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WESTCHESTER FIRE INSURANCE COMPANY v. ML LIQUIDATING TRUST et al Exh Policies

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

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Case 2:11-cv-00456-JAT Document 1-1
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EXHIBIT 1
Case 2:11-cv-00456-JAT Document 1-1
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Westchester Fire Insurance Company
Business and Management Indemnity Policy
Declarations
This Policy is issued by the stock insurance company listed above (“Insurer”). THE EMPLOYMENT PRACTICES, DIRECTORS & OFFICERS AND COMPANY, AND FIDUCIARY COVERAGE SECTIONS OF THIS POLICY, WHICHEVER ARE APPLICABLE, COVER ONLY CLAIMS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD OR, IF ELECTED, THE EXTENDED PERIOD AND REPORTED TO THE INSURER PURSUANT TO THE TERMS OF THE RELEVANT COVERAGE SECTION. THE CRIME COVERAGE SECTION, IF APPLICABLE, APPLIES ONLY TO LOSS DISCOVERED DURING THE POLICY PERIOD. PLEASE READ THIS POLICY CAREFULLY. THE LIMITS OF LIABILITY AVAILABLE TO PAY INSURED LOSS SHALL BE REDUCED BY AMOUNTS INCURRED FOR COSTS, CHARGES AND EXPENSES UNLESS OTHERWISE PROVIDED HEREIN. AMOUNTS INCURRED FOR COSTS, CHARGES AND EXPENSES AND LOSS SHALL ALSO BE APPLIED AGAINST THE RETENTION AND DEDUCTIBLE AMOUNTS. TERMS THAT APPEAR IN BOLD FACE TYPE HAVE SPECIAL MEANING. PLEASE REFER TO THE APPROPRIATE DEFINITIONS SECTIONS OF THIS POLICY. Policy Number: BMI20047145 Item A. Parent Company: Principal Address: Item B. Policy Period: Mortgages, Ltd. 55 East Thomas Road Phoenix, AZ 85012 From 9/22/2007 to 9/22/2008
12:01 a.m. local time at the Principal Address shown in Item A. Item C. Coverage Sections: EMPLOYMENT PRACTICES 1. Limit of Liability a. b. c. $3,000,000 $1,000,000 $4,000,000 $25,000 N/A 3. Continuity Date: aggregate for all Loss, subject to 1.b. and 1.c. immediately below, additional aggregate for all Costs, Charges and Expenses, subject to 1.c. immediately below, maximum aggregate for this Coverage Section each Employment Practices Claim each Third Party Claim 9/22/2006 No X
2. Retention
4. Third Party Coverage: Yes
DIRECTORS & OFFICERS AND COMPANY 1. Limit of Liability a. $3,000,000 b. $1,000,000 c. $4,000,000 2. Retentions $0 $25,000
PF-15190 (07/05)
aggregate for all Loss, subject to 1.b. and 1.c. immediately below, additional aggregate for all Loss under Insuring Clause A.1., subject to 1.c. immediately below, maximum aggregate for this Coverage Section each Claim under Insuring Clause 1. each Claim under Insuring Clause 2.
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Case 2:11-cv-00456-JAT Document 1-1
$25,000 3. Continuity Date: FIDUCIARY 1. Limit of Liability 2. Retention each Claim under Insuring Clause 3. 9/22/2006
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$3,000,000 maximum aggregate for this Coverage Section $0 each Claim
3. Continuity Date: 09/22/2006 Item D. Premium: $42,200 Item E. Discovery Period 1. One (1) year 2. Two (2) years 100% of the premium 125% of the premium
3. Three (3) years 150% of the premium As provided in subsection H. of the General Terms and Conditions, only one of the above Discovery Period options may be elected and purchased. Item F. Run-Off Period 1. One (1) year 2. Two (2) years 110% of the premium 112% of the premium
3. Three (3) years 115% of the premium 4. Four (4) years 120% of the premium 5. Five (5) years 6. Six (6) years 122% of the premium 125% of the premium
As provided in subsection I. of the General Terms and Conditions, only one of the above Run-Off Period options may be elected and purchased. Item G. Notice under this Policy shall be given to: ACE Westchester Specialty Claims 1325 Avenue of the Americas 19th Floor New York, NY 10019 Item H. Forms attached at Policy issuance:

PF-15191 (07/05), PF-15192 (07/05), PF-15193 (07/05), PF-15194 (07/05), PF-16294 (08/04), PF-20863 (09/06), PF-19595 (01/06), PF-19625 (01/06), PF-19596 (01/06), PF-19594 (01/06), PF-19590 (01/06), PF20548 (06/06), PF-19593 (03/06), PF-16291 (08/04), PF-18305 (04/05), PF-16304 (08/04), PF-18307 (04/05), PF-19588 (01/06), PF-20108 (04/06), PF-16306 (08/04), PF-15333 (03/04), PF-19602 (01/06), PF-18313 (04/05), TRIA [DO] (08/06), TRIA [EPL] (08/06),
IN WITNESS WHEREOF, the Insurer has caused this Policy to be signed by its President and Secretary, and countersigned by a duly authorized representative of the Insurer.
GEORGE D. MULLIGAN, Secretary
DENNIS A. CROSBY, JR., President
PF-15190 (07/05)
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10/10/2007 Authorized Representative Date
PF-15190 (07/05)
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Case 2:11-cv-00456-JAT Document 1-1
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Business and Management Indemnity Policy General Terms and Conditions In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows: A. SEVERABILITY OF GENERAL TERMS AND CONDITIONS These General Terms and Conditions apply to each and every Coverage Section of this Policy. The terms and conditions of each Coverage Section apply only to that Coverage Section and shall not be construed to apply to any other Coverage Section. B. DEFINITIONS Whenever used in this Policy, the terms that appear below in boldface type shall have the meanings set forth in this Definitions subsection of the General Terms and Conditions. However, if a term also appears in boldface type in a particular Coverage Section and is defined in that Coverage Section, that definition shall apply for purposes of that particular Coverage Section. Terms that appear in boldface in the General Terms and Conditions but are not defined in this Definitions subsection and are defined in other Coverage Sections of the Policy shall have the meanings ascribed to them in those Coverage Sections. 1. Application means all applications, including any attachments thereto, and all other information and materials submitted by or on behalf of the Insureds to the Insurer in connection with the Insurer underwriting this Policy or any policy of which this Policy is a renewal or replacement. All such applications, attachments, information, materials and documents are deemed attached to and incorporated into this Policy. 2. Company means: a. the Parent Company; and b. any Subsidiary, and includes any such organization as a debtor-in-possession or the bankruptcy estate of such entity under United States bankruptcy law or an equivalent status under the law of any other jurisdiction. 3. Discovery Period means one of the periods described in Item E. of the Declarations which is elected and purchased pursuant to subsection H. below. 4. Domestic Partner means any natural person qualifying as a domestic partner under the provisions of any applicable federal, state or local law or under the provisions of any formal program established by the Company. 5. Extended Period means the Discovery Period or the Run-Off Period, if such provision is elected and purchased pursuant to subsections H. or I. respectively, below. 6. Insurer means the insurance company providing this insurance. 7. Parent Company means the entity first named in Item A. of the Declarations. 8. Policy means, collectively, the Declarations, the Application, this policy form and any endorsements. 9. Policy Period means the period from the effective date and hour of the inception of this Policy to the Policy expiration date and hour as set forth in Item B. of the Declarations, or its earlier cancellation date and hour, if any.
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10. Run-Off Period means one of the periods described in Item F. of the Declarations, which is elected and purchased pursuant to subsection I. below. 11. Subsidiary means: a. any entity of which more than 50% of the outstanding securities representing the present right to vote for the election of such entity's directors or managers are owned by the Parent Company, directly or indirectly, if such entity: i. was so owned on or prior to the inception date of this Policy; or ii. becomes so owned after the inception date of this Policy; and b. any joint venture entity in which the Parent Company, or an entity described in a above, has an exact fifty percent (50%) ownership of the interests of such joint venture entity and where, pursuant to a written joint venture agreement, the Parent Company or entity described in a above solely controls the management and operations of such joint venture entity. 12. Takeover means: a. the acquisition by any person or entity of more than 50% of the outstanding securities of the Parent Company representing the present right to vote for the election of directors; or b. the merger or consolidation of the Parent Company into another entity such that the Parent Company is not the surviving entity. All definitions shall apply equally to the singular and plural forms of the respective words. C. LIMITS OF LIABILITY, RETENTIONS AND DEDUCTIBLES 1. The Limits of Liability, Retentions and Deductibles for each Coverage Section are separate Limits of Liability, Retentions and Deductibles pertaining only to the Coverage Section for which they are shown. The application of a Retention or Deductible to Loss under one Coverage Section shall not reduce the Retention or Deductible under any other Coverage Section, and no reduction in the Limit of Liability applicable to one Coverage Section shall reduce the Limit of Liability under any other Coverage Section. 2. In the event that any Claim is covered, in whole or in part, under two or more Insuring Clauses or more than one Coverage Section, the total applicable Retention or Deductible shall not exceed the single largest applicable Retention or Deductible. The largest applicable Retention or Deductible shall apply only once to such Claim. D. WARRANTY It is warranted that the particulars and statements contained in the Application are the basis of this Policy and are to be considered as incorporated into and constituting a part of this Policy and each Coverage Section. By acceptance of this Policy, the Insureds agree that: 1. the statements in the Application are their representations, that such representations shall be deemed material to the acceptance of the risk or the hazard assumed by Insurer under this Policy, and that this Policy and each Coverage Section are issued in reliance upon the truth of such representations; and 2. in the event the Application, including materials submitted or required to be submitted therewith ,contains any misrepresentation or omission made with the intent to deceive, or contains any misrepresentation or omission which materially affects either the acceptance of the risk or the hazard assumed by Insurer under this Policy, this Policy, including each and all Coverage Sections, shall be void ab initio with respect to any Insureds who had knowledge of such misrepresentation or omission. E. CANCELLATION 1. By acceptance of this Policy, the Insureds hereby confer to the Parent Company the exclusive power and authority to cancel this Policy on their behalf. The Parent Company may cancel this Policy in its entirety or any of the applicable Coverage Sections individually by surrender thereof to the Insurer, or by mailing written PF-15191 (07/05) Page 2 of 5
Case 2:11-cv-00456-JAT Document 1-1
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notice to the Insurer stating when thereafter such cancellation shall be effective. The mailing of such notice shall be sufficient notice and the effective date of cancellation shall be the date the Insurer received such notice or any later date specified in the notice, and such effective date shall become the end of the Policy or applicable Coverage Section. Delivery of such written notice shall be equivalent to mailing. 2. This Policy may be cancelled by the Insurer only for nonpayment of premium, by mailing written notice to the Parent Company stating when such cancellation shall be effective, such date to be not less than ten (10) days from the date of the written notice. The mailing of such notice shall be sufficient notice and the effective date of cancellation stated in the notice shall become the end of the Policy Period. Delivery of such written notice by the Insurer shall be equivalent to mailing. If the foregoing notice period is in conflict with any governing law or regulation, then the notice period shall be deemed to be the minimum notice period permitted under the governing law or regulation. 3. If this Policy or any Coverage Section is cancelled, the Insurer shall retain the pro rata proportion of the premium therefore. Payment or tender of any unearned premium by Insurer shall not be a condition precedent to the effectiveness of cancellation. F. ESTATES, LEGAL REPRESENTATIVES, AND SPOUSES The estates, heirs, legal representatives, assigns, spouses and Domestic Partners of natural persons who are Insureds shall be considered Insureds under this Policy; provided, however, coverage is afforded to such estates, heirs, legal representatives, assigns, spouses and Domestic Partners only for a Claim arising solely out of their status as such and, in the case of a spouse or Domestic Partner, where the Claim seeks damages from marital community property, jointly held property or property transferred from the natural person who is an Insured to the spouse or Domestic Partner. No coverage is provided for any Wrongful Act of an estate, heir, legal representative, assign, spouse or Domestic Partner. All of the terms and conditions of this Policy including, without limitation, the Retentions and Deductibles applicable to Loss incurred by natural persons who are Insureds shall also apply to Loss incurred by such estates, heirs, legal representatives, assigns, spouses and Domestic Partners. G. AUTHORIZATION CLAUSE By acceptance of this Policy, the Parent Company agrees to act on behalf of all Insureds, and the Insureds agree that the Parent Company will act on their behalf, with respect to the giving of all notices to Insurer, the receiving of notices from Insurer, the agreement to and acceptance of endorsements, the payment of the premium and the receipt of any return premium. H. DISCOVERY PERIOD 1. If this Policy or any Coverage Section is cancelled or is not renewed by the Insurer, for reasons other than non-payment of premium or if the Parent Company elects to cancel or not to renew this Policy or a Coverage Section, then the Parent Company shall have the right, upon payment of an additional premium calculated at that percentage shown in Item E. of the Declarations of the total premium for this Policy, or the total premium for the cancelled or not renewed Coverage Section, whichever is applicable, to purchase an extension of the coverage granted by this Policy or the applicable cancelled or not renewed Coverage Section with respect to any Claim first made during the period of time set forth in Item E. of the Declarations after the effective date of such cancellation or, in the event of a refusal to renew, after the Policy expiration date, but only with respect to any Wrongful Act committed before such date. The Parent Company shall have the right to elect only one of the Discovery Periods set forth in Item E. of the Declarations. 2. As a condition precedent to the right to purchase the Discovery Period set forth in subsection H.1. above, the total premium for the Policy must have been paid. Such right to purchase the Discovery Period shall terminate unless written notice, together with full payment of the premium for the Discovery Period, is received by Insurer within 30 days after the effective date of cancellation, or, in the event of a refusal to renew, within 30 days after the Policy expiration date. If such notice and premium payment is not so given to Insurer, there shall be no right to purchase the Discovery Period. 3. In the event of the purchase of the Discovery Period, the entire premium therefore shall be deemed earned at the commencement of the Discovery Period. 4. The exercise of the Discovery Period shall not in any way increase or reinstate the limit of Insurer's liability under any Coverage Section.
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Case 2:11-cv-00456-JAT Document 1-1
I. RUN-OFF COVERAGE In the event of a Takeover:
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1. The Parent Company shall have the right, upon payment of an additional premium calculated at the percentage of the total premium for this Policy set forth in Item F. of the Declarations, to an extension of the coverage granted by this Policy with respect to any Claim first made during the Run-Off Period, as set forth in Item F. of the Declarations, but only with respect to any Wrongful Act committed before the effective date of the Takeover (herein defined as “Run-Off Coverage”); provided, however, such additional premium shall be reduced by the amount of the unearned premium from the date of the Takeover or the date of notice of the election of the Run-Off Coverage, whichever is later, through the expiration date set forth in Item B. of the Declarations. 2. The Parent Company shall have the right to elect only one of the periods designated in Item F. of the Declarations. The election must be made prior to the expiration of the Policy Period. The right to purchase a Run-Off Period shall terminate on the expiration of the Policy Period. 3. If a Run-off Period is elected and purchased: a. Subsection E. above, is deleted in its entirety and neither the Insureds nor the Insurer may cancel this Policy or any Coverage Section thereof; b. Subsection H. above, is deleted in its entirety; and c. the maximum aggregate Limit of Liability of the Insurer for each Coverage Section purchased and set forth on the Declarations shall be twice the otherwise applicable maximum aggregate Limit of Liability set forth in Item C. of the Declarations for such Coverage Section; provided, however, the maximum aggregate Limit of Liability of the Insurer in connection with any one Claim shall be amount originally shown as the maximum aggregate Limit of Liability for each Coverage Section purchased and set forth on the Declaration. J. ALTERNATIVE DISPUTE RESOLUTION The Insureds and the Insurer shall submit any dispute or controversy arising out of or relating to this Policy or the breach, termination or invalidity thereof to the alternative dispute resolution (“ADR”) process described in this subsection. Either an Insured or the Insurer may elect the type of ADR process discussed below; provided, however, that the Insured shall have the right to reject the choice by the Insurer of the type of ADR process at any time prior to its commencement, in which case the choice by the Insured of ADR process shall control. There shall be two choices of ADR process: (1) non-binding mediation administered by any mediation facility to which the Insurer and the Insured mutually agree, in which the Insured and the Insurer shall try in good faith to settle the dispute by mediation in accordance with the then-prevailing commercial mediation rules of the mediation facility; or (2) arbitration submitted to any arbitration facility to which the Insured and the Insurer mutually agree, in which the arbitration panel shall consist of three disinterested individuals. In either mediation or arbitration, the mediator or arbitrators shall have knowledge of the legal, corporate management, and insurance issues relevant to the matters in dispute. In the event of arbitration, the decision of the arbitrators shall be final and binding and provided to both parties, and the award of the arbitrators shall not include attorneys’ fees or other costs. In the event of mediation, either party shall have the right to commence arbitration in accordance with this section; provided, however, that no such arbitration shall be commenced until at least 60 days after the date the mediation shall be deemed concluded or terminated. In all events, each party shall share equally the expenses of the ADR process. Either ADR process may be commenced in New York, New York or in the state indicated in Item A. of the Declarations as the principal address of the Parent Company. The Parent Company shall act on behalf of each and every Insured in connection with any ADR process under this section. K. TERRITORY Coverage under this Policy shall extend to Wrongful Acts taking place or Claims made anywhere in the world.
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Case 2:11-cv-00456-JAT Document 1-1
L. ASSISTANCE, COOPERATION AND SUBROGATION
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The Insureds agree to provide Insurer with such information, assistance and cooperation as Insurer reasonably may request, and they further agree that they shall not take any action which in any way increases Insurer's exposure under this Policy. In the event of any payments under this Policy, Insurer shall be subrogated to the extent of such payment to all of the Insureds' rights of recovery against any person or entity. The Insureds shall execute all papers required and shall do everything that may be necessary to secure and preserve such rights, including the execution of such documents as are necessary to enable Insurer effectively to bring suit or otherwise pursue subrogation in the name of the Insureds, and shall provide all other assistance and cooperation which Insurer may reasonably require. M. ACTION AGAINST INSURER, ALTERATION AND ASSIGNMENT Except as provided in subsection J. above, Alternative Dispute Resolution, no action shall lie against Insurer unless, as a condition precedent thereto, there shall have been compliance with all of the terms of this Policy. No person or organization shall have any right under this Policy to join Insurer as a party to any action against the Insureds to determine their liability, nor shall Insurer be impleaded by the Insureds or their legal representative. No change in, modification of, or assignment of interest under this Policy shall be effective except when made by a written endorsement to this Policy which is signed by an authorized representative of the Insurer. N. ENTIRE AGREEMENT By acceptance of this Policy, the Insureds agree that this Policy embodies all agreements existing between them and Insurer or any of their agents relating to this insurance. Notice to any agent or knowledge possessed by any agent or other person acting on behalf of Insurer shall not effect a waiver or a change in any part of this Policy or estop Insurer from asserting any right under the terms of this Policy or otherwise, nor shall the terms be deemed waived or changed except by written endorsement or rider issued by Insurer to form part of this Policy.
PF-15191 (07/05)
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Business and Management Indemnity Policy Employment Practices Coverage Section In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows. A. INSURING CLAUSES 1. Employee Insuring Clause Insurer shall pay the Loss of the Insureds which the Insureds have become legally obligated to pay by reason of an Employment Practices Claim first made against the Insureds during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E.1. herein, for an Employment Practices Wrongful Act taking place prior to the end of the Policy Period. 2. Third Party Insuring Clause In the event Third Party Coverage is affirmatively designated in Item C. of the Declarations relating to this Coverage Section, the Insurer shall pay the Loss of the Insureds which the Insureds have become legally obligated to pay by reason of a Third Party Claim first made against the Insureds during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E.1. herein, for a Third Party Wrongful Act taking place prior to the end of the Policy Period. B. DEFINITIONS 1. Claim means any: a. Employment Practices Claim; or b. Third Party Claim. 2. Continuity Date means the Continuity Date set forth in Item C. of the Declarations relating to this Coverage Section. 3. Costs, Charges and Expenses means reasonable and necessary legal costs, charges, fees and expenses incurred by any of the Insureds in defending Claims and the premium for appeal, attachment or similar bonds arising out of covered judgments, but with no obligation to furnish such bonds and only for the amount of such judgment that is up to the applicable Limit of Liability. Costs, Charges and Expenses do not include salaries, wages, fees, overhead or benefit expenses of or associated with officers or employees of the Company. 4. Employee means any person who was, now is or shall become: a. a full-time or part-time employee of the Company, including voluntary, seasonal, and temporary employees; b. any individual who applies for employment with the Company; and c. any natural person who is a leased employee or is contracted to perform work for the Company, or is an independent contractor for the Company, but only to the extent such individual performs work or services for or on behalf of the Company. 5. Employment Practices Claim means: a. a written demand against an Insured for damages or other relief;
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Case 2:11-cv-00456-JAT Document 1-1
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b. a civil, judicial, administrative, regulatory or arbitration proceeding or a formal governmental investigation against an Insured seeking damages or other relief, commenced by the service of a complaint or similar pleading, including any appeal therefrom; c. a civil proceeding against an Insured before the Equal Employment Opportunity Commission or any similar federal, state or local governmental body, commenced by the filing of a notice of charges, investigative order or similar document; or d. a criminal proceeding brought for an Employment Practices Wrongful Act in a court outside of the United States against any Insured, commenced by a return of an indictment or similar document, or receipt or filing of a notice of charges; brought by or on behalf of an Employee in their capacity as such. Employment Practices Claim does not include a labor or grievance proceeding, which is pursuant to a collective bargaining agreement. 6. Employment Practices Wrongful Act means any actual or alleged: a. violation of any common or statutory federal, state, or local law prohibiting any kind of employment related discrimination; b. harassment, including any type of sexual or gender harassment as well as racial, religious, sexual orientation, pregnancy, disability, age, or national origin-based harassment, or unlawful workplace harassment, including workplace harassment by any non-employee; c. abusive or hostile work environment; d. wrongful discharge or termination of employment, whether actual or constructive; e. breach of an actual or implied employment contract; f. wrongful deprivation of a career opportunity, wrongful failure or refusal to employ or promote, or wrongful demotion; g. employment-related defamation, libel, slander, disparagement, false imprisonment, misrepresentation, malicious prosecution, or invasion of privacy; h. wrongful failure or refusal to adopt or enforce workplace or employment practices, policies or procedures, solely as respects employment-related discrimination or harassment; i. wrongful discipline; j. employment-related wrongful infliction of emotional distress, mental anguish, or humiliation; k. Retaliation; l. negligent evaluation; or m. negligent hiring or negligent supervision of others in connection with a. through l. above, but only if employment-related and claimed by or on behalf of any Employee and only if committed or allegedly committed by any of the Insureds in their capacity as such. 7. Insured Persons means all persons who were, now are or shall become: a. a director or officer of the Company; b. any Employee; and c. the functional equivalent of a director, officer or Employee in the event the Company is incorporated or domiciled outside the United States. 8. Insureds means the Company and any Insured Persons.
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9. Interrelated Wrongful Acts means all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of facts, circumstances, situations, events, transactions or causes. 10. Loss means the damages, judgments, settlements, front pay and back pay, pre-judgment or post-judgment interest awarded by a court, and Costs, Charges and Expenses incurred by any of the Insureds. Loss does not include: a. taxes, fines or penalties; b. matters uninsurable under the laws pursuant to which this Policy is construed; c. punitive or exemplary damages, liquidated damages awarded by a court pursuant to a violation of the Equal Pay Act, the Age Discrimination in Employment Act or the Family Medical Leave Act, all as amended, or any rules or regulations promulgated thereunder, or similar provisions of any common or statutory federal, state or local law, or the multiple portion of any multiplied damage award, except to the extent that such punitive, exemplary, or liquidated damages or the multiple portion of any multiplied damage award are insurable under the internal laws of any jurisdiction which most favors coverage for such damages and which has a substantial relationship to the Insureds, Insurer, this Policy or the Claim giving rise to such damages; d. the cost of any remedial, preventative or other non-monetary relief, including without limitation any costs associated with compliance with any such relief of any kind or nature imposed by any judgment, settlement or governmental authority; e. amounts owed under any employment contract, partnership, stock or other ownership agreement, or any other type of contract; f. disability, social security, workers compensation, medical insurance, retirement or pension benefit payments, or settlement amounts representing benefit payments; g. the costs to modify or adapt any building or property to be accessible or accommodating, or to be more accessible or accommodating, to any disabled person; h. the cost of creating or reinstating employment; i. any amount owed as wages to any Employee, other than front pay or back pay; or j. any amount for which the Insured is not financially liable or legally obligated to pay. 11. Retaliation means any actual or alleged response of any of the Insureds to: a. the disclosure or threat of disclosure by an Employee to a superior or to any governmental agency of any act by any of the Insureds where such act is alleged to be a violation of any federal, state local or foreign law, whether common or statutory, or any rule or regulation promulgated thereunder; b. the actual or attempted exercise by an Employee of any right that such Employee has under law, including rights under any worker's compensation law, the Family and Medical Leave Act, the Americans with Disabilities Act or any other law relating to employee rights; c. the filing of any claim under the Federal False Claims Act or any similar federal, state, local or foreign "whistleblower" law or “whistleblower” provision of any law; or d. any legally-protected Employee work stoppage or slowdown. 12. Third Party means any natural person who is a customer, vendor, service provider, client, or other business invitee of the Company; provided, however, Third Party shall not include any Employee. 13. Third Party Claim means: a. any written demand for damages or other relief against an Insured; b. a civil judicial, administrative or arbitration proceeding against an Insured seeking damages or other Page 3 of 8
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relief, including any appeal therefrom; or
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c. a criminal proceeding brought for an Employment Practices Wrongful Act in a court outside of the United States against any Insured, commenced by a return of an indictment or similar document, or receipt or filing of a notice of charges; brought by or on behalf of a Third Party in their capacity as such. 14. Third Party Wrongful Act means any actual or alleged: a. harassment of a Third Party, including but not limited to any type of sexual or gender harassment as well as racial, religious, sexual orientation, pregnancy, disability, age, or national origin-based harassment; or b. discrimination against a Third Party, including but not limited to any such discrimination on account of race, color, religion, age, disability or national origin. 15. Wrongful Act means: a. Employment Practices Wrongful Act; or b. Third Party Wrongful Act. C. EXCLUSIONS Insurer shall not be liable for Loss under this Coverage Section on account of any Claim: 1. for actual or alleged bodily injury, sickness, disease or death of any person, or damage to or destruction of any tangible or intangible property including loss of use thereof, whether or not such property is physically injured; provided, however, this exclusion shall not apply to mental anguish, emotional distress or humiliation; 2. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: a. any Wrongful Act, fact circumstance or situation which has been the subject of any written notice given under any other policy of which this Policy is a renewal or replacement or which it succeeds in time; or b. any other Wrongful Act whenever occurring which, together with a Wrongful Act which has been the subject of such notice, would constitute Interrelated Wrongful Acts; 3. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: a. the actual, alleged or threatened discharge, dispersal, release, escape, seepage, migration or disposal of Pollutants; or b. any direction or request that any Insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants, or any voluntary decision to do so; including without limitation any such Claim by or on behalf of the Company, its securities holders or creditors based upon, arising out of, or attributable to the matters described in this exclusion. Provided, however, this exclusion shall not apply to that part of any Claim under this Coverage Section where such Claim is for Retaliation. For purposes of this exclusion, Pollutants means any substance exhibiting any hazardous characteristics as defined by, or identified on, a list of hazardous substances issued by the United States Environmental Protection Agency or any federal, state, county, municipal or local counterpart thereof or any foreign equivalent. Such substances shall include, without limitation, solids, liquids, gaseous, biological, bacterial or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials (including materials to be reconditioned, recycled or reclaimed). Pollutants shall also mean any other air emission or particulate, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products, noise, fungus (including mold or mildew and any mycotoxins, spores, scents or byproducts produced or Page 4 of 8
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Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 14 of 63
released by fungi, but does not include any fungi intended by the Insured for consumption) and electric or magnetic or electromagnetic field; 4. for any actual or alleged violation of the responsibilities, obligations or duties imposed by the Employee Retirement Income Security Act of 1974, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Occupational Safety and Health Act, all as amended, or any rules or regulations promulgated thereunder, or similar provisions of any common or statutory federal, state or local law; provided, however, this exclusion does not apply to any such Claim alleging violations of the Equal Pay Act or Retaliation; 5. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any dishonest, deliberately fraudulent or criminal act; provided, however this exclusion shall not apply unless and until there is a final judgment against such Insured as to such conduct. If such excluded conduct is established through a final judgment, the Insured shall reimburse the Insurer for any Costs, Charges and Expenses; 6. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act actually or allegedly committed subsequent to a Takeover; 7. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: a. any prior or pending litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry, including without limitation any investigation by the U.S. Department of Labor or the U.S. Equal Employment Opportunity Commission, filed or pending on or before the Continuity Date; or b. any fact, circumstance, situation, transaction or event underlying or alleged in such litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry, including any investigation by the U.S. Department of Labor or the U.S. Equal Employment Opportunity Commission; 8. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act, fact, circumstance, or situation which any of the Insured Persons who were, now are, or shall be directors, officers, managers or supervisory employees, had knowledge of prior to the Continuity Date where such Insured Persons had reason to believe at the time that such known Wrongful Act could reasonably be expected to give rise to such Claim; 9. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any actual or alleged responsibility, obligation or duty of any Insured pursuant to any workers compensation, unemployment insurance, social security, disability benefits or pension benefits or similar law; provided, however, this exclusion shall not apply to any such Claim alleging Retaliation; or 10. for that portion of Loss which is covered under any other Coverage Section of this Policy. No Wrongful Act of one or more Insureds shall be imputed to any other Insureds for the purpose of determining the applicability of any of the above exclusions. D. LIMIT OF LIABILITY AND RETENTIONS 1. The liability of the Insurer shall apply only to that part of Loss which is excess of the Retention amount applicable to this Coverage Section, as shown in Item C. of the Declarations. Such Retention shall be borne uninsured by the Insureds and at their own risk. If different parts of a single Claim are subject to different applicable Retentions under this Coverage Section, the applicable Retentions will be applied separately to each part of such Loss, but the sum of such Retentions shall not exceed the largest applicable Retention. 2. As shown in Item C.1. of the Declarations relating to this Coverage Section, the following Limits of Liability of the Insurer shall apply: a. The amount set forth in Item C.1.a. relating to this Coverage Section shall be the aggregate limit of liability for the payment of Loss, subject to additional payments for Costs, Charges and Expenses as further described in subsection b. immediately below.
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Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 15 of 63
b. The amount set forth in Item C.1.b. relating to this Coverage Section shall be the aggregate limit of liability for the payment of Costs, Charges and Expenses in addition to the limit described in subsection a. immediately above; provided, all payments for Costs, Charges and Expenses under the additional limits described in this subsection b. shall be excess of the limit described in subsection a. above, and excess of any other available insurance that is specifically excess to this Policy. Such excess insurance must be completely and fully exhausted through the payment of loss, including but not limited to defense costs thereunder, before the Insurer shall have any obligations to make any payments under the additional limits described in this subsection b. c. The amount set forth in Item C.1.c. of the Declarations relating to this Coverage Section shall be the maximum aggregate limit of liability under this Coverage Section and the limit of liability set forth in C.1.a. and C.1.b. relating to this Coverage Section shall be a part of and not in addition to the maximum aggregate limit of liability set forth in Item C.1.c. for this Coverage Section. 3. All Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts shall be deemed to be a single Claim, and such Claim shall be deemed to have been made at the earliest of the following times, regardless of whether such date is before or during the Policy Period: a. the time at which the earliest Claim involving the same Wrongful Act or Interrelated Wrongful Acts is first made; or b. the time at which the Claim involving the same Wrongful Act or Interrelated Wrongful Acts shall be deemed to have been made pursuant to subsection E.2. below. 4. Payments of Loss by Insurer shall reduce the Limit(s) of Liability under this Coverage Section. Costs, Charges and Expenses are part of, and not in addition to, the Limit(s) of Liability, and payment of Costs, Charges and Expenses reduce the Limit(s) of Liability. If such Limit(s) of Liability are exhausted by payment of Loss, the obligations of the Insurer under this Coverage Section are completely fulfilled and extinguished. E. NOTIFICATION 1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give to Insurer written notice of any Claim made against the Insureds as soon as practicable, but in no event later than sixty (60) days after such Claim is first made against the Insureds, or the expiration of the Policy Period, whichever is later. If any Claim is first made against the Insureds during the Extended Period, if purchased, written notice to Insurer must be given as soon as practicable, but in no event later than sixty (60) days after such Claim is first made against the Insureds, or the end of the Extended Period, whichever is later. 2. If, during the Policy Period or the Discovery Period, any of the Insureds first becomes aware of a specific Wrongful Act which may reasonably give rise to a future Claim covered under this Policy, and if the Insureds, during the Policy Period or the Discovery Period, if purchased, give written notice to Insurer as soon as practicable of: a. a description of the Wrongful Act allegations anticipated; b. the identity of the potential claimants; c. the circumstances by which the Insureds first became aware of the Wrongful Act; d. the identity of the Insureds allegedly involved; e. the consequences which have resulted or may result; and f. the nature of the potential monetary damages and non-monetary relief; then any Claim made subsequently arising out of such Wrongful Act shall be deemed for the purposes of this Coverage Section to have been made at the time such written notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such Wrongful Act results in a Claim. 3. Notice to Insurer shall be given to the address specified in Item G. of the Declarations for this Policy.
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Case 2:11-cv-00456-JAT Document 1-1
F. SETTLEMENT AND DEFENSE
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1. It shall be the duty of the Insurer and not the duty of the Insureds to defend any Claim. Such duty shall exist even if any of the allegations are groundless, false or fraudulent. The Insurer’s duty to defend any Claim shall cease when the Limits of Liability have been exhausted by the payment of Loss including Costs, Charges and Expenses. 2. The Insurer may make any investigation it deems necessary. and shall have the right to settle any Claim; provided, however, no settlement shall be made without the consent of the Parent Company, such consent not to be unreasonably withheld. 3. Notwithstanding subsection 1. above, in the event that any Claim is brought as a class action, and all or any part of such Claim involves any actual or alleged violation of the Fair Labor Standards Act of 1938, as amended, or any similar state law, regulation or code, then it shall be the duty of the Insureds and not the duty of the Insurer to defend any such Claim. 4. The Insureds agree not to settle or offer to settle any Claim, incur any Costs, Charges and Expenses or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be liable for any settlement, Costs, Charges and Expenses, assumed obligation or admission to which it has not consented. The Insureds shall promptly send to the Insurer all settlement demands or offers received by any Insured from the claimant(s). 5. If the Insurer does not have the duty to defend a Claim, then the Insurer shall have the right and shall be given the opportunity to effectively associate with, and shall be consulted in advance by, the Insureds regarding the defense and negotiation of any settlement of any Claim. 6. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agree that, in the event of a Claim, the Insureds will do nothing that shall prejudice the position of the Insurer or its potential or actual rights of recovery. 7. If the Insurer does not have the duty to defend a Claim , the Insurer shall, on a quarterly basis, advance on behalf of the Insureds covered Costs, Charges and Expenses, which the Insureds have incurred in connection with Claims made against them, prior to disposition of such Claims. Any advancement of Costs, Charges and Expenses shall be subject to the condition that such advanced amounts shall be repaid to the Insurer by the Insureds severally according to their respective interests if and to the extent the Insureds shall not be entitled to coverage for such Costs, Charges and Expenses under the terms and conditions of this Policy. G. OTHER INSURANCE 1. For any Employment Practices Claim, if any Loss covered under this Coverage Section is covered under any other valid and collectable insurance, then this Policy shall be primary insurance; provided that with respect to that portion of an Employment Practice Claim made against any leased, temporary or independently contracted Employee, Loss, including Costs, Charges and Expenses, payable on behalf of such Employee under this Coverage Section will be specifically excess of and will not contribute with such other insurance, including but not limited to any such other insurance under which there is a duty to defend, unless such insurance is specifically stated to be in excess over the Limit of Liability of this Coverage Section. 2. For any Third Party Claim, if any Loss covered under this Coverage Section is covered under any other valid and collectable insurance, then this Policy shall be specifically excess of and will not contribute with such other insurance, including but not limited to any such other insurance under which there is a duty to defend, unless such other insurance is specifically stated to be excess over the Limit of Liability of this Coverage Section. H. ALLOCATION If the Insurer does not have the duty to defend a Claim, then the following subsections shall apply to such Claim. 1. If, in any Claim covered in whole or in part under this Coverage Section, the Insureds who are afforded coverage for such Claim incur Loss jointly with others, or incur an amount consisting of both Loss covered by this Policy and loss not covered by this Policy because such Claim includes both covered and uncovered matters, then the Insureds and the Insurer shall allocate such amount between covered Loss and uncovered PF-15192 (07/05) Page 7 of 8
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loss based upon the relative legal and financial exposures and the relative benefits obtained by the parties to covered and uncovered matters. 2. If there can be an agreement between Insureds and the Insurer on an allocation of Costs, Charges and Expenses, the Insurer shall advance on a current basis covered Costs, Charges and Expenses. If there can be no agreement on allocation of Costs, Charges and Expenses, the Insurer shall advance on a current basis Costs, Charges and Expenses which the Insurer believes to be covered under this Policy until a different allocation is negotiated or arbitrated. 3. Any negotiated or arbitrated allocation of Costs, Charges and Expenses on account of a Claim shall be applied retroactively to all Costs, Charges and Expenses on account of such Claim, notwithstanding any prior advancement to the contrary. Any allocation or advancement of Costs, Charges and Expenses on account of a Claim shall not apply to or create any presumption with respect to the allocation of other Loss on account of such Claim or any other Claim.
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Business and Management Indemnity Policy Directors & Officers and Company Coverage Section In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows. A. INSURING CLAUSES 1. The Insurer shall pay the Loss of the Directors and Officers for which the Directors and Officers are not indemnified by the Company and which the Directors and Officers have become legally obligated to pay by reason of a Claim first made against the Directors and Officers during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E.1. herein, for any Wrongful Act taking place prior to the end of the Policy Period. 2. The Insurer shall pay the Loss of the Company for which the Company has indemnified the Directors and Officers and which the Directors and Officers have become legally obligated to pay by reason of a Claim first made against the Directors and Officers during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E.1. herein, for any Wrongful Act taking place prior to the end of the Policy Period. 3. The Insurer shall pay the Loss of the Company which the Company becomes legally obligated to pay by reason of a Claim first made against the Company during the Policy Period or, if applicable, the Extended Period, and reported to the Insurer pursuant to subsection E.1. herein, for any Wrongful Act taking place prior to the end of the Policy Period. B. DEFINITIONS 1. Claim means: a. a written demand against any Insured for monetary damages or non-monetary or injunctive relief; b. a written demand by one or more of the securities holders of the Company upon the board of directors or the management board of the Company to bring a civil proceeding against any of the Directors and Officers on behalf of the Company; c. a civil proceeding against any Insured seeking monetary damages or non-monetary or injunctive relief, commenced by the service of a complaint or similar pleading; d. a criminal proceeding against any Insured commenced by a return of an indictment or similar document, or receipt or filing of a notice of charges; e. an arbitration proceeding against any Insured seeking monetary damages or non-monetary or injunctive relief; or f. a civil, administrative or regulatory proceeding, or a formal governmental investigation against any Insured commenced by the filing of a notice of charges, investigative order or similar document. 2. Continuity Date means the date set forth in Item C. of the Declarations relating to this Coverage Section. 3. Costs, Charges and Expenses means: a. reasonable and necessary legal costs, charges, fees and expenses incurred by any of the Insureds in defending Claims and the premium for appeal, attachment or similar bonds arising out of covered judgments, but with no obligation to furnish such bonds and only for the amount of such judgment that is up to the applicable Limit of Liability; and Page 1 of 8
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Filed 03/08/11 Page 19 of 63
b. reasonable and necessary legal costs, charges, fees and expenses incurred by any of the Insureds in investigating a written demand, by one or more of the securities holders of the Company upon the board of directors or the management board of the Company, to bring a civil proceeding against any of the Directors and Officers on behalf of the Company. Costs, Charges and Expenses do not include salaries, wages, fees, overhead or benefit expenses of or associated with officers or employees of the Company. 4. Directors and Officers means any person who was, now is, or shall become: a. a duly elected or appointed director, officer, or similar executive of the Company, or any member of the management board of the Company; b. a person who was, is or shall become a full-time or part-time employee of the Company; and c. the functional equivalent of directors or officers of a Company incorporated or domiciled outside the United States of America. 5. Insureds mean the Company and the Directors and Officers. 6. Interrelated Wrongful Acts means all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of facts, circumstances, situations, events, transactions or causes. 7. Loss means damages, judgments, settlements, pre-judgment or post-judgment interest awarded by a court, and Costs, Charges and Expenses incurred by Directors and Officers under Insuring Clauses 1. or 2. or the Company under Insuring Clause 3. Loss does not include: a. taxes, fines or penalties; b. matters uninsurable under the laws pursuant to which this Policy is construed; c. punitive or exemplary damages, or the multiple portion of any multiplied damage award, except to the extent that such punitive or exemplary damages, or multiplied portion of any multiplied damage award are insurable under the internal laws of any jurisdiction which most favors coverage for such damages and which has a substantial relationship to the Insureds, Insurer, this Policy or the Claim giving rise to such damages; d. the cost of any remedial, preventative or other non-monetary relief, including without limitation any costs associated with compliance with any such relief of any kind or nature imposed by any judgment, settlement or governmental authority; e. any amount for which the Insured is not financially liable or legally obligated to pay; f. the costs to modify or adapt any building or property to be accessible or accommodating, or more accessible or accommodating, to any disabled person; or g. any amounts owed or paid to one or more securities holders of the Company under any written or express contract or agreement. 8. Outside Entity means: a. any non-profit company which is exempt from taxation under the Internal Revenue Code, as amended, in which any of the Directors and Officers is a director, officer, trustee, governor, executive director or similar position of such non-profit company; and b. any other company specifically identified by endorsement to this Policy. 9. Wrongful Act means any actual or alleged error, omission, misleading statement, misstatement, neglect, breach of duty or act allegedly committed or attempted by: a. any of the Directors and Officers, while acting in their capacity as such, or any matter claimed against Page 2 of 8
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any Director and Officer solely by reason of his or her serving in such capacity; b. any of the Directors and Officers, while acting in their capacity as a director, officer, trustee, governor, executive director or similar position of any Outside Entity where such service is with the knowledge and consent of the Company; and c. the Company, but only with respect to Insuring Clause 3. of this Coverage Section. C. EXCLUSIONS 1. Exclusions Applicable to All Insuring Clauses Insurer shall not be liable for Loss under this Coverage Section on account of any Claim: a. for actual or alleged bodily injury, sickness, disease, death, false imprisonment, assault, battery, mental anguish, emotional distress, invasion of privacy of any person, or damage to or destruction of any tangible or intangible property including loss of use thereof, whether or not such property is physically injured; b. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice given under any other policy of which this Policy is a renewal or replacement or which it succeeds in time; or ii. any other Wrongful Act, whenever occurring, which together with a Wrongful Act which has been the subject of such prior notice, would constitute Interrelated Wrongful Acts; c. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. the actual, alleged or threatened discharge, dispersal, release, escape, seepage, migration or disposal of Pollutants; or ii. any direction or request that any Insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants, or any voluntary decision to do so; provided, however, this exclusion shall not apply to any Claim brought directly, derivatively or otherwise by one or more securities holders of the Company in their capacity as such. For purposes of this exclusion, Pollutants means any substance exhibiting any hazardous characteristics as defined by, or identified on, a list of hazardous substances issued by the United States Environmental Protection Agency or any federal, state, county, municipal or local counterpart thereof or any foreign equivalent. Such substances shall include, without limitation, solids, liquids, gaseous, biological, bacterial or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials (including materials to be reconditioned, recycled or reclaimed). Pollutants shall also mean any other air emission or particulate, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products, noise, fungus (including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi, but does not include any fungi intended by the Insured for consumption) and electric or magnetic or electromagnetic field; d. for any actual or alleged violation of the responsibilities, obligations or duties imposed by Employee Retirement Income Security Act of 1974, as amended, or any rules or regulations promulgated thereunder, or similar provisions of any federal, state or local statutory or common law; e. brought or maintained by, on behalf of, in the right of, or at the direction of any Insured in any capacity, any Outside Entity or any person or entity that is an owner of or joint venture participant in any Subsidiary in any respect and whether or not collusive, unless such Claim: i. is brought derivatively by a securities holder of the Parent Company and is instigated and continued totally independent of, and totally without the solicitation, assistance, active
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participation of, or intervention of, any Insured; ii. is brought or maintained by any Insured in the form of a cross claim, third party claim or other proceeding for contribution or indemnity which is part of, and directly results from a Claim that is covered by this Coverage Section; iii. is brought or maintained by an employee of the Company who is not or was not a director or officer of the Company; iv. is brought or maintained by any former director or officer of the Company solely in their capacity as a securities holder of the Company and where such Claim is solely based upon and arising out of Wrongful Acts committed subsequent to the date such director or officer ceased to be a director or officer of the Company and where such Claim is first made two (2) years subsequent to the date such director or officer ceased to be a director or officer of the Company; or v. is brought or maintained by any bankruptcy trustee or bankruptcy appointed representative of the Company; f. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. any dishonest, deliberately fraudulent or criminal act of an Insured; provided, however this exclusion f.i. shall not apply unless and until there is a final judgment against such Insured as to such conduct; or ii. the gaining of any profit, remuneration or financial advantage to which any Directors and Officers were not legally entitled; provided, however this exclusion f.ii. shall not apply unless and until there is a final judgment against such Directors and Officers as to such conduct. When f.i. or ii. apply, the Insured shall reimburse the Insurer for any Costs, Charges or Expenses; g. for the return by any of the Directors and Officers of any remuneration paid to them without the previous approval of the appropriate governing body of the Company or Outside Entity, which payment without such previous approval shall be held to be in violation of law; h. against any of the Directors and Officers of any Subsidiary or against any Subsidiary alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act actually or allegedly committed or attempted by a Subsidiary or Directors and Officers thereof: i. before the date such entity became a Subsidiary or after the date such entity ceased to be a Subsidiary; or ii. occurring while such entity was a Subsidiary which, together with a Wrongful Act occurring before the date such entity became a Subsidiary, would constitute Interrelated Wrongful Acts; i. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act actually or allegedly committed subsequent to a Takeover; j. for a Wrongful Act actually or allegedly committed or attempted by any of the Directors and Officers in his or her capacity as a director, officer, trustee, manager, member of the board of managers or equivalent executive of a limited liability company or employee of, or independent contractor for or in any other capacity or position with any entity other than the Company; provided, however, that this exclusion shall not apply to Loss resulting from any such Claim to the extent that: i. such Claim is based on the service of any of the Directors and Officers as a director, officer, trustee, governor, executive director or similar position of any Outside Entity where such service is with the knowledge and consent of the Company; and ii. such Outside Entity is not permitted or required by law to provide indemnification to such Directors and Officers; and
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iii. such Loss is not covered by insurance provided by any of the Outside Entity's insurer(s); k. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. any prior or pending litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry filed or pending on or before the Continuity Date; or ii. any fact, circumstance, situation, transaction or event underlying or alleged in such litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry; l. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any Wrongful Act, fact, circumstance or situation which any of the Insureds had knowledge of prior to the Continuity Date where such Insureds had reason to believe at the time that such known Wrongful Act could reasonably be expected to give rise to such Claim; m. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any employment or employment-related matters brought by or on behalf of or on the right of an applicant for employment with the Company, or any of the Directors and Officers, including any voluntary, seasonal, temporary, leased or independently-contracted employee of the Company; n. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. any initial public offering of securities undertaken and consummated by the Company, including all activities in connection therewith; ii. the actual or alleged violation of the Securities Act of 1933, the Securities Exchange Act of 1934, any rules or regulations of the Securities Exchange Commission adopted thereunder, any federal, state or provincial statute or common law regulating securities similar to the foregoing, including any amendments thereto, any rules or regulations adopted pursuant thereto in connection with any Wrongful Act actually or allegedly committed subsequent to the consummation of an initial public offering of securities of the Company; or iii. any equity or debt offering, solicitation, sale, distribution or issuance of securities of the Company in excess of $50 million where such issuance takes place during the Policy Period and is exempt from the registration requirements of the Securities and Exchange Commission pursuant to Section 3.b. of the Securities Act of 1933 and rules and regulations promulgated thereunder, or any activities or transactions dealing in any way with such issuance of securities of the Company; provided, however, this exclusion shall not apply if the Insurer agrees in writing to extend coverage for Wrongful Acts in connection with such issuance of securities and the Insureds have paid the premium required by the Insurer for such coverage extension; or o. for that portion of Loss which is covered under any other Coverage Section of this Policy. 2. Exclusions Applicable Only to Insuring Clause A.3. Insurer shall not be liable for Loss on account of any Claim: a. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving the actual or alleged breach of any contract or agreement; except and to the extent the Company would have been liable in the absence of such contract or agreement; or b. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. any actual or alleged infringement, misappropriation, or violation of copyright, patent, service marks, trademarks, trade secrets, title or other proprietary or licensing rights or intellectual property of any products, technologies or services; or
PF-15193 (07/05)
ii. any goods or products manufactured, produced, processed, packaged, sold, marketed,
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distributed, advertised or developed by the Company. Provided, however, the exclusions in 2.a. and 2.b. above shall not apply to any such Claim brought or maintained, directly or indirectly, by one or more securities holders of the Company in their capacity as such. No Wrongful Act of one or more Insureds shall be imputed to any other Insureds for the purpose of determining the applicability of any of the above exclusions. D. LIMIT OF LIABILITY AND RETENTIONS 1. The liability of the Insurer shall apply only to that part of Loss which is excess of the Retention amounts applicable to this Coverage Section, as shown in Item C. of the Declarations. Such Retentions shall be borne uninsured by the Insureds and at their own risk. If different parts of a single Claim are subject to different applicable Retentions under this Coverage Section, the applicable Retentions will be applied separately to each part of such Loss, but the sum of such Retentions shall not exceed the largest applicable Retention. 2. As shown in Item C.1. of the Declarations relating to this Coverage Section, the following Limits of Liability of the Insurer shall apply: a. The amount set forth in Item C.1.a. relating to this Coverage Section shall be the aggregate limit of liability for the payment of Loss under all Insuring Clauses for this Coverage Section, subject to additional payments for Loss under Insuring Clause A.1. as further described in subsection b. immediately below. b. The amount set forth in Item C.1.b. relating to this Coverage Section shall be an aggregate limit of liability for the payment of Loss under Insuring Clause A.1. in addition to the limit described in subsection a. immediately above; provided, all payments for Loss under the additional limits described in this subsection b. shall be excess of the limit described in subsection a. above, and excess of any other available insurance that is specifically excess to this Policy. Such excess insurance must be completely and fully exhausted through the payment of loss, including but not limited to defense costs thereunder, before the Insurer shall have any obligations to make any payments under the additional limits described in this subsection b. c. The amount set forth in Item C.1.c. of the Declarations relating to this Coverage Section shall be the maximum aggregate limit of liability for the payment of Loss under all Insuring Clauses for this Coverage Section. The limit of liability set forth in C.1.a. and C.1.b. relating to this Coverage Section shall be a part of and not in addition to the maximum aggregate limit of liability set forth in Item C.1.c. for this Coverage Section. 3. All Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts shall be deemed to constitute a single Claim and shall be deemed to have been made at the earliest of the following times, regardless of whether such date is before or during the Policy Period: a. the time at which the earliest Claim involving the same Wrongful Act or Interrelated Wrongful Act is first made; or b. the time at which the Claim involving the same Wrongful Act or Interrelated Wrongful Acts shall be deemed to have been made pursuant to subsection E.2. below. 4. The Retention applicable to Insuring Clause 2. shall apply to Loss resulting from any Claim if indemnification for the Claim by the Company is required or permitted by applicable law, to the fullest extent so required or permitted, regardless of whether or not such actual indemnification by the Company is made, except and to the extent such indemnification is not made by the Company solely by reason of the Company’s financial insolvency. 5. Payments of Loss by Insurer shall reduce the Limit(s) of Liability under this Coverage Section. Costs, Charges and Expenses are part of, and not in addition to, the Limits of Liability and payment of Costs, Charges and Expenses reduce the Limits of Liability. If such Limit(s) of Liability are exhausted by payment of Loss, the obligations of the Insurer under this Coverage Section are completely fulfilled and extinguished. E. NOTIFICATION
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Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 24 of 63
1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give Insurer written notice of any Claim as soon as practicable, but in no event later than sixty (60) days after the end of the Policy Period. If any Claim is first made against the Insureds during the Extended Period, if purchased, written notice to Insurer must be given as soon as practicable, but in no event later than sixty (60) days after the end of the Extended Period. 2. If, during the Policy Period or the Discovery Period, if purchased, any of the Insureds first becomes aware of a specific Wrongful Act which may reasonably give rise to a future Claim covered under this Policy, and if the Insureds, during the Policy Period or the Discovery Period, if purchased, give written notice to Insurer as soon as practicable of: a. a description of the Wrongful Act allegations anticipated; b. the identity of the potential claimants; c. the circumstances by which the Insureds first became aware of the Wrongful Act; d. the identity of the Insureds allegedly involved; e. the consequences which have resulted or may result; and f. the nature of the potential monetary damages and non-monetary relief; then any Claim made subsequently arising out of such Wrongful Act shall be deemed for the purposes of this Coverage Section to have been made at the time such notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such Wrongful Act results in a Claim. 3. Notice to Insurer shall be given to the address shown under Item G. of the Declarations for this Policy. F. SETTLEMENT AND DEFENSE 1. It shall be the duty of the Insurer and not the duty of the Insureds to defend any Claim. Such duty shall exist even if any of the allegations are groundless, false or fraudulent. The Insurer’s duty to defend any Claim shall cease when the Limits of Liability have been exhausted by the payment of Loss including Costs, Charges and Expenses. 2. The Insurer may make any investigation it deems necessary, and shall have the right to settle any Claim; provided, however, no settlement shall be made without the consent of the Parent Company, such consent not to be unreasonably withheld. 3. The Insureds agree not to settle or offer to settle any Claim, incur any Costs, Charges and Expenses or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be liable for any settlement, Costs, Charges and Expenses, assumed obligation or admission to which it has not consented. The Insureds shall promptly send to the Insurer all settlement demands or offers received by any Insured from the claimant(s). 4. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agree that, in the event of a Claim, the Insureds will do nothing that shall prejudice the position of the Insurer or its potential or actual rights of recovery. G. OTHER INSURANCE If any Loss covered under this Coverage Section is covered under any other valid and collectible insurance, then this Policy shall cover the Loss, subject to its terms and conditions, only to the extent that the amount of the Loss is in excess of the amount of such other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the Limit of Liability for this Coverage Section. H. PAYMENT PRIORITY 1. If the amount of any Loss which is otherwise due and owing by the Insurer exceeds the then-remaining Limit of
PF-15193 (07/05) Page 7 of 8
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 25 of 63
Liability applicable to the Loss, the Insurer shall pay the Loss, subject to such Limit of Liability, in the following priority: a. first, the Insurer shall pay any Loss covered under Insuring Clause A.1. in excess of any applicable Retention shown in Item C. of the Declarations; and b. second, only if and to the extent the payment under subsection 1. above does not exhaust the applicable Limit of Liability, the Insurer shall pay any Loss in excess of the Retention shown in Item C. of the Declarations covered under any other applicable Insuring Clause. c. Subject to the foregoing subsection, the Insurer shall, upon receipt of a written request from the Chief Executive Officer of the Parent Company, delay any payment of Loss otherwise due and owing to or on behalf of the Company until such time as the Chief Executive Officer of the Parent Company designates, provided the liability of the Insurer with respect to any such delayed Loss payment shall not be increased, and shall not include any interest, on account of such delay.
PF-15193 (07/05)
Page 8 of 8
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 26 of 63
Business and Management Indemnity Policy Fiduciary Coverage Section In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows. A. INSURING CLAUSE Insurer shall pay the Loss of the Insureds which the Insureds have become legally obligated to pay by reason of a Claim first made against the Insureds during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E.1. herein, for any Wrongful Act taking place prior to the end of the Policy Period. B. DEFINITIONS 1. Administration means: a. counseling employees, beneficiaries or Plan participants with respect to any Plan; b. providing interpretations with respect to any Plan; c. handling records in connection with any Plan; or d. enrolling, terminating, or canceling employees under any Plan. 2. Claim means: a. a written demand for damages or other relief against an Insured; b. a civil, administrative, regulatory or arbitration proceeding against any Insured seeking damages or other relief, commenced by the service of a complaint or similar pleading, including any appeal therefrom; or c. a civil proceeding or formal investigation brought by the U.S. Department of Labor, the U.S. Pension Benefit Guaranty Corporation or any similar federal, state or local governmental body, including any appeal therefrom. 3. Continuity Date means the date set forth in Item C. of the Declarations relating to this Coverage Section. 4. Costs, Charges and Expenses means reasonable and necessary legal costs, charges, fees and expenses incurred by any of the Insureds in defending Claims and the premium for appeal, attachment or similar bonds arising out of covered judgments, but with no obligation to furnish such bonds and only for the amount of such judgment that is up to the applicable Limit of Liability. Costs, Charges and Expenses do not include salaries, wages, overhead or benefit expenses associated with officers or employees of any of the Insureds. 5. Employee Benefit Plan means any plan so defined by the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, or any rules and regulations promulgated thereunder. 6. Insured Persons means: a. any natural persons who were, now are, or shall become a trustee, director, officer or employee of the Sponsor Company or Plan, b. any natural persons who were, now are, or shall become a fiduciary of any Plan; and
PF-15194 (07/05) Page 1 of 7
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 27 of 63
c. any natural persons for whose Wrongful Acts any of the Insureds are legally responsible. 7. Insured Plan means any government-mandated insurance for workers' compensation, unemployment, social security or disability benefits for employees of the Sponsor Company. 8. Insureds means: a. the Sponsor Company, b. any Plan, c. any Insured Persons; and d. any other natural person or entity who was, now are, or shall be acting as a plan administrator of any of the Plans at the written request and consent of the Sponsor Company. 9. Interrelated Wrongful Acts means all Wrongful Acts which have as a common nexus any fact, circumstance, situation, event, cause, transaction or series of facts, circumstances, situations, causes, events or transactions. 10. Loss means monetary damages, judgments, settlements, pre-judgment or post-judgment interest awarded by a court, and Costs, Charges and Expenses incurred by any of the Insureds. Loss does not include: a. taxes, fines or penalties; b. matters uninsurable under the laws pursuant to which this Policy is construed; or c. punitive or exemplary damages, or the multiple portion of any multiplied damage award, except to the extent that such punitive or exemplary damages or the multiple portion of any multiplied damage award are insurable under the internal laws of any jurisdiction which most favors coverage for such damages and which has a substantial relationship to the Insureds, Insurer, this Policy or the Claim giving rise to such damages; 11. Pension Benefit Plan means any plan so defined in the Employee Retirement Income Security Act of 1974, as amended. 12. Plan means: a. any Sponsored Plan, and b. any Insured Plan, established before or after the inception of this Policy. 13. Plan Termination means the termination, suspension, merger or dissolution of any Plan. 14. Sponsor Company means the Company. 15. Sponsored Plan means: a. any Employee Benefit Plan, Pension Benefit Plan, or Welfare Benefit Plan which is operated by the Sponsor Company for the benefit of the employees of the Sponsor Company; b. any other plan, fund or program specifically included as a Sponsored Plan by endorsement to this Policy; and c. any other employee benefit plan or program not subject to Title 1 of the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder, sponsored by the Sponsor Company for the benefit of the employees of the Sponsor Company, including any employee stock ownership plan; provided, however, that the Sponsored Plan shall not include any multi-employer plan, as defined in the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder.
PF-15194 (07/05) Page 2 of 7
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 28 of 63
16. Welfare Benefit Plan means any employee welfare benefit plan so defined in the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder. 17. Wrongful Act means: a. with respect to a Sponsored Plan: i. any actual or alleged breach of the responsibilities, obligations or duties imposed upon fiduciaries of the Sponsored Plan by the Employee Retirement Income Security Act of 1974, as amended, or by the Health Insurance Portability and Accountability Act of 1996, or any similar state or local common or statutory law, and any rules and regulations promulgated under either of these Acts; ii. any other matter claimed against the Sponsor Company or any of the Insured Persons solely because of the service of the Sponsor Company or any of the Insured Persons as a fiduciary of any Sponsored Plan, including any actual or alleged violation of the Health Insurance Portability and Accountability Act of 1996 or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder; or iii. any actual or alleged act, error or omission in the Administration of any Sponsored Plan, including any actual or alleged violation of the Health Insurance Portability and Accountability Act of 1996 or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder; and b. with respect to an Insured Plan, any actual or alleged act, error or omission in the Administration of such Insured Plan. C. EXCLUSIONS 1. Insurer shall not be liable for Loss under this Coverage Section on account of any Claim: a. for actual or alleged bodily injury, sickness, disease, death, false imprisonment, assault, battery, mental anguish, emotional distress, invasion of privacy of any person, or damage to or destruction of any tangible or intangible property including loss of use thereof, whether or not such property is physically injured. b. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice given under any other policy of which this Policy is a renewal or replacement or which it succeeds in time; or ii. any other Wrongful Act, whenever occurring, which together with a Wrongful Act which has been the subject of such prior notice, would constitute Interrelated Wrongful Acts; c. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. the actual, alleged or threatened discharge, dispersal, release, escape, seepage, migration or disposal of Pollutants; or ii. any direction or request that any Insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants, or any voluntary decision to do so; including without limitation any Claim by or on behalf of the Company, its securities holders or creditors based upon, arising out of, or attributable to the matters described in this exclusion. For purposes of this exclusion, Pollutants means any substance exhibiting any hazardous characteristics as defined by, or identified on, a list of hazardous substances issued by the United States Environmental Protection Agency or any federal, state, county, municipal or local counterpart thereof or any foreign equivalent. Such substances shall include, without limitation, solids, liquids,
PF-15194 (07/05) Page 3 of 7
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 29 of 63
gaseous, biological, bacterial or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials (including materials to be reconditioned, recycled or reclaimed). Pollutants shall also mean any other air emission or particulate, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products, noise, fungus (including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi, but does not include any fungi intended by the Insured for consumption) and electric or magnetic or electromagnetic field; d. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, the failure to comply with any statutory or common law governing workers' compensation, unemployment, social security or disability benefits or any similar law; provided, however, this exclusion shall not apply to any actual or alleged obligation of any Insured pursuant to the: i. Consolidated Omnibus Budget Reconciliation Act of 1985, as amended; or ii. Health Insurance Portability and Accountability Act of 1996, as amended; e. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. any dishonest, deliberately fraudulent or criminal act of an Insured; provided, however this exclusion e.i. shall not apply unless and until there is a final judgment against such Insured as to such conduct; or ii. the gaining of any profit, remuneration or financial advantage to which any Insured Person was not legally entitled; provided, however this exclusion e.ii. shall not apply unless and until there is a final judgment against such Insured Person as to such conduct; When e.i. or ii. apply, the Insured shall reimburse the Insurer for any Costs, Charges or Expenses; f. against any Subsidiary or any of the Insured Persons of a Subsidiary alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act actually or allegedly committed or attempted by a Subsidiary or any of the Insured Persons of a Subsidiary: i. before the date such entity became a Subsidiary or after the date such entity ceased to be a Subsidiary; or ii. occurring while such entity was a Subsidiary which, together with a Wrongful Act occurring before the date such entity became a Subsidiary, would constitute Interrelated Wrongful Acts; g. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any Wrongful Act actually or allegedly committed subsequent to a Takeover; h. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. any prior or pending litigation, arbitration, or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry filed or pending on or before of the Continuity Date; or ii. any fact, circumstance, situation, transaction, cause or event underlying or alleged in such litigation, arbitration, administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry; i. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any Wrongful Act actually or allegedly committed subsequent to a Plan Termination; provided, however, that this exclusion shall only apply to those Plans which were the subjects of the Plan Termination; j. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any employment or employment–related matters; provided, however, this
PF-15194 (07/05) Page 4 of 7
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 30 of 63
exclusion shall not apply to any Claim where such employment or employment-related matters involve actual or alleged violations of the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder; k. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act, fact, circumstance or situation which any of the Insureds had knowledge of prior to the Continuity Date where such Insureds had reason to believe at the time that such known Wrongful Act could reasonably be expected to give rise to such Claim; or l. for that portion of Loss which is covered under any other Coverage Section of this Policy. 2. Insurer shall not be liable to make any payment under this Coverage Section, other than Costs, Charges and Expenses, on account of any Claim: a. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving the actual or alleged breach of any contract or agreement; except to the extent that liability would have attached to the Sponsor Company in the absence of such contract or agreement, or where the liability was assumed in accordance with or under the trust agreement or equivalent document pursuant to which any of the Plans was established; b. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any actual or attempted reversion or payment of assets of any of the Plans to the Sponsor Company, or to any successor or assign of the Sponsor Company; c. for or which seeks or constitutes fines or penalties or the multiple portion of any multiplied damage award, other than the five percent (5%) or less, or the twenty percent (20%) or less, civil penalties imposed upon any of the Insureds as a fiduciary under Section 502 i or l , respectively, of the Employee Retirement Income Security Act of 1974, as amended; d. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, the failure to collect from the Sponsor Company contributions owed to any of the Plans, or the failure to fund a Plan in accordance with the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder, unless the failure is solely due to the negligence of any of the Insureds; or e. which constitutes benefits due to or to become due under the terms of any Plan if such Plan complied with all applicable law, unless and to the extent that: i. the Insured is a natural person and the benefits are payable by such Insured as a personal obligation; and ii. recovery for the benefits is based upon a covered Wrongful Act. No Wrongful Act of one or more Insureds shall be imputed to any other Insureds for the purpose of determining the applicability of any of the above exclusions. D. LIMIT OF LIABILITY AND RETENTION 1. The liability of the Insurer shall apply only to that part of Loss which is excess of the Retention amount applicable to this Coverage Section, as shown in Item C. of the Declarations. Such Retention shall be borne uninsured by the Insureds and at their own risk. 2. The amount shown in Item C. of the Declarations relating to this Coverage Section shall be the maximum aggregate Limit of Liability of Insurer under this Coverage Section. 3. All Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts shall be deemed to be a single Claim and shall be deemed to have been made at the earliest of the following times, regardless of whether such date is before or during the Policy Period: a. the time at which the earliest Claim involving the same Wrongful Act or Interrelated Wrongful Act is first made; or Page 5 of 7
PF-15194 (07/05)
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 31 of 63
b. the time at which the Claim involving the same Wrongful Act or Interrelated Wrongful Acts shall be deemed to have been made pursuant to subsection E.2. below. 4. Payments of Loss, other than Costs, Charges and Expenses, by Insurer shall reduce the Limit(s) of Liability under this Coverage Section. Costs, Charges and Expenses are not part of, and are in addition to, the Limit(s) of Liability and payment of Costs, Charges and Expenses shall not reduce the Limit(s) of Liability. If such Limit(s) of Liability are exhausted, the obligations of the Insurer under this Coverage Section are completely fulfilled and extinguished. E. NOTIFICATION 1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give Insurer written notice of any Claim as soon as practicable, but in no event later than sixty (60) days after the end of the Policy Period. If any Claim is first made against the Insureds during the Extended Period, if purchased, written notice to Insurer must be given as soon as practicable, but in no event later than sixty (60) days after the end of the Extended Period. 2. If, during the Policy Period or the Discovery Period, if purchased, any of the Insureds first becomes aware of a specific Wrongful Act which may reasonably give rise to a future Claim covered under this Policy, and if the Insureds, during the Policy Period or the Discovery Period, if purchased, give written notice to Insurer as soon as practicable of: a. a description of the Wrongful Act allegations anticipated; b. the identity of the potential claimants; c. the circumstances by which the Insureds first became aware of the Wrongful Act; d. the identity of the Insureds allegedly involved; e. the consequences which have resulted or may result; and f. the nature of the potential monetary damages and non-monetary relief; then any Claim made subsequently arising out of such Wrongful Act shall be deemed for the purposes of this Coverage Section to have been made at the time such notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such Wrongful Act results in a Claim. 3. Notice to Insurer shall be given to the address shown under Item G. of the Declarations for this Policy. F. SETTLEMENT AND DEFENSE 1. It shall be the duty of the Insurer and not the duty of the Insureds to defend any Claim. Such duty shall exist even if any of the allegations are groundless, false or fraudulent. The Insurer’s duty to defend any Claim shall cease when the Limits of Liability have been exhausted. 2. The Insurer may make any investigation it deems necessary and shall have the right to settle any Claim; provided, however, no settlement shall be made without the consent of the Parent Company, such consent not to be unreasonably withheld. 3. The Insureds agree not to settle or offer to settle any Claim, incur any Costs, Charges and Expenses or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be liable for any settlement, Costs, Charges and Expenses, assumed obligation or admission to which it has not consented. The Insureds shall promptly send to the Insurer all settlement demands or offers received by any Insured from the claimant(s). 4. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agree that, in the event of a Claim, the Insureds will do nothing that shall prejudice the position of the Insurer or its potential or actual rights of recovery. G. OTHER INSURANCE PF-15194 (07/05)
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Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 32 of 63
If any Loss covered under this Coverage Section is covered under any other valid and collectible insurance, then this Policy shall cover the Loss, subject to its terms and conditions, only to the extent that the amount of the Loss is in excess of the amount of such other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the Limit of Liability for this Coverage Section. H. WAIVER OF RECOURSE Insurer shall have no right of recourse, including but not limited to rights of contribution and subrogation, against any Insureds with respect to any Claim if this Coverage Section has been purchased by that Insured, with the exception of any of the Plans.
PF-15194 (07/05)
Page 7 of 7
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 33 of 63
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
1
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company ABSOLUTE CONTRACT EXCLUSION It is agreed that the Directors & Officers and Company Coverage Section is amended in the following manner: 1. Subsection C.1. is amended by adding the following: p. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving the actual or alleged breach of any oral, written, express or implied contract or agreement. 2. Subsection C.2.a. is deleted in its entirety. All other terms and conditions of this Policy remain unchanged.
PF-16294 (08/04)
Page 1 of 1
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 34 of 63
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
2
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company AMEND EXCLUSION N. $100 MM It is agreed that Section C., Exclusions, subsection 1., paragraph n. iii. of the Directors & Officers and Company Coverage Section is deleted in its entirety and the following is inserted: iii. any debt offering, solicitation, sale, distribution or issuance of securities of the Company in excess of $100 million where such issuance takes place during the Policy Period and is exempt from the registration requirements of the Securities and Exchange Commission pursuant to Section 3(b) of the Securities Act of 1933 and rules and regulations promulgated thereunder, or any activities or transactions dealing in any way with such issuance of securities of the Company; provided, however, this exclusion shall not apply if the Insurer agrees in writing to extend coverage for Wrongful Acts in connection with such issuance of securities and the Insureds have paid the premium required by the Insurer for such coverage extension; or All other terms and conditions of this Policy remain unchanged.
PF-20863 (09/06)
Page 1 of 1
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 35 of 63
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
3
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company AMEND NOTICE OF CIRCUMSTANCES It is agreed that Section E., subsection 2. of the Directors and Officers and Company Coverage Section is deleted in its entirety and the following is inserted: 2. If during the Policy Period or the Discovery Period, if purchased, any of the Insureds first become aware of specific facts or circumstances which may reasonably give rise to a future Claim covered under this Policy, and if the Insureds, during the Policy Period or the Discovery Period, if purchased, give written notice to Insurer as soon as practicable of: a. a description of the facts or circumstances allegations anticipated; b. the identity of the potential claimants; c. the circumstances by which the Insureds first became aware of the facts or circumstances; d. the identity of the Insureds allegedly involved; e. the consequences which have resulted or may result; and f. the nature of the potential monetary damages and non-monetary relief; then any Claim made subsequently arising out of such facts or circumstances shall be deemed for the purposes of this Coverage Section to have been made at the time such notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such facts or circumstances results in a Claim. All other terms and conditions of this Policy remain unchanged.
PF-19595 (01/06)
Page 1 of 1
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 36 of 63
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
4
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company AMEND NOTICE OF CIRCUMSTANCES - EPL It is agreed that Section E., subsection 2. of the Employment Practices Coverage Section is deleted in its entirety and the following is inserted: 2. If during the Policy Period or the Discovery Period, if purchased, any of the Insureds first become aware of specific facts or circumstances which may reasonably give rise to a future Claim covered under this Policy and if the Insureds, during the Policy Period or the Discovery Period, if purchased, give written notice to Insurer as soon as practicable of: a. a description of the facts or circumstances allegations anticipated; b. the identity of the potential claimants; c. the circumstances by which the Insureds first became aware of the facts or circumstances; d. the identity of the Insureds allegedly involved; e. the consequences which have resulted or may result; and f. the nature of the potential monetary damages and non-monetary relief; then any Claim made subsequently arising out of such facts or circumstances shall be deemed for the purposes of this Coverage Section to have been made at the time such notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such facts or circumstances results in a Claim. All other terms and conditions of this Policy remain unchanged.
PF-19625 (01/06)
Page 1 of 1
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 37 of 63
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
5
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company AMEND NOTICE PROVISION - D&O It is agreed that Section E., Notification, subsection 1. of the Directors and Officers and Company Coverage Section is amended to add the following: A Claim shall be deemed to have been first made against the Insureds on the date an Insured who is an executive officer, director or general counsel becomes aware of such Claim. All other terms and conditions of this Policy remain unchanged.
PF-19596 (01/06)
Page 1 of 1
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 38 of 63
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
6
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company AMEND NOTICE PROVISION - EPL It is agreed that Section E., Notification, subsection 1. of the Employment Practices Coverage Section is amended to add the following: A Claim shall be deemed to have been first made against the Insureds on the date an Insured who is an executive officer, director or general counsel becomes aware of such Claim. All other terms and conditions of this Policy remain unchanged.
PF-19594 (01/06)
Page 1 of 1
Case 2:11-cv-00456-JAT Document 1-1
Filed 03/08/11 Page 39 of 63
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
7
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company AMEND OUTSIDE SERVICES EXCLUSION It is agreed that Section C., Exclusions, subsection 1., paragraph j., subparagraph ii. of the Directors & Officers and Company Coverage Section is deleted in its entirety and the following is inserted: ii. such Outside Entity is not permitted or required by law to provide indemnification to such Directors and Officers, or is unable to indemnify such Directors and Officers as a result of Financial Impairment; and For the purposes of this endorsement Financial Impairment means the status of the Company resulting from (1) the appointment by any state or federal official, agency or court of any receiver, conservator, liquidator, trustee, rehabilitator or similar official to take control of, supervise, manage or liquidate the Company, or (2) the Company becoming a debtor in possession. All other terms and conditions of this Policy remain unchanged.
PF-19590 (01/06)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
8
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company AMENDED ALLOCATION PROVISION - EPL This endorsement modifies insurance under the following: BUSINESS AND MANAGEMENT INDEMNITY POLICY EMPLOYMENT PRACTICES COVERAGE SECTION A. Section F., Settlement and Defense, subsection 2., is deleted in its entirety and the following is inserted: 2. The Insurer may make any investigation it deems necessary, and shall have the right to settle any Claim; provided, however, no settlement shall be made without the consent of the Insureds. If the Insurer recommends a settlement, which is acceptable to the claimant, but the Insureds do not consent to such settlement within 30 days of the date the Insureds are first made aware of the potential settlement, the Insurer's liability for all Loss on account of such Claim shall not exceed i. the amount for which the Insurer could have settled such Claim plus Costs, Charges and Expenses incurred as of the date the potential settlement was proposed in writing by the Insurer to the Insureds, and ii. 70% of all subsequent covered Loss in excess of such amount, the remaining 30% of which shall be borne by the Insureds uninsured and at their own risk. However, this subsection does not apply to any potential settlement that is within the Retention. B. Section H., Allocation, is amended to add the following: If the Insurer does have the duty to defend a Claim, then the following subsections shall apply to such Claim. 1. If, in any Claim covered in whole or in part under this Coverage Section, the Insureds who are afforded coverage for such Claim incur Loss jointly with others, or incur an amount consisting of both Loss covered by this Policy and loss not covered by this Policy because such Claim includes both covered and uncovered matters, then: a. this Policy shall pay 100% of Costs, Charges and Expenses incurred by such Insureds on account of such Claim; and b. the Insureds and the Insurer shall allocate any remaining damages, judgments, settlements, front pay and back pay, and pre-judgment or post-judgment interest between covered Loss and uncovered loss based upon the relative legal and financial exposures and the relative benefits obtained by the parties to covered and uncovered matters. All other terms and conditions of this Policy remain unchanged.
PF-20548 (06/06)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
9
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company AMENDED WARRANTY PROVISION It is agreed that Section D.2. of the General Terms and Conditions is deleted in its entirety and replaced with the following: 2. in the event the Application, including materials submitted or required to be submitted therewith, contains any misrepresentation or omission made with the intent to deceive, or contains any misrepresentation or omission which materially affects either the acceptance of the risk or the hazard assumed by Insurer under this Policy, this Policy, including each and all Coverage Sections, shall be void ab initio only with respect to: a. any natural person Insured who had knowledge of such misrepresentation or omission; and b. the Company, in the event the signer of the Application or the chief executive officer, president, chief financial officer, partner or chairman of the board, if the signer of the Application is not such person, had knowledge of such misrepresentation or omission, provided; however, such voidance of coverage for the Company shall not apply to any indemnification obligation the Company has to any natural person Insured. All other terms and conditions of this Policy remain unchanged.
PF-19593 (03/06)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
10
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company INSURANCE OPERATIONS EXCLUSION It is agreed that the Directors & Officers and Company Coverage Section is amended as follows: 1. Subsection B. is amended to include the following: 10. Insurance Contract means any policy of insurance, policy of reinsurance, bond or indemnity including, but not limited to any annuity, endowment or pension contract or any risk management of any insurance program or pool, or any similar program. 2. Subsection C.1. is amended by the addition of the following: q. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: i. the cancellation of any Insurance Contract; ii. the actual or alleged refusal to renew any Insurance Contract; iii. the actual or alleged failure or refusal to pay benefits due or alleged to be due under any Insurance Contract; iv. the actual or alleged delay in the payment of benefits due or alleged to be due under any Insurance Contract; v. the actual or alleged breach of duty, lack of good faith or unfair dealing in the handling of any Claim or obligation arising out of or under any Insurance Contract, or the brokering or underwriting of insurance policies or risks; vi. the conduct of the Insureds or any of the Directors and Officers as insurance agents or insurance brokers in the negotiation, placement or maintenance of any Insurance Contract. All other terms and conditions of this Policy remain unchanged.
PF-16291 (08/04)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
11
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company LENDERS LIABILITY EXCLUSION It is agreed that Section C.1. of the Directors & Officers and Company Coverage Section is amended to include the following: r. based upon, arising out of, directly or indirectly resulting from, in consequence of, or in any way involving the actual or alleged purchase, sale, origination, participation, grant, commitment, restructuring, termination, transfer, repossession or foreclosure of any loan, lease or extension of credit, or the failure to do any of the foregoing, or the rendering of advice in connection with any loan, lease or extension of credit.
All other terms and conditions of this Policy remain unchanged.
PF-18305 (04/05)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
12
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company NAMED ENTITY EXCLUSION It is agreed that subsection C.1. of the Directors & Officers and Company Coverage Section is amended by the addition of the following: s. brought or maintained by, on behalf of, in the right of, or at the direction of SMC Revocable Trust , its directors, officers, employees, subsidiaries, affiliates, or shareholders thereof.
All other terms and conditions of this Policy remain unchanged.
PF-16304 (08/04)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
13
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company NON DUTY TO DEFEND - DIRECTORS & OFFICERS AND COMPANY COVERAGE SECTION It is agreed that the Directors & Officers and Company Coverage Section is amended as follows: 1. Section F., is deleted in its entirety and replaced with the following: F. SETTLEMENTS AND DEFENSE 1. It shall be the duty of the Insureds and not the duty of the Insurer to defend any Claim. 2. The Insureds agree not to settle or offer to settle any Claim, incur any Costs, Charges and Expenses or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be liable for any settlement, Costs, Charges and Expenses, assumed obligation or admission to which it has not consented. The Insurer shall have the right to investigate and settle any Claim; provided, however, no settlement shall be made without the consent of the Parent Company, such consent not to be unreasonably withheld. The Insureds shall promptly send to the Insurer all settlement demands or offers received by any Insured from the claimant(s). 3. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agree that, in the event of a Claim, the Insureds will do nothing that shall prejudice the position of the Insurer or its potential or actual rights of recovery. The Insurer may make any investigation it deems necessary. 4. The Insurer shall, on a quarterly basis, advance on behalf of the Insureds covered Costs, Charges and Expenses which the Insureds have incurred in connection with Claims made against them, prior to disposition of such Claims. Any advancement of Costs, Charges and Expenses shall be subject to the condition that such advanced amounts shall be repaid to the Insurer by the Insureds severally according to their respective interests if and to the extent the Insureds shall not be entitled to coverage for such Costs, Charges and Expenses under the terms and conditions of this Policy.
2. Section I. Allocation, is added as follows: I. ALLOCATION 1. If, in any Claim covered in whole or in part under this Coverage Section, the Insureds who are afforded coverage for such Claim incur Loss jointly with others, or incur an amount consisting of both Loss covered by this Policy and loss not covered by this Policy because such Claim includes both covered and uncovered matters, then the Insureds and the Insurer shall allocate such amount between covered Loss and uncovered loss based upon the relative legal and financial exposures and the relative benefits obtained by the parties to covered and uncovered matters. 2. If there can be an agreement between Insureds and the Insurer on an allocation of Costs, Charges and Expenses, the Insurer shall advance on a current basis covered Costs, Charges and Expenses. If there can be no agreement on allocation of Costs, Charges and Expenses, the Insurer shall advance on a current basis Costs, Charges and Expenses which the Insurer believes to be covered under this Policy until a different allocation is negotiated or arbitrated. 3. Any negotiated or arbitrated allocation of Costs, Charges and Expenses on account of a Claim shall be applied retroactively to all Costs, Charges and Expenses on account of such Claim, notwithstanding
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any prior advancement to the contrary. Any allocation or advancement of Costs, Charges and Expenses on account of a Claim shall not apply to or create any presumption with respect to the allocation of other Loss on account of such Claim or any other Claim.
All other terms and conditions of this Policy remain unchanged.
PF-18307 (04/05)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
14
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company NON-RESCINDABLE SIDE A ENDORSEMENT It is agreed that subparagraph 2. of the second paragraph of Section D., Warranty, of the General Terms and Conditions Coverage Section, is amended to add the following: Provided, however, that solely with respect to the coverage afforded under Section A., Insuring Clauses, subsection 1., of the Directors & Officers and Company Coverage Section, the Insurer shall not seek to rescind this Policy. All other terms and conditions of this Policy remain unchanged.
PF-19588 (01/06)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
15
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company PROFESSIONAL SERVICES EXCLUSION - SECURITIES HOLDER EXCEPTION It is agreed that Section C., Exclusions subsection 1. of the Directors & Officers and Company Coverage Part is amended by adding the following: t. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving the rendering or failing to render professional services. Provided, however, this exclusion shall not apply to any Claim(s) brought by a securities holder of the Company in their capacity as such.
All other terms and conditions of this Policy remain unchanged.
PF-20108 (04/06)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
16
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company REGULATORY EXCLUSION It is agreed that subsection C.1. of the Directors & Officers and Company Coverage Section is amended by the addition of the following: u. brought or maintained by, on behalf of, in the right of, or at the direction of the Resolution Trust Corporation, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Comptroller of the Currency, or similar federal or state agency (collectively referred herein as “Agencies”), regardless of whether such Agencies are acting in the capacity of a depository insurance organization, regulatory agency, receiver, conservator or liquidator of any institution, and further without regard to whether any Claim is brought in the name of such Agencies by or on behalf of such Agencies in the name of the Insureds, another entity or individual, or solely by or on behalf of any of the Insureds, another entity or individual and based upon, attributable to, arising from or in any way related to a claim, action or proceeding brought by or on behalf of such (Agencies).
All other terms and conditions of this Policy remain unchanged.
PF-16306 (08/04)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
17
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company REMOVAL ALTERNATIVE DISPUTE RESOLUTION PROVISION It is agreed that the General Terms and Conditions Section is amended by deleting Section J., Alternative Dispute Resolution, in its entirety. All other terms and conditions of this Policy remain unchanged.
PF-15333 (03/04)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
18
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company SCIENTIFIC AND ADVISORY BOARD EXTENSION It is agreed that Section B., Definitions, subsection 4. of the Directors and Officers and Company Coverage Section is amended to add the following: d. A natural person member of the Scientific or Advisory Board of the Company (collectively, “Advisory Board Members”) that is indemnified by the Company pursuant to a written indemnification agreement. The Company agrees to indemnify the Advisory Board Members to the fullest extent permitted by law, taking all steps necessary or advisable in furtherance thereof, including the making in good faith of any application for court approval, the passing of any resolution by the board of directors or shareholders of the Company, the amendment of any charter, bylaws, operating agreement or similar documents of the Company or the execution of any contract. The Company further agrees to advance Costs, Charges and Expenses actually and reasonably incurred by any Advisory Board Member in defending any threatened, pending or contemplated action, suit or proceeding prior to a final disposition of any such action, suit or proceeding and shall not require any determination or adjudication, interim or final, of the entitlement of the Advisory Board Member to indemnification, where permitted by law to do so. The financial ability of any Advisory Board Member to make repayment shall not be a prerequisite to the making of such an advance, and the right to receive advancement of Costs, Charges and Expenses herein is a contractual right. The agreements contained in this paragraph are binding upon the Company and enforceable by the Insurer or the Advisory Board Member.
All other terms and conditions of this Policy remain unchanged.
PF-19602 (01/06)
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TRADE OR ECONOMIC SANCTIONS ENDORSEMENT This insurance does not apply to the extent that trade or economic sanctions or other laws or regulations prohibit us from providing insurance, but not limited to, the payment of claims. All other terms and conditions of Policy remain unchanged.
ALL-21101 (11/06)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
19
Effective
BMI
20047145
9/22/2007 to 9/22/2008
9/22/2007
Issued By (Name Of Insurance Company)
Westchester Fire Insurance Company YIELD SPREAD PREMIUM EXCLUSION It is agreed that the Directors & Officers and Company Coverage Section is amended in the following manner: 1. Section C., Exclusions, is amended to include the following: based on or arising out of, or in any consequence of any Yield Spread Premium fees paid to or by any mortgage broker or banker in connection with a mortgage loan, or any other similar type of undisclosed lending fees. 2. Subsection B. is amended to include the following: 11. Yield Spread Premium means any yield spread premium, coverage, rebate, premium pricing, yield spread differential, par plus pricing or any other payment, fee, consideration or “thing of value” (as defined by 3(2) of the Real Estate Settlement Practices Act, 12 U.S. C. 2602(2) that is linked in any way to the interest on a residential mortgage loan. All other terms and conditions of this Policy remain unchanged. v.
PF-18313 (04/05)
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POLICYHOLDER DISCLOSURE NOTICE OF TERRORISM INSURANCE COVERAGE
This endorsement applies only to insurance provided under the following: Business and Management Indemnity Policy Directors & Officers and Company Coverage Section You should be aware that under the Terrorism Risk Insurance Act of 2002 ("The Act") effective November 26, 2002, any losses caused by certified acts of terrorism under your existing coverage may be partially reimbursed by the United States under a formula established by federal law (applicability is subject to the terms and conditions of each individual policy). The Act was specifically designed to address the ability of businesses and individuals to obtain property and casualty insurance for terrorism and to protect consumers by addressing market disruptions and ensure the continued availability of terrorism coverage. Under the terms of The Act, you may now have the right to purchase insurance coverage for losses arising out of acts of terrorism, as defined in Section 102(1) of the Act: The term "act of terrorism" means any act that is certified by the Secretary of the Treasury, in concurrence with the Secretary of State, and the Attorney General of the United States-to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property; or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of an air carrier or vessel or the premises of a United States mission; and to have been committed by an individual or individuals acting on behalf of any foreign person or foreign interest, as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. Responsibility for Compensation under The Act is shared between insurance companies covered by The Act and the United States. Under the formula set forth in The Act, the United States pays 90% of covered terrorism losses exceeding the statutorily established deductible, which is paid by the insurance company providing the coverage. We are providing you with the terrorism coverage required by The Act. We have not established a separate price for this coverage; however the portion of your annual premium that is reasonably attributable to such coverage is equal to the amount derived by multiplying 1% of the total premium for the coverage purchased.
Name of Insured: Mortgages, Ltd. Policy No. BMI20047145 Terrorism Risk Insurance Act premium: $290.00
TRIA [DO] (08/06)
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POLICYHOLDER DISCLOSURE NOTICE OF TERRORISM INSURANCE COVERAGE
This endorsement applies only to insurance provided under the following: Business and Management Indemnity Policy Employment Practices Coverage Section You should be aware that under the Terrorism Risk Insurance Act of 2002 ("The Act") effective November 26, 2002, any losses caused by certified acts of terrorism under your existing coverage may be partially reimbursed by the United States under a formula established by federal law (applicability is subject to the terms and conditions of each individual policy). The Act was specifically designed to address the ability of businesses and individuals to obtain property and casualty insurance for terrorism and to protect consumers by addressing market disruptions and ensure the continued availability of terrorism coverage. Under the terms of The Act, you may now have the right to purchase insurance coverage for losses arising out of acts of terrorism, as defined in Section 102(1) of the Act: The term "act of terrorism" means any act that is certified by the Secretary of the Treasury, in concurrence with the Secretary of State, and the Attorney General of the United States-to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property; or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of an air carrier or vessel or the premises of a United States mission; and to have been committed by an individual or individuals acting on behalf of any foreign person or foreign interest, as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. Responsibility for Compensation under The Act is shared between insurance companies covered by The Act and the United States. Under the formula set forth in The Act, the United States pays 90% of covered terrorism losses exceeding the statutorily established deductible, which is paid by the insurance company providing the coverage. We are providing you with the terrorism coverage required by The Act. We have not established a separate price for this coverage; however the portion of your annual premium that is reasonably attributable to such coverage is equal to the amount derived by multiplying 1% of the total premium for the coverage purchased.
Name of Insured: Mortgages, Ltd. Policy No. BMI20047145 Terrorism Risk Insurance Act premium: $99.00
TRIA [EPL] (08/06)
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U.S. TREASURY DEPARTMENT'S OFFICE OF FOREIGN ASSETS CONTROL ("OFAC") ADVISORY NOTICE TO POLICYHOLDERS
No coverage is provided by this Policyholder Notice nor can it be construed to replace any provisions of your policy. You should read your policy and review your Declarations page for complete information on the coverages you are provided. This Notice provides information concerning possible impact on your insurance coverage due to directives issued by OFAC. Please read this Notice carefully. The Office of Foreign Assets Control (OFAC) administers and enforces sanctions policy, based on Presidential declarations of "national emergency". OFAC has identified and listed numerous:
● ● ● ● ●
Foreign agents; Front organizations; Terrorists; Terrorist organizations; and Narcotics traffickers;
as "Specially Designated Nationals and Blocked Persons". This list can be located on the United States Treasury's web site – http//www.treas.gov/ofac. In accordance with OFAC regulations, if it is determined that you or any other insured, or any person or entity claiming the benefits of this insurance has violated U.S. sanctions law or is a Specially Designated National and Blocked Person, as identified by OFAC, this insurance will be considered a blocked or frozen contract and all provisions of this insurance are immediately subject to OFAC. When an insurance policy is considered to be such a blocked or frozen contract, no payments nor premium refunds may be made without authorization from OFAC. Other limitations on the premiums and payments also apply.
IL P 001 01 04
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ACE PRODUCER COMPENSATION PRACTICES & POLICIES ACE believes that policyholders should have access to information about ACE's practices and policies related to the payment of compensation to brokers and independent agents. You can obtain that information by accessing our website at http://www.aceproducercompensation.com or by calling the following toll-free telephone number: 1-866-512-2862.
ALL-20887 (10/06)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Endorsement Number
Mortgages, Ltd.
Policy Symbol Policy Number Policy Period
20 20047145 September 22, 2007
BMI
to September 22, 2008 April 9, 2008
Effective
Issued By (Name of Insurance Company)
Westchester Fire Insurance Company
Amend Parent Company/Principal Address
It is agreed that Item A. of the Declarations, Parent Company, is amended to read as follows:
Item A. Parent Company: Mortgages, Ltd Principal Address: 4455 E. Camelback Road Phoenix, AZ 85018
All other terms and conditions of this Policy remain unchanged.
____________________________ Authorized Signature
_________________ Date
ADM103 (03/05)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Mortgages, Ltd. Policy Symbol BMI Policy Number 20047145 Policy Period September 22, 2007 to September 22, 2008 Endorsement Number 21 Effective September 22, 2008
Issued By (Name of Insurance Company) Westchester Fire Insurance Company Additional Premium $10,423
Amend Policy Period
It is agreed that Item B. of the Declarations, Policy Period, is amended to read as follows:
Item B. Policy Period: From September 22, 2007 to December 21, 2008 12:01 a.m. local time at the Principal Address shown in Item A.
All other terms and conditions of this Policy remain unchanged.
____________________________ Authorized Signature
_________________ Date
ADM104 (03/05)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Mortgages, Ltd. Policy Symbol BMI Policy Number 20047145 Policy Period September 22, 2007 to February 19, 2009 Endorsement Number 20 Effective September 22, 2007
Issued By (Name of Insurance Company) Westchester Fire Insurance Company Additional Premium $63,300
DISCOVERY PERIOD ELECTION
THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING: BUSINESS AND MANAGEMENT INDEMNITY POLICY
It is agreed that the Parent Company has elected and paid for the additional Discovery Period listed in Item E. 3. of the Declarations, but solely as respects the Employment Practices, Directors & Officers and Company and Fiduciary Coverage Sections, thereby complying with the requirements of Section H. of the General Terms and Conditions.
All other terms and conditions of this Policy remain unchanged.
June 8, 2009
__________________________________ Authorized Representative _________________ Date
PF-15338 (07/08)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Mortgages, Ltd. Policy Symbol BMI Policy Number 20047145 Policy Period September 22, 2007 to February 19, 2009 Endorsement Number 22 Effective September 22, 2007
Issued By (Name of Insurance Company) Westchester Fire Insurance Company
Endorsement(s) Deletion
It is agreed that Endorsement No: 20 is deleted in its entirety.
All other terms and conditions of this Policy remain unchanged.
____________________________ Authorized Signature
06/01/2010 Date
ADM108 (03/05)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Mortgages, Ltd. Policy Symbol BMI Policy Number 20047145 Policy Period September 22, 2007 to December 21, 2008 Endorsement Number 23 Effective December 21, 2008
Issued By (Name of Insurance Company) Westchester Fire Insurance Company Additional Premium $6,921
Amend Policy Period
It is agreed that Item B. of the Declarations, Policy Period, is amended to read as follows:
Item B. Policy Period: From September 22, 2007 to February 19, 2009 12:01 a.m. local time at the Principal Address shown in Item A.
All other terms and conditions of this Policy remain unchanged.
____________________________ Authorized Signature
June 15, 2009 _________________ Date
ADM104 (03/05)
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THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
Named Insured Mortgages, Ltd. Policy Symbol BMI Policy Number 20047145 Policy Period September 22, 2007 to February 19, 2009 Endorsement Number 24 Effective February 19, 2009
Issued By (Name of Insurance Company) Westchester Fire Insurance Company Additional Premium $63,300
DISCOVERY PERIOD ELECTION
THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING: BUSINESS AND MANAGEMENT INDEMNITY POLICY
It is agreed that the Parent Company has elected and paid for the additional Discovery Period listed in Item E. 3 of the Declarations, but solely as respects the Employment Practices, Directors & Officers and Company and Fiduciary Coverage Sections Coverage Sections, thereby complying with the requirements of Section H. of the General Terms and Conditions.
All other terms and conditions of this Policy remain unchanged.
__________________________________ Authorized Representative
06/1/2010 Date
SL-15338 (07/08)
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