1. GENERAL DESCRIPTION

Arch Insurance Group offers a policy to various size employers to cover their exposures in these areas: wrongful termination, discrimination, and sexual harassment.

2. CONTACT

Arch Insurance Group

One Liberty Plaza, 53rd Floor

New York, NY 10006

(415) 397-2962

3. UNDERWRITING GUIDELINES

Information not made available.

4. AVAILABILITY OF COVERAGE

Worldwide.

5. LIABILITY

6. LIMITS AND DEDUCTIBLES AVAILABLE.

Limits begin at $1 million/ $2 million and go to $25 million on a primary or excess basis. Claim expenses are included in the limit of liability. Self-insured retentions begin at $2,500.

7. INSURING AGREEMENT.

The policy promises to pay damages the insured incurs as a result of an “employment practices wrongful act.” Payment shall be on a claims made basis on claims that occur during the policy period or an extended reporting period if applicable. Third party liability is also available; it must be shown on the Declaration.

8. DEFINITIONS. The following terms are defined:

A.Application.

B.Claim — any written or oral demand served on the insured that alleges a wrongful employment practice, including civil proceedings including lawsuits, arbitration or alternative dispute resolution; administrative or regulatory proceedings including proceedings before the Equal Employment Opportunity Commission, administrative or regulatory investigation of an insured commenced by the receipt by or service upon any insured of a formal investigative order, or written request to an insured to toll or waive a period of statute of limitations regarding a potential claim. The definition of claim does not include any labor or grievance arbitration, criminal proceedings or investigation, or audit by the Office of Federal Contract Compliance Programs. Claims for the same wrongful act or any interrelated wrongful acts shall be deemed to be a single claim first made on the earliest date that any of such claims commenced, even if before the policy period; proper notice of such wrongful act was given to the insurer, or notice of any fact, circumstance or situation was given under any prior employment practices liability, management liability, or similar liability policy.

C.Claim Manager — any chief executive officer, chief financial officer, member of the in-house risk management or law departments, or director of the human resources department of the named organization, including any functionally equivalent positions.

D.Class Action Claim.

E.Defense costs.

F.Domestic Partner — any person considered to be a domestic partner under any federal, state, or local law or under the provisions of any formal program established by an insured organization.

G.EEOC Charge— any written charge filed by an employee, applicant for employment or independent contract with the Equal Employment Opportunity Commission or any state or local fair employment practices agency.

H.Employee— includes seasonal, full-time, part-time, leased, loaned, and temporary workers as well as volunteers.

I.Employment Practices Wrongful Act— any actual or alleged wrongful dismissal, discharge or termination of employment, discrimination based on age, gender, race, color, origin, religion, sexual preference or orientation, disability, pregnancy, or any other protected status under federal, state or local law, sexual or other workplace harassment, wrongful deprivation of a career opportunity, demotion, breach of any oral, written or implied employment contract or agreement. Also included is retaliation, and violation of the family and medical leave act.

J.Independent Contractor.

K.Insolvency.

L.Insured Organization.

M.Insured Persons— includes any elected or appointed director, officer, trustee, or member of the board of managers or a management committee of an insured organization, any employee, or independent contractor.

N.Insureds—any insured person or organization.

O.Interrelated Wrongful Acts— wrongful acts that have as a common connection any fact, circumstance, situation, event, cause, or series of casually connected facts, circumstances, situations, transactions, or causes.

P.Loss— includes defense costs, damages, settlements, judgments, and pre- and post-judgment interest. Excluded from loss are any fines, penalties, taxes, non-monetary relief, employment related benefits, severance payments, compensation earned or due to a claimant other than back pay or front pay.

Q.Named Organization.

R.Policy Period—is indicated on the declarations page. The policy comes with the option of purchasing an extended reporting period, if the insurer nonrenews or cancels for a reason other than non-payment. The insured must request and pay for the extended reporting period within thirty days after the end of the policy. The insurer covers claims made within the extended reporting period but only for practices that occurred prior to the termination date.

S.Prior EPL Policy—the policy immediately preceding this policy as specified on the declarations page.

T.Retaliation—negative treatment of an employee in response to an employee exercising his rights under workers compensation, Family Medical Leave Act, or Americans with Disabilities leave act; refusing to violate any law; assisting or cooperating with a proceeding or investigation into alleged violations of law; disclosing or threatening to disclose to a superior or to any governmental agency any alleged violations of law or filing any claim under the False Claims Act, Sarbanes-Oxley Act of 2002, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or any similar whistleblower protection law.

U.Subsidiary.

V.Third Party.

W.Third Party Wrongful Act — any actual or alleged discrimination, sexual harassment, or violation of civil rights relating to such discrimination directed against a third party, by any insured person in their capacity as such or with the insured organization.

X.Written Demand.

Y.Wrongful Act — any employment practices or third party wrongful act.

9.SPOUSAL, DOMESTIC PARTNER, ESTATE, AND LEGAL REPRESENTATIVE COVERAGE. The lawful spouse or domestic partner of an insured person, or, upon the death, incapacitation or bankruptcy of an insured person such person's estate, heirs, assigns or legal representatives are covered as long as claims arise out of the person's status as spouse, domestic partner, trustee, beneficiary, heir, assignee or legal representative of such insured person or such person's ownership of property sought as recovery for a wrongful act. Likewise if the insured person is named in such a claim along with such persons or entities, no coverage shall apply to any claim for a wrongful act of such persons or entities.

10.EXTENDED REPORTING PERIOD. An optional extended reporting period is available if the policy is canceled or nonrenewed for any reason other than nonpayment of premium.

11.EXCLUSIONS. The policy does not pay loss:

A.Arising from claims based on or attributable to any fact, situation, or circumstance that was the subject of any notice given under similar insurance.

B.In connection with any claim arising from, based on, or attributable to any written demand, suit, or proceeding made against the insured prior to the prior litigation date listed in the declarations or any wrongful acts described in any such demand, suit or proceeding or any interrelated wrongful acts.

C.For bodily injury, sickness, disease, or death to any person or damage to any property including loss of use. This exclusion does not apply to loss resulting from emotional distress or mental anguish.

D.For violation of workers compensation, Employee Retirement Income Security Act, National Labor Relations Act. Liability imposed under these acts — as well as similar federal, state, or local acts — is not covered.

E.Claims arising from violation of the Fair Labor Standards Act, overtime compensation, minimum wage compensation, classification of employees, meal or rest periods, or other such fair labor provisions.

F.Contractual liability.

G.Third party exclusion. Claims involving price discrimination or violation of anti-trust law or other law designed to protect competition are not paid.

12.LIMIT OF LIABILITY. The maximum aggregate amount of liability is specified in item 4.A of the declarations. When the limit of liability is exhausted, the premium is fully earned. Specific coverage “conditions” are spread throughout the policy. There is also a section of general policy conditions.

The aggregate limit of liability is specified in item 4.B of the declarations. The limit in 4.B. is part of, and not in addition to, the limit listed in item 4.A.

Defense costs are part of and not in addition to each applicable limit of liability.

13. RETENTION. Losses are paid once they have exceeded the retention amount. If a claim is subject to multiple retentions only the largest retention applies. Retention does not apply when insured organizations cannot indemnify because of insolvency.

14.DEFENSE OF CLAIMS.

A.Duty to defend — insureds are to defend any claim provided that the insurer has the right to associate with the insured in the defense of any claim and make any investigation it deems necessary.

B.Advance of defense costs — the insurer shall advance defense costs in excess of the applicable retention upon receipt of written request of the insured, provided the insureds repay the defense costs if it is later determined that they are not covered under the policy.

C.No admission of liability — the insured shall not admit nor assume liability, offer settlement, enter into any settlement agreement, or incur any defense costs without prior written consent of the insurer. The insurer is not liable for any such admission, assumption, or settlement to which it has not agreed to. Insureds may enter into a settlement agreement without prior written consent only when the loss is less than 50% of the applicable retention amount listed in item 5 of the declarations.

D.Settlement amount — the insurer may, with written consent of the insureds, settle any claim for a monetary amount the insurer deems reasonable. If the insured refuses to consent, the insurer shall not pay more than the proposed amount plus defense costs incurred prior to such refusal, and 80% of loss incurred for such claim in excess of the claim made plus defense costs.

E.Cooperation — the insureds shall cooperate with the insurer and provide all information as the insurer may reasonably request.

15.NOTIFICATION OF CLAIM

As soon as any claim manager becomes aware of a claim, notice to the insurer is required as soon as possible but no later than 60 days after the end of the policy period or the end of the extended reporting period, if applicable. If the policy is being cancelled by the insurer for nonpayment of premium, any notice of claim must be made before the termination date.

Notice of wrongful acts that could result in the filing of a claim against the insured is also required. The notice to the insurer must specify the reasons for anticipating the claim, the nature and date of the wrongful act, identity of the insureds involved, injuries or damages sustained, names of potential claimants and manner in which the insureds first became aware of said wrongful act.

16.ALLOCATION

When a claim includes covered and uncovered matters or involves covered and uncovered parties, the insurer and the insured shall allocate the loss based upon the relative legal and financial exposures of a covered or uncovered parties or matters. If a settlement occurs, the allocation is based on the relative benefit of the parties from settlement of covered and uncovered portions of said claim.

If the insured and insurer cannot agree on the amount of defense costs to be paid, the insurer shall advance costs on a current basis of what it believes to be covered under this policy until a different amount is agreed upon or determined.

17.SUBROGATION

The insurer is subrogated to all the insureds rights on recovery; the insured is required to protect such rights for the insurer.

18.OTHER INSURANCE

Other than insurance issued on an insurer duty to defend basis or to any company furnishing leased employees to an insured organization, coverage under this policy is primary. When insurance is as previously described, this policy applies in excess of such other insurance regardless of whether that coverage is described as excess, contributory, contingent or otherwise, unless such other insurance is specifically excess by reference in such other insurance to this policy number.

19.CHANGES IN CONTROL

If the insured merges, consolidates, or is taken over by another entity coverage exists for wrongful acts that occurred before the merger/takeover/consolidation. Written notice to the insurer is required within 90 days of the transaction.

If the insured acquires a subsidiary or merges with another entity and is the surviving entity, the newly created organization is covered for any wrongful act that occurs after the merger, acquisition, or creation. Additional premium may be required.

If an entity ceases to be a subsidiary of the insured, coverage continues until the end of the policy term but only for acts that occurred before the date the entity ceased to be a subsidiary.

20.APPLICATION AND SEVERABILITY

The insured represents that the information on the application is true and correct and the insurer issues the policy based on that information. Misrepresentations made knowingly at the time of the application shall cause coverage not to be afforded.

Knowledge possessed by any insured person is not imputed to another insured person; only knowledge possessed by a chief executive officer, chief financial officer, general counsel or anyone signing the application shall be imputed to the insured organization. The application is incorporated into the policy.

21.SUITS AGAINST THE INSURER

The insured cannot file a suit unless the insured has fully complied with the policy terms and conditions. No person or organization can join the insurer in a claim against the insureds.

22.ENTIRE AGREEMENT, POLICY CHANGES, ASSIGNMENT

The policy includes the declarations, written endorsements, and application. Changes to the policy may be made only by written endorsement issued by the insurer. Assignment of the coverages to another party is not binding unless agreed to by the insurer and acknowledged by written endorsement.

23.NAMED ORGANIZATION'S AUTHORITY

The named organization shall act on behalf of insureds regarding all matters under this policy.

24.CANCELLATION, BANKRUPTCY, NOTICES

The insurer may cancel the policy for nonpayment by sending no less than 10 days notice to the named organization. The named organization may cancel the policy by sending written notice of cancellation to the insurer. Such notice is effective upon date of receipt by the insurer unless a specific date is mentioned in the notice. Bankruptcy of an insured does not relieve the insurer of its obligations for coverage.

Notices to the insured shall be sent to the named organization at the address specified in the declarations page. Notice to the insurer shall be sent to the address specified in the declarations.

25.TITLES, REFERENCES TO LAWS

The titles of the sections in this policy are for reference only and do not constitute coverage. Any statute, code, or act mentioned in the policy shall include all amendments, rules, and regulations under such act, statute, or code. If the policy references similar laws then any similar laws of those mentioned in the policy are included.