Nautilus Insurance Company

NAUTILUS INSURANCE COMPANY POLICY NUMBER: LIABILITY ENDORSEMENT

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ABUSE OR MOLESTATION LIABILITY COVERAGE

This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART Except to the extent that such coverage is provided as described below, this insurance does not apply to "bodily injury", "property damage", "personal and advertising injury", or medical payments arising out of "abuse or molestation". SCHEDULE COVERAGE LIMIT OF INSURANCE $ AGGREGATE (INCLUDING CLAIM EXPENSE) ABUSE OR MOLESTATION LIABILITY $ EACH OCCURRENCE (INCLUDING CLAIM EXPENSE) DESCRIPTION OF OPERATIONS PREMIUM BASIS RATE PREMIUM $ $ INSURING AGREEMENT With respect to the coverage and limits provided by this endorsement, Paragraph a. of the Insuring Agreement under SECTION I - COVERAGE A - BODILY INJURY AND PROPERTY DAMAGE LIABILITY is replaced by the following: a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies and will include damages arising out of "abuse or molestation". We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result, but: (1) The amount we will pay for damages is limited as described in this endorsement; and (2) Our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements, including "claim expense." No other obligation or liability to pay sums or perform acts or services is covered. With respect to this endorsement, SUPPLEMENTARY PAYMENTS - COVERAGES A AND B is deleted. ADDITIONAL EXCLUSIONS The following exclusions are added to Paragraph 2. Exclusions of SECTION I - COVERAGE A - BODILY INJURY AND PROPERTY DAMAGE LIABILITY: This insurance does not apply to: (1) "Bodily injury" or "property damage" arising out of "abuse or molestation" of any: (a) "Employee" of the insured arising out of and in the course of employment by the insured; (b) "Employee" or "volunteer worker" of the insured, or any party subcontracted by the insured; or (c) Person that first occurs prior to the inception of this policy even if such "abuse or molestation" continues into this policy period; (2) "Bodily injury" or "property damage" arising out of "abuse or molestation" for operations which are not shown in the Schedule above; (3) Liability for "abuse or molestation" assumed under any contract or agreement, either oral or written; (4) Criminal defense cost of any individual(s) or to any other costs associated with a criminal trial including appeals; or (5) Facilities that include corporal punishment as part of their written disciplinary policy.

S128 (09/03) Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 1 of 2 LIMITS OF INSURANCE With respect to this endorsement, SECTION III - LIMITS OF INSURANCE is replaced with the following: The Limits of Insurance under this endorsement shall be separate and exclusive of the Limits of Insurance set forth in the policy and applicable to all claims of whatever nature or description that arise, in whole or in part, from actual or alleged "abuse or molestation." The Limits of Insurance shown in this endorsement and the rules below fix the most we will pay regardless of the number of: a. Insureds; b. Claims made or "suits" brought; or c. Persons or organizations making claims or bringing "suits". The Abuse or Molestation Liability Aggregate Limit is the most we will pay for all "bodily injury", including "claim expense", because of "abuse or molestation". Subject to the Abuse or Molestation Liability Aggregate Limit above the Abuse or Molestation Liability Each Occurrence Limit is the most we will pay for all "bodily injury", including "claim expense", because of "abuse or molestation" arising out of any one "occurrence". "Claim expense" incurred in investigating and defending such claims made under the provisions of this endorsement will be included within the Limits of Insurance as set forth above and are not in addition to them. Such "claim expense" will reduce the available limits of insurance. ADDITIONAL DEFINITIONS The following definitions are added to the DEFINITIONS Section: "Abuse or molestation" means "bodily injury" to any person while in the care, custody or control of any insured, arising out of actual or threatened abusive behavior, conduct, or verbal or nonverbal communication whether such "bodily injury" is: a. For sexual gratification, discrimination, intimidation, coercion, or for any other purpose; and/or b. Results in emotional or psychological injury or harm of any person(s). "Abuse or molestation" includes the negligent: a. Employment; b. Supervision; c. Investigation; d. Reporting or failure to report to the proper authorities; or e. Retention; of a person whose behavior, conduct or verbal or nonverbal communication results in "abuse or molestation".

"Claim expense" means payments allocated by us to a specific claim or "suit" for its investigation, adjustment, legal expense incurred, settlement, whether or not payment is made to the claimant, compromise settlement is reached or the claim is denied, the cost of bonds to appeal judgment or award in any "suit" we defend, the cost of bonds to release attachments and costs taxed against the insured in "suit." However, "claim expense" will not include defense costs or any other costs associated with a criminal trial of any individual(s).

All other terms and conditions of this policy remain unchanged.

S128 (09/03) Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 2 of 2