EXHIBIT 10.3
INSURANCE AGREEMENT
This Insurance Agreement (the "Agreement") is made and entered into as of
this 25th day of July, 1997, by and among General Semiconductor, Inc., a
Delaware corporation ("GS"), NextLevel Systems, Inc., a Delaware corporation
("NextLevel Systems"), and CommScope, Inc., a Delaware corporation
("CommScope").
WHEREAS, General Instrument Corporation, a Delaware corporation ("GI"),
NextLevel Systems, and CommScope have entered into that certain Distribution
Agreement, dated as of June 12, 1997 (the "Distribution Agreement"), pursuant to
which (i) GI and its Subsidiaries shall cause to be consummated the Corporate
Restructuring Transactions in order to restructure, divide, and separate their
existing businesses and assets so that (a) the NextLevel Systems Assets and
NextLevel Systems Business shall be owned, controlled, and operated, directly
and indirectly, by NextLevel Systems, (b) the CommScope Assets and CommScope
Business shall be owned, controlled, and operated, directly and indirectly, by
CommScope, and (c) the GS Assets and GS Business shall be owned, controlled, and
operated, directly and indirectly, by GI, which will be renamed General
Semiconductor, Inc., a Delaware corporation, immediately following the NextLevel
Systems Distribution (as defined herein), (ii) GI shall distribute (the
"NextLevel Systems Distribution") to the holders of GI's outstanding shares of
common stock the outstanding shares of common stock of NextLevel Systems
("NextLevel Systems Common Stock"), and (iii) NextLevel Systems shall distribute
(the "CommScope Distribution") to the holders of NextLevel Systems Common Stock
(which holders also will be the stockholders of GI) the outstanding shares of
common stock of CommScope (such two distributions being collectively referred to
as the "Distributions"), upon the terms and subject to the conditions set forth
in the Distribution Agreement;
WHEREAS, GI, its Subsidiaries, and their respective predecessors have
historically maintained various Policies for the benefit or protection of one or
more of the NextLevel Systems Covered Persons, the CommScope Covered Persons,
and the GS Covered Persons;
WHEREAS, in connection with the transactions contemplated by the
Distribution Agreement, GI, NextLevel Systems, and CommScope have determined
that it is necessary and desirable to provide for the respective continuing
rights and obligations in respect of said Policies from and after the NextLevel
Systems Distribution Date; and
WHEREAS, pursuant to the Distribution Agreement the parties hereto have
agreed to enter into this Agreement,
NOW THEREFORE, in consideration of the mutual agreements, provisions, and
covenants contained in this Agreement and the Distribution Agreement, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 General. Unless otherwise defined herein or unless the context
otherwise requires, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined).
"Agreement" shall mean this Insurance Agreement, dated as of July 25,
1997, by and among GS, NextLevel Systems, and CommScope, including any
amendments hereto and each Schedule attached hereto.
"Cable Manufacturing Business" shall mean, when unqualified, the CommScope
Assets, CommScope Liabilities, and/or CommScope Business.
"Claims Administration" shall mean, with respect to any Policy, the
processing of claims made under such Policy, including, without limitation, the
reporting of losses or claims to insurance carriers and the management, defense,
and settlement of claims.
"Claims Deposit" shall mean the amount of funds, as of the NextLevel
Systems Distribution Date, maintained by GS on deposit for the benefit of the
insurance carriers under the Retrospective-Rated Policies.
"Claims-Made" shall mean, with respect to any Policy, coverage provided by
such Policy for claims made during a period specified therein.
"Claims-Made Policies" shall mean those current and past Policies which
are Claims-Made in nature, including but not limited to those Policies
identified on Schedule A hereto, which show GI or any of its predecessors (or
such entity and its subsidiaries and/or affiliates) as the named insured, but
excluding (i) any directors' and officers' liability insurance policies which
are or were maintained by or on behalf of GI, (ii) the Exclusive Policies, and
(iii) the Retrospective-Rated Policies.
"Common Policies" shall mean the Claims-Made Policies, Occurrence-Based
Policies, and Retrospective-Rated Policies.
"CommScope Assets" shall have the meaning set forth in the Distribution
Agreement.
"CommScope Business" shall have the meaning set forth in the Distribution
Agreement.
"CommScope Covered Person" shall mean each member of the CommScope Group
and any other Person, in each case to the extent any Policy addressed herein
purports to provide insurance coverage in respect of any claims, suits, actions,
proceedings, injuries, losses, liabilities, occurrences, damages, or expenses
incurred by such Person arising out of, in connection with, or otherwise related
to the Cable Manufacturing Business.
"CommScope Distribution" shall have the meaning set forth in the recitals.
"CommScope Exclusive Policies" shall mean all current and past Policies
identified on Schedule D hereto, which show CommScope, any other member of the
CommScope Group, or any of their respective predecessors (or such entity and its
subsidiaries and/or affiliates) as the named insured and do not purport to
relate to the Communications Business or the Power Semiconductor Business or to
cover any NextLevel Systems Covered Person or GS Covered Person, excluding (i)
any directors' and officers' liability policies which are or were maintained by
or on behalf of CommScope, and (ii) any Retrospective-Rated Policy.
"CommScope Group" shall have the meaning set forth in the Distribution
Agreement.
"CommScope Liabilities" shall have the meaning set forth in the
Distribution Agreement.
"Communications Business" shall mean, when unqualified, the NextLevel
Systems Assets, NextLevel Systems Liabilities, and/or NextLevel Systems
Business.
"Corporate Restructuring Transactions" shall have the meaning set forth in
the Distribution Agreement.
"Covered Persons" shall mean (i) with respect to GS, the GS Covered
Persons, (ii) with respect to NextLevel Systems, the NextLevel Systems Covered
Persons, and (iii) with respect to CommScope, the CommScope Covered Persons.
"Current Claims-Made Policies" shall mean the Claims-Made Policies in
effect as of the NextLevel Systems Distribution Date, which Policies are set
forth on Schedule A hereto.
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"Current Occurrence-Based Policies" shall mean the Occurrence-Based
Policies in effect as of the NextLevel Systems Distribution Date, which Policies
are set forth on Schedule B hereto.
"Distribution Agreement" shall mean that certain Distribution Agreement,
dated as of June 12, 1997, by and among GI, NextLevel Systems, and CommScope,
including any amendments, exhibits, and schedules thereto.
"Distributions" shall have the meaning set forth in the recitals.
"Distribution Time" shall mean the time at which the NextLevel Systems
Distribution shall become effective.
"Exclusive Policies" shall mean the NextLevel Systems Exclusive Policies
and the CommScope Exclusive Policies.
"Group" shall have the meaning set forth in the Distribution Agreement.
"GS Assets" shall have the meaning set forth in the Distribution
Agreement.
"GS Business" shall have the meaning set forth in the Distribution
Agreement.
"GS Covered Person" shall mean each member of the GS Group and any other
Person, in each case to the extent any Policy addressed herein purports to
provide insurance coverage in respect of any claims, suits, actions,
proceedings, injuries, losses, liabilities, occurrences, damages, or expenses
incurred by such Person arising out of, in connection with, or otherwise related
to the Power Semiconductor Business or the discontinued GI operations.
"GS Group" shall have the meaning set forth in the Distribution Agreement.
"GS Liabilities" shall have the meaning set forth in the Distribution
Agreement.
"Insurance Administration" shall mean, with respect to any Policy, the
accounting for premiums, defense costs, indemnity payments, deductibles, and
retentions, as appropriate, under the terms and conditions of such Policy, and
the distribution of Insurance Proceeds.
"Insurance Proceeds" shall mean those monies, net of any applicable
premium adjustment, deductible, retention, or similar cost paid or held by or
for the benefit of an insured party which are either (i) received by an insured
from an insurance carrier, or (ii) paid by an insurance carrier on behalf of an
insured.
"Letters of Credit" shall have the meaning set forth in Section 7.1
hereof.
"NextLevel Systems Assets" shall have the meaning set forth in the
Distribution Agreement.
"NextLevel Systems Business" shall have the meaning set forth in the
Distribution Agreement.
"NextLevel Systems Common Stock" shall have the meaning set forth in the
recitals. "NextLevel Systems Covered Person" shall mean each member of the
NextLevel Systems Group and any other Person, in each case to the extent any
Policy addressed herein purports to provide insurance coverage in respect of any
claims, suits, actions, proceedings, injuries, losses, liabilities, occurrences,
damages, or expenses incurred by such Person arising out of, in connection, with
or otherwise related to the Communications Business.
"NextLevel Systems Distribution" shall have the meaning set forth in the
recitals.
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"NextLevel Systems Distribution Date" shall have the meaning set forth in
the Distribution Agreement.
"NextLevel Systems Exclusive Policies" shall mean all current and past
Policies, including but not limited to the current Policies set forth on
Schedule E hereto, which show NextLevel Systems, any other member of the
NextLevel Systems Group, or any of their respective predecessors (or such entity
and its subsidiaries and/or affiliates) as the named insured and do not purport
to relate to the Cable Manufacturing Business or the Power Semiconductor
Business or to cover any CommScope Covered Person or GS Covered Person,
excluding (i) any directors' and officers' liability policies which are or were
maintained by or on behalf of NextLevel Systems, and (ii) any
Retrospective-Rated Policy.
"NextLevel Systems Group" shall have the meaning set forth in the
Distribution Agreement.
"NextLevel Systems Liabilities" shall have the meaning set forth in the
Distribution Agreement.
"Occurrence-Based" shall mean, with respect to any Policy, coverage
provided by such Policy for acts, omissions, damages, or injuries which occur or
are alleged to have occurred during a period specified in such Policy.
"Occurrence-Based Policies" shall mean those current and past Policies
which are Occurrence-Based in nature, including but not limited to those
policies identified on Schedule B hereto, which show GI or any of its
predecessors (or such entity and its subsidiaries and/or affiliates) as the
named insured, but excluding (i) any directors' and officers' liability policies
which are or were maintained by or on behalf of GI, (ii) the Exclusive Policies,
and (iii) the Retrospective-Rated Policies.
"Person" shall have the meaning set forth in the Distribution Agreement.
"Policies" means insurance policies and insurance contracts of any kind
(other than life and benefits policies or contracts), including, without
limitation, primary, excess, and umbrella policies, commercial general liability
policies, fiduciary liability, automobile, aircraft, property and casualty,
workers' compensation, and employee dishonesty insurance policies, bonds, and
self-insurance and captive insurance company arrangements, together with the
rights, benefits, and privileges thereunder.
"Power Semiconductor Business" shall mean, when unqualified, the GS
Assets, GS Liabilities, and/or GS Business.
"Retrospective-Rated Policies" shall mean the Policies identified on
Schedule C hereto, together with all other current and past primary workers'
compensation, automobile liability, and general liability (including products
liability) Policies showing GI, any member of the NextLevel Systems Group, the
CommScope Group, or the GS Group, or any of their respective predecessors (or
such entity and its subsidiaries and/or affiliates) as the insured party and
which are cost plus, fronting, high deductible, or retrospective premium
programs.
"Subsidiary" shall have the meaning set forth in the Distribution
Agreement.
"Termination Time" shall mean with respect to coverage under any Policy
for any Covered Person, the time as of which coverage under said Policy is to be
cancelled with respect to that Covered Person pursuant to the terms hereof.
1.2 References. References herein to a "Schedule" are, unless otherwise
specified, to one of the Schedules attached to this Agreement, and references to
an "Article" or a "Section" are, unless otherwise specified, to one of the
Articles or Sections, respectively, of this Agreement.
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ARTICLE II
CANCELLATION OF POLICIES
2.1 Current Occurrence-Based Policies. On or prior to the NextLevel
Systems Distribution Date, GI shall take or cause to be taken all necessary or
appropriate action to cause the Current Occurrence-Based Policies identified on
Schedule B hereto to be cancelled as of, and to afford no future coverage to the
insureds thereunder except as otherwise contemplated by this Agreement from and
after, the Distribution Time, with respect to any NextLevel Systems Covered
Person, CommScope Covered Person, or GS Covered Person.
2.2 Current Claims-Made Policies. On or prior to the NextLevel Systems
Distribution Date, GI shall take or cause to be taken all necessary or
appropriate action to cause the Current Claims-Made Policies identified on
Schedule A hereto to be cancelled as of, and to afford no future coverage to the
insureds thereunder except as otherwise contemplated by this Agreement from and
after, the Distribution Time, with respect to any NextLevel Systems Covered
Person, CommScope Covered Person, or GS Covered Person.
ARTICLE III
COVERAGE
3.1 Maintenance of Coverage Through Distribution Time. From the date
hereof up to the Distribution Time, the parties hereto agree to maintain (and to
cause each member of their respective Groups over which they have legal or
effective direct or indirect control to maintain) in full force and effect the
Occurrence-Based Policies, Claims-Made Policies, and Retrospective-Rated
Policies for the benefit of any NextLevel Systems Covered Person, CommScope
Covered Person, and GS Covered Person to which such Policies by their terms
relate.
3.2 Coverage Under Occurrence-Based Policies.
(a) Termination of Coverage Under Occurrence-Based Policies. The parties
hereto agree to take or cause to be taken all necessary or appropriate action so
that, notwithstanding anything to the contrary contained in any Occurrence-Based
Policy, coverage under the Occurrence-Based Policies shall be terminated so that
none of the Occurrence-Based Policies shall afford any future coverage to any
NextLevel Systems Covered Person, CommScope Covered Person, or GS Covered Person
for occurrences which take place or are alleged to have taken place on or after
the Distribution Time, with respect to any NextLevel Systems Covered Person,
CommScope Covered Person, or GS Covered Person.
(b) Access to Policies Following Termination Time. Notwithstanding the
provisions of Section 3.2(a) hereof, from and after their respective Termination
Time under any Occurrence-Based Policy each NextLevel Systems Covered Person,
CommScope Covered Person, and GS Covered Person shall have the right to coverage
and to make or pursue a claim for coverage under such Occurrence-Based Policy
with respect to all claims, suits, actions, proceedings, injuries, losses,
liabilities, occurrences, and damages incurred or claimed to have been incurred
prior to such Termination Time, as well as all expenses that relate to such
claims, suits, actions, proceedings, injuries, losses, liabilities, occurrences,
and damages, whether incurred prior to or after such Termination Time, by such
Covered Person in or in connection with the operation of, or otherwise related
to, (i) the Communications Business, with respect to any NextLevel Systems
Covered Person, (ii) the Cable Manufacturing Business, with respect to any
CommScope Covered Person, or (iii) the Power Semiconductor Business, with
respect to any GS Covered Person, in each case subject to the terms, conditions,
and limitations of such Occurrence-Based Policy, provided, however, that nothing
in this Section 3.2(b) shall be deemed to constitute or reflect an assignment of
any such Occurrence-Based Policy.
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(c) Policy Limits. Any NextLevel Systems Covered Person, CommScope Covered
Person, or GS Covered Person entitled hereunder to make or pursue a claim for
insurance coverage under an Occurrence-Based Policy may claim for such insurance
as and to the extent that such insurance is available up to the full extent of
the applicable limits of liability under such Occurrence-Based Policy.
Notwithstanding the foregoing, each of NextLevel Systems, CommScope, and GS
shall, to the extent any of its respective Covered Persons shall have exhausted
all or any portion of the limits of liability, if any, under any
Occurrence-Based Policy, use its best efforts to obtain and maintain in full
force and effect a Policy in replacement of the limits of liability exhausted
under such Occurrence-Based Policy for all claims which would be covered thereby
absent such exhaustion (including any pending or known claims), and be
responsible for and pay all costs and expenses in connection therewith, which
Policy shall provide at least the same coverage, and contain terms and
provisions which are no less favorable to the insured parties, as existed under
the Occurrence-Based Policy in respect of which such replacement is obtained,
provided, however, that no party hereto shall be required to expend more than an
amount equal to 350% of the original premium paid with respect to the portion of
the limits of liability under such Occurrence-Based Policy (determined on a pro
rata basis) exhausted by such party's respective Covered Persons to obtain a
replacement Policy as contemplated hereby, it being understood that each party
hereto shall nonetheless be required to obtain the maximum amount of replacement
coverage available for such 350% premium amount in accordance with the terms and
provisions of this sentence. If at any time a party (an "Impairing Party")
hereto becomes aware (such party being deemed to be aware whenever any of the
directors or executive officers of such party or any other member of its
respective Group become aware) of a claim or potential claim against any of such
Impairing Party's respective Covered Persons, which claim is reasonably likely
to exhaust (but has not yet exhausted) all or any portion of the aggregate
limits of liability, if any, under any Occurrence-Based Policy (a "Potential
Impairment"), such Impairing Party shall promptly provide notice of such
Potential Impairment to the other parties hereto. If such Potential Impairment
actually occurs, the Impairing Party shall have five business days thereafter to
obtain a Policy in replacement of such limits of liability (in accordance with
the terms and provisions of the second preceding sentence).
3.3 Coverage Under Claims-Made Policies.
(a) Termination of Coverage Under Claims-Made Policies. The parties hereto
agree to take or cause to be taken all necessary or appropriate action so that,
notwithstanding anything to the contrary contained in any Claims-Made Policy,
coverage under the Claims-Made Policies shall be terminated so that no
Claims-Made Policy shall afford any future coverage to any NextLevel Systems
Covered Person, CommScope Covered Person, or GS Covered Person for claims which
have not been reported or made as provided by the terms of such Claims-Made
Policy prior to the Distribution Time, with respect to any NextLevel System
Covered Person, CommScope Covered Person, or GS Covered Person.
(b) Access to Policies Following Termination Time. Notwithstanding the
provisions of Section 3.3(a) hereof, from and after their respective Termination
Time under any Claims-Made Policy each NextLevel Systems Covered Person,
CommScope Covered Person, and GS Covered Person shall have the right to coverage
and to make or pursue a claim for coverage under such Claims-Made Policy with
respect to all claims, suits, actions, proceedings, injuries, losses,
liabilities, occurrences, damages, and expenses which are reported in accordance
with the terms of such Claims-Made Policy prior to such Termination Time and
which are incurred or claimed to be incurred by such Covered Person in or in
connection with the operation of, or otherwise related to, (i) the
Communications Business, with respect to any NextLevel Systems Covered Person,
(ii) the Cable Manufacturing Business, with respect to any CommScope Covered
Person, or (iii) the Power Semiconductor Business, with respect to any GS
Covered Person, in each case subject to the terms, conditions, and limitations
of such Claims-Made Policy, provided, however, that nothing in this Section
3.3(b) shall be deemed to constitute or reflect an assignment of any such
Claims-Made Policy.
(c) Policy Limits. Any NextLevel Systems Covered Person, CommScope Covered
Person, or GS Covered Person entitled hereunder to make or pursue a claim for
insurance coverage under a Claims-Made Policy may claim for such insurance as
and to the extent that such insurance is available up to the full extent of the
applicable limits of
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liability under such Claims-Made Policy. Notwithstanding the foregoing, each of
NextLevel Systems, CommScope, and GS shall, to the extent any of its respective
Covered Persons shall have exhausted all or any portion of the limits of
liability, if any, under any Claims-Made Policy, use its best efforts to obtain
and maintain in full force and effect at its own cost a Policy in replacement of
the limits of liability exhausted under such Claims-Made Policy for all claims
which would be covered thereby absent such exhaustion (including any pending or
known claims), and be responsible for and pay all costs and expenses in
connection therewith, which Policy shall provide at least the same coverage, and
contain terms and provisions which are no less favorable to the insured parties,
as existed under the Claims-Made Policy in respect of which such replacement is
obtained, provided, however, that no party hereto shall be required to expend
more than an amount equal to 350% of the original premium paid with respect to
the portion of the limits of liability under such Claims-Made Policy (determined
on a pro rata basis) exhausted by such party's respective Covered Persons to
obtain a replacement Policy as contemplated hereby, it being understood that
each party hereto shall nonetheless be required to obtain the maximum amount of
replacement coverage available for such 350% premium amount in accordance with
the terms and provisions of this sentence. If at any time an Impairing Party
becomes aware (such party being deemed to be aware whenever any of the directors
or executive officers of such party or any other member of its respective Group
become aware) of a claim or potential claim against any of such Impairing
Party's respective Covered Persons which claim is reasonably likely to exhaust
(but has not yet exhausted) all or any portion of the aggregate limits of
liability, if any, under any Claims-Made Policy, such Impairing Party shall
promptly provide notice of such Potential Impairment to the other parties
hereto. If such Potential Impairment actually occurs, the Impairing Party shall
have five business days thereafter to obtain a Policy in replacement of such
limits of liability (in accordance with the terms and provisions of the second
preceding sentence).
3.4 Coverage Under Retrospective-Rated Policies.
(a) Termination of Coverage at Distribution Time. On or prior to the
NextLevel Systems Distribution Date, the parties hereto agree to take or cause
to be taken all necessary or appropriate action so that, except as otherwise
contemplated by the terms of this Agreement and notwithstanding anything to the
contrary contained in any Retrospective-Rated Policy, coverage under the
Retrospective-Rated Policies shall be terminated so that none of the
Retrospective-Rated Policies shall afford any future coverage to any NextLevel
Systems Covered Person, CommScope Covered Person, or GS Covered Person for
occurrences which take place or are alleged to have taken place on or after the
Distribution Time, with respect to any NextLevel Systems Covered Person,
CommScope Covered Person, or GS Covered Person.
(b) Access to Policies and Policy Limits. Notwithstanding the provisions
of Section 3.4(a) hereof, from and after their respective Termination Time under
any Retrospective-Rated Policy each NextLevel Systems Covered Person, CommScope
Covered Person, and GS Covered Person shall have the right to coverage and to
make or pursue a claim for coverage under such Retrospective-Rated Policy with
respect to all claims, suits, actions, proceedings, injuries, losses,
liabilities, occurrences, and damages incurred or claimed to have been incurred
prior to such Termination Time, as well as all expenses that relate to such
claims, suits, actions, proceedings, injuries, losses, liabilities, occurrences,
and damages, whether incurred prior to or after such Termination Time, by such
Covered Person in or in connection with the operation of, or otherwise related
to, (i) the Communications Business, with respect to any NextLevel Systems
Covered Person, (ii) the Cable Manufacturing Business, with respect to any
CommScope Covered Person, or (iii) the Power Semiconductor Business, with
respect to any GS Covered Person, in each case subject to the terms, conditions,
and limitations of such Retrospective-Rated Policy, provided, however, that
nothing in this Section 3.4(b) shall be deemed to constitute or reflect an
assignment of any such Retrospective-Rated Policy. Any NextLevel Systems Covered
Person, CommScope Covered Person, or GS Covered Person may claim insurance
coverage under a Retrospective-Rated Policy as and to the extent that such
insurance is available up to the full extent of the applicable limits of
liability under such Retrospective-Rated Policy.
3.5 Coverage Under Exclusive Policies. From and after the Distribution
Time, coverage under any Exclusive Policy may (at the option of the party or
parties shown as the named insured thereunder, and subject to the rights of the
insurers thereunder) continue with respect to any claims, suits, actions,
proceedings, injuries, losses, liabilities,
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occurrences, damages, or expenses incurred or claimed to have been incurred
prior to, on, or after the Distribution Time, subject to the terms, conditions,
and limitations of such Exclusive Policy, provided, however, that (i) no member
of the NextLevel Systems Group or GS Group shall have any liability or
obligation with respect to any of the CommScope Exclusive Policies, and (ii) no
member of the CommScope Group or GS Group shall have any liability or obligation
with respect to any of the NextLevel Systems Exclusive Policies.
3.6 Assistance in Obtaining Additional Coverage. Each of the parties
hereto agrees to use its reasonable best efforts to assist the other parties in
the transition to obtain separate insurance coverage for the NextLevel Systems
Group, CommScope Group, and GS Group from and after the NextLevel Systems
Distribution Date, which assistance shall include, but shall not be limited to,
the identification of potential insurance carriers.
3.7 Discovery Periods. Except as specified in this Section 3.7 and except
as the parties hereto may otherwise agree, the parties hereto acknowledge and
agree that when this Agreement calls for the termination of insurance coverage
under a Claims-Made Policy, such insurance coverage shall be terminated as of
the time specified and that no discovery period of coverage in respect of such
Policy shall be provided thereunder, notwithstanding anything to the contrary
contained herein or in any such Policy. Notwithstanding the foregoing, GS shall
use its reasonable best efforts to cause the relevant insurers under the
Claims-Made Policies providing directors' and officers' liability insurance to
offer to GS the maximum discovery period of coverage available under said
Claims-Made Policies, and/or to purchase run-off coverage for the liabilities
insured under said Claims-Made Policies with an aggregate limitation of
liability separate from the limitation of liability under said Claims-Made
Policies. All premiums, costs, and other charges with respect to any discovery
period of coverage provided under any Claims-Made Policy or any run-off coverage
for the liabilities insured under any Claims-Made Policy shall be the sole
responsibility of (i) NextLevel Systems, with respect to coverage for NextLevel
Systems Covered Persons, (ii) CommScope, with respect to coverage for CommScope
Covered Persons, and (iii) GS, with respect to coverage for GS Covered Persons.
Each party hereto shall not (and shall not permit any of its respective Covered
Persons over which it has legal or effective direct or indirect control to) take
any action contrary to the provisions of this Section 3.7.
3.8 Further Assurances. Each of NextLevel Systems, CommScope, and GS
agrees to take (and to cause each of its respective Covered Persons over which
it has direct or indirect legal or effective control to take) all such actions
as are necessary or appropriate, including the provision of notice to all
relevant insurance carriers, to effectuate the purposes of this Article III.
ARTICLE IV
PREMIUMS, DEDUCTIBLES, AND RELATED MATTERS
4.1 Occurrence-Based and Claims-Made Policies.
(a) Premiums in Respect of Occurrence-Based and Claims-Made Policies. From
and after the Distribution Time, all premiums, costs, and other charges with
respect to any Occurrence-Based Policy or Claims-Made Policy shall be paid by
GS, provided, however, that (i) NextLevel Systems shall promptly reimburse GS in
full for any such premiums, costs, or other charges in respect of the cover
afforded under any such Occurrence-Based Policy or Claims-Made Policy to any
NextLevel Systems Covered Person, and (ii) CommScope shall promptly reimburse GS
in full for any such premiums, costs, or other charges in respect of the cover
afforded under any such Occurrence-Based Policy or Claims-Made Policy to any
CommScope Covered Person, in each case determined in accordance with GI's
historical practices with respect to the allocation of such premiums, costs, and
charges prior to the date hereof. All amounts refunded from and after the
Distribution Time by insurance carriers in respect of premiums previously paid
under any Occurrence-Based Policy or Claims-Made Policy shall be the sole
property of NextLevel Systems, provided, however, that NextLevel Systems shall
promptly pay to CommScope or GS, as applicable, upon receipt thereof from an
insurance carrier, the CommScope Group's or the GS Group's respective share of
any such amounts refunded (such respective share to be determined in accordance
with GI's historical practices with respect
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to the allocation of insurance premiums among its Subsidiaries and divisions
prior to the date hereof). Each of CommScope and GS shall (and shall cause each
member of its respective Group over which it has direct or indirect legal or
effective control to) promptly pay to NextLevel Systems any such refunded
amounts actually received by it to which NextLevel Systems is entitled pursuant
hereto.
(b) Deductibles, Retentions, and Self-Insured Amounts. From and after the
Distribution Time, all deductibles, retentions, and self-insured amounts with
respect to coverage or a claim for coverage under any Occurrence-Based Policy or
Claims-Made Policy shall be the sole responsibility of (i) NextLevel Systems,
with respect to any coverage or claim for coverage in respect of any NextLevel
Systems Covered Person, (ii) CommScope, with respect to any coverage or claim
for coverage in respect of any CommScope Covered Person, and (iii) GS, with
respect to any coverage or claim for coverage in respect of any GS Covered
Person.
4.2 Retrospective-Rated Policies.
(a) Premiums, Costs, and Other Charges. From and after the Distribution
Time, all premiums, costs, and other charges with respect to any
Retrospective-Rated Policy, including claim payments and associated expenses
under cost plus or fronting policies or retrospective-rated premium programs,
shall be the sole responsibility of and be paid by GS, provided, however, that
(i) NextLevel Systems shall promptly reimburse GS for all such premiums, costs,
and other charges paid by GS (including amounts paid by GS as reimbursement in
respect of amounts drawn under Letters of Credit maintained by GS pursuant to
Section 7.1 hereof but excluding LC Maintenance Fees defined in Section 7.1
hereof) in respect of coverage provided for any NextLevel Systems Covered Person
to the extent such premiums, costs, and other charges exceed the amount of the
Claims Deposit, and (ii) CommScope shall promptly reimburse GS for all such
premiums, costs, and other charges paid by GS (including amounts paid by GS as
reimbursement in respect of amounts drawn under Letters of Credit maintained by
GS pursuant to Section 7.1 hereof but excluding LC Maintenance Fees defined in
Section 7.1 hereof) in respect of coverage provided for any CommScope Covered
Person to the extent such premiums, costs, and other charges exceed the amount
of the Claims Deposit. All amounts refunded from and after the Distribution Time
by insurance carriers pursuant to the terms of any Retrospective-Rated Policy
incepting before April 1, 1991 shall be shared equally by GS and NextLevel
Systems, and all amounts refunded from and after the Distribution Time by
insurance carriers pursuant to the terms of any Retrospective-Rated Policy
incepting on or after April 1, 1991 shall be shared equally by GS, NextLevel
Systems, and CommScope.
(b) Deductibles, Retentions, and Self-Insured Amounts. From and after the
Distribution Time, all deductibles, retentions, and self-insured amounts with
respect to coverage or a claim for coverage under any Retrospective-Rated Policy
shall be the sole responsibility of (i) NextLevel Systems, with respect to any
coverage or claim for coverage in respect of any NextLevel Systems Covered
Person, (ii) CommScope, with respect to any coverage or claim for coverage in
respect of any CommScope Covered Person, and (iii) GS, with respect to any
coverage or claim for coverage in respect of any GS Covered Person.
(c) Conversion to Guaranteed-Cost. From and after the Distribution Time,
(i) GS shall be authorized to negotiate with the insurance carrier of any
Retrospective-Rated Policy to convert such Policy to provide coverage in respect
of GS Covered Persons on a guaranteed-cost basis; (ii) NextLevel Systems shall
be authorized to negotiate with the insurance carrier of any Retrospective-Rated
Policy to convert such Policy to provide coverage in respect of NextLevel
Systems Covered Persons on a guaranteed-cost basis, and (iii) CommScope shall be
authorized to negotiate with the insurance carrier of any Retrospective-Rated
Policy to covert such Policy to provide coverage in respect of CommScope Covered
Persons on a guaranteed-cost basis, provided, however, that (i) GS shall not be
authorized to negotiate the conversion of any Retrospective-Rated Policy in
respect of NextLevel Systems Covered Persons or CommScope Covered Persons, (ii)
NextLevel Systems shall not be authorized to negotiate the conversion of any
Retrospective-Rated Policy in respect of GS Covered Persons or CommScope Covered
Persons, and (iii) CommScope shall not be authorized to negotiate the conversion
of any Retrospective-Rated Policy in respect of GS Covered Persons or NextLevel
Systems Covered Persons.
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4.3 Exclusive Policies. From and after the Distribution Time, all
deductibles, retentions, self-insured amounts, premiums, and other costs with
respect to any Exclusive Policy or claim for coverage thereunder shall be the
sole responsibility of, and all refunded premiums with respect to any Exclusive
Policy shall be the sole property of, (i) NextLevel Systems, with respect to any
NextLevel Systems Exclusive Policy, and (ii) CommScope, with respect to any
CommScope Exclusive Policy.
4.4 Excess Costs and Settlements. Each Covered Person shall be responsible
for any excess costs and expenses relating to its respective claims permitted
hereunder (or those of any member of its respective Group) under the Common
Policies, including defense costs to the extent such defense costs are not
covered under such Common Policies, and shall be responsible for obtaining or
reviewing the appropriateness of releases upon settlement of such claims.
4.5 Effect on Other Agreements. Notwithstanding anything to the contrary
contained herein, nothing in this Article IV shall be construed to alter or in
any way limit any rights to indemnity provided in the Distribution Agreement or
in any other Ancillary Agreement (as such term is defined in the Distribution
Agreement).
ARTICLE V
ADMINISTRATION
5.1 Occurrence-Based and Claims-Made Policies.
(a) Administration. From and after the NextLevel Systems Distribution
Date, Claims Administration and Insurance Administration with respect to the
Occurrence-Based Policies and Claims-Made Policies shall be the responsibility
of (i) NextLevel Systems, with respect to any coverage or claim for coverage of
any NextLevel Systems Covered Person, (ii) CommScope, with respect to any
coverage or claim for coverage of any CommScope Covered Person, and (iii) GS,
with respect to any coverage or claim for coverage of any GS Covered Person.
Each of NextLevel Systems and CommScope shall (and shall cause each of its
respective Covered Persons over which it has direct or indirect legal or
effective control to) provide prompt notice to GS of all actions taken by it
with respect to the Claims Administration and Insurance Administration for the
Occurrence-Based Policies and Claims-Made Policies as contemplated by this
Section 5.1. Each party hereto shall (and shall cause each other member of its
Group over which it has direct or indirect legal or effective control to) take
all necessary or appropriate action, if any, to delegate Claims Administration
and Insurance Administration with respect to the Occurrence-Based Policies and
Claims-Made Policies to any other party who is to assume such responsibilities
pursuant hereto, but, to the extent any party hereto (a "Precluded Party") is
not permitted by the terms of any such policy to engage in Claims Administration
or Insurance Administration with respect to coverage or claims for its
respective Covered Persons, the party permitted to engage in Claims
Administration or Insurance Administration shall do so with respect to coverage
or claims for the Precluded Party's Covered Persons only upon the express
authorization and direction of such Precluded Party. Each party hereto shall be
responsible for its own disbursements and out-of-pocket expenses and the direct
and indirect costs of its employees or agents relating to Claims Administration
and Insurance Administration contemplated by this Section 5.1. Notwithstanding
anything to the contrary contained herein, GS shall have the right to undertake
at its own cost and expense Claims Administration and/or Insurance
Administration with respect to any coverage or claim for coverage of any
NextLevel Systems Covered Person or CommScope Covered Person.
(b) Effect of Administrative Responsibilities. Each of NextLevel Systems,
CommScope, and GS acknowledges and agrees that each other party's
responsibilities under this Section 5.1 for Claims Administration and Insurance
Administration shall not relieve any party submitting an insured claim under any
Occurrence-Based Policy or Claims-Made Policy of (a) the primary responsibility
for reporting such insured claim accurately, completely, and in a timely manner,
or (b) any other right or responsibility which such party may have pursuant to
the terms of any Occurrence-Based Policy or Claims-Made Policy.
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5.2 Retrospective-Rated Policies. From and after the Distribution Time, GS
shall be solely responsible for Claims Administration and Insurance
Administration with respect to the Retrospective-Rated Policies including,
without limitation, the administration of all xxxxxxxx associated with the
Retrospective-Rated Policies by the insurance carriers thereunder.
Notwithstanding the foregoing, each of NextLevel Systems and CommScope shall
retain the right to, at its option, direct the management, defense, reporting,
and settlement of claims involving its respective Covered Persons under the
Retrospective-Rated Policies. GS shall not settle any claim against any
NextLevel Systems Covered Person or CommScope Covered Person under any
Retrospective-Rated Policy without the consent of NextLevel Systems or
CommScope, respectively.
ARTICLE VI
PROCEEDS
6.1 Occurrence-Based and Claims-Made Policies. From and after the
NextLevel Systems Distribution Date, Insurance Proceeds received with respect to
claims, costs, and expenses under the Occurrence-Based Policies and Claims-Made
Policies shall be paid to the Covered Person to which such Insurance Proceeds
are due pursuant to the terms of such Policies.
6.2 Retrospective-Rated Policies. From and after the NextLevel Systems
Distribution Date, Insurance Proceeds received with respect to claims, costs,
and expenses under the Retrospective-Rated Policies shall be paid, as
appropriate, to the Covered Person to which such Insurance Proceeds are due
pursuant to the terms of such Policies.
6.3 Return of Proceeds. Each of NextLevel Systems, CommScope, and GS shall
(and shall cause each of its respective Covered Persons over which it has direct
or indirect legal or effective control to) promptly pay to each other party any
Insurance Proceeds actually received by it to which any of such other party's
Covered Persons are entitled pursuant hereto, which other party shall then
distribute such Insurance Proceeds to the Covered Person to which they are due
pursuant hereto.
ARTICLE VII
LETTERS OF CREDIT AND SURETY BONDS
7.1 Maintenance. (a) Letters of Credit. From and after the NextLevel
Systems Distribution Date, to secure obligations under the Retrospective-Rated
Policies relating to periods preceding the Distribution Time, GS shall, for such
time as may be required by law or the terms of any Retrospective-Rated Policy,
maintain in full force and effect the letters of credit identified on Schedule
7.1-A hereto or, as necessary or appropriate, substitute therefor and maintain
in full force and effect letters of credit acceptable to the insurance carriers
and/or surety under the Retrospective-Rated Policies issued by comparably rated
lenders containing substantially identical terms and conditions (collectively,
the "Letters of Credit"). GS shall be solely responsible for the actual and
reasonable administrative fees and expenses (the "LC Maintenance Fees") in
respect of the issuance and maintenance of the Letters of Credit and shall not
obtain reimbursement for any portion thereof from either NextLevel Systems or
CommScope.
(b) Surety Bonds. The parties hereto acknowledge that GI is obligated to
indemnify the sureties under certain performance bonds and other surety
instruments that secure obligations of the NextLevel Systems Business, NextLevel
Systems Group, CommScope Business, CommScope Group, GS Business, and/or GS Group
including, but not limited to, the surety instruments identified on Schedule
7.1-B hereto (the "GI-Provided Bonds"). From and after the Distribution Time, GS
shall maintain such GI-Provided Bonds in place for such time as may be required
by law. To the extent possible on commercially reasonable terms, each of
NextLevel Systems and CommScope shall use reasonable commercial efforts to
obtain a replacement for each GI-Provided Bond that
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secures obligations of the NextLevel Systems Business or NextLevel Systems
Group (in the case of NextLevel Systems) or the CommScope Business or CommScope
Group (in the case of CommScope) and to thereafter arrange for the release of GS
from the GI-Provided Bond which has been so replaced. If the surety under any
GI-Provided Bond is required to and does in fact perform according to the terms
of said GI-Provided Bond and GS is required to and does in fact indemnify such
surety in respect thereof, (i) NextLevel Systems shall reimburse GS for all
amounts actually paid by GS to such surety to the extent such amounts constitute
NextLevel Systems Liabilities, and (ii) CommScope shall reimburse GS for all
amounts actually paid by GS to such surety to the extent such amounts constitute
CommScope Liabilities.
ARTICLE VIII
MISCELLANEOUS
8.1 Termination. This Agreement may not be terminated except upon the
written agreement of each of the parties hereto.
8.2 Further Assurances. If at any time after the NextLevel Systems
Distribution Date any further action is necessary or desirable to carry out the
purposes of this Agreement, each of NextLevel Systems, CommScope, and GS shall,
on the written request of any of them, take (or cause the appropriate member of
its Group over which it has direct or indirect legal or effective control to
take) all such reasonably necessary or desirable action. If subsequent to the
NextLevel Systems Distribution Date any Policy showing any member of the
NextLevel Systems Group, CommScope Group, or GS Group, or any of their
respective predecessors, as named insured is discovered which was in effect for
periods prior to the Distribution Time and has not been addressed by the
provisions of this Agreement, the parties hereto agree to negotiate in good
faith an arrangement with respect to such Policy which shall give, to the
fullest extent possible, effect to the purposes of this Agreement and the
transactions contemplated by the Distribution Agreement.
8.3 Cooperation. The parties hereto agree to use their reasonable best
efforts to cooperate with respect to the various insurance matters contemplated
by this Agreement. Each party hereto shall not (and shall not permit any of its
respective Covered Persons over which it has legal or effective direct or
indirect control to) take any action or permit any inaction that could
reasonably be expected to jeopardize or otherwise interfere with the rights of
any other party (or any of such other party's respective Covered Persons)
hereunder or the ability of any other party (or any of such other party's
respective Covered Persons) to collect any proceeds which might be available
under any of the Policies addressed herein in accordance with the terms of this
Agreement.
8.4 No Representations and Warranties. The parties hereto understand and
agree that no representation or warranty as to the existence, applicability, or
extent of insurance coverage for the Communications Business, the Cable
Manufacturing Business, or the Power Semiconductor Business under any Policy is
herein being made.
8.5 Limitation on Liability. Except as may be otherwise expressly provided
for herein, no party hereto shall be liable hereunder to another party or any of
such other party's Covered Persons for claims not reimbursed by insurers for any
reason not within the control of such party including, without limitation,
coinsurance provisions, deductibles, quota share deductibles, exhaustion of
aggregates, self-insured retentions, bankruptcy or insolvency of an insurance
carrier, Policy limitations or restrictions, any coverage disputes, any failure
to timely claim, or any defect in such claim or its processing.
8.6 Successors and Assigns. Except as otherwise expressly provided herein,
no party hereto may assign or delegate, whether by operation of law or
otherwise, any of such party's rights or obligations under or in connection with
this Agreement without the written consent of each other party hereto. No
assignment will, however, release the assignor of any of its obligations under
this Agreement or waive or release any right or remedy the other parties may
have against such assignor hereunder. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will be binding upon and
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enforceable against the respective successors and assigns of such party and will
be enforceable by and will inure to the benefit of the respective successors and
permitted assigns of such party.
8.7 Modification; Waiver; Severability. This Agreement may not be amended
or modified except in a writing executed by each of the parties hereto. The
failure by any party to exercise or a delay in exercising any right provided for
herein shall not be deemed a waiver of any right hereunder. Whenever possible,
each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be prohibited by or invalid under applicable law, such provision will
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
8.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute one and the same Agreement.
8.9 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
8.10 Notices. All notices, demands, or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or five
business days after mailing by certified or registered mail, return receipt
requested and postage prepaid, to the recipient at such recipient's address as
indicated below:
NextLevel Systems: 0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
CommScope: 0000 Xxxxxx-Xxxxx Xxxxxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
GS: 00 Xxxxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
8.11 Survival. Each of the agreements of the parties herein shall survive
the NextLevel Systems Distribution Date.
8.12 No Third Party Beneficiaries. This Agreement is made solely for the
benefit of the parties hereto and their respective Covered Persons and shall not
give rise to any rights of any kind to any other third parties.
8.13 Other. ALL QUESTIONS AND/OR DISPUTES CONCERNING THE CONSTRUCTION,
VALIDITY, AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL
LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE. EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES TO BE
SUBJECT TO, AND HEREBY CONSENTS AND SUBMITS TO, THE JURISDICTION OF THE COURTS
OF THE STATE OF DELAWARE AND OF THE FEDERAL COURTS SITTING IN THE STATE OF
DELAWARE. This Agreement, together with the Distribution Agreement and other
Ancillary Agreements (as such term is defined in the Distribution Agreement),
constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties with respect to the subject matter hereof.
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8.14 Sole Agent. In all matters relating to this Agreement, including the
resolution of any disputes relating to this Agreement between any members of
different Groups, (i) NextLevel Systems shall be the sole agent for the members
of the NextLevel Systems Group, (ii) CommScope shall be the sole agent for the
members of the CommScope Group, and (iii) GS shall be the sole agent for members
of the GS Group. No member of any Group shall have any authority to represent
itself in any such matter or to terminate such agency without the prior written
consent of each party hereto.
8.15 No Double Recovery. No provision of this Agreement shall be construed
to provide recovery to any Person for any costs, expenses, or other amounts for
which such Person has been fully compensated under any other provision of this
Agreement, any other agreement, or otherwise.
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IN WITNESS WHEREOF, the parties have made and entered into this Insurance
Agreement as of the date first set forth above.
GENERAL SEMICONDUCTOR, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman, CEO & President
NEXTLEVEL SYSTEMS, INC.
By: /s/ Xxxxx X. Zar
----------------
Name: Xxxxx X. Zar
Title: Vice President and General Counsel
COMMSCOPE, INC.
By: /s/ Xxxxx X. Xxxxx, XX
----------------------
Name: Xxxxx X. Xxxxx, XX
Title: Secretary
