ACE Risk Management®

already have provided, as indicated in E) Collateral & Paid Loss Deposit Fund above. Additional amounts may be due at other times, all as provided in the Collateral Agreement.

The Paid Loss Deposit Fund and Collateral are subject to all of the terms and conditions of the Collateral Agreement executed by you and us.

Client will maintain a Claim Fund and will continue to remit additional funds, upon ESIS's written request, sufficient to maintain a minimum balance (the "Required Level") in the Claim Fund in an amount equal to the greater of: a) $425,943; or b) the sum of all claim payments and allocated loss expenses paid by ESIS during the previous 4.5 months (excluding payments funded as Special Billed Amounts).

Special Billed Amount: means an individual claim payment, or individual payment of allocated loss expense, that will exceed the sum of $50,000, and the funds for which will be specially requested of the Insured by ESIS, and funded by the Insured, outside of the Claim Fund.

ESIS will make claim payments and payments for allocated loss expenses from funds deposited by the Insured for the Claim Fund, but any payment qualifying as a Special Billed Amount will be made from funds specially requested of, and provided by, the Insured for that payment. The Insured will remit funds for payments that qualify as Special Billed Amounts whenever specially requested in writing by ESIS, and immediately upon receipt of the request. ESIS will have no obligation to make any such payment until the Insured has remitted in advance the full amount of the funds specially requested by ESIS.

The Insured grants ESIS the right to adjust either or both elements of the Required Level whenever (a) the Required Level is, in ESIS's reasonable judgment, insufficient to secure the prompt payment of claims or allocated loss expenses as incurred; or (b) the Insured has failed to remit funds in any amount requested by ESIS or within the required time period. Within thirty (30) days of notification of any such adjustment, the Insured will make a cash deposit in the amount of the difference between the previous Required Level and the adjusted Required Level.

### 7. Taxes, Non-Premium Surcharges and Assessments

The tax and non-premium surcharge and assessment charges herein are based upon the Company's current knowledge of the state's interpretation of current law. If current law or a state interpretation thereof changes, or a rate or basis of assessment changes, then the Insured and the Company agree that the Company shall have the right to amend such prior tax and/or surcharge and/or assessment charges to the Insured in order to match the state interpretation, and the Company shall bill the Insured for such retrospective taxes and/or assessments accordingly.

If audited exposures and/or adjusted premiums generate a basis of assessment for any tax, assessment, or surcharge not listed in schedule G) NON-PREMIUM SURCHARGES AND ASSESSMENTS, then the Insured and the Company agree that the Company shall have the right to add such charges to the schedule and bill the Insured accordingly.

### 8. Audit Cooperation for Policies Subject to Audit

The Policies require the Insured to keep records of information needed to compute premium and to allow the Company examination of the Insured's books and records as they relate to the Policy or Policies.

If the Insured does not allow this examination or furnish the Company the records or information as requested or does not otherwise cooperate in allowing the Company to perform the audit(s) within ninety days after the expiration or cancellation of the Policies, the Company may estimate the Insured's premium adjustment, subject to applicable state law requirements. The Company, in its sole discretion, will base its calculation upon the assumption that the Insured's exposure base will increase by an amount up to two hundred percent (200%) above the original estimate. Such calculation will be authorized by the Director of Premium Audit Field Operations of the Company's ACE Risk Management business having supervisory authority over audit services, or their designee. The Company will calculate the Insured's premium adjustment based on the applicable increase. The Insured will also be responsible for cooperating in the completion of any employer documentation required by a governmental or regulatory body regarding a premium audit, such as an explanation or certification when no actual audit is performed. The Insured will be responsible to indemnify the Company for any fines or penalties that we may incur as a result of the Insured's failure to cooperate in the completion of an actual premium audit or of any required documentation.

INTERNAT_05212016
05/16/2016
Notice of Election Page 9 of 17