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1 Sony Pictures Entertainment Inc. Directors and Officers Liability Insurance Summary October 31, 2012 to October 31, 2013 Prepared by: Lockton Companies Phone: 646-572-7365 Fax: 646-871-7365 Website: www.lockton.com
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2 Sony Pictures Entertainment Inc. Directors and Officers Liability Insurance Summary Company:Sony Pictures Entertainment Inc. (“SPE”) and its Subsidiaries Coverage:Side A Directors & Officers Liability (“D&O”) Insurer / A.M. Best Rating:XL Specialty Insurance Company (“X.L. USA”) / “A XV” Policy Period: October 31, 2012 to October 31, 2013 Limit of Liability:$15,000,000 per Claim and in the Aggregate (incl. Defense Expenses) Retention:$0 Premium:$125,000 Policy Number:ELU127713-12 Optional Extension Period:12 Months @ $125,000 (e.g. 100% of the annual premium) Notice of Claim:As a condition precedent to any right to payment under this Policy with respect to any Claim, the Insured Persons or the Parent Company shall give written notice to the Insurer of any Claim as soon as practicable after it is first made and the General Counsel or Director of Risk Management of the Parent Company first becomes aware of such Claim. What is Covered? Non-Indemnifiable Loss (Insuring Agreement A only) - Protecting the personal assets of Insured Persons for any alleged or actual Wrongful Acts if such Loss in not paid by any other Insurance Program or as indemnification from the Company or an Outside Entity. Outside Directorship Liability for Insured Persons of the Company who are serving at the specific request of the Company as a director, officer, trustee, regent or governor of any Outside Entity. Outside Entity means any corporation or organization other than the Company. Who is Covered? “Insured Persons” meaning any past, present, or future director or officer, or member of the Board of Managers of the Company (e.g. SPE and its Subsidiaries) and those persons serving in a functionally equivalent role, general counsel, trustee (other than a bankruptcy trustee), governor, management committee member of a joint venture or partnership, member of the management board of a limited liability company; or any natural person who was, now is or shall be an employee of the Company, but solely with respect to a Claim while the Claim is also made against a person thereof. “Insured Persons” while acting in his or her capacity as a fiduciary of the Company’s employee benefit plans DISCLAIMER: This insurance summary is subject to the terms, conditions and limitations of the policy. Nothing contained herein should be construed as legal advise. It is provided as general advise only. Knowledgeable legal counsel should be consulted for any legal questions or interpretations.
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3 Sony Pictures Entertainment Inc. Directors and Officers Liability Insurance Summary Important Definitions: “Claim” means: (1) a written demand for monetary or non-monetary relief; (2) any civil or criminal judicial proceeding in a court of law or equity, or arbitration; (3) a civil, criminal, or administrative regulatory proceeding or investigation against an Insured Person (including Wells Notices); (4) request to waive or toll a statute of limitations; (5) mediation or arbitration proceedings; and (6) any official written request for Extradition of any Insured Person or the execution of a warrant for the arrest of any Insured Person where such execution is an element of Extradition. “Employment Practices Wrongful Act” means any actual or alleged: (1) wrongful termination of employment whether actual or constructive; (2) employment discrimination of any kind;(3)sexual or other harassment in the workplace; or (4) wrongful deprivation of career opportunity, employment related misrepresentations, retaliatory treatment against an employee of the Company, failure to promote, demotion, wrongful discipline or evaluation, or refusal to hire. “Wrongful Act” means: (1) any actual or alleged act, error, or omission, misstatement, misleading statement, neglect, or breach of duty by any Insured Person while acting in his or her capacity as : (i) Insured Person of the Company or a person serving in a functionally equivalent role for the Parent Company or any Subsidiary; (ii) Insured Person of the Company who at the specific request of the Company is serving as a director, officer, trustee, regent or governor of an Outside Entity; or a (iii) fiduciary of the Company’s employee benefit plans; (2) any Employment Wrongful Act. “Subsidiary” means: (1) any for-profit entity during any time on or before the inception of the Policy Period in which the Parent Company (e.g. SPE), either directly or through one or more Subsidiaries, has Management Control thereover; and (2) any not-for-profit entity during any time on or before the inception of the Policy Period in which it is sponsored exclusively by the Parent Company Management Control means with respect to any entity: (1) the ownership interests representing the power to elect, appoint or designate a majority of (i) its directors, if such entity is a corporation; (ii) its management committee members, if such entity is a joint venture or partnership; or (iii) the members of its management board, if such entity is a limited liability company; or (b) possession of the right, pursuant to written contract or the by-laws, charter, operating agreement or similar documents of the Parent Company, to elect, appoint or designate a majority of: (i) its directors, if such entity is a corporation; (ii) its management committee members, if such entity is a joint venture or partnership; or (iii) the members of its management board, if such entity is a limited liability company. The Parent Company will deemed to have Management Control over any company during any time in which such company is consolidated with it for financial reporting purposes. DISCLAIMER: This insurance summary is subject to the terms, conditions and limitations of the policy. Nothing contained herein should be construed as legal advise. It is provided as general advise only. Knowledgeable legal counsel should be consulted for any legal questions or interpretations.
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4 Sony Pictures Entertainment Inc. Directors and Officers Liability Insurance Summary Major Exclusions: Pending & Prior Litigation prior to November 9, 1989 Intentional Dishonest/Fraudulent/Criminal acts and personal profit who which an Insured Person was not legally entitled (except for Defense Expenses) Initial Public Offering of common stock of the Company (except for those securities exempt from registration under the Securities Act of 1933) Parent Exclusion – Claims brought by or on behalf of, directly or indirectly, Sony Corporation and its subsidiaries, any executives or employees of any such entity and/or any subsidiary or affiliate thereof (other than SPE or its subsidiaries) Notice provided under any prior D&O policy Other Coverage Advantages: Provides broad-form personal coverage to Insured Persons when indemnification is not permitted, is refused or when the Company is unable to indemnify No exclusions for ERISA, Pollution, Bodily Injury/Property Damage, or Insured vs. Insured No Asset-Acquisition Threshold — Insured Persons will be covered automatically for Wrongful Acts that occur subsequent to the completion of any acquisition, regardless of acquisition size Policy is non-rescindable Policy can only be cancelled by the Chairman or CEO or SPE. Premium will be returned pro-rata minus brokerage commission This policy provides personal asset protection dedicated solely to individual Insured Persons Endorsements: Terrorism Insurance Disclosure U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) Notice Privacy Policy Notice Fraud Notice CA Notice Change of Insurer Address & Preamble Correction Terrorism Premium ($waived) CA Amendatory Sony Pictures Entertainment Endorsement (Parent Exclusion / BI/PD Exclusion Deleted / Entity v. Insured Exclusion Deleted / Amended Pollution Exclusion) Classic Number 1 Endorsement (Amended Definitions of “Loss”, “Outside Entity”, and “Wrongful Act” / Amended Other Insurance & Indemnification Provision / Amended Notice of Circumstance Provision) with the following changes at renewal: Delete Paragraph (2): In Cornerstone Form Paragraphs (3) & (4) Change (P) to (Q) to fit Cornerstone Form Paragraph (5): Delete Reference to “any source, including but not limited to” Paragraph (6): Change (i)&(ii) to (1)&(2) to fit Cornerstone Form Delete Paragraph (8): In Cornerstone Form DISCLAIMER: This insurance summary is subject to the terms, conditions and limitations of the policy. Nothing contained herein should be construed as legal advise. It is provided as general advise only. Knowledgeable legal counsel should be consulted for any legal questions or interpretations.
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5 Sony Pictures Entertainment Inc. Directors and Officers Liability Insurance Summary Endorsements (continued): Pending and/or Prior Litigation Exclusion (November 09, 1989) Domestic Partner Extension Amend Cancellation Provision Initial Public Offering Exclusion Amend Definition of Subsidiary (Include Management Control Language) with the following change at renewal: Amended to fit Cornerstone Form: Change (O) to (P) Amend Definition of “Insured Person” Amend Definition of “Wrongful Act” (Include Fiduciary Liability Coverage) Extradition Extension Amend Definition of “Change in Control” (Delete Bankruptcy Trigger) Amend Definition of “Company” (Include Debtor-in-Possession) Amend Definition of “Claim" (Delete Reference To “Formal”) Section 11, 12 & 15 Extension Amend Conditions (F)(1) Amend Definition of “Claim" (Statute of Limitations) Amend Definition of “Claim" (Wells Notices) Amend Definition of “Claim" (Subpoena) Amend Definition of “Defense Expenses” (Bond Premiums) Amend Exclusion (A)(2) with the following changes at renewal: Replace the absolute language with “for” wording Delete reference to “willful violation of any statute, rule or law” Reference “personal profit” Amend Notice of Claim (GC/Director of Risk Management) Amend Definition of “Defense Expenses” (SOX 304/Dodd Frank 954 Costs) Amend Condition (J)(2) (60 Days) Amend Definition of “Claim“ (Mediation and Arbitration Proceedings) Amend Definition of “Subsidiary” (Foundations, Charitable Trusts and PACs) Order of Payments in Bankruptcy (Prioritize The Payment Of Pre-Bankruptcy Loss) Add Pre-Claim Inquiry Coverage Global Liberalization Clause Amend Notice of Claim (E-Mail Notices) Amend Condition (C) (Run-Off Coverage For Former Subsidiaries) DISCLAIMER: This insurance summary is subject to the terms, conditions and limitations of the policy. Nothing contained herein should be construed as legal advise. It is provided as general advise only. Knowledgeable legal counsel should be consulted for any legal questions or interpretations.
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