Free Motion for Partial Summary Judgment - District Court of Colorado - Colorado


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Date: July 1, 2005
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State: Colorado
Category: District Court of Colorado
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Case 1:04-cv-00725-RPM

Document 41-29

Filed 07/01/2005
WAYNE JULIANNA
LEE WRA E

Page 1 of 5
ROCCO
ELIZABETH ANN MARIE

KAUFMAN

BORGEEST
ATTORNEY ATTORNEYS
AT LAW

RYAN

BORGEEST RYAN
KREZ BERGER

MATRA OBRIEN PRETFI TOTFEN COLLINSTT

747 TIMW AVENUE NEW YOIX NEW YORK 10017
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RETURN

REQUESTED

PATRICK E

MEYER MEYERSESQ

VICE PRESIDENT AND GENERAL COUNSEL

QUIZNO QUIZNOS CORPORATION PLACEPLAZA TOWER 18THTREETUITE 2850 1099 S S DENVERCOLORADO 80202
DENVER RE INSURED CLAIMANT

QUIZNO CORPORATION QUIZNOS EDWARD SEBESTA AND SIMILARLY SITUATED
SHAREHOLDER SHAREHOLDERSAT OCTOBER 5 2001 RHP 606493 1998 TO FEBRUARY 1999 24

N ROYAL OLICYO P T POLICYERM CLAIM ROYAL KBRFIIENO DEAR MR NO

FEBRUARY 24
1250021311 810157

MEYER MEYERS

WE HAVE BEEN RETAINED TO REPRESENT ROYAL INDEMNITY OMPANY C ROYAL IN CONNECTION WITH THE COMPLAINT SUBMITTED FOR COVERAGE UNDER THE CAPTIONED YOU POLICY WE ACKNOWLEDGE OF FORWARDED WITH YOUR LETTER DATED JANUARY 2002 RECEIPT COMPLAINT WE WRITETO YOU IN 23 AS OF THE QUIZNO FOR THE PURPOSES OF YOUR CAPACITY REPRESENTATIVE QUIZNOSCORPORATION QUIZNO QUIZNOS PURPOSE THI THI TO COVERAGE FORTHIS MATTERAND WE TRUST THATYOU WILL FORWARDTHIS POSITION ANY AFFECTEDINSURED

ROYAL INDEMNITY COMPANY ROYAL

ISSUED

DIRECTOR DIRECTORS AND FOR CLAIMS CLAIM

OFFICER OFFICERS

LIABILITYAND

REIMBURSEMENT POLICY NUMBER RHP606493 COMPANY PERSON PERSONS AND REPORTED ROYAL TO THE PERIOD DURING POLICY 1999

THE POLICY

THE

REFLECTED 4 POLICY

MILLION

INSURED AGAINST OF FEBRUARY4 1998 AND FEBRUARY 2 24 LIMIT OF LIABILITY TO SUBJECT 75000

FIRST MADE

QWESTOO1

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Case 1:04-cv-00725-RPM
MR RE PATRICK F SEBESTA V NO

Document 41-29

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Page 2 of 5

MEYER MEYERS

QUIZNO QUIZNOS
1250021311

F ROYALILE

PAGE
RETENTION THE

POLICY PROVIDED ENTITYOVERAGE C
8

FOR SECURITIES CLAIMS SECURITIE CLAIM

ONLYAS

DEFINED IN THE

A POLICYT ENDORSEMENT

BASED EDWARD C RICHARD E

ON

INFORMATIONAVAILABLE WE
ON

UNDERSTAND THAT IN NOVEMBER

2001

SHAREHOLDER

SEBESTA

BEHALF OF HIMSELF AND OTHERS SIMILARLY OTHER FILED SITUATED

COMPLAINT AGAINST

SCHADENRICHARD F SCHADENFREDERICK H SCHADENMARK L BRONBERG ERIC J JOHN J TODD BRAD A GRIFFIN AND THE QUIZNOS CORPORATION IN THE DISTRICT COURT LAWRENCE QUIZNO OF TO IN THI AS CITYAND COUNTY DENVERCOLORADO REFERRED THISLETTER THE SEBESTACOMPLAINT
THE PLAINTIFF PLAINTIFFS THAT ALLEGE ON FIRENZE
OR

ABOUT

MAY

2001

RICHARD E
TO

SCHADEN AND RICHARD F

SCHADEN FORMED HELD STOCK OF BOARD 2001
OR

COMPANY

CORPORATION FIRENZE
THE

QUIZNO QUIZNOS MERGER
FIRENZE FIRENZES

PLAINTIFF PLAINTIFFSCONTEND THAT
F

THE ACQUIRE REMAININGUBLICLY P C SPECIALOMMITTEE FOR THE

DIRECTOR INAPPROPRIATELY DIRECTORS CONSIDERED FIRENZE FIRENZES OFFER 850 OF
RICHARD DIRECTOR DIRECTORS
ON

TO

QUIZNO QUIZNOS BECAUSE
FOR POSITION POSITIONS

ISSUED IN JUNE PER SHARE SCHADENAND RICHARD F SCHADEN HAD

SHAREHOLDER SHAREHOLDERS CLAIM THAT THE SPECIAL BARGAINING COMMITTEE IMPROPERLY ONE 2001 IGNORED HIGHERFFERS OFFER PARTICULARLYMADE IN SEPTEMBER O FROM FOR SHARE FAGANCAPITAL 1063 INCORPORATED FAGAN PER
THE MERGER THE HAD CONFLICT OF INTEREST THEY ASSERT THAT THE BOARD AND ENTITY AND BREACHED THEIR COMMITTEE COMMITTEES AND QUIZNOS FIDUCIARY TO SHAREHOLDERS EVIDENCED BY THE SPECIAL DUTY SHAREHOLDER AS QUIZNO REFUSALTO THE HIGHER SHARE PRICE OFFERED BY FAGAN AND REFUSAL TO GET THE BEST VALUE FOR THE ACCEPT SHAREHOLDER SHAREHOLDERS STOCK IN CONNECTION WITH THE FIRENZES PROPOSAL FIRENZE THE PLAINTIFFS POINT PLAINTIFF RTO NOVEMBER 2001 PROXY STATEMENT THATPURPORTED TO DESCRIBE THE FIRENZE TRANSACTIONIN ADVANCE OF STOCKHOLDERMEETING HELD ON NOVEMBER 30 2001 WHICH THEY SPECIAL IS ALLEGE MATERIALLY FALSEAND MISLEADING BECAUSE IT OMITS THE FOLLOWING OMIT INFORMATION
A

INSIDER INSIDERS

THAT THE

C SPECIALOMMITTEE

REFUSED TO DEAL WITH

INC FAGANCAPITAL

IN OCTOBER

2001
B THAT PAGAN INC CAPITAL
WAS

1063 OFFERING

PER

213 SHARE

MORE

THAN FIRENZES FIRENZE

OFFER AND
C

THAT THE PROXY STATEMENT AND FINANCIAL ADVISORS AS ADVISOR

DESCRIBED THE SPECIAL INAPPROPRIATELY COMMITTEE COMMITTEES LEGAL BEING INDEPENDENT

THE PLAINTIFFS PLAINTIFF STATE THAT MR

RICHARD E SCHADEN AND RICHARD F SCHADEN USED THE

SAME

S LEGAL ADVISOR TUCKER ANTHONYUTRO CAPITALARKETS AND BROBECKPHIEGER ADVISORS MARKET M IN TENDER OFFER FOR QUIZNOS STOCK IN OCTOBER 1999 PRIOR HARRISONLLP RESPECTIVELY QUIZNO TO AND AND CONCEPTION CREATION OF THE FIRENZE CORPORATIONMERGER PROPOSAL PLAINTIFFS AN THE PLAINTIFF SEEK THE FIRENZE MERGER PROPOSED AT SHAREHOLDER SHAREHOLDERS MEETING INJUNCTION AGAINST AND IN THE PROXY ISSUED IN NOVEMBER 2001 AND ALTERNATIVELY SEEK COMPENSATORY STATEMENT THEY DAMAGEWITH DAMAGES FEE FEES INTEREST AND
COSTS

FINANCIALAND

KAUFMAN
1289841

BORGEEST

RYAN

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Case 1:04-cv-00725-RPM
MR PATRICK E RE SEBESTA
V

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MEYER MEYERS

QUIZNO QUIZNOS
1250021311

F ROYALILE

NO

PAGE
IN WITH TERM CONDITION OF COMPLAINT CONJUNCTION THE TERMS AND CONDITIONS THE POLICYAND CONVEY ROYAL POSITION COVERAGE FOR THIS MATTER THI BASED ON ROYALS ON REVIEW OF AVAILABLE INFORMATION COVERAGE IS AVAILABLE FOR THE SEBESTA COMPLAINT NO UNDER THE PRESENTLY THE POLICY FIRSTTHE CLAIM WAS NOT MADE DURING POLICYERIODBUT RATHERSEVERALYEARS AFTERTHE P YEAR THE IS POLICY MOREOVER SEBESTA COMPLAINT NOT COVERED PURSUANT SECTION4G2 TO EXPIRATION OF THE POLICYECAUSE IT DOES NOT ARISEOUT OF ANY OF THE WRONGFUL THATQUIZNOS B DOE ACT ACTS QUIZNO NOTICEDTO TO ROYAL RIOR THE POLICY XPIRATION P E
TO SECTION INSURING CLAUSE TURNING THE POLICY

WE HAVE REVIEWED THE SEBESTA

IN PROVIDE PROVIDESPERTINENT PART

INSURER AGREES WITH THE INSURED ORGANIZATION IF DURINGTHE POLICY THAT CLAIM OR GLAIMS ARE FIRSTMADE AGAINSTINSURED PERSONS PERIOD ANY GLAIM PERSON AND

REPORTEDTHE INSURER WILL PAY
THEREFORE CLAIM
ORDERTO MADE
MUST BE FIRSTMADE AND

LOS LOSS
TO THE REPORTED ROYAL URING POLICYERIOD P D

IN

CLAUSE CLAUSES TRIGGER COVERAGE UNDER THE INSURING THE POLICYERIOD P DURING

OF THE POLICY IN THIS CASE THI

NO

CLAIM

WAS

SECTION4CONDITIONS G2 4CONDITION
IF

IN PROVIDE PROVIDESPERTINENT PART
AN

THE P DURING POLICYERIOD
AWARE

INSURED PERSON OR THE INSURED

ORGANIZATION

OF ANY CIRCUMSTANCE WHICH MAY REASONABLY BE TO GIVE RISE TO CLAIM AGAINST INSURED PERSON AND EXPECTED ANY GIVE TO GIVES INC ROYALSPECIALTY NOTICE UNDERWRITING ON BEHALF OF THE INSURER WRITTEN VIA CERTIFIED MAIL AT THE ADDRESS SHOWN ON THE DECLARATIONSPAGE OFSUCH ADDRES DECLARATION CIRCUMSTANCE CIRCUMSTANCES ALONG WITH THEN ANY CLAIM
OUT OF SUCH

FIRST BECOMES BECOME

FULL ARTICULARS THE SYECFIC PARTICULAROF P ALLEREDWRONGFUL MADE THE SUBSEQUENTLY AGAINST INSURED PERSON ARISING CIRCUMSTANCE WILL BE DEEMED FIRST MADE DURING THE POLICY

PERIOD ACT ACTS SPECIFICLLEGED A WRONGFUL GIVERISE TO CLAIM AND CLAIM DOES RESULTFROM THOSE PARTICULAR DOE CIRCUMSTANCE CIRCUMSTANCES TO REPORTED ROYAL ROYALWOULD DEEM ANY SUBSEQUENT CLAIM FROM THOSE VERY ARISING FIRSTMADE DURING POLICY CIRCUMSTANCE CIRCUMSTANCES THE PERIOD NOTICE OF THAT MAY R ROYAL ECEIVED NOTICE THAT DECEMBER 29 1998 PROPOSAL LEVERAGED FOR BUYOUT WAS LBO PROPOSAL RECEIVED BY QUIZNOSAND IN JANUARY SHAREHOLDER QUIZNO 1999 SINGLE WROTE LETTER HIS FOR EXPRESSING CONCERN OF POTENTIAL CONFLICTOF INTEREST THE PROPOSED IN LBO ON JANUARY 1999 PAUL EISNER SHAREHOLDER QUIZNOS OF QUIZNO CORPORATION TWO PAGE LETTER SENT TO FOR DORSEY WHITNEY THEN ATTORNEYS THE QUIZNOS CORPORATION UNDERSTANDFROM ATTORNEY QUIZNO WE OF QUIZNOS TO ROYAL THAT TIME THAT THE RICHARE E AND RICHARD F SCHADEN REPRESENTATION REPRESENTATIONS QUIZNO AT WERE AN CONTEMPLATING MAKING OFFER BETWEEN 8 AND 9 PER SHARE FOR QUIZNOS STOCK MR QUIZNO EISNER EISNERS LETTER INDICATEDTHATHE WOULD BRING SUIT IF THE LBO WERE PURSUED HE STATEEDTHAT SUCH WOULD LIKELY INCLUDE DERIVATE ACTIONS FOR BREACH OF FIDUCIARY ACTION LITIGATION DUTY USE OF INSIDER INFORMATION AND CONFLICTOF INTERESTAS WELL AS DERIVATIVE ACTION FORDISGORGEMENT OF FEES BASED ON FEE IN THIS CASE THI WHERE THEREFORE THE INSURED

PLACEROYALON PLACES

KAUFMAN
1289841

BORGEEST

RYAN

QWESTOO1

94

Case 1:04-cv-00725-RPM
MR RE PATRICK E SEBESTA V NO

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MEYER MEYERS

QUIZNO QUIZNOS
1250021311

ROYALFILE PAGE4

CONFLICT F INTEREST MR EISNER CLOSED HIS LETTERSTATING IT WOULD BE O THAT

MORE

BENEFICIAL FORTHE
IT IS

PROSPECTIVE BUYERMESSRS SCHADEN AND SCHADEN BUYERS OUR UNDERSTANDINGTHEY THAT THI THIS PURSUED AVENUE
MONTH MONTHS AFTERTHE EISNER LETTER

TO ACCUMULATE STOCK IN THE OPEN MARKET

WITH

TENDER OFFER IN OCTOBER

1999

OVER

THE CIRCUMSTANCE LETTER AS NOTICEOF ROYAL ACCEPTED EISNER CIRCUMSTANCES CIRCUMSTANCEUNDER SECTION 4 G2 CIRCUMSTANCES OF THE POLICY IN PERTINENT IN THAT THE EVENT STATING CLAIM IS SUBSEQUENTLY AND ARISES MADE ARISE OUT OF SUCH CIRCUMSTANCES CIRCUMSTANCE REFERENCED YOUR LETTER WILL IN IT BE DEEMED FIRST MADE DURING POLICY ERIOD THE REFERENCEDABOVE FEBRUARY 1998 TO FEBRUARY P 24 ABOUT 1999

25 FEBRUARY

24 1999
RECEIVED NO ADDITIONAL COMMUNICATIONSFROM QUIZNOS SINCE FEBRUARY 1999 COMMUNICATION ROYAL QUIZNO II AT THATTIME MR MEYERS STATEDTHAT THE BOARD OF DIRECTORS MEYERS MEYER DIRECTOR WAS IN THE PROCESS PROCES OF EVALUATING DECEMBER 29 1998 PROPOSAL AN APPROXIMATE OF 30 DAYS THE FOR TIME DAY AND QUIZNOS QUIZNO CONFIRMED THAT IT WOULD KEEP OF DEVELOPMENT AND ROYAL APPRISED DEVELOPMENTSIN THE EVENT OF LAWSUIT FROM MR
W ROYAL POLICYAS NOT RENEWED AND EXPIRED FEBRUARY 1999 24 ROYALRECEIVED NO NOTICE OF ANY OTHER FACTS OR CIRCUMSTANCES FACT CIRCUMSTANCE PRIOR THE EXPIRATION THE ROYAL TO OF POLICY WE UNDERSTANDTHAT QUIZNOS CURRENTLY INSUREDUNDER MANAGEMENT QUIZNO IS PROTECTIONINSURANCE POLICY

THE

ISSUED

BYWESTCHESTER FIRE

INSURANCE

CLAIM CLAIMS COMPANY COVERING

MADE

FEBRUARY 24

1999

TO THE

PRESENT

DIRECTING YOU
WILL NOT RESULTIN

4G2
THE

OF THE EXPIRED NOTICE OF CIRCUMSTANCES G2 ROYALPOLICY CIRCUMSTANCE FOR CLAIM FIRST MADE BEYOND THE POLICY PERIOD UNDER SECTION COVERAGE UNLESS UNLES THE SUBSEQUENT CLAIM ARISES ARISE OUT OF THE PARTICULAR CIRCUMSTANCENOTICED TO ROYAL CIRCUMSTANCES
TO

SECTION4

CIRCUMSTANCETHATROYALAS W

THI THIS POLICYHIGHLIGHTS REQUIREMENT HIGHLIGHT THAT THE CLAIM ARISE FROM SUCH STATING MUST PLACED NOTICE OF PRIOR THE EXPIRATION POLICYERIOD ON TO OF THE P IN THIS CASE SECTION4G2 THI DOE DOES NOT EXTEND COVERAGE TO THE SEBESTA COMPLAINT BECAUSE THE CIRCUMSTANCE THAT WERE OR EVEN REFERENCE CIRCUMSTANCES

THE SEBESTA

DOE DOES NOT ARISE FROM COMPLAINT

NOTICEDTO ROYAL

THE DOE DOES SPECIFICALLY SEBESTA COMPLAINT NOT MENTION IN ANY PORTION THE OF 1998 PROPOSAL MADE TO QUIZNOS REGARDING 29 QUIZNO AN LBO THERE ARE NO ACT ACTS ALLEGED PUIPORTEDLY THE BASIS OF THE COMPLAINT THAT FORTH BASI THATOCCURREDPRIOR APRIL TO 2001 AS FROM REVIEW OF THE COMPLAINT BASED ON INFORMATION AND APPEAR APPEARS AVAILABLE US AT THIS TIME TO THI THE ALLEGATION ALLEGATIONSDECEMBER AND CIRCUMSTANCE DO COMPLAINT THE EISNER CIRCUMSTANCES NOT ARISE FROM THE SAME SET OF AND TRANSACTION CIRCUMSTANCE CIRCUMSTANCES THE TRANSACTIONSAT ISSUE IN EACH OF THESE MATTERS ARE DISTINCT MATTER TAKING PLACE ALMOSTTHREE YEARS APART THE EISNER CIRCUMSTANCE REFERENCE REFERENCESAN LBO PROPOSALDECEMBER YEAR IN 1998 AND THE SEBESTA COMPLAINTOCUSESON MISREPRESENTATIONS TO SHAREHOLDERS FOCUSE F MADE MISREPRESENTATION SHAREHOLDERIN NOVEMBER 2001 PROXY STATEMENT REGARDING FIRENZE MERGER PROPOSAL THE THE FIRENZE ENTITY WAS NOT FORMED UNTIL SEVERAL YEARS AFTERTHE EXPIRATION THE ROYAL OF ABOUT MAY 2001 YEAR ON POLICY OR TO ACCORDING THE INFORMATION AVAILABLE PRESENTLY LIKEWISE IT APPEARS THAT AT LEAST TWO OF THE APPEAR DIRECTORDEFENDANTS WERE NOT DIRECTORS QUIZNOS CORPORATION DEFENDANT DIRECTOR OF QUIZNO THE DURING ROYALPOLICYERIOD P MESSRS JOHN J TODD AND BRAD A GRIFFIN THE SEBESTA

ALSO

THE ATTORNEYS R ATTORNEYEFERENCEDIN THE EISNER MATTER

KAUFMAN
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RYAN

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MEYER MEYERS QUIZNO QUIZNOS
1250021311

F ROYALILE

PAGE
FIRST TO THE NOTICED CLAIM AND THE BUT CONTRIBUTING WILL
AMOUNT AMOUNTS

SHALL NOT BE CONSIDERED POLICY THE DIFFERENCE BETWEEN ALL INDEMNIFY NLY O
OR

RECOVERABLE AND OTHER INSURANCE

INDEMNIFICATION

AND

THI NOT OF ANY LOSS OTHERWISE COVERED UNDER THIS POLICY LOS THE SHOWN ON THE DECLARATIONSPAGE AND DECLARATION EXCEEDING LIMIT OF LIABILITY THE AMOUNTS AMOUNT
TO SUBJECT

ALL POLICY IN PROVISIONS THE EVENT THAT THERE IS OTHER

A INDEMNIFYVAILABLETO THE INSURED PERSON OR INSURED THEN THIS INSURANCE SHALL PROVIDE THI EXCES EXCESS SPECIFIC ORGANIZATION THE TERMS OF ANY OTHER AND SHALLNOT BE SUBJECT TO TERM COVERAGE ONLY INSURANCE OR INDEMNIFY
INSURANCE
OR

PROTECTION INSURANCE SINCEWESTTHESTER FIRE INSURANCE COMPANYISSUED MANAGEMENT INC DIRECTOR OFFICER FOR TO QUIZNO POLICY QUIZNOSCORPORATION AND ITS DIRECTORS AND OFFICERS THE PERIOD FOLLOWING SOMEHOW FOUNDTO WERE FEBRUARY 1999 WESTCHESTER 24 POLICY EVEN IF THE ROYAL POLICY W APPLY ROYAL OULD BE OVER THE INSURANCE AVAILABLE UNDER THE CURRENT WESTCHESTERFIRE INSURANCE COMPANY POLICY FACT THI IN VIEW OF THE FACTSOF THIS MATTERBASED
ON

IS AVAILABLE UNDER THE ROYAL OLICYORTHE SEBESTA F P THE

AVAILABLE INFORMATION NO CURRENTLY COMPLAINT

COVERAGE

MADE AVAILABLE TO DATE BASED
ON

RELIE RELIES FOREGOING COVERAGE DETERMINATION NECESSARILY ON INFORMATION THAT HAS BEEN REFERENCE THOSE POLICY REFERENCES TERM TERMS THATAPPEAR TO APPLY THE COMPLAINT TO ROYAL AND INFORMATION THE TERMS REFERENCED HEREIN IN TERM ITS
NO

CURRENT

WAY

ARE

EXHAUSTIVE OF

UNDER THE POLICY ROYAL RESERVE RESERVES ROYAL RIGHTS ROYALS RIGHT EXPRESSLY DETERMINATION IF NECESSARY AS NEW INFORMATION BECOMES BECOME ABOUT ROYALS CONTACT ME ROYAL POSITIONLEASE P

THI THIS TO RIGHT SUPPLEMENT COVERAGE AVAILABLE IF YOU HAVE ANY QUESTION

VERYTRULY YOUR YOURS KAUFMAN
BORGEEST RYAN

IARYA
CC

MS

KATHY CAREY

ASSISTANT VICE PRESIDENT INC ROYAL PECIALITY S UNDERWRITING 945 EAST PACES FERRY PACE ROAD SUITE 1800 303261125 ATLANTA GEORGIA

KAUFMAN
1289841

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RYAN

QWESTOO1

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