PACIFIC EMPLOYERS INSURANCE COMPANY v. GLOBAL REINSURANCE CORPORATION OF AMERICA et al Petition to...

8/4/2019 PACIFIC EMPLOYERS INSURANCE COMPANY v. GLOBAL REINSURANCE CORPORATION OF AMERICA et al Petition to C

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T

T;TLU N I T E D S T AT E SDISTRICT COURT:

SOUTHERN DISTRICT OF NEVI ?

PACIFIC EMPLOYERS INSURANCECOMPANY, `"

CIVILPetitioner, s

iflj. ` ,.G 2 0 1 1GLOBAL REINSURANCE CORPORATION OF : DC S. M YAMERICA, U.S. BRANCH (F/K/A GERLINGGLOBAL REINSURANCE CORPORATION, U.S.:BRANCH),

Respondent.

PACIFIC EMPLOYERS INSURANCE COMPANY'SPETITION TO CONFIRM ARBITRATION AWARD

Petitioner, Pacific Employers Insurance Com pany ("PEIC "), by its counsel White and

Williams LLP, hereby moves this Cou rt to enter an order confirming the arbitral Final Award

dated March 7, 2011, which was issued following an arbitration between PEIC and Global

Reinsurance Corporation of A merica, U.S. Branch (f/k/a Gerling Global R einsurance

Corporation, U.S. Branch) ("Global").

1. his Petition to Confirm Arbitration Award pursuant to Section 9 of the Federal

Arbitration Act ("FAA") is submitted to confirm the arbitral Final Award (the "Final Award"),

dated March 7, 2011, which was issued following a two day arbitration between Petitioner and

Respondent, Global Reinsurance Corporation of America, U.S. Branch (f/k/a Gerling Global

Reinsurance Corporation, U.S. Branch) ("Global"). See Final Award, attached hereto as Exhibit

1 .1

1 Pursuant to the agreement of the parties that certain Arbitration Information be confidential,PEIC has requested that the Court maintain the Final Award under seal for the reasons set forththerein.

8096816v.1

Case 1:11-cv-06301-JGK Document 1 Filed 09/09/11 Page 1 of 31


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THE PARTIES

2. PEIC is a Pennsylvania corporation with its principal place of business located at

436 Walnut Street, Philadelphia, Pennsylvania 19106.

3. Upon information and belief, Global is a New York corporation with its principal

place of business located at Times Square Tower, 7 Times Square, 37th Floor, New York, New

Y ork 1 0036.

JURISDICTION AND VENUE

4. This Petition is submitted under Chapter 1 of the FAA, 9 U.S.C. 1-16. This

proceeding involves commercial arbitration agreements that are between citizens of the United

States, and thus falls within Chapter 1 of the FAA.See 9 U.S.C. 1.

5. This Court has subject matter jurisdiction pursuant to 28 U.S.C. 1332 in that the

petition involves citizens of different states and the amount in controversy exceeds the sum or

value of $75,000, ex clusive of interest and costs.

6. This Court has personal jurisdiction over Global as Global is incorporated by the

State of New Y ork and has its principal place of business in New Y ork, New Y ork.

7. Further, this Court has personal jurisdiction by virtue of Global's agreement, in

the subject contracts of reinsurance, that "any arbitration shall take place in New York, N.Y."

See Global Facultative Certificate Nos. 71-23346 and 71-23347 (hereinafter "Global

Certificates"), attached hereto as Exhibits 2 and 3 respectively, at 17 ("Arbitration Clause")

As the arbitration occurred in New York, New York, pursuant to the agreement of the parties,

personal jurisdiction is proper in this Court. See id.

8. Venue is proper in this Court because Global is deemed to reside in this district,

as its principal place of business is located in this district and a substantial part of the events

giving rise to this action occurred in this district. 28 U.S.C. 1391(a)(2).

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9. urther, venue is proper here because Section 9 of the FAA provides that "[i]f no

court is specified in the agreement of the parties, then such application may be made to the

United States court in and for the district within which such award was made." 9 U.S.C. 9.

The Final Award was made in New Y ork, New Y ork; thus, venue in this district is proper.

10. Moreover, venue is appropriate in this Court as, pursuant to the contractual

agreement of the parties, the arbitration hearing w as conducted in this district.

BACKGROUND

11. The underlying arbitration concerned Global's responsibility under two

facultative reinsurance certificates for asbestos claims paid by PEIC under an umbrella excess

policy issued to Buffalo Forge Company ("Buffalo Forge")

12. In a reinsurance contract, a reinsurer agrees to indemnify the reinsured against all

or part of the loss that the reinsured may sustain under an insurance policy or policies the

company has issued, in exchange for a portion of the premium paid to the reinsured for the

insurance po licies.

13. A "facultative" reinsurance contract reinsures a specific insurance policy or risk,

as opposed to "treaty" reinsurance, which reinsures multiple insurance policies or an entire book

of business written by the reinsured.

14. PEIC issued an umbrella commercial liability excess of loss policy to its insured,

Buffalo Forge, effective June 30, 1980 to June 30, 1981 ("PEIC Policy"). See PEIC Policy No.

XM O 003649, attached as Exhibit 4 hereto.

15. The PEIC Policy provides indemnity limits of $9 million per occurrence and in

the aggregate for products claims excess of $1 million in underlying insurance provided by Utica

M utual. Id . at 1.

16. The PEIC Policy also provides for the payment of defense costs "in addition" to

the policy limit.Id . at 2.-3-

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1 7. erling Global Reinsurance Corporation (as predecessor to Global), issued two

facultative reinsurance certificates to PEIC, Global Certificate Nos. 71-23346 and 71-23347,

pursuant to which Global, as the reinsurer, agreed to reinsure, on an excess of loss basis, parties

of the PEIC Policy.

18. The Global C ertificates obligated Global to reimburse PE IC for a proportion of

"loss" and "in addition thereto" a proportion of expenses under PEIC's policy with Buffalo

Forge. S ee Exhibits 2 and 3, at 1 1 .

19. As with m any reinsurance contracts, the Global Certificates provided that

Global's liability "shall follow that of [PEIC] and ... shall be subject in all respects to all the

terms and conditions of [PEIC's] policy." S ee Exhibits 2 and 3, at 9.

20. The G lobal Certificates also contain "follow the settlements" language, which

provides that all of PEIC's loss settlements under the Buffalo Forge policy will be paid promptly

following the receipt of proof of loss.S ee Exhibits 2 and 3, at 1 2.

21. After the Global Certificates were executed, Buffalo Forge and its corporate

successors were named as d efendants in many asbestos products personal injury claims and

lawsuits. These claims and lawsuits were tendered to Buffalo Forge's insurers for defense and

indemnity.

22. Eventually, the insurance policy below PEIC's policy exhausted and PEIC began

to participate in defense and indemnity of B uffalo Forge and its corporate successors, pursuant to

the terms of the PEIC Policy.

23. PEIC's participation in the defense and indemnity of Buffalo Forge was in

accordance with the terms of a "Defense and Indemnity Agreement" between Buffalo Forge's

corporate successors and their remaining insurers with unexhausted insurance policies.

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24. Eventually, PEIC's indemnity payments under the PEIC Policy exceeded the

retention on the lower of Global's facultative certificates.

25. Beginning on Sep tember 2, 2009, PEIC issued reinsurance billings to Global

under Global's share of PEIC indemnity payments under the PEIC Policy and, in addition

thereto, Global's proportionate share of defense costs.

26. In Novem ber 2009, G lobal sent another letter to PEIC, w herein Global raised a

laundry list of purported issues with PEIC's reinsurance billing.

27. Global refused to pay the billings in full,inter alia, because Global contended that

the "Reinsurance A ccepted" provision of the facultative certificate operated as a "cap" on its

total liability under the certificates, inclusive of defense costs.

28. On December 3, 2009, PEIC initiated arbitration proceedings seeking to recover

the outstanding balance due from Global under Global Certificate No. 71-23346, as well as a

declaration regarding Global's payment obligations for amounts which will in the future become

due under that certificate and Global C ertificate No. 71 -23347.

29. A panel of three arbitrators (the "Panel") was appointed and accepted by the

parties at an Organizational Meeting on October 11, 2010 in New York, New York.

30. After discovery and briefing, a two-day evidentiary hearing was held on March 1 St

and M arch 2ud, 2011 in New Y ork, New Y ork.

31. The Panel issued its Final Award on March 7, 2011. See Exhibit 1.

32. PEIC now petitions this Court to confirm the Final Award.

THE AWARD SHOULD BE CONFIRMED

33. Section 9 of the FAA provides that a party may seek an order confirming an

arbitration award within one year of the date the award was made, and that a court "must grant

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such an order unless the award is vacated, mod ified, or corrected as prescribed in sections 1 0 and

11 of [the FAA]." 9 U.S.C. 9.

34. Second C ircuit precedent is clear that, under this standard, "arbitration aw ards are

subject to `severely limited' review by the courts" and thus the courts shall confirm the award

absent certain specific, enumerated grounds for refusal or deferral of recognition. Bradley v.

Merrill Lynch & Co., Inc.,344 Fed. Appx. 689, 690 (2d Cir. 2009).

35. Pursuant to 9 U.S.C. 12, a party wishing to vacate, modify, or correct an

arbitration award must do so within three months from the date that the award was filed or

delivered. Where such party fails to do so, as is the case here, that party is estopped from later

objecting to the award. See, e.g., Arch Dev. Corp. v. Biomet, 2003 WL 21697742 (N.D. Ill.

2003), quoting Piccolo v. Dain, Kalman & Quail, Inc., 641 F.2d 598, 600 (8th Cir. 1981) ("A

party who failed to comply with the statutory precondition of timely service of notice forfeits the

right to judicial review of the award.")

36. More than three (3) months have elapsed since the Panel delivered its Final

Award and, within such time, Global did not move to vacate, modify, or correct the Panel's Final

Award.

37. Further, none of the grounds for vacating an award, as set out in the FAA under

section 10 , are present.

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38. EIC now petitions this Court to confirm the Panel's Final Award pursuant to 9

U.S.C. 9. As the Final Award has not been vacated, modified, or corrected as prescribed by

sections 10 and 11 of the FAA, this Court must confirm the Panel's Final Award pursuant to 9

U.S.C. 9.

Respectfully submitted,

OF COUNSEL:Christine G. RussellEllen K. BurrowsBrendan D. McQuiggan1 650 M arket StreetOne Liberty Place, Suite 1 800Philadelphia, PA [email protected]@[email protected](215) 864-6301/7028/7173

Dated: August 26, 201 1

By:Rafael VergaraWhite and Williams LLPOne Penn Plaza250 W. 34 thStreet, Suite 41 1 0New York, NY [email protected](212) 244-9500

Attorneys for Petitioner,Pacific Employers Insurance Company

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Exhibit 1



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CONFIDENTIALIn the Matter of the Arbitration Between

PACIFIC EM PLOYERS INSURANCE COM PANY,

Petitioner,

- and -

GLOBAL REINSURANCE CORPORATION OFAM ERICA, U.S. BRANCH (F/K/A GERLIINNGGLOBAL REINSURANCE CORPORATION,U.S. BRANCH),

Respondent.

(Concerning Buffalo Forge Asbestos Claims)

FINAL AWARD

The Panel, consisting of Lawrence O. Monin, Susan S. Claflin and Paul A. Bellone,

having reviewed the parties' respective position statements and pre-hearing briefing and having

considered all the evidence and arguments presented at a two-day evidentiary hearing on

March 1 and 2, 2011 in New York and after additional review, consideration and deliberation,

the Panel ORDERS as follows:

1 ) Global is Ordered to pay its pro rata share of expenses in addition to the"Reinsurance Accepted" amount set forth in Paragraph 5, Section 4 of itsCertificate Nos. 71-2 3346 and 71 -23347.

2) Within five (5) days of the date hereof, the parties shall reconcile and agree as tothe amount of any previous billings that remain unpaid. Such unpaid amount(s)will be paid to PEIC within (30) days from the date hereof together with interestcalculated pursuant to paragraph (4) below. This decision precludes Global fromraising any defense to the payment ordered.

3) Global shall pay to PEIC the full amount of all future billings under CertificateNos. 71 -23346 and 71 -23347 within thirty (30) days of their receipt. With respectto all future billings under Certificates Nos. 71-23346 and 71-23347, Global isprecluded from raising, as a defense to payment, any defense which it could haveraised during the course of this Arbitration or any defense raised and subsequently



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to all future billings under Certificates Nos. 71 -23346 and 71 -23347, Global isprecluded from raising, as a defense to payment, any defense which it could haveraised during the course of this Arbitration or any defense raised and subsequentlywithdrawn or abandoned. Interest on future billings outstanding for more than 30days will accrue at the Pennsylvania statutory rate of 6% per annum.

4) Global is further ordered to pay interest on all past due amounts at thePennsylvania statutory rate of 6% per annum . Interest shall be calculated on allamounts from a date thirty (30) days following the date of the billing. Within five(5) days from the date of this Order, the parties shall reconcile and agree as to theamount currently due with respect to interest.

5) All other requests for relief are denied.

6) The Panel will retain jurisdiction to resolve any dispute arising out of theperformance of this Award for 1 80 days from the date of the Award, unless theParties jointly agree to terminate the Panel's jurisdiction at an earlier date.

BY ANEL: /~J~

Y~~~ `'" , Umpire

______ ____ _ Arbitrator

Arbitrator Bellone disagrees with ORDERparagraph #1 , but in view of the M ajority's agreement on Order paragraph #1,Arbitrator. Bellone agrees with Order paragraphs 2 6,

Arbitrator

Dated: arch 7, 201 1



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Exh ibit 2



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t

CERTIFICATE OF FACULTATIVE REINSURANCE

GERLING GLOBAL REINSURANCE CORPORATION1 23346

UNITED STATES BRANCH

717 Fifth Avenue, Now York, N.Y. 10022Herein called the "ReInsurer"

1 . Does hereby reinsure: ECLARATIONS

.Jiaeifie 1ployers Insurance f,. ~ b..., herein called the Company) in respect of the Company's policy hereinafterLos Angel es , Ca ""Y ~ escribed, in consideration of the payment of the premium and subiect to

he terms, conditions and a mount of liability set forth, as follows:

(Name and Address of Ceding Company)

2. Name of Insured : uffalo Forge Company, Etal

Location : uffalo, N.Y.

3.Company Policy No.: M )

00 3649ffective From J

11q~ o

: June 1, 1981(12:01 A.M. Standard Time a{ the A~3ressof tl ~e hdtired)Q. Reinsurance Period : ffective From : 3 Y9 o: J une 1, 1981

(12:01 A.M. Stenderd Tina of the Address of the insured)

5. DETAILS OF REINSURANCE AFFORDED:

SECTION 1. ab jlitymbrella Liab ilityTYPE OF INSURANCE -

SECTION 2. $9,000, 000 each occurrence/annual aggregate Where applicable excessPOLICY LIMITS AND Primary Insurance or SIR,

APPLICATION

SECTION 3. $ 150,000 part of the First $ 1 , 000,000 each occurrence/annual aggregateCOMPANY RETENTION Where applicable excess Primary Insurance or SIR.

S E C T I O N 4 . $1 ,0 00 ,000 p a r t Of $ 4 ,000 ,000 each occu r r ence an n u a l agg rega t e w h e r eREINSURANCE ACCEPTED applicable excess $l,ik'x.~, OG each. occurr'enee/ammual aggregate where

a p p l i c a b l e e x c e s s P r i m a z y . T n s u r a n c e o r S I R .

SECTION 5.BASIS OF ACCEPTANCE

XExcess of Loss ontributing Excess J Non Concurrent

SECTION 6.CANCELLATION NOTICE IF DIFFERENT THAN ITEM 18 45 AYS

6. Reinsurance Premium Computation U Fiat ChargeDeposit Premium S - ,718.75

Minimum Premium S ,718,75

Audit Period: one7. Ceding Commission: il

8. Intermediary:

( E.W. Blanch CampalryNorthwestern F i bane i a] C enter

~ ismeapolis, n esota 55431

CERT. 1. REV. 6/80

Adjustable on Basis of er

PREMIUM IF PAID IN INSTALLMENTS

EFFECTIVE DATE 1st ANNIVERSARY 2nd ANNIVERSARY TOTAL

PREMIUM S

GERLING GLOBAL OFFICES- INC.U.S. Manager

J uthors 'Si natureO W G I c A N 1 `



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Ii, The Company warrants toretain foe its pwn account, subject tootherReinsurance. the amount of liability specified in Section 3. Item 5 ofthe Declarations, and the liability o1the Reinsurer specified in Section 4.I tent 5 of the Declarations shall 1ollow that of the Company and except asotherwise specifically provided herein, or designated as non -concturent re-insurance in the Declarations, shall be subject in all respects to off the termsand conditions of the Company's policy.' In no event shall anyone other:hut the Cienpuny, or in the event of the Company's insolvency, Its Re-cetvet. Lx to;(Vitnr, or Statutor y successor, have et rights or .assignment of igtits vetoer tltr. contract. The Cn,npany shall furnish the Reinsurer with a.

r:+v if ts nnlicy and all en'Jgrs_m .rc :heertto whict , n any m anner effecttoCcrtil cats, end slaill make ti :a i:a a fur ;nap, ctirn sno plan-c at The did.

;K%sal%li - the Reinsurer , at reasoneU :y tunes ; ar.v ht ::; ::,,cards relotinq toTs romsurs nce or ciaiint in NJnneC:; .e - ;Itei'e.,t:t h.

10, The Company Shall notify thr Reinsurer prort:ptly, in writing, of anyiecurrer ce which In the Company 's estimate of the value nt the injuries orOauaegks sought, wirheut regard to twoil;ty, might result in a judgement inan amount sufficie:it toinvolve this Certificate, Or .+herein the Companyhet created a loss reserve equal to t; 1reawr than fifty (CIO) nr.rcent of theCiimpany s retention as specified .n Section 3. ; tern 5 of the Declarations ;or if finis reittstuance applies on a cn'n rihuioy rx..cs basis . when notice ofc'aim is received liv the Company The Compan , will 'further advise thefi. insuier of subsequent dctelopnr:nts, it writ og, ;r: 'a complete andtimely manner. Wh;'e the Reinsure. does not wtdertutie to:.:.estipaw o,tiefenu claims or suns, it shall nevertheless have the right and shall be givei.the opocrun;ty , with the fuk eooperatn , s of the Crrmranv , to associatecoutiscl, at its own expense. and :o ;oe , viththe Cc'm:,any and its repte.sentati,res in the defanse.and control 7t soy claim, suit or proceeng

involving this Certificate, if not excluded in other Darts of this C ertificate.11. Reinsurer shalt pay its proportion of es.;-ones , other than Companysr-ieri,s and 'officenapenser int.rrrerJ by use Company in theinvestigationand sottler.enl of efs ins or suits : rrtvi[ eel i;ss ra+p u.-nn 1, nacre by the.Company affecting this Certificaty, ir. thi. ratiothat thti Riinsurer's lossosyment beers to the Cortpar.y's cross icss payrent. anti with the priornotice toand consent of Reinsurer totrial court proceedings, its propor-tion of court costs and interest on any judger.e^.t dr aee.rn.

12, Payment of Its proportion of doss and expense paid by the Companywill Ix made 'by the Reinsurer to the Cor:tpsny promptly Jglttwving thereceipt of proof of Toss.

13. The Reinsurer will be paid or credited by the Company with itsproportion of salvage, i.e., reimbursement obtained or recovery made bythe Company, less the actual cost (excluding Company salaries and officeexpenses) of obtaining such reimbursement or making such recovery, If Thereinsurance afforded by this certificate is on an excess of loss basis, salvageshall be applied in the inverse order in which.liabi(ity attaches,

14, The Company undertakes not to claim any deduction in respect ofthe premium herein when making tax returns, other than Income or ProfitsTax returns. toeny State or Territory of the United States or the Districtof Columbia.

15, In the event of the insolvency of the Company, the reinsuranceo:ovided by this Certificate shall be payable by the Reinsurer on the basisif the tiability.of the Company under the policyfies) reinsured, withoutdirninution becduse of such insolvency, directly to the Company or itsReceiver, Liquidator, or Statutory successor pursuant to the Statute of anyState of the United States having jurisdiction and tothe extent that suchreinsurance as is afforded hereunder may be credited to the Company as an,r)mitted asset or deduction from liability, it being understood that subjectto such amendment, the Reinsurer may avail itself of any other provisionsof any such Statute applicable. The Reinsurer shall be given written noticeof the pendency of each claim against the Company on the policy(ies)reinsured hereunder within a reasonable time after such claim is filed in theinsolvency proceedings. The Reinsurer shall have the right to investigateeach such claim and interpose, at its ow n expense, in the proceeding wheresuch claim is to be adjudicated , any del enseswhich it may deem availabletothe Company or. its Receiver, Liquidator, or Statutory successor ,Thee x p e n s e t h u s I n c u r r e d b y t h e R e i n s u r e r s h e l l b e c h a r g e a b l e , s u b j e c t t ocourt approval, against the insolvent Company as part of the expense ofliquidation to the extent of a proportionate share of the benefit whichmay accrue to the Company solely as a result of the defense undertaken byt h e R e i n s u r e r .

16. The Reinsurer may offset any balance(s) whether on account of pre-miums, commissions, claims, losses, adjustment expense, salvage or anyother amount(s) due from one party tothe other under this Certificate orunder gri other agreement heretofore or hereafter entered into betweenthe Conff ,. end Reinsurer, whether acting as assuming Reinsurer or asCeding Corp,y ~

17. Should an irreconcilable difference of opinion arise as td the inter-'pretation of this Certificate, it is hereby mutudlfv agreed that, as a condi.tion precedent toany right of action hereunder, such difference shall'besubmitted to 'arbitration, one arbitrator to be chosen by the Co mpany ,onearbitrator by the Reinsurer and an umpire to be m utually agreed upon andchosen by the two arbitrators before they enter upon arbitration. The arbi-trators and umpire so selected shall be officers or form er officers of otherinsurance or reinsurance companies. In the event that either party shouldfait tochoose an arbitrator within sixty (60) days following receipt of awritten request by the other party to enter upon arbitration, the requestingparty may then choose a seco nd arbitrator and the two selected arbitratorsshall in turn choose an umpire before entering upon arbitration, in theevent, the twoselected arbitrators fail toagree on the selection of an um-pire, after meeting together and within ten (10) days of their appointment,then eacharbitrator shall select one name frorr a list of three names sub-mitted by the other arbitrator and the umpire shall be Selected by tat be-tween the two names chosen.

Each party shall thereupon present its csiu: to the arbitratois within sixty(60) days alter date of their appointment. The decision of the arbitratorsshall be final and binding upon both parties, but falling to agree they shallcall upon the umpire and the decision of the majority shalt be final antibinding upon bothparties. Each party shall bear the expense of -its ownarbitrator and shall jointly and equally beer withthe other the expense-ofthe umpire and of the arbitration. In the event that twoof the arbitnirosare chosen by one party, as above 'provided. the expense of the arbitrators,the umpire and the arbitration shall be equally divided between the twoDenies, The arbitrators shall adopt their own rules and procedures andmay waive the reateirements of the mules of evidence, Any such arbmatiur,shelf take place in New York, N.Y., unless some other location is tnutwakyagreed upon by the two p arties In interest,

ill. Cancellation of the policy of the Company shall constitute automaticcancellation of this Curitifxate end it may also be cancelled Oh' a porn ratebasis- by either ratty :rattling or delivering to the other written .traitsstating when, not less than shiny (30) days thereafter, suchcancetlattar,shall be effective. if at any time during the continuance of this Ceni:i.ante, the Company should lose the whole or any part of its paid-up cap,-tai or gointo liquidation or receivership, whether voluntary or involun.nary, or should have a Conservator or Rehabilitator appointed or undergoany process of reconstruction or reinsure its entire business or be acquiredor controlled or merged withany other company, corporation or body,the Reinsurer shall have the right totetrmihate this Certificate forthwithupon the giving of notice in writing to the Company,

19. The terms of this Certificate shall not be waived or changed except byerxrorsernenr issued to form a part hereof, and executed by a duly at,tnni .ized.representative of the Reinsurer.

.20. The Company'shall notify the Reinsurer promptly, in writing, pt anysituation wherein the Company may become obligated topay as damageseither by judgement or agreement, due tothe alleged or actual bad faithfraud, or negligence of the Company, its employees or representatives, inthe handling of, or failure to settle a claim on behalf of or by the riainadinsured under its polieylies), or for the costs qr expense incurred there-from, The Reinsurer shall have the right and shall be given the opportunity,ivhhthe full cooperation of the Company, to associate counsel, at its ow.:expense, and to. join with. the Com jtaity and Its representatives in the lie-ferise and control of any claim, suit or proceeding involving this Item.

21, Definitions:As used in this Certificate under Section 5., Item 5 of the Declarations, thefollowing terms shell have the meaning set opposite each:

Excess of Loss: The limit(s) of liability of the Reinsurer, as stated in Sec-tion 4, Item 5 of the Declarations, appliesly) only tothat portion of losswithin the policy limits, in excess of the applicable retention of the Com-pany as stated in Section 3, Item 5 of the Declarations.

Contributing Excess: The Company's policy(ies) applies(y) in excess ofother valid insurance, reinsurancg or self-insured retention and the limit(s)of liability of the Reinsurer spplie(y),proportionately to all loss.within thepolicy limits in the amoun t(s) jet forth In Section 4, Item 5 of the Declara-

tions.

Non-Concurrent: The reinsurance provided does not apply toany hazardsor risks of loss or damage covered under the Company's policy, whicharespecifically' excluded In the Deelerstiops: The retention of the Companyand liability of the Reinsurer shall be determined as thoug h the Company'spolicy(ies) applied only to the hazards or risks of loss or damage whichwould not be excluded in the Declarations.

In witness Whereof, the Reinsurer has cau sedthis Certificate to be signedby its authorized representative.



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Exhibit 3



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t

CERTIFICATE OF FACULTATIVE REINSURANCE

GERLING GLOBAL REINSURANCE CORPORATION 1' 23347

UNITED STATES BRANCH717 Fifth Avenue. New York, N.Y. 10022 ,

Herein calledthe "Reinsurer"1 . Does hereby reinsure: ECLARATIONS

I Pacific EW1oyers Insurance Cou)any, herein called the Company) in respect of the Company's policy herek afterLOS Angeles, Ca escribed, in consideration of the payment of the premium and subject to

the terms, conditions and amount of liability set forth, as follows:

L (Name and Address of Ceding Company)

2. Name of Insured: falo Forge

Location: uffalo, N.Y.

3. Company Policy NO.: .M)00 3649 ffective From:. June 1, 1980 o; une 1, 1981

(12:01 A.M. Standard Time at the Address of the Insured)

4. Reinsurance Period: ffective From: une 1, 1980 o: une 1, 1981412x11 A.M. Standard Time at the Address of the Insured)

5. DETAILS OF REINSURANCE AFFORDED:

SECTION 1. UmbrellaLiab ilityTYPE OF INSURANCE

SECTION 2. $9,000,000 each occ=renceannual aggregate where applicable estcess .POLICY LIMITS AND Pnny Insur ance or SIR.

APPLICATION

SECTION 3. $150, 000 part of the First $1,000,000 each Occurrence/annualCOMPANY RETENTION aggregate where applicable excess Priimry Insurance or SIR.

SECTION 4. $2,000,000part of l4, 000,000 each occurrence/annual aggregate whereREINSURANCE ACCEPTED applicable excess $5,000, 000 each occurrence/annual. aggregate where

applicable excess Primary Insurance or SIR.

BASIS OF ACCEPTANCE X Excess of Loss Contributing E KeessNon -Concurrent

SECTION 6.CANCELLATION NOTICE IF DIFFERENTTIfAN ITEM 18 5 AYS

6. Reinsurance Premium Computation lat Charge [J Adjustable on Basis of e rDeposit Premium $ ,812.

PREMIUM IF PAID IN INSTALLMENTSMinimum Premium $ ,812.50

Audit Period: IOTle.7. Ceding Commission: il

8. Intermediary: ERLING GLOBAL OFFICES INC.

F E.W. Blanch CCmpany U.S. ManagerNatthwestern Financial. Center

L Witrieapolis, -V&mesota 55431 uthorizCERT. 1 REV. 61 80 R I G I N

EFFECTIVE DATEtss ANNIVERSARY 2nd ANNIVERSARY.

TOTAL'PREMIUMS



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9. The Company warrants toretain for its own account, subject toother.Reinsurance, the amount of liability specified in Section 3. Item 5 ofthe Declarations, and the liability of the Reinsurer specified in Section 4,Item 5 of the Declarations shall follow that of the Company and except as

otherwise specifically provided heroin or designated as non-concurrent re-insurance in the Declarations. shall be subject in all respects to all the term sand conditions of the Company s policy.. In no event shall anyone otherthan the Company, or in the event of the Company's insolvency, its Re.ceiver, Liquidator, or Statutory succeaSdr, have any rights or assignment oftights under this conn.tct. The Company shall f urnish the Reinsures with acot my of its policy and all endorsements thereto w hich in any manner affectThis Certificate, and shaft make availatile for inspection and place at the die.onsal of the Reinsurer, at reasontble times, any of its records relating tothis reinsurance or claims in connection therewith.

10. The Company shall notify the Reinsurer promptly, in writing, of anytx:currence which in the Company's estimate of the value of the injuries ordamages sought. without regard toliability, might result in a judgement Inan amount sufficient to involve this Certificate, or wherein the Companyhas created a loss reserve equalte or greater then fifty (501percent of theCompany's retention as specified in Section 3, Item a of site. Declarations;ry if this reinsurance applies on a contributory excess basis, when notice o fclaim .is received by the Company. The Company will further advise , tlhel- einsurar. of subsequent developments, in writing, in a complete andtimely manner. While the Reinsurer does not undertake toinvestigate ordefend claims or wits, it shall nevertheless have the right anti shall be giventhe opportunity, with the full cooperation of The Company, toassociatecounsel, at its own expense, and tojoin with the Company arid Its reps[sentatives in the defense and control of any claim, suit or proceedinginvolving this Certificate, if not excluded in other parts of this Certificate.

11, Reinsurer shall pay its proportion of expenses, other than Companysalaries and office expenses incurred by the Company in the investigationand settlement of claims tx suits provided 'foss payment is made by theCompany affecting this Certilicate, in the ratio that the Reinsurer' s losspayment bears to the Company's gross loss payment, and with the priornotice toand consent of Reinsurer totrial court proceedings, its propor-lice, of court costs and interest on any judgeme nt or award.

12. Payment of its proportion of loss and expense paid by the Companywill be made by the Reinsurer to the Company promptly following thereceipt of proof of loss.

13. The Reinsurer will be paid or credited by the Company with itsproportion of salvage, i.e., reimbursement obtained or recovery made by!he.Compeny, less the actual cost texciuding Company salaries and officeexpenses) 'of obtaining such reimbursement or m aking such recovery. If thereinsurance afforded by this certificate is on an excess of loss basis; salvageShall be applied in the inverse order in w hich liability attaches.

14. The Company undertakes not to claim any deduction in respect of

the premium herein when making tax returns, other than Income or ProfitsTax returns, toany State or Territory of the United States or the Districtof Columbia.

15. In the event of the - insolvency of the Company, the reinsuranceprovided by this Certificate-shall be payable.by the Reinsurer on the basisof the liability of the Company under the policyfies) reinsured,.withoutdiminution because of such insolvency, directlyto the Company or itsReceiver, Liquidator, or Statutory successor pursuant to the Statute of anyState of the United States having jurisdiction and tothe extent that suchreinsurance as is afforded hereunder may be credited to the Company as anadmitted 'asset or deduction from liability, it being understood that subjecttosuchamendment, the Reinsurer may avail itself of any other provisionsof any suchStatute applicable. The Reinsurer shall be given written noticeof the pendency of each claim against the Company on the policy(ies)reinsured hereunder within a reasona ble time after such claim Is filed in theinsolvency proceedings. The Reinsurer shall have the right to investigateeachsuchclaim and interpose, at its own expense, in the proceeding wheresuchclaim is tobe adjudicated, any defenses whichit may deem availableto the Company or' its Receiver, Liquidator, or Statutory successor . Theexpense thus, incurred by the Reinsurer shall be chargeable, 'subject tocourt approval, against the insolvent Company as part of the expense ofliquidation to the extent of a proportionate share of the benefit whichmay accrue to the Company solely as a result of the defense undertaken bythe Reinsurer,

16. The Reinsurer may offset any balance(s) whether on account of pre-miums, commissions, claims, losses, adjustment expense, salvage or anyother amount(s) due from one party to the other under this Certificate orunder any other agreement heretofore or hereafter entered into betweenthe Company and Reinsurer, whether acting as assuming Rgirsurer or asCeding Company.

17. Should an irreconcilable difference of opinion arise as tothe inter-pretation of this Certificate, It is hereby mutually agreed that, as a condi-tionprecedem toany right of action hereustuer; suchdifference shall'besubmitted- to arbitration, one arbitrator to be chosen by the Company, onearbitrator by the Reinsurer and an umpire to be mutually agreed upon andchosen by the two arbitrators before they en ter upon arbitration. The arbi-tratorf apd umpire sp selected shall be officers or form er officers of otherinsurance or reinsurance companies. In the event that either party shouldfail tochoose as arbitrator within sixty (60) duys following receipt of awritten request by the other party to enter upon arbitration, the requestingparty may then choose a second arbitrator and tho two selected arbitratorsshall in turn, choose an umpire before entering upon arbitration, in theevent, the twoselected arbitrators fail toagree on the selection of an um-pire; after meeting- together and within ten (10) days Of their appointment,then each arbitrator shall select one name from a list of Three names sub-mitted by the other arbitrator and the umpire shaft b e selected hy'lot be -tween the two names chosen,

Eachparty shall thereupon present its case to tine arbitrators within sixty(60) days after date of their appointment. Thu decision of the arbitratorsshall be final and binding upon bothpar es, but tailing to gyree they shallCall upon the umpire and the decision of the majority shall tofinal andbinding upon bothparties. Each party shrill bear the expense of its ownarbitrator and shall jointly and equally bear with the other the expense ofthe umpire and of the arbitration. In the even; that twoof the arbitratorsare chosen by one party; as above provided, the expense of the arbitrators,the umpire and the arbitration shall be equally divided between the twoparties. The arbitrators shall adopt their own, rules * and procedures andmay waive the requirem ents of the rules of evidence. Any such arbitrationshall take place in New York, N.Y., unless some other location. is mutuallyagreed upon by the two parties in interest.

18. 'Cancellation of the policy of the Company shall constitute auromaliccaneellatio't at plus C +,rltificate and it may also he cancelled on a pro rata.basis by either parr, -miffing or delivering tothe otner written noticestating when, not less that thirty (30) , lays thereafter, such cancellationshall be etlective..11at any time during the continuance of this Certifi-cate, the Company should lose the whole! or any part of its paid'up capi.tal or gointo liquidation or receivership, whether voluntary or involun-tary, or should have a Conservator or Reitabriitator appointed or undergopny process, of reconstruction or reinsure its entire business or be acquiredor controlled or merged withany, other company, corporation or body,the Reinsurer shall have the right toterminate this Certificate forthwithupon the giving of notice in writing to the Company,

19. The terms of this Certificate shall not be waived or changed except byendorsement issued toform a pan hereof, and executed by s duly author.iced representative bf the Reinsurer..

-20. Toe Company shaft notify the Reinsurer promptly, in writing, of anysituation wherein the Company may become obligated topay as damageseither by judgement or agreement, due to the alleged or actual bad faith,fraud, or negligence of the Company, its employees or representatives, inthe handling of, or failure tosettle a claim on behalf of or by the named.insured under its policy(ies). or for the costs or expense incurred there-from. The Reinsurer shall have the right and shall be given the opportunity,withthe full cooperation of.the Company, to associate counsel, at its ownexpense, and ta.join withthen Company and its representatives in the de-fense and control of any claim, suit or proceeding involving this item.

21. Definitions:As used in this Certificate under Section 5, Item 5 of the Declarations, thefollowing terms shall have the meaning set opposite each:

Excess of Loss: The limit(s) of liability of the Reinsurer, as stated in Sec-tion 4, Item 5 of the Declarations, appliesty) only to that portion of losswithin the policy limits, in excess of the applicable retention of the Corn.Perry as stated in Section 3, item 5 of the Declarations:

Contributing Excess: The Company's policy(ies) applied',) in excess ofother valid insurance, reinsurance or self-insured retention and the limit(s)of liability of the Reinsurer applies(y) proportionately to all loss within the .policy limits in the amountisl set forth in Section 4, Item 5 of the Declara-

tions.

Nors.Concurrent: The reinsurance provided does not apply to any hazardsor risks of loss or damage covered undei the Company's policy, whicharespecifically excluded in the Declarations. The retention of the Companyand liability of the Reinsurer shall be determined as though the Com pany'spolicy(ies) applied only to the hazards or risks of loss or damage whichwould not be excluded in the Declarations.

In witness Whereof, the Reinsurer has caused this Certificate to be signedby its authorized representative.



17/31

Exhibit 4



18/31

x0

OO

WC)

.L~CC+

L..: ?olicy No.

New; 0 Renewal;Q Rewrite of:.-Agency Name

EXCESS BLANKET CATASTROPHELIABILITY POLICY

PACIFIC EMPLOYERS INSURANCE COMPANY

rNamed uffalo Forge Cctapazl rInsured 90 Brotsdtrty

Buffalo, Key York 131201iAddress

L

io 00 36 49

12:81 A.M., standard time at the addressPolicy Period: From -1 --80 o 6--1-81 It 't i of the Nam ed Insured as stated herein.

ed

Audit Period: Annual, unless otherwise stated Endorsements attached to policy at inception: uclear Energy Liability Exclusion Sob. of U n$ , d Ins

Bltdorsement , C.C.C. , }xcel . , B.R.I.S.A . Exc1. a 7 f9dc ~~

L I M I T S O FLIABILITYPEIC'S LIMIT OF LIABILITY:

ITEM1. $ 9,000,000rising out of any one occurrence because of personal injury,

property damage or advertising injury or any combination thereof.

ITEM.2. $9.000,000

INSUREDS RETAINED LIMIT:Underlying Insurance, or

ITEM3. $ 2.0 ,000

arising out of all occurrences during each policy year because ofthe products hazard, or the completed operations hazard, or both combined.

because of personal injury, property damage or advertising Injury arisingout of any one occurrence not within the terms of coverage of underlyinginsurance but within the terms of the co verage of this insurance.

PREMIUM COM PUTATIONTotal Advance

Estimated ate per remium

F i a t 1 8 ,naa_nn

MINIMUM PREMIUM $ 31- Rs O 9in the event of cancellation by the Named Insured, PEIC shall receive and retain not less than $ 1 2,000 . 00 s the M inimum Premium.

Countersigned ByAuthorized Agent

EXTRA COPY



19/31

V.

I N I~ A C I F I C- E M P L OY E R S IN S U R A N C E C O M PA N Y, LOS ANGELES, CALIFORNIA

EXCESS BLANKET CATASTROPHE

LIABILITY POLICY-

A Stock Insurance Company, herein called PEIC

In consideration of the premium to be paid. in reliance upon the statements in the declarations made a part hereof and subject to all of the termspolicy. agrees with the Named Insured as fellows:

INSURING AGREEM ENTCoverage A Personal Injury LiabilityCoverage B Property Damage LiabilityCoverage C Advertising LiabilityPEIC will indemnify the Insured for ultimate net loss in excess of the re-tained limit hereinafter stated which the Insured shall becom e legallyobligated to pay as damages because of

A. e r s o n a l i n j u r y o rB. property damage orC. d v e r t i s i n g I n j u r y

to which this insurance applies, caused by an occurrence, and -

(1) With respect to any personal injury, property damage or advertisinginjury not within the terms of the coverage of underlying. insurance butwithin the terms of coverage of this insurance; or

(21.If limits of liability of the underlying insurance are exhausted because ofpersonal injury, property damage or advertising injury during the period

of this policyPEIC vri6(a) have the right and duty to defend any suit against the.insured seeking

damages on account of such personal injury, property damage or ad-vertising injury, even if any of the allegations of t he suit are ground-less, false or fraudulent, and may make such investigation andsettlement of any claim or suit as It deems expedient; but PEIC shallnot be obligated to pay any claim or judgmen t or to defend any suit

after PEIC's limit of liability has been exhausted by payment ofjudgments or settlements;

(b) In addition to the amount of ultimate net loss payable:

(1 )pay all expenses incurred by PEIC, all costs taxed against theInsured in any suit defended by PEIC and all interest on thentire amount of any judgment therein which accrues after entryof the judgment and before PEiC has paid or tendered or deposited. In court that part of the judgmentwhich does not exceethe limit of PE IC's liability thereon;

(i) - pay premiums on appeal bonds required in any suit, premium anbonds to release attachments in any such suit for an amount notIn excess of the applicable limit of liability of this policy. andthe cost of ball bonds required of the Insured because of acci-dent or traffic law violation arising out of the use of any vehicleto which this policy applies but PEIC shall have no obligation tapply for or furnish any such bonds; '

(iii) pay reasonable expenses incurred by the Insured at PEiC'srequest in assisting PEIC in the investigation or defense o f anyclaim or suit, Including actual loss of earnings not to exceed$50 per day.

In jurisdictions where PEIC may be prevented by law or otherwise frocarrying out this agreement, PEIC will indemnify the Insured for suchexpense Incurred with its written consent in accordance With this provisio

PERSONS OR ENTITIES-INSUREO(1)The Named Insured is the organization(s) named in the declarations of

this policy and includes:(a) any subsidiary company (including subsidiaries thereof) and any other

company und er their control and active management at the Inceptiondate of this policy;

(b )ne w organizations acquired by the Named insured during the policyperiod, through consolidation, merger, purchase of the assets of, orassumption of control and active management; provided such acqum-tion or assumption Is reported to PEIC within 60 days after It iseffected and provided further such acquisition is endorsed on thispolicy;

(c) If the Nained Insured in the declarations Is a partnership or jointventure, any partner or member thereof is Included as a NamedInsured but only with respect to his liability as a partner or memberof such partnership or joint venture.

(2) Each of the following is an Insured under this policy to the extent setfort hbel ow -

(a) any person, organization, trustee or estate to whom or to which the

Named Insured Is obligated by virtue of a written contract or-permito provide Insurance such as Is afforded by the terms of this po licy,but only with respect to operations by or on behalf of the NamedInsured or to facilities of or facilities used by the Nam ed Insured anthen only to the extent of the coverage required by such contract andfor the limits of liability specified in such contract, but In no eventfor insurance not afforded by this policy nor for limits of liability inexcess of the a pplicable limits of liability of this polcy;

(b) at the option of the Named Insured and subject to the tenets of thecoverage of this Insurance, any additional Insured(s) included in theunderlying insurance listed In Schedule A, but only to the extentthat Insurance Is provided for such additional Insured(s) thereunder

(c) except with respect to the ownership, maintenance o r use, includingloading or unloading, of automo biles or aircraft,

(h)any officer. executive, employee, director or stockholder of the' Named Insured while acting on behalf of such Named Insured

(ii) any person or organization while acting as iael estate managerfor the Named Insured;

LO-6B92 Printed In U.S.A. : . ! :x



20/31

SpEdFmSSt~Ett- .

PERSONS OR ENTITIES INSURED(poo$nt edl

(d) any person while using, With the permission of the Named Insured,any automobile or airci tt owned by,.loaned to Cr hired for use by oron behalf of the Named Insured and any person or organizationlegally responsible for the use thereof, provided the actual operationor other actual use is within the scope of such permission, and anyofficer, director or stockholder of the N amed Insured w ith respect tothe use of an automobile or aircraft not owned by the Named Insuredbut ordywhile such.eutom obili or aircraft Is being usedInthe businessof the Named Insured. The insurance with respect toany person or organization ether then the NamedInsured does not apply un der this paragraph (d): ---

(f) to any person or organization, or to any agent oremployee thereof, operating an automobile salesagency, repair shop, service station, storage garageor public parking place;

(ii) to any automobile or aircraft hired by or loaned tothe Named Insured, to the owner or a lessee (of .

whom the Named Insured is a.subdessee)Ztiereof otlier than theNamed Insured, or to any agent or employee of such owner orlessee;

(iii) to any manufacturer of aircraft, aircraft engines or aviationaccessories, or any aviation $ales, service or repair organizationor airport or hangar operator or their respective employees oragents.

RETAINED LIM ITPEICS LIMIT OF LIABILITY

Regardless of the number of (1) Insureds under this policy, (2) persons ororganizations who sustain injury or damage, or (3) claims made or suitsbrought because of personal injury, property damage, or'advertising injury.PEIC's liability Is limited as follows.

With respect to personal Injury, property damage or advertising injury, orany combination thereof, PEIC's liability shall be only for the ultimatenet toss in excess of the Insured's retained limit defined as the greater of:(a) an amoun t equal to the limits of liability Indicated beside theunder-

lying insurance listed in Schedule A hereof, plus the applicable limitsof any other underlying insurance collectible by the Insured; or

(b) the amount specified in Item 3. of the Limits of Liability section ofthe declarations because of personal Injury, property damage or ad-vertising injury not within the terms of the coverage of the under-lying insurance listed in Schedule A:

and then for in amount not exceeding the amount specified in Item 1. ofthe Limits of Liability section of the declarations arising out of any oneoccurrence.

There is no limit to the number of occurrences during the policy period forwhich claims may be made, except that the liability of PEIC, because of

either the products hazard or the com pleted operations hazard, or both combined, arising out of all occurrences during each policy year shall not exceedthe amount specified in Item 2. of.the Limits of Liability section of thedeclarations.If the aggregate limits of liability of the underlying insurance listed inSchedule A are reduced or exhausted because of personal injury, propertydamage or advertising injury during the period of this policy, PEIN will,subject to PEIC's limit of liability stated above, continue such coverage as isafforded by such listed underlying insurance for the remainder of the p olicyyear of such underlying insurance in excess of the reduced or exhaustedlimits.For the purpose of determining the limits of PEIC's liability, (1) all personalInjury and property damagearising out of continuous or repeated exposureto substantially the same general conditions shall be considered as arising outof one occurrence, and (2) with respect to advertising injury, all injury arisingout of any advertisement, publicity article, broadcast or telecast or anycombination thereof involving the some injurious material or act, regardlessof the frequency of repetition thereof or the number or kind of m edia used,whether claim is made by one or more persons, shall be deemed to arise outof one occurrence.

POLICY PERIOD, TERRITORY

This policy applies to personal injury, property damage or advertising Injury which occurs anywhere during the policy period.

EXCLUSIONS

This policy does not apply:(a) to any obligation for w hich the Insured or any carrier as his Insurer may

be held liable under any workmen's compensation, unemploymentcompensation or disability benefits law, or under any similar law;

(b) to property damage to (1) property owned by the Insured, or (2) the In-sured's products arising out of such products or any part of suchproducts, or (3) work performed by or an behalf of the Insured arisingout of the work or any portion thereof, or out of materials, parts orequipment furnished in connection therewith;

(c) to loss of use of tangible property which has not been physically Injured

or destroyed resulting from(1) a delay in or lack of performance by or.on behalf of the Named Insured of any contract or agreement, or (2) thefailure of the Named Insured's products or work performed by-or onbehalf of the Named Insured to meet the level of performance, quality,fitness or durability warranted or represented by the Nam ed Insured; butthis exclusion does not apply to loo of use of other tangible propertyresulting from chi sudden and accidental physial Injury to or destructionof the Named Inland': products or work performed by or on behalf ofthe. Napped Insured after such products or work have been put to useby any person or organization odor than an Insured;

(d) o damages claimed for the withdrawal, Inspection, repair, replacement orloss of the use of the Insured's products orwork completed by or for theInsured or of any property of which such products or work forma part,

if such products, work or property are withdrawn from the market orfrom use because of any known or suspected defect or deficiency therein;

(e).to advertising Injury resulting from (1) failure of performance of contract,(2 )infringement of trade mark, service mark ortredename by use thereofas the trade mark, service mark or trade name of goods or services sold,offered for sale or advertised, but this shall not relate to titles or slogans,(3) incorrect'description of any article or commodity, or (4) mistake inadvertised price;

If) to property damage in accordance with the provisions of the propertydamage exclusion endorsement attached hereto;

(g)as respects parts (b), (c), and (d) of the definition of person al injury, toinjury arising out of the willful violation of a penal statute or ordinancecommitted.-by-or.with the knowledge or consent of the Named Insured;

(h) as respects part (c) of the definition of person al injury, to Injury arisingout of any publication or utterance, If the first injurious publication orutterance of the some or.dinflar material by or on behalf of the NamedInsured was made prior to thaeffeedve date of this polity;

C l)to bodilyInjury or property damage arising out of the discharge,dispersal,release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxicchemicals, liquids or gases, wa ste materialsorotherktltents,contaminantsor pollutants into or upon land, the atmosphere or any water course orbody of water; but this exclusion does not apply if such discharge,dispersal, release or escape isstudden and accidental.

Y..s ' ..q A.. . es" *'- fi aM ~ ,.... twhe. :...rr w.a ~ wi+4.iA-:. la.Fr..N tribun -a-0 ~ vs4J



21/31

DEFINITIONS r fl ~OtCtSSUi b r eo f): brought, except with respect to the limits of.P E I C ' s li a b i li t y ;f copy- " nsured's products" means goods or products manufactured, s o l d , h a n d l e dtion or or distributed by the Insured or by others trading under his name; including

activities; any container thereof(other than a vehicle).but "Insured's products" shellby any not Include a vending machine or any property other than such a container,y time rented to or located for use of others but not sold;

When used in thb+poljs'y .(including endorsementsforming a part h"advertising lnflu "' means libel, slander, defamation, infringement of

title or slogan, piracy, unfair competition, idea misappropriainvasion of rights of privacy; arising out of the insured'sadvertising"bodily injury" means bodily Injury, sickness or disease sustainedperson which occurs during the policy period, including death at an

resulting therefrom;"completer) operations hazard" includes personal injury and property damagearising out of operations or reliance upon a representation or warranty m adeat any time w ith respect thereto, but only if the personal Injury or propertydamage occurs after such operations have been completed or abandoned andoccurs any from premises owned by or rentedto the Insured. "Operations"include materials, parts or equipment furnished in connection therewith.Operations shall be deem ed completed at the earliest of the following times:(a) when all operations to be performed b y or on behalf of the Insured unde r

the contract have been completed,(b)when all operations to be performed by or on behalf of the Insured at the

site of the operations have been completed, or

(c )when the portion of the work out of which the injury or damage ariseshas been put to Its intended use by any person or organization other thana n o t h e r c o n t r a c t o r o r s u b c o n t r a c t o r e n g a g e d i n p e r f o r m i n g o p e r a t i o n sfora principal as a pert of the same project.

Operations which m ay require further service or maintenance w ork, or cor-rection. repair or replacement because of any defect or deficiency, but w hichare otherwise complete shall be deemed completed.The completed operations hazard does not include personal injury or pro-perty damage arising out of (1) operations in connection with the transpor-tation of property, unless the personal injury or property damage arises outof a condition in or on a vehicle created by the loading or unloading thereof,(2) the existence of tools, uninstalled equipment or abandoned or unusedmaterials;"damages" means only those damages which are payable because of personalInjury, property damage or adve rtising Injury to which this Insurance appliesand includes damages for (1) death and for care and loss of services resultingfrom personal Injury, (2) loss of use of property resulting from propertydamage, and 13 1advertising injury;"i nsured" means any person or organization qualifying as all Insured underthe Persons or E ntities Insured section of this policy. The insurance affordedapplies separately to each Insured against whom claim is made or suit is

"Nerved Insured" mean s the organization(s) named In the declarations ofthis policy;The word "Insured" includes the Named Insured;"occurrence" means an accident, including continuous or repeated exposureto conditions, which results in personal injury or p roperty damage neitherexpected nor intended from the standpoint of the Insured;"personal injury" means, (a) bodily injury; (b) false arrest, detention or Im-prisonment or malicious prosecution;(c 1the publication or utterance of alibel or slander or of other defam atory or derogatory material, or a publica-tion or utterance in violation of an individual's right of privacy, except whenany of the foregoing of this part (c) arises from publications or utterances inthe course o f or related to advertising, broadcasting or telecasting activitiesconducted by or an behalf of the Named Insured: ( d) wrongful entry oreviction, or other invasion of the right of private occupancy ; (e) assault andbattery notcommitted by or at the direction, of the Insured, unless com-mitted for the purpose of protecting persons or property; "products hazard" Includes bodily injury and property damage arising out.ofthe insured's products or reliance upon a representation or warranty made atany time with respect thereto, but only If the bodily injury or propertydamage occurs away from premises owned by or rented to the Insured andafter physical possession of such products has been relinquished to others;"property damage" m eans (1 ) physical injury to or destruction of tangibleproperty which occurs during the policy period, including the loss of usethereof at any time resulting therefrom, or (2) loss of use of tangible pro-perty which has not been physically injured or destroyed provided such losof use is caused by an occurrence during the policy period:

"ultimate net loss" means the sum actually paid or payable in cash in thesettlement or satisfaction of losses for w hich the insured is liable either byadjudication or compromise with the written consent of PEIC, after makingproper deduction for eli' recoveries and salvages collectible, but excludes allloss expenses and legal expenses (including attorneys' fees, court costs andinterest on any judgment or aw ard) and all salaries of employees and offic.expenses of the Insured, PEIC or any underlying insurer so Incurred.

CONDITIONS1. Premium

The premium for this policy shall bees stated in the Declarations.if the premium as stated in the declarations is an advance premium, itshall be computed In accordance w ith the premium computation en-dorsement attached to the policy. If the Named Insured Includes morethan one. person, partnership or organization they shalt be jointly andseverally liable for the premium for this policy.Inspection and AuditPEIC shall be permitted but not obligated to PEICrs Inspect the NamedInsured's property and operations at any time. Neither PEIC's right tomake Inspections nor the making thereof nor any report thereon shallconstitute an undertaking on behalf of or for the benefit of the NamedInsured or others, to determine or warrant that such property or opera-tions are safe or healthful, or arc In compliance with any law, rule or

regulation. PEIC may examine and audit the Insured's books and re-cords at any time during the policy period and extensions thereof andwithin three years after the final termination of this policy, as for asthey relate to the subject matter of this Insurance.Insured's Duties In the Event of Occurrence, Claim or Su it(a)In the event of an occurrence, reasonably likely to exceed the re-

tained limit, , written notice containing particulars sufficient toidentify the Insured and also reasonably obtainable Informationwith respect to the time, placeend circumstances thereof, apd thenames and addresses of the injured and of available witnesses,thallbe given by or for the Insured to PEIC or any of Its authorizedagents as soon as practicable.

(b) if claim is made or suit Is brought against the Insured, the Insuredshall immediately forward_to PEIC every demand, notice, summons

or other process received by him or his representative.

(c)The Insured shall cooperate with PEIC and upon PEIC's request,assist in making settlements, in the conduct of suits and in enforcingany right of contribution or Indemnity against any person ororganization who may be liable to the Insured because of personal

Injury or property damage or advertising Injury with respect towhich insurance is afforded under this policy; and the Insured shalattend hearings and trials and assist In securing and giving evidenceand obtaining the attendance of witnesses. The Insured shall not,except at his own cost; voluntarily make any payment, assume anyobligation or Incur any expense; however, if the am ount of ultimatenet loss becomes certain either through trial court judgment oragreement amon g the Insured, the claimant and PEIC, then, theInsured may pay the amount of ultimate net loss to the claimant to

effect settlement and, upon submission of due p roof thereof, PEICshall indemnify the Insured for that part of such paym ent which Isin excess of the retained limit. or, PEiC will, upon request of theInsured, make such payment to the claimant an behalf of theInsured.

(di The Named Insured shall promptly reimburse PEIC for any amounof ultimate net loss paid on behalf of any Insured within theretained limit.

(e )As this policy is excess insurance, the Insured warrants that coveragunder the uninsured motorist laws will be maintained during the -policy period. It Is agreed that the Named' I n s u r e dsiiall promptly.reimburse PEIC for any amoun t of ultimate net lost paid on behalof any Insured as respects any payment made under an uninsured motorist law, or any similar law.



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4. A p p a l s if the Insured or the Insured's underlying insurer elects not to appeal ajudgment In excess of the retained limit, PEIC may also to do so at itsown expense, and shall be liable for the taxable costs, disbursementsand interest incidental thereto, but In no event sh ed the liability ofPEW for ultimate net loss exceed the am ount specified In the Limits ofLiability section of the Declarations plus the taxable c osts, disburse-

ments and interest Incidental to such appeal.5. Action AgaiastPElCNo action shall He against PEIC unless, as a cond ition precedent thereto.there shall have been full compliance with all the terms of this policy.nor, until the amount of the Insured's obligation to p ay shall have beenfinally determined either by judgment against the Insured after actualtrial or by written agreement of the Insured, the claim ant and PEIC.Any person or organization or the legal representative thereof who hassecured such judgm ent or written agreement shall thereafter be entitledto recover under this policy to the extent of the insurance afforded bythis policy. No parson or organization shall have any right und er thispollcy'to join PEIC as a co-d efendant In any action against the Insuredto determine the Insured's liability, nor shall PEIC be Impleaded by th eInsured or his Legal Representative. Bankruptcy or Insolvency of theInsured shall not relieve PEIC of any of its obligations hereunder.

5. Other InsuranceIf collectible insurance with any insurer is available to the Insured

covering a loss alsocovered hereunder, the insurance hereunder shallbe in excess of, and not contribute with, such-other insurance provided,however, this does not apply to insurance which Is written as excessInsurance over PEIC's limit of liability provided In th is policy.When b oth this insurance and other insurance apply to the loss on thesame basis, whether prim ary, excess or contingent, PEIC shall not beliable under this policy for a greater proportion of the loss than thatstated In the applicable contributioi provision below:(a ) Contribution by Equal Shares. If all of such other valid and collec-

tible insurance provides for contribution by equal shares, PEIC shallnot be liable for a greater proportion of such loss than would b epayable If each Insurer contributes an equal than until the share ofeach insurer equals the lowest applicab le limit of liability under anyone p olicy or the full am oun t of the loss is paid, an d w ith respect toany amount of loss not so paid the rem aining insurers then continueto contribute equal shares of the remaining amount of the loss untileach such insurer has p aid its limit In full or the full amount of the

loss is paid.(b ) Contribution by Limits. If any of such other insurance does not pro-

vide for contribution by 'equal shares, PEIC shall not b e liable fora greater proportion of such loss than the appliable limit of liabilityunder this policy for such loss bears to the total applicable limit of.liability of all valid and collectible Insurance against such loss.

7. SubrogationIn the event of any paym ent under this policy, PEIC shall be subro-gated to all the Insured's rights of recovery therefor against any personor organization; and the Insured shah execute and deliver instrumentsand pap ers and do wh atever else is necessary to secure such rights. Anyamount-so recovered shall be app ortioned as follows:Any Interest (including the Insured':) having paid an amount in excessof the retained limit plus PEIC's limit of liability hereunder shall bereimbursed first to the extent of actual payment PEIC shall be reim-bursed next to the extent of Its actual payment hereunder. If anybalance then remains unpaid, it shall be app lied to reimburse the In-sured or any underlying insurer, as their Interest may appear. Theexpenses of all such recovery proceedings shall be app ortioned In theratio of respective recoveries. If there Is no recovery In p roceedingsconducted solely by PEIC, it shall bear the expenses thereof.

SPA FOAM8. Changes . F1'Om

Notice to any agent or knowledge possessed dyady ,egent or by anyother person shall not effect a Waiver or a'change in any part of thisp o l i c y o r e s t o p P E I C f r o m a s s e r t in g a n y r i g h t u n d e r t h e t e r mpolicy; nor shell the terms of this policy be waived or chang ed, exceptby endorsem ent issued to form a pan of this policy.

9. Assignment

Assignment of interest under th is policy shall not bind PEIC until itsconsent is endorsed h ereon; if, however, the Named Insured shall die.or be adjudged bankrdpt or insolvent, such Insurance as is afforded bythispolicy shall apply (a) to the Nam ed Insured's legal representative,as the Named Insured, but only while acting-within the scope of h isduties as such, and (b) with respect to the property of the Named In-sured, to the person having proper temp orary custody thereof, asInsured, but only until the app ointment and q ualification of the legalrepresentative.

10. Three Year PolicyIf this policy Is Issued fora p eriod of three years, the lim its of PEIC'sliability shall apply separately to each consecutive policy year thereof.

11. Maintenance of Underlying PoliciesThe Named Insured shall maintain the underlying policies (and renewalsthereof) with limits of-liability as stated in Sched ule A In full effectduring this policy period, except for any reduction or exhaustion of theaggregate limit or limittcontained in such policies solely by paym ent ofclaims arising out of occurrences which happ en during this policyperiod. Failure of the Named Insured to com ply with the foregoingshall not inv alidate this policy but In the event of such failure PE ICshall be liable only to the extent thatit would have b een liable had theNamed Insured com plied therewith. The Named Insured shall give PEIC written notice as soon as practicableof any change in the scope of coverage or in the amount of limits ofinsurance under any und erlying policy, and of the termination of anyc o v e r a g e o r e x h a u s t io n o f a g g r e g a t e l im i ts o f a n y u n d e r l y in g .liability.

12. CancellationThis policy may be cancelled by the Named Insured by surrenderthereof to PEIC or any of Its authorized agents or by m ailing to PEICwritten notice stating-when thereafter the cancellation shall be effective.This policy may be cancelled by PEIC by mailing to the Named Insureda t t h e a d d r e s s s h o w n i n t h i s p o l ic y w r it te n n o t ic e s t a t in g w h e nthan thirty days thereafter,-such cancellation shall be effective. Themailing of notice as aforesaid shall be sufficient notice. The tim e ofsurren der or the effective d ate and hour of canc ellation stated in thenotice shall become the end of the policy p eriod. Delivery of suchwritten notice either by the Nam ed Insured or by PEIC shall be equiva-lent to mailing. if the Named Insured cancels, earned premium shall becomputed in accordance with the customary short rate table and pro-cedure. If PEIC cancels, earned premium shall be computed pro rate.When this policy Insures more than one Nam ed insured cancellationmay be effected by the first named of such Named Insured for theaccount of all Insureds. Notice of cancellation by PEIC to the firstNamed Insured shall be deemed notice to all Insureds and payment ofany unearned premium to such first named Nam ed Insured shall be forthe account of all Insureds. Premium ad justment may be made eitherat the time cancellation Is effected or as soon as practicable aftercancellation becomes effective, but payment or tender of un earnedpremium is not a condition of cancellation.

13. Acceptance

By accep tance of this policy, the Insur ed agrees that this policy ens-bodies allagreements existing -between himself and PEIC or any of Itsagents relating to this Insurance.

IN WITNESS W HERE OF, the PACIFICEM PLO YE RS INSU RANC E C OM PAN Y has caused this policy to be signed by Its President and a SecretaryLos Angeles, California, and eountelsigned on the Declarations page by a duty Autho rized Agent of the Comp any.

j4)DENNIS C. POULSEN. S ecretar y ERNARD A. OUGE. JR.. President



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I ,Cli. N E R G Y. L IA B I L IT Y E X C L U S IO N E N D O R S E . ;~1 T

( B r o a d F o n n lE n d o r s e m e n t # 1

BUFFALO FORGE COMPANY

E f f e c t i v e

inc above is required to be Com pleted only when this endorsement is Issued suosequenc to inc preparation or me

T h i s e n d o r s e m e n t - n i d & f i e s s u c h i n s u r a n c e a s i s a f f o r d e d b y t h e p r o v i s i o n s o f t h e p o l i c y r e l a t i n g t o t

A L L A U T O M O B IL E L IA B I LIT Y, G E N E R A L L IA B I LIT Y A N D M E D I C A L PA Y M E N T S-

IN S U R A N C E O T H E R T H A N F A M ILY A U T O M O B ILE ,S P E C I A L PA C K A G E A U T O M O B I L E ,

C O M P R E H E N S IV E P E R S O N A L A N D F A R M E R 'S C O M P R E H E N S IV E P E R S O N A L I N S U R A

It is agreed that:

1. The policy does not apply:

A. Under any Liability Coverage, to bodily injury or property damage

(1 ) with respect to which an Insured under the policy is also an Insured under a nuclear energy Liability policy issued by Nuclear Energy L iability insurance Assciation. M utual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an Insured under any such policy but for itstermination upon exhaustion of its limit of liability; or

(2 ) resulting from the hazardous properties of nuclear material and with respect to w hich(a) any person or organization is required to maintain financial protectionpursuant to the Atomic Energy Act of 1954, or any law amendatory thereof, or (b) the insured is, or-had this policy not been issued would be. entitled toindemnity from the United States of Am erica, or any agency thereof, under any agreement entered into by the U nited States of America, or any agency thereof.with any person or organization.

B. Under any M edical Payments Coverage, or under any Supp lementary Payments provision relating to first aid, to expenses incurred with respect to bodily injuryresulting from the hazardous properties of nu clear material and arising out of the operation of a nuclear facility by any person or organization.

C. Under any Liability Coverage, to bodily injury or property damage resulting from the hazardous properties of nuclear material, it

(1 ) the nudearmaterial (a) is at any nuclear facility owned by. or operated by or on behalf of. an Insured or (b) has been dischargedof dispersed therefrom;

(2 ) the nuclear material is contained in spent fuel or waste at any time possessed, handled, used, processed, stored, transported or disposed of by or on behalf

of an Insured; or(3 ) the bodily injury or property damage arises out of the furnishing by an Insured of services, materials, parts or equipmentin connection with the planning,construction, maintenance, operation or use of any nuclear facility, butif such facility is located within the United States of America. it; territories or posses-sions or Canada, this exclusion(3) applies only to property damage to such Nuclear facility and any property thereat.

It. As used in this endorsement:"hazardous properties" include radioactive, toxic or explosive properties;

"nuclear material" means source material, special nuclear material or byproduct material;

"source material ". " special nuclear materlal" , and "byproduct m aterial" have the meanings given them in the Atomic Energy Act of 1954 or in any lawamendatory thereof:"spent fuel" means any fuel element or fuel comp onent, solid or liquid, which has been used or exposed to radiation in a nuclear reactor;

"waste " means any waste maierial( 1) containing byproduct material and(2) resulting from the operation by any person or organization of any n uclear facility includedwithin the definition of nuclear facility under paragraph (a) or (b) thereof;

"nuclear facility" means

(a ) any nuclear reactor,

(b) any equipment or device designed or used for-(1) separating the isotopes of uranium or plutonium, (2) processing or utilizing spent fuel, or (3)handling., -proeasing or packaging waste.

(c) any equipment or device used for the processing, fabricating or alloying of special nuclear material if at any time the total amount of such material in thecustody of the Insured at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 23or any combination thereof, ormore Than 250 grains of uranium 235,

(d) any structure, basin, exavation, premises or place prepared or used for the storage or disposal of waste.and includes the site on which any of the foregoing is located, all operations conducted on such site and all premises used for such operations;"nuclear reactor" means any apparatus designed or used to sustain nuclear fission in a sellsupportingchain reaction or to contain a critical mass of'lissionablematerial:"property damage" includes all forms of radioactive contamination of property.

Authmired Agent

LC- 1012 (A0009) 12.7.66 Pnntel iv U.S A.( 6 3 2 0 1



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INK U C L . i EN E R G Y L IA B I L IT Y E X C L U S IO N E N D O R ! E N T(Broad Form)Endorsement #1

BUFFALO FORGE COM PANY

Policy No.

C O M P A N Y

The above is required to be comp leted only when this endorsement is issued subsequent to the preparation of the

This endorsement modifies such insurance as is afforded by the provisions of the policy relating to the following:

A L L A U T O M O B I L E L I A B IL I T Y, G E N E R A L L I A B IL I T Y A N D M E D I C A L PAY M E N T S

: IN S U R A N C E O T H E R T H A N F A M I LY A U T O M O B I L E , S P E C IA L PA C K A G E A U T O M O B I L E ,

C O M P R E H E N S IV E P E R S O N A L A N D F A R M E R 'S C O M P R E H E N SI V E P E R S O N A L I NS U R A N C E

It is agreed that:

1. The policy does not apply:

A. Under any Liability Coverage, to bodily injury or property damage

(1) with respect to which an Insured under the policy is also an Insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Asso.cation, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada. or would be an Insured und er any such policy b ut for itstermination upon exhaustion of its limit of liability; or

(2 ) resulting from the hazardous properties of nuclear material and with respect to which(a) any p erson or organization is required to maintain financial protectionpursuant to the Atomic Energy Act of 1954, or any law am endatory thereof, or (b) the Insured is, or had this policy not been issued would be, entitled toindemnity from the United States of America, or any agency thereof, under any agreem ent entered into by the United States of America, or any agency thereof.with any person or organization.

B. Under any Medical Paym ents Coverage, or under any Supplementary Pay ments provision relating to first aid, to expenses incurred with respect to bodily injuryresulting from the hazardous properties of nuclear material and arising out of the operation of a nuclear facility by any person or organization.

C. Under any Liability Coverage, to bodily injury or property damage resulting from the h azardous properties of nuclear material, if

(1 ) the nuclear material (a) is at any nuclear facility owned by, or operated by or on behalf of, an Insured or (b) has been discharged or dispersed therefrom;(2 ) the nuclear material is contained in spent fuel or waste'et any time possessed, handled, used, processed, stored, transported or disposed of by or on behalf

of an Insured; or(3 ) the bodily injury or property damage arises out of the furnishing by an Insured of services, materials, parts or equipment in connection with the planning,construction, maintenance, operation or use of any nuclear facility, but if such facility is located within the United States of America, its territories or posses.sions or Canada, this exclusion (3) applies only to p roperty dam age to such nuclear facility-and any property thereat.

As used in this endorsement:

"hazardous properties" include radioactive, toxic or explosive properties;"nuclear material" means source material, special nuclear material or byproduct material;

"source material", "special nuclear material', and "byproduct material" have the meanings given them in the Atomic Energy Act of 1954 or in any lawamendatory thereof;

"spent fuel" m eans any fuel element or fuel comp onent, solid or liquid, which has b een used or exposed to radiation in a.nuclar reactor;

"waste" m eans any waste material(1) containing byproduct material and (2) resulting from the operation by any person or organization of any nuclear facility includedwithin the definition of nuclear facility under p aragraph (a) or (b) thereof;

"nuclear facility" means

(a ) any nuclear reactor,(b ) any equipment or d evice designed or used for (1) separating the isotopes of uranium or p lutonium, (2) processing or utilizing spent fuel, or (3) handling, pros-

easing or packaging waste,

(c ) any equipment o rdevice used for the processing, fabricating or alloying of special nuclear material U at any time the total amount of such material in thecustody of the Insured at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233or any combination thereof, or wore than 250 grams of uranium 235,

(d ) any structure, basin, excavation, premises or place prepared or used for the storage or d isposalo fwaste,and induces the site on winch any of the foregoing is located, all operations conducted on such site and all premises used for such operations;

"nuclear reactor" m eans any app aratus designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionablematerial:"property damage" includes all forms of radioactive contamination of property.

{uthnased Agent

LC.1012 rA0o09i i2.;.66 Punted in U.S.A.CGt201



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IIY~j~ CHEDULE OF UNDERLYING INSURANCE

SCHEDULE A OLICY NO. XMO 00 36 1 9

Carrier, Policy ype of pplicable

Number & Period olicy imits

Utica MutualGLA 39286 - 1 - 8 0 / 8 1

Utica Mutual.j3M-704855

6-1-80/81

Utica MutualW- 3 6334].-796 - 1 - 8 0 / 8 1

Comprehens ive ,000/1 ,000G e n e r a l L i a b i l i t y 50/1 ,000

C o m p r e h e n m i v e ,000,000A u t o . Li a b i l i t y

Wor km e n' s Conaensa t iou 00 ,000and E ploye .r s Liability

t.D6B.94 Ptd. In U.S.A.E X T R A C O P Y



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:l

Named Insured Endorsement Number

Policy Symbol

XWPolicy Number

oo61cPolicy Period Effective Date of Endorsement

Issued BY (Name of Insurance Company)

Insert the he remainder of the information is to becomp leted only when this endo rsement is issued subsequent to the preparation of th e

I if3tJi+D INSLI D END0BS i

It is hereby agreed and understood that the named insured shall read as follows:

1. Buffalo Forge Company

2. Buffalo Pumps, Division of Buffalo Forge Company.

3. Buffalo Forge Sales, Inc.

4. Buffalo Forge Export Co., Inc.g. Aerofin Corporation6. Aerofin Corporation (Canada)Ltd.

T. Aerofin S.A.

6. Amherst Division Buffalo Forge Com pany

9. Buffalo Forge S.A. de C.V.

10. Ial tobilaria Tepalcapa S . A. de C.V. , Mexico

and all other entities, principally owned b y the named Insured, as m ay hereafterbe created or acquired..

Authorized Agent

EXTRA COPY

CC-1E15 Ptd. In U.S.A.



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iNh PROPERTY D

PACIFIC EMPLOYERS INSURANCE COMPANY v. GLOBAL REINSURANCE CORPORATION OF AMERICA et al Petition to...

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