DAMAGES WHICH ARISE FROM
OR RELATE TO ANY ALLEGED OR ACTUAL ACT, ERROR OR OMISSION BY THE COMPANY,
WHETHER INTENTIONAL OR OTHERWISE, OR FROM ANY RECKLESS CONDUCT OR BAD FAITH BY
THE COMPANY IN CONNECTION WITH THE HANDLING OF ANY CLAIM UNDER ANY OF THE
POLICIES OR IN CONNECTION WITH THE PREPARATION, ISSUANCE, DELIVERY OR
CANCELLATION OF ANY OF THE POLICIES; AND
(G)
ALL LIABILITY FOR EX GRATIA PAYMENTS.
2.3
NATIONAL UNION SHALL HAVE THE BENEFIT OF ANY
AND ALL DEFENSES, SETOFFS AND COUNTERCLAIMS TO WHICH THE COMPANY WOULD BE
ENTITLED WITH RESPECT TO SUCH POLICY LIABILITIES, IT BEING EXPRESSLY UNDERSTOOD
AND AGREED BY THE PARTIES THAT NO SUCH DEFENSES, SETOFFS OR COUNTERCLAIMS ARE
WAIVED BY THE EXECUTION OF THIS AGREEMENT OR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THAT, AS OF THE EFFECTIVE DATE, NATIONAL
UNION SHALL BE FULLY SUBROGATED TO ALL SUCH DEFENSES, SETOFFS AND COUNTERCLAIMS.
4
2.4
NATIONAL UNION IS HEREBY IRREVOCABLY
DESIGNATED THE SUCCESSOR TO THE COMPANY UNDER THE POLICIES AS IF SUCH POLICIES
WERE DIRECT OBLIGATIONS OF NATIONAL UNION.
NATIONAL UNION SUBSTITUTES ITSELF AS
OF THE EFFECTIVE DATE IN THE PLACE AND STEAD OF THE COMPANY AS IF NAMED IN THE
POLICIES IN PLACE OF THE COMPANY.
AS OF THE EFFECTIVE DATE, THE INSURED UNDER
THE POLICIES SHALL, AND DOES HEREBY, IMMEDIATELY RELEASE AND DISCHARGE THE
COMPANY FROM ANY AND ALL DUTIES, OBLIGATIONS AND LIABILITIES UNDER THE POLICIES
AND THE RELATED AGREEMENTS, AND THEREAFTER SHALL DISREGARD THE COMPANY AS A
PARTY THERETO. IMMEDIATELY AFTER THE EFFECTIVE DATE, THE COMPANY SHALL, AND DOES
HEREBY, IMMEDIATELY RELEASE AND DISCHARGE THE INSURED FROM ANY AND ALL DUTIES,
OBLIGATIONS AND LIABILITIES UNDER THE POLICIES AND THE RELATED AGREEMENTS,
EXCEPT FOR OBLIGATIONS TO COOPERATE WITH THE COMPANY.
EXCEPT TO THE EXTENT
PROHIBITED BY APPLICABLE LAW AND REGULATIONS, PAYMENTS MADE BY NATIONAL UNION
FOR THE BENEFIT OF THE INSURED SUBSEQUENT TO THE EFFECTIVE DATE IN DISCHARGE OF
OBLIGATIONS TO PROVIDE DIRECT COVERAGE TO THE INSURED UNDER ARTICLE II OF THIS
AGREEMENT SHALL DIMINISH, DOLLAR FOR DOLLAR, ANY OBLIGATION IN RESPECT THEREOF
WHICH NATIONAL UNION MAY HAVE TO THE COMPANY UNDER ARTICLE VI OF THIS
AGREEMENT.
AFTER THE EFFECTIVE DATE, THE INSURED SHALL FILE CLAIMS ARISING
UNDER THE POLICIES DIRECTLY WITH THE TPA ACTING ON BEHALF OF NATIONAL UNION
(EXCEPT FOR CLAIMS ON WHICH THE COMPANY HAS MADE PAYMENTS OR OTHERWISE SATISFIED
ITS LIABILITIES), AND NATIONAL UNION HEREBY CONSENTS TO BE SUBJECT TO DIRECT
ACTION TAKEN BY THE INSURED IN ACCORDANCE WITH THE INSURED'S RIGHTS UNDER THE
POLICIES; PROVIDED, HOWEVER, THAT THIS AGREEMENT SHALL NOT CONFER UPON THE
INSURED ANY ADDITIONAL RIGHTS OTHER THAN SUCH RIGHTS THAT THE INSURED WOULD HAVE
HAD AGAINST THE COMPANY IN THE ABSENCE OF THIS AGREEMENT. ON OR AFTER THE
EFFECTIVE DATE, NATIONAL UNION SHALL HAVE THOSE RIGHTS TO SUBROGATION AND
SALVAGE THAT MAY ACCRUE WITH REGARD TO CLAIMS ACTUALLY PAID BY NATIONAL UNION
UNDER THE POLICIES OR UNDER THE INDEMNITY SET FORTH IN THIS AGREEMENT.
THE
COMPANY SHALL BE ENTITLED TO THOSE RIGHTS OF