AGREEMENT

This Confidential Settlement Agreement and Site Release ("Agreement") is made by

and between the Port of Seattle ("The Port" as that term is defined more fully below),

Lamorak Insurance Company, formerly known as OneBeacon America Insurance

Company, for itself and as successor to both Commercial Union Insurance Company and

Employers Surplus Lines Insurance Company ("Lamorak), and Bedivere Insurance

Company, formerly known as OneBeacon Tnsurance Company, foritself and as the successor in

interest to certain rights and obligations under policiesissued by American Employers' Insurance

Companies (Lamorak and Bedivere Insurance Company are hereinafter collectively referred to

as "Bedivere" as that term is defined more fully below). Collectively, The Port and Bedivere

shall be referred to as the "Parties."

RECITALS

WHEREAS, The Parties agree that the Port was a named insured or insured under

certain insurance policies allegedly issued by Bedivere to The Port (the "Alleged Policies" as

that term is defined more fully below); and

WHEREAS, The Port has tendered claims to Bedivere related to the Sites (as that term

is more fully defined below), and disputes have arisen between and among The Port and

Bedivere as to the terms, conditions, interpretation, and application of the Alleged Policies,

and/or to what extent the Alleged Policies provide coverage for the environmental claims at the

Sites; and

WHEREAS, The Port has incurred and may in the future incur certain liabilities,

losses and expenses arising out of the claims relating to environmental contamination at the

Sites; and

WHEREAS, The Port and Bedivere have differing interpretations as to their respective

obligations, if any, under the Alleged Policies; and

WHEREAS,the Parties now desire to compromise, settle and adjust fully and

finally all disputes which now or hereafter may exist between them with respect to any and

all claims, known and unknown, past, present or future, which have arisen or may arise

under any and all coverages of the Alleged Policies relating to and/or arising out of the Sites;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and

covenants contained herein, the sufficiency of which is hereby acknowledged, and intending

to be legally bound, the Parties agree as follows:

1.      DEFINITIONS

For purposes ofthis Agreement, the following defined terms shall have the meanings

set forth below:

1.1    "The Port" means the Port of Seattle and any Persons identified as an insured,

named insured, person insured or additional insured under the Policies and any such Persons

claiming, or which has claimed or which may in the future claim any right,title, interest or

benefit in or under the Policies.

1.2    "Bedivere" means Lamorak Insurance Company, formerly known as

OneBeacon America Insurance Company, in its own right and as successor to both

Commercial Union Insurance Company and Employers Surplus Lines Insurance

Company ("Lamorak), and Bedivere Insurance Company, formerly known as OneBeacon

Insurance Company,in its own right and as the successorin interest to certain rights and

obligations under policies issued by American Employers' Insurance Companies, and each of

their agents, representatives, predecessors, successors, parents, subsidiaries,affiliates,

divisions, employees, assigns, claims administrators, board members, directors, and

officers.

1.3    "Person" or "Persons" shall mean any individual, corporation, partnership,

unincorporated association, organization, Governmental Agency, sole proprietorship,trust or

any other entity (or estate, guardian or beneficiary thereof) recognized in law orin fact to

have rights or obligations.

1.4    "Governmental Agency" means (i) the government of the United States of

America, and any state, commonwealth, territory or possession of the United States of

America, including the District of Columbia and Puerto Rico, and the government of any

county, province, city or municipality thereof; (ii) any subdivision, instrumentality,

department or agency of any ofthe foregoing; (iii) the government of any foreign country,

state or territory and any province, county, city or municipality thereof; and (iv) any

subdivision, instrumentality, department or agency of any such foreign country, state,territory

or any province, county, city or municipality thereof.

1.5    "The Alleged Policies" shall mean the primary, umbrella or excess, policies

issued or alleged to have been issued by Bedivere to The Port as identified on Schedule "A"

attached hereto.

1.6    "The Sites" shall mean the contaminated sites as identified and defined by the

United States Environmental Protection Agency ("EPA") and the Washington State Department

of Ecology ("Ecology") commonly known as the Lower Duwamish Waterway Superfund Site,

the East Waterway Operable Unit of the Harbor Island Superfund Site,, Terminal 117 Early

Action Area, Terminal 115 North, Terminal 115 South,, Terminal 108, and South Park Marina,

and Terminal 91and including adjacent properties to the extent that contamination from those

areas has co-mingled with contamination of the listed contaminated sites.

1.7    "Environmental Claims" means any and all past, present or future claims,

counterclaims, cross-complaints, rights, demands, requests, allegations, suits, lawsuits,

administrative proceedings, causes, causes of action, liens, debts, bills, accounts, duties,

dues, reckonings, sums, sums of money, bonds, specialties, rights of indemnity, rights of

subrogation, demands for injunctive relief, controversies, contributions, exonerations,

covenants, agreements, contracts, promises, acts, omissions, trespasses, variances, damages,

judgments, compensations,set-offs, reimbursements, restitution, costs, expenses, losses,

exposures, executions, attorneys' fees, obligations, orders, and liabilities, whatsoever, known

or unknown, whether in law, equity, admiralty or otherwise, that any Person may now have,or

hereinafter may have against The Port arising from alleged, potential, threatened or actual

pollution by, contamination with, or exposure to smoke, vapors, soot, fumes,acids, alkalis,

toxic chemicals, liquids or gases, waste materials or other irritants, contaminants, or

pollutants, or any form oftoxic, hazardous or injurious substances or materials, including

without limitation, any "hazardous waste" as that term is defined in 42 U.S.C. 9601 at,

from or arising out ofthe Sites.

1.9    "Natural Resource Damages Claims" or "NRD Claims" means any and all claims,

known or unknown, alleging damages, restitution, or compensation for injury to, destruction of,

loss of use of, loss of, or restoration to, natural resources under the trusteeship of the

Washington Department of Ecology, the Environmental Protection Agency, and/or any other

federalorstate governmental agency caused by the release or threatened release of hazardous

substances at or arising out of the Sites, including the reasonable costs of assessing such

injury, destruction, or loss resulting from such releases, as set forth in or recoverable under

Section 107(a) and 111(b) of CERCLA, 42 U.S.C. 9607(a) and 9611(b), the Spill Act, the

Washington Model Toxics Control Act, RCW Chapter 70.105d, and/or any other federal,

state  and  local  statute,  rule,  regulation, ordinance, law or common law as the same may be

amended or superseded.

1.10  "Effective Date Of This Agreement" shall mean the latest date of
any Party's
signature to this Agreement.

As used in this Agreement, the singular and masculine gender shall mean also the

plural and feminine or neuter, as may be appropriate; "it" shall include "he" and "she"; and

"each" and "all" includes "each" and "every."

2.       SETTLEMENT

2.1   Bedivere shall pay to The Port the total sum of eight hundred twenty thousand

dollars ($820,000.00) (the "Settlement Sum"), within thirty (30) days of the Effective Date Of

This Agreement.

2.2  Payment ofthe Settlement Sum shall be made by check or draft made payable

to "Port of Seattle."  Bedivere shall not reduce or offset the Settlement Sum by
any amount,
including but not limited to, any deductible, co-insurance, self-insurance or retrospective

premium or rating adjustment.

2.3       The Settlement Sum shall be delivered to:

c/o K. Michael Fandel
Miller Nash Graham & Dunn
Pier 70
2801 Alaskan Way, Suite 300
Seattle, WA 98121

3.      RELEASES

3.1    Release By The Port for Alleged Policies. In consideration for payment ofthe

Settlement Sum, The Port hereby fully and irrevocably releases, acquits and forever

discharges Bedivere from any and all Environmental Claims and NRD Claims relating to the

Sites under the Alleged Policies, whether such claims are known or unknown, and does hereby

covenant and agree to forever relinquish and abandon any and all rights, whether actual
or

alleged, known or unknown, accrued or unaccrued, currently existing or which may arise

under any circumstances whatsoever in the future, under the Policies for coverage of

Environmental Claims and NRD Claims relating to the Sites, including without limitation,

claims for bad faith, extra-contractual damages, violation of an alleged duty of good faith and

fair dealing or comparable statutory claims seeking compensatory damages, punitive damages,

exemplary damages, statutory multiple damages, interest, costs, or any other type of relief

relating in any way to coverage for Environmental Claims and NRD Claimsrelating to the

Sites.  This Release by The Port shall not bar or otherwise affect contribution rights that
may or

may not exist between Bedivere and Great American Insurance Company and Great American

Insurance Company ofNew York, formerly known as American National Fire Insurance

Company (collectively "the Great American Companies") and U.S.Fire Insurance Company

inter se for any costs incurred prior to the Effective Date when the Alleged Policies were agreed

to be exhausted.

3.2    Release by The Port for All Other Policies  In consideration for payment of

the Settlement Sum, The Port hereby fully and irrevocably releases, acquits and forever

discharges Bedivere from any and all Environmental Claims and NRD Claims, including all

claims for bad faith, extra-contractual damages, violation of an alleged duty of good faith and

fair dealing or comparable statutory claims seeking compensatory damages, punitive damages,

exemplary damages, statutory multiple damages,interest, costs,relating to the Sites underall

insurance policies other than the Alleged Policies issued by Bedivere and under which The Port

is or alleges to be a Named Insured, Insured, or Additional Insured, whether those policies are

primary or excess, known or unknown, and whether such claims are known or unknown,

provided, however, The Port's release underall policies other than the Alleged Policies applies

only to fees, costs and losses for Environmental Claims or NRD Claims relating to the Sites

which are incurred prior to the date that The Port provides written notice to Bedivere of an

Environmental Claim or NRD Claim relating to the Sites under a policy other than an Alleged

Policy, the existence of which The Port discovers after the Effective Date of This Agreement.

The Port reserves its post-notice rights,if any, under such potentially applicable policies other

than the Alleged Policies. The Parties representthat following reasonable searchesthey are not

currently aware of any policies other than the Alleged Policies issued by Bedivere to the Port.

3.3    Release by Bedivere. Bedivere hereby fully and irrevocably releases, acquits

and forever discharges The Port from any and all Environmental Claims and NRD Claims

relating to the Sites under the Alleged Policies, whether such claims are known or unknown,

and does hereby covenant and agree to forever relinquish and abandon
any and all rights,

whether actual or alleged, known or unknown, accrued or unaccrued, currently existing or

which may arise under any circumstances whatsoever in the future, under the Alleged

Policies for coverage of Environmental Claims and NRD Claimsrelating to the Site. No

portion ofthis Paragraph 3.2 of this Agreement shall affect in any way Bedivere's rights (if

any) with respect to reinsurance.

4.     EXHAUSTION OF ALLEGED POLICIES

The Parties agree that by payment ofthe Settlement Sum all policy limits of the Alleged

Policies, whether per accident, per occurrence, or aggregate, applicable to all Environmental Claims

and NRD Claims relating to the Sites have been exhausted. The Alleged Policies are deemed

exhausted without regard to the numberof accidents or occurrences giving rise to the Environmental

Claims and NRD Claimsrelating to the Sites.

5.      WAIVER OF COMMON LAW AND STATUTORY RIGHTS

The Port acknowledges thereis a risk that subsequent to the execution ofthis Settlement

Agreement, it will incur,suffer, or discover losses, damages or injuries relating to the Sites which are

unknown and unanticipated at the time this Settlement Agreementis signed. This Settlement

Agreement shall act as a release of The Port's future claims, statutory or otherwise,relating to the Sites

that may arise from or underthe Alleged Policies, whether such claimsare currently known, unknown,

foreseen or unforeseen. The Board understands and acknowledges the significance and
consequence

ofthis specific waiver, and hereby assumes full responsibility for any injuries, damages, losses or

liability relating to the Sites that may presently exist or hereafter occur. The Parties agree thatthis

waiver was separately bargained for.

6.      NO ADMISSIONS

The Parties acknowledge that this Settlement Agreement is a compromise of disputed claims,

and that neither this Settlement Agreement, nor any compliance herewith or consideration pursuant

hereto, shall be construed as an admission by any of the Parties of any liability whatsoever.

7.      NO ASSIGNMENT

Each of the Parties represents and warrants thatit has not assigned, transferred or conveyed,

or purported to have assigned, transferred, or conveyed to any person orentity any claim, demand,

debt, liability, account, obligation, or cause of action herein released.

8.      AUTHORITY TO SIGN.

Each of the individuals executing this Settlement Agreementrepresents and warrants that

he/she has full power and authority to enterinto this Settlement Agreement on behalf of the Party

he/she represents, and each Party represents that it is authorized to perform
any and all transactions or

other matters contemplated to be performed underthis Settlement Agreement. To the extent that
any
Party is subsequently determined to have violated this provision of the Settlement Agreement, such

Party shall indemnify and hold harmless any other Party which is damaged by such violation,

including, but not limited to, for all attorney's fees, expert fees and costs incurred.

9.      INTERPRETATION AND DRAFTING

The Parties acknowledge that in executing this Settlement Agreement, neither shall be

construed to be solely responsible for the drafting ofthis Settlement Agreementand, therefore, any

ambiguity shall not be construed against any of the Parties as the alleged draftsperson. The Parties

agree that all parts ofthis Settlement Agreement shall be construed as a whole according to their fair

meaning and shall not be presumed to be construed for or against any party.

10.     COUNTERPART EXECUTION

This Settlement Agreement may be executed in counterparts, each of which, when so executed,

shall together constitute and be one and the same instrument. Electronically scanned or facsimile

signatures are acceptable, which scan or facsimile shall be deemed to be an original.

11.    COSTS AND FEES

Each ofthe Parties will bear its own attorneys' fees and costs related to the entry into this

Settlement Agreement.

12.     CHOICE OF LAW

This Settlement Agreementshall be construed according to the substantive law ofthe state of

Washington.

13.     CONTINUING OBLIGATION

This Settlement Agreementshall be binding upon and inure to the benefit of all Parties, their

heirs, successors, insurers, and assigns with the exception of contribution rights that may or may not

exist between Bedivere and the Great American Companies and U.S.Fire Insurance Company inter se.

It shall also be binding on any and allthird parties and/or third-party beneficiaries under the Policies.

14.    ENFORCEMENT OF AGREEMENT

This Settlement Agreementshall be admissible as to the terms and substance ofthis Settlement

Agreementin any proceeding for enforcement hereof. The prevailing Party in any such dispute shall

recoverits attorneys' fees and costs in connection with any such proceeding.

15.    FINAL INTEGRATED AGREEMENT

This Settlement Agreementis the entire agreement between the Parties with respect to the

subject matter hereof and supersedes all prior and contemporaneous oral agreements and discussions,

and all prior written agreements. This Settlement Agreement may not be amended orally or in any
way

other than in writing thatis signed by the Parties hereto. Each of the Parties represents and warrants

that it has neither made nor relied upon any statements, representations or promises other than those

expressly contained in this Settlement Agreement.

16.     CONFIDENTIALITY

The Parties agree not to disclose or publicly comment
upon the terms, provisions, or

information contained within this Settlement Agreement. The Parties further
agree that all

communications relating to the negotiation ofthis Settlement Agreement shall be confidential.

Notwithstanding the foregoing provisions, the Parties may: (1) disclose any terms to legal counsel,

financial advisors, parententities and/or agents or representatives (including, but not limited to,

indemnitors, auditors, reinsurers, reinsurance intermediaries, and underwriters); (2) disclose any

terms as are necessary to fulfill any obligations underthis Settlement Agreement; (3) disclose
any

terms as are necessary to comply with the requirements of any law, contractual requirement and/or

legal process, including those necessary for a party to assert any answer, affirmative defense, or

counterclaim to any action, proceeding, or claims (including
any claim or action challenging the

exhaustion of the Alleged Policies); and (4) disclose any terms as
necessary to comply with any public

disclosure obligations.

17.     MODIFICATION

No subsequent modifications or amendments to the Settlement Agreement shall be effective

unless memorialized in a writing signed by the Parties.

Agreed and accepted:

BEDIVERE (as defined above)                    PORT OF SEATTLE



By:=  By:

Its: ANI7keri=) Leapsre   Its:

Date:     2) 7/77                          Date:



SCHEDULE A

Alleged Bedivere Insurance Policies

Carrier           Policy           Effective            Limits           Attachment
American
Employers
Insurance                            1/1/1961-         100,000 (PD),
Company        CLA37204781   1/1/62          200,000 (BI)    0
American
Employers
Insurance                            1/1/1960-         100,000 (PD),
Company        CLA37200380   1/1/61          200,000 (Bl)    0