POLICY NUMBER:
858-56-36
RENEWAL OF:
856-27-73
(LOGO) AMERICAN INTERNATIONAL COMPANIES
/_/ AIU Insurance Company /_/ Granite State Insurance Company
/_/ American Home Assurance Company /_/ Illinois National Insurance Company
/_/ American International Pacific
Insurance Company /X/ National Union Fire Insurance
Company of Pitts., Pa.
/_/ American International South
Insurance Company /_/ National Union Fire Insurance
Company of Louisiana
/_/ Birmingham Fire Insurance Company
of Penns. /_/ New Hampshire Insurance Company
(each of the above being a capital stock company)
DIRECTORS, OFFICERS AND CORPORATE LIABILITY INSURANCE POLICY
D&O GOLD(sm)
NOTICE: THIS IS A CLAIMS MADE POLICY. EXCEPT TO SUCH EXTENT AS MAY OTHERWISE BE
PROVIDED HEREIN, THE COVERAGE OF THIS POLICY IS GENERALLY LIMITED TO LIABILITY
FOR ONLY THOSE CLAIMS THAT ARE FIRST MADE AGAINST THE INSUREDS DURING THE POLICY
PERIOD AND REPORTED IN WRITING TO THE INSURER PURSUANT TO THE TERMS HEREIN.
PLEASE READ THE POLICY CAREFULLY AND DISCUSS THE COVERAGE THEREUNDER WITH YOUR
INSURANCE AGENT OR BROKER.
NOTICE: THE LIMIT OF LIABILITY AVAILABLE TO PAY JUDGMENTS OR SETTLEMENTS SHALL
BE REDUCED BY AMOUNTS INCURRED FOR LEGAL DEFENSE. AMOUNTS INCURRED FOR LEGAL
DEFENSE SHALL BE APPLIED AGAINST THE RETENTION AMOUNT.
NOTICE: THE INSURER DOES NOT ASSUME ANY DUTY TO DEFEND; HOWEVER, THE INSURER
MUST ADVANCE DEFENSE COSTS PAYMENTS PURSUANT TO THE TERMS HEREIN PRIOR TO THE
FINAL DISPOSITION OF A CLAIM.
DECLARATIONS
ITEM 1. NAMED CORPORATION: STV GROUP, INCORPORATED
MAILING ADDRESS: 205 WEST WELSH DRIVE
DOUGLASSVILLE, PA 19518
STATE OF INCORPORATION OF THE NAMED CORPORATION:
Pennsylvania
ITEM 2. SUBSIDIARY COVERAGE: any past, present or future Subsidiary of the
Named Corporation
ITEM 3. POLICY PERIOD: From: May 5, 1999 To: May 5, 2000
(12:01 A.M. at the address stated in Item 1.)
ITEM 4. LIMIT OF LIABILITY: $6,000,000 aggregate for Coverages A,
B and C combined (including
Defense Costs)
ITEM 5. RETENTION:
SECURITIES CLAIMS (INCLUDING YEAR 2000 SECURITIES CLAIMS):
Judgments & Settlements (all coverages) None
Defense Costs (non-Indemnifiable Loss) None
Defense Costs (Coverage B(i) and Indemnifiable Loss) $ 125,000
for Loss arising from Claims
alleging the same Wrongful Act
or related Wrongful Acts
(waivable under Clause 6 in
certain circumstances)
Year 2000 CLAIMS (OTHER THAN YEAR 2000 SECURITIES CLAIMS):
Judgments, Settlements and Defense
Costs (non-Indemnifiable Loss) None
Judgments, Settlements and Defense
Costs (Coverage B (ii) and Indemnifiable Loss) $ 125,000
for Loss arising from Claims
alleging the same Wrongful Act
or related Wrongful Acts
(waivable under Clause 6 in
certain circumstances)
OTHER CLAIMS:
Judgments, Settlements and Defense
Costs (non-Indemnifiable Loss) None
Judgments, Settlements and Defense
Costs (Indemnifiable Loss) $ 125,000
for Loss arising from Claims
alleging the same Wrongful Act
or related Wrongful Acts
ITEM 6. YEAR 2000 THIRD PARTY CLAIMS ALLOCATION
Judgments, Settlements and Defense
Costs (non-Indemnifiable Loss) 100%
Coverage B(ii) and Indemnifiable Loss:
DEFENSE COSTS
(A) Pre-trial: 25 %
(B) Trial and appeal 100%
SETTLEMENTS AND JUDGMENTS
(C) Joint Settlements and Judgments (except in (D) below) 10 %
(D) Joint Judgments (Company insolvency) 100%
ITEM 7. CONTINUITY DATES:
A. All Coverages (other than Outside Entity Coverage) October 26, 1983
B. Outside Entity Coverage (Per Outside Entity)
See Endorsement #2
ITEM 8. PREMIUM: $66,475
ITEM 9. NAME AND ADDRESS OF INSURER ("Insurer):
(This policy is issued only by the insurance company indicated below.)
National Union Fire Insurance Company of Pittsburgh, Pa.
175 Water Street
New York, NY 10038
IN WITNESS WHEREOF, the Insurer has caused this policy to be signed on the
Declarations Page by its President, a Secretary and a duly authorized
representative of the Insurer.
/s/ Elizabeth M. Tuck /s/ John P. Cavoores
- --------------------- --------------------
SECRETARY PRESIDENT
/s/ Ty Sagalow
-------------------------
AUTHORIZED REPRESENTATIVE
_____________________ ________________
COUNTERSIGNATURE DATE COUNTERSIGNED AT
ROEHRS & COMPANY INC
PO BOX 100
EXTON, PA 19341
American International Companies
DIRECTORS, OFFICERS AND CORPORATE LIABILITY INSURANCE POLICY
D&O GOLD(sm)
In consideration of the payment of the premium, and in reliance upon the
statements made to the Insurer by application forming a part hereof and its
attachments and the material incorporated therein, the insurance company
designated in Item 9 of the Declarations, herein called the "Insurer", agrees as
follows:
1. INSURING AGREEMENTS
COVERAGE A: NATURAL PERSON INSUREDS INSURANCE
This policy shall pay the Loss of each and every Natural Person Insured(s)
arising from a Claim (including a Securities Claim and a Year 2000 Claim)
first made against the Natural Person Insured(s) during the Policy Period
or the Discovery Period (if applicable) and reported to the Insurer
pursuant to the terms of this policy for any actual or alleged Wrongful Act
in their respective capacities as Natural Person Insured(s), except when
and to the extent that the Company has indemnified the Natural Person
Insureds. The Insurer shall, in accordance with and subject to Clause 8,
advance Defense Costs of such Claim prior to its final disposition.
COVERAGE B: CORPORATE LIABILITY INSURANCE
This policy shall pay the Loss of the Company arising from a:
(i) Securities Claim (including a Year 2000 Securities Claim) first made
against the Company, or
(ii) Year 2000 Third Party Claim first made against the Company, or
(iii) Claim (including a Securities Claim or Year 2000 Claim) first made
against the Natural Person Insured(s),
during the Policy Period or the Discovery Period (if applicable) and
reported to the Insurer pursuant to the terms of this policy for any actual
or alleged Wrongful Act, but, in the case of (ii) above, only during the
time that the Claim was also made against a Directors or Officers, and, in
the case of (iii) above, only to the extent that the Company has
indemnified the Natural Person Insureds for such Loss pursuant to law,
common or statutory, or contract, or the Charter or By-laws of the Company
duly effective under such law which determines and defines such rights of
indemnity. The Insurer shall, in accordance with and subject to Clause 8,
advance Defense Costs of such Claim prior to its final disposition.
COVERAGE C: YEAR 2000 CRISISFUND(sm) INSURANCE
This policy shall pay the Year 2000 Crisis Loss of the Company arising from
a Year 2000 Crisis first occurring during the Policy Period and reported to
the Insurer pursuant to Clause 7(a) of this policy up to the amount of the
Year 2000 Crisisfund(sm). Clause 4, Exclusions, shall not be applicable to
Year 2000 Crisis Loss. There shall be no Retention amount applicable to
Year 2000 Crisis Loss, and the Insurer shall pay such Loss from first
dollar subject to the other terms and conditions of this policy. Clause 8
of this policy shall have no applicability to any Year 2000 Crisis.
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2. DEFINITIONS
(a) "Claim" means:
(1) a written demand for monetary or non-monetary relief;
(2) a civil, criminal, or administrative, regulatory or arbitration
proceeding for monetary or non-monetary relief which is commenced
by:
(i) service of a complaint or similar pleading; or
(ii) return of an indictment, information or similar document (in
the case of a criminal proceeding); or
(iii) receipt or filing of a notice of charges; or
(3) a civil, criminal, or administrative, regulatory investigation
(including a Securities and Exchange Commission, Equal Employment
Opportunity Commission or grand jury investigation) of a Natural
Person Insured but only after such Natural Person Insured is
identified in writing by the investigating authority as a person
against whom a proceeding described in clause (2) above may be
commenced, or in the case of a securities investigation, after
the service of a subpoena on such Natural Person Insured.
The term "Claim" shall include a Securities Claim and Year 2000 Claim;
provided, however, that with respect to Coverage B(i) only, Claim or
Securities Claim shall not mean an administrative or regulatory
proceeding against the Company.
(b) "Company" means the entity designated in Item 1 of the Declarations
and any Subsidiary thereof and any limited liability company
specifically listed in an endorsement to this policy ("LLC"); and, in
the event any bankruptcy proceeding shall be instituted by or against
the Named Corporation or any Subsidiary thereof or any LLC, the Debtor
in Possession (or equivalent status outside the United States), if
any.
(c) "Continuity Date" means the date set forth in:
(1) Item 7A of the Declarations with respect to all coverages (other
than Outside Entity Coverage); or
(2) Item 7B of the Declarations with respect to a Claim against a
Director or Officer arising out of such Director or Officer
serving as a director, officer, trustee or governor of an Outside
Entity.
(d) "Defense Costs" means reasonable and necessary fees, costs and
expenses consented to by the insurer (including premiums for any
appeal bond, attachment bond or similar bond arising out of a covered
judgment, but without any obligation to apply for or furnish any such
bond) resulting solely from the investigation, adjustment, defense and
appeal of a Claim against the Insureds, but excluding salaries of
Officers or Employees of the Company.
Further, with respect to the limit of liability set forth in Clause
5(c)(1), Defense Costs shall also include the reasonable and necessary
fees, costs and expenses consented to by the Insurer resulting solely
from the prosecution or appeal of a Year 2000 Claim brought by the
Insured, in the same proceeding, as a counterclaim, cross-claim or
third-party claim which results directly from a Year 2000 Claim
brought against such Insured ("Prosecution Costs").
(e) "Director(s) or Officer(s)" means any past, present or future duly
elected or appointed directors or officers of the Company or any past,
present or future duly elected, appointed or designated member of the
Board of Managers or officers of an LLC. In
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the event the Named Corporation, a Subsidiary or a LLC thereof
operates outside the United States, then the term "Director(s) or
Officer(s)" shall also mean those titles, positions or capacities in
such foreign Named Corporation, Subsidiary or LLC which is equivalent
to the position of Director of Officer in a corporation incorporated
or LLC formed within the United States. Coverage will automatically
apply to all new Directors and Officers after the inception date of
this policy.
(f) "Employment Practices Violation(s)" means any actual or alleged:
(1) wrongful dismissal, discharge or termination (either actual or
constructive) of employment, including breach of an implied
contract;
(2) harassment (including sexual harassment whether "quid pro quo",
hostile work environment or otherwise);
(3) discrimination, (including but not limited to discrimination
based upon age, gender, race, color, national origin, religion,
sexual orientation or preference, pregnancy, or disability);
(4) retaliation (including lockouts);
(5) employment-related misrepresentation(s) to an Employee or
applicant for employment with the Company or an Outside Entity;
(6) employment-related libel, slander, humiliation, defamation or
invasion of privacy;
(7) wrongful failure to employ or promote;
(8) wrongful deprivation of career opportunity, wrongful demotion or
negligent employee evaluation, including the giving of negative
or defamatory statements in connection with an employee
reference;
(9) wrongful discipline;
(10) failure to grant tenure;
(11) failure to provide or enforce adequate or consistent corporate
policies and procedures relating to any other Employment
Practices Violation;
(12) violation of any natural person's civil rights relating to any of
the above.
but only if the Employment Practices Violation relates to an
Employee(s), Officer or applicant(s) for employment, with the Company
or an Outside Entity, whether direct, indirect, intentional or
unintentional.
With respect to any customer(s), client(s) or other natural person(s),
other than an Employee, Officer or applicant for employment with the
Company or an Outside Entity, Employment Practices Violation shall
mean only any actual or alleged discrimination, sexual harassment or
violation of any natural person's civil rights relating to such
discrimination or sexual harassment, whether direct, indirect,
intentional or unintentional.
(g) "Employee" means any past, present or future employee of the Company
(other than an employee who is a Director or Officer) whether such
employee is full-time, part-time, seasonal, permanent or temporary and
shall include employees in a supervisory, managerial, co-worker or
subordinate position or otherwise.
(h) "Indemnifiable Loss" means Loss for which the Company has indemnified
or is permitted or required to indemnify a Natural Person Insured.
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(i) "Insured(s)" means:
(1) with respect to Coverages A and B(iii), any Natural Person
Insured:
(2) with respect to Coverage B(i) only, the Company; and
(3) with respect to Coverage B(ii) only, the Company, but only during
the time that the Claim was also made against a Director or
Officer.
(j) "Loss" means damages, judgments (including any award of pre-judgment
and postjudgment interest), settlements, Defense Costs and Year 2000
Crisis Loss; however, Loss shall not include civil or criminal fines
or penalties imposed by law, punitive or exemplary damages, the
multiplied portion of multiplied damages, taxes, any amount for which
the Insureds are not financially liable or which are without legal
recourse to the Insureds, any judgment solely against, or settlement
solely by, the Company and/or any Employee in a Year 2000 Third Party
Claim, any cost or expense incurred by the Company in connection with
the assessing, auditing, testing, correcting, converting, renovating,
rewriting, designing, evaluating, inspecting, installing, maintaining,
repairing or replacing any Computer System of the Company with respect
to a potential Year 2000 Problem (as such terms are defined below in
definition (r)).
In the event of a Claim alleging that the price or consideration paid
or proposed to be paid for the acquisition or completion of the
acquisition of all or substantially all of the stock issued by or
assets owned by any entity is inadequate or excessive, Loss with
respect to such Claim shall not include any amount of any judgment or
settlement by which such price or consideration is increased or
decreased, directly or indirectly; provided, however, that the
foregoing shall not apply to any non-Indemnifiable Loss resulting from
any judgment (other than a stipulated judgement) against a Natural
Person Insured.
Notwithstanding the foregoing, with respect to Securities Claims only
and subject to the other terms, conditions and exclusions of the
policy, Loss shall include punitive or exemplary damages imposed upon
any Insured. It is further understood and agreed that the
enforceability of the foregoing coverage shall be governed by such
applicable law which most favors coverage for punitive or exemplary
damages.
(k) "Natural Person Insured(s)" means:
(1) with respect to all Claims, any Director or Officer;
(2) with respect to Securities Claims, any Employee; and
(3) with respect to Year 2000 Third Party Claims, any Employee, but
only during the time that the Claim was also made against a
Director or Officer.
(l) "No Liability" means with respect to a Securities Claim or a Year 2000
Third Party Claim made against the Insured(s): (1) a final judgment of
no liability obtained prior to trial, in favor of all Insureds, or
with respect to a Year 2000 Third Party Claim, in favor of all
Directors and Officers, by reason of a motion to dismiss or a motion
for summary judgment, after the exhaustion of all appeals; or (2) a
final judgment of no liability obtained after trial, in favor of all
Insureds, or with respect to a Year 2000 Third Party Claim, in favor
of all Directors and Officers, after the exhaustion of all appeals. In
no event shall the term "No Liability" apply to a Claim made against
an Insured for which a settlement has occurred.
(m) "Outside Entity" means:
(1) any not-for-profit organization; or
(2) any other corporation, partnership, joint venture or other
organization listed by endorsement to this policy.
4
(n) "Policy Period" means the period of time from the inception date shown
in Item 3 of the Declarations to the earlier of the expiration date
shown in Item 3 of the Declarations or the effective date of
cancellation of this policy.
(o) "Securities Claim" means a Claim (including a civil lawsuit or
criminal proceeding brought by any governmental body) made against an
Insured and brought anywhere in the world alleging a violation of any
law, regulation or rule, whether statutory or common law, which is:
(1) brought by any person or entity alleging, arising out of, based
upon or attributable to, in part or in whole, the purchase or
sale or offer or solicitation of an offer to purchase or sell,
any securities of the Company, or
(2) in the form of a securities holder derivative claim brought on
the behalf of the Company, or
(3) brought by a securities holder of the Company, with respect to
such securities holder's interest in such securities of the
Company, whether directly or by class action.
(p) "Subsidiary" means:
(1) (A) a corporation of which the Named Corporation owns on or
before the inception of the Policy Period more than 50% of the
issued and outstanding voting stock either directly, or
indirectly through one or more of its Subsidiaries or (B) a
corporation of which the Named Corporation owns on or before the
inception of the Policy Period exactly 50% of the issued and
outstanding voting stock and which, pursuant to or in connection
with a written agreement with the owner(s) of the remaining 50%
of the issued and outstanding voting stock of such corporation,
solely controls such corporation (a "Controlled Joint Venture"),
in each case either directly, or indirectly through one or more
of its Subsidiaries;
(2) automatically a corporation whose assets total less than 15% of
the total consolidated assets of the Company as of the inception
date of this policy, which corporation becomes a Subsidiary
during the Policy Period. The Named Corporation shall provide the
Insurer with full particulars of the new Subsidiary before the
end of the Policy Period;
(3) a corporation which becomes a Subsidiary during the Policy Period
(other than a corporation described in paragraph (2) above) but
only upon the condition that within 90 days of its becoming a
Subsidiary, the Named Corporation shall have provided the Insurer
with full particulars of the new Subsidiary and agreed to any
additional premium and/or amendment of the provisions of this
policy required by the Insurer relating to such new Subsidiary.
Further, coverage as shall be afforded to the now Subsidiary is
conditioned upon the Named Corporation paying when due any
additional premium required by the Insurer relating to such new
Subsidiary;
(4) a not-for-profit organization under section 501(c)(3) of the
Internal Revenue Code of 1986 (as amended) sponsored exclusively
by the Company.
A corporation becomes a Subsidiary when the Named Corporation (1) owns
more than 50% of the issued and outstanding voting stock or (2) in the
case of a Controlled Joint Venture, owns exactly 50% of the issued and
outstanding voting stock and, pursuant to or in connection with a
written agreement with the owner(s) of the remaining 50% of the issued
and outstanding voting stock of such corporation, solely controls such
corporation, in each case either directly, or indirectly through one
or more of its Subsidiaries. A corporation ceases to be a Subsidiary
when the Named Corporation (1)
5
ceases to own more than 50% of the issued and outstanding voting
stock, either directly, or indirectly through one or more of its
Subsidiaries or (2) in the case of a Controlled Joint Venture, ceases
to own exactly 50% of the issued and outstanding voting stock or
solely to control, pursuant to or in connection with a written
agreement with the owner(s) of the remaining 50% of the issued and
outstanding voting stock of such corporation, such corporation, in
each case either directly, or indirectly through one or more of its
Subsidiaries.
In all events, coverage as is afforded with respect to a Claim made
against a Subsidiary or any Natural Person Insured thereof shall only
apply for Wrongful Acts committed or allegedly committed after the
effective time that such Subsidiary became a Subsidiary and prior to
the time that such Subsidiary ceased to be a Subsidiary.
(q) "Wrongful Act" means:
(1) with respect to a Director or Officer, any actual or alleged
Employment Practice Violation or other actual or alleged breach
of duty, neglect, error, misstatement, misleading statement,
omission or act by the Directors or Officers in their respective
capacities as such, or any matter claimed against them solely by
reason of their status as Directors or Officers of the Company,
or any matter claimed against a Director or Officer arising out
of their serving as a director, officer, trustee or governor of
an Outside Entity in such capacities, but only if such service is
at the specific written request or direction of the Company, and
(2) with respect to an Employee, any actual or alleged breach of
duty, neglect, error, misstatement, misleading statement,
omission or act by the Employees in their respective capacities
as such or any matter claimed against them solely by reason of
their status as Employees of the Company but solely as respects a
Securities Claim or a Year 2000 Claim, and
(3) with respect to the Company, any actual or alleged breach of
duty, neglect, error, misstatement, misleading statement,
omission or act by the Company, but solely as respects a
Securities Claim or Year 2000 Claim.
(r) "Year 2000 Claim" means (1) any Claim (including a Securities Claim)
against a Director(s) or Officer(s), or (ii) any Year 2000 Securities
Claim against the Company and/or any Employee, or (iii) any Year 2000
Third Party Claim against the Company and/or any Employee (but only
during the time the Claim is also made against a Director of Officer)
alleging, arising out of, based upon, attributable to or involving,
directly or indirectly, in whole or in part:
(1) any computer, computer system or code (including but not limited
to firmware, hardware, microprocessors, software, operating
systems, networks, peripherals attached to or used in conjunction
with any of the foregoing, or any other computerized or
electronic equipment or components) ("Computer System"), of any
organization (whether or not an Insured):
(A) failing to accurately and properly read, process, perform
mathematical calculations, store, sort, distinguish,
recognize, accept or interpret prior to, during or after,
the year 2000 any data containing date information;
(B) failing to accurately and properly read and process the fact
that the year 2000 is a leap year;
(C) reading and processing so-called "magic dates" such as the
date "9/9/99" or any other date field data used by an
organization to signify information other than the date;
6
(D) failing to be compatible with any other organization's
Computer System with respect to (A), (B) and (C) above.
(the foregoing individually or collectively being sometimes
referred to as the "Year 2000 Problem");
(2) any assessing, auditing, correcting, converting, renovating,
rewriting, designing, evaluating, inspecting, installing,
maintaining, repairing or replacing any Computer System with
respect to a potential or actual Year 2000 Problem, or any
failure to do any of the foregoing activities, or any disclosure,
advice, consolation or supervision of any of the foregoing
activities or any failure relating thereto.
(s) "Year 2000 Crisis" means a Negative Earnings or Sales Announcement
resulting from a Year 2000 Problem which, in the good faith opinion of
the chief financial officer of the Named Corporation reported in
writing to the Insurer pursuant to Clause 7(a) of the policy,
reasonably may have been associated with, or reasonably has the
potential to be associated with, a Material Effect on the Company's
Common Stock Price within a period of 48 hours after the time of the
public announcement.
"Negative Earnings or Sales Announcement" means a public announcement
of the Company's past or future earnings or sales which is
substantially below: (1) the Company's last prior public statement or
projection of earnings or sales for such period, (2) the last
consensus outside securities analysts' estimate as published by First
Call (or if First Call does not publish financial estimates regarding
the Company then any other similar consensus outside analysis
estimate), or (3) the Company's prior year's earnings or sales for the
same period.
"Material Effect on the Company's Common Stock Price" means that the
price per share of the Company's common stock shall experience a
decrease net of the change in the Standard & Poor's Composite Stock
Index of the greater of: $5 per share ($2.50 per share if the Company
is solely traded on The Nasdaq Stock Market) or 10%.
(t) "Year 2000 Claim Fund" means Ten Thousand Dollars ($10,000).
(u) "Year 2000 Crisis Loss" means the following amounts incurred during
the Pendency of a Year 2000 Crisis, regardless of whether a Claim is
ever made against an Insured arising from the Year 2000 Crisis and, in
the case where a Claim is made, regardless of whether the amount is
incurred prior to or subsequent to the making of the Claim:
(1) amounts for which the Company is legally liable for the
reasonable and necessary fees and expenses incurred by a Year
2000 Crisis Management Firm in the performance of Year 2000
Crisis Management Services for the Company arising from a Year
2000 Crisis; and
(2) amounts for which the Company is legally liable for the
reasonable and necessary printing, mailing of materials, or
travel by Directors, Officers, Employees or agents of the Company
or the Year 2000 Crisis Management Firm in connection with the
Year 2000 Crisis.
The "Pendency of a Year 2000 Crisis" means the period of time
beginning when the Year 2000 Crisis or anticipated Year 2000 Crisis is
first reported to the Insurer or the Year 2000 Crisis Management Firm
and ending with the earliest of the following events: (A) the Year
2000 Crisis Management Firm advises the Company that the Year 2000
Crisis no longer exists or (B) the Year 2000 CrisisFund has been
exhausted.
(v) "Year 2000 Crisis Management Firm" means any public relations firm,
crisis management firm or law firm hired by the Company with the
Insurer's consent (which consent shall not be unreasonably withheld)
to perform Year 2000 Crisis Management
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Services. Attached to this policy is a list of firms which have been
pre-approved by the Insurer and may be hired by the Company without
further approval by the Insurer.
(w) "Year 2000 Crisis Management Services" means those services performed
by a Year 2000 Crisis Management Firm in advising the Company or any
of its Directors, Officers or Employees on minimizing potential harm
to the Company arising from the Year 2000 Crisis, including but not
limited to maintaining and restoring investor confidence in the
Company.
(x) "Year 2000 Securities Claim" means any Year 2000 Claim in the form of
a Securities Claim.
(y) "Year 2000 Third Party Claim" means any Year 2000 Claim other than a
Year 2000 Securities Claim.
3. EXTENSIONS
Subject otherwise to the terms hereof, this policy shall cover Loss arising
from a Claim made against the estates, heirs, or legal representatives of
deceased Natural Person Insureds, and the legal representatives of Natural
Person Insureds in the event of incompetency, insolvency or bankruptcy, who
were Natural Person Insureds at the time the Wrongful Acts upon which such
Claims are based were committed.
Subject otherwise to the terms hereof, this policy shall cover Loss arising
from a Claim made against the lawful spouse (whether such status is derived
by reason of statutory law, common law or otherwise of any applicable
jurisdiction in the world) of a Natural Person Insured for a Claim arising
solely out of his or her status as the spouse of a Natural Person Insured,
including a Claim that seeks damages recoverable from marital community
property, property jointly held by the Natural Person Insured and the
spouse, or property transferred from the Natural Person Insured to the
spouse; provided, however, that this extension shall not afford coverage
for any Claim for any actual or alleged Wrongful Act of the spouse, but
shall apply only to Claims arising out of any actual or alleged Wrongful
Acts of a Natural Person Insured, subject to the policy's terms, conditions
and exclusions.
4. EXCLUSIONS
The Insurer shall not be liable to make any payment for Loss in connection
with a Claim made against an Insured:
(a) arising out of, based upon or attributable to the gaining in fact of
any profit or advantage to which the Insured was not legally entitled;
(b) arising out of, based upon or attributable to payments to an Insured
of any remuneration without the previous approval of the stockholders
or members of the Company, which payment without such previous
approval shall be held to have been illegal;
(c) arising out of, based upon or attributable to the committing in fact
of any deliberate criminal or deliberate fraudulent act by the
Insured;
For the purpose of determining the applicability of the foregoing
exclusions 4(a) through 4(c), the facts pertaining to and knowledge
possessed by any Insured shall not be imputed to any Natural Person
Insured; only facts pertaining to and knowledge possessed by any past,
present or future chairman of the board, president, chief executive
officer, chief operating officer or chief financial officer of the
Company shall be imputed to the Company.
8
(d) alleging, arising out of, based upon or attributable to the facts
alleged, or to the same or related Wrongful Acts alleged or contained,
in any Claim which has been reported, or in any circumstances of which
notice has been given, under any policy of which this policy is a
renewal or replacement or which it may succeed in time;
(e) alleging, arising out of, based upon or attributable to any pending or
prior litigation as of the Continuity Date, or alleging or derived
from the same or essentially the same facts as alleged in such pending
or prior litigation;
(f) for emotional distress or for injury from libel, slander, defamation,
disparagement, or a violation of a person's right of privacy;
provided, however, this exclusion shall not apply to any Claim
alleging an Employment Practices Violation;
(g) with respect to serving as a director, officer, trustee or governor of
an Outside Entity, for any Wrongful Act occurring prior to the
Continuity Date if the Insured knew or could have reasonably foreseen
that such Wrongful Act could lead to a Claim under this policy;
(h) alleging, arising out of, based upon or attributable to any actual or
alleged act or omission of the Natural Person Insureds serving in
their capacities as directors, officers, trustees or governors of any
other entity other than the Company or an Outside Entity, or by reason
of their status as directors, officers, trustees, employees or
governors of such other entity;
(i) which is brought by or on behalf of any Insured or the Company; or
which is brought by any security holder or member of the Company,
whether directly or derivatively, unless such security holder's or
member's Claim is instigated and continued totally independent of, and
totally without the solicitation of, or assistance of, or active
participation of, or intervention of, any Director or Officer or the
Company; provided, however, this exclusion shall not apply to:
(1) any Claim brought by a Natural Person Insured in the form of a
cross-claim or third-party claim for contribution or indemnity
which is part of and results directly from a Claim which is not
otherwise excluded by the terms of this policy; or
(2) any Claim alleging an Employment Practices Violation brought by
any past or present Natural Person Insured other than a past or
present Natural Person Insured who is or was a member of the
Company's Board of Directors or, in the case of an LLC, the Board
of Managers; or
(3) any Claim brought by or against an Employee; or
(4) in any bankruptcy proceeding by or against the Named Corporation
or any Subsidiary thereof, any Claim brought by the Examiner or
Trustee of the Company, if any, or any assignee of such Examiner
or Trustee;
(j) for any Wrongful Act arising out of the Insured serving as a director,
officer, trustee or governor of an Outside Entity if such Claim is
brought by the Outside Entity or by any director or officer thereof;
or which is brought by any security holder of the Outside Entity,
whether directly or derivatively, unless such security holder's Claim
is instigated and continued totally independent of, and totally
without the solicitation of, or assistance of, or active participation
of, or intervention of, the Outside Entity, any director or officer
thereof, the Company a Director or Officer;
(k) for bodily injury, sickness, disease, death of any person, or damage
to or destruction of any tangible property, including the loss of use
thereof;
9
(l) alleging, arising out of, based upon, attributable to, or in any way
involving, directly or indirectly:
(1) the actual, alleged or threatened discharge, dispersal, release
or escape of pollutants; or
(2) any direction or request to test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize pollutants,
including but not limited to a Claim alleging damage to the Company or
its securities holders; provided, however, that this exclusion shall
not apply to non-Indemnifiable Loss arising from a Claim alleging
damage to the Company or its securities holders.
Pollutants include (but are not limited to) any solid, liquid, gaseous
or thermal irritant or contaminant, including smoke, vapor, soot,
fumes, acids, alkalis, chemicals and waste. Waste includes (but is not
limited to) materials to be recycled, reconditioned or reclaimed;
(m) for violation(s) of any of the responsibilities, obligations or duties
imposed upon fiduciaries by the Employee Retirement Income Security
Act of 1974, or amendments thereto or any similar provisions of state
statutory law or common law.
EXCLUSIONS NOT APPLICABLE TO YEAR 2000 CLAIMS
Notwithstanding the foregoing, with respect to Year 2000 Claims:
(1) exclusion 4(b) shall not apply;
(2) exclusion 4(c) shall not apply to any Year 2000 Securities Claim which
arises out of, is based upon or is attributable to any statement or
other disclosure (including any statement filed with the Securities
and Exchange Commission) if all such statements and other disclosure
had been written or approved by a Panel Counsel Firm (as defined in
Clause 9);
(3) exclusion 4(e) shall not apply.
5. LIMIT OF LIABILITY (FOR ALL LOSS - INCLUDING DEFENSE COSTS)
The Limit of Liability stated in Item 4 of the Declarations is the limit of
the Insurer's liability for all Loss, under Coverage A, B and C combined,
arising out of all Claims first made against the Insureds, or all Year 2000
Crises occurring, during the Policy Period and the Discovery Period (if
applicable); however, the Limit of Liability for the Discovery Period shall
be part of, and not in addition to, the Limit of Liability for the Policy
Period. Further, a Claim which is made subsequent to the Policy Period or
Discovery Period (if applicable) which pursuant to Clause 7(b) or 7(c) is
considered made during the Policy Period or Discovery Period shall also be
subject to the one aggregate Limit of Liability stated in Item 4 of the
Declarations.
In the event of a Year 2000 Securities Claim, this policy shall provide
coverage for 100% of Loss incurred by the Directors, Officers, Employees,
the Company, individually or collectively, up to the Limit of Liability of
the policy, subject to the policy's terms, conditions and exclusions.
In the event of a Year 2000 Third Party Claim, the following provisions
shall apply:
(a) During the time in which the Claim is solely made against a Director
or Officer, this policy shall provide coverage for 100% of Loss
incurred by the Insureds up to the Limit of Liability of the policy,
subject to the policy's terms, conditions and exclusions;
(b) During the time in which the Claim is solely made against the Company
and/or any Employee(s), this policy shall not provide any coverage for
Loss incurred by the Company and/or any Employee(s);
10
(c) Except as provided in (d) below, during the time in which the Claim is
jointly made against both the Company and/or any Employee(s) on the
one hand, and one or more Directors and Officers on the other hand,
this policy shall pay Loss as follows (subject to the policy's other
terms, conditions and exclusions):
(1) the total combined amount of Defense Costs (including Prosecution
Costs) incurred by the Directors and Officers, the Company and/or
any Employee(s), prior to the commencement of trial multiplied by
the percent set forth in Item 6A of the Declarations;
(2) the total combined amount of Defense Costs incurred by the
Directors and Officers, the Company and/or any Employee(s), after
the commencement of trial (including appeal) multiplied by the
percent set forth in Item 6B of the Declarations;
(3) the total combined net monetary amount of any: (1) joint judgment
(other than one described in (4) below) against, or (2) joint
settlement (including any stipulated judgment) entered into by,
the Directors or Officers, the Company and/or any Employee(s)
multiplied by the percent set forth in Item 6C of the
Declarations;
(4) the total combined net monetary amount of any joint judgment
(other than a stipulated judgment) against the Directors or
Officers, the Company and/or any Employee(s) multiplied by the
percent set forth in Item 6D of the Declarations, but only to the
extent the Company has insufficient assets to pay the judgment.
(d) Notwithstanding (c) above, in the event of a Year 2000 Third Party
Claim jointly made against both the Company and/or any Employee on the
one hand, and one or more Directors and Officers on the other hand,
for which non-Indemnifiable Loss is incurred by the Directors and
Officers, this policy shall provide coverage for 100% of such
non-Indemnifiable Loss and shall pay, in addition, the combined
Indemnifiable Loss and Coverage B(ii) Loss for the Claim multiplied by
the applicable percent set forth in (c) above, subject to the other
terms, conditions and exclusions of the policy.
The limit of the Insurer's liability for Year 2000 Crisis Loss arising from
all Year 2000 Crises occurring during the Policy Period, in the aggregate,
shall be the amount set forth as the Year 2000 Crisis Fund. This limit
shall be the maximum liability of the Insurer under this policy regardless
of the number of Year 2000 Crises occurring during the Policy Period.
The amounts referred to in all of the foregoing shall be part of and not in
addition to the Limit of Liability stated in Item 4 of the Declarations and
shall in no way be construed to increase such limit.
Defense Costs are not payable by the Insurer in addition to the Limit of
Liability. Defense Costs are part of Loss and as such are subject to the
Limit of Liability for Loss.
6. RETENTION CLAUSE
The Insurer shall only be liable for the amount of Loss arising from a
Claim which is in excess of the applicable Retention amount stated in Item
5 of the Declarations, such Retention amount to be borne by the Company
and/or the Insureds and shall remain uninsured, with regard to: (i) all
Indemnifiable Loss; and (ii) Loss under Coverage B(i) and B (ii). A single
Retention amount shall apply to Loss arising from all Claims alleging the
same Wrongful Act or related Wrongful Acts.
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Notwithstanding the foregoing, solely with respect to a Securities Claim,
the Retention shall only apply to Defense Costs. Further, solely with
respect to a Securities Claim or a Year 2000 Claim, no Retention shall
apply to Loss arising from such Claims and the Insurer shall reimburse
Defense Costs otherwise covered hereunder and paid by the Insured, in the
event of:
(1) a determination of No Liability of all Insureds in a Securities Claim;
or
(2) a determination of No Liability of all Directors and Officers in a
Year 2000 Third Party Claim; or
(3) a dismissal or a stipulation to dismiss all Insureds in a Securities
Claim without prejudice and without the payment of any consideration
by any Insured; or
(4) a dismissal or a stipulation to dismiss all Directors and Officers in
a Year 2000 Third Party Claim without prejudice and without the
payment of any consideration by any Insureds;
provided, however, that in the case of (3) and (4) above, such
reimbursement shall occur 90 days after the date of dismissal or
stipulation as long as such Claim is not brought (or any other Claim which
is subject to the same single retention by virtue of Clause 6 is not
brought) again within the time, and further subject to an undertaking by
the Company in a form acceptable to the Insurer that such reimbursement
shall be paid back by the Company to the Insurer in the event the Claim (or
any other Claim which is subject to the same single retention by virtue of
Clause 6) is brought after such 90-day period and before the expiration of
the statute of limitations for such Claim.
7. NOTICE/CLAIM REPORTING PROVISIONS
Notice hereunder shall be given in writing to the Insurer named in Item 9
of the Declarations at the address indicated in Item 9 of the Declarations.
If mailed, the date of mailing shall constitute the date that such notice
was given and proof of mailing shall be sufficient proof of notice.
(a) The Company or the Insureds shall, as a condition precedent to the
obligations of the Insurer under this policy, give written notice to
the Insurer of a Claim made against an Insured as soon as practicable
after the Named Corporation's risk manager or general counsel first
becomes aware of the Claim but in all events no later than either:
(1) anytime during the Policy Period or during the Discovery Period
(if applicable); or
(2) within 30 days after the end of the Policy Period or the
Discovery Period (if applicable), as long as such Claim is
reported no later than 30 days after the date such Claim was
first made against an Insured.
(b) If written notice of a Claim has been given to the Insurer pursuant to
Clause 7(a) above, then a Claim which is subsequently made against the
Insureds and reported to the Insurer alleging, arising out of, based
upon or attributable to the facts alleged in the Claim for which such
notice has been given, or alleging any Wrongful Act which is the same
as or related to any Wrongful Act alleged in the Claim of which such
notice has been given, shall be considered made at the time such
notice was given.
(c) If during the Policy Period or during the Discovery Period (if
applicable) the Company or the Insureds shall become aware of any
circumstances which may reasonably be expected to give rise to a Claim
being made against the Insureds and shall give written notice to the
Insurer of the circumstances and the reasons for anticipating such a
Claim, with full particulars as to dates, persons, and entities
involved, then a
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Claim which is subsequently made against the Insureds and reported to
the Insurer alleging, arising out of, based upon or attributable to
such circumstances or alleging any Wrongful Act which is the same as
or related to any Wrongful Act alleged or contained in such
circumstances, shall be considered made at the time such notice of
such circumstances was given.
8. DEFENSE COSTS, SETTLEMENTS, JUDGMENTS (INCLUDING THE ADVANCEMENT OF DEFENSE
COSTS)
Under both Coverage A and Coverage B of this policy, except as hereinafter
stated, the Insurer shall advance excess of the applicable retention
amount, at the written request of the Insured, covered Defense Costs every
ninety (90) days. Such advanced payments by the Insurer shall be repaid to
the Insurer by the Insureds or the Company, severally according to their
respective interests, in the event and to the extent that the Insureds or
the Company shall not be entitled under the terms and conditions of this
policy to payment of such Loss.
The Insurer does not, however, under this policy, assume any duty to
defend. The Insureds shall defend and contest any Claim made against them.
The Insureds shall not admit or assume any liability, enter into any
settlement agreement, stipulate to any judgment, or incur any Defense Costs
without the prior written consent of the Insurer. Only those settlements,
stipulated judgments and Defense Costs which have been consented to by the
Insurer shall be recoverable as Loss under the terms of this policy. The
Insurer's consent shall not be unreasonably withheld, provided that the
Insurer shall be entitled to effectively associate in the defense, the
prosecution and the negotiation of any settlement of any Claim that
involves or appears reasonably likely to involve the Insurer.
The Insurer shall have the right to effectively associate with the Company
and the Insureds in the defense and prosecution of any Claim that involves
or appears reasonably likely to involve the Insurer, including but not
limited to negotiating a settlement. The Company and the Insureds shall
give the Insurer full cooperation and such information as it may reasonably
require.
Notwithstanding any of the foregoing, if all Insured defendants are able to
dispose of all Claims which are subject to one retention amount for an
amount not exceeding such retention amount (inclusive of Defense Costs),
then the Insurer's consent shall not be required for such disposition.
The Company is not covered in any respect under Coverage A; the Company is
covered, subject to the policy's terms and conditions, only with respect to
its indemnification of its Natural Persons Insureds under Coverage B(iii)
as respects a Claim against such Natural Person Insureds, and subject to
the policy's terms and conditions, under Coverage B(i) for a Securities
Claim and B(ii) for a Year 2000 Third Party Claim made against the Company.
Accordingly, the Insurer has no obligation under this policy for Defense
Costs incurred by, judgments against or settlements by the Company arising
out of a Claim made against the Company other than a covered Securities
Claim or Year 2000 Claim, or any obligation to pay Loss arising out of any
legal liability that the Company has to the claimant except as respects a
covered Securities Claims or Year 2000 Third Party Claim against the
Company.
With respect to (1) Defense Costs jointly incurred by, (ii) any joint
settlement entered into by, and/or (iii) any judgment of joint and several
liability against the Company and any Natural Person Insured in connection
with any Claim other than a Securities Claim and a Year 2000 Claim (other
than Claims described in Clause 5(d)), the Company and the Natural Person
Insureds and the Insurer agree to use their best efforts to determine a
fair and proper allocation of the amounts as between the Company and the
Natural Person
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Insureds and the Insurer taking into account the relative legal and
financial exposures of and the relative benefits obtained by, the Natural
Person Insureds and the Company.
In the event that a determination as to the amount of Defense Costs to be
advanced under the policy cannot be agreed to, then the Insurer shall
advance such Defense Costs which the Insurer states to be fair and proper
until a different amount shall be agreed upon or determined pursuant to the
provisions of this policy and applicable law.
In the event of Loss arising from a Claim or Claims for which payment is
due under the provisions of this policy, then the Insurer shall:
(a) first, pay such non-Indemnifiable Loss for which coverage is provided
under Coverage A of this policy; and
(b) then, with respect to whatever remaining amount of the Limit of
Liability is available after payment of such non-Indemnifiable Loss,
at the written request of the chief executive officer of the Named
Corporation, either pay or withhold payment of such other Loss for
which coverage is provided under this policy.
In the event the Insurer withholds payment pursuant to subparagraph (b)
above, then the Insurer shall at such time and in such manner as shall be
set forth in written instructions of the chief executive officer of the
Named Corporation, remit such payment to the Company or directly to a
Natural Person Insured.
9. PRE-AUTHORIZED SECURITIES DEFENSE ATTORNEYS
Only with respect to a Securities Claim:
Affixed as Appendix A hereto and made a part of this policy is a list of
Panel Counsel law firms ("Panel Counsel Firms"). The list provides the
Insured a choice of law firms from which a selection of legal counsel shall
be made to conduct the defense of the Claim made against them.
The Insureds shall select a Panel Counsel Firm to defend the Claim made
against the Insureds in the jurisdiction in which the Claim is brought. In
the event the Claim is brought in a jurisdiction not included on the list,
the Insureds shall select a Panel Counsel Firm in the listed jurisdiction
which is the nearest geographical jurisdiction to either where the Claim is
brought or where the corporate headquarters of the Named Corporation is
located. In such instance the Insureds also may, with the express prior
written consent of the Insurer, which consent shall not be unreasonably
withheld, select a non-Panel Counsel Firm in the jurisdiction in which the
Claim is brought to function as "local counsel" on the Claim to assist the
Panel Counsel Firm which will function as "lead counsel" in conducting the
defense of the Securities Claim.
With the express prior written consent of the Insurer, an insured may
select a Panel Counsel Firm different from that selected by other Insured
defendants if such selection is required due to an actual conflict of
interest or is otherwise reasonably justifiable.
The list of Panel Counsel Firms may be amended from time to time by the
Insurer. However, no change shall be made to the specific list attached to
this policy during the Policy Period without the consent of the Named
Corporation. The Insurer may in its discretion add to the attached list of
Panel Counsel Firms for the purposes of defending the Claim made against
the Insured in any specified jurisdiction (including a jurisdiction not
originally included in the Panel Counsel list) a Panel Counsel Firm not
originally listed for such jurisdiction. The Insurer may in its discretion
waive, in part or in whole, the provisions of this clause as respects a
particular Claim.
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10. DISCOVERY CLAUSE
Except as indicated below, if the Insurer or the Named Corporation shall
cancel or refuse to renew this policy, the Named Corporation shall have the
right to a period of either one, two or three years following the effective
date of such cancellation or nonrenewal upon payment of the respective
"Additional Premium Amount" described below (herein referred to as the
"Discovery Period") in which to give to the Insurer written notice pursuant
to Clause 7(a) of Claims first made against the Insureds during said
Discovery Period or pursuant to Clause 7(c) of circumstances of which the
Company or the Insureds shall become aware during said Discovery Period, in
each case with respect to any Wrongful Act occurring prior to the end of
the Policy Period and otherwise covered by this policy.
The Additional Premium Amount for: (1) one year shall be 75% of the "full
annual premium"; (2) two years shall be 150% of the "full annual premium";
(3) three years shall be a reasonable premium amount to be mutually agreed
upon by the Insured and the Insurer. As used herein, "full annual premium"
means the premium level in effect immediately prior to the end of the
Policy Period. The rights contained in this paragraph shall terminate,
however, unless written notice of such election together with the
additional premium due is received by the Insurer within 60 days of the
effective date of cancellation or nonrenewal. The Additional Premium for
the Discovery Period shall be fully earned at the inception of the
Discovery Period. The Discovery Period is not cancelable. This clause and
the rights contained herein shall not apply to any cancellation resulting
from non-payment of premium.
Notwithstanding the first paragraph of Clause 5, if the Insurer or the
Named Corporation gives notice of its intention to cancel or non-renew this
policy, then the Named Corporation shall also have the right, within 60
days before the end of the Policy Period, to request an offer from the
Insurer of a Discovery Period (with respect to Wrongful Acts occurring
prior to the end of the Policy Period) for a period of one, two or three
years with an aggregate limit of liability applicable to Claims made
against the Insured during such Discovery Period which is in addition to,
and not part of, the applicable Limit of Liability set forth in Item 4 of
the Declarations. The Insurer shall quote such a Discovery Period pursuant
to such terms, conditions, exclusions and additional premium as it deems
appropriate in its sole and absolute discretion.
In the event of a Transaction, as defined in Clause 12, or the confirmation
of a Bankruptcy Plan of Reorganization of the Named Corporation, the Named
Corporation shall have the right, within 30 days before the end of the
Policy Period, to request an offer from the Insurer of a Discovery Period
(with respect to Wrongful Acts occurring prior to the effective time of the
Transaction or such confirmation) for a period of no less than three years
or for such longer or shorter period as the Named Corporation may request.
The Insurer shall offer such Discovery Period pursuant to such terms,
conditions and additional premium as the Insurer may reasonably decide. In
the event of a Transaction or such a confirmation, the right to a Discovery
Period shall not otherwise exist except as indicated in this paragraph.
The additional premium for the Discovery Period shall be fully earned at
the inception of the Discovery Period. The Discovery Period is not
cancelable. This clause and the rights contained herein shall not apply to
any cancellation resulting from non-payment of premium.
11. CANCELLATION CLAUSE
This policy may be canceled by the Named Corporation at any time only by
mailing written prior notice to the Insurer or by surrender of this policy
to the Insurer or its authorized agent. This policy may also be canceled by
or on behalf of the Insurer by delivering to the Named Corporation or by
mailing to the Named Corporation, by registered, certified, or other first
class mail, at the Named Corporation's address as shown in Item 1 of the
15
Declarations, written notice stating when, not less than 60 days thereafter
(15 days in the case of cancellation for non-payment of premium), the
cancellation shall be effective. The mailing of such notice as aforesaid
shall be sufficient proof of notice. The Policy Period terminates at the
date and hour specified in such notice, or at the date and time of
surrender.
If this policy shall be canceled by the Named Corporation, the Insurer
shall retain the customary short rate proportion of the premium herein.
If this policy shall be canceled by the Insurer, the Insurer shall retain
the pro rate proportion of the premium herein.
Payment or tender of any unearned premium by the Insurer shall not be a
condition precedent to the effectiveness of cancellation, but such payment
shall be made as soon as practicable.
If the period of limitation relating to the giving of notice as set forth
above is also set forth in any law controlling the construction thereof,
the period set forth above shall be deemed to be amended so as to be equal
to the minimum period of limitation set forth in the controlling law.
12. TERMINATION OF COVERAGE FOR WRONGFUL ACTS AFTER CERTAIN TRANSACTIONS
If during the Policy Period:
a. the Named Corporation shall consolidate with or merge into, or sell
all or substantially all of its assets to any other person or entity
or group of persons and/or entities acting in concert; or
b. any person or entity or group of persons and/or entities acting in
concert shall acquire an amount of the outstanding ownership interests
representing more than 50% of the voting or designation power for the
election of Directors of the Named Corporation, or acquires the voting
or designation rights of such an amount of such ownership interests;
(either of the above events herein referred to as the "Transaction")
then this policy shall continue in full force and effect as to Wrongful
Acts occurring prior to the effective time of the Transaction, but there
shall be no coverage afforded by any provision of this policy for any
actual or alleged Wrongful Act occurring after the effective time of the
Transaction. This policy may not be canceled after the effective time of
the transaction and the entire premium for this policy shall be deemed
earned as of such time. The Named Corporation shall also have the right to
an offer by the Insurer of a Discovery Period described in Clause 10 of the
policy.
The Named Corporation shall give the Insurer written notice of the
Transaction as soon as practicable, but not later than 30 days after the
effective date of the Transaction.
13. SUBROGATION
In the event of any payment under this policy, the Insurer shall be
subrogated to the extent of such payment to all the Company's and the
Insureds' rights of recovery thereof, and the Company and the Insureds
shall execute all papers required and shall do everything that may be
necessary to secure such rights including the execution of such documents
necessary to enable the Insurer effectively to bring suit in the name of
the Company and/or the Insureds. Any amounts recovered in connection with a
Year 2000 Claim by the Insured shall be applied first to reimburse the
Insurer for any Prosecution Costs paid by the Insurer in connection with
such Year 2000 Claim and then to reimburse the Insurer and the Insureds in
proportion to their respective payments of Loss. In no event, however,
shall the Insurer exercise its rights of subrogation against an Insured
under this policy unless such Insured has been convicted of a deliberate
criminal act, or
16
been determined to have in fact committed a deliberate fraudulent act, or
obtained any profit or advantage to which such Insured was not legally
entitled.
14. OTHER INSURANCE AND INDEMNIFICATION
Such insurance as is provided by this policy shall apply only as excess
over any other valid and collectible insurance.
In the event of a Claim against a Director or Officer arising out of his or
her serving as a director, officer, trustee or governor of an Outside
Entity, coverage as is afforded by this policy shall be specifically excess
of indemnification provided by such Outside Entity and any insurance
provided to such Outside Entity with respect to its directors, officers. In
the event of a Year 2000 Third Party Claim or Year 2000 Crisis, coverage as
is afforded by this policy shall be specifically excess of any other
insurance provided for such Claim or Crisis for any Insured. Further, in
the event such other Outside Entity insurance or Year 2000 Crisis insurance
is provided by the Insurer or any other member company of American
International Group, Inc. (AIG) (or would be provided but for the
application of the retention amount, exhaustion of the limit of liability
or failure to submit a notice of a Claim) then the maximum aggregate Limit
of Liability for all Losses combined covered by virtue of this policy as
respects any such Claim shall be reduced by the limit of liability (as set
forth on the Declarations Page) of the other AIG insurance provided to such
Outside Entity.
15. NOTICE AND AUTHORITY
It is agreed that the Named Corporation shall act on behalf of its
Subsidiaries and all Insureds with respect to the giving notice of Claim or
giving and receiving notice of cancellation, the payment of premiums and
the receiving of any return premiums that may become due under this policy,
the receipt and acceptance of any endorsements issued to form a part of
this policy and the exercising or declining to exercise any right to a
Discovery Period.
16. ASSIGNMENT
This policy and any and all rights hereunder are not assignable without the
written consent of the Insurer.
17. DISPUTE RESOLUTION PROCESS
It is hereby understood and agreed that all disputes or differences which
may arise under or in connection with this policy, whether arising before
or after termination of this policy, including any determination of the
amount of Loss, shall be submitted to the alternate dispute resolution
process ("ADR") set forth in this clause.
Either the Insurer or the Insureds may elect the type of ADR discussed
below; provided, however, that the Insureds shall have the right to reject
the Insurer's choice of the type of ADR at any time prior to its
commencement, in which case the Insureds' choice of ADR shall control.
The Insurer and the Insureds agree that there shall be two choices of ADR:
(1) non-binding mediation administered by the American Arbitration
Association, in which the Insurer and the Insureds shall try in good faith
to settle the dispute by mediation under or in accordance with its
then-prevailing Commercial Mediation Rules; or (2) arbitration submitted to
the American Arbitration Association under or in accordance with its
then-prevailing Commercial Arbitration Rules, in which the arbitration
panel shall consist of three disinterested individuals. In either mediation
or arbitration, the mediator(s) or arbitrators shall have knowledge of the
legal, corporate management, or insurance issues relevant to the matters in
dispute. The mediator(s) or arbitrators shall also give due
17
consideration to the general principles of the law of the state where the
Named Corporation is incorporated in the construction or interpretation of
the provisions of this policy; provided, however, that the terms,
conditions, provisions and exclusions of this policy are to be construed in
an even- handed fashion in the manner most consistent with the relevant
terms, conditions, provisions and exclusions of the policy. In the event of
arbitration, the decision of the arbitrators shall be final and binding and
provided to both parties, and the arbitrators' award shall not include
attorneys fees or other costs. In the event of mediation, either party
shall have the right to commence a judicial proceeding; provided, however,
that no such judicial proceeding shall be commenced until the mediation
shall have been terminated and at least 120 days shall have elapsed from
the date of the termination of the mediation. In all events, each party
shall share equally the expenses of the ADR.
Either choice of ADR may be commenced in either New York, New York;
Atlanta, Georgia; Chicago, Illinois; Denver, Colorado; or in the state
indicated in Item 1 of the Declarations page as the mailing address for the
Named Corporation. The Named Corporation shall act on behalf of all
Insureds in deciding to proceed with ADR under this clause.
18. ACTION AGAINST INSURER
Except as provided in Clause 17 of the policy, no action shall lie against
the Insurer unless, as a condition precedent thereto, there shall have been
full compliance with all of the terms of this policy, nor until the amount
of the Insureds' obligation to pay shall have been finally determined
either by judgment against the Insureds after actual trial or by written
agreement of the Insureds, the claimant and the Insurer.
Any person or organization or the legal representative thereof who has
secured such judgment or written agreement shall thereafter be entitled to
recover under this policy to the extent of the insurance afforded by this
policy. No person or organization shall have any right under this policy to
join the Insurer as a party to any action against the Insureds or the
Company to determine the Insureds' liability, nor shall the Insurer be
impleaded by the Insureds or the Company or their legal representatives.
Bankruptcy or insolvency of the Company or the Insureds or of their estates
shall not relieve the Insurer of any of its obligations hereunder.
19. WORLDWIDE TERRITORY
This policy shall apply to Claims made against an Insured anywhere in the
world.
20. HEADINGS
The descriptions in the headings of this policy are solely for convenience,
and form no part of the terms and conditions of coverage.
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SUMMARY OF SUBSTANTIVE CHANGES
(Non-exclusive, for discussion purposes only)
1. Revert to 5/95 "in fact" exclusions (but added "by the insured" to the
criminal acts exclusion).
2. Eliminate imputation between company and individuals but keep imputation
between top five officers and company.
3. Eliminate preset 10/25% allocation for Third Party Y2k Claims; place blanks
on Dec. Page.
4. Revert to 5/95 formulas for interrelated acts.
5. Added "information" (or other similar document) to criminal claim trigger
(from only indictment)
6. Added employees as Insureds for Third Party Y2k Claims (co-defendant basis)
7. Broaden retention waiver to non-securities Y2k claims from only securities
claims (all types).
8. Push back definition of claim for sec investigations from target letter to
subpoena date
9. Enhanced (maybe clarified in a positive way) coverage for
enity/non-indemnifiable combo claims
10. I v I does not exclude shareholder actions assisted by an non-officer
employee Insured.
11. Advancement of defense costs must be done every 90 days. (Only covered
amounts are advanced and advancement is excess of retention amount.)
12. Excluded cost of appeal bonds for non-covered judgments
13. Added non-pryamiding provision for Y2k Third Party Claims and Y2k Crises.
SUMMARY OF NON-SUBSTANTIVE CHANGES
(Non-exclusive, for discussion purposes only)
1. Put co-defendant requirement in insuring agreements
2. Deleted "solely" in a couple of places
3. Separated Insured in D&O and the Company (two definitions instead of one)
4. Eliminated phrase "(including Y2k Claims in the form of Securities Claims")
and opted for better definition of Y2k Securities Claims and Y2k Third
Party Claims
5. Added foreign equivalent DIPs
6. Made clear Y2k Third Party allocation coverage provisions
7. Corrected "criminal proceedings by the SEC" error in definition of
Securities Claim
8. Clarified derivative actions as covered Securities Claims
9. Added "deliberate" twice in criminal acts exclusion rather than moving the
adjective
10. Simplified reporting of Y2k Crisis by eliminating need to report
"anticipated" Crises
11. Clarified that Y2k application is being treated as a questionnaire and used
for underwriting purposes.
19
-1-
APPENDIX A
PANEL COUNSEL
California
Brobeck, Phleger & Harrison
Spear Street Tower
One Market
San Francisco, CA 94105
Contact:
Tower C. Snow Jr. 415-442-0900
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, CA 90071-3197
Contact:
Robert S. Warren 213-229-7326
John H. Sharer 213-229-7476
Wayne W. Smith 213-229-7464
Heller, Ellman, White & McAuliffe
333 Bush Street San Francisco,
CA 94104 Main Tel:
Contact: 415-772-6000
Douglas N. Schwab
M. Laurence Popofsky
Heller, Ellman, White & McAuliffe
525 University Avenue
Palo Alto, CA 94301
Contact:
Norman J. Blears 415-324-7000
Irell & Manella
1800 Avenue of the Stars
Suite 900
Los Angeles, CA 90067
Contact:
Richard Borow 310-277-1010
Latham & Watkins
633 West Fifth Avenue
Suite 4000
Los Angeles CA, 90071-2007
Contact:
Hugh Stevens Wilson 213-485-1234
Latham & Watkins
505 Montgomary Street
Suite 1900
San Francisco, CA 94111
Contact:
Paul H. Dawes 415-391-0600
McCutchen Doyle, Brown & Emerson
355 South Grand Avenue
Suite 4400
Los Angeles, CA 90071-1560
Contact:
John C. Morrissey 213-680-6400
McCutchen, Doyle, Brown & Emerson
Three Embarcadero Center
San Francisco, CA 94111
Contact:
David M. Balabanian 415-393-2000
Mary Huser 415-393-2000
Morrison & Foerster
425 Market Street
San Francisco, CA 94104-2482
Contact:
Paul T. Friedman 415-268-7444
Morrison & Foerster
555 West 5th Street -Suite 3500
Los Angles, CA 90013-1024
Contact:
Rober S. Stern 213-892-5464
Munger, Tolles & Olson
355 South Grand Avenue-35th Floor
Los Angeles, CA 90071-1560
Contact:
Dennis L. Kinnaird 213-683-9264
John W. Spiegel 213-683-9152
O'Melveny & Myers
400 South Hope Street
Los Angeles, CA 90071-2899
Main Tel: 213-669-6000
Contact:
Seth Aronson
Robert Vanderet
O'Melveny & Myers
610 Newport Center
Newport Beach, CA 92660
Contact:
Phillip Kaplan 714-760-9600
-2-
APPENDIX A (continued)
PANEL COUNSEL
O'Melveny & Myers
275 Battery Street
San Francisco, CA 94111
Contact:
Richard Warner 415-984-8700
Orrick Herrington & Sutcliffe
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111
Main Tel: 415-392-1122
Contact:
James A. Hughes
W. Reece Bader
Richard J. Lucas
Pillsbury Madison & Sutro
225 Bush Street
P.O. Box 7880
San Francisco, CA 94104
Contact:
Gary H. Anderson 415-983-1000
Pillsbury Madison & Sutro
725 South Figueroa Street
Suite 1200
Los Angeles CA 90017
Contact:
Steve 0. Kramer 213-488-7100
Pillsbury Madison & Sutro
101 West Broadway
Suite 1800
San Diego, CA 92101
Contact:
David E. Kleinfeld 619-234-5000
Sherman & Sterling
555 California Street
San Francisco, CA 94104
Contact:
Susan Samuels Muck 415-616-1198
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, CA 90071
Main Tel: 213-687-5000
Contact:
Frank Rothman
James E. Lyons
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo, Alto, CA 94304-1050
Main Tel: 415-493-9300
Contact:
Bruce G. Vanyo
Steven M. Sethatz
District of Columbia
Arnold & Porter
555 Twelfth Street N.W.
Washington, D.C. 20004-1202
Contact:
Scott Schreiber 202-942-5672
Davis, Polk & Wardwell
1300 I Street, N.W.
Washington, DC 20005
Main Tel: 202-962-7000
Contact
Scott W. Muller
Gibson, Dunn & Crutcher
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5306
Contact:
F. Joseph Warin 202-887-3609
Patton Boggs, L.L.P.
2550 M Street N.W.
Washington, D.C. 20037
Contact:
C. Allen Foster 202-457-6320
Charles H. Camp 202-457-5265
Sherman & Sterling
801 Pennsylvania Avenue, N.W.
Washington, DC 20004-2604
Main Tel: 202-508-8000
Contact:
Thomas S. Martin
Jonathan L. Greenblat
Willkie Farr & Gallagher
Three Lafayette Centre
1155 21st Street N.W.
Washington, D.C. 20036-3384
Contact:
Kevin B. Clark 202-328-8000
-3-
APPENDIX A (continued)
PANEL COUNSEL
Florida
Fowler White, Gillen, Boggs, Villareal
and Banker, P.A.
501 East Kennedy Boulevard
Suite 1700
Tampa, Fl 33602
Contact:
W. Donald Cox 813-228-7411
Fowler, White, Gillen, Boggs, Villareal
and Banker, P.A.
601 Cleveland Street
Suite 800
Clearwater Florida 34615
Contact:
Burton W. Wiand 813-446-8525
Katz, Barron, Squtiero, Faust & Berman, P.A.
2699 South Bayshore Drive
Seventh Floor
Miami, Florida 33133-5408
Contact:
Richard E. Berman 305-856-2444
Zuckerman Spaeder Taylor & Evans LLP
900 Miami Center
201 South Biscayne Boulevard
Miami, Fl 33131
Main Tel: 305-358-5000
Ronald B. Ravikoff
Thomas J. Meeks
Guy A. Rasco
Steel, Hector & Davis LLP
200 South Biscayne Boulevard
Miami, FL 33131-2398
Contact:
Lewis F. Murphy, P.A. 305-577-2957
Holland & Knight
400 North Ashley Drive
Suite 2300
Tampa, FL 33602
Main Tel: 813-227-8500
Contact:
Frederick S. Schrils
Calvin Hayes
Gregory P. Hansel
Holland & Knight
50 North Laura Street
Suite 3900
Jacksonville, Fl 32202
Main Tel: 904-353-2000
Contact:
George E. Schultz, Jr.
Holland & Knight
701 Brickell Avenue
Suite 3000
Miami, FL 33131
Main Tel: 305-374-8500
Contact:
Marty Steinberg
William F. Hamilton
Holland & Knight
315 South Calhoun Street
Suite 600
Tallahassee, FL 32301
Main Tel: 904-224-7000
Contact:
Robert R. Feagin, III
Georgia
Alston & Bird
One Atlantic Center
1201 W. Peachtree Street
Atlanta, GA 30309
Contact:
Peter Q Bassett 404-881-7343
Mary C. Gill 404-881-7276
King & Spalding
191 Peachtree Street
Atlanta, GA 30303-1763
Main Tel: 404-572-4600
Contact:
Grippin B. Bell
Michael R. Smith
Long, Aldridge & Norman
One Peachtree Center-Suite 5300
303 Peachtree Street
Atlanta, GA 30308
Contact:
J. Allen Maines 404-527-8340
Sharon Glenn 404-527-8391
-4-
APPENDIX A (continued)
PANEL COUNSEL
Smith Gambrell & Russel
3343 Peachtree Road, N.E.-Suite 1800
Atlanta, GA 30326-1010
Contact:
David A. Handley 404-264-2671
Robert C. Schwartz 404-264-2658
Illinois
Jenner & Block
One IBM Plaza
Chicago, IL 60611
Contact:
Jerold Solovy 312-222-9350
Freeborn & Peters
311 South Wacker Drive
Suite 3000
Chicago, IL 60606-6677
Contact:
David H. Kistenbroker 312-360-6567
Kirkland & Ellis
2000 East Randolph Drive
Chicago, IL 60601
Main Tel: 312-861-2000
Contact:
Garrett B. Johnson
Robert J. Kopecky
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Contact:
Walter C. Carlson 312-853-7734
Robert A. Downing 312-853-7434
Eugene A. Schoon 312-853-7279
Skadden, Arps, Slate, Meager & Flom
333 West Wacker Drive
Chicago, IL 60606
Main Tel: 312-407-0700
Contact: Susan Getzendanner
Timothy A. Nelsen
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, IL 60606
Contact:
Harold D. Shapiro 312-876-8035
Massachusetts
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Contact:
Don M. Kennedy 617-570-1000
Hale & Dorr
60 State Street
Boston, MA 02109
Main Tel: 617-526-6000
Contact:
Jeffrey Rudman
John Batter
Mintz, Levin, Cohn, Feris, Glovsky & Popeo
One Financial Center
Boston, MA 02111
Contact:
Peter M. Saparoff 617-542-6000
Palmer & Dodge
One Beacon Street
Boston, MA 02108
Contact:
Peter S. Terris 617-573-0100
Ropes & Gray
One International Plaza
Boston, MA 02110-2624
Contact:
John D. Donovan, Jr. 617-951-7566
Skadden, Arps, Slate, Meager & Flom
One Beacon Street
Boston, Ma 02108
Main Tel: 617-573-4800
Contact:
Thomas A. Dougherty
George J. Skelly
-5-
APPENDIX A (continued)
PANEL COUNSEL
Testa, Hurwitz & Thibeault
High Street Tower
125 High Street
Boston, MA 02110
Contact:
Brian E. Pastuszenski 617-248-7000
Edmund G. Case
New York
Arnold & Porter
399 Park Avenue
New York, NY 10022-4690
Contact:
Scott Schreiber 212-715-1000
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Main Tel: 212-701-3000
Contact:
Charles A. Gilman
Immanuel Kohn
Thomas J. Kavaler
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Main Tel: 212-450-4000
Contact:
Henry L. King
Daniel F. Kolb
Fried, Frank, Harris, Shiver & Jacobson
One New York Plaza
New York, NY 10004
Contact:
Sheldon Raab 212-859-8090
Kaye, Scholer, Fiernan, Hays & Handler
425 Park Avenue
New York, NY 10022
Contact:
Frederic W. Yerman 212-836-8663
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Main Tel: 212-446-4800
Contact:
Yosef J. Riemer
Frank M. Holozubiec
Mikbank, Tweed Hadley & McCloy
One Chase Manhattan Plaza
New York, NY 10005
Contact: 212-530-5554
Russell Brooks
Shearman & Sterling
Citicorp Center
153 East 53rd Street
New York, NY 10022-4676
Contact
Jeremy G. Epstein 212-848-8000
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Main Tel: 212-455-2000
Contact:
Roy L. Reardon
James J. Hagan
Michael J. Chepiga
Skadden, Arps, Slate, Meager & Folm
919 Third Avenue
New York, NY 10022
Main Tel: 212-735-3000
Contact:
Barry H. Garfinkel
Jonathan J. Lerner
Stroock, & Stroock & Lavan
Seven Hanover Square
New York, NY 10004-2696
Main Tel: 212-806-5400
Contact
Melvin A Brosterman
Lawrence Greenwald
Alvin K. Hellerstein
-6-
APPENDIX A (continued)
PANEL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, NY 10004-2498
Main Tel: 212-558-4000
Contact:
John L. Warden
Philip L. Grahman, Jr.
Robinson, Silverman, Pearce, Aronachn
& Berman
1290 Avenue of the Americas
New York, NY 10104
Contact:
Herbert Teitelbaum 212-541-2000
Mark Bunin
Wachtell, Lipton, Rosen & Katz
51 West 57th Street
New York, NY 10019
Contact:
Norman Redlich 216-371-9200
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Contact:
Dennis J. Block 213-310-8000
Wilkie, Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4677
Main Tel: 212-821-8000
Contact:
David L. Foster
Richard L. Posen
Michael R. Young
Ohio
Jones Day, Reavis & Pogue
North Point
Lakeside Avenue
Cleveland, OH 44114
Contact:
John Newman Jr. 216-586-3939
Philadelphia
Blank, Rome, Comisky & McCauley
1200 Four Penn Center
Philadelphia, PA 19103
Main Tel: 215-569-5500
Contact:
Alexander D. Bono
Richard P. McElroy
Jerome R. Richter
Cozen and O'Connor
The Atrium
1900 Market Street
Philadelphia, PA 19103
Main Tel: 215-665-2000
Contact:
Patrick J. O'Connor
Thomas C. Zielinski
H. Robert Fiebach
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Main Tel: 215-994-4000
Contact:
Seymour Kurland
Jeffrey G. Weil
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Main Tel: 215-963-5000
Contact:
Gregory M. Harvey
Marc J. Sonnenfeld
Elizabeth Hoop Fay
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103-2799
Main Tel: 215-981-4000
Contact:
Jon A. Baughman
Laurence Z. Shiekman
-7-
APPENDIX A (continued)
PANEL COUNSEL
Wolf, Block, Schorr and Solis-Cohen
12th Floor-Packard Building S.E.
Corner 15th & Chestnut Streets
Philadelphia, PA 19102-2678
Contact:
Jay A. Dubow 215-977-2058
Washington
Foster Pepper & Shefelman
1111 Third Avenue, Suite 3400
Seattle, Washington 98101-2399
Main Tel: 206-447-4400
Main Fax: 206-447-9700
Contact:
Peter S. Ehrlichman 206-447-8998
Stellman Keehnel 206-447-8935
Davis Wright Tremain
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98101-1688
Main Tel: 206-622-3150
Contact:
Stephen M. Rummage 206-628-7755
Bogle & Gates
Two Union Square
601 Union Street
Seattle, Washington 98101-2346
Main Tel: 206-682-5151
Contact:
Evan Schweb 206-621-1478
Arthur C. Claflin 206-621-1448
Heller, Ehrman, White & McAuliffe
701 Fifth Avenue
Seattle, WA 98104-7098
Main Tel: 206-447-0900
Main Fax: 206-447-0849
Contact:
George E. Greer
Lane Powell Spearslubersky
1420 Fifth Avenue, Suite 4100
Seattle, WA 98101-2338
Main Tel: 206-223-7000
Main Fax: 206-223-7107
Contact:
James L. Robart
Rudy A. Englund
James B. Stoetzer
Perkins Cole
1201 Third Avenue, 40th Floor
Seattle, WA 98101-3099
Main Tel: 206-583-8888
Main Fax: 206-583-8500
Contact:
Ronald L. Berenstein
Harry H. Schneider
Texas
Akin, Gump, Statauss, Haurer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, TX 75201-4618
Main Tel: 214-969-2800
Contact:
Lou Bickel
Mike Lowenberg
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Pennzoil Place - South Tower
711 Louisianna Street
Suite 1900
Houston, TX 77002
Main Tel: 713-220-5800
Contact:
Charlie Moore
Paula Hinton
Baker & Botts, L.L.P.
910 Louisianna
Houston, TX 77002-4995
Main Tel: 713-229-1234
Contact:
William C. Slusser
Harold L. Metts
-8-
APPENDIX A (continued)
PANEL COUNSEL
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, TX 75201-2916
Contact:
Ronald L. Palmer 214-953-6500
Fulbright & Jaworski, L.L.P.
1301 McKinney
Suite 5100
Houston, TX 77010
Main Tel: 713-651-5151
Contact:
Frank G. Jones
Richard N. Carrell
Fullbright & Jaworski, L.L.P.
2200 Ross Avenue
Suite 2800
Dallas, TX 75201
Contact:
Karl G. Dial 214-855-8000
Haynes & Boone, L.L.P.
3100 Nationsbank Plaza
901 Main Street
Dallas, TX 75202-3789
Main Tel: 214-651-5000
Contact:
Michael Boone
George Bramblett
Noel Hensley
Locke Purnell Rain Harrell
2200 Ross Avenue
Suite 2200
Dallas, TX 75201-6776
Contact:
John McElhaney 214-740-8458
Peter Flynn 214-740-8654
Morris Harrell 214-740-8404
Thompson & Knight, P.C.
1700 Pacific
Suite 3300
Dallas, TX 75201-4693
Contact:
Timothy R. McCormick 214-969-1103
Vinson & Elkins
2500 First City Tower
1001 Fannin
Houston, TX 77002-6760
Contact:
David T. Hedges, Jr. 713-758-2676
Vinson & Elkins
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201-2975
Contact:
Orrin L. Harrison
ADDENDUM TO THE DECLARATIONS - COMPANY ADDRESSES
AIU INSURANCE COMPANY
70 Pine Street
New York, New York 10270
AMERICAN HOME ASSURANCE COMPANY
70 Pine Street
New York, New York 10270
AMERICAN INTERNATIONAL SOUTH INSURANCE COMPANY
2005 Market Street
Philadelphia, Pennsylvania 19103
BIRMINGHAM FIRE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
1750 CNG Tower
Pittsburgh, Pennsylvania 15222
GRANITE STATE INSURANCE COMPANY
2005 Market Street
Philadelphia, Pennsylvania 19103
ILLINOIS NATIONAL INSURANCE COMPANY
500 West Madison Street
Chicago, Illinois 60606
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
1750 CNG Tower
Pittsburgh, Pennsylvania 15222
NEW HAMPSHIRE INSURANCE COMPANY
2005 Market Street
Philadelphia, Pennsylvania 19103
ENDORSEMENT# 2
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh, Pa.
OUTSIDE ENTITY ENDORSEMENT
In consideration of the premium charged, it is hereby understood and agreed that
the following entities shall be deemed an "Outside Entity" with respect to its
corresponding Continuity Date below:
OUTSIDE ENTITY CONTINUITY DATE
1) any not-for-profit organization; May 3, 1996
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 3
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh, Pa.
PA AMENDATORY ENDORSEMENT
Wherever used in this endorsement: 1) "we", "us", "our", and "Insurer" mean the
insurance company which issued this policy; and 2) "you", "your", "named
Insured", "First Named Insured", and "Insured" mean the Named Corporation, Named
Organization, Named Sponsor, Named Insured, or Insured stated in the
declarations page; and 3) "Other Insured(s)" means all other persons or entities
afforded coverage under the policy.
Cancellation/Nonrenewal
The cancellation provision of this policy is amended as follows:
Cancelling a policy midterm is prohibited except if:
1) A condition material to insurability has changed substantially;
2) Loss of reinsurance or a substantial decrease in reinsurance has
occurred;
3) Material misrepresentation by the Insured;
4) Policy was obtained through fraud;
5) The Insured has failed to pay a premium when due;
6) The Insured has requested cancellation;
7) Material failure to comply with terms;
8) Other reasons that the commissioner may approve.
Notice Requirements for Midterm Cancellation and Nonrenewal
Notice shall be mailed by registered or first class mail by the Insurer directly
to the named Insured. Written notice will be forwarded directly to the named
Insured at least sixty (60) days in advance of the termination date unless one
or more of the following exists:
1) The Insured has made a material misrepresentation which affects the
insurability of the risk, in which case the prescribed written notice
of cancellation shall be forwarded directly to the named Insured at
least fifteen (15) days in advance of the effective date of
termination.
2) The Insured has failed to pay a premium when due, whether the premium
is payable directly to the Insurer or its agents or indirectly under a
premium finance plan or extension of credit, in which case the
prescribed written notice of cancellation shall e forwarded directly
to the named insured at least fifteen (15) days in advance of the
effective date of termination.
3) The policy was cancelled by the named Insured, in which case written
notice of cancellation shall not be required and coverage shall be
terminated on the date requested by the Insured. Nothing in these
three sections shall restrict the Insurer's right to rescind an
insurance policy ab initio upon discovery that the policy was obtained
through fraudulent statements, omissions or concealment of fact
material to the acceptance of the risk or to the hazard assumed by the
Insurer.
ENDORSEMENT# 3 (continued)
The notice shall be clearly labeled "Notice of Cancellation" or "Notice of
Nonrenewal". A midterm cancellation or nonrenewal notice shall state the
specific reasons for the cancellation or nonrenewal. The reasons shall identify
the condition or loss experience which caused the midterm cancellation or
nonrenewal. The notice shall provide sufficient information or data for the
Insured to correct the deficiency.
A midterm cancellation or nonrenewal notice shall state that, at the Insured's
request, the Insurer shall provide loss information to the Insured for at least
three years or the period of time during which the Insurer has provided coverage
to the Insured, whichever is less. Loss information on the Insured shall consist
of the following:
1) Information on closed claims, including date and description or
occurrence, and any amount of payments, if any;
2) Information on open claims, including date and description or
occurrence, amount of payment, if any, and amount or reserves, if any;
3) Information on notices of occurrence, including date and description
of occurrence and amount of reserves, if any.
The Insured's written request for loss information must be made within ten (10)
days of the Insured's receipt of the midterm cancellation or nonrenewal notice.
The Insurer shall have thirty (30) days from the date of receipt of the
Insured's written request to provide the requested information.
Notice of Increase in Premium
The Insurer shall provide not less than sixty (60) days notice of intent to
increase the Insured's renewal premium with thirty (30) days notice of an
estimate of the renewal premium. The notice of renewal premium increase will be
mail or delivered to the Insured's last known address. If notice is mailed, it
will be by registered or first class mail.
Return of Unearned Premium
Cancellation Initiated by Insurer -- Unearned premium must be returned to the
Insured not later than ten (10) business days after the effective date of
termination.
Cancellation Initiated by Insured -- Unearned premium must be returned to the
Insured not later than thirty (30) days after the effective date of termination.
All other terms, conditions and exclusions shall remain the same.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 4
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh, Pa.
PENNSYLVANIA AMENDATORY ENDORSEMENT
Directors, Officers and Corporate Liability Insurance Policy
The policy is hereby amended as follows:
I. Section (a)., of Clause 7., NOTICE/CLAIM REPORTING PROVISIONS, is deleted
in entirety and replaced with the following:
(a) The Company or the Insureds shall, as a condition precedent to the
obligations of the Insurer under this policy, give written notice to
the Insurer of a Claim made against an Insured as soon as practicable
after the Company's risk manager or general counsel first becomes
aware of the Claim and either:
(1) anytime during the Policy Period or during the Discovery Period
(if applicable); or
(2) within 60 days after the end of the Policy Period or the
Discovery Period (if applicable), as long as such Claim or Crisis
is reported no later than 60 days after the date such Claim was
first made against an Insured or such Crisis.
II. The last paragraph of Clause 10., DISCOVERY CLAUSE, is deleted in entirety
and replaced with the following:
The additional premium for the Discovery Period shall be fully earned at
the inception of the Discovery Period. The Discovery Period is not
cancelable.
In the event of cancellation or nonrenewal by the Insured for nonpayment of
premium or other monies due to the Company, the right to a Discovery Period
under this Clause 10., is available to any Insured upon payment of an
amount equal to (a) the premium due for the Discovery Period plus (b) any
earned premium for the Policy Period which has not yet been paid.
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN THE SAME.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 5
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh, Pa.
NUCLEAR ENERGY LIABILITY EXCLUSION ENDORSEMENT
(BROAD FORM)
In consideration of the premium charged, it is hereby understood and agreed that
the Insurer shall not be liable to make any payment for Loss in connection with
any Claim(s) made against any Insured(s):
A. alleging, arising out of, based upon, attributable to, or in any way
involving, directly or indirectly the hazardous properties of nuclear
material, including but not limited to:
(1) nuclear material located at any nuclear facility owned by, or operated
by or on behalf of, the Company, or discharged or dispersed therefrom;
or
(2) nuclear material contained in spent fuel or waste which was or is at
any time possessed, handled, used, processed, stored, transported or
disposed of by or on behalf of the Company; or
(3) the furnishing by an Insured or the Company of services, materials,
parts or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility; or
(4) claims for damages to the company or its shareholders which alleges,
arises from, is based upon, is attributed to or in any way involves,
directly or indirectly, the hazardous properties of nuclear material.
B.
(1) which is insured under a nuclear energy liability policy issued by
Nuclear Energy Liability Insurance Association, Mutual Atomic Energy
Liability underwriters, or Nuclear Insurance Association of Canada, or
would be insured under any such policy but for its termination or
exhaustion of its Limit of Liability; or,
(2) with respect to which (a) any person or organization is required to
maintain financial protection pursuant to the Atomic Energy Act of
1954, or any law amendatory thereof, or (b) the Insured is, or had
this policy not been issued would be entitled to indemnity from the
United States of America, or any agency thereof, under any agreement
entered into the United States of America, or any agency thereof, with
any person or organization.
As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive properties;
"nuclear material" means source material, special nuclear material or
byproduct material;
"source material", "special nuclear material", and "byproduct material"
have the meanings given them in the Atomic Energy Act of 1954 or in law
amendatory thereof;
ENDORSEMENT# 5 (continued)
"spent fuel" means any fuel element or fuel component, solid or liquid,
which has been used or exposed to radiation in a nuclear reactor;
"waste" means any waste material (1) containing byproduct material and (2)
resulting from the operation by any person or organization of any nuclear
facility included within the definition of nuclear facility under paragraph
(a) or (b) thereof;
"nuclear facility" means -
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating the
isotopes of uranium or plutonium, (2) processing or utilizing spent
fuel, or (3) handling, processing or packaging waste,
(c) any equipment or device used for the processing, fabricating or
alloying of special nuclear material if at any time the total amount
of such material in the custody of the Insured at the premises where
such equipment or device is located consists of or contains more than
25 grams of plutonium or uranium 233 or any combination thereof, or
more than 250 grams of uranium 235,
(d) any structure, basin, excavation, premises or place prepared or used
for the storage or disposal of waste, and includes the site on which
any of the foregoing is located, all operations conducted on such site
and all promises used for such operations;
"nuclear reactor" means any apparatus designed or used to sustain nuclear
fission in a self- supporting chain reaction or to contain a critical mass of
fissionable material.
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 6
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh, Pa.
COMMISSIONS EXCLUSION
In consideration of the premium charged, it is hereby understood and agreed that
the Insurer shall not be liable to make any payment for Loss in connection with
any Claim(s) made against any Insured(s) alleging, arising out of, based upon,
or attributable to:
(i) Payments, commissions, gratuities, benefits or any other favors to or
for the benefit of any full or part-time domestic or foreign
government or armed services officials, agents, representatives,
employees or any members of their family or any entity with which they
are affiliated; or
(ii) Payments, commissions, gratuities, benefits or any other favors to or
for the benefit of any full or part-time officials, directors, agents,
partners, representatives, principal shareholders, or owners or
employees, or "affiliates" (as that term is defined in The Securities
Exchange Act of 1934, including any officers, directors, agents,
owners, partners, representatives, principal shareholders or employees
of such affiliates) of any customers of the company or any members of
their family or any entity with which they are affiliated; or
(iii) Political contributions, whether domestic or foreign.
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 7
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh, Pa.
SECURITIES CLAIMS EXCLUSION -
EFFECTIVE UPON A SECONDARY PUBLIC OFFERING OF SECURITIES
(WITH 30 DAY REPORTING PROVISION)
In consideration of premium charged, it is hereby understood and agreed that the
Insurer shall not be liable to make any payment for Loss in connection with any
Claim(s) made against any Insured(s) (including but not limited to any Claim(s)
brought by any governmental or regulatory entity/ies or any security holder(s),
whether directly, derivatively or by class action, or by any other claimant(s))
whether under federal, state or foreign, statutory, regulatory or common law, if
such Claim(s) either:
(i) allege, arise out of, are based upon or are attributable to the
purchase or sale, or offer, or solicitation of an offer to purchase or
sell, any securities of the Company (whether purchased or sold from or
by the Company or in the after market); or
(ii) allege, arise out of, are based upon or are attributable to the
purchase or sale, or offer, or solicitation of an offer to purchase or
sell, any security of the Company in a public offering of securities
(hereinafter an OFFERING OF SECURITIES).
This exclusion shall apply, but not be limited to, any such Claim(s) which
allege, arise out of, are based upon or are attributable to any Claim(s) arising
out of any alleged misrepresentation(s) or non-disclosure(s) in any written or
oral statement(s), including but not limited to any Registration Statement,
prospectus, offering circular, or other document or statement relating to the
OFFERING OF SECURITIES, as well as any failure to file any document required to
be filed with the Securities and Exchange Commission.
Notwithstanding the above, this endorsement shall not apply to the OFFERING OF
SECURITIES described below:
REGISTRATION STATEMENT NO. ______ DATE
Notwithstanding the foregoing, however, this endorsement shall not apply:
(1) to any Claim(s) brought by an equity security holder of the Company
with regard to securities purchased or held by such security holder
prior to the effective time of the OFFERING OF SECURITIES; or
(2) in the event that within thirty days prior to the effective time of an
OFFERING OF SECURITIES other than an OFFERING OF SECURITIES described
in (2) above:
(i) the Insured(s) give written notice thereof, together with all the
particulars and underwriting information relating thereto, to the
Insurer;
(ii) the Insurer agrees, in its discretion, to grant coverage subject
to such terms, conditions and additional premium as it may
require;
ENDORSEMENT# 7 (continued)
(iii) the Insurer accepts such terms, conditions and additional
premium as the Insurer may so require; and
(iv) the Insured(s) pay, when due, any such additional premium.
ALL OTHER TERMS, CONDITIONS, AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 8
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh, Pa.
ARCHITECT OR ENGINEER E&O EXCLUSION
In consideration of the premium charged, it is hereby understood and agreed that
the Insurer shall not be liable to make any payment for Loss in connection with
any Claim(s) made against any Insured(s) alleging, arising out of, based upon or
attributable to the performance of or failure to perform services as an
architect or engineer, or any act, error or omission related thereto.
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 9
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union fire Insurance Company of Pittsburgh, Pa.
CAPTIVE INSURANCE COMPANY EXCLUSION
In consideration of the premium charged, it is hereby understood and agreed that
the Insurer shall not be liable to make any payments for Loss in connection with
any Claim(s) made against any Insured(s) alleging, arising out of, based upon,
attributable to the ownership, management, maintenance and/or control by the
Company of any captive insurance company or entity including but not limited to
any Claim(s) alleging the insolvency or bankruptcy of the Named Corporation as a
result of such ownership, operation, management and control.
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 10
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh Pa.
P&P Dates for Excess Limits
In consideration of the premium charged, it is hereby understood and agreed that
Clause 4, EXCLUSION (e) of the form 70320 is deleted in its entirety and
replaced by the following:
(e) alleging, arising out of, based upon or attributable to any pending or
prior litigation as of May 05, 1992 or alleging or derived from the
same or essentially the same facts as alleged in such pending or prior
litigation.
It is further understood and agreed that with respect to the Limit of Liability
$1,000,000 excess of $3,000,000 exclusion 4(e) is amended to indicate that the
Insurer shall not be liable to make any payment for Loss in connection with any
claim or claims made against the Directors and Officers alleging, arising out
of, based upon or attributable to any pending or prior litigation as of August
19, 1992 or alleging or derived from the same or essentially the same facts as
alleged in such pending or prior litigation.
It is further understood and agreed that with respect to the Limit of Liability
$2,000,000 excess of $4,000,000 exclusion 4(e) is amended to indicate that the
Insurer shall not be liable to make any payment for Loss in connection with any
claim or claims made against the Directors and Officers alleging, arising out
of, based upon or attributable to any pending or prior litigation as of May 05,
1994 or alleging or derived from the same or essentially the same facts as
alleged in such pending or prior litigation.
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 11
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union Fire Insurance Company of Pittsburgh, Pa.
GENERAL PARTNER - PARTNERSHIP MANAGER -
JOINT VENTURE MANAGER EXCLUSION
In consideration of the premium charged, it is hereby understood and agreed that
the Insurer shall not be liable to make any payment for Loss in connection with
any Claim(s) made against any Insured(s) alleging, arising out of, based upon or
derived from any Insured(s) acting as a general partner of any limited
partnership(s), and/or a partnership manager of any general partnership(s),
and/or joint venture manager of any joint venture(s).
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMAIN UNCHANGED.
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
ENDORSEMENT# 12
This endorsement, effective 12:01 a.m. May 5, 1999 forms a part of
policy number 858-56-36
issued to STV GROUP, INCORPORATED
by National Union fire Insurance Company of Pittsburgh, Pa.
CrisisFund(sm)
(Crisis Communications Management Insurance)
In consideration of the premium charged, it is hereby understood and agreed that
this policy is amended to provide Crisis Management Coverage pursuant to the
terms and conditions set forth below:
1) The Clause of the policy entitled INSURING AGREEMENTS is amended to add the
following new insuring agreement:
CRISIS MANAGEMENT COVERAGE
This policy shall pay the Crisis Management Loss of the Company
arising from a Crisis Management Event first commencing during the
Policy Period, up to the amount of the Crisis Management Fund.
2) The Section of the policy entitled EXCLUSIONS shall not be applicable to
Crisis Management Loss.
3) The Section of the policy entitled LIMIT OF LIABILITY, is amended to add
the following:
The limit of the Insurer's liability for Crisis Management Loss
arising from all Crisis Management Events occurring during the Policy
Period, in the aggregate, shall be the amount set forth as the Crisis
Management Fund. This limit shall be the maximum limit of the Insurer
under this policy regardless of the number of Crisis Management Events
occurring during the Policy Period. Provided, however, that this
single Crisis Management Event(s) limit shall be part of and not in
addition to the Limit of Liability stated in the Item of the
Declarations' page entitled LIMIT OF LIABILITY, which shall in all
events be the maximum liability of the Insurer for all loss under this
policy.
4) There shall be no Retention amount applicable to Crisis Management Loss,
and the Insurer shall pay such Loss from first dollar subject to the other
terms and conditions of this endorsement.
5) An actual or anticipated Crisis Management Event shall be reported to the
Insurer as soon as practicable but in no event later than thirty (30) days
after the Company first incurs Crisis Management Loss for which coverage
will be requested under this endorsement.
6) The Section of the policy entitled DEFENSE COSTS, SETTLEMENTS, JUDGMENTS
(INCLUDING THE ADVANCEMENT OF DEFENSE COSTS) shall have no applicability to
Crisis Management Events. There shall be no requirement for the Company to
obtain prior written approval of the Insurer before incurring any Crisis
Management Loss, provided that the Crisis Management Firm selected by the
Company to perform the Crisis Management Services has been approved by the
Insurer.
ENDORSEMENT# 12 (continued)
Definitions
For the purposes of this endorsement, the following definitions shall apply:
A) "Material Effect on the Company's Common Stock Price" shall mean, within a
period of 24 hours, that the price per share of the Company's common stock
shall decrease by the greater of $5 per share or 10% net of the change in
the Standard & Poor's Composite Index.
B) "Crisis Management Event" shall mean:
I. One of the following events which, in the good faith opinion of the
Chief Financial Officer of the Company, did cause or is reasonably
likely to cause, a Material Effect on the Company's Common Stock
Price:
(1) Negative earning or sales announcement
The public announcement of the Company's past or future earnings or
sales, which is substantially less favorable than any of the
following: (i) the Company's prior year's earnings or sales for the
same period, (ii) the Company's prior public statements or projections
regarding earnings or sales for such period, or (iii) an outside
securities analyst's published estimate of the Company's earnings or
sales.
(2) (2) Loss of a patent, trademark or copyright or major customer or
contract
The public announcement of an unforeseen loss of: (i) the Company's
intellectual property rights for a patent, trademark or copyright,
other than by expiration; (ii) a major customer or client of the
Company; or (iii) a major contract with the Company.
(3) Product recall or delay
The public announcement of the recall of a major product of the
Company or the unforeseen delay in the production of a major product
of the Company.
(4) Mass tort
The public announcement or accusation that the Company has caused the
bodily injury, sickness, disease, death or emotional distress of a
group of persons, or damage to or destruction of any tangible group of
properties, including the loss of use thereof.
(5) Employee layoffs or loss of key executive officer(s)
The public announcement of employee layoffs, or the death or
resignation of one or more key executive officer(s) of the Company.
(6) Restatement of financial statement
The public announcement of a restatement of the Company's previously
filed financial statements.
ENDORSEMENT# 12 (continued)
(7) Elimination or suspension of dividend
The public announcement of the elimination or suspension of a
regularly scheduled dividend previously being paid by the Company.
(8) Write-off of assets
The public announcement that the Company intends to write off a
material amount of its assets.
(9) Debt restructuring or default
The public announcement that the Company has defaulted or intends to
default on its debt or intends to engage in a debt restructuring.
(10) Bankruptcy
The public announcement that the Company intends to file for
bankruptcy protection or that a third party is seeking to file for
involuntary bankruptcy on behalf of the Company; or the imminence of
bankruptcy proceedings, whether voluntary or involuntary.
(11) Governmental or regulatory litigation
The public announcement of the commencement or threat of commencement
of litigation or governmental or regulatory proceedings against the
Company.
(12) Other
Any other event previously consented to by the Insurer which, in the
good faith opinion of the Chief Financial Officer of the Company, did
cause or is reasonably likely to cause, a Material Effect on the
Company's Common Stock Price, but only if such event is specifically
scheduled by written endorsement to the policy.
II. Unsolicited takeover bid
An unsolicited written offer or bid by any person or entity other than
an Insured or any affiliate of any Insured, whether publicly announced
or privately made to a director or executive officer of the Company,
to effect a Transaction (as Transaction is defined in Clause 12 of the
policy) of the Company.
Provided, however, that the term Crisis Management Event shall not include any
event relating to:
(1) any Claim(s) which have been reported, or any circumstances of which
notice has been given, under any policy of which this policy is a
renewal or replacement or which it may succeed in time;
(2) any pending or prior litigation as of May 5, 1998
ENDORSEMENT# 12 (continued)
(3) the actual, alleged or threatened discharge, dispersal, release or
escape of pollutants; or any direction or request to test for,
monitor, clean up, remove, contain, treat, detoxify or neutralize
pollutants; provided, however, the foregoing shall not apply if the
policy contains any endorsement modifying or deleting, in part or in
whole, exclusion (1) of the policy;
(4) the hazardous properties of nuclear materials; provided, however, the
foregoing shall not apply to any Crisis Management Event(s) arising
from the ownership of, operation of, construction of, management of,
planning of, maintenance of or investment in any nuclear facility.
The descriptions in the headings of the Crisis Management Events are solely for
convenience and form no part of the terms and conditions of coverage.
For the purposes of this endorsement, a Crisis Management Event shall first
commence when the Company or any of its directors or executive officers shall
first become aware of the event and shall conclude at the earliest of the time
when the Crisis Management Firm advises the Company that the crisis no longer
exists or when the Crisis Management Fund has been exhausted.
C) "Crisis Management Firm" shall mean any public relations firm, crisis
management firm or law firm hired by the Company or its directors, officers
or employees to perform Crisis Management Services in connection with the
Crisis Management Event which has been consented to by the Insurer, the
consent for which shall not be unreasonably withheld. Attached to this
endorsement is a list of firms which have been pre-approved by the Insurer
and may be hired by the Company without further approval by the Insurer:
D) "Crisis Management Fund" shall mean Fifty Thousand Dollars ($50,000).
E) "Crisis Management Loss" shall mean the following amounts incurred during
the pendency of or within 90 days prior to and in anticipation of, the
Crisis Management Event, regardless of whether a Claim is ever made against
an Insured arising from the Crisis Management Event and, in the case where
a Claim is made, regardless of whether the amount is incurred prior to or
subsequent to the making of the Claim:
(1) Amounts for which the Company is legally liable for the reasonable and
necessary fees and expenses incurred by a Crisis Management Firm in
the performance of Crisis Management Services for the Company arising
from a Crisis Management Event(s); and
(2) Amounts for which the Company is legally liable for the reasonable and
necessary printing, advertising, mailing of materials, or travel by
directors, officers, employees or agents of the Company or the Crisis
Management Firm, in connection with the Crisis Management Event(s).
F) "Crisis Management Services" means those services performed by a Crisis
Management Firm in advising the Company or any of its directors, officers
or employees on minimizing potential harm to the Company arising from the
Crisis Management Event, including but not limited to maintaining and
restoring investor confidence in the Company.
ALL OTHER TERMS, CONDITIONS AND EXCLUSIONS REMA
/s/ Ty Sagalow
----------------------------------
AUTHORIZED REPRESENTATIVE
PRE-APPROVED CRISIS MANAGEMENT FIRMS
1) Abernathy MacGregor Scanlon
501 Madison Avenue
New York, NY 10022
(212) 371-5999
Contact: James T. MacGregor
(2) Burson-Marsteller
230 Park Avenue South
New York, NY 10003-1566
(212) 614-5236
Contact: Michael Claes
(3) Kekst and Company.
437 Madison Avenue
New York, NY 10022
(212) 593-2655
Contact: Andrew Baer
(4) Kroll Associates
900 Third Avenue
New York, NY 10022
(212) 833-3385
Contact:
Richard G. McCormick
(5) Robinson Lerer & Montgomery
75 Rockefeller Plaza , 6th floor
New York, NY 10019
(212) 484-7721
Contact: Michael Gross
(6) Sard Verbinnen & Co.
630 Third Avenue
New York, NY 10017
(212) 687-8080
Contact: Paul Verbinnen or George Sard
(7) Sitrick & Company
2029 Century Park East
Suite 1750
Los Angeles, CA 90067
(310) 788-2850
Contact: Michael Sitrick