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Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 1 of 16

Chafter
Recreational Marine Insurance
Policy One ofthe ACE Group of Companies

RENEWAL
Policy Number: SPC Y07954840 Agency Code, Name & Address
226834
NORTHERN MARINE INSURANCE
19630 76 AVE WEST
LYNNWOOD, WA 98036

This is your Charter Policy's Declarations Page. Please read carefully. It gives you important facts about your
coverage .
.The Company Providing This Insurance
ACE AMERICAN INSURANCE COMPANY
436 Walnut Street, P.O. Box 1000
Phila, PA 19106-3703
The Named Insured Under This Policy: (NAME)

LONE EAGLE RESORTS


DBA PYBUS POINT LODGE
Address: PO BOX 33497
JUNEAU, AK 99803

The Vessel Covered By This Policy (NAME)

Refer to Scheduled Ve'ssel Endorsement (MA-2W80) for Individual Vessel Information


(yEAR BUlL"!) (LENG1l!) (MAKE) (MODEL) (DOC. OR HULL. IDENT. NO)

This policy will take effect on 6/1/2007 and end on 6/1/2008


It will begin and end at 12:01 A.M. standard time, at the place where this policy was issued.
In return for the "Total Premium," listed below, we agree to provide the insurance coverages for which a premium is shown in the
chart below.
COVERAGE PROVIDED-- AMOUNT DEDUCTIBLE
PARTS COVERAGES OF INSURANCE AMOUNT PREMIUM
A Property Damage $ See MA-2W80 $ $ 3,875
Windstonn Deductible $ See MA-2W80 $ 0
Commercial Towing & Assistance $ See MA-2W80 $ $ 0
B Liability Coverage $ See MA-2W80 $ $ 2,442
C Medical Payments $ See MA-2W80 $ $ 0
D Uninsured Boater $ See MA-2W80 $ $ 0
E L&HCA $ Statutory Limits $ $ (included in "B" if any)
F Trailer $ Not Covered $ $
G Personal Property $ See MA-2W80 $ $ o
Premium Bearing Endt(s): See Attached Endorsements $ 2,100

TOTAL PREMIUM $ 8,417


LIMITS ON USE: See Navigation Warranty See MA-2W80
ENDORSEMENTS:ALL20887 ALL-4X07 MA-1X0ge MA-2T99 MA-2W74 MA-2W80£ MA-7W63 MA-8301f
MA-9S93£ MA-9S98

Lay-up Warranty'- It is warranted the vessel will be laid up for part of the year, the dates are:
From noon: To noon:
Laid up Ashore 0 If this box is marked. you agree to lay-up your vessel ashore during the above period.
LOSS PAYEE: We will make payments for Part A: Property Damage losses to the Assured and

EXHIBIT A
Page 1 of 48
Countersigned at

~,Agent
this day of;~'

MA-7N39i (06/05) INSURED COPY 412612007


Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 2 of 16

ACE INA PRIVACY STATEMENT

The ACE INA group of companies strongly believes in maintaining the privacy of information we collect about individuals. We
want you to understand how and why we use and disclose the collected information. The following. provides details of our practices
and procedures for protecting the security of nonpublic personal information that we have collected about individuals. This privacy
statement applies to policies underwritten by the ACE INA group member companies listed below.

INFORMATION WE COLLECT

The information we collect will vary depending on the type of product or service individuals seek or purchase, and may include:

• Information we receive from individuals, such as their name, address, age, phone number, social security number, assets,
income, or beneficiaries;
• Information about individuals' transactions with us, with our affiliates, or with others, such as policy coverage, premium,
payment history, motor vehicle records; and
• Information we receive from a consumer reporting agency, such as a credit history.

INFORMATION WE DISCLOSE

We do not disclose any personal information to anyone except as is necessary in order to provide our products or services to a
person, or otherwise as we are required or permitted by law.
We may disclose any of the information that we collect to companies that perform marketing services on our behalf or to other
financial institutions with whom we have joint marketing agreements.

THE RIGHT TO VERIFY THE ACCURACY OF INFORMATION WE COLLECT

Keeping information accurate and up to date is important to us. Individuals may see and correct their personal information that we
collect except for information relating to a claim or a criminal or civil proceeding.

CONFIDENTIALITY AND SECURITY

We restrict access to personal information to our employees, our affiliates' employees, or others who need to know that
information to service the account or in the course of conducting our normal business operations. We maintain physical, electronic,
and procedural safeguards to protect personal information.

Rec. Marine EXHIBIT A


Page 2 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 3 of 16

CONTACTiNG US

If you have any questions about this privacy statement or would like to learn more about how we protect privacy, please write to us
at ACE INA Customer Services, P.O. Box 1000,436 Walnut Street, WA04F, Philadelphia, PA 19106. Please include the policy
number on any correspondence with us.

ACE American Insurance Company


ACE American Lloyds Irisurance Company
ACE Fire Underwriters Insurance Company
ACE Indemnity Insurance Company
ACE Insurance Company of Illinois
ACE Insurance Company of Ohio
A<:::E Insurance Company of the Midwest
ACE Property and Casualty Insurance Company
Atlantic Employers Insurance Company
Bankers Standard Fire and Marine Company
Bankers Standard Insurance Company
Century Indemnity Company
Illinois Union Insurance Company
Indemnity Insurance Company of North America
Insurance Company of North America
Pacific Employers Insurance Company
Westchester Fire Insurance Company
Westchester Surplus Lines Insurance Company
ESIS, Inc.

EXHIBIT A
Page 3 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 4 of 16

Signatures

The only signatures applicable to this policy are those representing the company named on the fIrst page of the
declarations.

By signing and delivering the policy to you, we state that it is a valid contract when countersigned by our authorized
representative.

Insurance Company of North America


~m
ACE American Insurance Company
Philadelphia, Pennsylvania Philadelphia, Pennsylvania

Indemnity Insurance Company of North America ACE Fire Underwriters Insurance Company
Philadelphia, Pennsylvania Philadelphia, Pennsylvania

EXHIBIT A
MA-IX0ge (05105) Page 4 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 5 of 16

SCHEDULED VESSEL
ENDORSEMENT

I
Named Insured LONE EAGLE RESORTS Endorsement Number
nRJI. PVRTTl=: P()TNT T.()n~F. Vessel 1
Policy Symbol IPolicy Number I Policy Period Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

In consideration of the "'p=.r.>=e."m""i""um=--"c"'h"'a""r'""Q.."e""d"--_ _ _ _ _ _ _ _ _ _ $...,1"-A,w8..,0"-'5"--__ , the following is hereby added to


the coverages afforded by the present policy:
Additional Insured:
Address:

SUBJECT MATTER OF INSURANCE


Vessel Description: 2000, 27' KOFFLER, SPORT FISHER
Hull LD.lDocumentation Number: AK7773N
Vessel Name: ' PYBUS POINT l'
AMOUNT OF ANNUAL
COVERAGES INSURANCE DEDUCTffiLE PREMIUM
Property Damage $ 65,000 $ 1,300 $ 919
Windstorm Deductible $ 2,500 $ 0
Commercial Towing & Assistance $ 500 $ 0 $ 0
Liability. $ 1,000,000 $ 0 $ 466
Medical Payments $ 1,000 $ 0 $ 0
1,000,000 0
Uninsured Boater
L&HCA
$
Statutory
$ $
Included °
Trailer $ Not Covered $ $
Personal Property $ 2,500 $ 250 $ 0
Premium Bearing Endt(s): See Attached Endorsements $ 420

Total $ 1,805
APPLICABLE ENDORSEMENTS:
ALL-4X07 MA-2T99 MA-7W63 MA-8301f MA-9S98

NAVIGATION WARRANTY:
Refer to form: MA-7W63

LAY-UP WARRANTY: It is warranted that the insured vessel will be laid up GY ashore, 0 afloat from
noon: 09/01 to noon: 06/01

LOSS PAYEE:

ALL OTHER TERMS AND CONDmONS REMAIN UNCHANGED.

Authorized Agent

MA-2W80f (10/06) EXHIBIT A


Page 5 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 6 of 16

An Important Notice to
Our Alaska Policyholders
ace usa

ALASKA DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT


DIVISION OF INSURANCE
ATTORNEY FEES COVERAGE NOTICE A
THIS POLICY LIMITS COVERAGE FOR ATTORNEY FEES
UNDER ALASKA RULE OF CIVIL PROCEDURE 82

In any suit in Alaska in which we have a right or duty to defend an insured in addition to the limits of liability, our obligation under
the applicable coverage to pay attorney fees taxable as costs against the insured is limited as follows:

Alaska Rule of Civil Procedure 82 provides that if you are held liable, some or all of the attorney fees of the person making a claim
against you must be paid by you. The amount that must be paid by you is detennined by Alaska Rule of Civil Procedure 82. We
provide coverage for attorney fees for which you are liable under Alaska Rule of Civil Procedure 82 subject to the following
limitation:

We will not pay that portion of any attorney's fees that is in excess of fees calculated by applying the schedule for
contested cases in Alaska Rule Civil Procedure 82(b)(1) to the limit of liability of the applicable coverage.

This limitation means the potential costs that may be awarded against you as attorney fees may not be covered in full. You will
have to pay any attorney fees not covered directly.

For example, the attorney fees provided by the schedule for contested cases in Alaska Rule of Civil Procedure 82(b)(1) are:

20% of the first $25,000 of a judgment;


10% of the amounts over $25,000 of ajudgment.

Therefore, if a court awards ajudgment against you in the amount of $125,000, in addition to that amount you would be liable under
Alaska Rule of Civil Procedure 82(b)(1) for attorney fees of $15,000, calculated as follows:

20% of $25,000 $5,000


10% of $100,000 $10,000
Total Award $125,000 Total Attorney Fees $15,000

If the limit of liability of the applicable coverage is $100,000, we would pay $100,000 of the $125,000 award, and $12,500 for Alaska
Rule of Civil Procedure 82(b)(1) attorney fees, as calculated as follows:

20% of $25,000 $5,000


10% of $75,000 $7,500
Total Limit of Liability $100,000 Total Attorney Fees Covered $12,500

You would be liable to pay, directly and without our assistance, the remaining $25,000 in liability plus the remaining $2,500 for
attorney fees under Alaska Rule of Civil Procedure 82 not covered by this policy.

EXHIBIT A
ALL-4X07 (7/96)
Page 6 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 7 of 16

ALASKA MANDATORY ENDORSEMENT

Endorsement Number
Named Insured

Policy Symbol
LONE EAGLE RESORTS

I
n'RlI. PV1'ITI!=l
Policy Number
pnTN"I' T.nnr.:F.
I Policy Period
I Vessel 1
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert the policy number. The remainder of the infonnation is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

THIS ENDORSEMENT LIMITS COVERAGE FOR ATTORNEY FEES UNDER ALASKA RULE OF CIVIL
PROCEDURE 82. PLEASE READ IT CAREFULLY.

In consideration of the premium paid, the section 'CLAIM OR SUIT AGAINST YOU' under 'GENERAL PROVISIONS IN
mE EVENT OF LOSS' is deleted, and replaced by the following.

CLAIM OR SUIT AGAINST YOU: If a claim is made or suit is brought against you for liability that may be covered under
this policy, you must immediately notify us and send us every demand, notice, summons or other legal papers received by you
or your representative. We will pay the ensuing cost of the suit. We will also have the option of naming attorneys to represent
you. Payments for the cost of your legal defense will be in addition to payments we make under your coverage for liability
claims against you. .

In any suit we defend in Alaska, we will not pay that portion of the attorney's fees awarded as costs that is in excess of the
amount calculated by applying the schedule of attorney's fees for contested cases contained in Alaska Rule of Civil Procedure
82(b)( 1) to the limit of liability of the applicable coverage.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-2T99 ('ll97) Ptd. in U.S.A. EXHIBIT A


Page 7 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 8 of 16

ALASKA NAVIGATION WARRANTY

Named Insured LONE EAGLE RESORTS Endorsement Number

Policy Symbol 1DBAPYBUS POINT. T.nnQlO!


Policy Number Policy Period I I Vessel 1
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6L1L2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert the policy number. The remainder of the infonnation is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

Warranted confined to the waters of the Gulf of Alaska and the inside waters of southeast
Alaska, all not west of Cape Spencer nor south of 54.5 degrees north latitude, and not more
than 25 miles offshore.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

MA-7W63 (6/96) Ptd. in U.S.A. EXHIBIT A


Page 8 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 9 of 16

CAPTAIN AND CREW LIMITA nON


ENDORSEMENT

I
Named Insured Endorsement Number
LONE EAGLE RESORTS
DBA PYBUS POTlITT T.onr.lF. Vessel 1
Policy Symbol Policy Number IPolicy Period Effective Date of Endorsement
SPC I Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the informatioa is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

In consideration of the additional premium of $ 420 , it is warranted that there shaH not be more than ( 1 ) crew
member(s), including the captain, employed aboard the vessel at anyone time. 'The maximum limit of liability for coverage
applicable to the Jones Act or under general Maritime Law, per each accident or occurrence is $1, 000, 000

It is further understood and agreed that in the event additional crew are to be employed, the Insured shaH give prior notice to
this Company and pay such additional premium as is required. If the Insured shaH fail to give such prior notice and at the
time of loss in respects to crew there is a greater number employed than that which is stated above, the insurance shall
respond only in the proportion that the stated number of crew bears to the number on board at the time of the accident.

Notwithstanding the aforementioned, the Company's maximum limit ofliability under PART B: Liability Coverage shaH not
exceed the amount of insurance shown for Liability Coverage on the Declarations Page or endorsements attached thereto.

ALL OTHER TERMS AND CONDmONS REMAIN UNCHANGED.

Authorized Agent

MA-8301f (12103) Ptd. in U.S.A. EXHIBIT A


Page 9 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 10 of 16

CHARTER VESSEL PASSENGER WARRANTY

I
Named Insured Endorsement Number
LONE EAGLE RESORTS
Policy Symbol I
DBA pVRm~
Policy Number
PO-rNT. LeDGE
Policy Period
Vessel 1
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the informalion is t"be compleled only when this endorsement is issued subsequenl 10 the preparalion Of Ibe policy.

In consideration of the premium paid, the insured warrants that the number of passengers shall
not exceed 6

ALL OTHER TERMS AND CONDITIONS REMAIN


UNCHANGED

Authorized Agent

MA-9S98 (11196) Ptd. in U.S.A. EXHIBIT A


Page 10 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 11 of 16

SCHEDULED VESSEL
ENDORSEMENT

I
Named Insured LONE EAGLE RESORTS Endorsement Number

DBA PYBUS POINT LODGE


I Policy Number I Vessel 2

I
Policy Symbol Policy Period Effecti ve Date of Endorsement
SPC L Y07954840 6/1/2007 TO 6[1/2008 6L1/2007'
Issued By (Name of Insurance Company)
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of Ihe information is to be completed only when this endorsemenl is issued subsequent to the preparation of the policy.

!::=-r-=em:2!.:!:i""um~..:=c±h~a~r~gl->e""d,,---_ _ _ _ _ _ _ _ _ _ $,-=1~'w6!.::3!.::3,--__" the following is hereby added to


In consideration of thep
the coverages afforded by the present policy:
Additional Insured:
Address:

SUBJECT MATTER OF INSURANCE


Vessel Description: 2001, 27' KOFFLER, SPORTFI SHER
Hull LD.lDocumentation Number: AK9592N
Vessel Name: ' PYBUS POINT 2'
AMOUNT OF ANNUAL
COVERAGES INSURANCE DEDUCTIBLE PREMIUM
Property Damage $ 70,000 $ 1,400 $ 747
Windstorm Deductible $ 2,500 $ 0
Commercial Towing & Assistance $ 500 $ 0 $ 0
Liability $ 1,000,000 $ 0 $ 466
Medical Payments $ 1,000 $ 0 $ 0
Uninsured Boater $ 1,000,000 $ 0 $ 0
L&HCA Statutory Included
Trailer $ Not Covered $ $
Personal Property $ 2,500 $ 250 $ 0
Premium Bearing Endt(s): See Attached Endorsements $ 420

Total $ 1,633
APPLICABLE ENDORSEMENTS:
ALL-4X07 MA-2T99 MA-7W63 MA-8301f MA-9S98

NAVIGATION WARRANTY:
Refer to form: MA-7W63

LAY-UP WARRANTY: It is warranted that the insured vessel will be laid up (i) ashore, 0 afloat from
noon: 09/01 to noon: 06/01

LOSS PAYEE:

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-2W80f (10/06) EXHIBIT A


Page 11 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 12 of 16

An Important Notice to
Our Alaska Policyholders
ace usa
ALASKA DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
DIVISION OF INSURANCE
ATTORNEY FEES COVERAGE NOTICE A
THIS POLICY LIlVllTS COVERAGE FOR ATTORNEY FEES
UNDER ALASKA RULE OF CIVIL PROCEDURE 82

In any suit in Alaska in which we have a right or duty to defend an insured in addition to the limits of liability, our obligation under
the applicable coverage to pay attorney fees taxable as costs against the insured is limited as follows:

Alaska Rule of Civil Procedure 82 provides that if you are held liable, some or all of the attorney fees of the person making a claim
against you must be paid by you. The amount that must be paid by you is determined by Alaska Rule of Civil Procedure 82. We
provide coverage for attorney fees for which you are liable under Alaska Rule of Civil Procedure 82 subject to the following
limitation:

We will not pay that portion of any attorney's fees that is in excess of fees calculated by applying the schedule for
contested cases in Alaska Rule Civil Procedure 82(b)(1) to the limit of liability of the applicable coverage.

This limitation means the potential costs that may be awarded against you as attorney fees may not be covered in fulL You will
have to pay any attorney fees not covered directly.

For example, the attorney fees provided by the schedule for contested cases in Alaska Rule of Civil Procedure 82(b)(1) are:

20% of the first $25,000 of a judgment;


10% of the amounts over $25,000 of a judgment.

Therefore, if a court awards a judgment against you in the amount of $125,000, in addition to that amount you would be liable under
Alaska Rule of Civil Procedure 82(b)(I) for attorney fees of $15,000, calculated as follows:

20% of $25,000 $5,000


10% of $100,000 $10,000
Total Award $125,000 Total Attorney Fees $15,000

If the limit ofliability of the applicable coverage is $100,000, we would pay $100,000 of the $125,000 award, and $12,500 for Alaska
Rule of Civil Procedure 82(b)(1) attorney fees, as calculated as follows:

20% of $25,000 $5,000


10% of $75,000 $7.500
Total Limit of Liability $100,000 Total Attorney Fees Covered $12,500

You would be liable to pay, directly and without our assistance, the remaining $25,000 in liability plus the remaining $2,500 for
attorney fees under Alaska Rule of Civil Procedure 82 not covered by this policy.

EXHIBIT A
ALL-4X07 (7196) Page 12 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 13 of 16

ALASKA MANDATORY ENDORSEMENT

I
Named Insured Endorsement Number
LONE EAGLE RESORTS
Vessel 2
Policy Symbol I
nBA PYBTT!'I POTN'T' T.onr.R
Policy Number IPolicy Period Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent 10 the preparation of the policy.

THIS ENDORSEMENT LIMITS COVERAGE FOR ATTORNEY FEES UNDER ALASKA RULE OF CIVIL
PROCEDURE 82. PLEASE READ IT CAREFULLY.

In consideration of the premium paid, the section 'CLAIM OR SUIT AGAINST YOU' under 'GENERAL PROVISIONS IN
THE EVENT OF LOSS' is deleted, and replaced by the following.

CLAIM OR SUIT AGAINST YOU: If a claim is made or suit is brought against you for liability that may be covered under
this policy, you must immediately notify us and send us every demand, notice, summons or other legal papers received by you
or your representative. We will pay the ensuing cost of the suit. We will also have the option of naming attorneys to represent
you. Payments for the cost of your legal defense will be in addition to payments we make under your coverage for liability
claims against you.

In any suit we defend in Alaska, we will not pay that portion of the attorney's fees awarded as costs that is in excess of the
amount calculated by applying the schedule of attorney's fees for contested cases contained in Alaska Rule of Civil Procedure
82(b)(1) to the limit ofliability of the applicable coverage.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authonzed Agent

MA-2T99 (2197) Ptd. in U.S.A. EXHIBIT A


Page 13 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 14 of 16

ALASKA NAVIGATION WARRANTY

I
Named Insured Endorsemenr Number
LONE EAGLE RESORTS
Policy Symbol I
DBA. PYBUS POINT
Policy Number I
r~ODGE
Policy Period
Vessel 2
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

Warranted confined to the waters of the Gulf of Alaska and the inside waters of southeast
Alaska, all not west of Cape Spencer nor south of 54.5 degrees north latitude, and not more
than 25 miles offshore.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-7W63 (6/96) Ptd. in U.S.A. EXHIBIT A


Page 14 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 15 of 16

CAPTAIN AND CREW LIMITATION


ENDORSEMENT

Named Insured Endorsement Number

Policy Symbol
LONE EAGLE RESORTS

I
niH\. pVFlnJ:: POTN'I' T.onr.:F.
Policy Number I Policy Period
I Vessel 2
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007 .

ACE AMERICAN INSURANCE COMPANY


Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

In consideration of the additional premium of $ 420 , it is warranted that there shan not be more than ( 1 ) crew
member(s), including the captain, employed aboard the vessel at anyone time. The maximum limit of liability for coverage
applicable to the Jones Act or under general Maritime Law, per each accident or occurrence is $1, 000,000

It is further understood and agreed that in the event additional crew are to be employed, the Insured shall give prior notice to
this Company and pay such additional premium as is required. If the Insured shall fail to give such prior notice and at the
time of loss in respects to crew there is a greater number employed than that which is stated above, the insurance shall
respond only in the proportion that the stated number of crew bears to the number on board at the time of the accident.

Notwithstanding the aforementioned, the Company's maximum limit ofliability under PART B: Liability Coverage shall not
exceed the amount of insurance shown for Liability Coverage on the Declarations Page or endorsements attached thereto.

ALL OTIIER TERMS AND CONDmONS REMAIN UNCHANGED.

Authonzed Agent

MA-8301f (12103) Ptd. in U.S.A. EXHIBIT A


Page 15 of 48
Case 3:08-cv-00050-TMB Document 1-1 Filed 03/24/08 Page 16 of 16

CHARTER VESSEL PASSENGER WARRANTY

Named Insured Endorsement Number

Policy Symbol
LONE EAGLE RESORTS
DBA PYBUS· POINT T.nnaR
lpOliCY Number I Policy Period
I Vessel 2
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

In consideration of the premium paid, the insured warrants that the number of passengers shall
not exceed 6

ALL OTHER TERMS ANI) CONDITIONS REMAIN


UNCHANGED

Authorized Agent

MA-9S98 (11/96) Ptd. in U.S.A. EXHIBIT A


Page 16 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 1 of 16

SCHEDULED VESSEL
ENDORSEMENT

Named Insured LONE EAGLE RESORTS 1 Endorsement Number


I Vessel
Policy Symbol I
DBA PYBUS POINT LODGE
Policy Number I Policy Period Effective Date of Endorsement
3

SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

In consideration of the I:'pC!:r-",e""m""i",wn~..:::c~h~a~r:.!:gL:5e~d"--_ _ _ _ _ _ _ _ _ _ $.~1!:.J'w6oL::3!..::3!..-_-" the following is hereby added to


the coverages afforded by the present policy:
Additional Insured:
Address:

SUBJECT MATTER OF INSURANCE


Vessel Description: 2001, 27' KOFFLER, SPORTFISHER
Hull LD.lDocumentation Number: AK8003P
Vessel Name: ' PYBUS POINT 3'
AMOUNT OF ANNUAL
COVERAGES INSURANCE DEDUCTffiLE PREMIUM
Property Damage $ 70,000 $ 1,400 $ 747
Windstorm Deductible $ 2,500 $ 0
Commercial Towing & Assistance $ 500 $ 0 $ 0
Liability $ 1,000,000 $ 0 $ 466
Medical Payments $ 1,000 $ 0 $ 0
Uninsured Boater $ 1,000,000 $ 0 $ 0
L&HCA Statutory Included
Trailer $ Not Covered $ $
Personal Property $ 2,500 $ 250 $ 0
Premium Bearing Endt(s): See Attached Endorsements $ 420

Total $ 1,633
APPLICABLE ENDORSEMENTS:
ALL-4X07 MA-2T99 MA-7W63 MA-8301f MA-9S98

NAVIGATION WARRANTY:
Refer to form: MA-7W63

LAY-UP WARRANTY: It is warranted that the insured vessel will be laid up <i> ashore, 0 afloat from
noon: 09/01 to noon: 06/01

LOSS PAYEE:

ALL OTHER 'TERMS AND CONDmONS REMAIN UNCHANGED.

Authorized Agent

MA-2W80f (10/06) EXHIBIT A


Page 17 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 2 of 16

An Important Notice to
Our Alaska Policyholders
ace usa

ALASKA DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT


DIVISION OF INSURANCE
ATTORNEY FEES COVERAGE NOTICE A
THIS POLICY LIMITS COVERAGE FOR ATTORNEY FEES
UNDER ALASKA RULE OF 'CIVIL PROCEDURE 82

In any suit in Alaska in which we have a right or duty to defend an insured in addition to the limits of liability, our obligation under
the applicable coverage to pay attorney fees taxable as costs against the insured is limited as follows:

Alaska Rule of Civil Procedure 82 provides that if you are held liable, some or all of the attorney fees of the person making a claim
against you must be paid by you. The amount that must be paid by you is determined by Alaska Rule of Civil Procedure 82. We
provide coverage for attorney fees for which you are liable under Alaska Rule of Civil Procedure 82 subject to the following
limitation:

We will not pay that portion of any attorney's fees that is in excess of fees calculated by applying the schedule for
contested cases in Alaska Rule Civil Procedure 82(b)(1) to the limit of liability of the applicable coverage.

This limitation means the potential costs that may be awarded against you as attorney fees may not be covered in fuU. You wiu
have to pay any attorney fees not covered directly.

For example, the attorney fees provided by the schedule for contested cases in Alaska Rule of Ci vii Procedure 82(b)( 1) are:

20% of the first $25,000 of a judgment;


10% of the amounts over $25,000 of a judgment.

Therefore, if a court awards ajudgment against you in the amount of $125,000, in addition to that amount you would be liable under
Alaska Rule of Civil Procedure 82(b)(1) for attorney fees of $15,000, calculated as follows:

20% of $25,000 $5,000


10% of $100,000 $10,000
Total Award $125,000 Total Attorney Fees $15,000

If the limit of liability of the applicable coverage is $100,000, we would pay $100,000 of the $125,000 award, and $12,500 for Alaska
Rule of Civil Procedure 82(b)(1) attorney fees, as calculated as follows:

20% of $25,000 $5,000


10% of $75,000 $7,500
Total Limit of Liability $100,000 Total Attorney Fees Covered $12,500

You would be liable to pay, directly and without our assistance, the remaining $25,000 in liability plus the remaining $2,500 for
attorney fees under Alaska Rule of Ci vil Procedure 82 not covered by this policy.

EXHIBIT A
ALL4X07 (7/96) Page 18 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 3 of 16

ALASKA MANDATORY ENDORSEMENT

Named Insured Endorsement Number

Policy Symbol
LONE EAGLE RESORTS
nl'lZt. pVl'lnl'l
Policy Number
pnTN'T' T.nnr.R
I Policy Period
I Vessel 3
Effecti ve Date of Endorsement
SPC I
. Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of lIle information is [0 be comple[ed only when Ibis endorsement is issued subsequent [0 the preparation of the policy.

THIS ENDORSEMENT LIMITS COVERAGE FOR ATTORNEY FEES UNDER ALASKA RULE OF CIVIL
PROCEDURE 82. PLEASE READ IT CAREFULLY.

In consideration of the premium paid, the section 'CLAIM OR SUIT AGAINST YOU' under 'GENERAL PROVISIONS IN
TIlE EVENT OF LOSS' is deleted, and replaced by the following.

CLAIM OR SUIT AGAINST YOU: If a daim is made or suit is brought against you for liability that may be covered under
this policy, you must immediately notify us and send us every demand. notice. summons or otherlegal papers received by you.
or your representative. We will pay the ensuing cost of the suit. We will also have the option of naming attorneys to represent
you. Payments for the cost of your legal defense will be in addition to payments we make under your coverage for liability
claims against you.

In any suit we defend in Alaska, we will not pay that portion of the attorney's fees awarded as costs that is in excess of the
amount calculated by applying the schedule of attorney' s f~es for contested cases contained in Alaska Rule of Civil Procedure
82(b)(1) to the limit ofliability of the applicable coverage.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-2T99 (2197) Ptd. in U.S.A. EXHIBIT A


Page 19 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 4 of 16

ALASKA NAVIGATION WARRANTY

Named Insured Endorsement Number


LONE EAGLE RESORTS
DBA PYBUS POINT T.onr.:F. / Vessel 3
Policy Symbol Policy Number IPolicy Period Effective Date of Endorsement
SPC I Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert Ibe policy number. The remainder of Ibe information is to be completed only when Ibis endorsement is issued subsequent to the preparation of the policy.

Warranted confined to the waters of the Gulf of Alaska and the inside waters of southeast
Alaska, all not west of Cape Spencer nor south of 54.5 degrees north latitude, and not more
than 25 miles offshore.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-7W63 (6/96) Ptd. in U.S.A. EXHIBIT A


Page 20 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 5 of 16

CAPTAIN AND CREW LIMITATION


ENDORSEMENT

Named Insured LONE EAGLE RESORTS Endorsement Number

Policy Symbol
~
I 'PVRTTl'I
Policy Number
POIN~
I
T.nnllF.
Policy Period
/ Vessel 3
Effective Date of Endorsement
SPC Y07954840
Issued By (Name ofInsurance Company)
6/1L2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

In consideration of the additional premium of $ 420 , it is warranted that there shall not be more than (1 ) crew
member(s), including the captain, employed aboard the vessel at anyone time. The maximum limit of liability for coverage
applicable to the Jones Act or under general Maritime Law, per each accident or occurrence is $1, 000, 000

It is further understood and agreed that in the event additional crew are to be employed, the Insured shall give prior notice to
this Company and pay such additional premium as is required. If the Insured shall fail to give such prior notice and at the
time of loss in respects to crew there is a greater number employed than that which is stated above, the insurance shall
respond only in the proportion that the stated number of crew bears to the number on board at the time of the accident.

Notwithstanding the aforementioned, the Company's maximum limit ofliability under PART B: Liability Coverage shall not
exceed the amount of insurance shown for Liability Coverage on the Declarations Page or endorsements attached thereto.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-8301f (12/03) Ptd. in U.S.A. EXHIBIT A


Page 21 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 6 of 16

CHARTER VESSEL PASSENGER WARRANTY

Endorsement Number
Named Insured

Policy Symbol
LONE EAGLE RESORTS

I
nRlI. PVRTT!=I POTN'l' T,OnaF.
Policy Number IPolicy Period
I Vessel 3
Effective Date of Endorsement
SPC Y07954840
Issued By (Name ofinsurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insen the policy number. The remainder of tbe information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

In consideration of the premium paid, the insured warrants that the number of passengers shall
not exceed 6

ALL OTHER TERMS AND CONDITIONS REMAIN


UNCHANGED

Authorized Agent

MA-9S98 (11196) Ptd. in U.S.A. EXHIBIT A


Page 22 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 7 of 16

SCHEDULED VESSEL
ENDORSEMENT

Named Insured LONE EAGLE RESORTS Endorsement Number

Policy Symbol I
nRJl PYBUl'; POTNT
Policy Number I
r.on~Ji'!
Policy Period
I Vessel 4
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert the policy number. The remainder of the information is 10 be compleled only when Ihis endorsemenl is issued subsequenllo the preparation oflhe policy.

In consideration of the I:<p"'r.>::em ......-'=c:.o:h.,.a""r'-"gJ.::e""d~_ _ _ _ _ _ _ _ _ _ $,~1~,L>6~4....,4"--__" the following is hereby added to


......i""um
the coverages afforded by the present policy:
Additional Insured:
Address:

SUBJECT MATTER OF INSURANCE


Vessel Description: 2002, 30' KOFFLER, SPORTFISHER
Hull LD.IDocumentation Number: AK1255P
Vessel Name: ' PYBUS POINT 4'
AMOUNT OF ANNUAL
COVERAGES INSURANCE DEDUCTIBLE PREMIUM
Property Damage $ 75,000 $ 1,500 $ 702
Windstorm Deductible $ 2,500 $ 0
Commercial Towing & Assistance $ 500 $ 0 $ 0
Liability $ 1,000,000 $ 0 $ 522
Medical Payments $ 1,000 $ 0 $ 0
Uninsured Boater $ 1,000,000 $ 0 $ 0
L&HCA Statutory Included
Trailer $ Not Covered $ $
Personal Property $ 2,500 $ 250 $ 0
Premium Bearing Endt(s): See Attached Endorsements $ 420

Total $ 1,644
APPLICABLE ENDORSEMENTS:
ALL-4X07 MA-2T99 MA-2W74 MA-8301f MA-9S98

NA VIGATION WARRANTY:
Refer to form: MA-2W74

LAY-UP WARRANTY: It is warranted that the insured vessel will be laid up <i) ashore, 0 afloat from
noon: 09/01 to noon: 06/01

LOSS PAYEE:

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-2W80f (I 0106) EXHIBIT A


Page 23 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 8 of 16

An Important Notice to
Our Alaska Policyholders
ace usa

ALASKA DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT


DIVISION OF INSURANCE
ATTORNEY FEES COVERAGE NOTICE A
THIS POLICY LIMITS COVERAGE FOR ATTORNEY FEES
UNDER ALASKA RULE OF CIVIL PROCEDURE 82

In any suit in Alaska in which we have a right or duty to defend an insured in addition to the limits of liability, our obligation under
the applicable coverage to pay attorney fees taxable as costs against the insured is limited as follows:

Alaska Rule of Civil Procedure 82 provides that if you are held liable, some or all of the attorney fees of the person making a claim
against you must be paid by you. The amount that must be paid by you is determined by Alaska Rule of Civil Procedure 82. We
provide coverage for attorney fees for which you are liable under Alaska Rule of Civil Procedure 82 subject to the following
limitation:

We will not pay that portion of any attorney's fees that is in excess of fees calculated by applying the schedu1e for
contested cases in Alaska Rule Civil Procedure 82(b )(1) to the limit of liability of the applicable coverage.

This limitation means the potential costs that may be awarded against you as attorney fees may not be covered in full. You will
have to pay any attorney fees not covered directly.

For example, the attorney fees provided by the schedule for contested cases in Alaska Rule of Civil Procedure 82(b)(1) are:

20% of the first $25,000 of a judgment;


10% of the amounts over $25,000 of a judgment.

Therefore, if a court awards a judgment against you in the amount of $125,000, in addition to that amount you would be liable under
Alaska Rule of Civil Procedure 82(b)(I) for attorney fees of $15,000, calculated as follows:

20% of $25,000 $5,000


10% of $100,000 $10,000
Total Award $125,000 Total Attorney Fees $15,000

If the limit of liability of the applicable coverage is $100,000, we would pay $100,000 of the $125,000 award, and $12,500 for Alaska
Rule of Civil Procedure 82(b)(1) attorney fees, as calculated as follows:

20% of $25,000 $5,000


10% of $75,000 $7,500
Total Limit of Liability $100,000 Total Attorney Fees Covered $12,500

You would be liable to pay, directly and without our assistance, the remaining $25,000 in liability plus the remaining $2,500 for
attorney fees under Alaska Rule of Civil Procedure 82 not covered by this policy.

EXHIBIT A
ALL·4X07 (7/96)
Page 24 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 9 of 16

ALASKA MANDATORY ENDORSEMENT

Named Insured Endorsement Number


LONE EAGLE RESORTS
/ Vessel 4
Policy Symbol I
DBA PYBUS POINT LODGE
Policy Number IPolicy Period Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

THIS ENDORSEMENT LIMITS COVERAGE FOR ATTORNEY FEES UNDER ALASKA RULE OF CIVIL
PROCEDURE 82. PLEASE READ IT CAREFULLY.

In consideration of the premium paid, the section 'CLAIM OR SUIT AGAINST YOU' under 'GENERAL PROVISIONS IN
THE EVENT OF LOSS' is deleted, and replaced by the following.

CLAIM OR SUIT AGAINST YOU: If a claim is made or suit is brought against you for liability that may be covered under
this policy, you must immediately notify us and send us every demand, notice, summons or other legal papers received by you
or your representative. We will pay the ensuing cost of the suit. We will also have the option of naming attorneys to represent
you. Payments for the cost of your legal defense will be in addition to payments we make under your coverage for liability
claims against you.

In any suit we defend in Alaska, we will not pay that portion of the attorney's fees awarded as costs that is in excess of the
amount calculated by applying the schedule of attorney's fees for contested cases contained in Alaska Rule of Civil Procedure
82(b)(l) to the limit ofIiability of the applicable coverage.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-2T99 (7197) Ptd. in U.S.A. EXHIBIT A


Page 25 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 10 of 16

PORT RISK WARRANTY

I
Named Insured Endorsement Number
LONE EAGLE RESORTS
Policy Symbol
SPC
IPolicy Number
nRlI. l)VRTT!": POINT_ T.nnr.!F.

Y07954840
I Policy Period
6/1/2007 TO 6/1/2008 I 6/1/2007
Vessel 4
Effective Date of Endorsement

Issued By (Name of Insurance Company)


ACE AMERICAN INSURANCE COMPANY
Insert Ihe policy number. The remainder of the information is to be completed only when Ihis endorsement is issued subsequent to Ihe preparation of Ihe policy.

In consideration of the premium charged, the following limits on use shall apply:

(i) Warranted insured yacht confined to port, located at Auke Bay Boat Harbor, ashore, , in
Juneau, AK Navigation is not
permitted.

o Warranted insured yacht is confined to port, located at ______________ _________________________, in


______________________________________________________________________ , however, for the
~

purpose of vessel demonstration, service or maintenance, navigation is granted within a mile radius of
______________________________________________________________________ ,. It is further warranted
that navigation of the vessel for the above purposes shall be conducted by the insured or a licensed captain.

ALL OTHER TERMS AND CONDmONS REMAIN UNCHANGED.

Authorized Agent

MA·2W74 (4/95) EXHIBIT A


Page 26 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 11 of 16

CAPTAIN AND CREW LIMITATION


ENDORSEMENT

Named Insured Endorsement Number


LONE EAGLE RESORTS

Policy Symbol
SPC
1
_DBA PYBUS POINT LODGE
Policy Number
Y0795484o-
Policy Period I 6/1/2007 TO 6/1/2008' I 6/1/2007
/ Vessel 4
Effective Date of Endorsement

Issued By (Name of Insurance Company)


ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the infomJation is io be completed only when this endorsemenl is issued subsequent 10 the preparation of the policy.

In consideration of the additional premium of $ 420 ,it is warranted that there shall not be more than (1 ) crew
member(s), including the captain, employed aboard the vessel at anyone time. The maximum limit of liability for coverage
applicable to the Jones Act or under general Maritime Law, per each accident or occurrence is $1« 000« 000

It is further understood and agreed that in the event additional crew are to be employed, the Insured shall give prior notice to
this Company and pay such additional premium as is required. If the Insured shall fail to give such prior notice and at the
time of loss in respects to crew there is a greater number employed than that which is stated above, the insurance shall
respond only in the proportion that the stated number of crew bears to the number on board at the time of the accident.

Notwithstanding the aforementioned, the Company's maximum limit ofliability under PART B: Liability Coverage shall not
exceed the amount of insurance shown for Liability Coverage on the Declarations Page or endorsements attached thereto.

ALL OTHER lERMS AND CONDITIONS REMAIN UNCHANGED.

Authonzed Agent

MA-830Jf (12103) Ptd. in U.S.A. EXHIBIT A


Page 27 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 12 of 16

CHARTER VESSEL PASSENGER WA.RRANTY

Endorsement Number
Named Insured

Policy Symbol
LONE EAGLE RESORTS

I
n~1I. PV~TT~
Policy Number
POTNT
I
T.onaF.
Policy Period
I Vessel 4
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY.


Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent 10 the preparation of the policy.

In consideration of the premium paid, the insured warrants that the number of passengers shall
not exceed 6

ALL OTHER TERMS AND CONDITIONS REMAIN


UNCHANGED

uthorized Agent

MA-9S98 (11196) Ptd. in U.S.A. EXHIBIT A


Page 28 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 13 of 16

SCHEDULED VESSEL
ENDORSEMENT

I
Named Insured LONE EAGLE RESORTS Endorsement Number

Policy Symbol I
DBA PYBUS POINT LODGE
Policy Number I Policy Period
Vessel 5
Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert Ibe policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to Ibc preparation of Ibe policy.

In consideration of the !:<p:.=r..:!:em~i~i..un~-"c<"h.,.a""r~g"",e"-,d,,,--_ _ _ _ _ _ _ _ _ _ $,-=1,,-,,,-,7wO>!.<22--__ , the following is hereby added to


the coverages afforded by the present policy:
Additional Insured:
Address:

SUBJECT MATTER OF INSURANCE


Vessel Description: 2003, 30' KOFFLER, SPORT FI SHER
Hull LD.lDocumentation Number: AK4054A
Vessel Name: ' PYBUS POINT 5'
AMOUNT OF ANNUAL
COVERAGES INSURANCE DEDUCTffiLE PREMIDM
Property Damage $ 75,000 $ 1,500 $ 760
Windstorm Deductible $ 2,500 $ 0
Commercial Towing & Assistance $ 500 $ 0 $ 0
Liability $ 1,000,000 $ 0 $ 522
Medical Payments $ 1,000 $ 0 $ 0
Uninsured Boater $ 1,000,000 $ 0 $ 0
L&HCA Statutory Included
Trailer $ Not Covered $ $
Personal Property $ 2,500 $ 250 $ 0
Premium Bearing Endtes): See Attached Endorsements $ 420

Total $ 1£702
APPLICABLE ENDORSEMENTS:
ALL-4X07 MA-2T99 MA-7W63 MA-8301f MA-9S98

NAVIGATION WARRANTY:
Refer to form: MA-7W63

LAY-UP WARRANTY: It is warranted that the insured vessel will be laid up <i) ashore, 0 afloat from
noon: 09/01 to noon: 06/01

LOSS PAYEE:

ALL OTHER TERMS AND CONDmONS REMAIN UNCHANGED.

Authorized Agent

MA-2W80f (I 0106) EXHIBIT A


Page 29 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 14 of 16

An Important Notice to
Our Alaska Policyholders
ace usa

ALASKA DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT


DIVISION OF INSURANCE
ATTORNEY FEES COVERAGE NOTICE A

THIS POLICY LIMITS COVERAGE FOR ATTORNEY FEES


UNDER ALASKA RULE OF CIVIL PROCEDURE 82

In any suit in Alaska in which we have a right or duty to defend an insured in addition to the limits of liability, our obligation under
the applicable coverage to pay attorney fees taxable as costs against the insured is limited as follows:

Alaska Rule of Civil Procedure 82 provides that if you are held liable, some or all of the attorney fees of the person making a claim
against you must be paid by you. The amount that must be paid by you is determined by Alaska Rule of Civil Procedure 82. We
provide coverage for attorney fees for which you are liable under Alaska Rule of Civil Procedure 82 subject to the following
limitation:

We will not pay that portion of any attorney's fees that is in excess of fees calculated by applying the schedule for
contested cases in Alaska Rule Civil Procedure 82(b)(1) to the limit of liability of the applicable coverage.

This limitation means the potential costs that may be awarded against you as attorney fees may not be covered in full. You will
Iw.ve to pay any attorney fees not covered directly.

For example, the attorney fees provided by the schedule for contested cases in Alaska Rule of Civil Procedure 82(b)(I) are:

20% of the first $25,000 of a judgment;


10% of the amounts over $25,000 of a judgment.

Therefore, if a court awards a judgment against you in the amount of $125,000, in addition to that amount you would be liable under
Alaska Rule of Civil Procedure 82(b)(1) for attorney fees of $15,000, calculated as follows:

20% of $25,000 $5,000


10% of $100,000 $10,000
Total Award $125,000 Total Attorney Fees $15,000

If the limit of liability of the applicable coverage is $100,000, we would pay $100,000 of the $125,000 award, and $12,500 for Alaska
Rule of Civil Procedure 82(b)(l} attorney fees, as calculated as follows:

20% of $25,000 $5,000


10% of $75,000 $7,500
Total Limit of Liability $100,000 Total Attorney Fees Covered $12,500

You would be liable to pay, directly and without our assistance, the remaining $25,000 in liability plus the remaining $2,500 for
attorney fees under Alaska Rule of Civil Procedure 82 not covered by this policy.

EXHIBIT A
Page 30 of 48
ALL-4X07 (7/96)
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 15 of 16

ALASKA MANDATORY ENDORSEMENT

I
Named Insured Endorsement Number
LONE EAGLE RESORTS
DRll PVRTTI=: POTNT T.011r.1'1 Vessel 5
Policy Symbol \ Policy Number \ Policy Period Effecti ve Date of Endorsement
SPC Y07954840 6/1/2007 TO 6/1/2008 \ 6/1/2007
Issued By (Name of Insurance Company)
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the information is to be completed only when this endorsement is issued subsequent to the preparation of Ibe policy.

THIS ENDORSEMENT LIMITS COVERAGE FOR ATTORNEY FEES UNDER ALASKA RULE OF CIVIL
PROCEDURE 82. PLEASE READ IT CAREFULLY.

In consideration of the premium paid, the section 'CLAIM OR SUIT AGAINST YOU' under 'GENERAL PROVISIONS IN
THE EVENT OF LOSS' is deleted, and replaced by the following.

CLAIM OR SUIT AGAINST YOU: If a claim is made or suit is brought against you for liability that may be covered under
this policy, you must immediately notify us and send us every demand, notice, summons or other legal papers received by you
or your representative. We will pay the ensuing cost of the suit. We will aiso have the option of naming attorneys to represent
you. Payments for the cost of your legal defense will be in addition to payments we make under your coverage for liability
claims against you.

In any suit we defend in Alaska, we will not pay that portion of the attorney's fees awarded as costs that is in excess of the
amount calculated by applying the schedule of attorney's fees for contested cases contained in Alaska Rule of Civil Procedure
82(b)(1) to the limit of liability of the applicable coverage.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-2T99 (2197) Ptd. in U.S.A. EXHIBIT A


Page 31 of 48
Case 3:08-cv-00050-TMB Document 1-2 Filed 03/24/08 Page 16 of 16

ALASKA NAVIGATION WARRANTY

I
Named Insured LONE EAGLE RESORTS Endorsement Number
Vessel 5
Policy Symbol I
nBA. PVRTT~
Policy Number
POTN'T'
I
T.on(.n~·
Policy Period Effective Date of Endorsement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert the policy number. The remainder of the informatioD is to be completed only when this endorsement is issued subsequent to the preparation of the policy.

Warranted confined to the waters of the Gulf of Alaska and the inside waters of southeast
Alaska, all not west of Cape Spencer nor south of 54.5 degrees north latitude, and not more
than 25 miles offshore.

ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.

Authorized Agent

MA-7W63 (6196) Ptd. in U.S.A. EXHIBIT A


Page 32 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 1 of 16

CAPTAIN AND CREW LIMITATION


ENDORSEMENT

I
Named Insured EndolSement Number
LONE EAGLE RESORTS
Policy Symbol I
nRJl.. PYRTTl=l POTlIl'T'
Policy Number I
T.on(.l~
Policy Period
Vessel 5
Effective Date of EndolSement
SPC Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007

ACE AMERICAN INSURANCE COMPANY


Insert the policy number. The remainder of the infonnation is to be completed only when this endorsement is issued subsequent to the preparation of the pclicy.

In consideration of the additional premium of $ 420 . it is warranted that there· shaH not be more than ( 1 ) crew
member(s), induding the captain, employed aboard the vessel at anyone time. The maximum limit of liability for coverage
applicable to the Jones Act or under general Maritime Law, per each accident or occurrence is $1,000,000

It is further understood and agreed that in the event additional crew are to be employed, the Insured shall give prior notice to
this Company and pay such additi~)llal premium as is required. If the Insured shall fail to give such prior notice and at the
time of loss in respects to crew there is a greater number employed than that which is stated above, the insurance shall
respond only in the proportion that the stated number of crew bears to the number on board at the time of the accident.

Notwithstanding the aforementioned, the Company's maximum limit ofliability under PART B: Liability Coverage shall not
exceed the amount of insurance shown for Liability Coverage on the Declarations Page or endorsements attached thereto.

ALL OTHER 1ERMS AND CONDmONS REMAIN UNCHANGED.

~gent
MA-8301f (12/03) Ptd. in U.S.A.
EXHIBIT A
Page 33 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 2 of 16

CHARTER VESSEL PASSENGER WARRANTY

Named Insured Endorsement Number

Policy Symbol
LONE EAGLE RESORTS
DBA PYBUS POTN'I' T.onr.:R
Policy Number IPolicy Period 1 Vessel 5
Effecti ve Date of Endorsement
SPC I Y07954840
Issued By (Name of Insurance Company)
6/1/2007 TO 6/1/2008 I 6/1/2007
ACE AMERICAN INSURANCE COMPANY
Insert the policy number. The remainder of the information is 10 be compleled only when this endo.-.emenl is issued subsequenllO the preparation of the policy.

In consideration of the premium paid, the insured warrants that the number of passengers shall
not exceed 6

ALL OTHER TERMS AND CONDITIONS REMAIN


UNCHANGED

Authorized Agent

MA-9S98 (11/96) Ptd. in U.S.A.


EXHIBIT A
Page 34 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 3 of 16

INAMAR GD

Recreational Marine Insurance

EXHIBIT A
one of the ACE Group of Companies

Page 35 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 4 of 16
4

CHARTER POLICY
QUICK REFERENCE
DECLARATIONS PAGE PARTF:
• Your Name and Address........................... 1 VESSELTR~LERCOVERAGE
• Your Insured Property............................... 1 • Perils Insured Against............................... 7
• Policy Period................... ......... ............... 1 • Exclusions............................ ..... ............. 7
• Coverages. ........................... ........ .......... 1 • Deductible Amount.................................. 7
• Amounts of Insurance.............................. 1 • Loss Settlement.... ....... .............. ............. 8
• Deductible..... ..................... .................... 1
• Lay-Up Warranty..................................... 1 PARTG:
• Limits on Use..... ...... ............................... 1 PERSONAL PROPERTY COVERAGE
• Loss Payee........ .............. .................. ..... 1 • Property Covered..................................... 8
• Fishing Equipment Stored Ashore.............. 8
AGREEMENT AND DEFINITIONS • Exclusions. ............. ................................ 8
• Agreement... ............ .............................. 3 • Mysterious Disappearance........................ 8
• Definitions.. ......... ................................... 3 • Causes of Loss Which Are Covered............ 8
• Deductible.............................................. 8
PART A: • Loss Settlement...................................... 8
PROPERTY DAMAGE COVERAGE
• Perils Insured Against............................... 4 GENERAL CONDITIONS AND EXCLUSIONS
• Overland Transport............................. ..... 4 • Policy Period........................................... 8
• Exclusions..... ..................... ......... ........... 4 • Extension of Coverage.............................. 9
• Equipment on Shore..................... ...... ...... 4 • Non-owned VesseL................................ 9
• Deductible Amount.... ...... ........ .......... ...... 4 • Racing.................................................... 9
• Loss Settlement.......... ............ ...... .......... 4 • Broadening Coverage............ .................... 9
• Property Subject to Depreciation................ 5 • Policy Premium and Renewal. ................ ..... 9
• Salvage Charges... ...... ........... ............ ..... 5 • Changes in Policy..................................... 9
• Commercial Towing and Assistance........... 5 • Conformity to State Law............................ 9
• Cancelling the Policy................................. 9
PARTB: • Return Premiums...................................... 9
LIABILITY COVERAGE • Use of Vessel.... ......... ............................. 9
• Perils Insured Against.............................. 5 • Captain Warranty..................................... 9
• Exclusions.............................................. 5 • Passenger Warranty................................. 9
• Limits of Liability..................................... 6 • Firearms Exclusion.................................. 10
• Navigation Warranty................................ 10
• Lay-Up Warranty..................................... 10
PART C:
MEDICAL PAYMENTS COVERAGE • Seaworthiness Warranty.......................... 10
• Loss-of-Use Exclusion.............................. 10
• Perils Insured Against............................... 6
• Transfer of Interest................................. 10
• Exclusions.................................... .......... 6
• Concealment, Misrepresentation or Fraud... 10
• Loss Settlement................ .......... ........ .... 6
• Dishonest, Illegal or Intentional Acts.......... 10
• Medical Payments Proof-of-Loss................ 6
• No Benefits to Others... .................. ......... 10
• Additional Requirements........................... 6
• War, Confiscation and Radioactive
• Admission of Liability.... ........................... 6
Contamination........................................ 10
PARTD: GENERAL PROVISIONS IN
UNINSURED BOATER COVERAGE THE EVENT OF LOSS
• Perils Insured Against....... ........................ 7 • Protection Against Loss ......................... .. 10
• Exclusions.................................... .......... 7 • Abandonment. ...................................... . 11
• Loss Settlement...................................... 7 • Notice of Loss ....................................... . 11
• Proof-of-Loss ........................................ . 11
PART E: • Claim of Suit Against you ....................... . 11
FEDERAL LONGSHOREMEN'S AND • Assistance and Cooperation .................... . 11
HARBOR WORKERS' • Payment of Loss ................................... .. 11
COMPENSATION INSURANCE .................. 7 • Our Right to Recover .............................. . 11
• Salvage ................................................. 11
• Suit Against Us ..................................... . 12
• Other Insurance .................................... .. 12
EXHIBIT A
Page 36 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 5 of 16

DECLARATIONS PAGE
(Attach Here)

This is not a complete and valid insurance policy without


an accompanying Declarations Page.

EXHIBIT A
Page 37 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 6 of 16

CHARTER POLICY
AGREEMENT AND DEFINITIONS

AGREEMENT
This is a legal contract between you and us. We will provide the insurance coverage described in this
policy in return for the premium and the compliance by all covered persons with all applicable provisions of
this policy.

DEFINITIONS
Throughout this policy, you and your refer to the named insured as shown in the Declarations Page, and
we, us and our refer to the company providing this Insurance. In addition, certain words and phrases
are defined as follows:

Insured Property is defined as:


a. the vessel(s) shown on the Declarations Page, including spars, sails, machinery, furniture, dinghies,
outboard motors, fittings and other equipment normally required for the operation or maintenance of the
vessel; moorings and cradles are excluded;
b. any vessel that you acquire ownership of during the Policy Period, however, you must notify us within
15 days of the time you acquire the vessel and pay any additional premium required; in the event of
loss during this period, we will pay no more than its cost to you, or $50,000, whichever is less.

Covered person is defined as you, or any person or legal entity operating your vessel(s) as shown on the
Declarations Page, for private pleasure use with your direct and prior permission. It does not include:

a. any paid captain or crew member;


b. any person or legal entity operating, or employed by, or the agent of a marina, boat repair yard, yacht
club, sales agency, boat service station or other similar organization.
However, we will cover your liability for bodily injury or property damage caused by any of these people or
organizations.

Horsepower is defined as that amount stated by the manufacturer as peak-cleveloped horsepower as


measured at the flywheel.

Latent Defect is a flaw in the material which is existing at the time of the building of the vessel or her
machinery and which is not discoverable by the assured through ordinary methods of testing.

Tropical Depressions, Tropical Storms, Hurricanes and Nor'easters are defined as those so
designated by the National Weather Service and/or the National Hurricane Center.

Actual Cash Value means the fair market value of the insured property at the time of loss.

Sports Equipment means jet skis, waverunners, snorkeling and scuba gear. It also includes water skis
and other items designed for being pulled behind the insured vessel.

Fishing Equipment means rods, reels, tackle, lures, tackle boxes and coolers.

Warranty means an agreement in the policy or provided by law that must be strictly and literally complied
with. A breach of a warranty voids the insurance contract during the term of such a breach.

Uninsured Boater and Uninsured Owner-Operator means any owner or operator of a vessel, other than
the vessel named in this policy, who is legally responsible for the accident and:
a. to whom no liability policy applies;
b. who cannot be identified, such as a hit-and run-operator.

EXHIBIT A
3 Page 38 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 7 of 16

PART A: PROPERTY DAMAGE COVERAGE

PERILS INSURED AGAINST: We will provide coverage for accidental, direct physical loss or damage
from any external cause to your insured vessel as well as salvage charges, except as specifically excluded
in this policy.

OVERLAND TRANSPORT: We will provide coverage while your vessel is being transported overland
including loading and unloading.

EXCLUSIONS: We do not provide coverage under Part A: Property Damage Coverage against loss or
resulting damage from:
a. wear and tear, gradual deterioration, weathering, insects, mold, animals or marine life;
b. marring, scratching or denting;
c. osmosis or blistering;
d. manufacturer's defects or defects in design;
e. the cost of replacing or repairing any item having a latent defect that causes damage to your insured
property, however, resulting damage would be covered;
f. willful misconduct;
g. corrosion, except electrolytic (stray current) corrosion.

EQUIPMENT ON SHORE: We will provide coverage for all insured property removed temporarily from
your vessel for storage on shore. The amount of insurance on the vessel will be reduced by the amount
covered on shore.

DEDUCTIBLE AMOUNT
a. we will adjust each claim separately for a covered loss to your insured property; the amount of each
adjusted claim will be automatically reduced by the Deductible Amount shown on the Declarations
Page; no deductible will be applied in the event of a total loss to your vessel, except for conditions
outlined in paragraph b below; for deductible purposes, we will treat any two or more covered losses
resulting from the same accident or occurrence as one claim;
b. we will apply a separate property damage deductible to losses caused by wind, rain, waves or hail
when those losses are the result of either a Tropical Depression, Tropical Storm, Hurricane or
Nor'easter; this deductible will be in lieu of the Part A: Property Damage Coverage Deductible Amount
shown on the Declarations Page, and will be applied to the amount of each loss; it will be applicable to
all partial, total or constructive total losses; the deductible amount will equal three times the Part A:
Property Damage Coverage Deductible Amount on the Declarations Page, or $2,500, whichever is
greater.

LOSS SETTLEMENT: In the event of loss or damage to your insured property, we will pay the lowest of
the following amounts:
a. the Part A: Property Damage Coverage limit as shown on the Declarations Page;
b. the cost of replacement;
c. the cost to repair with no deduction for depreCiation, except as specified in Part A: Property Damage
Coverage and as shown in the Property Subject to Depreciation section.

We will pay for a total loss to your vessel and other covered property only if:
a. the vessel is completely lost or destroyed;
b. the cost of recovering and/or repairing the vessel is greater than the amount of insurance shown on the
Declarations Page.

The cost of repairs shall be determined by yacht repair yards, equipment repairers or surveyors agreeable
to the company.

The amount we will pay for a total loss shall be reduced by the amount paid for repairs of prior covered
damage not completed at the time of the total loss.

EXHIBIT A
4 Page 39 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 8 of 16

PROPERTY SUBJECT TO DEPRECIATION: In the event of loss or damage to your insured plastic or
canvas coverings, inclusive of all-weather bridge and cockpit enclosures, and dodgers, sails, outboard
motors or outdrive units, machinery inside the vessel that is over seven years old, or components of any of
the preceding items which requires replacement or repair, we will pay the lesser of:
a. the actual cash value at the time of loss;
b. the cost to repair subject to depreciation;
c. the cost of replacement.

SALVAGE CHARGES: We will pay for salvage charges you incur arising from a covered loss. Payments
for salvage charges will be in addition to any other payments we make for losses covered by this policy.
However, the most we will pay for salvage charges is the Part A: Property Damage Coverage limit shown
on the Declarations Page. The Part A: Property Damage Coverage Deductible Amount does not apply to
this coverage.

COMMERCIAL TOWING AND ASSISTANCE: We will provide additional protection in the event there
is an emergency situation where. you and your vessel are not in imminent danger. The coverage shall be
deemed excess over all other valid and collectible towing assistance benefits. We will reimburse you for the
reasonable costs you incur, not to exceed a total of $500, resulting from the following services to your
vessel if help is not available and you must obtain commercial assistance:
a. towing to the nearest place where necessary repairs can be made;
b. delivery of fuel, oil, parts or loaned battery (excluding the cost of these items themselves) and
emergency labor, while away from safe harbor.
Neither the policy deductible, nor the OTHER INSURANCE paragraph under GENERAL PROVISIONS IN
THE EVENT OF LOSS, apply to this coverage.

PART B: LIABILITY COVERAGE

PERILS INSURED AGAINST: We will pay sums that you or a covered person become legally obligated
to pay as a result of the ownership, operation or maintenance of your insured vessel because of:

a. attempted or actual raising, removal or destruction of the wreck of your insured property;
b. failure to raise, remove or destroy the wreck of your insured property;
c. bodily injury or loss of life;
d. your liability to paid crew as defined in the Jones Act or under general Maritime Law;
e. loss or damage to any property;
f. pollution or contamination of any kind.

EXCLUSIONS: We do not provide coverage under Part B: Liability Coverage for:


a. liability of other covered persons to you, your spouse, or other persons who reside in your household;

b. your liability to your spouse, or other persons who reside in your household;
c. liability assumed by you under any contract or agreement;
d. liability that arises while your insured property is being conveyed except at the point the vessel is
hauled out of the water or launched;
e. fines or other penalties that any government unit requires you to pay;
f. punitive damages;
g. bodily injury or property damage ariSing out of parasailing or scuba diving;
h. liability that arises as a result of the sale, dispensing or consumption of alcoholic beverages on board
the vessel insured by this policy;
i. swimmers and divers of any kind, if any, either while embarking, after leaving the vessel(s) to enter the
water, while in the water, towed behind the insured vessel, or while boarding the vessel(s) on the return
from the water; in addition, this policy excludes all liability for injury, death or accidents from or in
connection with any sales, service or use of diving equipment of any kind, or in any manner connected
with diving or swimming activities.

EXHIBIT A
5 Page 40 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 9 of 16

LIMITS Of LIABILITY: We will pay no more than the amount of insurance shown on the Declarations
Page for all damage or losses resulting from:
a. anyone accident or occurrence; with respect to pollution or contamination of any kind, we will pay up to
the Part B: Liability Coverage limit shown on the Declarations Page, or $500,000, whichever is greater;

b. any series of accidents or occurrences arising out of the same event; this is the most we will pay
regardless of the number of covered persons involved, claims made, vessels or premiums shown on
the Declarations Page or the number of vessels involved.

PART C: MEDICAL PAYMENTS COVERAGE

PERILS INSURED AGAINST: We will pay for reasonable medical, ambulance, hospital, professional
nursing and funeral costs that become necessary due to accidental bodily injury to persons injured while in,
upon, boarding or leaving your insured vessel. We will pay only for those costs incurred within one year of
the date of accident.

EXCLUSIONS: We do not provide coverage under Part C: Medical Payments Coverage for:
a. any employee of yours injured while in the course of employment or while using, maintaining or
repairing your insured property;
b. any responsibility for payment assumed by you under contract or agreement;
c. anyone who is injured while your insured property is being conveyed, hauled out or launched;
d. anyone to or for whom benefits are payable under any state or federal compensation law or act;
e. anyone who is injured while parasailing or scuba diving;
f. swimmers and divers of any kind, if any, either while embarking, after leaving the vessel(s) to enter the
water, while in the water, towed behind the insured vessel, or while boarding the vessel(s) on the return
from the water; in addition, this policy excludes all liability for injury, death or accidents from or in
connection with any sales, service or use of diving equipment of any kind, or in any manner connected
with diving or swimming activities.

LOSS SETTLEMENT: We will pay no more than the amount of insurance shown for Part C: Medical
Payments Coverage on the Declarations Page for all covered costs of each person injured as a result of
anyone accident or series of accidents arising out of the same event. Any payment made under Part C:
Medical Payments Coverage shall reduce the amount payable under Part B: Liability Coverage or Part D:
Uninsured Boater Coverage.

MEDICAL PAYMENTS PROOf-Of-LOSS: A written, sworn proof of loss must be filed with us by any
person seeking payment by us under the Part C: Medical Payments Coverage, or by someone on his/her
behalf. This proof-of-Ioss must include:
a. the name and address of each person and organization performing covered services;
b. the nature, extent and dates of these services; and
c. itemized charges and any sums already paid.
This proof-of-Ioss must be filed:
a. as soon as reasonably possible after completion of services;
b. as soon as reasonably possible after the cost of services being provided equals the amount of our
liability under Part C: Medical Payments Coverage on the Declarations Page;
c. within one year of the date of the accident, whichever of the above occurs first.

ADDITIONAL REQUIREMENTS: Each person seeking payment by us under Part C: Medical Payments
Coverage must:
a. submit to a physical examination by a physician selected by us when and as often as we reasonably
require; we will pay for the cost of the examination; and
b. provide us with written authorization for release to us of copies of pertinent medical reports and·
records.

ADMISSION Of LIABILITY: Any payment made under this section is not an admission of liability by you
or us.

EXHIBIT A
6 Page 41 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 10 of 16

PART D: UNINSURED BOATER COVERAGE

PERILS INSURED AGAINST: We will pay for the damages which, because of bodily injury received
aboard your vessel, you are legally entitled to recover from the uninsured owner or operator of another
vessel.

EXCLUSIONS: We do not provide coverage under Part D: Uninsured Boater Coverage:


a. for claims settled without our written consent;
b. if the uninsured vessel is owned by a government agency or unit;
c. for vessels owned by or furnished for your regular use, or the use of a member of your immediate
family or any person insured by this policy;
d. for an insured using a vessel without permission;
e. where no evidence of physical contact exists between your vessel and an unidentified vessel, or where
no evidence of physical contact exists between your vessel and an uninsured vessel.

LOSS SETTLEMENT: The amount shown for Part D: Uninsured Boater Coverage on the Declarations
Page is the most we will pay under Part D, regardless of the number of insured persons, claims made or
vessels involved in anyone accident or series of accidents arising out of the same event. This coverage
will not apply directly or indirectly to the benefit of any insured under any state or federal compensation law
or act. Payment made for this coverage to or for an insured person will reduce the amount that person is
entitled to recover from the Part B: Liability Coverage of this policy.

PART E: FEDERAL LONGSHOREMEN'S AND HARBOR WORKERS'


COMPENSATION INSURANCE
When insurance is provided under Part B: Liability Coverage, insurance is also provided under this section.
We will provide coverage for any liability which you, as owner of the insured property, incur during the term
of the policy under Part E: Federal Longshoremen's and Harbor Workers' Compensation Insurance.

PART F: VESSEL TRAILER COVERAGE

PERILS INSURED AGAINST: We will provide coverage for all accidental, direct physical loss or
damage to any trailer listed on the Declarations Page, but only:
a. if used exclusively for transporting the vessel; and
b. while located in the continental United States including Alaska, Hawaii, Puerto Rico or Canada.

EXCLUSIONS: We do not provide coverage under Part F: Vessel Trailer Coverage against loss or
resulting damage from:
a. wear and tear, mechanical breakdown, gradual deterioration, weathering, insects, mold, animals,
marine life, ice, freezing or extremes of temperature;
b. marring, scratching or denting;
c. osmosis, blistering, electrolysis or corrosion;
d. manufacturer's defects, defects in designs or latent defects;
e. weight of a load exceeding the rated capacity of a trailer.

DEDUCTIBLE AMOUNT: We will adjust each claim separately for a covered loss to your insured
property. The amount of adjusted claim will be automatically reduced by the Deductible Amount shown on
the Declarations Page. We will treat each covered loss as a separate claim. For deductible purposes, we
will treat two or more covered losses resulting from the same accident or occurrence as one claim.

EXHIBIT A
7 Page 42 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 11 of 16

LOSS SETILEMENT: In the event of loss or damage to the vessel trailer, we will pay the lowest of the
following amounts;
a. the Part F: Vessel Trailer Coverage limit as shown on the Declarations Page;
b. the actual cash value at the time of loss;
c. the cost to repair subject to depreciation;
d. the cost of replacement.

PART G: PERSONAL PROPERTY COVERAGE

PROPERTY COVERED: We will cover clothing, fishing equipment and personal effects that belong to
you, your clients or members of your family while these items are on board your vessel or are being loaded
or unloaded. We will not cover sports equipment, money, jewelry, traveler's checks or any other valuable
papers or documents.

FISHING EQUIPMENT STORED ASHORE: We will cover fishing equipment temporarily stored
ashore. However, the coverage 'provided herein does not insure the mysterious disappearance and/or theft
of any covered fishing equipment, unless:
a. there is visible evidence of forcible entry into the storage facility;
b. there is visible evidence of forcible removal of covered fishing equipment from the storage facility.

EXCLUSIONS: We do not provide coverage under Part G: Personal Property Coverage against loss or
resulting damage from:
a. wear and tear, mechanical breakdown, gradual deterioration, weathering, insects, mold, animals,
marine life, ice, freezing or extremes of temperature;
b. marring, scratching or denting;
c. osmosis, blistering, electrolysis or corrosion;
d. manufacturer's defects, defects in designs or latent defects.

MYSTERIOUS DISAPPEARANCE: The coverage provided herein does not insure the mysterious
disappearance and/or theft of any covered property unless:
a. there is visible evidence of forcible entry into the cabin of the insured vessel;
b. there is visible evidence of forcible removal of covered properties from the insured vessel;
c. there is a theft of the entire vessel.

CAUSES OF LOSS WHICH ARE COVERED: We will cover direct physical loss or damage from any
external cause, except as specifically excluded in this policy.

DEDUCTIBLE: We will adjust each claim separately for a covered loss to your insured property. The
amount of adjusted claim will be automatically reduced by the Deductible Am9unt shown on the
Declarations Page. We will treat each covered loss as a separate claim. For deductible purposes, we will
treat two or more covered losses resulting from the same accident or occurrence as one claim.

LOSS SETILEMENT: In the event of loss or damage to your insured property, we will pay the lowest of
the following amounts:
a. the Part G: Personal Property Coverage limit as shown on the Declarations Page;
b. the actual cash value at the time of loss;
c. the cost to repair subject to depreciation;
d. the cost of replacement.

The OTHER INSURANCE paragraph under GENERAL PROVISIONS IN THE EVENT OF LOSS does not
apply to PART G: PERSONAL PROPERTY COVERAGE.

GENERAL CONDITIONS AND EXCLUSIONS

POLICY PERIOD: This policy applies only in the event of an accident or loss which occurs during the
Policy Period as shown on the Declarations Page.

EXHIBIT A
8 Page 43 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 12 of 16

EXTENSION OF COVERAGE: If the Navigational Limits or Lay-Up Warranty shown on the Declarations
Page are breached due to matters beyond your control, the policy will remain in effect, but only if you give
us written notice of the breach within 10 days after the breach and pay any additional premiums due us for
this extension of coverage. If the Navigation Limits or Lay-Up Warranty are breached voluntarily, there shall
be no coverage under this policy without both prior notice to us and approval by us.

NON-OWNED VESSEL: We do not provide any coverage for non-owned vessels you may operate.

RACING: We will not pay for any loss that occurs while the insured vessel is being operated in any race or
speed test. This does not apply to sailboats navigating in inland waters or in coastwise waters of the
continental United States within 10 miles offshore.

BROADENING COVERAGE: If, during the Policy Period, we make any revision to this policy, which
broadens the coverage without additional premium, the broadened coverage will apply as of the effective
date of such revision.

POLICY PREMIUM AND RENEWAL: The premium shown on the Declarations Page is the initial
premium for this policy. If we agree to renew or continue the policy, then at the time of each renewal or
continuation of, on the policy anniversary date, the premil,!m for the renewal or continuation will be
computed by us according to our premium rules, forms and guidelines then in use.

CHANGES IN POLICY: This policy contains all of the agreements between you and us. Its terms may
not be changed or waived except by an endorsement issued by us. If a change requires a premium
adjustment, we will adjust the premium as of the effective date of the policy change.

CONFORMITY TO STATE LAW: When a provision of this policy is in conflict with the applicable law of
the state in which this policy is issued, then the law of the state shall apply.

CANCELLING THE POLICY: You may cancel this policy by returning it to us or our authorized agent or
by advising us or our authorized agent in writing, stating the future date you want it to be cancelled. We
may cancel this policy by delivering or mailing to you at your last address shown on our records, written
notice stating when, not less than 15 day after mailing, the policy will be cancelled. Delivery or mailing of
this notice to you shall be sufficient proof that notice of cancellation was given. The date of the cancellation
stated in the notice shall become the end of the Policy Period.

RETURN PREMIUMS: If this policy is cancelled, you may be entitled to a premium refund. If we cancel
the policy, any return premium will be computed on a pro-rata basis. If you cancel the policy, any return
premium will be computed on a 90% pro-rata basis. No premiums will be returned to you if we have paid
you for a total or constructive total loss of the vessel insured under this policy. Any return premium will be
paid to you as soon as'possible after the cancellation.

USE OF VESSEL: We do not provide any coverage while your insured property is used for any type of
commercial purposes other than carrying fare-paying passengers on sport fishing and other similar
excursions. It is further warranted that, if applicable, the vessel maintain a current certificate of inspection
from the United States Coast Guard. We will provide coverage when your vessel is used for private
pleasure and while you are attempting to aid other vessels in distress, provided there is no consideration
for your services.

CAPTAIN WARRANTY: Warranted that while the insured vessel(s) is used for commercial purposes
such as described under Use of Vessel, a captain duly licensed in accordance with United States law and
the law of the Port from which the vessel operates shall be aboard and in charge of the vessel at all times.

PASSENGER WARRANTY: Warranted that the number of passengers carried on board the insured
vessel(s) shall be in compliance with all United States Coast Guard and/or government regulations.

EXHIBIT A
9
Page 44 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 13 of 16

FIREARMS EXCLUSION: We do not provide coverage against loss, damage or expense arising from
the intentional or accidental discharge of a firearm on board the vessel(s) insured by this policy.

NAVIGATION WARRANTY: Navigation will be confined as stated in the Declarations Page, but in no
event shall the vessel be navigated beyond the limits permitted by the United States Coast Guard.

LAY-UP WARRANTY: Means a series of consecutive months during the policy period when your vessel
is laid up and out of commission. During this time your vessel must be laid up in a safe berth ashore or
afloat, and not navigated or used for living aboard. All removable gear and equipment must be taken off the
vessel and stored ashore.

SEAWORTHINESS WARRANTY: Warranted that, at the inception of coverage and throughout the
policy term, the vessel shall be in seaworthy condition, the insured shall exercise due diligence to keep the
vessel seaworthy, and in all respects fit, tight, and properly manned, equipped and supplied.

LOSS-OF-USE EXCLUSIO~: We do not cover loss resulting from cancellation of charters,


noncollectibility of freight, bad debts, insolvency of agents or others, or detention of demurrage of the
vessels insured by this policy.

TRANSFER OF INTEREST: All coverage provided by Us will terminate upon the sale, assignment,
transfer or pledge of the insured property or of this contract unless prior written consent has been obtained
from us.

CONCEALMENT, MISREPRESENTATION OR FRAUD: All coverage provided by us will be


voided from: the beginning of the Policy Period if you intentionally conceal or misrepresent any material
fact or circumstance relating to this contract of insurance, or the application for such insurance, whether
before or after a loss.

DISHONEST, ILLEGAL OR INTENTIONAL ACTS: We do not pay for loss or damage caused by the
dishonest, illegal or intentional acts of any covered person, or any person to whom your insured property is
entrusted, regardless of whether or not such person is convicted of such an act by a criminal court.

NO BENEFIT TO OTHERS: No person or organization, which has custody of your insured property and
is to be paid for services, will benefit from this insurance.

WAR, CONFISCATION AND RADIOACTIVE CONTAMINATION: We do not provide any coverage


for loss or damage due to:
a. war, including undeclared war, civil war, insurrection, rebellion, revolution, warlike act by military force
or military personnel, destruction or seizure for military purpose and including any consequence of
these;
b. the lawful or unlawful capture, seizure, confiscation, requisition or detainment of your vessel by a civil
or military authority, or an attempt at any of these, due to, or on account of:
1. any illicit or prohibited trade;
2. entering or for the consequences of entering prohibited fishing waters;
3. violation of any port regulation;
4. claims for wages or provisions furnished to officers or crew while the vessel insured hereunder may
be detained as a result of any such violations, seizure detention, confiscation, loss or disaster, or
during any subsequent salvage and/or repairs;
c. radioactive contamination.

GENERAL PROVISIONS IN THE EVENT OF LOSS


PROTECTION AGAINST lOSS: If your vessel or other property covered by this policy is damaged, you
must take all reasonable steps to protect it from further damage. We will reimburse you for reasonable
expenses for protecting the property from further damage. Payments for protecting damaged property will
be in addition to any other payments we make for losses covered by this policy. However, the most we will
pay for protecting damaged property is the coverage limit which applies to that property.
EXHIBIT A
10 Page 45 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 14 of 16

ABANDONMENT: If we take any steps to protect damaged property, this does not mean we are
accepting an abandonment of the property. And, if you take steps to protect damaged property, this does
not mean you are waiving any rights you have to abandon the property.

NOTICE OF LOSS: You must report in writing to us, or our authorized agent, as soon as possible after
the occurrence of any accident, loss, damage or expense that may be covered under this policy. This
notice should state when, where and how the event· occurred, and should include the names and
addresses of any witnesses. You are also required to notify the police and file a police report as soon as
you are aware that your property has been stolen or vandalized. If you do not provide the notice to us as
required under this section as soon as possible, any claim for such loss under this policy will be voided.

PROOF-OF-LOSS: You must file with us, or our authorized agent, as soon as possible after our written
request, a detailed proof-of-Ioss signed and sworn to by you setting forth to the best of your knowledge, the
facts of the loss. We may also require you to submit to an examination under oath. See Part C: Medical
Payments Coverage for special proof-of-Ioss requirements for medical payments claims.

CLAIM OR SUIT AGAINST YOU: If a claim is made or suit is brought against you for liability that may
be covered under this policy, you must immediately notify us and send us every demand, notice, summons
or other legal papers received by you or your representative. We will pay the ensuing cost of the suit We
will also have the option of naming attorneys to represent you. Payments for the cost of your legal defense
will be in addition to payments we make under your coverage for liability claims against you.

ASSISTANCE AND COOPERATION: Any person making a claim must:


a. cooperate with us in the investigation, settlement or defense of any claim or suit under this policy;
b. assist us in the enforcement of any right of contribution or indemnity against any person or organization
which may be liable to any covered person;
c. allow us to inspect and appraise all damaged property, not stolen or otherwise unrecoverable, before it
is repaired or disposed of;
d. sign a written authorization permitting us to obtain medical files and other pertinent records;
e. submit, at our expense and as often as we reasonably require, to a physical examination by physicians
we select and at the time and place we select;
f. not assume any obligation or admit any fault or liability that you or we may be liable for without first
obtaining our written consent; and
g. not incur any expenses that we may be liable for without first obtaining our written consent; the only
expenses you may incur without obtaining our written consent are those covered under Part C: Medical
Payments Coverage of this policy, or as described in General Provisions In The Event Of Loss in the
Protection Against Loss section.

PAYMENT OF LOSS: Unless a claim has been paid by others, we will pay for any loss covered under
this policy within 30 days after both the detailed sworn proof of loss and proof of your interest in the insured
property are given to us.

OUR RIGHT TO RECOVER:


a. if we make a payment under this policy and the person to or for whom payment was made has the right
to recover from another for the covered loss, we will be subrogated to that right; that person will do
whatever is necessary to enable us to exercise our rights and will do nothing after the loss to prejudice
them;
b. if we make a payment under this policy and the person to or for whom payment is made, recovers
damages from another, that person will hold the proceeds of the recovery for us and will reimburse us
to the extent of our payment.

SALVAGE: If we have made payment under this policy for loss or damage, and if there is salvage or
recovery as a result of that loss or damage, we have the right to recover that salvage or recovery to the
extent of our payment

EXHIBIT A
11 Page 46 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 15 of 16

SUIT AGAINST US: You may not bring a suit against us unless you have complied with all terms and
conditions of this policy. In addition:
a. with respect to any claim or loss to insured property, any suit against us must commence within one
year of the date of loss or damage;
b. with respect to any other claim for loss, no suit may be brought against us until the amount of the
covered person's obligation to pay has been determined by final judgments after trial or by written
agreement signed by you, us and the claimant; and such legal action against us must commence within
one year of the date of judgment or written agreement;
c. no one shall have any right to join us as a party to any action against a covered person;
d. if any time limitations of this policy are prohibited or invalid under the law, then legal action against us
must be commenced within the shortest limitation of time permitted by such law.

OTHER INSURANCE: If any covered person has any other insurance against a property damage loss
covered under this policy, we will not pay for any greate"r proportion of the loss than our applicable amount
of insurance stated on the Declarations Page bears to the total amount of insurance covering the loss. With
respect to a liability, medical payments and/or uninsured boater loss, any insurance provided by this
contract shall be deemed excess over all other valid and collectible insurance.

EXHIBIT A
Page 47 of 48
Case 3:08-cv-00050-TMB Document 1-3 Filed 03/24/08 Page 16 of 16

SIGNATURES

The only signatures applicable to this policy are those representing the company named on the
first page of the declarations.

By signing and delivering the policy to you, we state that it is a valid contract when countersigned by our
authorized representative.

~, ". "m"" ,,,""'


Insurance Company of North America ACE American Insurance Company
Philadelphia, Pennsylvania Philadelphia, Pennsylvania

Indemnity Insurance Company of North America


Philadelphia, Pennsylvania

EXHIBIT A
Page 48 of 48
Case 3:08-cv-00050-TMB Document 26-2 Filed 08/26/08•.. Page 1 of 1
800.643.2423 ext.7730 tel
", Recreational Marine Claims 800.643.8507 fax
Routing 1275-4E
1 Beaver Valley Road pamela.king@ace-ina.com
Wilmington 19803 www.ace-ina.com
ace usa
Pamela L. King
Recreational Marine Claims Adjuster

September 26, 2006

Lone Eagle Resorts


DBA Pybus Point Lodge
P.O. Box 33497
Juneau, AK 99803

Re: Claim #796S169054-6


Policy #SPC Y07954840
Date of Loss: 9/12/06

Dear Insured:

This letter is to advise you that your claim filed for damage to your 2002 Koftler Sportfisher may not
covered by your policy for the following reason:

The date of loss, September 12, 2006, falls within your policy lay-up period of 09/1 - 6/1 as
indicated on your Declarations Page of your policy. During this time, your vessel must be laid up
ashore and not in use.

Therefore, we are hereby notifying you that your claim will be handled under a Full Reservation of Rights
in accordance with the full terms and conditions of the policy, #SPC Y07954840. We are not waiving any
of our rights or defenses under the policy. It is understood and agreed that all of your rights under the
policy are likewise afforded the same protection.

If you have any questions regarding this matter, please feel free to contact me at 800.643.2423 ext. 7730.

Sincerely,

Pam King
ACE Recreational Marine Claims

CC: Northern Marine Insurance

One of the ACE Group of Insurance & Reinsurance Companies

Exhibit 2
Page 1 of 1
(
·-
Case 3:08-cv-00050-TMB Document 26-3 Filed 08/26/08 Page 1 of 6
'- The SEA-M~OUNTAIN Group
Sea-Mountain Insurance
Northern Marine Insurance
Eugene Horton & Associates

Friday: 05/25/2007
'f
..': MAr.2 9 2007
To: Pam King '-

ACE Recreational Marine Claims


Routing 1275-4E
1 Beaver Valley Road
Wilmington Delaware 19803

c Re: Claim # 796S 169054-6


Lone Eagle Resorts

Hi Pam

The insured wishes to appear the claim decision of 09/27/2006.

Attached is a report on the loss developed by an independent


investigator.

The information contained in the report gives the insured a very


good argument for appeal and recovery on the loss.

Please review the report and advise me of your findings and


decision.

An~ /Jflll?'
Mike Miller 1N orthem Marine Insurance
mikeglobaltraveler@hotmail.com
425-775-1410 ext. 126

19630 - 76th AVE. W. • LYNNWOOD, WASHINGTON 98036-5843 • (425) 775-1410 • FAX (425) 774-4177 • 1-800-553-3624
Exhibit 3
Page 1 of 6
Case 3:08-cv-00050-TMB Document 26-3 Filed 08/26/08 Page 2 of 6

MENDENHALL INVESTIGATIONS INC.


227 7TH STREET • JUNEAU, ALASKA 99801 • (907) 586-3303 • FAX: (907) 586-2206

APRIL 20, 2007

Brent Cole, Esq.


Marston &: Cole
Suite 502
745 West Fourth Avenue
Anchorage, Alaska 99501

Subject: Marine Casualty on 9/12/06: partial sinking of Vessel


AX 8003-P in Cannery Cove on the beach at Pybus Point
Lodge, Admiralty Island, Alaska

REPORT OF INVESTIGATION

It was reported to this investigator that the 32-foot


Koffler Boat, AK 8003-P, sank while tied to the dock at Pybus
Point Lodge; photographs of the vessel are included in this
report. The reported date and time of the partial sinking was
September 12, 2006 at approximately 2:30 PM, according to Alan
Veys lodge manager. The high tides for that date occurred at
~ 4:51AM +13.9 feet, and 4:52PM +15.9 feet. The partial sinking
occurred 2 hours and 22 minutes before the full tide. (See
Attached Tide Chart for Cannery Cove.)
At Pybus Point Lodge, located on Admiralty Island, there are
no trucks to attach to a boat trailer to remove a boat from the
water. The lodge also does not have a hard surface boat-launching
ramp. In order to launch boats from the boat trailer, or to
remove the boats from the water, this must be accomplished over a
sand and gravel beach with the use of a backhoe. So that the
backhoe does not become stuck on the beach, and swamped with the
tide, the boats are moved up the beach on high tides, where the
gravel is firmer. This reduces the chance of the backhoe becoming

Exhibit 3
Page 2 of 6
Case 3:08-cv-00050-TMB Document 26-3 (
Filed 08/26/08 Page 3 of 6

stuck on the beach, when the boat is being removed from the
water. In the spring, the boats are launched at high tides, so
that the backhoe can remain on a firm portion of the beach.
At the time of the partial sinking, all other lodge boats
had been stored for the winter by being removed from the water
and placed on the beach above all high tide lines. AK 8003-P was
tied to the dock awaiting a high tide with a no wave or smooth
water conditions so that it to could be removed from the water.
AK 8003-P was going dry with each low tide, and it was
floating for only short periods of time on the high tides. The
vessel had been prepared for removal from the water. It was in
preparation for dry-docking and winter storage. It was reported

c that AK 8003-P was scheduled for removal at the high PM tide on


the 12th of September. The vessel was no longer in service,
consistent with its insurance coverage.

OBSERVATIONS FROM PHOTOGRAPHS


Alan Veys provided this investigator with photograph numbers
3,4 and 5. Mr. Veys took these photographs on 9/12/06. The
photographs show the partial sunken condition of AK 8003-P while
it is tied to the dock. AK 8003-P is sitting on the beach bottom.
Photograph #3 clearly shows that floating buildings and other
lodge boats had been removed from the water and placed on the
beach. Using these photographs and comparing them to photographs
numbered 1 and 2 which had been taken earlier by this
investigator during normal operations at the lodge during the
2006 season, one can determine that AK 8003-P had been moved up
the dock.
Photograph #8 and Photograph #10 show that a green algae
water line was forming on the boat above an older waterline that
had turned brown. This would show that over a period of time the
boat started to sit lower in the water. This green algae line is
very close, although below, the bottom of the scupper drain.
Photograph #11 shows a non-watertight access cover and a
broken fitting. The non-watertight access cover allowed saltwater
to enter the compartment, which caused the boat to sit lower in
Report of Investigation dated April 20, 2007 Page 2
Concerning Marine Casualty Loss

Exhibit 3
Page 3 of 6
Case 3:08-cv-00050-TMB Document 26-3 Filed 08/26/08 Page 4 of 6

the water; the broken fitting, which had been welded to the
transom of AK 8003-P. This broken fitting would allow water to
pass directly through the transom and into the bilge.

RECOVERY
The vessel was recovered about midnight, according to Mr.
Veys, with the use of pumps and the replacement of the scupper
plugs. It was then towed to Kake Alaska where it was shipped by
barge to Juneau Alaska for repair at willie's Marine. Due to the
closure of the lodge and the lack of an aircraft for emergency
use, no other course of action was available to the lodge owner,
who was alone at the time of the loss.

INVESTIGATOR'S BACKGROUND RELEVANT TO THIS MATTER


From 1979 to 1982, this investigator worked in a
logging camp in Tenakee Inlet. Part of my responsibilities
included the care and handling of all of the boats and docks for
the Corner Bay Logging Camp. The floating inventory of boats
consisted of the following vessels: (a.) a 28 foot Bayliner, (b.)
a 44 foot crew or passenger boat, (c.) a 60 foot crew utility
boat (c.) Two log broncs (d.) 28 foot aluminum crew boat, (f.) a
21 foot Boston Whaler, and (g.) An 18 foot Boston Whaler. I was
also responsible for more that 150 feet of docks.

c As part of my duties and responsibilities, I took boats out


of the water over sand and gravel beaches using heavy equipment
most often a front-end loader and a boat trailer. I am aware of
the process of moving a boat up the dock to get it close to a
firm area on the beach, so that the boat can be removed from the
water.
The logging camp boats would remain tied to the dock for
some days with the boat going dry twice a day and then floating
on the high tides twice a day. Sometimes we would wait four of
five days to get the boat on the highest tide possible. We waited
for the wind to quit, so that we would be working with smooth
water while placing the boat on a trailer. During the times we
were preparing the boat for removal from the water, that the boat
Report of Investigation dated April 20, 2007 Page 3
Concerning Marine Casualty Loss

Exhibit 3
Page 4 of 6
','
Case 3:08-cv-00050-TMB Document 26-3 Filed 08/26/08 Page 5 of 6

was considered out of service. The boat handling process at Pybus


Point Lodge is consistent with my experience.

INVESTIGATIVE FINDINGS, ANALYSIS AND CONCLUSIONS


When this investigator inspected the subject boat AK 8003-P
at Willies Marine, the non-watertight access cover was opened and
the compartment was discovered to be nearly full of salt water
within 3 inches of the top. (Saltwater by taste) Also observed
was a broken fitting (see photos), which would allow water to
pass directly in to bilges of the subject vessel.
Further observed was a new green algae waterline above the
old waterline that had formed on the hull, which allows the

( thought that the aft of the boat had become heavier over a period
of time, which is consistent with the hypothesis or reason for
the boat lowering in the water could be attributed to the slow
flooding of the engine-mounting compartment. This compartment is
isolated from the bilges on AK 8003-P, and does not have a
mechanical or electrical water extraction device installed.
After a complete review, this investigator believes the
following: (1) that the angles of the beach at Pybus, the 32 foot
length of the hull, and the stern heavy nature of the subject
vessel because of its engine weight, would cause the stern to
remain low in the water and remain grounded on the beach on low
tide, while the subject vessel was tied to the dock awaiting dry
dock; (2) As the tidewater rose and fell over the non-watertight
access covers of the engine mounting compartment, it gradually
flooded, over a period of a few tide cycles; (3) As the engine-
mounting compartment flooded, this allowed the stern of the boat
to sink even lower in the water; (4) In addition, water flooding
in through the broken fitting on the transom further
incrementally increased the weight of the stern of the boat until
it remained on the beach during the rising tide; and(S) A further
source of water intrusion into the vessel could have come in
through the scuppers but of little consequence given points 1- 4
above.

Report of Investigation dated April 20, 2007 Page 4


Concerning Marine Casualty Loss

Exhibit 3
Page 5 of 6
, I' '
Case 3:08-cv-00050-TMB Document 26-3 Filed 08/26/08 Page 6 of 6

The subject boat casualty was therefore a direct result of a


series of events involving several sources of flooding, which
each occurred slowly and subtly, until the vessel accumulated
enough water to finally sink suddenly in a rising tide, while
tied to the dock. The water accumulation inside of the closed
compartments would not have been noticeable prior to sinking with
out opening the compartments.

COST ESTIMATE FOR REPAIR OF DAMAGE TO VESSEL AND ENGINES


The vessel AK 8003-P was taken to willis Marine at 2281
Industrial Blvd Juneau Ak. This investigator requested an
estimate for repairs. The amount estimated is $40,763.69. (See
estimate attached) .
This investigator has been informed that Lone Eagle Resorts,
Inc. owner of the vessel may have the vessel repaired and
returned to service during the claims process, in order to
prepare the lodge for opening in May 2007, so that consequential
losses may be avoided.

Report of Investigation dated April 20, 2007 Page 5


Concerning Marine Casualty Loss

Exhibit 3
Page 6 of 6
" . ..,,,
Case 3:08-cv-00050-TMB Document 26-4 ,
Filed 08/26/08 ..
Page 1 of 2
) 800.643.2423 ext.7730 tel
Recreational Marine Claims 800.6'43.8507 fax
Routing 1275-4E "'"
1 Beaver Valley Road pamela .king@ace-ina.com
Wilmington 19803 www.ace-ina.com
ace usa
Pamela L. King
Recreational Marine Claims Adjuster

May 30,2007

Lone Eagle Resorts


DBA Pybus Point Lodge
P.O. Box 33497
Juneau,AU< 90803

Re: Claim #796S 169054-6


Policy #SPC Y07954840
Date of Loss: 09/12/06
Issuing Company: ACE American Insurance Company

Dear Insured:

In response to your agent's letter dated May 25, 2007, please be advised that the denial of your claim
stands.

We have reviewed the documentation provided by your hired investigator, Mendenhall Investigations,
Inc., and have confirmed that the boat was indeed in the water on the date of loss, September 12, 2006.
The photos provided within the report support the same.

The date of loss, September 12, 2006, falls within your policy lay-up period of 9/1 - 6/1, as indicated on
your Declarations Page of your policy. During this time, your vessel must be laid up ashore and not in
use.

The policy specifically states:


General Conditions and Exclusions
.( Extension of Coverage: If the Navigation Warranty included in this policy, or the Lay-
up Warranty shown on the Declarations Page, are breached due to matters beyond
your control, the policy will remain in effect, but only if you give us written notice of
the breach within (10) days after the breach and pay any additional premiums due for
this extension of coverage. If the Navigation Wa"anty or Lay-up Warranty are
breached voluntarily there shall be no coverage under this policy without both prior
notice to us and approval by us.

Therefore, your claim will remain closed within our system with no payment rendered. If you choose to
challenge this decision legally, you must do so in accordance with the policy provisions listed on page 10
of your policy, form #MA-9S93e.

One of the ACE Group of Insurance & Reinsurance Companies

Exhibit 4
Page 1 of 2
i ,
Case 3:08-cv-00050-TMB
\.
Document 26-4 Filed 08/26/08 Page 2 of 2

ace usa

If you have any questions regarding this matter, please feel free to contact me at 800.433.0385 ext. 7730.

Sincerely,

~~~
Pam King
ACE Recreational Marine Claims

CC: Northern Marine Insurance

Page 2/2

Exhibit 4
Page 2 of 2
r
Case 3:08-cv-00050-TMB
( Document 26-5 Filed 08/26/08 Page 1 of 19
C l ~) DORSEY
DORSEY & WHITNEY LLP

JOHN A. TREPTOW
(907) 257-7820
treptow.john@dorsey.com

July 12, 2007

Pamela l. King
Recreational Marine Claims Adjuster
Post-it- Fax Note 7671 Date 8-C).--6'{ Ip~g"Js~ 82
ACE USA From ~ \<. i tJ.6
Recreational Marine Claims Routing 1275-4E Tat)jc.\<. Bl~()\q_.J i~+-
One Beaver Valley Road Co./Oept. V Co.
Ac£.
Wilmington, Delaware 19803 Phone # Phone #

Fax #
Fax#ao~- 855- Cfdl1
Re: Claim No.: 796S169054-6
Policy No.: SPC Y07954840
Date of Loss: 9/12/06
Issuing Company: ACE American Insurance Company
(
Dear Ms. King:

This office represents Lone Eagle Resorts, dba Pybus Point Lodge ("LER") with respect
to the loss sustained by its 32-foot Kofler boat, AK8003-P, which sank while tied to the dock at
Pybus Point Lodge on September 12, 2006.

We have had an opportunity to review your correspondence of May 30,2007, to LER,


and respectfully request that ACE USA reconsider its decision to deny LER coverage for the
loss. To facilitate your review, we enclose a copy of Mendenhall Investigations' April 20, 2007
Report of Investigation together with copies of relevant court decisions.

The subject policy contains a "lay-up warranty." That warranty states: "It is warranted
that the insured vessel will be laid up ashore from noon 09/01 to noon 06/01." On
September 12, 2006, the date of the loss, the vessel was not ashore and was still in the water.
However, the vessel was (a) out of navigation, (b) in a secure location, (c) prepared for being
moved ashore, and (d) awaiting a sufficiently high tide to permit removal. Under the facts of this
case and applicable law, it is our opinion that the vessel was laid up and that the warranty has
been met.

The Report of Investigation done by Mendenhall Investigations lays out, in considerable


detail, the circumstances of this loss. In our opinion, the investigator's discussions at pages 3
and 4 of his report are particularly significant to the lay-up issue. It is LER's position that at the
time of the loss, the vessel was out of navigation and was being prepared to be taken ashore.
In Southeast Alaska there are very few facilities for lifting boats out of the water. There was no
boat ramp, lifts, or cranes available at the vessel's location. The usual method employed to
remove a vessel for winterization in Southeast Alaska is to use heavy equipment, most often a
front-end loader and a boat trailer. In that situation, it is imperative to pull the boat out of the
highest tide possible in order to avoid having the front-end loader get stuck in the sand or the
mud. As the investigator indicated, sometimes it is necessary to wait four or five days to get the
boat in the highest tide possible and to ensure that the winds are not sufficiently strong to
prevent removal. That is exactly what LER planned to do in this case.

DORSEY & WHITNEY LLp· WWW.DORSEY.COM • T 907.276.4557· F 907.276Exhibit


. 4152 5
1031 WEST FOURTH AVENUE· SUITE 600 • ANCHORAGE, ALASKA 99501-5907
Page 1 of 35
USA CANADA EUROPE ASIA
Case 3:08-cv-00050-TMB Document 26-5 Filed 08/26/08 Page 2 of 19
C 2»
DORSEY

Pamela L. King
July 12, 2007
Page 2

According to Alan Veys, the boat was in the position it was at the time that it sank only
because it was being taken out of the water. It was never moored or docked in that position
while it was being used. LER was simply awaiting tide and wind conditions that would allow the
vessel to be taken out of the water safely.

It is our opinion that the rather unique circumstances that a vessel owner faces in
Southeast Alaska should be considered by ACE USA in determining whether a warranty has
been breached. In addition, we believe that ACE USA should review the following legal
precedent.

In Campbell v. Hartford Fire Ins. Co., 533 F.2d 496,498 (9th Cir. 1976), the Ninth Circuit
Court held:

The lay-up warranty is concerned not with the location of the vessel at a
( particular time, but rather with the condition of the vessel during the winter
months, namely, whether she has been secured, according to local custom, in a
manner which will protect her from the perils of inclement weather. Lay-up in any
location appropriate for that purpose would have constituted compliance with the
warranty we are here considering . Such a warranty is not one as to location but
only as to condition.

See also Goodman v. Fireman's Fund Ins. Co., 600 F.2d 1040, 1042 (4th Cir. 1979) ("Whether
a vessel is laid up during the time warranted in a marine insurance policy depends upon local
custom."); New Hampshire Ins. Co. v. Dagnone, 2005 A.M.C. 1339,1346 (D.R.L 2005) ("Courts
have looked to the local custom of laying up similar vessels to guide their decisions.").

In this case, we think that the facts show that the vessel was being prepared to be taken
ashore pursuant to local custom. The vessel was out of navigation at the time of the loss,
awaiting tide and wind conditions that would allow safe removal. We would request that
ACE USA withdraw its declination of coverage and agree that the subject loss is covered.

We await your advices

Very truly yours,

.4.~
John A. TrePto~
cc: Alan Veys
Eric Martinez
Michael R. Mills
Michele Droege

Exhibit 5
Page 2 of 35
DORSEY & WHITNEY LLP
• Case 3:08-cv-00050-TMB Document 26-5 Filed 08/26/08 Page 3 of 19

MENDENHALL INVESTIGATIONS INC.


227 7TH STREET. JUNEAU, ALASKA 99801 • (907) 586-3303 • FAX: (907) 586-2206

APRIL 20, 2 007

Brent Cole, Esq.


Marston & Cole
Suite 502
745 West Fourth Avenue
Anchorage, Alaska 99501

(., Subject: Marine Casualty on 9/12/06: partial sinking of Vessel


AX 8003-P in Cannery Cove on the beach at Pybus Point
Lodge, Admiralty Island, Alaska

REPORT OF INVESTIGATION

It was reported to this investigator that the 32-foot


Koffler Boat, AK 8003-P, sank while tied to the dock at Pybus
Point Lodge; photographs of the vessel are included in this
report. The reported date and time of the partial sinking was
September 12, 2006 at approximately 2:30 PM, according to Alan
Veys lodge manager. The high tides for that date occurred at
4:51AM +13.9 feet, and 4:52PM +15.9 feet. The partial sinking
occurred 2 hours and 22 minutes before the full tide. (See
Attached Tide Chart for Cannery Cove.)
At Pybus Point Lodge, located on Admiralty Island, there are
no trucks to attach to a boat trailer to remove a boat from the
water. The lodge also does not have a hard surface boat-launching
ramp. In order to launch boats from the boat trailer, or to
remove the boats from the water, this must be accomplished over a
sand and gravel beach with the use of a backhoe. So that the
backhoe does not become stuck on the beach, and swamped with the
tide, the boats are moved up the beach on high tides, where the
gravel is firmer. This reduces the chance of the backhoe becoming

Exhibit 5
Page 3 of 35
Case 3:08-cv-00050-TMB Document 26-5 Filed 08/26/08 Page 4 of 19

stuck on the beach, when the boat is being removed from the
water. In the spring, the boats are launched at high tides, so
that the backhoe can remain on a firm portion of the beach.
At the time of the partial sinking, all other lodge boats
had been stored for the winter by being removed from the water
and placed on the beach above all high tide lines. AK 8003-P was
tied to the dock awaiting a high tide with a no wave or smooth
water conditions so that it to could be removed from the water.
AK 8003-P was going dry with each low tide, and it was
floating for only short periods of time on the high tides. The
vessel had been prepared for removal from the water. It was in
preparation for dry-docking and winter storage. It was reported
that AK 8003-P was scheduled for removal at the high PM tide on
( the 12th of September. The vessel was no longer in service,
consistent with its insurance coverage.

OBSERVATIONS FROM PHOTOGRAPHS


Alan Veys provided this investigator with photograph numbers
3,4 and 5. Mr. Veys took these photographs on 9/12/06. The
photographs show the partial sunken condition of AK 8003-P while
it is tied to the dock. AK 8003-P is sitting on the beach bottom.
Photograph #3 clearly shows that floating buildings and other
lodge boats had been removed from the water and placed on the
beach. Using these photographs and comparing them to photographs
~ numbered 1 and 2 which had been taken earlier by this
investigator during normal operations at the lodge during the
2006 season, one can determine that AK 8003-P had been moved up
the dock.
Photograph #8 and Photograph #10 show that a green algae
water line was forming on the boat above an older waterline that
had turned brown. This would show that over a period of time the
boat started to sit lower in the water. This green algae line is
very close, although below, the bottom of the scupper drain.
Photograph #11 shows a non-watertight access cover and a
broken fitting. The non-watertight access cover allowed saltwater
to enter the compartment, which caused the boat to sit lower in
Report of Investigation dated April 20, 2007 Page 2
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the wateri the broken fitting, which had been welded to the
transom of AK 8003-P. This broken fitting would allow water to
pass directly through the transom and into the bilge.

RECOVERY
The vessel was recovered about midnight, according to Mr.
Veys, with the use of pumps and the replacement of the scupper
plugs. It was then towed to Kake Alaska where it was shipped by
barge to Juneau Alaska for repair at willie's Marine. Due to the
closure of the lodge and the lack of an aircraft for emergency
use, no other course of action was available to the lodge owner,
who was alone at the time of the loss.

o INVESTIGATOR'S BACKGROUND RELEVANT TO THIS MATTER


From 1979 to 1982, this investigator worked in a
logging camp in Tenakee Inlet. Part of my responsibilities
included the care and handling of all of the boats and docks for
the Corner Bay Logging Camp. The floating inventory of boats
consisted of the following vessels: (a.) a 28 foot Bayliner, (b.)
a 44 foot crew or passenger boat, (c.) a 60 foot crew utility
boat (c.) Two log broncs (d.) 28 foot aluminum crew boat, (f.) a
21 foot Boston Whaler, and (g.) An 18 foot Boston Whaler. I was
also responsible for more that 150 feet of docks.
As part of my duties and responsibilities, I took boats out
of the water over sand and gravel beaches using heavy equipment
most often a front-end loader and a boat trailer. I am aware of
the process of moving a boat up the dock to get it close to a
firm area on the beach, so that the boat can be removed from the
water.
The logging camp boats would remain tied to the dock for
some days with the boat going dry twice a day and then floating
on the high tides twice a day. Sometimes we would wait four of
five days to get the boat on the highest tide possible. We waited
for the wind to quit, so that we would be working with smooth
water while placing the boat on a trailer. During the times we
were preparing the boat for removal from the water, that the boat
Report of Investigation dated April 20, \ 2007 Page 3
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was considered out of service. The boat handling process at Pybus


Point Lodge is consistent with my experience.

INVESTIGATIVE FINDINGS, ANALYSIS AND CONCLUSIONS


When this investigator inspected the subject boat AK 8003-P
at Willies Marine, the non-watertight access cover was opened and
the compartment was discovered to be nearly full of salt water
within 3 inches of the top. (Saltwater by taste) Also observed
was a broken fitting (see photos), which would allow water to
pass directly in to bilges of the subject vessel.
Further observed was a new green algae waterline above the
old waterline that had formed on the hull, which allows the
thought that the aft of the boat had become heavier over a period
of time, which is consistent with the hypothesis or reason for
the boat lowering in the water could be attributed to the slow
flooding of the engine-mounting compartment. This compartment is
isolated from the bilges on AK 8003-P, and does not have a
mechanical or electrical water extraction device installed.
After a complete review, this investigator believes the
following: (1) that the angles of the beach at Pybus, the 32 foot
length of the hull, and the stern heavy nature of the subject
vessel because of its engine weight, would cause the stern to
remain low in the water and remain grounded on the beach on low
tide, while the subject vessel was tied to the dock awaiting dry
C. dock; (2) As the tidewater rose and fell over the non-watertight
access covers of the engine mounting compartment, it gradually
flooded, over a period of a few tide cycles; (3) As the engine-
mounting compartment flooded, this allowed the stern of the boat
to sink even lower in the water; (4) In addition, water flooding
in through the broken fitting on the transom further
incrementally increased the weight of the stern of the boat until
it remained on the beach during the rising tide; and(S) A further
source of water intrusion into the vessel could have come in
through the scuppers but of little consequence given points 1- 4
above.

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The subject boat casualty was therefore a direct result of a


series of events involving several sources of flooding, which
each occurred slowly and subtly, until the vessel accumulated
enough water to finally sink suddenly in a rising tide, while
tied to the dock. The water accumulation inside of the closed
compartments would not have been noticeable prior to sinking with
out opening the compartments.

COST ESTIMATE FOR REPAIR OF DAMAGE TO VESSEL AND ENGINES


The vessel AK 8003-P was taken to Willis Marine at 2281
Industrial Blvd Juneau Ak. This investigator requested an
estimate for repairs. The amount estimated is $40,763.69. (See
estimate attached) .
This investigator has been informed that Lone Eagle Resorts,
Inc. owner of the vessel may have the vessel repaired and
returned to service during the claims process, in order to
prepare the lodge for opening in May 2007, so that consequential
losses may be avoided.

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REFERENCE PHOTOGRAPHIC INFORMATION ON FILE


August 26 th 27th and 28th 2006 I was at Pybus Bay on other
Business, and stayed at the Pybus Point Lodge. While I was at the
Lodge, I took some photographs of the docks and the lodge
Buildings should they ever be needed.
The photo #1 shows the ramping and floats system as
It is installed for summer use. This photograph was taken in late
morning after most of the guests had left the lodge on boats to
go fishing.

Fish cleaning and freezing area, floating freezer building

Power pole piling

Photograph #1 View of docks and ramps at Pybus Bay viewed from


the Main Lodge building second story deck.
Pilings are reference points.
Power pole piling is the first pole used in the ramping system. The Dock
piling is the second piling used in the ramping system

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