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MM01 Intellectual Property Litigation Wording (02/11/06) 1 of 22

Intellectual Property Litigation Insurance Policy Wording Schedule

Policy No:

Assured: Address:

Period of Insurance: From: To: (both dates inclusive)

Cover: Limit of Indemnity any one claim for Professional Fees

Limit of Indemnity any one claim for Damages

Section 1 – Contractual Obligations GBP GBP

Section 2 – Contractual Disputes GBP GBP

Section 3 – First Party Defence GBP GBP

Section 4 – First Party Pursuit GBP GBP

Section 5 – Investigation Costs GBP GBP

Section 6 – Directors’ & Officers’ Liability

GBP GBP

Subject to GBP in the aggregate for all Claims during the Period of

Insurance Excess GBP any one Claim Coinsurance: % any one Claim

Territorial Limits:

Declared Agreements:

Declared Intellectual Property:

Declared Products:

Premium: £ Governing Law: Endorsements: Address for Service of Notices:

Intellectual Property Litigation Insurance Policy Wording


This is a “claims made” Policy and only covers claims notified during the Period of Insurance.

The Assured has provided to us, the Underwriters (“Underwriters”), a completed proposal form which is hereby agreed to be the basis of the contract of insurance evidenced by this Policy and is deemed to be incorporated herein. Receipt of the premium specified in the Schedule by Underwriters is a condition precedent to their liability under this Policy.

Underwriters agree to indemnify the Assured subject to the terms, conditions, limitations and exclusions of this Policy.

A. Definitions

In this Policy, words in the singular shall also include the plural and vice versa and words in the masculine shall also include the feminine. Any word or phrase printed in bold typeface shall have the following meaning:

Action

Any legal action which the Assured has a right to pursue or the defence of any legal action commenced or threatened against the Assured which forms the subject of a Claim in accordance with the terms and conditions of this Policy (including without limitation, any appeal against judgment or decision of a Court or the resisting of such an appeal to which Underwriters have given their prior written approval).

Assured

The individual person or persons, company, partnership, joint venture, firm, trust, association, or organisation named in the Schedule and at the written request of the Assured, Employees (excluding Directors and Officers of Assured unless Directors & Officers Liability cover under Section 6 is taken) while acting on behalf of the Assured.

Circumstance

Any actual or alleged act, omission or other event of which the Assured first becomes aware during the Period of Insurance and within the Territorial Limits, which although has not resulted in an Action, might reasonably be expected to result in an Action at some future date, and includes any communication, formal or informal, which indicates that a third party considers that dealings in a Declared Product requires a licence under its intellectual property rights.

Claim

A request for indemnity made under this Policy by the Assured in respect of an Action that arises in and is subject to a jurisdiction within the Territorial Limits.

All Actions arising out of the same original cause, event or Circumstance shall be regarded as one Claim.



Coinsurance

The amount specified in the Schedule which the Assured must pay in respect of any one Claim accepted under this Policy.

Computer

Any computer or other electronic or data device capable of processing input and producing output, equipment or system, including without limitation any hardware, firmware, software, program, data storage device component utilised or intended to be utilised in or by any such item, or any actual or intended function of or process performed by any of them.

Court

Any formally constructed court of competent jurisdiction or equivalent tribunal (including without limitation, an arbitral tribunal and hearings within national patent or trade mark offices, the World Trade Organisation or the World Intellectual Property Organisation) with authority to deliver legally-binding judgments, awards or orders on the matter at issue within the Territorial Limits, or any formal, arbitration or dispute resolution conducted by an independent professional arbitrator or mediator.

Damages

Any sum payable by the Assured to compensate another party for loss in connection with any Action covered by this Policy (including, but not limited to, any statutory compensation awarded to an Employee in relation to the Declared Intellectual Property, but excluding any Professional Fees and Expenses) which is awarded by a Court (inclusive of any interest) or agreed as part of a settlement approved in writing by Underwriters.

Declared Agreement

Any licence, confidentiality, non-disclosure, marketing or other agreement which controls the exploitation of Declared Intellectual Property or the manufacture, sale, distribution or use of a Declared Product to which the Assured is a party and which has been declared to Underwriters in writing by or on behalf of the Assured either at inception of this Policy or during the Period of Insurance and which Underwriters have accepted and listed in the Schedule.

Declared Intellectual Property

Any or all of the following that have been declared to Underwriters in writing by or on behalf of the Assured either at inception of this Policy or during the Period of Insurance and which Underwriters have accepted and listed in the Schedule:

Patent

Any patent, petty patent or utility model granted to or applied for by the Assured or of which the Assured is an exclusive licensee, which has been filed in a patent office within the Territorial Limits.



Copyright

Any copyright subsisting in a work capable of protection by copyright within the Territorial Limits, of which the Assured is the owner or an exclusive licensee; or

Any work capable of protection by database right within the Territorial Limits of which the Assured is the creator or an exclusive licensee.

Design

Any design registered or applied to be registered in the name of the Assured or of which the Assured is an exclusive licensee, which has been filed with a design registrar within the Territorial Limits; or

Any design right protected by unregistered design right within the Territorial Limits of which the Assured is the owner or an exclusive licensee including any design right in a semiconductor topography.

Mark

Any registered trade or service mark registered or applied to be registered in the name of the Assured or of which the Assured is an exclusive licensee, which has been filed in a trade mark office within the Territorial Limits; or

Any unregistered trade or service mark, brand name, domain name, logo, appellation of origin, device, trade dress or get-up (including, but not limited to, the shape or get-up of a Declared Product) rights within the Territorial Limits of which the Assured is the owner or an exclusive licensee.

Trade Secret

Any information owned by the Assured or of which the Assured is an exclusive licensee and which has been reduced to written legible form, including, but not limited to, a formula, pattern, compilation, program, device, method, technique or process which:

a. derives independent economic value, actual or potential, from not being generally known, and not being readily ascertainable through proper means by other persons who would obtain economic advantage from its disclosure ; and

b. is kept confidential, and not accessible to third parties (save in conditions of confidence); and

c. is used, or intended to be used in commerce (and is so capable of being used) and does not include information which is the subject of a Patent, Design, Copyright, Mark, Domain Name or Miscellaneous Intellectual Property Rights as defined herein.

Domain Name

Any legal rights in a name held by the Assured that identifies one or more Internet protocol addresses and is used in connection with an URL (Uniform Resource Locator) to identify the location of particular Web pages.



Miscellaneous Intellectual Property Rights

Any rights subsisting in a work capable of protection as an intellectual property right (e.g. plant variety rights) within the Territorial Limits of which the Assured is the owner or an exclusive licensee.

Declared Product

Any product of the Assured (including without limitation, any process by which such product is made) which has been declared to Underwriters in writing by or on behalf of the Assured either at inception of this Policy or during the Period of Insurance and which Underwriters have accepted in writing and is listed in the Schedule.

Employee

Any individual who is or was subject to a contract of service or apprenticeship or training scheme with the Assured.

Excess

The amount specified in the Schedule which the Assured must first pay in respect of any one Claim accepted under this Policy before Underwriters become liable to make any payment.

Investigation Costs

Any professional fees, expenses and other disbursements reasonably incurred by the Assured or the Representative with Underwriters’ prior written approval for investigatory work carried out by or on behalf of the Assured to determine whether an Action exists in connection with any Claim under Sections 1 or 3 of Part B of this Policy. Such professional fees, expenses and other disbursements will only be paid on a reimbursement basis providing that an Action is shown to exist and Underwriters have accepted the Claim in writing. Any and all investigation costs paid by Underwriters to the Assured shall be exclusive of any VAT (or any equivalent sales tax) recoverable by the Assured.

Period of Insurance

The period of time in which this Policy will be in force, as specified in the Schedule.

Policy

This policy together with the Schedule and any endorsement, extension or condition agreed between the parties, and any other document expressed to be incorporated by reference. All documents comprising the Policy shall be read together.

Professional Fees and Expenses

Any professional fees, expenses and other disbursements reasonably incurred and charged by the Representative after prior written approval of Underwriters in connection with any Action, including, but not limited, to:

(i) the reasonable fees of expert witnesses (other than those who are Employees of the Assured);



(ii) the reasonable attendance expenses of any other witnesses called by the Representative on behalf of the Assured (other than those who are Employees of the Assured); and

(iii) any reasonable travelling and or subsistence expenses incurred by the Assured.

Any legal costs and disbursements incurred by the opponent in connection with any Action, to the extent that the Assured is held liable by a Court to pay such legal costs and disbursements, or such legal costs and disbursements have been agreed as part of a settlement made with Underwriters prior written approval.

Any and all Professional Fees and Expenses paid by Underwriters to the Assured shall be exclusive of any VAT (or any equivalent sales tax) recoverable by the Assured.

Representative

A lawyer, advocate, barrister, patent or trade mark agent or other appropriately qualified person approved by Underwriters and appointed by the Assured to act on their behalf in accordance with the terms and conditions of this Policy.

Schedule

The schedule attached to and forming part of this Policy.

Territorial Limits

The countries and territories specified in the Schedule.



B. Cover

To the extent the Assured is entitled to cover as specified in the Schedule, Underwriters shall indemnify the Assured for Professional Fees and Expenses, Investigation Costs and Damages resulting from any Action or Circumstance which the Assured first becomes aware of during the Period of Insurance, which is notified to Underwriters in accordance with Section E and which relates to one of the following Sections:-

1. Section 1 - Contractual Obligations

1.1 The indemnification of a third party as a result of any indemnity or hold-harmless provisions granted by the Assured to the third party as a term of a Declared Agreement, solely in respect of an infringement by a Declared Product to the extent that the Assured would be entitled to such indemnification under this Policy.

1.2 The indemnification of a third party as a result of any indemnity or hold-harmless provisions granted by the Assured to the third party as a term of a Declared Agreement, solely in respect of an obligation to pursue actual or alleged third party infringement of Declared Intellectual Property to the extent that the Assured would be entitled to such indemnification under this Policy.

2. Section 2 - Contractual Disputes

2.1 An Action by the Assured against a third party alleging breach of a Declared Agreement due to:

2.1.1 non-payment of licence fees or milestone payments due to the Assured under a Declared Agreement provided such non-payment does not arise from monies due to the Assured which are less than three (3) months in arrears; and

2.1.2 the enforcement of the Assured’s rights in respect of any indemnity or hold-harmless provisions granted to the Assured by the third party as a term of a Declared Agreement provided that the breach by the third party or failure to afford indemnity to the Assured is not a consequence of any earlier or previous breach of the agreement by the Assured.

2.2 An Action brought against the Assured alleging breach of a Declared Agreement by non-payment of licence fees or milestone payments payable by the Assured under the Declared Agreement).

2.3 The prosecution or defence of any counterclaim by the Assured directly relating to an Action in respect of Clauses B.2.1 or B.2.2 above.



3. Section 3 - First Party Defence

3.1 The defence of an Action brought against the Assured alleging:

3.1.1 infringement of another party’s intellectual property by the Assured’s dealings in the Declared Product (including, but not limited to, passing-off or unfair competition) or the Assured’s use or licensing of the Declared Intellectual Property (but excluding any dispute between a licensee or licensor);

3.1.2 unlawful disclosure or use by the Assured of a Trade Secret;

3.1.3. groundless threats of infringement (or a cause of action which the Representative advises is equivalent under the laws of the country in which the Action arises) relating to a communication made in writing by the Assured, following Underwriters’ prior written approval, in respect of any Patent, Design or Mark .

3.2 The defence of an Action which directly threatens the Assured’s rights in or ownership of the Declared Intellectual Property (other than by way of a counter-claim brought against the Assured in response to an Action brought by the Assured) including, but not limited, to:

3.2.1 invalidity, rectification, cancellation or revocation proceedings (where applicable) or applications to amend any register;

3.2.2 applications for post-grant entitlement;

3.2.3. applications for the grant of a compulsory licence, or licence of right;

3.2.4 an application for a declaration of non-infringement;

3.2.5 a claim by an Employee that they have ownership or joint title to the rights or a request for statutory compensation.

3.3 The bringing of any counterclaim by the Assured to an Action in respect of Clauses B.3.1 or B.3.2 above.

4. Section 4 - First Party Pursuit

4.1 An Action brought by the Assured in pursuit of a third party in respect of:

4.1.1 an infringement of the Declared Intellectual Property;

4.1.2 groundless threats of infringement (or a cause of action which the Representative advises is equivalent under the laws of the country in which the Action arises) relating to a written communication to the Assured or another party alleging infringement of any third party Patent, Design or Mark by possession or use of a Declared Product or the Declared Intellectual Property;

4.1.3 passing-off (including, but not limited to unfair competition) in respect of a Declared Product or the Declared Intellectual Property;



4.1.4. unauthorised use or disclosure of a Trade Secret.

4.2 The defence of any counterclaim brought against the Assured directly relating to an Action in respect of Clause B.4.1 above.

5. Section 5 - Investigation Costs

Any professional fees, expenses and other disbursements reasonably incurred by the Assured or the Representative with Underwriters’ prior written approval for investigatory work carried out by or on behalf of the Assured to determine whether an Action exists in connection with any Claim under Sections 1.2 or 4 of Part B of this Policy. Such professional fees, expenses and other disbursements will only be paid on a reimbursement basis providing that an Action is shown to exist and Underwriters have accepted the Claim in writing. Any and all investigation costs paid by Underwriters to the Assured shall be exclusive of any VAT (or any equivalent sales tax) recoverable by the Assured.

6. Section 6 - Directors & Officers Liability

The defence of an Action covered by Section 3 brought against the Directors or Officers of the Assured in respect of infringement by the Assured at the direction of the Director or Officer of third party intellectual property rights by the Declared Products.



C. Limits of Indemnity

The total liability of Underwriters under this Policy shall not exceed the Limits of Indemnity set out in the Schedule.

D. Exclusions

Underwriters shall have no liability under this Policy for:

1. Any Excess payable by the Assured;

2. Any Claim arising from an Action outside the Territorial Limits;

3. Any Claim arising from an Action involving any intellectual property rights, products or agreements which have not been declared to Underwriters, accepted by them and listed in the Schedule.

4. Any fine, penalty, punitive, exemplary or non-compensatory damages;

5. Any Claim arising from an Action between two or more persons named as Assured under this Policy or which is made on behalf of or at the request, direction or assistance of either Assured;

6. Any Claim in respect of which the Assured is entitled to indemnity under any other insurance policy or from any other third party;

7. Any Claim brought about by or contributed to by or consequent upon:

(a) loss or destruction of, or damage to, any property whatsoever or any loss or expense whatsoever resulting or arising from such loss, destruction or damage including without limitation any consequential loss, any loss of profit (whether flowing naturally from a breach or not), anticipated profit, revenues and anticipated savings;

(b) death of or bodily injury to any person; or

(c) breach of any duty owed by the Assured in providing any professional service or as a director or officer; or

(d) defamation, malicious or injurious falsehood;

(e) any liability of whatsoever nature; directly or indirectly caused by or contributed to by or arising from;



(i) ionising radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel;

(ii) the radioactive, toxic, explosive or other hazardous properties of any explosive nuclear assembly or nuclear component thereof.

8. Any Claim arising out of any litigation pending or completed prior to the Period of Insurance;

9. Any Claim based on an Action or circumstances which may lead to an Action of which the Assured was aware prior to the Period of Insurance.

10. Any Claim based on the pursuit of an Action where Assured has knowledge of any prior art which may invalidate the relevant Declared Intellectual Property, or of any published patent specifications the claims of which conflict with the relevant Declared Intellectual Property or a Declared Product;

11. Any Professional Fees and Expenses which, in Underwriters’ sole discretion, are considered to be routine costs incurred in the procurement, prosecution, maintenance or collation of any intellectual property rights or monitoring for infringement of any intellectual property rights, which are not specifically occasioned by an Action for which a Claim could be made under this Policy. Such excluded Professional Fees and Expenses include, but are not limited to, salaries and expenses of the Assured's officers, directors, staff, in-house attorneys and Employees.

12. Any Professional Fees and Expenses arising in respect of an opposition or observation made to any national or international intellectual property office by a third party during or as part of the application or registration process to prevent or reverse the granting of or restrict the scope of the Declared Intellectual Property;

13. Any Investigation Costs, Professional Fees and Expenses, liability for Damages or liability for any security for costs or cross-undertaking in damages or payment into Court incurred prior to Underwriters giving written consent to a Claim or for which Underwriters have not given prior written approval;

14. Any Claim arising from an Action where the Assured

14.1 intentionally, recklessly or knowingly acted in disregard of a third party’s’ intellectual property rights or other civil rights; or

14.2 intentionally or knowingly breached the terms of a Declared Agreement.

15. Any Claim in respect of an Action with any government body, trade regulator or customs authority whether regional, national, state or federal, including, but not limited to, a breach of anti trust, restraint of trade, taxation or trading standards legislation;



16. Any Claim arising from an Action involving the Assured’s actual or alleged dishonesty, fraud, malicious or criminal conduct, unless the Assured is proven innocent of such conduct or the Action is dismissed;

17 Any Claim arising from or as a result of any consequence of any failure of any Computer to recognise or respond to, correctly and effectively, any particular date or period of time (continuous or otherwise).

18 Any Claim involving the Assured's ownership or use of a Domain Name where the Assured did not seek to employ the Internet Corporation for Assigned Names and Numbers (ICANN) dispute resolution procedure or an equivalent domain name dispute resolution procedure, where such dispute resolution procedures are appropriate and available.

19 Any Professional Fees and Expenses or Damages incurred as a result of or for which the Assured is liable under an indemnity or hold harmless provision which is not an obligation under a Declared Agreement.



E. Claims Conditions

1. Conduct

The Assured shall at all times (whether before or after notification of a Circumstance or Action) take reasonable care and will do all things reasonably practicable and prudent to avoid an Action being taken against them and to minimise the amount of damages that may be awarded against them including (but not limited to):

1.1 commissioning an appropriate qualified lawyer or attorney to conduct prior art and prior right searches in the relevant territory in advance of first import manufacture or sale of a Declared Product (or of a substantially modified version of a Declared Product) in a territory; and

1.2 complying with any clearance procedures set out in the proposal form.

and the Assured will ensure that its licensees of Declared Intellectual Property or Declared Products do the same.

2. Notification

2.1 It is a condition precedent to Underwriters’ liability to pay any Claim that the Assured shall give to Underwriters immediate notice in writing of

2.1.1 an Action; or

2.1.2 a Circumstance

as soon as Assured becomes aware of the same.

2.2 Any such notification must be given during the Period of Insurance (or within thirty (30) days after the end of the Period of Insurance). In the event that the Policy is cancelled by Underwriters or the Assured during the Period of Insurance no days of grace will apply, in accordance with Clause F2.

2.3 Where a Circumstance is notified in accordance with clause E2.1 above, then any Action arising out of such Circumstance for which a Claim is subsequently made shall be deemed to have been made at the time written notification was first given to Underwriters.

2.4 The Assured must supply with such notification (or a short time after it) full details of the Action or the Circumstance, including the identity of the potential claimant(s)or defendant(s), a statement regarding how and when the Assured first became aware of it, the facts underlying it, Assured’s assessment of the merits of any potential Action, any potential settlement options or routes and details of any professional advice received by the Assured (including advice by in-house counsel) relating to the Action or Circumstance.



2.5 At the request of Underwriters, the Assured will promptly take and provide to Underwriters, such professional advice as Underwriters may require to properly assess the Action or Circumstance (the cost of such advice to form part of the Professional Fees and Expenses in the event that the claim is accepted). Underwriters may reject any notification under this clause E.2 where Assured fails to comply with Underwriters’ requests.

2.6 The Assured shall promptly and fully give to Underwriters all information regarding such Action or Circumstance as Underwriters may request from time to time (whether before or after a Claim is made) and shall provide updates to Underwriters at least every 3 months (or such shorter period as Underwriters may require).

3. Consent

3.1 Underwriters must have given consent in writing to a Claim before any Claim can be paid. Consent will be given if the Assured can satisfy Underwriters that:

3.1.1 Underwriters have all the information that they need in order to evaluate the Claim; and

3.1.2 there are reasonable grounds and prospects of success for the Action, taking into account the likely Investigation Costs and/or Professional Fees and Expenses incurred in so doing and that a worthwhile result will probably be achieved taking into account the proportionality of all costs likely to be incurred as against the perceived likely result.

3.2 Following acceptance of any Claim in accordance with Clause E. 3.1 Underwriters must provide their consent in writing before any Investigation Costs and/or Professional Fees and Expenses are incurred by the Assured.

3.3 Underwriters have the right to withdraw the consent granted at Clause E.3.1. if:

3.3.1 there are no longer reasonable grounds for continuing the Action;

3.3.2 the Assured acts wrongly or unreasonably in dealing with the Action or otherwise prejudices the Action;

3.3.3 the Representative ceases to represent the Assured in the Action;



3.3.4 the Assured becomes insolvent and is unlikely to receive or retain any benefit by continuing the Action, even if successful. The Assured shall be deemed insolvent upon the appointment in relation to the Assured of a trustee in bankruptcy, receiver, administrator, administrative receiver, liquidator, or equivalent office holder; or if the Assured is unable to pay its debts within the meaning of S.123 Insolvency Act 1986 (or equivalent); becomes subject of a voluntary arrangement; has passed a resolution for its winding up or has anything similar or analogous happen in relation to it.

3.4 If Underwriters do withdraw their consent, they shall, notwithstanding such withdrawal, pay for all Investigation Costs, Professional Fees and Expenses and Damages to which the Assured is entitled under this Policy up to the date of such withdrawal.

3.5 Where a claim is a defence claim of a type set out in clauses B1.1 or B3.1, and the Representative, or other specialist counsel appointed for the purpose by Underwriters, gives an opinion that the ongoing or proposed conduct of Assured or its indemnified party which is the subject of the Action is or will infringe the claimant’s intellectual property rights, Underwriters may by written notice require the Assured to take steps to cease or avoid such infringement to Underwriters’ satisfaction by:

3.5.1 ceasing dealings in the relevant Declared Product;

3.5.2 modifying the Declared Product;

3.5.3 obtaining an appropriate licence; or

3.5.4 taking such other steps as may be agreed

and where the Assured declines or fails to do so then Underwriters shall not be liable under this Policy to indemnify Assured for Damages awarded against Assured or the Assured’s indemnified party in respect of any period after the date of Underwriters’ notice.

3.6 If the Assured withdraws the Claim or ceases or discontinues the Action without Underwriters’ consent, the Assured shall pay all Investigation Costs, Professional Fees and Expenses and Damages that arise in relation to such Action whether arising before or as a result of such decision. Any Investigation Costs and Professional Fees and Expenses paid by Underwriters shall be reimbursed by the Assured.

4. Selection of Representative

Save where clause E6.3 applies:

4.1 After consultation with the Underwriters the Assured must promptly notify Underwriters of the name of the professional advisor they wish to appoint as the Representative in any Action and obtain Underwriters’ consent to the the terms of such appointment.

4.2 Assured shall ensure that the Representative acknowledges that Underwriters will be relying upon the Representative’s advice and



services, and that the Representative owes a commensurate duty of care to the Underwriters.

4.3 If in the course of the Action, the Assured wishes to appoint an alternative Representative to act in the further conduct of the Action, it must first obtain Underwriters’ prior written consent.

4.4 If in the course of the Action, the Representative wishes to instruct counsel, Underwriters’ prior written consent must be obtained (which will not be unreasonably withheld). In order to request such consent, the Representative must submit counsel’s name to Underwriters together with an explanation of the necessity for such action.

5 Obligation to Disclose

5.1 The Representative must be given all information and assistance required in relation to the Action accepted under this Policy. This must include a complete and truthful account of the facts of the case and all relevant documentary and other evidence in the Assured’s power, possession or control (even where such information or evidence constitutes confidential information of the Assured). The Assured must obtain or execute all documents as necessary and attend any meetings or conferences when requested to do so by the Representative.

5.2 Underwriters shall be entitled to obtain from the Representative any information, document or advice relating to the Claim accepted under this Policy, whether or not privileged. Underwriters shall be entitled to request oral or written updates from the Representative at reasonable intervals. On request, the Assured will give any instructions necessary to comply with this clause

5.3 Underwriters shall have the right to make any investigation they deem necessary, including without limitation, any investigation with respect to the statements made in the proposal form or the information supplied by the Assured in connection with the Policy.

6 Conduct of Legal Proceedings

6.1 The Assured must take all reasonable steps to minimise the cost of the Claim, including where appropriate applying for transfer of the Action to a lower Court and assessing the appropriate level of legal representation and, in all cases where the Action is settled in favour of the Assured, to seek to recover from any appropriate third party all Investigation Costs, Professional Fees and Expenses and damages to which the Assured is entitled.

6.2 The Assured or Representative shall seek Underwriters’ consent to key steps in any Action including (but not limited to) issuing, service or entering defence, any non-specific or material interim application or motion to the Court, instruction of expert, or the taking or giving it any deposition.



6.3 If the Action includes any application for Damages brought against the Assured (and cover for Damages is shown as operative in the Schedule), the Assured shall not be required to contest the Action unless a specialist counsel experienced in the subject matter in dispute (to be agreed upon by the Assured and Underwriters or, in default of such agreement, to be appointed by the President of the Law Society) shall advise that on the facts and legal merits of the case the Action should be contested or that a settlement is in the interests of the Assured.

6.4 If the Action includes any application for Damages brought against the Assured or a third party indemnified by the Assured (and cover for Damages is shown as operative in the Schedule), Underwriters shall be entitled to select the Representative and to have conduct and absolute control of the Action and its settlement using where necessary the name of the Assured or the indemnified third party.

7. Appeal Procedure

If the Assured wishes to appeal against the decision of a Court, Underwriters’ prior written consent must first be obtained. In order to obtain such consent, the Assured must submit reasons to Underwriters as soon as possible, allowing sufficient time for Underwriters to consider granting consent. The Assured will be informed of Underwriters’ decision as soon as reasonably practicable and in any event before the date for submission of the notice of appeal. If consent is given, the Assured must co-operate with Underwriters in the conduct of the appeal.

8. Settlement

8.1 The Assured must advise Underwriters immediately of any third party offer to settle the Action whether made verbally or in writing or of any payment into Court or any verbal or written offer made by the Assured or their Representative to settle the action to include, but not limited to, “without prejudice” correspondence and payments into Court and shall obtain Underwriters’ prior written consent to any proposed response to such offer.

8.2 The Assured must not make any offer, or counter-offer, to settle any Action or enter into any agreement to settle any Action without Underwriters’ prior written consent.

8.3 Assured will permit Underwriters’ representatives to participate in any settlement discussions where Underwriters, acting reasonably, consider it appropriate to do so.

8.4 Underwriters may withdraw consent granted at clause E.3.1 if the Assured refuses to accept any third party offer to settle the Action or accept any payment into Court which is recommended by the Representative or Underwriters;



9. Representative’s Costs

Copies of all legal cost bills relating to the Action which the Assured receives from the Representative must be forwarded to Underwriters without delay. Assured will instruct the Representative to provide such supporting details (such as copies of disbursement invoices and timesheets) as they may require. Underwriters may decline to reimburse fees which they consider to have been unreasonably incurred or incurred without Underwriters’ consent. If requested by Underwriters, the Assured must ask the Representative to submit such legal cost bill for costs assessment or certification by the Law Society, Court or other professional body as appropriate. Although the Assured is responsible for payment of all Investigation Costs and Professional Fees and Expenses, Underwriters will settle these direct if requested provided that the legal cost bills are certified by the Assured to the effect that such Investigation Costs and Professional Fees and Expenses have been properly incurred. Any payments made shall be deemed to be made on account, fully reserving Underwriters rights to have the Representative’s costs assessed at conclusion of the case or at the point of Underwriter’s liability ceasing, whichever shall be the sooner.

10. Reimbursement

10.1 The Assured shall use best endeavours to secure an award of costs or damages in favour of the Assured in connection with any Court judgment or other settlement. Following an award to the Assured of costs or damages of any nature, or an agreed settlement in favour of the Assured, the Assured shall procure prompt reimbursement (up to the amount of such award or settlement) to Underwriters of any Investigation Costs, Professional Fees and Expenses or damages which Underwriters have paid or have an obligation to pay under this Policy.

10.2 Underwriters shall not seek to recover any sum in excess of their obligation in respect of Investigation Costs and Professional Fees and Expenses or any sum in excess of the amount of any judgment, award, order, costs, damages or settlement received by the Assured. If Underwriters have not yet been asked to pay such Investigation Costs and Professional Fees and Expenses, but would be obligated to pay such Investigation Costs and Professional Fees and Expenses, the amount of Investigation Costs and Professional Fees and Expenses shall be reduced by the Assured's reimbursement obligations hereunder.

10.3 Notwithstanding the above, Underwriters shall have a lien on any award, order, costs, damages or settlement due to the Assured to recover the Investigation Costs and Professional Fees and Expenses paid or payable under this Policy. Underwriters’ lien shall also extend to any income received or receivable by the Assured after the date of settlement or award where such payments are due from the third party against whom the relevant action was taken and are attributable directly or indirectly to such Action. The Assured shall ensure that its licensees, licensors and secured creditors consent to the terms of this clause.



11. Third party indemnities

The indemnification in Section B1 is conditional upon the indemnified third party observing, fulfilling and being subject to the terms, limitations, exclusions and conditions of this Policy as though they were the Assured.

12. Claims Sunset

It is a condition of this Policy that should an Action or Circumstance that has been notified to Underwriters under Section E2 of this Policy not be progressed to any material extent after three years from the date of notification or date of last notified position then such Claim or Circumstance shall be deemed to be closed and Underwriters will not be liable to indemnify the Assured for Professional Fees and Expenses and/or Investigation Costs resulting from any action that may arise from the Claim or Circumstance except where such Action is required in the U.S.A. or Canada then the period shall be two years. Upon written request by Assured prior to the expiry of such period, Underwriters may extend such period and shall not unreasonably refuse to do so where Assured demonstrates, based on professional legal advice, good reasons for the lack of progress.



F. General Conditions

1. Underwriters’ Liability

Underwriters’ liability under any and all contracts of insurance evidenced or deemed to be evidenced by this Policy shall be the liability specified in this Policy as applicable to any one such contract and shall not (save as so specified) be varied or deemed varied by virtue of the number or type of persons named as Assured or the number or type of Claims under this Policy.

2. Cancellation

2.1 This Policy may be cancelled at any time at the request of the Assured in writing to Underwriters (provided that there has been no Claim made, or any notification of any Circumstance which may give rise to a Claim under this Policy) and on receipt of such a request, the premium paid by the Assured shall be adjusted on the basis of Underwriters receiving or retaining a short rate premium which shall be determined by Underwriters. Underwriter’s liability will cease immediately upon cancellation and there will be no days of grace for notification of Claims or Circumstances.

2.2 This Policy may also be cancelled by or on behalf of Underwriters on expiry of 30 days’ written notice to the Assured (or the Assured’s agent) and in such event the premium paid by the Assured shall be adjusted on the basis of Underwriters receiving or retaining pro rata premium in respect of the expired Period of Insurance. Underwriter’s liability will cease immediately upon cancellation and there will be no days of grace for notification of Claims or Circumstances.

3. Fraudulent Claims

If the Assured makes any Claim under this Policy knowing it to be fraudulent or false in any respect (or in circumstances where it ought reasonably to be known) or where there is collusion between the parties to the Action, this Policy shall become void, any premium paid for the Policy shall be forfeited and no payment shall be made under this Policy in respect of any Claim.

4. Dispute Resolution

4.1 In the event of a question or difference arising between Underwriters and the Assured concerning the construction, meaning or extent of this Policy or any dispute arising out of or in connection with this Policy (including as to whether there are reasonable grounds in an Action), shall be referred to and finally resolved by arbitration under the Rules of the LCIA (London Court of International Arbitration) which rules are deemed to be incorporated by reference into this Clause.

4.2 The number of arbitrators shall be one. The place of the arbitration shall be London and the language to be used in the arbitral proceedings shall be English.



4.3 If the difference relates to the refusal or withdrawal of consent by Underwriters under Clause E.3.1 or E.3.3 and the arbitrator’s decision is in favour of the Assured, Underwriters shall give or maintain consent under Clause E.3.1 or E.3.3 and shall pay the costs of the arbitration. Underwriters rights under Clause E.3.3 shall continue notwithstanding any decision in any previous arbitration.

4.4 If the arbitrator’s decision is in favour of Underwriters, Underwriters shall refuse or withdraw consent and the cost of the arbitration (including the costs of the Representative) shall be borne by the Assured.

4.5 If the difference or question relates to any other matter under this Policy, the costs of the arbitration shall be borne by the parties in such proportion as may be determined by the arbitrator.

4.6 Nothing in this Clause shall prevent either party from having recourse to a court of competent jurisdiction for the sole purpose of seeking a preliminary injunction or such other provisional judicial relief as it considers necessary to avoid irreparable damage. In the event that either party resorts to litigation pursuant to this provision, the English courts shall have exclusive jurisdiction.

5. Assignment

The Assured’s rights under this Policy may not be assigned without Underwriters’ prior written agreement, such agreement not to be unreasonably withheld.

6. Notices

Notice under this Policy shall be deemed given:

6.1 to Underwriters if sent by first class prepaid post to The Broker and Adress given in the Schedule or to such other address as has been notified to the Assured for this purpose from time to time;

6.2 to the Assured or any other person if sent by post to his last known address.

7. Governing Law

This Policy shall be governed by English law, unless agreed otherwise by the Assured and Underwriters and is stated in the Schedule.

8. Subrogation

In the event of any payment by Underwriters under this Policy, Underwriters shall be subrogated to all of the Assured's rights of recovery therefore against any person or entity, and the Assured shall execute and deliver all instruments and papers and do whatever else is necessary to secure such rights for Underwriters. Furthermore, the Assured shall do nothing to prejudice such rights at any time. Any amount recovered in excess of Underwriters' total payment shall be paid to the Assured, less the cost to Underwriters of recovery. Where Assured has contributed to such payments through its Coinsurance obligation any sums recovered and costs of recovery shall be attributed between Underwriters and



Assured proportionately.

9. Severability

In the event any of the provisions of this Policy are deemed to be contrary to any applicable law, such provisions shall be deemed to be reformed so as to conform to such law. The provisions in this Policy are severable, and the voiding or unenforceability of any provision by operation of law shall not void the entire Policy, but only such provision.

10. Allocation

If there are multiple Actions constituting one Claim, and if one or more, but not all of the Actions are not covered by this Policy, in whole or in part, the Assured and Underwriters shall use their best efforts to fairly and reasonably allocate Investigation Costs and Professional Fees and Expenses (and any Damages) between such Actions. If the Assured and Underwriters are unable to agree upon such an allocation, then their dispute shall be subject to dispute resolution pursuant to Clause F.4. In such dispute resolution, no presumption shall exist as to what is a fair and reasonable allocation. Furthermore, if the Assured and Underwriters are unable to agree upon such an allocation, Underwriters shall advance Investigation Costs and Professional Fees and Expenses (and any Damages) on behalf of the Assured in the proportion that Underwriters believe to be proper until a different allocation is agreed upon by the Assured and Underwriters, or is determined through dispute resolution pursuant to Clause F.4. Any such allocation agreed to or determined by dispute resolution shall be applied retroactively to all Investigation Costs and Professional Fees and Expenses (and any Damages) paid with respect to the Claim, notwithstanding any prior advancement to the contrary. Any advancement of Investigation Costs and Professional Fees and Expenses (and any Damages) shall not apply to or create any presumption with respect to the allocation of Investigation Costs and Professional Fees and Expenses (and any Damages) on account of any other Claim.



Notice To The Assured

If at any time you have any query or complaint regarding your contract of insurance, you should in the first instance refer to your insurance broker or other intermediary or advisor, if any.

If you are not satisfied with the way a complaint had been dealt with, you may refer it to the Complaints and Advisory Department, Lloyd’s, One Lime Street, London, EC3M 7HA, (telephone 0207 327 1000).

If you have a complaint concerning an insurance broker, registered in accordance with Insurance Brokers (Registration Act) 1977, you may refer it to the General Insurance Standards Council, 110 Cannon Street, London. EC4N 6EU (telephone 020 7648 7800).

If you pursue your query or complaint with any of the persons or bodies mentioned above, this will not affect your right to have recourse to legal action or any other remedy open to you.

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