SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR

Transcription

1 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Filing at a Glance Company: Product Name: State: TOI: Sub-TOI: Filing Type: National Specialty Insurance Company Hi-Tech Initial Filing California 05.0 CMP Liability and Non-Liability Commercial Package New Program Date Submitted: 04/26/2017 SERFF Tr Num: SERFF Status: State Tr Num: State Status: Co Tr Num: Effective Date Requested (New): Effective Date Requested (Renewal): Author(s): Reviewer(s): STNA Closed-Approved Approved NSIC-CA-HITECH-CMP-0417FR 07/01/ /01/2017 Donna Stokes Disposition Date: 12/01/2017 Disposition Status: Effective Date (New): Effective Date (Renewal): Leo Tam (primary), Neruka Okpara Approved This filing was provided as part of The California Insurance ADVISOR or call PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

2 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR General Information Project Name: Project Number: NSIC-CA-CMP-0417FR Reference Organization: Reference Title: Filing Status Changed: 12/01/2017 Status of Filing in Domicile: Authorized Domicile Status Comments: Reference Number: Advisory Org. Circular: State Status Changed: 12/01/2017 Deemer Date: 07/04/2017 Created By: Donna Stokes Corresponding Filing Tracking Number: STNA Filing Description: Submitted By: Donna Stokes National Specialty Insurance Company is authorized to write commercial lines insurance in you state. Attached is a Filing Authorization Letter authorizing Donna Stokes to submit this filing on behalf of National Specialty Insurance Company (hereinafter referred to as the company). This is a re-submission of STNA Please direct all correspondence regarding this filing to Donna. At this time we are filing our initial filing for the Hi-Tech Program, which will insure electronic industry/precision manufacturing entities. The companion auto filing is submitted under STNA The policies will be written in conjunction with the attached rate and rule manual. (NSIC-CA-Hi-Tech 0115) and include rates based on: Property Our independent manual, which begins with AAIS COP base rates. GL ISO loss costs with our LCM and independent manual IM both AAIS (EDP) and ISO (signs accts rec, valuable papers/records and misc noc) with our LCM The company respectfully requests that the filing be effective July 1, 2017 or the earliest effective date acceptable to the department. Company and Contact Filing Contact Information Donna Stokes, Compliance Analyst Meadowbrook Insurance American Drive Southfield, MI Filing Company Information National Specialty Insurance Company 1900 L. Don Dodson Drive Bedford, TX (800) ext. [Phone] donna.stokes@meadowbrook.com [Phone] CoCode: Group Code: 93 Group Name: State National Companies FEIN Number: State of Domicile: Texas Company Type: Property & Casualty State ID Number: Filing Fees Fee Required? Retaliatory? No No PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

3 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Fee Explanation: State Specific Variance Requested? (Yes/No): No PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

4 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Correspondence Summary Dispositions Status Created By Created On Date Submitted Approved Neruka Okpara 12/01/ /01/2017 Objection Letters and Response Letters Objection Letters Response Letters Status Created By Created On Date Submitted Responded By Created On Date Submitted Respond Neruka Okpara 08/04/ /04/2017 Donna Stokes 11/20/ /20/2017 immediately Respond Leo Tam 06/06/ /07/2017 Donna Stokes 06/13/ /13/2017 immediately Respond Leo Tam 06/06/ /06/2017 Donna Stokes 06/13/ /13/2017 immediately Respond immediately Leo Tam 05/19/ /19/2017 Donna Stokes 05/23/ /23/2017 Amendments Schedule Schedule Item Name Created By Created On Date Submitted Supporting Revised Prior Approval Rate Template Donna Stokes 06/20/ /20/2017 Document Filing Notes Subject Note Type Created By Created On Date Submitted Waiver of Deemer Note To Reviewer Donna Stokes 06/28/ /28/2017 Waiver of Deemer Request Note To Filer Leo Tam 06/28/ /28/2017 Status Note To Filer Leo Tam 06/27/ /27/2017 Request for an extension Note To Reviewer Donna Stokes 06/15/ /15/2017 Guidance requested Note To Reviewer Donna Stokes 06/08/ /08/2017 PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

5 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Disposition Disposition Date: 12/01/2017 Effective Date (New): Effective Date (Renewal): Status: Approved Comment: Only the changes specifically indicated in the application set forth above, as it may have been amended, are approved. Nothing in this letter shall constitute approval of any other application, whether incorporated by reference, or filed prior or subsequent to the application set forth above. The insurer shall begin issuing policies pursuant to this approval within 90 days of the date of this approval, provided that the insurer is licensed in California to transact the line of insurance for which the approval is given. The insurer may implement this approval earlier if it is able to do so. Regardless of the implementation date, the insurer shall implement this approval with the same effective date for both new and renewal business and shall offer this product to all eligible applicants as of the implementation date. This approval shall continue to have full force and effect until such time as a subsequent change for the referenced lines or programs may be approved or ordered by the Insurance Commissioner. If the approved rate change is different than originally submitted, please be reminded that you must submit copies of rate pages at the approved level within 30 days. If any portion of the application or related documentation conflicts with California law, that portion is specifically not approved. Policy forms and underwriting guidelines included in this filing were reviewed only insofar as they relate to rates contained in this filing or currently on file with the California Department of Insurance. This approval does not constitute an approval of underwriting guidelines nor the specific language, coverages, terms, covenants and conditions contained in any forms, or the forms themselves. The Commissioner may at any time take any action allowed by law if he determines that any underwriting guidelines, forms or procedures for application of rates, or any other portions of the application conflict with any applicable laws or regulations. Company Name: National Specialty Insurance Company Overall % Indicated Change: Overall % Rate Impact: Written Premium Change for this Program: Number of Policy Holders Affected for this Program: Written Premium for this Program: Maximum % Change (where req'd): Minimum % Change (where req'd): % % % % Schedule Schedule Item Schedule Item Status Public Access Supporting Document (revised) New Prior Approval Rate Application Yes Supporting Document Filing Authorization Letter Yes Supporting Document Underwriting Guidelines Yes PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

6 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Schedule Schedule Item Schedule Item Status Public Access Supporting Document Bureau Adoption Information Yes Supporting Document Actuarial Memorandum Yes Supporting Document Exhibit 16 Yes Supporting Document Loss Costs Yes Supporting Document AAIS Yes Supporting Document Revised Prior Approval Rate Template Yes Supporting Document New Prior Approval Rate Application Yes Form (revised) Commercial Lines Jacket Yes Form Commercial Lines Jacket Yes Form PREMIUM INSTALLMENT NOTICE Yes Form CALIFORNIA IMPORTANT NOTICE Yes Form IDENTITY RECOVERY COVERAGE Yes Form POLICYHOLDER NOTICE - CALIFORNIA INSURANCE Yes GUARANTEE ASSOCIATION (CIGA) SURCHARGE Form COMMERCIAL LINES POLICY COMMON POLICY Yes DECLARATIONS Form COMMERCIAL HI-TECH PRECISION Yes MANUFACTURING PROGRAM COMMON DECLARATIONS Form POLICYHOLDER DISCLOSURE NOTICE TERRORISM Yes INSURANCE COVERAGE ELECTION - REJECTION Form COMMERCIAL INLAND MARINE DECLARATIONS Yes Form HI-TECH/PRECISION MANUFACTURING PROGRAM Yes INCOME COVERAGE PART Form HI-TECH/PRECISION MANUFACTURING PROGRAM Yes EXTRA EXPENSE COVERAGE PART Form HI-TECH/PRECISION MANUFACTURING PROGRAM Yes PROPERTY COVERAGE PART Form WELFARE AND PENSION PLAN ERISA COMPLIANCE Yes ENDORSEMENT Form LEGAL LIABILITY COVERAGE ENDORSEMENT Yes Form CALIFORNIA FUNGI OR BACTERIA EXCLUSION Yes ENDORSEMENT Form CGL SPECIAL BROADENING ENDORSEMENT Yes Form NON-OWNED AND HIRED AUTO LIABILITY Yes PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

7 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Schedule Schedule Item Schedule Item Status Public Access Form COMMERCIAL GENERAL LIABILITY DECLARATIONS Yes Form EMPLOYEE BENEFITS LIABILITY COVERAGE Yes Form Commercial Lines Policy Jacket Yes Rate (revised) NSIC-CA-HiTech 0115 Yes Rate NSIC-CA-HiTech 0115 Yes Rate NSIC-CA-HiTech 1117 Yes PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

8 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Objection Letter Objection Letter Status Respond immediately Objection Letter Date 08/04/2017 Submitted Date 08/04/2017 Respond By Date Dear Donna Stokes, Introduction: CMP - Liability: The Department is not unaware that filling is a new program, and therefore data are projections. However, the Template for Hi Tech - Liability shows highly inadequate rate based on projections. Therefore, revised projections are required. Why would National Specialty Insurance Company write exposure with projected $918,427 earned premium but combined projected loss and DCCEs of $1,412,170? Conclusion: Sincerely, Neruka Okpara PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

9 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Objection Letter Objection Letter Status Respond immediately Objection Letter Date 06/06/2017 Submitted Date 06/07/2017 Respond By Date 06/13/2017 Dear Donna Stokes, Introduction: Page 9 and Form Schedule tab I have trouble locating policy forms (coverage part) in connection with GL, IM, property. The coverage part to which the endorsements are attached was not provided with the filing, such as Commercial General Liability Coverage Form. I counted there are 19 forms in the Form tab and on Page 9. LCM Rate Template I do not find the LCM templates linked to the proposed LCMs {1.485, 1.399, 1.404?} for GL, IM, and property respectively. Would you please follow it up? Thank you. Conclusion: Sincerely, Leo Tam PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

10 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Objection Letter Objection Letter Status Respond immediately Objection Letter Date 06/06/2017 Submitted Date 06/06/2017 Respond By Date 06/13/2017 Dear Donna Stokes, Introduction: Please clarify AAIS manual rates and rules as to whether rates or loss costs. On the bottom of Page 20, it shows that, LCM of applies to convert the published loss costs to final charges. You need to demonstrate company LCM via our Rate Template. I see there're three proposed LCMs in this filing. Thank you. Conclusion: Sincerely, Leo Tam PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

11 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Objection Letter Objection Letter Status Respond immediately Objection Letter Date 05/19/2017 Submitted Date 05/19/2017 Respond By Date 05/26/2017 Dear Donna Stokes, Introduction: Please provide support documentations (approved CDI file #s - rates or loss costs) related to the use of advisory organization materials, as follows: (1) property, GL, and IM (2) AAIS and ISO (3) independent manual Thank you. Conclusion: Sincerely, Leo Tam PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

12 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Response Letter Response Letter Status Submitted to State Response Letter Date 11/20/2017 Submitted Date 11/20/2017 Dear Leo Tam, Introduction: Good morning, Response 1 Comments: Please see the revised Prior Approval Rate Application and Prior Approval Rate Template attached. Changed Items: Supporting Document Schedule Item Changes Satisfied - Item: New Prior Approval Rate Application Comments: PPA - CMP Signature Page.pdf Rate Template_Ed Package.pdf Attachment(s): PriorAppRateAPL_Ed Hi Tech - Package.xls Rate Template_Ed Package.xls PriorAppRateAPL_Ed Hi Tech - Package.pdf Previous Version Satisfied - Item: New Prior Approval Rate Application Comments: Copy of PriorAppRateAPL_Ed Hi Tech - Package.pdf Copy of PriorAppRateAPL_Ed Hi Tech - Package.xlsm Attachment(s): Copy of Prior-Approval-Rate-Template-Edition Hi Tech - Package.pdf Copy of Prior-Approval-Rate-Template-Edition Hi Tech - Package.xlsm PPA - CMP Signature Page.pdf PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

13 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Form Schedule Item Changes Item No. Form Name 1 Commercial Lines Jacket Previous Version 1 Commercial Lines Jacket 2 Commercial Lines Policy Jacket Form Number Edition Date Form Type Form Action Action Specific Data JCL (NS) PCF Withdrawn Previous Filing Number: Replace d Form Number: Readability Score Attachments Submitted Date Submitted: 11/20/2017 By: Donna Stokes JCL (NS) PCF New JCL Date Submitted: (NS) Coml Lines Jacket - NSIC (new 04/26/2017 By: Donna Stokes Secretary).pdf JCL (NS) PCF New JCL (NS) Commercial Lines Policy Jacket.pdf Date Submitted: 11/20/2017 By: Donna Stokes Rate Schedule Item Changes Item Previous State Filing No. Exhibit Name Rule # or Page # Rate Action Number Date Submitted 1 NSIC-CA-HiTech 0115 Withdrawn 11/20/2017 By: Donna Stokes Previous Version 1 NSIC-CA-HiTech 0115 New 04/26/2017 By: Donna Stokes 2 NSIC-CA-HiTech 1117 New 11/20/2017 By: Donna Stokes Conclusion: We are also attached a revised manual to this filing. The manual was submitted and approved in monoline filing CD1 # Please let me know if you have any questions. Thank you. Sincerely, Donna Stokes PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

14 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Response Letter Response Letter Status Submitted to State Response Letter Date 06/13/2017 Submitted Date 06/13/2017 Dear Leo Tam, Introduction: Response 1 Comments: Please see the filing note attached. Changed Items: No Supporting Documents changed. No Form Schedule items changed. No Rate/Rule Schedule items changed. Conclusion: Sincerely, Donna Stokes PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

15 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Response Letter Response Letter Status Submitted to State Response Letter Date 06/13/2017 Submitted Date 06/13/2017 Dear Leo Tam, Introduction: Response 1 Comments: Please see the filing note attached. Changed Items: No Supporting Documents changed. No Form Schedule items changed. No Rate/Rule Schedule items changed. Conclusion: Sincerely, Donna Stokes PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

16 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Response Letter Response Letter Status Submitted to State Response Letter Date 05/23/2017 Submitted Date 05/23/2017 Dear Leo Tam, Introduction: Good day, This is in response to your objection dated 05/19/17. Response 1 Comments: Please see the Loss Costs attached under the Supporting Documentation tab. Changed Items: Supporting Document Schedule Item Changes Satisfied - Item: Loss Costs Comments: Attachment(s): GL Loss Costs.pdf IM Loss Costs.pdf Supporting Document Schedule Item Changes Satisfied - Item: Loss Costs Comments: Attachment(s): GL Loss Costs.pdf IM Loss Costs.pdf Satisfied - Item: Comments: Attachment(s): AAIS CA COP FE List.pdf No Form Schedule items changed. No Rate/Rule Schedule items changed. PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

17 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Conclusion: Please let me know if you have any questions. Thank you. Sincerely, Donna Stokes PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

18 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Amendment Letter Submitted Date: 06/20/2017 Comments: Please see the revised Prior Approval Rate Template attached under the Supporting Documentation tab. Changed Items: No Form Schedule Items Changed. No Rate Schedule Items Changed. Supporting Document Schedule Item Changes Satisfied - Item: Revised Prior Approval Rate Template Comments: Attachment(s): Copy of Prior-Approval-Rate-Template-Edition Hi Tech - Package.xlsm Copy of Prior-Approval-Rate-Template-Edition Hi Tech - Package.pdf PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

19 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Note To Reviewer Created By: Donna Stokes on 06/28/ :36 PM Last Edited By: Donna Stokes Submitted On: 06/28/ :36 PM Subject: Waiver of Deemer Comments: Regarding the above-referenced rate application, National Specialty Insurance Company ("applicant") hereby waives all deemer provisions of California Insurance Code Section , specifically, the 60-day deemer and the 180-day deemer. If the applicant wishes to reactivate the deemer provisions, the applicant will make its request in writing to the Department of Insurance Rate Filing Bureau, Los Angeles, California. Upon reactivation, the 60-day deemer will resume five days after the Department's receipt of the applicant's request to reactivate the deemer, on day 54, and the 180-day deemer will resume five days after the Department's receipt of the applicant's request to reactivate the deemer, on day 63. PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

20 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Note To Filer Created By: Leo Tam on 06/28/ :15 PM Last Edited By: Leo Tam Submitted On: 06/28/ :15 PM Subject: Waiver of Deemer Request Comments: Our records indicate that the deemer date for this filing is July 04,2017. In order for us to complete our review, we request a waiver of the deemer. We ask that National Specialty Insurance Company submits a SERFF note with the wording below to waive the deemer provisions: Regarding the above-referenced rate application, National Specialty Insurance Company ("applicant") hereby waives all deemer provisions of California Insurance Code Section , specifically, the 60-day deemer and the 180-day deemer. If the applicant wishes to reactivate the deemer provisions, the applicant will make its request in writing to the Department of Insurance Rate Filing Bureau, Los Angeles, California. Upon reactivation, the 60-day deemer will resume five days after the Department's receipt of the applicant's request to reactivate the deemer, on day 54, and the 180-day deemer will resume five days after the Department's receipt of the applicant's request to reactivate the deemer, on day 63. PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

21 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Note To Filer Created By: Leo Tam on 06/27/ :49 PM Last Edited By: Leo Tam Submitted On: 06/27/ :49 PM Subject: Status Comments: Good afternoon, I am in review of your responses starting today. Thank you. PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

22 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Note To Reviewer Created By: Donna Stokes on 06/15/ :00 AM Last Edited By: Donna Stokes Submitted On: 06/15/ :00 AM Subject: Request for an extension Comments: We are in the process of answering your objections. We would like to have an extension of response time. Thank you. PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

23 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Note To Reviewer Created By: Donna Stokes on 06/08/ :55 AM Last Edited By: Donna Stokes Submitted On: 06/08/ :55 AM Subject: Guidance requested Comments: Hello, We would like to respond to your objection but we are running into issues. We filed Property, Liability and Inland Marine on one iteration of the template. This involved combining the premium, exposure, loss (historic and DCCE) into one lump record and calling it "Commercial Multi-Peril combined". However, in order to put together the exhibit 8.1, we are running into some issues: 1. The template only allows for one CDI number to be selected. 2. Property is independently rated, so there is no CDI number of associated load, and as such it would be inappropriate to fill out this form for General Liability, Property and Inland Marine together. 3. While we can create groups, there are only two options: Commercial Multi Peril (Liability) and Commercial Multi Peril (non- Liability). Can you provide some guidance on the best way to proceed? We can resubmit three separate applications, one for General Liability, one for Property and one for Inland Marine. Will the DOI find issue with 3 Rate Templates and only one Rate Application? Any ideas on best practices for moving forward would be greatly appreciated. Thank you. PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

24 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Form Schedule Item Schedule Item Form Form Edition No. Status Name Number Date Type Action Data 1 Commercial Lines Jacket JCL (NS) PCF Withdrawn Previous Filing Number: Replaced Form Number: 2 PREMIUM INSTALLMENT NOTICE 3 CALIFORNIA IMPORTANT NOTICE 4 IDENTITY RECOVERY COVERAGE 5 POLICYHOLDER NOTICE PN CALIFORNIA 04 INSURANCE GUARANTEE ASSOCIATION (CIGA) SURCHARGE 6 COMMERCIAL LINES POLICY COMMON POLICY DECLARATIONS 7 COMMERCIAL HI-TECH PRECISION MANUFACTURING PROGRAM COMMON DECLARATIONS 8 POLICYHOLDER DISCLOSURE NOTICE TERRORISM INSURANCE COVERAGE ELECTION - REJECTION Form Form Action Specific Readability Score Attachments NO DSC New 3919 NO 1100 Premium Installment Notice.pdf 4521 NO 0913 DSC New 4521 NO 0913 California Important Notice (Complaints) (NSIC).pdf IL END New 4528 IL 0306 Identity Recovery Coverage.pdf 1201 DSC New PN California CIGA Notice.pdf 2015 ML 0913 DEC New 2015 ML 0913 Commercial Lines Policy Common Policy Declarations (NSIC).pdf 2187 CP 0913 DEC New 2187 CP 0913 Hi-Tech Common Declarations.pdf PC NO DSC New PC NO PH Disclosure Notice Terrorism.pdf PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

25 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Item Schedule Item Form No. Status Name 9 COMMERCIAL INLAND MARINE DECLARATIONS 10 HI-TECH/PRECISION MANUFACTURING PROGRAM INCOME COVERAGE PART 11 HI-TECH/PRECISION MANUFACTURING PROGRAM EXTRA EXPENSE COVERAGE PART 12 HI-TECH/PRECISION MANUFACTURING PROGRAM PROPERTY COVERAGE PART 13 WELFARE AND PENSION PLAN ERISA COMPLIANCE ENDORSEMENT 14 LEGAL LIABILITY COVERAGE ENDORSEMENT 15 CALIFORNIA FUNGI OR BACTERIA EXCLUSION ENDORSEMENT 16 CGL SPECIAL BROADENING ENDORSEMENT Form Edition Form Form Action Specific Readability Number Date Type Action Data Score Attachments 2626 IM 0913 DEC New 2626 IM 0913 Commercial Inland Marine Declarations (NSIC).pdf CP PCF New 2184 CP 0999 Income Coverage Part.pdf CP PCF New 2185 CP 0999 Extra Expense Coverage Part.pdf CP PCF New 2186 CP 0100 Property Coverage Part.pdf CP END New 2188 CP 0999 Welfare and Pension Plan ERISA Compliance Endorsement.pdf CP END New 2189 CP 0999 Legal Liability Coverage Endorsement.pdf GL END New 4121 GL 1002 California Fungi or Bacteria Exclusion Endorsement.pdf 2197 GL 0113 END New 2197 GL 0113 CGL Special Broadening Endorsement.pdf PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

26 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Item Schedule Item Form No. Status Name 17 NON-OWNED AND HIRED AUTO LIABILITY 18 COMMERCIAL GENERAL LIABILITY DECLARATIONS 19 EMPLOYEE BENEFITS LIABILITY COVERAGE 20 Commercial Lines Policy Jacket Form Edition Form Form Action Specific Readability Number Date Type Action Data Score Attachments GL END New 2986 GL 0299 Non-Owned and Hired Auto Liability.pdf GL DEC New 2014 GL 0101 Commercial General Liability Declarations.pdf GL END New 3444 GL 0399 Employee Benefits Liability Coverage.pdf JCL (NS) PCF New JCL (NS) Commercial Lines Policy Jacket.pdf Form Type Legend: ABE Application/Binder/Enrollment ADV Advertising BND Bond CER Certificate CNR Canc/NonRen Notice DEC Declarations/Schedule DSC Disclosure/Notice END Endorsement/Amendment/Conditions ERS Election/Rejection/Supplemental Applications OTH Other PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

27 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Rate Information Rate data does NOT apply to filing. PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

28 NATIONAL SPECIALTY INSURANCE COMPANY CALIFORNIA IMPORTANT NOTICE To obtain information or make a complaint you may contact State National Insurance at the address and toll-free telephone number below for information or to make a complaint at: National Specialty Insurance Company 3741 Douglas Blvd. Suite # 390 Roseville, CA Fax: You may also contact the California Department of Insurance to obtain information on companies, coverages, rights or complaints at: Consumer Service Division California Department of Insurance 45 Fremont Street, 22nd Floor San Francisco, California HELP (4357) Out-of-state callers: TDD: TDD (4833) PREMIUM OR CLAIM DISPUTES: Should you have a dispute concerning your premium, or about a claim, the California Department of Insurance should only be contacted after you have had discussion with the company first, or the company s agent or broker, and if such discussion has failed to produce a satisfactory resolution to the problem. If the dispute is not so resolved, you may then contact the California Department of Insurance at the address and telephone numbers shown above. ATTACH THIS NOTICE TO YOUR POLICY: This notice is for information only and does not become a part or condition of the attached policy NO 0913 Page 1 of 1

29 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. IDENTITY RECOVERY COVERAGE IDENTITY THEFT CASE MANAGEMENT SERVICE AND EXPENSE REIMBURSEMENT The following is added as an Additional Coverage: IDENTITY RECOVERY COVERAGE We will provide the Case Management Service and Expense Reimbursement Coverage indicated below if all of the following requirements are met: 1. There has been an identity theft involving the personal identity of an identity recovery insured under this policy; and 2. Such identity theft is first discovered by the identity recovery insured during the policy period for which this Identity Recovery coverage is applicable; and 3. Such identity theft is reported to us within 60 days after it is first discovered by the identity recovery insured. If all three of the requirements listed above have been met, then we will provide the following to the identity recovery insured : 1. Case Management Service Services of an identity recovery case manager as needed to respond to the identity theft ; and 2. Expense Reimbursement Reimbursement of necessary and reasonable identity recovery expenses incurred as a direct result of the identity theft. This coverage is additional insurance. EXCLUSIONS The following additional exclusions apply to this coverage: We do not cover loss or expense arising from any of the following. 1. The theft of a professional or business identity. 2. Any fraudulent, dishonest or criminal act by an "identity recovery insured" or any person aiding or abetting an "identity recovery insured", or by any authorized representative of an "identity recovery insured", whether acting alone or in collusion with others. 3. Loss other than "identity recovery expenses". 4. An identity theft that is first discovered by the identity recovery insured prior to the policy period or after the policy period, whether or not such identity theft began or continued during the policy period. 5. An identity theft that is not reported to us within 60 days after it is first discovered by the identity recovery insured. 6. An identity theft that is not reported in writing to the police. LIMITS Case Management Service is available as needed for any one identity theft for up to 12 consecutive months from the inception of the service. Expenses we incur to provide Case Management Service do not reduce the amount of limit available for Expense Reimbursement coverage. Expense Reimbursement coverage is subject to a limit of $15,000 annual aggregate per identity recovery insured. Regardless of the number of claims, this limit is the most we will pay for the total of all loss or expense arising out of all identity thefts to any one identity recovery insured which are first discovered by the identity recovery insured during a 12-month period starting with the beginning of the present annual policy period. If an identity theft is first discovered in one policy period and continues into other policy periods, all loss and expense arising from such identity theft will be subject to the aggregate limit applicable to the policy period when the identity theft was first discovered. Legal costs as provided under item d. of the definition of identity recovery expenses are part of, and not in addition to, the Expense Reimbursement coverage limit. DEDUCTIBLE Case Management Service is not subject to a deductible. Expense Reimbursement coverage is subject to a deductible of $100. Any one identity recovery insured shall be responsible for only one deductible under this Identity Recovery Coverage during any one policy period. CONDITIONS The following additional conditions apply to this coverage: A. Assistance and Claims For assistance, the identity recovery insured should call the Identity Recovery Help Line at IL Page 1 of 3

30 The Identity Recovery Help Line can provide the identity recovery insured with: 1. Information and advice for how to respond to a possible identity theft ; and 2. Instructions for how to submit a service request for Case Management Service and/or a claim form for Expense Reimbursement Coverage. In some cases, we may provide Case Management services at our expense to an identity recovery insured prior to a determination that a covered identity theft has occurred. Our provision of such services is not an admission of liability under the policy. We reserve the right to deny further coverage or service if, after investigation, we determine that a covered identity theft has not occurred. As respects Expense Reimbursement Coverage, the identity recovery insured must send to us, within 60 days after our request, receipts, bills or other records that support his or her claim for "identity recovery expenses." B. Computer Security It is the responsibility of each identity recovery insured to use and maintain his or her computer system security, including personal firewalls, antivirus software and proper disposal of used hard drives. C. Services The following conditions apply as respects any services provided by us or our designees to any identity recovery insured under this endorsement:. 1. Our ability to provide helpful services in the event of an identity theft depends on the cooperation, permission and assistance of the identity recovery insured. 2. We do not warrant or guarantee that our services will end or eliminate all problems associated with an identity theft or prevent future identity thefts. DEFINITIONS With respect to the provisions of this endorsement only, the following definitions are added: 1. "Identity Recovery Case Manager" means one or more individuals assigned by us to assist an identity recovery insured with communications we deem necessary for re-establishing the integrity of the personal identity of the identity recovery insured. This includes, with the permission and cooperation of the identity recovery insured, written and telephone communications with law enforcement authorities, governmental agencies, credit agencies and individual creditors and businesses. 2. "Identity Recovery Expenses" means the following when they are reasonable and necessary expenses that are incurred in the United States or Canada as a direct result of an identity theft : a. Costs for re-filing applications for loans, grants or other credit instruments that are rejected solely as a result of an identity theft. b. Costs for notarizing affidavits or other similar documents, long distance telephone calls and postage solely as a result of your efforts to report an identity theft or amend or rectify records as to your true name or identity as a result of an identity theft. c. Costs for up to 12 credit reports from established credit bureaus dated within 12 months after your knowledge or discovery of an identity theft. d. Fees and expenses for an attorney approved by us for: (1) Defending any civil suit brought against an identity recovery insured by a creditor or collection agency or entity acting on behalf of a creditor for non-payment of goods or services or default on a loan as a result of an identity theft ; and (2) Removing any civil judgment wrongfully entered against an identity recovery insured as a result of the identity theft. 3. Identity Recovery Insured means the following: a. When the business insured under this policy is a sole proprietorship, the identity recovery insured is the individual person who is the sole proprietor of the insured business. b. When the business insured under this policy is a partnership, the identity recovery insureds are all partners listed on this policy as insureds. c. When the business insured under this policy is a corporation or other organization, the identity recovery insureds are all individuals having an ownership position of 20% or more of the insured business. However, if and only if there is no one who has such an ownership position, then the identity recovery insured shall be: (1) The chief executive of the insured entity; or (2) As respects a religious institution, the senior ministerial employee. An identity recovery insured must always be an individual person. The business insured under this policy is not an identity recovery insured IL Page 2 of 3

31 4. Identity Theft means the fraudulent use of the social security number or other method of identifying an identity recovery insured. This includes fraudulently using the personal identity of an identity recovery insured to establish credit accounts, secure loans, enter into contracts or commit crimes. Identity theft does not include the fraudulent use of a business name, d/b/a or any other method of identifying a business activity. Identity theft does not include the unauthorized use of a valid credit card, credit account or bank account. However, identity theft does include the fraudulent alteration of account profile information, such as the address to which statements are sent. All other provisions of this policy apply IL Page 3 of 3

32 PN (Ed ) POLICYHOLDER NOTICE CALIFORNIA INSURANCE GUARANTEE ASSOCIATION (CIGA) SURCHARGE Companies writing property and casualty business in California are required to participate in the California Insurance Guarantee Association. If a company becomes insolvent, the California Insurance Guarantee Association settles unpaid claims and assesses each insurance company for its fair share. California law requires all companies to surcharge policies to recover these assessments. If your policy is surcharged, CA Surcharge or CA Surcharge (CIGA Surcharge) with an amount will be displayed on your premium notice. This notice does not change the policy to which it is attached. Insured Date of Notice Policy No. Policy Period PN (12-01) Page 1 of 1

33 NATIONAL SPECIALTY INSURANCE COMPANY 1900 L Don Dodson Drive, Bedford, TX COMMERCIAL LINES POLICY COMMON POLICY DECLARATIONS Renewal of Number: Policy No. Named Insured and Mailing Address (No., Street, Town or City, County, State, Zip Code) Policy Period: From to at 12:01 A.M. Standard Time at your mailing address shown above. IN RETURN FOR THE PAYMENT OF THE PREMIUM, AND SUBJECT TO ALL THE TERMS OF THIS POLICY, WE AGREE WITH YOU TO PROVIDE THE INSURANCE AS STATED IN THIS POLICY. THIS POLICY CONSISTS OF THE FOLLOWING COVERAGE PARTS FOR WHICH A PREMIUM IS INDICATED. THIS PREMIUM MAY BE SUBJECT TO ADJUSTMENT. AUDIT PERIOD (if applicable) ANNUALLY QUARTERLY SEMI-ANNUALLY MONTHLY PREMIUM Commercial Auto Coverage Part $ Commercial Property Coverage Part $ Commercial General Liability Coverage Part $ Crime and Fidelity Coverage Part $ Commercial Inland Marine Coverage Part $ Equipment Breakdown Coverage Part $ Employment-Related Practices Liability Coverage Part $ $ TOTAL $ Premium shown is payable: $ at inception; $ 1st Anniversary; $ 2nd Anniversary Form(s) and Endorsement(s) made a part of this policy at time of issue*: *Omits applicable Forms and Endorsements if shown in specific Coverage Part/Coverage Form Declarations. Countersigned: Agent License No.: By Authorized Representative THESE DECLARATIONS TOGETHER WITH THE COMMON POLICY CONDITIONS, COVERAGE PART DECLARATIONS, COVERAGE PART COVERAGE FORM(S) AND FORMS AND ENDORSEMENT, IF ANY, ISSUED TO FORM A PART THEREOF, COMPLETE THE ABOVE NUMBERED POLICY ML 0913 Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 1 of 1

34 NATIONAL SPECIALTY INSURANCE COMPANY COMMERCIAL HI-TECH PRECISION MANUFACTURING PROGRAM COMMON DECLARATIONS POLICY NUMBER PRODUCER NAME NAMED INSURED AND MAILING ADDRESS AGENT BROKER PRODUCER CODE POLICY PERIOD FROM TO at 12:01 A.M. Standard Time at your mailing address shown above. BUILDING PROPERTY AND BUSINESS PERSONAL PROPERTY COVERAGES PROPERTY COVERED AT ANY ONE LOCATION $ REFER TO SCHEDULED LOCATIONS ENDORSEMENT $ REPLACEMENT COST APPLIES $ TIME ELEMENT COVERAGES BLANKET TOTAL INCOME COVERAGE LIMIT $ EXTRA EXPENSE COVERAGE $ REFER TO THE SCHEDULE OF LOCATIONS ENDORSEMENT $ INCOME COVERAGE OPTIONS (check one) EARNINGS, RENTS AND EXTRA EXPENSE $ EARNINGS AND EXTRA EXPENSE $ RENTS AND EXTRA EXPENSE $ DAYS EXTENDED PERIOD OF INDEMNITY $ DEDUCTIBLE AMOUNT $ OTHER MORTGAGE HOLDER NAME AND ADDRESS OTHER ENDORSEMENTS MADE A PART OF THIS POLICY AT TIME OF ISSUE $ $ PREMIUM PAYABLE AT INCEPTION $ 2187 CP 0913 Page 1 of 3

35 POLICY SCHEDULE OF NAMES AND ADDRESSES - Continued POLICY NUMBER POLICY PERIOD COVERAGE IS PROVIDED IN THE AGENCY CODE FROM TO NAMED INSURED AND ADDRESS AGENT 2187 CP 0913 Page 2 of 3

36 COMMERCIAL PROPERTY COVERAGE PART DECLARATIONS - Continued POLICY NUMBER POLICY PERIOD COVERAGE IS PROVIDED IN THE AGENCY CODE FROM TO NAMED INSURED AND ADDRESS AGENT 2187 CP 0913 Page 3 of 3

37 POLICYHOLDER DISCLOSURE NOTICE TERRORISM INSURANCE COVERAGE ELECTION - REJECTION You are hereby notified that under the Terrorism Risk Insurance Act, as amended, you have a right to purchase insurance coverage for losses arising out of acts of terrorism, as defined in Section 102(1) of the Act: The term act of terrorism means any act or acts that are certified by the Secretary of the Treasury in consultation with the Secretary of Homeland Security, and the Attorney General of the United States to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property; or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of certain air carriers or vessels or the premises of a United States mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. YOU SHOULD KNOW THAT COVERAGE PROVIDED BY THIS POLICY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM, SUCH LOSSES MAY BE PARTIALLY REIMBURSED BY THE UNITED STATES GOVERNMENT UNDER A FORMULA ESTABLISHED BY FEDERAL LAW. HOWEVER, YOUR POLICY MAY CONTAIN OTHER EXCLUSIONS WHICH MIGHT AFFECT YOUR COVERAGE, SUCH AS AN EXCLUSION FOR NUCLEAR EVENTS. UNDER THE FORMULA, THE UNITED STATES GOVERNMENT GENERALLY REIMBURSES THE PERCENTAGE SHOWN BELOW OF COVERED TERRORISM LOSSES EXCEEDING THE STATUTORILY ESTABLISHED DEDUCTIBLE PAID BY THE INSURANCE COMPANY PROVIDING THE COVERAGE. THE PREMIUM CHARGED FOR THIS COVERAGE IS PROVIDED BELOW AND DOES NOT INCLUDE ANY CHARGES FOR THE PORTION OF LOSS THAT MAY BE COVERED BY THE FEDERAL GOVERNMENT UNDER THE ACT. 1. Insured Losses would be partially reimbursed by the United States Government. If the aggregate industry Insured Losses exceed: a. $100,000,000, with respect to such Insured Losses occurring in calendar year 2015, the United States Government would pay 85% of our Insured Losses that exceed our Insurer Deductible. b. $120,000,000, with respect to such Insured Losses occurring in calendar year 2016, the United States Government would pay 84% of our Insured Losses that exceed our Insurer Deductible. c. $140,000,000, with respect to such Insured Losses occurring in calendar year 2017, the United States Government would pay 83% of our Insured Losses that exceed our Insurer Deductible. d. $160,000,000, with respect to such Insured Losses occurring in calendar year 2018, the United States Government would pay 82% of our Insured Losses that exceed our Insurer Deductible. e. $180,000,000, with respect to such Insured Losses occurring in calendar year 2019, the United States Government would pay 81% of our Insured Losses that exceed our Insurer Deductible. f. $200,000,000, with respect to such Insured Losses occurring in calendar year 2020, the United States Government would pay 80% of our Insured Losses that exceed our Insurer Deductible. YOU SHOULD ALSO KNOW THAT THE TERRORISM RISK INSURANCE ACT, AS AMENDED, CONTAINS A $100 BILLION CAP THAT LIMITS U. S. GOVERNMENT REIMBURSEMENT AS WELL AS INSURER S LIABILITY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM WHEN THE AMOUNT OF PC NO National Association of Insurance Commissioners Page 1 of 2

38 SUCH LOSSES IN ANY ONE CALENDAR YEAR EXCEEDS $100 BILLION. IF THE AGGREGATE INSURED LOSSES FOR ALL INSURERS EXCEED $100 BILLION, YOUR COVERAGE MAY BE REDUCED. Acceptance or Rejection of Terrorism Insurance Coverage I hereby elect to purchase Terrorism coverage for a prospective premium of $. I hereby decline to purchase terrorism coverage for certified acts of terrorism. I understand that I will have no coverage for losses resulting from certified acts of terrorism. Policyholder/Applicant s Signature Insurance Company Print Name Policy Number Date PC NO National Association of Insurance Commissioners Page 2 of 2

39 NATIONAL SPECIALTY INSURANCE COMPANY 1900 L Don Dodson Drive, Bedford TX COMMERCIAL INLAND MARINE DECLARATIONS POLICY NUMBER: RENEWAL OF: NAMED INSURED: MAILING ADDRESS: PRODUCER: NUMBER: Policy Period: From: This policy becomes effective and expires at 12:01 a.m. Standard Time at Your Mailing Address shown above. To: Coverage Parts that apply to this Policy: Coverage Part Premium: $ $ $ $ $ Endorsements that apply to all Coverage Parts: LOSS PAYEE ( NAME AND ADDRESS ) IM Copyright MCMXCIV, American Assoc. of Insurance Services Page 1 of 1

40 HI-TECH/PRECISION MANUFACTURING PROGRAM INCOME COVERAGE PART Coverage is provided for one or more of the Coverage Options when shown by a "limit" on the "declarations". If a "limit" is shown for more than one of the Coverage Options, the provisions under the Hi-Tech / Precision Manufacturing Program -Income Coverage Part apply separately to each. ADDITIONAL DEFINITIONS 1. "Business" means normal business activities occurring at "covered locations" including the tenantability of "covered locations" when the selected coverage option includes "rents". 2. "Restoration period" means the time it should reasonably take to resume "your" "business" starting from the date of loss to "covered locations" caused by a covered peril, and ending on the date the property should be rebuilt, repaired, or replaced. This is not limited by the expiration date of the policy. This does not include any increase in time due to the enforcement of any ordinance, law, or decree that: a. Regulates the construction, use, repair, or demolition of any property; or b. Requires the testing, evaluating, observing, or recording the existence, level, or effects of "pollutants". 3. "Rents" means "your" actual loss of: a. Rental income of "covered locations" as furnished or equipped less any expenses that do not continue; b. The rental value of any part of "covered locations" that "you" occupy less any expenses that do not continue; and other charges for which a tenant is legally obligated and which "you" would otherwise be obligated. 4. Dependent property means property operated by others on whom you depend to: a. Deliver materials or services, other than water, communication or power supply services to you, or to others for your account; b. Accept your products or services; or c. Manufacture products for delivery to your customers under contact of sale. COVERAGE OPTIONS 1. Earnings, "rents", and extra expense. 2. Earnings and extra expense. 3. "Rents" and extra expense. Earnings includes "rents" when option 1. is selected. Earnings means only "rents" when option 3. is selected. "We" provide the coverages shown below during the "restoration period" when "your" "business" is necessarily interrupted by loss to building property or business personal property as a result of a covered peril. This coverage applies only when the loss to building property or business personal property is at "covered locations" or in the open (or in vehicles) within 1,000 feet thereof. EARNINGS "We" cover "your" actual loss of net income (net profit or loss before income taxes), payroll expense, interest, and other continuing operating expenses normally earned or incurred by "your" "business". "We" cover only the expenses that are necessary during the "restoration period". Consideration is given to continuation of payroll and other expenses to the extent necessary to resume "your" "business" with the same quality of service that existed before the loss. EXTRA EXPENSE "We" cover the necessary extra expenses that "you" incur to resume or continue "your" "business" as nearly as practicable. "We" cover only the extra expenses that are necessary during the "restoration period". "We" cover extra expenses to repair, replace, or restore any property, but only to the extent that they reduce the loss otherwise payable under this Coverage Part. "We" cover extra expenses to research, replace, or restore information on damaged "valuable papers and records", but only to the extent that they reduce the loss otherwise payable under this Coverage Part CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 1 of 4 Copyright American Association of Insurance Service, 1995

41 EXCLUSIONS AND LIMITATIONS 1. Finished Stock -- "We" do not cover loss of earnings caused by loss to stock manufactured by "you" which is ready to pack, ship, or sell. This does not apply to stock manufactured for retail outlets that "you" own. 2. Fire Extinguishment -- "We" do not cover expenses to put out a fire. 3. Leases, Licenses, Contracts, or Orders -- "We" do not cover any increase in loss due to the suspension, lapse, or cancellation of leases, licenses, contracts, or orders. However, "we" do cover loss during the "restoration period" if the suspension, lapse, or cancellation results directly from the interruption of "your" "business". "We" do not cover any extra expense caused by the suspension, lapse, or cancellation of leases, licenses, contracts, or orders beyond the "restoration period". 4. Strikes, Protests, and Other Interference - "We" do not cover any increase in loss due to interference by strikers or other persons at "covered locations". This applies to interference with rebuilding, repairing, or replacing the property or with resuming "your" "business". 5. Unnecessary Expenses -- "We" do not cover any expenses that are not necessary during the "restoration period". ADDITIONAL COVERAGES 1. Alterations and New Buildings -- "We" extend "your" coverage for earnings and extra expense to include loss caused by damage to: a. Additions or alterations; b. New buildings or structures, completed or under construction; and c. Machinery, equipment, supplies, or building materials located on or within 1,000 feet of "covered locations" used in the construction, alterations, or additions; or incidental to the occupancy of new buildings or structures at "covered locations" caused by a covered peril. If such loss delays the start of "your" "business", the "restoration period" starts from the time "your" "business" would have begun had no loss occurred. This does not increase the "limit". 2. Interruption by Civil Authority -- "We" extend "your" coverage for earnings and extra expense to include loss while access to "covered locations" is specifically denied by an order of civil authority. This order must be a result of damage to property other than at "covered locations" and caused by a covered peril. This extension is limited to two consecutive weeks from the date of the order. This does not increase the "limit". 3. Newly Acquired Locations -- When the Locations and Scheduled Locations Endorsements are attached to this Coverage Part, "we" extend "your" coverage for earnings and extra expense to include loss caused by damage to covered property at locations, other than at fairs or exhibitions, that "you" acquire. The damage must be caused by a covered peril. The most "we" pay is the "limit" shown on the "declarations" for this Coverage Part, but not exceeding $250,000. This coverage applies for 180 days after "you" acquire the location or until "you" report the newly acquired location to "us", whichever occurs first. This coverage does not go beyond the expiration of this policy. "You" must pay any additional premium due from the date "you" acquire the location. This is an additional amount of insurance and is not subject to and not considered in applying coinsurance. 4. Period of Loss Extension -- "We" extend "your" coverage for earnings to cover loss from the date the covered property that incurred the loss is rebuilt, repaired, or replaced until: a. The end of 30 consecutive days (unless otherwise shown on the "declarations"); or b. The date "you" could reasonably resume "your" "business" to the conditions that would have existed had no loss occurred, whichever is earlier. This does not increase the "limit". 4. Dependent Properties -- We pay up to 25% of the limit shown on the CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 2 of 4 Copyright American Association of Insurance Service, 1995

42 declarations for this coverage part but not more than $100,000. The coverage territory is worldwide for loss of your earnings and the necessary extra expense that you incur caused by direct physical loss at any premises of a dependent property if: a. Your loss is due to the necessary suspension of your operations during the restoration period, and b. The suspension is due to direct physical damage caused by a covered peril at the premises of a dependent property. This coverage will apply separately to each dependent property. Your loss of earnings, other than extra expense, will be reduced to the extent that you can resume operations by using any other available source of materials or outlet for your products. This coverage does not increase the limit. 5. Utility Services We pay up to $25,000 for loss to your earnings and / or the necessary extra expense that you incur caused by the interruption of utility services at your described premises. The interruption must be caused by direct physical loss by a covered peril to property away from your described premises that provide you with the following services: a. Water supply services; b. Communication services; or c. Power supply services. d. We will pay for loss you sustain only after the first 12 hours of interrupted services following the direct physical loss to the utility property described above. This coverage does not increase the limit. PERILS COVERED See the Hi Tech / Precision Manufacturing Program -- Property Coverage Part. WHAT MUST BE DONE IN CASE OF LOSS Other "terms" relating to What Must Be Done In Case Of Loss may also apply. These are shown in the Property Coverage Part. 1. Notice -- In case of a loss, "you" must: a. Give "us" or "our" agent prompt notice including a description of the property involved ("we" may request written notice); and b. Give notice to the police when the act that causes the loss is a crime. 2. Proof of Loss -- "You" must send "us" proof of loss (under oath, if requested) within 60 days after the loss. This must include the time, place, and circumstances of the loss; and other information "we" request to investigate the loss. 3. Intent to Continue Business -- If "you" intend to continue "your" "business", "you" must resume all or part of "your" "business" as soon as possible. VALUATION In determining a loss, "we" consider the experience of "your" "business" before the loss and the probable experience had no loss occurred. The salvage value of any property bought for temporary use shall be deducted from the amount of loss determined for extra expense. "We" do not pay for any increase in loss due to "your" failure to use reasonable efforts to resume all or part of "your" "business". This includes making use of other locations and property to reduce the loss. If "your" "business" is not resumed as soon as possible, or if it is not resumed at all, the value of loss payment is based on the period of time it would have otherwise taken to resume "your" "business" as soon as possible. HOW MUCH WE PAY Other "terms" relating to How Much We Pay may also apply. These are shown in the Property Coverage Part. "We" pay only the loss of earnings and extra expenses incurred within 12 consecutive months after the loss to covered property. Payment for earnings and extra expense combined does not exceed the "limit" CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 3 of 4 Copyright American Association of Insurance Service, 1995

43 LOSS PAYMENT See the Hi Tech / Precision Manufacturing Program -- Property Coverage Part. OTHER CONDITIONS The following condition applies as it relates to this Coverage Part. Other "terms" may also apply. These are shown in the Property Coverage Part. Appraisal -- If "you" and "we" do not agree on the amount of net income (net profit or loss before income taxes), payroll expense, interest, and operating expenses, or the amount of loss, either party may demand that these amounts be determined by appraisal. If either makes a written demand for appraisal, each selects a competent, independent appraiser and notifies the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, "you" or "we" can ask a judge of a court of record of the state in which the appraisal is pending to make the selection. The appraisers then determine and state separately the amount of loss. A written agreement is binding on all parties. If the appraisers fail to agree within a reasonable time, they submit only their differences to the umpire. Written agreement so itemized and signed by any two of these three is binding on all parties. Each appraiser is paid by the party selecting that appraiser. Other expenses of the appraisal and the compensation of the umpire is paid equally by "you" and "us". If there is an appraisal, "we" retain "our" right to deny the claim CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 4 of 4 Copyright American Association of Insurance Service, 1995

44 HI-TECH/PRECISION MANUFACTURING PROGRAM EXTRA EXPENSE COVERAGE PART "We" provide the coverage shown below during the "restoration period" when "your" "business" is necessarily interrupted by direct physical loss to building property or business personal property as a result of a covered peril. This coverage applies only when the loss to building property or business personal property is at "covered locations" or in the open (or in vehicles) within 1,000 feet thereof. ADDITIONAL DEFINITIONS "We" cover only the extra expenses that are necessary during the "restoration period". "We" cover extra expenses to repair, replace, or restore any property, but only to the extent that they reduce the loss otherwise payable under this Coverage Part. "We" cover extra expenses to research, replace, or restore information on damaged "valuable papers and records", but only to the extent that they reduce the loss otherwise payable under this Coverage Part. 1. "Business" means normal business activities occurring at "covered locations". 2. "Restoration period" means the time it should reasonably take to resume "your" "business" starting from the date of loss to "covered locations" caused by a covered peril, and ending on the date the property should be rebuilt, repaired, or replaced. This is not limited by the expiration date of the policy. This does not include any increase in time due to the enforcement of any ordinance, law, or decree that: a. Regulates the construction, use, repair, or demolition of any property; or b. Requires the testing, evaluating, observing, or recording the existence, level, or effects of "pollutants". 3. Dependent property means property operated by others on whom you depend to: a. Deliver materials or services, other than water, communication or power supply services to you, or to others for your account; b. Accept your products or services; or c. Manufacture products for delivery to your customers under contact of sale. COVERAGE "We" cover the necessary extra expenses that "you" incur in order to resume or continue "your" "business" as nearly as practicable. EXCLUSIONS AND LIMITATIONS 1. Fire Extinguishment -- "We" do not cover expenses to put out a fire. 2. Leases, Licenses, Contracts, or Orders -- "We" do not cover any increase in loss due to the suspension, lapse, or cancellation of leases, licenses, contracts, or orders. However, "we" do cover loss during the "restoration period" if the suspension, lapse, or cancellation results directly from the interruption of "your" "business". "We" do not cover any extra expense caused by the suspension, lapse, or cancellation of leases, licenses, contracts, or orders beyond the "restoration period". 3. Strikes, Protests, and Other Interference - "We" do not cover any increase in loss due to interference by strikers or other persons at "covered locations". This applies to interference with rebuilding, repairing, or replacing the property or with resuming "your" "business". 4. Unnecessary Expenses -- "We" do not cover any expenses that are not necessary during the "restoration period". ADDITIONAL COVERAGES 1. Alterations and New Buildings -- "We" extend "your" coverage to include loss caused by damage to: a. Additions or alterations; b. New buildings or structures, completed or under construction; and CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 1 of 3 Copyright American Association of Insurance Service, 1995

45 c. Machinery, equipment, supplies, or building materials located on or within 1,000 feet of "covered locations" used in the construction, alterations, or additions; or incidental to the occupancy of new buildings or structures at "covered locations" caused by a covered peril. If such loss delays the start of "your" "business", the "restoration period" starts from the time "your" "business" would have begun had no loss occurred. This does not increase the "limit". 2. Interruption by Civil Authority -- "We" extend "your" coverage to include loss while access to "covered locations" is specifically denied by an order of civil authority. This order must be a result of damage to property other than at "covered locations" and caused by a covered peril. This extension is limited to two consecutive weeks from the date of the order. This does not increase the "limit". 3. Newly Acquired Locations -- When the Locations and Scheduled Locations Endorsements are attached to this Coverage Part, "we" extend "your" coverage to include loss caused by damage to property at locations, other than at fairs or exhibitions, that "you" acquire. The damage must be caused by a covered peril. The most "we" pay is the "limit" shown on the "declarations" for this Coverage Part, but not exceeding $250,000. This coverage applies for 180 days after "you" acquire the location or until "you" tell "us" how "you" want this Coverage Part to apply to that location, whichever occurs first. This coverage does not go beyond the expiration of this policy. "You" must pay any additional premium due from the date "you" acquire the location. This is an additional amount of insurance. 4. Dependent Properties -- We pay up to 25% of the limit shown on the declarations for this coverage part but not more than $ 50,000. The coverage territory is worldwide for the necessary extra expense that you incur caused by direct physical loss at any premises of a dependent property if: a. Your loss is due to the necessary suspension of your operations during the period of restoration, and b. The suspension is due to direct physical damage caused by a covered peril at the premises of a dependent property. c. This coverage will apply separately to each dependent property. This coverage does not increase the limit. 5. Utility Services We pay up to $25,000 to cover the necessary extra expense that you incur caused by the interruption of utility services at your described premises. The interruption must be caused by direct physical loss by a covered peril to property away from your described premises that provide you with the following services: a. Water supply services; b. Communication services; or c. Power supply services. We will pay for loss you sustain only after the first 12 hours of interrupted services following the direct physical loss to the utility property described above. This coverage does not increase the limit. PERILS COVERED See the Hi Tech / Precision Manufacturing Program -- Property Coverage Part. WHAT MUST BE DONE IN CASE OF LOSS The following applies as it relates to this Coverage Part. Other "terms" may also apply. These are shown in the Property Coverage Part. 1. Notice -- In case of a loss, "you" must: a. Give "us" or "our" agent prompt notice including a description of the property involved ("we" may request written notice); and b. Give notice to the police when the act that causes the loss is a crime. 2. Proof of Loss -- "You" must send "us", within 60 days after "our" request, a signed, sworn proof of loss. This must include the time, place, and circumstances of the loss; and other information "we" request to investigate the loss. 3. Intent to Continue Business -- If "you" intend to continue "your" "business", "you" must resume all or part of "your" "business" as soon as possible CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 2 of 3 Copyright American Association of Insurance Service, 1995

46 VALUATION In determining a loss, "we" consider the experience of "your" "business" before the loss and the probable experience had no loss occurred. The salvage value of any property bought for temporary use shall be deducted from the amount of loss determined for extra expense. "We" do not pay for any increase in loss due to "your" failure to use reasonable efforts to resume all or part of "your" "business". This includes making use of other locations and property to reduce the loss. If "your" "business" is not resumed as soon as possible, or if it is not resumed at all, the value of loss payment is based on the period of time it would have otherwise taken to resume "your" "business" as soon as possible. HOW MUCH WE PAY Other "terms" relating to How Much We Pay may also apply. These are shown in the Property Coverage Part. "We" pay no more than "our" "limit" for any loss multiplied by the percentages shown on the "declarations". When the "restoration period" is 30 days or less, the first percentage applies to the "limit". When the "restoration period" is 31 to 60 days, the second percentage applies to the "limit". When the "restoration period" is over 60 days, the third percentage applies to the "limit". Example "Limit" $100,000 Percentages shown on the "declarations" 40% 80% 100% "Restoration period" 60 days Loss (incurred extra expenses) $90,000 "We" pay no more than $80,000 (80% x $100,000). "We" do not pay the remaining $10,000. See the Hi Tech / Precision Manufacturing Program -- Property Coverage Part. OTHER CONDITONS The following condition applies as it relates to this Coverage Part. Other "terms" may also apply. These are shown in the Property Coverage Part. Appraisal -- If "you" and "we" do not agree on the amount of loss, either party may demand that these amounts be determined by appraisal. If either makes a written demand for appraisal, each selects a competent, independent appraiser and notifies the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, "you" or "we" can ask a judge of a court of record of the state in which the appraisal is pending to make the selection. The appraisers then determine and state separately the amount of loss. A written agreement is binding on all parties. If the appraisers fail to agree within a reasonable time, they submit only their differences to the umpire. Written agreement so itemized and signed by any two of these three is binding on all parties. Each appraiser is paid by the party selecting that appraiser. Other expenses of the appraisal and the compensation of the umpire is paid equally by "you" and "us". If there is an appraisal, "we" retain "our" right to deny the claim. LOSS PAYMENT CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 3 of 3 Copyright American Association of Insurance Service, 1995

47 AGREEMENT HI-TECH/PRECISION MANUFACTURING PROGRAM In return for "your" payment of the required premium, "we" provide the coverage described herein subject to all the "terms" of the Hi-Tech/Precision Manufacturing Program. This coverage is also subject to the "declarations" and additional policy conditions relating to assignment or transfer of rights or duties, cancellation, changes or modifications, inspections, and examination of books and records. Endorsements and schedules may also apply. They are identified on the "declarations". Refer to Definitions for words and phrases that have special meaning. These words and phrases are shown in quotation marks or bold type. DEFINITIONS 1. The words "you" and "your" mean the persons or organizations named as the insured on the "declarations". 2. The words "we", "us", and "our" mean the company providing this coverage. 3. "Computers" means: a. "Hardware" owned by "you" or in "your" care, custody, or control; or b. "Software". 4. "Covered locations" means any location or premises where "you" have buildings, structures, or business personal property covered under this coverage. 5. "Declarations" means all pages labeled Declarations, Supplemental Declarations, or Schedules, which pertain to this coverage. 6. Employee means any natural person: a. While in your service and for 30 days after termination of service; and b. Whom you compensate directly by salary, wages or commissions; and c. Whom you have the right to direct and control while performing services for you ; or d. Employed by an employment contractor while that person is subject to your PROPERTY COVERAGE PART direction and control and performing services for you, excluding, however, any such person while having care and custody of property outside of covered premises. Employee does not mean any: a. Agent, broker, factor, commission merchant, consignee, independent contractor or representative of the same general character; or b. Director or trustee except while performing acts coming within the scope of the usual duties of an employee. 7. "Fine arts" means paintings, etchings, pictures, tapestries, art glass windows, and other bona fide works of art of rarity, historical value, or artistic merit. 8. "Hardware" means a network of electronic machine components capable of accepting instructions and information, processing the information according to the instructions, and producing desired results. 9. "Limit" means the amount of coverage that applies. 10. Messenger means you, any of your partners, officers or members or any employee while having care and custody of money and securities outside your premises. 11. Money means currency, coins and bank notes and bullion in current use and having a face value, including traveler s checks, register checks and money orders held for sale to the public. 12. "Mobile equipment" means: a. Contractors' equipment or similar equipment of a mobile or floating nature; b. Self-propelled vehicles designed and used primarily to carry mounted equipment; or c. Vehicles designed for highway use that are unlicensed and not operated on public roads. 13. "Pollutant" means: a. Any solid, liquid, gaseous or thermal irritant, or contaminant; b. Electromagnetic (visible or invisible) or sound emission; or CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 1 of 19 Copyright American Association of Insurance Service, 1995

48 c. Waste, including materials to be disposed of as well as recycled, reclaimed, or reconditioned. 14. Securities means negotiable and nonnegotiable instruments or contracts representing either money or other property and includes: a. Tokens, tickets (lottery tickets held for sale are not securities ), revenue and other stamps or unused value (whether represented by actual stamps or unused value in a meter) in current use; and b. Evidences of debt issued in connection with credit or charge cards which are cards not issued by you ; But does not include money. 15. "Sinkhole collapse" means the sudden settlement or collapse of earth supporting the covered property into subterranean voids created by the action of water on a limestone or similar rock formation. It does not include the value of the land or the cost of filling sinkholes. 16. "Software" means: a. Processing, recording, or storage media used for electronic data processing operations. This includes films, tapes, cards, discs, drums, cartridges, or cells. b. Data, including instructions or information, stored on processing, recording, or storage media used for electronic data processing operations. 17. "Specified perils" means aircraft; civil commotion; explosion; falling objects; fire; hail; leakage from fire extinguishing equipment; lightning; riot; "sinkhole collapse"; smoke; sonic boom; vandalism; vehicles; "volcanic action"; water damage; weight of ice, snow, or sleet; and windstorm. Falling objects does not include loss to business personal property in the open, to the interior of buildings or structures, or business personal property inside buildings or structures unless the exterior of the roof or walls are first damaged by a falling object. Water damage means the sudden or accidental discharge or leakage of water or steam as a direct result of breaking or cracking of a part of the system or appliance containing the water or steam. 18. "Terms" are all provisions, limitations, exclusions, conditions, and definitions that apply. 19. "Valuable papers and records" means inscribed, printed, or written documents; manuscripts; or records. This includes abstracts, books, deeds, drawings, films, maps, or mortgages. 20. "Volcanic action" means airborne volcanic blast or airborne shock waves; ash, dust, or particulate matter; or lava flow. It does not include the cost to remove ash, dust, or particulate matter that does not cause direct physical loss to the covered property. PROPERTY COVERED "We" cover direct physical loss to covered property at "covered locations" caused by a covered peril. "We" cover the following types of property. BUILDING PROPERTY This means buildings and structures including: 1. Completed additions; 2. Fixtures, machinery, and equipment which are a permanent part of a covered building or structure; 3. Outdoor fixtures; 4. Personal property owned by "you" and used to maintain or service a covered building or structure or its premises. This includes airconditioning equipment; fire extinguishing apparatus; floor coverings; and appliances for refrigerating, cooking, dish washing, and laundering; 5. If not covered by other insurance: a. Buildings and additions to buildings under construction, alteration, and repair; b. Materials, equipment, supplies, and temporary structures, on or within 1,000 feet of "covered locations", used for the construction, alteration, and repair of buildings or additions to buildings; 6. Building glass; 7. The following property if it is located on or within 1,000 feet of a covered building or structure: a. Radio and television towers, antennas, satellite dishes, masts, lead-in wiring, and guy wires. This includes foundations and any other property that is permanently attached to any of these types of property; b. Awnings or canopies; and c. Fences. 8. Signs, whether or not they are attached to covered buildings, or structures. BUSINESS PERSONAL PROPERTY This means "your" business personal property in buildings or structures at "covered locations" or in CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 2 of 19 Copyright American Association of Insurance Service, 1995

49 the open (or in vehicles) on or within 1,000 feet of "covered locations". This includes: 1. "Your" use interest as a tenant in improvements to the buildings or structures. Improvements are fixtures, alterations, installations, or additions: a. To a building or structure "you" occupy but do not own; and b. Made or acquired at "your" expense and which cannot be legally removed by "you". 2. Leased personal property which "you" have a contractual responsibility to insure. 3. "Your" interest in personal property of others to the extent of "your" labor, material, and services. 4. "Computers", if not covered by other insurance. 5. Personal property which will become a part of "your" installation, fabrication, or erection project while: a. At the site of installation, fabrication, or erection; or b. While in temporary storage awaiting installation, fabrication, or erection. Coverage under this provision is not restricted to buildings or structures at "covered locations" or within 1,000 feet of "covered locations". 6. "Mobile equipment", if not covered by other insurance. Coverage under this provision is not restricted to buildings or structures at "covered locations" or within 1,000 feet of "covered locations". 7. Personal property of others. This means personal property of others that is in "your" care, custody, or control. Personal property of others includes property that is sold under an installation agreement where "your" responsibility continues until the property is accepted by the buyer. "Our" payment for loss to personal property of others will only be for the benefit of the owners of the personal property. PROPERTY NOT COVERED 1. Airborne or Waterborne Property -- "We" do not cover airborne or waterborne personal property unless the property is being transported by regularly scheduled airlines or ferry service. 2. Aircraft or Watercraft -- "We" do not cover aircraft or watercraft (including their motors, equipment, and accessories) that are operated principally away from "covered locations". However, "we" do cover: a. Aircraft or watercraft (including their motors, equipment, and accessories) that "you" manufacture, process, warehouse, or hold for sale; and b. Rowboats or canoes out of water at "covered locations". 3. Animals -- "We" do not cover animals, including birds and fish, unless owned by others and boarded by "you". "We" do cover animals "you" own and hold for sale. 4. Automobiles and Vehicles -- "We" do not cover automobiles, motor trucks, tractors, trailers, and similar conveyances designed and used for over-the-road transportation of people or cargo. "We" do cover: a. "Mobile equipment" described as Business Personal Property; and b. Automobiles and vehicles that "you" manufacture, process, or warehouse. However, "we" do not cover automobiles or vehicles held for sale. 5. Contraband -- "We" do not cover contraband or property in the course of illegal transportation or trade. 6. Crops -- "We" do not cover grain, hay, straw, or other crops when outdoors. 7. Exports and Imports -- "We" do not cover exported or imported property that is covered under any ocean marine cargo insurance policy or any similar policy that anyone has obtained covering exports and imports. 8. Land, Water, or Cost of Excavation -- "We" do not cover: a. Land, including land on which the covered property is located; b. Underground or surface water; or c. Cost of excavations, grading, or filling. 9. Money and Securities Except as provided under SUPPLEMENTAL MARINE COVERAGES, "we" do not cover accounts, bills, currency, food stamps, or other evidences of debt, lottery tickets not held for sale, money, notes, or securities. 10. Property More Specifically Insured -- "We" do not cover property which is more specifically insured in whole or in part by any other insurance. "We" do cover the amount in excess of the amount due from the more specific insurance CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 3 of 19 Copyright American Association of Insurance Service, 1995

50 11. Property of Others -- "We" do not cover property of others for which "you" are responsible as: a. A carrier for hire; or b. An arranger of transportation. This includes carloaders, consolidators, brokers, freight forwarders, or shipping associations. 12. Property You Have Sold -- "We" do not cover property that "you" have sold after it has been delivered. This does not include property which "you" have sold under an installation agreement. ADDITIONAL COVERAGES We provide the following Additional Coverages and unless otherwise stated are additional limits of coverages: 1. Debris Removal -- "We" pay the cost to remove the debris of covered property that is caused by a covered peril. This coverage does not include costs to: a. Extract "pollutants" from land or water; or b. Remove, restore, or replace polluted land or water. "We" will not pay any more under this coverage than 25% of the amount "we" pay for the direct loss. "We" will not pay more for loss to property and debris removal combined than the "limit" for the damaged property. However, "we" pay an additional amount of debris removal expense up to $30,000 when the debris removal expense exceeds 25% of the amount "we" pay for direct loss or when the loss to property and debris removal combined exceeds the "limit" for the damaged property. "We" do not pay any expenses unless they are reported to "us" in writing within 180 days from the date of direct physical loss to covered property. We will also pay up to $1,000 for the costs you incur at each premises to remove debris of outdoor trees, shrubs or plants that are blown onto your premises by wind. 2. Emergency Removal -- "We" pay for loss to covered property while it is moved, being moved or temporally stored to prevent a loss caused by a covered peril. "We" will pay for any direct physical loss caused by a peril that is not excluded. This coverage applies for up to ninety days after the property is first moved, but does not extend past the date on which this policy expires. 3. Fire Department Service Charges -- "We" pay up to $5,000 to cover "your" liability, assumed by contract or agreement prior to the loss, for fire department service charges. This coverage is limited to charges incurred when the fire department is called to save or protect covered property from a covered peril. No deductible applies. 4. Pollutant Cleanup and Removal -- "We" pay "your" expense to extract "pollutants" from land or water at the scheduled locations if the discharge, dispersal, seepage, migration, release, or escape of the "pollutants" is caused by a covered peril that occurs during the policy period. The expenses are paid only if they are reported to "us" in writing within 180 days from the date the covered peril occurs. "We" do not pay the cost of testing, evaluating, observing, or recording the existence, level, or effects of "pollutants". However, "we" pay the cost of testing which is necessary for the extraction of "pollutants" from land or water. The most "we" pay for each site or location is $50,000 for the sum of all such expenses arising out of a covered peril occurring during each separate 12 month period of this policy. 5. Recharge of Fire Protection Equipment -- "We" pay up to $10,000 to cover "your" incurred expenses to recharge automatic fire protection equipment when the equipment is discharged to fight a fire or as a result of a covered peril. SUPPLEMENTAL COVERAGES "We" provide the following supplemental coverages and unless otherwise stated are additional limits of coverage. Each supplemental coverage: a. Applies to loss caused by a covered peril; b. Applies to covered property in or on buildings or structures at "covered locations" or in the open (or in vehicles) within 1,000 feet of the "covered locations"; and c. Is not subject to and not considered in applying coinsurance when coinsurance conditions are added to this coverage. 1. Arson Reward -- "We" pay up to $30,000 as reward for information that leads to an arson conviction. The conviction must be for a covered CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 4 of 19 Copyright American Association of Insurance Service, 1995

51 fire loss. The amount "we" pay is not increased by the number of persons involved in providing the information. Coinsurance and the deductible indicated on the Declarations Page do not apply to this Supplemental Coverage. 2. Brands or Labels Expense --"We" pay up to $50,000 for "your" expenses for stamping or removing brands or labels. If covered business personal property is damaged, "we" have the option to take all or any part of the damaged business personal property at the agreed or appraised value. "You" may stamp salvage or remove any brands or labels from the property or its containers. "You" must not damage the property or containers when "you" remove the brands or labels. "You" must relabel the merchandise or its containers if required by law. 3. Consequential Loss -- "We" pay up to $10,000 for the consequential loss of undamaged business personal property. Consequential loss means the loss of value of an undamaged part or parts of a product which becomes unmarketable. It must be unmarketable due to a physical loss to another part or parts of the product caused by a covered peril. 4. Foundations of Buildings, Pilings, and Underground Pipes -- "We" pay up to $250,000 or 10% of the "limit" shown on the "declarations" for covered property at any one "covered location", whichever is less for loss to: a. Foundations of buildings, structures, machinery, or boilers if their foundations are below: 1) The lowest basement floor; or 2) The surface of the ground, if there is no basement; b. Pilings, piers, wharves, docks, or retaining walls; c. Underground pipes, flues, or drains. d. The cost of excavating, grading, backfilling or filling. 5. Inventory and Appraisals Expenses -- "We" pay up to $50,000 for reasonable expenses, for the taking of inventory and appraisals, incurred by "you" at "our" request to assist "us" in the determination of the amount of a covered loss. "We" do not pay for: a. Any expenses incurred under the Other Conditions, Appraisal section of this coverage; or b. Any public adjusters' fees. 6. Newly Acquired Buildings --"We" pay up to $1,000,000 for loss to each building or structure in any one occurrence. When the Locations and Scheduled Locations Endorsements are attached to this coverage, "we" cover "your" buildings or structures being built or that "you" acquire during the policy period. This coverage applies for 90 days from the date "you" acquire or begin to construct the building or structure or until "you" report the newly acquired property to "us", whichever occurs first. This coverage does not go beyond the end of the policy period. "You" must pay additional premium due from the date construction is started or "you" acquire the property. 7. Property Off-Premises Other Locations We will pay up to $200,000 for loss to your Business Personal Property, including stock, while Off-Premises or at other locations, you occupy, operate or lease, whether owned or not. We cover your Business Personal Property including stock while at storage locations, processing locations and installation sites. Coverage at installation sites ends when the installation is completed, even if it has not been accepted by the owner. Property Off-Premises/Other Locations coverage does not apply to Covered Property : a. In the care, custody or control of your sales representative; b. At any fair or exhibition; c. At newly acquired locations; or d. Damaged during installation or testing. 8. Ordinance or Law -- When a covered peril occurs to covered buildings or structures, "we" cover: a. Loss caused by the enforcement of any ordinance, law, or decree that: 1) Requires the demolition of undamaged parts of covered buildings or structures that are damaged or destroyed by a covered peril; 2) Regulates the construction or repair of buildings or structures, or establishes building, zoning, or land use requirements at "covered locations"; and 3) Is in force at the time of loss. b. The increased cost to repair, rebuild, or construct covered buildings or structures as CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 5 of 19 Copyright American Association of Insurance Service, 1995

52 a result of the enforcement of building, zoning or land use ordinance, law, or decree. If covered buildings or structures are repaired or rebuilt, they must be intended for similar occupancy as the current property, unless otherwise required by building, zoning or land use ordinance, law, or decree. c. The cost to demolish and clear the site of undamaged parts of covered buildings or structures that are damaged or destroyed by a covered peril as a result of the enforcement of the building, zoning or land use ordinance, law, or decree. "We" do not cover the costs associated with the enforcement of any ordinance, law, or decree that requires "you" or anyone else to test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize or in any way respond to or assess the effects of "pollutants". "We" do not cover the increased cost of construction until the covered building or structure is actually repaired or replaced and unless the repairs or replacement are made as soon as reasonably possible after the loss, not to exceed two years. If the covered building or structure is repaired or replaced, "we" pay the lesser of: a. The amount "you" actually spend to demolish and clear the site, plus the amount "you" actually spend to repair, rebuild, or construct the property but not for more than buildings or structures of the same height, floor area, and style; or b. $100,000. If the covered building or structure is not repaired or replaced, "we" pay the lesser of: a. The amount "you" actually spend to demolish and clear the site, plus the cost to replace the damaged or destroyed property with other property: 1) Of like kind, and quality; 2) Of the same height, floor area, and style; and 3) Used for the same purpose; or b. $100, Personal Effects -- "We" pay up to $10,000 at each "covered location" for personal effects owned by "you", "your" officers, "your" partners, or "your" employees. 10. Personal Property - Acquired Locations -- "We" pay up to $500,000 for loss to business personal property at acquired locations in any one occurrence. When the Locations and Scheduled Locations Endorsements are attached to this coverage, "we" cover "your" Business Personal Property at locations that "you" acquire during the policy period. "We" do not cover personal property at fairs or exhibitions except as provided under Property On Exhibition. This coverage applies for 90 days from the date "you" acquire the location or until "you" report the acquired location to "us" whichever occurs first. This coverage does not go beyond the end of the policy period. "You" must pay an additional premium due from the date "you" acquire the location. 11. Trees, Shrubs, and Plants -- "We" pay up to $50,000 including debris removal expenses, for "your" outdoor trees, shrubs, plants, and lawns except for those held for sale. "We" only cover loss caused by: a. Fire; b. Lightning; c. Explosion; d. Riot or civil commotion; or e. Falling objects. 12. Worldwide Property Off Premises We pay up to $45,000 for loss to your Business Personal Property and covered Business Personal Property of Others when it is temporarily outside the coverage territory while in transit or on an airborne transportation carrier, for the purpose of exhibition, service or repair. SUPPLEMENTAL MARINE COVERAGES "We" provide the following SUPPLEMENTAL MARINE COVERAGES and unless otherwise stated are Additional Limits of Coverage. Each supplemental marine coverage: a. Applies to loss caused by a covered peril; and b. Is not subject to and not considered in applying coinsurance when coinsurance conditions are added to this coverage. 1. Accounts Receivable -- "We" pay up to $50,000 to cover losses and expenses that "you" incur as a result of loss or damage to "your" records of accounts receivable CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 6 of 19 Copyright American Association of Insurance Service, 1995

53 Losses and expenses under this coverage means: a. All sums due "you" from customers, provided "you" are unable to effect collection; b. Interest charges on any loan used to offset impaired collections pending prepayment of such sums made uncollectible by loss or damage; c. Collection expenses in excess of normal collection costs made necessary because of loss or damage; d. Other reasonable expenses incurred by "you" in recreating records of accounts receivable following such loss or damage. 2. Fine Arts -- "We" pay up to $50,000 for "your" "fine arts" at "covered locations". 3. Property on Exhibition -- "We" pay up to $100,000 for covered business personal property including property of others while in your care, custody and control while temporarily on display or exhibit at locations "you" do not regularly occupy. Our payment for loss to property of others will only be for the account of the owner of the property. PERILS EXCLUDED 1.e., 2.a., and 2.f. of this coverage form do not apply to this coverage. 4. Property in Transit -- "We" pay up to $100,000 in any one occurrence for covered business personal property (other than property in the care, custody, or control of "your" sales representatives) while in transit within the coverage territory. This includes property you have sold but not delivered. We will also cover your expenses to inspect, repackage and reship undamaged covered property when the shipment is damaged by a Covered Peril, regardless if the loss involves one or more vehicles, conveyances, containers, trailers, or any combination of these. This coverage also applies to outgoing shipments where the risk of loss is transferred to the buyer. You must use all reasonable means to collect any amount due you from the buyer after a loss. Should you present a claim to us under this coverage section, we will not make payment until you grant us the right of recovery against the buyer. We also cover shipments during loading or unloading and within 100 feet of any transporting conveyance, and outgoing shipments which have been rejected by the consignee or are not deliverable while: a. In due course of transit, being returned to you ; or b. Up to 30 days after delivery or attempted delivery waiting to be returned to you. Under this Property In Transit coverage, we will not pay for: a. Property in the care, custody or control of your sales representative; b. Shipments in the custody of the U.S. Postal Service; or c. Property of others for which you are responsible as a carrier for hire, car loader, consolidator, broker, freight forwarder, shipping association or other arranger of transportation. You must not impair our rights to recover form any carrier for hire. But you may accept bills of lading, receipts or contracts of transportation containing a limitation of value from carriers for hire. PERILS EXCLUDED 2.f., 2.k., 2.m., 2.o., and 2.q. of this coverage form do not apply to this Property In Transit coverage. 5. Sales Representative Samples -- "We" pay up to $75,000 for samples of "your" stock in trade (including containers) and similar property of others. "We" cover samples of "your" stock in trade and similar business property of others while the property is away from the described premises in the schedule of locations and is: a. In the custody of "your" sales representatives and agents (exclusively for your benefit); b. In "your" custody while acting as a sales representative; or c. In transit between "your" "covered locations" and "your" sales representatives. PERILS EXCLUDED 1.e., 2.a., 2.f., 2.k., and 2.o. of this coverage form do not apply to "your Sales Representative Samples coverage. 6. Valuable Papers and Records - Cost of Research -- "We" pay up to $50,000 for the cost of research or other expenses necessary to reproduce, replace, or restore lost information on lost or damaged "valuable papers and records". This includes those "valuable papers and records" which exist on electronic or magnetic media for which duplicates do not exist. 7. Depositors Forgery CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 7 of 19 Copyright American Association of Insurance Service, 1995

54 We pay up to $25,000 for loss you sustain because a written promise or order to pay money is forged or altered. We will pay for this loss whether the promise or order is: a. Made by you ; b. Drawn upon by you ; or c. Made or drawn by an agent of yours. 8. Employee Dishonesty We pay up to $100,000 for loss to covered property resulting from dishonest acts committed by an employee, whether acting alone or in collusion with others and with the express intent to cause you to sustain loss and for that employee to obtain financial gain. a. We will not pay for any loss or damage when: 1) You or any of your partners, officers or members, either acting alone or in collusion with others, commit a dishonest or criminal act; 2) The only proof of loss is: a) Shortage discovered during inventory; b) A profit and loss computation. All loss or damage caused by one or more than one person, or involving a single or series of related acts, is considered one occurrence. b. We only pay for loss you sustain through acts or events occurring during the policy period. The limit of this coverage does not accumulate from year to year or policy period to policy period. c. This coverage does not apply to any employee immediately upon discovery by you or any of your partners, officers, directors or members not in collusion with that employee, of any dishonest act committed by that employee before or after being hired by you. We will only pay for a covered loss if it is discovered no later than one year from the end of the policy period. d. If you sustain a loss during any prior insurance coverage that would have paid for the loss except that the time to discover the loss had expired, we will pay for that loss under this coverage provided that: 1) This coverage became effective immediately after the end of the prior insurance; and 2) The loss would have been covered by this insurance had it been in effect at the time of the loss. e. The coverage under paragraph d. above is not in addition to the limit of insurance applying to this coverage, and is further limited to the lesser of 1) This coverage as of its effective date; or 2) The prior insurance had it remained in effect. f. This coverage may be extended to apply to loss caused by an employee while temporarily outside the coverage territory for a period of up to 90 days. g. PERILS EXCLUDED 2.d. of this coverage part does not apply to Employee Dishonesty coverage. 9. Welfare and Pension Plan ERISA Compliance -- We pay up to $500,000 for a bond to cover Welfare and Pension Plan ERISA Compliance requirements. In compliance with the provisions of the Employee Retirement Income Security Act (ERISA): a. An employee includes any person who is: 1) A trustee, officer, administrator or manager, except an independent contractor, of any Employee Welfare or Pension Benefit Plan (hereafter called Plan) insured under this coverage; and 2) Your director or trustee while the pension is handling funds or other property of any Plan insured under this coverage. b. If any Plan is insured with another entity under this coverage, you or the Plan Administrator must select a limit of insurance for the Employee Dishonesty coverage we provide that is sufficient to cover each Plan. That amount must be at least equal to the amount required if each Plan were insured separately. c. If you are an entity or organization other than a Plan, any payment we make to you because of loss sustained by any Plan must be held for the use and benefit of the Plan sustaining loss. d. If two or more Plans are covered by this insurance, any payment we make for loss: 1) Sustained by two or more Plans; or 2) Of commingled funds or other property of two or more Plans that arise out of CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 8 of 19 Copyright American Association of Insurance Service, 1995

55 one occurrence, is to be shared by each Plan sustaining loss in the proportion that the amount of insurance required for each Plan under ERISA provisions bears to the total of those amounts. a) The deductible shown on the Declarations Page of this policy does not apply to loss under the Welfare and Pension Plan ERISA Compliance. 10. Money and Securities We pay up to $50,000 for loss to your money or securities resulting from theft, disappearance or destruction while: a. Inside your premises; b. Inside the premises of a banking institution or similar safe depository; or c. Outside your premises while in the custody of : 1) A messenger; or 2) An armored motor vehicle company. PERILS EXCLUDED 1.e., 2.a., 2.f., 2.k., 2.o., and 2.s., do not apply to this coverage. 11. Water Damage PERILS EXCLUDED g.3. of this coverage part is amended to read as follows: d. We pay up to $10,000 for loss to covered property at each described premises caused by underground water pressing on, flowing or seeping through: 1) Foundations, walls, floors, or paved surfaces; 2) Basements, whether paved or not; or 3) Doors, windows or other openings. This coverage does not apply to your business personal property away from your described premises. 12. Blanket Limit of Insurance We pay up to $250,000 for loss under one or more of the following: a. Movement of Property We will pay for loss to covered property if: 1) You move covered property from a described premises to a new premises; and 2) A limit of insurance for the new premises is added to this policy and the prior described premises has been deleted from this policy; and 3) Loss from a covered peril occurs to covered property at the prior described premises before the movement of property to the new premises is completed. Coverage under this Movement of Property section will end at the earliest of the following: 1) The movement of the covered property to the new premises is completed; or 2) 30 days after the new premises has been endorsed to this policy. b. Outdoor Property We will pay for loss under Blanket Limit of Insurance to the following: 1) Bridges, roadways, walks, patios or other paved surfaces; 2) In-ground sprinkler systems and applicable piping; 3) Outdoor fences and awnings; 4) Radio, microwave or television towers, antennas or satellite dishes, including their lead-in wiring and masts; 5) Retaining walls that are not part of the building; 6) Signs, whether or not attached to covered buildings or structures; or 7) Building glass which you own or for which you have a contractual obligation to insure. This coverage includes your debris removal expense due to any covered peril. c. Theft Damage To Buildings We pay for loss or damage caused directly by theft or attempted theft to: 1) That part of any building containing your covered property; or 2) Equipment within the building used to maintain or service that building. Under this Theft Damage To Buildings coverage, we will not pay for damage to: CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 9 of 19 Copyright American Association of Insurance Service, 1995

56 a) Building glass; or b) Lettering or artwork on glass; or c) Etching on glass. This Theft Damage To Buildings coverage applies only to premises where you are a tenant and are responsible for such damage. d. Marring or Scratching We pay for loss to covered property at the described premises due to accidental marring or scratching of: 1) Your stock; and 2) Property of others in your care, custody or control. This coverage does not apply to: 1) Property at other premises; and 2) Property in transit. e. Consequential Loss To Stock We pay for loss due to the reduction in value of the remaining parts of your stock when the reduction in value is caused by direct loss from a covered peril to other parts of your covered stock. The Blanket Limit of insurance applies separately to each covered premises shown in the declarations and is also subject to the deductible shown on the declarations. This Blanket Limit of Insurance does not apply to premises shown on the declarations as Any Other Location. At the time of loss, you may elect to apportion this Blanket Limit of Insurance to one or any combination of the Coverages shown, but under no circumstances will the aggregate apportionment be permitted to exceed the Blanket Limit of Insurance shown above at any one covered premises. PERILS COVERED "We" cover external risks of direct physical loss unless the loss is limited or caused by a peril that is excluded. PERILS EXCLUDED 1. "We" do not pay for loss if one or more of the following exclusions apply to the loss, regardless of other causes or events that contribute to or aggravate the loss, whether such causes or events act to produce the loss before, at the same time as, or after the excluded causes or events. a. Ordinance or Law -- Except as provided under SUPPLEMENTAL COVERAGES, "we" do not pay for loss or increased cost caused by enforcement of any code, ordinance, or law regulating the use, construction, or repair of any building or structure; or requiring the demolition of any building or structure including the cost of removing its debris. b. Earth Movement or Volcanic Eruption -- "We" do not pay for loss caused by any earth movement (other than "sinkhole collapse") caused by earthquake, or eruption, explosion, or effusion of a volcano. Earth movement includes, but is not limited to: earthquake; landslide; mudflow; mudslide; mine subsidence; or sinking, rising, or shifting of earth. "We" do cover direct loss by fire, explosion, or "volcanic action" resulting from either eruption, explosion, or effusion of a volcano. All volcanic eruptions that occur within a 168 hour period shall be considered a single loss. This exclusion does not apply to "computers" or "mobile equipment". c. Civil Authority -- "We" do not pay for loss caused by order of any civil authority, including seizure, confiscation, destruction, or quarantine of property. "We" do cover loss resulting from acts of destruction by the civil authority to prevent the spread of fire, unless the fire is caused by a peril excluded under this coverage. d. Nuclear Hazard -- "We" do not pay for loss caused by or resulting from a nuclear reaction, nuclear radiation, or radioactive contamination (whether controlled or uncontrolled; whether caused by natural, accidental, or artificial means). Loss caused by nuclear hazard is not considered loss caused by fire, explosion, or smoke. Direct loss by fire resulting from the nuclear hazard is covered. e. Utility Failure -- "We" do not pay for loss caused by interruption of power or other utility services resulting from any cause if the interruption takes place away from the "covered locations". Interruption includes reduced or increased voltage, low or high pressure, or other interruptions of normal services CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 10 of 19 Copyright American Association of Insurance Service, 1995

57 "We" do cover the direct loss by a covered peril which occurs at "covered locations" as a result of any power interruption. This exclusion does not apply to "computers", "mobile equipment", and the SUPPLEMENTAL MARINE COVERAGES. f. War -- "We" do not pay for loss caused by war. This means: 1) Declared war, undeclared war, civil war, insurrection, rebellion, or revolution; 2) A warlike act by a military force or by military personnel; 3) The destruction, seizure, or use of the property for a military purpose; or 4) The discharge of a nuclear weapon even if it is accidental. g. Water -- "We" do not pay for loss caused by water. This means: 1) Flood, surface water, waves, tidal water, or the overflow of a body of water, all whether driven by wind or not. This includes spray that results from these whether driven by wind or not; 2) Water that backs up through a sewer or drain; and 3) Water below the surface of the ground. This includes water that exerts pressure on or flows, seeps, or leaks through or into a building or structure, sidewalk, driveway, foundation, swimming pool, or other structure. If fire, explosion, or sprinkler leakage results, "we" do cover the resulting loss. This exclusion does not apply to "computers" or "mobile equipment". 2. "We" do not pay for loss or damage if one or more of the following exclusions apply to the loss. a. Animals -- "We" do not pay for loss caused by animals, including birds, insects, or vermin. "We" do cover any resulting loss caused by a "specified peril" or breakage of building glass. b. Collapse -- "We" do not pay for loss caused by collapse, except as provided under the Other Coverages, Collapse. If loss caused by a covered peril results at the "covered locations" "we" will pay for that resulting loss. This exclusion does not apply to "computers", "mobile equipment", and the SUPPLEMENTAL MARINE COVERAGES. c. Contamination or Deterioration -- "We" do not pay for loss caused by contamination or deterioration including corrosion, decay, fungus, mildew, mold, rot, rust, or any quality, fault, or weakness in covered property that causes it to damage or destroy itself. "We" do cover any resulting loss caused by a "specified peril" or breakage of building glass. However, "we" do cover loss caused by corrosion, decay, fungus, mildew, mold, rot, or rust to "computers" that results from direct physical damage by a covered peril to the air conditioning system that services "your" "computers". d. Criminal, Fraudulent, or Dishonest Acts -- "We" do not pay for loss caused by or resulting from criminal, fraudulent, dishonest, or illegal acts alone or in collusion with another by: 1) "You"; 2) Others who have an interest in the property; 3) Others to whom "you" entrust the property; 4) "Your" partners, officers, directors, trustees, joint adventurers; or 5) The employees or agents of 1), 2), 3), or 4) above, whether or not they are at work. This exclusion does not apply to acts of destruction by "your" employees, but "we" do not pay for theft by employees. This exclusion does not apply to covered property in the custody of a carrier for hire. e. Defects, Errors, and Omissions -- "We" do not pay for loss which results from one or more of the following: 1) An act, error, or omission (negligent or not) relating to: a) Land use; b) The design, specification, construction, workmanship, installation, or maintenance of property; c) Planning, zoning, development, siting, surveying, grading, or compaction; or d) Maintenance of property (including land, structures, or improvements); whether on or off the "covered locations"; CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 11 of 19 Copyright American Association of Insurance Service, 1995

58 2) A defect, weakness, inadequacy, fault, or unsoundness in materials used in construction or repair, whether on or off the "covered locations"; 3) The cost to make good an error in design; or 4) A data processing error or omission in programming or giving improper instructions. In addition, "we" do not pay for loss to business personal property caused by deficiencies or defects in design, specifications, materials, or workmanship, or caused by latent or inherent defects. "We" do cover any resulting loss caused by a covered peril unless the resulting loss itself is excluded. f. Electrical Currents -- "We" do not pay for loss caused by arcing or by electrical currents other than lightning. If a fire results, "we" cover only the loss caused by fire. "We" do cover the direct loss by a covered peril which occurs at "covered locations" as a result of any power interruption or other utility services. g. Explosion -- "We" do not pay for loss caused by explosion of steam boilers, steam pipes, steam turbines, or steam engines that "you" own or lease or that are operated under "your" control. If a fire or combustion explosion results, "we" do cover the resulting loss. "We" also cover loss caused by the explosion of gas or fuel in a firebox, combustion chamber, or flue. h. Freezing -- "We" do not pay for loss caused by water; other liquids; powder; or molten material that leaks or flows from plumbing, heating, air-conditioning systems, or appliances other than fire protective systems caused by freezing. This does not apply if "you" use reasonable care to maintain heat in the building or structure; or "you" drain the equipment and turn off the supply if the heat is not maintained. i. Increased Hazard -- "We" do not pay for loss occurring while the hazard has been materially increased by any means within "your" knowledge or "your" control. j. Loss of Use -- "We" do not pay for loss caused by loss of use, business interruption, delay, or loss of market. k. Mechanical Breakdown -- "We" do not pay for loss caused by mechanical breakdown or rupturing or bursting of moving parts of machinery caused by centrifugal force. "We" do cover any resulting loss caused by a "specified peril", breakage of building glass, or elevator collision. This exclusion does not apply to "computers". l. Neglect -- "We" do not pay for loss caused by "your" neglect to use all reasonable means to save covered property at and after the time of loss. "We" do not pay for loss caused by "your" neglect to use all reasonable means to save and preserve covered property when endangered by a covered peril. m. Pollutants -- "We" do not pay for loss caused by or resulting from release, discharge, seepage, migration, dispersal, or escape of "pollutants" unless the release, discharge, seepage, migration, dispersal, or escape is caused by a "specified peril". "We" do pay for any resulting loss caused by a "specified peril". n. Seepage -- "We" do not pay for loss caused by continuous or repeated seepage or leakage of water or steam that occurs over a period of 14 days or more. o. Settling, Cracking, Shrinking, Bulging, or Expanding -- "We" do not pay for loss caused by settling, cracking, shrinking, bulging, or expanding of pavements, footings, foundations, walls, ceilings, or roofs. "We" do cover any resulting loss caused by a "specified peril" or breakage of building glass. This exclusion does not apply to "computers" and "mobile equipment". p. Smog, Smoke, Vapor, or Gas -- "We" do not pay for loss caused by smog, smoke, vapor, or gas from agricultural smudging or industrial operations. This exclusion does not apply to "computers" and "mobile equipment". q. Temperature/Humidity -- "We" do not pay for loss to personal property caused by humidity or changes in or extremes of temperature. "We" will cover any resulting loss caused by "specified perils" or breakage of building glass. However, "we" do pay for loss to "computers" that results from direct physical damage by a covered peril to the air conditioning system that services "your" "computers" CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 12 of 19 Copyright American Association of Insurance Service, 1995

59 r. Voluntary Parting -- "We" do not pay for loss caused by or resulting from voluntary parting with title to or possession of any property because of any fraudulent scheme, trick, or false pretense. s. Wear and Tear -- "We" do not pay for loss caused by wear and tear, marring, or scratching. "We" do pay for any resulting loss caused by a "specified peril" or breakage of building glass. t. Weather -- "We" do not pay for loss caused by weather conditions if the weather conditions contribute in any way with a cause or event excluded in paragraph 1. above. "We" do pay for any resulting loss caused by a covered peril unless the resulting loss itself is excluded. ADDITIONAL PROPERTY NOT COVERED OR SUBJECT TO LIMITATIONS 1. Accounts Receivable -- "We" do not cover loss to accounts receivables that is a result of: a. An error or omission in bookkeeping, accounting, or billing; b. "Your" discovery of a discrepancy in "your" books or records if an audit or inventory computation is necessary to prove the factual existence of the discrepancy. 2. Animals -- "We" do not cover loss to animals, including birds and fish, except death or destruction of animals held for sale caused by "specified perils" or breakage of building glass. 3. Boilers -- "We" do not cover loss to steam boilers, steam pipes, steam turbines, or steam engines caused by any condition or occurrence within such equipment. "We" do cover loss to such equipment caused by the explosion of gas or fuel in a firebox, combustion chamber, or flue. "We" do not cover loss to hot water boilers or heaters caused by any condition or occurrence within such equipment other than explosion. This exclusion includes bursting, cracking, or rupturing. 4. Furs -- "We" do not cover furs or fur garments for loss by theft for more than $10,000 total in any one occurrence. 5. Glassware/Fragile Articles -- "We" do not cover breakage of fragile articles such as glassware, statuary, porcelains and bric-a-brac, except as a result of "specified perils" or breakage of building glass. This does not apply to glass that is a part of a building or structure, bottles or other containers held for sale, or lenses of photographic and scientific instruments. 6. Gutters and Downspouts -- "We" do not cover loss to gutters and downspouts caused by the weight of ice, sleet, or snow. 7. Interior of Buildings -- "We" do not cover loss to the interior of buildings or structures or to personal property in the buildings or structures caused by rain, snow, sleet, ice, sand, or dust, unless: a. Entering through openings made by a "specified peril"; or b. The loss is caused by the thawing of snow, sleet, or ice on the building or structure. 8. Jewelry, Watches, Jewels, Pearls, Precious Stones, and Metals -- "We" do not cover more than $10,000 total in any one occurrence for loss by theft of jewelry; watches; watch movements; jewels; pearls; precious or semi-precious stones, and bullion. This limitation does not apply to items of jewelry or watches worth $100 or less. Gold, silver, platinum or other precious alloys or metals used in the manufacture of your product are subject to a limit of $35,000 for any one or combination of these items. 9. Missing Property -- "We" do not cover missing property when the only proof of loss is unexplained or mysterious disappearance, or shortage discovered on taking inventory, or other instance where there is no physical evidence to show what happened to the property. This exclusion also applies to property in the custody of carriers for hire. 10. Personal Property in the Open -- "We" do not cover loss to personal property in the open caused by rain, snow, ice, or sleet. This exclusion does not apply to "mobile equipment" or to property in the custody of carriers for hire. 11. Stamps, Tickets, and/or Letters of Credit -- "We" do not cover more than $5,000 total in any one occurrence for loss to stamps, tickets (including lottery tickets held for sale), or letters of credit by theft. 12. Transferred Property -- "We" do not cover loss to property that has been transferred to a person or to a place away from the "covered locations" on the basis of unauthorized instructions CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 13 of 19 Copyright American Association of Insurance Service, 1995

60 13. Valuable Papers and Records -- "We" do not cover loss to "valuable papers and records" caused by errors or omissions in processing or copying except as a result of "specified perils" or breakage of building glass. OTHER COVERAGES 1. Collapse -- "We" pay for loss caused by direct physical loss involving collapse of a covered building or structure or any part of a building or structure caused only by one or more of the following: a. "Specified perils"; all only as covered in Hi Tech / Precision Manufacturing Program Coverages; b. Hidden decay; c. Hidden insect or vermin damage; d. Weight of people or business personal property; e. Weight of rain that collects on a roof; or f. The use of defective material or methods in construction, remodeling, or renovation if the collapse occurs during the course of the construction, remodeling, or renovation. "We" do not pay for loss to the following types of property, if otherwise covered under Hi Tech / Precision Manufacturing Program Coverage, under items a. through f. above, unless the loss is a direct result of the collapse of a building or structure: a. Outdoor awnings or canopies or their supports; b. Fences; c. Gutters and downspouts; d. Yard fixtures; e. Outdoor swimming pools; f. Piers, wharves, and docks; g. Beach or diving platforms or appurtenances; h. Retaining walls; i. Foundations; j. Walks, roadways, and other paved surfaces. 2. Tearing Out and Replacing -- If loss or damage to your described property is caused by water, other liquids, powder or molten material, we pay for your expense to tear out and replace any part of the damaged building, underground pipes, lawns, shrubs or paved area in order to repair the system or appliance from which the water or other substance escaped and damaged your described premises. Payment under this coverage is included in the limit of insurance shown on the declarations. The most we will pay for loss to lawns, shrubs or paved areas is $25,000. WHAT MUST BE DONE IN CASE OF LOSS 1. Notice -- In case of a loss, "you" must: a. Give "us" or "our" agent prompt notice including a description of the property involved ("we" may request written notice); b. Give notice to the police when the act that causes the loss is a crime; and c. Give notice to the credit card company if the loss involves a credit card. 2. Protect Property -- "You" must take all reasonable steps to protect covered property at and after an insured loss to avoid further loss. "We" will pay the reasonable costs incurred by "you" for necessary repairs or emergency measures performed solely to protect covered property from further damage by a peril insured against if a peril insured against has already caused a loss to covered property. "You" must keep an accurate record of such costs. However "we" will not pay for such repairs or emergency measures performed on property which has not been damaged by a peril insured against. This does not increase "our" "limit". 3. Proof of Loss -- "You" must send "us", within 60 days after "our" request, a signed, sworn proof of loss. This must include the following information: a. The time, place, and circumstances of the loss; b. Other policies of insurance that may cover the loss; c. "Your" interest and the interests of all others in the property involved, including all mortgages and liens; d. Changes in title or occupancy of the covered property during the policy period; e. Detailed estimates for repair or replacement of covered property; f. An inventory of damaged and undamaged covered property showing in detail the quantity, description, cost, actual cash value, and amount of the loss. "You" must attach to the inventory copies of all bills, receipts, and CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 14 of 19 Copyright American Association of Insurance Service, 1995

61 related documents that substantiate the inventory. 4. Examination -- "You" must submit to examination under oath in matters connected with the loss as often as "we" reasonably request and give "us" sworn statements of the answers. If more than one person is examined, "we" have the right to examine and receive statements separately and not in the presence of others. 5. Records -- "You" must produce records, including tax returns and bank microfilms of all cancelled checks relating to value, loss, and expense and permit copies and extracts to be made of them as often as "we" reasonably request. 6. Damaged Property -- "You" must exhibit the damaged and undamaged property as often as "we" reasonably request and allow "us" to inspect or take samples of the property. 7. Volunteer Payments -- "You" must not, except at "your" own expense, voluntarily make any payments, assume any obligations, pay or offer any rewards, or incur any other expenses except as respects protecting property from further damage. 8. Abandonment -- "You" may not abandon the property to "us" without "our" written consent. 9. Cooperation -- "You" must cooperate with "us" in performing all acts required by the Hi Tech / Precision Manufacturing Program Coverages. VALUATION 1. Actual Cash Value -- When replacement cost is not shown on the "declarations" for covered property, the value of covered property will be based on the actual cash value at the time of the loss (with a deduction for depreciation) except as provided in the paragraphs below. 2. Replacement Cost -- When replacement cost is shown on the "declarations" for covered property, the value of covered property will be based on the replacement cost without any deduction for depreciation. The replacement cost is limited to the cost of repair or replacement with similar materials on the same or other site and used for the same purpose. The payment shall not exceed the amount "you" spend to repair or replace the damaged or destroyed property. We will not pay on a replacement cost basis for any loss or damage: a. Until the lost or damaged property is actually repaired or replaced; and b. Unless repairs or replacement are made as soon as reasonably possible after the loss or damage. The cost of building repairs or replacement does not include increased cost attributable to enforcement of any ordinance or law regulating the construction, use or repair of any property, except as specifically provided for under this coverage part. Replacement cost valuation does not apply until the damaged or destroyed property is repaired or replaced. "You" may make a claim for actual cash value before repair or replacement takes place, and later for the replacement cost if "you" notify "us" of "your" intent within 180 days after the loss. This replacement cost provision does not apply where a different valuation basis is provided in the paragraphs below. 3. Fine Arts -- The value of "fine arts" will be based on the lesser of the following amounts: a. The actual cash value of the property at the time of loss or damage; or b. The amount which you could reasonably be expected to pay to have the property repaired to its condition immediately prior to the loss. 4. Glass -- The value of glass will be based on the cost of safety glazing material where required by code, ordinance, or law. 5. Manufacturers Selling Price / Merchandise Sold We will determine the value of finished stock you manufacture at: a. The selling price, if no loss or damage occurred; b. Less discounts and expenses you otherwise would have had. The value of merchandise that "you" have sold but not delivered will be based on the selling price less all discounts and unincurred expenses. 6. Pair or Set The value is either: a. The cost to repair or replace any part to restore the pair or set to its value before the loss; or b. The difference between the value of the pair or set before and after the loss. 7. Loss to Parts -- The value of a lost or damaged part of an item that consists of several parts CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 15 of 19 Copyright American Association of Insurance Service, 1995

62 when it is complete is based on the value of only the lost or damaged part or the cost to repair or replace it. 8. Tenant's Improvements -- The value of tenant's improvements losses will be based on the actual cash value if repaired or replaced at "your" expense within a reasonable time. The value of tenant's improvements losses will be based on a portion of "your" original cost if not repaired or replaced within a reasonable time. This portion is determined as follows: a. Divide the number of days from the date of the loss to the expiration date of the lease by the number of days from the date of installation to the expiration date of the lease; and b. Multiply the figure determined in 8.a. above by the original cost. If "your" lease contains a renewal option, the expiration of the lease in this procedure will be replaced by the expiration of the renewal option period. Tenant's improvements losses are not covered if repaired or replaced at another's expense. 9. Valuable Papers and Records -- The value of "valuable papers and records", including those which exist on electronic or magnetic media, is based on the cost of blank materials for reproducing the records, and the labor to transcribe or copy the records when there is a duplicate. 10. Inflation Guard -- The limit of insurance for covered premises will automatically increase the percentage shown on the declarations to provide for increases in cost of construction during the preceding policy year. The calculated amount of increase is as follows: a. The limit of insurance that applied on the most recent policy inception date, the policy anniversary date, or any other policy change date amending the limit of insurance, times b. The applicable percentage expressed as a decimal (example: 4% is.04), times c. The number of days since the beginning of the current policy period or the effective date of the most recent policy change amending the limit of insurance, divided by Property In Transit Property in transit is valued at: a. The amount of invoice plus accrued costs, prepaid charges and charges since shipment that are not included in the invoice amount; or b. In the absence of an invoice, the value of the covered property will be: 1) It s selling price if no loss or damage occurred, less discounts and expenses you otherwise would have had if the covered property is your finished stock; or 2) It s actual cash value as of the time of loss or damage. 12. Business Personal Property of Others and Personal Property of others --- This coverage is paid at replacement cost unless otherwise stated in the Declarations. 13. Contents of Residence This coverage is paid at actual cash value. 14. Manuscripts This coverage is paid at actual cash value. HOW MUCH WE PAY 1. Insurable Interest -- "We" do not cover more than "your" insurable interest in any property. 2. Deductible -- "We" pay only that part of "your" loss over the deductible amount stated on the "declarations" in any one occurrence. The deductible applies to the loss before application of any coinsurance or reporting provisions. 3. Loss Settlement Terms -- Subject to paragraphs 1., 2., 4., and 5. under How Much We Pay and coinsurance provisions (if applicable), "we" pay the lesser of: a. The amount determined under Valuation; b. The cost to repair, replace, or rebuild the property with material of like kind and quality to the extent practicable; or c. The "limit" that applies to covered property. For accounts receivable, "we" will pay the lesser of: a. The sum of all accounts receivable due (with reasonable deductions); b. The reasonable cost to reconstruct "your" accounts receivable records; or c. The applicable "limit". 4. Insurance Under More Than One Coverage -- If more than one coverage of this policy insures CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 16 of 19 Copyright American Association of Insurance Service, 1995

63 the same loss, "we" pay no more than the actual claim, loss, or damage sustained. 5. Insurance Under More Than One Policy -- "You" may have another policy subject to the same plan, terms, conditions, and provisions as this policy. If "you" do, "we" will pay "our" share of the covered loss. "Our" share is the proportion that the applicable "limit" under this policy bears to the "limit" of all policies covering on the same basis. If there is another policy covering the same loss, other than that described above, "we" will pay only for the amount of covered loss in excess of the amount due from that other policy, whether "you" can collect on it or not. But "we" will not pay more than the applicable "limit". LOSS PAYMENT 1. Our Options -- "We" have the following options: a. Pay the value of the loss; b. Pay the cost of repairing or replacing the loss; c. Rebuild, repair, or replace with property of like kind and quality, to the extent practicable, within a reasonable time; d. Take all or any part of the damaged property at the agreed or appraised value. "We" must give "you" notice of "our" intent to rebuild, repair, or replace within 30 days after receipt of a duly executed proof of loss. 2. Your Losses -- "We" will adjust all losses with "you". Payment will be made to "you" unless another loss payee is named in the policy. An insured loss will be payable 30 days after a satisfactory proof of loss is received, and the amount of the loss has been established either by written agreement with "you" or the filing of an appraisal award with "us". 3. Property of Others -- Losses to property of others may be adjusted with and paid to: a. "You" on behalf of the owner; or b. The owner. If "we" pay the owner, "we" do not have to pay "you". "We" may also choose to defend any suits arising from the owners at "our" expense. OTHER CONDITIONS In addition to the "terms" which are contained in other sections of the Hi Tech / Precision Manufacturing Program Coverages the following conditions apply. 1. Appraisal -- If "you" and "we" do not agree on the amount of the loss or the actual cash value of covered property, either party may demand that these amounts be determined by appraisal. If either makes a written demand for appraisal, each will select a competent, independent appraiser and notify the other of the appraiser's identity within 20 days of receipt of the written demand. The two appraisers will then select a competent, impartial umpire. If the two appraisers are unable to agree upon an umpire within 15 days, "you" or "we" can ask a judge of a court of record in the state where the property is located to select an umpire. The appraisers will then determine and state separately the amount of each loss. The appraisers will also determine the value of covered property items at the time of the loss, if requested. If the appraisers submit a written report of any agreement to "us", the amount agreed upon will be the amount of the loss. If the appraisers fail to agree within a reasonable time, they will submit only their differences to the umpire. Written agreement so itemized and signed by any two of these three sets the amount of the loss. Each appraiser will be paid by the party selecting that appraiser. Other expenses of the appraisal and the compensation of the umpire will be paid equally by "you" and "us". 2. Benefit to Others -- Insurance under the Hi Tech / Precision Manufacturing Program Coverages shall not directly or indirectly benefit anyone having custody of "your" property. 3. Conformity With Statute -- When a condition of this coverage is in conflict with an applicable law, that condition is amended to conform to that law. 4. Control of Property -- The Commercial Output Policy Coverages are not affected by any act or neglect beyond "your" control. 5. Death -- If "you" die, "your" rights and duties will pass to "your" legal representative but only while acting within the scope of duties as "your" legal representative. Until "your" legal representative is appointed, anyone having proper temporary custody of "your" property will have "your" rights and duties but only with respect to that property. 6. Liberalization -- If a revision of a form or endorsement which broadens Hi Tech / Precision Manufacturing Program Coverages CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 17 of 19 Copyright American Association of Insurance Service, 1995

64 without additional premium is adopted during the policy period, or within six months before this coverage is effective, the broadened coverage will apply. 7. Misrepresentation, Concealment, or Fraud -- These Hi Tech / Precision Manufacturing Program Coverages are void as to "you" and any other insured if, before or after a loss: a. "You" or any other insured have willfully concealed or misrepresented: 1) A material fact or circumstance that relates to this insurance or the subject thereof; or 2) "Your" interest herein; or b. There has been fraud or false swearing by "you" or any other insured with regard to a matter that relates to this insurance or the subject thereof. 8. Policy Period -- "We" pay for a covered loss that occurs during the policy period. 9. Recoveries -- If "we" pay "you" for the loss and lost or damaged property is recovered, or payment is made by those responsible for the loss, the following provisions apply: a. "You" must notify "us" promptly if "you" recover property or receive payment. b. "We" must notify "you" promptly if "we" recover property or receive payment. c. Any recovery expenses incurred by either are reimbursed first. d. "You" may keep the recovered property but "you" must refund to "us" the amount of the claim paid, or any lesser amount to which "we" agree. e. If the claim paid is less than the agreed loss due to a deductible or other limiting "terms" of this policy, any recovery will be pro rated between "you" and "us" based on our respective interest in the loss. 10. Restoration of Limits -- Any loss "we" pay under the Hi Tech / Precision Manufacturing Program Coverages does not reduce the "limits" applying to a later loss. 11. Subrogation -- If "we" pay for a loss, "we" may require "you" to assign to "us" "your" right of recovery against others. "You" must do all that is necessary to secure "our" rights. "We" will not pay for a loss if "you" impair this right to recover. "You" may waive "your" right to recover from others in writing before a loss occurs. 12. Suit Against Us -- No one may bring a legal action against "us" under this coverage unless: a. All of the "terms" of the Hi Tech / Precision Manufacturing Program Coverages have been complied with; and b. The suit has been brought within two years after "you" first have knowledge of the loss. If any applicable law makes this limitation invalid, then suit must begin within the shortest period permitted by the law. 13. Territorial Limits -- "We" cover property while in the United States of America, its territories and possessions, Canada, and Puerto Rico. 14. Mortgage Provisions -- If a mortgagee (mortgage holder) is named in this policy, loss to building property shall be paid to the mortgagee and "you" as their interest appears. If more than one mortgagee is named, they shall be paid in order of precedence. The insurance for the mortgagee continues in effect even when "your" insurance may be void because of "your" acts, neglect, or failure to comply with the coverage "terms". The insurance for the mortgagee does not continue in effect if the mortgagee is aware of changes in ownership or substantial increase in risk and does not notify "us". If "we" cancel this policy, "we" will notify the mortgagee at least ten days before the effective date of cancellation if "we" cancel for "your" nonpayment of premium, or 30 days before the effective date of cancellation if "we" cancel for any other reason. "We" may request payment of the premium from the mortgagee, if "you" fail to pay the premium. If "we" pay the mortgagee for a loss where "your" insurance may be void, the mortgagee's right to collect that portion of the mortgage debt from "you" then belongs to "us". This does not affect the mortgagee's right to collect the remainder of the mortgage debt from "you". As an alternative, "we" may pay the mortgagee the remaining principal and accrued interest in return for a full assignment of the mortgagee's interest and any instruments given as security for the mortgage debt. If "we" choose not to renew this policy, "we" will give written notice to the mortgagee at least ten days before the expiration date of this policy. 15. Vacancy - Unoccupancy -- "We" do not pay for loss caused by attempted theft; breakage of building glass; sprinkler leakage (unless "you" have protected the system against freezing); CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 18 of 19 Copyright American Association of Insurance Service, 1995

65 theft; vandalism; or water damage occurring while the building or structure has been: a. Vacant for more than 60 consecutive days; or b. Unoccupied for more than: 1) 60 consecutive days; or 2) The usual or incidental unoccupancy period for the "covered locations". whichever is longer. The amount "we" will pay for any loss that is not otherwise excluded will be reduced by 15%. Unoccupied means that the customary activities or operations at the "covered location" are suspended, but business personal property has not been removed. The building or structure shall be considered vacant and not unoccupied when the occupants have moved, leaving the building or structure empty or containing only limited business personal property. Buildings or structures under construction are not considered vacant or unoccupied CP Includes copyrighted material of American Association of Insurance Service, with its permission. Page 19 of 19 Copyright American Association of Insurance Service, 1995

66 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. WELFARE AND PENSION PLAN ERISA COMPLIANCE ENDORSEMENT The following is added to Employee Dishonesty Coverage if made a part of the Commercial Output Program Coverages: COVERAGE 1. All Welfare and Pension Plans for which coverage is required under the Employee Retirement Income Security Act (ERISA) are included as insureds but only with respect to loss or losses under Employee Dishonesty Coverage. 2. The most we will pay for loss or damage caused by one occurrence shall not exceed $500,000. Coverage shall be in addition to the limit of insurance for Employee Dishonesty shown in the Declarations. 3. If any plan is insured jointly with any other entity under this insurance, you or the plan administrator must select a limit of insurance for Employee Dishonesty Coverage that is sufficient to provide an amount of insurance for each plan that is at least equal to that required if each plan were separately insured. ADDITIONAL DEFINITION Employee also includes any natural person who is: 1. A trustee, an officer, employee, administrator or a manager, except an administrator or a manager who is an independent contractor of any employee welfare or pension benefit plan (hereafter called plan ) insured under this insurance, and 2. Your director or trustee while that person is handling funds or other property of any Plan insured under this insurance CP Page 1 of 1

67 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. LEGAL LIABILITY COVERAGE ENDORSEMENT AGREEMENT We cover those sums that you become legally obligated to pay as damages because of direct physical loss or damage, including loss of use, to covered property caused by a covered peril. We will have the right and duty to defend any "suit" seeking those damages. However, we have no duty to defend you against a "suit" seeking damages for direct physical loss or damage to which this insurance does not apply. We may investigate and settle any claim or "suit" at our discretion. But: 1. The amount we will pay for damages is limited as described in How Much We Pay; and 2. Our right and duty to defend end when we have used up the limit in the payment of judgments or settlements. ADDITIONAL DEFINITIONS "Suit" includes an arbitration proceeding to which you must submit or submit with our consent. PROPERTY COVERED We cover tangible property of others in your care, custody or control that is described in the Declarations or on the Legal Liability Coverage Schedule. SUPPLEMENTAL COVERAGES We will pay, with respect to any claim or any "suit" against you we defend: 1. All expenses we incur. 2. The cost of bonds to release attachments, but only for bond amounts within our limit. We do not have to furnish these bonds. 3. All reasonable expenses incurred by you at our request, including actual loss of earnings up to $100 a day because of time off from work. 4. All costs taxed against you in the "suit". 5. Prejudgment interest awarded against you on that part of the judgment we pay. If we make an offer to pay the limit, we will not pay any prejudgment interest based on that period of time after the offer. 6. All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within our limit. COVERAGE EXTENSIONS 1. Additional Insureds. If you are a partnership or corporation, then throughout this endorsement, the words "you" and "your" include partners, executive officers, trustees, directors and stockholders of such partnership or corporation, but only with respect to their duties as such. 2. Newly Acquired Organizations. Throughout this endorsement, the words "you" and "your" also include any organization (other than a partnership or joint venture) you newly acquire or form and over which you maintain ownership or majority interest if there is no other similar insurance available to that organization. This Coverage Extension ends: a. 90 days after you acquire or form the organization; or b. At the end of the policy period shown in the Declarations; whichever is earlier. This Extension does not apply to direct physical loss or damage that occurred before you acquired or formed the organization. 3. Newly Acquired Property a. You may extend the insurance that applies to Covered Property, as used in this Coverage Form, to apply to your liability for tangible property of others that comes under your care, custody or control after the beginning of the current policy period. This Extension is subject to the following: (1) All terms and Conditions of this endorsement. (2) Buildings must be intended for: (a) Similar use as the building described in the Declarations or on the Legal Liability Coverage Schedule; or (b) Use as a warehouse. The most we will pay as the result of any one accident for loss or damage to the total of all buildings covered under this Extension is $250,000 at each building CP Page 1 of 2

68 (3) Personal property must be at a location: (a) That you own; or (b) That is or comes under your care, custody or control; other than at fairs or exhibitions. The most we will pay as the result of any one accident for loss or damage to the total of all personal property covered under this Extension is $100,000 at each building. b. Insurance under this Extension for each item of property of others will end when any of the following first occurs: (1) This policy expires; (2) 30 days expire after the property has come under your care, custody or control; or (3) You report values to us. We will charge you additional premium for values reported from the date the property comes under your care, custody or control. This Extension does not apply to direct physical loss or damage that occurred before the property came under your care, custody or control. WHAT MUST BE DONE IN CASE OF LOSS The following loss condition applies to this endorsement: 1. Duties In The Event Of Accident, Claim Or Suit a. You must see to it that we are notified promptly of any accident that may result in a claim. Notice should include: (1) How, when and where the accident took place; and (2) The names and addresses of any witnesses. Notice of an accident is not notice of a claim. b. If a claim is made or "suit" is brought against you, you must see to it that we receive prompt written notice of the claim or "suit". c. You must: (1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit"; (2) Authorize us to obtain records and other information; (3) Cooperate with us in the investigation, settlement or defense of the claim or "suit"; and (4) Assist us, upon our request, in the enforcement of any right against any person or organization that may be liable to you because of damage to which this insurance may also apply. d. You will not, except at your own cost, voluntarily make a payment, assume any obligation, or incur any expense without our consent. C. LIMITS OF INSURANCE HOW MUCH WE PAY The most we will pay in damages as the result of any one accident is the applicable limit shown on the Legal Liability Coverage Schedule, or in the Declarations. Payments under the Supplemental Coverages and the Newly Acquired Property Coverage Extension are in addition to the limits. The existence of one or more: 1. Additional Insureds, or 2. Newly Acquired Organizations, does not increase the limit. OTHER CONDITIONS The following conditions apply in addition to the Common Property Conditions: 1. Amendment Of Commercial Property Conditions The following Other Conditions in the Hi- Tech/Precision Manufacturing Program Coverages do not apply to this endorsement: a. Condition 2. Benefit to Others; b. Condition 4. Control of Property. 2. Bankruptcy Bankruptcy or insolvency of you or your estate will not relieve us of our obligations under this endorsement. 3. Separation Of Insureds The insurance under this Coverage Form applies separately to you and each additional insured, except with respect to the limits CP Page 2 of

69 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. CALIFORNIA FUNGI OR BACTERIA EXCLUSION ENDORSEMENT This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART A. The following exclusion is added to Paragraph 2., Exclusions of Section I Coverage A Bodily Injury And Property Damage Liability: 2. Exclusions This insurance does not apply to: Fungi or Bacteria a. "Bodily injury" or "property damage" which would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of, any "fungi" or bacteria on or within a building or structure, including its contents, regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage. b. Any loss, cost or expenses arising out of the abating, testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing, remediating or disposing of, or in any way responding to, or assessing the effects of, "fungi" or bacteria, by any insured or by any other person or entity. This exclusion does not apply to any "fungi" or bacteria that are, are on, or are contained in, a good or product intended for consumption. B. The following exclusion is added to Paragraph 2., Exclusions of Section I Coverage B Personal And Advertising Injury Liability: 2. Exclusions This insurance does not apply to: Fungi or Bacteria a. "Personal and advertising injury" which would not have taken place, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of any "fungi" or bacteria on or within a building or structure, including its contents, regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury. b. Any loss, cost or expense arising out of the abating, testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing, remediating or disposing of, or in any way responding to, or assessing the effects of, "fungi" or bacteria, by any insured or by any other person or entity. C. The following definition is added to the Definitions Section: "Fungi" means any type or form of fungus, including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi GL Page 1 of 1

70 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. CGL SPECIAL BROADENING ENDORSEMENT This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SUMMARY OF COVERAGES 1. Additional Insured by Contract, Agreement or Permit Included 2. Additional Insured Broad Form Vendors Included 3. Aggregate Limit per Location Included 4. Alienated Premises Included 5. Bodily Injury Redefined Included 6. Broad Form Property Damage - Borrowed Equipment, Customers Goods & Use of Elevators Included 7. Incidental Malpractice (Employed nurses, EMT's & paramedics) Included 8. Knowledge of Occurrence Included 9. Medical Payments - Increased Limit $10, Mobile Equipment Redefined Included 11. Newly Acquired or Formed Organizations - Covered until end of policy period Included 12. Non-Owned Aircraft Hired, Chartered or Loaned with Paid Crew Included 13. Non-owned Watercraft 51 feet 14. Personal Injury - Broad Form Included 15. Product Recall Expense $100, Damage To Premises Rented To You $300, Supplementary Payments Increased Limits - Bail Bonds - Loss of Earnings $2,500 $ Unintentional Failure to Disclose Hazards Included 19. Unintentional Failure to Notify Included With respect to coverage provided by this endorsement, the provisions of the Commercial General Liability Coverage Form apply unless modified by the endorsement. ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 1 of 9

71 1. ADDITIONAL INSURED BY CONTRACT, AGREEMENT OR PERMIT Under Section II - Who Is An Insured, Paragraph 4. is added as follows: 5.a. Any person or organization with whom you agreed, because of a written contract, written agreement or permit, is an insured, but only with respect to: (1) "Your work" for the additional insured(s) at the location designated in the contract, agreement or permit. (2) Facilities owned or used by you. This insurance applies on a primary basis if that is required by the written contract, written agreement or permit. However: (1) The insurance afforded to such additional insured only applies to the extent permitted by law; and (2) If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured. b. This provision does not apply: (1) Unless the written contract or written agreement has been executed or permit has been issued prior to the "bodily injury", "property damage", "personal injury" or "advertising injury". (2) To any person or organization included as an insured by an endorsement issued by us and made part of this Coverage Part. (3) To any person or organization included as an insured under item 2. of this endorsement. (4) To any lessor of equipment: (a) after the equipment lease expires; or (b) if the "bodily injury", "property damage", "personal injury" or "advertising injury" arises out of sole negligence of the lessor. (5) To any: (a) Owners or other interests from whom land has been leased which takes place after the lease for that land expires; or (b) Managers or lessors of premises if: (i) the occurrence takes place after you cease to be a tenant in that premises; or (ii) the "bodily injury", "property damage", "personal injury" or " advertising injury" arises out of structural alterations, new construction or demolition operations performed by or onbehalf of the manager or lessor. c. With respect to the insurance afforded to these additional insureds, the following is added to Section III - Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: (1) Required by the contract or agreement; or (2) Available under the applicable Limits of Insurance shown in the Declarations; whichever is less. This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations. ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 2 of 9

72 2. ADDITIONAL INSURED BROAD FORM VENDORS Under Section II - Who Is An Insured, Paragraph 5. is added as follows: 6.a. Any person or organization with whom you agreed, because of a written contract or. written agreement to provide insurance, but only with respect to "bodily injury" or " property damage" arising out of "your products" which are distributed or sold in the regular course of the vendor's business. However: (1) The insurance afforded to such additional insured only applies to the extent permitted by law; and (2) If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured. b. The insurance afforded the vendor does not apply to: (1) "Bodily injury" or "property damage" for which the vendor is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that the vendor would have in the absence of the contract or agreement; (2) Any express warranty unauthorized by you; (3) Any physical or chemical change in the product made intentionally by the vendor; (4) Repackaging, unless unpacked solely for the purpose of inspection, demonstration, testing, or the substitution of parts under instruction from the manufacturer, and then repackaged in the original container; (5) Any failure to make such inspection, adjustments, tests or servicing as the vendor has agreed to make or normally undertakes to make in the usual course of business in connection with the sale of the product; (6) Demonstration, installation, servicing or repair operations, except such operations performed at the vendor's premises in connection with the sale of the product; (7) Products which, after distribution or sale by you, have been labeled or relabeled or used as a container, part or ingredient of any thing or substance by or for the vendor. c. This insurance does not apply to any insured person or organization, from whom you have acquired such products, or any ingredient, part or container, entering into, accompanying or containing such products. d. With respect to the insurance afforded to these vendor additional insureds, the following is added to Section III - Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: (3) Required by the contract or agreement; or (4) Available under the applicable Limits of Insurance shown in the Declarations; whichever is less. This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations. 3. AGGREGATE LIMIT PER LOCATION A. Under Section III - Limits Of Insurance the General Aggregate Limit applies separately to each of your "locations" owned by or rented to you. B. Under Section V - Definitions, definition 23. is added as follows: ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 3 of 9

73 20. "Location" means premises involving the same or connecting lots, or premises whose connection is interrupted only by a street, roadway, waterway or right-of-way of a railroad. 4. ALIENATED PREMISES Under Section I - Coverage A, Paragraph 2. Exclusions, j. (2) is replaced in its entirety with the following: (2) Premises you sell, give away or abandon, if the "property damage" arises out of any part of those premises and occurred from hazards that were known by you, or should have reasonably been known by you, at the time the property was transferred or abandoned. 5. BODILY INJURY REDEFINED Under Section V - Definitions, definition 3. "bodily injury" is replaced in its entirety with the following: 3. "Bodily injury" means bodily injury, sickness or disease sustained by a person. This includes mental anguish, mental injury, shock, fright or death resulting from "bodily injury", sickness or disease. 6. BROAD FORM PROPERTY DAMAGE Borrowed Equipment, Customers Goods, Use of Elevators A. Under Section I - Coverage A, paragraph 2., Exclusion j. is amended as follows: Paragraph (4) does not apply to "property damage" to borrowed equipment while at a jobsite and not being used by or for you to perform operations. Paragraphs (3), (4) and (6) do not apply to "property damage" to "customers goods" while on your premises nor to the use of elevators. B. Under Section V - Definitions, definition 21. is added as follows: 21. "Customers goods" means property of your customer on your premises for the purpose of being: a. Worked on; or b. Used in your manufacturing process. C. The insurance afforded under this provision is excess over any other valid and collectible property insurance (including deductible) available to the insured whether primary, excess, contingent or on any other basis. 7. INCIDENTAL MALPRACTICE - Employed Nurses, EMT's and Paramedics Under Section II - Who Is An Insured, paragraph 2.a. (1) (d) does not apply to a nurse, emergency medical technician or paramedic employed by you if you are not engaged in the business or occupation of providing medical, paramedical, surgical, dental, x-ray or nursing services. 8. KNOWLEDGE OF OCCURRENCE Under Section IV - Commercial General Liability Conditions, Condition 2. - Duties in The Event Of Occurrence, Offense, Claim or Suit, paragraph e. is added as follows: ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 4 of 9

74 e. Notice of an "occurrence", offense, claim or "suit" will be considered knowledge of the insured if reported to an individual named insured, partner, executive officer or an "employee" designated by you to give us such a notice. 9. MEDICAL PAYMENTS - INCREASED LIMITS Under Section I - Coverage C, paragraph 1. a. (2) after provided that: is replaced in its entirety by the following: (2) The expenses are incurred and reported to us within three years of the date of the accident; and B. Under Section III - Limits Of Insurance, paragraph 7. is replaced in its entirety by the following: 7. Subject to 5. above, the higher of: a. $ 10,000; or b. The amount shown in the Declarations for Medical Expense Limit is the most we will pay under Coverage C for all medical expenses because of "bodily injury" sustained by any one person. C. This coverage does not apply if Coverage C -Medical Payments is excluded either by the provisions of the Coverage Part or by endorsement. 10. MOBILE EQUIPMENT REDEFINED Under Section V - Definitions, definition 11., Mobile Equipment, paragraph f. (1) (a), (b) and (c) does not apply to self-propelled vehicles of less than 1,000 pounds gross vehicle weight. 11. NEWLY ACQUIRED OR FORMED ORGANIZATIONS Under Section II - Who Is An Insured, paragraph 4.a. is replaced in its entirety by the following: a. Coverage under this provision is afforded only until the end of the policy period. 12. NON-OWNED AIRCRAFT, HIRED, CHARTERED OR LOANED WITH PAID CREW Under Section I - Coverage A, paragraph 2. Exclusions, g. (6) is added as follows: (6) An aircraft that you do not own that is hired, chartered or loaned with a paid crew. Paragraph (6) does not apply if the insured has any other insurance for "bodily injury" or "property damage" liability that would also be covered under this provision, whether the other insurance is primary, excess, contingent or on any other basis. In that case, this provision does not provide any insurance. 13. NON-OWNED WATERCRAFT Under Section I - Coverage A, paragraph 2. Exclusions, g.(2) is replaced in its entirety by the following: (2) A watercraft you do not own that is: (a) Less than 51 feet long; and (b) Not being used to carry persons or property for a charge; ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 5 of 9

75 This provision applies to any person, who with your consent, either uses or is responsible for the use of a watercraft. 14. PERSONAL INJURY - BROAD FORM A. Under Section I Coverage B, paragraph 2. a. (5) is deleted. B. Under Section V Definitions, definition 14., paragraph h. is added as follows: h. Discrimination or humiliation (unless insurance thereof is prohibited by law) that results in injury to the feelings or reputation of a natural person, but only if such discrimination or humiliation is: (1) Not done intentionally by or at the direction of: (a) An insured; or (b) Any officer of the corporation, director, stockholder, partner or member of the insured; and (2) Not directly or indirectly related to an "employee", nor to the employment, prospective employment or termination of any person or persons by an insured. C. This coverage does not apply if Coverage B - Personal and Advertising Injury Liability is excluded either by the provisions of the Coverage Part or by endorsement. 15. PRODUCT RECALL EXPENSE A. Under Section I - Coverage A, paragraph 2. Exclusions, exclusion n. is replaced in its entirety by the following: n. Recall of Products, Work or Impaired Property Damages claimed for any loss, cost or expense incurred by you or others for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of: (1) "Your product"; (2) "Your work"; or (3) "Impaired property"; if such product, work, or property is withdrawn or recalled from the market or from use by any person or organization because of a known or suspected defect, deficiency, inadequacy or dangerous condition in it, but this exclusion does not apply to "product recall expenses" that you incur for the "covered recall" of "your product". The exception to the exclusion does not apply to "product recall expenses" resulting from: (1) Failure of any products to accomplish their intended purpose; (2) Breach of warranties of fitness, quality, durability or performance; (3) Loss of customer approval, or any cost incurred to regain customer approval; (4) Redistribution or replacement of "your product" which has been recalled by like products or substitutes; (5) Caprice or whim of the insured; (6) A condition likely to cause loss of which any insured knew or had reason to know at the inception of this insurance; ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 6 of 9

76 (7) Asbestos, including loss, damage or clean up resulting from asbestos or asbestos containing materials; (8) Recall of "your products" that have no known or suspected defect solely because a known or suspected defect in another of "your products" has been found. B. Under Section II - Who Is An Insured, paragraph 4. d. is added as follows: d. Coverage A. does not apply to "product recall expense" arising out of any withdrawal or recall that occurred before you acquired or formed the organization. C. Under Section III - Limits of Insurance, paragraph 3. is replaced in its entirety by the following: 3. The Products-Completed Operations Aggregate Limit is the most we will pay for the sum of: a. Damages under Coverage A because of "bodily injury" and "property damage" included in the "products-completed operations hazard"; and b. "Product recall expenses". D. Under Section III - Limits of Insurance, paragraph 8. is added as follows: 8. Subject to 5. above, $100,000 is the most we will pay for all "product recall expenses" arising out of the same defect or deficiency. E. Under Section IV - Commercial General Liability Conditions, Condition 2. Duties in the Event Of Occurrence, Offense, Claim or Suit, paragraph e. Is added as follows: e. You must see to it that the following are done in the event of an actual or anticipated "covered recall" that may result in "product recall expense": (1) Give us prompt notice of any discovery or notification that "your product" must be withdrawn or recalled. Include a description of "your product" and the reason for the withdrawal or recall; and (2) Cease any further release, shipment, consignment or any other method of distribution of like or similar products until it has been determined that all such products are free from defects that could be a cause of loss under this insurance. F. Under Section V - Definitions, the following definitions are added: 22. "Covered recall" means a recall made necessary because you or a government body has determined that a known or suspected defect, deficiency, inadequacy, or dangerous condition in "Your product" has resulted or will result in "bodily injury" or "property damage". 23. "Product recall expense" means: a. Necessary and reasonable expenses for: (1) Communications, including radio or television announcements or printed advertisements including stationery, envelopes and postage; (2) Shipping the recalled products from any purchaser, distributor or user to the place or places designated by you; (3) Remuneration paid to your regular "employees" for necessary overtime; (4) Hiring additional persons, other than your regular "employees"; (5) Expenses incurred by " employees" including transportation and accommodations; ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 7 of 9

77 (6) Expenses to rent additional warehouse or storage space; (7) Disposal of "your product", but only to the extent that specific methods of destruction other than those employed for trash discarding or disposal are required to avoid "bodily injury" or "property damage" as a result of such disposal; You incur exclusively for the purpose of recalling "your product"; and b. Your lost profit resulting from such "covered recall". 16. DAMAGE TO PREMISES RENTED TO YOU (1) Under Section III - Limits Of Insurance, paragraph 6. is replaced in its entirety by the following: 6. Subject to 5. above, the most we will pay under Coverage A for damages because of property damage to any one premises, while rented to you, or in the case of damage by fire, lightning, explosion, smoke and leakage from fire protective systems, while rented to you or temporarily occupied by you with permission of the owner, is the higher of: a. $300,000, or b. The Damage To Premises Rented To You Limit shown in the Declarations. (2) Under Section I - Coverage A, the last paragraph (after the exclusions) is replaced in its entirety by the following: Exclusions c. through n. do not apply to damage by fire, lightning, explosion, smoke or leakage from fire protective systems to premises while rented to you or temporarily occupied by you with the permission of the owner. A separate limit of insurance applies to this coverage as described in Section III Limits of Insurance. This limit will apply to all damage proximately caused by the same event, whether such damage results from fire, lightning, explosion, smoke or leakage from fire protective systems or any combination of the five. (3) Under Section IV - Commercial General Liability Conditions, Condition 4. Other Insurance, paragraph b. (1) (b) is replaced in its entirety by the following: (b) That is fire, lightning, explosion, smoke or leakage from fire protective systems insurance for premises rented to you or temporarily occupied by you with permission of the owner; (4) Under Section V - Definitions, definition 9. "Insured contract", paragraph a. is replaced in its entirety by the following: a. A contract for a lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire, lightning, explosion, smoke or leakage from fire protective systems to premises while rented to you or temporarily occupied by you with permission of the owner is not an "insured contract". (5) This coverage does not apply if Damage To Premises Rented To You or Fire Damage Legal Liability is excluded under Coverage A either by the provisions of the Coverage Part or by endorsement. 17. SUPPLEMENTARY PAYMENTS INCREASED LIMITS Under Section I - Supplementary Payments Coverages A and B, paragraphs 2. and 4. are replaced in their entirety as follows: ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 8 of 9

78 2. Up to $2500 for cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which the Bodily Injury Liability Coverage applies. We do not have to furnish these bonds. 4. All reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or "suit", including actual loss of earnings up to $300 a day because of time off from work. 18. UNINTENTIONAL FAILURE TO DISCLOSE HAZARDS Under Section IV - Commercial General Liability Conditions, Condition 6. Representations, paragraph d. is added as follows: d. We will not disclaim coverage under this Coverage Part if you fail to disclose all hazards existing as of the inception date of the policy provided such failure is not intentional. 19. UNINTENTIONAL FAILURE TO NOTIFY Under Section IV - Commercial General Liability Conditions, Condition 2. - Duties In The Event Of Occurrence, Offense, Claim or Suit, paragraph f. is added as follows: f. Your rights afforded under this policy shall not be prejudiced if you fail to give us notice of an "occurrence", offense, claim or "suit", solely due to your reasonable and documented belief that the "bodily injury" or "property damage" is not covered under this policy. All other terms and conditions of this policy remain unchanged. ` 2197 GL 0113 Includes copyrighted material of Insurance Services Office, Inc. with its permission. Page 9 of 9

79 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. NON-OWNED AND HIRED AUTO LIABILITY This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement. SCHEDULE COVERAGE Limit of Insurance Premium Non-Owned Auto Liability $ $ Hired Auto Liability $ $ If a Limit of Insurance and premium is shown in the Schedule, we will pay all sums an insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident which occurs during the policy period and results from the maintenance or use of a hired auto and/or a non-owned auto in the course of your business. We have the right and duty to defend any suit asking for these damages. However, we have no duty to defend suits for bodily injury or property damage not covered by this endorsement. We may investigate and settle any claim or suit as we consider appropriate. Our duty to defend or settle ends when the Limit of Insurance shown in the Schedule or in the declarations as applicable to this endorsement has been exhausted by payment of judgments or settlements. EXCLUSIONS With respect to the insurance provided by this endorsement: SECTION I - COVERAGE A. Exclusions b, c, e, f, g, h, j, k, l, m, and n of the Commercial General Liability Coverage Form are deleted. The following additional exclusions are added for the purpose of this endorsement: a. Liability assumed under any contract or agreement. But this exclusion does not apply to liability for damages: (1) Assumed in a contract or agreement that is an insured contract provided the bodily injury or property damage occurs subsequent to the execution of the contract or agreement; or (2) That the insured would have in the absence of the contract or agreement. b. Bodily Injury : (1) To an employee of the insured arising out of and in the course of employment by the insured ; or (2) To the spouse, child, parent, brother or sister of that employee as a consequence of (1) above. (3) To any fellow employee of the insured arising out of and in the course of the fellow employee s employment. This exclusion applies: (a) Whether the insured may be liable as an employer or in any other capacity; and (b) To any obligation to share damages with or repay someone else who must pay damages because of injury. This exclusion does not apply to: (c) Liability assumed by the insured under an insured contract ; or (d) Bodily injury to domestic employees not entitled to workers compensation benefits. c. Property damage to: GL Includes copyrighted material of Insurance Services Office, Inc., with its permission Page 1 of 4 Copyright, Insurance Services Office, Inc.

80 (1) Property owned or transported by, or rented or loaned to the insured ; or (2) Property in the care, custody or control of the insured. d. Bodily injury or property damage : (1) Resulting from the handling of property: (a) Before it is moved from the place where it is accepted by the insured for movement into or onto the covered auto ; or (b) After it is moved from the covered auto to the place where it is finally delivered by the insured. (2) Resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered auto. (3) Arising out of the operation of any mobile equipment. (4) Arising out of your work after that work has been completed or abandoned. e. Bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants : (1) That are, or that are contained in any property that is: (a) Being transported or towed by, handled, or handled for movement into, onto or from the covered auto ; (b) Otherwise in the course of transit by or on behalf of the insured ; or (c) Being stored, disposed of, treated or processed in or upon the covered auto ; (2) Before the pollutants or any property in which the pollutants are contained are moved from the place where they are accepted by the insured for movement into or onto the covered auto ; or (3) After the pollutants or any property in which the pollutants are contained are moved from the covered auto to the place where they are finally delivered, disposed of or abandoned by the insured. Any loss, cost or expense arising out of any demand or request that you test for, monitor, clean up, remove, contain, treat, detoxify or neutralize any pollutants. This includes demands, directives, complaints, suits or requests brought by any governmental entity or by any person or group of persons. Pollutants means any solid, liquid, gaseous, thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. Paragraph e.(1) does not apply to fuels, lubricants, fluids, exhaust gases or other similar pollutants that are needed for or result from the normal electrical, hydraulic or mechanical functioning of the auto or its parts if: (a) The pollutants escape, seep, migrate or are discharged, dispersed or released directly from an auto part designed by its manufacturer to hold, store, receive or dispose of such pollutants ; and (b) The bodily injury or property damage does not arise out of the operation of any mobile equipment. Paragraphs (2) and (3) above of this exclusion do not apply to accidents that occur away from premises owned by or rented to an insured with respect to pollutants not in or upon a covered auto if: (c) The pollutants or any property in which the pollutants are contained are upset, overturned or damaged as a result of the maintenance or use of a covered auto ; and (d) the discharge, disposal, seepage migration, release or escape of the pollutants is caused directly by such upset, overturn or damage. f. This insurance does not apply to any covered autos while used in any professional or organized racing or demolition contest or stunting activity, or while practicing for such contest or activity. This insurance also does not apply while that covered auto is being prepared for such a contest or activity. SECTION II - WHO IS AN INSURED with respect to this endorsement is replaced by the following: a. You; b. Any other person using a hired auto with your permission; c. With respect to a non-owned auto, any partner or executive officer of yours, but only while such non-owned auto is being used in your business; d. Any other person or organization, but only with respect to their liability because of acts or omissions of an insured under a., b., or c. above; GL Includes copyrighted material of Insurance Services Office, Inc., with its permission Page 2 of 4 Copyright, Insurance Services Office, Inc.

81 None of the following is an insured : a. Any person engaged in the business of his other employer with respect to bodily injury to any co-employee of such person injured in the course of employment; b. any partner or executive officer with respect to any auto owned by such partner or officer or a member of his other household; c. any person while employed in or otherwise engaged in duties in connection with an auto business, other than an auto business you operate; d. the owner or lessee (of whom you are a sub-lessee) of a hired auto or the owner of a non-owned auto or any agent or employee of any such owner or lessee; e. any person or organization with respect to the conduct of any current or past partnership or joint venture that is not shown as an Insured in the Declarations; SECTION III - LIMITS OF INSURANCE with respect to this endorsement is replaced by the following: Regardless of the number of autos, insureds, premiums paid, claims made or vehicles involved in the accident, the most we will pay for all damages resulting from any one accident is the applicable Limit of Insurance shown in the Schedule. All bodily injury and property damage resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one accident. SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS Paragraph 4.b. is replaced by the following, with respect to this endorsement: b. Excess Insurance This insurance is excess over any other insurance, whether primary, excess, contingent or on any other basis, that is covering the auto as an owned auto. When this insurance is excess, we will have no duty under this endorsement to defend any claim or suit that any other insurer has a duty to defend. If no other insurer defends, we will undertake to do so, but we will be entitled to the insured s rights against all those other insurers. When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: (1) the total amount that all such other insurance would pay for the loss in the absence of this insurance; and (2) the total of all deductible and self-insured amounts under all that other insurance. We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limit of Insurance shown in the Schedule. SECTION V - DEFINITIONS. The following additional definitions apply for purposes of this endorsement: Accident includes continuous or repeated exposure to the same conditions resulting in bodily injury or property damage. Auto business means the business or occupation of selling, repairing, servicing, storing or parking autos. Non-owned auto means any auto you do not own, lease, hire, rent or borrow which is used in connection with your business. However, if you are a partnership a non-owned auto does not include any auto owned by any partner. Hired auto means any auto you lease, hire, rent or borrow. This does not include any auto you lease, hire, or borrow from any of your employees or partners or members of their households. Insured means any person or organization qualifying as an insured in the Who Is An Insured shown above in this endorsement. Except with respect to the Limit of Insurance, the coverage afforded applies separately to each insured who is seeking coverage or against whom a claim or suit is brought. Insured contract means: a. A lease of premises; b. A sidetrack agreement; GL Includes copyrighted material of Insurance Services Office, Inc., with its permission Page 3 of 4 Copyright, Insurance Services Office, Inc.

82 c. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad; d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality; e. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another to pay for bodily injury or property damage to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement; f. That part of any contract or agreement entered into, as part of your business, pertaining to the rental or lease, by you or any of your employees, of any auto. However, such contract or agreement shall not be considered an insured contract to the extent that it obligates you or any of your employees to pay for property damage to any auto rented or leased by you or any of your employees. An insured contract does not include that part of any contract or agreement: (1) That indemnifies any person or organization for bodily injury or property damage arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, roadbeds, tunnel, underpass or crossing; or (2) That pertains to the loan, lease or rental of an auto to you or any of your employees, if the auto is loaned, leased or rented with a driver; or (3) That holds a person or organization engaged in the business of transporting property by auto for hire harmless for your use of a covered auto over a route or territory that person or organization is authorized to serve by public authority. All other terms and conditions remain unchanged GL Includes copyrighted material of Insurance Services Office, Inc., with its permission Page 4 of 4 Copyright, Insurance Services Office, Inc.

83 COMMERCIAL GENERAL LIABILITY DECLARATIONS Policy No. LIMITS OF INSURANCE General Aggregate Limit (Other Than Products-Completed Operations) $ Products-Completed Operations Aggregate Limit $ Personal and Advertising Injury Limit $ Any One Person/Org. Each Occurrence Limit $ Damage To Premises Rented To You Limit $ Any One Premises Medical Expense Limit $ Any One Person RETROACTIVE DATE ( CG only ) This Insurance does not apply to bodily injury, property damage or personal and advertising injury which occurs before the Retroactive Date, if any, shown here: (Enter Date or None if no Retroactive Date applies) BUSINESS DESCRIPTION AND LOCATION OF PREMISES Type of Business: Individual Joint Venture Partnership Limited Liability Company Organization, including a Corporation, but not including a Partnership, Joint Venture or Limited Liability Company Business Description: Location of All Premises You Own, Rent or Occupy: CLASSIFICATION AND PREMIUM Loc. No Classification Code No Prem Base Pr. Ops Rate Prd/ C.O. Advance Premium Pr. Prd/ Ops C.O. $ $ Endorsement(s) Premium $ Premium shown is payable: At inception: $ State Tax or Other ( if applicable ) $ Each anniversary: $ Total Policy Premium $ Total Advance Premium $ Audit Period (if applicable): Annually Semi-annually Quarterly Monthly FORMS AND ENDORSEMENTS ATTACHED: Forms and Endorsements applying to this Coverage Part and made part of this policy at time of issue: THESE DECLARATIONS, TOGETHER WITH THE COMMON POLICY DECLARATIONS AND COVERAGE FORM(S) AND ANY ENDORSEMENT(S) COMPLETE THE ABOVE NUMBERED POLICY GL Includes copyrighted material of Insurance Services Office, Inc., with its permission Page 1 of 1 Copyright, Insurance Services Office, Inc., 1998

84 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EMPLOYEE BENEFITS LIABILITY COVERAGE This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement. The provisions of this endorsement apply only to the Employee Benefits Liability coverage described below. INSURING AGREEMENT SCHEDULE LIMITS OF INSURANCE Each Claim Limit $ Aggregate Limit $ Deductible Each Claim $ We will pay under this endorsement those sums that the insured becomes legally obligated to pay as damages because of a claim brought by any employee, former employee, or their beneficiaries or legal representatives in connection with any negligent act, error, omission or breach of duty of the insured or any other person for whose acts the insured is legally liable, in the Administration of your Employee Benefits Program. This insurance applies only to negligent acts, errors, or omissions that: a. Occur during the policy period; and b. Take place in the "coverage territory". We have the right and duty to defend any suit seeking those damages. But: a. The amount we will pay for damages is limited as described in the Limits Of Insurance in the above Schedule; and b. We may at our discretion, investigate any report of a negligent act, error or omission and settle any claim or suit that may result; and c. Our right and duty to defend ends when we have used up the applicable Limits Of Insurance shown in the Schedule in the payment of judgments or settlements. EXCLUSIONS This insurance does not apply: a. To any dishonest, fraudulent, criminal or malicious act, or to libel, slander, discrimination or humiliation committed by any insured; b. To any bodily injury, personal injury and advertising injury or property damage ; c. To any claim for failure of performance of contract by any insured; d. Failure to comply with mandatory provisions of laws concerning workers compensation, Social Security, disability benefits or unemployment compensation law, or any similar law; e. To any failure of any investment shares to perform as represented by any insured; f. To any advice given to any person to participate or not to participate in any plan included in the Employee Benefits Program; g. To any claim arising out of an insufficiency of funds to meet any obligation under any plan included in the Employee Benefits Program; GL Includes copyrighted material of Insurance Services, with its permission. Page 1 of 3 Copyright, Insurance Services Office, Inc., 1999

85 h. To any claim based upon any persons failure or error in handling, settling, or paying a claim when coverage or benefit exists in an Employee Benefits Program; i. To any actual or alleged error or omission or breach of duty, committed or alleged to have been committed by any insured, in the discharge of fiduciary duties, obligations or responsibilities imposed by the Federal Employee Retirement Income Security Act of 1974 or Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (Public Law ) or Section 9319 of the Omnibus Budget Reconciliation Act of 1986 (Public Law ) or any amendments to these Acts; j. If, as of the effective date of this endorsement, the insured had knowledge or could reasonably foresee any circumstances which might result in a claim; k. To any fines, penalties or taxes. SUPPLEMENTARY PAYMENTS The SUPPLEMENTARY PAYMENTS COVERAGES A AND B is extended to apply to Employee Benefits Liability Coverage. WHO IS AN INSURED Paragraph 2. under SECTION II WHO IS AN INSURED is replaced by the following: 2. The following is also an insured: a. Your "employees", other than either your "executive officers" (if you are an organization other than a partnership, joint venture or limited liability company) or your managers (if you are a limited liability company), but only for acts within the scope of their employment by you while performing duties related to the "administration" of your "Employee Benefits Programs". b. Your legal representative if you die, but only with respect to duties as such. That representative will have all your rights and duties under this Coverage Form. Paragraph 4. under SECTION II WHO IS AN INSURED is amended to add the following: 4. d. The Employee Benefits Coverage provided in this endorsement does not apply to any negligent act, error or omission that was committed before you acquired or formed the organization. LIMITS OF INSURANCE The Limits of Insurance shown in the Schedule of this endorsement and the rules below, fix the most we will pay regardless of the number of: a. Insureds; b. Claims made or suits brought; c. Persons or organizations making claims or bringing suits ; d. Acts, errors or omissions which result in loss; or e. Plans included in your "Employee Benefits Program". The Each Claim Limit is the most we will pay for damages arising out of any one claim. However, we will pay no more than would have been payable under the Employee Benefits Program had no error been made. The Aggregate Limit is the most we will pay for the sum of all damages under this endorsement. The Limits of Insurance apply separately to each consecutive annual period and to any remaining period of less than 12 months starting with the beginning of the policy period shown in the Declarations, unless the policy period is extended after issuance for an additional period of less than 12 months. In that case, the additional period will be deemed part of the last preceding period for purposes of determining the Limits of Insurance GL Includes copyrighted material of Insurance Services, with its permission. Page 2 of 3 Copyright, Insurance Services Office, Inc., 1999

86 DEDUCTIBLE The Deductible, if shown in the Schedule, applies to each claim covered by this endorsement. We may pay part or all of the deductible amount in settlement of any claim or suit. If we do, you agree to promptly reimburse us for the deductible amount we pay. Our obligation to pay damages on behalf of the insured applies only to the amount of damages in excess of the deductible amount stated in the Schedule. The Limits of Insurance applicable will not be reduced by the amount of this deductible. Claims resulting from the same negligent act(s), error(s) or omissions(s) of one or more of the Insureds are a single claim, and only one deductible applies. CONDITIONS SECTION IV COMMERCIAL GENERAL LIABILITY CONDITIONS is amended as follows: Paragraph 2.a. Duties In The Event Of Occurrence, Offense, Claim Or Suit, is replaced by the following: 2. a. You must see to it that we are notified as soon as practicable of an act, error or omission which may result in a claim. Notice should include: (1) A description of the act, error or omission and when it occurred; and (2) The names and addresses of any employees who may suffer damages as a result of the act, error or omission. Paragraph 4. Other Insurance is amended to also apply to Employee Benefits Liability Coverage. The following is added to the Other Insurance section: 4. d. If an Employee Benefits Liability loss covered under this endorsement is also covered in whole or in part under any other policy issued to the Insured prior to the inception date of this policy, our Limit of Insurance as stated in the Schedule shall be reduced by any amounts due the Insured on account of any loss under such prior insurance. Subject to the above paragraph and to all other terms and conditions of this policy, in the event that damages arising out of a claim covered under this endorsement is continuing at the time of termination of this coverage or policy, we will continue to protect the insured for liability in respect of such claim for damages without payment of additional premium. ADDITIONAL DEFINITIONS The following DEFINITIONS apply to this endorsement: Administration means any of the following acts that you do or authorize a person to do: a. Counseling employees on the Employee Benefits Program : b. Interpreting your Employee Benefits Program ; c. Handling records for your Employee Benefits Program ; or d. Effecting enrollment, termination or cancellation of employees under your Employee Benefits Program. Employee Benefits Program means: a. group life, accident, health insurance, retirement or pension plans; providing that no one other than an employee may subscribe to such insurance or plans; b. profit sharing plans provided they are equally available to all eligible full time "employees"; c. employee stock subscription plans, providing they are equally available to all eligible full-time "employees"; d. employee travel, vacation, or savings plans; e. workers compensation insurance; f. salary continuance plans, unemployment insurance, social security and disability benefits insurance; g. or any similar plan GL Includes copyrighted material of Insurance Services, with its permission. Page 3 of 3 Copyright, Insurance Services Office, Inc., 1999

87 COMMERCIAL LINES POLICY NATIONAL SPECIALTY INSURANCE COMPANY ( a stock company ) 1900 L Don Dodson Drive Bedford, TX JCL (NS)

88 In Witness Whereof, the company has caused this policy to be executed and attested, but this policy shall not be valid unless signed by a duly authorized representative of the company. Secretary President JCL (NS)

89 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Rate/Rule Schedule Item Schedule Item Previous State No. Status Exhibit Name Rule # or Page # Rate Action Filing Number Attachments 1 NSIC-CA-HiTech 0115 Withdrawn 2 NSIC-CA-HiTech 1117 New NSIC-CA-HiTech 1117.pdf PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

90 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH/PRECISION MANUFACTURING, ASSOCIATED AND RELATED INDUSTRIES PROGRAM MANUAL OF RATES AND RULES CALIFORNIA 1 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

91 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA APPLICATION OF THIS MANUAL This is a self-contained manual specifically for Electronic Industry/Precision manufacturing entities, which provides rules, classifications, rates and forms for the Electronics Industry/Precision manufacturing program. Anything that does not fall into the scope of this manual will be written according to ISO rules and forms. SECTION 1 -- ELIGIBILITY 1.1 ELIGIBLE OPERATIONS Coverage in accordance with low hazard modern computer numerically controlled (CNC) electronic/precision manufacturing risks including their associated and related operations and industries Classification Table Electronic Component and Equipment Manufacturers Semiconductor Equipment Property Rate Group Per AAIS Classification Section General Liability Rate Group 1 Code Light Electronic Component and Equipment Manufacturing Property Rate Group Per AAIS Classification Section General Liability Rate Group 2 Code Electronic Component Manufacturing, Equipment Manufacturing, Semiconductor Manufacturing Property Rate Group Per AAIS Classification Section General Liability Rate Group 3 Code Electronic Component and Equipment Distributor Property Rate Group Per AAIS Classification Section General Liability Rate Group 4 Code Electronic Component and Equipment Manufacturing Representative Property Rate Group Per AAIS Classification Section GL Rate Group 5 Code Electronic Component and Precision Manufacturing Lessors Risk Property Rate Group - Per AAIS Classification Section General Liability Group 6 Code /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

92 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA 1.2 INELIGIBLE OPERATIONS The high hazard segment of the electronics or related/associated industries using equipment which may present serious life safety conditions as well as catastrophic property loss potential when they fail to operate correctly. We will not entertain electronics risks that manufacture or use any of the following equipment or processes: 1.3 PROCESSES Diffusion Furnaces Etchers (Acid) Epitaxial Reactors Burn-in ovens (Plasma or Gas Diffusion reactors, not test ovens) Modular Diffusion Systems Water Processing Systems Low or high pressure, low particulate plasma Chemical Vapor Etchers Mainframe or Super Computers Metallization Systems Products Aircraft or Medical, Critical Life Safety SECTION 2 -- PROGRAM DESCRIPTION 2.1 PROPERTY COVERAGE Blanket coverage is provided for buildings and business personal property when a limit is shown on the declarations Building Property The covered building property includes additions; permanent fixtures, machinery, and equipment; maintenance equipment; buildings in the course of construction; towers and antennas; outdoor fixtures; glass; and signs Business Personal Property Coverage is provided for property at and within 1,000 feet of the covered locations including tenant improvements, computers, property installed, leased personal property, and personal property of others. Covered mobile equipment is not subject to the 1,000-foot limitation. 3 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

93 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Extra Expense Coverage Extra Expense Coverage may be added to the policy at no additional premium charge. Use form CP Income Coverage Coverage for income expenses may be added to the policy at no additional premium charge. Use form CP Welfare and Pension Plan ERISA Form CP. Welfare and Pension Plan ERISA Compliance Endorsement, may be added to the policy when required. No additional premium shall be charged Additional and Supplemental Coverages Limited coverage is provided for various additional and supplemental coverages. A flat premium charge of $350 shall be charged for the additional enhancements contained within the policy. 2.2 PERILS COVERED Covered property is insured against risks of direct physical loss that are not specifically excluded by the terms of the form. SECTION 3 POLICYWRITING INSTRUCTIONS 3.1. POLICY FORMAT The Program may be issued as a monoline policy or may be packaged with other coverage forms. Use form CP. Declaration Page CP shall be used with this program. 3.2 POLICY PERIOD The policy inception and expiration, including times and dates, are shown on the declarations. 3.3 POLICY TERM Policies can be written for a specific term not exceeding three years, or on a continuous basis. 4 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

94 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Annual Annual rating information is shown in this manual Three-Year Prepaid The rate at the inception of this policy is guaranteed for three years Less Than One Year or Less Than Three Years A policy may be written for a term of less than one year or less than three years in order to maintain common anniversary dates with other policies. The annual premium is prorated Continuous A policy may be written on a continuous basis, subject to the eligibility of the covered property. The forms and rates in effect at inception must be used at the time of inception. The forms and rates in effect at each anniversary date must be used at the time of anniversary. "Until cancelled" or similar language should be shown on the declarations for the policy period. Attach endorsement COP Minimum Premium The premium for all coverages combined shall be subject to a $1,000 minimum. 3.4 SCHEDULED LOCATIONS Coverage can be provided on a scheduled location basis. Building property, business personal property, and time element coverage can be scheduled. Blanket coverage can be provided for business personal property at locations that are not scheduled. A coinsurance option can be included with this endorsement, provided coverage is not written on a reporting basis. On the Scheduled Locations Endorsement, show the property covered, type of coverage, the limit for each location, and the coinsurance percentage, if applicable. Attach endorsements COP-226 and COP PROPERTY LOSS SETTLEMENT PROVISIONS Actual cash value loss settlement provisions apply. Replacement cost loss settlement provisions can apply to loss to covered buildings and business personal property if it is noted on the declarations. Glass and merchandise sold have other loss settlement provisions. 5 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

95 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA 3.6 LOSS PAYABLE OPTIONS The Loss Payable Options endorsement COP-232 may be used in those instances where the standard mortgage provisions in the Property Coverage Part are not applicable. These options are to be used when another party has a financial interest in the property of an insured and the interested party requires that it be included as a loss payee under the insurance covering the property Loss Payable This option requires the insurer to pay claims jointly to the insured and the loss payee as their interests may appear. This option does not offer the loss payee any protection against the policy being voided by actions of the insured, and it does not require that advance notice of cancellation or nonrenewal be given to the loss payee Lender's Loss Payable This option includes provisions similar to the standard mortgage provisions in the Property Coverage Part except that it is not limited in its application to buildings or structures. This option can be used with coverage for other personal or real property if the other party has an interest that can be established by a written contract or other documentary evidence. This option also gives the loss payee the same limited protection against acts of the insured voiding coverage as provided to lenders under the standard mortgage provisions in the Property Coverage Part. Advance notice of cancellation or nonrenewal must be given to the loss payee Contract of Sale This option is used when the insured is in the process of buying or selling property and both the seller and the buyer have insurable interests in the property. Losses are paid jointly to the insured and the loss payee as their interests may appear. 3.7 CANCELLATION OR REDUCTION IN LIMITS OR COVERAGE If the policy is canceled or the limits or coverages are reduced, the amount of any return premium due is calculated on a pro rata basis. 6 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

96 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA 3.8 REPORTING CONDITIONS Coverage can be provided on a reporting basis. The reporting feature requires the insured to report the total value of business personal property, all covered property, sales or gross receipts, or specified property either monthly, quarterly or annually. The premium is adjusted monthly (available only with monthly reporting), quarterly (not available with annual reporting) or annually. Attach endorsement COP-231. SECTION 4 -- DEDUCTIBLE The minimum program deductible amount is $250. Show the deductible amount on the declarations. 4.1 FLAT DEDUCTIBLE -- ALL COVERED PERILS A single deductible amount is subtracted from covered property losses. The deductible is subtracted only once per loss. Coverage may be written with a higher deductible amount. Separate deductible amounts can apply to earthquake and flood when these coverages are added. The deductible provision is found in CP. 4.2 MULTIPLE DEDUCTIBLE Only one of the following can apply Scheduled Perils Coverage can be issued with deductible amounts that vary by the covered peril. Only one deductible is subtracted per loss. If the total loss is caused by two separate perils, the highest deductible applies. Attach endorsement COP Scheduled Locations and Property Coverage can be issued with deductible amounts that vary by the types of property and locations covered. Only one deductible is subtracted per loss. If the loss involves more than one covered location resulting from the same occurrence or more than one kind of property, the highest deductible applies. Attach endorsement COP /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

97 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA SECTION 5 -- COVERAGE OPTIONS 5.1 TIME ELEMENT COVERAGE Income Coverage The Income Coverage Part provides coverage for loss of earnings (including or not including rents) and extra expense. There are three coverage options available. They are: (a) (b) (c) Earnings, rents, and extra expense. Earnings and extra expense. Rents and extra expense. Coverage is provided for one or more of the options when shown by a limit on the declarations. If a limit is shown for more than one of the options, the provisions of the Program apply separately to each. When Option (a) is selected, earnings include rents. When Option (c) is selected, earnings means only rents. Attach coverage part CP Extra Expense Coverage The Extra Expense Coverage Part provides coverage for extra expenses to resume or continue normal business following a loss to covered property. Recovery is based on the length of the restoration period. For example, if the monthly limitation were identified on the declarations as "40% B 80% B 100%" recovery would be limited to 40% of the limit shown on the declarations when the restoration period is 30 days or less, 80% when the restoration period is 31 to 60 days, and 100% when the restoration period is over 60 days. Refer to Table F for the available limitations. Identify the "monthly limitations" on the declarations. Refer to Rule 5.2.2, Expanded Restoration Period Extra Expense, when there are four recovery periods. Attach coverage form CP. 5.2 TIME ELEMENT ENDORSEMENTS Increased Restoration Period Ordinance or Law The Increased Restoration Period Ordinance or Law endorsement, COP- 201, is used with either the Income Coverage Part, CP, or the Extra 8 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

98 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Expense Coverage Part, CP. This endorsement is used to extend coverage for the increased time of interruption of the insured's business caused by the enforcement of any ordinance, law, or decree. This does not increase the limit of the underlying time element coverage. However, limits should be increased as necessary to have full protection. Attach endorsement COP Expanded Restoration Period -- Extra Expense The Expanded Restoration Period -- Extra Expense endorsement, COP-202, is used with the Extra Expense Coverage Part, CP, when the percentage that applies to the limit of loss payment contemplates four recovery periods. Rule 5.1.2, Extra Expense Coverage, applies when providing Expanded Restoration Period -- Extra Expense, COP-202. Refer to Table F. Attach endorsement COP Income Coverage From Dependent Locations The Income Coverage From Dependent Locations endorsement, COP-206, is used with the Income Coverage Part, CP. Income Coverage From Dependent Locations, COP-206, provides coverage for loss from contingent business interruption. Loss occurs when there is direct physical loss to a dependent location caused by a covered peril. This endorsement extends the coverage and limit of the Income Coverage Part, CP. Dependent locations must be identified on the schedule provided in the endorsement. Dependent locations are locations operated by others and that the insured's business depends on. They include: a. Contributing locations -- Contributing locations are the insured's suppliers. Contributing locations do not include water, communication, or power suppliers. b. Recipient locations -- Recipient locations receive the insured's products. c. Leader locations -- Leader locations attract customers to the insured's business. d. Manufacturing locations -- Manufacturing locations make products for delivery to the insured's customers under contract of sale. 9 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

99 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Attach endorsement COP Income Coverage From Dependent Locations -- Separate Limits Use Income Coverage From Dependent Locations -- Separate Limits, COP- 204, in lieu of Income Coverage From Dependent Locations, COP-206, when assigning limits for each scheduled dependent location. The same rules that otherwise apply to Income Coverage From Dependent Locations, COP-206, also apply to Income Coverage From Dependent Locations -- Separate Limits, COP-204. This endorsement can be used when: a. the insured is not providing a limit or purchasing coverage under the Income Coverage Part, CP, for the insured's own premises; and b. establishing different limits for dependent locations from the underlying income limit. Attach endorsement COP Period of Loss Extension The Income Coverage Part, CP, automatically extends earnings coverage to cover loss from the date the property that incurred the loss is rebuilt, repaired, or replaced until the earlier of: a. the end of 30 consecutive days; or b. the date business is resumed to the condition that existed before the loss. The number of days beyond the necessary time to rebuild, repair, or replace the damaged or destroyed property can be increased. Identify the number of days (in lieu of 30 days) on the declarations Payroll Options a. Coverage for ordinary payroll may be excluded. b. Coverage for ordinary payroll can be limited to 90, 120, 150, or 180 days in the Income Coverage Part. Ordinary payroll means payroll for all employees except executives, department managers, and employees under contract. Specific job classifications or employees can also be exempt from ordinary payroll. Identify any specific job classifications or employees. Attach endorsement COP-242 (Limitation) or COP-240 (Exclusion) /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

100 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Power, Heat, and Refrigeration The costs of power, heat, and refrigeration may be deducted from the earnings computation. Endorsement COP-236 must be attached to the policy Seasonal Leases Earnings coverage under the Income Coverage Part can be extended to apply to seasonal rental property having written leases. Attach endorsement COP Tuition Earnings coverage under the Income Coverage Part can be extended to include tuition, fees, and other educational services and related activities. Attach endorsement COP FLOOD COVERAGE Property and time element coverages can be endorsed to cover loss caused by flood. Coverage can be provided on a scheduled or blanket basis. The minimum deductible for this coverage is $250. Higher deductible amounts may be written. Show the location covered, property, deductible, and limits on the Scheduled Flood Endorsement. Flood Coverage not applicable in California Attach endorsements COP-222 and COP EARTHQUAKE COVERAGE Property and time element coverages can be endorsed to cover loss caused by earthquake. Coverage can be provided on a scheduled or blanket basis. A separate deductible, percentage or dollar amount, applies. Higher deductible percentages or amounts may be written. Show the location covered, property, deductible, and limits on the Scheduled Earthquake Endorsement. Earthquake Coverage not applicable in California. Attach endorsements COP-220 and COP VEHICLE COVERAGE These endorsements define vehicles, restate the vehicles exclusion in the Property Coverage Part, CP, and provide a schedule. Attach endorsements CP /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

101 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA 5.6 VALUABLE PAPERS If higher limits than provided are required, the supplemental coverage in the CP can be replaced by the coverage provided by endorsement COP-217. Additional conditions and exclusions apply. On endorsement COP-216, show the limit for this property. If this coverage is to apply to locations that are scheduled or to items that are scheduled, show the locations at which this coverage applies or the items to which this coverage applies on endorsement COP-216. Storage containers can be described on endorsement COP-216. Attach endorsements COP-216 and COP PROPERTY EXCLUDED Certain property can be specifically excluded from coverage under the Property Coverage Part, CP. Attach endorsement COP ACCOUNTS RECEIVABLE If higher limits than provided are required, the supplemental coverage in CP can be replaced by the coverage provided by endorsement COP-219. Additional conditions and exclusions apply. On endorsement COP-218, show the total limit of coverage for this property. If this coverage is to apply at locations that are scheduled, show the locations at which this coverage applies on endorsement COP-218. Storage containers can be described on endorsement COP-218. Attach endorsements COP-218 and COP AUTOMATIC INCREASE (INFLATION GUARD) The building and/or business personal property limit, shown either on the declarations or the Scheduled Locations Endorsement, can be increased automatically. Attach endorsement COP-230 and show the annual percentage of the increase on the declarations or on the Scheduled Locations Endorsement. This option is not available for coverage provided on a reporting basis. Attach endorsement COP SUPPLEMENTAL LIMITS The limits that apply to several of the Supplemental Coverages and Supplemental Marine Coverages can be increased. Limits can be increased for brands or labels; inventory and appraisals; ordinance or law; trees, shrubs, and plants; property on exhibition; property in transit; and sales representatives samples. Show the total limit for the appropriate coverage on the endorsement /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

102 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Attach endorsement COP SPOILAGE Coverage can be provided for loss to scheduled perishable stock at scheduled locations caused by the perils of breakdown, contamination, power disruption, or contamination and power disruption. Attach endorsement COP THEFT EXCLUSION The peril of theft may be excluded. Attach endorsement COP AGREED AMOUNT Agreed amount coverage may be provided for specific items of covered property. These items must be listed on a schedule. Attach endorsement COP PROTECTIVE DEVICES A company may require protective devices or other protective measures it considers necessary for the protection of the property. Attach endorsement COP OFF PREMISES COMPUTERS Coverage for computers used away from a covered location or in transit can be provided subject to a separate limit. Attach endorsement COP UTILITY INTERRUPTION Property damage and time element coverage can be provided against loss resulting from the interruption of designated off-premises utilities caused by covered perils. Attach endorsement COP-244 (Property) and/or COP-246 (Time Element) SEWER BACKUP AND WATER BELOW THE SURFACE The perils of sewer backup and/or water below the surface can be added. Attach endorsement COP /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

103 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA SECTION 6 -- PREMIUM DETERMINATION 6.1 CALCULATION OF THE FINAL HI-TECH PROPERTY PREMIUM The value of building property and business personal property limits may be increased or decreased by the addition of some endorsements reflecting those increases or decreases. Refer to Rule 6.3. If more than one deductible applies, use the most appropriate one based on the total exposure. If the deductible is $5,000 or more, the Normal Loss Basic Charge equals zero. Skip to Step 2. Step 1 Add the net losses (loss less deductible) for the past three years, capping each loss at $5,000. Multiply the sum by a factor of one point eight (1.8), then divide the result by the sum of the insured values, per $100, of the building and business personal property for the past three years to obtain the Normal Loss Basic Charge. Step 2 Determine the classification for the risk from the AAIS Classification Tables. Obtain the building Basic Major Loss Load and the business personal property Basic Major Loss Load for the classification from Table A. Step 3 Using Table B, assign deficiency points separately for the building and for the business personal property for each characteristic described. Step 4 Add the deficiency points assigned in Step 3 for the building and for the business personal property. Using Table C, obtain the Deficiency Point Charge that correlates to the deficiency points assigned to the building and the business personal property. Refer to the optional coverages that involve deficiency point consideration. Step 5 To determine the building Major Loss Load, add the building charge from Step 4 to the load from Step 2. To determine the business personal property Major Loss Load, add the business personal property charge from Step 4 to the load from Step 2. Step 6 Add the building Major Loss Load to the Normal Loss Basic Charge. This is the Final Building Factor. Step 7 Add the business personal property Major Loss Load to the Normal Loss Basic Charge. This is the Final Business Personal Property Factor. Step 8 Using the factors developed in Steps 6 and 7 above, multiply the total values for the building and business personal property per $100 by their respective factors. The results are the premiums for the building and business personal property coverages /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

104 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Step 9 Add the premiums for the building and business personal property together. This result is the Property Premium. If the deductible is less than $5,000, the Property Premium is the Final Hi-Tech Property Premium. If the deductible is $5,000 or greater, apply the credit factor obtained from Table D to the Property Premium. This result is the Final Hi-Tech Property Premium. Step 10 The Final Hi-Tech Property Premium can be increased by the factor for automatic increase in Table E. 6.2 TIME ELEMENT PREMIUM CHARGE Time element risks are categorized as mercantile or non-manufacturing, manufacturing and mining, and rental properties. Each of the following is a separate charge Income Coverage Multiply the Final Building Factor by the appropriate factor from Table F to obtain the Income Coverage Factor. If there is no Final Building Factor, use the Final Business Personal Property Factor. Apply the Income Coverage Factor to the limit for Income Coverage Extra Expense Coverage Multiply the Final Building Factor by the appropriate factor from Table F to obtain the Extra Expense factor. If there is no Final Building Factor, use the Final Business Personal Property Factor. Apply the Extra Expense Factor to the limit for Extra Expense Coverage Increased Restoration Period Ordinance or Law Multiply the factor for Income Coverage, Rule 6.2.1, or Extra Expense Coverage, Rule 6.2.2, whichever is applicable, by the factor shown in Table F. Use this modified factor in place of the one developed for Rule or Expanded Restoration Period -- Extra Expense Multiply the Final Building Factor by the appropriate factor from Table F to obtain the Expanded Restoration Period -- Extra Expense Factor. If there is no Final Building Factor, use the Final Business Personal Property Factor. Apply the Expanded Restoration Period -- Extra Expense Factor to the limit for Extra Expense Coverage /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

105 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Income Coverage From Dependent Locations Determine the Income Coverage Factor in Table F that applies to the dependent location. Multiply the Final Building Factor by the factor in Table F. If applicable, further modify the resulting factor by the Period of Loss Extension Factor. Apply the resulting factor to the limit for Income Coverage. If there is no Final Building Factor, use the Final Business Personal Property Factor. If there is more than one dependent location, use the Income Coverage Part Factor for the highest rated dependent location Income Coverage From Dependent Locations -- Separate Limits Determine the Income Coverage Factor in Table F that applies to the dependent location. Multiply the Final Building Factor by the factor in Table F. If applicable, further modify the resulting factor by the Period of Loss Extension Factor. Apply the resulting factor to the limit for Income Coverage. If there is no Final Building Factor, use the Final Business Personal Property Factor. If there is more than one dependent location, use the Income Coverage Part Factor for the highest rated dependent location Period of Loss Extension Multiply the factor developed for Income Coverage in Rule or Rule 6.2.3, whichever is applicable, by the factor shown in Table F Ordinary Payroll Exclusion Multiply the factor developed for Income Coverage in Rule by the factor shown in Table G Ordinary Payroll Limitation Multiply the factor developed for Income Coverage in Rule by the factor shown in Table G Power, Heat, and Refrigeration Exclusion Multiply the factor developed for Income Coverage in Rule by the factor shown in Table G Seasonal Leases Multiply the Final Building Factor by the appropriate factor from Table G to obtain the Seasonal Leases Factor. If there is no Final Building Factor, use the Final Business Personal Property Factor /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

106 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Tuition Multiply the Final Building Factor by the appropriate factor from Table G to obtain the Tuition Factor. If there is no Final Building Factor, use the Final Business Personal Property Factor Utility Interruption -- Time Element Add the appropriate Utility Interruption Factor from Table H to the Final Income Coverage Factor, Rule OPTIONAL COVERAGES PREMIUM CHARGE Earthquake Coverage The premium for this exposure is determined in Step 3 through the use of deficiency points. No additional charge applies. Earthquake coverage not applicable in California Flood Coverage The premium for this exposure is determined in Step 3 through the use of deficiency points. No additional charge applies. Flood coverage not applicable in California Supplemental Limits The premium of this exposure is determined in Step 3 through the use of deficiency points. No additional charge applies Scheduled Perils Deductible The deductible amount is considered in the calculation of the Normal Loss Basic Charge. Refer to Rule 6.1, Step 1. Additional consideration can occur in Rule 6.1, Steps 3 and 10. Scheduled Perils Deductible not applicable in California Scheduled Locations/Property Deductible The deductible amount is considered in the calculation of the Normal Loss Basic Charge. Refer to Rule 6.1, Step 1. Additional consideration can occur in Rule 6.1, Steps 3 and 10. Scheduled Locations/Property Deductible not applicable in California Property Excluded Adjust the value of the covered property to reflect the excluded property when 17 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

107 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA calculating the Final Property Premium. Do not include losses to this property in Rule 6.1, Step 1. No additional charges apply Valuable Papers This exposure is considered in the business personal property value used in the calculation of the Final Property Premium. No additional charges apply Accounts Receivable This exposure is considered in the business personal property value used in the calculation of the Final Property Premium. No additional charges apply Vehicles This exposure is considered in the business personal property value used in the calculation of the Final Property Premium and in Step 3 through the use of deficiency points. No additional charges apply Automatic Increase Obtain the appropriate factor from Table E. Apply that factor to the Final Property Premium in Rule 6.1, Step Theft Exclusion Remove any theft losses from the calculation of the Normal Loss Basic Charge. Additional consideration can occur in Rule 6.1, Step Protective Devices The charge for this coverage is determined in Rule 6.1, Step 3 through the use of deficiency points Utility Interruption The charge for this coverage is determined in Rule 6.1, Step 3 through the use of deficiency points Agreed Amount Total values should reflect the valuation, no premium adjustment applies Manufactured Stock Valuation Total values should reflect the valuation, no premium adjustment applies /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

108 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Spoilage For each scheduled location separately determine the charge in Supplemental Table AA based on the peril and apply to the applicable limit Off Premises Computer Coverage The charge for this coverage is determined in Rule 6.1, Step 3 through the use of deficiency points Sewer Back Up and Water Below the Surface The charge for this coverage is determined in Rule 6.1, Step 3 through the use of deficiency points. 6.4 TOTAL PREMIUM CHARGE Add the premium charges developed from Rules 6.1, 6.2, and 6.3. This is the total policy premium charge. 6.5 REPORTING CONDITIONS Business Personal Property Only Use the Final Business Personal Property Factor after the deductible credit, if applicable Building and Business Personal Property Take the Final Property Premium after the deductible credit, if applicable, divide by the total building and business personal property values (per $100) to arrive at a single Hi-Tech factor Sales or Gross Receipts Other Develop a gross receipts/sales factor by taking the Final Property Premium after the deductible credit, if applicable, and dividing by the gross receipts/sales figure (per $100). Use applicable building or business personal property factor based on the property that is specified in the form /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

109 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA TABLE A BASIC MAJOR LOSS LOAD Classification Building Business Personal Group Number Property Property /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

110 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA TABLE B DEFICIENCY POINTS Deficiency Item Characteristic Points A. Disaster exposure Preliminary Location represents 70% or more of values and limit 0 2,500 exceeds 50,000,000. High concentration of values in excess of 100,000,000 with high 2,500 5,000 Hazard exposures within 100 feet. B. Climatical hazards Inaccessible due to weather probable High potential for severe weather related to hazards such as wind C. Special occupancy hazards Some crowding and congestion of equipment or stock 0-1,500 Less than 50% CNC production 50 to 100 gallons of class one flammables stored on premises. Water based spray painting in approved spray booth. Alcohol based waver solder machines with external vent. 1,500 3,000 Sheet plastic stored as part of vacuforming operations. Gas plasma manufacturing CFC cleaning operations Less than 25% CNC production Zyline, phosphine or arsine used in manufacturing process. 3,000 5,000 Alcohol wave solder machines with no external venting 80% or more sheet vacuforming operations Oil based painting operations with or without approved painting spray booths. Epitaxial plasma production ION implant production D. Lack of private protection. No SB 198 safety program in place ,000 Premises not sprinklered with fire hazard low or medium. Hand fire extinguishers absent, unchanged or improper type. Local burglar alarm for hazards medium low to medium. Traffic congestion may affect fire response /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

111 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Premises sprinklered but do not meet NFPA standard for 2,000 3,500 medium/high hazard occupancies. Lack of central station alarm for burglary hazards medium or high No hazardous materials program when 50 to 100 gallons of class one flammables are present. Fire department delay possible. Non sprinklered medium or high fire hazard 3,500 5,000 No burglary alarm medium to high theft exposure No hazardous materials program when excess of 100 gallons of class one flammables are present. Fire department delay certain E. Inadequate public protection Values exceed 5,000,000 for nonsprinklered locations ,000 located in protection class six. Values exceed 4,000,000 without private sprinkler system 2,000 4,000 Protection or private fire protection system protection class six and seven. Fire equipment access restricted Values exceed 3,000,000 without private sprinklered protection 4,000 5,000 or fire protection system, protection class nine or higher. F. External exposure Parapets less than 24 inches between exposures Large unprotected wall openings Frame exposure severe Exposing property vacant and/or in unsatisfactory condition Exposure has high hazard occupancy Forest, brush or grass fire hazard heavy G. Construction Building and business personal property values 10,000, or greater while located in non-sprinklered frame or better type buildings properly upgraded to code and adequate for occupancy. Building and business personal property values 2,000,000 or 750 1,500 greater while located in a building with inadequate wiring, heating, plumbing, and roofing beyond useful life, maintenance inadequate or replacement needed /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

112 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA H. Combustibility/Susceptibility Integrated circuit dies not packaged and protected from water contamination. Large concentrations of equipment with high water damage susceptibility. Hydrogen plasmas used in production Copper vapor lasers used in production. Precious metal used in process. Extensive plating operations. I. Arrangement of specific insurance J. Transit or floating equipment exposures greater than those contemplated by this class shall not be written under this policy. K. Water damage (Flood Coverage not included) 0 2,500 Machinery and stock with high susceptibility to water damage or contamination from work with moderate probability. Machinery and stock with high susceptibility to water damage 2,500-5,000 or contamination from water with high probability. L. Lower deductible(s) on selected portions of the risk ,000 Judgment based on individual susceptibility to all related exposures /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

113 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA TABLE C DEFICIENCY POINT CHARGE Deficiency Points Charge Deficiency Points Charge Note: Charges are developed and added separately to the Building and Business Personal Property Basic Major Loss Loads. For each additional 200 deficiency points add /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

114 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA TABLE D MAJOR LOSS LOAD DEDUCTIBLE PLAN Deductible Amount Deductible Factor $ 5, , , , , , , Note: The deductible factor is applied only to the Final Property Premium /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

115 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA TABLE E AUTOMATIC INCREASE Amount of Annual Increase Factor 6% % % % 1.06 For each additional 2% Add /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

116 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA TABLE F TIME ELEMENT FACTORS INCOME COVERAGE PART, CP Type Of Risk Coinsurance Mercantile/ Manufacturing Rental Percentage Nonmanufacturing and Mining Properties 125% * * Use this row when writing on a blanket, no coinsurance basis. PERIOD OF LOSS EXTENSION (show on declarations) Total Number of Days Factor EXTRA EXPENSE COVERAGE PART, CP Three Recovery Periods Limits On Loss Payment Factor 100% % % % -- 80% % % -- 70% % /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

117 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Table F (continued) EXPANDED RESTORATION PERIOD, COP-202 Four Recovery Periods Limits On Loss Payment Factor 30% -- 60% -- 90% % % -- 50% -- 75% % % -- 40% -- 80% % 1.60 INCREASED RESTORATION PERIOD ORDINANCE OR LAW, COP-201 Factor /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

118 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA TABLE G Ordinary Payroll Exclusion Factor: 1.12 Attach Ordinary Payroll Exclusion, COP-240 Ordinary Payroll Limitation Factors Limitation Factor 90 days days days days 1.00 Attach Ordinary Payroll Limitation, COP-242. Power, Heat, and Refrigeration Exclusion Factor: 1.06 Attach Power, Heat, and Refrigeration Exclusion, COP-236. Seasonal Leases Factor: 0.65 Attach Seasonal Leases, COP-250. Tuition Factor: 0.88 Attach Tuition Coverage, COP /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

119 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA TABLE H UTILITY INTERRUPTION -- TIME ELEMENT Utilities Load Electricity, steam or gas excluding transmission lines.035 Transmission lines.100 Water.035 Communications excluding transmission lines.055 Transmission lines.100 Attach Utility Interruption -- Time Element, COP /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

120 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA SUPPLEMENTAL TABLE AA -- SPOILAGE COVERAGE Power Disruption.85 Breakdown & Contamination With Refrigeration Maintenance or Service Agreement 1.61 Without Refrigeration Maintenance or Service Agreement 2.30 Both Power Disruption and Breakdown & Contamination With Refrigeration Maintenance or Service Agreement 2.21 Without Refrigeration Maintenance or Service Agreement 2.84 Selling Price Apply factor to applicable spoilage rate 1.40 Attach Spoilage Coverage, COP-253. ADDITIONAL OPTIONS SUPPLEMENT RULE 1 ADDITIONAL POLICYWRITING INSTRUCTION 1.1 Resident Agent Countersignature When required by law, a resident agent countersignature must be included with the policy. Attach endorsement COP Interstate Accounts Policies that cover property located in more than one state can be written subject to the rules, forms, and endorsements for the state with either the largest values or where the insured s headquarters are located /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

121 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA RULE 2 - ADDITIONAL COVERAGE OPTIONS 2.1 Increased Limits The limits that apply to several of the Additional Coverages, Supplemental Coverages, and Supplemental Marine Coverages can be increased. If no limit is indicated on this endorsement then the applicable limit shown in the Property Coverage Part applies. Show the total limit for the appropriate coverage on the endorsement. The premium for this exposure is determined in Rule 6.1, Step 3 through the use of deficiency points. No additional charge applies. Attach endorsement COP Debris Removal The additional limit that applies to Debris Removal in Additional Coverages can be increased. Show the total limit for the appropriate coverage on the endorsement. The premium for this exposure is determined in Rule 6.1, Step 3 through the use of deficiency points. No separate charge applies. Attach endorsement COP Utility Interruption, Property Damage - Separate Limits Property damage coverage can be provided against loss resulting from the interruption of designated off-premises utilities caused by covered perils. A separate property damage limit applies. The premium for this exposure is determined in Rule 6.1, Step 3 through the use of deficiency points. No separate charge applies. Attach endorsement COP Sewer Back Up and Water Below the Surface - Separate Limits The perils of sewer backup and/or water below the surface can be added. A separate sewer back up limit applies. The premium for this exposure is determined in Rule 6.1, Step 3 through the use of deficiency points. No separate charge applies. Attach endorsement COP Additional Computer Coverages Coverage for computers can be extended for: a. computers used away from a covered location or in transit, subject to a separate limit; b. software stored at an unscheduled storage location, subject to a separate limit; or 32 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

122 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA c. electrical and power supply disturbance. The premium for this exposure is determined in Rule 6.1, Step 3 through the use of deficiency points. No separate charge applies. Attach endorsement COP Transit - Backhaul Transit coverage in Supplemental Marine Coverages can be extended for the insured's liability for property of others that is shipped on the insured's vehicles. The premium for this exposure is determined in Rule 6.1, Step 3 through the use of deficiency points. No separate charge applies. Attach endorsement COP Fraud and Deceit Coverage Fraud and deceit coverage can be provided against loss that results when the insured is induced to voluntarily part with covered property by false representation or acceptance of fraudulent documents. A separate fraud and deceit limit applies. The premium for this exposure is determined in rule 6.1, Step 3 through the use of deficiency points. No separate charge applies. Attach endorsement COP-275. RULE 3 - ADDITIONAL TIME ELEMENT OPTIONS 3.1 Monthly Limitation - Income Coverage A thirty day limitation on the amount paid can be added for loss of income. The limitation is based on the income coverage limit multiplied by the monthly limitation percentage or fraction indicated on the declarations. Multiply the Final Building Factor by the appropriate factor from Table J to obtain the Monthly Limitation -- Income Coverage Factor. If there is no Final Building Factor, use the Final Business Personal Property Factor. Apply the Monthly Limitation -- Income Coverage Factor to the limit for Income Coverage. Attach endorsement COP How Much We Pay - Income Coverage The conditions under How Much We Pay are deleted and replaced by conditions that do not contain a 12 month limitation for earnings and extra expense. The premium for this expanded condition can be addressed in Rule 6.1, Step 3 through the use of deficiency points. No separate charge applies /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

123 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Attach endorsement COP-272. TABLE J TIME ELEMENT FACTORS INCOME COVERAGE PART, MONTHLY LIMITATION Type Of Risk Monthly Mercantile/ Manufacturing Rental Limitation Nonmanufacturing and Mining Properties 1/ / / / SECTION 7 GENERAL LIABILITY 1.1 EXPOSURES The following are the average exposures reflecting standard rates and classifications listed in this manual Light Hazard Operations Premises operations: Good loss record, lawful business, average housekeeping, care and maintenance. Light fire hazard with adequate controls. Quick spreading fire unlikely, no high piling of stock. Suitable building and area for operation, no blank wall exposure over 200 feet with good fire department access, light manufacturing or light bench assembly, low fuel load, low quantity of flammables. Fire protection adequate for exposures and no unusual hazards noted. Products: Low to medium products exposures, no design work, no structural aircraft, critical life safety, nuclear or train components contemplated. Normally component parts or low hazard or OEM products, no structural or critical components, appropriate quality control program in place /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

124 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Medium to High Hazard Premises operations: Primary operations are generally sprinklered with central station alarm or have adequate controls for fire and explosion. SB 198 safety program mandatory with a current hazardous material program in place were appropriate. Products/manufacturing systems are up to date. Chemical exposures fully controlled, good fire department access, light forest brush or grass exposures, primary location in protection class six or better. Building and equipment in good care and condition with good housekeeping. Products: Products may be component or OEM finished goods. Bodily injury or property damage exposures should be low to medium. A formal quality control program with recordkeeping mandatory. No structural aircraft, critical life safety, nuclear, or train components contemplated. Basic Limits Composite Rates Table Rates are per $1,000 Sales Sales (000) To $4,999 $5,000 to $24,999 $25,000 to $49,999 $50,000 and above Group Group Group Group Rates are per $1,000 Commission (Payroll) Group Rates are per 1,000 square feet Group 6 Rate of $13 subject to the applicable increased limits factors shown below The above A rates represent the exposures as listed by hazards in the general liability General Underwriting guidelines. A rates are subject to modification to reflect higher or lower exposures or unique conditions. Deviation from the general liability underwriting guidelines or the rates noted above will be reflected in our records and documentation represented in the underwriting file /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

125 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA Increased Limits Table Composite Increased Limits are for both Premises/Operations and for Products/Completed Operations. Rate Group Occurrence Aggregate $500,000 $500, $500,000 $1,000, $1,000,000 $1,000, $1,000,000 $2,000, $1,000,000 $3,000, $2,000,000 $4,000, See classification table in section 1 for Rate Groups. SECTION 8 MISCELLANEOUS COVERAGES a) Fire Legal Liability Coverage: Hi Tech Building Rate x.25 per $100 Value. No mods apply. Use form CP to provide this coverage. b) Hired/Non-owned Auto Coverage: Hired/Non-owned Auto coverage may be purchased at an additional premium charge as follows: $103 subject to a limit of $1,000,000 $113 subject to a limit of $2,000,000 Attach form number GL. c) Additional Insured Coverage: Additional insureds may be added to the policy. A flat premium charge of $10 shall apply per additional insured for lessors or leased equipment, managers operators of premises (landlords), $25 for vendors and owners lessees and contractors, guarantor or franchise, and concessionaires. For all other additional insureds refer to ISO rules. d) California Fungi or Bacteria Exclusion GL. This form is mandatory and must be attached to all policies providing general liability coverage /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

126 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA e) CGL Special Broadening Endorsement Commercial General Liability Coverage may be broadened at an additional premium charge of $250. This charge is not subject to any credits Attach form number CG. f) All Other Inland Marine Coverages Inland Marine Rates for coverage not otherwise specified in this manual will be determined by applying a loss cost multiplier of to the ISO loss costs CM RLA1 11/14. g) All Other General Liability Coverages General Liability rates for coverages not otherwise specified in this manual will be determined by applying a loss costs multiplier of to the ISO loss costs GL BGL1 05/13. h) Identity Recovery Coverage The Identity Recovery Coverage Endorsement is attached to the policy to cover all identity recovery insureds as defined in the applicable policies. Form IL is optional. A $100 flat charge shall be applied to any policy which this form is attached. i) Employee Benefit Liability Coverage This form provides coverage for negligent acts and errors or omissions in the administration of employee benefits as stated in coverage form GL. This coverage may only be written in conjunction with commercial general liability coverage. a. Annual Basic Limit Premium The rate per employee is $.20. The resulting premium reflects the basic limit manual premium for this coverage. b. Annual Minimum Premium Annual Basic Limits Number of Employees Minimum Premium 0-10 $ $ $ This minimum is subject to the application of increased limits factors, but is not subject to package discount nor may it be reduced under any rating plan /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

127 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA c. Increased Limits Factors Annual basic limits are $25,000 per claim and $50,000 aggregate. Increased limits are obtained by using premises/operations CGL Table 1. d. Deductible A $1,000 deductible is mandatory and should be shown on the coverage form. e. Endorsement Attach endorsement GL to the policy. j) Computer Coverage Listed below are rating guidelines for EDP risks with values (i.e. hardware, software, and extra expense) up to $250,000 for all locations, each location should be rated separately: Building Construction Rates Fire Resistive, $.10 Modified Fire Resistive, and Masonry Non-Combustible Non-Combustible, and $.15 Joisted Masonry Frame $.25 Modifications -- The computer coverage rates can be amended by applying a deductible credit and/or risk modification credits or debits. Deductible Amount Credit $ 500 0% $1,000 10% $2,500 20% Attach endorsement IM 7201 Computer Coverage to the policy /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

128 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA k) Electronic Data Processing Coverage Listed below are rating guidelines for EDP risks with values (hardware, software and extra expense) over $250,000 for all locations, each location should be rated separately: Fire Use final COP BPP rate as Electronic Data Processing base rate. Attach endorsement IM 7212 to the policy Coverage Loadings To obtain the EDP rate add the following Coverage loadings, if applicable, to the adjusted location rate: 1. Disturbance Coverage. Installation of the line protection; deletion of the 500ft. limitation. Attach endorsement IM 7212 to the policy 2. Earthquake (EQ rating not applicable in California) Earthquake Zone Loading 1 or 2 Not Available 3, 4, or Attach endorsement IM 7211 to the policy 3. Flood. The rates for zones B, C and X can be used if a risk is located above the 2 nd story building. (Flood rating not applicable in California) Flood Zone Loading A or V Not Available B, C OR X Attach endorsement IM 7211 to the policy 4. Transit and Off-Premises Coverage. Apply the final business personal property rate developed in Section 6 Premium Determinations. Steps 1 thru 8 multiplied by the excess limit over $7,500 to determine the excess premium /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

129 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA l) Hardware Upgrade When the Upgrade Value Endorsement is added to a policy, the developed computer/edp rate should be added to the scheduled upgraded values instead of the current values. Since this endorsement applies only to a total loss and not to a partial loss, the computer/edp rate can give a credit of 10% when applied to the upgraded values. Attach Endorsement IM 7213 and IM 7214 m) Loss Of Income When the loss of income coverage is added to a policy, the following rating method should be followed: 1. determine the number of days of coverage by dividing the loss of income coverage limit by the day limit, as shown on the declarations/schedule. 2. select the factor that corresponds to the number of days of coverage (apply interpolation if the number of days falls between those shown): No. of Days Covered Factor Multiply the factor (step 2.) by the computer/edp rate Attach endorsement IM 7215 and 7216 n) Leased Hardware An EDP operation may lease hardware and their lease agreement may require them to obtain insurance for the leased property. The extent of the required coverage will vary from lessor to lessor. The computer/edp coverage forms exclude loss caused by a peril for which the insured is not responsible under the terms of a lease 40 11/17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

130 NATIONAL SPECIALTY INSURANCE COMPANY HI-TECH PRECISION MANUFACTURING PROGRAM MANUAL OF RATES AND RULES CALIFORNIA agreement. For this reason the computer/edp rate can be reduced for leased equipment when the lease only requires the insured to obtain fire insurance, then loadings for special perils and other coverages (e.g. disturbance coverage) can be eliminated. A copy of the lease agreement should be obtained when consideration is given to reducing the rate for leased hardware /17 Includes Copyrighted Material of the American Association of Insurance Services, with their permission.

131 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: 05.0 CMP Liability and Non-Liability/ Commercial Package Product Name: Hi-Tech Initial Filing Project Name/Number: /NSIC-CA-CMP-0417FR Supporting Document Schedules Satisfied - Item: Comments: Attachment(s): Item Status: Status Date: Satisfied - Item: Comments: Attachment(s): Item Status: Status Date: Satisfied - Item: Comments: Attachment(s): Item Status: Status Date: Satisfied - Item: Comments: Attachment(s): Item Status: Status Date: Satisfied - Item: Comments: Attachment(s): Item Status: New Prior Approval Rate Application PPA - CMP Signature Page.pdf Rate Template_Ed Package.pdf PriorAppRateAPL_Ed Hi Tech - Package.xls Rate Template_Ed Package.xls PriorAppRateAPL_Ed Hi Tech - Package.pdf Filing Authorization Letter FAL NSIC MB CA HITECH CMP RRF.pdf Underwriting Guidelines Underwriting Guidelines.pdf Bureau Adoption Information AAIS and ISO Information to be adopted in this filing. AAIS CA COP MANUAL REVISION PAGES pdf GL Rules and Loss Costs.pdf IM Rules and Loss Costs.pdf CA COP FE List.pdf CMP Forms List with Form Name.pdf Actuarial Memorandum Actuarial Memorandum.pdf PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

132 SERFF Tracking #: STNA State Tracking #: Company Tracking #: NSIC-CA-HITECH-CMP-0417FR State: California Filing Company: National Specialty Insurance Company TOI/Sub-TOI: Product Name: Project Name/Number: Status Date: 05.0 CMP Liability and Non-Liability/ Commercial Package Hi-Tech Initial Filing /NSIC-CA-CMP-0417FR Satisfied - Item: Exhibit 16 Comments: Attachment(s): Exhibit 16 - Package.pdf Item Status: Status Date: Satisfied - Item: Comments: Attachment(s): Item Status: Status Date: Satisfied - Item: Comments: Attachment(s): Item Status: Status Date: Satisfied - Item: Comments: Attachment(s): Item Status: Status Date: Loss Costs GL Loss Costs.pdf IM Loss Costs.pdf AAIS CA COP FE List.pdf Revised Prior Approval Rate Template Copy of Prior-Approval-Rate-Template-Edition Hi Tech - Package.xlsm Copy of Prior-Approval-Rate-Template-Edition Hi Tech - Package.pdf PDF Pipeline for SERFF Tracking Number STNA Generated 12/21/ :23 AM

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