Group No. __ hereinafter referred to as the "Group."

2. OBJECTIVES

This Safety Group is formed for the following purposes:

Incidental to these objectives is the encouragement of members to assist in the proper handling of claims and payroll information.

3. MEMBERSHIP

A. Application for Membership

i. All applications for membership in the Group shall be made to the Group Manager for approval and acceptance by the Executive Committee. Each such application shall be accompanied by an application to the State Insurance Fund for insurance to take effect upon the expiration or termination of any other compensation insurance then being carried by the applicant. The Group Manager shall forward the application for insurance to the State Insurance Fund, together with an authorization that the applicant has been accepted as a member of the Group, subject to the approval of the application of the State Insurance Fund.

ii. Each member shall, at the time of its application for membership in the Group, designate and appoint the Group Manager as its agent and representative to deal with the State Insurance Fund in all matters pertaining to its insurance. Each member shall, at the time of its application for membership in the Group, agree to abide by all the Rules and Regulations of the Group.

B. Industry Classifications

Only those manual classifications, which apply in whole or in part to the industry are to be included and one of such authorized manual classifications must be the governing classification for a risk to become eligible to group membership:

C. Discontinuance of Members

i. Membership in the Group shall be continuous from year to year except that the Executive Committee of the Group may, subject to the approval of the State Insurance Fund, exclude any member from continued membership thereunder at any anniversary date of the Group for failure to comply with these Rules and Regulations. Notice of intention to discontinue membership and the reason therefor shall be given to such member and to the State Insurance Fund at least thirty (30) days prior to the anniversary date of the Group.

ii. Any Member of the Group may be removed, terminated or discontinued from the Group as of any anniversary date, if in the opinion of the State Insurance Fund management, after consultation with the Group Manager and/or the Executive Committee, continued membership in the Group would not serve the basic objectives for which the Group was formed.

D. Withdrawal from Group

A member may withdraw from the Group only upon the anniversary date of the Group and upon giving written notice to the Group Manager and to the State Insurance Fund at least thirty (30) days prior to the anniversary date of the Group.

E. Cancellation of Insurance

i. Cancellation of the insurance of any member of the Group shall operate to terminate any and all benefits that would otherwise accrue to such member from its membership in the Group except that such member may be entitled to participate in any dividends that may be declared for the last period of its membership or such other period, if any, falling within the final three group periods in the event of group termination, in proportion to the earned premium of the member of such period or periods. Cancellation of the insurance of a member of the Group during the Group period shall render such member ineligible for membership in the State Insurance Fund General Group until the regular policy renewal date following the date of cancellation.

ii. Cancellation of insurance of a member of the General Group during the policy period shall render such member ineligible for membership in a Safety Group until the regular renewal date following the date of cancellation. The reinstatement of the insurance of a member by the State Insurance Fund during the same period in which cancellation becomes effective shall also operate to reinstate such employer in the Group.

F. Transfer from One Group to Another

i. A qualified risk may transfer from the General Group to the Group upon giving notice to the Group Manager and to the State Insurance Fund at least thirty (30) days prior to the anniversary date of the risk, provided new business in a similar amount of annual premium precedes or accompanies such notice or transfer.

ii. No policy may be transferred directly from one State Insurance Fund Safety Group to another State Insurance Fund Safety Group unless such policy is covered in the State Insurance Fund General Group for at least two (2) years.

4. GROUP MEETINGS

A. The first meeting of the Group shall be held within ninety (90) days after the date of establishment of the Group for ratification of these Rules and Regulations and for the election of an Executive Committee, Chairman, Vice-Chairman (who shall act in the absence of the Chairman) of such committee and the Group Secretary, who need not be a member of the Group but may be the Group Manager.

B. Thereafter, meetings of the Group shall be held annually within thirty (30) days or at the next annual meeting of the Group for the election of an Executive Committee, Chairman, and Vice-Chairman (who shall act in the absence of the Chairman) of such committee and the Group Secretary, who need not be a member of the Group but may be the Group Manager and for the transaction of such other business as may properly come before the Group. At each annual meeting the Group Manager shall present a report of the Group and its relation with the State Insurance Fund, together with any recommendation that may be proper or desirable in the interest of the Group. A report shall also be submitted of the transactions of the Executive Committee. A copy of the minutes of each annual meeting of the Group shall be submitted to the State Insurance Fund within ten (10) days after the meeting.

C. The State Insurance Fund shall have the right to be represented at all meetings of the Group and the Group Manager shall notify the State Insurance Fund Underwriting Director in writing of the location, date and time of such meeting at least twenty (20) days in advance of the meeting.

5. VOTING

Voting shall be limited to members of the Group. Each member shall be entitled to one vote at all meetings of the Group. A majority vote of those present or proxy shall decide any question which may be acted upon. One-half of the membership, present in person or by proxy, shall constitute a quorum for the transaction of business and election of officers.

6. EXECUTIVE COMMITTEE

A. There shall be an Executive Committee, consisting of not less than five (5) Group members, which shall have general supervision over the affairs of the Group.

B. OPTION 1

The Executive Committee shall hold office until after the next annual Group meeting when their successors shall be elected. Thereafter, the Executive Committee shall be elected at each annual meeting. Should vacancies occur, the Executive Committee shall have the power to fill such vacancies in its membership until the next annual meeting of the Group. The Executive Committee may authorize and approve such sub-committees as may be desirable or necessary and shall define their powers and duties.

OPTION 2

At the next annual meeting of the Group, the Executive Committee, for the purposes of election, shall be divided into three groups, and shall be elected in groups, for varying terms of one, two and three years. Thereafter, members of the Executive Committee shall be elected at the annual meeting as their respective terms expire, for the term of three years. Should vacancies occur, the remaining members of the Executive Committee shall have the power to fill such vacancies in its membership until the next annual meeting, at which time the members of the Group shall elect a replacement to fill any unexpired portion of a term. The Executive Committee may authorize and approve such sub-committees as may be desirable or necessary and shall define their powers and duties.

C. The Executive Committee shall elect a Chairman and Vice-Chairman (who shall act in the absence of the Chairman) from its membership and shall also elect a Secretary who need not be a member of the Group but may be the Group Manager.

D. The Chairman shall preside at all meetings of the Executive Committee and of the Group and shall submit to the Group all reports of the Executive Committee and shall generally conduct the affairs of the Group subject to the approval of the Executive Committee. He shall, except as otherwise provided, appoint all committees and shall define their powers and duties.

E. The Secretary shall keep the minutes of the meetings of the Group and of the Executive Committee and, at the direction of the Chairman, shall give at least fifteen (15) days notice of all meetings and otherwise conduct the correspondence of the Group. The secretary shall file the minutes of the meetings of the Group with the State Insurance Fund within 10 days following the meetings.

F. The Executive Committee shall meet at least annually upon the call of the Chairman. A majority of the members of the Committee, whether present in person or by proxy, shall constitute a quorum for the transaction of business and a majority vote of all members of the Executive Committee, whether present in person or by proxy, shall be required to decide any question.

G. If a proxy is sought for an Executive Committee meeting at which a Group Manager is to be designated, written notice that such a designation is to be considered must accompany the proxy which is sent to the member. Each proxy must be signed by the member and shall be valid only for the particular meeting for which the proxy was sought. In the event more than one proxy is submitted for the same member, the prior proxy will be the valid one unless the later proxy expressly revokes the prior proxy.

H. The State Insurance Fund shall have the right to be represented at all Executive Committee meetings and the Group Manager shall notify the State Insurance Fund Underwriting Director in writing of the location, date and time of such meeting at least twenty (20) days in advance of the meeting.

I. The Executive Committee shall arrange for and employ the services of a Group Manager.

7. GROUP MANAGER

A. Purpose

The Group Manager shall be employed for the purpose of efficiently securing the benefits for which the Group is established and carrying out the spirit and intent of the law.

B. Term

The Group Manager shall be designated at the beginning of each Group Year by the Executive Committee and shall act in that capacity until the end of the Group Year unless sooner terminated at the discretion of the Executive Committee or the State Insurance Fund.

C. Qualification and Approval

The proposed Group Manager shall submit in writing to the State Insurance Fund his qualifications for Group Management. No Group Manager shall act in such capacity until the State Insurance Fund has given its approval in writing, which shall be effective only until the end of the Group Year.

D. Duties

i. The Group Manager shall promulgate rules and regulations (subject to the approval of the State Insurance Fund) for establishing an accident prevention program. He shall diligently carry out such approved program and shall cooperate fully with the State Insurance Fund in the investigation of claims, the presentation of all material and facts for the consideration and determination thereof, and shall keep record of the accidents of the Group.

ii. The Group Manager shall be responsible for instruction of all members in the maintenance of proper payroll and other records which may reflect in any way upon wage expenditures, shall assist the State Insurance Fund in securing true and accurate payroll records and reports wherever possible, and shall also assist the State Insurance Fund in the prompt collection of premiums, and shall keep a record of the estimated and earned premiums of the Group.

iii. The Group Manager shall be responsible for insuring that all applications for insurance submitted on behalf of prospective members shall be correctly and fully completed, containing all information required by the State Insurance Fund.

iv. The Group Manager shall be the representative of the Group in dealing with the State Insurance Fund and with individual members of the Group. The Group Manager shall see that the provisions of these Group Rules and Regulations are carried out.

E. Service Charges

The Group Manager may be remunerated by the Group members as may be agreed upon by the Executive Committee of the Group, but in no instance shall such remuneration be in excess of eight (8) percent of standard (i.e., Rating Board level) premium, or alternatively, ten (10) percent of the State Insurance Fund's premium. All ordinary expenses of the Group shall be borne by the Group Manager and shall be paid out of such remuneration.

8. ACCIDENT PREVENTION AND SAFETY SERVICE

A. Safety Advisory Committee

i. The Executive Committee at its first meeting after the annual meeting of the Group, but not later than thirty (30) days after such annual meeting, shall appoint a committee of Group Members which together with the Group Manager shall be known as the Safety Advisory Committee. This Committee shall, as often as practicable, confer with the appropriate Loss Control Staff of the State Insurance Fund for the purpose of revising existing rules or formulating new rules and regulations for the prevention of accidents and the minimizing of occupational disease hazards.

ii. The Safety Advisory Committee shall meet as often as practicable discuss and act on the following:

a. Review past and current experience of the Group.

b. Review accidents currently reported and make suggestions to prevent recurrence.

c. Review, revise or formulate new Safety Rules and Regulations to be carried out by Group members.

d. Devise methods to obtain cooperation in accident prevention from all Group members and decide action to be taken with regard to members who are uncooperative or whose risks indicate a consistently poor loss ratio.

B. Each Group member shall fully cooperate with the State Insurance Fund, Group Manager and the Group Safety Advisory Committee in carrying out the following program:

i. Establish a comprehensive and effective program for the education of supervisory and other employees in safe practices. Particular attention should be given to new employees.

ii. Cooperate in investigating any accident immediately after occurrence to determine the cause and the prevention of recurrence.

iii. Appoint a Safety Committee from the management (superintendents, foremen and responsible employees) to hold safety meetings and formulate rules and regulations peculiar to the individual operation for the prevention of accidents and the minimizing of occupational disease hazards.

iv. Give access to representatives of the State Insurance Fund, at any time during work hours, to the premises for the purpose of making inspections, investigations and making recommendations for the elimination of accidents and the minimizing of occupational disease hazards.

v. Make the fullest use of the facilities of the State Insurance Fund in accident prevention and safety work and take prompt action on all recommendations for correcting unsafe conditions.

9. CLAIMS AND MEDICAL SERVICE

Each member shall:

A. Report promptly all accidents and occupational diseases within ten (10) days in accordance with the requirements of Section 110 of the Workers' Compensation Law. (See reverse side form C-2 Employer's Report of Injury.) Irrespective of whether or not Form C-2 Employer's Report of Injury, are required to be filed, keep a permanent record of all injuries sustained in the course of employment; and such record shall include the name of injured, occupation, time, date, place of injury, description of occurrence, treatment given, name and address of physician, and shall show any lost time.

B. Consult with the appropriate Claim staff of the State Insurance Fund (at its nearest office) on matters relating to accidents, occupational diseases, medical care and treatment in the handling and investigation of claims. Promptly notify the appropriate Claim staff of the State Insurance Fund in writing of all loss of time of an employee, whether due to injury or to occupational disease. Promptly file in duplicate Form C-11, upon return to work of such employee. When requested, file in duplicate payroll reports of injured employees or similar workers as may be required.

C. Provide adequate and efficient medical treatment and care to injured employees within the scope and provisions of the Workers' Compensation Law, and comply with Section 13 of said Law. Send to the appropriate Claim staff of the State Insurance Fund all medical bills promptly. Transmit immediately any information or communications, whether oral or written, received from any physician, attorney, claimant or any other person relating to any claims.

10. PAYROLL RECORDS

Each member shall keep a complete record of his payroll expenditures properly segregated by classification. Authorized representatives of the State Insurance Fund shall be permitted at all times to examine the members' books, vouchers, contracts, documents and records of any and every kind, which show or tend to show or verify the remuneration earned by the employees of the member, or which show or tend to show the premium payable.

11. DIVIDENDS

Dividend payments will be made pro rata on the basis of the earned premiums. Before making payment of any dividend to any policyholder, the amount of its indebtedness, if any, for unpaid premiums will first be deducted. All dividends and premium returns will be paid or credited by the State Insurance Fund directly to the individual members of the Group. The declaration of a Group dividend is within the sole discretion of the State Insurance Fund.

12. FRAUD

The State Insurance Fund reserves the right to assess a penalty up to and including the amount of any annual dividend which would have been otherwise payable to a policyholder, to any policyholder who is adjudged guilty of insurance fraud related to a policy issued hereunder, for the year(s) during which such insurance fraud was committed. The State Insurance Fund may additionally or alternatively exclude any such policyholder from continued membership in the Group as of the next anniversary date of the Group commencing in the year following commencement of the fraud. Such penalty(s) shall be imposed after a hearing before an authorized representative of the State Insurance Fund. Any dividends withheld or recovered shall be added to the Group Contingent Balance as provided for in the Group endorsement.

13. DISCONTINUANCE OF GROUP

A. The Group may be discontinued or terminated upon the adoption of a resolution to such effect by the majority vote of the active members of the Group. The discontinuance or termination shall be effective as of the Group anniversary date immediately following the adoption of the resolution, provided the State Insurance Fund is notified in writing and a copy of the resolution is given to the State Insurance Fund prior to such Group anniversary date and not later than thirty (30) days after the resolution is adopted.

B. The Group may be discontinued or terminated by the State Insurance Fund as of any anniversary date, if in the opinion of the State Insurance Fund management, continued operation will not serve the basic objectives for which the Group was formed. Written notice shall be given to each member and the Group Manager not later than thirty (30) days prior to the date of discontinuance or termination.

14. AMENDMENTS

A written copy of any new rule, or any amendment of an existing rule, promulgated by the State Insurance Fund, shall be sent to the Group Manager at least thirty (30) days before the Group renewal period, and shall become part of these Group Rules and Regulations. Any rule or amendment, approved by the State Insurance Fund, may be revoked by the State Insurance Fund at any time, upon giving the Group Manager thirty (30) days' notice before the Group renewal period.

15. NOTICE TO MEMBERS

The Group Manager shall send a copy of these Rules and Regulations or any amendment thereto to each member within ten (10) days after adoption.

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