EMPLOYEE or CONTRACTOR?

A Seminar Presented for

NAUTILUS INSURANCE COMPANY

Friday, June 25, 2004

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Overview of Topics

Employee versus Contractor

Exclusionary Provisions

Claims Handling

Employee versus Contractor

Primary Factors Group

− Behavioral Control

− Financial Control

− Type of Relationship

I.R.S. Test

24-Factor Matrix

Common Law Test

Statutory Employee & Exemptions

Exclusionary Provisions

Workers Compensation and Similar Laws

Employer’s Liability

− Purpose

− Dual Capacity Claims

− Third-Party-Over Actions

− Amendatory Endorsements

− Standard and Endorsed Definitions

Co-Employee Exclusion

Voluntary Labor

Claims Handling

Early Investigation

Declaratory Relief

Workers Compensation Proceedings

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PRIMARY FACTORS

Behavioral Control

Facts that show whether the policyholder has a right to direct and control how the worker does the task for which the worker is hired include the type and degree of—

• Instructions the policyholder gives the worker

An employee is generally subject to the policyholder’s instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work:

When and where to do the work

What tools or equipment to use

What workers to hire or to assist with the work

Where to purchase supplies and services

What work must be performed by a specified individual

What order or sequence to follow

The amount of instruction needed varies among different jobs. Even if no in-structions are given, sufficient behavioral control may exist if the policyholder has the right to control how the work results are achieved. A policyholder may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. The key considera-tion is whether the policyholder has retained the right to control the details of a worker's performance or instead has given up that right.

• Training the policyholder gives the worker

An employee may be trained to perform services in a particular manner. In dependent contractors ordinarily use their own methods.

Financial Control

Facts that show whether the policyholder has a right to control the policyholder aspects of the worker's job include:

• The extent to which the worker has unreimbursed business expenses

Independent contractors are more likely to have unreimbursed expenses than are employees. Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. How-ever, employees may also incur unreimbursed expenses in connection with the services they perform for their business.

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• The extent of the worker's investment

An employee usually has no investment in the work other than his or her own time. An independent contractor often has a significant investment in the fa-cilities he or she uses in performing services for someone else. However, a significant investment is not necessary for independent contractor status.

• The extent to which the worker makes services available to the market

An independent contractor is generally free to seek out business opportuni-ties. Independent contractors often advertise, maintain a visible business lo-cation, and are available to work in the relevant market.

• How the policyholder pays the worker

An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. An independent contractor is usually paid by a flat fee for the job. However, it is common in some professions, such as law, to pay independent contrac-tors hourly.

• The extent to which the worker can realize a profit or loss

Since an employer usually provides employees a workplace, tools, materials, equipment, and supplies needed for the work, and generally pays the costs of doing business, employees do not have an opportunity to make a profit or loss. An independent contractor can make a profit or loss.

Type of Relationship

Facts that show the type of relationship between the worker and policyholder in-clude:

• Written contracts describing the relationship the parties intended to create

This is probably the least important of the criteria, since what really matters is the nature of the underlying work relationship, not what the parties choose to call it. However, in close cases, the written contract can make a difference.

• Whether the policyholder provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay

The power to grant benefits carries with it the power to take them away, which is a power generally exercised by employers over employees. A true independent contractor will finance his or her own benefits out of the overall profits of the enterprise.

• The permanency of the relationship

If the company engages a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is

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generally considered evidence that the intent was to create an employer-employee relationship.

• The extent to which services performed by the worker are a key aspect of the regular business of the policyholder

If a worker provides services that are a key aspect of the policyholder’s regu-lar business activity, it is more likely that the policyholder will have the right to direct and control the worker’s activities. For example, if a law firm hires an attorney, it is likely that it will present the attorney's work as its own and would have the right to control or direct that work. This would indicate an employer-employee relationship.

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I.R.S. TEST

Compliance With Instructions

Does the policyholder provide instructions to the worker about when, where, and how he or she is to perform the work?

Workers who must comply with another person's instructions about when, where, or how to work generally are considered employees. This applies even if the other person has the right to require compliance but does not exercise that right.

Training

Does the policyholder provide training to the worker?

Requiring that a worker be trained through such methods as working with an ex-perienced employee, attending instructional sessions or training courses, or cor-responding with the employer, is indicative of employee status because it shows that the employer controls the way the work is done or the method that is used. Independent contractors, on the other hand, normally are not trained by the pur-chasers of their services.

Integration Into The Business

Are the services provided by the worker integrated into the policyholder’s business operations?

The fact that a worker's services are so integrated into an employer's operations that the success or continuation of the business depends on the performance of the services generally indicates that the individual is subject to a certain amount of control by the owner of the business.

Personal Services Required

Must the services be rendered personally by the worker?

Employee status is suggested if a worker is required to personally render the services in question, because such an arrangement indicates that the employer controls the methods used to accomplish the tasks. By contrast, a worker's right to substitute another's services without the employer's knowledge suggests the existence of a contractor relationship.

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Hiring, Supervising, Paying

Does the policyholder hire, supervise, and pay assistants to the worker?

An employer that hires, supervises, and pays a worker's assistants usually is viewed as controlling the work (and the individual performing the services) in question. On the other hand, workers who hire, supervise, and pay other workers in situations where they have agreed to provide the labor needed to attain a cer-tain result generally are treated as independent contractors.

Continuing Relationship

Is there a continuing relationship between the policyholder and the worker?

Employees usually are hired for a continuing, indefinite period. This generally applies even to work or services performed on an irregular but recurring basis, as well as to part-time, temporary, and seasonal work. The relationship between an independent contractor and employer, on the other hand, usually ends when the job is finished.

Set Hours Of Work

Does the policyholder set the work hours and schedule?

A requirement that workers adhere to certain work hours established by the em-ployer generally is viewed as a factor indicating employer control.

Full-Time Work Requirement

Does the worker devote substantially full time to the policyholder’s business?

Employee status is suggested if a worker must work on a substantially full-time basis for the employer since this indicates that the employer controls the amount of time the individual spends working and thus essentially restricts the worker's ability to perform services for someone else. By contrast, independent contrac-tors typically are free to work when and for whom they choose.

Employer’s Premises

Is the work performed on the policyholder’s premises?

Performance of work on the employer's premises may be evidence of employer control, especially if the work could be done elsewhere. While performance at an off-premises site demonstrates some freedom from employer control, it does not by itself mean that the worker is an independent contractor. The importance of the work-on-premises factor depends on the nature of the service involved and the extent to which an employer generally world require that employees perform

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such services on the employer's premises. Employer control is suggested when the employer has the right to compel the worker to travel a designated route, to canvass a territory within a certain time, or to work at specific places.

Mandatory Work Sequence

Is the worker required to perform the services in an order or sequence set by the policyholder?

A requirement that a worker perform work in a certain order or sequence may in-dicate that the employer controls or retains the right to control the worker.

Required Reports

Is the worker required to submit oral or written reports to the policyholder?

A degree of control is suggested where a worker is required to submit regular oral or written reports to the employer.

Payment Period

Is the worker paid by the hour, week, or month?

Employees generally are paid by the hour, day, or month, while independent con-tractors typically are paid by the job or on a lump-sum or straight commission ba-sis.

Discharge Rights

Does the policyholder have the right to discharge the worker at will?

If an employer has the right to discharge an individual, that worker is viewed as an employee. Independent contractors, on the other hand, cannot be fired as long as they perform services in accordance with their contract specifications.

Termination Rights

Can the worker terminate his or her relationship with the policyholder any time he or she wishes without incurring liability to the policyholder?

Employees typically can end their employment relationship at any time without incurring any liability, whereas independent contractors might be liable for a breach of contract if they leave without completing their work.

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Travel Expenses

Does the policyholder pay the business or traveling expenses of the worker?

Employer payment of a worker's business or work-related travel expenses gen-erally indicates employee status.

Tools And Materials

Does the worker furnish significant tools, materials and equipment?

An employer-employee relationship is indicated where an employer supplies a worker with a significant amount of the tools, materials, or other equipment needed to perform services. Moreover, in some occupations and industries where it is customary for individuals to provide their own tools, these workers also may be treated as employees.

Investment In Facilities

Does the worker have a significant investment in facilities?

Individuals are likely to be treated as independent contractors if they have a sig-nificant investment in the facilities they use in the course of performing services (such as an office rented at fair market value from a third party).

Risks Of Profits Or Loss

Can the worker realize a profit or loss as a result of his or her services?

Independent contractors typically can invest significant amounts of time or capital in their work without any guarantee of success (that is they realize a profit or sus-tain a loss based on their success in performing the work or service). When workers are insulated from loss or are restricted in the amount of profit they can gain, they usually are classified as employees.

Working For More Than One Firm

Does the worker provide services for more than one firm at a time?

Workers who perform services for a number of businesses or people at the same time usually are considered independent contractors. However, a worker who performs services for more than one person may be an employee of each of the persons, especially where such persons are part of the same service arrange-ment.

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Availability To General Public

Does the worker make his or her services available to the general public?

Workers who make their services available to the public on a regular and consis-tent basis generally are treated as independent contractors.

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NOTES

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NOTES

EXHIBIT 1 EXHIBIT 1

EXHIBIT 1 EXHIBIT 1

Independent Contractor Tester

Instructions

Answer each of the following 20 questions. Click the for more information on each question. When you are finished the answers will be tabulated to help you determine worker classification.

1. Do you provide instructions to the worker about when, where, and how he or she is to perform the work?

Yes

No

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2. Do you provide training to the worker? Yes

No

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3. Are the services provided by the worker integrated into your business operations? Yes

No

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4. Must the services be rendered personally by the worker? Yes

No

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5. Do you hire, supervise, and pay assistants to the worker? Yes

No

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6. Is there a continuing relationship between you and the worker? Yes

No

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7. Do you set the work hours and schedule? Yes

No

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8. Does the worker devote substantially full time to your business? Yes

No

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9. Is the work performed on your premises? Yes

No

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10. Is the worker required to perform the services in an order or sequence set by you? Yes

No

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11. Is the worker required to submit oral or written reports to you? Yes

No

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12. Is the worker paid by the hour, week, or month? Yes

No

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13. Do you have the right to discharge the worker at will? Yes

No

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14. Can the worker terminate his or her relationship with you any time he or she wishes without incurring liability to you?

Yes

No

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15. Do you pay the business or traveling expenses of the worker? Yes nmlkj

http://www.hrtools.com/etoolsapplets/indcontractortester/contracttest3.asp

No nmlkj

16. Does the worker furnish significant tools, materials and equipment? Yes

No

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17. Does the worker have a significant investment in facilities? Yes

No

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18. Can the worker realize a profit or loss as a result of his or her services? Yes

No

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19. Does the worker provide services for more than one firm at a time? Yes

No

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20. Does the worker make his or her services available to the general public? Yes

No

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Clear Answers Analyze My Answers

http://www.hrtools.com/etoolsapplets/indcontractortester/contracttest3.asp

EXHIBIT 2 EXHIBIT 2

EXHIBIT 2 EXHIBIT 2

INDEPENDENT CONTRACTOR/EMPLOYEE STATUS DETERMINATION ELEMENTS – COMMON LAW

ELEMENTS EMPLOYEE INDEPENDENT CONTRACTOR1. Instructions A worker who is required to comply with instructions about when,

where, and how to work is ordinarily an employee. The instructionsmay be in the form of manuals or written procedures that show how thedesired result is to be accomplished. Some workers may performservices without receiving instructions because they are highlyproficient and conscientious workers. Even if no instructions are given,the control factor is present if the employer has the right to giveinstructions.

An independent contractor decides howto do the job, establishes his or her ownprocedures, and is not supervised. Theentity engaging his or her services is onlyinterested in the end result.

2. Training Training of a worker by an experienced employee working with him orher, by correspondence, by required attendance at meetings, and byother methods is a factor of control indicating that the employer wantsthe services performed in a particular manner. This is especially true ifthe training is given periodically or at frequent intervals.

An independent contractor ordinarily useshis or her own methods and receives notraining from the principal. He or she isnot required to attend meetings.

3. Integration If the worker’s services are so integrated into an employer’s operationsthat the success or continuation of the business depends on theperformance of the services, it generally indicates employment.

If the individual’s performance of serviceand those of the assistants establish oraffect his or her own business reputationand not the business reputation of thosewho purchase their services, it is anindication of an independent contractorrelationship.

4. Services RenderedPersonally

If the services must be rendered personally, it indicates the employer isinterested in the methods as well as the results.

An individual’s right to substituteanother’s services without the principal’sknowledge suggests the existence of anindependent relationship.

5. Hiring Assistants A worker performs services for an employer who hires, supervises, andpays assistants. If a worker hires and supervises assistants at thedirection of the employer, he or she is acting as an employee in thecapacity of a foreman for or representative of the employer.

An independent contractor hires,supervises, and pays assistants under acontract that requires him or her toprovide materials and labor.

6. Continuing Relationship The existence of a continuing relationship between a worker and theperson for whom he or she performs services indicates an employer-employee relationship. If the arrangement consists of continuing orrecurring work, the relationship is considered permanent, even if theservices are rendered on a part-time basis, are seasonal in nature, or ifthe person actually works for only a short time.

The relationship between an independentcontractor and his or her client ends whenthe job is finished.

INDEPENDENT CONTRACTOR/EMPLOYEESTATUS DETERMINATION ELEMENTS – COMMON LAW

ELEMENTS EMPLOYEE INDEPENDENT CONTRACTOR7. Set Hours of Work The establishment of set hours of work by the employer is a factor of

control. If the nature of the occupation makes fixed hours impractical, arequirement that the worker work at certain times is an element ofcontrol.

An independent contractor is the masterof his or her own time.

8. Full-Time Work Full-time work for the business is indicative of control by the employersince it restricts the worker from doing other gainful work. Full-timedoes not necessarily mean an eight-hour day or a five-day week. Itsmeaning may vary with the intent of the parties, the nature of theoccupation, and the customs in the locality. These conditions should beconsidered in defining full-time. Full-time services may be requiredeven though not specified orally or in writing.

An independent contractor is free to workwhen he or she chooses and to set his orher daily or weekly schedule. Anindependent contractor would normallyperform services less than full time forone principal.

9. Work Done on Premises Doing the work on the employer’s premises, on a route, or at a locationdesignated by an employer implies employer control, especially wherethe work is of such a nature that it could be done elsewhere. The useof desk space and of telephone and stenographic services provided byan employer places the worker within the employer’s direction andsupervision unless the worker has the option as to whether he or shewants to use these facilities. However, the fact that work is done off thepremises does not indicate freedom from control since someoccupations (for example, construction workers) are necessarilyperformed away from the premises of the employer.

Doing work away from the principal’spremises when it could be done on theprincipal’s premises indicates a lack ofcontrol, especially when the work is freefrom supervision.

10. Order or Sequence Set If a worker must perform services in the order or sequence set by theemployer, it shows that the worker is not free to follow an independentpattern of work but must follow the established routines and schedulesof the employer. Often, because of the nature of the occupation, theemployer either does not set the order of the services or sets theminfrequently. Control is sufficiently shown, however, if the employerretains the right to do so.

If the principal is not interested in theorder or sequence by which the individualcompletes the work, there is an indicationthat there is a lack of control over themanner and means by which the work isperformed.

11. Reports The submission of regular oral or written reports indicates control sincethe worker must account for his or her actions.

An independent contractor is not requiredto file reports that constitute a review ofhis or her work. (However, reports relatedonly to an end result are not an indicationof employment or independence.)

INDEPENDENT CONTRACTOR/EMPLOYEESTATUS DETERMINATION ELEMENTS – COMMON LAW

ELEMENTS EMPLOYEE INDEPENDENT CONTRACTOR12. Payments Payment by the hour, week, or month generally represents an

employer-employee relationship

The guarantee of a minimum salary or the granting of a drawingaccount at stated intervals with no requirement for repayment of theexcess over earnings tends to indicate the existence of an employer-employee relationship.

Payment on a commission or job basis iscustomary where the worker is anindependent contractor. Payment by thejob includes a lump sum computed by thenumber of hours required to do the job ata fixed rate per hour.

13. Expenses Payment of the worker’s business and travel expenses by the employerindicates control over the worker.

A worker who is paid on a job basis andwho has to take care of all incidentalexpenses is generally an independentcontractor. Since the person isaccountable to no other person for theexpenses, the person is free to workaccording to his or her own methods andmeans.

14. Tools and Materials The furnishing of tools, materials, etc., by the employer indicatescontrol over the worker. In some occupations and industries, it iscustomary for workers to provide their own tools, which are usuallysmall hand tools; in that case, workers may be considered to beemployees.

When a worker furnishes tools andmaterials, especially when a substantialsum is involved, there is an indication ofindependence.

15. Investment The furnishing of all necessary facilities by the employer tends toindicate an employment relationship.

Facilities generally include equipment or premises necessary for thework, but not tools, instruments, clothing, etc., that are commonlyprovided by employees in their particular trade.

A significant investment by the worker infacilities used by him or her in performingservices for another tends to showindependent contractor status.

In order to be significant, the investmentmust be real, essential, and adequate.

INDEPENDENT CONTRACTOR/EMPLOYEESTATUS DETERMINATION ELEMENTS – COMMON LAW

ELEMENTS EMPLOYEE INDEPENDENT CONTRACTOR16. Profit or Loss When workers are insulated from loss or are restricted in the amount of

profit they can gain, they are usually employees. The opportunity forhigher earnings, such as from pay on a piecework basis or thepossibility of gain or loss from a commission arrangement, is notconsidered profit or loss.

The possibility of a profit or loss for theworker as a result of his or her servicesgenerally shows independent contractorstatus. Profit or loss implies the use ofcapital by the worker in an independentbusiness. Whether a profit is realized orloss suffered generally depends onmanagement decisions; that is, the oneresponsible for a profit or loss can use hisor her own ingenuity, initiative, andjudgment in conducting the business orenterprise. Factors that affect whether ornot there is a profit or loss are whetherthe worker:• Hires, directs, and pays assistants.• Has his or her own office equipment,

materials, or other facilities for doingthe work.

• Has continuing and recurring liabilitiesor obligations.

• Succeeds or fails depending on therelation of his or her receipts to his orher expenditures.

• Agrees to perform specific jobs forprices agreed upon in advance.

• Pays expenses incurred in connectionwith the work.

Independent contractors typically caninvest significant amounts of time orcapital in their work without anyguarantee of success.

INDEPENDENT CONTRACTOR/EMPLOYEESTATUS DETERMINATION ELEMENTS – COMMON LAW

ELEMENTS EMPLOYEE INDEPENDENT CONTRACTOR17. Works for More Than One

Person or FirmIt is possible that a person may work for a number of people or firmsand still be an employee of one or all of them because he or she worksunder the control of each firm.

Work for a number of persons or firms atthe same time usually indicates anindependent contractor status becausethe worker is usually free, in such cases,from control by any of the firms.

18. Offers Services to theGeneral Public

If a worker performs services for only one person, does not advertisehis or her services to the general public, does not hold licenses or hireassistants, and performs services on a continuing basis, it is anindication of an employment relationship.

The availability of services to the generalpublic usually indicates independentcontractor status. This may be evidencedby the worker having his or her own officeand assistants, hanging out a “shingle” infront of his or her own home or office,holding business licenses, maintainingbusiness listings in telephone directories,or advertising in newspapers, tradejournals, magazines, etc.

19. Right to Fire If an employer has the right to discharge an individual at will andwithout liability, that worker is considered an employee. The employerexercises the control through the ever present threat of dismissal,which causes the worker to obey instructions. A restriction on theemployer’s right to discharge in a labor union contract does not detractfrom the existence of an employment relationship.

An independent contractor cannot bedischarged as long as he or she producesa result that measures up to his or hercontract specifications. However, therelationship can be terminated withliability.

20. Right to Quit The right to quit at any time without incurring liability indicates anemployer/employee relationship.

An independent contractor usually agreesto complete a specific job, and he or sheis responsible for its satisfactorycompletion or is legally obligated to makegood for failure to complete the job.

21. Custom in Industry andLocation

If the work is traditionally done by civil service employees under thedirection of a supervisor, it is an indication of employment.

If the work is done by outside specialists,it is an indication of independence.

22. Required Level of Skill A low level of technical skill is strong evidence of employment, since asthe skill level declines, there is less room to exercise the discretionnecessary for independence.

A high level of technical skill is importantwhen combined with other factors suchas owning a separate and distinctbusiness.

INDEPENDENT CONTRACTOR/EMPLOYEESTATUS DETERMINATION ELEMENTS – COMMON LAW

ELEMENTS EMPLOYEE INDEPENDENT CONTRACTOR23. Belief of the Parties It is an indication of employment if:

• Both parties (the worker and the State) believe the relationship isemployment.

• Either party believes that the relationship is employment.

If the parties agree that the relationship isone of independence, it may be.However, consideration should be givento the fact that many individuals do notknow how employment determinationsare made and believe they areindependent contractors because theyare told they are.

24. Business Decisions Employees cannot make business decisions that would enable them toearn a profit or incur a financial loss.

Independent contractors make businessdecisions that enable them to earn aprofit or incur a loss. Investment of theworker’s time is not sufficient to show arisk of loss.

EXHIBIT 4 EXHIBIT 4

EXHIBIT 4 EXHIBIT 4

STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor DEPARTMENT OF INDUSTRIAL RELATIONS DIVISION OF LABOR STANDARDS ENFORCEMENT

INDEPENDENT CONTRACTORS

Individuals who are “independent contractors” are not considered employees for wage and hour purposes. The state agencies most involved with the determination of the independent contractor status are the Employment Development Department (EDD), which is concerned with employment-related taxes, and the Division of Labor Standards Enforcement (DLSE), which is concerned with whether the wage, hour and workers’ compensation insurance laws apply. There are other agencies, such as the Franchise Tax Board (FTB) and the Contractors State Licensing Board (CSLB), which also have regulations or requirements concerning independent contractors. Since different laws are involved, it is possible that the same individual will be considered an employee for purposes of one law and an independent contractor under another law. Because the potential liabilities and penalties are significant, if an individual is treated as an independent contractor and later found to be an employee, it is advisable that each such relationship be thoroughly researched before implemented. There is no single determinative factor in determining whether an individual is an independent contractor or an employee for purposes of wage and hour laws. An individual will be considered an employee where the employer exercises all necessary control by direct or indirect means over the work details of the individual. (S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989 48 Cal.3d 341) In addition, the following factors are to be considered in determining an individual’s independent contractor or employee status:

1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;

2. Whether or not the work is part of the regular business of the principal;

3. Whether the principal or the worker supplies the instrumentalities, tools and the place for the person doing

the work;

4. The individual’s investment in the equipment or materials required by his or her task;

5. The skill required in the particular occupation;

6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;

7. The individual’s opportunity for profit or loss depending on his/her managerial skill;

8. The length of time for which the services are to be performed;

9. The degree of permanence of the working relationship;

10. The method of payment, whether by time or by the job;

11. Whether or not the parties believe they are creating an employer-employee relationship. (Borello, Id. at 350)

Even where there is an absence of control over the details, an employer-employee relationship will be found if the principal retains pervasive control over the operation of the whole, the worker’s duties are an integral part of the operation, and the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288) In addition, the existence of a written agreement purporting to establish an independent contractor relationship is not determinative. (Borello, Id.at 349) Nor is the fact that a worker is issued a 1099 form rather than a W-2 form determinative with respect to independent contractor status. (Toyota Motor Sales v. Superior Court (1990) 220 Cal.App.3d 864, 877)

There is a rebuttable presumption that where a worker performs services that require a license pursuant to Business and Professions Code § 7000, et seq., or who performs services for a person who is required to obtain such a license, the worker is an employee and not an independent contractor (Labor Code § 2750.5)

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EXHIBIT 5 EXHIBIT 5

EXHIBIT 5 EXHIBIT 5

COMMERCIAL GENERAL LIABILITY CG 00 01 10 93

CG 00 01 10 93 Copyright, ISO Commercial Risk Services, Inc., 1992 Page 1 of 12

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered.

Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy. The words "we", "us" and "our" refer to the company providing this insur-ance.

The word "insured" means any person or organization qualifying as such under WHO IS AN INSURED (SECTION II).

Other words and phrases that appear in quotation marks have special meaning. Refer to DEFINITIONS (SECTION V).

SECTION I – COVERAGES

COVERAGE A. BODILY INJURY AND PROP- ERTY DAMAGE LIABILITY

1. Insuring Agreement.

a. We will pay those sums that the insured be-comes legally obligated to pay as damages be-cause of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend any "suit" seeking those damages. We may at our discretion in-vestigate any "occurrence" and settle any claim or "suit" that may result. But:

(1) The amount we will pay for damages is limited as described in LIMITS OF INSURANCE (SECTION III); and

(2) Our right and duty to defend end when we have used up the applicable limit of insur-ance in the payment of judgments or set-tlements under Coverages A or B or medi-cal expenses under Coverage C.

No other obligation or liability to pay sums or perform acts or services is covered unless ex-plicitly provided for under SUPPLEMENTARY PAYMENTS – COVERAGES A AND B.

b. This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; and

(2) The "bodily injury" or "property damage" occurs during the policy period.

c. Damages because of "bodily injury" include damages claimed by any person or organiza-tion for care, loss of services or death resulting at any time from the "bodily injury".

2. Exclusions.

This insurance does not apply to:

a. Expected or Intended Injury

"Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property.

b. Contractual Liability

"Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a con-tract or agreement. This exclusion does not apply to liability for damages:

(1) Assumed in a contract or agreement that is an "insured contract", provided the "bodily injury" or "property damage" occurs subse-quent to the execution of the contract or agreement; or

(2) That the insured would have in the absence of the contract or agreement.

c. Liquor Liability

"Bodily injury" or "property damage" for which any insured may be held liable by reason of:

(1) Causing or contributing to the intoxication of any person;

(2) The furnishing of alcoholic beverages to a person under the legal drinking age or un-der the influence of alcohol; or

(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alco-holic beverages.

This exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.

Page 2 of 12 Copyright, ISO Commercial Risk Services, Inc., 1992 CG 00 01 10 93

d. Workers Compensation and Similar Laws

Any obligation of the insured under a workers compensation, disability benefits or unemploy-ment compensation law or any similar law.

e. Employer's Liability

"Bodily injury" to:

(1) An "employee" of the insured arising out of and in the course of:

(a) Employment by the insured; or

(b) Performing duties related to the conduct of the insured's business; or

(2) The spouse, child, parent, brother or sister of that "employee" as a consequence of paragraph (1) above.

This exclusion applies:

(1) Whether the insured may be liable as an employer or in any other capacity; and

(2) To any obligation to share damages with or repay someone else who must pay dam-ages because of the injury.

This exclusion does not apply to liability as-sumed by the insured under an "insured con-tract".

f. Pollution

(1) "Bodily injury" or "property damage" arising out of the actual, alleged or threatened dis-charge, dispersal, seepage, migration, re-lease or escape of pollutants:

(a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured;

(b) At or from any premises, site or location which is or was at any time used by or for any insured or others for the han-dling, storage, disposal, processing or treatment of waste;

(c) Which are or were at any time trans-ported, handled, stored, treated, dis-posed of, or processed as waste by or for any insured or any person or organi-zation for whom you may be legally re-sponsible; or

(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or in-directly on any insured's behalf are per-forming operations:

(i) If the pollutants are brought on or to the premises, site or location in con-nection with such operations by such insured, contractor or subcontractor; or

(ii) If the operations are to test for, moni-tor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants.

Subparagraphs (a) and (d)(i) do not apply to "bodily injury" or "property damage" aris-ing out of heat, smoke or fumes from a hos-tile fire.

As used in this exclusion, a hostile fire means one which becomes uncontrollable or breaks out from where it was intended to be.

(2) Any loss, cost or expense arising out of any:

(a) Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants; or

(b) Claim or suit by or on behalf of a gov-ernmental authority for damages be-cause of testing for, monitoring, cleaning up, removing, containing, treating, de-toxifying or neutralizing, or in any way responding to, or assessing the effects of pollutants.

Pollutants means 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.

g. Aircraft, Auto or Watercraft

"Bodily injury" or "property damage" arising out of the ownership, maintenance, use or en-trustment to others of any aircraft, "auto" or wa-tercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading".

Page 6 of 12 Copyright, ISO Commercial Risk Services, Inc., 1992 CG 00 01 10 93

7. All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within the applicable limit of insurance.

These payments will not reduce the limits of insur-ance.

SECTION II – WHO IS AN INSURED

1. If you are designated in the Declarations as:

a. An individual, you and your spouse are insur-eds, but only with respect to the conduct of a business of which you are the sole owner.

b. A partnership or joint venture, you are an in-sured. Your members, your partners, and their spouses are also insureds, but only with re-spect to the conduct of your business.

c. An organization other than a partnership or joint venture, you are an insured. Your "executive of-ficers" and directors are insureds, but only with respect to their duties as your officers or direc-tors. Your stockholders are also insureds, but only with respect to their liability as stockhold-ers.

2. Each of the following is also an insured:

a. Your "employees", other than your "executive officers", but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business. However, no "employee" is an insured for:

(1) "Bodily injury" or "personal injury":

(a) To you, to your partners or members (if you are a partnership or joint venture), or to a co-"employee" while in the course of his or her employment or while perform-ing duties related to the conduct of your business;

(b) To the spouse, child, parent, brother or sister of that co-"employee" as a conse-quence of paragraph (1)(a) above;

(c) For which there is any obligation to share damages with or repay someone else who must pay damages because of the injury described in paragraphs (1)(a) or (b) above; or

(d) Arising out of his or her providing or failing to provide professional health care services.

(2) "Property damage" to property:

(a) Owned, occupied or used by,

(b) Rented to, in the care, custody or control of, or over which physical control is be-ing exercised for any purpose by

you, any of your "employees" or, if you are a partnership or joint venture, by any partner or member.

b. Any person (other than your "employee"), or any organization while acting as your real es-tate manager.

c. Any person or organization having proper tem-porary custody of your property if you die, but only:

(1) With respect to liability arising out of the maintenance or use of that property; and

(2) Until your legal representative has been appointed.

d. Your legal representative if you die, but only with respect to duties as such. That representa-tive will have all your rights and duties under this Coverage Part.

3. With respect to "mobile equipment" registered in your name under any motor vehicle registration law, any person is an insured while driving such equipment along a public highway with your per-mission. Any other person or organization respon-sible for the conduct of such person is also an in-sured, but only with respect to liability arising out of the operation of the equipment, and only if no other insurance of any kind is available to that person or organization for this liability. However, no person or organization is an insured with respect to:

a. "Bodily injury" to a co-"employee" of the person driving the equipment; or

b. "Property damage" to property owned by, rented to, in the charge of or occupied by you or the employer of any person who is an in-sured under this provision.

4. Any organization you newly acquire or form, other than a partnership or joint venture, and over which you maintain ownership or majority interest, will qualify as a Named Insured if there is no other similar insurance available to that organization. However:

a. Coverage under this provision is afforded only until the 90th day after you acquire or form the organization or the end of the policy period, whichever is earlier;

Page 10 of 12 Copyright, ISO Commercial Risk Services, Inc., 1992 CG 00 01 10 93

(b) The activities of a person whose home is in the territory described in a. above, but is away for a short time on your busi-ness; and

(2) The insured's responsibility to pay damages is determined in a "suit" on the merits, in the territory described in a. above or in a set-tlement we agree to.

5. "Employee" includes a "leased worker". "Em-ployee" does not include a "temporary worker".

6. "Executive officer" means a person holding any of the officer positions created by your charter, con-stitution, by-laws or any other similar governing document.

7. "Impaired property" means tangible property, other than "your product" or "your work", that cannot be used or is less useful because:

a. It incorporates "your product" or "your work" that is known or thought to be defective, defi-cient, inadequate or dangerous; or

b. You have failed to fulfill the terms of a contract or agreement;

if such property can be restored to use by:

a. The repair, replacement, adjustment or re-moval of "your product" or "your work"; or

b. Your fulfilling the terms of the contract or agreement.

8. "Insured contract" means:

a. A contract for a lease of premises. However, that portion of the contract for a lease of prem-ises that indemnifies any person or organiza-tion for damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner is not an "insured con-tract";

b. A sidetrack agreement;

c. Any easement or license agreement, except in connection with construction or demolition op-erations on or within 50 feet of a railroad;

d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;

e. An elevator maintenance agreement;

f. That part of any other contract or agreement pertaining to your business (including an in-demnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property dam-age" to a third person or organization. Tort li-ability means a liability that would be imposed by law in the absence of any contract or agreement.

Paragraph f. does not include that part of any contract or agreement:

(1) That indemnifies a railroad for "bodily injury" or "property damage" arising out of con-struction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, road-beds, tunnel, underpass or crossing;

(2) That indemnifies an architect, engineer or surveyor for injury or damage arising out of:

(a) Preparing, approving or failing to pre-pare or approve maps, drawings, opin-ions, reports, surveys, change orders, designs or specifications; or

(b) Giving directions or instructions, or fail-ing to give them, if that is the primary cause of the injury or damage; or

(3) Under which the insured, if an architect, engineer or surveyor, assumes liability for an injury or damage arising out of the in-sured's rendering or failure to render pro-fessional services, including those listed in (2) above and supervisory, inspection or engineering services.

9. "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker".

10. "Loading or unloading" means the handling of property:

a. After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraft or "auto";

Page 12 of 12 Copyright, ISO Commercial Risk Services, Inc., 1992 CG 00 01 10 93

Work that may need service, maintenance, cor-rection, repair or replacement, but which is oth-erwise complete, will be treated as completed.

c. This hazard does not include "bodily injury" or "property damage" arising out of:

(1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle created by the "loading or unloading" of it;

(2) The existence of tools, uninstalled equip-ment or abandoned or unused materials; or

(3) Products or operations for which the classi-fication in this Coverage Part or in our man-ual of rules includes products or completed operations.

15. "Property damage" means:

a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or

b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occur-rence" that caused it.

16. "Suit" means a civil proceeding in which damages because of "bodily injury", "property damage", "personal injury" or "advertising injury" to which this insurance applies are alleged. "Suit" includes:

a. An arbitration proceeding in which such dam-ages are claimed and to which you must submit or do submit with our consent; or

b. Any other alternative dispute resolution pro-ceeding in which such damages are claimed and to which you submit with our consent.

17. "Your product" means:

a. Any goods or products, other than real prop-erty, manufactured, sold, handled, distributed or disposed of by:

(1) You;

(2) Others trading under your name; or

(3) A person or organization whose business or assets you have acquired; and

b. Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products.

"Your product" includes:

a. Warranties or representations made at any time with respect to the fitness, quality, durabil-ity, performance or use of "your product"; and

b. The providing of or failure to provide warnings or instructions.

"Your product" does not include vending machines or other property rented to or located for the use of others but not sold.

18. "Temporary worker" means a person who is fur-nished to you to substitute for a permanent "em-ployee" on leave or to meet seasonal or short-term workload conditions.

19. "Your work" means:

a. Work or operations performed by you or on your behalf; and

b. Materials, parts or equipment furnished in con-nection with such work or operations.

"Your work" includes:

a. Warranties or representations made at any time with respect to the fitness, quality, durabil-ity, performance or use of "your work"; and

b. The providing of or failure to provide warnings or instructions.

EXHIBIT 6 EXHIBIT 6

EXHIBIT 6 EXHIBIT 6

COMMERCIAL GENERAL LIABILITY CG 00 01 10 01

CG 00 01 10 01 © ISO Properties, Inc., 2000 Page 1 of 16

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered.

Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy. The words "we", "us" and "our" refer to the company providing this insur-ance.

The word "insured" means any person or organization qualifying as such under Section II – Who Is An In-sured.

Other words and phrases that appear in quotation marks have special meaning. Refer to Section V –Definitions.

SECTION I – COVERAGES

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured be-comes legally obligated to pay as damages be-cause of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investi-gate any "occurrence" and settle any claim or "suit" that may result. But:

(1) The amount we will pay for damages is limited as described in Section III – Limits Of Insurance; and

(2) Our right and duty to defend ends when we have used up the applicable limit of insur-ance in the payment of judgments or set-tlements under Coverages A or B or medi-cal expenses under Coverage C.

No other obligation or liability to pay sums or perform acts or services is covered unless ex-plicitly provided for under Supplementary Pay-ments – Coverages A and B.

b. This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";

(2) The "bodily injury" or "property damage" occurs during the policy period; and

(3) Prior to the policy period, no insured listed under Paragraph 1. of Section II – Who Is An Insured and no "employee" authorized by you to give or receive notice of an "oc-currence" or claim, knew that the "bodily in-jury" or "property damage" had occurred, in whole or in part. If such a listed insured or authorized "employee" knew, prior to the policy period, that the "bodily injury" or "property damage" occurred, then any con-tinuation, change or resumption of such "bodily injury" or "property damage" during or after the policy period will be deemed to have been known prior to the policy period.

c. "Bodily injury" or "property damage" which occurs during the policy period and was not, prior to the policy period, known to have oc-curred by any insured listed under Paragraph 1. of Section II – Who Is An Insured or any "em-ployee" authorized by you to give or receive no-tice of an "occurrence" or claim, includes any continuation, change or resumption of that "bodily injury" or "property damage" after the end of the policy period.

d. "Bodily injury" or "property damage" will be deemed to have been known to have occurred at the earliest time when any insured listed un-der Paragraph 1. of Section II – Who Is An In-sured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim:

(1) Reports all, or any part, of the "bodily injury" or "property damage" to us or any other in-surer;

(2) Receives a written or verbal demand or claim for damages because of the "bodily injury" or "property damage"; or

(3) Becomes aware by any other means that "bodily injury" or "property damage" has oc-curred or has begun to occur.

CG 00 01 10 01 © ISO Properties, Inc., 2000 Page 9 of 16

SECTION II – WHO IS AN INSURED

1. If you are designated in the Declarations as:

a. An individual, you and your spouse are insur-eds, but only with respect to the conduct of a business of which you are the sole owner.

b. A partnership or joint venture, you are an in-sured. Your members, your partners, and their spouses are also insureds, but only with re-spect to the conduct of your business.

c. A limited liability company, you are an insured. Your members are also insureds, but only with respect to the conduct of your business. Your managers are insureds, but only with respect to their duties as your managers.

d. An organization other than a partnership, joint venture or limited liability company, you are an insured. Your "executive officers" and directors are insureds, but only with respect to their du-ties as your officers or directors. Your stock-holders are also insureds, but only with respect to their liability as stockholders.

e. A trust, you are an insured. Your trustees are also insureds, but only with respect to their du-ties as trustees.

2. Each of the following is also an insured:

a. Your "volunteer workers" only while performing duties related to the conduct of your business, or your "employees", other than either your "executive officers" (if you are an organization other than a partnership, joint venture or limited liability company) or your managers (if you are a limited liability company), but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business. However, none of these "em-ployees" or "volunteer workers" are insureds for:

(1) "Bodily injury" or "personal and advertising injury":

(a) To you, to your partners or members (if you are a partnership or joint venture), to your members (if you are a limited liabil-ity company), to a co-"employee" while in the course of his or her employment or performing duties related to the con-duct of your business, or to your other "volunteer workers" while performing du-ties related to the conduct of your busi-ness;

(b) To the spouse, child, parent, brother or sister of that co-"employee" or "volunteer worker" as a consequence of Paragraph (1)(a) above;

(c) For which there is any obligation to share damages with or repay someone else who must pay damages because of the injury described in Paragraphs (1)(a) or (b) above; or

(d) Arising out of his or her providing or failing to provide professional health care services.

(2) "Property damage" to property:

(a) Owned, occupied or used by,

(b) Rented to, in the care, custody or control of, or over which physical control is be-ing exercised for any purpose by

you, any of your "employees", "volunteer workers", any partner or member (if you are a partnership or joint venture), or any mem-ber (if you are a limited liability company).

b. Any person (other than your "employee" or "volunteer worker"), or any organization while acting as your real estate manager.

c. Any person or organization having proper tem-porary custody of your property if you die, but only:

(1) With respect to liability arising out of the maintenance or use of that property; and

(2) Until your legal representative has been appointed.

d. Your legal representative if you die, but only with respect to duties as such. That representa-tive will have all your rights and duties under this Coverage Part.

3. With respect to "mobile equipment" registered in your name under any motor vehicle registration law, any person is an insured while driving such equipment along a public highway with your per-mission. Any other person or organization respon-sible for the conduct of such person is also an in-sured, but only with respect to liability arising out of the operation of the equipment, and only if no other insurance of any kind is available to that person or organization for this liability. However, no person or organization is an insured with respect to:

a. "Bodily injury" to a co-"employee" of the person driving the equipment; or

b. "Property damage" to property owned by, rented to, in the charge of or occupied by you or the employer of any person who is an in-sured under this provision.

CG 00 01 10 01 © ISO Properties, Inc., 2000 Page 13 of 16

3. "Bodily injury" means bodily injury, sickness or disease sustained by a person, including death re-sulting from any of these at any time.

4. "Coverage territory" means:

a. The United States of America (including its territories and possessions), Puerto Rico and Canada;

b. International waters or airspace, but only if the injury or damage occurs in the course of travel or transportation between any places included in a. above; or

c. All other parts of the world if the injury or dam-age arises out of:

(1) Goods or products made or sold by you in the territory described in a. above;

(2) The activities of a person whose home is in the territory described in a. above, but is away for a short time on your business; or

(3) "Personal and advertising injury" offenses that take place through the Internet or simi-lar electronic means of communication

provided the insured's responsibility to pay dam-ages is determined in a "suit" on the merits, in the territory described in a. above or in a settlement we agree to.

5. "Employee" includes a "leased worker". "Em-ployee" does not include a "temporary worker".

6. "Executive officer" means a person holding any of the officer positions created by your charter, con-stitution, by-laws or any other similar governing document.

7. "Hostile fire" means one which becomes uncontrol-lable or breaks out from where it was intended to be.

8. "Impaired property" means tangible property, other than "your product" or "your work", that cannot be used or is less useful because:

a. It incorporates "your product" or "your work" that is known or thought to be defective, defi-cient, inadequate or dangerous; or

b. You have failed to fulfill the terms of a contract or agreement;

if such property can be restored to use by:

a. The repair, replacement, adjustment or re-moval of "your product" or "your work"; or

b. Your fulfilling the terms of the contract or agreement.

9. "Insured contract" means:

a. A contract for a lease of premises. However, that portion of the contract for a lease of prem-ises that indemnifies any person or organiza-tion for damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner is not an "insured con-tract";

b. A sidetrack agreement;

c. Any easement or license agreement, except in connection with construction or demolition op-erations on or within 50 feet of a railroad;

d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;

e. An elevator maintenance agreement;

f. That part of any other contract or agreement pertaining to your business (including an in-demnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property dam-age" to a third person or organization. Tort li-ability means a liability that would be imposed by law in the absence of any contract or agreement.

Paragraph f. does not include that part of any contract or agreement:

(1) That indemnifies a railroad for "bodily injury" or "property damage" arising out of con-struction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, road-beds, tunnel, underpass or crossing;

(2) That indemnifies an architect, engineer or surveyor for injury or damage arising out of:

(a) Preparing, approving, or failing to pre-pare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders or drawings and specifi-cations; or

(b) Giving directions or instructions, or fail-ing to give them, if that is the primary cause of the injury or damage; or

(3) Under which the insured, if an architect, engineer or surveyor, assumes liability for an injury or damage arising out of the in-sured's rendering or failure to render pro-fessional services, including those listed in (2) above and supervisory, inspection, ar-chitectural or engineering activities.

Page 14 of 16 © ISO Properties, Inc., 2000 CG 00 01 10 01

10. "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker".

11. "Loading or unloading" means the handling of property:

a. After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraft or "auto";

b. While it is in or on an aircraft, watercraft or "auto"; or

c. While it is being moved from an aircraft, water-craft or "auto" to the place where it is finally de-livered;

but "loading or unloading" does not include the movement of property by means of a mechanical device, other than a hand truck, that is not at-tached to the aircraft, watercraft or "auto".

12. "Mobile equipment" means any of the following types of land vehicles, including any attached ma-chinery or equipment:

a. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads;

b. Vehicles maintained for use solely on or next to premises you own or rent;

c. Vehicles that travel on crawler treads;

d. Vehicles, whether self-propelled or not, main-tained primarily to provide mobility to perma-nently mounted:

(1) Power cranes, shovels, loaders, diggers or drills; or

(2) Road construction or resurfacing equipment such as graders, scrapers or rollers;

e. Vehicles not described in a., b., c. or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently at-tached equipment of the following types:

(1) Air compressors, pumps and generators, including spraying, welding, building clean-ing, geophysical exploration, lighting and well servicing equipment; or

(2) Cherry pickers and similar devices used to raise or lower workers;

f. Vehicles not described in a., b., c. or d. above maintained primarily for purposes other than the transportation of persons or cargo.

However, self-propelled vehicles with the fol-lowing types of permanently attached equip-ment are not "mobile equipment" but will be considered "autos":

(1) Equipment designed primarily for:

(a) Snow removal;

(b) Road maintenance, but not construction or resurfacing; or

(c) Street cleaning;

(2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and

(3) Air compressors, pumps and generators, including spraying, welding, building clean-ing, geophysical exploration, lighting and well servicing equipment.

13. "Occurrence" means an accident, including con-tinuous or repeated exposure to substantially the same general harmful conditions.

14. "Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses:

a. False arrest, detention or imprisonment;

b. Malicious prosecution;

c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person oc-cupies, committed by or on behalf of its owner, landlord or lessor;

d. Oral or written publication, in any manner, of material that slanders or libels a person or or-ganization or disparages a person's or organi-zation's goods, products or services;

e. Oral or written publication, in any manner, of material that violates a person's right of privacy;

f. The use of another's advertising idea in your "advertisement"; or

g. Infringing upon another's copyright, trade dress or slogan in your "advertisement".

CG 00 01 10 01 © ISO Properties, Inc., 2000 Page 15 of 16

15. "Pollutants" 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.

16. "Products-completed operations hazard":

a. Includes all "bodily injury" and "property dam-age" occurring away from premises you own or rent and arising out of "your product" or "your work" except:

(1) Products that are still in your physical pos-session; or

(2) Work that has not yet been completed or abandoned. However, "your work" will be deemed completed at the earliest of the fol-lowing times:

(a) When all of the work called for in your contract has been completed.

(b) When all of the work to be done at the job site has been completed if your con-tract calls for work at more than one job site.

(c) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.

Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed.

b. Does not include "bodily injury" or "property damage" arising out of:

(1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle not owned or operated by you, and that condition was created by the "loading or unloading" of that vehicle by any insured;

(2) The existence of tools, uninstalled equip-ment or abandoned or unused materials; or

(3) Products or operations for which the classi-fication, listed in the Declarations or in a pol-icy schedule, states that products-completed operations are subject to the General Aggregate Limit.

17. "Property damage" means:

a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or

b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occur-rence" that caused it.

For the purposes of this insurance, electronic data is not tangible property.

As used in this definition, electronic data means in-formation, facts or programs stored as or on, cre-ated or used on, or transmitted to or from com-puter software, including systems and applications software, hard or floppy disks, CD-ROMS, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment.

18. "Suit" means a civil proceeding in which damages because of "bodily injury", "property damage" or "personal and advertising injury" to which this in-surance applies are alleged. "Suit" includes:

a. An arbitration proceeding in which such dam-ages are claimed and to which the insured must submit or does submit with our consent; or

b. Any other alternative dispute resolution pro-ceeding in which such damages are claimed and to which the insured submits with our con-sent.

19. "Temporary worker" means a person who is fur-nished to you to substitute for a permanent "em-ployee" on leave or to meet seasonal or short-term workload conditions.

20. "Volunteer worker" means a person who is not your "employee", and who donates his or her work and acts at the direction of and within the scope of duties determined by you, and is not paid a fee, salary or other compensation by you or anyone else for their work performed for you.

21. "Your product":

a. Means:

(1) Any goods or products, other than real property, manufactured, sold, handled, dis-tributed or disposed of by:

(a) You;

(b) Others trading under your name; or

(c) A person or organization whose busi-ness or assets you have acquired; and

(2) Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products.

EXHIBIT 7 EXHIBIT 7

EXHIBIT 7 EXHIBIT 7

EXHIBIT 8 EXHIBIT 8

EXHIBIT 8 EXHIBIT 8

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310-784-2443 (telephone) 310-784-2444 (facsimile)

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