Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 9 of 22

EXHIBIT
A
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 10 of 22

l'itY·
O.l'l". '~6@Q
;Crl /'7e.~
~lCHING TO AND FORMING' PART OF POLICY No.u. 61268
, .
REINSURANCE AGREEMENT between ·the DlSURANcE COMPANY OF NORTH AMERICA
PHILADELpHIA (hereinafber referred to a's the IIcom~") ~d thGtUND'ERWRITINI
~ER.S Oli' LLOYD'S qomPl'1a~ tM Synd,lcatall bear the ..,~:f1n1 ,iva nUJll~ra
l';Iet t~ in tM 3®~d:PH attsol;,e.d. hereto, ca¢h in "pro,POt't1on aa aat,
{lHW1:ffliaftHID Faf~fl~dV'eo wll~r;e" uReinsurers") in respeot >$1; -6:2..05 'f,
ot: the following. ,:
, ',' ..1
BEING A REINSURANCE Of the net exoess liability as ~erein prov1~ed
and speoified·whioh may acorUe to the Company on business written by
the Automobile Department~ Oompensation and Liabilit~ Department,
Speoial Aooounts Departmen~ and paokage ~ Multiple tine Department under
public Liability (inoluding Per~onal Injury).'~operty·DamageJ Wor~ns
CQmpe~sation and Employers Li~b1l1ty inoluding oontraotual L1abi~ity
ins~anoes issued or renewed by the Comp~y in ~espect of risks talling
within"the Explosives 01' Chemical or l'hal;'ltlaceut1oal categot';tea wber~
,the so-called "Expl.osive h~za.l:'du or uChemioal hazard ll 0);' t1Pharmaoeutioal
hazard" is a. substantial oonsideration at the time of the. 91'1ginal
underwriting of such risks by the Company and where suoh r~sk8 involve
in l1hole or in pa.rt the handling, loaliing, storing and manufacture of
Explosives and Ohem1oals aM l'harmaoeutica:ls.. '.
NO~' IT IS HE!REBY AGREED AS FOLLOWS :-
ARTICLE l'
C~VER;

'.lJh1s Agreement sha.ll apply to all pol;f.Oies, oontraots and binders

of insuranoe and/or, in oa~es where legal restrictions do not pe~mit
the Company to write direot insuranoe and another oarrier issues a
:pol1~y.. c'ontra,ct or, binder whioh the company reinsut'es ]'00%, rein-
?Ufance (hereinafter oalled the original pol~oies) in force and issued
or ~enewed by the Oompany in r~speot of ~iaks as above defined, written
in the United States of Amerioa~ ita Te~itories, an~ l'ossessions o~
Dependenoies, Canada ~a Mexioo,
,ART:wrn 2
EXOLUSIONS :

! t 1s'unde~stood and ~greed th~t this Agr~ement:-

A. Pqes not oover R~insuranqes, other than as provided for

in 'Artiole 1 above.
B. Does not cOVer Atomic Energy risks.
O. Is s~bjeot to the following W~ Exolusion Clause:"
As regards interests whioh at time of loss or damage are on
shore; no liability shall attaoh hereto ~ respeot of any
loss or damage whioh is oooasioned by war, invasion, hostilities,
aots of foreign enemies, oivil war, rebellion, insurreotion,
military' 0);' usurped .pOI'ler, OX' martia;L law or Qonfisoation by
order of any government or publio authority. .
This War Exolusion Olause shal.l not, hOi-lever, apply to :l.ntere~ts
which at time of' loss or damage are within the territorial limits
of the United states of Amerioa (compris~ the fifty States of
the Union and the District of Columbia and inoluding Bridges
between the U.S.A. and Mexioo provided they are under United
states ownership), Oanada, St.Pierre and Miquelon. prOVided suoh
interests are insured under pOlioies,' endorsements or binders
oontaining a standa:rd war or hostilities Ot' warlilte operations
exolusions olause. .
Contd ••••
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 11 of 22

~ "

D. Is subjeot to the following Nuolear InQident EXclusion Olause

Liability Reinauranoe ;-
M
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 12 of 22

I\RTICL'l!: :2
LIMIT 8: RETENTION:
The Reinsurers agree for. the considar,at1on hereinafter appearing
to pay to the Company up to bub not exoeed1ng:-
(a) $1,000.000 ultimate net loss on aooount of ea~ and every
aooident for which the Company shall beoome liable in '
excess of $100,000 Ultimate net loss on aooount of'ea6h
, ,,!Uld evel'Y aooident, as l'§!.§peots all ()lasl39s of: bU6~ess...
qovered hereunder except Produots Bodily Inju~ - "
Phro.'maceu tioal s.. . ' :;
(b) $85Q,OOoultimate net loss on aooount of eaoh ~nd e~ery
aooident for whioh the Oompany shali beoome liable'in
excess of $250.000 ultimate net loss on aooount of eaoh
'and every aooident, as ~espaots ~Oduots Bodily Injury -
Pharmaceutioals only.
arising under the, origina.l p01:l.0ies hereby peinaured.,
ARTICIE 4
'~RM:

This A~eement shall apply to all aOoidents oaourring and on /

atter the first da~ of Jan~ary 1964 and on or before the Thirty-first
day ot Deoember 19641 1~e$paotive qf ~he Inoapt1on dates of the -
origi~l polioies.

ARTICLE 2.
NE,T RETAJ:NI?D LINES s
':Chis Agreern,ent sha,.ll apply ~llly 'to "that porti'on--of any,insuranoe
or reinsur~oe whioh the Oompany retains net for its own aooount, and
in oalculating the amount of' any loas hereunder and also in oompu,ting .
the amount in exoess of whioh this Agreement attaches, only loss or
105se9 in respeot to that pqrt10n of any insurance or reinsuranoe
whioh the Company r~ta1ns net for its own acoount shall be inoluded
it being understood and agreed that the amount of: liability hereunder
in respeot to any loss or losses ~hall not be increased by reason of
the inability of the Company to oolleot from any other reinsurers,
whether speoifio or generai J any amounts which may bave become due
~rom them, whether suoh inability arises from the insolvenoy of suoh
other reinsurers or otherwise ..
ARTICIE 6
DEli'INI';PIONSt
A. The word "Explosives" );'e1'e;r;os to munitions, dynamite. blaok:
powder and. similax- 'substanoes intended 1'01' use a.s eXlllosivas
and does not refer to liquefied petroleum or other sUbstanoes
whioh might explode an4 which are not statutorily olassified
as Exp~osives.
B. By the woro.s "Explosive or Chem.ioal or Pha.rmiMeut:Loal. oateg-:>'t'ies tl
is understood any O};'Iglnal PolIoies issued or to be Issued by the
Company which ~t th~ time of tbe happening of any loss are
o1~ssified by the Company in their own books under that-heading
and the Company shall be th~ sole judge of suoh olassifloat~on.
" ,

C. The term !leaoh and 'every- aco:ldent" as used in this Agl'eement shall
be understood to mean ':each and every aocident oX' se-ries of
aooidents arising out of one event 01' ooourrence"; provided that;
Contd •••••
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 13 of 22

'~
t~;r~
"

(a) As respeot Froduous Bod~1y Injury Liabi~ity and' Produots

Prqperty Damage Liability. it is ~lso understood tbat~
(1) rnjuries to all ~ersons and all damage to property
of others occurr1ng during a policy period and
prooe'ed1,ng £rom or tX'M'eable to the same oausative
agenoy., shall be deemed to arise out of one aOOident,
and the date of suoh accident shall be deemed to.~e
the oommencing date of the policy period. For the
'.~ purpose of this provfs1on, eaoh annual period of a, ....
policy Whioh oontinues in force for maranhan one
~ear shall be deemed to be a separate polio¥ P~iOdj
(2) However. whel;'6 it is possible to detel'mine the :extent
to whioh injuries to persons and damage to property of
of.' others prooeeds £rom the use or oonsumption of one
prepared or aoquired lot of 'merohand:l,se o~ produoti tl1en
snoh injtlt'ies and damage shall, be deemed',. to bave ream ted
from one aooident and sba2l be ~xo1uded from the so~~~ of
aub ... paragraph (1) above. _" I
I
~e word 1f1njurie~1f as u:;;ed inthis,pat'agraph, (a) inoludes
but is nQt limited to, infection, oontagion, poisoning or '
oontaminatlon.
(b) As respeots Property Damage ~iabi11ty (other than AutomobIle
and llroduots), said term shall a~so be understood to mean
"loss '01' losses oaused by a series ot operations, events or
ooourrenoes ariSing out Of' operationa at one speoifio site
and wh1o~ oannot be attributed to any s~Sle one ot suoh
9P~rat1ons; events ot' OCQ1J:l'.l;'en1]es, but ,l:'athel'.' to the cumulative
effeots of tl\e same". In ass~ssing each and every Moldent
within the ~oreg6ing definition it is understood apd agreed
that : .
(1) the series o~ ope~ations, events or ooourrences
shall not extend over a perio'd longet' than
12 cons,:outive months; and
the d~te' on whioh the per104 of not exoeeding 1~ conseou-
tive monthB shall be deemed to have commenced sball be
at the election of the Reassured and shall fall within
the period of this Agreement
(0) As respects elas'ses 01" business l'einsured under this Agreement
other than thos~ e~~~l'ated in paragraphs (a), (b) and Cd) of
this Articl.e, a,a.id term ,shaJ.l alao be unde1.'stooo. to mean, as
regard.s each original Assured, Il:rnjuries to one or mora than
one person X'esult1ng from infection" oontagion, poisoning or
qontaminatlon prooeeding from or traoeable to the same
oausative agenoyJl.
(d) An oooupational or other disease suffered by an employee,
,whioh disease arises out of the employment and for Whioh the
employer is liable shall be deemed an aooident Within the'
meaning hereof. In case tpe COmpany shall within a policy
yea~ sustain several losses arising but Qf suoh an oocupational
or oth~r disease of one apecifio kind or claasl suffered by
Several employees of one Assu~ed, suoh losses shall be deemed
to arise out of one acoident~ A loss as resp~ots each employee
affected by the disease $hall be deemed to have been sustained
by the company at the date when compensable disability Qf the
employee commenced and at no other date.
(e) As respeots businesa where the causa of loss is the "neglectll,
"erX'o);' or' omisaion tl of the Assured, it is undel."stood tha'\i suoh
negleot, e.l;'t'o;t' or Ql1l'ission sl}all be deemed to be an "aooident"
within the meaning hereof.
\ ... 4 Contd, •• ,
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 14 of 22

~."
'"
~

D. The tet'm "net J.08S'" shall mean the SUlU actually pa:J.d bY' the
Company in settlement of losses 0,1.' liabil-:l.ty after making ,
deduotions tor all reooveries, all salvages and all ola+ms upon·
other Reinsurances whether oollected or .not and shall inolude
all adjustment expenses arising trom ~he settlement of olaims
inoluding a pro rata share of salaries and expenses of the
. company's employees in its New York Law Department conneoted
, with ahy rasistanoe to,· invest1gat:ton of. or negotiations
oonoerning settlem.ent of: suoh olaims, but otherwise e~oluding
the salal;"ies of employees and the offige expenses ,of :~he Comp'any.
. ,. ..
All salvages, reooveries or payments reoovered or reci~ived
subsequent to a loss settlement unde~ this A~eement'shall be
appl~ed as it ~eoovered ov reoeived,prior to the aforesaid
settlement and all neoeasary adjustments shall be made by the
parties her~to. Provided always that nothing in th~s Clause
shali be'oonstrued to mean t~at losses under this Agreement
are not recoverable until the Company's ultimate net loss
has been asoertained~
A,RTICrE 7.
DECLARATIONS:
1. In"force bua1nes~at inoeption hereof - Original POlioies
decla.red, under tihe' expirj,ng Agreement are oovered hereunder
, as of the inception elate qf, tqia A.gl'eement. '
2. New ,and" ren!9\~al bu~1nesa' - The Company will advise Messrs.
Pi'itohat'd 8: Baird, 11:10.', 123 Wll,iialD street# New York :38,
New York, U.S.A. o,r eaoh (It'iginal 1'01:1.0'1 falling wi thin th\'l
scope Pi' this Agreement. ~'

ARTICLE 8

The premium to be paid to the Reinsurers hereon shall be ~

oaloulated at the ~ate o~ 25% of the Gross Nett Ea~ned Premium !noome
aooounted fo~ by the Company in'respeot of business the subjeot matter
of this Agreement.
The term uGross Nett Earned Premium Income fl shall mean the
gross premiums ea~ned during the our~enoy of this Agreement less
ea~ned p~emtums on reinsuranoes, recoveries under whioh inure to
the bener~t of Reinsurers.
, '
A minimum and depo~i~ premium of $400,000.00 (payable in tour
1nstal~ents) shall be, paid to th~ ~e1nsurers he~eunder ViZt

1st JanuarY 1964 •••••••••• $IOO~OOOJOO

1st April 1964 ••••••••••••• $100~OOO.OO
1st July 1964 •••••••••••••,$100;000.00
1st Ootober 1964 ••••• ...... $100,000.00
As soo~ as praotioable after the expiration of this Agree~ent,
the company shall prepare a statement of the premium due to Rein-
surers oaloulated in aooordanoe with the oonditions of this Artiole
and should the premium so oaloUlated exoeed the minimum and deposit
premium of $400,000.00 th~ Oompan~ will pay the amount in eXoess
thereof to Reinsurers, but if the p~emlum so oaloulated be less than
$400,000.00 the~e shall be no refUnd to the Company as the minimum
premium payable hereunder is $400,000.00.
- 5 " Contd •••••
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 15 of 22

. '- ~'
r-:l~
-,
-' .~
.
........ t;)
"~

ARTICIJi) ~
IJ:AXES:,
In oonsideration o~ the te~ms under whioh this Agreement is
1ssued t the Comp~y undertakes not to olaim any deduct~on in respeot
of the premium hereon When making tax· returns, other t~an Inoome Or
Pit.ot'its· Tax return,s- to any...~~ate ot' Terr1torw or the D1s~~~~ot of
Oolumpia.
~
".' ,~

Notioe is hereby given that the Reinsurers haVe'ag~eed to allow

~a a deduotion from the premium pay~ble on this Agreement the arnqunt
required for the pur~ose of p~ohasing United states Government
Stamps for attaohment to tbe Agreement i~ respeot of the Federal
stamp Tax due ther~on.
It is understood and agreed that in the event of any return of
premium beooming due under this Agreement. the Reinsurers will
deduot trom the amount of the ~eturn the same peroentage as the
a~lowanoe towards the rederal Stamp T.ax made by the Rein$u~ers on
the total premium. .
where such retur~ of premium beoo.mes due owing to
Neverthe~eas
the cancellation of this Agreement by the Reinsurers the above
.
/ ,"-,-

deduotion of the Tax allowanoe shall 'not be made exoept in SQ far

as the company has a right to' recover .the '])ax from the United States
Government. -
ARTIOIE 10
CLAIMS,:
, The Company will adv~se the Reinsurers prQmptly of al~ olaims
and any subsequent developments pertaining thereto;'whlch may in its
opinion develop into losses lnvoly~g reinsurance hereunder and all
papal's oonnected With the adjustment of the same shall be at al~
times at the oommand of Reinsurers Dr parties deSignated by them
for inspeotion., ,
It is understood th~t, when 60 ~quested, the Company will-afford
the ReinSUrers an opportunity. to be associat~d with the Company at '
the expense of the R~1nsurers# in the defense or control of any olaim
or suit or proceeding l~volving this ~elnsuranoe, and the Company and
the Re1n~ers shal~ co~operate in every respeot in the defense or
oontrol of such olaim or suit or proaeeding.
The Reinsurers agree to pay to the Company any amounts that may
be recoverable-under this, Agreement promptly upon reoeipt of proof
of: payment by the Company.
- The Oompany will turpish to the Reinsurevs annually a list of
outstanding olaims in \'lh1ch the Reinsurers are interested, showing
the.amount of loss rese~es set up by the Company in respect of: both
the gross amount and the amount recoverable hereunder 1n respeot of
each and every suoh claim.
ARTICIE 11
COMMUTATI.ON:
. Twenty-four month$ after the expiry date of this Agreement the
Company shall advise the Reinsurers of any olaims involving Workmen's
Compensation Polioies which may not: h~ve been finally settled and
whioh llIay cause a olaim unde:t' this Agreement. The ReinSUl"ers may
then, o~ at any time thereafter demand that the Company make-a f~nal
claim against the R&insurers in respeot of suoh unsettled claims.
Contd •••••
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 16 of 22

In 'that: event t:le". Oompany' and··the"R€JinSUJ;'eJ;'sm:ia~J. mut.lially .. ~

appoint' an Aotuaz>y or Appraise):, who Elhall in~estiga.te ~ determir.~ and
oapitalise any suoh uns~t~led olaims. ~nd the paymen~ of the
Re~surers' proportion of this sum shall oonstitute a oomplete release
of the Re~urera for such loss so valued.'
ARTICLE 12
PRovtS10N FOR RUN-OFF:
,.,..
/

It is underst90d that 'in the event of termination 0f\ this Agree- I

ment Reinsurers will agree to oontinue th~ reinsuranoe in respeot to
in-foroe business for a. period of one yea.r from the ,date':of termination
or to the f~rst anniversary of any, in~foroe business wh~ghever period
:1.15 the 1easer, at the trea.ty rate of 2~. •
ARTICLE ,12,
ERRORS AND OMISSIONS I
Any deiays, omissions, or e'rrors made in conneotion with the
business dealv with under this Agreem~nt shall not be held to relieve
e:l:thet' party hereto f'l.'oin any 1.1abllity ~lh1ch 'would have a.,ttached to
it hereunder if suoh delays. omissions ot' et'I'Ol'S had no~ been made,
provided suoh omissions or errors are reotified immediately upon
disoovery. '
AR'UCIE 14
ARBITRATION ~ ---... "
If aby dispute shall a.:t'ise '~~~tweenthe Company and the ReinsUl"al.'s
with referenoe to the interp,l;'etation of this AgX'eement, or the rights
"~
with respect of any transaction involved; the dispute sPall be
referred to two Arbi~rators. one ~o be ohosen by each party. ,and suo~
A:t'bitrators shall ohoOSe a,t\ Umpire, and in the event of sa1.d At'b:i~
tra-tors not asreeing~ the dao1sio~ of said Umpire ~hall be final and
binding upon all parties. The At'b1trators and the Umpire shall
interpret this A~eement as an honourable engagement. and they shall,
make thei~ award with a view to effeoting the general purpose of this
.Agreement in a reasonable manner~ rather than in aoo6~danoe with a
literal 1:nte!'pretat1on of the language. Said At'bltration to take
plaoe in Philadelphia.
ARTIOIE 1:2
INSPEOTIONI
The, Company shal.l place at the c;U,sposal of the ReinsurerS at all
reasonable times, and the ~einsurers shaLl have the right to inspeot,
through their a'Uthol'ized representa.tives', all !:looks. i>ecoJ.'da and
papers of the Company in connection ~r.Lth any reins~ance hereunder,
or olaims in conneotion herewith.
f.RTIOLE 16'
CURRENCY':
Premiums and losses hereunder spall be payabla in United States
of America pollara.
ARTIClE 17
,TIlTERME:DIAR! :
Messrs. Pritchard & Baird, Ino.~ 12) William street. New York,
New York 10038, U.S.A. are hereby reoognised as th~ intermedialW
negotiating this Agveement through whom all oommunioations ~elating
thereto Shall be trans~tted to both parties~

GMB
 Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 17 of 22

~j:~:
I ' lllEMORANDUM of intent abtaohing to and fcrm1ns pat't or Polio:! No. U. 61268
'/'
The deOision as to whetber a~risk qualifies for deolaration
under this Reinsul:'anoe Agreement, whe -he).' it is an Explosive,
Chemiaal or Pharmaceutioal r:J,sjc that· ,s involved, is at the s.ole
disQl'etion of the Compa.ny. ." HoweV8r Where the' aat;iV'it;J..~s of an
t
O~iginal Assured are auah that the Co p~y feels it canQot olearly
define fol' olassification purposes be ween Explos'ive and/or
Chemioa:l. and/or Pharrne.oeutiaal oat~goties then the Ul'.lde'l1sl{anding
'is tbat a Pharmaoeutioal Produots Bod+ly Injury losS shall be
d~emsd to be one whe.ra ~he ola~m ,for :Bodily Injury at'iS8S fV9m:

i. Artioles intended for use in theldiagnosis, oure, mitigation,

trea£m~nt or preve~tion of diseare in man; anct

ii. Artioles (other than food) inten~ed to affeot the st~uoture "~
or any other funotion of.t~e bodt of man; and I.J
iii. Artic1.es intended for use· as a o6mponent of any articles
speoified in clause 1, or 11, bUt does n.ot include devices
\
or thei:t' compone';lts. parts oX' ac essories.
Note A: . .
. . '"

'
"

The wo~d "devioes 1t :I.n iii in~ana ~nstl'Ulllex+tsJ apparatus. and

oo~tI'ivanoes. including tbeir oo~onenta, parts, and aocessories,
intende'd (eo) for use in the dia@o!'l1s; cure, mitigation, Vreat- .
mant, or prevent1o~ of.diseaae in man; or (b) to affeot the
struoture 0)." any tunotion ot the body or man. '
Note B:
The term uarbio-les", as used in itel!lS' 11 :l.i, and iii is not
1ntal,1ded to inolude llcosmet1oslt. The term "cosmetio ll means:
(1) articles inbended to be l'Ubbed. poured, sprinll;led or .
sprayed on. introduoed,into'Jor otherwise'applied to
tbe human body o~ any part tpereof for cleanSing,
bea~t1fy1ng. p~omoting attraotiveness. or altering
the appearanoe, and
(2) artioles 1nte.nd~d for u~e as a ~omponent of any suoh
al.'tioles; e'xgept tb.a.t sUoh term shall not :l,nolude .soap.
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 18 of 22

Addengum No. 1.

IT IS HEj1EBY understood and agreed that the :folloViing clauses

ar~ deemed to be inoorpora~ed in thia Agreement:- ~}
,
(A) ~'.:~. INSOLVENCY CUUSl!l (lUllINSURANCES) "l
,
(other than Oal1:forn;t.a)

1~ REINSURERS (nereinafter called the Assuming In~urers)

here,by agree th~t. in the event of: the I.naoJ.vency of 'the COl1lIlany
(hereinatter called the Oeding Insurer), this contraot of reinsuranoe
shall be sq construed that the reinSlU'ancu 6h9).1 be payable directlY
to the Ceding ~nBurer Or to ita liquidator, reoeiver Or statutory
sUoceSSOr by the Assuming Insurers in·the ev~nt of the insolvency of:
'!ihe Oeding InsureI' on thl1' basis of the liability of the Ceding Insurer
undel' the contract Or oontI'.acta reinsured wi:thout diminution because
ot: the illsolvenoy ot: t1i.e Geding InsureI'. :It is :f.urth~r agJJeed that ..
the' liquidator, the reoeiver; or the statutory suocessor of the Oe~ng ,.
Insurer shali sive written notioe to the Assuming lnaurevs of the ,
pendenoy of a olaim against the Oeding Insurer on the Polioy re~nsured
w~thin a reasonable time atter.suoh olaim 1s f;led in the ipaolvenoy
prooeed1ngsj' that during the pendenciy of a~oh.olaim the Assuming
In8ur~ra may Investigate suoh claim and interpoae at their Own e~ense
in the prooeed.ings.where suoh ~laim is to be adjudioated any defenoe
or defe~oaa whic~ the~ may 4eem availab~~ to .the Oeding'I~sure~ 01' its
liquidator, reoeiv.er or statutory BuOOeaaoI1; that the 8:lCPense thus
:j.nOuI're.d by ~he ..Aseuming Insurers Shall be chargeable subjeot to OOUl't
approv~l against the' Ceding. Insurer as part of' tha· expense of liqui-
dation to the extent ot $ pro~ort10nate Share of the benefit which may
aoorue to suon Oeding !neu~er solely as a result o~ th~ defenoe under~
taken by the Assuming Insurers.
(B) INSOLVENOY OLAUSE) (REINstJRA'NCES)
.' Cl;I.l11'orn::l.a.

IN '.mE EVENT o~ the inaol ValiOY Of the oomp any , reinsurano e

under this Agreement shall 'be payable by the Reinsurer to the liqui-
.dator or oQneervator Of th~ Oompany (exoept where either the contract
of' insuranoe OX' this oontJ.>!lct 8pe.o11'1oal1y provides another payee of
suoh reinaurance in the event of insolvenoy o~ the co~any) on the
basis of the olaim o~ olaims'alloWed by such liquidato~ or conservator
w~thout diminution beoause of suoh insolvenoy or beoause the liquidator
or conservator 61' the Oompany has failed to pay Qll or a portion of any·
olf\im~ :ct is agreed, hOW8yer, that the liquidator, conservatol',
reoeiver or statutory suooessor of the Company shall give written
not~pe to the Reinaurers of the. pendency of a olaim against the'Oompany
indicating. the Policy or bond reinsured whi6h claim wou.ld involve a
possible liability Qn the part of the ReinBu~era within a reasonable
time arter such claim is f'iled in the conae~vation or liquidation
prooeeding and that dUring the pendency of Buch claim the Reinsurers
ma.y investigate suoh claim and int.erpose,. at their own eXpenaet in the
proceeqing Where SUch claim is to be adjudicated any de:fenoe or defenceS
whioh they may deem available to the Company Or its liquidator,
conse~vatorJ receiver or statutovy aucoessor. The expense thus
inou.rredby the Reinsurers shall be chargeable, subject to the approval
of' the Oourt, against the Company as pal't of' .·the expense ot conservation
or liquidation to the extent ot a pro rata share of the benefit whioh may
accrUe to the Oompany solelY as a resUlt of the defenoe undertaken by
the ReinauX'srs.
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 19 of 22

Ad.dendum No. 2

ATTACHING
___~ TO and forming
~~
_____ ~ ~
______ ~
pal't
___ Of
___ FOlic~
______________ ~
lto.U61268.
________________ H~~ _ _ _ _ _ ~~~ _ _ _ _ _

, • • I ,,;. .. ' ~

IT IS HEREBY understood and agreed t~t the foll~wi~g'~lause is

deemed to be 'incorporated in this Agreement :-
SEftVIOE OF SUIT OLAUSm (U.S.A)
It is'agreed that in the ev~nt of the faiiur~ of Underwr,itera hereon to
pay any amount claimed to be due hereunder, Under~ritera hereon, at the
request o.f tlJ.e Insured (ot' fteil'1sured), will submit to the jurisdiotion
of al'lY Court of' competent jUl'isdiction w~thin the United Btatea and will
oomp~y with all ~equ1rementa neces$ary to give euch Court jurisdiction
and all mattera, aX'!sing hel'eunder I?~ll be det.ermined in acooro.anoe with
the law andpractioe of such OOUl't.
It ia further agreed that se~ioe of prooess in such suit may be made
upon ~essrs. 'Mendes and Mount, 27 W1111Ml street, New York, and th.a:t :l.p.
any suit inatitute~ ag~inst anyone of ~hem upon this oontraot, Under~
writers will abide by the final'decision of such Court O~ of any
Appellate O,?u~t· in the event of an appea.l~ . '
The aQove-uam~a ~~e a~tho~iaad and directed to a~cept service of process
,on behalf of Underwriters in any such sui.t and! oX' u;pon the. req~est of the
insured (or reinsured) to giv~ a wX'itten undertaking to the insured (or
reinsured) that they will en~er ~ gener~ appea~ance upon. Unde~/riters'
behalf in the, event suoh a suit' shall be instituted. .
Further, pursuant to any statute of any stat~, terX'ito~ or,distriot of
the united states whioh makes provision therefor Undel'Writera hereon
hereby deSignate the Superintendent, Commissioner or Direotor 6f Insurance
or other officer speoified for that purpose· in the statute, or his
successor o~ successors in offioe, ~s their true and lawfUl attorney
upon whom may be s6~ea any lawfUlprooe~~ in a~ aotion, suit Or
prooeed:!,n,g inat:!. tuted by or on behalf' of the :Lmlu:red (or Reinsured) oX'
~ny benefioiary hereunder arising out of this oontract of inauranoe
\or l'einsuJ;'anoe), and hel'eb;r designate the above-named as the :per-son
to whom the said offioer is authoriseQ. to mail such prooess Or a true
oopy thereOf.
~he words lIUndel'Vll'l tera" and., "inSUred (or reinsured) II mentioned. a.bove
are understood to refer to. the Reimlurers and the Company respectively.

RR/
 Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 20 of 22

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Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 21 of 22

EXHIBIT
B
Case 2:11-cv-01055-LDD Document 1 Filed 02/11/11 Page 22 of 22

Umpire Selection Methodology

1. The starting point of the selection process is the list of the 175 JAMS members
identified as IIInsul.'aJlce Neutrals. II

2. The next step is to reduce this list to a more manageable universe in a fail' and random
manner. We would propose two potential methods of doing this:

a) GeogmphicalJy - By choosing those candidates who reside in the Northeast

Conidor (Boston, New York, Philadelphia and Washington, DC) we would reduce the
universe to 42. Ifwe eliminated Boston, the universe would be further. reduced to 31.
The geographical method has some advantages including the candidates being more
likely/able to se~'Ve, cost and convenience; or

b) randomly select 30-40 names from the JAMS list.

We are quite flexible as to the reduction methodology as long as it is random and fau', so
if you have any ideas we would be happy to consider them.

3. Both sides would then have a celtain number of strikes. We'would suggest
somewhere between 5 and 10 strikes each. Again, we are quite flexible on the number of
strikes, as long as there remains a pool of at least 10-12 candidates.

4. Umpu'e questionnaires would be emailed to the remaining candidates and those with
a conflict or unable/unwilling to serve would be elimi'nated. To further ensure that the
umpire is not pre-disposed on the issue, the questiomlaire would also ask the candidates
whether they had previously considered the issue of the accumulation/aggregation of
asbestos claims as an. occurrence or accident under a reinsurance contract. Those
answering affirmatively wouLd also be eliminated.

5. The names of the remaining candidates would then be thrown into a hat and the
neutral umpire would be selected. We should probably pick an alternate or two, at the
same tune, in case of'any unforeseen conflicts, etc. so that we don't have to go through
the whole process all over again.