Case 1:04-cv-00725-RPM
Document 41-38
Filed 07/01/2005
Page 1 of 3
LEWI LEWIS
BRISBOI BRISBOIS
BISGAARD
AT LAW
SMITH
LLP
ATTORNEY ATTORNEYS
100 PHONE
WALL
STREET
NINTH FAX
FLOOR
NEW
YORK
NEW WEBSITE
YORK
100053701 WWWLBBSLAWCOM
2122321300
2122321399
THOMA THOMAS
M
SANFORD
APRIL
2004
FILE NO 2645781
DIRECTDIAL EMAIL
212 2321309 SANFORDLBBSLAWCOM
APR
VIA AND FACSIMILE FIRST CLAS CLASS
303
2912400
2004
MAIL
LEONARD H
MACPHEE ESQ
PERKIN PERKINS COIE 1899 S WYNKOOPTREET 802021043
SUITE 700
DENVER CO
RE
WESTCHESTERFIRE INSURANCE COMPANY PROTECTIONINSURANCE POLICY MANAGEMENT INSURED THE QUIZNOS QUIZNO CORPORATION POLICIE POLICIES CLAIM NO MATTER DON 648451 X390L9630918
1
SEBESTA THE
2
THE SEBESTA ACTION DISSENTER V QUIZNO CORPORATION FAGAN ET AL THEDISSENTERS
V
SCHADENET
AL
ACTION
3 NICKERSON
V
THE
ET AL QUIZNO CORPORATION THENICKERSON QUIZNOS
ACTION
DEAR LEN
TO QUIZNO QUIZNOSCORPORATION QUIZNO QUIZNOS IN RESPECT THE OF AND ITS CLIENTS COVERAGE POSITION OUR CLIENT WESTCHESTERFIRE INSURANCE COMPANY WESTCHESTER CLAIM CLAIMS ADMINISTRATOR ACE USA IN RESPECT THE SUBJECT OF MATTERS WESTCHESTERAND ACE TO REVIEW NEW INFORMATION CONCERNINGSUBJECT THE ACE ON ITS BEHALFHAVE HAD AN OPPORTUNITY THI MATTER MATTERS AND TAKE THIS OPPORTUNITY TO INFORM THE INSURED OF CERTAIN THAT POLICY PROVISION PROVISIONS MAY LIMIT OR PRECLUDE WITH WESTCHESTERS DUTIES AND OBLIGATIONS WESTCHESTER DUTIE AS OBLIGATION AN INSURER COVERAGE IN KEEPING ALL CAPITALIZED TERM TERMS USED HEREIN SHALLHAVE THE DEFINITIONS DEFINITION ASCRIBED TO THEM UNDER THE CAPTIONED UNLES UNLESSOTHERWISE SPECIFIED POLICY
THI THIS LETTER WILL
SERVE
TO INFORM THE
TO THE MAY 22 2001 QUIZNOS ANNOUNCED THAT IT HAD RECEIVED PROPOSALCOMPLETE QUIZNO TRANSACTIONTHE TRANSACTION MERGING WITH FIRENZE CORP AN GOINGPRIVATE BY OWNED BY RICHARD E SCHADEN QUIZNOS CHAIRMAN PRESIDENT AND CEO AND ENTITY WHOLLY QUIZNO
ON
SECOND STEPOF
LOS ANGELES ANGELE 2132501800
SAN
FRANCISCO
SAN DIEGO
COSTA
MESA
SAN BEIAIWNJO
SACRAMENTO 9165645400
NEW
YORK
LAS VEGAS VEGA 7023669212
4153622580
6192331006
7145459200
9093871130
2122321300
4831768952321
QWEST00345
Case 1:04-cv-00725-RPM
LEWI LEWIS BRISB0IS BRISB0I
LEONARD H
Document 41-38
LLP
Filed 07/01/2005
Page 2 of 3
BISGAARD
FIL
MACPHEE ESQ
APRIL
PAGE
2004
RICHARD F BE THE
SECRETARY WHEREBY QUIZNO WOULD QUIZNOS OWNED CORPORATIONMERGER THE FIRSTSTEP THE TRANSACTION SURVIVINGRIVATELY P OF THE WAS SELF TENDER OFFERCOMPLETED DECEMBER 11 2000 WHEREBY ON QUIZNO OFFEREDTO PURCHASE QUIZNOS ITS SHARES FROM EXISTING SHARE SHAREHOLDER SHAREHOLDERSFOR 800 PER SHARE THE TENDER OFFER IN CONNECTION WITH THE MERGER THOSE MINORITY SHAREHOLDER SHAREHOLDERS HAD NOT PARTICIPATED TENDER OFFER WERE WHO IN THE OFFERED850 SHARE THE SHAREHOLDERS SHAREHOLDER APPROVED MERGER VOTE ON NOVEMBER 30 2001 THE PER BY
ON NOVEMBER
ON
VICE SCHADENQUIZNOS QUIZNO DIRECTOR
PRESIDENT AND
14 2001 QUIZNOS OF QUIZNO NOTIFIEDWESTCHESTER OF THE FILING THE SEBESTA ACTION
CLAS CLASS OF SHAREHOLDERS QUIZNOSON OCTOBER 2001 SHAREHOLDER QUIZNO OF BROUGHT THE COMPLAINT THAT ALLEGED THE RECOMMENDATION OF 850 PURCHASE WAS AND CONSTITUTED PRICE INADEQUATE BREACH OF FIDUCIARY DUTIE DUTIES BY THE DIRECTORS THE MINORITY DIRECTOR TO SHAREHOLDERS DECEMBER 27 2001 ON QUIZNO NOTIFIEDWESTCHESTER OF ITS RECEIPT LETTERS QUIZNOS OF LETTER FROM NUMBER OF SHAREHOLDERS SHAREHOLDER INDICATING THEIR INTENT TO DEMAND PAYMENT TO THE COLORADO BUSINES BUSINESS CORPORATION CBCA ACT PURSUANT DISSENTER DISSENTERS RIGHTS DISSENTER GOVERNING THEREAFTER QUIZNO QUIZNOSFILED THE DISSENTERS ACTION SEEKING JUDICIAL OF SHAREHOLDER SHAREHOLDERS SHARES WESTCHESTER RECEIVEDNOTICE OF THE NICKERSON APPRAISAL THE DISSENTING ACTION BYCORRESPONDENCE OF JANUARY 2004 THE NICKERSON ACTION PURPORTS BE ON BEHALF OF 23 TO PURPORT CLAS CLASS OF SHAREHOLDERS SHAREHOLDER WHO PARTICIPATED IN THE TENDER OFFER AND NAMES NAME QUIZNO QUIZNOSAND CERTAIN DIRECTORAND OFFICER QUIZNOS DEFENDANTS THE ALLEGATIONS NICKERSON ACTION MIRROR DIRECTORS OF QUIZNO AS OF ALLEGATIONTHE THOSE MADE IN THE SEBESTA ACTION THAT THE PRICE PAIDIN THE TRANSACTION WAS INADEQUATE AND CONSTITUTEDBREACH OF FIDUCIARY DUTIE DUTIES BY THE DIRECTORS THE MINORITY DIRECTOR TO SHAREHOLDERS BEHALF OF COUNSEL FORWESTCHESTER ISSUED AN INITIAL RESERVATIONOF RIGHTS LETTER RIGHT ON JANUARY 2002 THATPOSITION CORRESPONDENCE SUPPLEMENTED OF FEBRUARY2002 AND MARCH 19 2002 AND BY
AND
MARCH
10
2004
AS
SPECIFICALLY
MORE
IN RESPECT THE SEBESTA ACTION WESTCHESTER RESERVED RIGHTS OF AND RIGHT GENERALLY DESCRIBED IN EACH OF THE RESPECTIVE FULLY LETTER AND BY RECENT LETTERS
AND ALLSUCH RESERVATIONOF RIGHTS THE NICKERSON ACTION CORRESPONDENCE ADOPTED INCORPORATED TO RIGHT WESTCHESTERDENIED COVERAGE OF THE DISSENTERS ACTION AS IT MERELYOUGHT ESTABLISHMENTF DISSENTER THE O S FAIR PRICE FORTHE SECURITIES ISSUEAND DID NOT ALLEGE WRONGFUL BY INSUREDS SECURITIE AT ACT ACTS ANY THE
COURT COURTS OPINION DATED
JANUARY 2004
IN THE DISSENTERS ACTION INDICATESTHATTHE DISSENTER INDICATE
INSURED DID NOT PAY FAIR VALUE TO ITS SHAREHOLDERS CONNECTION WITH THE TRANSACTION WE REFER SHAREHOLDER IN TO THE JANUARY 2002 CORRESPONDENCE TO PATRICK E MYERS YOU MYER ESQ FROM ARTER HADDEN LLP IN WHICH WESTCHESTER SPECIFICALLY RESERVED ITS RIGHTS RESPECT EXCLUSIONA7 IN OF RIGHT OF THE
POLICY
WHICH PROVIDES THAT PROVIDE
THE INSURER SHALLNOT BE LIABLEFORLOSS LOS MADE
ON
ACCOUNT OF ANY CLAIM
AGAINST INSURED BASED UPON ARISING OF OR ATTRIBUTABLE OUT ANY TO SUCH INSURED GAINING FACT IN R O ANY PROFITEMUNERATIONR FINANCIAL TO WHICH SUCH INSURED IS NOT LEGALLY ADVANTAGE BUT THIS ENTITLED THI EXCLUSION SHALLNOT APPLY LOSS INDENMIFIED BY THE COMPANY TO LOS
ACE FINANCIAL AND WESTCHESTERHAVE HAD
AN
TO REVIEW OPPORTUNITY
THE DECISION IN THE DISSENTERS DISSENTER
OR PROFIT
ACTION AND BELIEVE THATTHE DECISION
TO WHICH ADVANTAGE
IT WAS
IN ESTABLISHE ESTABLISHES
NOT
THATQUIZNOS RECEIVED FACT QUIZNO
ENTITLED ACCORDINGLY ACE LEGALLY
AND WESTCHESTER
483
1768952321
QWEST00346
Case 1:04-cv-00725-RPM
LEWI LEWIS BRISBOIS BRISBOI
LEONARD H
Document 41-38
LLP
Filed 07/01/2005
Page 3 of 3
BISGAARD
1TH
MACPHEE ESQ
APRIL PAGE
2004
MATTER TO THE TRANSACTION BASED DENY COVERAGE FORALL MATTERS RELATING ACE AND WESTCHESTERFURTHER THE RIGHT SEEK RESERVE TO SPECIFICALLY OF DEFENSE COST FROM THE INSUREDS COSTS TO WHICH INSURED PURSUANT CLAUSE OF THE POLICY REPAYMENT THE EXTENT THATIT IS FINALLY TO ESTABLISHEDTHAT SUCH DEFENSE COSTS ARE NOT COST REQUIRE REQUIRES REPAYMENT COVERED UNDER THE POLICY
RESERVE SPECIFICALLY UPON EXCLUSION A7
THE RIGHT TO
31 2004 ADVISING IN PLAINTIFF THE PLAINTIFFS NICKERSON ACTION AS WELL AS YOU VOICEMAIL OF APRIL 2004 ADVISING PLAINTIFFS AGREED MEDIATE THAT THATPLAINTIFF HAVE TO MESSAGE TO THE UNDERSIGNED MATTER IN LIGHT THE ABOVE AND THE PRIORORRESPONDENCE OF FROMCOUNSEL TO ACE AND C THE DOE D TO WESTCHESTER POLICYOES NOT RESPONDPROVIDE TO INCURREDBY COVERAGE WITH RESPECT LIABILITY INSURED INSUREDS RELATING TO INADEQUATE CONSIDERATION PAID SHAREHOLDERS TO SHAREHOLDER FORTHEIR HOLDINGSQUIZNOS IN HOLDING QUIZNO MAY OF COURSE SEEK TO SETTLETHE NICKERSON ACTIONBUTIN DOING IT SHOULD QUIZNOS SO UNDERSTANDTHATTHEREIS NO COVERAGE AFFORDEDFORSUCH LOSS UNDER THE POLICYACE AND LOS WESTCHESTER DISAGREE YOUR CONTENTION WITH THATTHE NICKERSON ACTION IS NOT RELATEDTO THE SEBESTA ACTION AND CONFIRMS THEIR POSITION CONFIRM OUTLINED IN OUR CORRESPONDENCE OF MARCH 10 2004 BOTH IN OF THE APPLICABILITY OF EXCLUSION A1 OF POLICYO DON N G21635662002 AND IN RESPECT RESPECT OF THE REASONABLENESSAND NECESSITY REASONABLENES OF RETAINING COUNSEL TO DEFEND THE NICKERSON ACTION NEW
US
THI THIS WILL ALSO ACKNOWLEDGE OF OF MARCH RECEIPTYOUR CORRESPONDENCE
OF
SETTLEMENTDEMAND FROM
ACE
AT LAW AND IN
AND WESTCHESTER MUST
CONTINUE TO
RESERVE
ALL RIGHTS DEFENSES UNDER THE POLICY AND DEFENSE RIGHT
WHETHER OR NOT REFERENCED THE HEREININCLUDING RIGHT DENY TO EQUITY COVERAGE BASED OTHER THAN THOSE EXPRESSLY FORTHIN THIS LETTER SET THI AND TO SUPPLEMENT ANDLORAMEND UPON GROUNDS GROUND THI THIS LETTER TO ADDRESS ADDITIONAL COVERAGE ISSUES AS THEY ADDRES ISSUE MAY ARISE BASED UPON ALL OF THE ENDORSEMENT DEFINITION PROVISION PROVISIONS TERM CONDITION EXCLUSIONS TERMS CONDITIONS EXCLUSIONENDORSEMENTS AND DEFINITIONS FOUND IN THE POLICY ITS AND ANY ADDITIONAL FACTS THAT MAY COME FACT TO ACE AND WESTCHESTERS ATTENTION WESTCHESTER APPLICATION STATED HEREIN AND NO FURTHERACTION TAKEN BY WESTCHESTER OR ON ITS BEHALF SHOULD BE NOTHING CONSTRUED AS WAIVER OF ANY OF ITS RIGHTS UNDER THE POLICY LAW OR IN EQUITYON THE CONTRARY AT RIGHT THI THIS TO IRISUREDS IN BY PROVIDING OR ANY PRIOR OR CORRESPONDENCE IRISUREDBY ENGAGING ANY PRIOR FUTURE DISCUSSION DISCUSSIONS WITH THE INSUREDS BYPAYING AGREEINGPAY ANY AMOUNT TO OR ON BEHALF OF THE OR TO INSURED OR DOE DOES INSURED WESTCHESTER EXPRESSLY NOT WAIVE ANY SUCH RIGHTS INSUREDS IF YOU HAVE ANY FEEL QUESTIONLEASE FREETO CONTACT QUESTIONS P THE UNDERSIGNED
VERY
YOUR YOURS
THOMA THOMAS M LEWI LEWIS TMS
SANFORD OF BISGAARD SMITH LLP
BRISBOI BRISBOIS
MAPCM KENNETH D MILBAUER
CC
4831768952321
QWEST00347