POLLUTION LIABILITY COVERAGE

POLLUTION 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. 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.

All of the Coverages referenced above were re-adopted unanimously by the Members of the Fund effective December 7, 2001, the same date the Interlocal Agreement was amended and restated. 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.

POLLUTION LIABILITY COVERAGE

1. Definitions for Pollution Liability Coverage. The Definitions set forth in the "Definitions" Section of the SIA (see, § II) are applicable to the interpretation of the Coverage provided by this Pollution Liability Coverage Section, except as may be modified specifically or by implication by the definitions set forth below which are specific to the Pollution Liability Coverage contained in this § VI.

1.1 Cleanup Costs (or Cleanup) -- shall mean the portion of Remediation Costs that relate to treating, incinerating, neutralizing, removing or otherwise cleaning up or disposing of Pollution (as distinguished from Containment Costs).

1.2 Containment Costs (or Containment) -- shall mean the costs of designing, building, installing, maintaining and monitoring a system for containing a Pollution Release and preventing further migration of the Pollution. In the context of a Remediation Action or Pollution Claim, "Containment Costs" shall be such actual costs of containing the Pollution, whether on a Member's property or Third Party Property, as may be imposed upon or agreed to by the Member with the Environmental Enforcement Agency, subject to the Liability Coverage Limit. In the context of a Claim by a Member for Property Damage to the Member's Owned Property resulting from a Pollution Release that occurred on the Owned Property, "Containment Costs" shall mean reasonable, or a reasonable estimate of, Containment Costs to prevent the migration of Pollution to Third Party Property or to prevent further Environmental Damage to such Third Party Property.

1.3 Contribution -- shall mean the legal obligation to pay a proportionate share of a whole liability as one of several joint tort-feasors, joint debtors or otherwise.

1.4 Emergency Response Costs -- shall mean the reasonable costs incurred by or on behalf of a Member, including reasonable wages and overhead allocations for a Members' use of its own Employees and/or equipment (as provided in the Operational Rules § VII, ¶ 7.1), in taking emergency measures to contain a Pollution Release and prevent it from imminently spreading to or causing further Environmental Damage to Third Party Property.

1.5 Environmental Damage -- generally, shall mean the injurious presence of Pollution in or upon land, the atmosphere, or any water course or body of water as a result of a Pollution Release. In the context of a Remediation Action by an Environmental Enforcement Agency, to constitute "Environmental Damage," the Pollution must rise to the threshold level authorizing an Environmental Enforcement Agency under the applicable law to take any Remediation Action or resulting in such Agency taking such Action against a Member for Remediation Costs. In all other contexts, "Environmental Damage" shall mean a Pollution Release that results in Personal Injury or Property Damage which may or in fact does give rise to a Pollution Claim.

1.6 Environmental Enforcement Agency -- shall mean any agency of any state or the federal government having jurisdiction over alleged Environmental Damage.

1.7 Imminent Threat -- shall mean the situation where it is probable that a Pollution Release on a Member's Owned Property will cause Environmental Damage to Third Party Property unless the Member takes immediate emergency measures to contain the Pollution.

1.8 Imminent Repollution -- shall mean the situation where, without certain Remediation measures for Pollution on a Member's Owned Property, the Pollution from the original Pollution Release would migrate to and/or otherwise imminently and in the natural course cause further Environmental Damage to Third Party Property after Remediation of the Third Party Property.

1.9 "Necessarily Related" Remediation Costs -- shall mean the Remediation Costs Covered by the Fund under § VI, ¶ 3.1.4 in the situation where some Remediation of the Pollution on the Member's Owned Property is necessarily required in order to fully Remediate the Environmental Damage to Third Party Property.

1.10 Occurrence or "Pollution Occurrence" -- In addition to the meaning of "Occurrence" in § II, in this Pollution Coverage Section, "Occurrence" or "Pollution Occurrence" shall also mean a Pollution Release during the Coverage Period that results in Environmental Damage.

1.11 Owned Property -- shall mean any real or personal property that falls within the terms of the Owned Property Exclusion contained in § III, ¶ 3.14 of the CGL Coverage. (See also, Pollution Liability Coverage, § VI, ¶ 3.1.1).

1.12 Owned Property Exclusion - shall mean § III, ¶ 3.14 which generally excludes from CGL Coverage Claims for damage to property owned, occupied, rented to or controlled by a Member. (See also, Pollution Liability Coverage, § VI, ¶ 3.1.1).

1.13 Pollution -- shall mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

1.14 Pollution Claim -- shall mean any Claim for Damages or Contribution asserted against a Member or Employee by any Third Party for Personal Injury or Property Damage arising out of a Pollution Release. Depending upon the context, the term "Pollution Claim" may also include a "Remediation Action."

1.15 Pollution Release -- shall mean the emission, discharge, release or escape of Pollution, whether sudden and accidental or gradual over time, into or upon any person, thing or place, including the land, the atmosphere, any man-made structure and any above or below ground watercourse or body of water, provided that such emission discharge release or escape results in Environmental Damage. The entirety of any such Release shall be deemed to be a single Pollution Occurrence.

1.16 Potentially Responsible Party -- shall mean any Third Parties, and any Members of the Liability Pool, that are potentially liable under applicable law to pay for or Contribute to the Remediation Costs for a Pollution Release imposed by or agreed to in a Remediation Action or as a result of a Pollution Claim.

1.17 Remediation -- shall mean the Containment and/or Cleanup of Pollution that has caused Environmental Damage. "Remediation" shall also refer to the same activities if performed on a Member's Owned Property.

1.18 Remediation Action -- shall mean any formal notice by any Environmental Enforcement Agency to any Member alleging that such Member is or may be responsible for all or a portion of any Remediation Costs for Environmental Damage, and shall include any subsequent legal proceedings relating thereto.

1.19 Remediation Costs -- shall mean such Cleanup Costs and/or Containment Costs, and any other related costs, as required or imposed by an Environmental Enforcement Agency or a court, or by agreement among Potentially Responsible Parties (approved by the Fund), or as result of a Pollution Claim, relating to or arising out of Environmental Damage.

1.20 "Repollution Avoidance" Remediation Costs -- shall mean the Remediation Costs Covered by the Fund under § VI, ¶ 3.1.5 in the situation where some Remediation of the Pollution on the Member's Owned Property is necessary to avoid Imminent Repollution of Third Party Property.

1.21 Third Party Property -- shall mean any real or personal property that does not fall within the terms of the Owned Property Exclusion contained in § III, ¶ 3.14 of the CGL Coverage (see, also, § VI, ¶ 3.1.1). "Third Party Property" shall include property which by State Constitution or statute belongs to the State or the people of the State.

2. Insuring Agreement and Conditions for Pollution Liability Coverage. Under its Pollution Liability ("Pollution") Coverage, the Fund provides the following:

2.1 Incorporation of CGL Coverage Insuring Agreements and Conditions for Pollution Liability Coverage. Coverage for any Pollution Claim, and for any Remediation Action, shall be governed by the Insuring Agreements and Conditions, to the extent applicable, in the CGL Coverage set forth in § III, ¶ 2.1 (re Coverage for Occurrences); ¶ 2.2 (re Liability Coverage Limit); ¶ 2.3 (re Deductible); ¶ 2.4 (re Coverage Qualifications); ¶¶ 2.5 and 2.6 (re PreApproval Requirements); ¶ 2.7 (re Other Insurance and Third party Indemnifications); ¶ 2.8 (re Claims Among Members); and ¶ 2.9 (re Board Establishing Number of Occurrences), which are hereby incorporated into this Pollution Liability Coverage Section by this reference, as modified specifically or by implication by the terms of this Pollution Liability Coverage Section.

2.2 Coverage Conditions Specific to Pollution Liability Coverage.

2.2.1 Determination of Amount of Remediation Costs Covered by Fund. For purposes of this Pollution Liability Coverage, the Damages the Fund will pay under its CGL Coverage, § III, ¶ 2.1, include the actual Remediation Costs a Member or Employee becomes legally obligated to pay because of a Pollution Occurrence, subject to the Liability Coverage Limit. The amount of Damages the Fund will pay under the Pollution Liability Coverage for "Necessarily Related" Remediation Costs (§ VI, ¶ 3.1.5) or "Repollution Avoidance" Remediation Costs (§ VI, ¶ 3.1.6) toward Remediation of a Member's Owned Property is the lesser of the Cleanup Costs or the Containment Costs, regardless of the nature or cost of the Remediation measures imposed by an Environmental Enforcement Agency, or agreed to by the Member with other Potentially Responsible Parties, for the Remediation of the Member's Owned Property, and subject to the Liability Coverage Limit.

2.2.2 Revocation of Pollution Liability Coverage for Member's Lack of Diligence in Discovering or Remediating a Pollution Release on Member's Owned Property. The Fund's obligation to provide Pollution Coverage for Pollution Claims under ¶ 2.1 or ¶¶ 3.1.3 through 3.1.6 shall be subject to the following condition subsequent: any Coverage for any Pollution Claims arising from the Pollution Release may be revoked by the Fund if the Member knew or in the exercise of reasonable care should have known of the Pollution Release in sufficient time for it to have taken reasonable measures to prevent the Pollution from becoming an Imminent Threat or causing Environmental Damage to Third Party Property, and failed to take or unreasonably delayed in taking those measures; provided, however, that any such revocation of Coverage shall not apply to the Fund's obligation to reimburse a Member for its Emergency Response Costs to contain an Imminent Threat of migration of the Pollution from Owned Property to Third Party Property under ¶ 3.1.4, except to the extent the Member's lack of diligence in discovering the Pollution Release or delay in taking measures to prevent such migration materially increased the amount of such Emergency Response Costs.

2.2.3 Coverage Re Property Environmentally Damaged at the Time Acquired by a Member. The Fund will not pay any Remediation Costs imposed upon a Member as a result of a Remediation Action or a Pollution Claim relating to a Pollution Release that has already occurred or Environmental Damage that already existed in or on real or personal property at the time such property was acquired by the Member unless the Member, before committing to acquire the property, obtained a reasonable environmental inspection of the property which failed to reveal the existence of the Pollution Release or Environmental Damage.

3. Exclusions for Pollution Liability Coverage. The Exclusions set forth in § III, ¶ 3 of the CGL Coverage shall apply to this Pollution Liability Coverage; provided, however, that the Owned Property Exclusion contained in § III, ¶ 3.14 shall be replaced with the Pollution Liability Coverage and subject to the Exclusions set forth in ¶ 3.1 below.

3.1 Effect of the "Owned Property Exclusion" under the Pollution Liability Coverage for Environmental Damage to Third Party Property Resulting from a Pollution Release on a Member's Owned Property.

3.1.1 Terms of "Owned Property Exclusion". Under § III, ¶ 3.14, incorporated herein, the Fund excludes from its CGL Coverage, and therefore its Pollution Liability Coverage, any Claim for damage to or loss of:

(a) Property owned or occupied by, or being used by or rented to the Member against which the Claim is asserted, or against whose Employee the Claim is asserted; or

(b) Property occupied by, rented to or being used by an Employee acting within the scope of his or her employment, or property owned by the Employee while being used within the scope of his or her employment;

(c) Property in the care, custody or control of the Member or Employee or as to which the Member or Employee is for any purpose exercising physical control.

3.1.2 "Owned Property Exclusion" Does Not Apply to Property Damage to Third Party Property. Property Damage to property that does not fall within subparagraphs (a), (b) and (c) of the Owned Property Exclusion above shall be deemed to be Property Damage to "Third Party Property." Third Party Property shall include property which by State Constitution or statute belongs to the State or the people of the State. The Owned Property Exclusion shall not apply to Pollution Liability Coverage for Property Damage to Third Party Property.

3.1.3 "Basic Coverage" for Pollution Release on Owned Property Which Causes Property Damage to Third Party Property. When a Pollution Release in or on a Member's Owned Property causes Environmental Damage to Third Party Property, the Fund will Cover, subject to the Liability Coverage Limit: the costs of investigating and testing for the existence and extent of Environmental Damage to Third Party Property; the Remediation Costs the Member becomes legally obligated to pay for the Environmental Damage to the Third Party Property; and, the cost of any mandated subsequent monitoring of Third Party Property; provided, however, the foregoing Coverage shall be revoked if the Member failed to exercise due diligence in discovering or remediating the Pollution Release, as provided in ¶ 2.2.2. Except as may be provided otherwise in ¶¶ 3.1.4 through 3.1.6 below and the Operational Rules, the Fund will not Cover: the costs of investigating and testing regarding the existence or extent of Environmental Damage to the Member's Owned Property; the cost of Remediating the Owned Property; or, the cost of subsequent monitoring of the Owned Property.

3.1.4 Coverage for Emergency Response Costs Where Pollution is "Imminent Threat" to Third Party Property. When, in the exercise of reasonable care, a Member discovers a Pollution Release that, at the time of discovery, constitutes an Imminent Threat or is continuing to cause Environmental Damage to Third Party Property, the Fund will Cover, subject to the Liability Coverage Limit and ¶ 2.2.2, the Member's reasonably necessary Emergency Response Costs.

3.1.5 "Necessarily Related" Remediation Costs. Where a Pollution Release in or on a Member's Owned Property has already caused Environmental Damage to Third Party Property at the time the Member, in the exercise of reasonable care, discovers the Pollution Release, and where Remediation of all or a portion of the Pollution on the Owned Property is necessary to effectuate Remediation of the Third Party Property, the Fund will Cover, subject to the Liability Coverage Limit, ¶ 2.2.2 and the applicable provisions of the Operational Rules, the reasonable Containment Costs or Cleanup Costs thereof, whichever is less, regardless of the nature or actual cost of the Remediation measures actually required of the Member as a result of any Remediation Action or Pollution Claim. (See, ¶ 2.2.1 and Operational Rules).

3.1.6 "Repollution Avoidance" Remediation Costs. Where a Pollution Release in or on a Member's Owned Property has already caused Environmental Damage to Third Party Property at the time the Member, in the exercise of reasonable care, discovers the Pollution Release, and where Remediation of all or a portion of the Owned Property is necessary to prevent Imminent Repollution of the Third Party Property, the Fund will Cover, subject to the Liability Coverage Limit, ¶ 2.2.2 and the applicable provisions of the Operational Rules, the reasonable Containment Costs or Cleanup Costs thereof, whichever is less, regardless of the nature or actual cost of the Remediation measures actually required of the Member as a result of any Remediation Action or Pollution Claim. (See, ¶ 2.2.1 and Operational Rules).