Laws, rules and regulations now or hereafter applicable to the execution, delivery and performance by the Applicant of this Agreement or to the transactions related to the Letter of Credit. 8. Applicant will indemnify and hold harmless Bank and its officers, directors, affiliates, employees, attorneys and agents (each, an "Indemnified Party") from and against any and all claims, liabilities, losses, damages, costs and expenses (including reasonable attorneys' fees and disbursements and other dispute resolution expenses (including fees and expenses in preparation for a defense of any investigation, litigation or proceeding) and costs of collection) that arise out of or in connection with: (A) the Letter of Credit or any pre-advice of its issuance; (B) any payment or action taken or omitted to be taken in connection with the Letter of Credit or this Agreement(including any action or proceeding to (i) restrain any presentation, (ii)compel or restrain any payment or the taking of any other action under the Letter of Credit, (iii)obtain damages for wrongful dishonor or honor of the Letter of Credit or for breach of any other duty arising out of or related to the Letter of Credit, (iv) compel or restrain the taking of any action under this Agreement or(v)obtain similar relief(including by way of interpleader,declaratory judgment,attachment or otherwise), regardless of who the prevailing party is in any such action or proceeding); (C)an adviser or a confirmer or other nominated person seeking to be reimbursed, indemnified or compensated, (D) any beneficiary requested to issue its own undertaking seeking to be reimbursed, indemnified or compensated or(E)any third party seeking to enforce the rights of an applicant,beneficiary, nominated person,transferee,assignee of Letter of Credit proceeds,this Agreement, the Collateral or the Letter of Credit; (G)the release by Applicant of any Letter of Credit to any third party prior to its issuance by the Bank; or (H) any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority(including with respect to any document or property received under this Agreement or the Letter of Credit)or any other cause beyond the Bank's control, except to the extent such liability, loss, damage, cost or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted directly from such Indemnified party's gross negligence or willful misconduct. Applicant will pay on demand from time to time all amounts owing under this section. If and to the extent that the Obligations of Applicant under this section are unenforceable for any reason,Applicant agrees to make the maximum contribution to the payment of such obligation that is permissible under applicable law. 9. Applicant is responsible for approving the text of the Letter of Credit as issued by Bank and as received by any Beneficiary. Applicant's ultimate responsibility for the final text shall not be affected by any assistance Bank may provide such as drafting or recommending text or by Bank's use or refusal to use text submitted by Applicant. Bank does not represent or warrant that the Letter of Credit will satisfy Applicant's requirements or intentions.Applicant is responsible for the suitability of the Letter of Credit for Applicant's purposes.Applicant will examine the copy of the Letter of Credit,and any other documents sent by Bank in connection with the Letter of Credit,and shall notify Bank of any non-compliance with Applicant's instructions,and of any discrepancy in any document under any presentment or other irregularity,within 3 business days after Applicant receives or should have received any of such documents(the"Required Time");provided,however,if the end of the Required Time falls on a weekend or Bank holiday, the deadline shall be extended to the end of the next business day. Applicant 's failure to give timely and specific notice during the Required Time shall automatically waive Applicant's right to object,and will be deemed to have authorized or ratified Bank's action or inaction,and preclude Applicant from raising any objection as a defense or claim against Bank. 318048(11/21) Page 5 of 10 Truist Corporate Forms Standby Letter of Credit Application and AMement 10. Upon the occurrence and during the continuation of any Event of Default or in the event of fees imposed upon the Bank by other parties in connection with the issuance,amendment, maintenance or collection of the Letter of Credit,the Applicant agrees that the Bank may,to the extent permitted by applicable law, set off against the balance due under this Agreement any and all Letter of Credits, money, stocks, bonds or other security or property of any nature whatsoever on deposit with, held by or in the possession of the Bank or its Agents to the Letter of Credit of or for the Applicant's account,without prior notice to or consent by the Applicant,but the Bank shall provide prompt written notice to the Applicant of such set off.The Bank's rights under this paragraph are in addition to other rights and remedies(including,without limitation,other rights of setoff)which the Bank may have. 11. The Applicant agrees to execute and deliver to the Bank any other documents and instruments the Bank may from time to time reasonably require in connection with the Letter of Credit in form satisfactory to the Bank,and will join the Bank in executing financing statements or other documents and pay the cost of filing the same,including all recordation,transfer and other taxes or fees. 12. Should the Bank, after the date hereof, determine that the adoption of any law or regulation regarding capital adequacy, or any change in the interpretation or administration thereof, has or would have the effect of reducing the Bank's rate of return under this Agreement or under the Letter of Credit to a level below that which the Bank could have achieved but for such adoption or change, by an amount which the Bank considers to be material, then, from time to time, 30 days after written demand by Bank, the Applicant shall pay to the Bank such additional amounts as will compensate the Bank for such reduction. Each demand by the Bank shall be made in good faith and shall be accompanied by a certificate claiming compensation under this paragraph and stating the amounts to be paid to it hereunder and the basis therefore. 13. In the event of any change,modification or amendment to the Letter of Credit,this Agreement shall be binding upon the Applicant with regard to the Letter of Credit as so changed, modified or amended and to any action taken by the Bank or any of its Agents in accordance with such change, modification or amendment, expressly including but not limited to, a change of the Beneficiary's name,change of the Beneficiary's address or any reduction in the amount of the Letter of Credit. 14. The terms and conditions of this Agreement may not be waived or amended except with the written consent of the Bank.The Bank may waive any default or remedy any default without waiving the default remedied or any other prior or subsequent default.The Bank's failure to exercise any right or take any action under this Agreement shall not constitute a waiver of that or any other right or action.The Bank is expressly authorized to make such minor changes in the terms set forth herein as it, in its sole discretion, deems necessary to issue the Letter of Credit provided that no such changes shall vary the principal terms hereof. 15. (A)Co-Applicants. If the Agreement is signed by two or more Applicants, it shall be the joint and several obligation of each. Each named Account Party shall be an Applicant for purposes of this Application and is subject to the terms, conditions and liabilities set forth herein. Bank at its discretion may accept, or seek instruction, from any Applicant or Co-Applicant regarding a Letter of Credit, including, without limitation, any amendment thereto or waiver of any discrepancy there under, and until the Bank receives written notice of revocation of such authority regarding one of the parties at the Standby Letter of Credit Department, each Applicant and Co-Applicant shall be bound by and hereby affirms the instructions of the other. (B)Financial Institution as Customer. If the Agreement is signed as Applicant or Co-Applicant by bank,trust company,or other financial institution for its customer,such Applicant appoints Bank as its agent to issue the Letter of Credit.Such Applicant and its customer agree to act in accordance with and be subject to the Agreement. If such Applicant is required (i) to reimburse Bank; (ii) to pay the Bank in the Event of Default; (iii) to indemnify Bank'(iv)to provide collateral,then its customer agrees to reimburse, pay or indemnify Applicant for the full amount of those payments and to provide the requisite collateral. In addition, the Financial Institution agrees to obtain its customer's consent before agreeing to waive any discrepancy in the documents related to the Letter of Credit or waive or amend any terms of the Agreement or the Letter of Credit. 16. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of the Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. 17. This Agreement shall become effective upon its receipt by the Bank provided that the Bank shall not be obligated to issue the Letter of Credit until this Agreement is accepted by the Bank's authorized officer. 18. This Agreement shall be binding upon the Applicant, its successors and assigns, and shall inure to the benefit of the Bank, its successors, transferees and assigns. 19. If any consideration transferred to Bank in payment of,or as collateral for,or in satisfaction of the Obligations,shall be voided in whole or in part as a result of(A)a subsequent bankruptcy or insolvency proceeding; (B)any forfeiture or in rem seizure action or remedy; (C)any fraudulent transfer or preference action or remedy;or(D)any other criminal or equitable proceeding or remedy,then Bank may at its option recover the Obligations or the consideration so voided from Applicant. In such event, Bank's claim to recover the voided consideration shall be a new and independent claim arising under this Agreement,and shall be jointly and severally due and payable immediately by Applicant. 20. Unless specifically committed to do so in a writing signed by the Bank,the Bank need not consent to any Letter of Credit amendment. If the Letter of Credit may be extended or terminated by a notice given or other action taken by the Bank(with or without the passage of time),then,whether or not requested to do so by the Applicant, the Bank shall have the right to give such notice or take such action, to fail or refuse to do so, or fail to retain proof of doing so. If the Bank gives such notice or takes such action at the Applicant's request, then the Applicant shall obtain the beneficiary's acknowledgment thereof and, in the case of Letter of Credit termination, return of the original Letter of Credit. If the Bank fails or refuses to give a notice of non-extension or termination at the Applicant's timely written request, then the Bank's Letter of Credit fees shall be calculated as if the Bank had given such notice or taken such action. 21. Bank may grant participations,without the consent of the Applicant,or may issue a Guarantee,at the request of the Applicant,in favor of beneficiary provided that the Applicant acknowledges and agrees that information pertaining to the Applicant as it relates to this Agreement, Participation or request for a Guarantee may be disclosed to the actual or prospective participants,issuers,transferees or assignees. Bank is authorized without the consent of the Applicant or Account Party to disclose information about this transaction to third parties including,but not limited to proposed or actual purchasers of a participation in the transaction and parties acting or proposed as issuers,transferees or assignees 318048(11/21) Page 6 of 10 Truist Corporate Forms Standby Letter of Credit Application and A99ement 22. The Applicant(s), individually and/or by the signature(s) of its authorized representative below, hereby certifies that: the foregoing has been carefully read by the Applicant and is given to Bank for the purpose of obtaining the credit described above and other credit from time to time in whatever form;the information in this Application and any other documents or information submitted in connection with this Application or any other credit request are true and correct statements of the Applicant's financial condition and may be treated by the Bank as a continuing statement thereof until replaced by a new Application or until the Applicant specifically notifies the Bank in writing of any change; and the credit requested herein and any other credit obtained from the Bank by the Applicant on the basis of the information contained in this Application shall be used solely for business and commercial purposes.The Applicant authorizes the Bank and shall cause any Guarantors to authorize the Bank to:verify at any time any information submitted to the Bank by or on behalf of the Applicant and/or any Guarantor; obtain further information concerning the credit standing of the Applicant, its representatives and Guarantors; and exchange such credit information with others. The Applicant agrees to provide additional information,financial or otherwise,upon request. 23. The International Standby Practices (ISP98) or the Uniform Customs and Practices for Documentary Credits (UCP), other agreed upon rules of practice or such later revisions reflecting generally accepted practice,custom and usage of Letters of Credit as stated in the text of the actual Letter of Credit shall in all respects be deemed a part of this Agreement as fully as if incorporated herein and shall apply to the Letter of Credit. The Applicant agrees that certain material events and occurrences relating to the Letter of Credit and this Agreement bear a reasonable relationship to the laws of Georgia. The laws of such jurisdiction and the federal law of the United States shall govern the construction of this Agreement and the rights and duties of the parties,except to the extent such laws are inconsistent or in variance with the ISP98, UCP or other rules stated in the Letter of Credit, as applicable,then to the extent permitted by law,the UCP or the ISP98 or other rules stated in the Letter of Credit, as applicable, shall govern or be read to explain the applicable law.The ISP98, UCP or other rules stated in the Letter of Credit shall serve, in the absence of proof to the contrary,as evidence of standard practice with respect to the subject matter hereof. 24. IN ANY PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THE AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER,APPLICANT IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN ANY COUNTY IN THE STATE OF GEORGIA AND AGREES NOT TO RAISE ANY OBJECTION TO THE JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN THE JURISDICTION. TO THE EXTENT PERMITTED BY APPLICABLE LAW,APPLICANT AND BANK HEREBY KNOWINGLY,VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE,TO THE FULLEST EXTENT PERMITTED BY LAW,THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION,WHETHER IN CONTRACT OR TORT,AT LAW OR IN EQUITY, BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LETTER OF CREDIT AND ANY OTHER DOCUMENT OR INSTRUMENT RELATED THERETO. 318048(11/21) Page 7 of 10 Truist Corporate Forms Standby Letter of Credit Application and A99ement Commissions If the commission rate is not completed,the commission will be charged at 3%or minimum $1,000.00,whichever is greater. 1. Issuance Processing Fee: $250.00 plus the commission in number two(2)below 2. The commission payable on the Letter of credit will be 0.50% . If the commission rate calculates to less than$1,000,the minimum charge of$1,000.00 will apply. Commissions based on percentage are calculated on an actual/360 basis, that is, actual number of days elapsed over a year of 360 days. The commission is subject to change. Initial commission and issuance processing fees are due and payable at time of issuance. Applicant Account Number 6167 will automatically be debited for fees and charges, unless otherwise indicated on approval documentation. 3. If this Letter of Credit has an automatic extension clause an Extension Fee of$100 will be charged in addition to the Commission above for each extended period. Bills and/or debit advices will be sent to Account Party unless otherwise specified below Company Name Attention To Orange County, North Carolina Gary Donaldson Physical Street Address City State ZIP Code 405 Meadowlands Drive, PO Box 8181 Hillsborough NC 27278- Telephone Number Fax Number 919-245-2453 Special Instructions See sample LC attached. Applicant(Obligor) Co-Applicant/Account Party Orange County, North Carolina Entity or Individual's Name Entity or Individual's Name Local Government Type of Organization Type of Organization North Carolina State of Organization State of Organization Signature Signature Gary Donaldson Printed Name Printed Name Chief Financial Officer Title Title Date Date Affix Corporate Seal if applicable. Affix Corporate Seal if applicable. After you have completed the application, sign and forward along with all applicable attachments to your Relationship Manager at Truist Bank. 318048(11/21) Page 8 of 10 Truist Corporate Forms Standby Letter of Credit Application and Agement Bank Use Only—This section must be completed by the Relationship Manager(RM). Please specify where this letter of credit was approved then complete the appropriate section below: ❑ WLS Production Center(complete first section) ❑ In the region (complete second section) ❑ In Special Assets Department (next two sections do not apply) For Letters of Credit approved by a WLS Production Center Work Package Number ACAPS ID# or nCino Work Package# and Request# Type of approval: Guidance Line for multiple LCs ❑ or Approval for Single LC only ❑ Certificate of Deposit# Amount Date Issued Note: For Private Wealth clients,the requirement for a CD may be waived by the credit approver. If the requirement for a CD has been waived by the WLS Production Center Credit Approver, please check here ❑ This letter of credit: Has an auto-extension clause (evergreen) ❑ Yes ❑ No Is for Insurance Purposes ❑ Yes ❑ No If either answer is Yes,then the CD must be auto-renew. For Letters of Credit approved by the region(including overridden from WLS Production Center): Work Package Number ACAPS ID# or nCino Work Package# and Request# Type of approval: Guidance Line for multiple LCs ❑ or Approval for Single LC only ❑ This letter of credit: Has an auto-extension clause (evergreen) ❑ Yes ❑ No Is for Insurance Purposes ❑ Yes ❑ No If yes is checked on either, please complete the following section Is this LC being issued under a sublimit of a committed line of credit? ❑ Yes ❑ No Is this LC secured by properly margined and monitored liquid collateral? ❑ Yes ❑ No If the answer to both of these is No,the following certification must be completed and signed. An exception to the collateral requirements in CML2131 has been approved and cited as TPE#18 in the credit approval package. (Signature) ❑ Region or Line of Business Senior Credit Officer or Designee (Print name) ❑ CIB Risk Manager or Designee (Print name) 318048(11/21) Page 9 of 10 Truist Corporate Forms Standby Letter of Credit Application and A99ement NOTE: Letters of Credit issued for Consumer Purposes are prohibited by bank policy. This Letter of Credit application,the customer,amount, auto renewal terms, and expiration date of which are referenced herein, is approved for issuance. I certify that I have appropriate lending authority and/or have obtained the same. I also certify that the pricing on this letter of credit is in accordance with the standards of my Line of Business. RM Name RM Signature Date Officer Number Center Number Telephone Number Fax Number Customer Name DDA Account Number COMPASS Obligor Number COMPASS Obligation Number ❑ Financial Standby(69x) ❑ Performance Standby(68x) Special Instructions • E-mail to LettersOfCreditCcDTruist.com • Send original to Truist Bank Attn: Standby Letter of Credit 7701 Airport Center Drive, STE 2100 MAIL CODE 527-99-02-85 Greensboro, NC 27409 • Applications received after 2:30 p.m. EST,will be considered as received the following day. • For questions,call Client Services at 800-951-7847,option 1. To avoid duplication of issuance,enter date form was originally faxed to International Operations. 318048(11/21) Page 10 of 10 Truist Corporate Forms 39 FOR INTERNAL IDENTIFICATION PURPOSES ONLY Applicant IRREVOCABLE LETTER OF CREDIT NO. TO: The Travelers Indemnity Company (Beneficiary) Credit Risk Management Attn: R. Thomas Coffey One Tower Square, GS05 Hartford, CT 06183 We hereby establish this clean irrevocable Letter of Credit in favor of the aforesaid addressee ("Beneficiary") for drawings up to United States $300,000.00 effective immediately. This Letter of Credit is issued, presentable and payable at our office at (issuing bank's address) and expires with our close of business on , 20 . After the Letter of Credit has been issued, it cannot be revoked or reduced without the consent of the Beneficiary. The term"Beneficiary" includes any successor by operation of law of the named Beneficiary including, without limitation, any liquidator,rehabilitator, receiver or conservator. We hereby undertake to promptly honor your sight draft(s) drawn on us, indicating our Credit No. , for all or any part of this Credit if presented at our office specified in paragraph one on or before the expiry date or any automatically extended expiry date. If you so choose, you will be able to draw on this Letter of Credit more than once, so long as the sum of the amounts which you have drawn does not exceed the full amount of the Letter of Credit. Any charges due and owing to the issuing bank from the account party or any other person or to the account party or any other person from the issuing bank may not be collected or deducted from the proceeds of the Letter of Credit. This Letter of Credit sets forth in full the terms of our undertaking, and such undertaking shall not in any way be modified, amended or amplified by reference to any note, document, instrument or agreement referred to herein or in which this Letter of Credit is referred to or to which this Letter of Credit relates and any such reference shall not be deemed to be incorporated herein by reference. The obligation of(issuing bank)under this Letter of Credit is the individual obligation of(issuing), and is in no way contingent upon reimbursement with respect thereto. It is a condition of this Letter of Credit that it is deemed to be automatically extended without amendment for one year from the expiry date hereof, or any future expiration date, unless 90 days prior to any expiration date we notify you by registered mail, or overnight courier that we elect not to consider this Letter of Credit renewed for any such additional period. In that event,you may draw hereunder on or prior to the then relevant expiration date, up to the 40 full amount then available hereunder, against your sight draft(s) on us, bearing the number of this Letter of Credit. This Letter of Credit is subject to and governed by the Laws of the State of Connecticut and the International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98) and, in the event of any conflict, the Laws of the State of Connecticut will control. Very truly yours, (Issuing Bank)