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PUBLIC OFFICIALS & ENTITY LIABILITY COVERAGE

PUBLIC OFFICIALS & ENTITY LIABILITY COVERAGE

FOR THE

PURMS JOINT SELF-INSURANCE AGREEMENT

Amended and Restated as of December 7, 2001

TABLE OF CONTENTS

                                                                                                                                                    

1.     Definitions for Public Officials and Entity Liability Coverage. 2

1.1       Customer 2

1.3       Defense Costs. 2

1.4       Employee. 2

1.5       Management 2

1.6       Not-For-Profit Organization. 2

1.7       PO&E Claim.. 2

1.8       Public Official 3

1.9       Public Utility Operations. 4

1.10     Ultimate Net Loss. 4

1.11     Vicarious Liability. 4

1.12     Wrongful Act 4

2.     Insuring Agreement and Conditions for Public Officials & Entity Liability Coverage. 4

2.1       PO&E Coverage for Liability Claims Arising from a "Wrongful Act". 4

2.1.1        Coverage for a Member for Vicarious Liability does not Depend upon Whether the Public Official Satisfies the Coverage Qualifications. 5

2.1.2        Multiple Liability Claims/Single Wrongful Act 5

2.1.3        No Overlapping or Double Coverage. 5

2.1.4        No Imputation of Acts, Omissions or Warranties. 5

2.1.5        PO&E Coverage Regarding Outside Not-For-Profit Organization. 5

2.1.6        Single Liability Coverage Limit for Claims Under More than One Type of Liability Coverage. 6

2.2       Liability Coverage Limit 6

2.3       Deductible. 6

2.4       Coverage Qualifications for Public Officials. 7

2.5       Other Insurance and Third Party Indemnifications of Public Officials. 7

2.6       Separation of Insureds with Respect to PO&E Claims Asserted Among Members and Single Liability Coverage Limit 7

2.7       Board's Authority to Establish the Number of Wrongful Acts Involved in a Covered PO&E Claim.. 7

2.8       Survival of Coverage. 8

2.9       Intended Scope of PO&E Coverage. 8

2.9.1        Scope of PO&E Coverage for a Public Official in Proceedings not Currently Involving the Assertion of a Claim for Damages. 8

2.9.2        Scope of PO&E Coverage for a Member Employing a Public Official That is Involved in Proceedings not Currently Involving the Assertion of a Claim for Damages. 8

2.9.3        Scope of PO&E Coverage for a Member That is Involved in Proceedings not Currently Involving the Assertion of a Claim for Damages. 9

2.9.4        Reservation of Rights. 10

3.     Exclusions for Public Officials & Entity Liability Coverage. 10

3.1       Fines and Penalties. 10

3.2       Wrongful Acts Occurring Outside Coverage Period. 10

3.3       Limitations Specific to PO&E Coverage for Public Officials and Member Indemnifications of Public Officials (Re: Personal Profits, Dishonest Acts, etc.) 11

3.4       Bodily Injury and Property Damage. 12

3.5       Personal Injuries From Specific Types of Wrongful Acts. 12

3.6       Member's Advertising Activities and Intellectual Property Claims. 12

3.7       Intentional, Knowing or Reckless Violations of or Non-Compliance with Applicable Law   12

3.8       Other Insurance and Third-Party Indemnifications. 13

3.9       Derivative and Security-Holder Claims. 13

3.10     Employee Claims re Employment Relationship. 13

3.11     Acts Other Than For a Member 14

3.12     Claims By or on Behalf of a Member Against its Own Employees. 14

3.13     Acts Outside Public Utility Operations. 14

3.14     Public Official's Acts as "Professional". 14

3.15     Breach of Contract 14

3.16     Unsatisfied Coverage Qualifications. 14

3.17     Nuclear Materials. 15

3.18     Injunctive Relief 16

3.19     When Fund Lacks Coverage Authority. 16

 


PUBLIC OFFICIALS & ENTITY LIABILITY COVERAGE

FOR THE

PURMS JOINT SELF-INSURANCE AGREEMENT

Amended and Restated as of December 7, 2001

Overview of Coverages for PURMS Risk Pools

The Coverages Sections of the SIA set forth the Insuring Agreements, Exclusions, and other terms and conditions which comprise the Coverages provided by the Fund for the Members of its Risk Pools and, as applicable, their Employees under the SIA. 

The current Liability Coverage provided by the Fund for Members of the Liability Pool includes:  Commercial General Liability (SIA § III, “CGL”); Public Officials & Entity Liability (SIA § IV, “PO&E”); Automobile Liability (SIA § V); and Pollution Liability (§ VI). The CGL Coverage was originally adopted on December 20, 1976, has been amended from time to time, and was unanimously re-adopted by the Members on December 7, 2001. The PO&E, Automobile and Pollution Liability Coverages were first adopted effective March 30, 1995. The PO&E Coverage was unanimously re-adopted by the Members on December 7, 2001.

The current Property Coverage provided by the Fund for Members of the Property Pool includes:  General Property Coverage (SIA § X) and Auto Physical Damage Coverage (SIA § XI). Both of these Property Coverages were originally adopted effective February 27, 1997.

Members of the Property Pool may participate in either or both Property Coverages (SIA § X and/or § XI).  Members of the Liability Pool must participate in all Liability Coverages provided by the Fund (SIA § III - VI).

The current Health & Welfare Coverage provided by the Fund for the Members of the H&W Pool is set forth in § XIV. The H&W Coverage was originally adopted on March 16, 2000, effective April 1, 2000, and was amended and restated and unanimously re-adopted by the Members as of December 7, 2001.

These Coverages, as amended from time to time pursuant to § I, ¶ 5.2, are specifically incorporated into the Interlocal Agreement and shall be deemed a part of that Agreement as if fully set forth therein.


PUBLIC OFFICIALS & ENTITY COVERAGE

1.               Definitions for Public Officials and Entity Liability Coverage.  The Definitions set forth in the "Definitions" Section of the SIA (see § II) apply to the interpretation of the Liability Coverage provided by this Public Officials and Entity Coverage Section ("PO&E Coverage"), except as may be modified specifically or by implication by the definitions set forth below which are specific to the PO&E Coverage contained in this § IV.

1.1            Customer  --  shall mean a person or entity that purchases Services or Products from a Member in connection with its Public Utility Operations.

1.2            Damages -- with respect to the PO&E Coverage, shall mean all sums a Public Official or Member, by indemnification of the Public Official or by Vicarious Liability, become legally obligated to pay to a Third Party either by adjudication or by compromise with the consent of the Fund, because of the Wrongful Act of a Public Official.

1.3            Defense Costs -- shall mean all reasonable expenses incurred by the Public Official, for which the Public Official has not been reimbursed by the Member, or by the Member, on behalf of such Public Official or for its own behalf, in the investigation, negotiation, settlement and defense of any Covered PO&E Claim, except all salaries, wages and benefit expenses of the Public Official or the Member.

1.4            Employee -- In the context of PO&E Coverage for the Vicarious Liability of a Member for the Wrongful Acts of its Public Officials under ¶ 2.1(c), "Employees" shall be included within the meaning of "Public Official" as defined in ¶ 1.8 herein.  In all other contexts of the PO&E Coverage, "Employee" shall be given its meaning in § II, which would include "Public Officials."

1.5            Management  -- shall mean the Member's officers, manager, department heads, administrators and supervisory personnel, Employees performing engineering and surveying activities to the extent not excluded by ¶ 3.14, and any other job positions that may from time to time be established in the Operational Rules, but excluding elected public officials and directors, and excluding all other Employees of the Member.

1.6            Not-For-Profit Organization -- shall mean:

(a)       An organization, no part of the income or assets of which is distributable to its owners, stockholders or members and which is formed and operated for a purpose other than the pecuniary profit or financial gain of its owners, stockholders or members; or

(b)       A political action committee which is defined for these purposes as a separate segregated fund to be utilized for political purposes as described in the United States Federal Election Campaign Act (2 U.S.C. 441b(2)(C)).

1.7            PO&E Claim.  Any formal demand, suit or proceeding asserted by a Third Party against any Public Official or a Member which seeks actual monetary Damages and which may result in any Public Official or Member becoming legally obligated to pay such Damages by reason of any Wrongful Act actually or allegedly caused, committed or attempted during the Coverage Period as a result of acts or omissions in the capacity of a Public Official while the Public Official was employed by a Member or, with respect to the PO&E Coverage provided to Members in § IV, ¶ 2.1(c), as a result of a Wrongful Act by any Employee acting within the scope of his/her actual or apparent authority while employed by the Member.  Multiple demands or suits arising out of the same Wrongful Act or interrelated acts shall be deemed to be a single PO&E Claim.

1.8            Public Official --  as used herein, either in the singular or plural, shall mean:

(a)       (1)       Any person who was, is now, or shall be a commissioner, director, trustee or Management of a Member and any other Employee of a Member who may be acting in the capacity of a commissioner, director, officer, trustee or Management of a Member with the express authorization of a commissioner, director, officer, trustee or Management of a Member;

(2)       Any person who was, is now or shall be a lawfully elected or appointed official or member of the governing body of a Member;

(3)       Any member of a commission, board or other unit operating by and under the jurisdiction of the governing body of a Member; or

(4)       Any Employee of a Member who is directly responsible to the governing body of a Member or to its commissions or boards;

(b)       Any person included in subparagraph (a)(1) above who is serving or has served at the specific request or with the permission of the Member's governing body as a director, officer or trustee of any outside Not-For-Profit Organization;

(c)       The estates, heirs, legal representatives or assigns of deceased persons who were persons included in subparagraph (1) above at the time the Wrongful Acts upon which such Claims were based were committed and the legal representatives or assigns of such persons in the event of their incompetency, insolvency or bankruptcy; and

(d)       With respect to the PO&E Coverage provided to the Member under § IV, ¶ 2.1(c) and applicable Exclusions, the term "Public Official" shall mean and include all Employees of a Member;

provided, however, that the term "Public Official" shall not include a trustee appointed pursuant to Title 11, United States Code, or pursuant to the Securities Investor Protection Act, a receiver appointed for the benefit of creditors by Federal or State courts, an assignee for the benefit of creditors or similar fiduciary appointed under Federal or State laws for the protection of creditors or the relief of debtors.

In the event that a Liability Claim which is within the PO&E Coverage afforded by § IV is made against any Public Official and such Claim includes a claim against the lawful spouse of such Public Official solely by reason of (a) such spousal status or (b) such spouse's ownership interest in property or assets which are sought as recovery for the Wrongful Act of a Public Official, such spouse shall be deemed to be a Public Official hereunder, but solely with respect to such Claim.  In no event, however, shall the lawful spouse of a Public Official be deemed to be a Public Official as regards any Claim in respect of which there is a breach of duty, neglect, error, misstatement, misleading statement or omission actually or allegedly caused, committed or attempted by or claimed against such spouse, acting individually or in his or her capacity as the spouse of a Public Official.

1.9            Public Utility Operations  -- shall mean the operations of the Member related to, arising from or associated with the production, transmission, delivery or furnishing of electricity, gas, water or sewer service to the public, including the ownership, operation, management or control of any plant or equipment used in connection therewith.

1.10         Ultimate Net Loss -- shall mean the total Damages and Defense Costs with respect to each Wrongful Act to which this PO&E Coverage applies, subject to the Liability Coverage Limit set forth in ¶ 2.2.

1.11         Vicarious Liability  --  shall mean the liability imposed upon a Member for the Wrongful Acts of one or more of its Public Officials, except for any liability imposed upon the Member solely because of the Member's indemnification of the Public Official.

1.12         Wrongful Act -- shall mean any actual or alleged breach of duty, neglect, error, misstatement, misleading statement or omission actually or allegedly caused, committed or attempted by:  (a) any Public Official while acting individually or collectively in their capacity as Public Officials, or claimed against them solely by reason of their being Public Officials; or (b) with respect to the PO&E Coverage provided to Members in ¶ 2.1(c) only, any Employee acting within the scope of his/her actual or apparent authority; or (c) a Member; but subparagraphs (a) through (c) above shall apply only with respect to the Public Utility Operations of a Member.

All such interrelated breaches of duty, neglects, errors, misstatements, misleading statements or omissions actually or allegedly caused, committed or attempted by or claimed against one or more of the Public Officials shall be deemed to be a single "Wrongful Act".

2.               Insuring Agreement and Conditions for Public Officials & Entity Liability Coverage.  Under its Public Officials & Entity Liability ("PO&E") Coverage, the Fund provides the following:

2.1            PO&E Coverage for Liability Claims Arising from a "Wrongful Act".  Except as otherwise provided in this ¶ 2 and in the Exclusions in ¶ 3 below, or in other sections of the SIA (see, e.g., § I., ¶ 13.5), and subject to § VII regarding Claims Resolution, the Fund shall pay on behalf of the Member or any Public Official, as applicable, the Ultimate Net Loss, which includes all Defense Costs and all monetary Damages, that:

(a)       such Public Official (for which the Member has not provided reimbursement); or

(b)       the Member, pursuant to lawful indemnification of the Public Official; or

(c)       the Member that employed such Public Official, including Employees, by Vicarious Liability;

has or may become legally obligated to pay to a Third Party resulting from a Covered PO&E Claim arising out of a Wrongful Act committed during the Coverage Period while the Public Official (or, with respect to an Employee under ¶ 2.1(c), the Employee) was employed by a Member and while the Public Official was acting in the capacity of a Public Official (or, with respect to an Employee under ¶ 2.1(c), the Employee was acting within the scope of his/her actual or apparent duties for the Member); provided, however, that the Fund shall not be obligated to provide Defense or to make any PO&E Coverage Payments to or on behalf of a Public Official (with respect to Coverage under ¶ 2.1(a)) or to or on behalf of a Member (with respect to Coverage under ¶ 2.1(b)) for any PO&E Claim unless the Coverage Qualifications set forth in ¶ 2.4 below are satisfied.  Directors, Officers of the Fund, and members of the Executive, Operations and Administrative Committees, and such other committees as are established by the Board, shall be deemed to be "Public Officials" and acting within the scope of their duties and employment for a Member when acting within the scope of their duties for the Fund.

2.1.1       Coverage for a Member for Vicarious Liability does not Depend upon Whether the Public Official Satisfies the Coverage Qualifications.  Whether the Fund provides Coverage under ¶ 2.1(c) for the Member for a PO&E Claim asserted against the Member for Vicarious Liability based upon the Wrongful Act of its Public Official shall be separate from and shall not be dependent upon whether the Fund provides Coverage for such Member's Public Official based on satisfaction of the Coverage Qualifications set forth in ¶ 2.4 (see, Exclusion in ¶ 3.16). 

2.1.2       Multiple Liability Claims/Single Wrongful Act.  Multiple Liability Claims arising out of the same Wrongful Act, even if made against different Public Officials employed by several different Members, shall be deemed to be a single PO&E Claim arising from a single Wrongful Act.  The Liability Coverage Limit shall apply only once regardless of the number of PO&E Claims arising out of the same Wrongful Act.  All interrelated acts shall be deemed to be a single Wrongful Act. 

2.1.3       No Overlapping or Double Coverage.  The inclusion herein of more than one Public Official, or the Fund providing coverage directly to the Public Official for the Wrongful Act and to the Member for any indemnification of the Public Official or Vicarious Liability therefore, shall not operate to increase the Fund's Liability Coverage Limit, or to create multiple Wrongful Acts, or to require the Fund to pay more than the Ultimate Net Loss arising from the Wrongful Act. Once the Fund has made Liability Coverage payments and/or paid Defense Costs to or on behalf of the Public Official, or Member, or combination thereof, equal to the Ultimate Net Loss or the Liability Coverage Limit, whichever is less, neither the Public Official nor the Member shall have a right to any additional PO&E Coverage or Defense Costs hereunder from the Fund.

2.1.4       No Imputation of Acts, Omissions or Warranties.  The acts, omissions or warranties of any Public Official shall not be imputed to any other Public Official with respect to the PO&E Coverage applicable under this § IV.

2.1.5       PO&E Coverage Regarding Outside Not-For-Profit Organization.  If any Public Official is serving or has served at the specific request or with the permission of the Member's governing body as a director or officer of an outside Not-For-Profit Organization, the PO&E Coverage afforded by this § IV:

(a)       Shall be specifically excess of any other indemnity or insurance available to such Public Official by reason of such service; and

(b)       Shall not be construed to extend to the outside Not-For-Profit Organization in which the Public Official is serving or has served, nor to any other director, officer or employee of such outside Not-For-Profit Organization (see, ¶ 2.5 and Exclusion ¶ 3.8).

2.1.6       Single Liability Coverage Limit for Claims Under More than One Type of Liability Coverage.  Although "wrongful acts" types of Claims, or portions thereof, might also be Covered under the Fund's CGL or Pollution Coverages, the Fund shall only be obligated to pay an amount equal to the "Ultimate Net Loss", as defined in this PO&E Coverage, subject to the Liability Coverage Limit, arising from a Claim based on a Wrongful Act regardless of which SIA Coverage Section applies to provide Coverage for all or portions of such Claim.

2.2            Liability Coverage Limit.  The Fund shall not be obligated to pay an Ultimate Net Loss in excess of the Liability Coverage Limit established by the Board for one or more Covered PO&E Claims arising out of any Wrongful Act, irrespective of the number of Members or Public Officers who may be liable therefor; provided, however, that all Defense Costs incurred in connection with a Covered PO&E Claim shall be included within the Liability Coverage Limit; and provided further, that if coverage for Defense Costs under the applicable Excess Liability Policy with respect to a particular Covered PO&E Claim does not begin at the point the Fund has paid the total amount of its Liability Coverage Limit, including Defense Costs, and if the Ultimate Net Loss (which includes Defense Costs) resulting from the Claim exceeds the Liability Coverage Limit, then the Board may, for Sufficient Cause and by Super-Majority Vote, increase the Liability Coverage Limit for such Claim in an amount within its discretion, up to a maximum of $500,000 of additional PO&E Coverage for the Claim, including Defense Costs.  The Fund's Liability Coverage Limit, effective January 1, 1996, is $1,000,000, less the amount of the Deductible determined by the Board as provided in ¶ 2.3; provided, however, that the Board may increase or decrease the Liability Coverage Limit from time to time by Super-Majority Vote, and any such change shall thereafter be reflected as provided in § I, ¶ 5.7, and in § IV, § 2.2 of revised Operational Rules. Any such change in the amount of the Liability Coverage Limit shall not apply to any PO&E Claim arising from a Wrongful Act which took place prior to the effective date of the amendment, except as permitted in § I, ¶ 5.4.2.2.  The Board shall attempt to coordinate any changes in the Liability Coverage Limit with the Attachment Points of any similar Excess Liability Coverage to prevent or minimize any gaps in coverage. 

2.3            Deductible.  All Members shall be required to pay a Deductible in an amount determined by the Board for each Covered PO&E Claim asserted against a Member and/or its Public Officials.  If more than one Covered PO&E Claim arises out of a Wrongful Act, they shall be deemed a single Covered PO&E Claim and the Member shall be required to pay only one Deductible for all such Claims.  In a Multi-Member PO&E Claim, even if it arises out of a single Wrongful Act, each Member against which such Claim is asserted shall be required to pay a Deductible; provided, however, that the Member shall pay the Deductible when the Covered PO&E Claim is asserted against both the Member and one or more of its Public Officials; and, provided further, that the Public Official shall pay the Deductible with respect to a Covered PO&E Claim asserted against the Public Official only which does not involve the Member.  The initial Deductible shall equal $250; provided, however, that the Board may increase or decrease the amount of the Deductible from time to time by Super-Majority Vote, and any such change shall thereafter be reflected as provided in § I, ¶ 5.7, and in § IV, ¶ 2.3 of revised Operational Rules.  A change in the amount of the Deductible shall not apply to any PO&E Claim arising from a Wrongful Act which took place prior to the effective date of the amendment, except as permitted in § I., ¶ 5.4.2.2.

2.4            Coverage Qualifications for Public Officials.  As a condition precedent  to PO&E Coverage for Public Officials and Members under ¶¶ 2.1(a) and (b), respectively, it must affirmatively appear to the satisfaction of the Administrative Committee that the Public Official's Wrongful Act gave rise to the Covered PO&E Claim asserted against the Public Official, and that in committing the alleged Wrongful Act, the Public Official was acting: (a) In good faith; and (b) In the capacity of a Public Official or within the scope of the Public Official's employment with or duties for a Member.

2.5            Other Insurance and Third Party Indemnifications of Public Officials.  If there is available to the Insured any valid and collectible Other Insurance or Third Party Indemnifications (hereinafter, included within the meaning of "Other Insurance") that affords coverage in whole or in part for a PO&E Claim the Fund also Covers under this § IV, the Fund's PO&E Coverage obligations are limited as set forth in Exclusion ¶ 3.8 below.  The Fund's Coverage for PO&E Claims arising from Public Officials' services for outside Not-For-Profit Organizations in relation to available "Other Insurance" shall be governed by ¶ 2.1.5 above.

2.6            Separation of Insureds with Respect to PO&E Claims Asserted Among Members and Single Liability Coverage Limit.  Except with respect to Claims excluded under the Exclusion paragraphs of the various Liability Coverage Sections of the SIA, in the event any Covered PO&E Claim is asserted by an Insured under the SIA against any other Insured under the SIA, the Fund will provide PO&E Coverage for the Claim for such other Insured against which the Claim is made in the same manner as if the Claim was being asserted by a Third Party; provided however, that when two or more Members and/or their Employees assert PO&E Claims against each other arising out of the same Wrongful Act, the total of the Fund's PO&E Coverage obligation shall be its Liability Coverage Limit; and provided, further, that no Employee of one Insured shall be construed to be an Employee of any other Insured, unless at the time of injury or death, there exists a relationship of master/servant between such Employee and such other Insured.

2.7            Board's Authority to Establish the Number of Wrongful Acts Involved in a Covered PO&E Claim.  The Board shall have the authority, by Super-Majority Vote, to establish the number of Wrongful Acts involved in connection with any Covered PO&E Claim and such determination shall be binding on all Members involved in the Claim; provided, however, that in making its decision, the Board shall consider the advice of General Counsel regarding the applicable law; and provided, further, that the Board's failure to affirmatively establish the number of Wrongful Acts with respect to a Covered PO&E Claim shall result in the Claim being treated as a single Wrongful Act by the Fund; and provided further, that any Dispute with the result of the Board's Vote may be submitted to Arbitration pursuant to § I., ¶ 24.5 and the Arbitrator shall affirm the Board's decision unless it is contrary to clearly established Washington law.

2.8            Survival of Coverage.  Neither a Public Official's right to Coverage for Wrongful Acts under ¶ 2.1(a), nor a Member's right to Coverage for indemnification thereof, nor a Member's right to Coverage for Vicarious Liability, shall be affected by the severance of such Public Official's employment relationship with the Member, or the Member's withdrawal from the Liability Pool, with respect to Wrongful Acts that Occurred during the Public Official's employment relationship with the Member while the Member belonged to the Liability Pool, subject to § I, ¶ 13.5.

2.9            Intended Scope of PO&E Coverage. It is the intent of the Members that the scope of Coverage provided for Public Officials and Members under this § IV be as broad as permitted under RCW 48.62 et. seq., subject, however, to any other more limiting statutes or regulations, and subject to the terms and conditions of PO&E Coverage provided herein, and the Exclusions set forth in ¶ 3 below, and subject to the terms of Claims Resolution, § VII.

2.9.1       Scope of PO&E Coverage for a Public Official in Proceedings not Currently Involving the Assertion of a Claim for Damages. With respect to a Public Official that has become personally involved in any action, claim or proceeding, whether judicial, quasi-judicial, administrative or investigative (hereinafter, collectively, “Proceeding”):

(a)       Provided that the acts or omissions of the Public Official that are the basis for the involvement of the Public Official in the Proceeding satisfy the Coverage Qualifications set forth in ¶ 2.4 herein, as determined by the Administrative Committee (see ¶ 2.1.1 herein), and satisfy any other applicable terms or conditions of PO&E Coverage contained in this § IV; and

(b)       Further provided that PO&E Coverage for the Public Official is not otherwise excluded by any of the Exclusions in ¶ 3 below; and

(c)       Notwithstanding that the definition of “PO&E Claim” requires the assertion of a claim for monetary “Damages”;

such Public Official will not be denied PO&E Coverage under § IV ¶ 2.1(a) herein, and in particular will not be denied a “Defense”, solely on the basis that the Proceeding does not currently involve the assertion of a claim for “Damages”; provided that:

(d)       In the judgment of the Administrative Committee, the acts or omissions which are the basis for the Public Official’s involvement in the Proceeding have a reasonable likelihood of giving rise to a PO&E Claim brought by a Third-Party in the foreseeable future that would likely seek monetary Damages against the Public Official for which the employing Member would be liable, or that would likely seek monetary Damages directly against the Member.

2.9.2       Scope of PO&E Coverage for a Member Employing a Public Official That is Involved in Proceedings not Currently Involving the Assertion of a Claim for Damages. With respect to a Member that employs a Public Official that has become personally involved in any action, claim or proceeding, whether judicial, quasi-judicial, administrative or investigative (hereinafter, collectively, “Proceeding”):

(a)       Regardless of whether the acts or omissions of the Public Official that are the basis for the involvement of the Public Official in the Proceeding satisfy the Coverage Qualifications set forth in ¶ 2.4 herein, as determined by the Administrative Committee (see ¶ 2.1.1 herein); and

(b)       Provided that the Member satisfies any other applicable terms or conditions of PO&E Coverage contained in this § IV;

(c)       Further provided that PO&E Coverage for the Member is not otherwise excluded by any of the Exclusions in ¶ 3 below; and

(d)       Notwithstanding that the definition of “PO&E Claim” requires the assertion of a claim for monetary “Damages”;

such Member will not be denied PO&E Coverage under § IV ¶ 2.1(c) herein, and in particular will not be denied a “Defense”, solely on the basis that the Proceeding does not currently involve the assertion of a claim for “Damages”; provided that:

(e)       In the judgment of the Administrative Committee, the acts or omissions which are the basis for the Public Official’s involvement in the Proceeding have a reasonable likelihood of giving rise to a PO&E Claim brought by a Third-Party in the foreseeable future that would likely seek monetary Damages against the Public Official for which the employing Member would be liable as a matter of law (but excluding liability imposed on the Member solely as a result of the Member’s indemnification of the Public Official), or that would likely seek monetary Damages directly against the Member.

2.9.3       Scope of PO&E Coverage for a Member That is Involved in Proceedings not Currently Involving the Assertion of a Claim for Damages. With respect to a Member that has become involved in any action, claim or proceeding, whether judicial, quasi-judicial, administrative or investigative (hereinafter, collectively, “Proceeding”):

(a)       Provided that the Member satisfies any other applicable terms or conditions of PO&E Coverage contained in this § IV; and

(b)       Further provided that PO&E Coverage for the Member is not otherwise excluded by any of the Exclusions in ¶ 3 below; and

(c)       Notwithstanding that the definition of “PO&E Claim” requires the assertion of a claim for monetary “Damages”;

such Member will not be denied PO&E Coverage under § IV ¶ 2.1(c) herein, and in particular will not be denied a “Defense”, solely on the basis that the Proceeding does not currently involve the assertion of a claim for “Damages”; provided that:

(d)       In the judgment of the Administrative Committee, the acts or omissions which are the basis for the Member’s involvement in the Proceeding have a reasonable likelihood of giving rise to a PO&E Claim brought by a Third-Party in the foreseeable future that would likely seek monetary Damages directly against the Member.

2.9.4       Reservation of Rights. If the Fund provides a Defense under any of the circumstances identified in ¶¶ 2.9.1 through 2.9.3 above, it will normally, but need not necessarily, be provided under a Reservation of Rights. If Defense is provided under a Reservation of Rights, the provisions in the SIA regarding a Reservation of Rights, and in particular, the terms of § VII, ¶¶ 2.2 and 5.2 shall apply, and among other things, based on the judgment of the Administrative Committee, Defense could be terminated and Coverage denied if it appears from facts admitted or reasonably well established that such a “Damages” claim would not or could not be asserted, or for other reasons it no longer appears that there may be Coverage. 

3.               Exclusions for Public Officials & Entity Liability Coverage.  Notwithstanding the provisions of any other paragraph of this § IV, the Fund shall not provide Defense or PO&E Coverage for the types of Claims described in the "Exclusions" below which shall not be Covered PO&E Claims.  The subparagraph headings for the Exclusions are for ease of reference only and shall have no effect with respect to the substantive meanings of the Exclusions.  Unless otherwise provided in an Exclusion below or in ¶ 2 above, all Exclusions are applicable to all three PO&E Coverages in ¶¶ 2.1(a), (b) and (c).

3.1            Fines and Penalties.  Any Claim, to the extent it results in:

(a)       Any fines or penalties imposed in, arising out of, or resulting   from a   criminal or quasi-criminal suit, action or proceeding,  whether by adjudication or settlement;

(b)       Any fines or penalties imposed in conjunction with political  contributions, payments, commissions or gratuities;

(c)       Any other fines or penalties imposed by final adjudication of a court of competent jurisdiction or any agency or commission possessing quasi-judicial authority, or resulting from settlement of proceedings before such court, agency or commission.

3.2            Wrongful Acts Occurring Outside Coverage Period.  Any Claims arising out the Wrongful Acts of a Public Official that occurred in whole or in part prior to the date such Public Official's employer became a Member of the Liability Pool or in whole or in part after the effective date of the termination of such Member's membership in the Liability Pool; provided, however, that if any part of the Wrongful Act occurred during the Coverage Period, the Fund will provide defense for the PO&E Claim (subject to a claim for Contribution against any applicable Other Insurance); and, provided further that, if and only to the extent there is a reasonable basis for separating out the Damages allocable to the portions of the Wrongful Act that occurred during the Coverage Period, the Fund shall also provide PO&E Coverage therefore; and, provided further, that the terms of ¶ 2.5 and Exclusion ¶ 3.8 regarding Other Insurance and Third Party Indemnifications shall also apply to determine the scope of this Exclusion.

3.3            Limitations Specific to PO&E Coverage for Public Officials and Member Indemnifications of Public Officials (Re: Personal Profits, Dishonest Acts, etc.)  With respect to the PO&E Coverage identified in ¶¶ 2.1(a) and 2.1(b), any Claim asserted against a Public Official:

(a)       Based upon, arising out of or attributable to such Public Official having gained any personal profit, advantage or remuneration to which such Public Official was not legally entitled if:

(1)       A judgment or other final adjudication adverse to such Public Official establishes that he/she in fact gained such personal profit, advantage or remuneration; or

(2)       Such Public Official has entered into a settlement agreement to repay, or has in fact repaid, all or a portion of such alleged personal profit, advantage or remuneration; or

(3)       It has been determined by the Administrative Committee, with the concurrence of the Executive Committee, that Defense should be terminated, and Coverage hereunder denied, for acts or omissions within sub-¶ (a) herein, based on procedures and considerations set forth in Claims Resolution § VII, ¶¶ 2.2 and 5.2;

(b)       For an accounting of profits made from the purchase or sale by such PublicOfficial of securities of the Member within the meaning of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any other Federal or State statutory or common law;

(c)       Brought about or contributed to by the dishonest, fraudulent, criminal or malicious act or omission of a Public Official if:

(1)       A final adjudication establishes that such Public Official intentionally, deliberately or knowingly committed or attempted to commit such acts or omissions with actual dishonest purpose or intent and such were material to the cause of action so adjudicated; or

(2)       Such Public Official enters into a settlement agreement to settle, or   otherwise settles, such Claim where the terms thereof, either explicitly or necessarily implicitly, establish that such Public Official intentionally, deliberately or knowingly committed or attempted to commit such acts or omissions with actual dishonest purpose or intent and such were material to the factual and/or legal basis for the Claim; or

(3)       It has been determined by the Administrative Committee, with the concurrence of the Executive Committee, that Defense should be terminated, and Coverage hereunder denied, because such Public Official intentionally, deliberately or knowingly committed or attempted to commit such acts or omissions within sub-¶ (c) herein with actual dishonest purpose or intent and such were material to the factual and/or legal basis for the Claim, based on procedures and considerations set forth in Claims Resolution § VII, ¶¶ 2.2 and 5.2.

(d)       Where such payment would be contrary to applicable law.

3.4            Bodily Injury and Property Damage.  Any Claim for Bodily Injury by any person, or for Property Damage, including physical injury to or destruction of tangible property or the loss of use thereof.

3.5            Personal Injuries From Specific Types of Wrongful Acts.  Any Claim for Personal Injury based upon, arising out of or attributable to:

(a)       False arrest, wrongful detention, wrongful imprisonment, loss of personal freedom, or malicious prosecution;

(b)       Wrongful entry, wrongful eviction or other invasion of the right of private occupancy;

(c)       Discrimination or sexual harassment (except as provided in § IV, ¶ 3.11);

(d)       Publication or utterance:

(1)       of a libel or slander or other defamatory or disparaging material; or

(2)       in violation of an individual's right of privacy; or

(e)       Invasion of the right of privacy.

3.6            Member's Advertising Activities and Intellectual Property Claims.  With respect to a Member's advertising activities, any Claim arising from piracy, plagiarism, unfair competition, idea misappropriation under implied contract, or infringement of copyright, title, slogan, registered trademark, service mark, or trade name.

3.7            Intentional, Knowing or Reckless Violations of or Non-Compliance with Applicable Law: With respect to PO&E Coverage identified in ¶¶ 2.1(a) and 2.1(b), any Claim against a Public Official based upon, arising out of, or attributable to such Public Official’s intentional, knowing or reckless violation of or Non-Compliance with applicable law, provided:

(a)       A judgment or other final adjudication adverse to such Public Official establishes such Public Official’s intentional, knowing or reckless violation of or Non-Compliance with such applicable law; or

(b)       Such Public Official enters into a settlement agreement to settle, or otherwise settles, such Claim where the terms thereof, either explicitly or necessarily implicitly, establish such Public Official’s intentional, knowing or reckless violation of or Non-Compliance with such applicable law; or

(c)       It has been determined by the Administrative Committee, with the  concurrence of the Executive Committee, that Defense should be terminated, and Coverage hereunder denied, for acts or omissions within sub-¶ (a) herein, based on procedures and considerations set forth in Claims Resolution § VII, ¶¶ 2.2 and 5.2.

3.8            Other Insurance and Third-Party Indemnifications.  Any Claims to the extent there is any valid and collectible Other Insurance that also affords coverage in whole or in part for such Claim, whether such Other Insurance is stated to be primary, contributory, excess, contingent or otherwise, but excluding the Fund's Excess Liability Policies; provided, however, this Exclusion shall not apply:

(a)       To the amount of the Ultimate Net Loss with respect to such Claim which is in excess of the limit of liability of such other policy or policies and any applicable deductible or retention thereunder; or

(b)       With respect to coverage afforded such Claim by any other policies purchased or issued specifically as insurance underlying or in excess of the PO&E Coverage afforded under this § IV;

provided always, that nothing herein shall be construed to cause the Fund's PO&E Coverage to contribute with any other policies or to make the Fund's PO&E Coverage subject to any of the terms of any policy of Other Insurance.  (See, ¶ 2.5 re "Other Insurance and Third Party Indemnifications" and ¶ 2.1.5 re "PO&E Coverage Regarding Outside Not-For Profit Organization").

3.9            Derivative and Security-Holder Claims.  Any Claim by, on behalf of, in the light of, at the request of, or for the benefit of, any security holder of a Member, any Public Official or Employee, or the Member, unless such Claim is: 

(a) Made derivatively for the benefit of the Member by any Customer of the Member that is not a Public Official, providing such Customer is:

(1) acting totally independent of, and totally without the suggestion, solicitation, direction, assistance, participation or intervention of, any Public Official, the Member, or any affiliate of the Member; and

(2) not an affiliate of the Member nor any entity within the definition of the term "Member"; or

(b) Made non-derivatively by a security holder who is not:

(1) a Public Official; or

(2) an affiliate of the Member or any entity within the definition of the term "Member."

3.10         Employee Claims re Employment Relationship.  Any Claim against a Member or Employee by one or more of the Member's Employees arising out of the employment relationship, or by any person who has applied for employment with a Member, but only to the extent such Claim seeks recovery of:  (1) wages, salary, pension contributions, or any other form of compensation or benefits; (2) any penalties or liquidated damages; (3) reinstatement, promotion or similar mandatory injunctive relief; or (4) costs or attorneys' fees; provided, however, that the Fund shall provide Defense for such Claims, to the extent they seek such types of recoveries, in accordance with § VII., ¶ 5, but the amount of the Fund's obligation to pay Defense Costs relating thereto shall be limited to $25,000 unless, and then only for so long as, the Administrative Committee determines that continued Defense of the Claim by the Fund is reasonable considering the circumstances (including the settlement alternatives available to the Member). 

3.11         Acts Other Than For a Member.  Any Claim arising out of such Public Official's activities as a director, officer or trustee of any entity other than:

(a) The Member; or

(b) Any outside Not-For-Profit Organization, as provided in ¶ 1.8(b) of the definition of "Public Official";

            provided, however, that this Exclusion shall not apply to activities by the Directors, Fund Officers and members of the Fund's Committees for or on behalf of the Fund.

3.12         Claims By or on Behalf of a Member Against its Own Employees.  Any Claim made by or on behalf of a Member or Public Official against one of the Member's own Employees (including Public Officials), including but not limited to, any Claim made by any Customer of a Member or other Third-Party, who is not a Public Official, asserting the rights of the Member against the Member's own Employee, unless such Customer or other Third party satisfies the conditions in Exclusion ¶ 3.9(a)(1) and (2) above.

3.13         Acts Outside Public Utility Operations.  Any Claim not arising out of or resulting from the Public Utility Operations of the Member.

3.14         Public Official's Acts as "Professional".  Any Claim where all or part of such Claim is, directly or indirectly, based upon, attributable to, arising out of, resulting from or in any manner related to a Public Official's actual or alleged performance of or failure to perform professional services for others, including, without limitation, architectural, engineering, surveying, legal, medical or consulting services, including financial advice, whether for a fee or not, or any act, error or omission relating thereto; provided however, that this Exclusion shall not apply to a PO&E Claim against a Public Official relating to engineering or surveying services the Public Official performed "for others" if such services were incidental to the Member's Public Utility Operations.

3.15         Breach of Contract.  Any Claim where all or part of the Claim from which the Damages arise is, directly or indirectly, based upon, attributable to, arising out of, resulting from or in any manner related to any actual or alleged failure, inability or refusal of the Member to fulfill, in whole or in part, any financial or other obligation it has under any contract or agreement.

3.16         Unsatisfied Coverage Qualifications.  Any Claim asserted against a Public Official for a Wrongful Act under ¶ 2.1(a), and Coverage for the Member's indemnification thereof under ¶ 2.1(b), with respect to which the applicable Coverage Qualifications set forth in ¶ 2.4 are not satisfied; provided that this Exclusion shall not apply to the PO&E Coverage provided to Members under ¶ 2.1(c). 

3.17         Nuclear Materials.  Any Claim arising out of Nuclear Operations or the Hazardous Properties of Nuclear Material as follows: 

(a)       Any Claim for Bodily Injury or Property Damage:

(1)       With respect to which the Public Official or Member is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters, Nuclear Insurance Association of Canada or any of their successors, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability; or

(2)       Resulting from Hazardous Properties of Nuclear Material and with respect to which (a) any person or organization is required to maintain financial protection pursuant to the Atomic Energy Act of 1954, or any law amendatory thereof, or (b) the Public Official or Member is, or without membership in the Fund would be, entitled to indemnity from the United States of America, or any agency thereof, under any agreement entered into by the United States of America, or any agency thereof, with any person or organization.

(b)       Any Claim for expenses incurred with respect to Bodily Injury resulting from the Hazardous Properties of Nuclear Material and arising out of the operation of a Nuclear Facility by any person or organization.

(c)       Any Claim for Bodily Injury or Property Damage resulting from the Hazardous Properties of Nuclear Material if:

(1)       The Nuclear Material (a) is at any Nuclear Facility owned by, or operated by or on behalf of the Member or (b) has been discharged or dispersed therefrom;

(2)       The Nuclear Material is contained in Spent Fuel or Waste at any time possessed, handled, used, processed, sorted, transported or disposed of by or on behalf of the Member; or

(3)       The Bodily Injury or Property Damage that arises out of the furnishing by the Member of services, materials, parts or equipment in connection with the planning, construction, maintenance, operation or use of any Nuclear Facility.

As used in this Exclusion ¶ 3.17, the following definitions shall apply:

Hazardous Properties shall mean radioactive, toxic or explosive properties;

Nuclear Material -- shall mean Source Material, Special Nuclear Material or Byproduct Material;

Source Material, Special Nuclear Material and Byproduct Material -- shall have the meanings given them in the Atomic Energy Act of 1954 or in any law amendatory thereof;

Spent Fuel -- shall mean any fuel element or fuel component, solid or liquid, which has been used or exposed to radiation in a Nuclear Reactor;

Waste -- shall mean any waste material (1) containing Byproduct Material other than the tailings or Wastes produced by the extraction or concentration of uranium or thorium from any ore processed primarily for its Source Material content, and (2) resulting from the operation by any person or organization of any Nuclear Facility included under the first two paragraphs of the definition of Nuclear Facility;

Nuclear Facility -- shall mean:

(a)       Any Nuclear Reactor,

(b)       Any equipment or device designed or used for (i) separating the isotopes of uranium or plutonium, (ii) processing or utilizing Spent Fuel, or (iii) handling, processing or packing Waste,

(c)       Any equipment or device used for the processing, fabricating or alloying of Special Nuclear Material if at any time the total amount of such material in the custody of Member at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233 or any combination thereof; or more than 250 grams of uranium 235, or

(d)       Any structure, basin, excavation, premises or place prepared or used for the storage or disposal of Waste,

and includes the site on which any of the foregoing is located, all operations conducted on such site and all premises used for such operations;

Nuclear Operations -- shall mean the design, engineering, financing, construction, operation, maintenance, use, ownership, conversion or decommissioning of any "nuclear facility" as defined in the Broad Form Nuclear Energy Liability Exclusion, set forth in ¶ 3.17.

Nuclear Reactor --  shall mean any apparatus designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionable material;

Property Damage includes all forms of radioactive contamination of property.

3.18         Injunctive Relief.  Any Claim seeking relief or redress in any form other than money damages, and any fees or expenses relating to or arising out of such a Claim; provided that this Exclusion shall not apply if and to the extent Defense and Coverage are being provided under the circumstances described and terms contained in ¶ 2.9 above.

3.19         When Fund Lacks Coverage Authority.  Any Claim for which the Fund lacks authority to or is otherwise prohibited by law from providing Coverage.