SPECIMEN

Property Insurance Policy

Zurich Global Corporate UK

Welcome to Zurich Thank you for taking your insurance out with us and welcome to Zurich Global Corporate UK. As part of Zurich Financial Services Group, one of the world’s largest insurance and financial services providers, we are able to provide innovative insurance solutions, products and services tailored to customers’ domestic and international needs through an integrated global platform. Our global network enables us to operate across national, regional and functional boundaries. We provide our customers with the benefit of our international expertise and detailed local knowledge. At Zurich we believe in working closely with our customers and look forward to continue working with you.

www.zurich.com

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Global Material Damage & Business Interruption Insurance Programme

Insert Insured's name Policy number:

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Policy of Insurance In Consideration of the Insured stated in the Schedule hereto paying or agreeing to pay the premium stated in the Schedule to the Insurers stated in the Schedule or to Insurers whose names are, with the consent of the Insured, substituted therefor by memorandum hereon or attached hereto signed by or on behalf of all the Insurers concerned (such Insurers or substituted Insurers, as the case may be, being hereinafter called ‘the Insurers’) The Insurers Severally Agree each for the proportion set against its name (subject to the conditions contained herein or endorsed or otherwise expressed hereon which conditions shall so far as the nature of them respectively will permit be deemed to be conditions precedent to the right of the Insured to recover hereunder) to indemnify the Insured, up to the Overall Limit of Liability stated in the Schedule, under: a)

Section I − In the event of the Property Insured or any part thereof incurring Damage arising

b)

Section II − If any of the Property Insured or other property used by the Insured at the Premises for the purposes of the Business shall sustain Damage and the Business is or would have been in consequence thereof interrupted or interfered with

at any time before Midnight local time of the last day of the Period of Insurance stated in the Schedule or of any subsequent period in respect of which the Insured shall have paid or agreed to pay and the Insurers shall have accepted or agreed to accept the premium required for the renewal of this Policy, on the basis set out in this Policy. This Policy and the Schedule shall be read together as one contract and any word or expression to which a specific meaning has been attached in any part of this Policy or of the Schedule shall bear such meaning wherever it may appear. Provided that: 1

In respect of the insurance under each section of this Policy the liability of the Insurers shall in no case exceed any limit of liability shown in this Policy, or such other amount as may be substituted therefore by memorandum hereon or attached hereto signed by or on behalf of the Insurers.

2

In respect of the insurance under Section II at the time of the happening of any loss, destruction or damage there shall be in force under Section I or otherwise an insurance covering the interest of the Insured in the property against such loss, destruction or damage and that: (i)

payment shall have been made or liability admitted therefore or

(ii)

payment would have been made or liability admitted therefor but for the operation of a proviso in such insurance excluding liability for losses below a specified amount.

In witness whereof I being a representative of the Leading Office which is duly authorised by the Insurers have hereunto subscribed my name on their behalf.

Date

Signed

Representative of the Leading Office

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Policy Operation 1

This Policy subject to its terms, limitations and conditions, shall only apply to the extent that: a)

the Insured Perils and/or definitions and/or conditions under this Policy are broader in meaning or scope than those of any Specific Local Primary Policy and/or

b)

limits of liability set forth herein are broader in meaning or scope than those of any Specific Local Primary Policy

and this Policy shall only apply to provide excess insurance over any amount collectible from such policies except in such territories (details lodged with the Insurers) where there is no Specific Local Primary Policy and the Insurers have agreed that this Policy shall act as a non admitted primary policy. Specific Local Primary Policy shall mean any Policy issued locally:

2

3

a)

by the Insurers or their representatives or associated companies

b)

by any other insurer and declared to and accepted by the Insurers

It is a condition that: a)

the sums insured on any Specific Local Primary Policy (ies) shall represent the total value at risk in the territory concerned, unless otherwise agreed with the Insurers

b)

the Insured shall maintain in force Specific Local Primary Policy (ies). Any renewal or substitution of such Policies shall provide the same cover as the original unless specifically agreed otherwise by the Insurers. In no event shall this Policy be considered a primary policy where a policy has lapsed or been cancelled, or where a deliberate decision has been taken not to arrange local insurance, unless such circumstances have been notified to and accepted by the Insurers.

No amount shall be recoverable under this Policy: a)

due to the application of any excess co-insurance or deductible under any Specific Local Primary Policy

b)

due to breach of any: (i)

risk management or risk protection condition(s) or warranty(ies), or

(ii) condition(s) or warranty(ies) which have been specifically applied to the Insured under any Specific Local Primary Policy c)

due to any local Business Interruption cover being intentionally restricted to Increase in Cost of Working or its local equivalent

d)

due to the maximum Indemnity Period on any Specific Local Primary Policy being less than that applicable to this Policy

unless the Insurers have confirmed that this Policy would indemnify the Insured in such circumstances. 4

Any claim for loss, destruction, damage or interruption shall first be submitted to the insurers of such Specific Local Primary Policy (ies).

5

In the event that the Overall Limit of Liability or any Aggregate Limit stated herein is exceeded by payments made on any or all of the Specific Local Primary Policies, the Insured undertakes to reimburse the Insurers in respect of any amount paid or expenses incurred by the Insurers in excess of the Overall Limit of Liability or any Aggregate Limit where such payment or expense arises out of a liability (whether in relation to a risk insured under this Policy or otherwise) under the terms of any Specific Local Primary Policy. Any amount due to the Insurers pursuant to the terms of this clause shall be paid by the Insured within 28 days of notice from the Leading Office giving details of the payment or expense incurred.

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Schedule

The Insured

xxxxx

Address

xxxxx

Business

xxxxx

Premises

Any Premises owned, occupied or used by the Insured within the Territorial Limits

Premises

Anywhere in the world but excluding Afghanistan, Albania, Angola, Armenia, Azerbaijan, Bosnia Herzegovina, Belarus, Buerma (Myanmar), Cuba, Democratic Republic of the Congo, Georgia, Iran, Iraq, Kazakhstan, Kampuchea (Cambodia), Kyrgyzstan, Laos, Lebano

Maximum Indemnity Period Period of insurance

xxxxx From

00.00.01 hours

to

24.00.01 hours

at the local time in the territory where the Damage occurs Renewal date Premium (annual)

£

Insurance Premium Tax

£

Overall limit of liability

The liability of the Insurers in respect of any one loss or series of losses resulting from any one incident shall in no case exceed in total the sum of

Leading office

xxxxx

Policy number

xxxxx

Insurers

Proportion % %

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Deductible All limits of liability are in excess of any Deductible. All claims arising out of any one loss or series of losses resulting from one incident in any one territory shall be adjusted as one claim. From the amount of such claim, which shall be adjusted in accordance with the terms exclusions and conditions of this Policy, there shall be deducted the amount of: 1

in respect of any loss destruction or damage arising out of any one incident of windstorm in the USA: 2% of the amount declared as representing the total value at risk for Property Damage and Business Interruption at the location where and upon the date when the loss destruction or damage occurs, subject to minimum Deductible of xxxxx

2

in respect of any loss destruction or damage arising out of any one incident of earthquake in the USA: 5% of the amount declared as representing the total value at risk for Property Damage and Business Interruption at the location where and upon the date when the loss destruction or damage occurs, subject to minimum Deductible of xxxxx

3

in respect of any other loss destruction or damage: xxxxx

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General Definitions

1

Property insured All real and personal property of every kind and description now or hereafter existing in any form, owned in whole or in part by the Insured, and property held in trust by the Insured or for which the Insured may be liable, or for which, prior to loss, the Insured may have assumed liability, under contract or agreement, or which the Insured may have an obligation to insure, except as hereafter specifically excluded.

2

Property excluded This Policy does not cover: 2.1

2.2

3

a)

Explosives, jewellery, precious stones, precious metals, bullion, furs or fine art

b)

Property in transit (unless specifically mentioned as being insured by this Policy)

c)

Coinage, bank and currency notes, luncheon vouchers, cheques, travellers cheques, giro cheques, giro cash cheques, bankers drafts, national giro drafts, money orders, postal orders, current postage stamps, stamp franking machine units, national insurance stamps, national savings certificates, holiday with pay stamps, (provided the Insured are not otherwise indemnified), credit cards, credit company sales vouchers, V.A.T. purchase invoices and trading stamps and securities of any description, unless specifically mentioned as being insured by this Policy

d)

Vehicles licensed for road use (including accessories thereon) whilst on the public highway, caravans, trailers, watercraft, aircraft or spacecraft

e)

Property or structures in course of demolition construction or erection and materials or supplies in connection therewith

f)

Land (including top-soil back-fill drainage or culverts), driveways, pavements, roads, airport runways, railway lines, overhead transmission lines, dams, reservoirs, canals, rigs, wells, tunnels, excavations, mines, property underground and off-shore property

g)

Livestock, growing crops, trees and other vegetation including lawns and shrubs, water/or air

h)

Property more specifically insured, except for any excess value beyond an such more specific insurance

Consequential loss resulting from loss or destruction of or damage to any of the Property Excluded

Insured perils Wherever the term 'Damage' or 'Damaged' appears in this Policy, it shall mean: All risks of accidental physical loss destruction or damage occurring during the Period of Insurance.

4

Perils excluded This Policy does not cover: 4.1

Damage to the Property Insured caused by or consisting of (or consequential loss arising therefrom) a)

its own faulty or defective design or materials inherent vice or latent defect

b)

faulty or defective workmanship

c)

misapplication of tools, operational error or omission by the Insured or of any employees of the Insured

d)

escape of liquid from process equipment where such escape is due to the use of the equipment by the Insured or of any employees of the Insured

e)

its undergoing any process of production, packing, treatment, testing, commissioning, servicing or repair

f)

corrosion, rust, dampness, dryness, frost, wet or dry rot, shrinkage, evaporation, loss of weight, marring, scratching, vermin, pests, insects, gradual deterioration, wear and tear or any gradually operating causes

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g)

change in temperature, colour, flavour, texture or finish

h)

settling cracking shrinkage or expansion of pavements foundations walls floors ceilings or swimming pools

i)

wind, rain, hail, sleet, snow, sand, flood or dust to fences, gates or moveable property in the open

j)

pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds

k)

changes in the water table level

l)

cracking, fracturing, collapse or overheating of boilers, economisers, superheaters, pressure vessels, tubes or pipes, joint leakage, nipple leakage or failure of welds of any range of steam feeding pipes in connection therewith

m) the bursting of a boiler economiser vessel machine or apparatus in which internal pressure is due to steam only and belonging to or under the control of the Insured other than: in respect of Section I − a boiler used for domestic purposes only in respect of Section II − any boiler or economiser on the premises n)

mechanical or electrical breakdown or derangement of the particular machine apparatus or equipment in which such breakdown or derangement originates

o)

(i)

freezing

(ii) malicious damage or vandalism (other than fire or explosion) (iii) escape of water from any tank, apparatus or pipes when the Premises are empty or not in use. p)

theft of Property Insured (other than Property Insured in transit): (i)

whilst in the open or elsewhere than at the Premises but this shall not exclude theft or attempted theft of such property involving entry into or exit from buildings at the premises of a sub-contractor of the Insured or at an exhibition by forcible means or theft following assault or violence or threat to the Insured or any employee of the Insured or of their sub-contractor.

(ii) by any person lawfully in or on the Premises unless following assault or violence to the Insured or any employee of the Insured 4.2

Damage to any building or structure caused by its own collapse or cracking (or consequential loss arising therefrom)

4.3

Damage or consequential loss resulting from interruption of or interference with the Business caused by the deliberate act of a supply authority in withholding the supply of water, gas, electricity, fuel or telecommunications service

None of the above Perils Excluded shall exclude any Damage (or consequential loss insofar as it is covered by Section II) arising therefrom if resulting from a cause which is not otherwise excluded, nor subsequent Damage (or consequential loss arising therefrom insofar as it is covered by Section II) resulting from an ensuing cause which is not otherwise excluded 4.4

Damage caused by or consisting of (or consequential loss arising therefrom): a)

subsidence, ground heave or landslip (i)

of yards, car parks, roads, pavements, walls, gates and fences unless a building at the same premises is also damaged thereby

(ii) caused by or consisting of: a)

normal settlement or bedding down of new structures

b)

the settlement or movement of made up ground

c)

coastal or river erosion

But this shall not exclude subsequent Damage (or consequential loss arising therefrom insofar as it is covered by Section II) resulting from an ensuing cause not otherwise excluded (iii) resulting from a)

demolition, construction, structural alteration or repair of any property, or

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b)

groundworks or excavation

of any property owned, occupied or used by the Insured at the same premises but this shall not exclude subsequent Damage (or consequential loss arising therefrom insofar as it is covered by Section II) resulting from an ensuing cause not otherwise excluded.

4.5

b)

disappearance, unexplained or inventory shortage, misfiling or misplacing of information

c)

the Insured or any partner, director or employee of the Insured parting with title or possession of any property if induced to do so by any fraudulent scheme, trick or false pretence

d)

act(s) of fraud or dishonesty by any employee or authorised representative of the Insured

Damage or consequential loss or costs or expenses of whatsoever nature directly or indirectly caused by, resulting from or in connection with war, invasion, act of foreign enemy, hostilities or warlike operations (whether war be declared or not), civil war, rebellion, revolution, insurrection civil commotion assuming the proportions of or amounting to an uprising, military or usurped power, nationalisation, confiscation, requisition, seizure or destruction by the government or any public authority. This Policy also excludes loss, damage, cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling, preventing, suppressing or in any way relating to the above. In any action, suit or other proceeding where the Insurers allege that by reason of the provisions of this exclusion any loss is not covered by this Policy, the burden of proving that such loss is covered shall be upon the Insured

4.6

4.7

Damage or consequential loss to any property whatsoever or any loss or expenses whatsoever resulting or arising therefrom directly or any consequential loss directly or indirectly caused by or contributed to by or arising from: a)

ionising radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion or nuclear fuel

b)

the radioactive, toxic, explosive or other hazardous properties of any explosive nuclear assembly or nuclear component thereof.

Damage or consequential loss which can be covered by any (i)

government or public authority compensation scheme

(ii) compulsory insurance (iii) insurance pool (iv) local monopoly insurer (v) natural catastrophe insurance scheme (vi) or similar insurance scheme or 1

where the insurance of such perils and/or events is prohibited by local law regulation or authorities

2

where the Insurers are legally/contractually restricted from doing so

except in respect of any excess beyond the amount which would be payable under such scheme insurance pool or by such insurer 4.8

Damage or consequential loss caused by or resulting from pollution or contamination except (unless otherwise excluded) destruction of or damage to the Property Insured resulting from destruction of or damage to property or any part thereof used by the Insured at the Premises for the purposes of the Business caused by a)

Pollution or contamination which itself results from fire, lightning, explosion, aircraft or other aerial devices or articles dropped therefrom, riot, civil commotion, strikers, locked-out workers, persons taking part in labour disturbances, malicious persons other than thieves, earthquakes, storm, flood, bursting overflowing discharging or leakage of water tanks, apparatus or pipes, sprinkler leakage or impact by any road vehicle or animal

b)

any of the perils in a) above which itself results from pollution or contamination

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4.9

Damage or consequential loss in the Republic of South Africa, Transkei, Ciskei Bophuthatswana, Venda and South West Africa (Namibia) a)

related to or caused by: (i)

civil commotion, labour disturbances, riot, strike, lock out, or public disorder or any act or activity which is calculated or directed to bring about any of the above

(ii) war, invasion, act of foreign enemy, hostilities or war like operations (whether war be declared or not) or civil war (iii) a)

b)

mutiny, rising, military or usurped power, martial law or state of siege or any other event or cause which determines the proclamation or maintenance of martial law or state of siege insurrection, rebellion or revolution

(iv) any act (whether on behalf of any organisation, body or person or group of persons) calculated or directed to overthrow or influence any state or government or any provincial, local or tribal authority with force, or by means of fear, terrorism or violence (v) any act which is calculated or directed to bring about Damage in order to further any political aim, objective or cause, or to bring about any social or economical change, or in protest against any state or government or any provincial, local or tribal authority, or for the purpose of inspiring fear in the public or any section thereof (vi) any attempt to perform any act referred to in paragraphs (iv) or (v) above (vii) the act of any lawfully established authority in controlling, preventing, suppressing or in any other way dealing with any occurrence referred to in paragraphs (i), (ii), (iii), (iv), (v), or (vi) above. b)

caused directly or indirectly by or through or in consequence of an occurrence for which a fund has been established in terms of the War Damage Insurance and Compensation Act 1976 (No. 85 of 1976).

In any action, suit or other proceeding where the Insurers allege that by reason of the provisions of this exclusion any loss is not covered by this Policy, the burden of proving that such loss is covered shall be upon the Insured 4.10 Damage or consequential loss or costs or expenses of whatsoever nature directly or indirectly caused by, resulting from or in connection with any act of terrorism regardless of any other cause or event contributing concurrently or in any other sequence to the loss For the purpose of this Policy an act of terrorism means an act, including but not limited to the use of force or violence and/or the threat thereof, of any person or group(s) of persons, whether acting alone or on behalf of or in connection with any organization(s) or government(s), committed for political, religious, ideological or similar purposes including the intention to influence any government and/or to put the public, or any section of the public, in fear. This Policy also excludes loss, damage, cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling, preventing, suppressing or in any way relating to any act of terrorism. In the event any portion of this exclusion is found to be invalid or unenforceable, the remainder shall remain in full force and effect. In any action, suit or other proceeding where the Insurers allege that by reason of the provisions of this exclusion any loss is not covered by this Policy, the burden of proving that such loss is covered shall be upon the Insured 4.11 Damage or consequential loss, distortion, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including but not limited to Computer Virus) or loss of use, reduction in functionality, cost, expense of whatsoever nature resulting therefrom, regardless of any other cause or event contributing concurrently or in any other sequence to the loss. Electronic Data means facts, concepts and information converted to a form useable for communications, interpretation or processing by electronic and electromechanical data processing or electronically controlled equipment and includes programmes, software and other coded instructions for the processing and manipulation of data or the direction and manipulation of such equipment.

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Computer Virus means a set of corrupting, harmful or otherwise unauthorised instructions or code including a set of maliciously introduced unauthorised instructions or code, programmatic or otherwise, that propagate themselves through a computer system or network of whatsoever nature. Computer Virus includes but is not limited to 'Trojan Horses', 'worms' and 'time or logic bombs'. b) However, in the event that a peril listed below results from any of the matters described in paragraph a) above, this Policy, subject to all its terms, conditions and exclusions, will cover physical damage occurring during the Policy period to property insured by this Policy directly caused by such listed peril. Listed Perils Fire Explosion Electronic Data Processing Media Valuation Notwithstanding any provision to the contrary within the Policy or any endorsement thereto, it is understood and agreed as follows: Should electronic data processing media insured by this Policy suffer physical loss or damage insured by this Policy, then the basis of valuation shall be the cost to repair, replace or restore such media to the condition that existed immediately prior to such loss or damage, including the cost of reproducing any Electronic Data contained thereon, providing such media is repaired, replaced or restored. Such cost of reproduction shall include all reasonable and necessary amounts, not to exceed insert any one loss, incurred by the Assured in recreating, gathering and assembling such Electronic Data. If the media is not repaired, replaced or restored the basis of valuation shall be the cost of the blank media. However this Policy does not insure any amount pertaining to the value of such Electronic Data to the Assured or any other party, even if such Electronic Data cannot be recreated, gathered or assembled. 4.12 Damage or consequential loss: (i)

directly or indirectly caused by or contributed to by or consisting of or arising in whole or in part from a)

the way in which any Data Processing System responds to or deals with or fails to respond to or fails to deal with any true calendar date

b)

any Data Processing System responding to or dealing in any way with: (i)

any data denoting a calendar date or dates as if such data did not denote a calendar date or dates

(ii) any data not denoting a calendar date or dates as if such data denoted a calendar date or dates whether such Data Processing System is the property of the Insured or not but this shall not exclude subsequent Damage not otherwise excluded by the Policy which itself results from a Defined Peril. The cover provided will only become operative from the date on which System Compliance is completed. (ii) costs expenses or fees incurred in a)

the pursuit of System Compliance

b)

the temporary protection and or preservation of the Property Insured from the effects of any potential or actual failure to accomplish System Compliance

whether of a preventative or remedial nature or otherwise and whether incurred before or after any loss destruction or damage Definitions For the purposes of Perils Excluded 4.12, the following special meanings shall apply: Data Processing System shall mean: (i)

any computer or data processing equipment or media or microchip or integrated circuit or similar device or any computer software or computer firmware or any other computerised or electronic equipment or component and

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(ii) any other product and any services data or function that directly or indirectly use or rely upon any of the items listed in (i) above whether or not any such item listed in (i) or (ii) above is owned by or in the possession of or in the custody or control of the Insured. ‘System Compliance’ shall mean any investigation assessment testing modification alteration correction repair or replacement of any Data Processing System or data which ensures that it completely and correctly deals with and responds to any true calendar date and data whether denoting a calendar date or otherwise. ‘Defined Peril’ shall mean: fire, lightning, explosion, aircraft or other aerial devices or articles dropped therefrom, riot, civil commotion, strikers, locked out workers, persons taking part in labour disturbances, malicious persons, theft or attempted theft, earthquake, subterranean fire, storm, tempest, flood, escape of water from any apparatus or pipe, subsidence, and impact by any road vehicle or animal. 4.13 Damage or consequential loss in People's Republic of China (China) in respect of Earthquake and any fire or other Damage which directly results therefrom. 4.14 Damage or consequential loss in Northern Ireland occasioned by or happening through or in consequence directly or indirectly of riot, civil commotion and (except in respect of loss, destruction or damage by fire or explosion) strikers, locked-out workers or persons taking part in labour disturbances. 4.15 All loss, cost or expense directly or indirectly arising out of, resulting from or in any manner related to Fungal Pathogens whether or not there is another cause of loss which may have contributed concurrently or in any sequence to a loss. ‘Fungal Pathogens’ as utilised herein, shall mean any fungus or mycota or any by-product or type of infestation produced by such fungus or mycota, including but not limited to, mould, mildew, mycotoxins, spores or any biogenic aerosols. 4.16 Damage or consequential loss in Belgium or the Netherlands due to damage, destruction and overflowing of dykes, floodgates and other similar works whether or not the resulting flood is due to a peril covered under this Policy 4.17 Damage or consequential loss in Germany due to Sturmflut. Sturmflut shall mean a flooding of dry land by storm driven waves on coastal areas, into bays or inland waters connected to the ocean or sea. Sturmflut will be declared by the 'Federal German Office for Maritime Shipping and Hydrographic'.

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Section I – Property Damage Indemnity to Insured In the event of the Property Insured or any part thereof incurring Damage: 1

2

the Insurers will pay to the Insured a)

the value of the property at the time of such Damage, or

b)

the amount of such Damage, or

the Insurers at their option will reinstate or replace such property or any part thereof.

Limit of Liability The liability of the Insurers shall in no case exceed the sums insured on any Specific Local Primary Policy (ies), except as expressly varied herein, or the Overall Limit of Liability as stated in the Schedule, whichever is the lesser.

Memoranda applicable to Section I 1

Interested parties Various parties may be interested in the insurance by this Policy, and the Insured undertake to declare the names, nature and extent of any interest of any such parties at the time of any loss.

2

Extensions of coverage Subject otherwise to its terms and conditions and without increasing the Limit(s) of Liability as stated in the Schedule this Policy is extended to cover: a)

Professional fees

Architects', surveyors', consultants', legal and other professional fees reasonably incurred in the reinstatement of the Property Insured consequent upon its Damage but not for preparing any claim. b)

Removal of debris (i)

Costs and expenses reasonably incurred by the Insured with the consent of the Insurers in: a)

removing debris

b)

dismantling and/or demolishing

c)

shoring up or propping

d)

clearing or cleaning drains or sewers

at the portion of the Property Insured which sustains Damage. (ii) Notwithstanding the extension of coverage provided by paragraph b) (i) the Insurers will not pay for any costs or expenses

c)

a)

incurred in removing debris except from the site of such property Damaged and the area immediately adjacent to such site

b)

arising from pollution or contamination of property not insured by this Policy.

Loss of Rent

Loss of rent of certain buildings as required under the terms of the respective leases. The insurance on rent applies if the said building or any part thereof is unfit for occupation in consequence of Damage and then the amount payable shall not exceed such proportion of the rent as the period necessary for reinstatement bears to the period of rent insured. © Zurich 11/2006 Property Master.doc

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3

European Community and Public Authorities Subject to the following special conditions the insurance by this Policy extends to include such additional cost of reinstatement as may be incurred solely by reason of the necessity to comply with the Stipulations of: a)

European Community Legislation, or

b)

Building or other Regulations under or framed in pursuance of any Act of Parliament or Statute or Bye-Laws of any Public Authority

(hereafter referred to as ‘the Stipulations’) in respect of: (i)

the Damaged Property Insured

(ii)

undamaged portions thereof

excluding a)

the cost incurred in complying with the Stipulations: (i)

in respect of Damage occurring prior to the granting of this extension

(ii) in respect of Damage not insured by this Policy (iii) under which notice has been served upon the Insured prior to the happening of the Damage (iv) for which there is an existing requirement which has to be implemented within a given period (v) in respect of property entirely undamaged by any peril hereby insured against b)

the additional cost that would have been required to make good the property Damaged to a condition equal to its condition when new had the necessity to comply with the Stipulations not arisen

c)

the amount of any charge or assessment arising out of capital appreciation which may be payable in respect of the property or by the owner thereof by reason of compliance with the Stipulations

Special Conditions (applicable to this Memorandum) a)

The work of reinstatement must be commenced and carried out without unreasonable delay and in any case must be completed within twelve months after the Damage or within such further time as the Insurers may allow and may be carried out upon another site (if the Stipulations so necessitate) subject to the liability of the Insurers under this extension not being thereby increased.

b)

If the liability of the Insurers under this Policy apart from this extension shall be reduced by the application of any of the terms and conditions of this Policy then the liability of the Insurers under this extension shall be reduced in like proportion.

c)

The total amount recoverable under this Policy in respect of this extension shall not exceed: a)

in respect of the Damaged property (i)

15% of its declared value

(ii) where the declared value applies to property at more than one Premises 15% of the total amount for which the insurers would have been liable had the property insured by the item at the Premises where the Damage has occurred been wholly destroyed b) d)

4

in respect of undamaged portions of property: insert

All the terms and conditions of this Policy except in so far as they are varied hereby shall apply as if they had been incorporated herein.

Motor vehicles Motor vehicles which are covered by a more specific insurance are excluded from the Insurance by this Policy except in respect of any amount over and above that which is recoverable under such specific Insurance.

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5

Contract price In respect only of goods sold but not delivered for which the Insured are responsible subject to a sale contract which, following Damage, is cancelled by reason of its conditions, wholly or to the extent of the Damage, the liability of the Insurers shall be based on the contract price.

6

Additions The insurance includes from the time the Insured became responsible therefore: any newly acquired and/or newly erected buildings, alterations, additions and improvements, machinery and plant (other than as set out in the Acquisition of Companies Memoranda applicable to Sections I and II) within the territories declared to the Insurers but not in respect of appreciation in value provided that:

7

a)

at any one situation this cover shall not exceed insert

b)

the Insured undertake to provide particulars of any such additions exceeding insert in value as soon as practicable but not exceeding six months after such cover applies and to effect specific insurance thereon retrospective to the date such cover applied

c)

immediately such specific insurance is effected, cover by this extension shall be fully reinstated

d)

this memorandum does not apply to any loss which results from earthquake, flood, storm or tsunami

Avoidance of impending loss In the event of an imminent or actual loss insured against it shall be lawful and necessary for the Insured, his or their factors, servants and assigns to sue, labour and travel for, in and about the defence, safeguard and recovery of the property, the acts of the Insured or the Insurers in recovering, saving and preserving the Property Insured in case of actual or imminent loss shall not be considered as a waiver or acceptance of abandonment. The expenses so incurred shall be borne by the Insured in the proportion that the applicable Deductible bears to the Limits of Liability hereunder for the actual or imminent contingency and the Insurers shall bear the balance of such expenses. Amounts recoverable hereunder shall not increase the Overall Limit of Liability cited in this Policy.

8

Fire Brigade charges In the event of Damage to the Property Insured the insurance hereunder shall cover fire brigade charges and other extinguishing expenses for which the Insured may be assessed provided that the sum of such charges and expenses. The liability of the Insurers under this Memorandum shall not exceed insert in respect of any one loss or series of losses resulting from any one incident.

9

Tenants and Neighbours Where the property is located in a country which is subject to the Napoleonic or similar Civil Code the Insurers shall be liable for: a)

Tenants' Liability, namely the financial consequences of the Liability which the Insured may incur as tenant, in respect of property damage under any Civil Code

b)

Neighbours' Liability, namely the financial consequences of the liability which the Insured may incur under any Civil Code for any property damage resulting from fire spreading from the property belonging to the Insured or for which he is responsible, and which is insured under this Policy

c)

Tenants' Liability claims against the landlord, namely the financial consequences of the liability incurred under any Civil Code by the latter for any property damage by fire caused to property of the said tenants, as a result of constructional defects or lack of maintenance.

Wherever the term ‘fire’ appears in this Memorandum 9 it shall be held to mean fire and explosion. This coverage applies only to liability incurred in those countries in which the Napoleonic or similar Civil Code applies and the amount of such liability is restricted to the maximum amount which would otherwise be payable under any local Policy. Furthermore, the liability of the Insurers under the terms of this Memorandum shall not exceed insert in respect of any one loss or series of losses resulting from any one incident.

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10 Damage to leased buildings The insurance by this Policy in respect of: a)

buildings (including landlords fixtures and fittings therein and thereon) of which the Insured is lessee, and/or

b)

rent payable by the Insured in respect of the aforesaid buildings

shall only indemnify the Insured to the extent of their legal liability for Damage to such buildings or for rent payable and specifically excludes any risk which any lessor has covenanted to insure. Notwithstanding the above, no amount shall be recoverable under this Memorandum (i)

due to the application of any excess, deductible or condition of average under any more specific insurance

(ii)

due to a breach, other than any unintentional breach by the Insured, of any condition or warranty under any such more specific insurance

(iii)

in excess of any monetary limit of indemnity under any such more specific insurance

Special Conditions (applicable to Memorandum 10) 1

The Insured agrees to make available to the Insurers on request a copy of the lease or the relevant portions thereof, in respect of any of the Premises to which this memorandum applies, and the Insured further agrees not to extend the relevant sections of such lease during the currency of this Insurance without the prior consent of the Insurers.

2

The Insurers will not be liable in respect of Rent payable unless the Building to which the Rent payable relates be so Damaged as to be rendered unfit for occupation and then only for such a proportion of the Rent payable as may be equivalent to the time necessary for reinstating the damage sustained.

11 Leased equipment It is hereby noted that certain Property Insured is leased to the Insured and that the valuation of such property for the purpose of settlement of any claim for Damage to such property will be the higher of either a) the reinstatement or

b) the termination sums as detailed by the terms of any leasing agreement.

12 Brand or trademark Following Damage to property bearing a brand or trademark or which in any way carries or implies the guarantee or the responsibility of the manufacturer or of the Insured, the salvage value of such damaged property shall be determined after removal in a customary manner of all such brands or trademarks or other identifying characteristics or withdrawal of guarantees or implied responsibilities. The Insured shall have full rights of possession of all goods involved in any loss under this Policy and shall retain control of all damaged goods. The Insured shall be consulted by the Insurers and/or their appointed adjusters as to whether goods involved in any loss under this Policy are fit for use and goods so deemed by the Insured to be unfit for use shall not be sold or otherwise disposed of except by the Insured or with the Insured's consent, but the Insured shall allow the Insurers any salvage obtained by the Insured on any sale or other disposition of such goods.

13 Inadvertent omissions The Insured having notified the Insurers of the Insured's intention to insure all Property Insured in which the Insured is interested and the Insured's belief being that all such Property Insured is insured if hereafter any such property shall be found to have been inadvertently omitted the Insurers will deem it to be insured within the terms of this Section subject to payment of the premium of all such property as from the inception of this Section or from the date of the Insured's interest in such Property if it is erected or purchased after the inception of this Section Provided that: a)

at any one location the Limit of Liability under this Memorandum shall not exceed insert

b)

the value of the Property Insured which has been inadvertently omitted shall be added to the Declared Value

c)

this memorandum does not apply to any loss which results from earthquake, flood, storm or tsunami

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14 Sale of Interest If at the time of Damage to any building hereby insured the Insured shall have contracted to sell his interest in such building and the purchase shall not have been but shall be thereafter completed, the purchaser on the completion of the purchase, if and so far as the property is not otherwise insured by or on behalf of the purchaser against such Damage, shall be entitled to the benefit of this Policy so far as it relates to such Damage without prejudice to the rights and liabilities of the Insured or the Insurers under this Policy up to the date of completion.

15 Reinstatement It is hereby agreed that in the event of the Property Insured by this Policy (other than stock) being destroyed or damaged the basis upon which the amount payable under this Policy is to be calculated shall be the reinstatement of the property destroyed or damaged, subject to the terms and conditions of this Policy except in so far as the same may be varied hereby. For the purposes of the insurance under this memorandum ‘reinstatement’ shall mean the carrying out of the following work: a)

where property is destroyed, the rebuilding of the property if a building, or, in the case of other property, its replacement by similar property, in either case in a condition equal to but not better or more extensive than its condition when new,

b)

where property is Damaged, the repair of the Damage and the restoration of the Damaged portion of the property to a condition substantially the same as but not better or more extensive than its condition when new.

Special provisions (i)

The work of reinstatement (which may be carried out upon another site anywhere within the Territorial Limits and in any manner suitable to the requirement of the Insured subject to the liability of the Insurers not being thereby increased) must be commenced and carried out with reasonable despatch; otherwise no payment beyond the amount which would have been payable under this Policy if this memorandum had not been incorporated therein shall be made.

(ii)

When any Property Insured under this memorandum is damaged or destroyed in part only the liability of the Insurers shall not exceed the sum which the Insurers could have been called upon to pay for reinstatement if such property had been wholly destroyed.

(iii)

No payment beyond the amount which would have been payable under this Policy if this memorandum had not been incorporated therein shall be made until the cost of reinstatement shall have been actually incurred.

(iv)

Where by reason of any of the above Special Provisions no payment is to be made beyond the amount which would have been payable under this Policy if this memorandum had not been incorporated therein the rights and liabilities of the Insurers and the Insured in respect of the destruction or damage shall be subject to the terms and conditions of this Policy as if this memorandum had not been incorporated therein.

16 Valuation For the purpose of adjustment of losses the basis of valuation of: a)

Stock shall be replacement cost

b)

Documents, manuscripts, business books, patterns, models, moulds, plans and designs shall be the value of the material together with the cost of rewriting or reproducing same and not for their value to the Insured

c)

Pedal cycles, tools and personal effects of visitors, directors or employees shall be the replacement value, for an amount not exceeding insert in respect of any one loss or series of losses resulting in any one incident

17 Unspecified storage locations This Policy extends to cover the Property Insured whilst at storage locations which are not owned or occupied by the Insured, subject to the liability of the Insurers not exceeding insert in respect of any one loss or series of losses resulting from any one incident.

18 Temporary removal The insurance by this Policy extends to include Damage to the Property Insured whilst temporarily removed to any premises not owned, occupied or used by the Insured, other than as referred to in Memorandum 17 above, subject to the liability of the Insurers not exceeding insert in respect of any one loss or series of losses resulting from any one incident.

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19 Involuntary betterment In the event that replacement property of like kind and quality is not obtainable, new property which is as similar as possible to that suffering Damage and which is capable of performing the same function, shall be deemed to be new property of like kind and quality and in no event shall this be considered as a betterment to the Insured The Insurers will also pay the cost of purchasing and installing technologically current equipment which is necessitated by incompatibility between new equipment installed to replace equipment suffering Damage and undamaged existing equipment at the same or an interdependent location provided that (i)

the Insurers shall be liable only for the amount sufficient to enable the Insured to resume operations in substantially the same manner as before the Damage

(ii)

the Insurers shall be liable for only the difference between the highest sales value of the undamaged existing equipment at the same or interdependent location and the installed cost of the technologically current equipment.

20 Damage to underground services The insurance by this Policy extends to include Damage to any underground water, drainage, sewerage, gas, electricity or telephone pipe or cable for which the Insured is responsible extending from the Premises to the main.

21 Designation For the purpose of determining where necessary the item under which any property is insured the Insurers agree to accept the designation under which such property has been entered in the Insured's books

Extension applicable to Section I Property in transit The Insurers will indemnify the insured in respect of Damage to the Property Insured whilst in transit by road, rail or inland waterway including loading and unloading and temporary housing in course of transit. The Insurers will also indemnify the Insured in respect of any reasonable cost incurred in: a)

conveyance of the Property Insured and its container to another vehicle following the disabling of the original conveying vehicle by its catching fire, collision or overturning, including delivery to original destination or return to point of despatch;

b)

reloading the Property Insured and its container in the event of its falling from the conveying vehicle.

c)

clearance of the debris of the Property Insured and its container following its damage or destruction provided this cost is not recoverable under another policy or from any other source.

Subject to the terms and conditions of this Policy and provided the Insured are not otherwise indemnified.

Additional exclusions applicable to property in transit The Insurers will not be liable for Damage to Property in Transit: (i)

by air or sea;

(ii) resulting from atmospheric or climatic conditions unless reasonable precautions have been taken to protect the Property Insured against such conditions; (iii) arising as a result of packing being inadequate to withstand normal handling during transit, or due to insufficient labelling or incorrect addressing; (iv) carried by the Insured for hire or reward; (v) by theft or attempted theft from any vehicle whilst the vehicle is unattended by the driver or mate unless all windows, doors and other means of access are fully closed, fastened and where possible locked and all keys are removed from the vehicles to a place of safety; (vi) resulting from any cause which is otherwise excluded by this Policy.

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Loss of money The Insurers will indemnify the Insured in respect of: (a) loss of Money resulting from Damage whilst in transit or within the Premises or in a bank night safe until removed by a bank official or in the private residences of the Insured's principals directors or authorised employees; (b) Damage to any stamp franking machine, safe, strongroom, security case, bag or other specially designed container for the carriage of Money belonging to the Insured or for which the Insured has accepted responsibility and directly caused by thieves. For the purposes of this Extension Perils Excluded 4.1 p), 4.4 c) and 4.4 d) of the General Definitions are deleted. Definition applicable to money ‘Money’

Coinage, bank and currency notes, luncheon vouchers, cheques, travellers cheques, giro cheques, giro cash, cheques, bankers drafts, national giro drafts, money orders, postal orders, current postage stamps, stamp national savings certificates, holiday with pay stamps (provided the Insured are not otherwise indemnified), credit company sales vouchers, V.A.T. purchase invoices and trading stamps belonging to the Insured or for which the insured have accepted responsibility and held in connection with the Business.

Exclusions applicable to money The Insurers will not be liable for loss of Money: (i)

arising from error or omission in receipts, payments or accountancy;

(ii) due to fraud or dishonesty on the part of any authorised representative of the Insured unless such loss is discovered within 30 days of the occurrence; (iii) resulting from a safe or strongroom being opened by the use of a key or a combination code having been left on the Premises whilst closed for business purposes; (iv) whilst in the custody or control of a security company unless the Insured is unable to recover such loss under the terms of their contract with the security company, in which case this insurance shall provide indemnity up to the Limit of Liability shown below; (v) from an unattended vehicle; (vi) from bank note, coin or token operated machines; (vii) resulting from malfunction of any stamp franking machine. (viii) resulting from any of the Perils Excluded as detailed under the General Definitions except as specifically varied above. Subject to the terms, conditions and exclusions of this Policy except insofar as they are expressly varied herein.

Limits of liability (i)

In respect of paragraph a) above: a)

crossed cheques, crossed giro cheques, crossed bankers drafts, crossed national giro drafts, crossed money orders, crossed postal orders, stamp franking machine units, used national insurance stamps, national savings certificates, credit company sales vouchers and V.A.T. purchase invoices insert any one loss or series of losses resulting from any one incident

b)

Any other Money: 1

within the Premises during business hours or in transit or in a bank night safe insert any one loss or series of losses resulting from any one incident

2

contained in a locked safe or locked strongroom within the Premises: insert any one loss or series of losses resulting from any one incident

3

within the Premises out of business hours but not contained in a locked safe or locked strongroom insert any one loss or series of losses resulting from any one incident

4

in the private residences of the Insured's principals, directors or authorised employees insert any one loss or series of losses resulting from any one incident

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(ii) In respect of paragraph (b) above, the reasonable cost of replacement or reinstatement of the stamp franking machine, safe, strongroom, security case, bag or other specially designed container for the carriage of Money in a condition equal to but not better than its condition when new.

Machinery breakdown The definition of ‘Damage’ is extended to include sudden and unforeseen loss destruction or damage to Machinery caused by Breakdown, Explosion or Collapse which necessitates immediate repair or replacement to enable normal working to continue.

Definitions applicable to this extension Breakdown a)

The actual breaking distortion or burning out of any part of an item of Machinery whilst in ordinary use arising from either mechanical or electrical defect in the item causing its sudden stoppage including any resultant loss of cooling lubricating or insulating oil or refrigerant or brine

b)

In respect of Computer Equipment, Auxiliary Equipment and Computer Media: the actual breaking or failure of any part of the equipment whilst is ordinary use deriving from either mechanical or electrical defect causing stoppage in the function thereof which necessitates repair or replacement in order to continue normal working or results in the erasure destruction corruption or distortion of software contained or data stored on fixed disks or Computer Media

c)

The fracturing of any part of an item of Machinery by frost when such fracture renders the item inoperative.

Explosion The sudden and violent rending of any item of Pressure Plant by force of internal steam or other fluid pressure (other than pressure of chemical action or of ignition of the contents or of ignited flue gases) causing bodily displacement of any part of the Pressure Plant together with forcible ejection of the contents. Collapse The sudden and dangerous distortion (whether or not attended by rupture) of any item of the Pressure Plant caused by crushing stresses by force of steam or other fluid pressure (other than pressure of chemical action or of ignition of the contents or of ignited flue gases). Machinery All installed machinery and plant owned by or leased to the Insured for the purpose of the Business and which is included within the Property Insured, but excluding a)

office machinery other than data processing equipment

b)

vehicles or self-propelled machinery other than purpose built lifting and handling machinery

c)

machinery and plant which is prototype or experimental

d)

machinery and plant located underground

e)

stock in trade and products of the Insured's Business.

Pressure Plant Machinery which is subject to steam or other fluid pressure. Computer Equipment Computer equipment (including fixed disks and interconnecting wiring) used for electronic processing communication and storage of data the property of the Insured or leased hired or rented to the Insured, excluding equipment more specifically described under Auxiliary Equipment and Computer Media. Auxiliary Equipment Auxiliary equipment comprising temperature and environmental control power supply and voltage regulating equipment and protective devices exclusively for use with the Computer Equipment the property of the Insured or leased hired or rented to the Insured.

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Computer Media Computer media of all types (other than paper records) the property of the Insured or leased hired or licensed to the Insured. Approved Maintenance Agreement An agreement which provides on-call remedial maintenance encompassing free repair or replacement in the event of Breakdown arising out of normal use. The Insured shall supply to the Insurers a copy of any such agreement on request.

Special conditions applicable to this extension Restricted Life 1

The indemnity provided in respect of conveyor belts refractory materials and other parts of the Property Insured which have a limited working life shall be restricted to the value of such part or parts at the time of the indemnifiable occurrence due allowance having been made for the length of the time the part or parts have been in service.

Duplicate Records 2

The Insured shall a)

back-up data records no less frequently than once every seven days and store such back-up records away from the Premises

b)

retain duplicate records of software and store such duplicate records away from the Premises

c)

store all Computer Media in accordance with the manufacturers' recommendations

Exclusions specific to this extension The Insurers will not be liable under this Extension in respect of:

Application of Tools 1

Damage caused by the application of any tool or process to any item of Machinery in the course of maintenance inspection repair alteration modification or overhaul

Testing 2

Damage to any item of Machinery which at the time of the occurrence of such damage is undergoing an hydraulic test or any form of testing involving abnormal stresses or intentional overloading

Breakdown of New Machinery 3

Damage to any item of Machinery due to its own breakdown or explosion occurring within 30 days of its initial installation at the Premises

Solidification of Materials 4

Damage caused by or arising from solidification of any materials in the course of process unless such solidification itself arises from a cause not otherwise excluded

Furnaces 5

Damage caused by the burnthrough of molten material contained in a furnace or damage to refractory linings or brickwork or other parts of furnaces ovens or kilns by burning cracking or distortion due to heat

Brickwork 6

Damage to brickwork (other than refractory brickwork) masonry foundations or chimneys

Renewable Parts 7

Damage to tools dies moulds and parts requiring periodical renewal

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Wear and Tear 8

the cost of rectification or making good a)

wear and tear gradual deterioration due to atmospheric conditions or otherwise rust corrosion or oxidisation or scratching of painted or polished surfaces

b)

gradually developing defects flaws deformation distortion cracks or partial fractures but insured damage resulting therefrom is not excluded

Wilful Act 9

Damage caused by the wilful act or wilful neglect of the Insured

Breakdown of Computer Equipment 10 Damage to any item of Computer Equipment or Auxiliary Equipment occasioned by its own Breakdown unless there is in force an Approved Maintenance Agreement in respect of the item.

Guarantee or Maintenance 11 Damage for which a)

any manufacturer supplier agent or maintenance undertaking is responsible under the terms of a guarantee or maintenance agreement to the extent that the Insured makes a recovery

b)

the Insured is relieved of responsibility under any rental hire or lease agreement

Acts of Supply Authority 12 any additional expenditure in consequence of a failure or fluctuation of the supply of electricity directly or indirectly due to a)

a deliberate act of the supply authority not performed for the sole purpose of safe-guarding life or protecting any part of the supply system or

b)

a scheme of rationing not necessitated by accidental damage to the supply authority's generating or supply equipment or

c)

the inability of the supply authority to maintain the supply system due to industrial action by any of its employees

Acts of Telecommunications Authorities 13 any additional expenditure in consequence of a failure of any telecommunications system directly due to a)

a deliberate act of the telecommunications authority or the exercise by the telecommunications authority of its power to withhold or restrict operation of the system

b)

the inability of the telecommunications authority to maintain the system due to industrial action by any of its employees

c)

the use by the Insured of equipment which is not approved by the telecommunications authority

d)

failure of any satellite prior to its obtaining its full operating function or while in or beyond the final year of its design life

e)

atmospheric solar or lunar conditions causing temporary interference with transmission to or from any satellite

Unproven Software 14 any additional expenditure in consequence of the use by the Insured of software in respect of which development has not been finalised or which has not passed all testing procedures or which has not been successfully proven

Incorrect Storage 15 any additional expenditure in consequence of failure to comply with manufacturer's recommendations relating to storage of Computer Media

Time Limitation 16 any additional expenditure commencing more than twelve (12) months after the date on which the Damage manifests itself.

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Programming Errors or Design Defects 17 a) b)

the costs of rectifying programming errors or designs in software in respect of third party proprietary software only any additional expenditure in consequence of programming errors or design defects but this exclusion shall not apply to additional expenditure consequent upon erasure destruction corruption or distortion of other software caused by programming errors or design defects in third party proprietary software.

Value of Data 18 the value to the Insured of data stored on Computer Equipment or Computer Media.

Extraneous Cause 19 Damage which would be covered elsewhere within this Policy if this Extension had not been incorporated herein.

Perils Excluded 20 any of the Perils Excluded, except insofar as they be expressly varied herein. Subject otherwise to the terms, Conditions and exclusions of this Policy. Where any difference occurs between the interpretation of terms or exclusions expressed under this Extension and those within the Policy those under this Extension shall take precedence.

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Section II – business interruption Indemnity to insured If any of the Property Insured or other property used by the Insured at the Premises for the purpose of the Business shall sustain Damage and the Business is or would have been in consequence thereof interrupted or interfered with the Insurers will pay to the Insured the amount of the loss resulting from such interruption or interference in accordance with the provisions contained herein. Damage is extended to include sudden or unforeseen loss destruction or damage to Machinery caused by Breakdown, Explosion or Collapse as described in the Machinery Breakdown Extension to Section I.

Sums insured Item 1

Estimated gross profit:

*

Item 2

Additional increase in cost of working:

insert any one loss or series of losses resulting from any one incident

Item 3

Research expenditure

insert any one loss or series of losses resulting from any one incident

Item 4

Advance profits

insert any one loss or series of losses resulting from any one incident

Item 5

Royalties

insert any one loss or series of losses resulting from any one incident

* the totals of the Estimated Gross Profit declared under the Specific Local Primary Policy (ies) issued by the Insurers or on their behalf

Limit of liability The liability of the Insurers shall in no case exceed, in respect of Item 1, 133 1/3% of the Estimated Gross Profit stated herein, nor in total the sum of 133 1/3% of the Estimated Gross Profit and 100% of the Sums Insured by any other items or such other amounts as may be substituted by memorandum hereon or attached hereto signed by or on behalf of the Insurers, or the Overall Limit of Liability as stated in the Schedule, whichever is the lesser.

Item 1 – gross profit The insurance under Item 1 is limited to loss of Gross Profit due to a) Reduction in Turnover and b) Increase in Cost of Working and the amount payable as indemnity thereunder shall be a)

In Respect of Reduction in Turnover the sum produced by applying the Rate of Gross Profit to the amount by which the Turnover during the Indemnity Period shall, in consequence of the Damage, fall short of the Standard Turnover

b)

In Respect of Increase in Cost of Working the additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in Turnover which but for that expenditure would have taken place during the Indemnity Period in consequence of the Damage, but not exceeding the sum produced by applying the Rate of Gross Profit to the amount of the reduction thereby avoided

less any sum saved during the Indemnity Period in respect of such of the charges and expenses of the business payable out of Gross Profit as may cease or be reduced in consequence of the Damage.

Item 2 – additional increase in cost of working The insurance under Item 2 is limited to the Additional Increase in Cost of Working (in excess of the amount payable under paragraph b) of Item 1) necessarily incurred during the Indemnity Period in consequence of the Damage for the sole purpose of avoiding or diminishing a reduction in Turnover or resuming or maintaining normal business operations © Zurich 11/2006 Property Master.doc

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Note: It is hereby noted that the cover provided for Increase in Cost of Working and Additional Increase in Cost of Working does not include any such costs or expenditure incurred in respect of Removal of debris as defined in the Memoranda Applicable to Section I.

Definitions applicable to items 1 and 2 Gross profit The amount by which the sum of the Turnover and the amount of closing stock and work in progress shall exceed the sum of the amount of the opening stock and work in progress and the amount of the Uninsured Working Expenses. Note 1: For the purpose of this Definition the amount of the Opening and Closing Stocks shall be arrived at in accordance with the Insured's usual accounting methods due provision being made for depreciation Note 2: The words and expressions used in this Definition shall have the meaning usually attached to them in the books and account of the Insured.

Estimated gross profit The amount declared by the Insured to the Insurers as representing not less the Gross Profit which it is anticipated will be earned by the Business during the financial year most nearly concurrent with the period of Insurance (or a proportionately increased multiple thereof if the Maximum Indemnity Period exceeds 12 months).

Turnover The money paid or payable to the Insured for goods sold and delivered and for services rendered in course of the Business at the Premises.

Indemnity period The period beginning with the occurrence of the Damage and ending not later than the Maximum Indemnity Period as stated in the Schedule thereafter during which the results of the Business shall be affected in consequence of the Damage.

Uninsured working expenses Purchases (less discounts received); discounts allowed; bad debts.

Rate of gross profit The rate of Gross Profit earned on the Turnover during the financial year immediately before the date of the Damage

Standard turnover The Turnover during that period in the 12 months immediately before the date of the Damage which corresponds with the Indemnity Period.

to which such adjustments shall be made as may be necessary to provide for the trend of the Business and for variations in or other circumstances affecting the Business either before or after the Damage or which would have effected the Business had the Damage not occurred, so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the results which but for the Damage would have been obtained during the relative period after the Damage

Item 3 – research establishment expenditure The Insurance under item 3 is limited to a) Research Establishment Expenditure and b) Increase in Cost of Working and the amount payable as indemnity thereunder shall be: (i)

In Respect of Research Establishment Expenditure: For each working week in the Indemnity Period during which the activities of the Business are, in consequence of the Damage, a)

Totally Interrupted or totally given over to the re-working of projects affected by the Damage, the Insured Amount per Week

b)

Partially Interrupted or partially given over to the re-working of projects affected by the Damage, an equitable proportion of the Insured Amount per Week based upon the time rendered ineffective by reason of the Damage

(ii) In Respect of Increase in Cost of Working reasonably and necessarily incurred solely in consequence of the Damage in order to minimise the interruption but the amount payable under this heading shall not exceed the additional amount that would have been payable under a) for loss in respect of Research Establishment Expenditure if no such Increase in Cost of Working had been incurred

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less any sum saved during the Indemnity Period in respect of such of the Research Establishment expenses as may cease or be reduced in consequence of the Damage.

Definitions applicable to item 3 Indemnity period The period beginning with the occurrence of the Damage and ending not later than the Maximum Indemnity Period as stated in the Schedule thereafter during which the results of the Business shall be affected in consequence of the Damage.

Research establishment expenditure The total expenditure on research by the Insured at the Premises less the relative costs of raw materials consumed.

Insured amount per week One-fiftieth part of the Research Establishment Expenditure incurred during the financial year immediately before the date of the Damage

to which such adjustments shall be made as may be necessary to provide for the trend of the Business and variations in or other circumstances affecting the Business either before or after the Damage or which would have affected the Business had the Damage not occurred, so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the results which but for the Damage would have been obtained during the relative period after the Damage.

Item 4 – advance profits The insurance under Item 4 is limited to loss of Advance Gross Profit due to a) Reduction in Turnover and b) Increase in Cost of Working and the amount payable as indemnity thereunder shall be: a)

In Respect of Reduction in Turnover the sum produced by applying the Rate of Gross Profit to the amount by which the Turnover during the Indemnity Period shall, in consequence of the Damage, fall short of the Standard Turnover

b)

In Respect of Increase in Cost of Working the additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in Turnover which but for that expenditure would have taken place during the Indemnity Period in consequence of the Damage, but not exceeding the sum produced by applying the Rate of Gross Profit to the amount of the reduction thereby avoided, less any sum saved during the Indemnity Period in respect of such of the charges and expenses of the business payable out of Gross Profit as may cease or be reduced in consequence of the Damage to (i)

buildings in course of erection and/or alteration and

(ii)

plant and machinery in course of installation

at any situation in the Territorial Limits for future use by the Insured for the purpose of the Business shall be deemed to be property used by the Insured at the Premises.

Definitions applicable to item 4 Indemnity period The period beginning with the date upon which but for the Damage the Turnover would have commenced to be earned and ending not later than the Maximum Indemnity Period as stated in the Schedule thereafter during which the results of the Business shall be affected in consequence of the Damage.

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Rate of gross profit The rate of Gross Profit that would have been earned on the Turnover during the Indemnity Period but for the Damage.

Standard turnover The Turnover which but for the Damage would have been earned during the Indemnity Period.

based upon the estimated production programme of the Business and costs and prices relating thereto to which such adjustments shall be made as may be necessary to provide for the trend of the Business and for variations in or other circumstances affecting the Business either before or after the Damage or which would have affected the Business had the Damage not occurred, so that the figure thus adjusted shall represent as nearly as may be reasonably practicable the results which but for the Damage would have been obtained during the relative period after the Damage.

Memorandum applicable to item 4 The Insurers shall not be liable under this Item for any loss due to fines and damages for breach of contract for late or noncompliance of orders or for any penalties of whatever nature.

Item 5 – royalties The insurance under Item 5 is limited to loss of Royalties following Damage at any Premises declared to the Insurers prior to the occurrence of such Damage and the amount payable as indemnity thereunder shall be the amount by which the Royalties during the Indemnity Period shall in consequence of the Damage fall short of the Standard Royalties, less any sum saved during the Indemnity Period in respect of such charges and expenses of the Business relating to the earning of Royalties as may cease or be reduced in consequence of the Damage.

Definitions applicable to item 5 Royalties The income normally derived by the Insured from the use by others of patents, rights and/or formulae of the Insured for which compensation or payment is made.

Estimated royalties The amount declared by the Insured to the Insurers as representing not less than the Royalties which it is anticipated will be earned by the Business during the financial year most nearly concurrent with the Period of Insurance (or a proportionately increased multiple thereof if the Maximum Indemnity Period exceeds 12 months).

Indemnity period The period beginning with the occurrence of the Damage and ending not later than the Maximum Indemnity Period as stated in the Schedule thereafter during which the results of the Business shall be affected in consequence of the Damage.

Standard royalties The Royalties during that period in the 12 months immediately before the date of the Damage which corresponds with the Indemnity Period appropriately adjusted where the Maximum Indemnity Period exceeds 12 months.

Memorandum applicable to item 5 Adjustments shall be made as may be necessary to provide for the trend of the Business and for variations in or other circumstances affecting the Business either before or after the Damage or which would have affected the Business had the Damage not occurred, so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the results which but for the Damage would have been obtained during the relative period after the Damage.

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Extensions applicable to section II Subject to the conditions of this Policy loss as insured by this Section resulting from interruption of or interference with the Business in consequence of Damage at the undernoted situations or to property as undernoted within the Territorial Limits shall be deemed to be loss resulting from Damage to other property used by the Insured at the Premises for the purpose of the Business, provided that, after the application of all other terms, conditions and provisions of this Policy the liability under this memorandum in respect of any one occurrence shall not exceed the amount shown below against such situation or property as the limit. Limit 1

The premises of the following specified suppliers:

Insert

2

The premises of the following specified customers:

Insert

3

The Premises of any of the Insured's unspecified suppliers manufacturers or processors of components goods or materials (excluding the public supply undertakings for gas, electricity, water and telecommunications services)

Insert

4

The Premises of any of the Insured's unspecified customers

Insert

5

Property of the Insured whilst stored elsewhere than at the Premises in the occupation of the Insured

Insert

6

Property of the Insured whilst in transit by road, rail or inland waterway

Insert

7

Property at any (i)

Generating station or sub-station of the public or private electricity supply undertaking

Insert

(ii)

Land based Premises of the public or private gas supply undertaking or of any natural gas producer linked directly therewith

Insert

(iii)

Water works and pumping stations of the public or private water supply undertaking

Insert

(iv)

Land based Premises of the public or private telecommunications undertaking

Insert

from which the Insured obtain electricity, gas, water or telecommunications services, provided that the Insurers shall not be liable for any loss resulting from any interruption of electricity, gas, water or telecommunications supplies of less than 48 hours in duration. 8

Property in the vicinity of the Premises, Damage to which shall prevent or hinder the use of the Premises or access thereto, whether the Premises or Property of the Insured therein shall be damaged or not

9

Additional metered water charges

Insert

This insurance extends to include Additional Metered Water charges incurred by the Insured solely as a result of any Damage insured by this Section The amount payable as indemnity shall be ascertained by comparing the charge made by the water suppliers on their account for the period during which the Damage occurred with the charges for the previous period/ corresponding period adjusted by any other relevant factors affecting the Insured's consumption of water during the period(s) concerned, provided that the liability of the Insurers under this Extension shall not exceed insert in respect of any one loss or series of losses resulting from any one incident.

10 Fines and damages This Policy is hereby extended to cover such sums as the Insured shall be legally liable to pay and shall pay in discharge of fines or damages incurred solely in consequence of the Damage for non-completion or late completion of orders. The liability of the Insurers under this extension shall not exceed insert in respect of any one loss or series of losses resulting from any one incident.

11 Accounts receivable This Policy is hereby extended to cover a)

all sums due to the Insured from customers provided the Insured is unable to effect collection thereof as the direct result of Damage to records of accounts receivable.

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b)

interest charges on any loan to offset impaired collections pending repayment of such sums made uncollectable by Damage.

c)

collection expense in excess of normal collection cost and made necessary because of such Damage.

d)

other expenses, when reasonably incurred by the Insured in re-establishing records of Accounts Receivable.

The amount payable hereunder shall be calculated as follows: (i)

The monthly average of accounts receivable during the last available twelve months, together with collection expenses in excess of normal collection costs and made necessary because of such Damage, and reasonable expenses incurred in reestablishing records of Accounts Receivable following such Damage, will be adjusted in accordance with the percentage increase or decrease in the twelve months average of monthly gross revenues which may have occurred in the interim.

(ii)

The monthly amount of Accounts Receivable thus established shall be further adjusted in accordance with any demonstrable variance from the average for the particular month in which the Damage occurred, due consideration also being given to the normal fluctuations in the amount of Accounts Receivable within the fiscal month involved.

(iii)

There will be deducted from the total amount of Accounts Receivable, the amount of such accounts evidenced by records not lost, or otherwise established or collected by the Insured, and an amount to allow for probable bad debts will be taken into account.

The liability of the Insurers under this Extension shall not exceed insert in respect of any one loss or series of losses resulting from any one incident.

Memoranda applicable to section II 1

Alternative trading If during the Indemnity Period goods shall be sold or services shall be rendered elsewhere than at the Premises for the benefit of the Business either by the Insured or by others on behalf of the Insured the money paid or payable in respect of such sales or services shall be brought into account in arriving at the Turnover during the Indemnity Period.

2

Professional accountants Any particulars or details contained in the Insured's books of accounts or other business books or documents which may be required by the Insurers under General Condition No 2 of this policy for the purpose of investigating or verifying any claim hereunder may be produced by professional accountants if at the time they are regularly acting as such for the Insured, and their report shall be prima facie evidence of the particulars and details to which such report relates. The Insurers will pay to the Insured the reasonable charges payable by the Insured to their professional accountants for producing such particulars or details or any other proofs, information or evidence as may be required by the Insurers under the terms or conditions of this policy and reporting that such particulars or details are in accordance with the Insured's books or accounts or other business books or documents provided that the sum of the amount payable under this Memorandum and the amount otherwise payable under this Policy shall in no case exceed the Overall Limit of Liability stated in the Schedule.

3

Departmental If the Business be conducted in departments, the independent trading results of which are ascertainable the provisions of Clauses (a) and (b) of Item 1 shall apply separately to each department affected by the Damage.

4

Salvage sale If following any Damage giving rise to a claim under this policy the Insured shall hold a salvage sale during the Indemnity Period, clause (a) of the item on Gross Profit shall, for the purpose of such claim, read as follows: a)

In respect of reduction in Turnover: the sum produced by applying the Rate of Gross Profit to the amount by which the Turnover during the Indemnity Period (less the Turnover for the period of the salvage sales) shall, in consequence of the Damage, fall short of the Standard Turnover, from which sum shall be deducted the Gross Profit actually earned during the period of the salvage sale.

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5

Accumulated stocks In adjusting any loss account shall be taken and an equitable allowance made if any reduction in Turnover due to the Damage is postponed by reason of the Turnover being temporarily maintained from accumulated stocks of finished goods in warehouses or depots.

6

Payments on account Payments on account may be made during the Indemnity Period, if desired, subject to any necessary adjustment at the termination of such period.

7

Value added tax To the extent that the Insured is accountable to the tax authorities for Value Added tax all items in this section of this Policy shall be exclusive of such tax.

8

Inter-group dependency Any loss resulting from interruption of or interference with the Business in consequence of Damage at the Premises applies not only at the location at which the Damage occurs but also to resulting interruption of or interference with the Business at any of the Premises insured by this Policy. The liability of the Insurers under the terms of this memorandum shall not exceed insert in respect of any one loss or series of losses resulting from any one incident for loss at any Premises where no Property Damage has been sustained.

Memoranda applicable to sections I and II 1

Associated companies The term ‘Associated Companies’ means those Companies in accordance with details lodged with the Insurers, including any and all Subsidiary Companies thereof. Nevertheless additional Associated Companies are automatically included under this policy subject to notification to Insurers as soon as reasonably practicable.

2

Declaration of values and average At the inception of each year of insurance the Insured undertake to declare to the Insurers the total value at risk which for the purpose of this declaration shall be: a)

The reinstatement value of that part of the Property Insured (other than leased buildings which the landlord has a responsibility to insure) which is buildings and plant as if such property were reinstated on the first day of the year of insurance. Such value to exclude professional fees and debris removal costs as defined.

b)

The cost of replacing the amount of stock in trade and work in progress (being part of property) as at the preceding stock-taking.

c)

The Gross Profit for the preceding financial year.

If the actual values arrived at in accordance with a), b) and c) of this condition shall, at the inception of the current year of insurance, exceed the values declared then in the event of Damage to the Property Insured the liability of the Insurers for any such Damage shall be limited so that proportion thereof which the values declared bear to the said actual values.

3

Automatic reinstatement of loss In the event of any claim occurring under this Policy and in the absence of written notice by the Insured to the contrary, the amount of insurance reduced by such claim is to be automatically reinstated as and from the date of Damage. This Memorandum does not apply to any loss which results from earthquake, flood, storm or tsunami.

4

Jurisdiction This Policy shall be governed by the Law of England and subject to jurisdiction in a court of England and Wales and any arbitration under the Arbitration Condition shall be held in London.

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5

Currency Foreign currencies in respect of a)

first and renewal premiums

b)

adjustment premiums

shall be converted at the sterling rate of exchange ruling at 9.00 a.m. British Standard Time on the effective date of cover and/or adjustment and c)

Losses

shall be converted at the Sterling rate of exchange ruling at 9.00 a.m. British Standard Time on the date of settlement of the loss. The rates of exchange shall be those shown in the Financial Times on the appropriate date or its first publication thereafter.

6

Coinsurance deficiency If after determination of the amount of Damage under any Specific Local Primary Policy the Insured shall be unable to collect the same in full as the result of the application of a co-insurance average clause this policy will pay the difference between the amount recoverable under the Specific Local Primary Policy and the total amount of Damage, subject to the other terms conditions and limits of this policy. No liability shall attach under this extension if the Insured shall be unable to recover in full any loss under the Specific Local Primary Policy should the inability to effect such recovery result from intentional under insurance on the part of the Insured. Upon discovery of any inadvertent error in determining the values declared, such error is to be corrected immediately with retroactive adjustment to the date of error but not exceeding the period from renewal date to date of discovery and with appropriate additional or return premium payment. The liability of the Insurers under the terms of this Memorandum shall not exceed insert in respect of any one loss or series of losses resulting from any one incident.

7

Earthquake, flood and storm definition Each loss by earthquake, volcanic action, flood, storm or tsunami if covered by this Policy shall constitute a single claim hereunder, provided, if more than one earthquake, volcanic action, flood, storm or tsunami shall occur within any period of seventy two (72) hours in any one territory during the term of this Policy, such earthquake, volcanic action, flood, storm or tsunami shall be deemed to be a single loss within the meaning hereof. The Insurers shall not be liable for any loss caused by any earthquake, volcanic action, flood, storm or tsunami occurring before the effective date and time of this Policy, nor for any occurring after the expiration date and time of this Policy. The liability of the Insurers in respect of any one loss or series of losses resulting from any one incident as insured by this policy of earthquake, flood, storm or tsunami, and for more than one such loss in any one Period of Insurance in any of the undernoted territories where the limit is shown as Aggregate Limit, shall not exceed the following sub-limits: a)

in respect of earthquake: (i)

b)

in California, USA

Insert (aggregate limit)

(ii) elsewhere in the USA

Insert (aggregate limit)

in respect of earthquake and any fire or other Damage which directly results from earthquake: (i)

in Japan

Insert (aggregate limit)

(ii) in Mexico

Insert (aggregate limit)

(iii) in Puerto Rico

Insert (aggregate limit)

(iv) in any other territory declared to and accepted by the Insurers

Insert

(v) in any other territory

Not insured

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c)

in respect of flood but not ensuing fire or other Damage which results from flood: (i)

d)

Insert (aggregate limit)

(iii) in the USA, flood zones A and V

Insert (aggregate limit)

(iv) in any other territory declared to and accepted by the Insurers

Insert

(v) in any other territory

Not insured

in respect of storm but not ensuing fire or other Damage which results from storm: in the USA

Insert (aggregate limit)

(ii) in the Caribbean

Insert (aggregate limit)

(iii) in any other territory declared to and accepted by the Insurers

Insert

(iv) in any other territory

Not insured

in respect of tsunami but not ensuing fire or other Damage which results from tsunami: (i)

8

Insert (aggregate limit)

(ii) in the Netherlands

(i)

e)

in Belgium

in any territory declared to and accepted by the Insurers

Insert (aggregate limit)

(ii) in total in respect of all losses resulting from any one loss or series of losses resulting from any one tsunami in any territories declared to and accepted by the Insurers

Insert (aggregate limit)

(iii) in any other territory

Not insured

Existing structures It is hereby noted that paragraph 2.1e of the Property Excluded under the General Definitions shall not exclude Damage to existing structures whilst in the course of repair, extension, renovation or alteration provided that the liability of the Insurers shall in no case exceed the following total amount for any one claim under Sections I and II of this Policy: Insert

9

Repairs and alterations Joiners or other tradesmen may be employed to effect repairs or minor structural alterations in all or any of the buildings insured without prejudice to the insurance hereby.

10 Subrogation waiver In the event of a claim arising under this Policy, the Insurers agree to waive any rights remedies or relief to which they might become entitled by subrogation against a)

any Company standing in the relation of Parent to Subsidiary (Subsidiary to Parent) to the Insured as defined in the Companies Act or Companies (N.I) Order, as appropriate, current at the time of the Damage

b)

any Company which is a Subsidiary of a Parent Company of which the Insured are themselves a Subsidiary,

in each case within the meaning of the Companies Act or Companies (N.I) Order, as appropriate, current at the time of the Damage. It is understood and agreed that the Insured may where they are contractually obliged to do so or where by failure to do so would be prejudicial to the Business release any person corporation or other party from liability for Damage caused by act or neglect of such parties or their agents or representatives and the Insurers agree to waive all rights of subrogation against such parties, subject to such release having been made and documented prior to the Damage occurring.

11 Removal of debris The liability of the Insurers for any costs incurred by the Insured in respect of Removal of Debris (as defined in the Memoranda applicable to Section I) shall not exceed the following total amount for any one claim under Sections I and II of this Policy: Insert

12 UK terrorism (only included if pool re cover purchased) Notwithstanding anything contained herein to the contrary in consideration of the payment of the UK Terrorism Premium and its Insurance Premium Tax in respect of the Period of Insurance:

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a)

In the event that Her Majesty's Government or Her Majesty's Treasury or any successor relevant authority issue a certificate certifying an event or occurrence to have been an Act of Terrorism (defined for the purpose of this Memorandum as ‘any act or acts of persons acting on behalf of, or in connection with, any organisation which carries out activities directed towards the overthrowing or influencing, by force or violence, of Her Majesty's government in the United Kingdom or any other government de jure or de facto’), or in the event that Her Majesty's Government or Her Majesty's Treasury or any successor relevant authority refuse to issue a certificate certifying an event or occurrence to have been an Act of Terrorism and that refusal is reversed by the decision of a validly constituted Tribunal, the Insurers by this Policy shall provide cover for Damage and/or Business Interruption (if requested by the Insured) proximately caused by such Act of Terrorism provided that: 1

Such Damage and/or Business Interruption occurs in England, Wales or Scotland but not the territorial seas adjacent thereto as defined by the Territorial Seas Act 1987 and not Northern Ireland, the Channel Islands or the Isle of Man

2

In any action suit or other proceedings where the Insurers allege that any Damage or loss resulting from Damage is not covered by this Policy the burden of proving that such Damage or loss is covered shall fall upon the Insured

3

The insurance effected by this Memorandum excludes any losses whatsoever: a)

occasioned by riot, civil commotion, war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection or military or usurped power, nationalisation, confiscation, requisition, seizure or destruction by the government or any public authority

b)

directly or indirectly caused by or contributed to by or arising from or occasioned by or resulting from damage to any computer or other equipment or component or system or item which processes stores transmits retrieves or receives data or any part thereof whether tangible or intangible (including but without limitation any information or programs or software) and whether the property of the Insured or not, where such damage is caused by Virus or Similar Mechanism or Hacking or Denial of Service Attack; including consequential loss directly or indirectly caused by or arising from Virus or Similar Mechanism or Hacking or Denial of Service Attack.

Definitions For the purposes of 3) b) above the following special meanings shall apply: ‘Virus or Similar Mechanism’ means program code, programming instruction or any set of instructions intentionally constructed with the ability to damage, interfere with or otherwise adversely affect computer programs, data files or operations, whether involving self-replication or not. The definition of Virus or Similar Mechanism includes but is not limited to trojan horses worms and logic bombs. ‘Hacking’ means unauthorised access to any computer or other equipment or component or system or item which processes stores transmits retrieves or receives data whether the property of the Insured or not. ‘Denial of Service Attack’ means any actions or instructions constructed or generated with the ability to damage, interfere with or otherwise affect the availability of networks, network services, network connectivity or information systems. Denial of Service Attacks include, but are not limited, to the generation of excess traffic into the network addresses, the exploitation of system or network weaknesses and the generation of excess or non-genuine traffic between and amongst networks. 4

The insurance effected by this Memorandum excludes: a)

Any type of property which has been specifically excluded in the Policy;

b)

any Nuclear Installation or Nuclear Reactor and all fixtures and fittings situated thereon and attached thereto and all pipes wires cables drains or other conduits or service media of any description which are affixed or connected to or in any way serve such Nuclear Installation or Nuclear Reactor.

Definitions For the purposes of 4) (b) above the following special meanings shall apply: ‘Nuclear Installation’ means any installation of such class or description as may be prescribed by regulations made by the relevant Secretary of State from time to time by statutory instrument, being an installation designed or adapted for: a)

the production or use of atomic energy;

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b)

the carrying out of any process which is preparatory or ancillary to the production or use of atomic energy and which involves or is capable of causing the emission of ionising radiations; or

c)

the storage processing or disposal of nuclear fuel or of bulk quantities of other radioactive matter, being matter which has been produced or irradiated in the course of the production or use of nuclear fuel.

‘Nuclear Reactor’ means any plant (including any machinery equipment or appliance whether affixed to land or not) designed or adapted for the production of atomic energy by a fission process in which a controlled chain reaction can be maintained without an additional source of neutrons. 5

b)

Save for the exclusions listed in sections 3) and 4) above no other exclusions in the Policy shall apply to the insurance effected by part A. of this Memorandum. All the other terms definitions and conditions of the Policy (including but not limited to any Excess or Deductible to be borne by the Insured) shall apply to the insurance effected by part A. of this Memorandum except for: a)

Any Long Term Undertaking applying to the Policy;

b)

Any terms in the Policy which provide for adjustments of premium based upon declarations on expiry or during the Period of Insurance;

c)

any extension of Premises to locations outside England and Wales and Scotland.

In the event that Her Majesty's Government or Her Majesty's Treasury or any successor relevant authority refuse to issue a certificate certifying an event or occurrence to have been an Act of Terrorism, and such refusal is upheld by the decision of a validly constituted Tribunal, this Memorandum amends the insurance by the Policy as follows: 1

The Exclusion in respect of Terrorism in the Policy shall not apply in respect of such event or occurrence.

Save for 1 above the terms definitions exclusions provisions and conditions of the Policy shall apply.

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General conditions

1

Misdescription The Insurers shall not be liable under this Policy in the event of deliberate misdescription, deliberate misrepresentation or deliberate non-disclosure in any material particular so far as it relates to property directly affected thereby.

2

Claims procedure On the happening of any occurrence which may give rise to a claim under this Policy the Insured shall:

3

a)

notify the Insurers in writing as soon as practicable

b)

send to the Insurers a written claim not later than 30 days (or such other period as the Insurers may agree to allow) after the loss, destruction or damage has occurred or after the expiry of the Indemnity Period in respect of claims under Section II providing at their own expense all detailed particulars and evidence regarding the cause and amount of the claim as the Insurers may reasonably require

c)

do with due diligence and concur in doing and permit to be done all things which may be reasonably practicable to avoid or diminish the loss, destruction or damage or to minimise or check any interruption of or interference with the Business.

Insurers rights after a loss On the happening of any Damage to any of the Property Insured the Insurers and any person authorised by the Insurers may a)

enter any building where the Damage has occurred and take and keep possession of the property

b)

deal with salvage in any reasonable manner provided that under no circumstances can the Insured abandon any property to the Insurers.

This Policy shall be proof that the Insured has given to the Insurers the licence and authority which they may need to exercise their rights under this condition.

4

Fraud If a claim is fraudulent or if any fraudulent means or devices are used by the Insured or any one acting on their behalf to obtain any benefit under this Policy or if the Damage be occasioned by the wilful act or with the connivance of the Insured all benefit under this Policy shall be forfeited.

5

Reinstatement If the Insurers elect or become bound to reinstate or replace any property the Insured shall at their own expense produce and give to the Insurers all such plans documents books and information as the Insurers may reasonably require. The Insurers shall not be bound to reinstate exactly or completely but only as circumstances permit and in reasonably sufficient manner and shall not in any case be bound to expend in respect of any one of the items insured more than its Sum Insured.

6

Subrogation Any claimant under this policy shall at the request and expense of the Insurers take and permit to be taken all necessary steps for enforcing rights against any other party in the name of the Insured before or after any payment is made by the Insurers.

7

Contribution Subject to Property Excluded 2.1 h, if at the time of any Damage to any Property Insured there be any other insurance or insurances whether effected by the Insured or by any other person or persons covering the same property the Insurers shall not be liable to pay or contribute more than their rateable proportion of such Damage.

8

Arbitration If any difference arises as to the amount to be paid under this Policy (liability being otherwise admitted) such difference shall be referred to an arbitrator to be appointed by the parties in accordance with statutory provisions. Where any difference is by this Condition to be referred to arbitration the making of an award shall be a condition precedent to any right of action against the Insurers.

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9

Alteration a)

Section 1 of this Policy shall be avoided with respect to any of the Property Insured in regard to which there be any alteration after the commencement of this Policy: a)

by removal or

b)

whereby the risk of Damage is increased or

c)

whereby the interest of the Insured ceases except by will or operation of law.

unless its continuance is agreed by the Insurers in writing. b)

Section II of this Policy shall be avoided if after the commencement of this Policy: a)

the Business be wound up or carried on by a liquidator or receiver or permanently discontinued, or

b)

the Insured's interest ceases otherwise than by death, or

c)

any major alteration be made either in the business or in the premises or property therein whereby the risk of Damage is increased

unless its continuance is agreed by the Insurers in writing.

10 Cancellation of policy This Policy may be cancelled by the Insurers, by giving to the Insured at least 60 days written notice of cancellation with or without tender of the excess of premium paid above the pro-rata premium for the expired time, which excess, if not tendered, shall be refunded on demand.

11 Reasonable precautions The Insured shall take all reasonable precautions to prevent Damage.

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Supplementary conditions Applicable where no Specific Local Primary Policy exists 1

Unoccupied buildings Notice is to be given to the Insurers when any buildings become unoccupied or when an unoccupied building or portion thereof is again occupied and a suitable additional premium paid if required. It is agreed in respect of any building or portion thereof which is empty or not in use that:

2

a)

all combustible contents including packing materials and packing cases are removed

b)

water, gas and electricity supplies are disconnected except where otherwise agreed with the Insurers

c)

all windows doors and letter boxes are properly secured and, where appropriate, windows are boarded

d)

the premises are inspected no less than fortnightly

e)

any damage found at the time of an inspection is repaired immediately.

Fire extinguishing appliances a)

It is agreed that all fire extinguishing appliances will be kept in working order during the currency of this policy.

b)

The Insured agrees to have the said appliances serviced and maintained under an annual service contract with a competent service provider.

Subject to the observance of the above undertaking this Section shall not be invalidated by any defect in any of the said appliances to any circumstances unknown to or beyond the control of the Insured.

3

Fire break doors and shutters It is agreed that all fire break doors and shutters will be kept closed except during working hours and will be maintained in efficient working order.

4

Automatic fire alarms It is agreed in respect of any automatic fire alarm installation(s) that the Insured will

5

a)

carry out the testing and checking requirements referred to on the completion certificate and remedy promptly any defect disclosed

b)

carry out the maintenance procedures specified by the manufacturers of the equipment

c)

notify the Insurers immediately of any disconnection or failure of the automatic fire alarm installation(s) likely to leave any area unprotected for 12 hours or more

d)

record details of all events such as alarms faults tests maintenance and disconnections and keep such details available for examination by the Insurers' representatives

Automatic sprinkler installation a)

In respect of any automatic sprinkler installation(s) in the custody or control of the Insured, it is agreed that the Insured will a)

make a test every working day for the purpose of ascertaining the condition of the circuit between the alarm switch and the control unit (except where it is continuously monitored or is such that one break of wires will not prevent an alarm signal being transmitted (e.g. a ring circuit))

b)

1

make a test at least once a week for the purpose of ascertaining the condition of (i)

the connection with the public fire station, central fire alarm depot or public fire brigade control (unless the Fire Brigade have given a written undertaking to carry out this test)

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(ii) the relevant batteries Note: Where the circuit concerned is not continuously monitored test (i) must be made every working day. 2

have a contract with approved installing engineers providing for the maintenance of and half-yearly inspection of the system referred to in 1 above and to obtain from them following each inspection certification that it is in satisfactory working order

c)

make a test each week for the purpose of ascertaining that the alarm gong is in working order and that the stop valves controlling the individual water supplies and the installation are fully open

d)

make a test each week for the purpose of ascertaining that the pump(s) can be started both automatically and manually and that in respect of any diesel engine driven pump the battery electrolyte level and density are correct and record the completion of these tests

e)

make quarterly or half yearly tests if required by the Insurers to do so for the purpose of ascertaining that each water supply is in order and record the particulars of each test

f)

remedy promptly any defect disclosed by such tests or otherwise

g)

display prominently at each sprinklered storage area (as defined by the Insurers) a notice of the terms agreed with the Insurers which specifies (i)

the description of goods which may be stored

(ii) the maximum height of storage (iii) the minimum permitted clearance between the goods stored and the sprinkler deflectors and comply with the terms of the notice. b)

6

a)

The Insured must give notice to the Insurers before any installation is rendered inoperative or immediately in the event of emergency

b)

The Insurers must have access to the Premises at all reasonable times for the purpose of inspecting the automatic sprinkler installation(s).

Security precautions a)

any Intruder Alarm System at any Premises shall: (i)

be inspected and maintained in accordance with the best local code of practice under contract by an installer or such other contractor which is a member of a recognised alarm inspectorate having achieved accreditation as required by the appropriate body.

(ii) be put into full and effective operation whenever the alarmed portion of the Premises is closed for business to customers or callers or left unattended (iii) (where the intruder alarm system is required and/or approved by the Insurers as a condition of cover) be installed in accordance with the specification or system record approved by the Insurers and no alteration or variation of the System or any structural alteration to the Premises which would affect the System shall be made without the written consent of the Insurers b)

any additional protection required by the Insurers shall be fitted in accordance with their requirements and together with all other devices for the protection of the Property Insured shall be kept in good order and put in full and effective operation whenever the Premises are closed for business to customers or callers or are unattended

c)

all keys including duplicate keys relative to the security of the Premises and all keys to any Intruder Alarm System or to any safe or strongroom containing Property Insured shall be removed from the Premises whenever they are closed for business or left unattended except that where part of the Premises is occupied residentially by the Insured or an employee of the Insured the said keys shall be removed from the business portion of the Premises.

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Notes 1

The Intruder Alarm shall not be regarded as effective and immediate advice shall be given to Insurers if: a)

the system provides for connection to a telephone line direct line or central station warning system and to the Insured's knowledge such line system is not in full and effective working order or the Insured has had notice of withdrawal of the police or telephone service and such service has actually been withdrawn

b)

notice has been received from a locally empowered authority that imposes any requirement for abatement of a nuisance under the terms of any local legislation.

2

This Condition has continuing effect and its terms should be kept in mind. If circumstances should arise which render the Insured unable to comply with any part the Insurers should be contacted at once.

3

Breach of this Condition shall only invalidate claims in respect of theft or attempted theft of property whilst contained in the Premises at which the breach of Condition has occurred.

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Our complaints procedure Zurich is committed to providing a high level of service to all its customers. However, if you have any cause for complaint you should in the first instance, contact either your broker or us directly. If the matter is not resolved to your satisfaction, please contact the Chief Underwriting Officer. You can telephone 020 7617 4242. Or write to: Chief Underwriting Officer Zurich Global Corporate UK Ltd London Underwriting Centre 3 Minster Court Mincing Lane London EC3R 7DD If you are still not satisfied, please contact the Managing Director’s Office. You can telephone 020 7617 4242. Or write to: Managing Director Zurich Global Corporate UK Ltd London Underwriting Centre 3 Minster Court Mincing Lane London EC3R 7DD A member of the Managing Director’s Office will respond to your complaint and offer resolution wherever possible. Written complaints will be acknowledged within one working day of receipt. If after four weeks you have had no contact, a letter of explanation will be issue. If you are still not happy with the way we have dealt with your complaint you may be eligible to have your case reviewed by the Financial Ombudsman Service. This is a free and impartial service available to businesses, with a turnover of £1 million (€1.5 million**) or less. You can telephone: 0845 080 1800 or email: [email protected] Or write to: Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR You are entitled to refer to the Financial Ombudsman Service at any stage of your complaint. Your legal rights are unaffected. **At an exchange rate of 1GBP = 1.5 Eur.

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Zurich Global Corporate UK London Underwriting Centre, 3 Minster Court, Mincing Lane, London EC3R 7DD, England. www.zurich.com Zurich Global Corporate UK is the trading name for the following companies: Zurich Global Corporate UK Limited. Registered in England and Wales No. 3206157. Registered office: The Zurich Building, 90 Fenchurch Street, London EC3M 4JX. Zurich Global Corporate UK Limited is an appointed representative in the UK of Zurich Insurance Company, Zurich International (UK) Limited and Zurich Insurance Ireland Limited

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Zurich Insurance Company* A limited company incorporated in Switzerland. Registered in the canton of Zurich No. CH-020.3.929.583-0. UK Branch registered in England and Wales No. BR105. Registered office: Mythenquai 2, 8022 Zurich, Switzerland. Head office in the UK: Zurich House, Stanhope Road, Portsmouth, Hants PO1 1DU. Zurich Insurance Ireland Limited** A limited company incorporated in the Republic of Ireland Registered No. 13460. UK Branch registered in England and Wales No. BR7985. Registered office: Eagle Star House, Ballsbridge Park, Dublin 4. Head Office in the UK: The Zurich Building, 90 Fenchurch Street, London EC3M 4JX Zurich International (UK) Limited* Registered in England and Wales No. 41334. Registered office: Zurich House, Stanhope Road, Portsmouth, Hants PO1 1DU. * Authorised and regulated by the Financial Services Authority. **Authorised and regulated by the Irish Financial Services Regulatory Authority and regulated by the Financial Services Authority for the conduct of UK business.