case 2:11-cv-02083-srb document 1 filed 10/25/11 page 1 of 39

FEDERAL DEPOSIT INSURANCE CORPORATIONJeffrey A. Sandell, Arizona State Bar No. 020658Bob J. Rogers, Texas State Bar No. 171634001601 Bryan St., l5thFloorDallas, TX 75201972.761.2280 Telephone972.761.8181 Facsimile

MULLIN HOARD & BROWN, LLPJohn M. Brown, Texas State Bar No. 03142500Anthony W. Kirkwood, Texas State Bar No. 24032508500 South Taylor Street, Suite 800Amarillo, Texas 79101(806) 372-5050 Telephone(806) 372-5086 Facsimile

Attorneys for Federal Deposit Insurance Corporation,as Receiver for First National Bank of Nevada

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

FEDERAL DEPOSITINSURANCE CORPORATION,as RECEIVER FOR FIRSTNATIONAL BANK OFNEVADA,

V.

Plaintiff,

SYNDICATE 2003 at LLOYD’S,also known as SYNDICATE 2003at LLOYD’S of LONDON; andLLOYD’S of LONDON CATLINSYNDICATE 2003,

Defendants.

Case No.

COMPLAINT FORDAMAGES FOR BREACH OFCONTRACT, BAD FAITH,AND PUNITIVE DAMAGES

Complaint I 164\OO\00396945

Case 2:11-cv-02083-SRB Document 1 Filed 10/25/11 of 39

Plaintiff, the Federal Deposit Insurance Corporation, as Receiver

for First National Bank of Nevada (“FDIC”), alleges as follows:

I. INTRODUCTION

1. This case is about an insurance company that collected a

steep premium and issued a $10 million directors and officers liability

policy, but when called upon to defend former officers and directors of

First National Bank of Arizona against covered claims, completely

abandoned its insureds, refused to defend them, denied coverage under

the policy, refused to explain its actions to its insureds, and then, behind

the backs of its insureds, attempted to concoct a paper trail designed to

exonerate itself for its own misconduct. Left to fend for themselves,

when the proceeds of another policy were insufficient to protect the

former officers and directors, they settled the claims the FDIC had

brought against them and assigned their rights against the insurance

company to the FDIC. The FDJC brings this suit to recover more than

$40 million from the defendants for their wrongful breach of the

insurance policy and their acts of bad faith in connection therewith.

II. PARTIES

2. Plaintiff: The Federal Deposit Insurance Corporation is an

agency of the United States of America under 12 U.S.C. 1819(b)(1). In

Complaint 2 1 164\OO\00396945


this case, the FDTC is acting in its capacity as Receiver for First National

Bank of Nevada as the successor to all claims originally held by the Bank

and any of its predecessors, stockholders, members, accountholders,

depositors, officers, or directors with respect to the institution and the

assets of the institution, and as the assignee of the claims brought in this

case. As such the FDJC is authorized to bring this action pursuant to 12

U.S.C. § 1821(d)(2).

3. Defendant: Syndicate 2003 at Lloyd’s, also known as

Syndicate 2003 at Lloyd’s of London, is a foreign company that offers

property and casualty insurance products to businesses and professionals.

Its principal office is in London, United Kingdom. Syndicate 2003 at

Lloyd’s is designated as the “Insurer” in the Declaration section of the

relevant insurance policy. Syndicate 2003 at Lloyd’s is authorized to

write insurance in Arizona, but does not have a certificate of authority

from the Director of the Arizona Department of Insurance. As such,

Syndicate 2003 at Lloyd’s is a non-admitted qualified insurer under

Arizona law. Accordingly, pursuant to Ariz. Rev. Stat. Ann. § 20-403A

(2003) the FDIC may perfect service upon Syndicate 2003 at Lloyd’s,

also known as Syndicate 2003 at Lloyd’s of London, by serving the

Director of the Arizona Department of Insurance.

Complaint 1 164\OO\00396945


4. Defendant: Lloyd’s of London Catlin Syndicate 2003 is a

foreign company that offers property and casualty insurance products to

businesses and professionals. Its principal office is in London, United

Kingdom. Lloyd’s of London Catlin Syndicate 2003 is designated as the

“Insurer” in the Endorsement section of the relevant insurance policy.

Lloyd’s of London Catlin Syndicate 2003 is authorized to write insurance

in Arizona, but does not have a certificate of authority from the Director

of the Arizona Department of Insurance. As such, Lloyd’s of London

Catlin Syndicate 2003 is a non-admitted qualified insurer under Arizona

law. Accordingly, pursuant to Ariz. Rev. Stat. Ann. § 20-403A (2003)

the FDIC may perfect service upon Lloyd’s of London Catlin Syndicate

2003 by serving the Director of the Arizona Department of Insurance.

5. The FDIC is informed and believes, and on that basis

alleges, that the titles “Lloyd’s of London Catlin Syndicate 2003,”

“Syndicate 2003 at Lloyd’s,” and “Syndicate 2003 at Lloyd’s of London”

as used in the relevant policy of insurance refer to the same entity, and

such entities are hereinafter collectively referred to in this Complaint in

the singular as “Catlin.” Catlin’s underwriting office in the United States

is do Catlin, Inc., 5700 Canoga Park Avenue, Suite 130, Woodland Hills,

CA 91367.

Complaint 4 1 164\OO\00396945


III. JURISDICTION AND VENUE

6. This Court has subject matter jurisdiction over this case

because this action arises under the laws of the United States of America

pursuant to 12 U.S.C. §18 19(b)(2)(A).

7. This Court has personal jurisdiction over Catlin because (i)

Catlin issued the relevant policy of insurance to a national bank located

in Arizona, and/or (ii) the relevant contract of insurance was performable

in whole or in substantial part in Arizona, and/or (iii) Catlin’s contract

breaches and acts of bad faith occurred in Arizona, and/or (iv) the acts

and omissions by Catlin complained of in this Complaint occurred in

Arizona.

8. Venue is proper in this judicial district under 28 U.S.C.

§1391 because all or a substantial part of the events and omissions giving

rise to the claims occurred in this judicial district.

IV. FACTUAL BACKGROUND

A. The Insured Banks.

9. This saga arose as a result of the activities of certain former

directors and officers of First National Bank of Arizona (“FNB Arizona”)

in connection with the operation of a segregated wholesale mortgage

operation. This wholesale mortgage operation was formed for the express

purpose of purchasing and marketing billions of dollars of non-traditional

Complaint 5 1 164\OO\00396945


single family residential mortgage loans commonly referred to as “Alt-A

loans.”

10. Alt-A loans were characterized by a lack of proper

underwriting, no verification of income or assets, and terms that all but

guaranteed high default rates in the future. While these types of risky

loans were initially profitable, they produced enormous losses once the

real estate market softened. From late 2006 through mid 2007 as the real

estate and single family residential mortgage markets were in a free fall,

FNB Arizona continued to purchase billions of dollars of Alt-A loans

destined for resale into the secondary market. When the real estate and

single family residential mortgage markets cratered in 2007, FNB

Arizona was left holding hundreds of millions of dollars of Alt-A loans it

could not sell in the secondary market. Ultimately, losses from the

wholesale mortgage operation caused the bank to fail in 2008.

11. FNB Arizona was one of three banks owned by First

National Bank Holding Company (“FNB Holding”), its sister banks

being First National Bank of Nevada (“FNB Nevada”) and First Heritage

Bank.

12. Prior to July 25, 2008, FNB Nevada was a depository

institution organized and existing under the laws of the United States, and

Complaint 6 1 164\OO\00396945


its deposits were insured by the Federal Deposit Insurance Corporation.

FNB Nevada’s principal place of business was located in Scottsdale,

Arizona.

13. Prior to June 30, 2008, FNB Arizona was a depository

institution organized and existing under the laws of the United States, and

its deposits were insured by the Federal Deposit Insurance Corporation.

FNB Arizona’s principal place of business was located in Scottsdale,

Arizona.

14. FNB Arizona merged into FNB Nevada on or about June 30,

2008. On July 25, 2008, FNB Nevada was closed by the Office of the

Comptroller of the Currency and the Federal Deposit Insurance

Corporation was thereupon appointed as receiver (previously defined as

“FDIC”). The failure of FNB Nevada is predicted to cause a loss to the

Deposit Insurance Fund approaching $1 billion.

15. Pursuant to 12 U.S.C. § 1821(d)(2), the FDIC succeeded to

all claims originally held by FNB Nevada and any of its predecessors,

stockholders, members, accountholders, depositors, officers, or directors

with respect to FNB Nevada and its assets. Among such assets to which

the FDIC succeeded were any and all claims, demands, and causes of

actions (i) against former directors, officers and employees of FNB

Complaint 7 11 64\OO\00396945


Arizona and FNB Nevada arising from the performance, nonperformance

and manner of performance of their respective functions, duties, acts, and

omissions as directors and/or officers of FNB Arizona and FNB Nevada,

and (ii) relating to all professional liability insurance policies relevant to

this case.

16. At all times relevant to this Complaint Raymond A. Lamb,

R. Patrick Lamb, Philip A. Lamb, Gary A. Dorris, M. Lynn Crane,

Gregory J. Smith, and Michael Whalen were former officers and

directors of FNB Arizona and FNB Nevada (“hereinafter collectively the

“Former Ds&Os”).

B. The Insurance Policies.

17. Federal Insurance Company (“Federal”) issued Financial

Institutions Portfolio Policy number 6804-3288, with a policy period

effective from April 9, 2007 to June 9, 2008 (“Federal Policy”). The

Federal Policy provided $10 million of coverage to, among others, the

directors and officers of FNB Arizona and FNB Nevada, including

specifically the Former Ds&Os (“Insureds”), according to its terms and

conditions. The Federal Policy was a “claims made” policy.

18. By letter dated June 5, 2008, notice was given to Federal on

behalf of certain of the Insureds under the Federal Policy. The notice

Complaint 8 11 64\OO\00396945


alerted Federal of potential claims that might be made in the future by

federal regulators in connection with FNB Arizona and FNB Nevada

(“Notice of Circumstances”)1.Since the Federal Policy was a “claims

made” policy, coverage could be triggered by giving notice to Federal

during the policy period of (i) a claim actually made, or (ii)

circumstances which could give rise to a claim after the policy period.

The purpose of the Notice of Circumstances was to put Federal on notice

that claims might be made against certain officers and directors in the

future in order to trigger coverage under the Federal Policy if those

claims were actually made.

19. As the expiration date of the Federal Policy was nearing,

FNB Nevada and FNB Arizona were looking for cost effective director

and officer insurance coverage as an alternative to the Federal Policy.

They were, however, unable to locate an insurance company admitted in

Arizona to provide coverage with the desired terms. Ultimately, Catlin, a

non-admitted qualified insurer, agreed to issue to FNB Nevada and FNB

Arizona a policy with terms that met the Banks’ requirements, including

the following:

Federal is a member of the Chubb Group of related insurance companies. Accordingly, inaccordance with the Federal Policy the Notice of Circumstances was actually addressed to Chubbrather than to Federal.

Complaint 9 11 64\OO\00396945


• Aggregate coverage of $10 million;

• No regulatory exclusion;

• A modified insured versus insured exclusion such thatclaims brought by a federal or bankruptcy receiverwould not be excluded from coverage; and

o A waiver of the Prior Notice Exclusion insofar as thatexclusion would otherwise apply to any claim arisingout of conduct described in the Notice ofCircumstances.

FNB Nevada and FNB Arizona specifically negotiated and paid for a

waiver of the Prior Notice Exclusion so that if any claims based on the

matters described in the Notice of Circumstances were brought while the

new policy was in force, those claims would be covered under the new

policy.

20. As a result, and in exchange for a $200,000 premium, Catlin

issued Director and Officer and Corporate Securities Liability Insurance

Policy number DOP-91825-0608, with a policy period effective from

June 9, 2008 to June 9, 2009 (“Catlin Policy”). The Catlin policy

provided coverage to, among others, the directors and officers of FNB

Arizona and FNB Nevada, including specifically the Former Ds&Os,

according to the terms and conditions of the Catlin Policy. The Catlin

Policy was a “claims made” policy.

Complaint 10 1 164\OO\00396945


21. The Catlin Policy contained the following endorsement

(“Prior Notice Exclusion Waiver”):

In consideration of the premium charged, it is agreed that:We [Catlin] agree to not use the prior notice exclusion asa means to avoid coverage for those matters identified inthe notice of circumstances provided to Chubb dated June5, 2008.

Indeed, every version of the Catlin Policy received by FNB Nevada and

FNB Arizona contained the Prior Notice Exclusion Waiver. Attached

hereto as Exhibits A, B, and C are true copies of the Catlin Policy sent to

FNB Nevada and FNB Arizona by or on behalf of Catlin.

22. Even though Catlin now disputes whether the Prior Notice

Exclusion Waiver endorsement ever existed, Catlin issued a binder,

executed by Catlin’s underwriter Michael Scarlata, to FNB Nevada and

FNB Arizona, dated June 12, 2008, which specifically referenced the

waiver endorsement. Attached hereto as Exhibit D is a true copy of

Catlin’s June 12, 2008 binder.

C. The FIMC’s Claims and the Relevant Insurance Coverage.

23. By letters dated May 29, 2009, and June 2, 2009, the FDIC

provided notice to the Former Ds&Os that the FDIC was asserting claims

against them arising out of their acts and omissions as officers and

directors of FNB Arizona and FNB Nevada (“FDIC Claims”). The FDIC

Complaint 11 1 164\OO\00396945


Claims arose out of the matters described in the Notice of Circumstances

sent to Federal on June 5, 2008.

24. Since the FDIC Claims arose from matters described in the

Notice of Circumstances and Federal received the Notice of

Circumstances while the Federal Policy was in force, coverage under the

Federal Policy was triggered. Accordingly, the Former Ds&Os timely

notified Federal of the FDIC Claims and Federal accepted the defense,

subject to a reservation of rights.

25. Since the FDIC Claims were made while the Catlin Policy

was in force and the prior notice exclusion in the Catlin Policy was

waived by endorsement as to the matters described in the Notice of

Circumstances, such claims were also covered under the Catlin Policy2.

Accordingly, the Former Ds&Os gave Catlin timely notice of the FDIC

Claims and demanded a defense under the Catlin Policy.

26. Catlin initially accepted the defense of the Former Ds&Os

under a reservation of rights. Attached hereto as Exhibit E is a true copy

of a letter dated July 8, 2009, from counsel for Catlin acknowledging

2 Catlin received a copy of the Notice of Circumstances before it issued the Catlin Policy. Indeed, thePrior Notice Exclusion Waiver endorsement specifically references “those matters identified in thenotice of circumstances provided to Chubb dated June 5, 2008.” See Exhibits A, B, and C.

Complaint 12 1 164\OO\00396945


Catlin’s acceptance of the defense of the Former Ds&Os against the

FDIC Claims under a reservation of rights.

27. On June 24, 2010, in an effort to foster a coordinated

defense against the FDIC, counsel for the Former Ds&Os sent a letter to

Catlin’s counsel transmitting a form of confidentiality agreement for

review and approval. Attached hereto as Exhibit F is a true copy of such

letter. In response, by letter dated June 30, 2010, counsel for Catlin

repudiated Catlin’s prior acceptance of the defense of the Former Ds&Os

and denied coverage under the Catlin Policy for the FDIC Claims.

Catlin’s repudiation of its duty to defend and denial of coverage was

based solely on the prior acts exclusion in the Catlin Policy. Attached

hereto as Exhibit G is a true copy of Catlin’s counsel’s June 30 letter.

28. In response to Catlin’s June 30 denial of coverage letter,

counsel for the Former Ds&Os sent a letter dated July 7, 2010 to Catlin’s

counsel pointing out that the prior notice exclusion in the Catlin Policy

was specifically waived by the Prior Notice Exclusion Waiver

endorsement. Counsel for the Former Ds&Os requested that Catlin

reconsider and retract its declination of coverage. Attached hereto as

Exhibit H is a true copy of such letter.

Complaint 13 1164\OO\00396945


29. In response to counsel’s July 7 letter, Catlin’s counsel

requested a copy of the Prior Notice Exclusion Waiver endorsement.

Counsel for the Former Ds&Os sent copies of the endorsement to

Catlin’s counsel by e-mail on July 8, 2010. On the same day, counsel for

Catlin responded by e-mail that the Prior Notice Exclusion Waiver

endorsement was not part of the policy. Attached hereto as Exhibit I is a

true copy of the Former Ds&Os counsel’s July 8 e-mail and Catlin’s

counsel’s July 8 response.

30. By letter dated July 23, 2010, Catlin’s counsel reaffirmed

Catlin’s position that there was no Prior Notice Exclusion Waiver

endorsement in the Catlin Policy and “reiterated” Catlin’s denial of

coverage. Catlin stated that its sole basis for the denial of coverage under

the Catlin Policy was that the Prior Notice Exclusion Waiver

endorsement was not part of the policy. Attached hereto as Exhibit J is a

true copy of Catlin’s counsel’s July 23 letter.

31. As a result of Catlin’s actions, the Former Ds&Os were left

to defend the FDIC claims without the insurance coverage for which

FNB Nevada and FNB Arizona had paid. In fact, Catlin, never paid a

dime in defense costs under the Catlin Policy before it denied coverage

for the FDIC Claims in June 2010.

Complaint 14 1164\OO\00396945


U. The Former Ds&Os’ Settlements with the FDIC.

(i) The Mediation.

32. Before the FDIC filed suit against the Former Ds&Os, the

parties agreed to mediate the FDIC Claims in New York City on May 23,

2011. Although Catlin had already refused to provide a defense and

denied coverage, counsel for the Former Ds&Os wrote Catlin’s counsel

on March 23, 2011 and requested that Catlin participate in the mediation.

Counsel for the Former Ds&Os further advised Catlin’s counsel that

Catlin’s continued denial of coverage and its failure to provide a defense

absolved the insureds of any obligation to give Catlin further notice of

any settlement negotiations or to seek Catlin’s consent to any settlement

of the FDIC Claims. Attached hereto as Exhibit K is a true copy of

counsel’s March 23 letter.

33. On April 18, 2011, counsel for Catlin sent a letter

reaffirming Catlin’s denial of coverage under the Catlin Policy for the

FDIC Claims. Attached hereto as Exhibit L is a true copy of Catlin’s

counsel’s April 18 letter. Catlin also refused to attend the May 23

mediation or participate in any way in the resolution of the FDIC Claims

despite knowing that there was a high potential for claimant recovery and

a high potential for damages exceeding policy limits.

Complaint 15 1 164\OO\00396945


34. Federal attended and actively participated in the parties’

mediation in New York. Catlin did not. At mediation, settlement offers

were made that were within the combined policy limits of the Federal and

Catlin policies, but were not considered given Catlin’s refusal to

participate or contribute to any settlement.

35. After a full day of mediation that ran well into the night, the

parties reached a settlement in principle of the FDIC Claims. It took an

additional three months of intense negotiations between and among the

parties to hammer out the details of the various settlements. On several

occasions the negotiations stalled, and at least twice it appeared that the

settlements would fall through. Three tolling agreements were entered

into between the FDIC and the Former Ds&Os before the settlements

were finally agreed upon.

36. On August 26, 2011, the parties executed a single settlement

agreement which documented the individual agreements settling in full

the FDIC Claims (“Settlement Agreement”). Each of the Former Ds&Os

entered into their respective settlements with the FDIC in order to protect

themselves and their respective beneficiaries, heirs, successors, and

assignees from further exposure to monetary loss in connection with the

Complaint 16 11 64\OO\003 96945


FDIC Claims. Each of the Former Ds&Os’ individual settlements were

negotiated in good faith and resulted in arm’s length agreements.

(ii) The Settlement with Raymond A. Lamb, R. Patrick Lamb,M. Lynn Crane, Gregory J. Smith and Michael Whalen.

37. Under the terms of the Settlement Agreement, Federal

agreed to pay to the FDIC the balance of its policy limits net of defense

costs. Federal has paid the FDIC in excess of $7 million in full

satisfaction of its obligations under the terms of the Settlement

Agreement. The Federal Policy has been fully exhausted through the

payment of defense costs and indemnity payments to the FDIC.

38. Under the terms of the Settlement Agreement, two of the

Former Ds&Os made payments to the FDIC from their personal

resources. Raymond A. Lamb and R. Patrick Lamb have paid the FDIC

$3,510,000 in full satisfaction of their monetary obligations under the

terms of the Settlement Agreement (collectively the “Lamb Settlement

Payments”). The Lamb Settlement Payments were in excess of the limits

of the Federal Policy.

39. Under the terms of the Settlement Agreement, Raymond A.

Lamb, R. Patrick Lamb, M. Lynn Crane, Gregory J. Smith, and Michael

Whalen assigned to the FDIC all of their respective rights, claims, and

causes of action against Catlin and its agents, brokers, employees,

Complaint 17 1 164\OO\00396945


officers and all other persons or entities relating to or arising out of the

Catlin Policy, any other applicable insurance policy or policies, and the

FDIC Claims. Raymond A. Lamb and R. Patrick Lamb also separately

assigned to the FDIC all of their respective rights, claims, and causes of

action against Catlin and its agents, brokers employees, officers and all

other persons or entities relating to or arising out of the Lamb Settlement

Payments.

40. By virtue of the assignments referenced in paragraph 39

above, the FDIC holds all of the respective rights, claims, and causes of

action of any type whatsoever that Raymond A. Lamb, R. Patrick Lamb,

M. Lynn Crane, Gregory J. Smith and Michael Whalen had against Catlin

and its agents, brokers, employees, officers and all other persons or

entities relating to or arising out of the Catlin Policy, any other applicable

insurance policy or policies, the Lamb Settlement Payments, and the

FDIC Claims, specifically including all of the claims brought against

Catlin in this case.

(iii) The Settlement with Gary A. Dorris and Philip A. Lamband the FNB Nevada Lawsuit.

41. Pursuant to the terms of the Settlement Agreement, the

FDIC filed suit against Philip A. Lamb (“Lamb”) and Gary A. Dorris

(“Dorris”) styled Federal Deposit Insurance Corporation, as Receiver

Complaint 18 1 164\OO\00396945


for First National Bank ofNevada v. Gary A. Dorris and Philip A. Lamb,

on August 23, 2011, in the United States District Court for the District of

Arizona, case number 2:11-cv-01652-GMS (“FNB Nevada Lawsuit”).

42. In the FNB Nevada Lawsuit, the FDIC asserted claims

against Dorris and Lamb relating to their conduct as former directors

and/or officers of FNB Arizona and FNB Nevada (“Professional

Claims”). The Professional Claims arise out of matters described in the

Notice of Circumstances and are included within the definition of “FDIC

Claims” referenced above.

43. Following a full evidentiary hearing at which the Court

received live testimony, written testimony, deposition testimony and

documentary evidence, on October 13, 2011, the Court entered

judgments in the FNB Nevada Lawsuit in favor of the FDIC and against

Dorris and Lamb severally, each in the amount of $20 million on the

Professional Claims (collectively “Judgment”). A true copy of the

Judgment is attached as Exhibit M.

44. On October 20 and 21, 2011, Dorris and Lamb assigned to

the FDIC all of their respective rights, title, claims, causes of action,

choses in action, and claims for relief, of whatever nature, against Catlin

and its agents, brokers, representatives, employees, officers and all other

Cornpaint 19 1 164\OO\00396945


persons or entities relating to or arising out of any applicable insurance

policy or policies, including without limitation the Catlin Policy, the

FDIC Claims, the Professional Claims, the FNB Nevada Lawsuit, or the

Judgment (“Dorris/Lamb Assignment”). Attached hereto as Exhibit N is

a true copy of the Dorris/Lamb Assignment.

45. By virtue of the Dorris/Lamb Assignment, the FDIC holds

all of the respective rights, title, claims, causes of action, choses in

action, and claims for relief, of whatever nature, that Dorris and Lamb,

and each of them, had against Catlin and its agents, brokers,

representatives, employees, officers and all other persons or entities

relating to or arising out of any applicable insurance policy or policies,

including without limitation the Catlin Policy, the FDIC Claims, the

Professional Claims, the FNI3 Nevada Lawsuit, or the Judgment,

including specifically all of the claims brought against Catlin in this case.

E. Catlin’s Bad Faith.

46. Catlin owed fiduciary duties of good faith, fair dealing,

equal consideration, fairness and honesty to the Former Ds&Os as

insureds under the Catlin Policy. Catlin’s denial of coverage under the

Catlin Policy and Catlin’s subsequent conduct when asked to justify its

denial were atrocious breaches of those fiduciary duties. The limited

Complaint 20 1 164\OO\00396945


information Catlin provided to the insured Former Ds&Os as a basis for

its failure to defend and its denial of coverage was misleading, incorrect,

made in bad faith, and designed to conceal the true facts, circumstances,

and conditions of the Catlin Policy. In addition, Catlin completely

abandoned the interests of its insureds in order to protect its own

interests. Catlin repeatedly refused reasonable requests from attorneys for

the Former Ds&Os in violation of the Arizona Administrative Code.

Moreover, in an attempt to override the express language of the Prior

Notice Exclusion Waiver endorsement, Catlin went behind the backs of

its insureds in an attempt to get FNB Nevada’s former insurance broker

to bind the Former Ds&Os to a “Memorandum of Understanding” that

Catlin had concocted, which was designed to “interpret” the otherwise

clear language of the Catlin Policy in a manner calculated to exonerate

Catlin from its egregious conduct. These actions violated Catlin’s

fiduciary duties of equal consideration, fairness, and honesty.

47. As stated in its denial letters, Catlin’ s denial of coverage was

based solely on the ground that the Prior Notice Exclusion Waiver

endorsement was not part of the Catlin Policy. See Exhibits G and J. Not

later than a few days after it denied coverage, Catlin knew that the Catlin

Policy sent to FNB Nevada by or on behalf of Catlin contained the Prior

Complaint 21 1 164\OO\00396945


Notice Exclusion Waiver endorsement because counsel for the Former

Ds&Os sent Catlin’s counsel a copy of such endorsement. See Exhibit I.

Yet Catlin did nothing to explain the claimed discrepancy.

48. Although counsel for the Former Ds&Os made repeated

written requests to Catlin for documentation supporting Catlin’s assertion

that the Prior Notice Exclusion Waiver endorsement was never part of

what Catlin maintained was the “official policy,” Catlin repeatedly

refused to provide its insured Former Ds&Os and their counsel with any

such documentation. Moreover, Catlin never offered any explanation to

the insured Former Ds&Os as to why the policies sent to FNB Nevada

and FNB Arizona contained the waiver endorsement (See Exhibits A, B,

and C) while the so-called “official policy” did not. Nor has Catlin ever

offered any explanation as to why the binder for the Catlin Policy, signed

by Catlin’s own underwriter, references the Prior Notice Exclusion

Waiver endorsement that Catlin now claims never existed. See Exhibit D.

49. On August 6, 2010, FNB Nevada’s former insurance broker,

Willis of North America (“Willis”), requested that Catlin’s broker, Tn-

City Insurance Brokers, Inc. (“Tn-City”), produce copies of all e-mail

and other correspondence between Tn-City and Catlin relating to the

issuance of the Catlin Policy. Tn-City initially represented to Willis that

Complaiin 22 11 64\OO\003 96945


Tn-City had had no such communications. After being pressed further by

Willis, on October 12, 2010, Tn-City finally came clean and stated that

“they had been instructed to no longer speak to Willis concerning this

matter.” The FDIC is informed and believes, and on that basis alleges,

that Catlin was involved in the decision to instruct its broker not to

release any information concerning the Catlin Policy to Willis or the

Former Ds&Os. Attached hereto as Exhibit 0 is a true copy of the e-mail

string evidencing Willis’ request for information from Tn-City, and Tn-

City’s refusal to provide that information.

50. On October 12, 2010, counsel for the Former Ds&Os sent

the following e-mail to Catlin’s counsel:

In the meantime, we note that Catlin has not explainedwhy the “prior notice” endorsement, attached to the D&Opolicy delivered to Willis by Catlin’s representatives, isnot binding on Catlin. Simply stated, none of theattorneys representing the insureds could recommendcompromising the apparently clear obligations of Catlinunder the insurance contract, or agree that Catlin’sdeclination has any merit, without some factual or legalbasis. Thus, we believe it would be most productive ifCatlin pennits us to review its underwriting file(s), withparticular emphasis on the drafting of the policy,Declarations, endorsements, and communicationsbetween Catlin, Tn-City, and Willis.

Please consider this a formal request, and let me know ifCatlin will agree to share its underwriting files, or if youhave any questions.

Complaint 23 1 164\OO\00396945


In response to this request, Catlin’s counsel refused to produce the

requested documentation and characterized the request as

“disingenuous.” Attached hereto as Exhibit P are true and correct copies

of this October 12 e-mail exchange.

51. On October 13, 2010, Willis made the following request to

Catlin’s counsel by e-mail:

It is my opinion and position that as Catlin’s client, Willisis entitled to our file, and we would expect that Catlinwould turn it over promptly upon request. We herebymake such request at this time.

To the knowledge of the FDIC, Catlin never complied with Willis’

request. Attached hereto as Exhibit Q is a true copy of Willis’ October 13

e-mail.

52. On October 28, 2010, Robert Novak, counsel for Raymond

A. Lamb, requested that Catlin produce “certified copies of any and all

applications, policies, endorsements, extensions of coverage periods,

invoices, billings, communications with the insured or Willis of Arizona,

Inc. together will all materials submitted therewith or made a part

thereof, collectively “Policies.” Attached hereto as Exhibit R is a true

copy of Mr. Novak’s correspondence. Under Arizona Administrative

Code R20-6-80 1, Catlin was required to respond to this request within

ten (10) days.

Complaint 24 I 164\OO\00396945


53. On January 13, 2011, Catlin finally responded to Mr.

Novak’s request by sending certified copies of the four Catlin policies

issued to FNB Arizona and FNB Nevada. Attached hereto as Exhibit S is

a copy of Catlin’s January 13, 2011 transmittal letter. Catlin never

produced the other documentation requested in Mr. Novak’s letter.

Catlin’s failure to respond to Mr. Novak’s October 28 correspondence

within ten (10) days and to produce the other documentation relating to

the Catlin Policy requested by Mr. Novak constitutes a prohibited

practice under Arizona Administrative Code R20-6-801, as well as a

violation of Catlin’s duty of good faith and fair dealing to its insureds.

54. On October 29, 2010, unbeknownst to any of the Former

Ds&Os or their counsel, Catlin’s counsel prepared a draft “memorandum

of understanding” purporting to address the terms and conditions of the

Catlin Policy and to define the intent of the underwriters and the broker

in issuing the policy (“Catlin MOU”). Catlin’s counsel sent the Catlin

MOU to Willis in an effort to get Willis to sign the document on behalf

of FNB Nevada. Attached hereto as Exhibit T is a true and correct copy

of the draft Catlin MOU prepared by Catlin’s counsel.

55. Even though Catlin knew the insured Former Ds&Os were

represented by counsel, Catlin and its counsel attempted to directly affect

Complaint 25 1 164\OO\00396945


the rights of the insured Former Ds&Os under the Catlin Policy by trying

to persuade Willis to sign a self serving document exonerating Catlin

from its misconduct in this matter. Quite rightly, Willis refused to sign

the Catlin MOU.

56. Catlin’s bad faith in drafting the Catlin MOU is self evident

because:

• In mid-October Catlin’s counsel mentioned in an email that she and counsel for Willis had been“discussing trying to agree on an MOU . . . .“ Inresponse, counsel for the Former Ds&Os admonishedCatlin’s counsel that Willis had no authority to act onbehalf of the Former Ds&Os “to negotiate anyagreement as to coverage, or to enter into anymemorandum of understanding concerning theinterpretation, scope, and application of Catlin’spolicy and the “prior notice” endorsement. If Catlinwants to make a proposal, please send it to theattorneys representing Catlin’s insureds.” See ExhibitP. Instead of complying with this request, Catlin’scounsel secretly drafted the Catlin MOU and sent it toWillis in late October 2010 (immediately afterreceiving Mr. Novak’s comprehensive request fordocuments - See Exhibit R), and counsel for theFormer Ds&Os did not learn of the Catlin MOU untilsix months later in April 2011.

• Catlin refused to involve the Former Ds&Os in thedrafting of an agreement that would have a profoundeffect on their substantive rights under the CatlinPolicy.

• Catlin’s counsel drafted the Catlin MOU for theexpress purpose of concocting an argument to supportits denial of coverage to the insured Former Ds&Os,

Complaint 26 1 164\OO\00396945


and thus depriving them of coverage under the CatlinPolicy.

• Catlin was attempting to procure the signature of FNBNevada’s former insurance agent on a documentpurporting to affect the rights of FNB Nevada longafter FNB Nevada had failed and was in receivership.

• Catlin’s June 30 and July 23 letters set out that thesole basis for denying coverage was the nonexistenceof the Prior Notice Exclusion Waiver endorsement.Nevertheless, five months later Catlin’s counseldrafted the Catlin MOU to provide that the PriorNotice Exclusion Waiver in fact did exist and was partof the Catlin Policy, but the endorsement applied toclaims arising out of the Notice of Circumstancesonly if Federal denied coverage for such claims. SeeExhibit T at ¶ 5. To the knowledge of the FDIC, nosuch version of the Prior Notice Exclusion Waiverendorsement, draft or otherwise, has ever been part ofany party’s file in this case.

57. Upon learning that a draft memorandum of understanding in

fact existed, counsel for the Former Ds&Os immediately repudiated any

attempt by Catlin to consummate such agreement.

V. CLAIMS FOR RELIEF

A. First Claim for Relief (Breach of Contract).

58. The FDIC incorporates by reference all allegations

previously made.

59. Under the Catlin Policy, Catlin contracted to provide a

policy of insurance which covered the Former Ds&Os for the FDIC’s

claims.

Complaint 27 1 l64\OO\00396945


60. Under the Catlin Policy, Catlin expressly covenanted to

provide the Former Ds&Os a defense for claims such as the FDIC claims,

and obliged itself to indemnify the Former Ds&Os for up to $10 million

(less defense costs) in damages covered by the policy.

61. In issuing the Catlin Policy, Catlin undertook a duty of good

faith and fair dealing to its insureds under that policy, including the

Former Ds&Os. By law, Catlin was also required to give the interests of

the Former Ds&Os under the policy equal consideration to Catlin’s own

interests.

62. Catlin also agreed to perform other relevant contract

obligations consistent with the reasonable expectations of the Former

Ds&Os at the time the policy was purchased and/or as specifically set

forth in the Catlin Policy. Such obligations will be disclosed during the

course of discovery in this litigation.

63. In exchange for Catlin’s promises, obligations and duties

under the Catlin Policy, Catlin was paid premiums totaling $200,000.

64. FNB Nevada, FNB Arizona and the Former Ds&Os have

performed all of their respective duties and obligations under the Catlin

Policy. All of the conditions precedent to Catlin’s duties and obligations

Complaint 28 11 64\OO\00396945


have occurred or have otherwise been performed. Catlin’s performance is

not excused by law.

65. Catlin materially breached the Catlin Policy when it failed

and refused to (i) defend the Former Ds&Os against the FDIC claims, (ii)

advance defense costs, and (iii) reasonably settle and/or indemnify the

Former Ds&Os in connection with the FDIC Claims, and Dorris and

Lamb in connection with the FNB Nevada Lawsuit.

66. Catlin also breached its fiduciary duties of good faith, fair

dealing and equal consideration through its conduct described above,

including without limitation:

• By providing the Former Ds&Os and their counselwith information about the reasons for Catlin’s failureto provide a defense and its denial of coverage thatwas misleading, incorrect, made in bad faith, anddesigned to conceal the true facts, circumstances andconditions of the Catlin Policy.

• By failing to respond to reasonable requests of theinsured Former Ds&Os and their counsel seeking anexplanation for why the Catlin Policy sent to FNBNevada and FNB Arizona contains the Prior NoticeExclusion Waiver endorsement and what Catlinmaintains to be the “official policy” does not.

• By refusing to respond to reasonable requests of theinsured Former Ds&Os and their counsel forunderwriting and other information relating to theCatlin Policy given Catlin’s confusion over the PriorNotice Exclusion Waiver endorsement.

Complaint 29 1 164\OO\00396945


o By refusing to reasonably and timely investigate thecircumstances of the issuance of the Prior NoticeExclusion Waiver endorsement in the policy Catlin orits agents sent to FNB Nevada and FNB Arizona, andto share the results of any such investigation with theinsured Former Ds&Os and their counsel.

• By surreptitiously concocting a written memorandumof understanding in an attempt to exonerate Catlin forits improper conduct, secretly attempting to secureWillis’ execution of the memorandum ofunderstanding in a manner calculated to impair therights of the insured Former Ds&Os under the CatlinPolicy without their knowledge, and concealing theexistence of such memorandum of understandingfrom the insured Former Ds&Os and their counseldespite being previously admonished that Willis hadno authority to execute a memorandum ofunderstanding on behalf of the insured FormerDs&Os.

• Preferring Catlin’s own interests under the CatlinPolicy to the complete exclusion of the interests of theinsured Former Ds&Os thereunder.

67. Catlin materially breached the insurance contract in other

aspects. As the FDJC discovers more information about Catlin’s

additional breaches, the FDIC will disclose such information in this

litigation. Such future disclosures are incorporated into this Complaint by

reference.

68. As a direct and proximate result of Catlin’s material

breaches of the Catlin Policy as specified herein, the Former Ds&Os have

been damaged in an amount far in excess of the limits of coverage of the

Complaint 30 1 164\OO\00396945


Catlin Policy, which limits are $10 million. The Former Ds&Os have

also sustained other general, special, consequential, and incidental

damages, all in an amount to be established at trial but not less than

$43,510,000.

69. By virtue of the assignments described in paragraphs 39 and

44 above, the FDIC holds all of the claims of the Former Ds&Os alleged

in this first claim for relief, and is therefore entitled to judgment in their

stead.

70. The FDIC is entitled to prejudgment interest on its damages

at the rate as provided by law.

71. Because this action arises out of an express or implied

contract, the FDIC, as assignee of the Former Ds&Os, is entitled to an

award of attorneys fees against Catlin in accordance with Ariz. Rev. Stat.

Ann. § 12-341.01 (2003), and the FDIC demands the same. In addition,

the FDIC is entitled to attorneys fees as an element of its consequential

damages on the bad faith claim.

B. Second Claim for Relief (Bad Faith).

72. The FDIC incorporates by reference into its Second Claim

for Relief all other allegations of this Complaint.

Complaint 31 1 164\OO\00396945


73. Catlin owed the Former Ds&Os the duties of good faith and

fair dealing to carefully investigate, evaluate and pay the FDIC claims

under the Catlin Policy.

74. Catlin also owed the Former Ds&Os fiduciary duties,

including the duties of equal consideration, fairness, and honesty. These

duties required Catlin to give the Former Ds&Os and their claim on the

Catlin Policy equal consideration to Catlin’s own interest.

75. Catlin breached its duties of good faith and fair dealing,

breached its fiduciary duties, and acted in bad faith in numerous respects,

including but not limited to the following:

• By providing the Former Ds&Os and their counselwith information about the reasons for Catlin’s failureto provide a defense and its denial of coverage thatwas misleading, incorrect, made in bad faith, anddesigned to conceal the true facts, circumstances andconditions of the Catlin Policy.

• By failing to respond to reasonable requests of theinsured Former Ds&Os and their counsel seeking anexplanation for why the Catlin Policy sent to FNBNevada and FNB Arizona contains the Prior NoticeExclusion Waiver endorsement and what Catlinmaintains to be the “official policy” does not.

• By refusing to respond to reasonable requests of theinsured Former Ds&Os and their counsel forunderwriting and other information relating to theCatlin Policy given Catlin’s confusion over the PriorNotice Exclusion Waiver endorsement.

Complaint 32 Il 64\OO\00396945


By refusing to reasonably and timely investigate thecircumstances of the issuance of the Prior NoticeExclusion Waiver endorsement in the policy Catlin orits agents sent to FNB Nevada and FNB Arizona, andto share the results of any such investigation with theinsured Former Ds&Os and their counsel.

• By surreptitiously concocting a written memorandumof understanding in an attempt to exonerate Catlin forits improper conduct, secretly attempting to secureWillis’ execution of the memorandum ofunderstanding in a manner calculated to impair therights of the insured Former Ds&Os under the CatlinPolicy without their knowledge, and concealing theexistence of such memorandum of understandingfrom the insured Former Ds&Os and their counseldespite being previously admonished that Willis hadno authority to execute a memorandum ofunderstanding on behalf of the insured FormerDs&Os.

• By preferring Catlin’s own interests under the CatlinPolicy to the complete exclusion of the interests of theinsured Former Ds&Os thereunder.

• By adopting an unreasonable interpretation of theCatlin Policy after receiving notice of the FederalPolicy that resulted in coverage for the FormerDs&Os becoming illusory.

• By consciously and unreasonably denying coveragefor the FDIC claims with the knowledge that suchdenial was and is wrongful and contrary to Catlin’sobligations under the Catlin Policy and the law.

• By consciously and unreasonably failing to properlyinvestigate the FDJC Claims fairly and in good faithand by refusing to give the interests of the FormerDs&Os at least as much consideration as Catlin gaveits own interest.

Complaint 33 1 164\OO\00396945


By consciously and unreasonably denying theindemnity claim of the Former Ds&Os withoutthoroughly investigating the foundation for the denial.

• By consciously and unreasonably misinterpreting thefacts and the Catlin Policy provisions at issue in a waycalculated to deprive the Former Ds&Os of benefitsunder the policy to which they were entitled.

• By failing to thoroughly investigate the coverageclaim of the Former Ds&Os.

• By failing to objectively evaluate the coverage claimof the Former Ds&Os.

• By adopting an unduly restrictive and unreasonableinterpretation of its own policy.

• By using improper standards to deny the claims of theFormer Ds&Os.

• By unreasonably refusing to acknowledge coveragefor the FDIC Claims.

• By engaging in dilatory claims handling practices.

• By failing to communicate timely with the FormerDs&Os and their counsel with respect to the FDICClaims.

• By refusing to participate in any settlementnegotiations or the mediation, despite the fact thatthere was a high potential for claimant recovery and ahigh potential for damages exceeding policy limits.

• By concealing information concerning the CatlinPolicy and the Prior Notice Exclusion Waiverendorsement in order to frustrate the Former Ds&Osin their efforts to obtain coverage under the CatlinPolicy.

• By completely disregarding the rights of the Former

Complaint 34 1 164\OO\00396945


Ds&Os under the Catlin Policy notwithstandingCatlin’s knowledge that its conduct would leave theFormer Ds&Os without adequate insurance coveragefor the FDIC Claims and would substantially impairthe ability of the Former Ds&Os to defend themselvesand/or settle the FDIC Claims.

76. Catlin committed bad faith and continues to commit bad

faith in other particulars, the full details of which the FDIC has not yet

discovered but for which the FDIC is entitled to recover damages against

Catlin. As the FDIC discovers more information about Catlin’s additional

acts of bad faith, it will disclose the information in the pending litigation.

These future disclosures are incorporated into this Complaint by

reference.

77. The FDIC is informed and believes, and based upon such

information and belief alleges, that the aforementioned conduct of Catlin

represents a common pattern and practice on its part and constitutes

Catlin’s general business practices directed at the public generally in that

such conduct (i) was an expressions of, and in compliance with, standard

company practices and procedures, (ii) is said by Catlin to be in

conformity with what it contends are standard claims practices, and,

consequently or incidentally, (iii) is committed or performed with such

frequency as to indicate general business practices.

Complaint 35 1 164\OO\00396945


78. As a direct and proximate result of Catlin’s bad faith

specified in this Complaint, the Former Ds&Os have sustained general,

special, consequential and incidental damages in an amount to be

established at trial, but not less than $43,510,000.

79. The FDIC is informed and believes, and on the basis of such

information and belief alleges, that Catlin intended to injure the Former

Ds&Os for Catlin’s own pecuniary gain, and intentionally thwarted the

objectives sought to be reached by the insurance contract in order to do

so. Catlin’s conduct was extreme and outrageous, and the trier of fact

could reasonably infer that (i) Catlin intended to injure the Former

Ds&Os; or (ii) Catlin, having reason to know, consciously disregarded a

substantial risk of harm that Catlin’s conduct might significantly injure

the Former Ds&Os. Given this conduct, the Former Ds&Os are entitled

to punitive damages in a sufficient amount to appropriately punish Catlin.

80. By virtue of the assignments described in paragraphs 39 and

44 above, the FDIC holds all the claims of the Former Ds&Os alleged in

this second claim for relief and is therefore entitled to judgment in their

stead.

81. The FDIC is also entitled to prejudgment interest on its

damages and at a rate that is provided by law.

Complaint 36 1 164\OO\003 96945


82. Because this action arises out of an express or implied

contract, the FDIC, as assignee of the Former Ds&Os, is entitled to an

award of attorneys fees against Catlin in accordance with Ariz. Rev. Stat.

Ann. § 12-341.01 (2003), and the FDIC demands the same. In addition,

the FDIC is entitled to attorneys fees as an element of its consequential

damages on the bad faith claim against Catlin.

VI. PRAYER

Wherefore, FDIC demands judgment against Syndicate 2003 at

Lloyd’s, also known as Syndicate 2003 at Lloyd’s of London, and

Lloyd’s of London Catlin Syndicate 2003 for damages as follows:

1. For general, special, consequential, and incidental damages

in an amount to be proved at trial but not less than $43,510,000;

2. For punitive damages;

3. For prejudgment interest on all of the FDIC’s damages at the

rate and as provided by law;

4. For attorney’s fees in accordance with Ariz. Rev. Stat. Ann.

§ 12-341.01 (2003) and as an element of consequential damages on the

FDIC’s bad faith claim;

Complaint 37 1 164\OO\00396945


5. For costs in accordance with Ariz. Rev. Stat. Ann. § 12-

341 (2003) and as an element of consequential damages on the FDIC’s

bad faith claim; and

6. For such other and further relief as this Court deems

appropriate.

Respectfully submitted this 25th day of October, 2011.

FEDERAL DEPOSIT INSURANCEColu0RATION

BY: Is! JEFFREY A. SANDELL

Jeffrey A. Sandell,Arizona State Bar No. 020658E-mail: [email protected] J. Rogers pro hac vice pendingTexas State BarNo. 17163400Email: brogers(,fdic .gov1601 Bryan St., 15th FloorDallas, TX 75201972.761.2280 Telephone972.761.8181 Facsimile

Complaint 38 1164\OO\00396945


MULLIN HOARD & BROWN, L.L.P.

John M. Brown, pro hac vice pendingTexas State Bar No. 03142500jmb(2mhba.cornAnthony W. Kirkwood, pro hac vicependingTexas State Bar No. [email protected] South Taylor StreetSuite 800Amarillo, Texas 79101Mailing Address:P.O. Box 31656Amarillo, Texas 79120-1656(806) 372-5050 Telephone(806) 372-5086 Facsimile

Attorneys for Federal Deposit InsuranceCorporation, as Receiver for FirstNational Bank of Nevada

Complaint 39 11 64\OO\00396945


EXHIBIT A

Case 2:11-cv-02083-SRB Document 1-1 Filed 10/25/11 Page 1 of 178

1 DIRECTOR AND OFFICER C AT L INAND CORPORATE SECURITIESLIABILITY INSURANCE POLICYDECLARATIONS

J Policy No.: DOP—91 825—0608 Renewal of Policy No.: NJA 1

Terms appearing in bold are defined in the Policy.

THIS IS A “CLAIMS MADE AND REPORTED” POLICY. SUBJECT TO ITS TERMS AND PROVISIONS,THIS POLICY ONLY AFFORDS COVERAGE FOR CLAIMS FIRST MADE AGAINST THE INSUREDS ANDREPORTED TO THE INSURER IN WRITING DURING THE POLICY PERIOD OR DISCOVERY PERIOD, IFAPPLICABLE. IN ADDITION, DEFENSE COSTS ARE INCLUDED IN AND WILL REDUCE THE LIMITS OFLIABILITY.

PLEASE READ THIS ENTIRE POLICY CAREFULLY. CONSULT YOUR BROKER OR OTHERREPRESENTATIVE IF YOU DO NOT UNDERSTAND ANY TERMS OR PROVISIONS OF THIS POLICY.

INSURER CORRESPONDENT OFFICE/UNDERWRITING OFFICE

Catlin Insurance Company (UK) Ltd.do Catlin Holdings (UK) Limited

3 Minster Court, Mincing LaneLondon EC3R 7DD

x

PRODUCER

Syndicate 2003 at Lloyd’sdo Catlin Underwriting Agency Ltd.

6th Floor, 3 Minster CourtMincing Lane, London EC3R 7DD

Catlin, Inc.6320 Canoga Ave.

Suite 1564Woodland Hills, CA 91367

Catlin Specialty Insurance Company160 Greentree Drive

Suite 101Dover,DE 19904

Tom Donnelly- Tn City — San Francisco

Item 1. Named Insured: First National Bank of ArizonaAddress: 17600 N. Perimeter Drive

Scottsdale, AZ 85255

Item 2. Policy Period: From:June 9,2008 to June 9,2009Both dates at 12:01 a.m. (local time at the address stated in Item 1)

Item 3.Aggregate Limit of Liability: $10,000,000

Page 1 of 43


Item 4. Retentions:Insuring Clause 1.: $0 each ClaimInsuring Clause 2.: $500,000 each Claims other than Securities ClaimsInsuring Clause 3.: $500,000 each Securities Claims only

Item 5. Coinsurance Percentage each Securities Claim: N/A

Item 6. Premium: $200,000Additional Premium for the Discovery Period: 1 00% of PremiumLength of the Discovery Period: 1 year

Item 7. Pending or Prior Date: Primary 3m - May 27, 1 9992m xs 3m -April 1,20045m xs 5m -April 1, 2005

Page 2 of 19


THESE DECLARATIONS, TOGETHER WITH THE COMPLETED AND SIGNED APPLICATION FOR THISPOLICY, ALL MATERIALS SUBMITTED THEREWITH OR MADE A PART THEREOF AND THE POUCYFORM ATTACHED HERETO, CONSTITUTE THE POLICY. -—

This Policy shall not be valid unless also signed by another duly authorized representative ofthe Insurer.

Item 8. Retroactive Date: Primary 3m - May 27, 19992mxs3m-ApriIl,20045m xs 5m - April 1, 2005

Item 9. Notices to Insurer:

Claims: All Other Notices:

Attri: Claims Director - Tom Deitz Attn: UnderwritingCatlin Group Inc.Catlrn Group Inc.6320 Canoga Ave3340 Peachtree NESuite 1 564Tower Place 100, Suite 2950 Woodland Hills, CA 91 367

Item 10. Endorsements Applicable to Coverage at Inception of Policy:

1. Amend defense and settlement endorsement2. Insuring clause 1 only coverage endorsement3. Add securities exclusion endorsement4. Arizona amendatory endorsement to the general terms and conditions section5. Amend insured versus insured exclusion (whistleblower) endorsement6. Failure to maintain insurance exclusion with side a carveback endorsement7. Prior notice amendment

Page 3 of 19


DIRECTOR AND OFFICER AND CORPORATE SECURITIES LIABILITYCOVERAGE FORM

In consideration of payment of the premium and subject to the Declarations, the General Termsand Conditions, and the limitations, conditions, provisions and other terms of this coveragesection, the Company and the Insureds agree as follows:—

Insuring Clauses

Executive Liability Coverage Insuring Clause 1

1. The Company shall pay, on behalf of each of the Insured Persons, Loss for whichthe Insured Person is not indemnified by the Organization and which the InsuredPerson becomes legally obligated to pay on account of any Claim first madeagainst the Insured Person, individually or otherwise, during the Policy Period or, ifexercised, during the Extended Reporting Period, for a Wrongful Act committed,attempted, or allegedly committed or attempted by such Insured Person before orduring the Policy Period, but only if such Claim is reported to the Company inwriting in the manner and within the time provided in Subsection 14 of thiscoverage section.

Executive /ndemnitkation Coverage Insuring Clause 2

2. The Company shall pay, on behalf of the Organization, Loss for which theOrganization grants indemnification to an Insured Person, as permitted or requiredby law, and which the Insured Person becomes legally obligated to pay on accountof any Claim first made against the Insured Person, individually or otherwise,during the Policy Period or, if exercised, during the Extended Reporting Period, fora Wrongful Act committed, attempted, or allegedly committed or attempted bysuch Insured Person before or during the Policy Period, but only if such Claim isreported to the Company in writing in the manner and within the time provided inSubsection 14 of this coverage section.

Entity Securities Coverage Insuring Clause 3-

3. The Company shall pay, on behalf of the Organization, Loss which theOrganization becomes legally obligated to pay on account of any Securities Claimfirst made against the Organization during the Policy Period or, if exercised,during the Extended Reporting Period, for a Wrongful Act committed, attempted,or allegedly committed or attempted by the Organization or the Insured Personsbefore or during the Policy Period, but only if such Securities Claim is reported to

Page 4 of 19


the Company in writing in the manner and within the time provided in Subsection14 of this coverage section.

Definitions

4. When used in this coverage section:

Application means all signed applications, including attachments and othermaterials submitted therewith or incorporated therein, submitted by the Insureds tothe Company for this coverage section or for any coverage section or policy of whichthis coverage section is a direct or indirect renewal or replacement. Application shallalso include, for each Organization, all of the following documents whether or notsubmitted with or attached to any such signed application: (i) the Annual Report(including financial statements) last issued to shareholders before this policy’sinception date; (ii) the report last filed with the Securities and ExchangeCommission on Form 10—K before this policy’s inception date; (iii) the report lastfiled with the Securities and Exchange Commission on Form 1 O—Q before thispolicy’s inception date; (iv) the proxy statement and (if different) definitive proxystatement last filed with the Securities and Exchange Commission before thispolicy’s inception date; (v) all reports filed with the Securities and ExchangeCommission on Form 8—K during the twelve months preceding this policy’sinception date; and (vi) all reports filed with the Securities and ExchangeCommission on Schedule 13D, with respect to any equity securities of suchOrganization, during the twelve months preceding this policy’s inception date. Allsuch applications, attachments, materials and other documents are deemedattached to, incorporated into and made a part of this coverage section.

Claim means:

(1) when used in reference to the coverage provided by Insuring Clause 1 or 2:

(a) a written demand for monetary damages or non-monetary relief;

(b) a civil proceeding commenced by the service of a complaint or similarpleading; or

(c) a formal civil administrative or civil regulatory proceeding commencedby the filing of a notice of charges or similar document or by the entryof a formal order of investigation or similar document,

against an Insured Person for a Wrongful Act, including any appealtherefrom;

Page 5 of 19


(2) when used in reference to the coverage provided by Insuring Clause 3:

(a) a written demand for monetary damages or non—monetary relief;

(b) a civil proceeding commenced by the service of a complaint or similarpleading; or

(c) a formal civil administrative or civil regulatory proceeding commencedby the filing of a notice of charges or similar document or by the entryof a format order of investigation or similar document, but only whitesuch proceeding is also pending against an Insured Person,

against an Organization for a Wrongful Act, including any appeal therefrom;or

(3) when used in reference to the coverage provided for a Securities Claim byInsuring Clause 1 or 2, a criminal proceeding commenced by the return of anindictment against an Insured Person for a Wrongful Act, including anyappeal therefrom.

Except as may otherwise be provided in Subsection Ii, Subsection 1 2(f),orSubsection 14(b) of this coverage section, a Claim will be deemed to have first beenmade when such Claim is commenced as set forth in this definition or, in the case ofa written demand, when such demand is first received by an Insured.

Defense Costs means that part of Loss consisting of reasonable costs, charges,fees (including but not limited to attorneys’ fees and éxperts’ fees) and expenses(other than regular or overtime wages, salaries, fees or benefits of the directors,officers or employees of the Organization) incurred in defending any Claim and thepremium for appeal, attachment or similar bonds.

-

Domestic Partner means any natural person qualifying as a domestic partner underthe provisions of any applicable federal, state or local law or under the provisionsof any formal program established by the Organization.

Financial Impairment means the status of an Organizatior resulting from:

(a) the appointment by any state or federal official, agency or court of anyreceiver, conservator, liquidator, trustee, rehabilitator or similar officialto take control of, supervise, manage or liquidate such Organization; or

Page 6 of 19


(b) such Organization becoming a debtor in possession under the UnitedStates bankruptcy law or the equivalent of a debtor in possession underthe law of any other country. -

Insured means the Organization and any Insured Person.

Insured Capacity means the position or capacity of an Insured Person that causeshim or her to meet the definition of Insured Person set forth in this coveragesection. Insured Capacity does not include any position or capacity held by anInsured Person in any organization other than the Organization, even if theOrganization directed or requested the Insured Person to serve in such position orcapacity in such other organization.

Insured Person means any natural person who was, now is or shall become:

(a) a duly elected or appointed director, officer, or the in—house generalcounsel of any Organization chartered in the United States of America;

(b) a holder of a position equivalent to any position described in (a) abovein an Organization that is chartered in any jurisdiction other than theUnited States of America; or

Cc) solely with respect to Securities Claims, any other employee of anOrganization, provided that such other employees shall not, solely byreason of their status as employees, be Insured Persons for purposes ofExclusion 5(c).

Loss means the amount that any Insured Prson (for pirposes of Insuring Clauses1 and 2) or the Organization (for purposes of Insuring Clause 3) becomes legallyobligated to pay on account of any covered Claim, including but not limited todamages (including punitive or exemplary damages, if and to the extent that suchpunitive or exemplary damages are insurable under the law of the jurisdictionmost favorable to the insurability of such damages provided such jurisdiction has asubstantial relationship to the relevant Insureds, to the Company, or to the Claimgiving rise to the damages), judgments, settlements, pre—judgment and post—judgment interest, and Defense Costs.

Loss shall not include:

(a) any amount not indemnified by the Organization for which an InsuredPerson is absolved from payment by reason of any covenant, agreementor court order;

Page 7 of 19


(b) any costs incurred by the Organization to comply with any order forinjunctive or other non—monetary relief, or to comply with anagreement to provide such relief;

(c) any amount incurred by an Insured in the defense or investigation ofany action, proceeding or demand that is not then a Claim even if (I)such amount also benefits the defense of a coved Claim, or (ii) suchaction, proceeding or demand subsequently gives rise to a Claim;

Cd) taxes, fines or penalties, or the multiple portion of any multiplieddamage award, except as provided above with respect to punitive orexemplary damages;

(e) any amount not insurable under the law pursuant to which thiscoverage section is construeo except as provided above with respect topunitive or exemplary damages;

(f) any amount allocated to non—covered loss pursuant to Subsection 16 ofthis coverage section; or

(g) any amount that represents or is substantially equivalent to an increasein the consideration paid (or proposed to be paid) by an Organization inconnection with its purchase of any securities or assets.

Organization means, collectively, those organizations designated in Item 5 of theDeclarations for this coverage section, and the Subsidiaries of such designatedorganizations.

Pollutants means (a) any substance located anywhere in the world exhibiting anyhazardous characteristics as defined by, or identified on a list of hazardoussubstances issued by, the United States Environmental Protection Agency or anystate, county, municipality or locality counterpart thereof, including but not limitedto solids, liquids, gaseous or thermal irritants, contaminants or smoke, vapor, soot,fumes, acids, alkalis, chemicals or waste materials, or (b) any other air emission,odor, waste water, oil or oil products, infectious or medical waste, asbestos orasbestos products or any noise.

Related Claims means all Claims for Wrongful Acts based upon, arising from, or inconsequence of the same or related facts, circumstances, situations, transactionsor events or the same or related series of facts, circumstances, situations,transactions or events.

Securities Claim means that portion of a Claim which:

PageS of 19


(a) is brought by a securityholder of an Organization:

(I) in his or her capacity as a. securityholder of such Organization,with respect to his or her interest in securities of suchOrganization, and against such Organization or any of its InsuredPersons; or

(ii) derivatively, on behalf of such Organization, against an InsuredPerson of such Organization; or

(b) alleges that an Organization or any of its Insured Persons:

(i) violated a federal, state, local or foreign securities law or a rule orregulation promulgated under any such securities law; or

(ii) committed a Wrongful Act that constitutes or arises from apurchase, sale, or offer to purchase or sell securities of suchOrganization;

provided that Securities Claim does not include any Claim by or on behalf of aformer, current, future or prospective employee of the Organization that is basedupon, arising from, or in consequence of any offer, grant or issuance, or any planor agreement relating to the offer, grant or issuance, by the Organization to suchemployee in his or her capacity as such of stock, stock warrants, stock options orother securities of the Organization, or any payment or instrument the amount orvalue of which is derived from the value of securities of the Organization.

Subsidiary means any organization while more than fifty percent (50%) of theoutstanding securities or voting rights representing the present right to vote forelection of or to appoint directors of such organization are owned, directly orindirectly, in any combination, by one or more of those organizations designatedin Item 5 of the Declarations for this coverage section.

Wrongful Act means:

(a) any error, misstatement, misleading statement, act, omission, neglect,or breach of duty committed, attempted, or. allegedly committed orattempted by an Insured Person in his or her Insured Capacity, or forpurposes of coverage under Insuring Clause 3, by the Organization, or

(b) any other matter claimed against an Insured Person solely by reason ofhis or her serving in an Insured Capacity.

Page 9 of 1 9


Exclusions

Applicable To All insuring Clauses

5. The Company shall not be liable for Loss on account of any Claim:

(a) based upon, arising from, or in consequence of any fact, circumstance,situation, transaction, event, or Wrongful Act that, before the inception dateset forth in Item 2 of the Declarations of the General Terms and Conditions,was the subject of any notice given under any policy or coverage section ofwhich this coverage section is a direct or indirect renewal or replacement;

(b) based upon, arising from, or in consequence of any demand, suit or otherproceeding pending against, or order, decree or judgment entered for oragainst any Insured, on or prior to the Pending or Prior Date set forth in Item7 of the Declarations for this coverage section, or the same or substantiallythe same fact, circumstance, situation, transaction, event, or Wrongful Actunderlying or alleged therein;

(c) brought or maintained by or on behalf of any Insured in any capacity;provided that this Exclusion 5(c) shall not apply to:

(I) a Claim brought or maintained derivatively on behalf of theOrganization by one or more securityholders of the Organization,provided such Claim is brought and maintained without any activeassistance or participation of, or solicitation by, any Insured Person;

(ii) an employment Claim brought or maintained by or on behalf of anInsured Person; or

(iii) a Claim brought or maintained by an Insured Person for contribution orindemnity, if such Claim directly results from another Claim coveredunder this coverage section;

Cd) based upon, arising from, or in consequence of:

(I) any actual, alleged, or threatened exposure to, or generation, storage,transportation, discharge, emission, release, dispersal, escape,treatment, removal or disposal of any Pollutants; or

(ii) any regulation, order, direction or request to test for, monitor, cleanup, remove, contain, treat, detoxify or neutralize any Pollutants, or any

Page Oof 19


action taken in contemplation or anticipation of any such regulation,order, direction or request,

including but not limited to any Claim for financial loss to the Organization,its securityholders or its creditors based upon, arising from, or inconsequence of any matter described in clause (I) or clause (ii) of thisExclusion 5(d);

(e) for bodily injury, mental anguish, emotional distress, sickness, disease ordeath of any person or damage to or destruction of any tangible propertyincluding loss of use thereof whether or not it is damaged or destroyed;provided that this Exclusion 5(e) shall not apply to mental anguish oremotional distress for which a claimant seeks compensation in anemployment Claim;

(f) for an actual or alleged violation of the responsibilities, obligations or dutiesimposed on fiduciaries by the Employee Retirement Income Security Act of1974, or any amendments thereto, or any rules or regulations promulgatedthereunder, or any similar provisions of any federal, state, or local statutorylaw or common law anywhere in the world;

(g) for Wrongful Acts of an Insured Person in his or her capacity as a director,officer, manager, trustee, regent, governor or employee of any entity otherthan the Organization, even if the Insured Person’s service in such capacity iswith the knowledge or consent or at the request of the OrganIzation; or

(h) for any Wrongful Act committed, attempted, or_allegedly committed orattempted by a Subsidiary or an Insured Person of a Subsidiary during anytime when such entity was not a Subsidiary.

,4ppllcab/e To Insuring Clauses 1 and 2 Only

6. The Company shall not be liable under Insuring Clause 1 or 2 for Loss on accountof any Claim made against any Insured Person:

(a) for an accounting of profits made from the purchase or sale by such InsuredPerson of securities of the Organization within the meaning of Section 1 6(b)of the Securities Exchange Act of 1 934, any amendments thereto, or anysimilar provision of any federal, state, or local statutory law or common lawanywhere in the world; or

(b) based upon, arising from, or in consequence of any deliberately fraudulentact or omission or any willful violation of any statute or regulation by such

Page 11 of 19


Insured Person, if a judgment or other final adjudication in any proceedingestablishes such a deliberately fraudulent act or omission or willful violation;or

-

(c) based upon, arising from, or in consequence of such Insured Person havinggained any profit, remuneration or advantage to which such Insured Personwas not legally entitled.

—

Appilcable To Insuring Clause 3 Only

7. The Company shall not be liable under Insuring Clause 3 for Loss on account ofany Securities Claim made against any Organization:

(a) based upon, arising from, or in consequence of any deliberately fraudulentact or omission or any willful violation of any statute or regulation by anOrganization or by any past, present or future chief financial officer, in—house general counsel, president, chief executive officer or chairperson of anOrganization, if a judgment or other final adjudication in any proceedingestablishes such a deliberately fraudulent act or omission or willful violation;or

(b) based upon, arising from, or in consequence of such Organization havinggained any profit, remuneration or advantage to which such Organizationwas not legally entitled; or

(c) for any actual or alleged liability of an Organization under any contract oragreement that relates to the purchase, sale, or offer to purchase or sell anysecurities; provided that this Exclusiàn 7(c) shall ret apply to liability thatwould have attached to such Organization in the absence of such contract oragreement.

Severability of Exclusions

8. (a) No fact pertaining to or knowledge possessed by any Insured Person shall beimputed to any other Insured Person for the purpose of applying theexclusions in Subsection 6 of this coverage section. -

(b) Only facts pertaining to and knowledge possessed by any past, present, orfuture chief financial officer, in—house general counsel, president, chiefexecutive officer or chairperson of an Organization shall be imputed to suchOrganization for the purpose of applying the exclusions in Subsection 7 of thiscoverage section.

Page 12 of 19


Spouses, Estates and Legal Representatives-

9. Subject otherwise to the General Terms and Conditions and the limitations,conditions, provisions and other terms of this coverage section, coverage shallextend to Claims for the Wrongful Acts of an Insured Person—made against:

(a) the estate, heirs, legal representatives or assigns of such Insured Person ifsuch Insured Person is deceased or the legal representatives or assigns ofsuch Insured Person if such Insured Person is incompetent, insolvent orbankrupt; or

(b) the lawful spouse or Domestic Partner of such Insured Person solely byreason of such spouse or Domestic Partner’s status as a spouse or DomesticPartner, or such spouse or Domestic Partner’s ownership interest in propertywhich the claimant seeks as recovery for an alleged Wrongful Act of suchInsured Person.

All terms and conditions of this coverage section, including but not limited to theRetention, applicable to Loss incurred by the Insured Persons, shall also apply toloss incurred by the estates, heirs, legal representatives, assigns, spouses andDomestic Partners of such Insured Persons. The coverage provided by thisSubsection 9 shall not apply with respect to any loss arising from an act oromission by an Insured Person’s estate, heirs, legal representatives, assigns,spouse or Domestic Partner.

Coordination With Employment Practices Liability Coverage Section

10. Any Loss otherwise covered by both (I) this coverage section and (ii) any employmentpractices liability coverage section or policy issued by the Company or by anyaffiliate of the Company (an Employment Practices Liability Coverage”) first shall becovered as provided in, and shalt be subject to the limit of liability, retention andcoinsurance percentage applicable to such Employment Practices Liability Coverage.Any remaining Loss otherwise covered by this coverage section which is not paidunder such Employment Practices Liability Coverage shall b&covered as provided in,and shall be subject to the Limit of Liability, Retention and Coinsurance Percentageapplicable to this coverage section; provided the Retention applicable to such Lossunder this coverage section shall be reduced by the amount of Loss otherwisecovered by this coverage section which is paid by the Insureds as the retentionunder such Employment Practices Liability Coverage.

Page 13 of 19


Extended Reporting Period

11. If the Company or the Parent Organization terminates or does not renew thiscoverage section, other than termination by the Company for nonpayment ofpremium, the Parent Organization and the Insured Persons shall have the right,upon payment of the additional premium set forth in Item 6.B) of the Declarationsfor this coverage section, to an extension of the coverage granted by this coveragesection for Claims that are (I) first made during the period set forth in Item 6(A) ofthe Declarations for this coverage section (the “Extended Reporting Period”)following the effective date of termination or non—renewal, and (ii) reported to theCompany in writing within the time provided in Subsection 14(a) of this coveragesection, but only to the extent such Claims are for Wrongful Acts committed,attempted, or allegedly committed or attempted before the earlier of the effectivedate of termination or non—renewal or the date of the first merger, consolidation,acquisition, or Financial Impairment event described in Subsection 1 9 below. Theoffer of renewal terms and conditions or premiums different from those in effectprior to renewal shall not constitute refusal to renew. The right to purchase anextension of coverage as described in this Subsection shall lapse unless writtennotice of election to purchase the extension, together with payment of theadditional premium due, is received by the Company within thirty (30) days afterthe effective date of termination or non—renewal. Any Claim made during theExtended Reporting Period shall be deemed to have been made during theimmediately preceding Policy Period. The entire additional premium for theExtended Reporting Period shall be deemed fully earned at the inception of suchExtended Reporting Period.

Limit of Liability, Retention and Coinsurance

12. (a) The Company’s maximum liability for all Loss on account of each Claim,whether covered under one or more Insuring Clauses, shall be the Limit ofLiability set forth in Item 2(A) of the Declarations for this coverage section.The Company’s maximum aggregate liability for all Loss onaccount of allClaims first made during the Policy Period, whether covered under one ormore Insuring Clauses, shall be the Limit of Liability for each Policy Period setforth in Item 2(8) of the Declarations for this covera&section.

(b) Defense Costs are part of, and not in addition to, the Limits of Liability setforth in Item 2 of the Declarations for this coverage section, and the paymentby the Company of Defense Costs shall reduce and may exhaust suchapplicable Limits of Liability.

Page 14 of 19


Cc) The Company’s liability under Insuring Clause 2 or 3 shall apply only to thatpart of covered Loss (as determined by any applicable provision in Subsection1 6 of this coverage section) on account of each Claim which is excess of theapplicable Retention set forth in Item 4 of the Declarations for this coverageSection. Such Retention shall be depleted only by Loss otherwise coveredunder this coverage section and shall be borne by the Insureds uninsuredand at their own risk. Except as otherwise provided in Subsection 1 3, noRetention shall apply to any Loss under Insuring Clause 1.

Cd) If different parts of a single Claim are subject to different Retentions, theapplicable Retentions will be applied separately to each part of such Claim,but the sum of such Retentions shall not exceed the largest applicableRetention.

(e) To the extent that Defense Costs resulting from a Securities Claim arecovered under Insuring Clause 2 or 3 (as determined by Subsection 16(a) ofthis coverage section) and are in excess of the applicable Retention, theInsureds shall bear uninsured and at their own risk that percentage of suchDefense Costs specified as the Coinsurance Percentage in Item 3(A) of theDeclarations for this coverage section, and the Company’s liability shall applyonly to the remaining percentage of such Defense Costs. To the extent thatLoss other than Defense Costs resulting from a Securities Claim is coveredunder Insuring Clause 2 or 3 (as determined by Subsection 1 6(a) of thiscoverage section) and is in excess of the applicable Retention, the lnsuredsshall bear uninsured and at their own risk that percentage of such Lossspecified as the Coinsurance Percentage in Item 3(B) of the Declarations forthis coverage section, and the Company’s liability shall apply only to theremaining percentage of such Loss. To the éxt&it that Defense Costsresulting from a Claim other than a Securities Claim are covered underInsuring Clause 2 or 3 (as determined by Subsection 16(b) of this coveragesection) and are in excess of the applicable Retention, the Insureds shall bearuninsured and at their own risk that percentage of such Defense Costsspecified as the Coinsurance Percentage in Item 3(C) of the Declarations forthis coverage section, and the Company’s liability shall apply only to theremaining percentage of such Defense Costs. To the extent that Loss otherthan Defense Costs resulting from a Claim other than a Securities Claim iscovered under Insuring Clause 2 or 3 (as determined. by Subsection 1 6(b) ofthis coverage section) and is in excess of the applicable Retention, theInsureds shall bear uninsured and at their own risk that percentage of suchLoss specified as the Coinsurance Percentage in Item 3(D) of the Declarationsfor this coverage section, and the Company’s liability shall apply only to theremaining percentage of such Loss.

Page 15 of 19


(f) All Related Claims shall be treated as a single Claim first made on the datethe earliest of such Related Claims was first made, or on the date the earliestof such Related Claims is treated as having been made in accordance withSubsection 1 4(b) below, regardless of whether such date is before or duringthe Policy Period.

(g) The limit of liability available during the ExtendecL Reporting Period (ifexercised) shall be part of, and not in addition to, the Company’s maximumaggregate limit of liability for all Loss on account of all Claims first madeduring the immediately preceding Policy Period.

Presumptive Indemnification

13. If the Organization fails or refuses, other than for reason of Financial Impairment,to indemnify an Insured Person for Loss, or to advance Defense Costs on behalf ofan insured Person, to the fullest extent permitted by statutory or common law,then, notwithstanding any other conditions, provisions or terms of this coveragesection to the contrary, any payment by the Company of such Defense Costs orother Loss shall be subject to:

(i) the applicable Insuring Clause 2 Retention set forth in Item 4 of theDeclarations for this coverage section; and

(ii) the applicable Coinsurance Percentage set forth in Item 3 of theDeclarations for this coverage section

Reporting and Notice

14. (a) The Insureds shall, as a condition precedent to exercising any right tocoverage under this coverage section, give to the Company written notice ofany Claim as soon as practicable, but in no event later than the earliest of thefollowing dates:

(I) sixty (60) days after the date on which any Organization’s office ofgeneral counsel or office of risk manager first becomes aware that theClaim has been made;

(ii) if this coverage section expires (or is otherwise terminated) withoutbeing renewed and if no Extended Reporting Period is purchased, sixty(60) days after the effective date of such expiration or termination; or

(iii) the expiration date of the Extended Reporting Period, if purchased;

Page 16 of 19


provided that if the Company sends written notice to the ParentOrganization, at any time before the date set forth in (i) above with respect toany Claim, stating that this coverage section is being terminated fornonpayment of premium, the Insureds shall give to the Company writtennotice of such Claim prior to the effective date of such termination.

(b) If during the Policy Period an Insured:

(i) becomes aware of circumstances which could give rise to a Claim andgives written notice of such circumstances to the Company; or

(ii) receives a written request to toll or waive a statute of limitationsapplicable to Wrongful Acts committed, attempted, or allegedlycommitted or attempted before or during the Policy Period and giveswritten notice of such request and of such alleged Wrongful Acts to theCompany,

then any Claim subsequently arising from the circumstances referred to in (I)above or from the Wrongful Acts referred to in (ii) above shall be deemed tohave been first made during the Policy Period in which the written noticedescribed in (I) or (ii) above was first given by an Insured to the Company,provided any such subsequent Claim is reported to the Company as set forthin Subsection 14(a) above. With respect to any such subsequent Claim, nocoverage under this coverage section shall apply to loss incurred prior to thedate such subsequent Claim is actually made.

(c) The Insureds shall, as a condition precedent fo_exercising any right tocoverage under this coverage section, give to the Company such information,assistance, and cooperation as the Company may reasonably require, andshall include in any notice under Subsection 14(a) or (b) a description of theClaim or circumstances, the nature of any alleged Wrongful Acts, the natureof the alleged or potential damage, the names of all actual or potentialclaimants, the names of all actual or potential defendants or Insuredsinvolved, and the manner in which the Insured first became aware of theClaim or circumstances.

Defense and Settlement

1 5. (a) It shall be the duty of the lnsureds and not the duty of the Company todefend Claims made against the Irisureds.

Page 17 of 19


(b) The Insureds agree not to settle or offer to settle any Claim, incur anyDefense Costs or otherwise assume any contractual obligation or admit anyliability with respect to any Claim without the Company’s prior writtenconsent. The Company shall not be liable for any element of Loss incurred,for any obligation assumed, or for any admission made, by any Insuredwithout the Company’s prior written consent. Provided the Insureds complywith Subsections 1 5(c) and (d) below, the Company shall not unreasonablywithhold any such consent.

(c) With respect to any Claim that appears reasonably likely to be covered inwhole or in part under this coverage section, the Company shall have theright and shall be given the opportunity to effectively associate with thelnsureds, and shall be consulted in advance by the Insureds, regarding theinvestigation, defense and settlement of such Claim, including but notlimited to selecting appropriate defense counsel and negotiating anysettlement.

(d) The Insureds agree to provide the Company with all information, assistanceand cooperation which the Company may reasonably require and agree thatin the event of a Claim the Insureds will do nothing that could prejudice theCompany’s position or its potential or actual rights of recovery.

(e) Any advancement of Defense Costs shall be repaid to the Company by theInsureds, severally according to their respective interests, if and to the extentit is determined that such Defense Costs are not insured under this coveragesection.

Allocation

- 1 6. (a) If in any Securities Claim the Insureds incur both Loss that is covered underthis coverage section and loss that is not covered under this coverage section,either because such Claim includes both covered and non—covered matters orbecause such Claim is made against both Insureds and others, the Insuredsand the Company shall allocate such amount between covered Loss and non-covered loss based on the relative legal and financial exposures of the partiesto covered and non-covered matters and, in the eventof a settlement in suchClaim, based also on the relative benefits to the parties from such settlement.The Company shall not be liable under this coverage section for the portion ofsuch amount allocated to non—covered loss.

Page iSof 19


(b) If in any Claim other than a Securities Claim the Insured Persons incur bothLoss that is covered under this coverage section and loss that is not coveredunder this coverage section, either because such Claim includes both coveredand non—covered matters or because such Claim is made against both InsuredPersons and others (including the Organization), the Insured Persons and theCompany shall allocate such amount between covered Loss and non-coveredloss based on the relative legal and financial exposures of the parties tocovered and non—covered matters and, in the event of a settlement in suchClaim, based also on the relative benefits to the parties from such settlement.The Company shall not be liable under this coverage section for the portion ofsuch amount allocated to non—covered loss.

(C) If the lnsureds and the Company agree on an allocation of Defense Costs, theCompany shall advance on a current basis Defense Costs allocated to thecovered Loss. If the Insureds and the Company cannot agree on an allocation:

(i) no presumption as to allocation shall exist in any arbitration, suit orother proceeding;

(ii) the Company shall advance on a current basis Defense Costs which theCompany believes to be covered under this coverage section until adifferent allocation is negotiated, arbitrated or judicially determined; and

(iii) the Company, if requested by the Insureds, shall submit the dispute tobinding arbitration. The rules of the American Arbitration Associationshall apply except with respect to the selection of the arbitration panel,which shall consist of one arbitrator selected by the Insureds, onearbitrator selected by the Company, and a fhid independent arbitratorselected by the first two arbitrators.

(d) Any negotiated, arbitrated or judicially determined allocation of Defense Costson account of a Claim shall be applied retroactively to all Defense Costs onaccount of such Claim, notwithstanding any prior advancement to the contrary.Any allocation or advancement of Defense Costs on account of a Claim shallnot apply to or create any presumption with respect to the allocation of otherLoss on account of such Claim.

Other Insurance

1 7. If any Loss under this coverage section is insured under any other valid insurancepolicy(ies), then this coverage section shall cover such Loss, subject to itslimitations, conditions, provisions and other terms, only to the extent that the

Page 19 of 19


amount of such Loss is in excess of the applicable retention (or deductible) andlimit of liability under such other insurance, whether such other insurance is statedto be primary, contributory, excess, contingent or otherwise, unless such otherinsurance is written only as specific excess insurance over the Limits of Liabilityprovided In this coverage section. Any payment by Insureds of a retention ordeductible under such other insurance shall reduce, by the amount of suchpayment which would otherwise have been covered under this coverage section,the applicable Retention under this coverage section.

Changes in Exposure

Acquisition /Creation ofAnother Organization

1 8. If before or during the Policy Period any Organization:

(a) acquires securities or voting rights in another organization or creates anotherorganization, which as a result of such acquisition or creation becomes aSubsidiary; or

(b) acquires another organization by merger into or consolidation with suchOrganization, such that such OrganizatIon is the surviving entity,

such other organization and its Insured Persons shall be Insureds under thiscoverage section, but only with respect to Wrongful Acts committed, attempted, orallegedly committed or attempted after such acquisition or creation unless theCompany agrees, after presentation of a complete application and all otherappropriate information, to provide coverage by endorsement for Wrongful Actscommitted, attempted, or allegedly committed or attempted by such Insuredsbefore such acquisition or creation.

-

If, at the time of any such acquisition or creation described above, the total assetsof any such acquired organization or new Subsidiary exceed ten percent (1 0%) ofthe total assets of the Parent Organization (as reflected in the most recent auditedconsolidated financial statements of such organization and the ParentOrganization, respectively, as of the date of such acquisition or creation), theParent Organization shall give written notice of such acquisition or creation to theCompany as soon as practicable, but in no event later than sixty (60) days after thedate of such acquisition or creation, together with such other information as theCompany in its sole discretion may require and shall pay any resonable additionalpremium required by the Company. If the Parent Organization fails to give suchnotice within the time specified in the preceding sentence, or fails to pay theadditional premium required by the Company, coverage for such acquired or

Page 20 of 19


created organization and its Insured Persons shall terminate with respect to Claimsfirst made more than sixty (60) days after such acquisition or creation. Coveragefor any acquired or created organization described in this paragraph, and for theInsured Persons of such organization, shall be subject to such additional ordifferent terms, conditions and limitations of coverage as the Company in its solediscretion may require.

Acquisition byAnother Organization

19. If:

(a) the Parent Organization merges into or consolidates with anotherorganization and the Parent Organization is not the surviving entity;

(b) another organization or person or group of organizations and/or personsacting in concert acquires securities or voting rights which result inownership or voting control by the other organization(s) or person(s) of morethan fifty percent (50%) of the outstanding securities or voting rightsrepresenting the present right to vote for the election of or to appointdirectors of the Parent Organization, or

(c) Financial Impairment occurs,

then coverage under this coverage section shall continue until termination of thiscoverage section, but only with respect to Claims for Wrongful Acts committed,attempted, or allegedly committed or attempted by lnsureds before such merger,consolidation, acquisition, or Financial Impairment. Upon the occurrence of anyevent described in (a), (b), or (c) of this Subsection 1 9, the-entire premium for thiscoverage section shall be deemed fully earned.

The Parent Organization shall give written notice of such merger, consolidation,acquisition, or Financial Impairment to the Company as soon as practicable, but inno event later than sixty (60) days after the date of such merger, consolidation,acquisition, or Financial Impairment, together with such other information as theCompany may require. Upon receipt of such notice and information and at therequest of the Parent Organization, the Company shall provide to the ParentOrganization a quotation for an extension of coverage (for-such period as may benegotiated between the Company and the Parent Organization) with respect toClaims for Wrongful Acts committed, attempted, or allegedly• committed orattempted by lnsureds before such merger, consolidation, acquisition, or FinancialImpairment. Any coverage extension pursuant to such quotation shall be subjectto such additional or different terms, conditions and limitations of coverage, andpayment of such additional premium, as the Company in its sole discretion mayrequire.

Page2 of 19


Cessation ofSubsidiary

• 20. In the event an organization ceases to be a Subsidiary before or during the PolicyPeriod, coverage with respect to such Subsidiary and its Insured Persons shallcontinue until termination of this coverage section, but only with respect to Claimsfor Wrongful Acts committed, attempted, or allegedly committed or attemptedwhile such organization was a Subsidiary.

Related Entity Public Offering

21. if any Organization files or causes to be filed, with the United States Securities andExchange Commission or an equivalent agency or government department in anycountry other than the United States of America, any registration statement incontemplation of a public offering of equity securities by any entity other than theParent Organization (irrespective of whether such public offering is an initial publicoffering or a secondary or other offering subsequent to an initial public offering),then the Company shall not be liable for Loss on account of any Claim based upon,arising from, or in consequence of such registration statement or the sale, offer tosell, distribution or issuance of any securities pursuant to such registrationstatement, unless (I) the Company receives written notice at least thirty (30) daysprior to the effective date of such registration statement providing full details of thecontemplated offering, and (ii) the Company, in its sole discretion, agrees by writtenendorsement to this coverage section to provide coverage for such Claims uponsuch terms and conditions, subject to such limitations and other provisions, and forsuch additional premium as the Company may require. If the Company in its solediscretion agrees to provide coverage for such Claims, the additional premiumspecified by the Company shall be payable to the Compn-in full not later than thedate on which such registration statement becomes effective.

Representations and Severability

22. In issuing this coverage section the Company has relied upon the statements,representations and information in the Application. All of the Insuredsacknowledge and agree that all such statements, representations and information:

(a) are true and accurate;

(b) were made or provided in order to induce the Company to issue thiscoverage section; and

Page 22 of 19


(c) are material to the Company’s acceptance of the risk to which this coveragesection applies.

In the event that any of the statements, representations or information in theApplication are not true and accurate:

(I) Insuring Clause 1 of this coverage section shall be vqjd with respect to anyInsured Person who knew as of the effective date of the Application the factsthat were not truthfully and accurately disclosed (whether or not the InsuredPerson knew of such untruthful disclosure in the Application);

(ii) Insuring Clauses 2 and 3 of this coverage section shall be void with respectto: (aa) any Insured Person who knew as of the effective date of theApplication the facts that were not truthfully and accurately disclosed(whether or not the Insured Person knew of such untruthful disclosure in theApplication); (bb) any Insured Person to whom, or any Organization to which,knowledge of such facts is imputed; and (cc) any Organization to the extentit indemriifies any Insured Person who had knowledge of such facts or towhom knowledge of such facts is imputed (whether or not knowledge of suchfacts is also imputed to such Organization). For the purposes of thepreceding sentence:

(A) the knowledge of any Insured Person who is a past, present or futurechief financial officer, in—house general counsel, chief executive officer,president, or chairperson of any Organization shall be imputed to suchOrganization and its Subsidiaries;

(B) the knowledge of the person(s) who signed-the Application shall beimputed to all of the lnsureds; and

(C) except as provided in (A) above, the knowledge of an Insured Personwho did not sign the Application shall not be imputed to any otherInsured.

Page 23 of 19


GENERAL TERMS AND CONDITIONS

Territory

1. Coverage shall extend anywhere in the world.

Terms and Conditions

2. Except for these General Terms and Conditions or unless stated to the contraryin any coverage section of this policy, the terms and conditions of each coveragesection shall apply only to that coverage section. If any provision in theseGeneral Terms and Conditions is inconsistent or in conflict with the terms andconditions of any coverage section, the terms and conditions of such coveragesection shall control for purposes of that coverage section. Any defined termreferenced in these General Terms and Conditions but defined in a coveragesection shall, for purposes of coverage under that coverage section, have themeaning set forth in that coverage section.

Definitions

3. When used in this policy:

Claim shall have the meaning set forth in the applicable coverage section.

Insured shall have the meaning set forth in The applicable coveragesection.

Parent Organization means the organization designated in Item 1 of theDeclarations of these General Terms and Conditions.

Policy Period means the period of time specified in Item 2 of the Declarations ofthese General Terms and Conditions, subject to prior termination in accordancewith Subsection 1 1 below. If this period is less than or greater than one year,then the limits of liability specified in the Declarations fo each coverage sectionshall be the Company’s maximum limit of liability under such coverage sectionfor the entire period.

Limits of Liability and Retentions

Page 24 of 19


4. Unless stated to the contrary in any coverage section, the limits of liability aridretentions shown for each coverage section are separate limits of liability andseparate retentions pertaining to the coverage section for which they are shown.Unless stated to the contrary in any coverage section of this policy, the paymentof a retention under one coverage section shall not constitute payment of, andshall not reduce, the applicable retention under any other coverage sction.

Notice

5. Any notice to the Company with respect to any coverage section shall designatethe coverage section under which notice is being given and shall be treated asnotice only under the coverage section(s) so designated.

Notice to the Company of a Claim or loss, or of circumstances which could giverise to a Claim, shall be given in writing addressed to:

Attn: Claims Director — Tom DeitzCatlin Group Inc.3340 Peachtree NETower Place 100, Suite 2950

All other notices to the Company shall be given in writing addressed to:

Attn: UnderwritingCatlin Group Inc.6320 Canoga AveSuite 1 564Woodland Hills, CA 91367

Any such notice shall be effective on the date of receipt by the Company at suchaddress.

Valuation and Foreign Currency

6. All premiums, limits, retentions, loss and other amounts under this policy areexpressed and payable in the currency of the United States of America. Except asotherwise provided in any coverage section, if a judgment is rendered, asettlement is denominated or any element of loss under this policy is stated in acurrency other than United States of America dollars, payment under this policyshall be made in United States of America dollars at the rate of exchangepublished in The Wall Street lournal on the date the judgment becomes final, theamount of the settlement is agreed upon or the element of loss is due,respectively.

Page 25 of 19


Subrogation

7. In the event of any payment under this policy, the Company shall be subrogatedto the extent of such payment to all the Insured’s rights of recovery, and suchInsured shall execute all papers required and shall do everything necessary tosecure and preserve such rights, including the execution of such documentsnecessary to enable the Company effectively to bring suit or otherwise pursuesubrogation rights in the name of the Insured.

Action Against the Company

8. No action may be taken against the Company unless, as a condition precedentthereto, there shall have been full compliance with all the terms of this policy. Noperson or entity shall have any right under this policy to join the Company as aparty to any action against any Insured to determine such Insured’s liability norshall the Company be impleaded by such Insured or legal representatives of suchInsured.

Parent Organization Rights and Obligations

9. By acceptance of this policy, the Parent Organization agrees that it shall beconsidered the sole agent of, and shall act on behalf of, each Insured withrespect to: the payment of premiums and the receiving of any return premiumsthat may become due under this policy; the negotiation, agreement to andacceptance of endorsements; the giving or receiving of any notice provided for inthis policy (except the giving of notice to apply for an Extended ReportingPeriod); the adjustment of loss amounts; and the receipt or enforcement ofpayment of loss (and the Parent Organization furtfe—agrees that it shall beresponsible for application of any such payment as provided in this policy). EachInsured agrees that the Parent Organization shall act on its behalf with respect toall such matters.

Alteration and Assignment

10. No change in, modification of, or assignment of interest under this policy shallbe effective except when made by written endorsement to this policy which issigned by an authorized employee of Chubb & Son, a division of FederalInsurance Company.

Termination of Policy or Coverage Section

11. This policy or any coverage section shall terminate at the earliest of the followingtimes:

Page 26 of 19


(a) sixty days after receipt by the Parent Organization of written notice oftermination from the Company for any reason other than non—payment ofpremium;

-

(b) twenty days after receipt by the Parent Organization of written notice oftermination from the Company for non—payment of premium;

(C) upon receipt by the Company of written notice of termination from theParent Organization; provided that this policy may not be terminated bythe Parent Organization after the effective date of any acquisition of theParent Organization as described in the Changes in Exposure subsectionof the applicable coverage section of this policy;

(d) upon expiration of the Policy Period as set forth in Item 2 of theDeclarations of these General Terms and Conditions; or

(e) at such other time as may be agreed upon by the Company and theParent Organization.

The Company shall refund the unearned premium computed at customary shortrates if this policy or any coverage section is terminated by the ParentOrganization. Under any other circumstances the refund shall be computed prorata. Payment or tender of any unearned premium by the Company shall not be acondition precedent to the effectiveness of a notice of termination, but suchpayment shall be made as soon as practicable thereafter.

Termination of Prior Bonds or Policies

2. Any bonds or policies issued by the Company or its affiliates and specified inItem 4 of the Declarations of these General Terms and Conditions shallterminate,if not already terminated, as of the inception of this policy.

Bankruptcy

1 3. Bankruptcy or insolvency of any Insured shall not relieve the Company of itsobligations nor deprive the Company of its rights or defenses under this policy.

Headings

14. The descriptions in the headings and sub—headings of this policy are solely forconvenience, and form no part of the terms and conditions of coverage.

Page 27 of 9


C AT L IN

Named InsuredEndorsement NumberFirst National ank of Arizona 1Policy Symbo’ Policy Number Policy Period Effective

N/A DOP—91 R2—0608 lime 9.2008 to lime 9. 2009 Inne g.20pIssued By (Name of insurance Company)

Lloyds of London Catlin Syndicate 2003

_____

AMEND DEFENSE AND SETTLEMENT ENDORSEMENT

In consideration of the premium charged, it is agreed that Subsection 12., Defense andSettlement, of this coverage section is amended by deleting paragraph (b) thereof.

Endorsement 1 page 1


The title and any headings in this endorsement/rider are solely for convenience and form nopart of the terms and conditions of coverage.

All other terms, conditions and limitations of this Policy remain unchanged.

—resetative

PLDO 001 0408Page 29 of 43


C AT L I N

Named InsuredEndorsement Number

_first National ank of Arizona 2Policy Symbol Policy Number Policy Period Effective- N/A DOP—91 R2c—060R Iun 9.20O to Iun g• 2009 lime Q200R.Issued Sy (Name of Insurance Company)


INSURING CLAUSE 1 ONLY COVERAGE ENDORSEMENT

In consideration of the premium charged, it is agreed that:

(1) Insuring Clause 1 Executive Liability Coverage of this coverage section is amended toread in its entirety as follows:

•The Company shall pay, on behalf of each of the Insured Persons, Loss for which theInsured Person is not indemnified by any source and which the Insured Person becomeslegally obligated to pay on account of any Claim first made against the Insured Person,individually or otherwise, during the Policy Period or, if exercised, during the ExtendedReporting Period, for a Wrongful Act committed, attempted, or allegedly committed orattempted by such Insured Person before or during the Policy Period, but only if suchClaim is reported to the Company in writing in the manner and within the time provided -

in Subsection 14 of this coverage section.

(2) Insuring Clause 2 Executive Indemnification Coverage of this coverage section is deletedin its entirety.accordingly, any and all references to Insuring clause 2 in this coveragesection are deleted in their entirety.

(3) Insuring Clause 3 Entity Securities Coverage of this coverage section is deleted in itsentirety. accordingly, any and all references to Insuring Clause 3 in this coverage sectionare deleted in their entirety.

(4) Subsection 1 3 Presumptive Indemnification of this coverage section is deleted in itsentirety. accordingly, any and all references to Subsection 13 in this coverage sectionare deleted in their entirety.

(5) The heading, Other Insurance, for Subsection 1 7 of this coverage section is amended toread in its entirety as follows:

Endorsement 2 page 1 of 2


Other Insurance and Indemnification

(6) Subsection 1 7 Other Insurance and Indemnification of this coverage section is amendedto read in its entirety as follows:

All coverage under this coverage section is excess over, and will not contribute with anyother insurance or indemnification to which any Insured Person is entitled from anysource, whether such other insurance is stated to be primary, contributory, excess,contingent or otherwise, unless such other insurance is written only as specific excessinsurance over the Limits of Liability provided in this coverage section. However, theCompany shall not be liable for Loss if any Organization fails orrefuses, other than for reason of Financial Impairment, to indemnify an Insured Personfor such Loss to the fullest extent permitted or required by law.

For the purposes of this Subsection 1 7, any by—law, certificate of incorporation, charter,article of association, shareholder resolution, board of director resolution, board ofmanager resolution, or other organizational document of an Organization shall bedeemed to provide indemnification or to advance Defense Costs to the fullest extentpermitted or required by law.

(7) This coverage section is deemed amended to the extent necessary to effectuate thepurposes and intent of this endorsement.

Endorsement 2 page 2/2


The title and any headings in this endorsement are solely for convenience and form no part ofthe terms and conditions of coverage.


resentative -



CATLIN

Named Insured Endorsement NumberFirst National ank of Arizona

Policy Symbol Policy Number Policy Period EffectiveJ[LA DOP—91 g2S—0608 lung 9.200R to Iiin 9. 2009 lime Q200RIssued By (Name of Insurance Company>

.Jiovds of London Catlin Syndicate 2003

ADD SECURiTIES EXCLUSION ENDORSEMENT

in consideration of the premium charged, it is agreed that no coverage will be available underthis coverage section for Loss on account of any Claim based upon, arising from, or inconsequence of:

(1) any offering, issuance, distribution, sale or purchase of securities;

(2) any Organization’s past, present, or future financial or operational performance, condition,or prospects; or

(3) any actual or alleged violation of the Securities Act of 1 933, Securities Exchange Act of1 934, Investment Act of 1940, any state “blue sky” securities law, or any other federal,state or local securities law or any amendments thereto or any. rules or regulationspromulgated thereunder, or any similar provisions of any federal, state, or localstatutory law or common law anywhere in the world (incIudiñ but not limited to anyprovision of statutory law or common law used to impose liability in connection with theoffer to sell or purchase, or the sale or purchase of securities). -



The title and any headings in this endorsement are solel-y for convenience and form no part ofthe terms and conditions of coverage.


Authori esentative

PLDO 001 0408of 43


C AT L IN

Named insuredEndorsement Number

First National sank of Arizona4Policy Symbol P01191 Number Policy Period Effective

N/A flnP—91 g2c—onR lune 9.2008 to tune 9. 2009 lime 9.2008issued By (Name of Insurance Company)

Uovds of London Catlin Syndicate 2003

ARIZONA AMENDATORY ENDORSEMENTTO THE GENERAL TERMS AND CONDONS SECTION

In consideration of the premium charged, it is understood and agreed that:

1. Subsection 11. Termination of Policy or Coverage Section (a) of the General Terms andConditions Section is amended to add the following at the end of such paragraph (a):

“provided that, if this policy or the applicable coverage section is in effect for at leastsixty (60) days or is a renewal, the Company may cancel this policy or such coveragesection, other than for non—payment of premium, only for one or more of the followingreasons:

(1) conviction ofan insured of a crime arising out of acts increasing the hazardinsured against;

(2) acts or omissions by an Insured or his, her or its representative constitutingfraud or material misrepresentation in obtaining this pollc)4 in continuingthis policy or in presenting a claim under this policy;

(3) a substantial change in the risk assumed, except to the extent that theCompany should reasonably have foreseen the change or contemplated therisk in writing this policy;

(4) a substantial breach of contractual duties or conditions,

(5) loss of reinsurance appilcable to the risk insured against, but only if theabsence of reinsurance has resulted from termination of treaty or facultativereinsurance initiated or implemented by the reinsurer or reinsurers of theCompany;

Endorsement 4, page 12


(6) a determination by the director of insurance that the continuation of thispolicy would place the Company in violation of the insurance laws of thestate ofArizona or wouldjeopardize the solvency of the Company; or

(7) acts or omissions by the Insured or his, her or Its representative thatmaterially increase the hazard Insured against”

2. Subsection 11. Termination of Policy or Coverage Section Cd) of the General Terms andConditions Section is amended by deleting the “or” at the end of such paragraph (d) andadding the, following:“provided that, non—renewal by the Company shall be effective only upon sixty (60)days’ advance written notice of non—renewal to the Parent Organization at the addressshown in the Declarations or the last address known to the Company. Such notice shallbe delivered or mailed by certified mail, with a copy to the agent or broker of record. Ifsuch notice is sent later than sixty (60) days before the expiration of the Policy Periodbut before such expiration, then coverage shall remain in effect until sixty (60) days‘after notice is sent, provided that the Parent Organization pays the premium for suchextension, which shall be calculated by pro—rating the expiring Policy Period premium.No notice of non—renewal is required if the Company offers to renew this policy or theParent Organization has obtained replacement coverage or has agreed in writing toobtain replacement coverage; or”

3. Subsection 11. Termination of Policy or Coverage Section of the General Terms andConditions Section is amended further by adding the following paragraphs at the end ofsuch Subsection:

“The Company will mall any notice of cancellation by certified mall to the ParentOrganization at the address shown in the Declarations or théla.t known address of theParent Organization, and will provide a copy ofsuch notice to the agent or broker ofrecord ifany. Such notice will state the reason(s) for cancellation and include a refund

- ofany unearned premium, except a premium that has been financed.

If the Company increases premium, changes deductible or retention, reduces limits orsubstantially reduces coverage at renewal, the Company will deliver or mail by certifiedmail written notice of such change(s) at least sixty (60) days’ before the expiration ofthis policy. If the Company does not provide such notice at least sixty (60) days beforethe expiration of this policy, coverage under this policy will remain in effect until noticeis given or until the Parent Organization obtains replacement coverage.”

The policy will be deemed to have been amended to the extent necessary to effect the purposesof this endorsement.

The regulatory requirements set forth in this Amendatory Endorsement shall supersede andtake precedence over any provisions of the policy or any endorsement to the policy, whenever



added, that are inconsistent with or contrary to the provisions of this Amendatory Endorsement,unless such policy or endorsement provisions comply with the applicable insurance laws of thestate of Arizona.


Sive



CATLIN


First NatinnI ink of ArizonaPolicy Symbol Policy Number Policy Period EffectiveN/A DOP—91 82c—060R June 9200R to June 9 200’ lime 9.200RIssued By (Name of Insurance Company)


AMEND INSURED VERSUS INSURED EXCLUSION (WHISTLEBLOWER) ENDORSEMENT

In consideration of the premium charged, it is agreed that Subsection 5., Exclusions Applicableto All Insuring Clauses, (c)(i) of this coverage section is deleted and replaced with the following:

(i) a Claim that is a securityholder derivative action brought and maintained on behalf ofthe Organization without any active assistance or participation of, or solicitation by, anyInsured Person (other than assistance, participation or solicitation for which Section 806of the Sarbanes—Oxley Act of 2002, or any similar “whistleblower” protection provisionof an applicable federal, state, local or foreign securities law, affords protection to suchInsured Person).





ed Representative

PLDO 001 0408Page 39 of 43


C AT L IN


Firct Ntinna[ank of Ari7nriaPolicy Symbol Policy Number Policy Period EffectiveN/A DOP—Q1R2S—(M08 liin Q200R to Iiineg. 2009 lune9.2fl_Issued By (Name of Insurance Company)


FAILURE TO MAINTAIN INSURANCE EXCLUSION WITH SIDE A CARVEBACK ENDORSEMENT

In consideration of the premium charged, it is agreed that the Company shall not be liable forLoss on account of any Claim based upon, arising from, or in consequence of any actual oralleged:

1. negligent act, error or omission or any breach of duty in exercising judgment ordiscretion in procuring and maintaining insurance; or

2. failure or omission in effecting and maintaining insurance; or

3. negilgent act, error or omission or breach of duty with respect to amount, form,condition or provisions ofany insurance contract.

Provided, however, that this exclusion shall not apply to Loss (a) which is on account of anyClaim against an Insured Person brought by any shareholder of the Organization in his capacityas such, whether in his own right or on behalf of the Organization, pr.’ided that such Claim isbrought and maintained without the assistance, participation or solicitation of any InsuredPerson, and (b) for which the Organization either is not permitted or required, or fails or refusesby reason of Financial Impairment, to indemnify the Insured Person.

It is further understood and agreed that this exclusion applies solely to Claims based upon,arising from, or in consequence of the Organization’s role in procuring, maintaining andeffecting insurance on its own behalf. This exclusion does not apply to Claims based upon,arising from, or in consequence of the Organization’s role as a provider of insurance to others.





Representative

PLDO 001 0408Page 41 of 43


C AT L TN


Firct National sank of Ari7ona 7Policy Symbol Policy Number Policy Period EffectiveN/A DnP—9lR2c—060R Iun Q 20(Th to liJn 9. 2009 Iiin g.200&Issued y (Name of Insurance Company)


PRIOR NOTICE AMENDMENT


We agree to not use the prior notice exclusion as a means to avoid coverage for those mattersidentified in the notice of circumstance provided to Chubb dated June 5, 2008.

The title and any headings in this endorsement are solely for convenience and form no part ofthe terms and conditions of coverage.



The title and any headngs in this endorsement/rider are solely for convenience and form nopart of the terms and conditions of coverage.


,Aut - epresentative

PLDO 001 0408Page 43 of 43


EXHIBIT B


DIRECTOR AND OFFICERAND CORPORATE SECURITIESLIABILITY INSURANCE POLICYDECLARATIONS

CATLIN

Policy No.: DOP-91825-0608 Renewal of Policy No.: N/A

Terms appearing in bold are defined in the Policy.

Item 1. Named Insured: First National Bank of ArizonaAddress: 17600 N. Perimeter Drive

Scottsdale, AZ 85255

Item 2. Policy Period: From: June 9, 2008 to June 9, 2009Both dates at 12:01 a.m. (local time at the address stated in Item 1)

Item 3. Aggregate Limit of Liability: $10,000,000

Item 4. Retentions:Insuring Clause 1.: $0 each ClaimInsuring Clause 2.: $500,000 each Claims other than Securities ClaimsInsuring Clause 3.: $500,000 each Securities Claims only

Item 5. Coinsurance Percentage each Securities Claim: N/A

Item 6. Premium: $200,000Additional Premium for the Discovery Period: 100% of PremiumLength of the Discovery Period: 1 year

Item 7. Pending or Prior Date: Primary 3m — May 27, 19992m xs 3m — April 1, 20045m xs 5m — April 1, 2005

THIS IS A “CLAIMS MADE AND REPORTED” POLICY. SUBJECT TO ITS TERMS ANDPROVISIONS, THIS POLICY ONLY AFFORDS COVERAGE FOR CLAIMS FIRST MADE AGAINSTTHE INSUREDS AND REPORTED TO THE INSURER IN WRITING DURING THE POLICY PERIOD ORDISCOVERY PERIOD, IF APPLICABLE. IN ADDITION, DEFENSE COSTS ARE INCLUDED IN ANDWILL REDUCE THE LIMITS OF LIABILITY.

PLEASE READ THIS ENTIRE POLICY CAREFULLY. CONSULT YOUR BROKER OR OTHERREPRESENTATIVE IF YOU DO NOT UNDERSTAND ANY TERMS OR PROVISIONS OF THISPOLICY.

INSURERCORRESPONDENT OFFICE!

Catlin Insurance Company (UK) Ltd.do Catlin Holdings (UK) Limited3 Minster Court, Mincing Lane

London EC3R 7DD

UNDERWRITING OFFICE

xSyndicate 2003 at Lloyd’s

do Catlin Underwriting Agency Ltd.6th Floor, 3 Minster Court

Mincina Lane. London EC3R 7DD

PRODUCER


Suite 1564Woodland Hills, CA 91367


Suite 101Dover, DE 19904

Tom DonnellyTn City — San Francisco

Page 1 of 30


THESE DECLARATIONS, TOGETHER WITH THE COMPLETED AND SIGNED APPLICATION FORTHIS POLICY, ALL MATERIALS SUBMITTED THEREWITH OR MADE A PART THEREOF AND THEPOLICY FORM ATTACHED HERETO, CONSTITUTE THE POLICY.

This Policy shall not be valid unless also signed by another duly authorized representative of the Insurer.

Item 8. Retroactive Date: N!A

Item 9. Notices to lnsurer:

Claims: All Other Notices:

Attn: Claims Director — Tom Deitz Attn: UnderwritingCatlin Group Inc.Catlin Group Inc.6320 Canoga Ave3340 Peachtree NE Suite 1564

Tower Place 100, Suite 2950 Woodland Hills, CA 91367Item 10. Endorsements Applicable to Coverage at Inception of Policy:

1. Outside D&O Directorship endorsement2. Arizona amendatory endorsement to the general terms and conditions section3. Amend insured versus insured exclusion (whistleblower) endorsement4. Failure to maintain insurance exclusion with side a carveback endorsement

Page 2 of 19


DIRECTOR AND OFFICER AND CORPORATE SECURITIES LIABILITYCOVERAGE FORM

In consideration of payment of the premium and subject to the Declarations, the General Terms andConditions, and the limitations, conditions, provisions and other terms of this coverage section, theCompany and the Insureds agree as follows:

Insuring Clauses

Executive Liablilty Coverage Insuring Clause I

1. The Company shall pay, on behalf of each of the Insured Persons, Loss for which theInsured Person is not indemnified by the Organization and which the Insured Personbecomes legally obligated to pay on account of any Claim first made against the InsuredPerson, individually or otherwise, during the Policy Period or, if exercised, during theExtended Reporting Period, for a Wrongful Act committed, attempted, or allegedlycommitted or attempted by such Insured Person before or during the Policy Period, butonly if such Claim is reported to the Company in writing in the manner and within the timeprovided in Subsection 14 of this coverage section.

Executive Indemnification Coverage Insuring Clause 2

2. The Company shall pay, on behalf of the Organization, Loss for which the Organizationgrants indemnification to an Insured Person, as permitted or required by law, and whichthe Insured Person becomes legally obligated to pay on account of any Claim first madeagainst the Insured Person, individually or otherwise, during the Policy Period or, ifexercised, during the Extended Reporting Period, for a Wrongful Act committed,attempted, or allegedly committed or attempted by such Insured Person before or duringthe Policy Period, but only if such Claim is reported to the Company in writing in themanner and within the time provided in Subsection 14 of this coverage section.

Entity Securities Coverage Insuring Clause 3

3. The Company shall pay, on behalf of the Organization, Loss which the Organizationbecomes legally obligated to pay on account of any Securities Claim first made againstthe Organization during the Policy Period or, if exercised, during the Extended ReportingPeriod, for a Wrongful Act committed, attempted, or allegedly committed or attempted by

- the Organization or the Insured Persons before or during the Policy Period, but only ifsuch Securities Claim is reported to the Company in writing in the manner and within thetime provided in Subsection 14 of this coverage section.

Definitions


Application means all signed applications, including attachments and other materialssubmitted therewith or incorporated therein, submitted by the lnsureds to the Company forthis coverage section or for any coverage section or policy of which this coverage section is adirect or indirect renewal or replacement. Application shall also include, for eachOrganization, all of the following documents whether or not submitted with or attached toany such signed application: (i) the Annual Report (including financial statements) lastissued to shareholders before this policy’s inception date; (ii) the report last filed with theSecurities and Exchange Commission on Form 10-K before this policy’s inception date; (iii)the report last filed with the Securities and Exchange Commission on Form 10-Q beforethis policy’s inception date; (iv) the proxy statement and (if different) definitive proxy

Page3oflg


statement last filed with the Securities and Exchange Commission before this policy’sinception date; (v) all reports filed with the Securities and Exchange Commission on Form8-K during the twelve months preceding this policy’s inception date: and (vi) all reports filedwith the Securities and Exchange Commission on Schedule 13D, with respect to any equitysecurities of such Organization, during the twelve months preceding this policy’s inceptiondate. All such applications, attachments, materials and other documents are deemedattached to, incorporated into and made a part of this coverage section.

Claim means:

(1) when used in reference to the coverage provided by lnsuring Clause 1 or 2:


(b) a civil proceeding commenced by the service of a complaint or similar pleading;or

(c) a formal civil administrative or civil regulatory proceeding commenced by thefiling of a notice of charges or similar document or by the entry of a formalorder of investigation or similar document,

against an Insured Person for a Wrongful Act, including any appeal therefrom;

(2) when used in reference to the coverage provided by Insuring Clause 3:


(b) a civil proceeding commenced by the service of a complaint or similar pleading;or

(c) a formal civil administrative or civil regulatory proceeding commenced by thefiling of a notice of charges or similar document or by the entry of a formalorder of investigation or similar document, but only while such proceeding isalso pending against an Insured Person,

against an Organization for a Wrongful Act, including any appeal therefrom; or

(3) when used in reference to the coverage provided for a Securities Claim by InsuringClause I or 2, a criminal proceeding commenced by the return of an indictmentagainst an Insured Person for a Wrongful Act, including any appeal therefrom.

Except as may otherwise be provided in Subsection 11, Subsection 12(f),or Subsection 14(b)of this coverage section, a Claim will be deemed to have first been made when such Claim iscommenced as set forth in this definition or, in the case of a written demand, when suchdemand is first received by an Insured.

Defense Costs means that part of Loss consisting of reasonable costs, charges, fees(including but not limited to attorneys’ fees and experts’ fees) and expenses (other thanregular or overtime wages, salaries, fees or benefits of the directors, officers or employeesof the Organization) incurred in defending any Claim and the premium for appeal,attachment or similar bonds.

Domestic Partner means any natural person qualifying as a domestic partner under theprovisions of any applicable federal, state or local law or under the provisions of any formalprogram established by the Organization.

Financial Impairment means the status of an Organization resulting from:

Page4of 19


(a) the appointment by any state or federal official, agency or court of any receiver,conservator, liquidator, trustee, rehabilitator or similar official to take control of,supervise, manage or liquidate such Organization; or

(b) such Organization becoming a debtor in possession under the United Statesbankruptcy law or the equivalent of a debtor in possession under the law of anyother country.

Insured means the Organization and any Insured Person.

Insured Capacity means the position or capacity of an Insured Person that causes him orher to meet the definition of Insured Person set forth in this coverage section. InsuredCapacity does not include any position or capacity held by an Insured Person in anyorganization other than the Organization, even if the Organization directed or requestedthe Insured Person to serve in such position or capacity in such other organization.

Insured Person means any natural person who was, now is or shall become:

(a) a duly elected or appointed director, officer, or the in-house general counsel ofany Organization chartered in the United States of America;

(b) a holder of a position equivalent to any position described in (a) above in anOrganization that is chartered in any jurisdiction other than the United Statesof America; or

(c) solely with respect to Securities Claims, any other employee of anOrganization, provided that such other employees shall not, solely by reasonof their status as employees, be Insured Persons for purposes of Exclusion5(c).

Loss means the amount that any Insured Person (for purposes of Insuring Clauses 1 and2) or the Organization (for purposes of Insuring Clause 3) becomes legally obligated topay on account of any covered Claim, including but not limited to damages (includingpunitive or exemplary damages, if and to the extent that such punitive or exemplarydamages are insurable under the law of the jurisdiction most favorable to the insurability ofsuch damages provided such jurisdiction has a substantial relationship to the relevantInsureds, to the Company, or to the Claim giving rise to the damages), judgments,settlements, pre-judgment and post-judgment interest, and Defense Costs.

Loss shall not include:-

(a) any amount not indemnified by the Organization for which an Insured Personis absolved from payment by reason of any covenant, agreement or courtorder;

(b) any costs incurred by the Organization to comply with any order for injunctiveor other non-monetary relief, or to comply with an agreement to provide suchrelief;

(c) any amount incurred by an Insured in the defense or investigation of anyaction, proceeding or demand that is not then a Claim even if (i) such amountalso benefits the defense of a covered Claim, or (ii) such action, proceeding ordemand subsequently gives rise to a Claim;

(d) taxes, fines or penalties, or the multiple portion of any multiplied damageaward, except as provided above with respect to punitive or exemplarydamages;

Page 5 of 19


(e) any amount not insurable under the law pursuant to which this coveragesection is construed, except as provided above with respect to punitive orexemplary damages;

(f) any amount allocated to noncovered loss pursuant to Subsection 16 of thiscoverage section; or

(g) any amount that represents or is substantially equivalent to an increase in theconsideration paid (or proposed to be paid) by an Organization in connectionwith its purchase of any securities or assets.

Organization means, collectively, those organizations designated in Item 5 of theDeclarations for this coverage section, and the Subsidiaries of such designatedorganizations.

Pollutants means (a) any substance located anywhere in the world exhibiting any hazardouscharacteristics as defined by, or identified on a list of hazardous substances issued by, theUnited States Environmental Protection Agency or any state, county, municipality or localitycounterpart thereof, including but not limited to solids, liquids, gaseous or thermal irritants,contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials, or(b) any other air emission, odor, waste water, oil or oil products, infectious or medical waste,asbestos or asbestos products or any noise.

Related Claims means all Claims for Wrongful Acts based upon, arising from, or inconsequence of the same or related facts, circumstances, situations, transactions or eventsor the same or related series of facts, circumstances, situations, transactions or events.

Securities Claim means that portion of a Claim which:

(a) is brought by a securityholder of an Organization:

(i) in his or her capacity as a securityholder of such Organization, withrespect to his or her interest in securities of such Organization, andagainst such Organization or any of its Insured Persons; or

(ii) derivatively, on behalf of such Organization, against an Insured Personof such Organization; or

(b) alleges that an Organization or any of its Insured Persons:

(i) violated a federal, state, local or foreign securities law or a rule orregulation promulgated under any such securities law; or

(ii) committed a Wrongful Act that constitutes or arises from a purchase,sale, or offer to purchase or sell securities of such Organization;

provided that Securities Claim does not include any Claim by or on behalf of a former,current, future or prospective employee of the Organization that is based upon, arisingfrom, or in consequence of any offer, grant or issuance, or any plan or agreement relatingto the offer, grant or issuance, by the Organization to such employee in his or her capacityas such of stock, stock warrants, stock options or other securities of the Organization, orany payment or instrument the amount or value of which is derived from the value ofsecurities of the Organization.

Subsidiary means any organization while more than fifty percent (50%) of the outstandingsecurities or voting rights representing the present right to vote for election of or to appointdirectors of such organization are owned, directly or indirectly, in any combination, by oneor more of those organizations designated in Item 5 of the Declarations for this coveragesection.

Page6ofl9


Wrongful Act means:

(a) any error, misstatement, misleading statement, act, omission, neglect, orbreach of duty committed, attempted, or allegedly committed or attempted byan Insured Person in his or her Insured Capacity, or for purposes ofcoverage under Insuring Clause 3, by the Organization, or

(b) any other matter claimed against an Insured Person solely by reason of his orher serving in an Insured Capacity.

Exclusions

Applicable To All Insuring Clauses


(a) based upon, arising from, or in consequence of any fact, circumstance, situation,transaction, event, or Wrongful Act that, before the inception date set forth in Item 2of the Declarations of the General Terms and Conditions, was the subject of anynotice given under any policy or coverage section of which this coverage section is adirect or indirect renewal or replacement;

(b) based upon, arising from, or in consequence of any demand, suit or other proceedingpending against, or order, decree or judgment entered for or against any Insured, onor prior to the Pending or Prior Date set forth in Item 7 of the Declarations for thiscoverage section, or the same or substantially the same fact, circumstance, situation,transaction, event, or Wrongful Act underlying or alleged therein;

(c) brought or maintained by or on behalf of any Insured in any capacity; provided thatthis Exclusion 5(c) shall not apply to:

(I) a Claim brought or maintained derivatively on behalf of the Organization byone or more securityholders of the Organization, provided such Claim isbrought and maintained without any active assistance or participation of, orsolicitation by, any Insured Person;

(ii) an employment Claim brought or maintained by or on behalf of an InsuredPerson; or

(iii) a Claim brought or maintained by an Insured Person for contribution orindemnity, if such Claim directly results from another Claim covered under thiscoverage section;

(d) based upon, arising from, or in consequence of:

(i) any actual, alleged, or threatened exposure to, or generation, storage,transportation, discharge, emission, release, dispersal, escape, treatment,removal or disposal of any Pollutants; or

(ii) any regulation, order, direction or request to test for, monitor, clean up,remove, contain, treat, detoxify or neutralize any Pollutants, or any actiontaken in contemplation or anticipation of any such regulation, order, direction orrequest,

Page 7 of 19


including but not limited to any Claim for financial loss to the Organization, itssecurityholders or its creditors based upon, arising from, or in consequence of anymatter described in clause (i) or clause (ii) of this Exclusion 5(d);

(e) for bodily injury, mental anguish, emotional distress, sickness, disease or death ofany person or damage to or destruction of any tangible property including loss of usethereof whether or not it is damaged or destroyed; provided that this Exclusion 5(e)shall not apply to mental anguish or emotional distress for which a claimant seekscompensation in an employment Claim;

(1 for an actual or alleged violation of the responsibilities, obligations or duties imposedon fiduciaries by the Employee Retirement Income Security Act of 1974, or anyamendments thereto, or any rules or regulations promulgated thereunder, or anysimilar provisions of any federal, state, or local statutory law or common lawanywhere in the world;

(g) for Wrongful Acts of an Insured Person in his or her capacity as a director, officer,manager, trustee, regent, governor or employee of any entity other than theOrganization, even if the Insured Person’s service in such capacity is with theknowledge or consent or at the request of the Organization; or

(h) for any Wrongful Act committed, attempted, or allegedly committed or attempted bya Subsidiary or an Insured Person of a Subsidiary during any time when suchentity was not a Subsidiary.

Applicable To Insuring Clauses I and 2 Only

6. The Company shall not be liable under Insuring Clause 1 or 2 for Loss on account of anyClaim made against any Insured Person:

(a) for an accounting of profits made from the purchase or sale by such Insured Personof securities of the Organization within the meaning of Section 16(b) of theSecurities Exchange Act of 1934, any amendments thereto, or any similar provisionof any federal, state, or local statutory law or common law anywhere in the world; or

(b) based upon, arising from, or in consequence of any deliberately fraudulent act oromission or any willful violation of any statute or regulation by such Insured Person,if a judgment or other final adjudication in any proceeding establishes such adeliberately fraudulent act or omission or willful violation; or

(c) based upon, arising from, or in consequence of such Insured Person having gainedany profit, remuneration or advantage to which such lnsuredPerson was not legallyentitled.

Applicable To Insuring Clause 3 Only

7. The Company shall not be liable under Insuring Clause 3 for Loss on account of anySecurities Claim made against any Organization:

(a) based upon, arising from, or in consequence of any deliberately fraudulent act oromission or any willful violation of any statute or regulation by an Organization or byany past, present or future chief financial officer, in-house general counsel, president,chief executive officer or chairperson of an Organization, if a judgment or other finaladjudication in any proceeding establishes such a deliberately fraudulent act oromission or willful violation; or

Page 8 of 19


(b) based upon, arising from, or in consequence of such Organization having gainedany profit, remuneration or advantage to which such Organization was not legallyentitled; or

(c) for any actual or alleged liability of an Organization under any contract or agreementthat relates to the purchase, sale, or offer to purchase or sell any securities; providedthat this Exclusion 7(c) shall not apply to liability that would have attached to suchOrganization in the absence of such contract or agreement.


8. (a) No fact pertaining to or knowledge possessed by any Insured Person shall beimputed to any other Insured Person for the purpose of applying the exclusions inSubsection 6 of this coverage section.

(b) Only facts pertaining to and knowledge possessed by any past, present, or future chieffinancial officer, inhouse general counsel, president, chief executive officer orchairperson of an Organization shall be imputed to such Organization for the purposeof applying the exclusions in Subsection 7 of this coverage section.

Spouses, Estates and Legal Representatives

9. Subject otherwise to the General Terms and Conditions and the limitations, conditions,provisions and other terms of this coverage section, coverage shall extend to Claims forthe Wrongful Acts of an Insured Person made against:

(a) the estate, heirs, legal representatives or assigns of such Insured Person if suchInsured Person is deceased or the legal representatives or assigns of such InsuredPerson if such Insured Person is incompetent, insolvent or bankrupt; or

(b) the lawful spouse or Domestic Partner of such Insured Person solely by reason ofsuch spouse or Domestic Partner’s status as a spouse or Domestic Partner, orsuch spouse or Domestic Partner’s ownership interest in property which theclaimant seeks as recovery for an alleged Wrongful Act of such Insured Person.

All terms and conditions of this coverage section, including but not limited to the Retention,applicable to Loss incurred by the Insured Persons, shall also apply to loss incurred bythe estates, heirs, legal representatives, assigns, spouses and Domestic Partners of suchInsured Persons. The coverage provided by this Subsection 9 shall not apply with respectto any loss arising from an act or omission by an Insured Person’s estate, heirs, legalrepresentatives, assigns, spouse or Domestic Partner.

Coordination With Employment Practices Liability Coverage Section

10. Any Loss otherwise covered by both (i) this coverage section and (ii) any employmentpractices liability coverage section or policy issued by the Company or by any affiliate of theCompany (an “Employment Practices Liability Coverage”) first shall be covered as providedin, and shall be subject to the limit of liability, retention and coinsurance percentageapplicable to such Employment Practices Liability Coverage. Any remaining Loss otherwisecovered by this coverage section which is not paid under such Employment Practices LiabilityCoverage shall be covered as provided in, and shall be subject to the Limit of Liability,Retention and Coinsurance Percentage applicable to this coverage section; provided theRetention applicable to such Loss under this coverage section shall be reduced by theamount of Loss otherwise covered by this coverage section which is paid by the Insuredsas the retention under such Employment Practices Liability Coverage.

Page9oflg



11. If the Company or the Parent Organization terminates or does not renew this coveragesection, other than termination by the Company for nonpayment of premium, the ParentOrganization and the Insured Persons shall have the right, upon payment of theadditional premium set forth in Item 6(8) of the Declarations for this coverage section, to anextension of the coverage granted by this coverage section for Claims that are (i) firstmade during the period set forth in Item 6(A) of the Declarations for this coverage section(the “Extended Reporting Period”) following the effective date of termination or non-renewal, and (ii) reported to the Company in writing within the time provided in Subsection14(a) of this coverage section, but only to the extent such Claims are for Wrongful Actscommitted, attempted, or allegedly committed or attempted before the earlier of theeffective date of termination or non-renewal or the date of the first merger, consolidation,acquisition, or Financial Impairment event described in Subsection ig below. The offer ofrenewal terms and conditions or premiums different from those in effect prior to renewalshall not constitute refusal to renew. The right to purchase an extension of coverage asdescribed in this Subsection shall lapse unless written notice of election to purchase theextension, together with payment of the additional premium due, is received by theCompany within thirty (30) days after the effective date of termination or non-renewal. AnyClaim made during the Extended Reporting Period shall be deemed to have been madeduring the immediately preceding Policy Period. The entire additional premium for theExtended Reporting Period shall be deemed fully earned at the inception of such ExtendedReporting Period.

Limit of Liability, Retention and Coinsurance

12. (a) The Company’s maximum liability for all Loss on account of each Claim, whethercovered under one or more Insuring Clauses, shall be the Limit of Liability set forth inItem 2(A) of the Declarations for this coverage section. The Company’s maximumaggregate liability for all Loss on account of all Claims first made during the PolicyPeriod, whether covered under one or more Insuring Clauses, shall be the Limit ofLiability for each Policy Period set forth in Item 2(B) of the Declarations for thiscoverage section.

(b) Defense Costs are part of, and not in addition to, the Limits of Liability set forth inItem 2 of the Declarations for this coverage section, and the payment by theCompany of Defense Costs shall reduce and may exhaust such applicable Limits ofLiability.

(c) The Company’s liability under Insuring Clause 2 or 3 shall apply only to that part ofcovered Loss (as determined by any applicable provision in Subsection 16 of thiscoverage section) on account of each Claim which is excess of the applicableRetention set forth in Item 4 of the Declarations for this coverage section. SuchRetention shall be depleted only by Loss otherwise covered under this coveragesection and shall be borne by the Insureds uninsured and at their own risk. Exceptas otherwise provided in Subsection 13, no Retention shall apply to any Loss underInsuring Clause 1.

(d) If different parts of a single Claim are subject to different Retentions, the applicableRetentions will be applied separately to each part of such Claim, but the sum of suchRetentions shall not exceed the largest applicable Retention.

(e) To the extent that Defense Costs resulting from a Securities Claim are coveredunder Insuring Clause 2 or 3 (as determined by Subsection 16(a) of this coveragesection) and are in excess of the applicable Retention, the lnsureds shall bear

Page 10 of 19


uninsured and at their own risk that percentage of such Defense Costs specified asthe Coinsurance Percentage in Item 3(A) of the Declarations for this coveragesection, and the Company’s liability shall apply only to the remaining percentage ofsuch Defense Costs. To the extent that Loss other than Defense Costs resultingfrom a Securities Claim is covered under Insuring Clause 2 or 3 (as determined bySubsection 16(a) of this coverage section) and is in excess of the applicableRetention, the lnsureds shall bear uninsured and at their own risk that percentage ofsuch Loss specified as the Coinsurance Percentage in Item 3(B) of the Declarationsfor this coverage section, and the Company’s liability shall apply only to theremaining percentage of such Loss. To the extent that Defense Costs resulting froma Claim other than a Securities Claim are covered under Insuring Clause 2 or 3 (asdetermined by Subsection 16(b) of this coverage section) and are in excess of theapplicable Retention, the Insureds shall bear uninsured and at their own risk thatpercentage of such Defense Costs specified as the Coinsurance Percentage in Item3(C) of the Declarations for this coverage section, and the Company’s liability shallapply only to the remaining percentage of such Defense Costs. To the extent thatLoss other than Defense Costs resulting from a Claim other than a SecuritiesClaim is covered under Insuring Clause 2 or 3 (as determined by Subsection 16(b) ofthis coverage section) and is in excess of the applicable Retention, the lnsuredsshall bear uninsured and at their own risk that percentage of such Loss specified asthe Coinsurance Percentage in Item 3(D) of the Declarations for this coveragesection, and the Company’s liability shall apply only to the remaining percentage ofsuch Loss.

(f) All Related Claims shall be treated as a single Claim first made on the date theearliest of such Related Claims was first made, or on the date the earliest of suchRelated Claims is treated as having been made in accordance with Subsection 14(b)below, regardless of whether such date is before or during the Policy Period.

(g) The limit of liability available during the Extended Reporting Period (if exercised) shallbe part of, and not in addition to, the Company’s maximum aggregate limit of liabilityfor all Loss on account of all Claims first made during the immediately precedingPolicy Period.

Presumptive Indemnification

13. If the Organization fails or refuses, other than for reason of Financial Impairment, toindemnify an Insured Person for Loss, or to advance Defense Costs on behalf of anInsured Person, to the fullest extent permitted by statutory or common law, then,notwithstanding any other conditions, provisions or terms of this coverage section to thecontrary, any payment by the Company of such Defense Costs or other Loss shall besubject to:

(I) the applicable Insuring Clause 2 Retention set forth in Item 4 of theDeclarations for this coverage section; and(ii) the applicable Coinsurance Percentage set forth in Item 3 of the Declarationsfor this coverage section

Reporting and Notice

14. (a) The Insureds shall, as a condition precedent to exercising any right to coverageunder this coverage section, give to the Company written notice of any Claim assoon as practicable, but in no event later than the earliest of the following dates:

Page 11 of 19


(i) sixty (60) days after the date on which any Organization’s office of generalcounsel or office of risk manager first becomes aware that the Claim has beenmade;

(ii) if this coverage section expires (or is otherwise terminated) without beingrenewed and if no Extended Reporting Period is purchased, sixty (60) daysafter the effective date of such expiration or termination; or

(iii) the expiration date of the Extended Reporting Period, if purchased;

provided that if the Company sends written notice to the Parent Organization, at anytime before the date set forth in (i) above with respect to any Claim, stating that thiscoverage section is being terminated for nonpayment of premium, the Insureds shallgive to the Company written notice of such Claim prior to the effective date of suchtermination.

(b) If during the Policy Period an Insured:

(i) becomes aware of circumstances which could give rise to a Claim and giveswritten notice of such circumstances to the Company: or

(ii) receives a written request to toll or waive a statute of limitations applicable toWrongful Acts committed, attempted, or allegedly committed or attemptedbefore or during the Policy Period and gives written notice of such requestand of such alleged Wrongful Acts to the Company,

then any Claim subsequently arising from the circumstances referred to in (i) aboveor from the Wrongful Acts referred to in (ii) above shall be deemed to have beenfirst made during the Policy Period in which the written notice described in (i) or (ii)above was first given by an Insured to the Company, provided any such subsequentClaim is reported to the Company as set forth in Subsection 14(a) above. Withrespect to any such subsequent Claim, no coverage under this coverage sectionshall apply to loss incurred prior to the date such subsequent Claim is actually made.

(c) The Insureds shall, as a condition precedent to exercising any right to coverageunder this coverage section, give to the Company such information, assistance andcooperation as the Company may reasonably require, and shall include in any noticeunder Subsection 14(a) or (b) a description of the Claim or circumstances, the natureof any alleged Wrongful Acts, the nature of the alleged or potential damage, thenames of all actual or potential claimants, the names of all actual or potentialdefendants or lnsureds involved, and the manner in which the Insured first becameaware of the Claim or circumstances.


15. (a) It shall be the duty of the Insureds and not the duty of the Company to defendClaims made against the Insureds.

(b) The lnsureds agree not to settle or offer to settle any Claim, incur any DefenseCosts or otherwise assume any contractual obligation or admIt any liability withrespect to any Claim without the Company’s prior written consent. The Companyshall not be liable for any element of Loss incurred, for any obligation assumed, orfor any admission made, by any Insured without the Company’s prior writtenconsent. Provided the Insureds comply with Subsections 15(c) and (d) below, theCompany shall not unreasonably withhold any such consent.

Page 12 of 19


(c) With respect to any Claim that appears reasonably likely to be covered in whole or inpart under this coverage section, the Company shall have the right and shall be giventhe opportunity to effectively associate with the lnsureds, and shall be consulted inadvance by the Insureds, regarding the investigation, defense and settlement ofsuch Claim, including but not limited to selecting appropriate defense counsel andnegotiating any settlement.

(d) The Insureds agree to provide the Company with all information, assistance andcooperation which the Company may reasonably require and agree that in the eventof a Claim the Insureds will do nothing that could prejudice the Company’s positionor its potential or actual rights of recovery.

(e) Any advancement of Defense Costs shall be repaid to the Company by the Insureds,severally according to their respective interests, if and to the extent it is determined thatsuch Defense Costs are not insured under this coverage section.

Allocation

16. (a) If in any Securities Claim the Insureds incur both Loss that is covered under thiscoverage section and loss that is not covered under this coverage section, eitherbecause such Claim includes both covered and non-covered matters or because suchClaim is made against both Insureds and others, the Insureds and the Company shallallocate such amount between covered Loss and non-covered loss based on therelative legal and financial exposures of the parties to covered and non-coveredmatters and, in the event of a settlement in such Claim, based also on the relativebenefits to the parties from such settlement. The Company shall not be liable under thiscoverage section for the portion of such amount allocated to non-covered loss.

(b) If in any Claim other than a Securities Claim the Insured Persons incur both Lossthat is covered under this coverage section and loss that is not covered under thiscoverage section, either because such Claim includes both covered and non-coveredmatters or because such Claim is made against both Insured Persons and others(including the Organization), the Insured Persons and the Company shall allocatesuch amount between covered Loss and non-covered loss based on the relative legaland financial exposures of the parties to covered and non-covered matters and, in theevent of a settlement in such Claim, based also on the relative benefits to the partiesfrom such settlement. The Company shall not be liable under this coverage section forthe portion of such amount allocated to non-covered loss.

(c) If the lnsureds and the Company agree on an allocation of Defense Costs, theCompany shall advance on a current basis Defense Costs allocated to the coveredLoss. If the Insureds and the Company cannot agree on an allocation:

(i) no presumption as to allocation shall exist in any arbitration, suit or otherproceeding;

(ii) the Company shall advance on a current basis Defense Costs which theCompany believes to be covered under this coverage section until a differentallocation is negotiated, arbitrated or judicially determined; and

(iii) the Company, if requested by the Insureds, shall submit the dispute to bindingarbitration. The rules of the American Arbitration Association shall apply exceptwith respect to the selection of the arbitration panel, which shall consist of onearbitrator selected by the Insureds, one arbitrator selected by the Company, anda third independent arbitrator selected by the first two arbitrators.

Page 13 of 19


(d) Any negotiated, arbitrated or judicially determined allocation of Defense Costs onaccount of a Claim shall be applied retroactively to all Defense Costs on account ofsuch Claim, notwithstanding any prior advancement to the contrary. Any allocation oradvancement of Defense Costs on account of a Claim shall not apply to or create anypresumption with respect to the allocation of other Loss on account of such Claim.

Other Insurance

17. If any Loss under this coverage section is insured under any other valid insurancepolicy(ies), then this coverage section shall cover such Loss, subject to its limitations,conditions, provisions and other terms, only to the extent that the amount of such Loss is inexcess of the applicable retention (or deductible) and limit of liability under such otherinsurance, whether such other insurance is stated to be primary, contributory, excess,contingent or otherwise, unless such other insurance is written only as specific excessinsurance over the Limits of Liability provided in this coverage section. Any payment bylnsureds of a retention or deductible under such other insurance shall reduce, by theamount of such payment which would otherwise have been covered under this coveragesection, the applicable Retention under this coverage section.

Changes in Exposure

Acquisition /Creation of Another Organization

18. If before or during the Policy Period any Organization:

(a) acquires securities or voting rights in another organization or creates anotherorganization, which as a result of such acquisition or creation becomes a Subsidiary;or

(b) acquires another organization by merger into or consolidation with suchOrganization, such that such Organization is the surviving entity,

such other organization and its Insured Persons shall be Insureds under this coveragesection, but only with respect to Wrongful Acts committed, attempted, or allegedlycommitted or attempted after such acquisition or creation unless the Company agrees, afterpresentation of a complete application and all other appropriate information, to providecoverage by endorsement for Wrongful Acts committed, attempted, or allegedlycommitted or attempted by such Insureds before such -acquisition or creation.

If, at the time of any such acquisition or creation described above, the total assets of anysuch acquired organization or new Subsidiary exceed ten percent (10%) of the total assetsof the Parent Organization (as reflected in the most recent audited consOlidated financialstatements of such organization and the Parent Organization, respectively, as of the dateof such acquisition or creation), the Parent Organization shall give written notice of suchacquisition or creation to the Company as soon as practicable, but in no event later thansixty (60) days after the date of such acquisition or creation, together with such otherinformation as the Company in its sole discretion may require, and shall pay any reasonableadditional premium required by the Company. If the ParentOrganization fails to give suchnotice within the time specified in the preceding sentence, or fails to pay the additionalpremium required by the Company, coverage for such acquired or created organization andits Insured Persons shall terminate with respect to Claims first made more than sixty (60)days after such acquisition or creation. Coverage for any acquired or created organizationdescribed in this paragraph, and for the Insured Persons of such organization, shall besubject to such additional or different terms, conditions and limitations of coverage as theCompany in its sole discretion may require.

Page 14 of 19


Acquisition by Another Organization

19. If:

(a) the Parent Organization merges into or consolidates with another organization andthe Parent Organization is not the surviving entity;

(b) another organization or person or group of organizations and/or persons acting inconcert acquires securities or voting rights which result in ownership or voting controlby the other organization(s) or person(s) of more than fifty percent (50%) of theoutstanding securities or voting rights representing the present right to vote for theelection of or to appoint directors of the Parent Organization, or


then coverage under this coverage section shall continue until termination of this coveragesection, but only with respect to Claims for Wrongful Acts committed, attempted, orallegedly committed or attempted by Insureds before such merger, consolidation,acquisition, or Financial Impairment. Upon the occurrence of any event described in (a),(b), or (c) of this Subsection 19, the entire premium for this coverage section shall bedeemed fully earned.

The Parent Organization shall give written notice of such merger, consolidation,acquisition, or Financial Impairment to the Company as soon as practicable, but in noevent later than sixty (60) days after the date of such merger, consolidation, acquisition, orFinancial Impairment, together with such other information as the Company may require.Upon receipt of such notice and information and at the request of the Parent Organization,the Company shall provide to the Parent Organization a quotation for an extension ofcoverage (for such period as may be negotiated between the Company and the ParentOrganization) with respect to Claims for Wrongful Acts committed, attempted, orallegedly committed or attempted by Insureds before such merger, consolidation,acquisition, or Financial Impairment. Any coverage extension pursuant to such quotationshall be subject to such additional or different terms, conditions and limitations of coverage,and payment of such additional premium, as the Company in its sole discretion mayrequire.

Cessation of Subsidiary

20. In the event an organization ceases to be a Subsidiary before or during the Policy Period,coverage with respect to such Subsidiary and its Insured Persons shall continue untiltermination of this coverage section, but only with respect to Claims for Wrongful Actscommitted, attempted, or allegedly committed or attempted while such organization was aSubsidiary.

Related Entity Public Offering

21. If any Organization files or causes to be filed, with the United States Securities andExchange Commission or an equivalent agency or government department in any countryother than the United States of America, any registration statement in contemplation of apublic offering of equity securities by any entity other than the Parent Organization(irrespective of whether such public offering is an initial public offering or a secondary or otheroffering subsequent to an initial public offering), then the Company shall not be liable for Losson account of any Claim based upon, arising from, or in consequence of such registrationstatement or the sale, offer to sell, distribution or issuance of any securities pursuant to suchregistration statement, unless (i) the Company receives written notice at least thirty (30) daysprior to the effective date of such registration statement providing full details of thecontemplated offering, and (ii) the Company, in its sole discretion, agrees by writtenendorsement to this coverage section to provide coverage for such Claims upon such termsand conditions, subject to such limitations and other provisions, and for such additional

Page 15 of 19


premium as the Company may require. If the Company in its sole discretion agrees to providecoverage for such Claims, the additional premium specified by the Company shall bepayable to the Company in full not later than the date on which such registration statementbecomes effective.

Representations and Severability

22. In issuing this coverage section the Company has relied upon the statements,representations and information in the Application. All of the Insureds acknowledge andagree that all such statements, representations and information:


(b) were made or provided in order to induce the Company to issue this coveragesection; and

(c) are material to the Company’s acceptance of the risk to which this coverage sectionapplies.

In the event that any of the statements, representations or information in the Applicationare not true and accurate:

(i) insuring Clause 1 of this coverage section shall be void with respect to any InsuredPerson who knew as of the effective date of the Application the facts that were nottruthfully and accurately disclosed (whether or not the insured Person knew of suchuntruthful disclosure in the Application);

(ii) Insuring Clauses 2 and 3 of this coverage section shall be void with respect to: (aa)any Insured Person who knew as of the effective date of the Application the factsthat were not truthfully and accurately disclosed (whether or not the Insured Personknew of such untruthful disclosure in the Application); (bb) any Insured Person towhom, or any Organization to which, knowledge of such facts is imputed; and (cc)any Organization to the extent it indemnifies any insured Person who hadknowledge of such facts or to whom knowledge of such facts is imputed (whether ornot knowledge of such facts is also imputed to such Organization). For the purposesof the preceding sentence:

(A) the knowledge of any Insured Person who is a past, present or future chieffinancial officer, in-house general counsel, chief executive officer, president, orchairperson of any Organization shall be imputed to such Organization andits Subsidiaries;

(B) the knowledge of the person(s) who signed the Application shall be imputedto all of the Insureds; and

(C) except as provided in (A) above, the knowledge of an Insured Person who didnot sign the Application shall not be imputed to any other Insured.

Page 16of19


PAYMENT OF LOSS23

(A) In the event of Loss arising from one or more Claims for which payment is otherwise due underthis Coverage Section but which Loss in the aggregate exceeds the remaining available Limit ofLiability for this Coverage Section, the Company shall:

(1) first pay such Loss for which coverage is provided under Insuring Clause (1)of thisCoverage Section; then

(2) with respect to whatever remaining amount of the Limit of Liability is available afterpayment of (1) above, pay such Loss for which coverage is provided under any otherInsuring Clause of this Coverage Section.

(B) Subject to the provisions of paragraph (A)(2) above, the Company shall, at the written request ofthe Parent Corporation, delay payment of Loss for which coverage is provided under anyInsuring Clause other than Insuring Clause (A) until such time as the Parent Corporationdesignates; provided that the Company’s liability with respect to such delayed payment shall notbe increased, and shall not include any interest as a result of such delay. The ParentCorporation shall provide written notice to the Company when such delayed payment shall bemade. Such written notice shall be deemed consent from all Insureds, including all InsuredPersons, to release such payment and the Company shall have no further obligation under thisPolicy with respect to such funds.

Page 17of19


GENERAL TERMS AND CONDITIONS

Territory

1. Coverage shall extend anywhere in the world.

Terms and Conditions

2. Except for these General Terms and Conditions or unless stated to the contrary in anycoverage section of this policy, the terms and conditions of each coverage section shallapply only to that coverage section. If any provision in these General Terms andConditions is inconsistent or in conflict with the terms and conditions of any coveragesection, the terms and conditions of such coverage section shall control for purposes ofthat coverage section. Any defined term referenced in these General Terms andConditions but defined in a coverage section shall, for purposes of coverage under thatcoverage section, have the meaning set forth in that coverage section.

Definitions

3. When used in this policy:

Claim shall have the meaning set forth in the applicable coverage section.

Insured shall have the meaning set forth in the applicable coverage section.

Parent Organization means the organization designated in Item 1 of theDeclarations of these General Terms and Conditions.

Policy Period means the period of time specified in Item 2 of the Declarations of theseGeneral Terms and Conditions, subject to prior termination in accordance withSubsection 11 below. If this period is less than or greater than one year, then the limits ofliability specified in the Declarations for each coverage section shall be the Company’smaximum limit of liability under such coverage section for the entire period.

Limits of Liability and Retentions

4. Unless stated to the contrary in any coverage section, the limits of liability and retentions- shown for each coverage section are separate limits of liability and separate retentions

pertaining to the coverage section for which they are shown. Unless stated to thecontrary in any coverage section of this policy, the payment of a retention under onecoverage section shall not constitute payment of, and shall not .reduce, the applicableretention under any other coverage section.

Notice

5. Any notice to the Company with respect to any coverage section shall designatethe coverage section under which notice is being given and shall be treated asnotice only under the coverage section(s) so designated.

Notice to the Company of a Claim or loss, or of circumstances which could giverise to a Claim, shall be given in writing addressed to:

Attn: Claims Director — Tom DeitzCatlin Group Inc.3340 Peachtree NETower PIece 100, Suite 2950

Page 18of19


All other notices to the Company shall be given in writing addressed to:

Attn: UnderwritingCatlin Group Inc.6320 Canoga AveSuite 1564Woodland Hills, CA 91367

Any such notice shall be effective on the date of receipt by the Company at suchaddress.

Valuation and Foreign Currency

6. All premiums, limits, retentions, loss and other amounts under this policy are expressedand payable in the currency of the United States of America. Except as otherwiseprovided in any coverage section, if a judgment is rendered, a settlement is denominatedor any element of loss under this policy is stated in a currency other than United States ofAmerica dollars, payment under this policy shall be made in United States of Americadollars at the rate of exchange published in The Wall Street Journal on the date thejudgment becomes final, the amount of the settlement is agreed upon or the element ofloss is due, respectively.

Subrogation

7. In the event of any payment under this policy, the Company shall be subrogated to theextent of such payment to all the Insured’s rights of recovery, and such Insured shallexecute all papers required and shall do everything necessary to secure and preservesuch rights, including the execution of such documents necessary to enable theCompany effectively to bring suit or otherwise pursue subrogation rights in the name ofthe Insured.


8. No action may be taken against the Company unless, as a condition precedent thereto,there shall have been full compliance with all the terms of this policy. No person or entityshall have any right under this policy to join the Company as a party to any action againstany Insured to determine such Insured’s liability nor shall the Company be impleaded bysuch Insured or legal representatives of such Insured.

Parent Organization Rights and Obligations

9. By acceptance of this policy, the Parent Organization agrees that it shall be consideredthe sole agent of, and shall act on behalf of, each Insured with reipect to: the payment ofpremiums and the receiving of any return premiums that may become due under thispolicy; the negotiation, agreement to and acceptance of endorsements; the giving orreceiving of any notice provided for in this policy (except the giving of notice to apply foran Extended Reporting Period); the adjustment of loss amounts; and the receipt orenforcement of payment of loss (and the Parent Organization further agrees that it shallbe responsible for application of any such payment as provided in this policy). EachInsured agrees that the Parent Organization shall act on its behalf with respect to allsuch matters.

Alteration and Assignment

10. No change in, modification of, or assignment of interest under this policy shall beeffective except when made by written endorsement to this policy which is signed by anauthorized employee of Chubb & Son, a division of Federal Insurance Company.

Page 19 of 19


Termination of Policy or Coverage Section

11. This policy or any coverage section shall terminate at the earliest of the following times:

(a) sixty days after receipt by the Parent Organization of written notice oftermination from the Company for any reason other than non-payment ofpremium;

(b) twenty days after receipt by the Parent Organization of written notice oftermination from the Company for non-payment of premium;

(c) upon receipt by the Company of written notice of termination from the ParentOrganization; provided that this policy may not be terminated by the ParentOrganization after the effective date of any acquisition of the ParentOrganization as described in the Changes in Exposure subsection of theapplicable coverage section of this policy;

(d) upon expiration of the Policy Period as set forth in Item 2 of the Declarations ofthese General Terms and Conditions; or

(e) at such other time as may be agreed upon by the Company and the ParentOrganization.

The Company shall refund the unearned premium computed at customary short rates ifthis policy or any coverage section is terminated by the Parent Organization. Under anyother circumstances the refund shall be computed pro rata. Payment or tender of anyunearned premium by the Company shall not be a condition precedent to theeffectiveness of a notice of termination, but such payment shall be made as soon aspracticable thereafter.

Termination of Prior Bonds or Policies

12. Any bonds or policies issued by the Company or its affiliates and specified in Item 4 ofthe Declarations of these General Terms and Conditions shall terminate, if not alreadyterminated, as of the inception of this policy.

Bankruptcy

13. Bankruptcy or insolvency of any Insured shall not relieve the Company of its obligationsnor deprive the Company of its rights or defenses under this .policy.

Headings

14. The descriptions in the headings and sub-headings of this policy are solely for convenience, andform no part of the terms and conditions of coverage.

Page 20 of 19


C.ATLIIST

Named InsuredEndorsement NumbiFirst National Bank of Arizona 1

Policy Symbol Policy Number Policy Period EffecUveN/A DOP-91825-0608 June 9,2008 to June 9, 2009 June 9,2008Issued By (Name of Insurance Company)Lloyds of London Catlin Syndicate 2003

OUTSIDE DIRECTORSHIP LIABILITY ENDORSEMENT


(1) Solely for the purposes of the coverage provided under Insuring Clauses 1 and 2 of this coveragesection, the term Wrongful Act, as defined in Subsection 4 Definitions of this coverage section,is amended to include:

(a) any error, misstatement, misleading statement, act, omission, neglect, or breach of dutycommitted, attempted, or allegedly committed or attempted by an Insured Person in anOutside Directorship; or

(b) any other matter claimed against an Insured Person in an Outside Directorship solelyby reason of his or her serving in such Outside Directorship.

(2) Subsection 4 Definitions of this coverage section, is amended to include the following terms:

Outside Directorship means the position of director, officer, trustee, governor, or equivalentexecutive position held by an Insured Person in an Outside Entity if service by such InsuredPerson in such position was at the specific written request of the Organization or was part of theregular duties assigned to such Insured Person by the Organization.

Outside Entity means:

(a) any non-profit corporation, community chest, fund organization or foundation exemptfrom federal income tax as an organization described in Section 501(c)(3) of the InternalRevenue Code of 1986, as amended; or

(b) any of the following organization(s), but only with respect to an Insured Person’sposition of director, officer, trustee, governor, or equivalent executive position held by

- such Insured Person in such organization listed opposite such Insured Person’s name:

[ Outside Entity: Insured Person:T[Enter the name of the Oustside [Enter the name fo the insured person(s).]

Entity(ies).]

(3) Subsection 5 Exclusion (d) of this coverage section is amended to read in its entirety as follows:

(d) based upon, arising from, or in consequence of:

(i) any actual, alleged, or threatened exposure to, or generation, storage,transportation, discharge, emision, release, dispersal, escape, treatment,removal or disposal of any Pollutants; or

Endorsement 2 page 1 of 2


(ii) any regulation, order, direction or request to test for, monitor, clean up, remove,contain, treat, detoxify or neutralize any Pollutants, or any action taken incontemplation or anticipation of any such regulation, order, direction or request,

including but not limited to any Claim for financial loss to the Organization, any OutsideEntity, any securityholder or creditor of the Organization, or any securityholder, creditor,or member of any Outside Entity based upon, arising from, or in consequence of anymatter described in clause (i) or clause (H) of this Exclusion 5(d);

(4) Subsection 5 Exclusion (g) of this coverage section is amended to read in its entirety as follows

(g) for Wrongful Acts of an Insured Person in his or her capacity as a director, officer,manager, trustee, regent, governor or employee of any entity other than the Organization,even if the Insured Person’s service in such capacity is with the knowledge or consent orat the request of the Organization; provided that this Exclusion 5(g) shall not apply toWrongful Acts of an Insured Person in an Outside Directorship; or

(5) Coverage provided to any Insured Person in an Outside Directorship shall:

(a) not extend to the Outside Entity or to any director, officer, trustee, governor or anyequivalent executive or any employee of the Outside Entity, other than such InsuredPerson serving in such Outside Directorship;

(b) be specifically excess of any indemnity (other than any indemnity provided by theOrganization) or insurance available to such Insured Person by reason of serving insuch Outside Directorship, including but not limited to any indemnity or insuranceavailable from or provided by the Outside Entity;

(C) not extend to Loss on account of any Claim for a Wrongful Act committed, attempted,or allegedly committed or attempted by such Insured Person while serving in suchOutside Directorship if such Wrongful Act is committed, attempted, or allegedlycommitted or attempted after the date:

(i) such Insured Person ceases to be in the position or capacity that causes him orher to meet the definition of Insured Person set forth in this coverage section; or

(ii) service by such Insured Person in such Outside Directorship ceases to be atthe specific request of the Organization or a part of the regular duties assignedto such Insured Person by the Organization; and

(d) not extend to Loss on account of any Claim for a Wrongful Act committed, attempted,or allegedly committed or attempted by such Insured Person while serving in suchOutside Directorship where such Claim is:

(i) brought by the Outside Entity or any affiliate of the Outside Entity;

(ii) brought by any director, officer, trustee, governor or any equivalent executive orany employee of the Outside Entity; or

(ii) brought on behalf of the Outside Entity, if such Claim is brought or maintainedwith any active assistance or participation of, or solicitation by, any director,officer, trustee, governor or any equivalent executive or any employee of theOutside Entity.

(6) If any Claim made against an Insured Person in an Outside Directorship gives rise tocoverage both under this coverage section and under any other policy issued by the Company oran affiliated company of the Company (collectively, the “Company”) to any other entity:



(a) the Company’s maximum limit of liability under this coverage section and such otherpolicy for all Loss on account of such Claim shall not exceed the largest single availablelimit of liability under either this coverage section or such other policy; and

(b) any payment under such other policy shall reduce any applicable Limit of Liability underthis coverage section by the amount of such payment.

This endorsement does not increase the Company’s applicable Limits of Liability beyond thoseset forth in this coverage section.

(7) No coverage will be available under this coverage section for Loss on account of any Claim:

(a) based upon, arising from, or in consequence any error, misstatement, misleadingstatement, act, omission, neglect, or breach of duty committed, attempted, or allegedlycommitted or attempted by any Insured Person in an Outside Directorship as afiduciary (including but not limited to as a fiduciary as defined in the Employee RetirementIncome Security Act of 1974, or any amendments thereto, or any rules or regulationspromulgated thereunder, or any similar provisions of any federal, state, or local statutorylaw or common law anywhere in the world) of any pension or welfare plan;

(b) based upon, arising from, or in consequence of:

(i) any demand, suit, or other proceeding pending against an Outside Entity on orprior to [Specific date], of which such Outside Entity or any director, officer,trustee, governor or any equivalent executive or any employee of such OutsideEntity had received notice or otherwise had knowledge on or prior to [Specificdatel;

(ii) the same or substantially the same fact, circumstance, situation, act, error,omission, transaction, or event underlying or alleged in any demand, suit or otherproceeding described in (i) above; or

(iii) any Wrongful Act committed, attempted, or allegedly committed or attempted byan Outside Entity or any director, officer, trustee, governor or any equivalentexecutive or any employee of an Outside Entity, which gave rise to anydemand, suit or other proceeding described in (i) above;

(c) for an accounting of profits made from the purchase or sale by an Insured Person in anOutside Directorship of securities of an Outside Entity, within the meaning of Section16(b) of the Securities Exchange Act of 1934, any amendments thereto, or any similarprovision of any federal, state, or local statutory law or common law anywhere in theworld;

(d) brought by or on behalf of any person or entity that owns, beneficially or directly, ten percent (10%) ormore of any class of outstanding stock of the Outside Entity; or

(e) based upon, arising from, or in consequence of any service by an Insured Person who was anelected or appointed public, governmental or quasi-governmental official.

The title and any headings in this endorsement are solely for convenience and form no part of the terms andconditions of coverage.



All other terms, conditions and limitations of this policy shall remain unchanged.The title and any headings in this endorsement are solely for convenience and form no part of the termsand conditions of coverage.


Authorized Representative

Enciorsemer)t 2 page 2)2


CA T L IN

Named Insured Endorsement NumberFirst National Bank of Arizona 2Policy Symbol Policy Number Policy Period EffectiveN/A DOP-91825-0608 June 9,2008 to June 9, 2009 June 9,2008

Issued By (Name of Insurance Company)Lloyds of London Catlin Syndicate 2003

ARIZONA AMENDATORY ENDORSEMENTTO THE GENERAL TERMS AND CONDITIONS SECTION

In consideration of the premium charged, it is understood and agreed that:

Subsection 11. Termination of Policy or Coverage Section (a) of the General Terms andConditions Section is amended to add the following at the end of such paragraph (a):

“provided that, if this policy or the applicable coverage section is in effect for at least sixty (60)days or is a renewal, the Company may cancel this policy or such coverage section, other thanfor non-payment of premium, only for one or more of the following reasons:

(1) conviction of an Insured of a crime arising out of acts increasing the hazard insuredagainst;

(2) acts or omissions by an Insured or hiss her or its representative constituting fraud ormaterial misrepresentation in obtaining this policy, in continuing this policy or inpresenting a claim under this policy;

(3) a substantial change in the risk assumed, except to the extent that the Companyshould reasonably have foreseen the change or contemplated the risk in writing thispolicy;

- (4) a substantial breach of contractual duties or conditions; -

(5) loss of reinsurance applicable to the risk insured against, but only if the absence ofreinsurance has resulted from termination of treaty or facultatie reinsurance initiatedor implemented by the reinsurer or reinsurers of the Company;

(6) a determination by the director of insurance that the continuation of this policy wouldplace the Company in violation of the insurance laws of the state of Arizona or wouldjeopardize the solvency of the Company; or

(7) acts or omissions by the Insured or his, her or its representative that materiallyincrease the hazard insured againsL”

2. Subsection 11. Termination of Policy or Coverage Section (d) of the General Terms andConditions Section is amended by deleting the “or” at the end of such paragraph (d) and addingthe following:“provided that, non-renewal by the Company shall be effective only upon sixty (60) days’ advancewritten notice of non-renewal to the Parent Organization at the address shown in the



Declarations or the last address known to the Company. Such notice shall be delivered or mailedby certified mail, with a copy to the agent or broker of record. If such notice is sent later than sixty(60) days before the expiration of the Policy Period but before such expiration, then coverageshall remain in effect until sixty (60) days after notice is sent, provided that the ParentOrganization pays the premium for such extension, which shall be calculated by pro-rating theexpiring Policy Period premium. No notice of non-renewal is required if the Company offers torenew this policy or the Parent Organization has obtained replacement coverage or has agreedin writing to obtain replacement coverage: or”

3. Subsection 11. Termination of Policy or Coverage Section of the General Terms and ConditionsSection is amended further by adding the following paragraphs at the end of such Subsection:

“The Company will mall any notice of cancellation by certified mail to the Parent OrganIzation atthe address shown in the Declarations or the last known address of the Parent Organization,and will provide a copy of such notice to the agent or broker of record, if any. Such notice willstate the reason(s) for cancellation and include a refund of any unearned premium, except apremium that has been financed.

If the Company increases premium, changes deductible or retention, reduces limits orsubstantially reduces coverage at renewal, the Company will deliver or mail by certified mailwritten notice of such change(s) at least sixty (60) days’ before the expiration of this policy. If theCompany does not provide such notice at least sixty (60) days before the expiration of this policy,coverage under this policy will remain in effect until notice is given or untH the ParentOrganization obtains replacement coverage.”

The policy will be deemed to have been amended to the extent necessary to effect the purposes of thisendorsement.

The regulatory requirements set forth in this Amendatory Endorsement shall supersede and takeprecedence over any provisions of the policy or any endorsement to the policy, whenever added, that areinconsistent with or contrary to the provisions of this Amendatory Endorsement, unless such policy orendorsement provisions comply with the applicable insurance laws of the state of Arizona.

Endorsement 4, page 2/2




Endorsement 4, page 2/2


CATLIN

Named InsuredEndorsement NumberFirst National Bank of Arizona 3

Policy Symbol Policy Number Policy Period EffectiveN/A DOP-91825-0608 June 9,2008 to June 9, 2009 June 9,2008Issued By (Name of Insurance Company)Lloyds of London Catlin Syndicate 2003

AMEND INSURED VERSUS INSURED EXCLUSION (WHISTLEBLOWER) ENDORSEMENT

In consideration of the premium charged, it is agreed that Subsection 5:, Exclusions Applicable to AllInsuring Clauses, (c)(i) of this coverage section is deleted and replaced with the following:

(i) a Claim that is a securityholder derivative action brought and maintained on behalf of theOrganization without any active assistance or participation of or solicitation by, any InsuredPerson (other than assistance, participation or solicitation for which Section 806 of the SarbariesOxley Act of 2002, or any similar ‘whistleblower” protection provision of an applicable federal,state, local or foreign securities law, affords protection to such Insured Person).

The title and any headings in this endorsement/rider are solely for convenience and form no part of theterms and conditions of coverage.





CATLIN

Named InsuredEndorsemijjrFirst National Bank of Arizona 4

Policy Symbol Policy Number Policy Period EffectiveN/A DOP-91 825-0608 June 9,2008 to June 9, 2009 June 9,2008Issued By (Name of Insurance Company)Lloyds of London Catlin Syndicate 2003

FAILURE TO MAINTAIN INSURANCE EXCLUSION WITH SIDE A CARVEBACK ENDORSEMENT

In consideration of the premium charged, it is agreed that the Company shall not be liable for Loss onaccount of any Claim based upon, arising from, or in consequence of any actual or alleged:

1. negligent act, error or omission or any breach of duty in exercising judgment or discretion inprocuring and maintaining insurance; or

2. failure or omission in effecting and maintaining insurance; or

3. negligent act; error or omission or breach of duty with respect to amount; form, condition orprovisions of any insurance contract.

Provided, however, that this exclusion shall not apply to Loss (a) which is on account of any Claimagainst an Insured Person brought by any shareholder of the Organization in his capacity as such,4 whether in his own right or on behalf of the Organization, provided that such Claim is brought andmaintained without the assistance, participation or solicitation of any Insured Person, and (b) for whichthe Organization either is not permitted or required, or fails or refuses by reason of FinancialImpairment, to indemnify the Insured Person.

It is further understood and agreed that this exclusion applies solely to Claims based upon, arising from,or in consequence of the Organization’s role in procuring, maintaining and effecting insurance on its ownbehalf. This exclusion does not apply to Claims based upon, arising from, or in consequence of theOrganization’s role as a provider of insurance to others.

The title and any headings in this endorsement/rider are solely for convenience and form no part of theterms and conditions of coverage.





CATLIN

Named InsuredEndorsement NumberFirst National Bank of Arizona 5

Policy Symbol Policy Number Policy Period EffectiveN/A DOP-91825-0608 June 9,2008 to June 9, 2009 June 9,2008Issued By (Name of Insurance Company)Lloyds of London CatIin Syndicate 2003



We agree to not use the prior notice exclusion as a means to avoid coverage for those matters identifiedin the notice of circumstance provided to Chubb dated June 5, 2008.

The title and any headings in this endorsement are solely for convenience and form no part of the termsand conditions of coverage.



EXHIBIT C


DIRECTOR AND OFFICERAND CORPORATE SECURITIESLIABILITY INSURANCE POLICYDECLARATIONS

CA r

j Policy Nc: DOP-91825-0608 Renewal of Policy No:. N/A

Catlin Insurance Company (U K) Ltd.do Catlin Holdings (UK) Umited3 Minster Court, Mincing Lane

London EC3R 700


Suite 101Dover, DE 19904

Temis appearing in bold are. defned in thePoIicy.

Item 1. Named Insured: F st.Nationl Bank ofAjAddres l76OON PerirrieterDrivé

Scottsdale, AZ 85255Item 2. Policy Period: Froni: June .9, 2Q08 to.Jurie9,.20Q9

Eath dates et 12:01.e.m. (ioeel-time at thead ressstated in itemItern3. Aggregate Limit:of Liability: $IQ,Q00,00Qitem 4. Retentions: V

Insuring Clause 1.:.$0 each ClaimInsuring Clause 2 $500,000 each Claims other than Securities ClaimsInsuring Clause 3.: $500,000 each Securities Claims only

V

ltem5. Coinsurance Percentage each Securities Claim: N/Aitem 6. Premium: $200,000

Additional Premium for the Discovery P.eriod 100% of PremiumLengthoftheDlsco.veryPeriod: 1 year

Item 7 Pending or Prior Date Primary m — May 27, 19992m. xs3rn — Apr11 1,20045 xs8m ....ApriI 1,2005

V

THIS IS A “CLAIMS MADE AND REPORTED” POLICY. SUBJECT TO ITS TERMS ANDPROVISIONS, THIS POUCY ONLY AFFORDS COVERAGE FOR CLAIMS FIRST MADE AAlNSTTHE INSUREDS AND REPORTED TO THE INSURER IN WRiTING DURING THE POLICY PERIOD. ORDISCOVERY PERIOD, IF APPLICABLE. IN ADDrnON. DEFENSE COSTS ARE iNCLUDED IN ANDWILL REDUCE THE LIMITS OF LIABIUTY.

PLEASE READ THIS ENTIRE POLICY CAREFULLY CONSULT YOUR BROKER OR OTHERREPRESENTATIVE IF YOU DO NOT UNDERSTAND ANY TERMS OR PROVISIONS OF THISPOLICY.

INSURERCORRESPONDENT.OFRCE[

UNDERWRITING OFFICE

x

Syndicate. 2003 at Lloyd’sdo Catlin Undewriting Agency Ltd.

6th Floor, 3 Minster CourtMindna Lane, London EC3R 70t)

PRODUCER


Suite 1564WoodlandHills,.CA 913e7:

TorrtDonnetlyTn City— San Francisco

Page 1 of SO


THESE DECLARATIONS, TOGETHER WITH THE COMPLETED ANl SIGNED APPUGATION FORTHIS POLICY, ALL MATERIALS SUBMITTED THEREWITH OR MADE APART THEREOF AND THEPOLICY FORM ATTACHED HERETO, CONSTrWTEtHEpOLIcv

This Policy shall not be valid unless also igned by another duly authorized represehtàtive of the Insurer.

Item 8. RetroactIve Dater N/AItem 9. Notices to Insurer:

______

All Other Nàtics.

Attn; Claims Director - Torn Deitr Attn: Underwritingr. - Ctl1n Group lnca n roup nc.

6320 Ave3340 Peachtree NE. Suitel 564Tower Place 100, Suite 2950 Wo land Hills. CA 91367Item 10. Endorsements Appiicble to Coverage.at Inception of Potiy

‘I. Outside D&O Diretorship endorsement,2. Arizona amendatoryendài-sementtothe geneTal ferrris an4. conditions section3. Amend insured versus insured exclusion (WhitlebJower endorsement4. Failure to maintain insurancexclusion with side a caveiackeridorsement

Page 2of


DIRECTORAND ØFFICER,ANP CORPORATE SECURITIES LIABILiTYCOVERAGE FORM

In consideration of payment of:the premium arid subject to the Declarations, the General terms andConditions arid the hniitations conditions provisions and other terms of this coverage section theCompany and the lnsuredsagree as follöws

insuring Clauses

Executive Liability Coverage ‘Ibsuring Clause I

1 The Company shall pay, on behalf ‘of each of the Insured Persons, Loss for which theInsured Person is not indemnified ‘by the Organization and Which the insured POrson’beconiei legally obligated to pay oriaccOunt of any Claim’ first n’iade galrist the InsOredPerson, individually or otherwise, ‘during the Policy Period or;, if eeróised. during’ the’Extended Reporting Period, for a Wrongful Act committed, attempted,, or allegedly’committed o1 attempted by such Insured Persn before’ or during the Policy Period, butonly if such ClaIm Is reported to the Company in Writing in the mariner and within the timeprovided in Subsection 14 of this coverage section.

Executive Indemnification Coverage Insuring Clause 2

2. The Company ‘shali’pay, on betialf:of the Organization, Loss fOr which The Organizationgrants indemnification toan,lnsured Persoii,’:as permitted ir required by law, and whichthe Insured Person becomes legally obligated to pay on account of any Claim first madeagainst the insured Person individually or otherwise3 duIin the Policy ‘Period or, if.exercised, during the’ Extended RepOrting Period, for a’ Wrongful Act committed.attempted or allegedly committed or attempted by such Insured Person before or duringthe Policy Period,, but only if such Claim is reported to the Company :In writirigiri themanner and Within the time provided in SubsectIon 14 of this coverage section.Entity Secuuities.povarage Insuring Ciauise 3

3. The Company shall, pay, on behalf of the Organizátionr, Loss which the ‘Organizationbecomes iegtIy obligated’ to pay on account of any’,Securltl’es Cialm first made againstthe Organization during the Policy Period or, if exercised, dçning the ‘Extended Reporting.Period, fora Wrongful, Act committed, attempted, or Ilegedly ‘cOmrritted or attempted bythe Organization or ‘the insured, Persons betre or’ during the Policy Period, but only Ifsuch Securities Clairn”is reported to the Company in writing in the manner and within theUmt, pivided fri Subsection 14 of this coverage $OCtiQfl

Definitions


AppHcatIo mean all sIged’ applications’, including attachments and Other náterialssubmitted therewitI Or incorporated ‘therein, submitted b/ tbs lAsured là the Company’fOithis coverage sectiOn or for’ahy coverage section ‘or policy of Wi icli’this Oovéragectiori is adirect Or indirect renewal o replaceriient. Aplicàtlon shall’ also inëlude, fOr eachOrganizatiOn, all of the following. docUments whether or not submitted with or’ attached tO”any such signed application (i) the Annual Report (including financial statements) lastissued to ‘shareholdera before this Øbllcy’s Inception dgte; (ii) the:’ repOrt. last:flled ‘With th:Securities and Exchange Commission on Form ‘10-K before this policy’s inception date (iii)the report last filed with the Secunties arid Exchange Commission on Form 10-Q beforethis policy’s inception ‘date; (iv) the proxy statement arid (if different)’ definitive. prxy

Pae3 of 19


statement fast fUèd with the Securities arid Exchatige Commission before this policy’sinception date; (v) all reports filed, with the: Securities and Exchange Commission on Form8-K during the ‘twelve months preceding this policy’s inception date; nd (vi)’all repoits Iliadwith the Securities and Exchange Commission on Schedule 13D with respect to any equitysecurities of such Organization,, during the twelve months preceding this polic?s inceptiondate Al) such applications attachments materials and other documents are deemedattached to, incorporated iñto’and made a part of thi coverage section..

Claim means:

(1) when used in refereñceto the coverage pros dccl. by Insuring Clause I or 2

(a) a wiitten demand fOr nonetary damaès or non-monetary relief

(b) a civil proceeding ommenced by the service of a complaint or similar pleading;or

(c) a formal civil administrative or civil regulatory proèEdirig co imenced by thefiling of a notice of charges or similar document or by the entry of a formalorder of invèstigatioh r’similar document,

against an Insured Person fr a Wrongful Act Including añy:appäl therñ’i;

(2) when used in referen’ceto the cover ge proided by Insuring Clause 3:

(a) a written demand fOr n4onetary damages Or non-monetary teHef

(b) a civil proceeding commenced by the servioe.of a complaint or similar pleading;:or

(c) a formal civil ‘administrative or dvii réulatory proce din commenced by Ihe.filing of a niotioe ‘Of charges or slñdlar documeiit Or by the entry of a fOrmalorder of investigation Or similar dOcument, but only while such proceOding isalso pending against an Insured Person,

against an Organization fer a Wrongful Ad, inc1udInganyappeal therefrom;’ or’

(3) when used in reference tb. the coverage provided for a Securities Claim by InsuringClause I or 2, ‘a criminal proceeding cOmmenced by the rètuin’ of an indictmentagainst an insured Persoil ‘fOr a Wrongful At Incltiding’any appeal therefrom.

of this coverage section, a Claim Will bédeenfed to’ha/e first been made when such Claim iscommenced as set forth lb’ this definition Or, in the dase of a written demand, When such’demand is first received by an InsurecL

Defense Costs, means that’ part of Loss conssting’of reascsnabte costs, cha:rges, fees’(tncludirig but not lmiteci to attorneys’ fees and experts” fees)’and expenses (othr ‘thanregular or overtime wages sa1tles, fees or benefitsf the dfrectGre, officers. or employeesof the Organization) incurred in defending. any Claim and the premium for appeal,attachment or similar bonds.

Domestic Partner means arty natural person qualitying as a ‘domestic partner under theprovisions of any applicable federal state or local law or under the provisions of any forrtialprogram established by the Organizátioh.

Financial Impairment means,;the status of an Organizatlon’resulting from:

Päge4 of 19,


(a) the appointment.by any stateçrfederat officiSi, agency or courtof any receiver,conservator hquidator trustee rehabilitator or similar official to take control ofsubervise, manage or liquidate such ‘QrganLzáIon; r

(b) such Organization becoming a debtor in possessk>n under the United Statesbankruptcy law or the equivalent of a debtor in possession under the law of anyother country.

Insered means the’ Orgahizatloñ and: any Insured Person.

Insured Capacity means the position or capacity of an Insured Persbn thatcauses’him orher to meet the déflnitioh of Insured Person set forth Fn this coverage section. InSuredCapacity does not include any position or capacity held by an InSured” Person in anyorgnization cthei than’the Organization, even if thèOrganizát1on directed or requestedthe Insured Person to serve in such psitionor capacity Insuch other organization

Insured Person means any natural persOn who was, now is Or shall beôotne:

(a) a duly elected or ‘appointed. director, officer, or the in-house genera) counsel ofany Organization chartered in the linited’States:of America;

(b) a holder of a position eqüivalent tO any’ position described in (a) äbové iri anOrganization that is. chartered in any, jurisdiction other than the United Statesof America; or

(c) solely with respect t Secuitles Claims, any other eniploye ofOrganization, provided that such other employees shall riot, solely by reason.of their’ status as employees,.. be.insured Persons or purposes of”ExclUsion:5(c).

LoSS means the amount that any Insured Person (for purposes of lnsurin Clauses I and2> àr the. Organization (for ‘purposes. of. insuring Clause 3) ‘becomes legally obligated topay on account of any covered ‘Claim, Including ‘but not limited to damages (includingpunitive or exemplary damages, If and to ‘the extent that such punitive or exemplarydamages are insurable under the’ lawor the jurlsdictioh most favorableto the insurability of:such damages provided ‘such jurisdiction has a substantial relationship to the relevantlnsureds, tO “the Company, or to the Claim giving rise, to the damages), judgments,settlements, prejidgment•ah’d post-judgment interest, end Defense Costs.

Loss shall not include:

(n) any amount not Iridcrnnrnoa Dy’tne urgan$zetlpri for which an insurea reren.is absolved from payment by reason of any covenant, agreement or courorder

(b) any costs ihcurred by the Organization to comply with ‘any”order for injunctiveor other non-monetary relief, or ‘to cbrnply’ with an agreement to provide such.relief;

(c) any amount’ incurred by an Insured in the defense or investigation of anyacion proceeding or demand that is. not then a ‘Claim even if’(i) ‘such’ amountalso benefIts the defense of a covered Claim, or (Ii) such action, proceeding ordemand subsequently. gives rfse.to a. Claim;

(ci) taxes, fines or penalties, or the multiple portion ‘cf. any multiplied damageaward, ‘except as. provided above with’ respect ‘to punitive or exemplarydamages;

Pge’of19


(e) any amount not iAsurabIe uhder the 1ai.pursuanf Là whIch this ergeseötion is construed, except as pmWdd stxve with n3spectto punitive cxxempiarydarnage.s;

(f) any amount ãllocäted to non-covered loss pursuant to Subseàtion 16 of thiscoverage section;or

(g any arnotrnt that rOpresent Or is substantially equivalent to n irirease in theconsideration paid (or prppsed to be paid) by an Organlztlon in connectionwith its: purchase Of ànj s cuñties or assets.

Orgafliztlon means,, collectively, thöse or9anizations designated in lterñ 5 of theDeclarations for this coverage sectiofl, nd the Subsidlarles. of: such designatedorganizations.

Pollutants means (a) any.substance.located anywhere in the wotld exhibiting any hazardouscharadteristIcs as defined by, or idehtlfiêd on a list Of hazardous substànóes Issued by, theUnited States Environmental Protection Agehoy or any state, county, municipality or Iocàlitcounterpart thereof including but not limited tO sOlidé, liquids, gaseous or thermal irritants,contaminants orsmoke, Vapor, soot fuhes, acids, alkalis, ch&rricalsor waste materials 0r(b) anyøther air.emissibn1odor, waste water, oil or oil products, infectious or medicaiwaste,asbestoS or asbestoa.producis or any noise.

ReLated claims means ati Claims for Wrongful Acts based upon, arising from, or inconsequence of the sameor related facts, circumstances1situations, tansactionsor eventsor the sameor related series of facI, cifcumStances, situation tiansactions or events.

Securities Claim means that portiort ofa Claim which:

(a) is broughtby a securityholder of an. Organizatlen:

(i) in his or her oSpaçity as. a securityholder of such Organization, withrespect t his or her interest In secuiitles of such Organization; and.against such Oganization or any of its Insured Persons; or

(II) derivatively, on behalf of such Organization1againtan insured Personof such Organization; or

(b) alleges that an Organization or any of Its Insured Persons:

(i) violated a federal, state, local or foreign securitips law or a rule orrguläUon nromulgatod under any 6uoevuri law. or

(II) conrnltted a Wrongful Act that constItutes pr arises froma purchase,sale, oroffpr to. purchase or seIlsecurities of such Organization;

provided that :Securltl s Claim does not inclde any Claim by or on behalf of a fOrmer,current, future or prospective employee of the Ogenizatlon that Is based upon, arising.from, or in consequene of: any offer, grant orissuance, ::or any plan or agreement relatingto the offer, grant cw issuance, by the Organizationto such employee iii his or her capacityas such of stock, stock warrants, stock pptions or other ecurttiés of the OrganlzatIon orany payment or instrument the amount or value of which is derivpd from the value ofsecurities of the O,anation..

Subsidiary means any organization while more Tharr fifty percent (50%) of the outstandingsecurities or voting mghts representing the prespnt rightip votefor efectlo of orto appointdirectors of such organization arepwripd, dectly or Indirectly, in any combination, by oneor more of those orgamzations designated in Item 5 of the Declarations for this coveragesection.

Page 6 ci IS.


Wrongful Act means:

(a) any error, misstatement misieading staternept. act, omissiàn neglect,. orbreach of duty committed, attempted, or allegedly committed or attempted byan Insured Person in his or her Insured Capacity or for purposes ofcoverage under Insuring Clause 3, by the Organization, or

(b) any other máttr claimed agairit aninsuréd Person solely by reason of Iliso?her serving ihan Insured Caaclty.

Exclusions

Applicable To All 1nswUg C1ause

5. The Company shall not be lIable for Loss on account:of any Claim:

(a) based ipon, arising from, or in onsequepce of any fact, circumstance, situation,transaction, event or Wrongful Act that before The inception date set forth In Item 2of the Declarabons of the General Terms and CondItions was the subject of anynotice given under any policy or coverage section of which this coverage section is adirect or indirect renewál.or replacement;

(b) based upon, arising from, or:lnconsequence ofany dernnd, suit orotherproceedingpendIng against, or order, decree or judgment entered for or against any lnsured onor prior to the Pending or Prior Date set forth In Item 7 of the Declarations for thiscoverage section, or the same or substantlaHy the same fact, pircurnstance, situation,transaction, evetit,or Wrongful Actundeilying or allegedtherein;

(c) brought or maintained by or on behalf of any Insured in any capacity; provided Thatthis Exclusion 5(c) shal[nOt apply to:

(I) a Claim brought or maintained cienvatively on behalf of the Organization byone or more securiyholders of the Orgarization, provided such Claim Isbrought and maintained without any active assistance or participation of, orsolicitation by, aiiy Insured Person;

(ii) an employment Claim btought or maintained by or on behalf of an InsuredPerson; or

(iii) a Claim brought or maintained by an Insured Piou fii wiatributiuji VI:indemnity If such Claim directly results from another Claim covered under thiscoverage section;

basedupon,arisingfrom,.orin onsequencé of

(I) any actvat. alleged, of threatened exposure to, or génerátion, storage,transportation, discharge,.1emission, relee, dispersal, esoápe, troent,remOval or disposal of any Pollutants; or

(ii) any regulation, order,. direction or request 1ó test fot. monitor, clean up,remove contain treat, detoxify or neutralize any Pollutants or any actiontaken In cOntemplation Or anticipatiOn ofàny such regulation, order, directioii Orreqiieat,

Pags 7f 19


including but .ot limited to any Claim for flanclai s to the Orgañizatioh; itssecurityholders or’ lt creditors based upon, arising from, or in onsquence of anymatter desciibed in clause (I) Orclause (ily QIthis Exclusion 5(d);

(e) for bodily injury, mental anguish, emotional distress, •slàkness, disêOse’ or dth ‘ofany person or damagé’to or dstructioh of any, tangible property including ‘toss of usethereof 4ieTher or nøt it is damaged or destroyed; provided that this ExclusIon 5(e)shall not apply to rnèhtal anguish or emotional distresi fo which a claimant seekscompensation in an empIoyrien’t Claim’;..

(f) for an actual or alleged violation of the responsibilities, obligations or duties imposedon fiduäiaries by the EmplOyeO Rétirernént IncOme Seourity Act of 1974, Or any.amendments thereto, or any niles’ cc regulations promulgated thereunder, or anysimilar provisions of any fOdétal, State, or locl statutory lw or common lawanywhere in the world;

(g) for Wrongful Acts ofan InSured Person in his or her .cpacity as a diiectOr, officer,managei, ttustee, regent,, b”emoi or. employee of any entity ether th3n theOrganization, even if the Insured Persofl’s ,.ser”ice in such capacIty is with theknowledge or consent or at the request Of the Or nizatlon; or

(fl): for any Wrongful Act committed, attempted, or allegedly committed ‘biattempted bya Subsidiary Or an Insured Person “of a Subsidiary during any time Whei suchentity was not a SubsIdiary.

Applicable To insuring Clauses I ahd 2 Only

The Company ,shll hot be liable under Insuring Clause for 2 for Loss on ‘account ef anyClaim made against any insure4.Persofl:

(a)’ ,fo.r.an accounting of:.profit$ made”from the purchase or ,1e by.such Insured Personof secuntes of the Orgamzation within the meaning of Section 16(b) of theSecurities Exchange Act of 1934,. any amendments ther to pr any similar provisionof any federal, state, or local statutory law orcommon lawapywhere in’ the world; or

(b) based upon, arising from, :or in consequence’ of any’ delibe.rateiy fraudulent act or:omission or any willful violation of any statute or regulation by such Insured Personif a judgment ‘or other final adjudication in any’ proceeding esLablisjies such adeliberately fraudulent, actor omission or willful violation; or

(c) based upon, arising from, vi ‘1u coiqueu uf u hured

any profit, remuneration or advantage to whlch .suchInsured Person was not legallyentitled.

Applicable To lpswlng Clause 3 Only

7. The Company shall not be liaie undør Insuring clause 3 fqr Loss on account, of anySecurities Claim made against any Organization:

(a) based upon, arising from, or in conspquencE of any deliberately fraudulent: act oromission or any willñil violation of any statute or regulation by an Organization or byany past, present or’future,,ci’iief’flnancial officer, in-housegeneralcounsel,. president,chief executive officer or chairperson of an Organization if a judgment or other finaladjudicatri in any proceeding establishes such a delberatety fraudulent act oromission or willful violation; :qr

Page Sof 19


(b) based upon arising from, or In consequence of sut Organization having gainedany profit, remuneration or advantage to which such Organization was not legallyentitled; or

(o) for any acttaI or allegd liability of an Organizatlort under any contract or agreementthat relates to the purchase, sale, or offer to püicháse or sell any securities; providedthat this Exciu1on 7(c) shall not apply to liability that would have attached to uchOrganization in the absence of such contract or agreement


8. (a> No fat: peJhlng to or knowledge: possesse.d by any Insured. Peron s1lI beimputeØ to any other Insured Person for the: purpose of applying the:exclusiøns. inSubsection €of this coverage.section.

(b) Only facts pertainingtQand knowledge possessed by any past, present, or future.chieffinancial officer, in-house generai pounsel, president,: chief executive officer orchairperson of an Organization shall be impited tosuch Qrganization forthe purposeof applying the exciusions. in Subsection 7 of this coverage section.

Spouses E•state and Legal Repreéentatlves

9: Suject bthervljse to the GeneraL Terms ahd COnditions and: the liitátiàns; codifions,provisions and other term Of this coverage sectiOn, coverage shall extend to Clàiths forth Wrongful Avtsofanjnsured Persói madeagalnst

(a) the estate; heirs, legal rèprèsehtativês or assigns of such Insured Person If suchInsured Person is deceased r the Ieal represeñtativesor assigns of such InsuredPerson if such Insured Person j5 incompetent, insolventoi bahkript, or

(b) the lawful spouse:or DbthestlcPaitner:of such Insured Person solely by reason ofsuch sp use oi DOrnestis Paftners status as a spuse 0 Domestic Paitner, orsuch spouse or Domstic Paftners owneishiØ Interest in property which theciaimnt seek as recov&yfôr an alleged Wrongful Act of such Insured Person;.

All terms and conditiOns of this coverage:sectlon, including bUt notlimlted:to the Retention,aplcable to Loss incurred by the Insured Persons, shall also apply to Io$s:incurred bkthe €states, heirs, léal fresentatives,:asigns pouses anti DOmestic Paitners of suchinsured Persohs The.c verageprovidéd by thisSubsection . shall not appti with respectto iiy loss arising from an actor omission ny an Insured reison’s estate, heirs, legalrepresentatives, assIgns, spouse or Doñiestic Partner.V

Coordination With Employment Practices LiabllityCoverage SctIon

10. An Loss otheiwise covered by both (i) this coverage section and (ii) any employmentpracbces liability coverage section or policy issued by the Company or by any affiliate of theGoipany (an “Employment Practices Liability Coverage”) flrstshallbe covered, as provIdedin and shall be subject to the limit of liability retention arid coinsurance percentageapplicable ta such Employment. Prectices Liability aoverage..An.y remaining Loss otherwisecovered by this coverage section which is not paid under such Employment Practices LiabilityCoverage shall be covered as provided in and shall be subject to the Limit of Liability,Retention and Coinsurance Percentage applicable to this coverage section provided theRetantion applicable to such Loss under this coverage section shall be reduced by theamount of Loss otherwle covered bythls:coverage sectiorr Which is paid. b the Insureds.as the retention under suchEmployment Practices LiabilityCoverage.

Pge 6f 19



11. If the Company or the Parent Organization terminates or does not renew this coveragesection other than termination by the Company for nonpayment of premim the ParentOrganization and the Insured Persons shall have the r1gtit upon payment of theadditional premium set forth lb item 6(B) of ma .Dedarations for this coveràg section, to enextønsion of the coverage granted by. this :coverage section for Claims that are (I) firstme during. the period set forth n. item (A) of the Declaratidris for this coverage sectiii(the ‘Exteiided Reporting Period’). fo1lowlg the effective date of terminatidt or riotirenwal, and (ii) reported to the Company ih’thiting within the time provided in Subsection14(a) of thiS coverage section, but only to the extent. suôh Claims. are fOr Wrongful Actscommitted, attempted, or allegedly committed or attempted before the eartier of theeffective date ofterminátion or non-renewal or the date of the first rñerger, conscifldatioh,acquisition, or Financial impairment event described In Subsection 19 below. The offer Ofrenewal terms. and conditions Or premiums different from thOse in effect prior to renewalshall not constitute refusal to renew. The right to purchase an eterisioh of Obvdrge asdecrIbed in this Subsection shall lapse unlesS written hotice of election topurthase theextension, together with payment of the additIOnal premium due, is received by theCorrpany within thirty (30) dayS after the effective date of térmlnatioh or non-reneWal. MyClaim made during the Extended Reporting Perlbd shall be deemed to have been rhadéduring the immediately preceding. Policy Period. The entire additional premium for theExtended Reporting Period shall bø deemed fully earned at the: inception.of such ExtendedReporting Period.

Lirnitof Liability,Retentlon and Coinsurance

12. (a) The Company’s maximum liabilltyforralt Loss- on accpunt of each Claim, whethercovered under one or more Insuring Clauses shall be the Limit of liability set forth inItem 2(A) of the Declarations. fo.this coverage section. The..Companys maximumaggregate liability tot all Loss on account of all claims first made during the PolicyPeriod, whether covered under one or more Insuring Clauses, shall be the LimitofLlabihty fOr each Policy Period set forth in Item 2(B) of the Declarations for thiscoverage section.

(b) Defense Costs are part of and not in addition to, the Limits of Liability set fOrth in.Item 2 of the Declarations for this coverage section and the payment by theCompany of Defense Costs shall reduce and may exhaust such applicable Limits ofLiability.

(c) The Company’s liability under Insuring Clause 2 or 3 shall apply only to that part ofcovered Loss (as determined by any applicable provision in Subsection 16 of thiscoverage section) on account of each Claim which is excess of the applicableRetention set forth in Item 4 of the Declarations for this coverage section SuchRetention shall be depleted only by Loss otherwise covered under this coveragesection and shall be borne by th Insureds uninsured and at their own risk Exceptas otherwise provided in Subsection 13 no Retention shall apply to any Loss underinsuring Clause 1.

(d) if different parts of a Cingle Claim are subject tO dlfferent:Reténtions, the appIiableRetenUob will be applied separately tàeaöh pert of such lalrn, but the sum of suchRetentiOns shalt nOt exceed the1arest applicable Retention.

(e)- To the extent that Defense Cost& resulting from a Securities Claim are coveredunder Insuring Clause 2 or 3 (as determined by Subsection 16(a) of this coveragesection) and :are in éxdess of the applicable RetentiOn, the Insureds Shall bear

Pagelo of 19


uninsured and at Their own risk that percentage of suchOefense osspecIfiedasthe Coinsurance Percentage in Item 3(A) of the Declarations for this coveragesection, and the Company’s liability shall apply only to the remaining peroentagc. äfsuch Defense .Coss. To the extent that. Loss other Than Defense Costs resultingfrom a Securities Claim Is covered under Insuring (lause 2 or 3 (as determined:ySubsection i(a) of this coverage section) anct is in excess of the applicableRetention the Insureds shall bear uninsured and at their own risk that percentage ofsuch Loss specified as the Coinsurance Percentage In item 3(8) of the Declarationsfor this coverage section and the Company s liability shall apply only to theremaining percentage of such Loss To the extent that Defense Costs resulting froma Claim other than a Securftlas claim are covered under Insuring Clause 2 or 3 (asdetermined by SubsectiOn 16(b)of. this coverage. section.) and are in excess of theapplicable Retention the Insureds shall bear uninsured and at their own risk thatpercentage of such Defense Costs specified as the Coinsurance Percentage in Item3(C) of the Declarations for this coverage section and the Company’s liability shallapply only to the remaining percentage of such Defense Costs To the extent thatLoss other than Defense Costs resulting from a Claim other than a SecuritiesClaim is covered under insunrig (lause 2 or 3 (as determined by Subsection f6(b) ofthis coverage section) and is in excess of the applicable Retention the Insuredsshall bear uninsured and at their Own risk that percentage of such Loss specified asthe Coinsurance Percentage in Item 3(D) of the Declarations for this coveragesection and the Company s liability shall apply only to the remaining percentage ofsuch Loss..

(f) All Rëlatéd Clahiis shall be treated as a single Claim first maite On the date the.earliest of such Related Claims was first made or on the date the earliest of suchRelated Claims is treated as having been made in accordance with Subsection 14(b)below, regardless of,hethersuch date is before ordiring the PolIcy Periäd.

(g) The limit of liability available during the Extended Reporting Period (if.exrcised) halibe part of and not in addltioh to the Company’s maxih-ium aggregate limit of liabilityfor all Loss on account of all Claims first made during the immediately precedingPolicy Period.

Presumptive IndemnifIcation

1:3. If the OrganizatIon fal1 or refuses, other than for reason of Financial Impairment, toindemnify en Insured Person for Loss, or to advance Defense Costs on behalf ofanInsured Person, to the fullest ex.,nt permitted by statutory or common law, then,notwithstanding any other conditions, provisions or terms of this coverage section to thecontrary, any payment by the Company of such Defense Cist or nthnr (n hii bsubject to:

(I) the applicable: insuring Clause 2 Retentioni set forth. In Item .4 Of theDciarations for this coverage section; atd(ii) the applicableQoinsurance Perce.tagesetforth iii Item .3of the. DecIarattonsfor this coverage section

Reporting and Nøtlce

14. (a) The lrisureds shall, as a cOndition précederitto exørclslng any right b coverageunder this coverage section give to the Company wntten notice of any Claim assoon as practicable, but in no event laterthan the earliest oHhe follOwIng dates:

Page 1l of.19


(I) sixty (60) days after th’e.date On which any Orgarizatlon’s office of generalcounsel or office of risk mandge fi?st’bs’cornesaare tht the Claim has beenmade;

(ii) if this coVerage sectioh expires (or is otherwise terminated) without beingrenewed and if no Eictendd Reporting. Period is purchased, sixty (60) daysafter the effective date ‘of’uch’expifatioñ or terminat On; or

(iii) the expiration date of the Extendd Reporting. Period1if purchased;

provided that if the Company sends written htice tO theParent Organkation at anytime before the date set forth in (I) aboVe with respect to any Claim, stating that thiscoverage section is being terminated for nonpayment Of premium, the’lnsureds shallgive to the Company ‘Written notice of‘such Claim prior to the. effective date of suchtermination.

(b) If during the Policy Period an. Insured:

(i) beOomesaware of circuitnces which could give riseto a Claim and giveswritten notlceofsuch:circUrnetancestOthe,Company;or

(ii) receivE a Written request totOll or waive a ‘statute of’ Imitations applicable toWrongful Acts committed, attempted, or allegedly committed or attemptedbefore or during the Policy Period and: gives written notice of such requestand of such alleged Wrongful Acts to the Company,

then any Claim subsequently arising fromthe circumstances referred, to in (i) :aboveor from the Wrongful Acts referred to in (ii) ribove shall, be ‘deemed to have beenfirst m2cle during ‘the Policy. Period in which the written notice described In (I) or (Ii)above was first given by an insured to the Company, provided any.such subsequentClaim is reported to the Compan’ as set fOrth in Subsection 14(à) above. Withrespect to any. such subsequent claim no coverage urter This coverage sectionshall apply to loss incurred prior to’the date such ‘subsequent Claim is actually’ made.

The Insurecis shall, as a condition precedent:’ t exercising’ any right to coverageunder this coverage section give to the Company such information, assistance andcooperation as the Company may reasonably require and shall include in any noticeunder Subsection 14(a) r (b) a description of the Claim or c[rcumstances The natureof any alleged Wrongfu[ Acts, the nature of the alleged or potentiai damage, thenames of all actual ,or potential, plairnaniv, the names of all actual or potentialdefendants or Insureds involved, and the manner in which the Insured first became’

_____________

nf th cb1m nr


15. (a) It shall be the”duty of the tsurèda and not the ty:’of the Company to’ dêfehdClaims made against the Insureds.

(b) The Insureds agree hOt to settle or Offer tO’ settle any Claim, inOur any DefeAseCosts or otherwise assume any contrctuaI obli9ation or admit any liability wIthrespect to any Claim without the Companys prior written consent The Companyshall not be liable for any element of Loss Incurred for any obligation assumed rfor any admission made, by any Insured without the Company’s prior writtenconsent Provided the Insureds comply with Subsections 15(c) and (d) below theCompany shall not unreasOnably withhold any such’co,nsent

Page 12 of’19


c) I With respect to any Claim that appears reaonabiy likely to becovered in whole or inpart undei-this’coverage section, the Company shall have the right and &iil be giventhe opportunity to effectively associate with tie insureds and shall be consulted inadvance by the insureds, iegardlng ‘the Investigation, defèhsè and’ seitl’mënt ofsuch. Claim, irludirg’ &tt nOt ‘limited to selecting appropriate dêfeñse counsel andnegotiating any. settlement

(d) The insureds .gree’t provide the Co’pan, With: all itimai h, assistance afdcooperation which the Company may reasonably require and agree that in the eventcia Claim the Insureds will do nothing that could prajudice the Compañ?s posiiionorits potential Or’ actual rights of recovery.

(e) Any advancement of Defense Costs shall be repaid. to the Company by the Insureds,severally according t’their respective interests, If and to the extent it is determined that.such Defense Costs are not insured: under this :coverãgè ectlon.

Allocaton

1G. (a) if in any Securities Claim the Insureds. cur :beth Lss that is covered under th.coverage section and loss that is not covered under this coverage section eitherbecause such ClaiimiticludesbOth covered, andrion-covered matters or because:suchClaim is rnade:against’both Insureds, and’others, thelnèureds and the Cornpanyshallallocate such amount between covered Loss and non-covered loss based on therelative legal and financial exposures of the parties ‘to covered ard Oon-covered.matters and In the event of a settlement In such Claim based also on the relativebenefits to the parties from such settlement The Company shall not be liéble under thiscoverage section fo(the, portion of such amount allopated’tonon-coveied loss.

(b) If in any Claim: other than a Securities Claim, the !nsured Perscns incur both Lossthat is covered under this coverage section and loss that is not covered under thiscoverage section, either because such Claim includes both covered and non-coveredmatters or because such Clahn is made against both Insured Persons and ethers(including the Orgarnzation) the Insured Persons and the Company shall allocatesuch amount between covered Loss and non-covered loss based on the relative legaland financial exposures of the parties to covered and non-covered matters and, In theevent of a settlement in such Claim based also on the relative benefits to the partiesfro’n such settlement The Company shall not. be liable under this, coverage section forthe portion of’ such amount allocated to non-covered làs.

if the In&ureds and the ‘Company agree on an’ :Ollootion of Defensa’ Costs, theCompany shall advance on a current basis Defense Costs allocated to the cOveredLoss. If the tnsuredê and the Company canriotagre on an allocation:

(I) no presumption as. t0 al .tlbn#ialL exist in ny rbitttion. sUit or othetpmceeljing;

(i the Company ‘shall advance. th ‘a cürreñt bais Defense Cots which’ theCompany believes to be covered under this coverage seätlon until a differentallocation is negotiated, arbitrated o’judicialiy determmned and

,iii) the Compy, .W requested by’ the Insur , shall subn-’it the dispute to bindiñarbitration The rules of the American Arbitration Associetion shall apply exceptwith respect to the selection of the arbitration panel which shall consist of onearbitrator selected by the Insureds one arbitrator selected by the Company andalhircHndependent.arb!tratOc.selectèd bthe ffrsttwO arbitrators.

Page.13 of 19


(di Any negotiated; arbitrated or judicially determihgd allocàtipn of Defense Costs onaccount ofa Claim s1a beappiid. refroatively to all Defense Costs on account ofsuch Claim, notwithstanding any prior advancement to the contrary. Any allocation oradvancement of Defense Costson account of a Claim shallrio apply O Or create ahypresumption wi respect to thêgllbcatonofothe Loss on accOunt of sunh Claint

Other insurance

IL if any Loss under :this coverage section is insured under any other valid. Insurancepolicy(ies) then this coverage section shall cover such Loss subject to its limitaborisconditions provisions and other terms, only to the extent that the amount of such Loss is inexcess of the..applicabie retention (or deductible) and limit of liability under such otherinstkance, whother suth Other insurance l stated to be primary, contributory, excess,.contingent or otherwise, unless .suãh other insurance is written only as specific excessinsurance over the Limits of Liability provided fri this coverage. section. Any payment bylnstreds of a retention or deductible trnder such other insurance shalt reduce, by the.amount of sucti payment which would otherwise have been covered under this coverage.section, the applicable Retentioh underthis coverage section.

Changes In Exposure

Acquisition ICreation of Another. Organization.

16. If before orduring.the Policy Period any Organization:

(a) acquires securities or voting rights in another organization Or creates ahotherorganizatk>n, which asa res If o such acquiclon or oretion beconies 0 Subsidiary;or

(b) acquires anOther organization by merg intO or cOnsiidation suchOrganization, such that such Organizatiøn f the sivingitity.

such other.organhzatlon, and its Insured Persñs. hall be Insureds under this coverage.sec(ion, but only with respect to Wrongful Acts c&rimitted, atternptsd, or allegedlycohjmittcd or attempted after such acquisition or cretitiOn unless.the.Cbrripäriy agrees, afterpreentation of a complete. application and ll othei apprOpriate information; to provide.coverage by endorsement for Wronful Acts committed, attempted, or allegedly.corintitfed or attempted by Such Insurids belkre such acquisitiOn or creation.

l1 c4 th Uiii vfiirudi quiitioi.vi itkii deubd aLive, th Mel ests vi ay.such acquired Orgni±ation or newSubsldlaryëxceed ten percent (10%) of the total assetsof the Parent Organization (as reflected in the most recent audited cohsolidated financialstatments of such organization and the Parent Orga atin,, respectively, as of the dateof sich àcquisitioñ or creation), the. Parent Organization shall gi.wrkten notice of suchacquisition or creation to the Company as. soonas practicable;. but fri nO event later thansixt (60) days after the date of:Uch acquicition or creatiOn, together with. such :otherinlorrnation as the Company in its sole disctetion my require and shall pay any reasonableadditional premium required by the Conpany; If the: Parent Organ iza.tlon:.fails to give suchnotfàe within the time specified fr the preceding sentence, or fails to pay the additiørrpreriium required by the Company, cOverage for such acquired or created:organizãtion andits insured PerSOns hãll ternuiiiaté With respectto CIlms fi made more than sixty (80)day* after such acquisition Or creCtioh Coverage.for any acqiiiredor cteated organfzt1ondesribed in this paragraph; and for the Insured Personsof such organization, shall be.subject to such additional or different terms, corIdition. and limitations of as the:Coripany in its. sole discretion may require.

Pagei4ofiS


Acquisition by Another Organization

19. It

(a) the Parent Organization merges into of consolidates with.:áhother orgahization andthe Parent OranizaUon is hot the Sürvt ring èttit;

(b) •anotheI organization or person .orrouØ of. organizations and! petsoris acting hiconcert acquires securities orvotlhg rigbts hich rsuIt ihöWnership er Voting cbhttOlby the other organization(s) or person(s) of more than fifty percent (50%) of theoutstanding securities or voting rights representing the present right to vote for theelection of or to appoint, directors of the Parent Organization;, or


ther coverage under this coverage sedtioii. shiI contjhue until. tsmiination of this coveragesection but only with respect to Claims for Wrongful Acts committed, attempted oraitegedly committed or attempted by lnsureds before such merger consolidationacquisition, or FInancial impairment. Upon the occurrence of any event described in (a)(1) or (c) of this Subsection 19. the entire premium for this coverage section shall bedeolted fUy’eamed.

The Parent Organization shall give written notice of such merger, consolidation,acquisition, or Financial Impairment tc the Company as soon as practicable, but in rievent later than sbty (60) days after the date Of suOh merger. consolidation, acquisitiOn, orFinancial Impairment, together with suCh other ihfvtrnstibn as the COmpahy may réqu ire..Upon receipt ofsuch nötice’and infOrmation and at the requestof the Parent’Organization,.the Company shall prVlde to the Parent Organization a quOtation for an extension ofcoverage (for sUCh period as may be. negotiated bebeen the Co4npany and the. ParentOrganization) with respect to Claims for Wrongful Acts corrmitted, attempted, oralieedly comhiitted or attempted by insureds be.fore such mergei. Consolidation,ecqtiisitiOn, or Fiflanclal. impairment. Any coverage extension pursuant toauch quotationshail be subject’tO such additioflal of differerit t S,. cOflditiOflS and llhiltattohs’ of coverage,and payment Of such additional premiutri’ ‘a.’the Company In its sole dIscretion mayreqiire.

Cessation of Subsidiaiy

20. In tue event an organization ceases to baa Subsidiary before or during the Policy. Period,coverage with respect to such Subsidiary arid its insured Persons shall continue untiltermination of this coverage section, but onlywith respect to Claims for Wrongful Actscon,mitted, a1±e ipted ulegadly:cornrnitted or attempted while sucti organization was aSubsidiary.

Related EntThj PuLIic O#’.edng

21. if ahy Organization files or .causea to be’ filed, with the. United, Sates Securities andExchangeCdrnrtiission or an eqtJIvä1e’ri’ agency or government department in any co(rnttyother than the.. United ‘States of America, any. registration staterneñtjri ‘cOntemplation of apub!ic offering of equity securities by any entity other than the Parent Organization(irrespective of whether such public offering is an initial public offering or a secondary or otheroffering subsequent to an initial public offenng) then the Company shall not be liable for Losson account of any Claim based upon,..arlsing from, or in consequence f such registration.statement or the sale offer to sell distribution or issuance of any securities pursuant to suchregistration statement unless (i) the Company receives written notice at least Thirty (30) dayspno to the effective date of such registration statement providing full details of thecontemplated offering end (ii) the Company, in its sole discretion agrees by writtenendorsement to this coverage section to provide coverage for such Claims upon such termsandi conditions, subject tc such limitatiOns aod other .provisiqns, and ‘fOr éuth’addilonal.Page1oft9


preriium as the Company may require. If the Gohiçiany in its sole discretion agrees to pr(Mdecoverage for such Claims, the additional remium specified by the Company shalt bepayable to the Company in fult not later than thedate. on which such Istratlon :statementbecomes effective.

Representations and Severablflty

22. En )ssuiig this coverage section th Company has relied upon the statements,repesentabons and inforrnahon in the Application All of the Insureds acknowledge andagree that all such statements, represerltstions.and information:


(b) were made or provided in order tc induce the Company to sue this coveragesection; and

(c) are material to the Company’s acceptance of the risk t whkh this coverage section.applies.

in. the event that any f thestatements, reprentatibns r information in the Appllcatlonar not true and accurate:

(i) lnsunng Clause I of this coverage section shall be void with respect to any InsuredPerson who knew as Of the effecth,e date of the Application the facts, that ‘were noftruthfully and accurately disclbsed’(whether or not the Insured Person knew of suchuntruthful disclosure ln the Application);

(31) insurIng Clauses•.2 and 3of this coverage’sectlonshaii be void with respect to; (aa)any Insured Person who knew as of the.effective date of the ppllcatIon the fcs.that were not truthfuilysnd accuratel disclosed (whether o riot,the Insured Personknew of such untruthfui disclosure in the ApplIeatIon) (bbj any Insured Person:to.whom or any Organization to which, knowledge of such facts is Imputed, and (cc)any Organization to the extent it indemnities any Insured Person who hadknowledge of such facts or to whom lcnowled9e of such facts is imputed (whether ornot knowledge of such facts is also imputed to such Organization) For the purposesof’ the preyed ng sertence:

(A) the: knOwledge of any Insured Person who is: a past, present Or Mute chieffinancial officer, inhouse general counsel, chief executive officer, president, orchairperson of any Organization shall be imputed to such Organization andits Subsldiarie;

(B) the knOwLedge of the persOn(s) who signed the Appllcatlon shall be i?nputodto all Of’the Insureds; arid

(C) except as provjrled’iñ:(A) abOve, the knowledUeof aninsured Pørsonwho didnot:sin the ApplicatlOnchal[notbe. lmputedto any otherIñsured.:

Page 16 of l


23

(A) in the evrit of Loss arising fromone.or rnqre Claims forwhich.payment.is. otherwise due underthis Coverage Section btit which Loss in the aggregate eceed the remaining available Limit ofLiability fdrthis Coverage Section, the Company shall:

(1) first pay such Loss for which coverage is proVided. under Insuring Ciause (1)of thisCbverage.Secubn; then

(2). with respect to whatever remaining. amount of the Limit of Liability is availabje afterpyrnent of (1) above, pay such Loss ftr which coverage is provided under any otherInsuring Clause of this Coverage $ecUon,

(B) Subject td the provisions of paragraph .(A)(2) above, the C pany shall. atthe written rgues ofthe Parent Corporation delay payment of Loss for which coverage is provided under anylnsurirg iause other than Insuring Clause (A) Until such time as, the Parent. Corporationdesignates provided That the Company’s habihty with respect to such delayed payment shall riotbe increased, and shall not Include any. iriterest as a isit of such de1ay The ParentCorporation shall provide written notice the Company when such delayed payment shall bemade Such written notice shall be deemed consent from all Insureds including aN InsuredPersons, to releasesuch payment and the Company shall have no further obiigion under thisPolicy with respeotto such funds.

Page 170119


GENERALTERMS AND CONDITIONS

Territory

Coverage shall extend anyWere in the wcld.

Terms arid Conditions

2. Ekcept for-these General Terms and Coiditions or unless stated to the contrary in anycoverage section of this pol1cy the terms and conditions of each coverage section shallapply only to that coverage section. If any provision in these General Terms andConditions is inconsistent or in conflict with the terms and conditions of any coveragesection, the terms and conditions of such coverag.section shall control for purposes ofthat coverage section Any defined term referenced in these General Terms andConditions but defined Ln :a coverage section shall, for puiposes of coverage under thatcverage section, have, the meaning set forth in that COver ge seOtloh.

Definitions

3. When used in this pàlicy:

CISIm ‘shall have the meaning setfOrtfrmn the applicable coveiãgo sêctiôn.

Insured shall have the meaning set fotth in the: applicable coverage .ection.

Parent Organization means the: organization designated in Item of theDeclarations of these General Terms anOonditiors

POlicy Period means the period. Of titnespecitied in Item 2 Of the Declarations of theeGheral TCrms Cnd Conditions, subject tO prior terminhtibh in ‘accordance with:Subsection 11 below. If thisperiod is less than or greater than one year,’then.The limits, oflibiIit’ specified in the Declarations ‘fOr each .cbvetage section shSll be the Qompany’s’‘rraximum limit of liability uhder such coverae’sectiOrifOrthe entire’perloc[

Limits of Liabilit and RetentiOns

4. Unless stated to the-cOntrary In an coverage section, the liinits: Of liability and retentionsslibWn for each coverage section ate: separate limits Of liability and separate retentidnspertaining to the coverage echori for which they are shown Unless stated to theUJ7tRfl y in d11 euvide’sectIon Qf this pulley, the paynient of’ a retention unc1 unecoverage section shall not constitute payment of and shall not reduce the applicableretention under any other coverage section.

-

Notice

5 Ay notice to the Company with respect to any coverage section shall designatethe coverage Section under which notice Is being given and shall be treated asnotice only under the coverage:section(sJ so designated,

Notice tO the Company of a Claim or loss, Or of circumstances which could give.rise to a Claim, shall be given in Writing addressed to:.

Attn: Clains Director- Tom DejtzCatlin Group tnc3340 Peactitree NETower PlacelGO, Suite295O

Page 1oft9’


All other notices to theCo.mpany shall be.giveri.in Writirg:addressed tO

Attn: UnderwritingCatlin Group Inc.6320 Uánàga AveSuite 1564Woodland Hills, CA-91367

Atiy such notice shall be effectivó on the ‘date of recit by the Comp’ny ataddress.

Valuation and Fqreign Currency

6.. All premiums, Iiniits, etentins, loss and othr amourts under this cIIcy areexpesedarid payable in the currency & the United States of: Aniadca. Except as otherwiseprovided in any coverage section if a judgment Is rendered a settlement is denominatedo any element ‘of loss under this policy [s’ stated in a currehy Other than United States Of$nerica dollars, .paymeht under this’póticy.shaI1 be madE: fri UñitOd States.of Americadollars at the rate of exdiange published: j1 Street Journal on the date thejlgment becomes final, the amOunt of the settlerñent Is agreed upon or the. element oflOss is due, respectively.

Subroatlon

7. I the Event, of any payment under this poIicy the:Compariy shall b sU.bmgated’to theO*teñt of such:payment’to.aIl’-the lnsured’s•.ri’ghts of reco’ery, and suchinsured halte*ecute all papers required and shall do everything recessary tO secure and reseiye.such rights, including ‘the execution of such .dbi’ments necessary to’, enable theCbmpany effectively tobring suit or otherwise pürsué subrogation rights lii the name ofthe hisured.


.8. .N action may be:taken agafrist;the. Company unless, as.ecciditiàn precedent thereto,there shall have been full compliance with all the terms of this policy No person or entitysiall have any right under this policy to join the Company as a party to any action againstany Insured to determine such Jnswedsiiabillty nor shàll:the Companybe Impleaded bysuch Insured or legal representatives of such Insured.Parent Organ izaJon Rights arid Obligations

9. By acceptance of this policy,, the Preflt Organization agrees that it shall be consideredthe sole agent of, and shall act on behalf of, each Insured with respect to: the payment ofpiemiums ‘and the. receiving of any. retiim’ premium that may become due. under thispolicy the negotiation agreement to and acceptance of endorsements the giving orreceiving of any notice provided for in this policy (except the giving of notice to apply foran Extended Reporting Period) the adjustment of loss amounts and the receipt oretiforcement of payment of toss (and the Parent Organization further agrees that it shallbe responsible for application of any such payTnent as ‘provided In. this policy>. EaOhhisured agrees that the Parent Organizatiçn shall ct on its- behalf with respect to allsuch matters.

Alteration and Mslgnment

10. Nb change in, modification of, ‘or assignment of interest under this policy’ siall’ beefeotive except when made by w nendors,ernentt this policy which is signe by.ariauthorized employee of Chubb’& Son, a division qfFe al:lnsurence company.

Page19of9


Ternilnation of Pplicy or Coverage Section

11. This policy or any coverage seOtlon shall terrtiinate at the earliest of.the following times:

() sixty days after receipt. by. the - Parent Organization of written notice ofI termination, from ‘the CorTiparly for any reason othr than non-paymect Ofpremium;

(ti’) twertSf days after recpt by the Parent Organization of written notice of.termination from,.the Company forh paymentof premium;

(of) upon receipt by the Company of written notice if termiiiatlbri from’ the ParentOrganization provided that this policy may not be terminated by the ParentOrganization after the offective date of any acquisition of the ParentOrganization as described iil the Changes in Eiposure sub$ection of thappIicabecoerag’e’ section ‘of thI polIcy;.

(d) upon ‘expiration of the Policy. Pedod asset forth in ltem.2 ‘of the Declarations ofthese Gharal Terms and Càncfltions; or

() at such other time as may be agreed upon by: the Company and the ParentOrganization.

The Company shall refund the unearned premium computed at customary. short :T*S ifthis policy or any coveragesection is terminated, by. the Parent.Organization. Undnr anyoer circumstances the refund shall be computed pto rate. Payment or tender of anyupeamed premium by the Company shall nt be a condition. precedent to “thøeffectiveness of a notice of termination, but such payment shall be made as soon. aspkacticable thereafter.

Termination of Por Bonds or Policies

12 Any bonds or policies issued by the Company or its affiliates and specified in item 4 ofthe’ Declarations of these General’ Terms and ‘Conditions shall terminate, if not alreadytrmlnated, as of the Inception of this policy.

Bankruptcy

ankruptcy or insolvency of any lAsured shall not relieve the Càmany cf its obligationsr deprive the Company of its dghte ordefensesunder this policy.

Headings

14. The descriptions:in the headings and sub-ieafrigs .thiS polliy aie solaly fo onvenience, andform no part of th tertns and onditions.of coverage.

Page.20 of19


C A T L I NNamed Insured

dorsementNwnbefFirst National Dank of Aiizonaj

Number Poily PeriodffedveN/A Jj)OP9lB25OSOO June 9,2008 to June. 9, 2009 .J’mé 942008_—3mmd By (Name of kteurane Company)


OUTSIDE DIREcTORSHIP LIABILfl ENDORSEMENT

In conskleratiori of the premium charged, it is agreed that

(1) Solely for:the purposes ofth overage pro’1ded under Insuiirig auses I and 2 of this coveragesection, tilie term Wronglul Act; asdeflned in ubsection 4 DefinItions of this coverage section,is amended to include:

(a) aiy error, misstatement, mislèadin statement,. act, omission. ne1ect,. or breach pf• dty.cxnmitt€d, attempted, or allegerily committed or attempted by an lnsred Person in an.()utslde;Plrectorsjiip;or

(b) any other matter claimed against an Insured Person in an Oulside Directorship solelybi reason of hisor her serving in such Outside Directorship.

(2) Subsectlon 4 Definitions of this coverage section, Is amended to include tile followIng terms:Outside Directorship means the position of director, officer, trustee, governor, or:equivaientexecutivei position held byañ Ensured Person in an Outside Enty jf seivi by. such InsuredPerson ir1 such position was at the specific written request of the Organization or was part of theregular duties assigned such Insured Person by the Organ ization.

Cutside Entity means:

(a). ariy non-profit corporation, comrnunty ôhest fund organizat1or or foundatio. ex?mptfl-cm federal income tax as an organization described in Section 501(c)(3) of the InternalRevenue Code of 1986,as amended;.Or

(b) athy of the fällbwing .prganizauon(s), but: only with esect to. an InsUred PeIsoñ!sposition of director officer, trustee, governor or equivalent executive position held bysuch hisured Person in such organization listed opposite such insured Person’s. namer

rid Entity:. .. . . Insured PersomI nter the name of the Ousiside [Enter the name fo the insu red person(s) JLntityies,1

(3) Subsection 5 Exclusion (d).of this coverage section isamended toraad. lIT. ftsentirety as Thliows:(d) based upon, arising from, or in consequence of:

(i) any actual, afleged, Qr threatened exposure to, oi. :genertton, storage,transportation; discharge, emission, re(ese, dispetsal, escape. treatmentremoval ordisposal of any Pollutants; or

Eñdoisernént 2 pgèi si2.


(Ic any reu1ation, :orcfer, dltection &r request to test for monitor, clean up, remove,contain, treat, detoxify Or neufralize any Pollutants, or any action taken incontemplation or anticipation of any such regulation, order, direction or request,

including but not limited to any Clairnför financial toss to the OrganizatIon, any OutsideEtlty, any secuntyholder or creditor of the Organization or any security holder creditor1or member of any Outside EntIty based upon arising from or in consequence of anyniàtter described in clause (i) or clause (ii) of this Exclusion 5(d);

(4) Subsection 5 Exclusion (g) of ttiis:.coverae section iarnendø4 tO read in it entirety as fbliows.

(g) fdr Wrongful Acts of an Insured Person in hi& r her capacity as a dIectór, officer.manager trustee regent governor or employee of any entity other than the Organizationeeh If the lnsuredPerson’s service in such capacityis 1th the knowledge or consentorat the request of the Organization provided that this Exdusioa 5(g) shall not apply toWrongful Actsofan lhsurédPersonih ahOutsIde Diróctorshlp, or

(5) Coveragel provided to any Insured Person iii an Outslde.Directorship shah:

(a) nt extend to the Outside Entity or to any director, officer, tru$e, ovemor Or anyequivalent executive or any etnployee of the Outside Entity, other than such InsuredPbrson serving in such Outside DWeIbrship;

(b) be specifically excess of any indemnity (other than any indemnity provided by theOrganization) or insurahce available to such Insured Person by reason of serving ins&h OutsIde Directorship, indhidihg but not limited tb any indemnity or insurahàea’allable from or provided by the. Outside’Ehtity;

(c) not extend to Loss on account of any Cfahn for a Wrongful Act committed, attethpted,ot allegedly committed or attemted by such Insured Person while serving in suchOutside Directorship if such WrOhgfl Act Is conimitted, attempted, Or allegedlycömmittedOr attempted after tbe.date:

(1i such Insured Person ceases to be In Ihe positionor apacity thatauseshuii orher tb meet the dèflnitionof Ensured Person set forth inthia coverage seioriOr

(ii service by sdch insured PersoC in such Outside Directorship ceases to be atthe speciflO request of the OrganiatIOi or a part:of the regular dutis assignedto such Insured Person by the 0rganlzatfoñ äñd

(d) nOt extend to LOss on account Of any Claim for a Wrongful Act committed, attehiptèd,c allegedly committed or attempted. by such Insured Person whe servino In suchOitsIdeDhrectorship where.such Claim is -

(i> brought bytheOUtside Entity or anyaffiliate of the O.btsidè Entity;

(ii) brought by any dirtor, officer, trustee1 governor or aniy.equlvalent e•utive orany employe&of the Outside. Entlty or

(ii) brought on behalf of the Outside Entity if such Claim is brought or maintainedwith any active assistance- or participation of, or solicitation by any director,officer, trustee, :govemor or any equivalent executive :.or any employee of the.Outside. Entity.

(6) If any Claim made against an Insured Person in an Outside DIrectorship gives rise tocoverage both under this coverage section and under any other policy issued by the Company oranaffihiated company of the Company(collectively, the ‘Compan)tb any other entity:

Endorserñent2p2/:


(a) the Company’s maximUm limit, of liability under’ this coverage Sctibn,and such otherpqIicy for all Loss on account of such Claim .hall nat exceed the largest sIngle availablelirrñt of liability under either this coverage section’ dr such other policy;and

(b) arty payment under such other policy shall reduce any applicabla L[mit of Liability undertht coverage section by the amount of such pãyment

This eridcisement does not increase the Corflpany’ applicable Lintits of Liability beyond. thoseset forth ir this iioverage setidn.

(7) No coverage will be available under this coverage section for Loss on account of an Clarn:

(a) bdsed upon, arising from, ot in con uence any error, misstatement,. misleadingsttement, act omission neglect or breach of duty committed attempted or allegedlycommitted or attempted by any Insured Person In an Outside Drectorshlp as afiduciary (including but notlimitad ‘tO as a fiduciary as deilned in the mployeeFeUremeritindome Security Act of 1974, or any amendments thereto, or any rules or regulationspromulgated thereunder, or any similar provisions of any federal, state, or local statutorylaw or common law anywtlere:in the world) of any pension or welfare plan;

(b) bdsed upon, arising’from, Or in consequereof

(i){ any demand, suit, or:other p.rocec, htg’ pending against an.Outslçje Entity on orprior to [Specific date], of which such Outside Entity or any director, officertrustee, governor or any equivalent executive or any employee of such OutsideEritityhad received nOtice or iherwls had knowledge:on’ór prior to [Specificdate];

-

(ii) the same or substantially. the same fact, circumsterice, situation, act, erroromission, transaction, or event underlying or alleged in any demand, suit or otherproceeding descrlhed.in (I)’ above; or

(ii any Wrongful Act committed, attempted, or allegedly committed or attempted byan Outside Entity or any director officer trustee governor or any equivalentexecutive or any employEe’ of an Outside Entity which gava rise to anydemand suit or other proceeding described’ in (1) above;

(c) for an accounting of profits made from the purchase or sale by an Insured Person in anOitslde Directorship of secunties of an Outside Entity within the meaning of Section16(b) of the Securities Exchange Act. ot 1934, any arnendment& theréto, or any similarprovision of any federal state, or local statutory law or common law anywhere in the

(d) bought by or on behalf pfan,’ persoh or entity that oWns, beneficially or directiy,’ten ç’ercent.(-1O%) orrrcre of any class of.outstàñdlng stOck othe Outside: Entity; or

(ë) based upon,. arising from, or In consequence of any service ‘by an Insured Person who ‘a.ane(eced orappointed publi, govrnmerdal or:qasi-governrnental.official.

The title and an headings In this endorsement are solèlyfdr conveniehce and ‘form’ rio part of’ihe terms andconditions of coverage.

Erdorsernent2 page’212


All other terms conditions and. lImitations of thsØà1iyhaIlremair urcbángd.The tifle and any headings iii this ndorsementaré so1eti for convenieñcé and form no part of the terms.and cänditions of coverage.

AU fhr +rrr- ‘+nr 4 emaifl !flChnged. -

Authorized Represntative

Endorsement.?


CAT LtN

Mam,d ffiQred End mentNumteFirst National Bank of Mzoria 2.Policy Symbol ollcyNUml)e Policy Period

- Efic:tIveN/A DOP918250606 June,200,8 to. June 9, 2Q09 June 9,2008

Issued By Nene of thurnce Coiany)Lloyds of London Catlin Syndicte200

ARIZONA.AMENDATORY ENDORSEMENTTO THE GENERAL TERMS AND CONDITIONS SECTION

In consderatibn o the premium charged, it is understood atid areedthat:

SubsectIon ii, Ten-nination of Policy or Coverage Section. (a) of the Gerièrat Terms andCondiUori Section iC amended to add the following tit the end osUhiaragrapli(a):

‘providedthat, if thi. policy or the applicable covergE section is in effect for at 1y (60)days or ic a renewal, the Company may. caflel this policy Or such:.coverage section, other-thanfor non-pyment of premium, only for one or more of the following reasons:.

(1) conviction of an insured pf a crime anslng out of acts increasihgthe haza,ti insuredaga!ns

(2) acts or omissions by an Insured or his hetor its representative constituting fraud ormafenal misrepresentation in obtaining this policy in continuing this policy or inpresentfr,g a.clàim:uflcler this poJicy

(3) a substantial change iii the risk assumed, except to the extent that-the Companyshould reasonably have foreseen the change or contemplated the risk in writing thispolicy;

(4) a substantiálbreachofcon actual duties or cqnditions;

of reinsurnrA appllcableto th r(.s1 hsuid aai,is1, butvuly ‘Lreinsurance has resulted from termination of frea4’ or faculttive reinsurance initiatedor implemented by the r&nsuir orreinszirers f the Company;

(6) a determination by the director of Insurance that the continuation of this policy wouldplace the Company In violation of the insurance laws of the state of Arizona or wouldjeopardize the solvency of the Company; or

(7) qts or omissions by the insured or his, her or ifs representative.that.materiallyIncrease the hazard iasutedagafnst”

2. Subsectlori 11. TerminatIon of Policy pr Coverage •Sep6on (d) :of the Gneral Terms andConditions Section is amended by deleting the or” at the end of such paragrapfr (d) arid addingthe fot1owng:‘provided That npn-renewal by the Qompony s I. le.effectiv only upon sixty (60) day’ advancewritten notice of non-renewal to the.. Parent. Organization at the addres shown In the

Endofsernent4,.pageiZ


Declaratiqns or the last.address known to the.Company. Such notice shall be delivered orrbailadby certified mail with a copy to the agent or broker of record If such notice is sent later than sixty(60) days before the expiration o the Policy Period but before such expiration then coverageshall remain in effect until sixty (60) days alter notice is sent, provided that the ParentOrganization pays the premium for such extension which shall be calculated by pro-rating theexpiring Policy Period premium No notice of non-renewal is required if the Company offers torenew this policy or the Parent Organization has obtained replacement coverage or has agreedin writing to obtain replacement coverage; or”

3. Subsectioi 11. TermInation of PoliEy ortdverge:Sectión of the Genétal Terms and COnditionsSection lsmerided further by adding the:folI&wing pärgraphs atthe end of suchSubsectiön:

The Conpany will maiIany notice of caAcellatianbycertifted maitto the Parent Organization atthe addreês shown in the Declarations orthe last known dcfiesMfthe Parent Organization,and will pAOvide a copy’ of suchnotióe tO the :aent or broker 5frecOrd, If any Such notice willstate the ?ieascn() forcancellation and incickie a ?efUid Of any uneárñed pemiurA, except apremium that has been lThanced

If the Company increases premium, changes deductible Or réténtion; reduces limits orsubstantially reduces coverage at renewal, the Company will deliver or mall by certified rnaitwritten notice of such change(s) at feast sii (60) days’ before the expiration of this policy If theCompanydoe not provke such notice at Iasfsixt:(60) days befOre theexpfration of this policy,coverage ithder this policy will remaIn In effect: until notice is iven or until the ParentOrganization Obtains replacenient coveraa.

The polic9 will bedeemd to have been n ndéd.iotheextent necessary to effect the purposesof thisendorserñent.

The regulatory quirernents Set forth h this Amendatory ndorsement shall Supersede and take.precedence over any provisions of the policy or any endorsement to the policy, whenever added, that areinconsistent with br contrary to the provisions of this Amendatory Endotsenient, unless. such policy orendorsement provisions comply with the appllcablelnsuranoê laws ofthestate of Arizona

Endursement 4,:page 212


All other ternis, conditions and llrnftatons.of tiil Policy remain unchanged.

:AUthdiized Representative

Endorsemeflt 4,.Page2f2


C. A T L I N

Narned Insured* EjdorsemsntNthnberFirst National Bánlc of Arizona 3

Focysyrnbo1 Pojrcywuniber •Po4lcypertod ffectveN/A DOP-91825-0608 June 9,2008 to June9, 2009 June 9,2008Issued By (Name o Insuranto Company)Lloyds of London GaflIh Syndicate 2003

AMEND INSURED VERSUS INSURED EXCLUSION (WHITLEBLOWER) ENtORSEMENT

In. cnsideration f the premium charged, it is agreed that Subsectión5, Exclusions Applicable tóAlllnsurirg Clauses, ö)(i) of this coverage.section is deleted :àhrepIaced wrth the following:

(i) a Claim 1hat is a securityhoider dertaUve actiGn brought and maintained on behalf fOrganizalon withoUt any active assistance or participation Of, or sölicitatlbñ by, any InsuredPerson (cther than as itaPce, paftián .solicitatioh förwhich Se oh 806 àfthe Sarbanes-.Oxley Act of 20iD2, or any similar Whit1eb1oWér” protection provision of an applicable federal,state, local or foreign securities lav, affords protection to. such Insured Person):

The title and any headings n this Endorsernentfrider àr:so1eIyforconvenierice alid form napartof the:terms and cohctiticns of cov€ rage.

All other terms, coñditions.andIimitatIons of thisPolicy remafn Qnchanged.

Authorized .Represeritathie

Iaement pagei


Named tnaured- Endorsement NumberFirst National Bank of ArIzona 4

Poy symbol Policy Number Po&y.e.N/A [QP91825V8O8 June 9,2008 to June 9, 2009 June 9,2008

lasued By. (Name of Insurnce Company)

_Lloydsof London catlin Syndicate 2003

FAILURE TO 4AlNTAlN INSURANCE EXCLUSION WITH SIDE A CARVEBACK ENDORSEMENT

In consideration of the premium Ch ad, it is areed..tht th Company shall riot be: liable for Loss onaccountof any Claim based upon, arisingfrpm,.or in consequegeofany aetualoraileged:.

1. negligentt, error or omission. or any breach: of duty n: e rising judgment or disetetion j:procuring ndrnairitainin insurance; ar

2. failure or omission in effecting and,maintaining insurance; or

3. negllgsnt act, error or omission är breach of duty. with repêót to amount, fdm condition OrproWsion of any insurane coAftt.

Provided, howevEr, that this .extiuioh shall riot apply to Loss (a) which is on accoUnt of any Claimagainst an hiurd Person brought’ by any shareholder of the Orgailzatlon in his capacity as such1whether in his own nght or on behalf of the Orgarnzation provided that suOh Claim is brought andmaintained withou’t the assistance, participation or solicitation of any Insured Person, and b) for whichthe Organization either is not permitted or’ requited, or fads orhrafuses by reason of FinancialImpairment, to in1ernnufy the Insu ted Person.

It is further undertood and agreed that this. èxdUsior applies solelS’to Claims based upon. arising from,or In consequenc of the Organlation’s role in prOcuring, maintaining and effecUng insurahce on its ownbehalt This exclUsion dOes not apply to Claims based upon, arising from,. or in consequence of the:Organization’s rle as a provider ofinsurárice to othrs.

The title and any headings in this endorsemoritfrldOr are solely for convenience and form no part of theterms and conditicns of coverage.

All other temis, conditiOns and Iimitatlohs of this Policy remain unchanged..

AuthOrized..Representative

Endorsemenf8 pane 1


mCEI:U


C. ATLIN

InsKedEndorsemelitNuniberFirst National Bank of ArIzona 5

Poucy Symbol Polnber Policy PeriodV EfrebeeN/A DOP91825-0608 June 9;200B tc June 9, 20G9 June9,2008

issued By (Nan of lnsurrce Comny)Lloyds of London Callin Srndicate 2003


In consideration of the premium charged, it Is agreed. that

We agree to not use the prior notice exclusion a means tG avoid coerágs for those matters ientifiedin the notice of circumstance provided to ChubbdatedJune 5, 2008.

The title and any headings in this endorsement are solely for convenience and form no part of the termsand conditions of àoverage.

Endorsererit 7 page 1


EXHIBIT B


CAT UN

VIA E-MAIL

June 12, 2008

Re: FirstNational Bank ofArizona

Catlin Underwriting Agency U.S Inc. of New York140 Eroadway, Suite. 4320

New Yorl NY 10.005Tel; (212) 801-3400Fax (212) 801-3401

BINDER

$,

In reliance on the application and other information that has been submitted to us to date, we arepleased to BIND coverage subject to the following terms and conditions:

POLICY NJMBER

NAMED INSURED:

D OP-9182 5-0608

First National Bank of Arizona17600 N. Perimeter DriveScottsdale. AZ 85255

Pursuant to Arizona Revised Statutes Sections20-401.1 Subsection B Paragraph 1, thIs policyis issued by an insurer that does not possess acertificate of authority from the Director of theArizona Department of Insurance. if the insurerthat issued this policy becomes insolvent,insureds or claimants will not be eligible forinsurance guaranty fund protection pursuant toAri±ona Revised Statutes Title 20.

INSURING COMPANY Lloyds of Londoh Catlin Syzdicate 2003

BINDER PERIOD: NIA

POLICY PERIOD: June 9, 2008 to June 9,2009

PRMllM cYc, -o

%TAX

%S.FEE:$..

TOTAL

________

COVERAGE:

POLICY FORM: As per expiring


*pmium. Ugvre.s do fbI include surplus lines tax. or stamping office fee (If applicable) or any othersurcharges or taxs required by law; compliance with applicable laws and payment of taxes is there.sponsibility of the InsLireci and/or the Insured’s Agent or Insurance Broker identified as the‘Prodbcer” herein.

RETROACTIVE DATE: As per expiring

PENDING OR PRIOR DATE: As per expiring

DISCOVERY PERIOD:

PROFESSIONAL SERVICES:

ENDORSEMENTS:

1 yeart00%

1. As per expiring2. PrIor notice amendment — as discussed3. Terrorism Risk InsuranceActEndorsement

.

6 year runoffoption at 200% annual premium

The coverage provided under this binder and/or the Policy to which It applies Is subject to ourreceipt:. review and acceptance of the following within 30 days of the inception of the PolicyPeriod:

1. All subjectivities have been saUsfid

Premiums must berernitted within 30 days of the inception of the Policy Pericsd.

All amounts are in United States Dollars unless noted otherwise.

Thank you once again for this opportunity and I look forward to working with you in the future.

Very trulyyours,

2


Inforniation About atlin

Cathn Group LInIted, headquartered InBermuda, Is an..l•nternational specialtyproperty/casuaky insurer andreinsurer writing more than 30 claSses ofbusiness.worldwide. Catlin shares are traded on the London StockExchange (ticker symbol: CGL). -

Catlin operates on four underwriting platforzns Catlin Insurance Company Ltd. (Catlin Bermuda), Cathn InsuranceCompany (UK) Ltd.. (Catlin UK), Lloyd’s ofLondon Syndicate 2003 (the Catlin Syndicate), and Catlin US.

The Catlin Syndicate, Catlin Bermuda and Cathu UK have financial strength rlings of’A’ (Excellent) from AM. BestCompany Catlin Bermuda and Catlin UK have insurance financial strength ratings of’A-’ (Strong) from Standard &Poor’s whilst the CalIin Syndicate has a Lloyd’s Syndicate Assessment of’4-’ (Low Dependency) from Standard &Poor’s.

Catlin US is the Catlin.Group’s newest underwriting platform and encompasses all of Cathn’s operations in theUnited States. Cathn US underwrites a diversified portfolio of.specialty classes of insurance including medicalmalpractice, professional liability, directors & officers liability and primary and excess casualty.

3


EXHIBIT E


Mid-Westchester Executive ParkTRAUB LIEBERMAN SevenSkyllneDsive

STRAUS & SHREWSBERRY LLP Hawthome,NewYorklOS32

NEW YORK NEW JERSEY! PLORIOA CHICAGO Telephone(914)347-2600Facsimile (914) 347-898www.Iraubl1eberman,m

July 8, 2009

VIA CERITh lED MAIL and E-MAIL

Jeanne Deni, Esq.,Senior Vice PresidentWillis HRH1050 17th Street, Suite 750Denver, CO 80265

-

Re: Insured : First National Bank of ArizonaClaimant Federal Deposit Insurance Corporation

Directors and Officers and Corporate SecuritiesLiability Insurance

Policy No. : DOP-91825-0608Our FileNo. : 242.0183

Dear Ms. Deni:

We have been retained by Syndicate 2003 at Lloyds (“Syndicate 2003”) in connection withits investigation and evaluation ofcoverage for the referenced matter. lxi that connection, Syndicate2003 was directly provided with copies of the May 29, 2009 letters sent by the Federal DepositInsurance Corporation (PDIC”) to various directors and officers of the First National Bank ofNevada (“FNB”) and the First Heritage Bank ofNewport Beach, California (“EBB”).’ We arewriting to advise you of Syndicate 2003’s initial coverage analysis.

NATURE OF CLAIM

Th FDIC’s May 29, 2009 letters fall into three categories, and within each category, areessentially identical except for the name and address of the recipient. We will discuss eachcorrespondence in turn.

The first category of correspondence concerns alleged actions by directors and officers of

1The FDIC’s May29, 2009 letter notes that the First National Bank ofArizona wasmerged into First National Bank ofNevada on June 30,2008, and that all references to the FirstNational Bank ofNevada are also intended to include the wrongful acts of each director andofficer of First National Bank of Arizona prior to the date ofthe merger.


Our File: 242.0183Page 2

both FNB and FIIB. This letter asserts that the recipient allowed and/or directed FNB to continueoperation of its ‘wholesale mortgage division long after he had actual knowledge that thoseoperations posed unreasonable risk to FNB, risk created both by the deterioration of the mortgagemarket and the failure to implement adequate policies and procedures. The FOIC claims that FNBsuffered losses in just the 9 month period following the closure ofthe wholesale mortgage divisionin September 2007 of at least $205.7 million.

This correspondence also asserts that the recipient as a director or officer of FHB directedFHB to make loans to FNB (in the form ofthe sale of Federal Funds) in the months preceding theFDIC’s appointment as Receiver ofbothbanks, even though he had actual knowledge that FNB wassubstantially undercapitalized and that such loans posed an unreasonable risk to FHB. The FDICclaims losses suffered by FHB resulting from these loans ofat least $74.4 million.The FDIC further asserts that the recipient’s acts or omissions with respect to both thewholesale mortgage operations at FNB and. the loans made by FlB to FNB constitutes WrongfulActs within the meaning ofthe referenced Directors and Officers and Corporate Securities LiabilityInsurance Policy. The FDIC further claims that these Wrongful Acts constitute a breach of therecipient’s fiduciary duties, including the duties of care, [oyalty and good faith, as well as grossnegligence.

The second category of letter was sent to directors and officers of FNB only, raises theoperation of FNB’s ‘wholesale mortgage division, and claims losses resulting therefrom of $205.7million. This letter makes the same allegations concerning the recipient’s breach offiduciary dutiesand gross negligence. Apparently, because the recipients were not directors and officers of FHB,it does not mention the inter-company loans.

The final category of letter is directed to directors and officers of FHB and is addressedsolely to the loans made by FHB to FNB, which allegedly resulted in losses to FHB in the amountof $74.4 million. This letter makes the same allegations that the acts and omissions with respect tothe loan constituted breach of fiduciary duties and gross negligence. It does not mention FNB’swholesale mortgage business.

The first group of letters were sent to Raymond A. Lamb and Gary A. Donis. The secondgroup of letters was sent to Marshal Lynn Crane, James A. Herk, Philip A. Lamb, William Oakley,Gregory 3. Smith, James C. Stratton, and Michael K. Whalen. The last category of letters were sentto James R. at Claffee, Kenneth 3. Musante and Daniel F. Stewart

On June 2, 2009, the FDIC sent a letter to R. Patrick Lamb, ostensibly because they did nothave an address for him when they sent out the May 29) 2009 letters. This letter falls within thesecond group and is the same as the other letters sent to the directors and officers ofFNB claiming$205.7 million in losses associated with the wholesale mortgage business.

TRAIJB LIEBERMANTRAU UaMANS&W8cip



POLICY INFORMATIQN

Syndicate 2003 issued Directors and Officers and Corporate Securities LiabilityinsurancePolicy No. DOP.-91 8250608 (the “Policy”) to the First National Bank of Arizona for the policyperiod June 9, 2008 to June 9, 2009. The Policy provides an aggregate limit of liability of $10million. It is subject to a zero dollar retention under Insuring Clause I and a $500,000 retentionunderlnsuririgClauses2 and 3?

Pursuant to Endorsement No. 5, the definition of Insured is amended to include the FirstNational Bank ofArizona, FNB and FHB. The definition ofInsured Person includes a duly electedor appointed director or officer of the Insured.

Insuring Clause 1 provides in pertinent part as follows:

The Company shall pay, on behalf of each of the Insured Persons,Loss for which the Insured Person is not indemnified by theOrganization in which the Insured Person becomes legally obligatedto pay on account ofany Claim firstmade against the Insured Person,individually or otherwise, during the Policy Period ... for a WrongfiilAct committed, attempted, or allegedly committed or attempted bysuch Insured Person before or during the Policy Period.

The definition ofClaim includes written demand for monetary damages against an Insured Personfor a Wrongful Act. Wrongful Act means any error, misstatement, misleading statement, act,omission, neglect, or breach of duty committed, attempted, or allegedly committed or attempted byan Insured Person in his or her Insured Capacity.

Subsection 12(c) provides that no retention shall apply to any Loss under Insuring Clause1, except as otherwise providedin Subsection 13. Subsection 13 concerns the Organization’s failureor refusal, other than for reason ofFinancial Impairment, to indemnify an Insured Person for Loss.Financial Impairment is defined to include the status of an Organization resulting from:(a) the appointment by any state or federal official, agency orcourt of any receiver, conservator, liquidator, trustee,rehabilitator or similar official to take control of, supervise,

Syndicate 2003 also issued ariEPL (EPP-91830-0608), Fiduciary (FLP-91829-0608) andSide A-DIC Excess (XSP-91 833-0608) Policies. The EPL and Fiduciary Policies are notimplicated because there is no claim by an employee for an employment related wrongftil act,and no claim for a wrongful act by a fiduciary or administrator of an employee benefit planunder ERISA, respectively. The Side A-DIC Excess Policy is not triggered unless and untilSyndicate 2003 wrongfully refuses to provide coverage or determines no coverage is available tothe Insured Persons under the D&O Policy (DOP-91825-0608).

TRAUB UEBERMANTfiAUB uRJuN 5&SIffiWSRvflp


Our File: 242.0183Page4

-

manage or liquidate such Organization;

Subsection 15(a) provides that it is the duty of the Insureds and not the duty of Syndicate2003 to defend Claims made against the Insureds. Subsection 12(b) provides that Defense Costs arepart of; and not in addition to, the limit of liability ofthe Policy, and the payment by Syndicate 2003of Defense Costs shall reduce and may exhaust the applicable limit of liability.

Subsection 19 provides withrespect to changes in exposure that upon Financial Impairmentof the Organization, coverage shall continue until termination of the Policy, but only with respectto claims for Wrongful Acts committed, attempted, or allegedly committed or attempted by theJnsureds before such Financial Impairment

Pursuant to Subsection 15(b), the Insureds agree not to settle or offer to settle any Claim orotherwise assume any contractual obligation or admit any liabilitywith respect to any Claim withoutthe prior written consent of Syndicate 2003. Under Subsection 15(c), Syndicate 2003 shall beconsulted in advance by the Insureds regarding the investigation, defense and settlement of suchClaims and the Insureds agree to provide Syndicate 2003 with all information, assistance andcooperation which Syndicate 2003 may reasonably require. The Jnsureds further agree that theywilldo nothing that could prejudice Syndicate 2003’s position or its potential or actual rights to recovery.Lastly, Subsection 17 provides that if any Loss is insured under any other valid insurancepolicy, the Policy shall cover such Loss only to the extent that the amount of such Loss is excess ofthe applicable retention and limit of liability under such other insurance.

ANALYSIS

Subject to the terms, conditions and exclusions ofthe Policy, it extends coverage to InsuredPersons. The FDIC’s letter states that the recipients are former directors and officers ofFNB and/orFHB, and assuming this is the case, they are extended coverage as Insured Persons. Please confirmthat the recipients of the letters are former directors and officers as alleged.

The appointment of the FDIC as Receiver appears to satisfr the definition of FinancialImpairment. Accordingly, no retention shall apply under Insuring Clause I of the Policy.Your recent correspondence indicates that the First National Bank Holding Company hasretained D. Jean Veta of Covington & Burling, LLP. It is not clear from yor letter whetherCovington & l3urling is being retained on behalfofthe directors and officers and we would requestclarification on this point In addition, it is not clear to us why First National Bank HoldingCompany retained counsel, as we have not been provided a copy of a letter directed by the FDICto this entity. We would also appreciate your guidance on this point. However, please be advisedthat the Policy only extends coverage to an insured Organization to the extent it grantsindemnification to an Insured Person (Insuring Agreement 2) or is the subject ofa Securities Claim(Insuring Agreement3). FirstNationalBankHolding Company, therefore, is not extended coveragewithrespeetto theFDIC’s correspondence, any investigationundertakenwith respect thereto, or any

TRAUB LIEBERMANTRW! UtM RTRMS&TRRaR$!ay LU’



claim thatmay be brought against it by the FDIC. So that we may give further consideration to yourrequest, kindly forward the identity and billing rates of the attorneys at Covington & Burling whowill be staffing this matter. In the event Syndicate 2003 extends its consent to Covington & Burlingacting as defense counsel, you should have counsel submit fee statements on a monthlybasis settingforth the identity of the person rendering services, a description of the services rendered, and thetime expended in increments of one-tenth of an hour,3

We note that while the FDIC’s letters demand monetary damages from the recipicnts,Syndicate 2003 reserve rights as to whether the correspondence set forth a Wrongful Act withsufficient particularity to satisfy the terms and conditions of the Policy. Accordingly, Syndicate2003 reserves rights as to whether the FDIC’s correspondence satisfy the Policy’s definition ofClaim. In addition, and for the same reason Syndicate 2003 reserve rights as to whether the noticeprovided to it satisfies the Policy’s requirements for the provision ofa notice of circumstance,4

Insuring Agreement 1 applies to a claim for aWrongful Act committed before or during thePolicy Period. However, pursuant to Subsection 19, there is no coverage for any Wrongful Actsoccurring after Financial Impairment. The FDIC apparently was appointed receiver on July 25,2008, and accordingly, there is no coverage for Wrongful Acts occurring after this date.As noted above, pursuant to Subsection 15, the Insured Persons have adutyto cooperate withSyndicate 2003 and must not engage in settlement negotiations or settle with the FDIC without theprior written consent of Syndicate 2003. Please consult withus in advance regarding investigation,defense and settlement of the matter as required by this provision of the Policy. Lastly, pleaseadvise if there is any other insurance that may respond to this matter. Subsection 17 provides thatthe Policy applies as excess insurance to the extent that there is other insurance available to theInsured Persons.

3We also received notice of this matter from MIchael 3. O’Connor of Jennings Strauss &Samon, PLC, who indiöated that he represented Mssrs. Lam and Whalen. Your correspondencedoes not indicate whether Mr. O’Connor is going to continue in that capacity. While we requestclarification with respect to this issue, please be advised that Syndicate 2003 will not consent tothe retention of separate counsel absent an actual conflict of interest among the defendants.41n order to give notice of circumstance under Subsections 14(b) and (c), the Insuredsmust describe the circumstances, the nature of the aileged Wrongful Acts, and the nattie of thealleged or potential damages.

TRAUB LIEBERMANIRA URARAMRASTVus &S1iRYSfRAI Lip



We look forward to working with you in this matter. Please feel free to contact us shouldyou have any questions or comments concerning this correspondence or Syndicate 2003’s coverageposition. We are proceeding on the basis that Syndicate 2003 and the Insured Persons are reservingtheir respective rights, duties and obligations under the Policy and applicable law.

Very truly yours,

TRAUB LIEBERMAN STRAUS & SJ{REWSBERRY LLP

Alexis 3. Rogoski

AJRJmmcc: Viii E-mail

M. Christopher Evans17550 N. Perimeter DriveSuite 370Scottsdale, AZ 85255george.gracieworldnet.att.net

Michael 3. O’ConnorJennings, Stouss & Saimon, P.L.C.201 East Washington Street, 1 1th FloorPhoenix, AZ 85004-2385moconisslaw.com

Joseph P. Mooney, Esq.Director ofProfessional Liability, USCatlin, Inc.3340 Peachtree Road. N.E.Suite295OAtlanta, GA 30326

TRAUB LIEBERMANT#UEN5flS&5IREwuRy U.?


EXHIBIT F


f ENABLE:LP 210 W. PENNSYLVANIA AVENUE SUITE 500 TOWSON. MD 212041410.494.6200 F 410.821.0147 www.Venablecom

June 24, 2010

VIA EMAIL: !shrewsberry(à)1traublieberman.comand FIRST CLASS MAIL

Johi H. Zink, 111t [email protected]

Lisa L. Shrewsberry, Esq.Traub Lieberman Straus & Shrewsberry, LLPMid-Westchester Executive ParkSeven Skyline DriveHawthorne, NY 20532

Re: First National Bank Holding Company— FDJC Claim

— Catlin InsuranceOur File No.: 99886-260636

Dear Lisa:

Please recall that Venable represents Phil Lamb and Gary Don-is, two of Catlin’sinsureds named in the FDIC claims, and I am also sending this letter on behalf ofinsureds represented by Robert Novak, Scott Wise, and Jean Veta. As you know, theChubb/Federal also provides coverage for these claims.

In an effort to facilitate communications between your office, Catlin, its insureds,and Chubb, we prepared the enclosed Confidentiality Agreement for your consideration,noting that we have entered into a similar agreement with Chubb.

Please review the enclosed Agreement, and let me know if you have anyquestions, comments, or suggested changes.

I hope that we will be able to agree on a fmal form without unnecessary delay,and thanking you for your cooperation, I am,

JHZ/sahEnclosures

Very

Zink, III


VENABLE:LPLisa L Shrewsberry, Esq.Traub Lieberman Straus & Shrewsberry, LLPJune 24, 2010Page 2

cc: Jean Veta, Esq. (w/enclosures — via emaIl)John. Douglas, Esq. (w/enclosures — via email)Scott Wise, Esq. (w/enclosures — via email)Ronald R. Glancz, Esq. (w/enclosures — via email)John Villa, Esq. (w/enclosures — via email)David Aufhauser, Esq. (w/enclosures — via email)Michael O’Connor, Esq. (w/enclosures — via email)Robert Novak, Esq. (w/enclosures — via email)

TO1DOCS1/I286859 v2


of 1

“irkay, Sally A.

Harkay, Sally A. on behalf of Zink, John H:, Ill,ent: Thursday, June 24, 2010 11:02 AM

To: ‘[email protected]’

Cc: veta@cov. corn’; ohn.dougIasdavispoIk.com’; ‘d.wisedavispolk.com’; Glancz, Ronald R.;villa@wccom’; ‘[email protected]’; ‘moconnorcjsslaw. corn’; ‘[email protected]’; Zink, John H, 111

Subject: FNBHC - FDIC Claim - Catlin InsuranceAttachments: Ltrto ShrewsberryPDF; Confidentiality Agreement.PDF

Please see the attached.John H. Zink, Ill I Venable LLP210 W. Pennsylvania Ave., Ste. 500 I Towson, MD 21204Tel: (410) 494-6254 Fax: (410) 821-0147Email: [email protected]

i/741’?nl U


AGREEMENT REGARDING CONFIDENTIALITY OF DOCUMENTS

This Agreement Regarding Confidentiality of Documents (“Agreement”) is entered intobetween Catlin Inc. as correspondent for Catlin Insurance Company (UK) Ltd., Syndicate 2003at Lloyd’s, and Catlin Specialty Insurance Company (collectively, “Catlin”) and the followingformer directors and officers ofFirst National Bank Holding Co.: Raymond A. Lamb, Gary A.Dorris, Philip A. Lamb, R. Patrick Lamb, James R. Claffee, Marshall Lynn Crane, James A.Herk, Kenneth J. Musante, William Oakley, Gregory J. Smith, James C. Stratton, Daniel F.Stewart, and Michael R. Wbalen (the “Insureds”) (Catlin and the Insureds are sometimescollectively referred to as the “Parties”).

WHEREAS, Catlin has a Director and Liability Policy, Policy number DOP-91825-0608,with a Policy Period from 8/9/08 to 6/9/09, and a Side A Liability Policy, Policy number XSP91833-0608, with a Policy Period from 619/08 to 6/9/09 (collectively, the “Policies”);

WHEREAS, the FDIC has asserted claims against the Insureds as set forth in the May 29,2009 letters from the FDIC (hereinafter the “FDIC Claims”);

WHEREAS, the Insureds have notified Catlin of the FDIC Claims pursuant to the termsand conditions of the Policy;

WHEREAS, Catlin advised the Insureds that it was covering the claims subject to its July8, 2009 reservation of rights from Catlin’s legal counsel;

WHEREAS Catlin may request documents from the Insureds and/or their defensecounsel, and the Insureds wish to provide certain documents and other information to Catlin forpurposes of Catlin’s defense of the claims; and

WHEREAS the Parties wish to preserve the confidentiality of such documents andinformation and maintain any privileges associated with such documents and information.

NOW THEREFORE, the Parties agree as follows:

1. The Insureds may designate, either orally or in writing, any non-public documentsor other hifc)rrnation lh?t. them ureds may provide to Catlin as confidential. information(hereinafter referred to as “Confidential Information.”).

2. Any Confidential Info ation provided to Catlin pursuant to this Agreement shallbe maintained strictly confidential by Catlin and will not be shared with anyone other than Catlinpersonnel working on the FDIC Claims, and Catlin’s Outside counsel orconsultartts working onsaid matter, as well as its reinsurers or auditors, provided such reinsurers or auditors agree to thesame or similar confidentiality provisions set forth herein.

3. No Confidential Information provided to Catlin pursuant to this Agreement shallbe used by Catlin for any purpose other than furthering Catlin’s investigation of the FDICClaims and evaluating coverage for the same. Subject to paragraph 4 below, Catlin may usesuch Confidential Information in any subsequent litigation between Catlin and the Insureds underthe Policy regarding coverage for the FDIC Claims provided that such Confidential Information


0would be otherwise subject to a valid discovery request, and provided that such ConfidentialInformation is protected by a confidentiality order providing terms similar to those in thisAgreement. By entering into this agreement, Catlin does not waive its right to contest theconfidential or privileged status of any Confidential Information in such subsequent litigation,except that Catlin does waive its right to argue that any information, otherwise confidential orprivileged, lost its confidential or privileged status as a result of any sharing of documents orinformation pursuant to this Agreement.

4. The provision of Confidential Information under this Agreement shall not beconstrued as a waiver of any privileges associated with such Confidential Information, includingwithout limitation the attorney-client privilege and the attorney work product protection. Anyprivileged document or privileged information that the Insureds provide to Catlin shall bedeemed to have been provided pursuant to the common interest of the Insureds and Catlin withrespect to the defense of the FDIC Claims; provided, however, that the provision of some suchinformation shall not be deemed to be a waiver of privilege with respect to any information notprovided. The Insureds reserve the right to withhold documents from Catlin in order to furtherprotect these privileges, and Catlin agrees to immediately return to the Insureds any documentsthat the Insureds identify as having been inadvertently provided to Catlin without waiver ofCatlin’s rights.

5. The provision of Confidential Information to Catlin under this Agreement shallnot be construed as a waiver of any trade secret protection or other similar protection afforded toany non-public information provided to Catlin.

6. Catlin agrees to provide reasonable notice to the Insureds in the event that itreceives a subpoena or other third party request (aside from requests by its reinsurers or outsideauditors) for the disclosure of Confidential Information provided by the Insureds to Catlinpursuant to this Agreement, and agrees to resist the production of such Confidential Information.However, Catlin is not required to disobey a valid court order requiring the production of suchConfidential Information.

7. This Agreement shall be construed in accordance with Arizona law. The Partiesacknowledge that they have had input into this Agreement, including advice of counsel, and thatthere shall not be any presumptionthat any uncertainty or ambiguity canbe construed againstOnó pirty or the other, and that this Agreement shall instead be construed as if all parties had

-- jointly drafted ifwith the understanding that the intent of this Agreement is to ensure that theConfidential Information provided urider this Agreement remain confidential to the maximumextent possible.

8. The Partiesagree that•this Agreement may he executed in multiple counterparts,each of which, whensoexecuted and delivered, shall be an original, but such counterparts shalltogether constitute one and the same instrument and agreement. Each counterpart may bedelivered by facsimile transmission or by e-mailing a scanned version, and a faxed or scannedsignature page shall have the same force and effect as an original signature.

Page 2 of 4


This Agreement is executed, and shall be effective on

__________________,

2010, asfollows:

Lisa L, Shrewsberry, with authority as legal counselfor, and on behalf of the Catlin partiesTraub Lieberman Straus Shrewsberry, LLPSeven Skyline DriveHawthorne, NY 10532

Robert J. NovakMichael J. O’ConnorJennings, Strouse &Salmon, PL.C.

201 East Washington St.Phoenix, AZ 85004-2385Counselfor Raymond A. Lamb

Ronald R. GlanczJohn H. Zink, IIIVenable LLP

7th Street, N.W.Washington, DC 20004Counselfor Gaiy A. Dorris and Philip A. Lamb

John L DouglasDScott WiseDavis Polk & WardwellSf 1000:.East13001 Sfteet,NW.Washington, DC 20005Counselfor R. Patrick Lamb

Page3of4


D. Jean VetaCovington & Burling LLP1201 Pennsylvania Ave, NW.Washington, DC 20004Counselfor James R. Claffee, Marshall Lynn Crane,James A. Herk, Kenneth J Musante, William Oakley,Gregory J Smith James C. Stratton, Daniel F. StewartMichael K Whalen

TO]DOCSII#285830 vi

Page4of4


EXHIBIT G


TRAUB L1EBERMAN Mid-WestchesterExecutjveparkSeven Skyline Drive

i RALJS & SHREWSBERRY LIYHawthorne, NewYork 10532

NEW YORK NEW JERSEY I FLORIDA I CHICAGO Telephone(914)347-2600Facsimile (914) 347-8898www.traublieberrnan.com

June 30, 2010

CERTIFIED MAIL -

RETUiN RECEIPT REQUESTED

Jeanne Deni, Esq.Sr. Vice PresidentWillis HRH Executive Risks1050 17th Street, Suite 750Denver, CO 80265

Re: Insured : First National Bank ofArizonaClaimant : Federal Deposit Insurance CorporationPolicy : Directors and Officers and Corporate Securities

Liability InsurancePolicy No. : DOP-91 825-0608Our File No. : 242.0183

Dear Ms. Deni:

As you know, we represent Syndicate 2003 at Lloyds (“Syndicate 2003”) with respect tothe above-referenced matter, which involves letters by the Federal Deposit Insurance Corporation(“FDIC”) to various directors and officers of the First National Bank ofNevada and the FirstHentage Bank of Newport Beach, California, dated May 29, 2009 As you also know, on July 8,2009, on behalf of Syndicate 2003, we sent you a letter reserving the rights of Syndicate 2003underthe above-referenced policy, which. was in effect from June 9, 2008 to June 9, 2009, as thematter was reported to Syndicate 2003 during such policy:period. However; on June 14,2010,we received a copy of your letterto Chubb dated. June 5, 20Q8, by which you first gave noticeofthis matter under the Chubb policy in effect from April 9, 2007 toJune 9,2008.

The Syndicate 2003 policy contains the following applicable exclusion:


(a) . based upon, arising from, or in consequence of any fact,circumstance, situation, transaction, event, or Wrongful Act


Jeanne Deni, Esq.Willis HR}I Executive RisksPolicy No.: DOP-91 825-0608Page 2

that, before the inception date set forth in Item 2 of theDeclarations of the General Terms and Conditions, was thesubject of any notice given under any policy or coveragesection ofwhich this coverage section is a direct or indirectrenewal or replacement;

As notice of this matter was provided to Chubb on June 5, 2008, before the inception of theSyndicate 2003 policy on June 9, 2008, Syndicate 2003 hereby declines coverage for this matterunder the above-referenced policy. This letter shall supercede all prior communications by or onbehalf of Syndicate 2003 with respect to this matter. Moreover, Syndicate 2003 continues toreserve all rights under the policy, at law and in equity.

Please do not hesitate to contact us ifyou would like to discuss this matter in greaterdetail. The coverage position set forth above is based upon presently available information. Inthe event you believe this position is incorrect, Syndicate 2003 will re-evaluate this matter on thebasis of any additional documentation, factual information or applicable precedent that yousubmit Should you have any information, questions or comments which may have a bearing onSyndicate 2003’s coverage position, please contact us at your earliest convenience.

Sincerely,

Lisa L. Shrewsberry

/mc

cc: Joseph P. Mooney, Esq.Michael. J O’Connor, Esq.Jean Veta,Esq.

TRAUB LIEBERMANTRAUB UEBERMAN STRAUS &SIIREWSBEBRY liP


EXHIBIT H

00388689.DOC


VENABLE 210W. PENNSYlVANIA AVENUE SUITE 500 TOWSON, MD 21204LLP T 410.49&6200 F 410.821.0147 www.Venable.com

July, 7, 2010 John H. Zink, III

t [email protected]

VIA. EMAIL: 1shrewsberrj)Iraub1kberman.comand FIRST CLASS MAIL

Lisa L. Shrewsberry, Esq.Traub Lieberman Straus & Shrewsberry, LLPMid-Westchester Executive ParkSeven Skyline DriveHawthorne, NY 20532

Re: Insured: First National Bank of ArizonaClaimant: Federal Deposit Insurance CorporationPolicy: Directors and Officers and Corporate Securities

Liability InsurancePolicy No.: DOP-9 1825-0608Your File No.: 242.0183Our File No.: 99886-260636

Dear Lisa:

Ireceiveda copyof your June 30, 2010 letter addressed to Jeanne Deni. If Iunderstand the letter correctly; CatliWSyndicate 2003 at Lloyds is declining coverage forthis claim based on the “Prior Notice” Exclusion.

I assume that you may have overlooked Endorsement 5 to the policy that reads asfollows:

We agree to not use the Prior Notice Exclusion as a means to avoidcoverage for those matters identified in the Notice of Circumstancesprovided to Chubb dated June 5, 2008

In view of t1is Endorsement, I would appreciate receivmg written confirmationthat Catlin/Syndicate 2003 has reconsidered and retracted its decimation of coverage

Assuming CatlinlSyndicate 2003 intends to participate in the defense of the FDICclaim, as reqjirçdby its insurance policy, I would appreciate a response to my letterdated June 24, concerning a Confidentiality Agreement


VENABLELisa L. Shrewsberry, Esq.Traub Liebérman Strans & Shrewsberry, LLPJuly7,2OiOPage 2

Thanking you for what I hope will be a timely and positive response, I am,

JHZIsahcc: Jean Veta, Esq. (via email)

John Douglas,. Esq. (via email,)Sott Wise, Esq. (via email,).Ronald R. Glancz, Esq. (via email)John Villa, Esq. (via email)David Aiifhauser, Esq. (via email)Michael O’Connor, Esq. (via email)Robert Novak, Esq (via email)

Very

Zink, III

TOIDOCS1/#287252 vi


Page lofl

rom: Harkay, Sally A. on behalf of Zink, John H., Ill

oent: Wednesday, July 07, 2010 3:15 PM

To: ‘lshrewsberrytraublieberman.com’

Cc: [email protected]’; oh [email protected]’; ‘d.wisedavispolk. corn’; Glancz, Ronald R.;‘[email protected]’; ‘[email protected]’; ‘[email protected]’; ‘[email protected]’; Zinic, John H., Ill

Subject: FNBHC - FDIC Claim - Catlin Insurance

Attachments: Ltrto Shrewsberry.PDF

Please see the attachecL

John K. Zink, Ill I Venable ILl’210 W. Pennsylvania Ave., Ste. 500 I Towson, MD 21204Tel: (410) 494-6254 Fax: (410) 821-0147Email: [email protected]

‘7 i’7 I’ 1.1 (


EXHIBIT I


of2

Zink, John H., ill

From: Lisa Shrewsberry [[email protected]]Sent: Thursday, July 08, 2010 10:25 AM

To: Zink, John H., lii

Cc: [email protected]; Glancz, Ronald R.; [email protected]: RE: FNBHC FDIC Claim Catlin Insurance

Thanks John. This endorsement is not a part of the policy that I have in my possession. However, I am followingup with the underwriters. I will call you as soon as I speak with them. Thanks! Lisa

Lisa L. ShrewsberryTRAUB LIEBERMAN STRAUS & SHREWSBERRY LLPMid-Westchester Executive ParkSeven Skyline DriveHawthorne, New York 10532Telephone: (914) 347-2600Facsimile: (914) 347-8898e-mail: [email protected]

If you have any difficulty, or if the transmission was incomplete, please advise. This message is intended only for the use of the individual or entity tovhich it is addressed and may contain information that i privileged, confidential and exempt from disclosure under applicable law. If the reader of thismessage is not the intended recipient or the employee or agent responsible for delivering the message to the intended recipient, you are hereby notifiedthat any dissemination, distribution or copying of this communication is stnclly prohibited. If you have received this communication in error, please notifyus immediately by telephone or e.-mail, and delete the electronic version of the message from your system. Thank you.

From: Harkay, Sally A. [mailto:[email protected] On Behalf Of Zink, John H., IIISent: Thursday, July 08, 2010 10:19 AMTo: Lisa ShrewsberryCc: [email protected]; Glancz, Ronald R.; [email protected]; Zink, John H., IIISubject: FNBHC - FDIC Claim - Catlin Insurance

Lisa,

I received your voicemail yesterday concerning. Endorsement 5. As you requested, I am attachinga copy of the Endorsement 5 form I refer to in my July 7 letter You indicate that you have adifferent Endorsement The attached form references ‘Endorsement 5” on the upper right side, butI note a reference to “Endorsement 7” at the bottom of the page Perhaps thIs IS the cause of theconfusion. En any event, after you review the attachment, pase give me a call.

John H. Zink, Ill Venable LP210 W. Pennsylvania Ave.. Ste. 500 I Towson, MD 21204el: (410) 494-6254 I Fax: (410)821-0147rEmail: [email protected]

**********************************************************************

U.S. Treasury Circular 230 Notice: Any tax advice contained in this communication

7IoI’r’.1 (


EXHIBIT J

00388689.DOC


T RA U B LIE B ER MA N Mid-Westchester Executive ParkSeven Skyline Drive

)TRAUS &SHREWSBERRY LLPNEW YORK I NEW JERSEY I FLORDAI CHICAGO Telephone (914) 347-2600

Facsimile (914) 347-8898www.traublieberman.com

July 23, 2010

VIA E-MAIL AND REGULAR MAIL

John H. Zink, III, Esq.Venable, LLP210 W. Pennsylvania Avenue, Suite 500Towson, Maryland 21204

Re: Insured: First National Bank of ArizonaClaimant: Federal Deposit Insurance CorporationPolicy No.: DOP-91825-0608Your File No.: 99886-260636Our File No.: 242:0183

Dear Mr. Zink:

As you know, we represent Syndicate 2003 at Lloyd’s (“Syndicate 2003”) with respect tothis matter. This letter is in response to your letter dated July 7, 2010, wherein you requestedthat we look into whether we may have overlooked an endorsement to the above-referencedpolicy, identified by you as Endorsement No. 5, which purports to create an exception to theprior notice exclusion with respect to “those matters identified in the Notice of Circumstancesprovided to Chubb dated June 5, 2008”. Please be advised that the above-referenced policycontains no such provision, by endorsement or otherwise. A complete copy of the policy isenclosed herewith for your file. Accordingly, we hereby reiterate Syndicate 2003’s declinationof coverage for this matter, as fully set forth in my letter to Jeanne Deni dated June 30, 2010.Please let me know if you would like to discuss this matter further.

Sincerely yours,

Lisa . ewsberryLLS!mccc: Joseph Mooney, Esq.

Jeanne Deni, Esq.Michael O’Connor, Esq.Jean Veta, Esq.


EXHIBIT K


210 W. PENNSYLVANIA AVENUE SUITE 500 TOWSON, MD 21204LLP T 41L3.494.6200 F 410.821.0147 www.Venable.com

March 23, 2011 John H. Zink, III

[email protected]

VL4 EMAIL: lshrewsberrV(i)Jraublieberman.comand FIRST CLASS MAIL

Lisa L. Shrewsberry, Esq.Traub Lieberman Straus & Shrewsberry, LLPMidWestchester Executive ParkSeven Skyline DriveHawthorne, NY 20532

Re: Insured: First National Bank of ArizonaYour Client: CatlinlSyndicate 2003 at Lloyd’sClaimant: Federal Deposit Insurance CorporationPolicy: Directors and Officers and Corporate Securities

Liability Insurance and Side A D&O Excess InsurancePolicy Nos.: DOP-91825-0608 and XSP-91833-0608Your File No.: 242.0183Our File No.: 99886-260636

Dear Lisa:

Please recall that Venable represents Gary Dorris and Phillip Lamb, formerDirectors and Officers of the First National Bank of NevadalFirst National Bank ofArizona, concerning the above-referenced claim brought by the FDIC. I am also writingon behalf of former Officers and Directors represented by Robert J. Novak (Jennings,Strouss & Salmon, PLC), Scott Wise (Davis, Polk & Wardwell), and Jean Veta(Covington & Burling, LLP) and who are named in the FDIC claim letters.

The primary purpose of this letter is to notify your client Catlin/Syndicate 2003 atLloyds (“Catlin”) that its insureds and the FDIC have recently agreed to participate inmediation in an effort to resolve the FDIC claims. The mediation is scheduled on May23, 2011, in New York. The parties selected Layn R. Phillips, a partner with the NewportBeach law finn of Irell & Manella LLP, to serve as mediator.


VENABLE:LP

Lisa L. Shrewsberry, Esq.Traub Lieberman Straus & Shrewsberry, LLPMarch 23, 2011Page 2

By letter dated June 30, 2010, addressed to Jeanne Deni with Willis HRHExecutive Risks, you advised that Catlin declined coverage for this claim.’ Yourinsureds objected to this denial, and continue to disagree with Catlin’s analysis indeclining coverage.

Catlin’s declination of coverage constitutes a breach of contract that absolvesyour insureds of any responsibility under either of the policies noted above to give you orCatlin any further notice concerning settlement negotiations, the defense of the claim,and/or final disposition of the FDIC claims or to seek Catlin’s consent to any settlementof the claims. Catlin may be bound by the tenns of any settlement that results from themediation, and your insureds will proceed with the defense of this claim at Catlin’s risk.We expect Catlin to compensate its insureds for all losses and damages attributable toCatlin’s breach of its duties and responsibilities. In this context, your insureds continueto reserve all of their rights, interests, coverages, and remedies, including recovery ofattorney’s fees arising out of the declination.

I also want to confirm that on September 2, 2010 I requested copies of Catlin’sunderwriting file, including documents related to the drafting of the policy no. 91825.You responded by email on October 12, 2010, refusing our request, which you describedas “disingenuous.” On October 28, 2010, Robert Novak, representing Raymond Lamb,sent you a letter requesting copies of documents described in the letter. It is myunderstanding that you did not respond to Mr. Novak’s letter, except that in January2011, Catlin provided only a small portion of the documents requested. These requestsremain outstanding.

Catlin’s declination letter referenced only policy no. 91825 and did not discuss Catlin’s coverageposition with respect to its Side A excess policy (policy no. 91833), which also was referred to in the priorletters seeking coverage for this claim. Both policies are potentially implicated by the FDIC claims, as theFDIC claims that have been asserted may exceed the limits of insurance coverage currently provided byChubb/Federal. Because Catlin has not affirmatively acknowledged coverage for the FDIC claims under itsSide A policy notwithstanding its insureds’ requests for coverage under both policies, we assume thatCatlin’s declination was intended to apply to both policies. Please let us know immediately if we aremistaken in this assumption.


VENABLE :LP

Lisa L. Shrewsberry, Esq.Traub Lieberman Straus & Shrewsberry, LLPMarch 23, 2011Page 3

Please let me know as soon as possible if Catlin will reconsider its declination ofcoverage. If Catlin’s response is positive, please let me know if Catlin intends to attendthe mediation. If you have any questions, or if you want to discuss this matter, pleasefeel free to contact my office.

Veryt ours,

c1John H. Zink, III

JHZ/sahcc: Jean Veta, Esq. (via email)

Scott Wise, Esq. (via email)Ronald R. Glancz, Esq. (via email)Robert Novak, Esq. (via email)

TOIDOCS1/I296943 v3


EXHIBIT L


TRAuB L1EBERMAN

_____________ ______________________________________

Seven Skyline Drive

1RAUS & SHREWSBERRY LIP Hawthome1Newyorklo532

NEW YORK MEW JERSEY FLORIDA I CHICAGO Télephone(914)347-2600FacsimIle (914) 347-8B98www.traubljebennan.com

April 18, 2011

VIA E..MAIL AND REGULAR MAIL

John FT. Ziuk, 111, Esq.Venable, LLP210 W. Pennsylvania Avenue, Suite 500Towson, Maryland 21204

Re: Insured: First National Bank of ArizonaClaimant: Federal Deposit Insurance CorporationPolicy Nos.: DOP-91825-0608

XSP-91833-0608Your File No.: 99886-26063 6OurFileNo.: 242.0183

Dear Mr. Zink:

Thank you for your letter dated March 23,2011. You are correct that the coverage positionof Syndicate 2003 at Lloyd’s (“Syndicate 2003 ‘) with respect to the above-referenced matter, as setforth in my letter to Jeanne Deni dated June 30, 2010, applies under both policy no. DOP-91825-0608 and excess policy no. XSP-91 833-0608. To confirm, as notice ofthe above-referenced matterwas provided to Chubb on June 5, 2008, before the inception of the Syndicate 2003 coverage onJune 9, 2008, no coverage is afforded by Syndicate 2003 for same.1

Contrary to the assertions contained in your letter, Catlin forwarded directly to Mr. Novakcertified copies of the above-referenced policies, in response to his request for same. In addition,although not mentioned in your letter, we forwarded to Ms. Deni on October 29, 2010, pursuant toher request, a Memorandum of Understanding that addresses the terms and conditions ofcoverageand the intent ofthe underwriters and the broker ofthis coverage, and which should put this matterto rest.

We note that the demands that were the subject of the notice to Chubb constitute a Claim made prior to theinception of policy no. XSP-91833-0608.


John H. Zink, ifi, Esq.Our File NoV: 2410183Page 2

Based upon the foregoing, Syndicate 2003 categorically denies your assertions of breach. ofcontract, and continues to reserve all rights under the policies, at law and in equity.

Sincerely,

Lisa L. hrewsberry

LLS/cpa

cc: Joseph Mooney, Esq.Robert J. Novak, Esq.Jean Veta, Esq.Scott Wise, Esq,

TRAUB 1JEBERMANTRAIJU LIRBERMAN $ThAUS&5UREwsaEpy ILP


EXHIBIT M


Case 2:11-c 1652-GMS Document 15 Filed 101i11 Page 1 of 5

UNITED STATES DISTRICT COURTDISTRICT OF ARIZONA

Federal Deposit Insurance §Corporation, as Receiver for First §National Bank of Nevada, §

Plaintiff, Case No. CV-11-1652-PHX-GMS§

v. § FINAL JUDGMENT ORDER

Gary A. Dorris, an individual;and Philip A. Lamb, anindividual,

Defendants.

On October 7, 2011 the Court considered the Joint Motion for Entry

of Judgment (Doc. 9) (“Motion”) filed herein by Plaintiff and Defendants.

Having considered the pleadings and evidence before the Court, the Court

finds as follows:

1. The Federal Deposit Insurance Corporation, as receiver of First

National Bank of Nevada (“FDIC Receiver”), has filed herein its complaint


Case 2:11c. 1652-GMS Document 15 Filed 10ii11 Page 2 of 5

alleging breaches of fiduciary duty and acts of negligence and gross

negligence in connection with Defendants’ roles as officers and directors of

First National Bank of Arizona and First National Bank of Nevada

(“Complaint”).

2. Defendants have filed an answer herein in which they deny the

allegations in the Complaint.

3. Lloyds of London Catlin Syndicate 2003 (“Catlin”) has denied

coverage, refused to defend, to advance defense costs, to indemnify, or to

consider settlement of the claims bought against Defendants in this action.

4. Plaintiff and Defendants have entered into a settlement

agreement pursuant to which, the Defendants’ answer notwithstanding, the

Defendants consent to the entry of the following several judgments for the

purpose of compromising disputed claims: a judgment in the amount of

TWENTY MILLION DOLLARS ($20,000,000) (plus post-judgment

interest) against defendant Philip A. Lamb, and a judgment in the amount of

TWENTY MILLION DOLLARS ($20,000,000) (plus post-judgment

interest) against defendant Gary A. Dorris (such judgments are hereinafter

collectively referred to as the “Stipulated Judgments”).

2


Case 2:11-c. 1652-GMS Document 15 RIed 1OI,11 Page 3 of 5

5. The amounts of the Stipulated Judgments are reasonable

calculations of what a jury might reasonably award Plaintiff as damages

based on the allegations of the Complaint.

6. Further, as part of the parties’ settlement, Defendants have

agreed that once the Stipulated Judgments are entered herein, Defendants

will assign to Plaintiff all of their rights, claims, and causes of action against

Catlin and its agents, brokers, employees, officers, and all other persons or

entities relating to or arising out of (i) any applicable insurance policy or

policies, (ii) the claims made by FDIC Receiver against certain former

directors and/or officers of First National Bank of Arizona and First National

Bank of Nevada up through and including July 25, 2008, and/or (iii) this

lawsuit (all as more fully described in the parties’ settlement agreement)

(“Assigned Claims”). In consideration for these assignments, and effective

after such assignments have been delivered to Plaintiff, said Plaintiff has

agreed not to take any action of any kind to assign, document, record,

register as a lien, or collect against the Defendants, the Stipulated

Judgments; save and except for each of the Defendant’s assets consisting of

any and all right, title and interest in the Catlin Policy together with all of

their respective rights, claims, and causes of action in the Assigned Claims

(“FDIC Covenant”). Plaintiff will thereafter dismiss this suit, which

3


Case 2:11-c. 1652-GMS Document 15 RIed 10/,11 Page 4 of 5

includes all of the Plaintiff’s claims against Defendants related to their

conduct as former directors and/or officers of First National Bank of Arizona

and First National Bank of Nevada up through and including July 25, 2008,

with prejudice.

7. The parties’ settlement is reasonable.

8. The Stipulated Judgments will be complete and final judgments

addressing all claims against all defendants.

9. The Motion is well taken and should be GRANTED.

IT IS THEREFORE ORDERED and ADJUDGED as follows:

A. Judgment is entered in this matter in favor of Plaintiff against

Defendant Gary A. Dorris on Plaintiff’s first and second claims for relief set

forth in the Complaint, in the amount of TWENTY MILLION DOLLARS

($20,000,000), to bear post-judgment interest (beginning from the date this

judgment is entered until payment) pursuant to 28 U.S.C. § 196 1(a).

B. Judgment is entered in this matter in favor of Plaintiff against

Defendant Philip A. Lamb on Plaintiff’s first and second claims for relief set

forth in the Complaint, in the amount of TWENTY MILLION DOLLARS

($20,000,000), to bear post-judgment interest (beginning from the date this

judgment is entered until payment) pursuant to 28 U.S.C. § 1961(a).

4


Case 2:11-c.. i652-GMS Document 15 Piled 1O/i11 Page 5 of 5

C. The judgments against Defendants are several, and no amount

recovered by Plaintiff on the judgment against one of the Defendants shall

be credited on the Judgment against the other Defendant.

D. Plaintiff FDIC shall not assign or, upon the FDIC Covenant

becoming effective, execute on the Stipulated Judgment except as to each of

the Defendant’ s assets consisting of any and all right, title and interest in the

Catlin Policy together with all of the Defendants’ respective rights, claims,

and causes of action in the Assigned Claims.

E. Upon the assignment of the Assigned Claims to Plaintiff by

Defendants, the FDIC Covenant shall become effective.

F. Within ten (10) days after the FDIC Covenant becomes

effective, Plaintiff shall file herein its motion for order of dismissal of this

case with prejudice.

G. This Judgment is subject to the further jurisdiction of this Court

pending the Plaintiff’s resolution of the Assigned Claims against Catlin.

H. Plaintiff shall pay all court costs.

Dated this 13th day of October, 2011.

1G. Murray SnowUnited States District Judge

5


EXHIBIT N


ASSIGNMENT

WHEREAS, on August 23, 2011, the Federal Deposit Insurance Corporation, as

receiver for First National Bank of Nevada (“FDIC”) filed suit against Philip A. Lamb

(“Lamb”) and Gary A. Dorris (“Dorris”) styled Federal Deposit Insurance Corporation,

as Receiver for First National Bank ofNevada v Gary A. Dorris and Philz A. Lamb, in

the United States District Court for the District of Arizona in case number 2:11 -cv

01652-GMS (“FNB Nevada Lawsuit”); and

WHEREAS, in the FNB Nevada Lawsuit the FDIC has asserted claims against

Dorris and Lamb relating to their conduct as former directors and/or officers of First

National Bank of Nevada (“FNB Nevada”) and First National Bank of Arizona (“FNB

Arizona”) up through and including July 25, 2008 (“Professional Claims”); and

WHEREAS, on October 13, 2011, the Court entered judgments in the FNB

Nevada Lawsuit in favor of the FDIC and against Dorris and Lamb severally, each in the

amount of $20 million on the Professional Claims (collectively “Judgment”); and

WHEREAS, Lloyds of London Catlin Syndicate 2003 (“Catlin”) issued Director

and Officer and Corporate Securities Liability Insurance Policy number DOP-91825-

0608, with a Policy Period effective from June 9, 2008 to June 9, 2009 (“Catlin Policy”),

which provides coverage to, among others, Dorris and Lamb for the Professional Claims;

and

WHEREAS, the Catlin Policy was in full force and effect at the time Catlin was

given notice of the Professional Claims; and

WHEREAS, Dorris and Lamb, among others, timel y provided notice of the

Professional Claims to Catlin under the Catlin Policy, and Catlin repeatedly has refused

Assignment 1 164\OO\00395712


and denied coverage under the Catlin Policy for the Professional Claims asserted by the

FDIC against Dorris and Lamb, and has (i) refused and failed to defend, to advance

defense costs, and to indemnify Dorris and Lamb in connection with the Professional

Claims, and (ii) refused and failed to protect the interests of Dorris and Lamb by failing

and refusing to defend, to advance defense costs, to participate in settlement proceedings

and negotiations, and/or to indemnify them in connection with the FNB Nevada Lawsuit

and the Professional Claims; and

WHEREAS, Catlin has completely ignored the requests of Dorris and Lamb for a

defense and denied them a defense and denied coverage, resulting in the Judgment; and

WHEREAS, as a result of such refusal and failure to defend and denial of

coverage by Catlin, Dorris and Lamb are and/or may be the present owners of certain

rights, claims, causes of action, choses in action, and claims for relief against Catlin and

its agents, brokers, representatives, employees, officers and all other persons or entities

relating to or arising out of any applicable insurance policy or policies, including without

limitation the Catlin Policy, the Professional Claims, the FNB Nevada Lawsuit, or the

Judgment, including but not limited to all statutory rights, contractual rights, and rights

arising in tort or otherwise, relating to (i) Catlin’s duties to Dorris and Lamb with respect

to the Professional Claims, the FNB Nevada Lawsuit, and the Judgment, specifically

including the duty of Catlin to defend Dorris and Lamb regarding the Professional

Claims, the duty of Catlin to reasonably settle and pay for the settlement of the

Professional Claims on behalf of Dorris and Lamb, and to reasonably settle and pay for

the Judgment entered in the FNB Nevada Lawsuit on behalf of Dorris and Lamb, and (ii)

the duties of all other persons or entities to Dorris and Lamb relating to or arising out of

Assignment 2 1 64\OO\OO395712


any applicable insurance policy or policies, including without limitation the Catlin

Policy; and

WHEREAS, the FDIC has agreed to execute and deliver to Dorris and Lamb a

Covenant Not to Execute against them, save and except for Dorris’ and Lamb’s assets

consisting of any and all right, title and interest in the Catlin Policy together with all of

their respective rights, claims, causes of action, choses in action, and claims for relief

against Catlin and its agents, brokers, representatives, employees, officers and all other

persons or entities relating to or arising out of any applicable insurance policy or policies,

including without limitation the Catlin Policy, the Professional Claims, the FNB Nevada

Lawsuit, or the Judgment, including but not limited to all statutory rights, contractual

rights, and rights of Dorris and Lamb arising in tort or otherwise, arising out of or relating

to (i) Catlin’ s duties to Dorris and Lamb with respect to the Professional Clairiis, the FNB

Nevada Lawsuit, and the Judgment, specifically including the duty of Catlin to defend

Dorris and Lamb regarding the Professional Claims, the duty of Catlin to reasonably

settle and pay for the settlement of the Professional Claims on behalf of Dorris and Lamb,

and to reasonably settle and pay for the Judgment entered in the FNB Nevada Lawsuit on

behalf of Dorris and Lamb, and (ii) the duties of all other persons or entities to Dorris and

Lamb relating to or arising out of any applicable insurance policy or policies; and

WHEREAS, such Covenant Not to Execute is to be effective immediately after

this Assignment is fully executed and delivered to the FDIC and becomes effective.

NOW, THEREFORE, Dorris and Lamb, and each of them, for the consideration

set forth herein and in return for the immediate effectiveness of the Covenant Not to

Execute following the full execution and delivery of this Assignment, and for other good

Assignment 3 1164\OO\00395712


and valuable consideration the receipt and sufficiency of which is hereby acknowledged,

hereby GRANT, CONVEY, TRANSFER and ASSIGN to the FDIC all of their rights,

title, claims, causes of action, choses in action, and claims for relief, of whatever nature,

as they or either of them may have against Catlin and its agents, brokers, representatives,

employees, officers and all other persons or entities relating to or arising out of any

applicable insurance policy or policies, including without limitation the Catlin Policy, the

Professional Claims, the FNB Nevada Lawsuit, or the Judgment, including but not

limited to all statutory rights, contractual rights, and rights arising in tort or otherwise,

arising out of or relating to (i) Catlin’s duties to Dorris and Lamb with respect to the

Professional Claims, the FNB Nevada Lawsuit, and the Judgment, specifically including

the duty of Catlin to defend Dorris and Lamb regarding the Professional Claims, the duty

of Catlin to reasonably settle and pay for the settlement of the Professional Claims on

behalf of Dorris and Lamb, and to reasonably settle and/or pay the Judgment entered in

the FNB Nevada Lawsuit on behalf of Dorris and Lamb, and (ii) the duties of all other

persons or entities to Dorris and Lamb relating to or arising out of any applicable

insurance policy or policies, including without limitation the Catlin Policy. This

Assignment is made pursuant to a Settlement Agreement with the FDIC dated August 26,

2011, and this Assignment is without recourse.

FURTHER, Dorris and Lamb, and each of them, for the consideration set forth

herein and in return for the immediate effectiveness of the Covenant Not to Execute

following the full execution and delivery of this Assignment, and for other good and

valuable consideration the receipt and sufficiency of which is hereby acknowledged,

hereby GRANT, CONVEY, TRANSFER and ASSIGN to the FDIC, any and all rights,

Assignment 4 1 64\OO\OO395712


following the full execution and delivery of this Assignment, and for other good and

valuable consideration the receipt and sufficiency of which is hereby acknowledged,

hereby GRANT, CONVEY, TRANSFER and ASSIGN to the FDIC, any and all rights,

title, claims, causes of action, choses in action, and claims for reliet, of whatever nature,

they or either of them may have, against any party arising out of any acts or omissions

relating in any way to the procuring, underwriting, drafting, coverages, and issuance of

the Catlin Policy.

Date: ct 20,2.OII

Date:____________________

______________

V Philip A. Lamb

Assgnmeit ) I I64\OOOO3957t2


title, claims, causes of action, choses in action, and claims for relief, of whatever nature,

they or either of them may have, against any party arising out of any acts or omissions

relating in any way to the procuring, underwriting, drafting, coverages, and issuance of

the Catlin Policy.

Date:______________________

________________________________

Gary A. Dorris

Date:A.Lab

Assignment 5 I I 64OO\OO3957i2


EXHIBIT 0


of6

Zink, John H., Ill

From: Duncan, Michael [Michael. [email protected]]

Sent: Tuesday, October 12, 2010 5:16 PM

To: Zink, John H., Ill

Cc: Veta, Jean; Williams, Jarrett; Novak, Robert; [email protected]; Glancz, Ronald R.; Deni,Jeanne; Smits, Kelly; Wagner, KJ; Cafferelli, Joseph

Subject: RE: FNHBC - Catlin Declination

Importance: High

Attachments: First National Bank - Catlin D&O Policy - Prior Notice Amendment

Hi John,

The answer to your first question is YES.

We have provided everything we can find in our system at this time but, as I noted previously, our Outlooksystem automatically archives e-mails after a certain amount of time and thus I cannot confirm that thedocumentation that has been provided based on our current search for information constitutes everythingthat occurred during that period in 2008. While I am happy to ask my IT department to perform anadditional search, please understand that that is both time-consuming and potentially expensive.

Lastly, please refer to my email to Tom Donnelly (of TriCity) dated 8/6/10 at 10:47 am) in which Willisrequested certain correspondence from TriCity/Catlin (re-attached for your review). To-date, we havenot received any reply. Willis has been advised by TriCity that they have been instructed to no longerspeak with Willis concerning this matter,

Trust this answers your questions.

Thank you,

Michael R. Duncan, CPCU, CIC

Placement Specialist

Willis of Arizona, Inc

11201 N. Tatum Blvd, Suite #300

Phoenix, AZ 85028

ph: 602-787-6316

cell: 602-639-2936

fax: 602-787-8040

[email protected]

www.willis.com

THE WILU5 CAUSE• We thoroughly understand our clients’ needs and their industries.

We develop client solutions with the best markets, price and terms.We relentlessly deliver quality client service.

• We get claims paid quickly.

.W1TH INTEGRITY

Click here for more information about The Willis Cause.

**** Please Consider The Environment Before Printing This Email***

10/12/2010


of 1

Zink, John H., III

From: Duncan, Michael [[email protected]]

Sent: Friday, August 06, 2010 1:48 PM

To: TDonneIIytricityins.com; gkoehntricityins.com; Cathy Brotman

Cc: Cafferelli, Joseph; Deni, Jeanne; Zink, John H., Ill; Wagner, KJ

Subject: First National Bank - Catlin D&O Policy - Prior Notice Amendment

Importance: High

Attachments: FW: FNB - D&O, EPLI, Fiduciary, Side A DIC policies - Need ASAPHi Tom,

I’ve spoken with John Zink (legal council for 2 of the FNB Directors) and here is what we need:

1, We need a copy of the email/correspondence between YOU and MIKE SCARLATTA confirming theacceptance of the “Prior Notice Amendment” by Catlin.2. We also need a copy of the email that Catlin sent to TriCity that contained the D&O Policy. All wehave is an Email from Cathy Brotman (in your office) to Willis on 7/15/08 that contained the policies.What we want, however, is the email from SCAR LATTA to TriCity showing how the policies weretransmitted to TriCity. Tom - here is the original email that Cathy sent us 2 years ago - if this helps you.

This matter is of high importance so please let us know ASAP when you have this information for us.

Thank you,

Michael R. Duncan, CPCU, CIC

Broker

Willis of North America

11201 N. Tatum BIvd, Suite #300

Phoenix, AZ 85028

ph: 602-787-6316

cell: 602-639-2936

fax: 602-787-8040

[email protected]

www.willis.com

THE WILLIS CIJSE8 We thoroughly understand our clients’ needs and their industries.• We develop client solutions with the best markets, price and terms.* We relentlessly deliver quality client service.8 We get claims paid quickly.

• WiTH INTEGRITY

Click here for more information about The Willis cause.

‘‘‘ Please Consider The Environment Before Prining This Email***

10/12/2010


Re: FNB - D&O, EPLI, Fiduciy, Side A DIC policies - Need ASAP Page 1 of 4

Zink, John H., Ill

From: Swaney, Darcy [[email protected]}

Sent: Thursday, July 22, 2010 1:02 PM

To: Duncan, Michael

Subject: FW: FNB - D&O, EPLI, Fiduciary, Side A DIC policies - Need ASAP

Attachments: Fiduciary Policy.pdf; D&O policy.pdf; EPL policy.pdf

Darcy Swaney, CISR, Assistant Client Manager, Middle MarketWillis Group, 11201 N. Tatum Blvd., #300 Phoenix, AZ 85028Direct; 602-787-6142, [email protected], www.willis.com

L___THE WILLIS CAUSE

We thoroughly understand our clients’ needs and their industries.We develop client solutions with the best markets, price and terms.We relentlessly deliver quality client service.We get claims paid quickly.

...WITH INTEGRITY

Click here for more information about The Willis Cause.

From: Cathy Brotman [mailto :[email protected]]Sent: Tuesday, July 15, 2008 2:38 PMTo: Duncan, Michael; Tom Donnelly; Katie VerryCc: Cafferelli, Joseph; Lemon, Kasey; Larson, Sue; Laura KukulanSubject: RE: FNB - D&O, EPLI, Fiduciary, Side A DIG policies - Need ASAP

Hi. Mike,

Per your request, attached please find the scan copies of the policies we have in. The pages on thepolicies are a little off and we need to amend the following:

• Deletejhe Retro-Dates from the policies

• EPL Policy is missing — Third Party Coverage Endorsement

• D&O Policy is missing — Outside Directorship Liab. Endorsement

• Fiduciary Policy — retention should be $5K in lieu of $25K

We will forward the revised policies upon receipt. In the meantime, please review and let me know if youhave any questions or concerns.

Regards,

Cathy BrotmanAssistant Vice President - Financial ServicesTn-City Brokerage50 California Street # 2000415 675-2299 (direct)

10/12/2010


Re: FNB - D&O, EPLI, Fiduciary, Side A DIC policies - Need ASAP Page 2 of 4

415 986-5004 (fax)[email protected]

From: Duncan, Michael [mailto: [email protected]]Sent: Tuesday, July 15, 2008 11:17 AMTo: Tom Donnelly; Katie VerryCc: Cafferelli, Joseph; Lemon, Kasey; Larson, Sue; Cathy BrotmanSubject: RE: FNB - D&O, EPU, Fiduciary, Side A DIC policies - Need ASAP

Thank you Tom,

Please scan and email them to us with the noted/requested changes. Thank you,

Michael R. Duncan, CPCUClient ManagerWillis of Arizona, Inc.11201 N. Tatum Blvd, Suite #300Phoenix, AZ 85028ph: 602-787-6316fax: [email protected]

From: Tom Donnelly [mailto:TDon [email protected]]Sent: Tuesday, July 15, 2008 10:55 AMTo: Duncan, Michael; Katie VerryCc: Cafferelli, Joseph; Lemon, Kasey; Larson, Sue; Cathy BrotmanSubject: Re: FNB - D&O, EPU, Fiduciary, Side A DIC policies - Need ASAP

Michael,

We actually have all the policies except the Aside at this point. Upon review, we noted and requested a couple changes. Weexpect these to be completed shortly and we should be able to send to you by the end of the week.

Thanks,

Tom

Original Message —--- V

From: Duncan, Michael <[email protected]>- To: Tom Donnelly; Katie Verry

Cc: Cafferelli, Joseph <[email protected]>; Lemon, Kasey <kasey.1emonwi11is.com>; Larson, Sue<[email protected]>Sent: Tue Jul 15 07:37:59 2008Subject: FNB - D&O, EPLI, Fiduciary, Side A DIC policies - Need ASAP

Hi Tom and Katie,

I hope all is well with you. Per the Insured’s request below, can you tell me how the policies are coming? I need to provide

them to the Client ASAP (be week’s end if humanly possible). As you can see from this email chain, the FDIC is the ones

needing it ASAP.

I look forward to hearing from you,

Michael R. Duncan, CPCUClient ManagerWillis of Arizona, Inc.

10/12/2010


Re:, FNB - D&O, EPLI, Fiducinry, Side A DIC policies - Need ASAP Page 3 of 4

11201 N. Tatum Blvd, Suite #300Phoenix, AZ 85028ph: 602-787-6316fax: [email protected]

From: Smith, GregSent: Monday, July 14, 2008 4:10 PMTo: Duncan, Michael; Lemon, KaseyCc: O’Neal-Boyd, TernSubject: FW: D&O policy-need asap

Michael:

Can you tell me when you expect Catlin to provide the D&O Policy?

Greg.

Gregory J. SmithEVP and CFOFirst National Banks17600 N. Perimeter Dr.Scottsdale, AZ 85255

From: Robertson, EdSent: Monday, July 14, 2008 7:55 AMTo: Smith, GregSubject: D&O policy-need asap

FDIC needs recent D&O policy asap- have binders so just policy. I am told you have it. Can you have someone copy andprovide to me this morning?

R Edward Robertson

Director of Internal Audit

Executive Vice President

First National Bank

1665 West Alameda Drive

Tempe, Az 85282

[email protected]

10/12/2010


Re: FNB - D&O, EPLI, Fiduciary, Side A DIC policies - Need ASAP Page 4 of 4

480-224-8454-Office in Tempe (Fountainhead)

480-458-3145- Office in Scottsdale (Perimeter)

602-740-7443-Cell

602-636-7251-Fax

This email message, including any attachments, is for the sole use of theintended recipient (s) and may contain information that is confidential,proprietary, legally privileged, or otherwise protected by law fromdisclosure. Any unauthorized review, use, copying, disclosure, ordistribution is prohibited. If you are not the intended recipient, or theperson responsible for delivering this to an addressee, you should notifythe sender immediately by telephone or by reply e-mail, and destroy allcopies of the original message.

For information pertaining to Willis’ email confidentiality and monitoring policy, usage restrictions, or for specific companyregistration and regulatory status information, please visit http://www.willis.com/email trailer,aspx

For information pertaining to Willis’ email confidentiality and monitoring policy, usage restrictions, or

for specific company registration and regulatory status information, please visithttp://www.willis.comlemail_trailer.aspx

10/12/2010


EXHIBIT P


of 4

Zink, John H., Ill

From: Lisa Shrewsberry [[email protected]]


To: Zink, John H., Ill; [email protected]

Cc: Glancz, Ronald R.; Veta, Jean; Williams, Jarrett; Novak, Robert; moconnor©jsslaw.comSubject: RE: FNBHC - FDIC Claim - Catlin

John,

I think Jeanne is involved because it was she who drafted the endorsement. However, as I have statedpreviously, Catlin had no knowledge of the purported endorsement until you sent it to me, and it is notpart of the policy issued by Catlin. I think you know that I am not going to turn over Catlin’s files to you,and it is disingenuous for you to request that of me. You know that Catlin did not draft the purportedendorsement, and that it never received the endorsement. Moreover, it is unclear why you would take theposition that two consecutive claims-made policies would apply to the same claim.

Lisa

Lisa L. ShrewsberryTRAUB LIEBERMAN STRAUS & SHREWSBERRY LLPMid-Westchester Executive ParkSeven Skyline Drive

( Hawthorne, New York 10532Telephone: (914) 347-2600Facsimile: (914) 347-8898e-mail: [email protected]

If you have any difficulty, or if the transmission was incomplete, please advise. This message is intended only for the use of the individual orentity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. Ifthe reader of this message is not the intended recipient or the employee or agent responsible for delivering the messageto the intendedrecipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you havereceived this communication in error, please notify us immediately by telephone or e-mail, and delete the electronic version of the messagefrom your system. Thank you.

From: Zink,John H., III [rnaiito:[email protected] Tuesday, October 12, 2010 6 35 PMTo Lisa Shrewsberry, jeanne deni@willis cornCc: Glàncz, RonaldR.; Veta,Jëan; Williams, Jarrett; Novak, Robert; [email protected]: RE: FNBHC -. FDIC Claim - Cätliñ

Lisa -

Thank-you for your reply, but please understand that Willis has no authority to act onbehalf of any of the insureds named in the FDIC claim to negotiate any agreement as tocoverage, or to enter into any memorandum of understanding concerning theinterpretation, scope, and application of Catlin’s policy and the “prior notice”

1 ff1 zf’7fl1 11


of3

Zink, John H., Ill

From: Zink, John H., Ill


To: ‘Lisa Shrewsberry’; [email protected]

Cc: Glancz, Ronald R.; Veta, Jean; Williams, Jarrett; Novak, Robert; [email protected]

Subject: RE: FNBHC - FDIC Claim - Catlin

Lisa V

Thank-you for your reply, but please understand that Willis has no authority to act onbehalf of any of the insureds named in the FDIC claim to negotiate any agreement as tocoverage, or to enter into any memorandum of understanding concerning theinterpretation, scope, and application of Catlin’s policy and the “prior notice”endorsement. If Catlin wants to make a proposal, please send it to the attorneysrepresenting Catlin’s insureds.

In the meantime, we note that Catlin has not explained why the “prior notice”endorsement, attached to the D&O policy delivered to Willis by Catlin’s representatives,is not binding on Catlin. Simply stated, none of the attorneys representing the insu redscan recommend compromising the apparently clear obligations of Catlin under theinsurance contract, or agree that Catlin’s declination has any merit, without some factualor legal basis. Thus, we believe it would be most productive if Catlin permits us toreview its underwriting file(s), with particular emphasis on the drafting of the policy,Declarations, and endorsements, and communications between Catlin, Tn-City, andWillis.

Please consider this a formal request, and let me know if Catlin will agree to share itsunderwriting files, or if you have any questions.

John H. Zink, Ill I Venoble LU’210W. Pennsylvania Ave., Ste. 500 I Towson, MD 21204Tel: (410) 494-6254 Fax: (410) 821-0147Email: [email protected]

From: Lisa Shrewsberry [rnailto:shrewsbeny@traubliebermancomjSent: Tuesday, Odober 12, 2010 11:04 AM V

To: Zink, John H., IIICc: Glancz, Ronald R.; Veta, Jean; Williams, Jarrett; Novak, Robert; [email protected]: RE: FNBHC - FDIC Claim - Cathn

John,V

Jeanne Deni and I have discussed trying to agree on a MOU, as you know I plan to get language to hershortly.

V

Lisa

10/12/2010


EXHIBIT Q


of4

Zink, John H., Ill

From: Deni, Jeanne [[email protected]]Sent: Wednesday, October 13, 2010 12:06 PM

To: Lisa Shrewsberry; Zink, John H., Ill

Cc: Glancz, Ronald R.; Veta, Jean; Williams, Jarrett; Novak, Robert; moconnorjsslaw.com

Subject: RE: FNBHC - FDIC Claim - Catlin

Lisa -

It is my opinion and position that as Catlin’s client, Willis is entitled to our file, and we would expect thatCatlin would turn it over promptly upon request. We hereby make such request at this time.

Should you have any questions regarding the above, please do not hesitate to contact me. Thanks foryour prompt attention to this matter.

Jeanne Deni, J.D., Senior Vice PresidentWillis Executive RisksWillis Group, 720 S. Colorado, Blvd., Suite 600-N, Denver, co 80246Direct: 303 218 4027, Mobile: 303 618 8008leanne.denkwillis.com, www.willis.com

THE WILLIS CAUSEWe thoroughly understand our clients’ needs and their industries.We develop client solutions with the best markets, price and terms.We relentlessly deliver quality client service.We get claims paid quickly.

...WITH INTEGRITY

From: Lisa Shrewsberry [mailto: [email protected]]Sent: Tuesday, October 12, 2010 4:42 PMTo: Zink, John H., III; Deni, JeanneCc: Glancz, Ronald R.; Veta, Jean; Williams, Jarrett; Novak, Robert; [email protected]: RE: FNBHC - FDIC Claim - Catlin

John, -

I think Jeanne is involved because it was she who drafted the endorsement. However, as I have statedpreviously Catlln had no knowledge of the purported endorsement until you sent it to me, and it is notpart of the policy issued by Catlin I think you know that I am not going to turn over Catlin’s files to youand it is disingenuous for you to request that of me You know that Catlin did not draft the purportedendorsement and that it never received the endorsement Moreover it is unclear why you would take theposition that two consecutive claims-made policies would apply to the same claim.

Lisa

Lisa L. ShrewsberryTRAUB LIEBERMAN STRAUS & SHREWSBERRY LLP

10/13/2010


EXHIBIT R


Jennings, Strouss & Salmon, PLCeririrngs Attorneys at Law

S One East Washington Street, Suite 1900trouss Phoenix, Arizona 85004-2554

www.jsslaw.com

Robert 3. NovakDirect Dial: 602.262.5833Direct Fax: 602.495.2637

[email protected]

October 28, 2010

Via Electronic Mail: lshrewsberry(Thtraublieberman.comand United States Mail

Lisa L. Shrewsberry, EsquireTRAuB LiEBERMAN STRAUS & SHREWsBERRY, LLPSeven Skyline DriveHawthorne, New York 10532

Re: Policy Nos.: DOP-91825-0608YSP-91833-0608EPP-91830-0608FLP-91829--0608XSP-91829-0608B0577/UN81576

Dear Ms. Shrewsberry:

As you know, our Firm represents Raymond Lamb relating to the above-referencedpolicies and with regard to various claims which have been asserted by the FDIC against Mr.Lamb. Mr. Lamb is an insured under each of these policies. This letter is to requestcertified copies of any and all applications, policies, endorsements, extensions of coverageperiods, invoices, billings, communications with the insured or Willis of Arizona, Inc.together with all materials submitted therewith or made a part thereof collectively “Policies.”This request refers to all Policies Catlin Insurance Company (UK) Ltd., Syndicate 2003 atLloyds, Catlin Specialty Insurance Company and or Catlin, Inc. issued to First National BankHolding Company. In responding to this request, please note your obligations pursuant toArizona Administrative Code R20-6-801 in addition to the insurers’ duty of good faith andfair dealing to its insured. A response to this letter is required within ten (10) days hereof.

If you have any questions regarding this request, please do not hesitate to contactme.

Very truly yours,

JENNINGS, STROUSS & SALMON, P.L.C.

By/RobertJ. Novak

Phoenix Peoria Washington, DC Las Vegas

3675840v1(58366,35)


Lisa L. Shrewsberry, EsquireOctober 28, 2010Page 2

RJ N/ehcc: Ron&d Glancz, Esquire

D. Jean Veta, EsquireD. Scott Wise, EsquireJohn Zink, Esquire

3675840v1(58366.35)


EXHIBIT S


CrLlN, INC.

3340 Peachtree Read, N.E.

Seuc 2950

Atlanta, Ceergia 30326lelephene (404) 443-4910

Facsimile (40-4) 443t9i 2

Januaty 13, 2011

Robert J. NovakJennings, Strouss & Salmon, P.1. C.One East Washington StreetSuite 1900Phoenix, Ariiona 85004—2554

Re: Certified copies of the following:

Policy Nos.: DQP-91 825-0608EPP-9 1830-0608FLP-9I 829-0608XSP-91 833-0606

Dear Mr. Novak:

Enclosed are ihe Certified Copies of the above-referenced Policies you recluested, It does notappear that Policy# 13O577IUN81 576 which you also requested is a Catlin Policy. In addition, yourequested Policylt YSP-91833-0608 which does not exist in Catlin’s system; however, we dobelieve the YSP was a typo and have included Catlin Policy XSP-91 833-0608.

If you equire any further information, please let me knew.

Sin(:erely

—SiEve nC Ada insSecretary

1AN fgfl.F


EXHIBIT T


of2

Znk, John H., III

From: Lisa Shrewsberry [[email protected]]

Sent: Tuesday, April 19, 2011 3:27 PM

To: Zink, John H., lii

Cc: [email protected]

Subject: FW: First National Bank of Arizona

Attachments: Memo of Understanding.pdf

Here you go. Thanks, Lisa


If you have any difficulty, or if the transmission was incomplete, please advise. This message is intended only for the use of the individual orentity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law, Ifthe reader of this message is not the intended recipient or the employee or agent responsible for delivering the message to the intendedrecipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you havereceived this communication in error, please notify us immediately by telephone or e-mail, and delete the electronic version of the messagefrom your system. Thank you.

From: Lisa ShrewsberrySent: Friday, October 29, 2010 1:24 PMTo: [email protected]: FW: First National Bank of Arizona

Hi Jeanne,

I’m sorry this took so long. I have spoken to absolutely everyone at Catlin, leaving no stone unturned,and no one had any knowledge of the purported endorsement, or even a discussion of the issue. I don’tknow if this MOU is helpful in any way, but let’s discuss?

Thanks,

Lisa


4/20/2011


MEMORANDUM OF UNDERSTANDING

This memorandum will serve to set forth the understanding ofthe below signed parties, with

respect to a request for clarification of certain terms and conditions of coverage provided by

Syndicate 2003 at Lloyd’s (hereinafter “Catlin”) to First National Bank ofArizona (hereinafter “the

Named Insured”) under Policy No. DOP-9 1825-0608, in effect for the policy period ofJune 9, 2008

to June 9, 2009 (“the Catlin policy”), and to all Insureds as defmed in the Catlin policy.

Wherefore, it is agreed as follows:

1. By letter dated June 5, 2008, notice was given on behalf of the Insureds to Federal

Insurance Company (hereinafter “Chubb”), of potential claims that might arise as a result of

regulatory oversight of, and supervisory actions against, First National Bank of Arizona, First

National Bank ofNevada and First Heritage Bank (California). The notice letter discusses potential

claims, including FDIC investigations, regulatory and administrative claims, as well as civil

litigation by borrowers and shareholders, both derivatively and directly. A copy of the June 5, 2008

notice letter to Chubb is annexed hereto as Exhibit “A”.

2. Notice of such potential claims was given to Chubb under its policy, which was in

effect for the policy period of April 9, 2007 to June 9, 2008 (hereinafter “the prior Chubb policy”).

3. Thereafter, by letters dated May29, 2009, the FDIC provided notice to certain Insured

individuals asserting allegations involving, inter alia, (1 )the operation of the wholesale division of

First National Bank ofNevada after knowledge that such continued operation posed risks because

of the deterioration of the mortgage market and the failure to implement adequate policies and

procedures; and (2) a transaction between First Heritage Bank of Newport Beach, California and

First National Bank of Nevada, wherein loans were made to the First National Bank of Nevada

despite knowledge that such bank was undercapitalized (hereinafter “the FDIC letters”).


4. Notice of the FDIC letters was provided to Chubb, under the prior Chubb policy, on

the basis that they arise out of and relate back to the notice ofpotential claims to Chubb, dated June

5,2008, and Chubb has assumed the defense of these matters under a reservation of the right to deny

coverage in the event and to the extent, inter alia, that the FDIC letters do not relate back to and arise

out of the notice to Chubb under the prior Chubb policy.

5. It is agreed by Catlin that in the event and to the extent that the FDIC letters are not

based upon, or do not arise from or are not a consequence ofthe circumstances set forth in the notice

to Chubb dated July 5, 2008, or any other notice given under a prior policy, then Catlin will not deny

coverage under Exclusion 5(a) of the Catlin policy, and such letters will otherwise be subject to the

terms and conditions of the Catlin policy.

6. It is agreed by and between the parties that the document annexed hereto as Exhibit

“B” is a complete copy of the Catlin policy.

Agreed to By:

On Behalf Of On Behalf Of

Syndicate 2003 First National

at Lloyd’s Bank of Arizona


I. (a) PLAINTIFFS

Federal Deposit Insurance Corporation, as Receiver for FirstNational Bank of Nevada

(b) County of Residence of First Listed Plaintiff

___________________

(EXCEPT IN U.S. PLAINTIFF CASES)

DEFENDANTS

Syndicate 2003 at Lloyd’s aka Syndicate 2003 at Lloyd’s ofLondon; and Lloyd’s of London Catlin Syndicate 2003

County of Residence of First Listed Defendant Maricopa, AZ(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THELAND INVOLVED.

Attorneys (If Known)

Unknown

JS 44 (Rev. 12/07) CIVIL COVER SHEETThe JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or otherpapers as required bylaw, except as providedby local roles ofcourt. This fonts, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk ofCourt for the purpose of initiatingthe civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)

(c) Attorney’s (Firm Name, Address, and Telephone Number)

See attached.

II. BASIS OF JURISDICTION (Place an ‘X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES(place an “X” in One Box for Plaintiff(For Diversity Cases Only) and One Box for Defendant)

I U.S. Government 0 3 Federal Question PTF DEF PTF DEFPlaintiff (U.S.GovemmentNotaParty) CitizenofThisState 0 1 0 I IncorporatedorPrincipalPlace 0 4 0 4

of Business In This State

0 2 U.S. Government 0 4 Diversity Citizen of Another State 0 2 0 2 Incorporated and Principal Place 0 5 0 5Defendant . of Business In Another State(Indicate Citizenship of Parties m Item III)

CitizenorSubjectofa 0 3 0 3 ForeignNation 0 6 0 6

-

Foreign Country

IV. NATURE OF SUIT (Place an “X” in One Box Only)CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES

110 Insurance PERSONAL INJURY PERSONAL INJURY 0 610 Agriculture 0 422 Appeal 28 USC 158 I] 400 State Reapportionment0 l20Marine 0 3loAirplane 0 362Personallnjuiy- 0 6200therFood&Dnig 0 423 Withdrawal 0 4l0Antitrust0 130 Miller Act 0 315 Airplane Product Med. Malpractice 0 625 Dnsg Related Seizure 28 USC 157 0 430 Banks and Banking0 140 Negotiable Instnsment Liability 0 365 Personal Injury - of Property 21 USC 881 0 450 Commerce0 150 Recovery of Overpayment 0 320 Assault, Libel & Product Liability 0 630 Liquor Laws PROPERTY RIGHTS U 460 Deportation

& EnforcementofJudgmen Slander 0 368 Asbestos Personal 0 640 R.R. & Tnick 0 820 Copyrights 0 470 Racketeer Influenced and0 151 Medicare Act 0 330 Federal Employers’ Injury Product 0 650 Airline Regs. 0 830 Patent Comipt Organizations0 152 Recovery of Defaulted Liability Liability 0 660 Occupational 0 840 Trademark 0 480 Consumer Credit

Student Loans 0 340 Marine PERSONAL PROPERTY Safety/Healtls 0 490 Cable/Sat TV(ExcI. Veterans) 0 345 Marine Product 0 370 Other Fraud 0 690 Other CI 810 Selective Service

CI 153 Recovery of Overpayment Liability Cl 371 Troth in Lending LABOR SOCIAL SECURITY CI 850 Securities/Commodities!of Veteran’s Benefits Cl 350 Motor Vehicle Cl 380 Other Personal Cl 710 Fair Labor Standards Cl 861 HIA (1395ff) Exchange

Cl 160 Stockholders’ Suits Cl 355 Motor Vehicle Property Damage Act Cl 862 Black Lung (923) CI 875 Customer ChallengeCl 190 Other Contract Product Liability Cl 385 Property Damage Cl 720 Labor/Mgmt. Relations Cl 863 DIWC/DIWW (445(g)) 12 USC 3410CI 195 Contract Product Liability Cl 360 Other Personal Product Liability Cl 730 Labor!MgmtReporting CI 864 SSID Title XVI Cl 890 Other Statutory ActionsCI 196 Franchise Injury & Disclosure Act Cl 865 RSI (405(g)) Cl 891 Agricultural Acts

REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS CI 740 Railway Labor Act FEDERAL TAX SUITS CI 892 Economic Stabilization ActCI 210 Land Condemnation CI 441 Voting El 510 Motions to Vacate CI 790 Other Labor Litigation Cl 870 Taxes (U.S. Plaintiff CI 893 Environmental Matters0 220 Foreclosure CI 442 Employment Sentence Cl 791 Empl. Ret. Inc. or Defendant) CI 894 Energy Allocation ActCl 230 Rent Lease & Ejectment CI 443 Housing! Habeas Corpus: Security Act Cl 871 IRS—Third Party Cl 895 Freedom of InformationCl 240 Torts to Land Accommodations CI 530 General 26 USC 7609 ActCl 245 Tort Product Liability Cl 444 Welfare Cl 535 Death Penalty IMMIGRATION Cl 900Appeal of Fee DeterminationCI 290 All Other Real Property CI 445 Amer. w/Disabilities - Cl 540 Mandamus & Other Cl 462 Naturalization Application Under Equal Access

Employment CI 550 Civil Rights CI 463 Habeas Corpus - to JusticeCI 446 Amer. w/Disabilities - Cl 555 Prison Condition Alien Detainee CI 950 Constitutionality of

Other CI 465 Other Immigration State StatutesCl 440 Other Civil Rights Actions

V. ORIGIN (Place an “x” in One Box Only) Appeal to District1 Original D 2 Removed from 3 Remanded from )] 4 Reinstated or D 5 TransfeaTed from 0 6 Multidisthct Judge from

Proceeding State Court Appellate Court Reopened another district Litigation Magistrate(spectM Judgment

Cittht5J(.kla tcnderwhich you are filing (Do not cite jurisdictional statutes unless diversity):

VI. CAUSE OF ACTIONBrief description of cause:Suit tor breach ot contract/bad taith to recover on a directors & officers liability insurance policy

VII. REQUESTED IN l CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint:COMPLAINT: UNDER F.R.C.P. 23 43,510,000.00 JURY DEMAND: Cl Yes gNo

VIII. RELATED CASE(S)IF ANY

(Seemstructions).JGE G. Murray Snow DOCKETNUMBER 2:11-cv-01652-GMS

DATE SIGNATURE OF ATFORNEY OF RECORD

10/25/2011 Is! Jeffrey A. Sandellr.,x urra..r. uo ONLY

RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE


•i ?

Plaintiffs’ Attorneys — Attached to Civil Cover Sheet

Jeffrey A. SandellBob J. RogersFederal Deposit Insurance Corp.1601 Bryan St., 15th FloorDallas, TX 75201972.761.2280 Telephone

John M. Brown,Anthony W. KirkwoodMULLIN HoARD & BRowN, L.L.P.500 South Taylor Street, Suite 800Amarillo, Texas 79101(806) 372-5050 Telephone


JS 44 Reverse (Rev. 12/07)

INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44

Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as requiredby law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the useof the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaintfiled. The attorney filing a case should complete the form as follows:

I. (a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiffor defendant is a government agency, use onlythe full name or standard abbreviations. If the plaintiffor defendant is an official within a government agency, identif, first the agency and then the official, givingboth name and title.

(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the timeof filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases,the county of residence of the “defendant” is the location of the tract of land involved.)

(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, notingin this section “(see attachment)”.

H. Jurisdiction. The basis ofjunsdiction is set forth under Rule 8(a), F.R.C.P., which requires that jurisdictions be shown in pleadings. Place an “X” in oneof the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.

United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.

United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an “X” in this box.

Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to theConstitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box1 or 2 should be marked.

Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of thedifferent parties must be checked. (See Section III below; federal question actions take precedence over diversity cases.)

III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this sectionfor each principal party.

IV. Nature of Suit. Place an “X” in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficientto enable the deputy clerk or the statistical clerks in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, selectthe most definitive.

V. Origin. Place an “X” in one of the seven boxes.

Original Proceedings. (1) Cases which originate in the United States district courts.

Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petitionfor removal is granted, check this box.

Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date.

Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date.

Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidjstrictlitigation transfers.

Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this boxis checked, do not check (5) above.

Appeal to District Judge from Magistrate Judgment. (7) Check this box for an appeal from a magistrate judge’s decision.

VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutesunless diversity. Example: U.S. Civil Statute: 47 USC 553

Brief Description: Unauthorized reception of cable service

VII. Requested in Complaint. Class Action. Place an “X” in this box if you are filing a class action under Rule 23, F.R.Cv.P.

Demand. In this space enter the dollar amount (in thousands of dollars) being demanded or indicate other demand such as a preliminary injunction.

Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.

VIII. Related Cases. This section of the JS 44 is used to reference related pending cases if any. If there are related pending cases, insert the docket numbersand the corresponding judge names for such cases.

Date and Attorney Signature. Date and sign the civil cover sheet.
